Exhibit 1.09
LEHMAN BROTHERS HOLDINGS INC.
Portfolio RANGERSSM
Portfolio Risk AdjustiNG Equity Range SecuritiesSM Notes
Due August 14, 2003
Number R-1 $10,000,000
CUSIP: 524908 DR 8
See Reverse for Certain Definitions
THIS SECURITY (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, at 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 Maturity Payment Amount.
Any amount payable on the Stated Maturity Date will be paid
only upon presentation and surrender of this Security.
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.
2
"RANGERS" and "Risk AdjustiNG Equity Range Securities" are
servicemarks of Lehman Brothers Inc.
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.
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: August 14, 2001 LEHMAN BROTHERS HOLDINGS INC.
By:
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Name: Oliver Budde
Title: Vice President
Attest:
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Name:
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: August 14, 2001
CITIBANK, N.A.,
as Trustee
By:
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Name:
Title: Authorized Signatory
(Reverse of Security)
This Security is one of a duly authorized series of Securities
of the Company designated as Portfolio RANGERSSM, Portfolio Risk AdjustiNG
Equity Range SecuritiesSM Notes Due August 14, 2003 (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 Maturity Payment Amount shall be determined by the
Calculation Agent pursuant to the Calculation Agency Agreement.
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 Date.
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 Date and
the date three Business Days prior thereto was the Calculation Date.
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 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,
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 multiples 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.
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 the terms used in this
Security.
"AMEX" shall mean the American Stock Exchange.
"Adjusted Value" shall mean, with respect to each Underlying
Equity Security:
(a) if the Ending Price is greater than or equal to the Starting Price, the
lesser of: ;
(i) $175; and
(ii) the product obtained by multiplying (A) $100
by (B) the quotient obtained by dividing the
Ending Price by the Starting Price by (C)
the quotient obtained by dividing the Ending
Multiplier by the Starting Multiplier;
or
(b) if the Ending Price is less than the Starting Price, the lesser of:
(i) $100; and
(ii) the product obtained by multiplying (A) $100
by (B) the quotient obtained by dividing the
Ending Price by 75% of the Starting Price by
(C) the quotient obtained by dividing the
Ending Multiplier by the Starting
Multiplier.
"Average Execution Price" shall mean, for a security or other
property, 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.
"Basket" shall mean the basket composed of the Underlying
Equity Securities.
"Business Day", notwithstanding any provision in the
Indenture, shall mean any day that is not a Saturday, a Sunday or a day on which
the NYSE, Nasdaq or AMEX is not open for trading or banking institutions or
trust companies in the City of New York are authorized or obligated by law or
executive order to close.
"Calculation Agency Agreement" shall mean the Calculation
Agency Agreement, dated as of August 14, 2001, between the Company and the
Calculation Agent, as amended 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 Maturity Payment Amount, which term shall, unless the
context otherwise requires, include its successors and assigns. The initial
Calculation Agent shall be Lehman Brothers Inc.
"Calculation Date" shall mean three Business Days prior to the
Stated Maturity Date; provided that if a Market Disruption Event occurs on such
date, the Calculation Date shall be the previous Business Day on which there was
not a Market Disruption Event.
"Close of Trading" shall mean 4:00 p.m., New York City time.
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"Company" shall have the meaning set forth on the face of this
Security.
"Ending Multiplier" shall mean, for each Underlying Equity
Security, the Starting Multiplier for such Underlying Equity Security adjusted
from time to time for the occurrence, prior to the Close of Trading on the
Calculation Date, of any of the extraordinary corporate transactions described
in Section 4 of Annex A of the Calculation Agency Agreement.
"Ending Price" shall mean, for each Underlying Equity
Security, as determined by the Calculation Agent based on information reasonably
available to it, subject to any Ending Price Adjustment:
(i) If the Underlying Equity Security is listed on a United
States national securities exchange or trading system or is a Nasdaq
security, the last reported sale price at the Close of Trading, regular
way, on such day, on the primary securities exchange registered under
the Securities Exchange Act of 1934 on which such Underlying Equity
Security is listed or admitted to trading or on Nasdaq, as the case may
be.
(ii) If the Underlying Equity 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 Equity Security is listed or
admitted to trading, as the case may be. The Ending Price shall then be
converted into U.S. dollars using the Official W.M. Reuters Spot
Closing Rate.
(iii) If the Underlying Equity Security is not listed on a
national securities exchange or trading system or is not a Nasdaq
security, and is listed or traded on a bulletin board, the Average
Execution Price of the Underlying Equity Security. If such Underlying
Equity Security is listed or traded on a non-United States bulletin
board, the Ending 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 Equity Security on a day on which the Ending Price for such
Underlying Equity Security is to be calculated, the Ending Price for
such Underlying Equity Security shall initially be determined using the
Ending Price for such Underlying Equity Security on the next preceding
Trading Day on which a Market Disruption Event did not occur. Once the
Market Disruption Event has ceased, the Ending Price of such Underlying
Equity Security shall then be adjusted to equal the Average Execution
Price of the Underlying Equity Security.
"Ending Price Adjustment" shall mean an adjustment made by
the Calculation Agent to an Underlying Equity Security's initial Ending Price
due to the occurrence of a Market Disruption Event three Business Days prior to
the Stated Maturity Date. An Ending Price Adjustment shall adjust such initial
Ending Price, once such Market Disruption Event ceases to exist, to equal the
Average Execution Price received upon the sale of that Underlying Equity
Security.
"Holder" shall have the meaning set forth on the reverse of
this Security.
"Indenture" shall have the meaning set forth on the reverse of
this Security.
"Market Disruption Event", on any day, shall mean any of the
following events as determined by the Calculation Agent:
(i) A suspension, absence or material limitation of trading in
an Underlying Equity 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 that security is traded or, in the case of
an Underlying Equity Security not listed or quoted in the United
States, on the primary exchange, trading system or market for that
security. Limitations on trading during significant market fluctuations
imposed pursuant to the rules of any primary organized U.S. exchange or
trading system similar 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 a security
traded on a bulletin board means a suspension, absence or material
limitation of trading of that security for more than two hours or
during the one-hour period preceding the Close of Trading.
(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 an Underlying Equity Security, whether by reason
of movements in price exceeding levels permitted by an exchange,
trading system or market on which such options contracts 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 an Underlying Equity Security or in respect
of options contracts related to an Underlying Equity Security, in each
case traded on any major U.S. exchange or trading system or, in the
case of securities of a non-U.S. issuer, traded on 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
shall 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 options contract on an
Underlying Equity 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, shall 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 shall 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 shall 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.
"Maturity Payment Amount" shall equal, for each $1,000
principal amount of Securities, the sum of the Adjusted Values of each
Underlying Equity Security. In the event that the Calculation Agent makes an
Ending Price Adjustment due to the occurrence of a Market Disruption Event, the
payment by the Company of the Maturity Payment Amount will be postponed until
the date three Business Days after the date of determination of any such Ending
Price Adjustment.
"Multiplier" shall mean the number of shares, or fraction of a
share, of each Underlying Equity Security included in the Basket.
"Nasdaq" shall mean The Nasdaq Stock Market, Inc.
"NYSE" shall mean the New York Stock Exchange.
"Official W.M. Reuters Spot Closing Rate" shall mean the
closing spot rate published on Reuters page "WMRA" relevant for an Underlying
Equity Security.
"Prospectus Supplement" shall mean the prospectus supplement,
dated August 9, 2001, issued by the Company relating to $10,000,000 aggregate
principal amount of the Securities.
"Securities" shall have the meaning set forth on the reverse
of this Security.
"Security" shall have the meaning set forth on the face of
this Security.
"Starting Multiplier" shall mean, for each Underlying Equity
Security, the Multiplier required so that such Underlying Equity Security
represented on August 9, 2001 approximately 10.0% of the Basket on a U.S. dollar
weighted basis, which Multiplier shall be the Multiplier set forth opposite the
name of such Underlying Equity Security in the table under the caption "The
Basket" on page S-18 of the Prospectus Supplement.
"Starting Price" shall mean, for each Underlying Equity
Security, the price set forth opposite the name of such Underlying Equity
Security in the table under the caption "The Basket" on page S-18 of the
Prospectus Supplement.
"Stated Maturity Date" shall mean August 14, 2003.
"Trading Day" shall mean a day on which trading generally is
conducted on the NYSE, AMEX and Nasdaq and in the over-the-counter market for
equity securities, as determined by the Calculation Agent.
"Trustee" shall have the meaning set forth on the reverse of
this Security.
"Underlying Equity Securities" shall mean the securities included in the
Basket from time to time and shall initially be the following 10 common stocks:
Amgen Inc., Cisco Systems, Inc., Dell Computer Corporation, Gemstar--TV Guide
International, Inc., Intel Corporation, Maxim Integrated Products, Inc.,
Microsoft Corporation, Oracle Corporation, QUALCOMM Incorporated and Sun
Microsystems, Inc. The Underlying Equity Securities shall only be adjusted by
the Calculation Agent pursuant to the Calculation Agency Agreement for certain
extraordinary transactions.
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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OR 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.