EXHIBIT 1.09
LEHMAN BROTHERS HOLDINGS INC.
RAPIDS(sm)
Return Accelerated PortfolIo Debt Securities Notes
Due November 5, 2002
Number R-1 $____________
CUSIP: 524908 DT 4
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.
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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.
"RAPIDS" is a servicemark 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.
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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: October 5, 2001 LEHMAN BROTHERS HOLDINGS INC.
By: ___________________________
Name: Barrett S. DiPaolo
Title: Vice President
Attest: _________________________
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: October 5, 2001
CITIBANK, N.A.,
as Trustee
By: _____________________________
Name:
Title: Authorized Signatory
(Reverse of Security)
This Security is one of a duly authorized series of Securities of the
Company designated as RAPIDS(sm), Return Accelerated PortfolIo Debt Securities
Notes Due November 5, 2002 (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
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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
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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 Company intends to treat and, by purchasing this Security, the
Holder hereof agrees to treat, for all tax purposes, this Security as a
financial contract for cash settlement, rather than as a debt instrument.
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 Value is greater than or equal to the Starting
Value, the lesser of:
(i) $132; and
(ii) the product obtained by multiplying (A) $100 by (B)
2 x Ending Value
( ---------------- -1);
Starting Value
or
(b) if the Ending Value is less than the Starting Value:
the product obtained by multiplying (A) $100 by (B) the quotient
obtained by dividing the Ending Value by the Starting Value.
"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 October 5, 2001, between the Company and the Calculation
Agent, as amended from time to time.
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"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.
"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.
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"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.
"Ending Value" shall mean the Ending Price, plus any cash or other
equity securities attributable to one share or unit of the Underlying Equity
Security as described in Section 4 of Annex A of the Calculation Agency
Agreement, multiplied by the Ending Multiplier.
"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:
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(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", relating to each Underlying Security, shall mean the
number of shares or other units (including ADRs) (or fraction of a share or
other unit expressed as a decimal) of such 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
October 2, 2001, issued by the Company relating to $7,500,000 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 following:
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Underlying Equity Security Starting Multiplier (number of shares)
American International Group, Inc. 1.274697
AOL Time Warner Inc. 3.039514
Citigroup Inc. 2.366864
Exxon Mobil Corporation 2.500625
General Electric Corporation 2.628121
Intel Corporation 5.117707
Internal Business Machines Corporation 1.066439
Microsoft Corporation 1.885014
Pfizer Inc. 2.409639
Wal-Mart Stores, Inc. 1.923077
"Starting Value" shall mean $100 for each Underlying Equity Security.
"Stated Maturity Date" shall mean November 5, 2002.
"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: American International Group, Inc., AOL Time Warner Inc., Citigroup
Inc., Exxon Mobil Corporation, General Electric Corporation, Intel Corporation,
International Business Machines Corporation, Microsoft Corporation, Pfizer Inc.
and Wal-Mart Stores, 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:
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TEN COM - as tenants in common UNIF GIFT MIN ACT - ________ Custodian ________
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(Cust) (Minor)
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TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
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JT TEN - as joint tenants with right of Act _________________________
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Survivorship and not as tenants in (State)
common
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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.