EXHIBIT 1.09
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LEHMAN BROTHERS HOLDINGS INC.
YEELDS(TM) Plus
8% Yield Enhanced Equity Linked Debt Securities Plus
Due November 13, 2003
Number R-1 $6,000,000
CUSIP: 524908 DV 9
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,
and to pay interest computed on the basis of a 360-day year of twelve 30-day
months, quarterly on February 13, May 13, August 13 and November 13 of each
year, commencing February 13, 2002, on said principal sum at said office or
agency, in like coin and currency, at a rate per annum equal to 8%, from
November 13, 2001 or the most recent February 13, May 13, August 13 or November
13 to which interest has been paid or duly provided for.
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The interest so payable on any February 13, May 13, August 13 or
November 13 shall, subject to certain exceptions provided in the Indenture
referred to on the reverse hereof, be paid to the person in whose name this
Security is registered at the close of business on the last day of the calendar
month prior to that in which the interest payment is made. 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.
Any amount payable on the Stated Maturity Date or on the Redemption
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.
"YEELDS" is a trademark 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: November 13, 2001 LEHMAN BROTHERS HOLDINGS INC.
By:
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Name: Barrett S. DiPaolo
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: November 13, 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 YEELDS(TM) Plus, 8% Yield Enhanced Equity Linked Debt
Securities Plus Due November 13, 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 Securities are not redeemable prior to December 13, 2002. The
Securities may be redeemed, at the option of the Company, in whole but not in
part (the "Redemption"), at any time on or after December 13, 2002, until the
Stated Maturity, upon the notice referred to below, at a price, for each $1,000
principal amount of the Securities redeemed, equal to the Redemption Payment
Amount.
Notwithstanding any provision to the contrary in the Indenture, notice
of Redemption shall be given by mailing a notice to the Holders of such
Redemption (the "Redemption Notice") not less than 10 calendar days nor more
than 30 calendar days prior to the Redemption Date in the manner provided in the
Indenture. A Redemption shall occur on the Redemption Date.
The Maturity Payment Amount and the Redemption Payment Amount shall be
determined by the Calculation Agent pursuant to the Calculation Agency
Agreement.
All percentages resulting from any interest rate or Discount Factor
calculation with respect to the Securities will be rounded upward or downward,
as appropriate, to the next higher or lower one hundred-thousandth of a
percentage point, and all dollar amounts used in or resulting from any
calculation relating to the Securities will be rounded upward or downward, as
appropriate, to the nearest cent, with one-half cent being rounded upward.
The Trustee shall fully rely on the determination by the Calculation
Agent of the Maturity Payment Amount and the Redemption Payment Amount and shall
have no duty to make any such determination.
This Security is not subject to any sinking fund.
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
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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
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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 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 with 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.
"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 November 13, 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
4
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.
"Closing Level of the Basket" shall mean the sum of the following
amounts calculated with respect to each Underlying Equity Security on the
Calculation Date: (i) the Closing Price of such Underlying Equity Security, plus
any cash or other equity securities attributable to one share or unit of such
Underlying Equity Security as described in Section 4 of Annex A of the
Calculation Agency Agreement, multiplied by (ii) the Ending Multiplier for such
Underlying Equity Security.
"Closing Price" shall mean, for each Underlying Equity Security, as
determined by the Calculation Agent based on information reasonably available to
it, subject to any Closing 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 Closing 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 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 Equity
Security on a day on which the Closing Price for such Underlying Equity Security
is to be calculated, the Closing Price for such Underlying Equity Security shall
initially be determined using the Closing 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 Closing Price of
such Underlying Equity Security shall then be adjusted to equal the Average
Execution Price of the Underlying Equity Security.
5
"Closing Price Adjustment" shall mean an adjustment made by the
Calculation Agent to an Underlying Equity Security's initial Closing Price due
to the occurrence of a Market Disruption Event three Business Days prior to the
Stated Maturity Date. A Closing Price Adjustment shall adjust such initial
Closing Price, once such Market Disruption Event ceases to exist, to equal the
Average Execution Price received upon the sale of that Underlying Equity
Security.
"Company" shall have the meaning set forth on the face of this
Security.
"Discount Factor" shall mean ( 1 )x where x is the number of
(-----}
(1.275)
years from the Issue Date, computed on the basis of a 360-day year of twelve
30-day months.
"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.
"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.
"Issue Date" shall mean November 13, 2001.
"Issue Price" shall mean $1,000.
"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.
6
(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, (i) the Closing Level of the Basket and (ii) any accrued but
unpaid interest through the Stated Maturity Date. In the event that the
Calculation Agent makes a Closing 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 Closing 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.
7
"Prospectus Supplement" shall mean the prospectus supplement, dated
November 7, 2001, issued by the Company relating to $6,000,000 aggregate
principal amount of the Securities.
"Redemption" shall mean the option of the Company to redeem, at any
time on or after December 13, 2002 until the Stated Maturity Date, in whole but
not in part, the Securities.
"Redemption Date" shall mean, notwithstanding anything to the contrary
in the Indenture, the date set forth in the Redemption Notice, which date shall
not be less than 10 nor more than 30 calendar days after the date of the
Redemption Notice.
"Redemption Payment Amount" shall equal (i) the Redemption Price and
(ii) any accrued but unpaid interest through the Redemption Date.
"Redemption Price" shall equal, on any Redemption Date, the amount of
cash, per $1,000 principal amount of Securities, that when discounted from the
Redemption Date to the Issue Date by the applicable Discount Factor and added to
the present value of all interest payments made or to be made through the
Redemption Date, discounted to the Issue Date by the applicable Discount Factor,
will equal the Issue Price.
"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:
Underlying Equity Security Starting Multiplier (number of shares)
-------------------------- --------------------------------------
Applied Materials, Inc. 5.083884
Cisco Systems, Inc. 10.565240
Oracle Corporation 12.836970
Sun Microsystems, Inc. 15.885624
Veritas Software Corporation 5.613247
"Starting Value" shall mean $200 for each Underlying Equity Security.
"Stated Maturity Date" shall mean November 13, 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 five common
stocks: Applied Materials, Inc., Cisco Systems, Inc., Oracle Corporation, Sun
Microsystems, Inc. and Veritas Software Corporation.
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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:
---------------------------------
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.