LEHMAN BROTHERS HOLDINGS INC.
Nikkei 225 Index SUNS(R)
Stock Upside Note Securities(R) Due June 10, 2010
Number R-1 $10,808,000
ISIN US 524908 JE 15 CUSIP: 524908 JE 1
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 its
registered assigns, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, on the Stated Maturity Date, 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. THE SECURITIES REPRESENTED HEREBY SHALL NOT BEAR ANY INTEREST.
Any amount payable on the Stated Maturity Date shall 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.
"Nikkei," "Nikkei Stock Average" and "Nikkei 225" are the service marks
of Nihon Keizai Shimbun, Inc. ("NKS"). The Securities, based on the performance
of the Nikkei Stock Average, are not sponsored, endorsed, or promoted by NKS.
"SUNS" and "Stock Upside Note Securities" are trademarks of Lehman
Brothers Inc., a wholly-owned subsidiary of Lehman Brothers Holdings 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: September 10, 2003 LEHMAN BROTHERS HOLDINGS INC.
By:_________________________________
Name: Oliver Budde
Title: Vice President
Attest:_____________________________
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: September 10, 2003
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 Nikkei 225 Index SUNS(R), Stock Upside Note Securities Due
June 10, 2010 (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 Final Index Level and 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 Final Index Level and 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 Date and the date three Business
Days prior thereto was the date for determining the Closing Level for the last
monthly period.
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, if any, or reduce any premium
payable on redemption, or make the principal thereof, or premium, if any, or
interest thereon, if any, 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, if any, 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.
The Company agrees, and by acceptance of beneficial ownership interest
in the Securities each beneficial holder of the Securities will be deemed to
have agreed, for United States federal income tax purposes, (i) to treat the
Securities as indebtedness that is subject to Treas. Reg. Sec. 1.1275-4 (the
"Contingent Payment Regulations") and (ii) to be bound by the Company's
determination of the "comparable yield" and "projected payment schedule," within
the meaning of the Contingent Payment Regulations, with respect to the
Securities. The Company has determined the "comparable yield" to be 4.56 % per
annum, compounded semi-annually, and the projected "payment schedule" per $1,000
note to be $1,355.73 due on the Stated Maturity Date.
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.
"Alternative Redemption Amount" shall mean, with respect to each $1,000
principal amount of Securities, the product of (a) $1,000 and (b) the Final
Index Level, divided by the Initial Index Level.
"Calculation Agency Agreement" shall mean the Calculation Agency
Agreement, dated as of September 10, 2003, 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 Final Index Level and 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.
"Close of Trading" shall mean, in respect of any primary exchange or
quotation system, the scheduled weekday closing time on a day on which the
primary exchange or quotation system is scheduled to be open for trading for its
respective regular trading session, without regard to after hours or any other
trading outside of the regular trading session hours.
"Closing Level" shall mean, with respect to any day, the official
closing level of the Index or any Successor Index on such day, as reported by
NKS or the publisher of the Successor Index.
"Company" shall have the meaning set forth on the face of this
Security.
"Exchange Business Day" shall mean any day on which the TSE, or the
relevant exchange for any Successor Index, is scheduled to be open for its
regular trading session.
"Final Index Level" shall mean the Closing Level on the Valuation Date.
"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.
"Index" shall mean the Nikkei Stock Average, as calculated, published
and disseminated by NKS that measures the composite price performance of
selected Japanese stocks. The Nikkei Stock Average is currently based on 225
underlying stocks trading on the TSE and represents a broad cross-section of
Japanese industry.
"Initial Index Level" shall mean 10,650.77, the Closing Level on
September 5, 2003.
"Market Disruption Event", on any day, shall mean, with respect to the
Index or any Successor Index, the occurrence of any of the following events, as
determined by the Calculation Agent in its sole discretion:
(i) A material suspension of or limitation imposed on trading
relating to the securities that then comprise 20% or more of the Index
or any Successor Index by the primary exchange or quotation system on
which those securities are traded, at any time during the one-hour
period that ends at the Close of Trading on such day, whether by reason
of movements in price exceeding limits permitted by that primary
exchange or quotation system or otherwise.
(ii) A material suspension of or limitation imposed on trading
in futures or options contracts relating to the Index or any Successor
Index by the primary exchange or quotation system on which those
futures or options contracts are traded, at any time during the
one-hour period that ends at the Close of Trading on such day, whether
by reason of movements in price exceeding limits permitted by that
primary exchange or quotation system or otherwise.
(iii) Any event, other than an early closure, that disrupts or
impairs the ability of market participants in general to effect
transactions in, or obtain market values for, the securities that then
comprise 20% or more of the Index or any Successor Index on the primary
exchange or quotation system on which those securities are traded at
any time during the one-hour period that ends at the Close of Trading
on such day.
(iv) Any event, other than an early closure, that disrupts or
impairs the ability of market participants in general to effect
transactions in, or obtain market values for, futures or options
contracts relating to the Index or any Successor Index on the primary
exchange or quotation system on which those futures or options
contracts are traded at any time during the one-hour period that ends
at the Close of Trading on such day.
(v) The closure of the primary exchange or quotation system on
which securities that then comprise 20% or more of the Index or any
Successor Index are traded or on which futures or options contracts
relating to the Index or any Successor Index are traded prior to its
scheduled closing time unless the earlier closing time is announced by
the primary exchange or quotation system at least one hour prior to the
earlier of (1) the actual closing time for the regular trading session
on the primary exchange or quotation system and (2) the submission
deadline for orders to be entered into the primary exchange or
quotation system for execution at the Close of Trading on such day.
(vi) The Company, or any of its affiliates, is unable, after
using commercially reasonable efforts to unwind or dispose of, or
realize, recover or remit the
proceeds, of any transactions or assets it deems necessary to hedge the
equity price risk of entering into and performing its obligations with
respect to the Securities.
For purposes of determining whether a Market Disruption Event
has occurred: the relevant percentage contribution of a security to the
level of the Index or any Successor Index will be based on a comparison
of (x) the portion of the level of the index attributable to that
security and (y) the overall level of the index, in each case
immediately before the occurrence of the Market Disruption Event.
"Maturity Payment Amount", for each $1,000 principal amount of
Securities, shall be equal to the greater of (a) $1,000 and (b) the Alternative
Redemption Amount.
"NKS" shall mean Nihon Keizai Shimbun, Inc.
"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.
"Stated Maturity Date" shall mean June 10, 2010 (or if June 10, 2010 is
not an Exchange Business Day, on the next succeeding Exchange Business Day);
provided, that if a Market Disruption Event occurs on the Valuation Date, the
Stated Maturity Date shall be the third Exchange Business Day following the date
the Final Index Level is determined.
"Successor Index" shall mean such substitute index as the Calculation
Agent may select pursuant to the Calculation Agency Agreement upon
discontinuance of the Index.
"Trustee" shall have the meaning set forth on the reverse of this
Security.
"TSE" shall mean the Tokyo Stock Exchange.
"Valuation Date" shall mean June 7, 2010; provided, that if such day is
not an Exchange Business Day, the Valuation Date shall mean the next succeeding
Exchange Business Day; provided further, that if a Market Disruption Event
occurs on such date, the Valuation Date will be the next succeeding Exchange
Business Day on which no Market Disruption Event occurs.
All terms used but not defined in this Security are used herein as
defined in the Indenture or the Calculation Agency Agreement.
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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.