-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O8GqrI+gR51F+d2klAGgNSRMkyBI2vaQy93EQjznJRDoX+ALqVA/7iOfTYpS0yet V8D2IjBVngJYjDlILvh0nA== 0000806085-02-000088.txt : 20020415 0000806085-02-000088.hdr.sgml : 20020415 ACCESSION NUMBER: 0000806085-02-000088 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20020326 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020326 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEHMAN BROTHERS HOLDINGS INC CENTRAL INDEX KEY: 0000806085 STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211] IRS NUMBER: 133216325 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09466 FILM NUMBER: 02587068 BUSINESS ADDRESS: STREET 1: LEHMAN BROTHERS STREET 2: 3 WORLD FINANCIAL CENTER CITY: NEW YORK STATE: NY ZIP: 10285 BUSINESS PHONE: 2125267000 MAIL ADDRESS: STREET 1: LEHMAN BROTHERS STREET 2: 3 WORLD FINANCIAL CENTER CITY: NEW YORK STATE: NY ZIP: 10285 FORMER COMPANY: FORMER CONFORMED NAME: SHEARSON LEHMAN HUTTON HOLDINGS INC DATE OF NAME CHANGE: 19901017 8-K 1 f02-03_268k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (date of earliest event reported): March 26, 2002 Lehman Brothers Holdings Inc. (Exact name of registrant as specified in its charter) Delaware (State or other jurisdiction of incorporation) 1-9466 13-3216325 (Commission File Number) (IRS Employer Identification No.) 399 Park Avenue New York, NY 10022 (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code: (212) 526-7000 2 Item 7. Financial Statements and Exhibits (c) Exhibits The following Exhibits are incorporated by reference into Registration Statement on Form S-3 No. 333-60474 as exhibits thereto and are filed as part of this Report. 1.01 Underwriting Agreement between the Registrant and Lehman Brothers Inc., as underwriter, relating to the Registrant's Floating Rate Convertible Notes due April 1, 2022 (filed herewith) 4.01 Form of Global Security representing $575,000,000 aggregate principal amount of the Registrant's Floating Rate Convertible Notes due April 1, 2022 (filed herewith) 4.02 Calculation Agency Agreement between the Registrant and Citibank N.A., as calculation agent, relating to the Registrant's Floating Rate Convertible Notes due April 1, 2022 (filed herewith) 3 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized. LEHMAN BROTHERS HOLDINGS INC. (Registrant) Date: March 26, 2002 By: /s/ Oliver Budde ------------------------------ Oliver Budde Vice President 4 EXHIBIT INDEX Exhibit No. Exhibit 1.01 Underwriting Agreement between the Registrant and Lehman Brothers Inc., as underwriter, relating to the Registrant's Floating Rate Convertible Notes due April 1, 2022 (filed herewith) 4.01 Form of Global Security representing $575,000,000 aggregate principal amount of the Registrant's Floating Rate Convertible Notes due April 1, 2022 4.02 Calculation Agency Agreement between the Registrant and Citibank N.A., as calculation agent, relating to the Registrant's Floating Rate Convertible Notes due April 1, 2022 EX-1 3 f02-03_26exund.txt EXHIBIT 1.01 UNDERWRITING AGREEMENT EXHIBIT 1.01 Debt Securities LEHMAN BROTHERS HOLDINGS INC. UNDERWRITING AGREEMENT New York, New York Dated the date set forth In Schedule I hereto To the Representative(s) named in Schedule I hereto, of the Underwriters named in Schedule II hereto Ladies and Gentlemen: Lehman Brothers Holdings Inc., a Delaware corporation (the "Company"), proposes to issue and sell to you and the other underwriters named in Schedule II hereto (the "Underwriters"), for whom you are acting as representatives (the "Representatives"), the principal amount of its debt securities identified in Schedule I hereto (the "Securities") to be issued under the indenture (the "Indenture") identified in such Schedule I, between the Company and the trustee (the "Trustee") identified therein. If the firm or firms listed in Schedule II hereto include only the firm or firms listed in Schedule I hereto, then the terms "Underwriters" and "Representatives" shall each be deemed to refer to such firm or firms. 1. Representations and Warranties.The Company represents and warrants to each Underwriter that: (a) The Company meets the requirements for the use of Form S-3 under the Securities Act of 1933, as amended (the "Securities Act"), and the rules and regulations promulgated thereunder (the "Rules"), and has carefully prepared and filed with the Securities and Exchange Commission (the "Commission") a registration statement on Form S-3 (the file number of which is set forth in Schedule I hereto), which has become effective, for the registration of the Securities under the Securities Act. The registration statement, as amended at the date of this Agreement, meets the requirements set forth in Rule 415(a)(1)(x) under the Securities Act and complies in all other material respects with such rule. The Company proposes to file with the Commission pursuant to Rule 424 under the Securities Act ("Rule 424") a supplement to the form of prospectus included in the registration statement relating to the initial offering of the Securities and the plan of distribution thereof and has previously advised you of all further information (financial and other) with respect to the Company to be set forth therein. The term "Registration Statement" means the registration statement, as amended at the date of this Agreement, including the exhibits thereto, financial statements, and all documents incorporated therein by reference pursuant to Item 12 of Form S-3 (the "Incorporated Documents"), and such prospectus as then amended, including the Incorporated Documents, is hereinafter referred to as the "Basic Prospectus"; and such supplemented form of prospectus, in the form in which it shall be filed with the Commission pursuant to Rule 424 (including the Basic Prospectus as so supplemented), is hereinafter called the "Final Prospectus". Any preliminary form of the Basic Prospectus which has heretofore been filed pursuant to Rule 424 is hereinafter called the "Interim Prospectus". Any reference herein to the Registration Statement, the Basic Prospectus, any Interim Prospectus or the Final Prospectus shall be deemed to refer to and include the Incorporated Documents which were filed under the Securities Exchange Act of 1934 (the "Exchange Act"), on or before the date of this Agreement or the issue date of the Basic Prospectus, any Interim Prospectus or the Final Prospectus, as the case may be; and any reference herein to the terms "amend", "amendment" or "supplement" with respect to the Registration Statement, the Basic Prospectus, any Interim Prospectus or the Final Prospectus shall be deemed to refer to and include the filing of any Incorporated Documents under the Exchange Act after the date of this Agreement or the issue date of the Basic Prospectus, any Interim Prospectus or the Final Prospectus, as the case may be, and deemed to be incorporated therein by reference. 2 (b) As of the date hereof, when the Final Prospectus is first filed with the Commission pursuant to Rule 424, when, before the Closing Date (hereinafter defined), any amendment to the Registration Statement becomes effective, when, before the Closing Date, any Incorporated Document is filed with the Commission, when any supplement to the Final Prospectus is filed with the Commission and at the Closing Date, the Registration Statement, the Final Prospectus and any such amendment or supplement will comply in all material respects with the applicable requirements of the Securities Act and the Rules, and the Incorporated Documents will comply in all material respects with the requirements of the Exchange Act or the Securities Act, as applicable, and the rules and regulations adopted by the Commission thereunder; on the date hereof and on the Closing Date, the Indenture shall have been qualified under and will comply in all material respects with the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"); on the date it became effective, the Registration Statement did not, and, on the date that any post-effective amendment to the Registration Statement becomes effective, the Registration Statement as amended by such post-effective amendment did not or will not, as the case may be, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; on the date the Final Prospectus is filed with the Commission pursuant to Rule 424 and on the Closing Date, the Final Prospectus, as it may be amended or supplemented, will not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading; and on said dates, the Incorporated Documents will comply in all material respects with the applicable provisions of the Exchange Act and rules and regulations of the Commission thereunder, and, when read together with the Final Prospectus, or the Final Prospectus as it may be then amended or supplemented, will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they are made, not misleading; provided that the foregoing representations and warranties in this paragraph (b) shall not apply to statements or omissions made in reliance upon and in conformity with written information furnished to the Company by or through the Representatives on behalf of any Underwriter specifically for use in connection with the preparation of the Registration Statement or the Final Prospectus, as they may be amended or supplemented, or to any statements in or omissions from the statement of eligibility and qualification on Form T-1 of the Trustee under the Trust Indenture Act ("Form T-1"). 3 (c) The Basic Prospectus and any Interim Prospectus, as of their respective dates, complied in all material respects with the requirements of the Securities Act and of the Rules and did not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Commission has not issued an order preventing or suspending the use of the Basic Prospectus or any Interim Prospectus. (d) The nationally recognized firm of independent public accountants whose report appears in the Company's most recent Annual Report on Form 10-K, which is incorporated by reference in the Final Prospectus, are independent public accountants as required by the Securities Act and the Rules. (e) In the event that a report of a nationally recognized firm of independent public accountants regarding historical financial information with respect to any entity acquired by the Company is required to be incorporated by reference in the Final Prospectus, such independent public accountants were independent public accountants, as required by the Securities Act and the Rules, during the period of their engagement to examine the financial statements being reported on and at the date of their report. (f) The audited consolidated financial statements of the Company in the Final Prospectus and the Registration Statement present fairly on a consolidated basis the financial position, the results of operations, changes in common stock and other stockholder's equity and cash flows of the Company and its subsidiaries, as of the respective dates and for the respective periods indicated, all in conformity with generally accepted accounting principles applied on a consistent basis throughout the periods involved. The unaudited consolidated financial statements of the Company, if any, included in the Final Prospectus and the Registration Statement and the related notes are true, complete and correct, subject to normally recurring changes resulting from year-end audit adjustments, and have been prepared in accordance with the instructions to Form 10-Q. 4 (g) Except as described in or contemplated by the Registration Statement and the Final Prospectus, there has not been any material adverse change in or any adverse development which materially affects the business, properties, financial condition or results of the Company or the Company and its subsidiaries taken as whole, from the dates as of which information is given in the Registration Statement and Final Prospectus. (h) The Securities conform to the description thereof contained in the Final Prospectus, are duly and validly authorized, and, when validly authenticated, issued and delivered in accordance with the Indenture and sold to the Underwriters as provided in this Agreement, will be validly issued and outstanding obligations of the Company entitled to the benefits of the Indenture. (i) Neither the Company nor any of the Significant Subsidiaries (as defined below) is in violation of its corporate charter or by-laws or in default under any agreement, indenture or instrument, the effect of which violation or default would be material to the Company and its subsidiaries taken as a whole. The execution, delivery and performance of this Agreement will not conflict with, result in the creation or imposition of any material lien, charge or encumbrance upon any of the assets of the Company or any of its subsidiaries pursuant to the terms of, or constitute a default under, any material agreement, indenture or instrument, or result in a violation of the corporate charter or by-laws of the Company or any of its subsidiaries or any order, rule or regulation of any court or governmental agency having jurisdiction over the Company, any of the Significant Subsidiaries or their property. Except as set forth in the Final Prospectus or as required by the Securities Act, the Exchange Act, the Trust Indenture Act and applicable state securities laws, no consent, authorization or order of, or filing or registration with, any court or governmental agency is required for the execution, delivery and performance of this Agreement. "Significant Subsidiary" means Lehman Brothers Inc., Lehman Brothers International (Europe), Lehman Brothers Finance S.A. and Lehman Brothers Special Financing Inc. (j) Each of the Company and the Significant Subsidiaries have been duly organized, are validly existing and in good standing under the laws of their respective jurisdictions of incorporation, are duly qualified to do business and in good standing as foreign corporations and are fully registered as a broker-dealer, broker, dealer or investment advisor, as the case may be, in each jurisdiction in which their respective ownership of property or the conduct of their respective businesses requires such qualification or registration and in which the failure to qualify or register would be reasonably likely, individually or in the aggregate, to have a material adverse effect on the business, condition or properties of the Company and its subsidiaries taken as a whole (a "Material Adverse Effect"). Each of the Company and the Significant Subsidiaries holds all material licenses, permits, and certificates from governmental authorities necessary for the conduct of its business and owns, or possesses adequate rights to use, all material rights necessary for the conduct of such business and has not received any notice of material conflict with the asserted rights of others in respect thereof, except in each case where the failure to do so would not be reasonably likely, individually or in the aggregate, to have a Material Adverse Effect; and each of the Company and the Significant Subsidiaries has the corporate power and authority necessary to own or hold its properties and to conduct the businesses in which it is engaged. Except as may be disclosed in the Registration Statement and the Final Prospectus, all outstanding shares of capital stock of the Significant Subsidiaries have been duly authorized and are validly issued and outstanding, fully paid and non-assessable and, except for directors' qualifying shares, are owned by the Company, directly or indirectly through subsidiaries, free and clear of any lien, pledge and encumbrance or any claim of any third party. 5 (k) Except as described in the Registration Statement and the Final Prospectus, there is no material litigation or governmental proceeding pending or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries which might reasonably be expected to have a Material Adverse Effect or which is required to be disclosed in the Registration Statement and the Final Prospectus. (l) The certificates delivered pursuant to paragraph (f) of Section 6 hereof and all other documents delivered by the Company or its representatives in connection with the issuance and sale of the Securities were on the dates on which they were delivered, or will be on the dates on which they are to be delivered, in all material respects true and complete. 2. Sale and Purchase of the Securities.The Company agrees to sell to each Underwriter, and each Underwriter, on the basis of the representations, warranties and agreements herein contained, but subject to the terms and conditions herein stated, agrees to purchase from the Company, at the purchase price set forth in Schedule I hereto, the principal amount of Securities set forth opposite the name of such Underwriter in Schedule II hereto, except that, if Schedule I hereto provides for the sale of Securities pursuant to delayed delivery arrangements, the respective principal amounts of Securities to be purchased by the Underwriters shall be as set forth in Schedule II hereto, less the respective amounts of Contract Securities determined as provided below. Securities to be purchased by the Underwriters are herein sometimes called the "Underwriters' Securities" and Securities to be purchased pursuant to Delayed Delivery Contracts (as hereinafter defined) are herein called "Contract Securities". The obligations of the Underwriters under this Agreement are several and not joint. The Underwriters have each agreed to the provisions contained in the Shearson Lehman Brothers Inc. Agreement Among Underwriters Basic Provision for Offerings of Securities, dated as of May 15, 1985. If so provided in Schedule I hereto, the Underwriters are authorized to solicit offers to purchase Securities, or a portion thereof, from the Company pursuant to delayed delivery contracts ("Delayed Delivery Contracts"), substantially in the form of Schedule III hereto but with such changes therein as the Company may authorize or approve, and the Underwriters will endeavor to make such arrangements. Delayed Delivery Contracts are to be with institutional investors, including commercial and savings banks, insurance companies, pension funds and educational and charitable institutions. The Company will make Delayed Delivery Contracts in all cases where sales of Contract Securities arranged by the Underwriters have been approved by the Company but, except as the Company may otherwise agree, each such Delayed Delivery Contract must be for not less than the minimum principal amount set forth in Schedule I hereto and the total principal amount of Contract Securities may not exceed the maximum principal amount set forth in Schedule I hereto. The Underwriters will not have any responsibility in respect of the validity or performance of Delayed Delivery Contracts. The principal amount of Securities to be purchased by each Underwriter as set forth in Schedule II hereto shall be reduced by an amount which bears the same proportion to the total principal amount of Contract Securities as the principal amount of Securities set forth opposite the name of such Underwriter bears to the total principal amount of Securities set forth in Schedule II hereto, except to the extent that the Representatives determine that such reduction shall be otherwise than in such proportion and so advise the Company in writing; provided, however, that the total principal amount of Securities to be purchased by all Underwriters shall be the total principal amount set forth in Schedule II hereto less the total principal amount of Contract Securities. 6 3. Delivery and Payment.Delivery by the Company of the Underwriters' Securities to the Representatives for the respective accounts of the several Underwriters and payment by the Underwriters therefor by certified or official bank check or checks payable in, or by wire transfer of, immediately available (federal) funds to or upon the order of the Company shall take place at the office, on the date and at the time specified in Schedule I hereto, which date and time may be postponed by agreement between the Representatives and the Company or as provided in Section 9 hereof (such date and time of delivery and payment for the Underwriters' Securities being herein called the "Closing Date"). Concurrently with the delivery of any payment for Underwriters' Securities as provided in this Section 3, the Company will deliver to the Representatives for the respective accounts of the several Underwriters a check in an amount equal to the fee set forth in Schedule I hereto with respect to the principal amount of Securities for which Delayed Delivery Contracts are made. The Underwriters' Securities will be registered in such names and in such authorized denominations as the Representatives may request no less than two full business days in advance of the Closing Date. The Company agrees to have the Underwriters' Securities available for inspection, checking and packaging by the Representatives at such place as is designated by the Representatives, not later than 1:00 p.m., New York City time, on the business day prior to the Closing Date. 4. Offering by Underwriters.The Company hereby confirms that the Underwriters and dealers have been authorized to distribute or cause to be distributed any Interim Prospectus and are authorized to distribute the Final Prospectus (as from time to time amended or supplemented if the Company furnishes amendments or supplements thereto to the Underwriters). The Representatives agree that, as soon as the Representatives believe the offering of the Securities has been terminated, the Representatives will so advise the Company. 5. Agreements.The Company agrees with the several Underwriters that: 7 (a) The Company will cause the Final Prospectus to be filed with the Commission pursuant to Rule 424 as required thereby and will promptly advise the Representatives (A) when the Final Prospectus shall have been filed with the Commission pursuant to Rule 424, (B) when any amendment to the Registration Statement relating to the Securities shall have become effective, (C) of any request by the Commission for any amendment of the Registration Statement, the Final Prospectus, the Basic Prospectus or any Interim Prospectus, or for any additional information, (D) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the qualification of the Indenture or the institution or threatening of any proceedings for that purpose and (E) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. After the date of this Agreement and prior to the termination of the offering of these Securities the Company will not file any amendment of the Registration Statement or amendment or supplement to the Final Prospectus (except an amendment or supplement to the Final Prospectus that is deemed to be incorporated by reference in the Final Prospectus pursuant to Item 12 of Form S-3) without the consent of the Representatives and will use its best efforts to prevent the issuance of any such stop order and, if issued, to obtain as soon as possible the withdrawal thereof. Prior to receipt of the advice to be given by the Representatives pursuant to Section 4, the Company will not file any document that would be deemed to be incorporated by reference in the Final Prospectus pursuant to Item 12 of Form S-3 without delivering to the Representatives a copy of the document proposed to be so filed, such delivery to be made at least twenty-four hours prior to such filing, and the Company will consult with the Representatives as to any comments which the Representatives make in a timely manner with respect to the document so delivered. (b) Subject to the last sentence of the immediately preceding paragraph, if, at any time during which a prospectus relating to the Securities is required to be delivered under the Securities Act, any event occurs as a result of which the Final Prospectus as then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, or if it shall be necessary at any time to amend or supplement the Final Prospectus to comply with the Securities Act or the Rules, the Company promptly will prepare and file with the Commission an amendment or supplement which will correct such statement or omission or an amendment which will effect such compliance and will use its best efforts to cause any amendment of the Registration Statement containing an amended Final Prospectus to be made effective as soon as possible. (c) The Company will deliver to the Representatives, without charge, (i) signed copies of the Registration Statement relating to the Securities and of any amendments thereto (including all exhibits filed with, or incorporated by reference in, any such document) and (ii) as many conformed copies of the Registration Statement and of any amendments thereto which shall become effective on or before the Closing Date (excluding exhibits) as the Representatives may reasonably request. 8 (d) During such period as a prospectus is required by law to be delivered by an Underwriter or dealer, the Company will deliver, without charge to the Representatives and to Underwriters and dealers, at such office or offices as the Representatives may designate, as many copies of the Basic Prospectus, any Interim Prospectus and the Final Prospectus as the Representatives may reasonably request. (e) The Company will make generally available to its security holders and to the Representatives as soon as practicable an earnings statement (which need not be audited) of the Company and its subsidiaries, covering a period of at least 12 months beginning after the date the Final Prospectus is filed with the Commission pursuant to Rule 424, which will satisfy the provisions of Section 11(a) of the Securities Act. (f) The Company will furnish such information, execute such instruments and take such actions as may be required to qualify the Securities for offering and sale under the laws of such jurisdictions as the Representatives may designate and will maintain such qualifications in effect so long as required for the distribution of the Securities; provided, however, that the Company shall not be required to qualify to do business in any jurisdiction where it is not now so qualified or to take any action which would subject it to general or unlimited service of process in any jurisdiction where it is not now so subject. (g) So long as any Securities are outstanding, the Company will furnish or cause to be furnished to the Representatives copies of all annual reports and current reports filed with the Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be designated by the Commission. (h) If the Company has applied for the listing of the Securities on the New York Stock Exchange Inc. (the "NYSE"), it will use its best efforts to cause such listing to be approved as soon as possible. (i) For a period beginning at the time of execution of this Agreement and ending on the later of the business day following the Closing Date or following the date on which any price restrictions on the sale of the Securities are terminated, without the prior consent of the Representatives, the Company will not offer, sell, contract to sell or otherwise dispose of any debt securities of the Company covered by the Registration Statement or any other registration statement filed under the Securities Act. (j) The Company will use its best efforts to do and perform all things to be done and performed hereunder prior to the Closing Date and to satisfy all conditions precedent to the delivery of the Securities to be purchased hereunder. 9 6. Conditions to the Obligations of the Underwriters.The obligations of the Underwriters to purchase the Securities shall be subject to the accuracy in all material respects of the representations and warranties on the part of the Company contained herein as of the date hereof and the Closing Date, to the accuracy of any material statements made in any certificates, opinions, affidavits, written statements or letters furnished to the Representatives or to Simpson Thacher & Bartlett ("Underwriters' Counsel") pursuant to this Section 6, to the performance by the Company of its respective obligations hereunder and to the following additional conditions: (a) The Final Prospectus shall have been filed with the Commission pursuant to Rule 424 not later than 5:00 p.m., New York City time, on the second business day following the date of this Agreement or such later date and time as shall be consented to in writing by the Representatives. (b) No order suspending the effectiveness of the Registration Statement, as amended from time to time, or suspending the qualification of the Indenture, shall be in effect and no proceedings for such purpose shall be pending before or threatened by the Commission and any requests for additional information on the part of the Commission (to be included in the Registration Statement or the Final Prospectus or otherwise) shall have been complied with to the reasonable satisfaction of the Representatives. (c) Since the respective dates as of which information is given in the Registration Statement and the Final Prospectus, there shall not have been any change or decrease specified in the letter referred to in paragraph (g) of this Section 6 which, in the judgment of the Representatives, makes it impracticable or inadvisable to proceed with the offering and delivery of the Securities as contemplated by the Registration Statement and the Final Prospectus. (d) The Company shall have furnished to the Representatives the opinion of a Deputy General Counsel or the Chief Legal Officer for the Company, dated the day of the Closing Date, to the effect that: (i) The Company has been duly organized and is validly existing and in good standing under the laws of the jurisdiction of its incorporation with all requisite corporate power and authority to own and operate its properties and to conduct its business as described in the Final Prospectus. (ii) The Securities and the Indenture conform in all material respects to the descriptions thereof contained in the Final Prospectus. (iii)The Indenture has been duly authorized, executed and delivered by the Company, has been duly qualified under the Trust Indenture Act and constitutes a legal, valid and binding instrument enforceable against the Company in accordance with its terms; and the Securities have been duly authorized, executed and issued by the Company, and assuming due authentication by the Trustee and upon payment and delivery in accordance with the Underwriting Agreement, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the Indenture; provided however, that the foregoing is subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and by an implied covenant of good faith and fair dealing. 10 (iv) No consent, approval, authorization or order of any court or governmental agency or body is required for the consummation of the transactions contemplated in this Agreement, except for (1) such consents, approvals, authorizations or orders as have been obtained under the Securities Act and such as may be required under the Exchange Act and the blue sky laws of any jurisdiction in connection with the purchase and distribution of the Securities by the Underwriters, and (2) the qualification of the Indenture under the Trust Indenture Act, which has been obtained. (v) Such counsel does not know of any contracts or other documents which are required to be filed as exhibits to the Registration Statement by the Securities Act or by the Rules which have not been filed as exhibits to the Registration Statement or incorporated therein by reference as permitted by the Rules. (vi) To the best of such counsel's knowledge, neither the Company nor any Significant Subsidiary that is organized under the laws of the United States or any State or territory thereof (a "Domestic Significant Subsidiary") is in violation of its corporate charter or by-laws, or in default under any material agreement, indenture or instrument known to such counsel, the effect of which violation or default would be material to the Company and its subsidiaries taken as a whole. (vii)This Agreement and, to the extent applicable, the Delayed Delivery Contracts have been duly authorized, executed and delivered by the Company; the execution, delivery and performance of this Agreement and any Delayed Delivery Contracts by the Company will not conflict with, or result in the creation or imposition of any material lien, charge or encumbrance upon any of the assets of the Company or any Domestic Significant Subsidiary pursuant to the terms of, or constitute a default under, any material agreement, indenture or instrument known to such counsel and to which the Company or any Domestic Significant Subsidiary is a party or is bound, or result in a violation of the corporate charter or by-laws of the Company or any Domestic Significant Subsidiary or any order, rule or regulation known to such counsel of any court or governmental agency having jurisdiction over the Company, any Domestic Significant Subsidiary or any of their respective properties, the effect of which would be material to the Company and its subsidiaries taken as a whole. (viii) The Registration Statement has become effective under the Securities Act, and, to the best of the knowledge of such counsel, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose is pending or threatened by the Commission. 11 (ix) The Registration Statement, the Final Prospectus and each amendment thereof or supplement thereto (except that no opinion need be expressed as to the financial statements or other financial or statistical data or the Form T-1 of the Trustee under the Trust Indenture Act included or incorporated by reference therein) comply as to form in all material respects with the requirements of the Securities Act and the Rules. (x) If the Securities are to be listed on the NYSE, authorization therefor has been given, subject to official notice of issuance and evidence of satisfactory distribution, or the Company has filed a preliminary listing application and all required supporting documents with respect to the Securities with the NYSE, and such counsel has no reason to believe that the Securities will not be authorized for listing, subject to official notice of issuance and evidence of satisfactory distribution. (xi) Each Domestic Significant Subsidiary is a duly organized and validly existing corporation in good standing under the laws of the jurisdiction of its incorporation with all requisite corporate power and authority to own and operate its properties and to conduct its business as described in the Final Prospectus. Each of the Company and the Domestic Significant Subsidiaries is duly qualified to do business as a foreign corporation, is in good standing and is duly registered as a broker-dealer, broker, dealer or investment advisor, as the case may be, in each jurisdiction in which the nature of the business conducted by it or in which the ownership or holding by lease of the properties owned or held by it require such qualification or registration and where the failure to so qualify or register would have a Material Adverse Effect. (xii)All the outstanding shares of capital stock of each Domestic Significant Subsidiary have been duly and validly authorized and issued and are fully paid and non-assessable and, except for directors' qualifying shares, are owned by the Company or a subsidiary of the Company free and clear of any claims, liens, encumbrances and security interests. (xiii) Such counsel does not know of any litigation or any governmental proceeding pending or threatened against the Company or any of its subsidiaries which would affect the subject matter of this Agreement or is required to be disclosed in the Final Prospectus which is not disclosed and correctly summarized therein. Such opinion shall also contain a statement that although such counsel is not passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement and the Final Prospectus (except as to those matters stated in paragraph (ii) of such opinion), such counsel has no reason to believe that (i) the Registration Statement, as of its effective date, contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading or (ii) the Final Prospectus contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading (except that no opinion need be expressed as to the financial statements or other financial or statistical data or the Form T-1 included or incorporated by reference therein). In rendering such opinion, such counsel may rely upon opinions of local counsel satisfactory to the Representatives for matters not governed by New York law and may rely as to matters of fact, to the extent he deems proper, upon certificates or affidavits of officers of the Company, the Trustee and public officials. Such counsel may rely on a certificate of the Trustee with respect to the execution of the Securities by the Company and the authentication thereof by the Trustee. 12 (e) The Representatives shall have received from Underwriters' Counsel such opinion or opinions, dated the day of the Closing Date, with respect to the issuance and sale of the Securities, the Registration Statement, the Final Prospectus and other related matters as the Representatives may reasonably require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. (f) The Company shall have furnished to the Representatives a certificate of its Chief Executive Officer, its President or any Managing Director or Vice President and its Chief Financial Officer or its Treasurer, dated the day of the Closing Date, to the effect that the signers of such certificate have carefully examined the Registration Statement, the Final Prospectus and this Agreement, and that, to the best of their knowledge after due inquiry: (i) The representations and warranties of the Company in this Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date, and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date. (ii) No stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or threatened. (iii)(x) The Registration Statement does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, (y) the Final Prospectus does not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, and (z) since the effective date of the Registration Statement there has not occurred any event required to be set forth in an amended or supplemented prospectus which has not been so set forth. 13 (g) At the Closing Date, a nationally recognized firm of independent public accountants shall have furnished to the Representatives a letter, dated the day of the Closing Date, confirming that they are independent auditors with respect to the Company within the meaning of the Securities Act and in form and substance satisfactory to the Representatives, stating in effect that: (i) In their opinion, the consolidated financial statements of the Company and its subsidiaries, and the supporting schedules, included in the Registration Statement and the Final Prospectus and audited by them comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Exchange Act and the related published rules and regulations thereunder. (ii) On the basis of a reading of the unaudited consolidated financial statements of the Company and its subsidiaries, if any, included in the Registration Statement and the Final Prospectus and of the latest unaudited consolidated financial statements made available by the Company and Lehman Brothers Inc., carrying out certain specified procedures (but not an audit in accordance with generally accepted auditing standards), a reading of the minutes of the meetings of the directors of the Company and Lehman Brothers Inc., and inquiries of certain officials of the Company and its subsidiaries, who have responsibility for financial and accounting matters of the Company and its subsidiaries, as to transactions and events subsequent to the date of the most recent audited consolidated financial statements included in the Registration Statement and the Final Prospectus, nothing came to their attention that caused them to believe that: (A) any material modifications should be made to the unaudited consolidated financial statements of the Company and its subsidiaries, if any, included in the Registration Statement and the Final Prospectus, for them to be in conformity with generally accepted accounting principles; and such financial statements do not comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the published instructions, rules and regulations thereunder. (B) the unaudited capsule information of the Company and its subsidiaries, if any, included in the Registration Statement and the Final Prospectus does not agree with the amounts set forth in the unaudited consolidated financial statements of the Company from which it was derived or was not determined on a basis substantially consistent with that of the corresponding financial information in the latest audited financial statements of the Company included in the Registration Statement and the Final Prospectus. (C) (I) as of the latest date as of which the Company and its subsidiaries have monthly financial statements compared to amounts shown in the most recent consolidated financial statements of the Company and its subsidiaries included in the Registration Statement and the Final Prospectus, there was any change in the capital stock (other than issuances of common stock upon the exercise of options or employee awards and the repurchase of common stock in the ordinary course of business to provide for common stock to be issued pursuant to the exercise of options or employee awards), or increase in long-term indebtedness, or decrease in net assets or stockholders' equity of the Company and its subsidiaries and (II) from the latest date as of which the Company and its subsidiaries have monthly financial statements to the date of the most recent consolidated financial statements of the Company and its subsidiaries included in the Registration Statement and Final Prospectus, there was any loss in income from operations before taxes or in net income of the Company and its subsidiaries. 14 (D) as of a specified date no more than three business days prior to the date of the letter, as compared to the date of the most recent consolidated financial statements of the Company and its subsidiaries included in the Registration Statement and Final Prospectus, there was any change in capital stock (other than issuances of common stock upon the exercise of options or employee awards and the repurchase of common stock in the ordinary course of business to provide for common stock to be issued pursuant to the exercise of options or employee awards), or increase in long-term indebtedness, or decrease in net assets or stockholders' equity of the Company and its subsidiaries; except in all instances for changes, increases or decreases set forth in such letter, in which case the letter shall be accompanied by an explanation by the Company as to the significance thereof, unless said explanation is not deemed necessary by the Representatives. (iii)If pro forma financial statements are included in the Registration Statement or the Final Prospectus, (x) they have read such pro forma financial statements, (y) they have made inquiries of certain officials of the Company who have responsibility for financial and accounting matters of the Company as to the basis for their determination of the pro forma adjustments and whether such pro forma financial statements comply as to form in all material respects with the applicable accounting requirements of Rule 11-02 of Regulation S-X and (z) they have proved the arithmetic accuracy of the application of the pro forma adjustments to the historical amounts; and as a result thereof, nothing came to their attention that caused them to believe that such pro forma financial statements do not so comply with Rule 11-02 of Regulation S-X and that such pro forma adjustments have not been properly applied to the historical amounts in the compilation of those statements. (iv) They have performed certain other specified procedures as a result of which they determined that certain information of an accounting, financial or statistical nature (which is expressed in dollars, or percentages derived from dollar amounts, and has been obtained from the general accounting records of the Company) set forth in the Registration Statement, as amended, and the Final Prospectus, as amended or supplemented, and in Exhibit 12 to the Registration Statement, including specified information, if any, included or incorporated from the Company's Annual Report on Form 10-K incorporated therein or specified information, if any, included or incorporated from any of the Company's Quarterly Reports on Form 10-Q or its Current Reports on Form 8-K incorporated therein, agrees with the accounting records of the Company and its subsidiaries or computations made therefrom, excluding any questions of legal interpretation. 15 (h) Subsequent to the execution of this Agreement, there shall not have been any decrease in the ratings of any of the Company's debt securities by Moody's Investors Service, Inc. or Standard & Poor's Corporation. (i) The Company shall have accepted Delayed Delivery Contracts in any case where sales of Contract Securities arranged by the Underwriters have been approved by the Company. (j) Prior to the Closing Date, the Company shall have furnished to the Representatives such further information, certificates and documents as the Representatives or Underwriters' Counsel may reasonably request. If any of the conditions specified in this Section 6 shall not have been fulfilled when and as required by this Agreement, or if any of the certificates or opinions furnished to the Representatives or Underwriters' Counsel pursuant to this Section 6 shall not be in all material respects reasonably satisfactory in form and substance to the Representatives and to Underwriters' Counsel, this Agreement and all obligations of the Underwriters hereunder may be cancelled at, or at any time prior to, the Closing Date by the Representatives. Notice of such cancellation shall be given to the Company in writing, or by telegraph confirmed in writing. 7. Expenses.(a) Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, the Company will pay all costs and expenses incident to the performance of the obligations of the Company hereunder, including, without limiting the generality of the foregoing, all costs, taxes and expenses incident to the issuance, sale and delivery of the Securities to the Underwriters, all fees and expenses of the Company's counsel and accountants, all costs and expenses incident to the preparing, printing and filing of the Registration Statement (including all exhibits thereto), any Interim Prospectus, the Basic Prospectus, the Final Prospectus and any amendments thereof or supplements thereto and the Indenture, and the rating of the Securities by one or more rating agencies, all costs and expenses (including fees of Underwriters' Counsel and their disbursements) incurred in connection with blue sky qualifications, advising on the legality of the Securities for investment, the filing requirements, if any, of the National Association of Securities Dealers, Inc. in connection with its review of corporate financings, the fee for listing the Securities on the NYSE, the fees and expenses of the Trustee and all costs and expenses of the printing and distribution of all documents in connection with such offering. Except as provided in this Section 7, the Company will have no responsibility to the Underwriters for the Underwriters' own costs and expenses, including the fees of Underwriters' Counsel and any advertising expenses in connection with any offer the Underwriters may make. (b) If the sale of the Securities provided for herein is not consummated because any condition to the obligations of the Underwriters set forth in Section 6 hereof is not satisfied or because of any refusal, inability or failure on the part of the Company to perform any agreement herein or comply with any provision hereof, the Company will, subject to demand by the Representatives, reimburse the Underwriters for all out-of-pocket expenses (including reasonable fees and disbursements of counsel) that shall have been incurred by them in connection with the proposed purchase and sale of the Securities. 16 8. Indemnification.(a) The Company agrees to indemnify and hold harmless each Underwriter and each person who controls such Underwriter within the meaning of the Securities Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, as originally filed or in any amendment thereof, or in any Interim Prospectus, the Basic Prospectus or the Final Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that (i) the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company as herein stated by the Representatives on behalf of any Underwriter specifically for use in connection with the preparation thereof, and (ii) such indemnity with respect to the Basic Prospectus or any Interim Prospectus shall not inure to the benefit of any Underwriter (or any person controlling such Underwriter) from whom the person asserting any such loss, claim, damage or liability purchased the Securities which are the subject thereof if such person did not receive a copy of the Final Prospectus at or prior to the confirmation of the sale of such Securities to such person in any case where such delivery is required by the Securities Act and the untrue statement or omission of a material fact contained in the Basic Prospectus or any Interim Prospectus was corrected in the Final Prospectus, unless such failure to deliver the Final Prospectus was a result of noncompliance by the Company with Section 5(d) hereof. This indemnity agreement will be in addition to any liability which the Company may otherwise have. (b) Each Underwriter severally agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who signs the Registration Statement, and each person, if any, who controls the Company within the meaning of the Securities Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, the Basic Prospectus, any Interim Prospectus or the Final Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that the same was made therein in reliance upon and in conformity with written information furnished to the Company as herein stated by the Representatives on behalf of such Underwriter specifically for use in the preparation thereof, and agrees to reimburse each such indemnified party for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability which any Underwriter may otherwise have. The statements set forth in the last paragraph of the cover page and under the heading "Underwriting" in the Final Prospectus constitute the only information furnished in writing by or on behalf of the several Underwriters for inclusion in the Registration Statement and the Final Prospectus, as the case may be, and you, as the Representatives, confirm that such statements are correct. 17 (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party otherwise than under this Section 8. In case any such action is brought against any indemnified party, and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein, and to the extent that it may elect by written notice delivered to the indemnified party promptly after receiving the aforesaid notice from such indemnified party, to assume the defense thereof, with counsel satisfactory to such indemnified party; provided, however, if the defendants in any such action include both the indemnified party and the indemnifying party and either (i) the indemnifying party or parties and the indemnified party or parties mutually agree or (ii) representation of both the indemnifying party or parties and the indemnified party or parties by the same counsel is inappropriate under applicable standards of professional conduct due to actual or potential differing interests between them, the indemnified party or parties shall have the right to select separate counsel to assume such legal defenses and to otherwise participate in the defense of such action on behalf of such indemnified party or parties. Upon receipt of notice from the indemnifying party to such indemnified party of its election so to assume the defense of such action and approval by the indemnified party of counsel, the indemnifying party will not be liable to such indemnified party under this Section 8 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof unless (i) the indemnified party shall have employed counsel in connection with the assumption of legal defenses in accordance with the proviso to the next preceding sentence (it being understood, however, that the indemnifying party shall not be liable for the expenses of more than one separate counsel, approved by the Representatives in the case of subparagraph (a) representing the indemnified parties under subparagraph (a), as the case may be, who are parties to such action), (ii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of commencement of the action or (iii) the indemnifying party has authorized the employment of counsel for the indemnified party at the expense of the indemnifying party. No indemnifying party shall (i) without the prior written consent of the indemnified parties (which consent shall not be unreasonably withheld), settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent (which consent shall not be unreasonably withheld), but if settled with its written consent or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss or liability by reason of such settlement or judgment. 18 (d) In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in subparagraph (a) of this Section 8 is due in accordance with its terms but is for any reason held by a court to be unavailable from the Company on grounds of policy or other similar grounds, the Company and the Underwriters shall contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) to which the Company and one or more of the Underwriters may be subject in such proportion so that the Underwriters are responsible for that portion represented by the percentage that the underwriting discounts appearing on the cover page of the Final Prospectus bear to the public offering prices appearing thereon and the Company is responsible for the balance; provided, however, that (i) in no case shall any Underwriter (except as may be provided in any agreement among underwriters) be responsible for any amount in excess of the underwriting discounts applicable to the Securities purchased by such Underwriter hereunder and (ii) no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person who controls an Underwriter within the meaning of the Securities Act shall have the same rights to contribution as such Underwriter, and each person who controls the Company within the meaning of either the Securities Act or the Exchange Act, each officer of the Company who shall have signed the Registration Statement and each director of the Company shall have the same rights to contribution as the Company, subject in each case to clauses (i) and (ii) of this subparagraph (d). Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this subparagraph (d), notify such party or parties from whom contribution may be sought, but the omission to so notify such party or parties shall not relieve the party or parties from whom contribution may be sought from any other obligation it or they may have hereunder or otherwise than under this subparagraph (d). 19 9. Default by an Underwriter.If any one or more Underwriters shall fail to purchase and pay for all of the Securities agreed to be purchased by such Underwriter or Underwriters hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the remaining Underwriters shall be obligated severally to take up and pay for (in the respective proportions which the principal amount of Securities set forth opposite their names in Schedule II hereto bear to the aggregate principal amount of Securities set opposite the names of the remaining Underwriters) the Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase; provided, however, that in the event that the aggregate principal amount of Securities which the defaulting Underwriter or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate principal amount of the Securities, the remaining Underwriters shall have the right to purchase all, but shall not be under any obligation to purchase any, of the Securities, and if such non-defaulting Underwriters do not purchase all the Securities, this Agreement will terminate without liability to any non-defaulting Underwriters or the Company. In the event of a default by any Underwriter as set forth in this Section 9, the Closing Date shall be postponed for such period, not exceeding seven days, as the Representatives shall determine in order that the required changes in the Registration Statement and the Final Prospectus or in any other documents or arrangements may be effected. Nothing herein contained shall relieve any defaulting Underwriter of its liability, if any, to the Company and any non-defaulting Underwriter for damages occasioned by its default hereunder. 10. Representations and Warranties of the Underwriters. Each Underwriter represents and warrants to the Company that (i) with respect to Securities which have a maturity of one year or more, it and each of its affiliates have not offered or sold and prior to the date six months after the date of issue of the Securities will not offer or sell any Securities to persons in the United Kingdom except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the public offers of Securities Regulations 1995; (ii) it and each of its affiliates have only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the "FSMA")) received by it in connection with the issue or sale of any Securities in circumstances in which Section 21(1) of the FSMA does not apply to Lehman Brothers Holdings; and (iii) it and each of its affiliates have complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Securities in, from or otherwise involving the United Kingdom. 11. Termination. This Agreement shall be subject to termination in the absolute discretion of the Representatives, by notice given to the Company at or prior to delivery of and payment for all the Securities, if, prior to such time (i) trading in securities generally on the NYSE or the over-the-counter market shall have been suspended or limited or minimum prices shall have been established on the NYSE or the over-the-counter market, (ii) a banking moratorium shall have been declared either by federal or New York State authorities, (iii) any new restriction materially affecting the distribution of the Securities shall have become effective; trading in any securities of the Company shall have been suspended or halted by any national securities exchange, the National Association of Securities Dealers, Inc. or the Commission, (iv) the United States becomes engaged in hostilities or there is an escalation in hostilities involving the United States or there is a declaration of a national emergency or war by the United States, or (v) there shall have been such a material adverse change in national or international political, financial or economic conditions, national or international equity markets or currency exchange rates or controls as to make it, in the judgment of the Representatives, inadvisable or impracticable to proceed with the payment for and delivery of the Securities. 20 12. Representations and Indemnities to Survive Delivery.The respective agreements, representations, warranties, indemnities and other statements of the Company or its officers (as such officers) and of the Underwriters set forth in or made pursuant to this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of any Underwriter or the Company or any of its officers or directors or any controlling person within the meaning of the Securities Act, and will survive delivery of the payment for the Securities. 13. Notices.All communications hereunder will be in writing, and, if sent to the Representatives will be mailed, delivered, telegraphed or telexed and confirmed to them, at the address specified in Schedule I hereto; or, if sent to the Company will be mailed, delivered, telegraphed or telexed and confirmed to it at 399 Park Avenue, New York, New York 10022, Attention: Chief Financial Officer. 14. Successors.This Agreement will inure to the benefit of and be binding upon the parties hereto and their successors and, to the extent and only to the extent stated in Section 8 hereof, the officers and directors and controlling persons referred to in Section 8 hereof, and except as provided in Section 8 hereof, no person other than the parties hereto and their respective successors will have any right or obligation hereunder. 15. Applicable Law.This Agreement will be governed by and construed in accordance with the laws of the State of New York. 21 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Company and the several Underwriters. Very truly yours, LEHMAN BROTHERS HOLDINGS INC. By/s/ Oliver Budde ------------------ Name: Oliver Budde Title: Vice President The foregoing Agreement is hereby confirmed and accepted as of the date first above written. LEHMAN BROTHERS INC. By /s/ Timothy B. Gould ---------------------- Name: Timothy B. Gould Title: Managing Director Acting on behalf of the Representatives named in Schedule I annexed hereto and the several Underwriters named in Schedule II annexed hereto. SCHEDULE I Date of Underwriting Agreement: As of March 21, 2002 Registration Statement No.: 333-60474 Representative and Address: Lehman Brothers Inc. 399 Park Avenue New York, NY 10022 Indenture, Title, Purchase Price and Description of Securities: Indenture: Indenture dated as of September 1, 1987, as supplemented, with Citibank, N.A. as trustee Title: Floating Rate Convertible Notes due April 1, 2022 Principal amount: $500,000,000 Price to public: 100% Purchase price: 98% Interest rate: Floating rate, based upon 3- Month LIBOR Interest payment dates: January 1, April 1, July 1 and October 1, commencing April 1, 2002 Maturity: April 1, 2022 Other provisions: As described in Exhibit A to this Schedule I Closing Date, Time and Location: Date: March 26, 2002 Time: 9:00 A.M., New York City time Location: Lehman Brothers Inc. 399 Park Avenue New York, New York 10022 Delayed Delivery Arrangements: None Option Securities: Up to $75,000,000 aggregate principal amount of Securities Other terms: The following sentence is added at the end of the introductory paragraph at the beginning of the Underwriting Agreement: Such Securities are hereinafter collectively referred to as the "Firm Securities". The following paragraph is added as a second introductory paragraph at the beginning of the Underwriting Agreement: In addition, if so identified in Schedule I hereto, the Company proposes to grant to the Underwriters an option to purchase up to an additional principal amount Securities (the "Option Securities"). Such Firm Securities and Option Securities, if purchased, are hereinafter collectively referred to as the "Securities". Section 1 of the Underwriting Agreement is amended by adding the following additional paragraph: (m) The shares of the Company's common stock into which the Securities are convertible (the "Conversion Shares") have been duly and validly authorized and reserved for issuance upon conversion of the Securities and are free of preemptive rights; and all Conversion Shares, when so issued and delivered upon such conversion in accordance with the terms of the Indenture, will be duly and validly authorized and issued, fully paid and nonassessable and free and clear of any liens and will conform, when issued, in all material respects to the descriptions thereof in the Final Prospectus. The first paragraph of Section 2 of the Underwriting Agreement is amended by adding the following two sentences immediately following the first sentence of the paragraph: In addition, the Company grants to the Underwriters an option to purchase up to the principal amount of Option Securities specified in Schedule I hereto. Such option is granted solely for the purpose of covering over-allotments in the sale of Firm Securities and is exercisable as provided in Section 3 hereof. The price of the Option Securities to the Underwriters shall equal the price of the Firm Securities set forth in Schedule I hereto. Section 3 of the Underwriting Agreement is amended in its entirety to read as follows: Delivery and Payment. Delivery by the Company of the Firm Securities to the Representatives for the respective accounts of the several Underwriters and payment by the Underwriters therefor by certified or official bank check or checks payable in, or by wire transfer of, immediately available (federal) funds to or upon the order of the Company shall take place at the office, on the date and at the time specified in Schedule I hereto, which date and time may be postponed by agreement between the Representatives and the Company or as provided in Section 9 hereof (such date and time of delivery and payment for the Firm Securities being herein called the "First Closing Date"). Concurrently with the delivery of any payment for Firm Securities as provided in this Section 3, the Company will deliver to the Representatives for the respective accounts of the several Underwriters a check in an amount equal to the fee set forth in Schedule I hereto with respect to the principal amount of Securities for which Delayed Delivery Contracts are made. The Firm Securities will be registered in such names and in such authorized denominations as the Representatives may request no less than two full business days in advance of the First Closing Date. The Company agrees to have the Firm Securities available for inspection, checking and packaging by the Representatives at such place as is designated by the Representatives, not later than 1:00 p.m., New York City time, on the business day prior to the First Closing Date. At any time on or before the eleventh day after the First Closing Date the option granted in Section 2 may be exercised by written notice being given to the Company by the Representatives. Such notice shall set forth the aggregate principal amount of Option Securities as to which the option is being exercised, the names in which the Option Securities are to be registered, the denominations in which the Option Securities are to be issued and the date and time, as determined by the Representatives, when the Option Securities are to be delivered, provided, however, that this date and time shall not be earlier than the First Closing Date nor earlier than the second business day after the date on which the option shall have been exercised nor later than the fifth business day after the date on which the option shall have been exercised. The date and time the Option Securities are delivered are sometimes referred to as the "Second Closing Date" and the First Closing Date and the Second Closing Date are sometimes each referred to as a "Closing Date." Delivery by the Company of the Option Securities to the Representatives for the account of the Underwriters and payment by the Underwriters therefor by certified or official bank check or checks payable in, or by wire transfer of, immediately available (federal) funds to or upon the order of the Company shall take place on the Second Closing Date at the office and at the time specified in Schedule I hereto, which date and time may be postponed by agreement between the Representatives and the Company. The Option Securities will be registered in such names and in such authorized denominations as the Representatives may request no less than two full business days in advance of the Second Closing Date. The Company agrees to have the Option Securities available for inspection, checking and packaging by the Representatives at such place as is designated by the Representatives, not later than 1:00 p.m., New York City time, on the business day prior to the Second Closing Date. Paragraph (d) of Section 6 of the Underwriting Agreement is amended by adding the following subparagraphs: (xiv) The Conversion Shares initially issuable upon conversion of the Securities have been duly reserved for issuance, and such shares, when issued in accordance with the Indenture and the Securities, will be validly issued, fully paid and nonassessable. (xv) The issuance of the Conversion Shares will not conflict with, or result in the creation or imposition of any material lien, charge or encumbrance upon any of the assets of the Company or any Domestic Significant Subsidiary pursuant to the terms of, or constitute a default under, any material agreement, indenture or instrument known to such counsel and to which the Company or any Domestic Significant Subsidiary is a party or is bound, or result in a violation of the corporate charter or by-laws of the Company or any Domestic Significant Subsidiary or any order, rule or regulation known to such counsel of any court or governmental agency having jurisdiction over the Company, any Domestic Significant Subsidiary or any of their respective properties, the effect of which would be material to the Company and its subsidiaries taken as a whole. The condition described in paragraph (g) of Section 6 of the Underwriting Agreement is eliminated. ANNEX A TO SCHEDULE I Issuer................................. Lehman Brothers Holdings Inc. ("Holdings") Securities Offered..................... $500,000,000 aggregate principal amount of Floating Rate Convertible Notes due April 1, 2022. Holdings has also granted the underwriter an option to purchase up to an additional $75,000,000 aggregate principal amount of notes solely to cover over-allotments. Offering Price......................... Each note will be issued at a price of 100% of its principal amount plus accrued interest, if any, from March 26, 2002. Maturity Date.......................... April 1, 2022. Ranking................................ The notes will be senior unsecured obligations of Holdings and will rank equal in right of payment with all existing and future senior unsecured indebtedness of Holdings. Interest Payment Dates................. January 1, April 1, July 1 and October 1, beginning July 1, 2002, unless any such interest payment date (other than an interest payment date at maturity) would otherwise be a day that is not a business day, in which case the interest payment date will be postponed to the next succeeding business day (except if that business day falls in the next succeeding calendar month, that interest payment date will be the immediately preceding business day). If the maturity date of the notes is a day that is not a business day, all payments to be made on such day will be made on the next succeeding business day, with the same force and effect as if made on the due date, and no additional interest will be payable as a result of such a delay in payment. Interest Rate.......................... Interest will accrue at a per annum rate equal to 3-month LIBOR minus a spread of 0.90%, subject to adjustment under certain circumstances. Notwithstanding any such adjustments, the interest rate on the notes will never be less than zero Contingent Interest.................... Holdings will pay contingent interest to the holders of notes during any quarterly interest period, commencing with the quarterly interest period beginning July 1, 2002, if the average trading price of the notes for the five trading days ending on the second trading day immediately preceding the relevant quarterly interest period equals 120% or more of the principal amount of the notes. The rate of contingent interest payable in respect of any quarterly interest period will equal the greater of (i) a per annum rate equal to 5.00% of Holdings' estimated per annum borrowing rate for senior non-convertible fixed-rate indebtedness with a maturity date and other terms comparable to the notes and (ii) 0.25% per annum. Contingent interest will be computed on the basis of the actual number of days elapsed in the relevant quarterly interest period, divided by 360. Conversion Rights...................... Holders may convert their notes prior to stated maturity under any of the following circumstances: o during any quarterly conversion period if the closing sale price of Holdings' common stock for a period of at least 20 trading days in the period of 30 consecutive trading days ending on the first day of such conversion period is more than 125% of the conversion price on that thirtieth day; o........on or before April 1, 2017, during the five business-day period following any 10 consecutive trading-day period in which the average of the trading prices for the notes was less than 105% of the average conversion for the notes during that period; o........during any period in which the credit rating assigned to the notes by either Moody's or Standard & Poor's is below "Baa3" and "BBB-", respectively, in which the credit rating assigned to the notes is suspended or withdrawn by either rating agency or in which neither rating agency continues to rate the notes or provide ratings services or coverage to Holdings; o........if the notes have been called for redemption; or o........upon the occurrence of specified corporate. For each of the notes surrendered for conversion, holders initially will receive 10.4062 shares of Holdings' common stock per $1,000 principal amount of notes. This represents an initial conversion price of approximately $96.10 per share of common stock. The conversion rate (and the conversion price) may be adjusted for certain reasons, but will not be adjusted for accrued interest (including contingent interest), if any. Upon conversion, holders will not receive any cash payment representing accrued interest. Instead, accrued interest will be deemed paid by the common stock received by holders on conversion. Notes called for redemption may be surrendered for conversion until the close of business one business day prior to the redemption date. Sinking Fund........................... None. Optional Redemption by Holdings........ Holdings may not redeem the notes prior to April 1, 2004. Holdings may redeem some or all of the notes on or after April 1, 2004 for a price equal to 100% of the principal amount of the notes plus any accrued and unpaid interest (including contingent interest) to, but excluding, the redemption date. Holdings will therefore be required to make eight quarterly interest payments before being able to redeem any notes. Optional Repurchase Right of Holders... Holders may require Holdings to repurchase all or a portion of their notes on April 1 of 2004, 2007, 2012 and 2017 at a repurchase price equal to 100% of the principal amount of those notes plus any accrued and unpaid interest (including contingent interest) to the date of purchase. Holdings will pay the purchase price, at Holdings option, in cash, common stock or a combination of cash and shares of Holdings common stock (if Holdings elects to pay all or a portion of the purchase price in common stock, it will be issued at the prevailing market price as described herein. Change of Control Repurchase Right of Holders................................ Upon a change of control of Holdings, holders may require Holdings, subject to certain conditions, to repurchase all or a portion of their notes. Holdings will pay a repurchase price equal to 100% of the principal amount of the notes plus any accrued and unpaid (including contingent interest) to, but excluding, the repurchase date. DTC Eligibility........................ The notes will be issued in book- entry form and will be represented by permanent global certificates without coupons deposited with a custodian for and registered in the name of a nominee of DTC in New York, New York. Beneficial interests in any such securities will be shown on, and transfers will be effected only through, records maintained by DTC and its direct and indirect participants, and any such interest may not be exchanged for certificated securities, except in limited circumstances. Use of Proceeds........................ Holdings intends to use the net proceeds for working capital and general corporate purposes. See "Use of Proceeds." Listing................................ Holdings does not intend to list the notes on any securities exchange. New York Stock Exchange Symbol For Holdings' Common Stock................. Holdings' common stock is traded on the New York Stock Exchange under the symbol "LEH". SCHEDULE II Principal Amount of Firm Securities to be Underwriter Purchased Lehman Brothers Inc. ........................................ $ 500,000,000 =========== SCHEDULE III Delayed Delivery Contract , 20 [Insert name and address of lead Representative] Ladies and Gentlemen: The undersigned hereby agrees to purchase from Lehman Brothers Holdings Inc. (the "Company"), and the Company agrees to sell to the undersigned, on , 20 (the "Delivery Date"), $ principal amount of the Company's % due (the "Securities") offered by the Company's Prospectus dated , 20 , and related Prospectus Supplement dated , 20 , receipt of a copy of which is hereby acknowledged, at a purchase price of % of the principal amount thereof, plus accrued interest or amortization of original issue discount, if any, thereon from , 20 , to the date of payment and delivery, and on the further terms and conditions set forth in this contract. Payment for the Securities to be purchased by the undersigned shall be made on or before 11:00 a.m., New York City time, on the Delivery Date to or upon the order of the Company in New York Clearing House (next day) funds, at your office or at such other place as shall be agreed between the Company and the undersigned upon delivery to the undersigned of the Securities in definitive fully registered form and in such authorized denominations and registered in such names as the undersigned may request by written or telegraphic communication addressed to the Company not less than five full business days prior to the Delivery Date. If no request is received, the Securities will be registered in the name of the undersigned and issued in a denomination equal to the aggregate principal amount of Securities to be purchased by the undersigned on the Delivery Date. The obligation of the undersigned to take delivery of and make payment for Securities on the Delivery Date, and the obligation of the Company to sell and deliver Securities on the Delivery Date, shall be subject to the conditions (and neither party shall incur any liability by reason of the failure thereof) that (1) the purchase of Securities to be made by the undersigned, which purchase the undersigned represents is not prohibited on the date hereof, shall not on the Delivery Date be prohibited under the laws of the jurisdiction to which the undersigned is subject, and (2) the Company, on or before the Delivery Date, shall have sold to certain underwriters (the "Underwriters") such principal amount of the Securities as is to be sold to them pursuant to the Underwriting Agreement referred to in the Prospectus and Prospectus Supplement mentioned above. Promptly after completion of such sale to the Underwriters, the Company will mail or deliver to the undersigned at its address set forth below notice to such effect, accompanied by a copy of the opinion of counsel for the Company delivered to the Underwriters in connection therewith. The obligation of the undersigned to take delivery of and make payment for the Securities, and the obligation of the Company to cause the Securities to be sold and delivered, shall not be affected by the failure of any purchaser to take delivery of and make payment for the Securities pursuant to other contracts similar to this contract. 2 This contract will inure to the benefit of and be binding upon the parties hereto and their respective successors, but will not be assignable by either party hereto without the written consent of the other. It is understood that acceptance of this contract and other similar contracts is in the Company's sole discretion and, without limiting the foregoing, need not be on a first come, first served basis. If this contract is acceptable to the Company, it is required that the Company sign the form of acceptance below and mail or deliver one of the counterparts hereof to the undersigned at its address set forth below. This will become a binding contract between the Company and the undersigned, as of the date first above written, when such counterpart is so mailed or delivered. This agreement shall be governed by and construed in accordance with the laws of the State of New York. Very truly yours, Name of Purchaser) By (Signature and Title of Officer) (Address) Accepted: Lehman Brothers Holdings Inc. By --------------------------------------------------- Authorized Signature) EX-4 4 f02-03_26ex401a.txt EXHIBIT 4.01 FORM OF GLOBAL NOTE EXHIBIT 4.01 LEHMAN BROTHERS HOLDINGS INC. Floating Rate Convertible Notes due April 1, 2022 CUSIP No. 524908 EC 0 ISIN No. US 524908 EC 04 Registered No. 1 Principal Amount: $500,000,000 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), 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. THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR. LEHMAN BROTHERS HOLDINGS INC., a Delaware corporation (herein called the "Company," which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to CEDE & CO. or registered assigns, the principal sum of $500,000,000 (FIVE HUNDRED MILLION Dollars) on April 1, 2022, and to pay Interest thereon from and including March 26, 2002 or from and including the most recent Interest Payment Date (as hereinafter defined) to which Interest has been paid or duly provided for, as the case may be. Interest will be paid quarterly on January 1, April 1, July 1 and October 1 of each year, commencing July 1, 2002, unless any such interest payment date (other than an interest payment date at maturity) would otherwise be a day that is not a Business Day, in which case the interest payment date will be postponed to the next succeeding Business Day (except if that Business Day falls in the next succeeding calendar month, that interest payment date will be the immediately preceding Business Day) (each, an "Interest Payment Date") at the rates per annum specified on the reverse hereof, until the principal hereof is paid or made available for payment. The Interest so payable and punctually paid or duly provided for on any Interest Payment Date will, as provided in the Indenture, be paid to the Person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on the Regular Record Date for such Interest, which shall be the fifteenth calendar day of the month immediately preceding such Interest Payment Date ("Regular Record Date"). Except as otherwise provided in the Indenture, any such Interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Note (or one or more predecessor Notes) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof is to be given to Holders of Note not less than 10 calendar days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in said Indenture. 2 While this Note is represented by one or more book-entry notes registered in the name of DTC or its nominee, the Company will cause payments of principal and Interest on such book-entry notes to be made to DTC or its nominee, as the case may be, by wire transfer to the extent, in the funds and in the manner required by agreements with, or regulations or procedures prescribed from time to time by, DTC or its nominee, and otherwise in accordance with such agreements, regulations and procedures. REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE. Unless the certificate of authentication hereon has been executed by the Trustee referred to on the reverse hereof, or its successor as Trustee, or its Authenticating Agent, by manual signature of an authorized signatory, this Note will not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its corporate seal. Dated: March 26, 2002 LEHMAN BROTHERS HOLDINGS INC. By:/s/ Oliver Budde Its:Vice President Attest: /s/ Cindy Gregoire Assistant Secretary TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the series of Securities issued under the within-mentioned Indenture. CITIBANK, N.A. By:/s/ Wafaa Orfy Authorized Signatory 3 LEHMAN BROTHERS HOLDINGS INC. Floating Rate Convertible Notes due April 1, 2022 SECTION 1. General. This Note is one of a duly authorized issue of Securities of the Company (herein called the "Notes"), issued and to be issued in one or more series under an Indenture, dated as of September 1, 1987, as amended and supplemented (the "Indenture"), between the Company and Citibank, N.A., as Trustee (herein called the "Trustee," which term includes any successor trustee under the Indenture), to which Indenture reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders of the Notes and of the terms upon which the Notes are, and are to be, authenticated and delivered. This Note is one of the Securities of the series designated on the face hereof as "Floating Rate Convertible Notes due April 1, 2022." The terms, conditions and provisions of the Notes are those stated in the Indenture, those made a part of the Indenture by reference to the Trust Indenture Act of 1939, as amended, and those set forth in this Note. To the extent that the terms, conditions and other provisions of this Note modify, supplement or are inconsistent with those of the Indenture, then the terms, conditions and other provisions of this Note shall govern. All terms used in this Note which are defined in the Indenture shall have the meanings assigned to them in the Indenture. SECTION 2. Interest and Payments. This Note will bear interest ("Regular Interest") from March 26, 2002 until the principal amount thereof is paid or made available for payment, or until such date on which the Notes are converted, redeemed or repurchased as provided in this Note and the Indenture, (i) prior to the occurrence of any Reset Transaction at a rate which will initially equal 1.13 % per year, which will be adjusted quarterly to equal 3-month LIBOR minus a spread of 0.90% (the "Initial Spread"), and (ii) following the occurrence of a Reset Transaction, at a rate equal to 3-month LIBOR minus the Adjusted Spread related to such Reset Transaction (as set forth in Section 3 hereof) to, but not including, the effective date of any succeeding Reset Transaction (the "Regular Interest Rate"). In addition, interest (the "Contingent Interest") will accrue on this Note during any quarterly interest period, commencing with the quarterly interest period beginning July 1, 2002, if the average of the Trading Prices of the Notes for the five consecutive Trading Days ending on the second Trading Day immediately preceding the beginning of the relevant quarterly interest period equals 120% or more of the principal amount of such Notes. The rate of Contingent Interest payable in respect of any quarterly interest period will equal the greater of (i) a per annum rate equal to 5.00 % of the Company's estimated per annum borrowing rate for senior non-convertible fixed-rate indebtedness with a maturity date and other terms comparable to the Notes and (ii) 0.25% per annum, in each case based on the outstanding principal amount of the Notes. Regular Interest and any Contingent Interest are collectively referred to as "Interest" herein. Upon determination that Holders of Notes will be entitled to receive Contingent Interest during any relevant quarterly interest period, on or prior to the start of the relevant quarterly interest period, the Company shall issue a press release and publish information with respect to any Contingent Interest on its web site. The Company shall pay Contingent Interest, if any, in the same manner as it shall pay Regular Interest and the obligations of Holders in respect of the payment of Contingent Interest in connection with the conversion of any Notes will also be the same as described below. Interest on this Note will be payable on the Interest Payment Date or Interest Payment Dates as specified on the face hereof and, in either case, at Maturity. Except as provided below, Interest will be paid (i) if this Note is represented by one or more book-entry notes, to DTC in immediately available funds, (ii) if this Note is represented by one or more certificated Notes having an aggregate principal amount at Maturity of $5,000,000 or less by check mailed to the Holders of such Notes and (iii) if this Note is represented by one or more certificated Notes having an aggregate principal amount at Maturity of more than $5,000,000 by wire transfer in immediately available funds at the election of the Holders of such Notes. 4 The Regular Interest Rate for each quarterly period (other than the period commencing March 26, 2002) will be adjusted on the first day of such quarterly period (an "Interest Adjustment Date"), which will be the Interest Payment Date for the immediately preceding quarterly period. The adjusted Regular Interest Rate will be based upon 3-month LIBOR, determined on the second preceding London banking day (an "Interest Determination Date") as described below, less the Adjusted Spread. Notwithstanding any quarterly adjustments of the Regular Interest Rate or resetting of the Spread, the Regular Interest Rate borne by the Notes will never be less than zero. The Regular Interest Rate will be determined by the Calculation Agent. Interest will be computed on the basis of the actual number of days for which Interest is payable in the relevant interest period, divided by 360. All percentages resulting from any calculation on the notes will be rounded to the nearest one hundredth-thousandth of a percentage point, with five one millionths of a percentage point rounded upwards (e.g., 4.876545% (or .04876545) would be rounded to 4.87655% (or .0487655)), and all dollar amounts used in or resulting from such calculation on the notes will be rounded to the nearest cent (with one-half cent being rounded upward). For purposes of determining the Regular Interest Rate, the Trustee may assume that a Reset Transaction has not occurred unless the Trustee has received an Officers' Certificate stating that a Reset Transaction has occurred and specifying the adjusted Regular Interest Rate then in effect. Interest shall be due and payable on a Note as follows: (a) A registered Holder of any Note as of the close of business on a Regular Record Date shall be entitled (except as otherwise indicated in this Section 2) to receive and shall receive, as the registered Holder as of such Regular Record Date, Interest on such Note on the corresponding Interest Payment Date (other than any Note Stated Maturity of which is prior to such Interest Payment Date). (b) In the event that a Note becomes subject to redemption and the Redemption Date occurs after a Regular Record Date but prior to the corresponding Interest Payment Date, the Person whose Note become subject to redemption (and only such Person rather than the Holder as of such Regular Record Date) shall be entitled to receive and shall receive accrued and unpaid Interest from the preceding Interest Payment Date (or such earlier date on which Interest, including Contingent Interest, if any, was last paid) to but not including the Redemption Date on such Note, even if such person is not the Holder of such Note. (c) In the event that a Note becomes subject to repurchase pursuant to Section 17 hereof, a Holder of any Note who exercises a repurchase right with respect to such Note shall be entitled to receive and shall receive Interest to but not including the applicable repurchase date for such Note, which amount shall be included in the applicable purchase price thereof. (d) In the event that a Note is converted pursuant to Sections 5 through 16 hereof, the Holder who converts such Note on any date other than an Interest Payment Date shall not be entitled to accrued and unpaid Interest from the preceding Interest Payment Date until the Conversion Date, or otherwise, on such Note, such amounts being deemed to have been paid by receipt of shares of Common Stock in full rather than canceled, extinguished or forfeited; and, accordingly, a Holder who converts a Note after a Regular Record Date but prior to the corresponding Interest Payment Date will receive accrued and unpaid Interest for such period on such Interest Payment Date but will be required to remit to the Company an amount equal to that Interest at the time such Holder surrenders the Note for conversion, provided that such Holder will not be required to remit such Interest if, prior to conversion, the Company has called such Note to be redeemed on a Redemption Date that is on or prior to the third Business Day after such Interest Payment Date and the Holder converts such Note prior to the applicable Redemption Date. Except as provided in this Section 2 or in Indenture, no adjustments in respect of payments of Interest on any Note surrendered for conversion or any dividends or distributions or Interest on the Common Stock issued upon conversion shall be made upon the conversion of any Note. 5 If Maturity for this Note falls on a day that is not a Business Day, payment of principal and Interest to be made on such day with respect to this Note will be made on the next day that is a Business Day with the same force and effect as if made on the due date, and no additional interest will be payable on the date of payment for the period from and after the due date as a result of such delayed payment. Principal will be paid (i) if this Note is represented by one or more book-entry notes, to DTC in immediately available funds or (ii) if this Note is represented by one or more certificated Notes, at our office or agency in New York City, which initially will be the office or agency of the Trustee in New York City. SECTION 3. Interest Rate Spread Adjustment. Following the occurrence of a Reset Transaction, the Notes will bear interest at a rate equal to 3-month LIBOR minus the Adjusted Spread related to such Reset Transaction to, but not including, the effective date of any succeeding Reset Transaction. SECTION 4. Redemption. At any time on or after April 1, 2004, except for Notes that it is required to repurchase or required to convert, the Company may, at its option, redeem for cash the Notes in whole at any time or in part from time to time, on any date prior to the Stated Maturity of such Notes (the "Redemption Date"), upon notice as set forth below, at a price equal to 100% of the principal amount of the Notes (the "Redemption Price"). If the Company exercises its option to redeem the Notes pursuant to this section, a Holder may nevertheless exercise its right to have its Notes repurchased pursuant to Section 17.1 hereof, if applicable, and to convert such Notes pursuant to Sections 5 through 16 hereof, in each case, until the close of business two Business Days immediately preceding the Redemption Date. The Company shall pay to the Holder of the Notes called for redemption (including those Notes which are converted into Common Stock after the date the notice of the redemption is mailed and prior to the Redemption Date) any Interest accrued but not paid to, but excluding, the Redemption Date; provided, however, that if the Redemption Date is an Interest Payment Date, the Company shall pay the Interest at the close of business on such Interest Payment Date to the Holder of the Notes as of the related Regular Record Date. If the Company elects to redeem Notes pursuant to the provisions of this Section 4 (such election to be ordered by a Board Resolution), it shall notify the Trustee at least 60 days prior to the intended Redemption Date (unless a shorter notice shall be satisfactory to the Trustee) of (i) such intended Redemption Date, (ii) the principal amount of Notes to be redeemed and (iii) the CUSIP numbers of the Notes to be redeemed. If any Notes selected for partial redemption are converted or elected to be repurchased in part before termination of the conversion right or repurchase right with respect to the portion of the Notes so selected, the converted or repurchased portion of such Notes shall be deemed to be the portion selected for redemption; provided, however, that the Holder of such Notes so converted or repurchased and deemed redeemed shall not be entitled to any additional interest payment as a result of such deemed redemption than such Holder would have otherwise been entitled to receive upon conversion or repurchase of such Notes. Notes which have been converted or purchased during a selection of Notes to be redeemed may be treated by the Trustee as Outstanding for the purpose of such selection. For all purposes of this Note, unless the context otherwise requires, all provisions relating to the redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed. Notice of redemption shall be given in the manner provided in Section 1105 of the Indenture to the Holders of Notes to be redeemed. Such notice shall be given not less than 20 nor more than 60 days prior to the intended Redemption Date. 6 All notices of redemption shall state: (a) such intended Redemption Date; (b) the Redemption Price and Interest, if any, accrued and unpaid to, but excluding, the Redemption Date; (c) if fewer than all the Outstanding Notes are to be redeemed, the principal amount of Notes to be redeemed and the principal amount of Notes which will be Outstanding after such partial redemption; (d) that on the Redemption Date, the Redemption Price and Interest, if any, accrued and unpaid to, but excluding, the Redemption Date, will become due and payable, and will cease to accrue, upon each such Note to be redeemed; (e) if applicable, the Conversion Price, the date on which the right to convert the principal of the Notes to be redeemed will terminate and the places where such Notes may be surrendered for conversion; (f) the place or places where such Notes are to be surrendered for payment of the Redemption Price and accrued and unpaid Interest; and (g) the CUSIP number of the Notes. The notice given shall specify the last date on which exchanges or transfers of Notes may be made, and shall specify the serial numbers of Notes and the portions thereof called for redemption. Notice of redemption of Notes to be redeemed at the election of the Company shall be given by the Company or, at the Company's written request delivered at least 20 days prior to the date of the mailing of such Notice (unless a shorter period shall be acceptable to the Trustee), by the Trustee in the name of and at the expense of the Company. Notice of redemption having been given as provided in this Section, the Notes so to be redeemed shall, on the Redemption Date, become due and payable at the Redemption Price and from and after such date (unless the Company shall default in the payment of the Redemption Price and accrued and unpaid Interest) such Notes shall cease to bear Interest. Upon surrender of any such Notes for redemption in accordance with such notice, such Notes shall be paid by the Company at the Redemption Price; provided, however, the installments of Interest on Notes whose Stated Maturity is prior to or on the Redemption Date shall be payable to the Holders of such Notes, or one or more Predecessor Securities, registered as such on the relevant Regular Record Date. Prior to or by 10:00 a.m. (New York City time) on any Redemption Date, the Company shall deposit with the Trustee or with a Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust) an amount of money in immediately available funds sufficient to pay the Redemption Price, and accrued and unpaid Interest in respect of all the Notes to be redeemed on that Redemption Date from the last Interest Payment Date to but not including the Redemption Date, other than any Notes called for redemption on that date which have been converted prior to the date of such deposit, and accrued and unpaid Interest on such Notes. The Trustee and Paying Agent shall then cause such funds to be paid to the Holders of the Notes being redeemed in accordance with this Article. If any Note delivered for redemption shall not be so redeemed by payment to the Holders thereof on the Redemption Date, the principal amount of such Note shall, until it is redeemed, bear Interest on the Redemption Date to but not including the actual date of redemption at the applicable Interest Rate, and each such Note shall remain convertible into shares of Common Stock pursuant to Sections 5 through 16 hereof and remain eligible for repurchase pursuant to Section 17 hereof until such Note shall have been so redeemed. 7 If any Note called for redemption is converted, any money deposited with the Trustee or with a Paying Agent or so segregated and held in trust for the redemption of such Note shall (subject to any right of the Holder of such Note or any Predecessor Security to receive Interest) be paid to the Company upon request by the Company or, if then held by the Company, shall be discharged from such trust. Any Note which is to be redeemed only in part shall be surrendered at an office or agency of the Company designated for that purpose (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or the Holder's attorney duly authorized in writing), and the Company shall execute, and the Trustee shall authenticate and deliver to the Holder of such Note without service charge, a new Note of any authorized denomination as requested by such Holder in principal amount equal to and in exchange for the unredeemed portion of the Note so surrendered. SECTION 5. Conversion Privilege . (a) Subject to and upon compliance with the provisions of Sections 5 through 16 of this Note, at the option of the Holder, any Notes or any portion of the principal amount thereof which is an integral multiple of $1,000 may be converted at the principal amount thereof, or of such portion thereof, into duly authorized, fully paid and nonassessable shares of Common Stock, at the Conversion Price, determined as hereinafter provided, in effect at the time of conversion: (1) during any Conversion Period, if the Sale Price of the Common Stock for at least 20 consecutive Trading Days in the 30 consecutive Trading-Day period ending on the first day of the Conversion Period was more than 125% of the Conversion Price on that thirtieth Trading Day; (2) on or before April 1, 2017, during the five Business-Day period following any 10 consecutive Trading-Day period in which the average of the Trading Prices for the Notes for that 10 Trading-Day Period was less than 105% of the average Conversion Value for the Notes during that period; (3) during any period in which the credit rating assigned to the Notes by either Moody's Investors Service or Standard & Poor's or their respective successors is lower than Baa3 or BBB-, respectively, in which the credit rating assigned to the Notes is suspended or withdrawn by either rating agency or in which neither rating agency continues to rate the Notes or provide ratings service or coverage to the Company; (4) if the Company has called the Notes for redemption; or (5) upon the occurrence of any of the corporate transactions specified in clause (b) of this Section 5. The Company shall determine on a daily basis whether the Notes shall be convertible as a result of the occurrence of an event specified in clause (1) or clause (2) above and, if the Notes shall be so convertible, the Company shall promptly deliver to the Trustee written notice thereof. Whenever the Notes shall become convertible pursuant to Section 5 hereof, the Company or, at the Company's written request, the Trustee in the name and at the expense of the Company, shall notify the Holders of the event triggering such convertibility in manner provided in Section 4 hereof, and the Company shall also publicly announce such information and publish it on the Company's web site. Any notice so given shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. (b) In the event that: 8 (1) (A) the Company distributes to all holders of its shares of Common Stock rights or warrants entitling them (for a period expiring within 60 days of the record date for such distribution) to subscribe for or purchase shares of Common Stock, at a price per share less than the Sale Price of the Common Stock on the Business Day immediately preceding the announcement of such distribution, (B) the Company distributes to all holders of its shares of Common Stock, cash or other assets, debt securities or rights or warrants to purchase its securities, where the Fair Market Value (as determined by the Board of Directors) of such distribution per share of Common Stock exceeds 10% of the Sale Price of a share of Common Stock on the Business Day immediately preceding the date of declaration of such distribution, or (C) a Change of Control occurs but Holders of Notes do not have the right to require the Company to purchase their Notes as a result of such Change of Control because either (i) the Sale Price of the Common Stock for specified periods (as described in the definition of Change of Control) exceeds specified levels (as described in the definition of Change of Control) or (ii) the consideration received in such Change of Control consists of Capital Stock that is freely tradeable and the Notes become convertible into that Capital Stock as specified in the definition of Change of Control, then, in each case, the Notes may be surrendered for conversion at any time on and after the date that the Company gives notice to the Holders of such right, which shall be not less than 20 days prior to the Ex-Dividend Time for such distribution, in the case of (A) or (B), or within 30 days after the occurrence of the Change of Control, in the case of (C), until the earlier of the close of business on the Business Day immediately preceding the Ex-Dividend Time or the date the Company announces that such distribution will not take place, in the case of (A) or (B), or the earlier of 30 days after the Company's delivery of the Company Notice regarding a Change of Control Repurchase Right or the date the Company announces that the Change of Control will not take place, in the case of (C), or (2) the Company consolidates with or merges into another corporation, or is a party to a binding share exchange pursuant to which the shares of Common Stock would be converted into cash, securities or other property as set forth in Section 8 hereof, then the Notes may be surrendered for conversion at any time from and after the date which is 15 days prior to the date announced by the Company as the anticipated effective time of such transaction until 15 days after the actual date of such transaction. SECTION 6. Conversion Procedure; Conversion Price; Fractional Shares. (a) Each Note shall be convertible at the office of the Conversion Agent into fully paid and nonassessable shares (calculated to the nearest 1/100th of a share) of Common Stock. The Notes will be converted into shares of Common Stock at the Conversion Price therefor. No payment or adjustment shall be made in respect of dividends on the Common Stock or accrued interest on a converted Note, except as described in Section 13 hereof. The Company shall not issue any fraction of a share of Common Stock in connection with any conversion of Notes, but instead shall, subject to Section 7(g) hereof, make a cash payment (calculated to the nearest cent) equal to such fraction multiplied by the Sale Price of the Common Stock on the last Trading Day prior to the date of conversion. Notwithstanding the foregoing, a Note in respect of which a Holder has delivered a Company Notice exercising such Holder's option to require the Company to repurchase such Note may be converted only if such notice of exercise is withdrawn in accordance with Section 17.3 hereof. (b) Before any Holder of a Note shall be entitled to convert the same into Common Stock, such Holder shall, in the case of Notes issued in global form, comply with the procedures of DTC in effect at that time, and in the case of definitive Note, surrender such Note, duly endorsed to the Company or in blank, at the office of the Conversion Agent, and shall give written notice to the Company at said office or place that such Holder elects to convert the same and shall state in writing therein the principal amount of Notes to be converted and the name or names (with addresses) in which such Holder wishes the certificate or certificates for Common Stock to be issued. Before any such conversion, a Holder also shall pay all funds required, if any, relating to interest on the Notes, as provided in Section 13 hereof, and all taxes or duties, if any, as provided in Section 12 hereof. 9 If more than one Note shall be surrendered for conversion at one time by the same Holder, the number of full shares of Common Stock which shall be deliverable upon conversion shall be computed on the basis of the aggregate principal amount of the Notes (or specified portions thereof to the extent permitted thereby) so surrendered. Subject to the next succeeding sentence, the Company will, as soon as practicable thereafter, issue and deliver at said office or place to such Holder of a Note, or to such Holder's nominee or nominees, certificates for the number of full shares of Common Stock to which such Holder shall be entitled as aforesaid, together, subject to the last sentence of Section 6 (a) above, with cash in lieu of any fraction of a share to which such Holder would otherwise be entitled. The Company shall not be required to deliver certificates for shares of Common Stock while the stock transfer books for such stock or the security register are duly closed for any purpose, but certificates for shares of Common Stock shall be issued and delivered as soon as practicable after the opening of such books or security register. A Note shall be deemed to have been converted as of the close of business on the date of the surrender of such Note for conversion as provided above, and the person or persons entitled to receive the Common Stock issuable upon such conversion shall be treated for all purposes as the record Holder or Holders of such Common Stock as of the close of business on such date. In case any Note shall be surrendered for partial conversion, the Company shall execute and the Trustee shall authenticate and deliver to or upon the written order of the Holder of the Notes so surrendered, without charge to such Holder (subject to the provisions of Section 12 hereof), new Notes in authorized denominations in an aggregate principal amount equal to the unconverted portion of the surrendered Notes. SECTION 7. Adjustments of Conversion Price for Common Stock. The Conversion Price shall be adjusted from time to time as follows: (a) In case the Company shall, at any time or from time to time while any of the Notes are outstanding, pay a dividend or make a distribution in shares of Common Stock to all holders of its outstanding shares of Common Stock, then the Conversion Price in effect at the opening of business on the date following the record date fixed for the determination of stockholders entitled to receive such dividend or other distribution shall be reduced by multiplying such Conversion Price by a fraction: (1) the numerator of which shall be the number of shares of Common Stock outstanding at the close of business on the record date fixed for such determination; and (2) the denominator of which shall be the sum of such number of shares and the total number of shares constituting such dividend or other distribution. Such reduction shall become effective immediately after the opening of business on the Business Day following the record date fixed for such determination. If any dividend or distribution of the type described in this Section 7 is declared but not so paid or made, the Conversion Price shall again be adjusted to the Conversion Price which would then be in effect if such dividend or distribution had not been declared. (b) In case the Company shall, at any time or from time to time while any of the Notes are outstanding, subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, then the Conversion Price in effect at the opening of business on the Business Day following the day upon which such subdivision becomes effective shall be proportionately reduced, and conversely, in case the Company shall, at any time or from time to time while any of the Notes are outstanding, combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then the Conversion Price in effect at the opening of business on the Business Day following the day upon which such combination becomes effective shall be proportionately increased. 10 Such reduction or increase, as the case may be, shall become effective immediately after the opening of business on the Business Day following the day upon which such subdivision or combination becomes effective. (c) In case the Company shall, at any time or from time to time while any of the Notes are outstanding, issue rights or warrants (other than any rights or warrants referred to in Section 7(d) hereof) to all holders of its shares of Common Stock entitling them to subscribe for or purchase shares of Common Stock (or securities convertible into shares of Common Stock) at a price per share (or having a conversion price per share) less than the Sale Price of the Common Stock on the Business Day immediately preceding the date of the announcement of such issuance (treating the conversion price per share of the securities convertible into Common Stock as equal to (x) the sum of (i) the price for a unit of the security convertible into Common Stock and (ii) any additional consideration initially payable upon the conversion of such security into Common Stock divided by (y) the number of shares of Common Stock initially underlying such convertible security), then the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect at the opening of business on the date after such date of announcement by a fraction: (1) the numerator of which shall be the number of shares of Common Stock outstanding on the close of business on the date of announcement, plus the number of shares or securities which the aggregate offering price of the total number of shares or securities so offered for subscription or purchase (or the aggregate conversion price of the convertible securities so offered) would purchase at such Sale Price of the Common Stock; and (2) the denominator of which shall be the number of shares of Common Stock outstanding at the close of business on the date of announcement, plus the total number of additional shares of Common Stock so offered for subscription or purchase (or into which the convertible securities so offered are convertible). Such adjustment shall become effective immediately after the opening of business on the Business Day following the date of announcement of such issuance. To the extent that shares of Common Stock (or securities convertible into shares of Common Stock) are not delivered pursuant to such rights or warrants, upon the expiration or termination of such rights or warrants, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of the delivery of only the number of shares of Common Stock (or securities convertible into shares of Common Stock) actually delivered. In the event that such rights or warrants are not so issued, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if the date fixed for the determination of stockholders entitled to receive such rights or warrants had not been fixed. In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such Sale Price of the Common Stock, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received for such rights or warrants, the value of such consideration if other than cash, to be determined by the Board of Directors. (d) In case the Company shall, at any time or from time to time while any of the Notes are outstanding, by dividend or otherwise, distribute to all holders of its shares of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Company is the continuing corporation and the Common Stock is not changed or exchanged), cash, shares of its capital stock (other than any dividends or distributions to which Section 7 (a) hereof applies), evidences of its indebtedness or other assets, including securities, but excluding (i) any rights or warrants referred to in Section 7(c), (ii) dividends or distributions of stock, securities or other property or assets (including cash) in connection with a reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance to which Section 8 hereof applies and (iii) dividends and distributions paid exclusively in cash (such capital stock, evidence of its indebtedness, cash, other assets or securities being distributed hereinafter in this Section 7(d) called the "distributed assets"), then, in each such case, subject to the third and fourth succeeding paragraphs and the last Section of this Section 7(d) hereof, the Conversion Price shall be reduced so that the same shall be equal to the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on the record date with respect to such distribution by a fraction: 11 (1) the numerator of which shall be the Current Market Price of the Common Stock, less the Fair Market Value on such date of the portion of the distributed assets so distributed applicable to one share of Common Stock (determined on the basis of the number of shares of Common Stock outstanding on the record date)(determined as provided in the definition on ) on such date; and (2) the denominator of which shall be such Current Market Price. Such reduction shall become effective immediately prior to the opening of business on the Business Day following the record date for such distribution. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such dividend or distribution had not been declared. If the Board of Directors determines the Fair Market Value of any distribution for purposes of this Section 7(d) hereof by reference to the actual or when issued trading market for any distributed assets comprising all or part of such distribution, it must in doing so consider the prices in such market over the same period (the "Reference Period") used in computing the Current Market Price to the extent possible, unless the Board of Directors determines in good faith that determining the Fair Market Value during the Reference Period would not be in the best interest of the Holders. In the event any such distribution consists of shares of capital stock of, or similar equity interests in, one or more of the Company's Subsidiaries (a "Spin-Off"), the Fair Market Value of the securities to be distributed shall equal the average of the Sale Prices of such securities for the five consecutive Trading Days commencing on and including the sixth day of trading of those securities after the effectiveness of the Spin-Off, and the Current Market Price shall be measured for the same period. In the event, however, that an underwritten initial public offering of the securities in the Spin-Off occurs simultaneously with the Spin-Off, Fair Market Value of the securities distributed in the Spin-Off shall mean the initial public offering price of such securities and the Current Market Price shall mean the Sale Price for the Common Stock on the same Trading Day. Rights or warrants distributed by the Company to all holders of its shares of Common Stock entitling them to subscribe for or purchase shares of the Company's capital stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events ("Trigger Event"), (i) are deemed to be transferred with such shares of Common Stock, (ii) are not exercisable and (iii) are also issued in respect of future issuances of shares of Common Stock shall be deemed not to have been distributed for purposes of this Section 7(d) (and no adjustment to the Conversion Price under this Section 7(d) will be required) until the occurrence of the earliest Trigger Event. If such right or warrant is subject to subsequent events, upon the occurrence of which such right or warrant shall become exercisable to purchase different distributed assets, evidences of indebtedness or other assets, or entitle the holder to purchase a different number or amount of the foregoing or to purchase any of the foregoing at a different purchase price, then the occurrence of each such event shall be deemed to be the date of issuance and record date with respect to a new right or warrant (and a termination or expiration of the existing right or warrant without exercise by the holder thereof). In addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto, that resulted in an adjustment to the Conversion Price under this Section 7(d): (1) in the case of any such rights or warrants which shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Price shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder of shares of Common Stock with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of shares of Common Stock as of the date of such redemption or repurchase; and 12 (2) in the case of such rights or warrants which shall have expired or been terminated without exercise, the Conversion Price shall be readjusted as if such rights and warrants had never been issued. For purposes of this Section 7(d) and Sections 7(a), 7(b) and 7(c) hereof, any dividend or distribution to which this Section 7(d) is applicable that also includes (i) shares of Common Stock, (ii) a subdivision or combination of shares of Common Stock to which Section 7(b) hereof applies or (iii) rights or warrants to subscribe for or purchase shares of Common Stock to which Section 7(c) hereof applies (or any combination thereof), shall be deemed instead to be: (1) a dividend or distribution of the evidences of indebtedness, assets, shares of capital stock, rights or warrants, other than such shares of Common Stock, such subdivision or combination or such rights or warrants to which Sections 7(a), 7(b) and 7(c) hereof apply, respectively (and any Conversion Price reduction required by this Section 7(d) with respect to such dividend or distribution shall then be made), immediately followed by (2) a dividend or distribution of such shares of Common Stock, such subdivision or combination or such rights or warrants (and any further Conversion Price reduction required by Sections 7(a), 7(b) and 7(c) hereof with respect to such dividend or distribution shall then be made), except: (A) the record date of such dividend or distribution shall be substituted as (i) "the date fixed for the determination of stockholders entitled to receive such dividend or other distribution," "record date fixed for such determinations" and "record date" within the meaning of Section 7(a) hereof, (ii) "the day upon which such subdivision becomes effective" and "the day upon which such combination becomes effective" within the meaning of Section 7(b) hereof, and (iii) as "the date fixed for the determination of stockholders entitled to receive such rights or warrants," "the record date fixed for the determination of the stockholders entitled to receive such rights or warrants" and such "record date" within the meaning of Section 12.3(c) hereof; and (B) any shares of Common Stock included in such dividend or distribution shall not be deemed "outstanding at the close of business on the date fixed for such determination" within the meaning of Section 7(a) hereof and any reduction or increase in the number of shares of Common Stock resulting from such subdivision or combination shall be disregarded in connection with such dividend or distribution. In the event of any distribution referred to in this Section 7(d) in which (1) the Fair Market Value (as determined by the Board of Directors) of such distribution applicable to one share of Common Stock (determined as provided above) equals or exceeds the average of the Sale Prices of the Common Stock over the ten consecutive Trading Day period ending on the Record Date for such distribution or (2) the average of the Sale Prices of the Common Stock over the ten consecutive Trading Day period ending on the record date for such distribution exceeds the Fair Market Value of such distribution by less than $1.00, then, in each such case, in lieu of an adjustment to the Conversion Price, adequate provision shall be made so that each Holder shall have the right to receive upon conversion of a Notes, in addition to shares of Common Stock, the kind and amount of such distribution such Holder would have received had such Holder converted such Notes immediately prior to the record date for determining the shareholders entitled to receive the distribution. In the event of any distribution referred to in Section 7(c) or 7(d) hereof, where, in the case of a distribution described in Section 7(d) hereof, the Fair Market Value of such distribution per share of Common Stock (as determined by the Board of Directors) exceeds 10% of the Sale Price of a share of Common Stock on the Business Day immediately preceding the declaration date for such distribution, then, if such distribution would also trigger a conversion right under Section 5(b) hereof or the Notes are otherwise convertible pursuant to Sections 5 through 16 hereof, the Company will be required to give notice to the Holders of Notes at least 20 days prior to the Ex-Dividend Time for the distribution and, upon the giving of notice, the Notes may be surrendered for conversion at any time on and after the date that the Company gives notice to the Holders of such conversion right, until the close of business on the Business Day prior to the Ex-Dividend Time or the Company announces that such distribution will not take place. No adjustment to the Conversion Price or the ability of a Holder of a Note to convert will be made if the Holder will otherwise participate in such distribution without conversion. 13 (e) In case the Company shall, at any time or from time to time while any of the Notes are outstanding, by dividend or otherwise, distribute to all holders of its shares of Common Stock, cash (excluding any cash that is distributed upon a reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance to which Section 8 hereof applies or as part of a distribution referred to in Section 7(d) hereof), in an aggregate amount that, combined together with: (1) the aggregate amount of any other such distributions to all holders of shares of Common Stock made exclusively in cash within the 12 months preceding the date of payment of such distribution, and in respect of which no adjustment pursuant to this Section 7(e) has been made; and (2) the aggregate amount of any cash, plus the Fair Market Value (as determined by the Board of Directors) of consideration payable in respect of any tender offer by the Company or any of its Subsidiaries for all or any portion of the shares of Common Stock concluded within the 12 months preceding the date of such distribution, and in respect of which no adjustment pursuant to Section 7(f) hereof has been made; exceeds 10% of the product of the Current Market Price of the Common Stock on the record date with respect to such distribution, times the number of shares of Common Stock outstanding on such date, then, and in each such case, immediately after the close of business on such date, the Conversion Price shall be reduced so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on such record date by a fraction: (1) the numerator of which shall be equal to the Current Market Price on the record date, less an amount equal to the quotient of (x) the excess of such combined amount over such 10% and (y) the number of shares of Common Stock outstanding on the record date; and (2) the denominator of which shall be equal to the Current Market Price on such date. However, in the event that the then Fair Market Value (as so determined) of the portion of cash and other securities, if any, so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price on the record date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Holder shall have the right to receive upon conversion of a Note (or any portion thereof) the amount of cash in excess of such 10% such Holder would have received had such Holder converted such Notes (or portion thereof) immediately prior to such record date. In the event that such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such dividend or distribution had not been declared. (f) In case a tender offer made by the Company or any of its Subsidiaries for all or any portion of the shares of Common Stock shall expire and such tender offer (as amended upon the expiration thereof) shall require the payment to stockholders (based on the acceptance (up to any maximum specified in the terms of the tender offer) of shares tendered) of an aggregate consideration having a Fair Market Value (as determined by the Board of Directors) that combined together with: 14 (1) the aggregate amount of the cash, plus the Fair Market Value (as determined by the Board of Directors), as of the expiration of such tender offer, of consideration payable in respect of any other tender offers, by the Company or any of its Subsidiaries for all or any portion of the shares of Common Stock expiring within the 12 months preceding the expiration of such tender offer and in respect of which no adjustment pursuant to this Section 7(f) has been made; and (2) the aggregate amount of any distributions to all holders of shares of Common Stock made exclusively in cash within 12 months preceding the expiration of such tender offer and in respect of which no adjustment pursuant to Section 7(e) hereof has been made; exceeds 10% of the product of the Current Market Price of the Common Stock as of the last time (the "Expiration Time") tenders could have been made pursuant to such tender offer (as it may be amended), times the number of shares of Common Stock outstanding (including any tendered shares) on the Expiration Time (such excess, the "Excess Amount"), then, and in each such case, immediately prior to the opening of business on the day after the date of the Expiration Time, the Conversion Price shall be adjusted so that the same shall equal the price determined by multiplying the Conversion Price in effect immediately prior to the close of business on the date of the Expiration Time by a fraction: (1) the numerator of which shall be the (x) the product of (i) the number of shares of Common Stock outstanding (including any tendered shares) at the Expiration Time and (ii) the Current Market Price of the Common Stock at the Expiration Time, less (y) the Excess Amount; and (2) the denominator shall be the product of the number of shares of Common Stock outstanding (including any tendered shares) at the Expiration Time and the Current Market Price of the Common Stock at the Expiration Time. Such reduction (if any) shall become effective immediately prior to the opening of business on the Business Day following the Expiration Time. In the event that the Company is obligated to purchase shares pursuant to any such tender offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all or a portion of such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such (or such portion of the) tender offer had not been made. If the application of this Section 7(f) to any tender offer would result in an increase in the Conversion Price, no adjustment shall be made for such tender offer under this Section 7(f). (g) The Company shall be entitled to make such additional reductions in the Conversion Price, in addition to those required by Sections 7(a), (b), (c), (d), (e) and (f) hereof, as shall be necessary in order that any dividend or distribution of Common Stock, any subdivision, reclassification or combination of shares of Common Stock or any issuance of rights or warrants referred to above shall not be taxable to the holders of Common Stock for United States federal income tax purposes. (h) To the extent permitted by applicable law, the Company may, from time to time, reduce the Conversion Price by any amount for any period of time, if such period is at least 20 days and the reduction is irrevocable during the period. Whenever the Conversion Price is reduced pursuant to the preceding sentence, the Company shall mail to the Trustee and each Holder at the address of such Holder as it appears in the register of the Notes maintained by the Registrar, at least 15 days prior to the date the reduced Conversion Price takes effect, a notice of the reduction stating the reduced Conversion Price and the period during which it will be in effect. (i) In any case in which this Section 7 shall require that any adjustment be made effective as of or retroactively immediately following a record date, the Company may elect to defer (but only for five Trading Days following the filing of the statement referred to in Section 9 hereof) issuing to the Holder of any Notes converted after such record date the shares of Common Stock issuable upon such conversion over and above the shares of Common Stock issuable upon such conversion on the basis of the Conversion Price prior to adjustment; provided, however, that the Company shall deliver to such Holder a -------- ------- due bill or other appropriate instrument evidencing such Holder's right to receive such additional shares upon the occurrence of the event requiring such adjustment. 15 (j) All calculations under this Section 7 shall be made to the nearest cent or one-hundredth of a share, with one-half cent and 0.005 of a share, respectively, being rounded upward. Notwithstanding any other provision of this Section 7, the Company shall not be required to make any adjustment of the Conversion Price unless such adjustment would require an increase or decrease of at least 1% of such price. Any lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustment or adjustments so carried forward, shall amount to an increase or decrease of at least 1% in such price. Any adjustments under this Section 7 shall be made successively whenever an event requiring such an adjustment occurs. (k) In the event that at any time, as a result of an adjustment made pursuant to this Section 7, the Holder of any Notes thereafter surrendered for conversion shall become entitled to receive any shares of stock of the Company other than shares of Common Stock into which the Notes originally were convertible, the Conversion Price of such other shares so receivable upon conversion of any such Notes shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in subparagraphs (a) through (k) of this Section 7, and the provisions of Sections 5, 6 and 8 through 12.13 hereof with respect to the Common Stock shall apply on like or similar terms to any such other shares and the determination of the Board of Directors as to any such adjustment shall be conclusive. (l) No adjustment shall be made pursuant to this Section 7 if the effect thereof would be to reduce the Conversion Price below the par value (if any) of the Common Stock or (ii) if the Holders of the Notes may participate in the transaction that would otherwise give rise to an adjustment pursuant to this Section 7. SECTION 8. Consolidation or Merger of the Company. If any of the following events occurs, namely: (1) any reclassification or change of the outstanding Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination); (2) any merger, consolidation, statutory share exchange or combination of the Company with another corporation as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock; or (3) any sale or conveyance of the properties and assets of the Company as, or substantially as, an entirety to any other corporation as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock; the Company or the successor or purchasing corporation, as the case may be, shall execute with the Trustee a supplemental indenture (which shall comply with the Trust Indenture Act as in force at the date of execution of such supplemental indenture, if such supplemental indenture is then required to so comply) providing that the Notes shall be convertible into the kind and amount of shares of stock and other securities or property or assets (including cash) which such Holder would have been entitled to receive upon such reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance had such Notes been converted into Common Stock immediately prior to such reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance assuming such holder of Common Stock did not exercise its rights of election, if any, as to the kind or amount of securities, cash or other property receivable upon such merger, consolidation, statutory share exchange, sale or conveyance (provided, that if the kind or amount of securities, cash or other property receivable upon such merger, consolidation, statutory share exchange, sale or conveyance is not the same for each share of Common Stock in respect of which such rights of election shall not have been exercised ("Non-Electing Share"), then for the purposes of this Section 8, the kind and amount of securities, cash or other property receivable upon such merger, consolidation, statutory share exchange, sale or conveyance for each Non-Electing Share shall be deemed to be the kind and amount so receivable per share by a plurality of the Non-Electing Share). Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in these Sections 5 through 16 hereof. If, in the case of any such reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance, the stock or other securities and assets receivable thereupon by a holder of Common Stock includes shares of stock or other securities and assets of a corporation other than the successor or purchasing corporation, as the case may be, in such reclassification, change, merger, consolidation, statutory share exchange, combination, sale or conveyance, then such supplemental indenture shall also be executed by such other corporation and shall contain such additional provisions to protect the interests of the Holders of the Notes as the Board of Directors shall reasonably consider necessary by reason of the foregoing, including to the extent practicable the provisions providing for the repurchase rights set forth in Sections 5 through 16 hereof. 16 The Company shall cause notice of the execution of such supplemental indenture to be mailed to each Holder, at the address of such Holder as it appears on the register of the Notes maintained by the Registrar, within 20 days after execution thereof. Failure to deliver such notice shall not affect the legality or validity of such supplemental indenture. The above provisions of this Section 8 shall similarly apply to successive reclassifications, mergers, consolidations, statutory share exchanges, combinations, sales and conveyances. If this Section 8 applies to any event or occurrence, Section 7 hereof shall not apply. SECTION 9. Notice of Adjustment. Whenever an adjustment in the Conversion Price with respect to the Notes is required: (1) the Company shall forthwith place on file with the Trustee and the Conversion Agent a certificate of the Treasurer of the Company, stating the adjusted Conversion Price determined as provided herein and setting forth in reasonable detail such facts as shall be necessary to show the reason for and the manner of computing such adjustment; and (2) a notice stating that the Conversion Price has been adjusted and setting forth the adjusted Conversion Price shall forthwith be given by the Company or, at the Company's written request, by the Trustee in the name and at the expense of the Company, to each Holder by first class mail to his address shown on the Register kept by the Registrar. Any notice so given shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. SECTION 10. Notice in Certain Events. In case: (1) of a consolidation or merger to which the Company is a party and for which approval of any stockholders of the Company is required, or of the sale or conveyance to another Person or entity or group of Persons or entities acting in concert as a partnership, limited partnership, syndicate or other group (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of all or substantially all of the property and assets of the Company; or (2) of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or 17 (3) of any action triggering an adjustment of the Conversion Price referred to in clauses (x) or (y) below; then, in each case, the Company shall cause to be filed with the Trustee and the Conversion Agent, and shall cause to be given, to the Holders of the Notes in the manner provided in Section by first class mail to his address shown on the Register kept by the Registrar, at least 15 days prior to the applicable date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of any distribution or grant of rights or warrants triggering an adjustment to the Conversion Price pursuant to these Sections 5 through 16 hereof, or, if a record is not to be taken, the date as of which the holders of record of Common Stock entitled to such distribution, rights or warrants are to be determined, or (y) the date on which any reclassification, consolidation, merger, sale, conveyance, dissolution, liquidation or winding up triggering an adjustment to the Conversion Price pursuant to these Sections 5 through 16 hereof is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger sale, conveyance, dissolution, liquidation or winding up. Failure to give such notice or any defect therein shall not affect the legality or validity of the proceedings described in clause (1), (2) or (3) of this Section 10. SECTION 11. Company to Reserve Stock; Registration; Listing. (a) The Company shall, in accordance with the laws of the State of Delaware, at all times reserve and keep available, free from preemptive rights, out of its authorized but unissued shares of Common Stock, for the purpose of effecting the conversion of the Notes, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all Notes then Outstanding into such Common Stock at any time (assuming that, at the time of the computation of such number of shares or securities, all such Notes would be held by a single Holder); provided, however, that nothing contained herein shall preclude the Company from satisfying its obligations in respect of the conversion of the Notes by delivery of purchased shares of Common Stock which are then held in the treasury of the Company. The Company covenants that all shares of Common Stock which may be issued upon conversion of the Notes will upon issue be fully paid and nonassessable and free from all liens and charges and, except as provided in Section 12 hereof, taxes with respect to the issue thereof. (b) If any shares of Common Stock which would be issuable upon conversion of Notes hereunder require registration with or approval of any governmental authority before such shares or securities may be issued upon such conversion, the Company will in good faith and as expeditiously as possible endeavor to cause such shares or securities to be duly registered or approved, as the case may be. The Company further covenants that so long as the Common Stock shall be listed on the New York Stock Exchange, the Company will, if permitted by the rules of such exchange, list and keep listed all Common Stock issuable upon conversion of the Notes, and the Company will endeavor to list the shares of Common Stock required to be delivered upon conversion of the Notes prior to such delivery upon any other national securities exchange upon which the outstanding Common Stock is listed at the time of such delivery. SECTION 12. Taxes on Conversion. The issue of stock certificates on conversion of the Notes shall be made without charge to the converting Holder for any documentary, stamp or similar issue or transfer taxes in respect of the issue thereof, and the Company shall pay any and all documentary, stamp or similar issue or transfer taxes that may be payable in respect of the issue or delivery of shares of Common Stock on conversion of the Notes pursuant hereto. The Company shall not, however, be required to pay any such tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock or the portion, if any, of the Notes which are not so converted in a name other than that in which the Notes so converted were registered, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Company the amount of such tax or has established to the satisfaction of the Company that such tax has been paid. 18 SECTION 13. Conversion After Record Date. Except as provided below, if any Notes are surrendered for conversion on any day other than an Interest Payment Date, the Holder of such Notes shall not be entitled to receive any Interest that has accrued on such Notes since the prior Interest Payment Date. By delivery to the Holder of the number of shares of Common Stock or other consideration issuable upon conversion in accordance with these Sections 5 through 16 hereof, any accrued and unpaid Interest on such Notes will be deemed to have been paid in full. If any Notes are surrendered for conversion subsequent to the Regular Record Date preceding an Interest Payment Date but on or prior to such Interest Payment Date, the Holder of such Notes at the close of business on such Regular Record Date shall receive the Interest payable on such Notes on such Interest Payment Date notwithstanding the conversion thereof. Notes surrendered for conversion during the period from the close of business on any Regular Record Date preceding any Interest Payment Date to the opening of business on such Interest Payment Date shall (except in the case of Notes which have been called for redemption on a Redemption Date within such period) be accompanied by payment by Holders, for the account of the Company, in New York Clearing House funds or other funds of an amount equal to the Interest payable on such Interest Payment Date on the Notes being surrendered for conversion; provided, however, that the Holders shall not be required to make any such payment with respect to any Notes being surrendered for conversion that the Company has called for redemption pursuant to Section 4 hereof prior to such conversion if the Redemption Date will be on or prior to the third Business Day after such Interest Payment Date. Except as provided in this Section 13, no adjustments in respect of payments of Interest on Notes surrendered for conversion or any dividends or distributions or interest on the Common Stock issued upon conversion shall be made upon the conversion of any Notes. SECTION 14. Company Determination Final. Any determination that the Company or the Board of Directors must make pursuant to these Sections 5 through 16 hereof shall be conclusive if made in good faith and in accordance with the provisions of these Sections 5 through 16 hereof, absent manifest error, and set forth in a Board Resolution. SECTION 15. Responsibility of Trustee for Conversion Provisions. The Trustee, in its capacity as trustee, has no duty to determine when an adjustment under these Sections 5 through 16 hereof should be made, how it should be made or what it should be. The Trustee makes no representation as to the validity or value of any securities or assets issued upon conversion of the Notes. The Trustee shall not be responsible for any failure of the Company to comply with these Sections 5 through 16 hereof. Each Conversion Agent other than the Company shall have the same protection under this Section 15 hereof as the Trustee. The rights, privileges, protections, immunities and benefits given to the Trustee under this Indenture including, without limitation, its rights to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each Paying Agent or Conversion Agent acting hereunder. SECTION 16. Unconditional Right of Holders to Convert. Notwithstanding any other provision in this Note or the Indenture, the Holder of any Note shall have the right, which is absolute and unconditional, to convert its Notes in accordance with Sections 5 through 16 hereof and to bring an action for the enforcement of any such right to convert, and such rights shall not be impaired or affected without the consent of such Holder. SECTION 17. Repurchase By the Company at the Option of the Holders. (a) Optional Repurchase Right. 19 On April 1 of 2004, 2007, 2012 and 2017 (each, an "Optional Repurchase Date"), each Holder shall have the right (each, an "Optional Repurchase Right"), at the Holder's option, to require the Company to repurchase, and upon the exercise of such right the Company shall repurchase, all of such Holder's Notes not theretofore called for redemption, or any portion of the principal amount thereof that is equal to $1,000 or an integral multiple thereof as directed by such Holder pursuant to Section 17.3 hereof (provided that no single Note may be repurchased in part unless the portion of the principal amount of such Note to be Outstanding after such repurchase is equal to $1,000 or an integral multiple thereof), at a purchase price in cash equal to 100% of the principal amount of the Note to be repurchased plus accrued and unpaid Interest, including Contingent Interest, if any, to, but excluding, such Optional Repurchase Date (the "Optional Repurchase Price"). (b) Change of Control Repurchase Right. In the event that a Change in Control shall occur, each Holder shall have the right (each, a "Change of Control Repurchase Right" and, together with the Optional Repurchase Right, each a "Repurchase Right"), at the Holder's option, but subject to the provisions of Section 17.2 hereof, to require the Company to repurchase, and upon the exercise of such right the Company shall repurchase, all of such Holder's Notes not theretofore called for redemption, or any portion of the principal amount thereof that is equal to $1,000 or an integral multiple thereof as directed by such Holder pursuant to Section 17.3 hereof (provided that no single Note may be repurchased in part unless the portion of the principal amount of such Note to be Outstanding after such repurchase is equal to $1,000 or an integral multiple thereof), on the date (the "Change of Control Repurchase Date" and, together with the Optional Repurchase Date, each a "Repurchase Date") that is a Business Day no earlier than 30 days nor later than 60 days after the date of the Company Notice at a purchase price in cash equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid Interest to, but excluding, the Change of Control Repurchase Date (the "Change of Control Repurchase Price" and, together with the Optional Repurchase Price, each a "Repurchase Price"); provided, however, that installments of Interest on Notes whose Stated Maturity is prior to or on the Change of Control Repurchase Date shall be payable to the Holders of such Notes, or one or more Predecessor Securities, registered as such on the relevant Regular Record Date according to terms and the provisions of Section 2 hereof. 17.2 Company Notice. (a) In the case of an Optional Repurchase Right, no later than 20 Business Days prior to each Optional Repurchase Date and in the case of a Change of Control Repurchase Right, no later than 30 days after the occurrence of a Change of Control, the Company shall mail a written notice (the "Company Notice") by first- class mail to the Trustee and to each Holder (and to beneficial owners as required by applicable law). The Company Notice shall include a form of notice (the "Repurchase Notice") to be completed by the Holder and delivered to the Paying Agent pursuant to Section 17.3(b) hereof, and shall state the following: (1) that it is a Company Notice pursuant to this Section; (2) in the case of a Change of Control Repurchase Right, the events causing a Change of Control and the date of such Change of Control; (3) the procedures with which such Holder must comply to exercise its right to have its Notes purchased pursuant to Section 17.1(a) or 17.1(b) hereof, including the date by which the completed Repurchase Notice pursuant to Section 17.3(b) hereof and the Notes the Holder elects to have repurchased pursuant to Section 17.1(a) or 17.1(b) hereof must be delivered to Paying Agent in order to have such Notes purchased by the Company pursuant to Section 17.1(a) or 17.1(b) hereof, as the case may be, the name and address of the Paying Agent and that the Notes as to which a Repurchase Notice has been given may be converted, if they are otherwise convertible pursuant to Sections 5 through 16 hereof, only if the completed and delivered Repurchase Notice has been withdrawn in accordance with the terms of this Note and the Indenture, the Holder's conversion rights pursuant to Sections 5 through 16 hereof, and the Conversion Rate then in effect and any adjustments thereto; (4) the Repurchase Date and the Repurchase Price; (5) that, unless the Company defaults in making payment of such Repurchase Price, Interest on the Notes surrendered for purchase by the Company will cease to accrue on and after Repurchase Date; 20 (6) the CUSIP number of the Notes; (7) if, with respect to the Optional Repurchase Right, the Company has elected to pay the Repurchase Price (or a specified percentage thereof) with Common Stock, the Company Notice shall: (i) state that each Holder will receive Common Stock with a Prevailing Market Price equal to the Repurchase Price of the Notes held by such Holder (except any cash amount to be paid in lieu of fractional shares); (ii) set forth the method of calculating the Prevailing Market Price of the Common Stock; and (iii)state that because the Prevailing Market Price of the Common Stock will be determined prior to the Repurchase Date, Holders will bear the market risk with respect to the value of Common Stock to be received from the date such Prevailing Market Price is determined to the Repurchase Date. No failure by the Company to give the foregoing Company Notice shall limit any Holder's right to exercise its rights pursuant to Section 17.1(a) or 17.1(b) hereof or affect the validity of the proceedings for the purchase of its Notes hereunder. 17.3 Delivery of Repurchase Notice; Forms of Repurchase Notice; Withdrawal of Repurchase Notice. (a) Delivery of Repurchase Notice. The Company shall deliver to all Holders (and beneficial holders of the Notes) a form of Repurchase Notice, which with respect to Holders' repurchase rights set forth in Section 17.1(a) or 17.1(b) hereof, as the case may be, shall be delivered to such Holders at least 20 Business Days prior to the Repurchase Date and, as set forth in Section 17.2 hereof shall be included in the Company Notice; provided that the delivery of such form of Repurchase Notice to the Holders shall be made in the Company's name and at the Company's expense and the text of such form of Repurchase Notice, shall be prepared by the Company pursuant to Section 17.2 hereof. (b) Form of Repurchase Notice. The form of Repurchase Notice shall provide instructions regarding procedures with which holders must comply to exercise their rights pursuant to Section 17.1 hereof and the completion of the Repurchase Notice and also shall state: (A) that it is the Repurchase Notice pursuant to Sections 17.3(a) hereof of the Notes and must be completed by the Holder and delivered to the Paying Agent (and any beneficial holder of securities), together with the delivery of the Holder's Notes for which the Holder will exercise its repurchase rights pursuant to Section 17.1 hereof, for such holder to receive the Repurchase Price; (B) the name and address of the Paying Agent to, and the date by, which the completed Repurchase Notice and Notes must be delivered in order for the holder to receive the applicable Repurchase Price; (C) the portion of the principal amount of the Notes which the Holder will deliver to be repurchased, which portion must be in principal amounts of $1,000 or an integral multiple thereof; 21 (D) any other procedures then applicable that the Holder must follow to exercise rights under Section 17 and a brief description of those rights; (E) the Repurchase Date and the Repurchase Price; (F) the procedures with which such Holder must comply to exercise its right to have its Notes purchased pursuant to Section 17.1 hereof, including the date by which the completed Repurchase Notice pursuant to Section 17.3 hereof and the Notes the Holder elects to have purchased pursuant to Section 17.1 hereof must be delivered to Paying Agent in order to have such Notes purchased by the Company pursuant to Section 17.1 hereof, the name and address of the Paying Agent and that the Notes as to which a Repurchase Notice has been given may be converted, if they are otherwise convertible pursuant to Sections 5 through 16 hereof, only if the completed and delivered Repurchase Notice has been withdrawn in accordance with the terms of the Indenture, the Holder's conversion rights pursuant to Sections 5 through 16 hereof, the Conversion Rate then in effect and any adjustments thereto; (G) the Holder's right to withdraw a completed and delivered Repurchase Notice, the procedures for withdrawing a Repurchase Notice, pursuant to clause (c) below and that Notes as to which a completed and delivered Repurchase Notice may be converted, if they are convertible only in accordance with Sections 5 through 16 hereof, if the applicable completed and delivered Repurchase Notice has been withdrawn; (H) that, unless the Company defaults in making payment on Notes for which a Repurchase Notice has been submitted, Interest on such Notes will cease to accrue on the Repurchase Date; (I) the CUSIP number of the Notes; (J) if, with respect to the Optional Repurchase Right, the Company has elected to pay the applicable Repurchase Price (or any portion thereof) in shares of Common Stock, but the Repurchase Price is ultimately to be paid to the Holder entirely in cash because any of the conditions to payment of the Repurchase Price (or any portion thereof) in Common Stock set forth in Section 17.7 hereof are not satisfied prior to the close of business on the Repurchase Date, advise the Company in the Holder's Repurchase Notice whether such Holder elects: (1) to withdraw the Repurchase Notice as to some or all of the Notes to which it relates; or (2) to receive cash in such event in respect of the entire Repurchase Price for all Notes or portions of Notes subject to such Repurchase Notice. If the Holder fails to indicate the Holder's choice with respect to the election described in this clause (J), the Holder shall be deemed to have elected to receive cash in respect of the entire Repurchase Price for all Notes subject to such Holder's Repurchase Notice. (c) Withdrawal of Repurchase Notice. Notwithstanding anything herein to the contrary, any Holder which has delivered a completed Repurchase Notice to the Paying Agent shall have the right to withdraw such Repurchase Notice, as applicable, by delivery of a written notice of withdrawal delivered to the office of the Paying Agent in accordance with the Repurchase Notice at any time prior to the close of business on the day immediately preceding the Repurchase Date specifying: 22 (A) the certificate number, if any, of the Notes in respect of which such notice of withdrawal is being submitted; (B) the principal amount of the Notes with respect to which such notice of withdrawal is being submitted; and (C) the principal amount, if any, of such Notes which remains subject to the original Repurchase Notice and which has been or will be delivered for purchase by the Company. (d) The Paying Agent shall promptly notify the Company of the receipt by it of any Repurchase Notice or written notice of withdrawal thereof. 17.4 Exercise of Repurchase Rights. (a) To exercise an Optional Repurchase Right pursuant to Section 17.1(a) hereof, a Holder must deliver to the Trustee at its offices no later than the close of business on the third Business Day prior to the Optional Repurchase Date the following: (1) a completed Repurchase Notice for Optional Repurchase Rights, the form of which is contained in Exhibit C hereto; and (2) the Notes or cause such Notes to be delivered through the facilities of DTC, as applicable, with respect to which the repurchase right is being exercised, with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer, in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing. (b) To exercise a Change of Control Repurchase Right pursuant to Section 17.1(b) hereof, a Holder must deliver to the Trustee at its offices on or prior to the close of business on the Business Day prior to the Change of Control Repurchase Date the following: (1) a completed Repurchase Notice for Change of Control Repurchase Rights, the form of which is contained in Exhibit D hereto; and (2) the Notes or cause such Notes to be delivered through the facilities of DTC, as applicable, with respect to which the repurchase right is being exercised, with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer, in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing. 17.5 The Company's Right to Elect Manner of Payment of Repurchase Price. (a) The Repurchase Price of Notes in respect of which a Repurchase Notice in respect of an Optional Repurchase Right has been given will be paid by the Company in cash, except that, the Repurchase Price of such Notes may, at the election of the Company in its sole discretion, be paid by the Company with cash or Common Stock or in any combination of cash and Common Stock, subject to the conditions set forth in this Section 17.5 and in Section 17.7 hereof. With respect to the Company Notice with respect to the Optional Repurchase Right, the Company shall designate, in the applicable Company Notice delivered pursuant to Section 17.4 hereof, whether the Company will purchase the Notes for cash or Common Stock, or, if a combination thereof, the percentages of the Repurchase Price of Notes in respect of which it will pay in cash and Common Stock; provided, however, that the Company will pay cash for fractional interests in Common Stock. For purposes of determining the existence of potential fractional interests, all Notes subject to purchase by the Company held by a Holder shall be considered together (no matter how many separate certificates are to be presented). Each Holder whose Notes are purchased pursuant to this Section 17 in respect of such Optional Repurchase Right shall receive the same percentage of cash or Common Stock in payment of the Repurchase Price for such Notes, except (i) as provided in Section 17.7 hereof with regard to the payment of cash in lieu of fractional Common Stock and (ii) if the Company is unable to purchase the Notes of a Holder or Holders for Common Stock because any necessary qualifications or registrations of the Common Stock under applicable state securities laws cannot be obtained, the Company may purchase the Notes of such Holder or Holders for cash. The Company may not change its election with respect to the consideration (or components or percentages of components thereof) to be paid once the Company has given its Company Notice to Holders except pursuant to this Section 17.5 or pursuant to Section 17.7 hereof in the event of a failure to satisfy, prior to the close of business on the Repurchase Date, any condition to the payment of the Repurchase Price, in whole or in part, in Common Stock. 23 (b) Not less than five Business Days before the date the Company Notice is furnished, the Company shall deliver an Officer's Certificate to the Trustee specifying: (1) the manner of payment selected by the Company; (2) the information required by Section 17.4(a) hereof; (3) if, with respect to the Optional Repurchase Right, the Company elects to pay the Repurchase Price, or a specified percentage thereof, in Common Stock, that the conditions to such manner of payment set forth in Section 17.7 hereof have been or will be complied with; and (4) whether the Company desires the Trustee to give the Company Notice required by Section 17.4(a) hereof. 17.6 Purchase With Cash. On each Repurchase Date in respect of an Optional Repurchase Right, at the option of the Company, the Repurchase Price of Notes in respect of which a Repurchase Notice pursuant to Section 17.4(b) hereof has been given, or a specified percentage thereof, may be paid by the Company with cash equal to the aggregate Repurchase Price of such Notes. 17.7 Payment by Issuance of Common Stock. On each Repurchase Date in respect of the Optional Repurchase Right, at the option of the Company, the Repurchase Price of Notes in respect of which a Repurchase Notice pursuant to Section 17.4(b) hereof has been given, or a specified percentage thereof, may be paid by the Company by the issuance to the Holder(s) of such Notes of a number of shares of Common Stock equal to the quotient obtained by dividing (i) the amount of cash to which the Holder(s) would have been entitled had the Company elected to pay all or such specified percentage, as the case may be, of the Repurchase Price of such Notes in cash by (ii) the "Prevailing Market Price"(as defined below) of a share of Common Stock, subject to the next succeeding paragraph. The Company will not issue any fractional shares of Common Stock in payment of the Repurchase Price. Instead the Company will pay cash for the pro rata value of the fractional share, which shall be calculated in accordance with the next sentence of this paragraph. The pro rata value of a fraction of a share of Common Stock shall be determined by multiplying the Prevailing Market Price by such fraction and rounding the product to the nearest whole cent with one-half cent being rounded upwards. If a Holder elects to have more than one Note repurchased, the number of shares of Common Stock shall be based on the aggregate amount of Notes to be repurchased. The Company's right, with respect to the Optional Repurchase Right, to exercise its election to purchase a percentage of the Notes pursuant to this Section 17 by issuing shares of Common Stock shall be conditioned upon: 24 (1) the Company's not having given its Company Notice of an election to pay entirely in cash and its giving of timely Company Notice of election to purchase all or a specified percentage of the Notes with Common Stock as provided herein; (2) the Company's having listed the Common Stock to be issued in respect of the Repurchase Price on the principal United Stated securities exchange on which the Company's Common Stock is then listed or, if not so listed, on Nasdaq; (3) the registration of the Common Stock to be issued in respect of the payment of the Repurchase Price under the Securities Act or the Exchange Act, in each case, if required for the initial issuance thereof; (4) any necessary qualification or registration under applicable state securities laws or the availability of an exemption from such qualification and registration; and (5) the receipt by the Trustee of an Officer's Certificate and an Opinion of Counsel each stating that (A) the terms of the issuance of the Common Stock are in conformity with this Indenture and (B) the shares of Common Stock to be issued by the Company in payment of a percentage of the Repurchase Price in respect of Notes have been duly authorized and, when issued and delivered pursuant to the terms of this Note in payment of the Repurchase Price in respect of the Notes, will be validly issued, fully paid and nonassessable and, to such counsel's knowledge, free from preemptive rights, and, in the case of such Officer's Certificate, stating that conditions (i), (ii) and (iii) above and the condition set forth in the second sentence of the immediately following paragraph have been satisfied and, in the case of such Opinion of Counsel, stating that conditions (ii) and (iii) above have been satisfied. Such Officer's Certificate shall also set forth the number of shares of Common Stock to be issued for each $1,000 Principal Amount of Notes, and an explanation setting forth in reasonable detail the calculation used to derive such number of shares and the amount of cash to be paid for each $1,000 Principal Amount of Notes. With respect to the Optional Repurchase Right, the Company may pay the Repurchase Price (or any portion thereof) in Common Stock only if the information necessary to calculate the Prevailing Market Price is published in The Wall Street Journal or another daily newspaper of national circulation. If the conditions set forth in this paragraph and the immediately preceding paragraph are not satisfied with respect to a Holder or Holders prior to the close of business on the Repurchase Date and the Company has elected to repurchase the Notes pursuant to this Section 17 through the issuance of Common Stock, the Company shall pay, without further notice, the entire Repurchase Price of the Notes of such Holder or Holders in cash. 17.8 Deposit and Payment of the Applicable Repurchase Price. The Company shall deposit cash (in respect of a cash purchase or for fractional shares of Common Stock, as applicable), or a combination of Common Stock and cash, as applicable. (a) If a Holder has exercised its rights pursuant to Section 17.1(a) or 17.1(b) hereof and has satisfied the conditions for the exercise of such rights in accordance with Section 17.4(a) or 17.4(b) hereof, as the case may be, then the Company shall, prior to 10:00 a.m. (New York City time) on the Business Day following the applicable Repurchase Date deposit with the Trustee or with the Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust) an amount of money in immediately available funds if deposited on such Business Day sufficient to pay the aggregate Repurchase Price of all the Notes or portions thereof which are to be purchased on such applicable Repurchase Date, and the Trustee or Paying Agent, as applicable shall pay the Holder the Repurchase Price multiplied by the principal amount of Notes for which such rights were exercised on the applicable Repurchase Date. (b) There shall be no purchase of any Notes pursuant to Section 17.1(a) or 17.1(b) hereof if there has occurred (prior to, on or after, as applicable, the giving, by the Holders of such Notes, of the required Repurchase Notice) and is continuing an Event of Default (other than a default in the payment of the Repurchase Price with respect to such Notes). The Paying Agent will promptly return to the respective Holders thereof any Notes (x) with respect to which a Repurchase Notice has been withdrawn in compliance with this Indenture, or (y) held by it during the continuance of an Event of Default (other than a default in the payment of the Repurchase Price with respect to such Securities) in which case, upon such return, the Repurchase Notice with respect thereto shall be deemed to have been withdrawn. 25 (c) If any Notes delivered for purchase pursuant to Section 17.1(a) or 17.1(b) hereof shall not be so paid on the Repurchase Date, the principal amount of such Notes shall, until it is paid, bear Interest from the purchase date to but not including the date of actual payment hereunder at the applicable Interest Rate, and each such Notes shall remain convertible into shares of Common Stock pursuant to Sections 5 through 16 hereof until such Notes shall have been paid. 17.9 Effect of Delivery of Repurchase Notice and Purchase. (a) Upon receipt by the Paying Agent of a Repurchase Notice, the Holder of the Notes in respect of which such Repurchase Notice was delivered shall (unless such Repurchase Notice is withdrawn pursuant to Section 17.3(c) hereof) thereafter be entitled to receive solely the Repurchase Price with respect to such Note, and, if applicable, any accrued and unpaid Interest pursuant to Section 2 hereof. Notes in respect of which a Repurchase Notice has been delivered by the Holder thereof may not be converted pursuant to Sections 5 through 16 hereof on or after the date of the delivery of such Repurchase Notice unless such Repurchase Notice which has been completed and delivered to the Paying Agent has first been validly withdrawn pursuant to Section 17.3(c) hereof. (b) All Notes delivered for purchase shall be canceled by the Trustee or Paying Agent, as applicable. 17.10 Physical Securities Repurchased in Part. Any Security in physical form which is to be repurchased only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder's attorney duly authorized in writing) and the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Notes, without service charge, new Notes, of any authorized denomination as requested by such Holder in principal amount equal to, and in exchange for, the portion of the principal amount of the Notes so surrendered which is not purchased. 17.11 Covenant to Comply With Securities Laws Upon Repurchase of Securities. When complying with the provisions of this Section 17 (if such offer or purchase constitutes an "issuer tender offer" for purposes of Rule 13e-4 (which term, as used herein, includes any successor provision thereto) under the Exchange Act at the time of such offer or purchase), the Company shall (a) comply with Rule 13e- 4 and Rule 14e-1 under the Exchange Act, (b) file the related Schedule TO (or any successor schedule, form or report) under the Exchange Act and (c) otherwise comply with all federal and state securities laws so as to permit the rights and obligations under this Section 17 to be exercised in the time and in the manner specified in this Article 17. 17.12 Repayment to the Company. The Trustee and the Paying Agent shall return to the Company upon written request any cash or Common Stock that remains unclaimed, together with interest or dividends, if any, thereon, held by them for the payment of the Repurchase Price; provided, however, that to the extent that the aggregate amount of cash and/or Common Stock deposited by the Company pursuant to Section 17.5 hereof exceeds the aggregate Repurchase Price of the Notes or portions thereof which the Company is obligated to purchase on the purchase date then, unless otherwise agreed in writing with the Company, promptly after the Business Day following such purchase date, the Trustee or Paying Agent, as applicable, shall return any such excess to the Company together with interest or dividends, if any, thereon. 26 SECTION 18. Tax Treatment. The Company agrees, and by acceptance of beneficial ownership interest in the Notes each beneficial holder of Notes will be deemed to have agreed, for United States federal income tax purposes (1) to treat the Notes as indebtedness that is subject to Treas. Reg. Sec. 1.1275-4 (the "Contingent Payment Regulations") and, for purposes of the Contingent Payment Regulations, to treat the fair market value of any stock beneficially received by a beneficial holder upon any conversion of the Notes as a contingent payment and (2) 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 Notes. A Holder of Notes may obtain the amount of original issue discount, issue date, yield to maturity, comparable yield and projected payment schedule by submitting a written request for it to the Company at the following address: Controller's Office, Lehman Brothers Holdings Inc., 745 Seventh Avenue, New York NY 10019. SECTION 19. Paying Agent, Conversion Agent, Calculation Agent, Registrar and Custodian. Citibank, N.A. will initially act as Paying Agent, Conversion Agent, Calculation Agent, Registrar and Custodian. The Company may appoint and change any Paying Agent, Conversion Agent, Calculation Agent, Registrar or Custodian without notice, other than notice to the Trustee; provided, that the Company will maintain at least one Paying Agent in the State of New York, City of New York, Borough of Manhattan, which shall initially be an office or agency of the Trustee. The Company or any of its Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent, Calculation Agent, Registrar or Custodian. SECTION 20. Sinking Fund. These Notes are not subject to a sinking fund. SECTION 21. Events of Default. In addition to those Events of Default set forth in Section 501 of the Indenture, each of the following will constitute an Event of Default under the Indenture with respect to the Notes: (a) the failure by the Company to convert any Notes into shares of Common Stock upon exercise of a Holder's right to convert Notes pursuant to Sections 5 through 16 hereof; and (b) the failure by the Company to pay an installment of Contingent Interest on any of the Notes for 30 days after the date when due. If any Event of Default with respect to Notes shall occur and be continuing, the principal of all the Notes may be declared due and payable in the manner and with the effect provided in the Indenture. SECTION 22. Modification or Waiver; Obligation of the Company Absolute. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of the Holders of the Notes at any time by the Company and the Trustee with the consent of the Holders of not less than a majority in principal amount of the Outstanding Notes. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the Outstanding Notes, on behalf of the Holders of all Notes, to waive, with respect to the Notes, compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. The Indenture also contains provisions prohibiting certain modifications of the Indenture without the consent of each Holder of any Security affected thereby. Any such consent or waiver by the Holder of this Note will be conclusive and binding upon such Holder and upon all future Holders of this Note and of any Notes issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. 27 Without the consent of the Holder of each Note affected thereby, no supplemental indenture or other modification to the Indenture or the rights of the Holders may: (a) impair or adversely affect the conversion rights of any holder of notes; (b) alter the manner of calculation or rate of accrual of interest, or Contingent Interest on any Note or extend the payment of any such amount; (c) except as otherwise permitted or contemplated by provisions concerning corporate reorganizations, adversely affect the repurchase option of holders upon a change of control or the conversion rights of the Holders; or (d) modify the redemption provisions of the Notes in a manner adverse to the Holders. No reference herein to the Indenture and no provision of this Note or of the Indenture will alter or impair the obligations of the Company, which are absolute and unconditional, to pay the principal of, and Interest on this Note at the times, places and rates herein prescribed and to convert this Note in accordance with the Indenture. SECTION 23. Discharge, Legal Defeasance and Covenant Defeasance. The provisions contained in the Indenture relating to defeasance will not apply to this Note. SECTION 24. Authorized Denominations. The Notes are issuable only in global or certificated registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein specified and to the limitations described below, if applicable, the Notes are exchangeable for a like aggregate principal amount of Notes with a like Stated Maturity and with like terms and conditions of a different authorized denomination, as requested by the Holder surrendering the same. SECTION 25. Registration of Transfer. As provided in the Indenture and subject to certain limitations therein specified and to the limitations described below, if applicable, the transfer of this Note is registerable in the Register upon surrender of this Note for registration of transfer at the office or agency of the Company maintained for that purpose duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Registrar (which will initially be the Trustee at its principal corporate trust office located in the Borough of Manhattan, The City of New York), duly executed by the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of authorized denominations and for the same Stated Maturity and aggregate principal amount, will be issued to the designated transferee or transferees. This Note is exchangeable for certificated Notes only upon the terms and conditions provided in the Indenture. Except as provided in the Indenture, owners of beneficial interests in this Book-Entry Note will not be entitled to receive physical delivery of Note in certificated registered form and will not be considered the Holders thereof for any purpose under the Indenture. No service charge will be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith. 28 SECTION 26. Owners. Prior to due presentment of this Note for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Note is registered as the owner hereof for all purposes, whether or not this Note be overdue and notwithstanding any notation of ownership or other writing hereon, and none of the Company, the Trustee or any such agent will be affected by notice to the contrary. SECTION 27. Governing Law. The Indenture and the Notes will be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of laws principles thereof. SECTION 28. Defined Terms. All terms used in this Note which are defined in the Indenture will have the meanings assigned to them in the Indenture unless otherwise defined herein; and all references in the Indenture to "Security" or "Securities" will be deemed to include the Notes. Set forth below are definitions of the terms used in this Note: "3-month LIBOR" means, with respect to any interest determination date: (a) the rate for 3-month deposits in United States dollars commencing on the related interest adjustment date, that appears on the Moneyline Telerate Page 3750 as of 11:00 A.M., London time, on the interest determination date, unless fewer than two such offered rates so appear; or (b) if fewer than two offered rates appear, or no rate appears, as the case may be, on the particular interest determination date on the Moneyline Telerate Page 3750, the rate calculated by the Calculation Agent of at least two offered quotations obtained by the Calculation Agent after requesting the principal London offices of each of four major reference banks in the London interbank market to provide the Calculation Agent with its offered quotation for deposits in United States dollars for the period of three months, commencing on the related interest adjustment date, to prime banks in the London interbank markets at approximately 11:00 A.M., London time, on that interest determination date and in a principal amount that is representative for a single transaction in United States dollars in that market at that time, or (c) if fewer than two offered quotations referred to in clause (b) are provided as requested, the rate calculated by the Calculation Agent as the arithmetic mean of the rates quoted at approximately 11:00 A.M., New York time, on the particular interest determination date by three major banks in the City of New York selected by the Calculation Agent for loans in United States dollars to leading European banks for a period of three months and in a principal amount that is representative for a single transaction in United States dollars in that markets at that time, or (d) if the banks so selected by the Calculation Agent are not quoting as mentioned in clause (c), 3-month LIBOR in effect immediately prior to the particular interest determination date. "Adjusted Spread" means, with respect to any Reset Transaction, the arithmetic average of the spreads, expressed as a percentage, from 3-month LIBOR quoted by two Reference Dealers selected by the Company or its successor as the spread from the 3-month LIBOR then being used to calculate the Regular Interest Rate which should be used in calculating the rate at which Regular Interest on the Notes should accrue so that, in the judgment of such Reference Dealers, the Trading Price, expressed in dollars, of the Notes immediately after the later of: (a) the public announcement of such Reset Transaction; or (b) the public announcement of a change in dividend policy in connection with such Reset Transaction, 29 would equal most closely the average Trading Price of the Notes for the 20 Trading Days preceding the date of such public announcement; provided that, in no event will the Adjusted Spread be more than the Initial Spread; that is, in no event will the rate of Regular Interest borne by the Notes at any time after July 1, 2002 be less than the greater of (a) zero and (b) 3-month LIBOR, determined as provided above, minus 0.90%. As used herein, the term "Reference Dealer" means a nationally recognized securities dealer engaged in the trading of convertible securities. "Business Day" means any day, other than a Saturday or Sunday, that is neither a legal holiday nor a day on which commercial banks are authorized or required by law, regulation or executive order to close in The City of New York. "Capital Stock" means, with respect to any Person, any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests (however designated) in equity of such Person, whether now outstanding or issued after March 26, 2002, including, without limitation, all common stock and preferred stock. "Change of Control" shall be deemed to have occurred at such time after the original issuance of the Notes when any of the following has occurred: (1) the acquisition by any "person", including any syndicate or group deemed to be a "person" under Section 13(d)(3) of the Exchange Act, as amended, of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of purchase, merger or other acquisition transactions of shares of the Company's Capital Stock entitling such person to exercise 50% or more of the total voting power of all shares of the Company's Capital Stock entitled to vote generally in elections of directors, other than any acquisition by the Company, any of its Subsidiaries or any of its employee benefit plans (except that such person shall be deemed to have beneficial ownership of all securities that such person has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition); (2) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors; or (3) any consolidation or merger of the Company with or into any other person (which for purposes of this definition has the meaning set forth in Section 13(d)(3) of the Exchange Act), any merger of another person into the Company, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of the properties and assets of the Company to another person, other than in each case (x) any transaction (i) that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of Capital Stock of the Company and (ii) pursuant to which holders of Capital Stock of the Company immediately prior to such transaction have the entitlement to exercise, directly or indirectly, 50% or more of the total voting power of all shares of Capital Stock of the Company entitled to vote generally in the election of directors of the continuing or surviving person immediately after such transaction or (y) any such merger solely for the purpose of changing the jurisdiction of incorporation of the Company and resulting in a reclassification, conversion or exchange of outstanding Common Stock solely into shares of the common stock of the surviving entity; provided, however, that a Change of Control shall not be deemed to have occurred if the Sale Price per share of the Common Stock for any five Trading Days within the period of 10 consecutive Trading Days ending immediately after the later of the Change of Control or the public announcement of the Change of Control, in the case of a Change of Control under clause (1) above, or the period of 10 consecutive Trading Days ending immediately before the Change of Control, in the case of a Change of Control under clause (2) above, shall equal or exceed 110% of the Conversion Price of the Notes in effect on each such Trading Day or at least 90% of the consideration in the transaction or transactions constituting a Change of Control consists of shares of Common Stock traded or to be traded immediately following such Change of Control on a national securities exchange or the Nasdaq National Market and, as a result of the transaction or transactions, the Notes become convertible solely into such Common Stock (and any rights attached thereto). 30 "Continuing Directors" means, as of any date of determination, any member of the Board of Directors of the Company who (i) was a member of the Board of Directors on March 26, 2002 or (ii) was nominated for election or elected to the Board of Directors with the approval of two-thirds of the Continuing Directors who were members of the Board of Directors at the time of a new director's nomination or election. "Conversion Agent" means any Person authorized by the Company to convert the Notes in accordance with Section 5 though 16 hereof. Initially, the Conversion Agent shall be Citibank, N.A. "Conversion Date" means, with respect to any Holder, the date on which such Holder has satisfied all the requirements to convert its Notes. "Conversion Period" means the period from and including the 30th Trading Day in a fiscal quarter to, but not including, the 30th Trading Day in the immediately following fiscal quarter. "Conversion Price" means the principal amount of Notes that can be exchanged for one share of Common Stock (initially approximately $96.10), subject to adjustments set forth herein. "Conversion Rate" means the number of shares of Common Stock into which each $1,000 principal amount of Notes is convertible (which is initially 10.4062), rounded to four decimal places (rounded up if the fifth decimal place thereof 5 or more or otherwise rounded down). "Conversion Value" means, on any day, the product of the Sale Price for the Common Stock on such day multiplied by the then-current Conversion Rate. "Current Market Price" on any date means the average of the daily Sale Prices per share of Common Stock for the ten consecutive Trading Days immediately prior to such date; provided, however, that if: (1) the "ex" date (as hereinafter defined) for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 7(a), (b), (c), (d), (e) or (f) hereof occurs during such ten consecutive Trading Days, the Sale Price per share of Common Stock for each Trading Day prior to the "ex" date for such other event shall be adjusted by dividing such Sale Price by the same fraction by which the Conversion Price is so required to be adjusted as a result of such other event; (2) the "ex" date for any event (other than the issuance or distribution requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 7a), (b), (c), (d), (e) or (f) hereof occurs on or after the "ex" date for the issuance or distribution requiring such computation and prior to the day in question, the Sale Price per share of Common Stock for each Trading Day on and after the "ex" date for such other event shall be adjusted by dividing such Sale Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such other event; and (3) the "ex" date for the issuance or distribution requiring such computation is prior to the day in question, after taking into account any adjustment required pursuant to clause (1) or (2) of this proviso, the Sale Price per share of Common Stock for each Trading Day on or after such "ex" date shall be adjusted by adding thereto the amount of any cash and the Fair Market Value (as determined by the Board of Directors in a manner consistent with any determination of such value for purposes of Section 7d), (e) or (f) hereof) of the evidences of indebtedness, shares of capital stock or assets being distributed applicable to one share of Common Stock as of the close of business on the day before such "ex" date. 31 For purposes of any computation under Section 7 hereof, if the "ex" date for any event (other than the tender offer requiring such computation) that requires an adjustment to the Conversion Price pursuant to Section 7(a, (b), (c), (d), (e) or (f) hereof occurs on or after the Expiration Time for the tender or exchange offer requiring such computation and prior to the day in question, the Sale Price per share of Common Stock for each Trading Day on and after the "ex" date for such other event shall be adjusted by dividing such Sale Price by the reciprocal of the fraction by which the Conversion Price is so required to be adjusted as a result of such other event. For purposes of this paragraph, the term "ex" date, when used: (1) with respect to any issuance or distribution, means the first date on which the shares of Common Stock trade regular way on the relevant exchange or in the relevant market from which the Sale Price of the Common Stock was obtained without the right to receive such issuance or distribution; (2) with respect to any subdivision or combination of shares of Common Stock, means the first date on which the shares of Common Stock trade regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective; and (3) with respect to any tender or exchange offer, means the first date on which the shares of Common Stock trade regular way on such exchange or in such market after the Expiration Time of such offer. Notwithstanding the foregoing, whenever successive adjustments to the Conversion Price are called for pursuant to this Section 7 such adjustments shall be made to the Current Market Price as may be necessary or appropriate to effectuate the intent of this Section 7 and to avoid unjust or inequitable results as determined in good faith by the Board of Directors. "Dividend Yield" on any security for any period means the dividends paid or proposed to be paid pursuant to an announced dividend policy on such security for such period divided by, if with respect to dividends paid on such security, the average Sale Price of such security during such period and, if with respect to dividends proposed to be paid on such security, the Sale Price of such security on the effective date of the related Reset Transaction. "Ex-Dividend Time" means, with respect to any issuance or distribution on shares of Common Stock, the first date on which the shares of Common Stock trade regular way on the principal securities market on which the shares of Common Stock are then traded without the right to receive such issuance or distribution. "Fair Market Value" shall mean the amount which a willing buyer would pay a willing seller in an arm's length transaction (as determined by the Board of Directors, whose determination shall be conclusive). "London banking day" means a day on which commercial banks are open for business, including dealings in United States dollars, in London. "Moneyline Telerate Page 3750" means the display on Moneyline Telerate (or any successor service) on such page (or any other page as may replace such page on such service) for the purpose of displaying the London interbank rates of major banks for United States dollars. "Prevailing Market Price" means the average of the " volume weighted daily average" Sale Prices (as defined above) of the Common Stock for the 10 Trading Days ending on the Business Day immediately prior to the applicable Repurchase Date (or, if such Business Day immediately prior to the Repurchase Date is not a Trading Day, the 10 Trading Day period will end on the last Trading Day ending immediately prior to the Business Day immediately preceding the Repurchase Date), appropriately adjusted to take into account the occurrence, during the period commencing on the first of such Trading Days during such 10 Trading Day period and ending on such Repurchase Date, of any event described in Section 7 hereof. 32 "record date" shall mean, with respect to any dividend, distribution or other transaction or event in which the holders of shares of Common Stock have the right to receive any cash, securities or other property or in which the shares of Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of stockholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise). "Reset Transaction" means any of (1) a merger, consolidation or statutory share exchange to which the entity that is the issuer of the shares of the common stock into which the Notes are then convertible is a party, (2) a sale of all or substantially all the assets of that entity, (3) a recapitalization of that common stock or (4) a distribution contemplated by Section 7(d) hereof, in any case, after the effective date of which transaction or distribution the Notes would be convertible into either: (a) shares of an entity, the common stock of which had a Dividend Yield for the four fiscal quarters of such entity immediately preceding the public announcement of such transaction or distribution that was more than 2.5% higher than the Dividend Yield on the Common Stock (or other common stock then issuable upon a conversion of the Notes) for the four fiscal quarters preceding the public announcement of such transaction or distribution; or (b) shares of an entity that announces a dividend policy prior to the effective date of such transaction or distribution which policy, if implemented, would result in a Dividend Yield on such entity's common stock for the next four fiscal quarters that would result in such a 2.5% increase. "Sale Price" of a security on any date of determination means: (a) the closing sale price (or, if no closing sale price is reported, the last reported sale price) of a security (regular way) on the New York Stock Exchange on that date; (b) if that security is not listed on the New York Stock Exchange on that date, the closing sale price as reported in the composite transactions for the principal U.S. securities exchange on which that security is listed; (c) if that security is not so listed on a U.S. national or regional securities exchange, the closing sale price as reported by the Nasdaq National Market; (d) if that security is not so reported, the last price quoted by Interactive Data Corporation for that security or, if Interactive Data Corporation is not quoting such price, a similar quotation service selected by us; or (e) if that security is not so quoted, the average of the mid-point of the last bid and ask prices for that security from at least two dealers recognized as market-makers for that security. "Spread", as of any date, means the Initial Spread or, if a Reset Transaction has occurred, the Adjusted Spread in effect on such date. "Trading Day" means: (a) if the applicable security is listed or admitted for trading on the New York Stock Exchange, a day on which the New York Stock Exchange is open for business; (b) if that security is not listed on the New York Stock Exchange, a day on which trades may be made on the Nasdaq National Market; 33 (c) if that security is not so listed on the New York Stock Exchange and not quoted on the Nasdaq National Market, a day on which the principal U.S. securities exchange on which the securities are listed is open for business; or (d) if the applicable security is not so listed, admitted for trading or quoted, any day other than a Saturday or a Sunday or a day on which banking institutions in the State of New York are authorized or obligated by law or executive order to close. "Trading Price" of a Note on any date of determination means, expressed as a dollar amount per $1,000 principal amount of Notes: (a) the average of the secondary market bid quotations per $1,000 principal amount of Notes obtained by the Company for $10,000,000 principal amount of the Notes at approximately 3:30 p.m., New York City time, on such determination date from three independent nationally recognized securities dealers selected by the Company; (b) if at least three such bids cannot reasonably be obtained by the Company or the Calculation Agent, but two such bids are obtained, then the average of the two bids shall be used; (c) if only one such bid can reasonably be obtained by the Company or the Calculation Agent, this one bid shall be used; or (d) if neither the Company nor the Calculation Agent can reasonably obtain at least one bid for $10,000,000 principal amount of the Notes from a nationally recognized securities dealer or, in the Company's reasonable judgment, the bid quotations are not indicative of the secondary market value of the Notes, then the trading price of the Notes will equal (i) the then-applicable Conversion Rate of the Notes multiplied by (ii) the sale price of the Company's Common Stock on such determination date. 34 ABBREVIATIONS The following abbreviations, when used in the inscription on the face of this instrument, will be construed as though they were written out in full according to applicable laws or regulations: TEN COM -as tenants in common TEN ENT -as tenants by the entireties JT TEN -as joint tenants with right of survivorship and not as tenants in common UNIF GIFT MIN ACT Custodian ....................................................... ------------------------------------------------------- (Cust) (Minor) Under Uniform Gifts to Minors Act ....................................................... ------------------------------------------------------- (State) Additional abbreviations may also be used though not in the above list. EXHIBIT B ASSIGNMENT FORM To assign this Security, fill in the form below and have your signature guaranteed: (I) or (we) assign and transfer this Security to: ------------------------------------------------------------------------------ (Insert assignee's social security or tax I.D. number) ------------------------------------------------------------------------------ (Print or type assignee's name, address and zip code) and irrevocably appoint __________ to transfer this Security on the books of the Company. The agent may substitute another to act for him. Your Name: _______________________________________________ (Print your name exactly as it appears on the face of this Security) Dated: ___________________________________________________ Your Signature: ____________________________________________________ (Sign exactly as your name appears on the face of this Security) Signature Guarantee* :______________________________________________________ EXHIBIT C REPURCHASE NOTICE FOR OPTIONAL REPURCHASE RIGHTS (1) Pursuant to Section 7 of the Floating Rate Convertible Notes due April 1, 2022 issued pursuant to the Indenture, dated as of September 1, 1987, as amended and supplemented (the "Indenture"), between the Company and Citibank, N.A., as Trustee, the undersigned hereby requests and instructs the Company to repurchase this Note, or any portion of the principal amount hereof (which is $1,000 in principal amount or an integral multiple of $1,000), below designated, in accordance with the terms and conditions specified in such Section 17. (2) The undersigned hereby directs the Trustee or the Company to pay the undersigned an amount in cash equal to 100% of the principal amount to be repurchased (as set forth below), plus accrued and unpaid Interest, including Contingent Interest, to the Optional Repurchase Date (the "Optional Repurchase Price"), as provided in the Indenture. (3) The undersigned elects (check one): to receive the Optional Repurchase Price with respect to the following portions of the following Note: Note certificate number: __________ Principal amount to be repurchased (if less than all): $__________ Remaining principal amount after repurchase: $__________ to receive the Optional Repurchase Price with respect to the full principal amount of all of the Notes that are subject to this notice. Notice: If the Holder fails to make an election, the Holder shall be deemed to have elected to receive the Optional Repurchase Price for the full principal amount of all of the Notes subject to this notice. (4) If, the Company elects, pursuant to a Company Notice, to pay the applicable Repurchase Price (or any portion thereof) in shares of Common Stock, but such portion of the Repurchase Price is ultimately to be paid to the Holder entirely in cash because any of the conditions to payment of the Repurchase Price (or any portion thereof) in Common Stock are not satisfied prior to the close of business on the Repurchase Date, I elect: to withdraw the Repurchase Notice as to [$_____] Principal Amount of Notes of the Notes to which it relates] [all of the Notes to which this Repurchase Notice relates]; or to receive cash in such event in respect of the entire Repurchase Price for all Notes or portions of Notes subject to which this Repurchase Notice relates. Dated: ___________________ _____________________________________ ------------------------------------- Signature(s) Signature(s) must be guaranteed by an Eligible Guarantor Institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. --------------------------------------- [Signature Guaranteed] If only a portion of this Notes is to be repurchased, please indicate: 1. Principal amount to be repurchased: $___________ 2. Remaining principal amount after repurchase: $-------------- --------------------------------------- Social Security or Other Taxpayer Identification Number EXHIBIT D REPURCHASE NOTICE FOR CHANGE OF CONTROL REPURCHASE RIGHTS TO: Lehman Brother Holdings Inc. [address] Pursuant to the Indenture among Lehman Brothers Holdings Inc. (the "Company") and Citibank, N.A., as Trustee, dated September 1, 1987 (the "Indenture"), as such Indenture is amended, modified or supplemented from time to time in accordance with the terms thereof, the undersigned registered owner of this Security hereby irrevocably acknowledges receipt of a notice from the Company as to the occurrence of a Change of Control (as defined in the Indenture) with respect to the Company and requests and instructs the Company to repay the entire principal amount of this Security, or the portion thereof (which is $1,000 principal amount or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Security, together with Interest accrued and unpaid to, but excluding, such date, to the registered holder hereof. Your Name: ------- (Print your name exactly as it appears on the face of this Security) Dated: ------------------------------------------------------- Your Signature: -- (Sign exactly as your name appears on the face of this Security) Social Security or other Taxpayer Identification Number: ----- Principal amount to be converted (if less than all): $ Signature Guarantee*: ----- EXHIBIT E FORM OF CONVERSION NOTICE TO: Lehman Brothers Holdings Inc. [address] Pursuant to the Indenture dated as of September 1, 1987, as amended and supplemented, between the Lehman Brothers Holdings Inc. (the "Company") and Citibank, N.A., as Trustee (the "Indenture"), as such Indenture is amended, modified or supplemented from time to time in accordance with the terms thereof, the undersigned registered owner of this Security hereby irrevocably exercises the option to convert this Security, or the portion hereof (which is $1,000 principal amount or an integral multiple thereof) below designated, into shares of Common Stock in accordance with the terms of the Indenture referred to in this Security, and directs that the shares issuable and deliverable upon such conversion, together with any check in payment for fractional shares and any Securities representing any unconverted principal amount hereof, be issued and delivered to the registered holder hereof unless a different name has been indicated below. If shares or any portion of this Security not converted are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto. To the extent provided in the Indenture, any amount required to be paid to the undersigned on account of Interest accompanies this Security. Your Name: _______________________________________________________ (Print your name exactly as it appears on the face of this Security) Dated: ____________________________________________________________ Your Signature: ____________________________________________________ (Sign exactly as your name appears on the face of this Security) Social Security or other Taxpayer Identification Number: ___________________ Principal amount to be converted (if less than all):$_______________________ Signature Guarantee*: _______________________________________________ Fill in for registration of shares (if to be issued) and Securities (if to be delivered) other than to and in the name of the registered holder: _______________________________________________________________________(Name) ------------------------------------------------------------------------- (Street Address) -------------------------------------------------------------------------- (City, State and Zip Code) - -------- * Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee). EX-4 5 f02-03_26excalc.txt EXHIBIT 4.02 CALCULATION AGENCY AGREEMENT EXHIBIT 4.02 CALCULATION AGENCY AGREEMENT BETWEEN LEHMAN BROTHERS HOLDINGS INC. AND CITIBANK, N.A. Dated as of March 26, 2002 Lehman Brothers Holdings Inc., a Delaware corporation (the "Company"), has authorized the issuance of up to $575,000,000 aggregate principal amount of its Floating Rate Convertible Notes due 2022 (the "Notes"). The Company proposes to issue the Notes under and pursuant to the terms of its Indenture dated as of September 1, 1987, as amended and supplemented (the "Indenture"), between the Company and Citibank, N.A., as Trustee (the "Trustee"). Terms not otherwise defined herein are used herein with the meanings ascribed to them in the Indenture and in the Notes. The Notes are to bear interest at rates per annum as set forth therein. For the purpose of providing for an agent of the Company (in such capacity, the "Calculation Agent") to calculate the interest rates applicable to the Notes as specified and described therein, the Company and Citibank, N.A., a national banking association, hereby agree as follows: Section 1. Appointment of Calculation Agent. The Company hereby appoints Citibank, N.A. as Calculation Agent of the Company with respect to the Notes, and Citibank, N.A. hereby accepts such appointment in such capacity and its obligations as set forth in this Agreement upon the terms and conditions set forth in this Agreement. 2 Section 2. Determinations and Other Duties of the Calculation Agent. On each Interest Determination Date for the Notes, or as soon thereafter as practicable, the Calculation Agent shall determine the applicable interest rates as provided for and contemplated by the Notes. The Calculation Agent shall notify the Company and the Trustee of such interest rates as soon as reasonably practicable after the determination thereof. The Calculation Agent shall perform such other actions and undertake such other duties of the Calculation Agent as are described in the Notes to be performed or undertaken by the Calculation Agent. The Calculation Agent shall not be responsible for calculating Contingent Interest payments. Section 3. Fees and Expenses. The Calculation Agent shall be entitled to such compensation for its services under this Agreement as may be agreed upon with the Company, and the Company shall pay such compensation and shall reimburse the Calculation Agent for all reasonable expenses and disbursements incurred or made by the Calculation Agent in connection with the services rendered by it under this Agreement (including legal fees and expenses) except any expenses, disbursements or advances attributable to its negligence or bad faith. Section 4. Rights and Liabilities of Calculation Agent. All certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions of the Notes relating to the payment and calculation of interest thereon will (in the absence of willful default, bad faith or manifest error) be binding on the Company, the Trustee, the Calculation Agent and all of the Holders of the Notes, and no liability will (in the absence of willful default, bad faith or manifest error) attach to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretion. The Calculation Agent shall incur no liability for, or in respect of, any action taken, omitted to be taken or suffered by it hereunder in reliance upon any certificate, affidavit, instruction, notice, request, direction, order, statement or other paper, document or communication reasonably believed by it to be genuine. Unless otherwise specifically provided herein, any certificate, affidavit, instruction, notice, request, direction, statement, order or other communication from the Company made or given by it and sent, delivered and directed to the Calculation Agent under, pursuant to, or as permitted by any provision of this Agreement, shall be sufficient for purposes of this Agreement if such communication is in writing and signed by any officer of the Company. The Calculation Agent may consult with counsel satisfactory to it and the opinion of such counsel shall constitute full and complete authorization and protection of the Calculation Agent with respect to any action taken, omitted to be taken or suffered by it hereunder in good faith and in accordance with and in reliance upon the opinion of such counsel. In acting under this Agreement and in connection with the Notes, the Calculation Agent is acting solely as agent for the Company; and in acting under this Agreement, the Calculation Agent (in its capacity as such) does not assume any obligation towards, or any relationship of agency or trust for or with, any of the owners or holders of the Notes. 3 Section 5. Duties of Calculation Agent. The Calculation Agent shall be obligated to perform only such duties as are specifically set forth herein and no other duties or obligations on the part of the Calculation Agent, in its capacity as such, shall be implied by this Agreement. Section 6. Termination, Resignation or Removal of Calculation Agent. The Calculation Agent may at any time terminate this Agreement by giving no less than 90 days written notice to the Company unless the Company consents in writing to a shorter time. Upon receipt of notice of termination by the Calculation Agent, the Company agrees promptly to appoint a successor Calculation Agent. The Company may terminate this Agreement at any time by giving written notice to the Calculation Agent and specifying the date when the termination shall become effective. Notwithstanding the foregoing, no termination by the Calculation Agent or by the Company shall become effective prior to the date of the appointment by the Company, as provided in Section 7 hereof, of a successor Calculation Agent and the acceptance of such appointment by such successor Calculation Agent. Upon termination by either party pursuant to the provisions of this Section, the Calculation Agent shall be entitled to the payment of any compensation owed to it by the Company hereunder and to the reimbursement of all reasonable expenses and disbursements incurred or made by the Calculation Agent in connection with the services rendered by it hereunder, as provided by Section 3 hereof, and the provisions of Section 8 hereof shall remain in effect following such termination. 4 Section 7. Appointment of Successor Calculation Agent. Any successor Calculation Agent appointed by the Company following termination of this Agreement pursuant to the provisions of Section 6 hereof shall execute and deliver to the Calculation Agent and to the Company an instrument accepting such appointment, and thereupon such successor Calculation Agent shall, without any further act or instrument become vested with all the rights, immunities, duties and obligations of the Calculation Agent, with like effect as if originally named as Calculation Agent hereunder, and the Calculation Agent shall thereupon be obligated to transfer and deliver, and such successor Calculation Agent shall be entitled to receive and accept, copies of any available records maintained by the Calculation Agent in connection with the performance of its obligations hereunder. Section 8. Indemnification. The Company shall indemnify and hold harmless the Calculation Agent, its directors, officers and employees from and against all actions, claims, damages, liabilities, losses and expenses (including reasonable legal fees and expenses) relating to or arising out of actions or omissions in any capacity hereunder, except actions, claims, damages, liabilities, losses and expenses caused by the negligence or willful misconduct of the Calculation Agent, its officers or employees. The provisions of this Section 8 shall survive the termination, for any reason, of this Agreement. 5 Section 9. Merger, Consolidation or Sale of Business by Calculation Agent. Any Person into which the Calculation Agent may be merged, converted, or consolidated, or any Person resulting from any merger, conversion or consolidation to which the Calculation Agent may be a party, or any Person to which the Calculation Agent may sell or otherwise transfer all or substantially all of its business, shall, to the extent permitted by applicable law, become the Calculation Agent under this Agreement without the execution of any paper or any further act by the parties hereto. Notice of any such merger, consolidation or sale shall forthwith be given to the Company. Section 10. Notices. Any notice or other communication given hereunder shall be delivered in person, sent by letter or telepcopy or communicated by telephone (subject, in the case of communication by telephone, to written confirmation dispatched within 24 hours) to the address given below or such other address as the party to receive such notice may have previously specified pursuant to notice given in accordance with this Section: To the Company: Lehman Brothers Holdings Inc. 399 Park Avenue New York, New York 10022 Attention: Corporate Counsel Telecopy: (212) 526-0339 Telephone: (212) 526-0858 6 To the Calculation Agent: Citibank, N.A. 111 Wall Street - 14th Floor New York, New York 10043 Attention: Citibank Agency & Trust Telecopy: (212) 657-3862 Telephone: (212) 657-7805 Any notice hereunder given by letter or telecopy shall be deemed to have been received when it would have been received in the ordinary course of post or transmission, as the case may be. Section 11. Benefit of Agreement. Except as provided herein, this Agreement is solely for the benefit of the parties hereto and their successors and assigns and no other person shall acquire or have any rights under or by virtue hereof. Section 12. Counterparts. This Agreement may be signed in any number of counterparts, each of which shallbe an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Section 13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 7 IN WITNESS WHEREOF, this Agreement has been entered into as of the day and year first above written. LEHMAN BROTHERS HOLDINGS INC. By: /s/ Oliver Budde Name:Oliver Budde Title: Vice President CITIBANK, N.A. By:/s/ Wafaa Orfy Name: Wafaa Orfy Title:Vice President -----END PRIVACY-ENHANCED MESSAGE-----