-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, bV+QVE+0xekMcK2RPEFgXF4cLLH4rTiqnCTHs9aBKoPxk0IfybRNqoXcxjMgPRwH b/XNiQxqUwcx7C7Nd0g6sg== 0000950109-95-001155.txt : 19950414 0000950109-95-001155.hdr.sgml : 19950406 ACCESSION NUMBER: 0000950109-95-001155 CONFORMED SUBMISSION TYPE: 10KT405/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19941130 FILED AS OF DATE: 19950405 SROS: NYSE 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: 10KT405/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-09466 FILM NUMBER: 95527141 BUSINESS ADDRESS: STREET 1: AMERICAN EXPRESS TWR STREET 2: 3 WORLD FINANCIAL CNTR CITY: NEW YORK STATE: NY ZIP: 10048 BUSINESS PHONE: 2125267000 MAIL ADDRESS: STREET 1: AMERICAN EXPRESS TOWER 15TH FL STREET 2: 2 WORLD TRADE CENTER CITY: NEW YORK STATE: NY ZIP: 10048 FORMER COMPANY: FORMER CONFORMED NAME: SHEARSON LEHMAN HUTTON HOLDINGS INC DATE OF NAME CHANGE: 19901017 10KT405/A 1 AMENDMENT NO. 1 TO FORM 10-K - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------- AMENDMENT NO 1 To FORM 10-K (MARK ONE) [_] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED [X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM JANUARY 1, 1994 TO NOVEMBER 30, 1994 COMMISSION FILE NUMBER 1-9466 LEHMAN BROTHERS HOLDINGS INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 13-3216325 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) (IDENTIFICATION NO.) 3 WORLD FINANCIAL CENTER 10285 NEW YORK, NEW YORK (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (212) 526-7000 SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- --------------------- Common Stock, $.10 par value New York Stock Exchange Pacific Stock Exchange $55 Million Serial Zero Coupon Senior Notes American Stock Exchange Due May 16, 1998 FT-SE Eurotrack 200 Index Call Warrants American Stock Exchange Expiring June 4, 1996 Japanese Yen Bear Warrants American Stock Exchange Expiring September 15, 1995 7 1/4% Oracle Yield Enhanced Equity Linked Debt American Stock Exchange Securities SM Due 1996 6 1/2% Amgen Yield Enhanced Equity Linked Debt American Stock Exchange Securities Due 1997 Japanese Yen Bear Warrants American Stock Exchange Expiring March 5, 1996 8 3/4% Notes Due 2002 New York Stock Exchange Global Telecommunications Stock Upside Note American Stock Exchange Securities SM Due 2000 9 1/8% Micron Yield Enhanced Equity Linked Debt American Stock Exchange Securities Due 1997 AMEX Hong Kong 30 Index Call Warrants American Stock Exchange Expiring February 26, 1996 Regional Bank Stock Upside Note American Stock Exchange Securities Due 1996
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE (TITLE OF CLASS) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ((S)229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [X]. Aggregate market value of the voting stock held by non-affiliates of the Registrant at January 31, 1995 was approximately $1,768,402,526. For purposes of this information, the outstanding shares of common stock owned by certain executive officers of the Registrant were deemed to be shares of common stock held by affiliates. As of January 31, 1995, 104,524,025 shares of the registrant's Common Stock, $.10 par value per share were issued and outstanding. DOCUMENTS INCORPORATED BY REFERENCE: (1) Lehman Brothers Holdings Inc. 1994 Annual Report to Stockholders-- Incorporated in part in Form 10-K, Parts I, II and IV. (2) Lehman Brothers Holdings Inc. Proxy Statement for its 1995 Annual Meeting of Stockholders--Incorporated in part in Form 10-K, Parts I and III. - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- PART IV ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K 3. Exhibits
EXHIBIT NO. ------- 10.15 Transaction Support Services Agreement dated as of September 30, 1994 by and between Bear, Stearns Securities Corp. and Lehman Brothers Inc.*,** * Filed herewith. ** Confidential Treatment has been requested for portions of this exhibit.
SIGNATURES Pursuant to the Requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to its Transition Report to be signed on its behalf by the undersigned, thereunto duly authorized. Lehman Brothers Holdings Inc. (Registrant) April 5, 1995 By: /s/ Karen M. Muller ____________________________________ Title: Vice President PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS AMENDMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED. NAME TITLE DATE * Chief Executive Officer and April 5, 1995 ________________________________ Chairman of the Board of RICHARD S. FULD, JR. Directors (principal executive officer) * ________________________________ Chief Operating Officer, April 5, 1995 T. CHRISTOPHER PETTIT President and Director * Chief Financial Officer April 5, 1995 ________________________________ (principal financial officer) ROBERT MATZA * ________________________________ Controller (principal accounting STEPHEN J. BIER officer) April 5, 1995 * Director April 5, 1995 ________________________________ ROGER S. BERLIND * Director April 5, 1995 ________________________________ JOHN J. BYRNE * Director April 5, 1995 ________________________________ KATSUMI FUNAKI * Director April 5, 1995 ________________________________ JOHN D. MACOMBER * Director April 5, 1995 ________________________________ MASATAKA SHIMASAKI * Director April 5, 1995 ________________________________ DINA MERRILL * Director April 5, 1995 ________________________________ MALCOLM WILSON By: /s/ Karen M. Muller _____________________________ KAREN M. MULLER (ATTORNEY-IN-FACT) April 5, 1995 EX-10.15 2 AMENDED AGREEMENT FOR TRANSACTION SUPPORT SERVICES EXHIBIT 10.15 BEAR STEARNS BEAR, STEARNS SECURITIES CORP. ONE METROTECH CENTER NORTH BROOKLYN, NEW YORK 11201-3859 (212) 272-1000 September 30, 1994 Lehman Brothers Inc. 200 Vesey Street New York, New York 10285 Attention: Jeremiah Callaghan Managing Director Re: Agreement for Transaction Support Services Gentlemen: This Agreement sets forth the terms and conditions under which Bear, Stearns Securities Corp. ("BSSC") will provide transaction support services and such other back office support services (collectively, the "Services"), as more specifically set forth herein, to Lehman Brothers Inc. ("you") to enable you to carry certain of your customer and proprietary accounts, and clear certain of your customer and proprietary securities transactions, as mutually agreed upon. This Agreement also sets forth the terms and conditions under which BSSC will open and carry, in your name, certain omnibus accounts, as more particularly described in paragraph 5(a), in order to facilitate the clearance by BSSC of government securities, securities settled outside the forty-eight contiguous states ("Non-U.S. Settled Securities") and such other products as you and BSSC shall agree. BSSC will also provide certain Services to Lehman Brothers Holdings Inc. and its subsidiaries. For purposes of the Securities Investor Protection Act and the financial responsibility rules of the Securities and Exchange Commission ("SEC"), customers shall be deemed to be your customers. 1. Engagement ---------- You hereby engage BSSC to provide the Services and to make available to you such personnel and facilities as are necessary therefor. The Services shall be performed in compliance with and subject to all applicable U.S. federal, state and foreign securities laws and regulations, and, as applicable, the constitution, rules, by-laws and regulations of the New York Stock Exchange Inc. and all other exchanges, boards of trade, contract markets and clearing organizations of which BSSC or you is a member (collectively, the "Applicable Rules"). 1 2. Commissions ----------- You shall have sole discretion to determine the amount of commissions and fees charged to your customer accounts, to the extent permitted by the Applicable Rules. 3. Fees - Term of Agreement ------------------------ [Confidential treatment has been requested for the omitted portions of this section] (f) The term of this Agreement shall be for a period of five years, unless extended by mutual consent. For purposes of computing the term of this Agreement, the first year of this Agreement shall be deemed to commence as of the first business day of the first full month following the Conversion Date. (j) In the event of an industry wide event that materially impacts the costs associated with providing the Services contemplated by this Agreement, the parties hereto agree to negotiate in good faith to amend the fees provided herein in a manner consistent with such event. (k) The term business day, as used in this Agreement, is defined as any day which is not a Saturday or Sunday on which the New York Stock Exchange is open for business. 4. Financial Information --------------------- You and BSSC each agree to supply the other with copies of monthly and quarterly Financial and Operational Combined Uniform Single Reports ("Focus Reports"), excluding the income statement and any profit and loss calculations, simultaneously with the filing thereof. 5. Omnibus Accounts ---------------- (a) In order to facilitate the clearance of government securities, Non-U.S. Settled Securities and such other products as you and BSSC shall agree, BSSC will open and carry in your name, a special omnibus account for the benefit of your customers (the "Customer Omnibus Account") and a separate omnibus account for your proprietary transactions (the "Proprietary Omnibus Account") (collectively, the "Omnibus Accounts"). You will become an omnibus correspondent of BSSC with respect to such Omnibus Accounts, which will be carried as either cash or margin accounts. (b) With respect to the Customer Omnibus Account, you and BSSC agree as follows: (i) the Customer Omnibus Account shall be established and maintained in compliance with the requirements of SEC Rule 15(c) 3-3 and Regulation T; (ii) all property held therein shall be held by BSSC for the exclusive benefit of your customer's (subject, however, to a lawfully issued subpoena or court order); (iii) BSSC shall maintain physical possession or control of the securities therein, free of any charge, lien or claim of any kind in favor of BSSC or any persons claiming through BSSC; (iv) BSSC shall not subject the Customer Omnibus Account to any right, charge, security interest, lien or other claim in favor of BSSC or any other party (except in response to a lawfully issued subpoena or court order); (v) there shall be no commingling of funds or property of the Customer Omnibus Account with funds or property of yours or of BSSC's, and (vi) day short sales effected will be short sales made on behalf of your customers, other than your partners, if any. (c) With respect to the Omnibus Accounts, you will be responsible to BSSC for: (i) compliance with Regulation T; (ii) maintaining margin in accordance with the Applicable Rules; (iii) unsecured debits; (iv) all check payments until credited to BSSC; and (v) the delivery of securities sold or loaned, in good delivery form under the Applicable Rules. 3 (d) BSSC shall have sole discretion to execute buy-ins or sell outs in the Omnibus Accounts whenever it determines such action appropriate. (e) During a tender period, BSSC will tender only on a trade date basis the number of shares net long in the Omnibus Accounts as of either the proration or withdrawal date. (f) BSSC shall issue and deliver comparisons and confirmations covering the Omnibus Accounts directly to you on BSSC's forms, with the following disclosure: "Transactions cleared through BSSC, a wholly owned and guaranteed subsidiary of Bear, Stearns & Co. Inc. You will be responsible for advising BSSC regarding the allocation of all transactions to each customer covered by the Customer Omnibus Account. BSSC shall issue and deliver confirmations and notices to your customers in accordance with paragraph 6. (g) Unless otherwise agreed, BSSC shall not be required to comply with any request other than from you to make transfers of cash or securities directly to your customers or other third parties. (h) You agree not to exceed, either acting alone for the Proprietary Omnibus Account or with others in concert, the applicable position and exercise limits for each of the Omnibus Accounts, respectively, as established by the options exchange or marketplace where options transactions are executed. (i) You agree that BSSC shall have a lien upon and security interest in all property held in the Proprietary Omnibus Account as security for the repayment of your obligations and liabilities to BSSC arising out of or incurred in connection with the Omnibus Accounts. You further agree that BSSC, having made a best efforts attempt, market conditions permitting, to provide you with prior notice, may debit any cash balance and/or liquidate any securities or commodities held in the Proprietary Omnibus Account and credit the proceeds to its account in an amount necessary to satisfy such obligations. This provision shall survive the termination of this Agreement, thereby extending the right to any lien and security interest for the duration of any account transfer period and for an additional reasonable period of time until, in the reasonable discretion of BSSC, security for the repayment of such obligations is no longer required. 6. Transaction Support Services ---------------------------- In order to provide the Services contemplated by this Agreement, BSSC will make available to you such personnel, data processing services and such other facilities as will be required to enable either you or BSSC, as the case may be, to carry your customer and proprietary accounts and clear your customer and proprietary transactions. (a) BSSC will provide such Services as are necessary and customary in order to enable you or BSSC, as the case may be, to clear securities transactions executed by you for certain 4 of your customer and proprietary accounts. BSSC will make available to you, at no extra charge, such operational and systems enhancements and provide such Services as are necessary to ensure your compliance with new settlement and other procedures mandated by the Applicable Rules. BSSC will also provide Services to enable either you or BSSC, as the case may be, to clear such new products as shall be mutually agreed upon. (b) BSSC will, in your name and on your behalf, issue and deliver, or receive and review, as the case may be, the documentation necessary to complete comparisons and trade confirmations, with respect to transactions listed on the BSSC end-of-day records (except transactions in Non-U.S. Settled Securities), on forms for such purpose which shall display your name in front (and not that of BSSC); except that (i) you shall be responsible for all trade date telephonic and other comparisons with brokers or dealers and (ii) you will instruct your counterparties to contact you directly if they find any discrepancies in confirmations. BSSC will send you duplicates of such documentation as you may reasonably request from time to time. At the end of each day, BSSC will report to you and you will report to BSSC any discrepancies that are disclosed during such day as a result of the comparison or confirmation process. BSSC will also provide you with a list of transactions with brokers or dealers for which BSSC has not received the necessary comparison information. You are solely responsible for reconciling all such discrepancies and BSSC is not obligated to perform any further Services under this Agreement in connection with any unreconciled transaction until all such discrepancies with respect to such transaction are resolved. BSSC is not responsible for any failure to settle or allocate securities, or for other irregularities that may arise, because either you or your counterparty did not call discrepancies to its attention during the comparison and confirmation process. (c) BSSC will, utilizing information provided by you, compute and produce, on a daily basis, calculations of the following requirements: (i) all possession and control; (ii) all margin requirements; (iii) reserve formula (on a weekly and calendar month-end basis and as reasonably needed by you, and only to the extent the information is provided to BSSC); (iv) daily settlement obligations (projected and final) of all clearing corporations and depository corporations; and (v) such other calculations as are feasible to compute and produce, given the information provided by you, to enable you to balance, monitor and reconcile all positions in securities and other instruments held by BSSC on your behalf for your customer and proprietary accounts. BSSC will provide you with a daily statement reporting such calculations and positions, and will make 2 best efforts attempt to accommodate your cut-off dates in providing such statement to you. (d) BSSC will, in your name and on your behalf and under your supervision and control, monitor your customer accounts for the following purposes: (i) requiring your customers to remit payment for purchases, interest and margin obligations and other charges, (ii) requiring your customers to deliver securities sold, (iii) requiring your customers to maintain money, securities and options as required by the Applicable Rules, (iv) advising your customers of the necessity to buy-in or sell-out positions based upon your 5 determination of such necessity, but subject to BSSC's interpretation of the Applicable Rules, (v) transferring securities to and from the accounts of your customers against payment and supervising funds deposits and transfers, (vi) arranging for the exercise and assignment of options, and (vii) providing custody, segregation and such safekeeping as is mutually agreed upon of money and securities of your customers. Other than as specifically set forth herein, BSSC shall not contact your customers during the term of this Agreement, unless specifically requested by you. (e) BSSC shall: (i) maintain certain of your books and records, as mutually agreed, pertaining to transactions with respect to which the Services are performed by BSSC on your behalf; (ii) provide the data necessary to enable you or your agent to prepare monthly statements for your customer accounts, as required by the Applicable Rules governing brokers having custody of money and securities; and (iii) provide such other services as are necessary, appropriate and consistent with this Agreement. (f) During the Termination Period, as such term is defined in paragraph 3(c), BSSC, in addition to continuing to provide the Services, shall provide such services as you and BSSC reasonably deem necessary and appropriate, including but not limited to data processing and employee transition support services, to enable you to deconvert your customer and proprietary accounts. (g) BSSC will provide the Services with the same standard of care it utilizes to clear and carry the transactions and accounts introduced to it by Bear, Stearns & Co. Inc.; provided, however, that BSSC shall be entitled to rely upon, as correct, all information provided by you for the purposes of this Agreement. (h) BSSC will not provide Services to enable either you or BSSC, as the case may be, to clear securities transactions in non-U.S. markets where BSSC does not have the required facilities or relationship to provide clearance services and BSSC has made a good faith determination not to provide such services in such non-U.S. market. (i) The Services shall be performed in accordance with BSSC's interpretation of the Applicable Rules. In the event of a dispute relating to such interpretation, you and BSSC hereby agree to present such dispute to a mutually acceptable expert unrelated to either party, and to make a good faith attempt to resolve such dispute in a commercially reasonable manner and as expeditiously as practicable, without resorting to industry arbitration. In the event such dispute is not resolved in a timely manner, BSSC will continue to perform the Services that are the subject of the dispute. In the event such dispute is resolved in accordance with BSSC's interpretation of the Applicable Rules and against your interpretation thereof, you shall indemnify BSSC for all loss, liability, damage, claim, cost or expense (including but not limited to reasonable fees and expenses of legal counsel) arising out of or incurred in connection with BSSC having performed such Services. 6 (j) BSSC shall serve as a passive, non-discretionary, non-bank custodian to your customer Individual Retirement Accounts ("IRAs") and Qualified Retirement Plans ("QRPs"), subject to BSSC receiving the approval of the Internal Revenue Service, and BSSC will maintain such custodial accounts in the same manner as BSSC maintains those established in connection with its IRA's and QRPs. 7. Financing Obligations --------------------- (a) BSSC shall neither finance nor in any way act as your creditor in connection with the Services to be provided to you hereunder, except to the extent the Omnibus Accounts are carried in margin accounts. It is agreed that: (i) all settlement obligations, including but not limited to those set forth in Section 6 of this Agreement, shall be your sole and exclusive responsibility and (ii) BSSC shall neither provide nor arrange for the borrowing and lending of securities in connection with the performance of the Services hereunder; (b) If BSSC incurs any liability, obligation, interest or other charge, charge- back, assessment or collateralization requirement with respect to the Omnibus Accounts, pursuant to the rules, regulations, procedures or other binding terms of a clearing corporation or system or arrangement for the settlement or comparison of your transactions which liability, obligation, interest or other charge, charge-back, assessment or collateralization requirement would not customarily be included in BSSC's standard processing charge, you shall promptly, upon demand by BSSC, transfer to BSSC such amount in immediately available funds or collateral sufficient to satisfy your pro-rata share of such liability, obligation, interest or other charge, charge-back, or assessment or collateralization requirement, such pro-rata share to be determined between you and BSSC on a basis comparable to that employed by such Clearing Corporation, system or arrangement in determining the amount of any such liability, obligation, interest or other charge, charge-back, assessment payable by, or collateralization requirement imposed upon BSSC. BSSC shall promptly send to you any written materials it receives from any such Clearing Corporation, system or arrangement describing any such liability, obligation, interest or other charge, charge-back or assessment or collateralization requirement. (c) BSSC will credit or debit you, as the case may be, at the BSSC Internal Benchmark Rate which is currently the Federal Funds Rate plus 3/8%, which rate may change at BSSC's discretion, for any open fail transactions BSSC has with you or with any other counterparty on account of your transactions, including but not limited to any cash account credit or debit balance in the Omnibus Accounts, BSSC fail transactions to or from you and unsettled syndicate transactions. (d) In the event you request BSSC to arrange for financing not specifically provided for herein (including margin balances in the Omnibus Accounts), such financing shall be provided on such terms and conditions as shall be mutually agreed upon. 7 8. Indemnification --------------- (a) You shall indemnify and hold harmless BSSC, its control persons and affiliates and its and their respective officers, directors, employees, successors and assigns ("Indemnified Parties") from and against any loss, liability, damage, claim, cost or expense (to the extent such cost or expense is not otherwise covered in paragraph 3), including but not limited to reasonable fees and expenses of legal counsel, incurred by BSSC or Indemnified Parties arising directly or indirectly out of or in connection with BSSC's performance of the Services hereunder; provided, however, that BSSC and Indemnified Parties shall not be indemnified or held harmless to the extent that such loss, liability, damage, claim, cost or expense arises from BSSC's negligence, bad faith or willful misconduct. You further agree to indemnify and hold harmless BSSC and Indemnified Parties for any act or omission of BSSC in its capacity as custodian of your customer IRAs and Qualified Retirement Plans, except insofar as such loss, liability, damage, claim, cost or expense arises from BSSC's negligence, bad faith or willful misconduct. (b) BSSC agrees to indemnify and hold harmless you and Indemnified Parties and you agree to indemnify and hold harmless BSSC and Indemnified Parties from and against any loss, liability, damage, claim, cost or expense (including but not limited to reasonable fees and expenses of legal counsel but excluding special or punitive damages) arising out of or resulting from any failure by the indemnifying party or its employees to carry out fully the duties and responsibilities assigned to such herein or any breach of any representation, warranty or covenant herein by such party under this Agreement. The indemnifying party shall have the right to retain legal counsel of its choosing, provided that the indemnified party consents to such legal counsel (which consent shall not be unreasonably withheld), and the indemnifying party shall have the right to settle any action for which indemnification is sought. (c) BSSC hereby agrees that it will not, without your prior written consent, initiate any legal action against any of your customers relating to or arising from this Agreement and BSSC's performance of the Services hereunder. 9. Representations, Warranties and Covenants ----------------------------------------- (a) You represent, warrant and covenant to BSSC as follows: (i) you are now conducting, and during the course of this Agreement you will conduct your business in all material respects in accordance with all federal and state statutes and the regulations and rules of all self-regulatory organizations that have jurisdiction over those matters; (ii) you are now, and during the term of this Agreement will remain, a member in good standing of the New York Stock Exchange Inc. and the National Association of Securities Dealers, Inc., and you agree to promptly notify BSSC of any additional affiliations or exchange memberships; (iii) you are now and during the term of this Agreement will remain, duly authorized and in good standing under the laws of the jurisdiction of your incorporation, and have the corporate power to own your property and to carry on your business as now 8 being conducted and are duly qualified to do business in each jurisdiction where such qualification is necessary; (iv) you have all the requisite authority in conformity with all Applicable Rules to enter into this Agreement and to retain the services of BSSC in accordance with the terms hereof and you have taken all necessary action to authorize the execution and delivery of this Agreement and the performance of your obligations hereunder; (v) you are in compliance, and during the term of this Agreement will remain in compliance, with; ( 1) the capital and financial reporting requirements of every national securities exchange or other securities exchange and/or securities association of which you are a member, (2) the net capital requirements of the Securities and Exchange Commission, and (3) the capital requirements of every state in which you are licensed as a broker-dealer; (vi) you hereby agree and warrant that you have and will maintain appropriate brokers blanket bond insurance policies covering all such acts of your employees, agents and officers, in the amount of $100,000,000. This insurance shall remain in effect until the effective date of termination of this Agreement. You further agree to notify BSSC immediately in the event such insurance is either cancelled, reduced or otherwise changed in any material respect. (b) BSSC represents, warrants and covenants to you as follows: (i) BSSC during the term of this Agreement (a) is and will remain duly organized and validly existing as a Delaware corporation, (b) is and will remain duly registered or licensed and in good standing as a broker dealer with the SEC and a member firm of the New York Stock Exchange Inc. and the National Association of Securities Dealers, Inc. (c) has corporate power to own its properties, to carry on its businesses now being conducted and to enter into and perform this Agreement and (d) has taken necessary action to authorize the execution of this Agreement and the performance of its obligations hereunder; (ii) BSSC has all the requisite authority in conformity with all Applicable Rules to enter into and perform this Agreement; (iii) BSSC hereby agrees and warrants that it has and will maintain appropriate brokers blanket bond insurance policies covering all such acts of its employees, agents and officers, in the amount of $200,000,000. BSSC further agrees to obtain a rider to such brokers blanket bond insurance policies acknowledging you as a loss payee for losses to your property and securities sustained as a result of the Services performed pursuant to this Agreement. This insurance shall remain in effect until the effective date of termination of this Agreement. BSSC further agrees to notify you immediately in the event such insurance is either cancelled, reduced or otherwise changed in any material respect. (c) You acknowledge that you will be responsible for obtaining such SIPC insurance as you deem necessary to cover losses arising out of or incurred in connection with a SIPC proceeding affecting your customers. (d) Each party shall be responsible for obtaining and maintaining registered and first class mail insurance covering losses arising out of or incurred in connection with any loss of mail under the control of each respective party. 9 10. Confidentiality --------------- You and BSSC each hereby undertake to keep confidential any information either party may acquire as a result of this Agreement regarding the business affairs and customers of the other party which each party supplies to the other party in confidence solely by reason of the Services provided hereunder. You and BSSC shall each endeavor in good faith to cause their respective employees to comply with this undertaking. 11. Supervision of Accounts ----------------------- (a) You shall be solely responsible for: (i) knowing each of your customers, assessing the suitability and transactions for your customer accounts and the Customer Omnibus Account; (ii) reviewing your customer accounts and the Customer Omnibus Account for, among other things, manipulative practices, insider trading, control and restricted securities and compliance with all federal and state statutes and the regulations and rules of all self- regulatory organizations that have jurisdiction over those matters; (iii) obtaining and maintaining all proper documentation including all new account documents and such other documents as are necessary for the performance of your responsibilities under this Agreement and retaining such documents in accordance with all federal and state statutes and the regulations and rules of all self-regulatory organizations that have jurisdiction over those matters except to the extent BSSC has either agreed to be responsible therefor or BSSC deems it necessary or desirable to be responsible therefor for the performance of its responsibilities hereunder, including but not limited to its responsibilities as custodian of your customer IRAs and Qualified Retirement Plans. (b) You shall be solely responsible for the supervision of your employees who open, approve or authorize transactions and their compliance with all federal and state statutes and the regulations and rules of all self- regulatory organizations that have jurisdiction over those matters, as well as for overall supervision of functions and activities performed by BSSC. 12. Systems Access -------------- In consideration of BSSC providing you access to certain of BSSC's computer systems, documentation and the programs and data accessible thereby (collectively the "Systems"), you acknowledge and agree to the following terms and conditions: (a) You acknowledge that any User I.D.s or password given to you relating to the Systems will be designated exclusively for your use and programmed specifically according to the functionality (i.e., entitlements) you have requested and been granted. Each such User I.D. is intended to enable you to view your data exclusively. You will take all necessary steps to preserve the confidentiality of and prevent any unauthorized person from obtaining access to or using any such User I.D. or password. You shall be required to change your password every 90 days. For the purposes of this Agreement, "your data" shall include but not necessarily be limited to your customers' names, addresses, 10 securities positions and activity, and the securities positions and activity in your proprietary account(s), including such positions and activities of your affiliates. (b) Although access to your data may be obtained from any location, device or other machine using the software provided to you, it is intended that access to your data will be controlled by the User I.D.s and passwords. Notwithstanding the foregoing, (i) you shall be solely responsible for controlling the access to and activity in your customer and proprietary accounts, (ii) otherwise protecting and preserving the confidentiality of all data, and (iii) you shall not copy or distribute any system programs or in any way use or allow use of the Systems beyond the specific use or uses for which you have been authorized. You shall not be responsible for controlling BSSC's access to and activity in your customer and proprietary accounts or for ensuring that BSSC, its employees and its agents adhere to BSSC's confidentiality obligation hereunder. (c) You shall be solely responsible for requesting the initiation, termination or limitation of the functionality of your User I.D.s. In particular, you acknowledge that time is of the essence in notifying BSSC of the termination or change in status of any employee or agent who has access to the Systems. All such requests and notices shall be in writing to your BSSC relationship manager. (d) You will communicate all requests for access to the Systems in writing to your BSSC relationship manager. (e) You acknowledge that BSSC may, in the course of maintaining the Systems, monitor your activities, and you hereby consent to such monitoring, subject to BSSC's express agreement to adhere to its obligation of confidentiality hereunder. (f) You hereby agree to release and discharge BSSC and the Indemnified Parties from all responsibility and liability arising out of or incurred in connection with your use of the Systems, your failure to perform any obligation pursuant to this paragraph 12 or BSSC providing you access to the Systems and from all damages that flow as a consequence of such action or failure to perform. You further agree to indemnify and hold harmless BSSC and the Indemnified Parties from any loss, liability, damage, claim, cost or expense (including but not limited to reasonable fees and expenses of legal counsel) arising out of or incurred in connection with your use of the Systems, your failure to perform any obligation pursuant to this paragraph 12 or BSSC providing you access to the Systems, except insofar as such loss, liability, damage, claim, cost or expense arises out of BSSC's negligence, bad faith or willful misconduct. (g) You undertake to take all reasonable steps to ensure that all of your employees and agents having access to the Systems comply with the terms of this paragraph 12. 11 13. Default ------- Notwithstanding any provision in this Agreement, the following events or occurrences shall constitute an Event of Default under this Agreement: (a) Either party hereto shall fail to perform or observe any term, covenant or condition to be performed hereunder and such failure shall continue to be unremedied for a period of 30 days after written notice from the non- defaulting party to the defaulting party specifying the failure and demanding that the same be remedied; provided, however, that non-payment of the fees due under paragraph 3 as a result of a bona-fide fee dispute shall not be deemed an Event of Default; or (b) Any representation or warranty made by either party shall prove to be incorrect at any time in any material respect; or (c) A receiver, liquidator or trustee of either party hereto or of any property held by either party, is appointed by court order and such order remains in effect for more than 30 days; or either party is adjudicated bankrupt or insolvent; or any property of either party is sequestered by court order and such order remains in effect for more than 30 days; or a petition is filed against either party under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect (collectively, "Insolvency Laws"), and is not dismissed within 30 days after such filing; or (d) Either party hereto files a petition in voluntary bankruptcy or seeks relief under any provision of any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, or consents to the filing of any petition against it under any such law ; or (e) Either party hereto makes an assignment for the benefit of its creditors, or admits in writing its inability to pay its debts generally as they become due, or consents to the appointment of a receiver, trustee or liquidator of either party, or of any property held by either party; or (f) Either party hereto ceases for whatever reason to be a member of the New York Stock Exchange or the National Association of Securities Dealers; or (g) Either party hereto fails to comply with the Applicable Rules in a manner which materially adversely affects the business of that party. Upon the occurrence of any such Event of Default, the nondefaulting party may, at its option and subject to the Applicable Rules, by notice to the defaulting party declare that this Agreement shall be thereby terminated and such termination shall be effective as of the date such notice has been communicated to the defaulting party. Termination 12 hereunder shall not release either party from obligations incurred in connection with this Agreement prior to the effective date of termination. 14. Software -------- In the event of an Event of Default with respect to BSSC under paragraph 13(c), (d) or (e), BSSC shall, to the extent permissible under the Insolvency Laws, negotiate with you regarding your request to purchase such of BSSC's proprietary systems software as shall have been used in connection with BSSC's provision of the Services hereunder. 15. Relationship of Parties ----------------------- (a) BSSC shall limit its services pursuant to the terms of this Agreement to the Services expressly defined and set forth herein. Neither this Agreement nor any operation hereunder shall create a general or limited partnership, association or joint venture or agency relationship between you and BSSC. (b) Neither party or its respective affiliates shall, without the prior written approval of the other party, place any advertisement in any newspaper, publication, periodical, sales literature or any other media if such advertisement in any manner makes reference to this Agreement or the Services embodied herein. BSSC and its affiliates shall not solicit your customers using this Agreement or the relationship created thereby as a marketing tool. (c) Should you in any way hold yourself out as, advertise or represent that you are an agent of BSSC, BSSC shall have the power, at its option, to terminate this Agreement and you shall be liable for any loss, liability, damage, claim, cost or expense (including but not limited to fees and expenses of legal counsel) sustained or incurred by BSSC as a result of such a representation of agency or apparent authority to act as an agent of BSSC or agency by estoppel. Notwithstanding the provision of this Agreement that any dispute or controversy between the parties relating to or arising out of this Agreement shall be referred to and settled by arbitration, in connection with any breach by you of this paragraph 15, BSSC may, at any time prior to the initial arbitration hearing pertaining to such dispute or controversy, seek by application to the United States District Court for the Southern District of New York or the Supreme Court of the State of New York for the County of New York any such temporary or provisional relief or remedy ("provisional remedy") provided for by the laws of the United States of America or the laws of the State of New York as would be available in an action based upon such dispute or controversy in the absence of an agreement to arbitrate. The parties acknowledge and agree that it is their intention to have any such application for a provisional remedy decided by the Court to which it is made and that such application shall not be referred to or settled by arbitration. No such application to either said Court for a provisional remedy, nor any act or conduct by either party in furtherance of or in opposition to such application, shall constitute a relinquishment or 13 waiver of any right to have the underlying dispute or controversy with respect to which such application is made settled by arbitration in accordance with this Agreement. 16. No Waiver of Rights ------------------- The enumeration herein of specific remedies shall not be exclusive of any other remedies. Any delay or failure by any party to this Agreement to exercise any right herein contained, now or hereafter existing under the Applicable Rules shall not be construed to be a waiver of such right, or to limit the exercise of such right. No single, partial or other exercise of any such right shall preclude the further exercise thereof or the exercise of any other right. 17. NYSE Filing Requirement ----------------------- This Agreement shall be submitted to and approved by the New York Stock Exchange, Inc., or other regulatory and self-regulatory bodies vested with the authority to review and approve this Agreement or any amendment or modifications hereto. In the event of disapproval, the parties hereto agree to bargain in good faith to achieve the requisite approval. 18. Arbitration/Governing Law ------------------------- (a) This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to the conflicts of law principles thereof. (b) In the event of a dispute or controversy relating to or in any way arising out of this Agreement, you and BSSC hereby agree to present such dispute or controversy to a panel to consist of three senior representatives of each party, including Jeremiah Callaghan of your firm and Bruce Geismar of BSSC, or their respective designees. (c) In the event a dispute or controversy is not resolved in accordance with subparagraph (b) above, such dispute or controversy shall be settled by arbitration before and under the rules and auspices of the New York Stock Exchange, Inc., unless the transaction which gives rise to such dispute or controversy is effected in another United States market which provides arbitration facilities, in which case it shall be settled by arbitration under such facilities. 19. Extraordinary Events/Acts of God -------------------------------- (a) BSSC shall not be liable for losses caused directly or indirectly by any inability of BSSC to provide the Services occasioned by government actions or restrictions, exchange or market rulings, suspension of trading, war, strikes, natural calamities (including weather conditions), delays, communications or utilities failures, terrorism, 14 criminal acts of others not under the control of BSSC or any other conditions or occurrences beyond its control. (b) You hereby acknowledge that BSSC has represented to you that it has a disaster recovery plan covering its back office operations located at One Metrotech Center North, Brooklyn, New York but that no such disaster recovery plan exists at the time of execution of this Agreement covering BSSC's data processing facility located at 115 South Jefferson Road, Whippany, New Jersey. The development of such a disaster recovery plan is in progress and will be implemented, with input from you, in a reasonable and timely manner. 20. Notices ------- BSSC agrees that it will send to you copies of all written notices sent to customers. Notices to you shall be sent to: Lehman Brothers Inc., 200 Vesey Street, New York, New York 10285, Attention, Jeremiah Callaghan, Managing Director, with a copy to David Marcus, Esq., Managing Director and General Counsel, at the same address. Notices to BSSC shall be sent to Richard Harriton, the President of Bear, Stearns Securities Corp., 245 Park Avenue, New York, N.Y. 10167, with a copy to Mark E. Lehman, Senior Managing Director and Chief Legal Officer of BSSC. Termination shall not affect any of the rights and liabilities of the parties hereto incurred before the date of receipt of such notice of termination. 21. Statute of Fraud; Amendments ---------------------------- (a) This Agreement supersedes all other agreements between the parties with respect to the Services contemplated herein. This Agreement may not be amended except by a writing signed by both parties hereto. 15 (b) This Agreement shall be binding upon and inure to the benefit of the respective successors of the parties. Neither party may assign any of its rights or obligations hereunder without the prior written consent of the other party, unless such assignment is made as part of a general assignment of a party s assets to another firm. Please evidence your agreement to the foregoing by executing and delivering to BSSC the enclosed copy hereof. whereupon you and BSSC shall have entered into this Agreement. Very truly yours, BEAR, STEARNS SECURITIES CORP. By: /s/ Richard Harriton ------------------------------- Title: President ---------------------------- Date: 10/12/94 ---------------------------- ACCEPTED AND AGREED TO: - ---------------------------------- Lehman Brothers Inc. By: Jeremiah Callaghan ------------------------------- Title: Managing Director ---------------------------- Date: 10/12/94 ---------------------------- 16 Schedule A [Confidential treatment has been requested for this Schedule A which is intentionally omitted] -----END PRIVACY-ENHANCED MESSAGE-----