-----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, B1vOVjKhVaKiSlmAQ6DKj0O3Dmkz7hQ6jCXVDMpdTuaw6AWVjxSLdzPxzRXFkWWZ w63GHH4RAfsY3Kg8rPoHxw== 0000950123-94-001707.txt : 19941027 0000950123-94-001707.hdr.sgml : 19941027 ACCESSION NUMBER: 0000950123-94-001707 CONFORMED SUBMISSION TYPE: 424B2 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19941026 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LEHMAN BROTHERS HOLDINGS INC CENTRAL INDEX KEY: 0000806085 STANDARD INDUSTRIAL CLASSIFICATION: 6211 IRS NUMBER: 133216325 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 424B2 SEC ACT: 1933 Act SEC FILE NUMBER: 033-58548 FILM NUMBER: 94555010 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 424B2 1 LEHMAN BROTHERS INC. PRELIMINARY PROSPECTUS SUPP. 1 PROSPECTUS SUPPLEMENT (To Prospectus Supplement dated October 24, 1994) Lehman Brothers Holdings Inc. Regional Bank Stock Upside Note Securities(SM) SUNS(SM) ["SUN" GRAPHIC] This brochure must be attached to the Prospectus and Prospectus Supplement that provides a description of SUNS, including details on the risks associated with an investment in SUNS. 2 PROSPECTUS SUPPLEMENT (TO PROSPECTUS DATED OCTOBER 14, 1994) REGIONAL BANK SUNS FEATURES THE STOCK UPSIDE NOTE SECURITIES(SM) (SUNS(SM)) OFFERED HEREBY ALLOW INVESTORS TO PARTICIPATE IN THE UPSIDE POTENTIAL OF THE UNDERLYING REGIONAL BANK BASKET. THE REGIONAL BANK BASKET IS A FIXED BASKET CONSISTING OF 20 EQUITY SECURITIES THAT TRADE ON THE NYSE OR NASDAQ NATIONAL MARKET SYSTEM REPRESENTING A VARIETY OF COMPANIES IN THE BANKING INDUSTRY. These SUNS offer investors: - -- DEGREE OF PRINCIPAL PROTECTION: No less than $23.75, representing 95% of the original issue price, is returned at maturity regardless of the performance of the underlying equity basket during the term of the Securities. - -- PARTICIPATION IN PRICE APPRECIATION OF UNDERLYING EQUITY BASKET: Investors will receive a specified percentage of the appreciation, if any, of the underlying equity basket from the date of issue to maturity. - -- SHORT MATURITY: The Regional Bank SUNS mature in approximately two years. - -- SENIOR DEBT SECURITIES: These SUNS are non-callable senior debt securities of Lehman Brothers Holdings Inc. ("Holdings"). - -- STOCK EXCHANGE LISTING: Application has been made to list the Securities on the American Stock Exchange. - -- PROVIDES FOR PAYMENT ONLY AT MATURITY: These SUNS provide for a payment only at maturity. There are no periodic payments prior to maturity. - -- SPECIAL CONSIDERATIONS: Consult the attached Prospectus Supplement for a detailed description of the risks associated with an investment in SUNS, including the possibility that an investor may receive only 95% of the original issue price at maturity. The price an investor receives for SUNS upon sale prior to maturity may be more or less than the original cost, depending on interest rates, dividend rates, time remaining to maturity, the value and volatility of the underlying equity basket and other factors described in the Prospectus Supplement. The payment at maturity is exclusive of dividends on the underlying equity basket. 3 Filed pursuant to Rule 424(b)(2) Registration No. 33-58548 and 33-53651 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION AND HAS BECOME EFFECTIVE. THIS PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. Subject to Completion, dated October 24, 1994 PROSPECTUS SUPPLEMENT (To Prospectus dated October 14, 1994) 1,500,000 SUNSSM LEHMAN BROTHERS HOLDINGS INC. REGIONAL BANK STOCK UPSIDE NOTE SECURITIESSM DUE 1996 ------------------------ The Regional Bank Stock Upside Note Securities Due 1996 (the "Securities" or "SUNS") of Lehman Brothers Holdings Inc. ("Holdings") are being offered at an issue price (the "Issue Price") of $25 per SUNS. The Stated Maturity of the Securities is , 1996. The amount payable at Stated Maturity will be calculated based on the change in the value of a basket of equity securities of United States bank holding companies (the "Basket"). The Securities are to be issued as a series of Debt Securities under the Senior Indenture described in the accompanying Prospectus and will constitute "Senior Debt" of Holdings as described in the accompanying Prospectus. The Securities may not be redeemed prior to Stated Maturity and are not subject to any sinking fund. The amount payable at Maturity (the "Maturity Payment Amount") will equal the product of (a) the Issue Price and (b) the sum of (i) one and (ii) a specified percentage (the "Participation Percentage") of the difference between the Basket Maturity Value (as defined herein) and the Original Basket Value of 100, divided by the Original Basket Value of 100; provided that, the Maturity Payment Amount will not be less than $23.75. In the event the Basket Maturity Value is greater than 100, the Participation Percentage will be %. If the Basket Maturity Value is equal to or less than 100, the Participation Percentage will be 100%. There will be no payments with respect to the Securities prior to Maturity. For information as to the calculation of the Maturity Payment Amount, the composition of the Basket and certain tax consequences to holders of the securities, see "Description of Securities," "Certain United States Federal Income Tax Consequences" and "The Basket" in this Prospectus Supplement. PURCHASERS OF SECURITIES SHOULD BE PREPARED TO SUSTAIN A LOSS OF UP TO 5% OF THE PRINCIPAL AMOUNT OF THEIR SECURITIES IF THE BASKET MATURITY VALUE IS LESS THAN 100. FOR OTHER INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS, SEE "SPECIAL CONSIDERATIONS" IN THIS PROSPECTUS SUPPLEMENT. The Securities will originally be issued as certificates in registered form. Forty-five calendar days after the closing of the offering, each registered holder will have the option to convert the form of such holder's Securities from certificated to book-entry form within a forty-five calendar day period as described herein. Ownership of converted Securities will be maintained in book-entry form by or through the Depository. Beneficial owners of Securities in book-entry form will not have the right to receive physical certificates evidencing their ownership except under the limited circumstances described herein. Application has been made to list the SUNS on the American Stock Exchange (the "AMEX") under the symbol "BKG". Lehman Brothers Inc., a wholly owned subsidiary of Holdings, may, but is not obligated to, purchase and sell the Securities for its own account for the purpose of making a market in the Securities. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNDERWRITING DISCOUNTS PROCEEDS TO PRICE TO PUBLIC AND COMMISSIONS(1) HOLDINGS(2) - ----------------------------------------------------------------------------------------------------- Per Security.................... $25.00 $ $ - ----------------------------------------------------------------------------------------------------- Total(3)........................ $37,500,000 $ $ - ----------------------------------------------------------------------------------------------------- - -----------------------------------------------------------------------------------------------------
(1) Holdings has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933. See "Underwriting." (2) Before deducting other expenses payable by Holdings estimated at $ . (3) Holdings has granted the Underwriters a 30-day option to purchase up to an additional 225,000 SUNS solely to cover over-allotments. If such option is exercised in full, the total Price to Public, Underwriting Discounts and Commissions and Proceeds to Holdings, before deducting expenses, will be $ , $ and $ , respectively. See "Underwriting." ------------------------ The Securities offered by this Prospectus Supplement are offered by the Underwriters subject to prior sale, withdrawal, cancellation or modification of the offer without notice, to delivery to and acceptance by the Underwriters and to certain further conditions. The Underwriters reserve the right to reject orders in whole or in part. It is expected that delivery of the Securities will be made at the offices of Lehman Brothers Inc., New York, New York, on or about November , 1994. This Prospectus Supplement together with the accompanying Prospectus may also be used by Lehman Brothers Inc. in connection with offers and sales of Securities related to market making transactions, by and through Lehman Brothers Inc., at negotiated prices relating to prevailing market prices at the time of sale or otherwise. Lehman Brothers Inc. may act as principal or agent in such transactions. ------------------------ LEHMAN BROTHERS KEMPER SECURITIES, INC. OPPENHEIMER & CO., INC. November , 1994 4 "SUNS" and "Stock Upside Note Securities" are service marks of Lehman Brothers Inc. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE AMERICAN STOCK EXCHANGE, IN THE OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. S-2 5 SUMMARY The following summary does not purport to be complete and is qualified in its entirety by the more detailed information set forth elsewhere or incorporated by reference in this Prospectus Supplement and the accompanying Prospectus. Issuer..................... Lehman Brothers Holdings Inc. ("Holdings"). Securities Offered......... 1,500,000 Regional Bank Stock Upside Note Securities Due 1996 (the "Securities" or "SUNS"). The Securities are to be issued as a series of Debt Securities under the Senior Indenture described in the accompanying Prospectus and will constitute Senior Debt of Holdings. Issue Price................ $25 per SUNS. Denominations.............. $25 and integral multiples thereof. Stated Maturity............ , 1996 (the "Stated Maturity"). Interest................... There will be no payments with respect to the Securities prior to Maturity. Maturity Payment Amount.... At Stated Maturity each Holder will be entitled to receive an amount (the "Maturity Payment Amount") with respect to each $25 principal amount of Securities equal to the following: Basket Maturity Value - 100 $25 x [ 1 + ( --------------- x Participation ) ] 100 Percentage provided that, the Maturity Payment Amount will not be less than $23.75. The Participation Percentage will be % if the Basket Maturity Value is greater than 100 and 100% if the Basket Maturity Value is equal to or less than 100. The basket maturity value (the "Basket Maturity Value"), will be determined by Lehman Brothers Inc., an affiliate of Holdings (the "Calculation Agent"), and, subject to certain exceptions described herein, will equal the sum of the products of the Average Market Prices and the applicable Multipliers for the securities in the Basket (each a "Basket Security" and collectively the "Basket Securities"). The average market price (the "Average Market Price") of a Basket Security will equal the average (mean) of the Market Prices (determined as described herein) of such Basket Security determined on the first ten Calculation Days occurring during the period beginning on the twentieth Trading Day prior to Stated Maturity, and on each succeeding Trading Day up to and including the eleventh Trading Day prior to Stated Maturity (the "Calculation Period"). If there are fewer than ten Calculation Days with respect to a Basket Security, then the Average Market Price will equal the average (mean) of the Market Prices on such Calculation Days, and if there is only one Calculation Day, the Average Market Price will equal the Market Price on such Calculation Day. The multiplier (the "Multiplier") relating to each Basket Security is specified under the caption "Description of Securities -- Basket Securities" below and indicates the number of shares (or the fraction of one share) of such Basket Security included in the calculation of the Basket Maturity Value. The Multipliers will remain constant for the term of the Securities unless adjusted for certain corporate events such as stock splits, reverse stock splits or stock dividends. In the event of a merger or consolidation of an issuer of a Basket Security in which such issuer is not the surviving entity, the value of such Basket Security will be based on the value of the consideration received in exchange for such Basket Security, as adjusted for the accrual of interest. See "Description of Securities -- Adjustments to the Multiplier and Basket" and "Description of Securities -- Maturity Payment Amount." See also "Description of Securities -- Events of Default and Acceleration" for a description of payments upon any acceleration of the maturity of the Securities. Regional Bank Basket....... The Regional Bank Basket (the "Basket") is made up of the stocks of 20 corporations operating as bank holding companies in the United States, 19 of which operate regional banks and one of which operates a national S-3 6 bank. Ownership of the Securities will not entitle Holders to receive Basket Securities. The Basket Securities have significantly different levels of market value (i.e., the number of shares outstanding of a security multiplied by the current price of such security). The original Multipliers will be determined so that each Basket Security represents an equal percentage of the Original Basket Value (as defined below) on the date the Securities are priced for initial sale to the public. See "Description of Securities -- Basket Securities" in this Prospectus Supplement. The inclusion of a Basket Security in the Basket is not a recommendation to buy or sell such Basket Security, and neither Holdings nor any of its affiliates make any representation as to the performance of the Basket or any Basket Securities. Basket Value............... The basket value (the "Basket Value") for any day will equal the sum of the products of the most recently available Market Prices and the applicable Multipliers for the Basket Securities. The Basket Maturity Value, however, is calculated based on Average Market Prices for certain days. As long as SUNS are listed on the AMEX, the AMEX intends to calculate and disseminate the value of the Basket based on the most recently reported prices at approximately 15 second intervals during AMEX business hours and the Basket Value at the end of such day to vendors via the facilities of the AMEX Tape under the symbol "BXK." See "Description of Securities -- Maturity Payment Amount" in this Prospectus Supplement. Original Basket Value...... Based on the individual prices of the Basket Securities on the date that the Securities are priced for initial offering to the public, the Multiplier for each Basket Security will be initially set so that the Basket Value on such date (the "Original Basket Value") will equal 100. Special Considerations..... The Securities are subject to certain special considerations. Investors should be aware that if the Basket Maturity Value is less than 100, at Maturity Holders will receive a Maturity Payment Amount that is up to 5% less than the Issue Price, even if the value of the Basket as of some interim period or periods prior to the Calculation Period may have exceeded 100, because the Maturity Payment Amount is calculated on the basis of the Basket Maturity Value only. The Basket Maturity Value does not reflect the payment of dividends on the Basket Securities and therefore the yield based on the appreciation of the Basket, if any, for the period from the date of determination of the Original Basket Value through the end of the Calculation Period will not produce the same yield as if the Basket Securities were purchased and held for a similar period. Moreover, there can be no assurance as to how the Securities will trade in the secondary market or whether such market will be liquid. The price at which a Holder will be able to sell Securities prior to Maturity may be at a discount from the principal amount thereof, if, among other things, the Basket Value at such time is below, equal to or not sufficiently above the Original Basket Value. It is expected that the secondary market for the Securities will be affected by a number of factors, including changes in interest rates, the volatility of the Basket Value, the time remaining to Stated Maturity and changes in dividend rates. See "Special Considerations" herein. Holders of the Securities will receive the Maturity Payment Amount at Maturity and will not have any right at any time to receive any of the Basket Securities or any ownership right or interest in such Basket Securities, even though the return on the investment in the Securities is based on the value of the Basket. It is suggested that prospective investors who consider purchasing the Securities should reach an investment decision only after carefully considering with their advisers the suitability of an investment in the Securities in the light of their particular circumstances. Investors should also consider risks specific to the banking industry. See "The Basket -- The Banking Industry" in this Prospectus Supplement. Investors should also consider the tax consequences of investing in the Securities. See "Certain United States Federal Income Tax Consequences" in this Prospectus Supplement. S-4 7 USE OF PROCEEDS The net proceeds from the sale of the Securities will be used as described under "Use of Proceeds" in the accompanying Prospectus and to hedge market risks affecting the value of the Maturity Payment Amount (described below under "Description of Securities -- Maturity Payment Amount"). SPECIAL CONSIDERATIONS PAYMENT AT MATURITY If the Basket Maturity Value is less than 100, the Maturity Payment Amount with respect to the Securities will be up to 5% less than the Issue Price. This will be true even though the value of the Basket as of some interim period or periods prior to the Calculation Period may have exceeded 100, because the Maturity Payment Amount is calculated on the basis of the Basket Maturity Value only. PURCHASERS OF SECURITIES SHOULD BE PREPARED TO SUSTAIN A LOSS OF UP TO 5% OF THE PRINCIPAL AMOUNT OF THEIR SECURITIES. Even if the principal of the Securities is fully returned, such return of principal will not reflect any opportunity cost implied by inflation and other factors relating to the time value of money. The Basket Maturity Value does not reflect the payment of dividends on the Basket Securities and therefore the yield based on the appreciation of the Basket, if any, for the period from the date of determination of the Original Basket Value through the end of the Calculation Period will not produce the same yield as if the Basket Securities were purchased and held for a similar period. TRADING Application has been made to list the Securities on the AMEX. There can be no assurance as to how the Securities will trade in the secondary market or whether such market will be liquid. It is expected that the secondary market for the Securities will be affected by a number of factors. The trading value of the Securities is expected to depend primarily on the extent of the appreciation, if any, of the Basket Value over the Original Basket Value of 100. However, the price at which a Holder will be able to sell Securities prior to Maturity may be at a discount from the principal amount thereof if, at such time, the Basket Value is below, equal to or not sufficiently above 100. A discount could also result from increased interest rates, increased dividends or decreased volatility of the Basket Securities. Before selling Securities, a Holder of Securities should carefully consider, among other things, (i) the trading price of the Securities, (ii) the Basket Value at the time, (iii) the time remaining to Stated Maturity, (iv) prevailing interest rates and (v) any related transaction costs. The trading value of the Securities may be affected by a number of interrelated factors, including those listed below. The relationship among these factors is complex. Accordingly, investors should be aware that factors other than the Basket Value are likely to affect the trading value of the Securities. The expected effect on the trading value of the Securities of each of the factors listed below, assuming in each case that all other factors are held constant, is as follows: Interest Rates. In general, if U.S. interest rates increase, the value of the Securities is expected to decrease. If U.S. interest rates decrease, the value of the Securities is expected to increase. Volatility of the Basket Value. If the volatility of the Basket Value increases, the trading value of the Securities is expected to increase. If the volatility of the Basket Value decreases, the trading value of the Securities is expected to decrease. Time Remaining to Stated Maturity. The Securities may trade at a value other than that which may be inferred from the level of interest rates and the Basket Value. This difference may be due to expectations concerning interest rates, volatility and the value of the Basket Value during the period prior to Stated Maturity. As the time remaining to Stated Maturity decreases, this difference in value is expected to decrease. S-5 8 Dividend Rates. If dividend rates on the stocks comprising the Basket Securities increase, the value of the Securities is expected to decrease. Conversely, if dividend rates on the Basket Securities decrease, the value of the Securities is expected to increase. OTHER CONSIDERATIONS It is suggested that prospective investors who consider purchasing the Securities should reach an investment decision only after carefully considering with their advisers the suitability of the Securities in the light of their particular circumstances. Investors should also consider the risks specific to the banking industry. See "The Basket -- The Banking Industry" in this Prospectus Supplement. Investors should also consider the tax consequences of investing in the Securities. See "Certain United States Federal Income Tax Consequences" in this Prospectus Supplement. S-6 9 DESCRIPTION OF SECURITIES GENERAL The Securities are to be issued as a series of Debt Securities under the Senior Indenture, which is more fully described in the accompanying Prospectus. The following description of the particular terms of the Securities offered hereby supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of the Debt Securities set forth under the heading "Description of Debt Securities" in the accompanying Prospectus. For a description of the rights attaching to different series of Debt Securities under the Senior Indenture, see "Description of Debt Securities" in the accompanying Prospectus. The Securities constitute "Senior Debt" as defined in the accompanying Prospectus. Certain capitalized terms used herein have the meanings ascribed thereto in the accompanying Prospectus. Reference is also made to the Glossary for certain defined terms used herein and the locations of other defined terms used herein. The aggregate number of SUNS to be issued will be 1,500,000, subject to the over-allotment option granted by Holdings to the Underwriters (see "Underwriting" in this Prospectus Supplement). The Securities will be issued at 100% of their principal amount in denominations of $25 and integral multiples thereof. The Securities will mature on , 1996. The Securities are not redeemable by Holdings or repayable at the option of any Holder prior to Stated Maturity and are not subject to any sinking fund. Upon the occurrence of an Event of Default with respect to the Securities, Holders of the Securities may accelerate the Maturity of the Securities, as described under "Description of Securities -- Events of Default and Acceleration" in this Prospectus Supplement and "Description of Debt Securities -- Events of Default" in the accompanying Prospectus. There will be no payments with respect to the Securities prior to Maturity. MATURITY PAYMENT AMOUNT At Stated Maturity each Holder will be entitled to receive an amount with respect to each $25 principal amount of Securities equal to the following: Basket Maturity Value -100 $25 x [ 1 + ( ---------------------------- x Participation Percentage ) ] 100 provided that, the Maturity Payment Amount will not be less than $23.75. The Participation Percentage will be % if the Basket Maturity Value is greater than 100 and 100% if the Basket Maturity Value is equal to or less than 100. The Basket Maturity Value will be determined by Lehman Brothers Inc. as Calculation Agent. The Basket Maturity Value, subject to certain exceptions described herein, will equal the sum of the products of the Average Market Prices and the applicable Multipliers for each Basket Security. The Average Market Price of a Basket Security will equal the average (mean) of the Market Prices (determined as described herein) of such Basket Security determined on the first ten Calculation Days occurring during the period beginning on the twentieth Trading Day prior to Stated Maturity and on each succeeding Trading Day up to and including the eleventh Trading Day prior to Stated Maturity. If there are fewer than ten Calculation Days with respect to a Basket Security, then the Average Market Price will equal the average (mean) of the Market Prices on such Calculation Days, and if there is only one Calculation Day, the Average Market Price will equal the Market Price on such Calculation Day. The Multiplier relating to each Basket Security is specified under the caption "Description of Securities -- Basket Securities" below and indicates the number of shares (or the fraction of one share) of such Basket Security included in the calculation of the Basket Maturity Value. The Multipliers will remain constant for the term of the Securities unless adjusted for certain corporate events such as stock splits, reverse stock splits or stock dividends. See "Description of Securities -- Basket Securities -- Adjustments to the Multiplier and Basket" in this Prospectus Supplement. "Calculation Day" with respect to a Basket Security means any Trading Day during the Calculation Period on which a Market Disruption Event has not occurred. If a Market Disruption Event occurs on all Trading Days during S-7 10 the Calculation Period then the eleventh scheduled Trading Day prior to Stated Maturity will be deemed a Calculation Day, notwithstanding the Market Disruption Event. "Market Price," which will be determined by the Calculation Agent based on information reasonably available to it, means for a Calculation Day the following: (i) If the Basket Security is listed on a national securities exchange or is a NASDAQ National Market System ("NASDAQ NMS") security, Market Price means the last reported sale price at 4:00 p.m., New York City time, regular way, on such day on the principal securities exchange registered under the Securities Exchange Act of 1934 on which such Basket Security is listed or admitted to trading or NASDAQ NMS, as the case may be. (ii) If the Basket Security is not listed on a national securities exchange or is not a NASDAQ NMS security, Market Price means the last reported sale price on the over-the-counter market. As used herein, "Trading Day" shall mean a day on which trading is generally conducted on the New York Stock Exchange ("NYSE"), AMEX and NASDAQ NMS and in the over-the-counter market for equity securities as determined by the Calculation Agent. "Market Disruption Event" with respect to a Basket Security means any of the following events as determined by the Calculation Agent: (i) the suspension or material limitation in the trading of such Basket Security for more than two hours of trading or during the period one-half hour prior to the time that such Basket Security is to be priced (for purposes of this definition, limitations pursuant to NYSE Rule 80A (or any applicable rule or regulation enacted or promulgated by the NYSE, any other self regulatory organization or the Securities and Exchange Commission of similar scope as determined by the Calculation Agent) on trading during significant market fluctuations shall be considered "material"), (ii) the suspension or material limitation (whether by reason of movements in price otherwise exceeding levels permitted by the relevant exchange or otherwise) in the trading of option contracts related to a Basket Security traded on any exchange for more than two hours of trading or during the period one-half hour prior to the time that such Basket Security is to be priced, or (iii) a banking moratorium has been declared by federal or any state authorities. For the purposes of this definition, a limitation on the hours in a trading day and/or number of days of trading will not constitute a Market Disruption Event if it results from an announced change in the regular business hours of the relevant exchange. All percentages resulting from any calculation on the Securities will be rounded to the nearest one hundred-thousandth of a percentage point, with five one millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting from such calculation will be rounded to the nearest cent with one-half cent being rounded upwards. S-8 11 BASKET SECURITIES The stocks listed below will be used to calculate the value of the Basket. Holders of the Securities will not have any right to receive the Basket Securities. The following table sets forth the Basket Securities, the primary exchange on which the Basket Securities are traded, the market capitalization of the respective issuers of the Basket Securities and the initial Multipliers. Each Basket Security will initially represent 5.0% of the Original Basket Value.
APPROXIMATE MARKET VALUE PRIMARY OF ISSUER OF ISSUER OF THE EXCHANGE OF BASKET INITIAL BASKET SECURITY BASKET SECURITY SECURITY(1) MULTIPLIER --------------- ----------------- ------------ ----------- ($MM) 1. Bancorp Hawaii, Inc. .......................................... NYSE 1,192.60 2. Barnett Banks, Inc. ........................................... NYSE 4,108.37 3. Baybanks, Inc. ................................................ NASDAQ NMS 1,118.40 4. Citizens Bancorp............................................... NASDAQ NMS 428.17 5. City National Corporation...................................... NYSE 462.27 6. CoreStates Financial Corp. .................................... NYSE 3,674.03 7. First American Corporation..................................... NASDAQ NMS 822.25 8. First Chicago Corporation...................................... NYSE 4,424.21 9. Hibernia Corporation........................................... NYSE 731.51 10. Mercantile Bancorporation Inc.................................. NYSE 1,493.16 11. Michigan National Corporation.................................. NASDAQ NMS 1,193.44 12. Midlantic Corporation.......................................... NASDAQ NMS 1,475.48 13. North Fork Bancorporation, Inc. ............................... NYSE 221.29 14. Provident Bankshares Corporation............................... NASDAQ NMS 156.63 15. Summit Bancorporation.......................................... NASDAQ NMS 529.78 16. U.S. Bancorp................................................... NASDAQ NMS 2,486.02 17. UJB Financial Corp. ........................................... NYSE 1,450.62 18. Union Planters Corporation..................................... NYSE 547.32 19. UST Corp. ..................................................... NASDAQ NMS 186.86 20. Vermont Financial Services Corp. .............................. NASDAQ NMS 102.74
- --------------- (1) The approximate total market value of the issuer of a Basket Security was calculated by multiplying the most recent publicly available number of outstanding shares of the Basket Security of such issuer by the Market Price for such shares on October 21, 1994. The initial Multiplier relating to each Basket Security will indicate the number of shares (or the fraction of one share) of such Basket Security, given the market price of such Basket Security, required to be included in the calculation of the Original Basket Value so that each Basket Security represents an equal percentage (i.e., 5.0%) of the Original Basket Value. The price of each Basket Security used to calculate the initial Multiplier relating to each such Basket Security will be the closing price of such Basket Security on the date that the Securities are priced by Holdings for initial sale to the public. The respective Multipliers will remain constant for the term of the Securities unless adjusted for certain corporate events, as described below. The Basket Value, for any day, will equal the sum of the products of the most recently available Market Prices for the most recent Trading Day with respect to each Basket Security and the applicable Multipliers for the Basket Securities. The Basket Maturity Value, however, is calculated based on the average Market Prices for certain days. The AMEX has informed Holdings that, as long as SUNS are listed on the AMEX, it intends to calculate and disseminate the value of the Basket based on the most recently reported prices at approximately 15 second intervals during AMEX business hours and the Basket Value at the end of such day to vendors via the facilities of the AMEX Tape under the symbol "BXK." In the event a Basket Security is converted into a Cash Component (as defined below), the interest that has accrued on any given day will only be reflected in the Basket Value quoted by the AMEX at the end of such day and not in the values disseminated at interim periods during the day. S-9 12 ADJUSTMENTS TO THE MULTIPLIER AND BASKET The Multiplier with respect to any Basket Security and the Basket will be adjusted by the Calculation Agent as follows: 1. If a Basket Security is subject to a stock split or reverse stock split then once such split has become effective, the Multiplier relating to such Basket Security will be adjusted to equal the product of the number of shares outstanding after such split has become effective with respect to each share of such Basket Security outstanding immediately prior to the effectiveness of such split and the prior Multiplier. 2. If a Basket Security is subject to an extraordinary stock dividend or extraordinary stock distribution (i.e., issuance of additional shares of the Basket Security other than in lieu of an ordinary cash dividend) that is given equally to all holders of shares of the issuer of such Basket Security, then once such Basket Security is trading ex-dividend, the Multiplier will be adjusted so that the new Multiplier shall equal the former Multiplier plus the product of the number of shares of such Basket Security issued with respect to one such share of Basket Security and the prior Multiplier. 3. If the issuer of a Basket Security is being liquidated or dissolved or is subject to a proceeding under any applicable bankruptcy, insolvency or other similar law such Basket Security will continue to be included in the Basket so long as a Market Price for such Basket Security is available. Subject to paragraph 7 below, if a Market Price is no longer available for a Basket Security for whatever reason, including the liquidation or dissolution of the issuer of such Basket Security or the subjection of the issuer of such Basket Security to a proceeding under any applicable bankruptcy, insolvency or other similar law, then the value of such Basket Security will equal zero in connection with calculating the Basket Value and the Basket Maturity Value for so long as no Market Price is available, and no attempt will be made to find a replacement stock or increase the value of the Basket to compensate for the deletion of such Basket Security. 4. If the issuer of a Basket Security has been subject to a merger or consolidation and is not the surviving entity and holders of such Basket Security are entitled to receive cash or securities in exchange for such Basket Security, then a value for such Basket Security will be determined (i) in the case of cash, at the time of receipt by such holders and will equal the amount of such cash consideration, and (ii) in the case of securities, on the first Trading Day on which such securities are traded regular way, and will equal the Market Price of such securities (in each case (i) and (ii), the "Cash Component"); provided, that if such securities do not have a Market Price, the Cash Component shall be the fair market value of such securities, as determined by the Calculation Agent. The Cash Component, as adjusted for the accrual of interest described below, will be constant for the remaining term of the Securities. No adjustment will be made to the Multiplier of such Basket Security. The Cash Component will accrue interest at a rate equal to the London Inter-Bank Offered Rate ("LIBOR") with a term equal to the period of time from the Interest Commencement Date (as defined below) to , 1996 (the "Specified Maturity"), determined and fixed on the first Business Day (the "LIBOR Determination Date") that is immediately following the date of determination of such Cash Component. LIBOR will accrue on such Cash Component commencing (i) in the case of cash, on the second London Business Day following such LIBOR Determination Date and (ii) in the case of securities, on the fifth Business Day following such LIBOR Determination Date (in each case (i) and (ii), the "Interest Commencement Date") up to and including the Specified Maturity. LIBOR, will be determined by the Calculation Agent in accordance with the following provisions: (i) On the relevant LIBOR Determination Date, LIBOR will be determined through the application of linear interpolation by reference to the offered rates for deposits of not less than U.S.$1,000,000 having a maturity immediately before and immediately after the Specified Maturity, commencing on the Interest Commencement Date, which appear either (a) if the Specified Maturity is one year or less from the relevant LIBOR Determination Date, on the display designated as Page 3750 on the Dow Jones Telerate Service (or such other page as may replace Page 3750 on that service for the purpose of displaying London Interbank offered rates of major banks) ("Telerate S-10 13 Page 3750"), or (b) if the Specified Maturity is more than one year from the relevant LIBOR Determination Date, on each of Telerate Page 3750 and on the display designated as page "SWAP" on the Reuter Monitor Money Rates Service (or such other page as may replace the SWAP page on that service for the purpose of displaying London Interbank offered rates of major banks) ("Reuters-SWAP"), in each case as of 11:00 A.M., London time; provided that if there is an offered rate for the Specified Maturity, then LIBOR will be such offered rate. If such offered rates do not appear, LIBOR with respect to such LIBOR Determination Date will be determined as described in (ii) below. (ii) With respect to a LIBOR Determination Date on which no such offered rates appear on Telerate Page 3750 or Reuters SWAP as described in (i) above, LIBOR will be determined on the basis of the rates at approximately 11:00 A.M., London time, on such LIBOR Determination Date, at which deposits in U.S. dollars having the Specified Maturity are offered to prime banks in the London Interbank market by four major banks in the London Interbank market selected by the Calculation Agent commencing on the Interest Commencement Date and in a principal amount equal to an amount not less than U.S.$1,000,000 that in the Calculation Agent's judgment is representative for a single transaction in such market at such time (a "Representative Amount"). The Calculation Agent will request the principal London office of each of such banks to provide a quotation of its rate. If at least two such quotations are provided, LIBOR with respect to such LIBOR Determination Date will be calculated by reference to the arithmetic mean of such quotations. If fewer than two quotations are provided, LIBOR with respect to such LIBOR Determination Date will be calculated by reference to the arithmetic mean of the rates quoted at approximately 11:00 A.M., New York City time, on such LIBOR Determination Date by three major banks in The City of New York, selected by the Calculation Agent, for loans in U.S. dollars to leading European banks having the Specified Maturity commencing on the Interest Commencement Date and in a Representative Amount; provided, however, that if fewer than three banks selected as aforesaid by the Calculation Agent are quoting as mentioned in this sentence, LIBOR with respect to such Cash sub-component will be the LIBOR as last in effect. "London Business Day" means any day on which dealings in deposits in U.S. dollars are transacted in the London interbank market. The value of any Basket Security converted into a Cash Component as of any given day will equal the sum of the Cash Component and all interest accrued thereon as of such day. The interest that has accrued on any given day will only be reflected in the Basket Value quoted by the AMEX at the end of such day and not in the values disseminated at interim periods during the day. For purposes of calculating the Basket Maturity Value, the value of any such Basket Security will equal the sum of the Cash Component and all interest accrued up to and including the Specified Maturity. Interest will not be compounded. 5. If all the Basket Securities of any class or series of an issuer are converted into or exchanged for the same or a different number of shares of any class or classes of equity security other than such Basket Security, whether by capital reorganization, recapitalization, reclassification or otherwise, (other than pursuant to paragraph 4 above) then, once such conversion has become effective, the former Basket Security will be removed from the Basket and such new equity securities will be added to the Basket as new Basket Securities. The Multiplier for each such new Basket Security will equal the product of the last value of the Multiplier with respect to the former Basket Security and the number of shares of such new Basket Security issued with respect to one share of the former Basket Security. 6. If the issuer of a Basket Security issues to all of its shareholders equity securities of an issuer other than the issuer of the Basket Security, then such new equity securities will be added to the Basket as a new Basket Security. The Multiplier for such new Basket Security will equal the product of the last value of the Multiplier with respect to the Basket Security for which the new Basket Security is being S-11 14 issued (the "Original Basket Security") and the number of shares of the new Basket Security issued with respect to one share of the Original Basket Security. 7. If a Basket Security is subject to an extraordinary dividend or an extraordinary distribution (including upon liquidation or dissolution) of cash or other property of any kind (other than any such dividend or distribution otherwise addressed in the preceding paragraphs) which is received equally by all holders of such Basket Securities, then the Calculation Agent shall determine the fair market value, if any, of such cash or other property received in respect of each share of such Basket Security and the Basket shall thereafter be deemed to include an amount equal to the product of the Multiplier on such date and such fair market value. No adjustments of any Multiplier of a Basket Security will be required unless such adjustment would require a change of at least 1% in the Multiplier then in effect. The Multiplier resulting from any of the adjustments specified above will be rounded to the nearest one thousandth with five ten-thousandths being rounded upward. S-12 15 THE BASKET GENERAL While the Basket consists of stocks of issuers that operate as bank holding companies in the United States, the Basket is not intended to provide an indication of the pattern of price movements of common stocks of bank holding companies generally. Nineteen of the 20 bank holding companies whose stocks comprise the Basket are engaged in the regional banking business and one is engaged in the national banking business. Each of the issuers of a Basket Security files certain information reports with the Securities and Exchange Commission (the "SEC") pursuant to the Securities Exchange Act of 1934. Such reports generally contain a description of the business of the issuer, financial statements and certain other information which may be material to potential investors in the Securities. THE INCLUSION OF A BASKET SECURITY IN THE BASKET IS NOT A RECOMMENDATION TO BUY OR SELL SUCH BASKET SECURITY, AND NEITHER HOLDINGS NOR ANY OF ITS AFFILIATES MAKE ANY REPRESENTATION TO ANY PURCHASER OF SECURITIES AS TO THE PERFORMANCE OF THE BASKET OR ANY BASKET SECURITY. THIS PROSPECTUS SUPPLEMENT RELATES ONLY TO THE SUNS OFFERED HEREBY AND DOES NOT RELATE TO THE BASKET SECURITIES. ALL DISCLOSURES CONTAINED IN THIS PROSPECTUS SUPPLEMENT REGARDING THE ISSUERS OF THE BASKET SECURITIES ARE DERIVED FROM THE PUBLICLY AVAILABLE DOCUMENTS DESCRIBED IN THE PRECEDING PARAGRAPH. NEITHER HOLDINGS NOR THE UNDERWRITERS HAVE VERIFIED EITHER THE ACCURACY OR THE COMPLETENESS OF THE INFORMATION CONCERNING THE ISSUERS OF THE BASKET SECURITIES INCLUDED THEREIN. THUS, THERE CAN BE NO ASSURANCE THAT ALL EVENTS OCCURRING PRIOR TO THE DATE HEREOF (INCLUDING EVENTS THAT WOULD AFFECT THE ACCURACY OR COMPLETENESS OF THE PUBLICLY AVAILABLE DOCUMENTS DESCRIBED IN THE PRECEDING PARAGRAPH) THAT WOULD AFFECT THE TRADING PRICE OF THE BASKET SECURITIES HAVE BEEN PUBLICLY DISCLOSED. BECAUSE THE AMOUNT PAYABLE AT MATURITY IS RELATED TO THE TRADING PRICE OF THE BASKET SECURITIES, SUCH EVENTS, IF ANY, WOULD ALSO AFFECT THE TRADING PRICE OF THE SUNS. HOLDINGS DOES NOT INTEND TO FURNISH TO HOLDERS OF SUNS SUBSEQUENT INFORMATION WITH RESPECT TO THE ISSUERS OF THE BASKET SECURITIES. Holdings or its affiliates may presently or from time to time engage in business with one or more of the issuers of the Basket Securities or with persons seeking to acquire such issuers, including providing advisory services to such issuers or other persons, including merger and acquisition advisory services. In the course of such business, Holdings or its affiliates may acquire non-public information with respect to such issuers and, in addition, one or more affiliates of Holdings may publish research reports with respect to such issuers. The actions described in the preceding sentences, including merger and acquisition advisory services, may directly adversely effect the Market Prices of the Basket Securities. Holdings does not make any representation to any purchaser of a Security with respect to any matters whatsoever relating to such issuers. Any prospective purchaser of a Security should undertake an independent investigation of the issuers of the Basket Securities as in its judgment is appropriate to make an informed decision with respect to an investment in the Securities. THE BANKING INDUSTRY The commercial banking industry in the United States is (i) subject to intense competition, (ii) extensively regulated, (iii) facing significant economic, regulatory and political risks and (iv) undergoing extensive consolidation -- each of which affects the prices of the equity securities of commercial banks and their holding companies, including the stocks in the Basket. Most commercial banking organizations and their affiliates face intense competition across many product lines from other commercial banks, savings banks, savings and loan associations, investment advisory firms, finance companies, mutual funds, insurance firms, brokerage firms and credit unions, many of which are not subject to the same or even similar regulatory burdens and restrictions and some of which for a variety of reasons are larger and have significantly more resources. The activities of commercial banks and their holding companies and affiliates are subject to extensive regulation under both federal and state law. The activities of such organizations are typically limited to those S-13 16 expressly provided for by law or otherwise considered necessary or incidental to carrying on the business of banking or closely related thereto, precluding such organizations in many cases from unrestricted participation in the financial services industry, particularly in the insurance and securities areas. Not only does such regulation restrict the types of activities in which such entities are engaged and the services offered, such regulation also imposes substantial restrictions on the manner in which such services and products are provided. Such restrictions include, for example, limitations on interest rates and places of business and extensive customer disclosure requirements. Although the geographical restrictions that were historically imposed on the locations of offices of commercial banks have undergone substantial relaxation over the past ten years, as a result of these restrictions many commercial banking organizations, including many of those in the Basket, operate in a relatively small geographic area in contrast to many of their non-bank competitors. In addition, commercial banking organizations are subject to various affirmative regulatory obligations not otherwise imposed upon many of their competitors. These include capital requirements, obligations to pay deposit insurance premiums and maintain certain non-interest bearing reserves with the Federal Reserve and requirements under various community reinvestment type laws. Most commercial banks face various economic, regulatory and political risks. Most of the significant assets of a commercial banking organization are financial assets the underlying value of which may fluctuate with changes in interest rates or the underlying credit-worthiness of the obligor or borrower. Many commercial banking organizations operate in a relatively small geographic area, resulting in concentration risks and subjecting the performance and financial condition of the organization in many cases directly to the status of the local economies in which it operates. Commercial banks also face the ongoing regulatory and political risk of even more expansive and costly regulation as well as the risk of potentially significant regulatory sanctions should they be found to have serious operational deficiencies or impaired results of operations or financial condition. The imposition of such sanctions can have a significantly adverse effect on a bank's results of operations and financial condition. As a result of significant overcapacity in the industry, the relaxation of geographic restrictions, economies of scale and a variety of other factors, the commercial banking industry in the United States has undergone extensive consolidation during the last ten years and this process is expected to continue in the near future. HISTORICAL INFORMATION The following table sets forth the high and low price for each of the Basket Securities as reported on the exchange in which it trades, during 1991, 1992, 1993 and during 1994 (through October 21, 1994), and the closing price on December 31, 1991, 1992, and 1993 and on October 21, 1994. The historical prices of the Basket Securities should not be taken as an indication of future performance, and no assurance can be given that the prices of the Basket Securities will increase sufficiently to cause the beneficial owners of the Securities to receive an amount greater than the Minimum Maturity Payment Amount at Stated Maturity. The historical stock prices set forth herein have been adjusted to reflect certain corporate events that affected the prices of the Basket Securities, including, but not limited to, scrips issues, rights issues, stock splits, reverse splits, stock dividends, spin-offs and extraordinary dividends. Certain adjustments to the Multiplier and the Basket will be made by the Calculation Agent as set forth under "Description of Securities -- Adjustments to the Multiplier and Basket;" such adjustments may not correspond to the adjustments made in determining the historical stock prices set forth herein.
BASKET SECURITIES HIGH LOW LAST - ----------------- ---- --- ---- Bancorp Hawaii, Inc. 1991........................................................... $31.83 $18.89 $30.00 1992........................................................... 34.67 26.83 29.33 1993........................................................... 35.92 26.67 27.33 1994 (through October 21)...................................... 34.75 27.00 28.13 Barnett Banks, Inc. 1991........................................................... 36.38 15.50 33.50 1992........................................................... 43.63 31.00 41.25 1993........................................................... 50.38 37.38 41.50 1994 (through October 21)...................................... 48.13 39.75 42.13
S-14 17
BASKET SECURITIES HIGH LOW LAST - ----------------- ---- --- ---- Baybanks, Inc. 1991........................................................... 20.00 9.25 19.13 1992........................................................... 41.00 18.50 40.75 1993........................................................... 52.25 37.75 50.75 1994 (through October 21)...................................... 65.25 49.25 59.25 Citizens Bancorp 1991........................................................... 21.00 14.75 16.25 1992........................................................... 22.75 15.75 22.75 1993........................................................... 31.75 21.75 27.00 1994 (through October 21)...................................... 31.50 26.00 28.75 City National Corporation 1991........................................................... $15.75 $ 8.63 $11.88 1992........................................................... 16.00 4.63 6.63 1993........................................................... 11.63 6.38 7.50 1994 (through October 10)...................................... 12.13 7.13 10.25 CoreStates Financial Corp. 1991........................................................... 24.31 12.00 23.94 1992........................................................... 28.94 21.00 28.56 1993........................................................... 30.19 25.13 26.13 1994 (through October 10)...................................... 29.13 24.13 26.00 First American Bancorp 1991........................................................... 18.25 6.00 18.00 1992........................................................... 28.13 18.00 27.50 1993........................................................... 34.50 25.25 32.00 1994 (through October 10)...................................... 35.00 28.75 31.50 First Chicago Corporation 1991........................................................... 28.75 15.63 24.63 1992........................................................... 37.75 22.88 36.75 1993........................................................... 50.63 35.50 43.25 1994 (through October 10)...................................... 55.50 41.13 47.88 Hibernia Corporation 1991........................................................... 8.25 2.00 2.75 1992........................................................... 7.00 2.50 5.88 1993........................................................... 9.13 5.50 7.75 1994 (through October 10)...................................... 9.13 7.25 8.25 Mercantile Bancorporation Inc. 1991........................................................... 25.17 12.67 25.08 1992........................................................... 32.17 23.17 32.17 1993........................................................... 37.67 29.08 30.08 1994 (through October 10)...................................... 39.25 29.92 35.38 Michigan National Corporation 1991........................................................... 42.00 14.25 41.50 1992........................................................... 52.50 40.25 51.25 1993........................................................... 65.00 49.75 57.50 1994 (through October 10)...................................... 80.75 54.63 78.00
S-15 18
BASKET SECURITIES HIGH LOW LAST - ----------------- ---- --- ---- Midlantic Corporation 1991........................................................... 9.38 2.88 4.50 1992........................................................... 21.88 4.38 19.88 1993........................................................... 28.63 17.50 25.50 1994 (through October 10)...................................... 31.88 24.25 28.13 North Fork Bancorporation, Inc. 1991........................................................... 10.75 3.75 4.75 1992........................................................... 9.50 4.25 8.13 1993........................................................... 13.38 7.63 12.88 1994 (through October 10)...................................... 16.88 12.50 15.50 Provident Bankshares Corporation 1991........................................................... $ 8.13 $ 2.75 $ 6.75 1992........................................................... 14.50 6.25 14.25 1993........................................................... 22.00 12.00 19.25 1994 (through October 10)...................................... 27.75 18.25 24.50 Summit Bancorporation 1991........................................................... 14.25 7.75 12.25 1992........................................................... 21.25 12.25 21.00 1993........................................................... 24.75 18.50 21.25 1994 (through October 10)...................................... 23.88 19.00 20.88 U.S. Bancorp 1991........................................................... 23.75 11.75 22.38 1992........................................................... 26.63 19.88 26.38 1993........................................................... 28.88 22.00 25.00 1994 (through October 10)...................................... 28.63 23.50 24.94 UJB Financial Corp. 1991........................................................... 17.50 6.88 14.63 1992........................................................... 24.50 14.00 24.25 1993........................................................... 33.50 21.50 24.00 1994 (through October 10)...................................... 29.25 23.50 26.50 Union Planters Corporation 1991........................................................... 16.88 6.50 14.38 1992........................................................... 24.88 13.50 24.25 1993........................................................... 30.00 22.38 25.13 1994 (through October 10)...................................... 28.88 22.75 23.75 UST Corp. 1991........................................................... 9.05 5.24 6.88 1992........................................................... 10.50 6.50 9.50 1993........................................................... 12.50 7.38 10.63 1994 (through October 10)...................................... 14.38 10.50 10.75 Vermont Financial Services Corp. 1991........................................................... 12.00 4.25 9.50 1992........................................................... 19.50 9.00 15.50 1993........................................................... 23.00 14.50 17.25 1994 (through October 10)...................................... 24.25 16.25 22.00
EVENTS OF DEFAULT AND ACCELERATION In case an Event of Default with respect to any Securities shall have occurred and be continuing, the amount payable to a Holder of a Security upon any acceleration permitted under the Senior Indenture will be equal to the Maturity Payment Amount calculated as though the date of acceleration was the Stated Maturity. S-16 19 See "Description of Securities -- Maturity Payment Amount" herein. If a bankruptcy proceeding is commenced in respect of Holdings, the claim of the Holder of a Security may be limited, under Section 502(b)(2) of Title 11 of the United States Code, to the principal amount of the Security, calculated as though the commencement of the proceeding was the Stated Maturity. CALCULATION AGENT All determinations made by the Calculation Agent shall be at the sole discretion of the Calculation Agent and, in the absence of manifest error, shall be conclusive for all purposes and binding on Holdings and the Holders of the Securities and the Calculation Agent shall have no liability therefor. FORM OF SECURITIES CONVERSION OPTION The Securities will initially be evidenced by certificates in fully registered form (each, a "Certificate"). Forty-five calendar days after the closing of the offering, each Holder will have the option to convert the form of such Holder's Securities from certificated to book-entry form within a forty-five calendar day period (the "Conversion Option Period"). In order to be exchanged for Securities in book-entry form (represented by a beneficial interest in the Global Security described below), a Certificate must be delivered to the Depository in the manner referred to below. The Conversion Option Period is expected to run from , 1994, through , 1994. Certificates received by the Depository for exchange during the Conversion Option Period will be exchanged for Securities in book-entry form by the close of business on the Business Day so received by the Depository (if received by the Depository at its then applicable cut-off time for same day credit) or on the following Business Day (if received by the Depository at its then applicable cut-off time for next day credit). After the last day of the Conversion Option Period, the Depository will not be required to accept delivery of Certificates for exchange for book-entry Securities, but may permit Certificates to be so exchanged on a case-by-case basis. It is anticipated that after the Conversion Option Period, Certificates delivered to the Depository in proper form for deposit will be accepted by the Depository for exchange for book-entry Securities, generally within three to four Business Days after delivery to the Depository. However, there can be no assurance that such Certificates will be accepted for exchange. Further, there can be no assurance, with respect to Certificates accepted for exchange, that exchange will occur within that time period. Securities surrendered at any time for exchange for book-entry Securities may not be delivered for transfer until such exchange has been effected. Since Certificates are not required to be exchanged for Securities in book-entry form, it is likely that not all Certificates will be so exchanged. Accordingly, Holders purchasing Securities in secondary market trading after the Conversion Option Period may wish to make specific arrangements with brokers or other participants or indirect participants if they wish to purchase only Securities in book-entry form and not Certificates. In order to be exchanged for a Security in book-entry form, a Certificate must be delivered to the Depository, in proper form for deposit, by a participant of the Depository. Accordingly, a Holder which is not a participant must deliver its Certificate, in proper form for deposit, to such a participant either directly or through an indirect participant or brokerage firm which maintains an account with the participant, in order to have its Certificate exchanged for a Security in book-entry form. Such Holders who desire to exchange their Certificates for Securities in book-entry form should contact their brokers or other participants or indirect participants to obtain information on procedures for submitting their Certificates to the Depository, including the proper form for submission and (during the Conversion Option Period) the cut-off times for same day and next day exchange. Certificates which are held by the Holder in nominee or "street" name may be automatically exchanged into book-entry form by the broker or other entity in whose name such Certificates are registered, without action of or consent by the beneficial owner of the related Security (i.e., such beneficial owner need not deliver a Certificate). Certificates which have been exchanged into book-entry form may not be re-exchanged for Certificates, except under the limited circumstances described in the accompanying Prospectus under "Global Securities." S-17 20 CERTIFICATES FOR SECURITIES The Trustee will maintain a register (the "Security Register") for registering the ownership of and transfers of Securities represented by Certificates. Prior to due presentment for registration of transfer, Holdings, the Trustee, and any agent of either of them may deem and treat the person in whose name a Certificate is registered (the "registered holder") as the absolute owner of the Securities evidenced by such Certificate for any purpose whatsoever, and as the person entitled to exercise the rights represented by the Securities evidenced thereby, and neither Holdings, the Trustee, nor any agent of either of them shall be affected by any notice to the contrary. Accordingly, if a beneficial owner of a Security evidenced by a Certificate is not the registered holder thereof (for example, if it holds the Certificate through a broker holding such Certificate in nominee or "street" name), it may exercise its rights as a Holder only through the registered holder. The Trustee shall from time to time register the transfer of any outstanding Certificates upon surrender thereof at the Trustee's office, duly endorsed, or accompanied by a written instrument or instruments of transfer in form satisfactory to the Trustee duly executed by the registered holder thereof, by the duly appointed legal representative thereof or by its duly authorized attorney, such signature to be guaranteed by a bank or trust company located, or with a correspondent office, in The City of New York or by a broker or dealer which is a member of a national securities exchange. A new Certificate shall be issued to the transferee upon any such registration of transfer. At the option of a Holder, Certificates may be exchanged for other Certificates, representing a like principal amount of Securities upon surrender to the Trustee at the Trustee's office of the Certificates to be exchanged. Holdings shall thereupon execute, and the Trustee shall countersign and deliver, one or more new Certificates representing a like principal amount of Securities. If any Certificate is mutilated, lost, stolen or destroyed, Holdings may in its discretion execute, and the Trustee may countersign and deliver, in exchange and substitute for and upon cancellation of the mutilated Certificate, or in lieu of the lost, stolen or destroyed Certificate, a new Certificate of like tenor and representing an equivalent principal amount of Securities, but only (in the case of loss, theft or destruction) upon receipt of evidence satisfactory to Holdings and the Trustee of such loss, theft or destruction of such Certificate and security or indemnity, if requested, also satisfactory to them. Applicants for substitute Certificates must also comply with such other reasonable regulations and pay such other reasonable charges as Holdings or the Trustee may prescribe. The Maturity Payment Amount on Securities in certificated form will be payable when due at the office of the Trustee, Citibank, N.A., Corporate Trust Services, at 111 Wall Street, 5th Floor, New York, New York 10043. BOOK-ENTRY FORM Securities held in book-entry form will be held in the form of one or more global certificates (the "Global Security") registered in the name of the nominee of the depository, The Depository Trust Company ("DTC", and together with any successor depository, the "Depository"). Holdings anticipates that the Depository's initial nominee will be CEDE & Co. ("CEDE"). Accordingly, CEDE is expected to be the registered holder of the Securities in book-entry form. DTC is a limited-purpose trust company which was created to hold securities for its participating organizations ("participants") and to facilitate the clearance and settlement of securities transactions between participants through electronic book-entry changes in accounts of its participants. Participants include securities brokers and dealers (including the Underwriters), banks and trust companies, clearing corporations and certain other organizations. Access to DTC's system is also available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly ("indirect participants"). Persons who are not participants may beneficially own securities held by DTC only through participants or indirect participants. DTC's nominee for all purposes will be considered the sole owner or holder of the Securities which are held in book-entry form. Holders which own Securities in book-entry form will not be entitled to have Securities registered in their names, will not be considered the holders thereof under the Senior Indenture, and S-18 21 will not be entitled to exchange their book-entry Securities for definitive form Certificates, except under the limited circumstances described below. A Holder that is not a participant will have its ownership of a Security in book-entry form recorded on or through the records of the brokerage firm or other entity that maintains such Holder's account. In turn, the total number of Securities in book-entry form held by an individual brokerage firm for its clients will be maintained on the records of the Depository in the name of such brokerage firm (or in the name of a participant that acts as agent for the Holder's brokerage firm if such firm is not a participant). Therefore, a Holder must rely upon the foregoing procedures to evidence such Holder's ownership of a Security in book-entry form. Transfer of ownership of a Security in book-entry form may be effected only through the Depository, and, if applicable, the brokerage firm or other entity that maintains the selling Holder's book-entry account. The laws of some states of the United States may require that certain purchasers of securities take physical delivery of such securities in definitive form. Such limits on transfer and such laws may impair the ability to own, transfer or pledge securities in book-entry form. Neither Holdings nor the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made to beneficial owners of book-entry securities or for maintaining, supervising or reviewing any records relating to such beneficial owners. Holdings understands that under existing industry practices, in the event that Holdings requests any action of Holders or that Holders which own Securities in book-entry form desire to give or take any action which Holders are entitled to give or take under the Senior Indenture, the Depository would authorize the participants to give or take such action, and such participants would authorize Holders owning through such participants to give or take such action or would otherwise act upon the instructions of Holders owning through them. Accordingly, each Holder which owns a Security in book-entry form must rely on the procedures of the Depository and, if such Holder is not a participant, on the procedures of the participant through which such Holder owns its Security, to exercise any rights of a Holder under the Senior Indenture. Payment of the principal of Securities registered in the name of the Depository or its nominee will be made to the Depository or its nominee, as the case may be, as the holder of the Global Securities representing such Securities. None of Holdings, the Trustee or any other agent of Holdings or any agent of the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests or for supervising or reviewing any records relating to such beneficial ownership interests. Holdings expects that the Depository, upon receipt of any payment of principal or any interest payment in respect of a Global Security, will credit the accounts of the participants with payment in amounts proportionate to their respective holdings in principal amount of beneficial interest in such Global Security as shown on the records of the Depository. Holdings also expects that payments by participants to Holders will be governed by standing customer instructions and customary practices, as is now the case with Securities held for the accounts of customers in bearer form or registered in "street name", and will be the responsibility of such participants. If at any time (i) the Depository notifies Holdings that it is unwilling or unable to continue as Depository or (ii) Holdings becomes aware that the Depository shall no longer be eligible under the Senior Indenture, Holdings shall appoint a successor Depository. If a successor Depository for the Securities is not appointed by Holdings within 90 days after any such event, Holdings will issue, and the Trustee will authenticate and deliver, Securities in definitive form in an aggregate principal amount equal to the aggregate principal amount of the Global Securities, in denominations of $25 and integral multiples thereof. Such definitive Securities shall be registered in such name or names as the Depository shall instruct the Trustee. It is expected that such instructions will be based upon directions received by the Depository from participants with respect to ownership of beneficial interests in such Global Securities. LISTING Application has been made to list the SUNS on the AMEX under the symbol "BKG". S-19 22 CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES In the opinion of Simpson Thacher & Bartlett, special counsel to Holdings, the following discussion is an accurate summary of the material United States federal income tax consequences of the ownership and disposition of the Securities. The following summary describes certain United States federal income tax consequences of the ownership of Securities as of the date hereof. Except where noted, it deals only with Securities held by initial purchasers as capital assets and does not deal with special situations, such as those of dealers in securities or currencies, financial institutions, life insurance companies, persons holding Securities as part of a hedging or conversion transaction or United States Holders whose "functional currency" is not the U.S. dollar. Furthermore, the discussion below is based upon the provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified so as to result in federal income tax consequences different from those discussed below. PERSONS CONSIDERING THE PURCHASE, OWNERSHIP OR DISPOSITION OF SECURITIES SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE FEDERAL INCOME TAX CONSEQUENCES IN LIGHT OF THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS OF ANY OTHER TAXING JURISDICTION. As used herein, a "United States Holder" of a Security means a Holder that is a citizen or resident of the United States, a corporation, partnership or other entity created or organized in or under the laws of the United States or any political subdivision thereof, or an estate or trust the income of which is subject to United States federal income taxation regardless of its source. A "Non-United States Holder" is a Holder that is not a United States Holder. GENERAL There are no regulations, cases or rulings directly addressing the treatment of securities similar to the Security other than the proposed regulations discussed below. Although not free from doubt, Holdings believes that the Securities should be treated as debt of Holdings for federal income tax purposes. Accordingly, Holdings intends to treat the Securities as debt for U.S. federal income tax purposes and file information returns with the Internal Revenue Service (the "IRS") consistent with such treatment. The discussion that follows is based on such approach. UNITED STATES HOLDERS Taxation of the Maturity Payment Amount Under general principles of U.S. federal income tax law, interest is included in income as ordinary income when paid or accrued, in accordance with a holder's regular method of accounting. Moreover, in accordance with such principles, "contingent interest" on debt is generally not includable in income before the amount of such interest becomes fixed. Accordingly, Holdings intends to treat amounts payable at Maturity in excess of the Issue Price, if any, as contingent interest includable in income by United States Holders as ordinary income at such time. If the amounts payable at Maturity are less than the Issue Price, the Holder should treat such difference as a capital loss. There are no regulations, cases or rulings directly applicable to the treatment of the Securities. The IRS may contend, however, that the Securities should be treated differently for U.S. federal income tax purposes from the treatment described above. Moreover, there can be no assurance that regulations that would apply different rules to the Securities from those described above will not come into effect and apply retroactively to the Securities. In such cases, the timing and character of a United States Holder's income could be affected, but not its aggregate amount. For example, under proposed regulations issued in 1991 (the "Bifurcation Regulations"), a Security could be treated for federal income tax purposes as two separate instruments: (1) a debt instrument of Holdings with a stated redemption price at maturity equal to its principal amount (the "noncontingent debt S-20 23 instrument") and (2) a cash settlement option based upon the value of the Basket that must be exercised by delivering the Security (the "property right"). The Bifurcation Regulations, however, would not apply to the Securities if the Issue Price exceeds the minimum Maturity Payment Amount by more than an "insubstantial amount." The Bifurcation Regulations do not define the term "insubstantial amount." If the Bifurcation Regulations were to apply to the Securities, the timing of income could be significantly accelerated. Moreover, the IRS may contend that rules similar to proposed regulations which were released to replace the Bifurcation Regulations, but which were withdrawn (the "Withdrawn Regulations"), should apply to the Securities. Under the Withdrawn Regulations, United States Holders would be required to accrue some minimum amount of interest income currently over the life of the Security (based on the estimated value of the Basket) with the result that all or a portion of amounts realized by a United States Holder at Maturity or on sale of a Security would be treated as ordinary income and not capital gain. As described above, however, Holdings intends to treat the Securities as requiring no accrual of contingent interest by United States Holders until such amounts are fixed and Holdings will file information returns with the IRS consistent with such treatment. Sale or Exchange of Securities A United States Holder's tax basis in a Security will, in general, be the United States Holder's cost therefor. Upon the sale or exchange of a Security, a United States Holder will recognize gain or loss equal to the difference between the amount realized and the adjusted tax basis of the Security. Although the matter is not free from doubt, under current law such gain or loss should be treated as capital gain or loss. It is possible, however, that the IRS could promulgate regulations that treat all or part of such gain or loss as ordinary and that such regulations could apply retroactively to the Securities. NON-UNITED STATES HOLDERS Under present United States federal income and estate tax law, and subject to the discussion below concerning backup withholding: (a) no withholding of United States federal income tax will be required with respect to the payment by Holdings or any paying agent of the Maturity Payment Amount on a Security owned by a Non-United States Holder, provided (i) that the beneficial owner does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of the Holdings entitled to vote within the meaning of section 871(h)(3) of the Code and the regulations thereunder, (ii) the beneficial owner is not a controlled foreign corporation that is related to Holdings through stock ownership, (iii) the beneficial owner is not a bank whose receipt of interest on a Security is described in section 881(c)(3)(A) of the Code and (iv) the beneficial owner satisfies the statement requirement (described generally below) set forth in section 871(h) and section 881(c) of the Code and the regulations thereunder; (b) no withholding of United States federal income tax will be required with respect to any gain or income realized by a Non-United States Holder upon the sale, exchange or retirement of a Security; and (c) a Security beneficially owned by an individual who at the time of death is a Non-United States Holder will not be subject to United States federal estate tax as a result of such individual's death, provided that such individual does not actually or constructively own 10% or more of the total combined voting power of all classes of stock of Holdings entitled to vote within the meaning of section 871(h)(3) of the Code and provided that the Maturity Payment Amount with respect to such Security would not have been, if received at the time of such individual's death, effectively connected with the conduct of a United States trade or business by such individual. To satisfy the requirement referred to in (a)(iv) above, the beneficial owner of such Security, or a financial institution holding the Security on behalf of such owner, must provide, in accordance with specified procedures, a paying agent of Holdings with a statement to the effect that the beneficial owner is not a United States person, citizen or resident. Pursuant to current temporary Treasury regulations, these requirements will be met if (1) the beneficial owner provides his name and address, and certifies, under penalties of perjury, that S-21 24 he is not a United States person, citizen or resident (which certification may be made on an IRS Form W-8 (or successor form)) or (2) a financial institution holding the Security on behalf of the beneficial owner certifies, under penalties of perjury, that such statement has been received by it and furnishes a paying agent with a copy thereof. Payments to Non-United States Holders not meeting the requirements of paragraph (a) above and thus subject to withholding of United States federal income tax may nevertheless be exempt from such withholding if the beneficial owner of the Security provides Holdings with a properly executed (1) IRS Form 1001 (or successor form) claiming an exemption from withholding under the benefit of a tax treaty or (2) IRS Form 4224 (or successor form) stating that interest paid on the Security is not subject to withholding tax because it is effectively connected with the owner's conduct of a trade or business in the United States. BACKUP WITHHOLDING AND INFORMATION REPORTING In general, information reporting requirements will apply to payment of the Maturity Payment Amount on a Security and to the proceeds of sale of a Security made to United States Holders other than certain exempt recipients (such as corporations). A 31 percent backup withholding tax will apply to such payments if the United States Holder fails to provide a taxpayer identification number or certification of foreign or other exempt status or fails to report in full dividend and interest income. No information reporting or backup withholding will be required with respect to payment of the Maturity Payment Amount by Holdings or any paying agent to Non-United States Holders if a statement described above in (a)(iv) under "Non-United States Holders" has been received and the payor does not have actual knowledge that the beneficial owner is a United States person. In addition, backup withholding and information reporting will not apply if payment of the Maturity Payment Amount on a Security is paid or collected by a foreign office of a custodian, nominee or other foreign agent on behalf of the beneficial owner of such Security, or if a foreign office of a broker (as defined in applicable Treasury regulations) pays the proceeds of the sale of a Security to the owner thereof. If, however, such nominee, custodian, agent or broker is, for United States federal income tax purposes, a United States person, a controlled foreign corporation or a foreign person that derives 50% or more of its gross income for certain periods from the conduct of a trade or business in the United States, such payments will not be subject to backup withholding but will be subject to information reporting, unless (1) such custodian, nominee, agent or broker has documentary evidence in its records that the beneficial owner is not a United States person and certain other conditions are met or (2) the beneficial owner otherwise establishes an exemption. Temporary Treasury regulations provide that the Treasury is considering whether backup withholding will apply with respect to such payment of the Maturity Payment Amount or the proceeds of a sale that are not subject to backup withholding under the current regulations. Under proposed Treasury regulations not currently in effect backup withholding will not apply to such payments absent actual knowledge that the payee is a United States person. Payment of the Maturity Payment Amount on a Security paid to the beneficial owner of a Security by a United States office of a custodian, nominee or agent, or the payment by the United States office of a broker of the proceeds of sale of a Security, will be subject to both backup withholding and information reporting unless the beneficial owner provides the statement referred to in (a)(iv) above and the payor does not have actual knowledge that the beneficial owner is a United States person or otherwise establishes an exemption. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against such Holder's U.S. federal income tax liability provided the required information is furnished to the IRS. S-22 25 UNDERWRITING Subject to the terms and conditions set forth in the Underwriting Agreement dated as of , 1994 (the "Underwriting Agreement"), Holdings has agreed to sell to each of the underwriters named below (the "Underwriters") for whom Lehman Brothers Inc., Kemper Securities, Inc. and Oppenheimer & Co., Inc. are acting as representatives (the "Representatives"), and each of the Underwriters has severally agreed to purchase, the number of SUNS set forth opposite its name below.
UNDERWRITERS NUMBER OF SUNS ------------ -------------- Lehman Brothers Inc. ....................................... Kemper Securities, Inc. .................................... Oppenheimer & Co., Inc. .................................... -------------- Total............................................. 1,500,000 =============
Holdings has been advised by the Representatives that the Underwriters propose initially to offer the Securities to the public at the public offering price set forth on the cover page of this Prospectus Supplement, and to certain dealers at such price less a concession not in excess of $ per Security. The Underwriter may allow and such dealers may reallow a concession not in excess of $ per Security to certain other dealers. After the initial public offering, the public offering price and such concessions may be changed. Holdings has granted an option to the Underwriters, exercisable within 30 days of the date of this Prospectus Supplement, to purchase up to an additional 300,000 SUNS to cover over-allotments, if any, at the price to public less the underwriting discounts and commissions specified on the cover page of this Prospectus Supplement. Lehman Brothers Inc. is a wholly owned subsidiary of Holdings. The participation of Lehman Brothers Inc. in the offer and sale of the SUNS complies with the requirements of Schedule E of the By Laws of the National Association of Securities Dealers regarding underwriting securities of an affiliate. The Representatives have advised Holdings that they intend to make a market in the Securities but the Representatives are not obligated to do so and may discontinue market making without notice at any time for any reason, including, without limitation, as a result of their respective investment banking businesses. No assurance can be given as to the liquidity of the trading market for the Securities. This Prospectus Supplement together with the accompanying Prospectus may also be used by Lehman Brothers Inc. in connection with offers and sales of Securities related to market making transactions, by and through Lehman Brothers Inc., at negotiated prices related to prevailing market prices at the time of sale or otherwise. Lehman Brothers Inc. may act as principal or agent in such transactions. Holdings has agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933. VALIDITY OF THE SECURITIES The validity of the Securities will be passed upon for Holdings by Karen Muller, Esq., Deputy General Counsel of Holdings and for the Underwriters by Sullivan & Cromwell, 125 Broad Street, New York, New York 10004. The Underwriters are being advised as to certain matters by Simpson Thacher & Bartlett (a partnership which includes professional corporations), 425 Lexington Avenue, New York, New York 10017. Simpson Thacher & Bartlett acts as counsel in various matters for Holdings, Lehman Brothers and certain of their subsidiaries. S-23 26 GLOSSARY Set forth below are definitions of some of the terms used in this Prospectus Supplement and not defined in the accompanying Prospectus. "Business Day" means a day of the week which is not a day on which banking institutions in New York, New York, are authorized or required by law to close. "Maturity" of any Security means the date on which the principal of such Security becomes due and payable as provided therein or in the Senior Indenture, whether at Stated Maturity or by declaration of acceleration or otherwise. "Holder" means, with respect to any certificated Security, the Person in whose name the certificate is registered in the Security Register and, with respect to any Global Security, any Beneficial Holder thereof to the extent of such Beneficial Holder's interest therein. In addition, definitions for the following terms are set forth in this Prospectus Supplement at the pages indicated:
DEFINED TERM PAGE ------ AMEX................................................................................. Cover Average Market Price................................................................. S-3 Basket............................................................................... Cover Basket Maturity Value................................................................ S-3 Basket Securities.................................................................... S-3 Basket Security...................................................................... S-3 Basket Value......................................................................... S-4 Calculation Agent.................................................................... S-3 Calculation Day...................................................................... S-7 Calculation Period................................................................... S-3 Cash Component....................................................................... S-10 CEDE................................................................................. S-18 Certificate.......................................................................... S-17 Code................................................................................. S-20 Conversion Option Period............................................................. S-17 Depository........................................................................... S-18 DTC.................................................................................. S-18 Global Security...................................................................... S-18 Holdings............................................................................. Cover indirect participants................................................................ S-18 IRS.................................................................................. S-20 Issue Price.......................................................................... Cover LIBOR................................................................................ S-10 LIBOR Determination Date............................................................. S-10 London Business Day.................................................................. S-11 Market Disruption Event.............................................................. S-8 Market Price......................................................................... S-8 Maturity Payment Amount.............................................................. S-3 Multiplier........................................................................... S-3 NASDAQ NMS........................................................................... S-8 NYSE................................................................................. S-8 Non-United States Holder............................................................. S-20 Original Basket Value................................................................ S-4
S-24 27
DEFINED TERM PAGE ------------ ---- Original Basket Security............................................................. S-12 participants......................................................................... S-18 Participation Percentage............................................................. Cover registered holder.................................................................... S-18 Representatives...................................................................... S-23 SEC.................................................................................. S-13 Securities........................................................................... Cover Security Register.................................................................... S-18 Specified Maturity................................................................... S-10 Stated Maturity...................................................................... S-3 SUNS................................................................................. Cover Trading Day.......................................................................... S-8 Underwriters......................................................................... S-23 Underwriting Agreement............................................................... S-23 United States Holder................................................................. S-20 Withdrawn Regulations................................................................ S-21
S-25 28 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF HOLDINGS SINCE THE DATE HEREOF. NEITHER THIS PROSPECTUS NOR THE ACCOMPANYING PROSPECTUS SUPPLEMENT CONSTITUTES AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. --------------------- TABLE OF CONTENTS
PAGE ---- PROSPECTUS SUPPLEMENT Summary............................... S-3 Use of Proceeds....................... S-5 Special Considerations................ S-5 Description of Securities............. S-7 The Basket............................ S-13 Form of Securities.................... S-17 Certain United States Federal Income Tax Consequences.................... S-20 Underwriting.......................... S-23 Validity of the Securities............ S-23 Glossary.............................. S-24 PROSPECTUS Available Information................. 2 Documents Incorporated by Reference... 2 The Company........................... 3 Use of Proceeds....................... 3 Ratio of Earnings to Fixed Charges.... 3 Description of Debt Securities........ 4 Description of Warrants............... 13 Global Securities..................... 20 United States Taxation................ 22 Capital Requirements.................. 22 Plan of Distribution.................. 23 ERISA Matters......................... 24 Legal Opinions........................ 24 Independent Accountants............... 25 - ------------------------------------------------------ - ------------------------------------------------------
- ------------------------------------------------------ - ------------------------------------------------------ 1,500,000 SUNS LEHMAN BROTHERS HOLDINGS INC. REGIONAL BANK STOCK UPSIDE NOTE SECURITIES DUE 1996 --------------------- PROSPECTUS SUPPLEMENT , 1994 --------------------- LEHMAN BROTHERS KEMPER SECURITIES, INC. OPPENHEIMER & CO., INC. - ------------------------------------------------------ - ------------------------------------------------------ 29 HOW SUNS WORK --------------------------------------- PURCHASE PRICE --------------------------------------- SUNS ARE PURCHASED FOR $25 EACH. --------------------------------------- PAYMENT AT MATURITY --------------------------------------- (THE $100 AMOUNT SPECIFIED IN THE FORMULA BELOW REPRESENTS THE ORIGINAL BASKET VALUE ON THE DATE THAT THE SECURITIES ARE PRICED BY HOLDINGS FOR INITIAL OFFERING TO THE PUBLIC.) Basket Maturity Value -100 $25 x [ + ( ---------------------------- x Participation Percentage ) ] 100 THE PARTICIPATION PERCENTAGE WILL BE 100% IF THE BASKET MATURITY VALUE IS EQUAL TO OR LESS THAN 100, AND % IF THE BASKET MATURITY VALUE IS GREATER THAN 100. IF THE BASKET MATURITY VALUE IS LESS THAN 100, THE AMOUNT PAYABLE AT MATURITY WITH RESPECT TO A SECURITY WILL BE LESS THAN THE PRINCIPAL AMOUNT OF SUCH SECURITY. IN NO EVENT WILL THE INVESTOR RECEIVE AT MATURITY LESS THAN 95% OF PRINCIPAL. -------------------------------------------- COMPONENT STOCKS OF THE REGIONAL BANK BASKET -------------------------------------------- COMPANY NAME BANCORP HAWAII, INC. BARNETT BANKS, INC. BAYBANKS, INC. CITIZENS BANCORP CITY NATIONAL CORPORATION CORESTATES FINANCIAL CORP. FIRST AMERICAN CORPORATION FIRST CHICAGO CORPORATION HIBERNIA CORPORATION MERCANTILE BANCORPORATION, INC. MICHIGAN NATIONAL CORPORATION MIDLANTIC CORPORATION NORTH FORK BANCORPORATION, INC. PROVIDENT BANKSHARES CORPORATION SUMMIT BANCORPORATION U.S. BANCORP UJB FINANCIAL CORP. UNION PLANTERS CORPORATION UST CORP. VERMONT FINANCIAL SERVICES CORP. THE INCLUSION OF A COMPONENT STOCK IN THE BASKET SHOULD NOT BE CONSIDERED A RECOMMENDATION TO BUY OR SELL SUCH COMPONENT STOCK, AND NEITHER HOLDINGS NOR ANY OF ITS AFFILIATES MAKE ANY REPRESENTATION TO ANY PURCHASER OF SECURITIES AS TO THE PERFORMANCE OF THE BASKET OR ANY COMPONENT STOCK. HOLDERS OF THE SECURITIES WILL NOT HAVE ANY RIGHT TO RECEIVE BASKET SECURITIES. 30 LEHMAN BROTHERS KEMPER SECURITIES, INC. OPPENHEIMER & CO., INC. (SM)"SUNS" and "Stock Upside Note Securities" are service marks of Lehman Brothers. -----END PRIVACY-ENHANCED MESSAGE-----