Edgar Filing: NEUBERGER BERMAN INC

FILED PURSUANT TO RULE 424B(3)
FILE NO. 333-66498

[LOGO] Neuberger Berman
PROSPECTUS

$175,000,000

NEUBERGER BERMAN INC.

LIQUID YIELD OPTION(TM) NOTES DUE 2021
(ZERO COUPON-SENIOR)
AND
COMMON STOCK ISSUABLE UPON
CONVERSION AND/OR PURCHASE OF THE LYONS

----------------

THE OFFERING
We issued the LYONs in a private placement on May 4, 2001 at an issue
price of $860.95 per LYON. Selling securityholders will use this prospectus to
resell their LYONs and the common stock issuable upon conversion, and/or
purchase by us, of their LYONs. We will not receive any of the proceeds from
the sale of the LYONs or shares of common stock by any of the selling
securityholders. We will not pay interest on the LYONs prior to maturity.
Instead, on May 4, 2021, the maturity date of the LYONs, a holder will receive
$1,000 per LYON then outstanding. The issue price of each LYON represents a
yield to maturity of .75% per year, calculated from May 4, 2001. The LYONs rank
equal in right of payment to all existing and future unsecured and
unsubordinated indebtedness of Neuberger Berman and are effectively
subordinated to all existing and future liabilities of Neuberger Berman's
subsidiaries.

CONVERTIBILITY OF THE LYONS
Holders may convert their LYONs into 13.8879 shares of our common stock
per LYON only if:

. during any calendar quarter commencing after June 30, 2001, the
closing sale price of our common stock for at least 20 trading days
in a period of 30 consecutive trading days ending on the last trading
day of the preceding calendar quarter is more than a specified
percentage, initially 120% and declining 0.12658% each quarter
thereafter, of the accreted conversion price per share of our common
stock on the last trading day of the preceding calendar quarter;

. the assigned credit rating by Standard & Poor's of the LYONs is below
investment grade;

. the LYONs are called for redemption; or

. certain specified corporate transactions have occurred.

In this prospectus, the conversion rate has been adjusted to reflect a
three-for-two stock split paid in shares of our common stock on August 16, 2001
to stockholders of record on August 1, 2001. The conversion rate is subject to
further adjustment in specified circumstances. Our common stock is listed on
the New York Stock Exchange under the symbol "NEU." The last reported sale
price on the NYSE for our common stock was $44.91 per share on August 16, 2001,
as adjusted to give effect to the three-for-two stock split.

PURCHASE OF THE LYONS
Holders may require us to purchase all or a portion of their LYONs on May
4, 2002, at a price of $867.42 per LYON, on May 4, 2004, at a price of $880.50
per LYON, on May 4, 2006, at a price of $893.79 per LYON, on May 4, 2011, at a
price of $927.87 per LYON, or on May 4, 2016, at a price of $963.26 per LYON.
We may choose to pay the purchase price of such LYONs in cash or common stock
or a combination of cash and common stock. In addition, if a change in control
of Neuberger Berman Inc. occurs on or before May 4, 2006, each holder may
require us to purchase for cash all or a portion of such holder's LYONs at a
price equal to the sum of the issue price and accrued original issue discount
of such LYONs on the redemption date.

REDEMPTION OF THE LYONS
We may redeem for cash all or a portion of the LYONs at any time on or
after May 4, 2006, at a price equal to the sum of the issue price and accrued
original issue discount of such LYONs on the redemption date.

----------------

INVESTING IN THE LYONS INVOLVES RISKS THAT ARE DESCRIBED IN THE "RISK
FACTORS" SECTION BEGINNING ON PAGE 9 OF THIS PROSPECTUS.

----------------

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

The date of this prospectus is August 20, 2001.

(TM) Trademark of Merrill Lynch & Co., Inc.

TABLE OF CONTENTS

Available Information..................................................... 1
Forward Looking Statements................................................ 3
Summary................................................................... 4
Risk Factors.............................................................. 9
Use of Proceeds........................................................... 16
Ratio of Earnings to Fixed Charges........................................ 16
Price Range of Common Stock and Dividends................................. 17
Description of LYONs...................................................... 18
Description of Capital Stock.............................................. 34
Certain United States Federal Income Tax Consequences..................... 39
Selling Securityholders................................................... 44
Plan of Distribution...................................................... 45
Legal Matters............................................................. 47
Experts................................................................... 47

You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone else to provide you
with different information. If anyone provides you with inconsistent
information, you should not rely on it. We are not making an offer to sell
these securities in any jurisdiction where the offer or sale is not permitted.
You should assume that the information appearing in this prospectus or any
documents incorporated by reference is accurate only as of the date on the
front cover of the applicable document or as specifically indicated in the
document. Our business, financial condition, results of operations and
prospects may have changed since that date.

AVAILABLE INFORMATION

Neuberger Berman files annual, quarterly and current reports, proxy
statements and other information with the Securities Exchange Commission. You
may read and copy any documents filed by us at the SEC's public reference room
at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room. Our
filings with the SEC are also available to the public through the SEC's
Internet site at http://www.sec.gov and through the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005, on which our common stock is
listed.

We have filed a registration statement on Form S-3 with the SEC relating
to the LYONs and shares of common stock covered by this prospectus. This
prospectus is a part of the registration statement and does not contain all of
the information in the registration statement. Whenever a reference is made in
this prospectus to a contract or other document of Neuberger Berman, please be
aware that the reference is only a summary and that you should refer to the
exhibits that are a part of the registration statement for a copy of the
contract or other document. You may review a copy of the registration statement
at the SEC's public reference room in Washington, D.C., as well as through the
SEC's Internet site.

We are "incorporating by reference" information into this prospectus.
This means that we can disclose important information to you by referring you
to another document. Any information referred to in this way is considered part
of this prospectus from the date we file that document. Any reports filed by us
with the SEC after the date of this prospectus and before the date that the
offering of the shares of common stock offered through this prospectus is
terminated will automatically update and, where applicable, supersede any
information contained in this prospectus or incorporated by reference in this
prospectus.

Neuberger Berman incorporates by reference into this prospectus the
following documents or information filed by Neuberger Berman with the SEC (File
No. 001-15361):

. Annual Report on Form 10-K for the fiscal year ended December 31,
2000;

. Quarterly Report on Form 10-Q for the quarter ended March 31, 2001;

. Quarterly Report on Form 10-Q for the quarter ended June 30, 2001;

. Current Report on Form 8-K, dated January 26, 2001 (other than with
respect to the information reported under Item 9 of that report);

. Current Report on Form 8-K, dated February 2, 2001;

. Current Report on Form 8-K, dated March 7, 2001;

. Current Report on Form 8-K, dated April 5, 2001;

. Current Report on Form 8-K, dated April 24, 2001;

. Current Report on Form 8-K, dated May 2, 2001 (other than with
respect to the information reported under Item 9 of that report);

. Current Report on Form 8-K, dated June 6, 2001 (other than with
respect to the information reported under Item 9 of that report);

. Current Report on Form 8-K, dated June 29, 2001 (other than with
respect to the information reported under Item 9 of that report);

. Current Report on Form 8-K, dated July 27, 2001 (other than with
respect to the information reported under Item 9 of that report);

. The description of common stock contained in the Registration
Statement on Form 8-A, dated October 4, 1999, of Neuberger Berman,
filed with the SEC under Section 12(b) of the Securities Exchange Act
of 1934; and

. All documents filed by Neuberger Berman under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 after the time of
filing of the initial registration statement and before effectiveness
of the registration statement, and after the date of this prospectus
and before the termination of this offering.

We will provide without charge to each person, including any beneficial
owner, to whom this prospectus is delivered, upon his or her written or oral
request, a copy of any or all documents referred to above which have been or
may be incorporated by reference into this prospectus, excluding exhibits to
those documents unless they are specifically incorporated by reference into
those documents. You can request those documents from our Director of Investor
Relations, 605 Third Avenue, New York, New York 10158-3698, telephone (212)
476-9000.

FORWARD LOOKING STATEMENTS

Our disclosure and analysis in this prospectus and in documents that are
incorporated by reference contain some forward looking statements. Forward
looking statements give our current expectations or forecasts of future events.
You can identify these statements by the fact that they do not relate strictly
to historical or current facts. They use words such as "anticipate,"
"estimate," "expect," "project," "intend," "plan," "believe," and other words
and terms of similar meaning in connection with any discussion of future
operating or financial performance. In particular, these include statements
relating to future actions, future performance of our products, expenses, the
outcome of any legal proceedings, and financial results. Although we believe
that our expectations and beliefs are based on reasonable assumptions within
the bounds of our knowledge of our business and operations, there can be no
assurance that our actual results will not differ materially from our
expectations or beliefs. Some of the factors that could cause our actual
results to differ from our expectations or beliefs include, without limitation,
the adverse effect from a decline in the securities markets or if our products'
performance declines, a general downturn in the economy, changes in government
policy or regulation, our inability to attract or retain key employees and
unforeseen costs and other effects related to legal proceedings or
investigations or governmental and self-regulatory organizations. These
statements are provided as permitted by the Private Securities Litigation
Reform Act of 1995.

SUMMARY

This following summary is qualified in its entirety by the more detailed
information included elsewhere or incorporated by reference in this prospectus.
This summary does not contain all of the information that may be important to
you. You should read the entire prospectus, as well as the information
incorporated by reference, before making an investment decision. See
"Forward-Looking Statements" for information relating to statements contained
in this prospectus that are not historical facts.

In this prospectus, all share information and per share data as well as
the conversion rate, the accreted conversion price and the conversion trigger
price of the LYONs give effect to a three-for-two stock split paid in shares of
our common stock on August 16, 2001 to stockholders of record on August 1,
2001.

When we use the terms "Neuberger Berman," the "firm," "we," "us" and
"our," we mean, for the period prior to our October 1999 initial public
offering, Neuberger Berman, LLC, a Delaware limited liability company, and its
consolidated subsidiaries, and Neuberger Berman Management Inc., a New York
corporation, and their predecessors. When we use these terms for the period
after our initial public offering, we mean Neuberger Berman Inc., a Delaware
corporation, and its consolidated subsidiaries, except in "Summary--The
Offering" and "Description of LYONs," where such terms refer only to Neuberger
Berman Inc., or unless otherwise specified.

When we use the term "Trust Companies," we mean: Neuberger Berman
National Trust Company, which holds a national bank charter; Neuberger Berman
Trust Company, a non-depository trust company chartered under the New York
Banking Law; Neuberger Berman Trust Company of Delaware, a non-depository
limited purpose trust company chartered under the Delaware Banking Code; and
Neuberger Berman Trust Company of Florida, a Florida corporation authorized to
engage in trust business chartered under the Florida Banking Law.

OUR BUSINESS

Neuberger Berman, with its subsidiaries, is an investment advisory firm
with $58.2 billion in assets under management as of June 30, 2001. For more
than 60 years, the firm and its predecessor companies have provided clients
with a wide array of investment products, services and strategies. We conduct
our business through our subsidiaries, including Neuberger Berman, LLC and
Neuberger Berman Management Inc., both of which are registered investment
advisers and broker-dealers. Neuberger Berman, LLC is also a member of the New
York Stock Exchange, Inc. As of July 31, 2001, we conducted our business from
18 offices in 16 cities.

We were founded in 1939 to be a premier provider of investment products
and services to high net worth individuals. We have built upon the qualities
that have made us successful in the high net worth market to establish a strong
presence in the mutual fund and institutional marketplaces, and to provide
estate planning and trust services through our Trust Companies. Our clients
include individuals, institutions, corporations, pension funds, foundations and
endowments.

We believe that one of our chief competitive advantages is our dedication
to asset management, and in particular, asset management for high net worth
individuals. To build on this competitive advantage, we are actively pursuing
new hires and acquisitions, including the addition of money management teams
with existing client relationships, as well as expanding our national sales
force.

In October 1999, we completed an initial public offering of our common
stock. As of July 27, 2001, our former principals and their affiliates and our
employees held approximately 76% of our outstanding common stock.

RECENT DEVELOPMENTS

On July 5, 2001, former principals of Neuberger Berman and certain
employees of Neuberger Berman who hold their shares through the Neuberger
Berman Employee Defined Contribution Stock Incentive Plan Trust completed the
sale of 5,906,949 shares of common stock in an underwritten secondary offering
for $45.33 per share (less the underwriting discount and expenses from the
offering). We did not receive any of the proceeds from the secondary offering.

On July 6, 2001, we purchased an aggregate of 2,400,900 shares of common
stock from a limited number of former principals who did not participate in the
secondary offering for a purchase price per share equal to the net proceeds per
share received by the selling stockholders in the secondary offering.

On July 24, 2001, we announced that our Board of Directors declared a
three-for-two stock split payable in shares of our common stock to stockholders
of record on August 1, 2001. The common stock dividend was paid on August 16,
2001. In addition, our Board of Directors also approved an increase in the
quarterly cash dividend to $0.075 per share on a split-adjusted basis. The cash
dividend was paid on August 16, 2001 to stockholders of record on August 1,
2001.

OUR HEADQUARTERS

Our headquarters are located at 605 Third Avenue, New York, New York
10158, telephone (212) 476-9000. Our website address is www.nb.com. We do not
intend that the information on our website be incorporated in this prospectus.

THE OFFERING

LYONs..................... Selling securityholders may sell up to $175,000,000
aggregate principal amount at maturity of LYONs due
May 4, 2021. We will not pay any interest on the
LYONs prior to maturity. Each LYON was issued at a
price of $860.95 per LYON and a principal amount at
maturity of $1,000.

Maturity of the LYONs..... May 4, 2021.

Yield to Maturity of LYONs 0.75% per year, computed on the original issue price
on a semiannual bond equivalent basis and calculated
from May 4, 2001.

Original Issue Discount... We issued our LYONs at a price significantly below
the principal amount at maturity of the LYONs. This
original issue discount accrues daily at a rate of 0.75%
per year beginning on the date of issuance of the
LYONs, calculated on a semiannual bond equivalent
basis at the yield to maturity of the LYONs, using a
360-day year comprised of twelve 30-day months.

You should be aware that, although we will not pay
interest on the LYONs, U.S. holders must include
original issue discount, as it accrues, in their gross
income for United States federal income tax purposes.
See "Certain United States Federal Income Tax
Consequences."

Conversion Rights For each LYON surrendered for conversion, if the
conditions for conversion are satisfied, a holder will
receive 13.8879 shares of our common stock. The
conversion rate may be adjusted for certain reasons,
but will not be adjusted for accrued original issue
discount. In this prospectus, the conversion rate has
been adjusted to give effect to a three-for-two stock
split paid in shares of our common stock on August
16, 2001 to stockholders of record on August 1, 2001.
Upon conversion, a holder will not receive any cash
payment representing accrued original issue discount.
Instead, accrued original issue discount will be
deemed paid by the shares of common stock received
by the holder on conversion.

Holders may surrender LYONs for conversion into
our shares of common stock in any calendar quarter
commencing after June 30, 2001, if, as of the last day
of the preceding calendar quarter, the closing sale
price of our common stock for at least 20 trading days
in a period of 30 consecutive trading days ending on
the last trading day of such preceding calendar quarter
is more than a specified percentage, beginning at
120% and declining 0.12658% per quarter thereafter
until it reaches 110.00018% for the quarter beginning
April 1, 2021, of the accreted conversion price per
share of common stock on the last trading day of such
preceding calendar quarter. The accreted conversion
price per share as of any day will equal the issue price
of a LYON plus the accrued original discount to that
day, divided by 13.8879, subject to any adjustments
to the conversion rate through that day.

Holders may also surrender a LYON for conversion
during any period in which the credit rating assigned
to the LYONs by Standard & Poor's is below
investment grade (BB+ or lower).

LYONs or portions of LYONs in integral multiples of
$1,000 principal amount at maturity called for
redemption may be surrendered for conversion until
the close of business on the second business day prior
to the redemption date. In addition, if we make a
significant distribution to our stockholders or if we
are a party to certain consolidations, mergers or
binding share exchanges, LYONs may be surrendered
for conversion, as provided in "Description of
LYONs--Conversion Rights." The ability to
surrender LYONs for conversion will expire at the
close of business on May 4, 2021.

Ranking......................................... The LYONs rank equal in right of payment to all
existing and future unsecured and unsubordinated
indebtedness of Neuberger Berman and are
effectively subordinated to all existing and future
liabilities of Neuberger Berman's subsidiaries. At
June 30, 2001, our subsidiaries had aggregate
indebtedness (subordinated liability and short-term
bank loans) of $37 million.

Sinking Fund.................................... None.

Redemption of LYONs at the Option of Neuberger
Berman........................................
We may redeem for cash all or a portion of the
LYONs at any time on or after May 4, 2006, at
redemption prices equal to the sum of the issue price
and accrued original issue discount for the LYONs on
the applicable redemption date. See "Description of
LYONs--Redemption of LYONs at our Option."

Purchase of the LYONs by Neuberger Berman at the
Option of the Holder..........................
Holders may require us to purchase all or a portion of
their LYONs on each of the following dates at the
following prices. These prices are equal to the sum of
the issue price and accrued original issue discount for
the LYONs on such dates, except for the price at May 4,
2002:

.On May 4, 2002 at a price of $867.42 per
LYON;

.On May 4, 2004 at a price of $880.50 per
LYON;

.On May 4, 2006 at a price of $893.79 per
LYON;

.On May 4, 2011 at a price of $927.87 per
LYON; and

.On May 4, 2016 at a price of $963.26 per
LYON.

We may pay the purchase price in cash or shares of
our common stock or in a combination of cash and
shares of our common stock.

Change in Control............................... Upon a change in control of Neuberger Berman
occurring on or before May 4, 2006, the holders may
require us to purchase for cash all or a portion of their
LYONs at a price equal to the sum of the issue price
and accrued original issue discount for the LYONs on
the date of purchase. See "Description of LYONs---
Change in Control Permits the Holder to Require
Neuberger Berman to Purchase the Holder's
LYONs."

Optional Conversion to Semiannual Coupon Notes upon
Tax Event........................................
From and after the occurrence of a Tax Event, at our
option, interest in lieu of future accrued original issue
discount will accrue on each LYON from the option
exercise date at a rate of 0.75% per year on the
restated principal amount and will be payable
semiannually. In such event, the redemption price,
purchase price and change in control purchase price
will be adjusted, as described herein. However, there
will be no change in the holder's conversion rights.
See "Description of LYONs--Optional Conversion to
Semiannual Coupon Notes upon Tax Event."

Use of Proceeds.................................... We will not receive any of the proceeds from the sale
by any selling securityholder of the LYONs or the
common stock issuable upon conversion, and/or
purchase by us, of the LYONs. See "Use of
Proceeds."

DTC Eligibility.................................... The LYONs were issued in fully registered book-
entry form and are represented by permanent global
LYONs without coupons. Global LYONs have been
deposited with a custodian for and registered in the
name of a nominee of The Depository Trust Company
in New York, New York. Beneficial interests in
global LYONs are shown on, and transfers thereof
will be effected only through, records maintained by
DTC and its direct and indirect participants, and your
interest in any global LYON may not be exchanged
for certificated LYONs, except in limited
circumstances described herein.

Trading............................................ We do not intend to list the LYONs on any national
securities exchange. The LYONs issued in the initial
private placement are eligible for trading in the
PORTAL system. LYONs sold using this prospectus,
however, will no longer be eligible for trading in the
PORTAL system. Our common stock is traded on the
NYSE under the symbol "NEU."

RISK FACTORS

RISKS RELATED TO NEUBERGER BERMAN

A DECLINE IN THE PRICES OF SECURITIES COULD LEAD TO A DECLINE IN OUR ASSETS
UNDER MANAGEMENT, REVENUES AND EARNINGS.

A large portion of our revenues are derived from investment advisory
contracts with our clients. Under these contracts, the investment advisory fees
we receive are typically based on the market value of assets under management.
Accordingly, a decline in the prices of securities generally may cause our
revenues and income to decline by:

. causing the value of our assets under management to decrease, which
would result in lower investment advisory fees; or

. causing our clients to withdraw funds in favor of investments they
perceive offer greater opportunity or lower risk, which would also
result in lower investment advisory fees.

If our revenues decline without a commensurate reduction in our expenses,
our net income will be reduced.

WE COULD LOSE CLIENTS AND SUFFER A DECLINE IN OUR REVENUES AND EARNINGS IF THE
INVESTMENTS WE CHOOSE PERFORM POORLY, REGARDLESS OF THE TREND IN THE PRICES OF
SECURITIES.

We believe that investment performance is one of the most important
factors for the growth of our assets under management. Poor investment
performance could impair our revenues and growth because:

. existing clients might withdraw funds in favor of better performing
products, which would result in lower investment advisory fees;

. our ability to attract funds from existing and new clients might
diminish; or

. firms with which we have strategic alliances may terminate their
relationships with us, and future strategic alliances may be
unavailable.

If our revenues decline without a commensurate reduction in our expenses,
our net income will be reduced.

Even when securities prices are rising, performance can be affected by
investment style. In certain recent years, growth stocks outperformed value
stocks as measured by the S&P/BARRA growth and value indices. However, because
of our historical emphasis on the value style of investing, our clients'
portfolios were less invested in growth stocks. As a result, we experienced
some loss of institutional accounts and increased repurchases of shares of the
Neuberger Berman mutual funds in those years.

OUR CLIENTS CAN REMOVE THE ASSETS WE MANAGE ON SHORT NOTICE.

Our investment advisory and administrative contracts are generally
terminable at will or upon 30 to 60 days' notice, and mutual fund investors may
redeem their investments in the funds at any time without prior notice.
Institutional and individual clients, and firms with which we have strategic
alliances, can terminate their relationship with us, reduce the aggregate
amount of assets under management, or shift their funds to other types of
accounts with different rate structures for any of a number of reasons,
including investment performance, changes in prevailing interest rates and
financial market performance. In a declining stock market the pace of

mutual fund repurchases could accelerate. Poor performance relative to other
investment management firms tends to result in decreased purchases of fund
shares, increased repurchases of fund shares, and the loss of institutional or
individual accounts or strategic alliances. The decrease in revenues that could
result from any such event could have a material adverse effect on our
business.

THE INVESTMENT MANAGEMENT BUSINESS IS INTENSELY COMPETITIVE.

We face substantial competition in every aspect of our business. Factors
affecting our business include brand recognition, business reputation,
investment performance, quality of service and the continuity of both client
relationships and assets under management. Fee competition also affects the
business, as do expenses, commissions, compensation, administration and/or
other expenses paid to intermediaries.

We compete with a large number of investment management firms. These
include global and domestic investment management companies, commercial banks,
brokerage firms and broker-dealers, insurance companies and other financial
institutions. Many competing firms are parts of larger financial services
companies and attract business through numerous avenues including retail bank
offices, investment banking and underwriting contacts, insurance agencies and
broker-dealers. A number of our competitors have greater capital and other
resources, and offer more comprehensive lines of products and services, than we
do.

U.S. banks and insurance companies can now affiliate with securities
firms. This has accelerated consolidation within the money management and
financial services industries. It has also increased the variety of competition
for traditional money management firms, which businesses are limited to
investing assets on behalf of institutional and individual clients. Foreign
banks and investment firms have entered the U.S. money management industry,
either directly or through partnerships or acquisitions.

Our competitors seek to expand their market share in many of the same
areas that we serve. Financial intermediaries that provide our products to
their clients may also provide competing products from competing firms, many of
which employ such advisers. Many current and potential competitors have greater
brand name recognition and more extensive client bases, which could be used to
our disadvantage.

We face significant competition from other registered open-end investment
companies. They vary both in size and investment philosophy. Their shares are
offered to the public on a load and no-load basis. Advertising, sales
promotions, the type and quality of services offered, and investment
performance influence competition for mutual fund sales.

OUR BUSINESS MAY BE ADVERSELY AFFECTED BY AN INABILITY TO RECRUIT, RETAIN AND
MOTIVATE KEY EMPLOYEES.

Our ability to attract and retain clients and mutual fund shareholders
and compete effectively in our businesses is dependent on our ability to
attract and retain highly skilled investment management, research, client
service, legal, fiduciary and sales professionals.

The market for such professionals is very competitive and has grown more
so in recent periods as the investment management industry has experienced
substantial growth. Our policy has been to provide our professionals with
compensation and benefits that we believe to be competitive with other leading
investment management firms. The inability to continue to provide competitive
compensation and benefits could affect our ability to attract or retain skilled
professionals.

While we have historically experienced little turnover among our
professionals, we cannot be sure that we will continue to be successful in
retaining our key personnel or in attracting highly qualified professionals. We
do not maintain "key person" insurance on any of our personnel.

WE MAY BE UNABLE TO CONTINUE SUCCESSFULLY OUR STRATEGIC INITIATIVE OF ACQUIRING
COMPANIES OR ADDING EXPERIENCED INVESTMENT MANAGEMENT TEAMS.

As one of our strategic initiatives to generate growth, we intend to
continue to acquire companies and add experienced investment management teams
where such additions would be both strategic and accretive to earnings.
However, we may not be able to identify suitable acquisition targets or
investment teams to add to our firm. In addition, if we do identify suitable
candidates, we may not be able to complete any such acquisition or addition of
teams in a timely manner or on terms that are commercially acceptable to us.
Our management may need to devote significant time and effort to pursuing these
acquisitions or the addition of teams. If we are unable to identify or complete
successfully these acquisitions or additions, we may fail to maintain or
increase assets under management.

WE DEPEND ON ACCESSING CLIENTS THROUGH INTERMEDIARIES.

Our ability to market our mutual funds and subadvisory services is highly
dependent on access to the client base of national and regional securities
firms, banks, insurance companies, defined contribution plan administrators and
other intermediaries which generally offer competing investment products. To a
lesser extent, our Private Asset Management business depends on referrals from
accountants, lawyers, financial planners and other professional advisors.
Although we have historically been successful in gaining access to these
channels, we cannot be sure that we will continue to be able to do so. The
inability to have this access could have a material adverse effect on our
ability to maintain or increase assets under management.

WE ARE SUBJECT TO EXTENSIVE REGULATION; VIOLATIONS OF REGULATORY REQUIREMENTS
COULD IMPAIR OUR ABILITY TO OPERATE OR RESULT IN FINES OR DAMAGE TO OUR
REPUTATION.

As with all investment management companies and broker-dealers, we and
our mutual fund business are heavily regulated. Noncompliance with applicable
statutes or regulations could result in sanctions including:

. the revocation of licenses to operate certain businesses;

. the suspension or expulsion from a particular jurisdiction or market
of our business organizations or key personnel;

. the imposition of fines and censures; and

. reputational loss.

Any of these events could have a material adverse effect on our business.

Our business and the securities industry in general are subject to
extensive regulation in the United States at both the federal and state level,
as well as by self-regulatory organizations. The financial services industry is
one of the nation's most extensively regulated industries. The Securities and
Exchange Commission is responsible for enforcing the federal securities laws
and serves as a supervisory body for all investment advisers to mutual funds,
as well as for national securities exchanges and associations. Our
subsidiaries, Neuberger Berman, LLC and Neuberger Berman Management Inc., are
registered broker-dealers. The regulation of broker-dealers has, to a large
extent, been delegated by the federal securities laws to self-regulatory
organizations, including the national securities and commodities exchanges and
the National Association of Securities Dealers, Inc. In addition, these
subsidiaries are subject to regulation under the laws of the fifty states, the
District of Columbia and certain foreign countries in which they are registered
to conduct securities, investment advisory or commodities businesses.

Broker-dealers are subject to regulations which cover all aspects of the
securities business, including sales practices, market making and trading among
broker-dealers, use and safekeeping of clients' funds and

securities, capital structure, recordkeeping and the conduct of directors,
officers and employees. Violation of applicable regulations can result in the
revocation of broker-dealer licenses, the imposition of censures or fines and
the suspension or expulsion of a firm, its officers or employees. Neuberger
Berman, LLC and Neuberger Berman Management Inc. are also subject to "Risk
Assessment Rules" imposed by the SEC which require, among other things, that
certain broker-dealers maintain and preserve certain information, describe risk
management policies and procedures and report on the financial condition of
certain affiliates whose financial and securities activities are reasonably
likely to have material impact on the financial and operational condition of
broker-dealers.

Our trust company subsidiaries are supervised by federal or relevant
state banking authorities, which regulate such matters as policies and
procedures relating to conflicts of interest, account administration and
overall governance and supervisory procedures.

Additional legislation and regulations, including those relating to the
activities of investment advisers and broker-dealers, changes in rules imposed
by the SEC or other U.S. or foreign regulatory authorities and self-regulatory
organizations or changes in the interpretation or enforcement of existing laws
and rules may adversely affect our business and profitability. Our businesses
may be materially affected not only by regulations applicable to it as an
investment adviser or broker-dealer, but also by regulations of general
application. For example, the volume of our principal investment advisory
business in a given time period could be affected by, among other things,
existing and proposed tax legislation and other governmental regulations and
policies (including the interest rate policies of the Federal Reserve Board)
and changes in the interpretation or enforcement of existing laws and rules
that affect the business and financial communities.

WE ARE SUBJECT TO NET CAPITAL RULES THAT COULD LIMIT OUR ABILITY TO REPAY DEBT
OR PAY DIVIDENDS ON OUR COMMON STOCK.

As registered broker-dealers and members of the NYSE and NASD, Neuberger
Berman, LLC and Neuberger Berman Management Inc. are subject to the SEC's
Uniform Net Capital Rule 15c3-1 which could limit our ability to repay debt or
pay dividends on our common stock. Rule 15c3-1 specifies the minimum level of
net capital a broker-dealer must maintain and also requires that part of its
assets be kept in relatively liquid form. Neuberger Berman, LLC is also subject
to the net capital requirements of various securities and other self-regulatory
organizations.

The SEC and various self-regulatory organizations impose rules that
require notification when net capital falls below certain predefined criteria,
dictate the ratio of subordinated debt to equity in the regulatory capital
composition of a broker-dealer and constrain the ability of a broker-dealer to
expand its business under certain circumstances. Additionally, Rule 15c3-1
imposes certain requirements that may have the effect of prohibiting a
broker-dealer from distributing or withdrawing capital and requiring prior
notice to the SEC for certain withdrawals of capital. Since our principal
assets are our ownership of our broker-dealer subsidiaries, the rules governing
net capital and restrictions on capital withdrawals could limit our ability to
repay debt or pay dividends on our common stock.

As of June 30, 2001, Neuberger Berman, LLC was required to maintain
minimum net capital of approximately $24,505,000 and had excess net capital of
approximately $167,612,000. As of June 30, 2001, Neuberger Berman Management
Inc. was required to maintain minimum net capital of $250,000 and had excess
net capital of approximately $14,201,000.

OUR BUSINESS IS HEAVILY DEPENDENT UPON COMPUTER-BASED SYSTEMS TO PROCESS
TRANSACTIONS; SYSTEMS FAILURES MAY DISRUPT OUR BUSINESS AND LIMIT OUR GROWTH.

Our business is highly dependent on communications and information
systems and those of our key service vendors. Any failure or interruption of
such systems could have a material adverse effect on our operating

results. Operational risk arises from mistakes made in the confirmation or
settlement of transactions or from the improper recording or accounting of
transactions. We are highly dependent on our ability to process a large number
of transactions on a daily basis, and rely heavily on financial, accounting and
other data processing systems. If any of these do not function properly, we
could suffer financial loss, business disruption, liability to clients,
regulatory intervention or damage to our reputation. If systems are unable to
accommodate an increasing volume of transactions, our ability to expand could
be affected. Although we have back-up systems in place, we cannot be sure that
any such systems failure or interruption, whether caused by a fire, other
natural disaster, power or telecommunications failure, act of war or otherwise
will not occur, or that back-up procedures and capabilities in the event of any
such failure or interruption will be adequate.

THE SECURITIES BROKERAGE BUSINESS HAS INHERENT RISKS.

The securities brokerage business is, by its nature, subject to numerous
and substantial risks, particularly in volatile or illiquid markets, and in
markets influenced by sustained periods of low or negative economic growth,
including the risk of losses resulting from the ownership of securities,
trading, principal activities, counterparty failure to meet commitments, client
fraud, employee errors, misconduct and fraud (including unauthorized
transactions by traders), failures in connection with the processing of
securities transactions and litigation. Our trading activities for our own
account are limited. Therefore, the principal risks of trading are those
relating to counterparty failure and unauthorized trading. We have risk
management procedures and internal controls to address these risks but we
cannot be certain that these procedures and controls will prevent losses from
occurring.

WE ARE EFFECTIVELY CONTROLLED BY OUR PRINCIPAL STOCKHOLDERS WHOSE INTERESTS MAY
DIFFER FROM THOSE OF OTHER STOCKHOLDERS.

As of July 27, 2001, the former Neuberger Berman principals who are
currently employed by us and their affiliates held approximately 54% of our
outstanding common stock. Neuberger Berman is a party to a Stockholders
Agreement with the former Neuberger Berman principals and certain family
limited partnerships and trusts formed by them providing that:

. before every stockholders' meeting, the former Neuberger Berman
principals who are currently employed by us and their affiliates will
take a separate preliminary vote on all the issues that will be
presented at the stockholders' meeting; and

. all shares held by them must be voted as a block in accordance with
the majority of shares voted in such preliminary vote.

As a result, the former Neuberger Berman principals who are currently employed
by us and their affiliates control our board of directors, and, therefore, our
business, policies and affairs including certain corporate transactions that
require stockholder approval, such as mergers and sales of our assets. The
control exerted by these former Neuberger Berman principals and their
affiliates and the transfer restrictions in the Stockholders Agreement could
preclude any unsolicited acquisition of Neuberger Berman and, consequently,
adversely affect the market price of the common stock or prevent our
stockholders from realizing a premium on their shares. See "Description of
Capital Stock--Stockholders Agreement."

PROVISIONS OF OUR ORGANIZATIONAL DOCUMENTS AND DELAWARE LAW MAY DISCOURAGE AN
ACQUISITION OF NEUBERGER BERMAN AND PREVENT OUR STOCKHOLDERS FROM REALIZING A
PREMIUM ON THEIR SHARES.

Our organizational documents contain provisions that may discourage a
third party from making a proposal to acquire us. For example, the Board of
Directors may, without the consent of stockholders, issue preferred stock with
greater voting rights than our common stock. In addition, the Delaware
corporation law imposes restrictions on mergers and other business combinations
between us and any holder of 15% or more of

our voting stock. See "Description of Capital Stock" for a more detailed
description of our capital stock and relevant Delaware corporation law. These
provisions could preclude any unsolicited acquisition of Neuberger Berman and,
consequently, adversely affect the market price of the common stock or prevent
our stockholders from realizing a premium on their shares.

OUR SHARE PRICE MAY DECLINE DUE TO THE LARGE NUMBER OF SHARES ELIGIBLE FOR
FUTURE SALE.

As of July 27, 2001, 70,660,723 shares of our common stock were issued
and outstanding. Sales, or the possibility of sales, of substantial amounts of
common stock by the former Neuberger Berman principals and their affiliates may
materially adversely affect the market price of the common stock prevailing
from time to time. The Stockholders Agreement to which the former Neuberger
Berman principals and their affiliates are parties generally provides that
shares of common stock cannot be sold until January 1, 2002. The restrictions
on the disposition of shares contained in the Stockholders Agreement can be
waived by our Board of Directors or its designee without notice to or consent
of our stockholders.

Our Board of Directors waived certain transfer restrictions under the
Stockholders Agreement in order to permit the former principals of Neuberger
Berman and their affiliates to sell 4,393,315 shares of common stock in the
secondary offering completed on July 5, 2001 and 2,400,900 shares of common
stock in the repurchase we completed on July 6, 2001. Amounts sold by a
participating former principal in the secondary offering or the repurchase
reduced the number of shares that such participating former principal would
otherwise be able to sell under the Stockholders Agreement beginning on January
1, 2002. After giving effect to the secondary offering and the repurchase and
without giving effect to any further waivers to permit additional transfers
before January 1, 2002, the former principals will be able to sell an aggregate
of 1,664,667 shares of common stock under the Stockholders Agreement beginning
on January 1, 2002. However, we currently anticipate that in December 2001 our
Board of Directors will permit our former principals to make charitable
contributions of shares that would otherwise not be eligible for transfer under
the Stockholders Agreement until January 1, 2002.

As of July 27, 2001, the Neuberger Berman Employee Defined Contribution
Stock Incentive Plan Trust holds an aggregate of 4,540,242 shares of common
stock on behalf of participants in our Employee Defined Contribution Stock
Incentive Plan. The right of a participant to receive shares allocated to his
or her account generally becomes vested, and the shares become distributable to
the participant, in three equal installments on the second, third and fourth
anniversaries of the allocation to the participant, subject to the satisfaction
of certain conditions. However, in connection with the secondary offering we
accelerated the vesting of 1,856,274 shares. Participants in the Neuberger
Berman Employee Defined Contribution Stock Incentive Plan Trust elected to have
1,513,633 of those shares sold in the secondary offering. The remaining 342,640
shares are eligible for sale on September 26, 2001. See "Description of Capital
Stock--Stockholders Agreement--Transfer Restrictions."

RISKS RELATED TO THE LYONS

AN ACTIVE TRADING MARKET FOR THE LYONS MAY NOT DEVELOP.

The LYONs issued in the initial private placement are eligible for
trading in the PORTAL system. LYONs sold using this prospectus, however, will
no longer be eligible for trading in the PORTAL system. We do not intend to
list the LYONs on any other national securities exchange or automated quotation
system. Trading prices of the LYONs will depend on prevailing interest rates,
the market for similar securities, the price of our common stock, our
performance and other factors. We believe that trading in the LYONs has been
limited and we do not know whether an active trading market will develop for
the LYONs. To the extent that an active trading market does not develop, the
liquidity and trading price for the securities may be harmed.

WE MAY NOT HAVE THE FUNDS NECESSARY TO PURCHASE LYONS AT THE OPTION OF THE
HOLDERS OR UPON A CHANGE IN CONTROL.

On May 4, 2002, May 4, 2004, May 4, 2006, May 4, 2011 and May 4, 2016,
holders of LYONs may require us to purchase their LYONs. However, it is
possible that we would not have sufficient funds at that time to make the
required purchase of LYONs. We may be required to pay all or a portion of the
purchase price in shares of our common stock, subject to satisfying the
conditions in the indenture for making such payments. If we were unable to
satisfy the conditions in the indenture to use our common stock to pay the
purchase price, we could be in default of our obligations on the LYONs. In
addition, if we fail to deliver our common stock upon a conversion of a LYON
and thereafter become the subject of bankruptcy proceedings, a holder's claim
for damages arising from such failure could be subordinated to all of our
existing and future obligations. See "Description of LYONs--Purchase of LYONs
by Neuberger Berman at the Option of the Holder."

In addition, upon the occurrence of certain specific kinds of change in
control events occurring on or before May 4, 2006, we would be required to
offer to purchase for cash all outstanding LYONs. However, it is possible that
upon a change in control we would not have sufficient funds to make the
required purchase of LYONs or that restrictions in our indebtedness would not
allow those purchases. In addition, certain important corporate events, such as
leveraged recapitalizations that would increase the level of our indebtedness,
would not constitute a "change of control" under the indenture. See
"Description of LYONs--Change in Control Permits the Holder to Require
Neuberger Berman to Purchase the Holder's LYONs."

OUR HOLDING COMPANY STRUCTURE RESULTS IN STRUCTURAL SUBORDINATION AND MAY
AFFECT OUR ABILITY TO MAKE PAYMENTS ON LYONS.

The LYONs are obligations exclusively of Neuberger Berman. We are a
holding company and, accordingly, substantially all of our operations are
conducted through our subsidiaries. As a result, our cash flow and our ability
to service our debt, including the LYONs, depend upon the earnings of our
subsidiaries. In addition, we depend on the distribution of earnings, loans or
other payments by our subsidiaries to us to, among other things, meet our net
capital requirements under Rule 15c3-1.

Our subsidiaries are separate and distinct legal entities. Our
subsidiaries have no obligation to pay any amounts due on the LYONs or to
provide us with funds for our payment obligations. In addition, any payment of
dividends, distributions, loans or advances by our subsidiaries to us could be
subject to statutory or contractual restrictions, including regulatory capital
requirements. See "Risk Factors--We are subject to net capital rules that could
limit our ability to repay debt or pay dividends on our common stock." Payments
to us by our subsidiaries will also be contingent upon our subsidiaries'
earnings and business considerations.

Our right to receive any assets of any of our subsidiaries, as an equity
holder of such subsidiaries, upon their liquidation or reorganization, and
therefore the right of the holders of the LYONs to participate in those assets,
will be effectively subordinated to the claims of that subsidiary's creditors,
including trade creditors, and any holders of preferred stock of that
subsidiary. The LYONs do not restrict the ability of our subsidiaries to incur
additional indebtedness. In addition, the LYONs are unsecured. Thus, even if we
were a creditor of any of our subsidiaries, our rights as a creditor would be
subordinate to any security interest in the assets of our subsidiaries and any
indebtedness of our subsidiaries senior to that held by us.

USE OF PROCEEDS

We will not receive any of the proceeds from the sale by the selling
securityholders of the LYONs, or shares of common stock issuable upon
conversion, and/or purchase by us, of the LYONs.

RATIO OF EARNINGS TO FIXED CHARGES

The following table sets forth the consolidated ratio of our earnings to
our fixed charges for each of the five years in the five-year period ended
December 31, 2000 and for the six-month period ended June 30, 2001.

YEAR ENDED DECEMBER 31,
------------------------ SIX-MONTHS
1996 1997 1998 1999 2000 ENDED JUNE 30, 2001
---- ---- ---- ---- ---- -------------------

Ratio of earnings to fixed charges (1) 2.76 3.20 3.14 1.92 2.34 2.44

(1)For the purpose of calculating the ratio of earnings to fixed charges,
"earnings" consist of pre-tax income from continuing operations plus fixed
charges. "Fixed charges" consist of interest expense, primarily comprised of
bank loans, repurchase agreements, stock loan, customer credit balances, and
subordinated debt, and capitalized interest.

PRICE RANGE OF OUR COMMON STOCK AND DIVIDENDS

On October 6, 1999, our common stock commenced trading on the NYSE under
the symbol "NEU". Prior to that there was no public market for our common
stock. The following table sets forth, for the calendar quarters indicated, the
high and low closing prices per share of our common stock as reported by the
NYSE.

PRICE RANGE OF CASH CASH
COMMON STOCK DIVIDENDS DIVIDENDS
--------------- DECLARED PAID
PERIOD HIGH LOW PER SHARE PER SHARE
------ ------- ------- --------- ---------

1999
Fourth Quarter (from October 6, 1999).. $21.333 $15.833 $0.067 $ --

2000
First Quarter.......................... $19.250 $15.917 $ -- $0.067
Second Quarter......................... 31.667 18.333 0.067 0.067
Third Quarter.......................... 42.250 29.959 0.067 0.067
Fourth Quarter......................... 56.000 38.583 0.067 0.067

2001
First Quarter.......................... $55.207 $40.247 $0.067 $0.067
Second Quarter......................... 55.347 38.027 0.067 0.067
Third Quarter (through August 16, 2001) 46.667 43.040 0.075 0.075

On August 16, 2001, the closing sales price per share for our common
stock on the NYSE was $44.913. There were approximately 18 stockholders of
record of our common stock as of June 30, 2001.

The declaration of dividends by Neuberger Berman is subject to the
discretion of our Board of Directors. Our Board of Directors will take into
account such matters as general business conditions, our financial results,
capital requirements, contractual, legal and regulatory restrictions on the
payment of dividends by us to our stockholders or by our subsidiaries to us,
and such other factors as our Board of Directors may deem relevant.

To the extent that assets are used to meet minimum net capital
requirements of Neuberger Berman, LLC and Neuberger Berman Management Inc.
under Rule 15c3-1, they are not available for distribution to stockholders as
dividends. See "Risk Factors--We are subject to net capital rules that could
limit our ability to repay debt or pay dividends on our common stock" for a
discussion of certain limitations on our receipt of funds from our regulated
subsidiaries. In addition, the debt covenants related to Neuberger Berman,
LLC's outstanding $35 million subordinated note include certain covenants that
may further restrict our ability to pay dividends to stockholders.

Our Board of Directors has authorized the repurchase of our common stock
in open market and/or private purchases. The acquired shares may be used for
corporate purposes, including stock option awards and shares issued to
employees under our employee stock purchase plans. As of July 27, 2001, we had
repurchased 4,870,137 shares of common stock (including the 2,400,900 shares we
repurchased on July 6, 2001 from a limited number of our former principals)
since the inception of our common stock repurchase programs for an aggregate of
approximately $172 million. We used cash flows from operations and the proceeds
from our LYONs offering to fund the purchases of these shares. As of July 27,
2001, authorizations for the repurchase of up to $78 million of our common
stock remain available.

DESCRIPTION OF LYONS

We issued the LYONs under an indenture, dated as of May 4, 2001, between
us and The Bank of New York, as trustee. The following summary does not purport
to be complete and is subject to, and qualified by reference to, all of the
provisions of the indenture, which we urge you to read because they define your
rights as a LYONs holder. As used in this description of LYONs, the words
"we,'' "us,'' "our" or "Neuberger Berman" refer only to Neuberger Berman Inc.
and do not include any current or future subsidiary of Neuberger Berman.

GENERAL

The LYONs are limited to $175,000,000 aggregate principal amount at
maturity. The LYONs mature on May 4, 2021. The principal amount at maturity of
each LYON is $1,000. The LYONs are payable at the principal corporate trust
office of the paying agent, which initially will be an office or agency of the
trustee, or an office or agency maintained by us for such purpose, in the
Borough of Manhattan, The City of New York.

The LYONs were offered at a substantial discount from their principal
amount at maturity. The LYONs were issued at an issue price of $860.95 per
LYON. We will not make periodic payments of interest on the LYONs except as
described below under "Optional Conversion to Semiannual Coupon Notes Upon Tax
Event." However, the LYONs accrue original issue discount while they remain
outstanding. Original issue discount is the difference between the issue price
and principal amount at maturity of a LYON. Original issue discount accrues at
a rate of 0.75% per year, beginning on the date of original issuance of the
LYONs. The calculation of the accrual of original issue discount is on a
semiannual bond equivalent basis, using a 360-day year composed of twelve
30-day months. The commencement date for the accrual of original issue discount
was May 4, 2001.

Original issue discount ceases to accrue on a LYON upon its maturity,
conversion, purchase by us at the option of a holder or redemption. We may not
reissue a LYON that has matured or been converted, purchased by us at your
option, redeemed or otherwise cancelled, except for registration of transfer,
exchange or replacement of such LYON.

LYONs may be presented for conversion at the office of the conversion
agent and for exchange or registration of transfer at the office of the
registrar. The conversion agent and the registrar shall initially be the
trustee. No service charge will be made for any registration of transfer,
exchange or conversion of LYONs. However, we may require the holder to pay any
tax, assessment or other governmental charge payable as a result of such
transfer, exchange or conversion.

RANKING OF THE LYONS

The LYONs rank equal in right of payment to all existing and future
unsecured and unsubordinated indebtedness of Neuberger Berman and are
effectively subordinated to all existing and future liabilities of Neuberger
Berman's subsidiaries. Any right of Neuberger Berman to participate in any
distribution of the assets of any of its subsidiaries upon the liquidation,
reorganization or insolvency of such subsidiary (and the consequent right of
the holders of the LYONs to participate in those assets) is subject to the
claims of the creditors (including trade creditors) of such subsidiary, except
to the extent that claims of Neuberger Berman itself as a creditor of such
subsidiary may be recognized, in which case the claims of Neuberger Berman
would still be subordinate to any security interest in the assets of such
subsidiary and any indebtedness of such subsidiary senior to that held by
Neuberger Berman. At June 30, 2001, our subsidiaries had aggregate indebtedness
(subordinated liability and short-term bank debt) of $37 million. The indenture
does not restrict

Neuberger Berman or its subsidiaries from incurring additional indebtedness. A
significant amount of the total liabilities reflected on our balance sheet are
incurred by our subsidiaries and are effectively senior to the LYONs.

BOOK-ENTRY SYSTEM

The LYONs were issued in the form of global securities held in book-entry
form. DTC or its nominee is the sole registered holder of the LYONs for all
purposes under the indenture. Owners of beneficial interests in the LYONs
represented by the global securities hold their interests pursuant to the
procedures and practices of DTC. As a result, beneficial interests in any such
securities are shown on, and may only be transferred through, records
maintained by DTC and its direct and indirect participants and any such
interest may not be exchanged for certificated securities, except in limited
circumstances. Owners of beneficial interests must exercise any rights in
respect of their interests, including any right to convert or require purchase
of their interests in the LYONs, in accordance with the procedures and
practices of DTC. Beneficial owners are not holders and are not entitled to any
rights under the global securities or the indenture. Neuberger Berman and the
trustee, and any of their respective agents, shall treat DTC or its nominee as
the sole holder and registered owner of the global securities.

EXCHANGE OF GLOBAL SECURITIES

LYONS represented by a global security are exchangeable for certificated
securities with the same terms only if:

. DTC is unwilling or unable to continue as depositary or if DTC ceases
to be a clearing agency registered under the Exchange Act and a
successor depositary is not appointed by us within 90 days;

. we decide to discontinue use of the system of book-entry transfer
through DTC (or any successor depositary); or

. a default under the indenture occurs and is continuing.

DTC has advised us as follows: DTC is a limited-purpose trust company
organized under the New York Banking Law, a "banking organization" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
facilitates the settlement of transactions among its participants through
electronic computerized book-entry changes in participants' accounts,
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, including Merrill Lynch,
banks, trust companies, clearing corporations and other organizations, some of
whom and/or their representatives, own DTC. Access to DTC's book-entry 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.

CONVERSION RIGHTS

Holders may surrender LYONs for conversion into shares of our common
stock only if at least one of the conditions described below is satisfied. In
addition, a LYON for which a holder has delivered a purchase notice or a change
in control purchase notice requiring us to purchase the LYONs may be
surrendered for conversion only if such notice is withdrawn in accordance with
the indenture.

The initial conversion rate is 13.8879 shares of common stock per LYON,
subject to adjustment upon the occurrence of certain events described below. A
holder of a LYON otherwise entitled to a fractional share will receive cash
equal to the applicable portion of the then current sale price (as defined
below) of our common stock on the trading day immediately preceding the
conversion date.

The ability to surrender LYONs for conversion expires at the close of
business on May 4, 2021.

To convert a LYON into shares of common stock, a holder must:

. complete and manually sign a conversion notice, a form of which is on
the back of the LYON, and deliver the conversion notice to the
conversion agent;

. surrender the LYON to the conversion agent;

. if required by the conversion agent, furnish appropriate endorsements
and transfer documents; and

. if required, pay all transfer or similar taxes.

Pursuant to the indenture, the date on which all of the foregoing requirements
have been satisfied is the conversion date.

The conversion agent will, on our behalf, determine if the LYONs are
convertible and notify the trustee and us accordingly. If one or more of the
conditions to the conversion of the LYONs has been satisfied, we will promptly
notify the holders of the LYONs thereof and use our reasonable best efforts to
post this information on our website or otherwise publicly disclose this
information.

Conversion Based on Common Stock Price. Holders may surrender LYONs for
conversion into our shares of common stock in any calendar quarter commencing
after June 30, 2001, if, as of the last day of the preceding calendar quarter,
the sale price of our common stock for at least 20 trading days in a period of
30 consecutive trading days ending on the last trading day of such preceding
calendar quarter is more than a specified percentage, beginning at 120% and
declining 0.12658% per quarter thereafter until it reaches 110.00018% for the
quarter beginning April 1, 2021, of the accreted conversion price per share of
common stock on the last day of such preceding calendar quarter.

The accreted conversion price per share as of any day will equal the
issue price of a LYON plus the accrued original issue discount to that day,
divided by the number of shares of common stock issuable upon conversion of a
LYON on that day. The sale price of our common stock on any trading day means
the closing per share sale price (or if no closing sale price is reported, the
average of the bid and ask prices or, if more than one in either case, the
average of the average bid and the average ask prices) on such date on the
principal national securities exchange on which the common stock is listed or,
if our common stock is not listed on a principal national securities exchange,
as reported by the NASDAQ System or otherwise as provided in the indenture.

The table below shows the conversion trigger price per share of our
common stock in respect of each of the first 20 calendar quarters following
issuance of the LYONs. These conversion trigger prices reflect the accreted
conversion price per share of common stock multiplied by the applicable
percentage for the respective calendar quarter. Thereafter, the accreted
conversion price per share of common stock increases each calendar quarter by
the accreted original issue discount for the quarter and the applicable
percentage declines by 0.12658% per quarter. The conversion trigger price for
the calendar quarter beginning April 1, 2021 is $79.15.

(3)
(1) (2) CONVERSION
ACCRETED APPLICABLE TRIGGER PRICE
CALENDAR QUARTER CONVERSION PRICE* PERCENTAGE (1) X (2)*
---------------- ----------------- ---------- -------------

2001
Third Quarter.. $62.07 120.0000% $74.48
Fourth Quarter. 62.18 119.8734% 74.54

2002
First Quarter.. 62.30 119.7468% 74.60
Second Quarter. 62.41 119.6202% 74.66
Third Quarter.. 62.53 119.4936% 74.72
Fourth Quarter. 62.65 119.3670% 74.78

2003
First Quarter.. 62.77 119.2404% 74.85
Second Quarter. 62.89 119.1138% 74.91
Third Quarter.. 63.00 118.9872% 74.97
Fourth Quarter. 63.12 118.8606% 75.03

2004
First Quarter.. 63.24 118.7340% 75.09
Second Quarter. 63.36 118.6074% 75.15
Third Quarter.. 63.47 118.4808% 75.21
Fourth Quarter. 63.59 118.3542% 75.27

2005
First Quarter.. 63.71 118.2276% 75.33
Second Quarter. 63.83 118.1010% 75.39
Third Quarter.. 63.95 117.9744% 75.45
Fourth Quarter. 64.07 117.8478% 75.51

2006
First Quarter.. 64.19 117.7212% 75.57
Second Quarter. 64.31 117.5946% 75.63

--------
* This table assumes no events have occurred (other than the three-for-two
stock split paid in shares of our common stock on August 16, 2001 to
stockholders of record on August 1, 2001, the effect of which is reflected
in this table) that would require an adjustment to the conversion rate.

Conversion Based on Credit Rating. Holders may also surrender a LYON for
conversion during any period that the credit rating assigned to the LYONs by
Standard & Poor's Rating Services is below investment grade (BB+ or lower).

Conversion Based on Redemption. A holder may surrender for conversion a
LYON called for redemption at any time prior to the close of business on the
second business day immediately preceding the redemption date for that LYON,
even if it is not otherwise convertible at such time. A LYON for which a holder
has delivered a purchase notice or a change in control purchase notice, as
described below, requiring us to purchase such LYON, may be surrendered for
conversion only if such notice is withdrawn in accordance with the indenture.

A "business day" is any weekday that is not a day on which banking
institutions in The City of New York are authorized or obligated to close. A
"trading day" is any day on which the NYSE is open for trading or, if the
applicable security is quoted on the NASDAQ National Market, a day on which
trades may be made on such market or, if the applicable security is not so
listed, admitted for trading or quoted, any business day.

Conversion Upon Occurrence of Certain Corporate Transactions. If we are
party to a consolidation, merger or binding share exchange or a transfer of all
or substantially all of our assets, a LYON may be surrendered for conversion at
any time from and after the date which is 15 days prior to the anticipated
effective date of the transaction until 15 days after the actual effective date
of such transaction, and at that effective date, the right to convert a LYON
into common stock will be changed into a right to convert it into the kind and
amount of securities, cash or other assets of Neuberger Berman or another
person which the holder would have received if the holder had converted the
holder's LYONs immediately prior to the transaction. If such transaction also
constitutes a change in control of Neuberger Berman, the holder will be able to
require us to purchase all or a portion of such holder's LYONs as described
under "Change in Control Permits the Holder to Require Neuberger Berman to
Purchase the Holder's LYONs."

In the event that we elect to make a distribution to all holders of
shares of our common stock pursuant to the third and fourth bullets below of
the provisions regarding adjustments to the conversion rate which, in the case
of the fourth bullet, has a per share value equal to more than 15% of the sale
price of our shares of common stock on the day preceding the declaration date
for such distribution, we will be required to give notice to the holders of
LYONs at least 20 days prior to the date for such distribution and, upon the
giving of such notice, the LYONs may be surrendered for conversion at any time
until the close of business on the business day prior to the date of
distribution or until we announce that such distribution will not take place.

Conversion Adjustments and Delivery of Common Stock. On conversion of a
LYON, a holder will not receive any cash payment of interest representing
accrued original issue discount. Delivery to the holder of the full number of
shares of common stock into which the LYON is convertible, together with any
cash payment of such holder's fractional shares, will be deemed:

. to satisfy our obligation to pay the principal amount at maturity of
the LYON; and

. to satisfy our obligation to pay accrued original issue discount
attributable to the period from the issue date through the conversion
date.

As a result, accrued original issue discount is deemed paid in full rather than
cancelled, extinguished or forfeited.

If we convert the LYONs to semiannual coupon notes following the
occurrence of a Tax Event and such LYONs are converted after a record date for
an interest payment, and prior to the payment date for that interest, holders
of such LYONs on the record date will receive the semiannual interest payable
on such LYONs in cash on the corresponding interest payment date
notwithstanding the conversion and such LYONs upon surrender must be
accompanied by funds in cash equal to the amount of semiannual interest payable
on the principal amount of LYONs so converted, unless such LYONs have been
called for redemption, in which case no such payment shall be required.

The conversion rate will not be adjusted for accrued original issue
discount. A certificate for the number of full shares of common stock into
which any LYON is converted, together with any cash payment for fractional
shares, will be delivered through the conversion agent as soon as practicable
following the conversion date. For a discussion of the tax treatment of a
holder receiving shares of our common stock upon surrendering LYONs for
conversion, see "Certain United States Federal Income Tax Consequences--U.S.
Holders--Sale, Exchange, Conversion or Redemption."

We will adjust the conversion rate for:

. dividends or distributions on our common stock payable in our common
stock or other capital stock of Neuberger Berman;

. subdivisions, combinations or certain reclassifications of our common
stock;

. distributions to all holders of our common stock of certain rights to
purchase our common stock for a period expiring within 60 days at
less than the then current sale price; and

. distributions to all holders of our common stock of our assets
(including shares of capital stock of a subsidiary) or debt
securities or certain rights to purchase our securities (excluding
cash dividends or other cash distributions from current or retained
earnings unless the annualized amount thereof per share exceeds 5% of
the sale price of our common stock on the day preceding the date of
declaration of such dividend or other distribution).

However, no adjustment to the conversion rate need be made if holders of
the LYONs may participate in the transaction or in certain other cases.

In the event that we pay a dividend or make a distribution on shares of
our common stock consisting of capital stock of, or similar equity interests
in, a subsidiary or other business unit of ours, the conversion rate will be
adjusted based on the market value of the securities so distributed relative to
the market value of the common stock, in each case based on the average closing
prices of those securities for the 10 trading days commencing on and including
the fifth trading day after the date on which "ex-dividend trading" commences
for such dividend or distribution on the principal United States securities
exchange or market on which the securities are then listed or quoted.

In addition, the indenture provides that if we implement a stockholders'
rights plan, such rights plan must provide that, upon conversion of the LYONs,
the holders of such LYONs will receive, in addition to the shares of common
stock issuable upon such conversion, the rights related to such common stock,
whether or not such rights have separated from the common stock at the time of
such conversion. However, there shall not be any adjustment to the conversion
privilege or conversion rate as a result of:

. the issuance of the rights;

. the distribution of separate certificates representing the rights;

. the exercise or redemption of such rights in accordance with any
rights agreement; or

. the termination or invalidation of the rights.

The indenture permits us to increase the conversion rate from time to
time.

Holders of the LYONs may, in certain circumstances, be deemed to have
received a distribution subject to federal income tax as a dividend upon:

. a taxable distribution to holders of common stock which results in an
adjustment of the conversion rate;

. an increase in the conversion rate at our discretion; or

. failure to adjust the conversion rate in some instances.

See "Certain United States Federal Income Tax Consequences--U.S.
Holders--Constructive Dividend."

REDEMPTION OF LYONS AT OUR OPTION

No sinking fund is provided for the LYONs. Prior to May 4, 2006, we
cannot redeem the LYONs at our option. Beginning on May 4, 2006, we may redeem
the LYONs for cash, as a whole at any time or from time to time in part. We
will give not less than 30 days' nor more than 60 days' notice of redemption by
mail to holders of the LYONs to be redeemed.

If redeemed at our option, the LYONs will be redeemed at a price equal to
the sum of the issue price and accrued original issue discount on such LYONs
through the applicable redemption date. The table below shows the redemption
prices of a LYON on May 4, 2006, at each May 4 thereafter prior to maturity and
at maturity on May 4, 2021. In addition, the redemption price of a LYON that is
redeemed between the dates listed below would include an additional amount
reflecting the additional accrued original issue discount that has accrued on
such LYON since the immediately preceding date in the table below to the date
of redemption.

(2) (3)
ACCRUED REDEMPTION
(1) ORIGINAL ISSUE PRICE
REDEMPTION DATE LYON ISSUE PRICE DISCOUNT (1) + (2)
--------------- ---------------- -------------- ----------

May 4,
2006.............. $860.95 32.84 $ 893.79
2007.............. 860.95 39.55 900.50
2008.............. 860.95 46.32 907.27
2009.............. 860.95 53.14 914.09
2010.............. 860.95 60.00 920.95
2011.............. 860.95 66.92 927.87
2012.............. 860.95 73.90 934.85
2013.............. 860.95 80.92 941.87
2014.............. 860.95 88.00 948.95
2015.............. 860.95 95.13 956.08
2016.............. 860.95 102.31 963.26
2017.............. 860.95 109.55 970.50
2018.............. 860.95 116.84 977.79
2019.............. 860.95 124.19 985.14
2020.............. 860.95 131.59 992.54
At stated maturity 860.95 139.05 1,000.00

If we convert the LYONs to semiannual coupon notes following the
occurrence of a Tax Event, the notes will be redeemable at the restated
principal amount plus accrued and unpaid interest from the date of the
conversion through the redemption date. However, in no event may the LYONs be
redeemed prior to May 4, 2006. For more information on this optional
conversion, see "--Optional Conversion to Semiannual Coupon Notes upon Tax
Event."

If less than all of the outstanding LYONs are to be redeemed, the trustee
will select the LYONs to be redeemed in principal amounts at maturity of $1,000
or integral multiples of $1,000. In this case, the trustee may select the LYONs
by lot, pro rata or by any other method the trustee considers fair and
appropriate. If a portion of a holder's LYONs is selected for partial
redemption and the holder converts a portion of the LYONs, the converted
portion will be deemed to be the portion selected for redemption.

PURCHASE OF LYONS BY NEUBERGER BERMAN AT THE OPTION OF THE HOLDER

On the purchase dates of May 4, 2002, May 4, 2004, May 4, 2006, May 4,
2011 and May 4, 2016, a holder may require us to purchase any outstanding LYON
for which a written purchase notice has been properly delivered by the holder
and not withdrawn, subject to certain additional conditions. Holders may submit
their

LYONs for purchase to the paying agent at any time from the opening of business
on the date that is 20 business days prior to such purchase date until the
close of business on the business day immediately preceding such purchase date.

The purchase price of a LYON will be:

. $867.42 per LYON on May 4, 2002;

. $880.50 per LYON on May 4, 2004;

. $893.79 per LYON on May 4, 2006;

. $927.87 per LYON on May 4, 2011; and

. $963.26 per LYON on May 4, 2016.

The above purchase prices reflect a price equal to the sum of the issue
price and accrued original issue discount on such LYONs as of the applicable
purchase date except for the price at May 4, 2002.

We may, at our option, elect to pay the purchase price in cash or shares
of common stock, or any combination thereof. For a discussion of the tax
treatment of a holder receiving cash, common stock or any combination thereof,
see "Certain United States Federal Income Tax Consequences--U.S. Holders--Sale,
Exchange, Conversion or Redemption."

If prior to a purchase date the LYONs have been converted to semiannual
coupon notes following the occurrence of a Tax Event, the purchase price will
be equal to the restated principal amount plus accrued and unpaid interest from
the date of the conversion to the purchase date. For more information on this
optional conversion, see "--Optional Conversion to Semiannual Coupon Notes upon
Tax Event."

We are required to give notice on a date not less than 20 business days
prior to each purchase date to all holders at their addresses shown in the
register of the registrar, and to beneficial owners as required by applicable
law, stating among other things:

. the amount of the purchase price;

. whether we will pay the purchase price of LYONs in cash or common
stock or any combination thereof, specifying the percentages of each;

. if we elect to pay in common stock, the method of calculating the
market price of the common stock; and

. the procedures that holders must follow to require us to purchase
their LYONs.

The purchase notice given by each holder electing to require us to purchase
LYONs shall state:

. the certificate numbers of the holder's LYONs to be delivered for
purchase;

. the portion of the principal amount at maturity of LYONs to be
purchased, which must be $1,000 or an integral multiple of $1,000;

. that the LYONs are to be purchased by us pursuant to the applicable
provisions of the LYONs; and

. in the event we elect, pursuant to the notice that we are required to
give, to pay the purchase price in common stock, in whole or in part,
but the purchase price is ultimately to be paid to the holder
entirely in cash because any of the conditions to payment of the
purchase price or portion of the purchase price in common stock is
not satisfied prior to the close of business on the purchase date, as
described below, whether the holder elects:

(1)to withdraw the purchase notice as to some or all of the LYONs to
which it relates, or

(2)to receive cash in respect of the entire purchase price for all
LYONs or portions of LYONs subject to such purchase notice.

If the purchase price for the LYONs subject to the purchase notice is
ultimately to be paid to a holder entirely in cash because we have not
satisfied one or more of the conditions to payment of the purchase price in
common stock prior to the close of business on the purchase date, a holder
shall be deemed to have elected to receive cash in respect of the entire
purchase price for all such LYONs unless such holder has properly notified us
of its election to withdraw the purchase notice. For a discussion of the tax
treatment of a holder receiving cash instead of common stock, see "Certain
United States Federal Income Tax Consequences--U.S. Holders--Sale, Exchange,
Conversion or Redemption."

Any purchase notice may be withdrawn by the holder by a written notice of
withdrawal delivered to the paying agent prior to the close of business on the
business day prior to the purchase date.

The notice of withdrawal shall state:

. the principal amount at maturity being withdrawn;

. the certificate numbers of the LYONs being withdrawn; and

. the principal amount at maturity, if any, of the LYONs that remains
subject to the purchase notice.

If we elect to pay the purchase price, in whole or in part, in shares of
our common stock, the number of such shares we deliver shall be equal to the
portion of the purchase price to be paid in common stock divided by the market
price of a share of common stock.

We will pay cash based on the market price for all fractional shares of
common stock in the event we elect to deliver common stock in payment, in whole
or in part, of the purchase price. See "Certain United States Federal Income
Tax Consequences--U.S. Holders--Sale, Exchange, Conversion or Redemption."

The market price of our common stock shall be an amount equal to the
average of the sale prices of our common stock for the five-trading-day period
ending on the third business day prior to the applicable purchase date, or, if
such business day is not a trading day, then on the last trading day prior to
such business day, appropriately adjusted to take into account any occurrence.
See "--Conversion Rights" for a description of the manner in which the sales
price of our common stock is determined.

Because the market price of our common stock is determined prior to the
applicable purchase date, holders of LYONs bear the market risk with respect to
the value of the common stock to be received from the date such market price is
determined to such purchase date. We may pay the purchase price or any portion
of the purchase price in common stock only if the information necessary to
calculate the market price is published in a daily newspaper of national
circulation.

Upon determination of the actual number of shares of common stock in
accordance with the foregoing provisions, we will promptly issue a press
release and publish such information on our website.

Our right to purchase LYONs, in whole or in part, with common stock is
subject to our satisfying various conditions, including:

. listing the common stock on the principal United States securities
exchange on which our common stock is then listed or, if not so
listed, on NASDAQ;

. the registration of the common stock under the Securities Act and the
Exchange Act, if required; and

. any necessary qualification or registration under applicable state
securities law or the availability of an exemption from such
qualification and registration.

If such conditions are not satisfied with respect to a holder prior to
the close of business on the purchase date, we will pay the purchase price of
the LYONs of the holder entirely in cash unless such holder has properly
notified us of its election to withdraw the purchase notice. See "Certain
United States Federal Income Tax Consequences--U.S. Holders--Sale, Exchange,
Conversion or Redemption." We may not change the form or components or
percentages of components of consideration to be paid for the LYONs once we
have given the notice that we are required to give to holders of LYONs, except
as described in the first sentence of this paragraph.

In connection with any purchase offer, we will, to the extent applicable:

. comply with the provisions of Rule 13e-4, Rule 14e-1 and any other
tender offer rules under the Exchange Act which may then be
applicable; and

. file a Schedule TO or any other required schedule under the Exchange
Act.

Payment of the purchase price for a LYON for which a purchase notice has
been delivered and not validly withdrawn is conditioned upon delivery of the
LYON, together with necessary endorsements, to the paying agent at any time
after delivery of the purchase notice. Payment of the purchase price for the
LYON will be made as soon as practicable following the later of the purchase
date or the time of delivery of the LYON.

If the paying agent holds money or securities sufficient to pay the
purchase price of the LYON on the business day following the purchase date in
accordance with the terms of the indenture, then, immediately after the
purchase date, the LYON will cease to be outstanding and accrued original issue
discount (or if the LYONs have been converted to semiannual coupon notes
following the occurrence of a Tax Event, interest) on such LYON will cease to
accrue, whether or not the LYON is delivered to the paying agent. Thereafter,
all other rights of the holder shall terminate, other than the right to receive
the purchase price upon delivery of the LYON.

No LYONs may be purchased for cash at the option of holders if there has
occurred and is continuing an event of default with respect to the LYONs, other
than a default in the payment of the purchase price with respect to such LYONs.

CHANGE IN CONTROL PERMITS THE HOLDER TO REQUIRE NEUBERGER BERMAN TO PURCHASE
THE HOLDER'S LYONS

In the event of a change in control occurring on or prior to May 4, 2006,
each holder has the right, at the holder's option, subject to the terms and
conditions of the indenture, to require us to purchase for cash all or any
portion of the holder's LYONs. However, the principal amount at maturity
submitted for purchase by a holder must be $1,000 or an integral multiple of
$1,000.

We are required to purchase the LYONs as of a date no later than 35
business days after the occurrence of such change in control at a cash price
equal to the sum of the issue price and accrued original issue discount on such
LYON on such date of purchase.

If prior to such date of purchase upon a change in control the LYONs have
been converted to semiannual coupon notes following the occurrence of a Tax
Event, we are required to purchase the notes submitted for purchase at a cash
price equal to the restated principal amount plus accrued and unpaid interest
from the date of the conversion to such date of purchase.

Within 15 days after the occurrence of a change in control, we are
obligated to mail to the trustee and to all holders of LYONs at their addresses
shown in the register of the registrar and to beneficial owners as required by
applicable law a notice regarding the change in control, which notice shall
state, among other things:

. the events causing a change in control;

. the date of such change in control;

. the last date on which the purchase right may be exercised;

. the change in control purchase price;

. the change in control purchase date;

. the name and address of the paying agent and the conversion agent;

. the conversion rate and any adjustments to the conversion rate
resulting from such change in control;

. that LYONs with respect to which a change in control purchase notice
is given by the holder may be converted only if the change in control
purchase notice has been withdrawn in accordance with the terms of
the indenture; and

. the procedures that holders must follow to exercise these rights.

To exercise this right, the holder must deliver a written notice to the
paying agent prior to the close of business on the business day prior to the
change in control purchase date. The required purchase notice upon a change in
control shall state:

. the certificate numbers of the LYONs to be delivered by the holder;

. the portion of the principal amount at maturity of LYONs to be
purchased, which portion must be $1,000 or an integral multiple of
$1,000; and

. that we are to purchase such LYONs pursuant to the applicable
provisions of the LYONs.

Any such change in control purchase notice may be withdrawn by the holder
by a written notice of withdrawal delivered to the paying agent prior to the
close of business on the business day prior to the change in control purchase
date.

The notice of withdrawal shall state:

. the principal amount at maturity being withdrawn;

. the certificate numbers of the LYONs being withdrawn; and

. the principal amount at maturity, if any, of the LYONs that remain
subject to a change in control purchase notice.

Payment of the change in control purchase price for a LYON for which a
change in control purchase notice has been delivered and not validly withdrawn
is conditioned upon delivery of the LYON, together with necessary endorsements,
to the paying agent at any time after the delivery of such change in control
purchase notice. Payment of the change in control purchase price for such LYON
will be made promptly following the later of the change in control purchase
date or the time of delivery of such LYON.

If the paying agent holds money sufficient to pay the change in control
purchase price of the LYON on the business day following the change in control
purchase date in accordance with the terms of the indenture, then, immediately
after the change in control purchase date, accrued original issue discount (or
if the LYONs have been converted to semiannual coupon notes following the
occurrence of a Tax Event, interest on such

LYON) on the LYON will cease to accrue, whether or not the LYON is delivered to
the paying agent. Thereafter, all other rights of the holder shall terminate,
other than the right to receive the change in control purchase price upon
delivery of the LYON.

Under the indenture, a "change in control" of Neuberger Berman is deemed
to have occurred at such time as:

. any person, including its affiliates and associates, other than
Neuberger Berman, its subsidiaries or their employee benefit plans,
files a Schedule 13D or Schedule TO (or any successor schedule, form
or report under the Exchange Act) disclosing that such person has
become the beneficial owner of 50% or more (or in the case of
signatories to the Stockholders Agreement, 90%, aggregating all
signatories for such purpose) of the aggregate voting power of our
common stock (or other capital stock into which the common stock is
reclassified or changed) and other capital stock entitled to vote in
the election of directors, with certain exceptions; or

. there shall be consummated any consolidation or merger of Neuberger
Berman pursuant to which the common stock would be converted into
cash, securities or other property, in each case other than a
consolidation or merger of Neuberger Berman in which the holders of
our common stock and other capital stock entitled to vote in the
election of directors, immediately prior to the consolidation or
merger have, directly or indirectly, at least a majority of the total
voting power in the aggregate of capital stock entitled to vote in
the election of directors of the continuing or surviving corporation
immediately after the consolidation or merger.

The indenture does not permit our board of directors to waive our
obligation to purchase LYONs at the option of holders in the event of a change
in control.

In connection with any purchase offer in the event of a change in
control, we will:

. comply with the provisions of Rule 13e-4, Rule 14e-1 and any other
tender offer rules under the Exchange Act which may then be
applicable; and

. file a Schedule TO or any other required schedule under the Exchange
Act.

The change in control purchase feature of the LYONs may, in certain
circumstances, make more difficult or discourage a takeover of Neuberger
Berman. The change in control purchase feature, however, is not the result of
our knowledge of any specific effort:

. to accumulate shares of common stock;

. to obtain control of us by means of a merger, tender offer,
solicitation or otherwise; or

. part of a plan by management to adopt a series of anti-takeover
provisions.

Instead, the change in control purchase feature is a standard term
contained in other LYONs offerings that have been marketed by Merrill Lynch.
The terms of the change in control purchase feature resulted from negotiations
between Merrill Lynch and us.

We could, in the future, enter into certain transactions, including
certain recapitalizations, that would not constitute a change in control with
respect to the change in control purchase feature of the LYONs but that would
increase the amount of our or our subsidiaries' outstanding indebtedness.

No LYONs may be purchased at the option of holders upon a change in
control if there has occurred and is continuing an event of default with
respect to the LYONs, other than a default in the payment of the change in
control purchase price with respect to the LYONs.

EVENTS OF DEFAULT AND ACCELERATION

The following are events of default under the indenture:

. default in the payment of any principal amount (including accrued
original issue discount and, if the LYONs have been converted to
semiannual coupon notes following a Tax Event, the restated principal
amount) at maturity, redemption price, purchase price, or change in
control purchase price due with respect to the LYONs;

. default in payment of any interest which becomes payable after the
LYONs have been converted to semiannual coupon notes following the
occurrence of a Tax Event, which default continues for 30 days;

. default in the performance or breach of any covenant of Neuberger
Berman in the indenture, which default continues uncured for a period
of 60 days after written notice to Neuberger Berman by the trustee or
to Neuberger Berman and the trustee by the holders of at least 25% in
principal amount at maturity of the outstanding LYONs;

. default under any bond, debenture, note or other evidence of
indebtedness for money borrowed by Neuberger Berman (other than
non-recourse indebtedness), whether such indebtedness now exists or
is created later, which default results in such indebtedness becoming
or being declared due and payable prior to the date on which it would
otherwise have become due and payable, and the principal amount of
all indebtedness so accelerated, together with all such indebtedness
due and payable but not paid prior to the end of any grace period, is
$15 million or more, and such acceleration has not been rescinded or
annulled within a period of 30 days after written notice to Neuberger
Berman by the trustee or to Neuberger Berman and the trustee by the
holders of at least 25% in principal amount at maturity of the LYONs;

. our failure to comply with any of our other agreements in the LYONs
or the indenture upon our receipt of notice of such default from the
trustee or from holders of not less than 25% in aggregate principal
amount at maturity of the LYONs, and our failure to cure (or obtain a
waiver of) such default within 60 days after we receive such notice;
or

. certain events of bankruptcy, insolvency or reorganization affecting
Neuberger Berman.

If an event of default shall have happened and be continuing, either the
trustee or the holders of not less than 25% in aggregate principal amount at
maturity of the LYONs then outstanding may declare the issue price of the LYONs
plus the original issue discount on the LYONs accrued through the date of such
declaration (or if the LYONs have been converted to semiannual coupon notes
following the occurrence of a Tax Event, the restated principal amount plus any
accrued and unpaid interest from the date on which accrued original issue
discount was converted to principal through the date of such declaration), and
any accrued and unpaid interest through the date of such declaration, to be
immediately due and payable. In the case of certain events of bankruptcy or
insolvency, the issue price of the LYONs plus the original issue discount
accrued thereon (or such restated principal amount plus accrued and unpaid
interest) through the occurrence of such event shall automatically become and
be immediately due and payable.

If a bankruptcy proceeding is commenced in respect of Neuberger Berman,
the claim of the holder of a LYON is, under Title 11 of the United States Code,
limited to the issue price of the LYON plus that portion of the original issue
discount that has accrued from the date of issue to the commencement of the
proceeding (or if the LYONs have been converted to semiannual coupon notes
following the occurrence of a Tax Event, the restated principal amount plus any
accrued and unpaid interest from the date on which accrued original issue
discount was converted to principal through the date of such commencement). In
addition, the holders of the LYONs are effectively subordinated to the
indebtedness and other obligations of our subsidiaries.

MERGERS AND SALES OF ASSETS

The indenture provides that we may not consolidate with or merge into any
person or convey, transfer or lease our properties and assets substantially as
an entity to another person, unless, among other things:

. the resulting, surviving or transferee person is a corporation or
limited liability company organized and existing under the laws of
the United States, any state thereof or the District of Columbia and
such corporation (if other than us) assumes all our obligations under
the LYONs and the indenture; and

. we or such successor entity shall not immediately thereafter be in
default under the indenture.

Upon the assumption of our obligations by such entity in such
circumstances, subject to certain exceptions, we shall be discharged from all
obligations under the LYONs and the indenture. Although such transactions are
permitted under the indenture, certain of the foregoing transactions occurring
could constitute a change in control in Neuberger Berman, permitting each
holder to require us to purchase the LYONs of such holder as described above.

OPTIONAL CONVERSION TO SEMIANNUAL COUPON NOTES UPON TAX EVENT

From and after the date of the occurrence of a Tax Event, we shall have
the option to elect to have interest in lieu of future accrued original issue
discount accrue at a rate of 0.75% per year on a principal amount per LYON
equal to the sum of the issue price and accrued original issue discount on such
LYON on the date of the Tax Event or the date on which we exercise such option,
whichever is later.

Such interest shall accrue from the date as of which we exercise our
option to pay interest in lieu of accrued original issue discount, and shall be
payable semiannually on the interest payment dates of May 4 and November 4 of
each year to holders of record at the close of business on April 20 or October
21 immediately preceding the interest payment date. Interest is computed on the
basis of a 360-day year comprised of twelve 30-day months. Interest accrues
from the most recent date to which interest has been paid or, if no interest
has been paid, from the date we exercise our option to pay interest. In the
event that we exercise our option to pay interest in lieu of accrued original
issue discount, the redemption price, purchase price and change in control
purchase price on the LYONs will be adjusted. However, there will be no change
in the holder's conversion rights.

A "Tax Event" means that we shall have received an opinion from
independent tax counsel experienced in such matters to the effect that, on or
after the date of this prospectus, as a result of:

. any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or
therein; or

. any amendment to, or change in, an interpretation or application of
such laws or regulations by any legislative body, court, governmental
agency or regulatory authority,

in each case which amendment or change is enacted, promulgated, issued or
announced or which interpretation is issued or announced or which action is
taken, on or after the date of this prospectus there is more than an
insubstantial risk that accrued original issue discount payable on the LYONs
either:

. would not be deductible on a current accrual basis; or

. would not be deductible under any other method,

in either case in whole or in part, by us (by reason of deferral, disallowance,
or otherwise) for United States federal income tax purposes.

If a proposal were ever enacted and made applicable to the LYONs in a
manner that would limit our ability to either

. deduct the interest, including the accrued original issue discount,
payable on the LYONs on a current accrual basis; or

. deduct the interest, including accrued original issue discount,
payable on the LYONs under any other method for United States federal
income tax purposes,

such enactment would result in a Tax Event and the terms of the LYONs would be
subject to modification at our option as described above.

The modification of the terms of LYONs by us upon a Tax Event as
described above could possibly alter the timing of income recognition by
holders of the LYONs with respect to the semiannual payments of interest due on
the LYONs after the date as of which we exercise our option to pay interest in
lieu of accrued original issue discount on the LYONs.

MODIFICATION

We and the trustee may modify or amend the indenture or the LYONs with
the consent of the holders of not less than a majority in aggregate principal
amount at maturity of the LYONs then outstanding. However, the consent of the
holders of each outstanding LYON would be required to:

. alter the manner of calculation or rate of accrual of original issue
discount or interest on any LYON or extend the time of payment;

. make any LYON payable in money or securities other than that stated
in the LYON;

. change the stated maturity of any LYON;

. reduce the principal amount at maturity, accrued original issue
discount, redemption price, purchase price or change in control
purchase price with respect to any LYON; provided that a conversion
of the LYONs to semiannual coupon notes following a Tax Event as
described in this prospectus shall not be deemed to cause any such
reduction;

. make any change that adversely affects the rights of a holder to
convert any LYON;

. make any change that adversely affects the right to require us to
purchase a LYON;

. impair the right to institute suit for the enforcement of any payment
with respect to, or conversion of, the LYONs; and

. change the provisions in the indenture that relate to modifying or
amending the indenture.

Without the consent of any holder of LYONs, we and the trustee may enter
into supplemental indentures for any of the following purposes:

. to evidence a successor to us and the assumption by that successor of
our obligations under the indenture and the LYONs;

. to add to our covenants for the benefit of the holders of the LYONs
or to surrender any right or power conferred upon us;

. to secure our obligations in respect of the LYONs;

. to make any changes or modifications to the indenture necessary in
connection with the registration of the LYONs under the Securities
Act and the qualifications of the LYONs under the Trust Indenture Act
as contemplated by the indenture;

. to cure any ambiguity or inconsistency in the indenture; provided,
however, that such amendment does not materially adversely affect the
rights of any holder of the LYONs;

. to convert the LYONs to semiannual coupon notes following a Tax Event
as described in this prospectus; or

. to make any change that does not adversely affect the rights of any
holder of the LYONs.

The holders of a majority in principal amount at maturity of the
outstanding LYONs may, on behalf of all the holders of all LYONs:

. waive compliance by us with restrictive provisions of the indenture,
as detailed in the indenture; and

. waive any past default under the indenture and its consequences,
except a default in the payment of the principal amount at maturity,
issue price, accrued and unpaid interest, accrued original issue
discount, redemption price, purchase price or change in control
purchase price or obligation to deliver common stock upon conversion
with respect to any LYON or in respect of any provision which under
the indenture cannot be modified or amended without the consent of
the holder of each outstanding LYON affected.

DISCHARGE OF THE INDENTURE

We may satisfy and discharge our obligations under the indenture by
delivering to the trustee for cancellation all outstanding LYONs or by
depositing with the trustee, the paying agent or the conversion agent, if
applicable, after the LYONs have become due and payable, whether at stated
maturity or any redemption date, or any purchase date, or a change in control
purchase date, or upon conversion or otherwise, cash or shares of common stock
(as applicable under the terms of the indenture) sufficient to pay all of the
outstanding LYONs and paying all other sums payable under the indenture.

CALCULATIONS IN RESPECT OF LYONS

We are responsible for making all calculations called for under the
LYONs. These calculations include, but are not limited to, determination of the
market prices of our common stock. We will make all these calculations in good
faith and, absent manifest error, our calculations will be final and binding on
holders of LYONs. We will provide a schedule of our calculations to the
trustee, and the trustee is entitled to rely upon the accuracy of our
calculations without independent verification.

INFORMATION CONCERNING THE TRUSTEE

The Bank of New York is the trustee, registrar, paying agent and
conversion agent under the indenture. We may maintain deposit accounts and
conduct other banking transactions with the trustee in the normal course of
business.

GOVERNING LAW

The indenture and the LYONs are governed by, and construed in accordance
with, the law of the State of New York, without regard to conflicts of laws
principles thereof.

DESCRIPTION OF CAPITAL STOCK

The following description of our capital stock does not purport to be
complete and is qualified in its entirety by reference to applicable Delaware
law and to the provisions of our certificate of incorporation and by-laws.
Copies of the forms of certificate of incorporation and by-laws have been
incorporated by reference as exhibits to our Annual Report on Form 10-K for the
calendar year ended December 31, 2000 and Amendment No. 2 to our Registration
Statement on Form S-3 (No. 333-62350), respectively.

Our authorized capital stock consists of 255,000,000 shares, each with a
par value of $.01 per share, of which:

. 250,000,000 are designated as common stock; and

. 5,000,000 are designated as preferred stock.

COMMON STOCK

As of July 27, 2001, there were 70,660,723 shares of common stock
outstanding.

Voting Rights

Each holder of common stock is entitled to one vote per share on all
matters to be voted on by stockholders. Holders of common stock are not
entitled to any cumulative voting rights.

Dividend Rights

Subject to the preferential rights of any holders of any outstanding
series of preferred stock and restrictions set forth in our credit facilities
and restrictions, if any, imposed by other indebtedness outstanding from time
to time, the holders of common stock will be entitled to such dividends and
distributions, whether payable in cash or otherwise, as may be declared from
time to time by our Board of Directors from legally available funds. See "Price
Range of our Common Stock and Dividends."

Other Rights

Upon our liquidation, dissolution or winding up, the holders of shares of
common stock would be entitled to share pro rata in the distribution of all of
our assets remaining available for distribution after satisfaction of all of
our liabilities and the payment of the liquidation preference of any
outstanding preferred stock. The holders of common stock have no preemptive or
other subscription rights to purchase shares of common stock, nor are they
entitled to the benefits of any sinking fund provisions. No outstanding share
of common stock is subject to any further call or assessment.

PREFERRED STOCK

Our certificate of incorporation authorizes 5,000,000 shares of preferred
stock, none of which are issued. Our Board of Directors has the authority to
issue shares of preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions granted to or imposed upon any
unissued shares of preferred stock and to fix the number of shares constituting
any series and the designations of such series, without any further vote or
action by the stockholders. We have no present plans to issue any of the
preferred stock.

CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK

We believe that the ability of our Board of Directors to issue one or
more series of preferred stock will provide us with flexibility in structuring
possible future acquisitions and in meeting other corporate needs that might
arise. Our Board of Directors, without stockholder approval, can issue
preferred stock with voting and

conversion rights which could adversely affect the voting power of the holders
of common stock. Although our Board of Directors has no current intention of
doing so, it could issue one or more series of preferred stock that could,
depending on the terms of such series, impede the completion of a merger,
tender offer or other takeover attempt. Our Board of Directors will make any
determination to issue such shares based on its judgment as to the best
interests of Neuberger Berman and its stockholders. Our Board of Directors, in
so acting, could issue preferred stock having terms that could discourage a
potential acquiror from making, without first negotiating with our Board of
Directors, an acquisition attempt through which such acquiror may be able to
change the composition of our Board of Directors, including a tender offer or
other transaction that some, or a majority, of our stockholders might believe
to be in their best interests or in which stockholders might receive a premium
for their stock over the then current market price.

ANTI-TAKEOVER PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BY-LAWS

Some provisions of our certificate of incorporation and by-laws,
applicable law and the Stockholders Agreement could make the acquisition of
Neuberger Berman by means of a tender offer, a proxy contest or otherwise more
difficult. As described above, our certificate of incorporation authorizes our
Board of Directors to designate and issue preferred stock. Other provisions in
the certificate of incorporation and in our by-laws impose procedural and other
requirements that may be deemed to have anti-takeover effects. These provisions
include the inability of our stockholders to take any action without a meeting
or to call special meetings of stockholders, certain advance notice procedures
for nominating candidates for election as directors and for submitting
proposals for consideration at stockholders' meetings, and limitations on the
ability to remove directors. Further, our stockholders can amend our by-laws
and certain provisions of our certificate of incorporation only with a
two-thirds majority vote. Additionally, the Stockholders Agreement requires all
former Neuberger Berman principals, who are employed by us, and their family
affiliates to vote their shares in accordance with a preliminary vote conducted
solely among these stockholders.

SECTION 203 OF THE DELAWARE GENERAL CORPORATION LAW

We are subject to section 203 of the Delaware General Corporation Law,
which prohibits a public Delaware corporation from engaging in a "business
combination" with a stockholder that is an "interested stockholder" for a
period of three years after the date of the transaction in which the
stockholder became an interested stockholder unless:

. prior to such date, our Board of Directors approved either the
business combination or the transaction which resulted in the
stockholder becoming an interested stockholder; or

. upon becoming an interested stockholder, the stockholder then owned
at least 85% of the voting stock, as defined in section 203; or

. subsequent to the date on which the stockholder became an interested
stockholder, the business combination is approved by both our Board
of Directors and by holders of at least 66/2//\\3\\% of our
outstanding voting stock, excluding shares owned by the interested
stockholder.

For these purposes, the term "business combination" includes mergers,
asset sales and other similar transactions with an "interested stockholder". An
"interested stockholder" is a person who, together with affiliates and
associates, owns (or, within the prior three years, did own) 15% or more of the
corporation's voting stock.

STOCKHOLDERS AGREEMENT

On October 7, 1999, the principals of Neuberger Berman, LLC and the
shareholders of Neuberger Berman Management Inc. exchanged their ownership
interests for 64.1 million shares of our common stock (the "Exchange"). On
October 13, 1999, we completed an initial public offering of our common stock
(the "IPO"). In

that offering, we sold 4.5 million shares of common stock and received net
proceeds after expenses of approximately $88 million. In addition, certain of
our stockholders who received our common stock in the Exchange sold 6,329,545
shares of that stock in the IPO.

The individuals who were principals of Neuberger Berman, LLC, their
family affiliates and Neuberger Berman have entered into a Stockholders
Agreement that governs transfers and voting of the shares of common stock
received by the principals and family affiliates in the Exchange. We refer to
these shares of common stock as the "Founder Shares".

Transfer Restrictions

The Stockholders Agreement prohibits any transfers of Founder Shares by
the individuals who were principals or their family affiliates prior to January
1, 2002 except in limited circumstances noted below. Thereafter, they may
transfer their Founder Shares only as follows:

(a)(1) In each calendar year beginning on January 1, 2002, they may
transfer in the aggregate up to 10% of the aggregate number of
Founder Shares initially received by them in the Exchange (plus, in
2002, a number of Founder Shares equal to the amount, if any, by
which 15% of the aggregate number of Founder Shares initially
received by them in the Exchange exceeds the aggregate number of
Founder Shares sold by them in our IPO).

(2) Founder Shares eligible to be transferred in any calendar year
but not transferred may be transferred at any time thereafter without
restriction.

(3) Notwithstanding (1) and (2) above, during the three years
following the date on which a former principal's employment with
Neuberger Berman terminates (the "Employment Termination Date"), that
former principal and his or her family affiliates may not transfer
any Founder Shares other than their Founder Shares that were eligible
to be transferred but were not transferred before the Employment
Termination Date.

(b)Notwithstanding paragraph (a) above, each former principal and his or
her family affiliates must at all times continue to hold at least 30%
of the aggregate number of Founder Shares initially received by them
in the Exchange until the third anniversary of the former principal's
Employment Termination Date.

Notwithstanding paragraphs (a) and (b) above, if a former principal's
Employment Termination Date occurs prior to January 1, 2003 for any reason
other than death, disability or termination by the firm without cause, that
principal and his or her family affiliates may not transfer any Founder Shares
prior to January 1, 2007. On and after January 1, 2007, that former principal
and his or her family affiliates may in any calendar year transfer in the
aggregate a maximum of 20% of the aggregate amount of Founder Shares held by
them on the principal's Employment Termination Date. The number of Founder
Shares eligible for transfer in any one calendar year but not transferred may
be added to the number otherwise eligible to be transferred in any future year.

Notwithstanding the foregoing, if a former principal's employment with
the firm terminates due to disability or death, the principal (or his or her
estate) and his or her family affiliates may transfer their Founder Shares
without restriction.

In addition, our Board of Directors (or a body designated by the Board of
Directors) has the authority to make exceptions to any or all of the transfer
restrictions contained in the Stockholders Agreement and may permit or cause
other persons to become party to the agreement.

Our Board of Directors waived certain transfer restrictions under the
Stockholders Agreement in order to permit the former principals of Neuberger
Berman and their affiliates to sell 4,393,315 shares of common stock in the
secondary offering completed on July 5, 2001 and 2,400,900 shares of common
stock in the repurchase we completed on July 6, 2001. Amounts sold by a
participating former principal in the secondary offering or the repurchase
reduced the number of Founder Shares that such participating former principal
would otherwise be able to sell under the Stockholders Agreement beginning on
January 1, 2002. After giving effect to the secondary offering and the
repurchase and without giving effect to any further waivers to permit
additional transfers before January 1, 2002, the former principals will be able
to sell an aggregate of 1,664,667 shares of common stock under the Stockholders
Agreement beginning on January 1, 2002. However, we currently anticipate that
we will permit our former principals to make charitable contributions in
December 2001 of Founder Shares that would otherwise not be eligible for
transfer under the Stockholders Agreement until January 1, 2002.

Voting

Prior to any vote of our stockholders, the Stockholders Agreement
provides for a separate, preliminary vote of the former principals, who are
employed by us, and their family affiliates (and any additional stockholders
who have agreed to vote their shares of common stock in accordance with the
Stockholders Agreement) on each matter upon which a vote of the stockholders is
proposed to be taken. In this preliminary vote, the participating stockholders
may vote all of the shares currently owned by them in such manner as each may
determine in his, her or its sole discretion. Each must then vote all of their
Founder Shares in accordance with the vote of the majority of the shares of
common stock present (in person or by proxy) and voting in such preliminary
vote. Each such former principal and family affiliate has granted the Secretary
of Neuberger Berman (or other officer designated by the Secretary) an
irrevocable proxy to vote his, her or its Founder Shares in order to give
effect to the voting provisions. Former principals and their family affiliates
are no longer required to vote in accordance with a preliminary vote under the
Stockholders Agreement after the former principals' Employment Termination
Date.

Call Right

The Stockholders Agreement provides that we may repurchase the Founder
Shares of a former principal and his or her family affiliates if the principal
engages in "Harmful Activity" at any time during his or her employment or
during the first three years after leaving. "Harmful Activity" includes:

. soliciting or accepting business from any financial intermediary (or
any employee of a financial intermediary) with which the principal
had business contact during the year prior to his or her departure
(or, in the case of an action taken during employment, during the
prior year);

. employing or soliciting for employment employees or consultants of
the firm;

. using (other than in seeking new employment) the investment
performance record of any mutual fund or client account with which
the principal was associated during his or her employment;

. using or disclosing confidential information of the firm; and

. publicly disparaging the firm or its former principals.

If our Board of Directors (or a body designated by the Board of
Directors) determines in good faith that a former principal has engaged in
Harmful Activity, we may purchase from that principal the excess of the number
of Founder Shares received by the former principal and his or her family
affiliates in the Exchange over the number of Founder Shares that the principal
and his or her family affiliates could have transferred prior to the date on
which the principal initially engaged in Harmful Activity. If a former
principal does not hold sufficient Founder Shares, we may purchase Founder
Shares from his or her family affiliates pro rata in accordance with their then
current holdings. The purchase price of any Founder Shares the Company
purchases in this manner will be $1.33 per share.

Transfer Administration and Distributions

The certificates representing the Founder Shares beneficially owned by
each former principal and family affiliate are registered in the name of the
firm or its nominee and held in the firm's custody at its principal office.
During any period in which we are in dispute with any former principal
regarding his or her obligations under the Stockholders Agreement or certain
other agreements, we will not release for transfer any Founder Shares of that
principal or his or her family affiliates or distribute to them any dividends
or distributions received in respect of their Founder Shares.

Amendments and Term

The Stockholders Agreement may be amended by our Board of Directors (or a
body designated by the Board of Directors), provided that any amendment that
materially adversely affects the former principals or family affiliates (or any
group of former principals or family affiliates) (other than any amendment to
cure any ambiguity in the agreement) must be approved by the former principals
and family affiliates holding a majority of the Founder Shares then subject to
the agreement. The agreement will terminate on the earlier to occur of (i) the
first date on which there are no former principals or family affiliates who
remain bound by its terms and (ii) the date on which we agree with former
principals and family affiliates who are then bound by its terms to terminate
the agreement.

LISTING

The common stock is listed on the New York Stock Exchange under the
symbol NEU.

TRANSFER AGENT AND REGISTRAR

American Stock Transfer & Trust Company is the transfer agent and
registrar for the shares of common stock.

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

GENERAL

This is a summary of certain United States federal income tax
consequences relevant to holders of LYONs and our common stock issuable upon
conversion or repurchase by us of the LYONs. This summary is based upon laws,
regulations, rulings and decisions now in effect, all of which are subject to
change (possibly with retroactive effect) or possible differing
interpretations. THE DISCUSSION BELOW DEALS ONLY WITH LYONS AND COMMON STOCK
THAT ARE HELD AS CAPITAL ASSETS AND DOES NOT PURPORT TO DEAL WITH PERSONS IN
SPECIAL TAX SITUATIONS, SUCH AS BANKS, INSURANCE COMPANIES, DEALERS IN
SECURITIES OR CURRENCIES, TAX-EXEMPT ENTITIES, PERSONS HOLDING LYONS OR COMMON
STOCK IN A TAX DEFERRED OR TAX-ADVANTAGED ACCOUNT, PERSONS WHO ARE FORMER
CITIZENS OR LONG-TERM RESIDENTS OF THE UNITED STATES SUBJECT TO TAXATION AS
EXPATRIATES OR PERSONS HOLDING LYONS OR COMMON STOCK AS A POSITION IN A
"STRADDLE'' OR AS PART OF A "HEDGING," "CONSTRUCTIVE SALE" OR "CONVERSION"
TRANSACTION FOR TAX PURPOSES. Furthermore, in general, this discussion does not
address the tax consequences applicable to holders that are taxed as
partnerships or other pass-through entities for United States federal income
tax purposes.

We do not address all of the tax consequences that may be relevant to a holder
of LYONs or common stock. In particular, we do not address:

. the United States federal income tax consequences to shareholders in,
or partners or beneficiaries of, an entity that is a holder of LYONs
or common stock;

. the United States federal estate (except where indicated), gift or
alternative minimum tax consequences of the purchase, ownership or
disposition of LYONs or common stock;

. any state, local or foreign tax consequences of the purchase,
ownership or disposition of LYONs or acquisition, ownership or
disposition of the common stock issuable upon conversion or
repurchase of the LYONs; or

. the consequences to persons who hold the LYONs or common stock whose
functional currency is not the United States dollar.

For purposes of this section, a U.S. Holder is a beneficial owner of the LYONs
or, where applicable, common stock who or which is:

. a citizen or individual resident of the United States, as defined in
Section 7701(b) of the Internal Revenue Code of 1986, as amended
(which we refer to as the Code);

. a corporation, including any entity treated as a corporation for
United States federal income tax purposes, created or organized in or
under the laws of the United States, any state thereof or the
District of Columbia;

. an estate if its income is subject to United States federal income
taxation regardless of its source; or

. a trust if (1) a United States court can exercise primary supervision
over its administration and (2) one or more United States persons
have the authority to control all of its substantial decisions.

Notwithstanding the preceding sentence, certain trusts in existence on
August 20,1996, and treated as a U.S. Holder prior to such date, may also be
treated as U.S. Holders. A Non-U.S. Holder is a holder of LYONs other than a
U.S. Holder.

No statutory, administrative or judicial authority directly addresses the
treatment of the LYONs or instruments similar to the LYONs for United States
federal income tax purposes. No rulings have been sought or are expected to be
sought from the Internal Revenue Service (which we refer to as the IRS) with
respect to any of

the United States federal income tax consequences discussed below, and no
assurance can be given that the IRS will agree with the tax characterizations
and the tax consequences described below.

WE URGE PROSPECTIVE INVESTORS TO CONSULT THEIR OWN TAX ADVISORS WITH
RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE, OWNERSHIP AND
DISPOSITION OF THE LYONS AND THE COMMON STOCK IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES, INCLUDING THE TAX CONSEQUENCES UNDER UNITED STATES FEDERAL,
STATE, LOCAL OR FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES
IN UNITED STATES FEDERAL OR OTHER TAX LAWS.

CLASSIFICATION OF THE LYONS

It is the opinion of counsel to Neuberger Berman, Willkie Farr &
Gallagher, that the LYONs will be treated as indebtedness for United States
federal income tax purposes.

TAX EVENT

The modification of the terms of the LYONs by us upon a Tax Event as
described in "Description of LYONs--Optional Conversion to Semiannual Coupon
Notes Upon Tax Event," could possibly alter the timing of income recognition by
the holders of LYONS with respect to the semiannual payments of interest due
after the option exercise date.

U.S. HOLDERS

The following discussion applies to you if you are a U.S. Holder of LYONs
for tax purposes.

Original Issue Discount. We issued the LYONs at a substantial discount
from their principal amount at maturity. For United States federal income tax
purposes, the difference between the issue price and the stated principal
amount at maturity of each LYON constitutes original issue discount ("OID").
You will be required to include OID in your gross income periodically over the
term of the LYONs before receipt of the cash or other payment attributable to
such income.

The OID you must include in gross income as it accrues is the sum of the
daily portions of OID with respect to the LYON for each day during the taxable
year or portion of a taxable year on which you hold the LYON. The daily portion
is determined by allocating to each day of an accrual period a pro rata portion
of an amount equal to the adjusted issue price of the LYON at the beginning of
the accrual period multiplied by the yield to maturity of the LYON. The accrual
period of a LYON may be of any length you choose and may vary in length over
the term of the LYON, provided that each accrual period is no longer than one
year and each scheduled payment of principal or interest occurs either on the
final day of an accrual period or on the first day of an accrual period.

The issue price of a LYON for OID purposes is the first price at which a
substantial amount of LYONs are sold to investors (excluding sales to bond
houses, brokers, or similar persons or organizations acting in the capacity of
underwriters, placement agents, or wholesalers), which price is expected to be
the issue price shown on the cover of this Prospectus. The adjusted issue price
of the LYON at the start of any accrual period is the issue price of the LYON
increased by the accrued original issue discount for each prior accrual period.

Under these rules, you will be required to include in gross income
increasingly greater amounts of OID in each successive accrual period. Any
amount included in income as OID will increase your basis in the LYON.

Acquisition Premium. Your acquisition of a LYON subsequent to its
original issue at an "acquisition premium" will reduce the amount of OID
otherwise includible in gross income to reflect the acquisition premium. A LYON
is purchased at an acquisition premium if, immediately after its purchase, its
adjusted basis is

greater than its adjusted issue price (as described above). If you purchase a
LYON at an acquisition premium, you may reduce the amount of OID otherwise
includible in income during an accrual period by a fraction. The numerator of
this fraction is the excess of the adjusted basis of the LYON to you
immediately after your acquisition over the adjusted issue price of the LYON.
The denominator of the fraction is the excess of the principal amount at
maturity of the LYON over the LYON's adjusted issue price. As an alterative to
reducing the amount of OID otherwise includible in income by this fraction, you
may elect to compute OID accruals by treating the purchase as if it were a
purchase at original issuance and compute OID accruals by applying the constant
yield method described above. Any such election applies to all debt instruments
acquired by you on or after the first day of the first taxable year to which
such election applies and is irrevocable without the consent of the IRS.

Sale, Exchange, Conversion or Redemption. If you elect to exercise your
option to tender a LYON to us on a purchase date or a change in control
purchase date or we exercise our right to redeem your LYON and we deliver
solely cash in satisfaction of the purchase price, you will recognize gain or
loss, measured by the difference between the amount of cash transferred by us
to you and your basis in the tendered LYON. Gain or loss recognized by the
holder will generally be capital gain or loss, and will be long-term capital
gain or loss if the tendered LYON is held for more than one year.

If you elect to exercise your option to tender a LYON to us on a purchase
date and we deliver a combination of common stock and cash (and such cash is
not merely received in lieu of a fractional share) in satisfaction of the
purchase price you will recognize gain (but not loss) to the extent such gain
does not exceed such cash. Such gain will generally be a capital gain, and will
be a long-term capital gain if the tendered LYON is held for more than one
year.

If you convert a LYON into common stock, or if you elect to exercise your
option to tender a LYON to us on a purchase date and we deliver solely common
stock (other than cash in lieu of a fractional share), you will not recognize
gain or loss, except with respect to cash received in lieu of a fractional
share. Cash received in lieu of a fractional share upon a tender of a LYON to
us on a purchase date or on conversion should be treated as a payment in
exchange for the fractional share. Accordingly, the receipt of cash in lieu of
a fractional share should generally result in capital gain or loss, if any,
measured by the difference between the cash received for the fractional share
and your basis in the fractional share.

Your basis in common stock received from us in exchange for a LYON
(whether on conversion or upon your exercise of your option to tender a LYON to
us on a purchase date, the purchase price of which we elect to satisfy in whole
or in part with common stock) will be the same as your basis in the LYON at the
time of conversion less any basis allocable to a fractional share. However,
this basis will be decreased by the amount of cash, other than cash received in
lieu of a fractional share, if any, received in exchange and increased by the
amount of any gain recognized by you on the exchange, other than gain with
respect to a fractional share. The holding period for common stock received in
the exchange will include the holding period for the LYON tendered to us,
except that the holding period for common stock attributable to accrued OID may
commence on the day following the date of conversion or repurchase.

Except as described above with respect to LYONs, gain or loss upon a sale
or exchange of a LYON or of common stock received upon a conversion or a
repurchase of a LYON will generally be capital gain or loss, which will be
long-term if the LYON or common stock is held for more than one year.

In the case of individuals, long-term capital gains are generally taxed
at a maximum rate of 20% (or 18% in the case of LYONs or common stock held for
more than five years). The deductibility of capital losses is subject to
limitation.

Market Discount. If you acquire a LYON other than in connection with its
original issue and you have a tax basis in the LYON that is less than its
adjusted issue price, as described above, the amount of such difference is
treated as "market discount" for federal income tax purposes, unless such
difference is less than 1/4 of one percent of the principal amount at maturity
multiplied by the number of complete years to maturity from the date of your
acquisition. Under the market discount rules, you are required to treat any
gain on the sale, exchange, retirement or other disposition of a LYON as
ordinary income to the extent of the accrued market discount that has not
previously been included in income. If you dispose of a LYON which has accrued
market discount in a nonrecognition transaction in which you receive property
the basis of which is determined in whole or in part by reference to the basis
of the LYON, the accrued market discount is generally not includible in income
at the time of such transaction. Instead, the accrued market discount attaches
to the property received in the nonrecognition transaction and is recognized as
ordinary income upon the disposition of such property. Such nonrecognition
transaction should include the conversion of a LYON for our shares of common
stock and our purchase of a LYON you have tendered with our common stock. In
general, the amount of market discount that has accrued is determined on a
ratable basis, by allocating an equal amount of market discount to each day of
every accrual period. You may, however, elect to determine the amount of
accrued market discount allocable to any accrual period under the constant
yield method.

Unless you elect to accrue market discount in income as it accrues, you
may not be allowed to deduct on a current basis a portion of the interest
expense on any indebtedness incurred or continued to purchase or carry LYONs
with market discount. Any such election applies to all debt instruments
acquired by you on or after the first day of the first taxable year to which
such election applies and is irrevocable without the consent of the IRS. If you
make such an election, your tax basis in the LYONs will be increased by the
amount of market discount included in income.

Dividends. If you receive common stock, distributions on the common stock
that are paid out of our current or accumulated earnings and profits generally
will constitute dividends taxable as ordinary income. If a distribution exceeds
our current and accumulated earnings and profits, the excess will be treated as
a tax-free return of your investment, up to your basis in the common stock. Any
remaining excess will be treated as capital gain. If you are a U.S.
corporation, you may be able to claim a deduction equal to a portion of any
dividends received.

Constructive Dividend. If at any time we make a distribution of cash or
property to our shareholders that would be taxable to the shareholders as a
dividend for United States federal income tax purposes and, in accordance with
the anti-dilution provisions of the LYONs, the conversion rate of the LYONs is
increased, such increase may be deemed to be the payment of a taxable dividend
to holders of the LYONs although they would not actually receive any cash or
other property.

For example, an increase in the conversion rate in the event of
distributions of our evidences of indebtedness or our assets or an increase in
the conversion rate at our discretion is likely to result in deemed dividend
treatment to holders of the LYONs, but generally an increase in the event of
stock dividends or the distribution of rights to subscribe for shares of common
stock should not. See "Description of LYONS -- Conversion Rights."

Backup Withholding and Information Reporting. Information reporting will
apply to payments of interest (including accruals of OID) or dividends, if any,
made by us on, or the proceeds of the sale or other disposition of, the LYONs
or shares of common stock with respect to certain non-corporate U.S. Holders,
and backup withholding (currently at a rate of 31%) may apply unless the
recipient of such payment supplies a correct taxpayer identification number,
and other required information or otherwise establishes an exemption from
backup withholding. Backup withholding will also apply if we are notified by
the IRS or a broker that it is required. Although the backup withholding rate
is currently set at 31%, effective August 7, 2001, that rate will be reduced to
30.5% and thereafter will be gradually reduced to 28% by year 2006. Any amount
withheld under the backup withholding rules will be allowable as a credit
against your United States federal income tax, provided that the required
information is provided to the IRS.

NON-U.S. HOLDERS

The following discussion applies to you if you are a Non-U.S. Holder.

Original Issue Discount and Disposition. In general and subject to the
discussion below under "--Backup Withholding and Information Reporting," you
will not be subject to United States federal income or withholding tax with
respect to OID accrued on LYONs or gain upon the disposition of LYONs or shares
of common stock if:

. you do not actually or constructively own 10% or more of the total
combined voting power of all classes of our shares;

. you are not a controlled foreign corporation that is related to us;

. you are not a bank receiving interest described in Section
881(c)(3)(A)of the Code;

. you certify your nonresident status by providing a Form W-8BEN or
appropriate substitute form to us or our agent (provided that if you
hold the note through a financial institution or other agent acting
on your behalf, you will be required to provide appropriate
documentation to the agent and your agent will then be required to
provide certification to us or our paying agent, either directly or
through other intermediaries);

. you are not an individual who is present in the United States for 183
days or more in the year of the sale, exchange or disposition of the
LYONs or common stock; and

. gain, if any, from a sale, exchange or disposition of the LYONs or
common stock is not effectively connected (or deemed effectively
connected by virtue of Section 897 of the Code) with the conduct by
you of a U.S. trade or business.

Dividends paid to you on common stock received in exchange for the LYONs
will generally be subject to a withholding tax at a 30 percent rate (or such
lower rate provided by an applicable income tax treaty if you establish that
you qualify to receive the benefits of such treaty) unless they are effectively
connected with the conduct by you of a U.S. trade or business and you provide
us with a Form W-8ECI. U.S. trade or business income will generally be subject
to regular United States federal income tax in the same manner as if it were
realized by a U.S. Holder. Moreover, if you are a non-U.S. corporation your
U.S. trade or business income may be subject to an additional branch profits
tax at a rate of 30% (or such lower rate provided by an applicable income tax
treaty if you establish that you qualify for the benefits of such treaty).

United States Federal Estate Tax. A LYON held by a nonresident alien
individual at the time of death will not be includable in the decedent's
taxable estate for United States federal estate tax purposes, provided that
such holder or beneficial owner did not at the time of death actually or
constructively own 10% or more of the combined voting power of all of our
classes of stock entitled to vote, and provided that, at the time of death,
payments with respect to such LYON (including OID) would not have been
effectively connected with the conduct by such holder of a trade or business
within the United States. If you are an individual, your common stock will be
subject to United States estate tax when you die unless you are entitled to the
benefits of an estate tax treaty.

Backup Withholding and Information Reporting. If the LYONs, or shares of
common stock into which LYONs have been converted, are held by you through a
non-U.S., or non-U.S. related, broker or financial institution, information
reporting and backup withholding generally would not be required. Information
reporting, and possibly backup withholding, may apply if the LYONs or shares of
common stock are held by you through a U.S., or U.S. related, broker or
financial institution and you fail to certify your nonresident status.

SELLING SECURITYHOLDERS

The LYONs were originally issued by us and sold by Merrill Lynch, Pierce,
Fenner & Smith Incorporated in a transaction exempt from the registration
requirements of the Securities Act to persons reasonably believed by Merrill
Lynch to be "qualified institutional buyers" as defined by Rule 144A under the
Securities Act. The selling securityholders (which term includes their
transferees, pledgees, donees, assignees or successors) may from time to time
offer and sell pursuant to this prospectus any and all of the LYONs and the
shares of common stock issuable upon conversion, and/or repurchase by us, of
the LYONs.

Set forth below are the names of each selling securityholder, the
principal amount of LYONs that may be offered by such selling securityholder
pursuant to this prospectus and the number of shares of common stock into which
such LYONs are convertible. Unless set forth below, none of the selling
securityholders has had a material relationship with us or any of our
predecessors or affiliates within the past three years.

We have prepared the table below based on information given to us by the
selling securityholders on or prior to August 17, 2001. However, any or all of
the LYONs or common stock listed below may be offered for sale pursuant to this
prospectus by the selling securityholders from time to time. Accordingly, no
estimate can be given as to the amount of LYONs or common stock that will be
held by the selling securityholders upon consummation of any such sales. In
addition, the selling securityholders identified in the table below may have
acquired, sold, transferred, or otherwise disposed of all or a portion of their
LYONs since the date on which the information regarding their LYONs was
provided, in transactions exempt from the registration requirements of the
Securities Act.

Information about the selling securityholders may change over time. Any
changed information will be set forth in prospectus supplements. From time to
time, additional information concerning ownership of the LYONs and common stock
may rest with certain holders thereof not named in the table below and of whom
we are unaware.

AGGREGATE PRINCIPAL
AMOUNT OF LYONS PERCENTAGE OF NUMBER OF SHARES OF PERCENTAGE OF
AT MATURITY THAT LYONS COMMON STOCK THAT COMMON STOCK
NAME MAY BE SOLD OUTSTANDING MAY BE SOLD (1) OUTSTANDING (2)
---- ------------------- ------------- ------------------- ---------------

AAM/Zazove Institutional Income Fund L.P.......... $ 1,000,000 * 13,888 *
AIG Sound Shore Opportunity Holding Fund Ltd...... 8,240,000 4.71% 114,436 *
AIG Sound Shore Strategic Holding Fund Ltd........ 5,260,000 3.01% 73,050 *
Ameritas Life Insurance Company................... 500,000 * 6,943 *
Argent Classic Convertible Arbitrage Fund
(Bermuda) Ltd.................................... 5,000,000 2.86% 69,439 *
Argent Convertible Arbitrage Fund Ltd............. 5,000,000 2.86% 69,439 *
Aristeia International, Limited................... 7,920,000 4.53% 109,992 *
Aristeia Partners, L.P............................ 3,080,000 1.76% 42,774 *
Bank of America Securities LLC.................... 1,500,000 * 20,831 *
CALAMOS(R) Convertible Growth and Income Fund--
CALAMOS(R) Investment Trust...................... 3,000,000 1.71% 41,664 *
Deutsche Banc Alex. Brown Inc..................... 21,250,000 12.14% 295,117 *
Global Bermuda Limited Partnership................ 2,500,000 1.43% 34,719 *
Gulf Investment Corporation....................... 450,000 * 6,249 *
Highbridge International LLC...................... 3,250,000 1.86% 45,135 *
Jackson County Employees' Retirement System....... 175,000 * 2,430 *
KBC Financial Products USA, Inc................... 5,500,000 3.14% 76,383 *
Lakeshore International, Ltd...................... 7,500,000 4.29% 104,159 *
McMahan Securities Co. L.P........................ 3,500,000 2.00% 48,607 *
Michigan Mutual Life Insurance Company............ 350,000 * 4,861 *
Morgan Stanley & Co............................... 5,000,000 2.86% 69,439 *
Nomura Securities International, Inc.............. 14,000,000 8.00% 194,430(3) *
Nomura Securities International, Inc.............. 7,500,000 4.29% 104,160(4) *
Paloma Securities LLC............................. 7,500,000 4.29% 104,160(5) *
Quattro Fund, Ltd................................. 1,000,000 * 13,888 *
R/2/ Investments, LDC............................. 6,500,000 3.71% 90,271 *
San Diego County Employees Retirement Association. 2,700,000 1.54% 37,497 *
State of Florida, Office of the Treasurer......... 2,500,000 1.43% 34,720 *
TD Securities (USA) Inc........................... 17,500,000 10.00% 243,038 *
Tokai Asia Limited................................ 5,000,000 2.86% 69,439 *
Triborough Partners QP LLC........................ 1,000,000 * 13,887 *
Zazove Convertible Securities Fund Inc............ 200,000 * 2,778 *
Zurich Institutional Benchmark Master Fund Ltd.... 1,300,000 * 18,054 *
All other holders of LYONs or future transferees,
pledgees, donees, assignees or successors of any
such holders(6)(7)............................... 18,325,000 10.47% 254,496 *
Total........................................... 175,000,000 100.00% 2,430,373 3.44%

(footnotes on following page)

--------
* Less than 1%.
(1)Calculated assuming only the conversion of all of the holder's LYONs at a
conversion rate of 13.8879 shares of common stock per $1,000 principal
amount at maturity of the LYONs (giving effect to the three-for-two stock
split paid in shares of our common stock on August 16, 2001 to stockholders
of record on August 1, 2001). This conversion rate is subject to adjustment,
however, as described under "Description of the LYONs--Conversion Rights."
As a result, the number of shares of common stock issuable upon conversion
of the LYONs may increase or decrease in the future. The number in this
column does not include common stock that may be issued by us upon purchase
of LYONs by us at the option of the holder nor does it include any other
shares of common stock otherwise held by each such holder.
(2)Calculated based on 70,660,723 shares of common stock outstanding as of July
27, 2001. In calculating this amount, we treated as outstanding that number
of shares of common stock issuable upon conversion of all of a particular
holder's LYONs. However, we did not assume the conversion of any other
holder's LYONs.
(3)Does not include 5,317 shares of common stock beneficially owned by Nomura
Securities International, Inc. that are in addition to the shares issuable
upon conversion of the LYONs.
(4)Does not include 5,317 shares of common stock beneficially owned by Nomura
Securities International, Inc. that are in addition to the shares issuable
upon conversion of the LYONs.
(5)Does not include 7,500 shares of common stock beneficially owned by Paloma
Securities LLC that are in addition to shares issuable upon conversion of
the LYONs.
(6)Information about other selling securityholders will be set forth in
prospectus supplements, if required.
(7)Assumes that any other holders of LYONs, or any future transferees,
pledgees, donees, assignees or successors of or from any such other holders
of LYONs, do not beneficially own any common stock other than the common
stock issuable upon conversion of the LYONs at the initial conversion rate.

PLAN OF DISTRIBUTION

The LYONs and the common stock are being registered to permit public
secondary trading of these securities by the holders thereof from time to time
after the date of this prospectus. We have agreed, among other things, to bear
all expenses (other than underwriting discounts and selling commissions) in
connection with the registration and sale of the LYONs and the common stock
covered by this prospectus.

We will not receive any of the proceeds from the offering of LYONs or the
common stock by the selling securityholders. We have been advised by the
selling securityholders that the selling securityholders may sell all or a
portion of the LYONS and common stock beneficially owned by them and offered
hereby from time to time on any exchange on which the securities are listed on
terms to be determined at the times of such sales. The selling securityholders
may also make private sales directly or through a broker or brokers.
Alternatively, any of the selling securityholders may from time to time offer
the LYONs or the common stock beneficially owned by them through underwriters,
dealers or agents, who may receive compensation in the form of underwriting
discounts, commissions or concessions from the selling securityholders and the
purchasers of the LYONs and the common stock for whom they may act as agent.
The aggregate proceeds to the selling securityholders from the sale of the
LYONs or common stock offering by them hereby will be the purchase price of
such LYONs or common stock less discounts and commissions, if any.

The LYONs and common stock may be sold from time to time in one or more
transactions at fixed offering prices, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. These prices
will be determined by the holders of such securities or by agreement between
these holders and underwriters or dealers who may receive fees or commissions
in connection therewith.

These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.

In connection with sales of the LYONs and the underlying common stock or
otherwise, the selling securityholders may enter into hedging transactions with
broker-dealers. These broker-dealers may in turn engage in short sales of the
LYONs and the underlying common stock in the course of hedging their positions.

The selling securityholders may also sell the LYONs and underlying common
stock short and deliver LYONs and the underlying common stock to close out
short positions, or loan or pledge LYONs and the underlying common stock to
broker-dealers that in turn may sell the LYONs and the underlying common stock.

To our knowledge, there are currently no plans, arrangements or
understandings between any selling securityholders and any underwriter,
broker-dealer or agent regarding the sale of the LYONs and the underlying
common stock by the selling securityholders. Selling securityholders may elect
to not sell any or all of the LYONs and the underlying common stock offered by
them pursuant to this prospectus. In addition, we cannot assure you that any
such selling securityholder will not transfer, devise or gift the LYONs and the
underlying common stock by other means not described in this prospectus. In
addition, any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule
144 or Rule 144A rather than pursuant to this prospectus.

Our outstanding common stock is listed for trading on the New York Stock
Exchange.

The selling securityholders and any broker and any broker-dealers, agents
or underwriters that participate with the selling securityholders in the
distribution of the LYONs or the common stock may be deemed to be
"underwriters" within the meaning of the Securities Act, in which event any
commission received by such broker-dealers, agents or underwriters and any
profit on the resale of the LYONs or the common stock purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.

The LYONs were issued and sold on May 4, 2001 in transactions exempt from
the registration requirements of the Securities Act to persons reasonably
believed by Merrill Lynch to be "qualified institutional buyers" (as defined in
Rule 144A under the Securities Act). We have agreed to indemnify Merrill Lynch
and each selling securityholder, and each selling securityholder had agreed to
indemnify us, Merrill Lynch and each other selling shareholder against certain
liabilities arising under the Securities Act.

The selling securityholders and any other persons participating in such
distribution will be subject to the Exchange Act. The Exchange Act rules
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of the LYONs and the underlying common stock by the selling
securityholders and any other such person. In addition, Regulation M of the
Exchange Act may restrict the ability of any person engaged in the distribution
of the LYONs and the underlying common stock to engage in market-making
activities with respect to the particular LYONs and the underlying common stock
being distributed for a period of up to five business days prior to the
commencement of such distribution. This may affect the marketability of the
LYONs and the underlying common stock and the ability of any person or entity
to engage in market-making activities with respect to the LYONs and the
underlying common stock.

We will use our reasonable efforts to keep the registration statement of
which this prospectus is a part effective until the earlier of (i) the sale
pursuant to the registration statement of all the securities registered
thereunder and (ii) the expiration of the holding period applicable to such
securities held by persons that are not our affiliates under Rule 144(k) under
the Securities Act or any successor provision, subject to certain permitted
exceptions in which case we may prohibit offers and sales of LYONs and common
stock pursuant to the registration statement to which this prospectus relates.

LEGAL MATTERS

The validity of the securities will be passed upon for us by Willkie Farr
& Gallagher, New York, New York. Mr. Jack H. Nusbaum is chairman of the law
firm of Willkie Farr & Gallagher, and a Director of Neuberger Berman. As of
July 27, 2001, Mr. Nusbaum beneficially owned 19,879 shares of the common stock
of Neuberger Berman.

EXPERTS

The audited consolidated statements of financial condition of Neuberger
Berman as of December 31, 2000 and 1999, and the related audited consolidated
statements of income, changes in stockholders' equity and cash flows for each
of the three years in the period ended December 31, 2000, included in the
Company's Annual Report on Form 10-K for the year ended December 31, 2000 and
incorporated by reference in this prospectus, have been audited by Arthur
Andersen LLP, independent public accountants, as stated in their report
included in the Annual Report on Form 10-K for the year ended December 31,
2000, and incorporated by reference in this prospectus, and are incorporated by
reference herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.