Exhibit 4.06


 


Execution Copy


 


LIMITED LIABILITY COMPANY AGREEMENT


 


OF


 


LEHMAN BROTHERS HOLDINGS E-CAPITAL LLC I


 


 


Dated as of August 19, 2005


 





















 


TABLE OF CONTENTS


 


	
  ARTICLE
  I

  
	
  DEFINED
  TERMS

  
	
   

  	
   

  	
   

  
	
  Section
  1.1.

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
  GENERAL PROVISIONS

  
	
   

  	
   

  	
   

  
	
  Section 2.1.

  	
  Formation

  	
   

  
	
  Section
  2.2.

  	
  Name

  	
   

  
	
  Section
  2.3.

  	
  Purposes
  of the LLC

  	
   

  
	
  Section
  2.4.

  	
  Term

  	
   

  
	
  Section
  2.5.

  	
  Registered
  Agent and Office

  	
   

  
	
  Section
  2.6.

  	
  Principal
  Place of Activity

  	
   

  
	
  Section
  2.7.

  	
  Managing
  Member

  	
   

  
	
  Section
  2.8.

  	
  Qualification
  to Conduct Activities

  	
   

  
	
  Section
  2.9.

  	
  Admission
  of Holders of Preferred Securities

  	
   

  
	
  Section
  2.10.

  	
  Consolidation,
  Merger or Sale of Assets

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
  CAPITAL CONTRIBUTIONS; REPRESENTATION OF

  
	
  PREFERRED SECURITY HOLDER’S INTEREST;

  
	
  CAPITAL ACCOUNTS

  
	
   

  	
   

  	
   

  
	
  Section
  3.1.

  	
  Capital
  Contributions

  	
   

  
	
  Section
  3.2.

  	
  Preferred
  Securities Holder’s Interest Represented by Preferred Securities

  	
   

  
	
  Section
  3.3.

  	
  Establishment
  and Maintenance of Capital Accounts

  	
   

  
	
  Section
  3.4.

  	
  Interest
  on Capital Contributions

  	
   

  
	
  Section
  3.5.

  	
  Withdrawal
  and Return of Capital Contributions

  	
   

  
	
  Section
  3.6.

  	
  Interests
  are Personal Property; No Title to Assets

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
  ALLOCATIONS

  
	
   

  	
   

  	
   

  
	
  Section
  4.1.

  	
  Profits
  and Losses

  	
   

  
	
  Section
  4.2.

  	
  Regulatory
  Allocation Provisions

  	
   

  
	
  Section
  4.3.

  	
  Tax
  Allocations

  	
   

  
	
  Section
  4.4.

  	
  Additional
  Interest Allocation

  	
   

  
	
  Section
  4.5.

  	
  Other
  Allocation Provisions

  	
   

  



 


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  ARTICLE V

  
	
  ISSUANCE OF PREFERRED SECURITIES

  
	
   

  	
   

  	
   

  
	
  Section
  5.1.

  	
  General
  Provisions Regarding Preferred Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
  DISTRIBUTIONS

  
	
   

  	
   

  	
   

  
	
  Section
  6.1.

  	
  Distributions

  	
   

  
	
  Section
  6.2.

  	
  Mandatory
  Deferral

  	
   

  
	
  Section
  6.3.

  	
  Optional
  Deferral

  	
   

  
	
  Section
  6.4.

  	
  Rights
  and Remedies Upon Certain Arrearages

  	
   

  
	
  Section
  6.5.

  	
  Limitations
  on Distributions

  	
   

  
	
  Section
  6.6.

  	
  Withholding

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
  REDEMPTION OF PREFERRED SECURITIES

  
	
   

  	
   

  	
   

  
	
  Section
  7.1.

  	
  Optional
  Redemption

  	
   

  
	
  Section
  7.2.

  	
  Mandatory
  Redemption

  	
   

  
	
  Section
  7.3.

  	
  Special
  Event Redemption

  	
   

  
	
  Section
  7.4.

  	
  Redemption
  Procedures

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
  ENFORCEMENT EVENTS

  
	
   

  	
   

  	
   

  
	
  Section
  8.1.

  	
  Special
  Representative

  	
   

  
	
  Section
  8.2.

  	
  Waiver

  	
   

  
	
  Section
  8.3.

  	
  General
  Voting

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  
	
  LLC INVESTMENTS

  
	
   

  	
   

  	
   

  
	
  Section
  9.1.

  	
  Initial
  Investments

  	
   

  
	
  Section
  9.2.

  	
  Reinvestment
  of Payments Received by the Company

  	
   

  
	
  Section
  9.3.

  	
  Sales
  of Affiliate Debt Instruments

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  
	
  BOOKS OF ACCOUNT, RECORDS AND REPORTS

  
	
   

  	
   

  	
   

  
	
  Section
  10.1.

  	
  Books
  and Records

  	
   

  
	
  Section
  10.2.

  	
  Accounting
  Method

  	
   

  
	
  Section
  10.3.

  	
  Annual
  Audit

  	
   

  



 


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  ARTICLE XI

  
	
  POWERS, RIGHTS AND DUTIES

  
	
  OF THE NON-MANAGING MEMBERS

  
	
   

  	
   

  	
   

  
	
  Section
  11.1.

  	
  Limitations

  	
   

  
	
  Section
  11.2.

  	
  Liability

  	
   

  
	
  Section
  11.3.

  	
  Priority

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII

  
	
  POWERS, RIGHTS AND DUTIES

  
	
  OF THE MANAGING MEMBER

  
	
   

  	
   

  	
   

  
	
  Section
  12.1.

  	
  Authority

  	
   

  
	
  Section
  12.2.

  	
  Powers
  and Duties of Managing Member

  	
   

  
	
  Section
  12.3.

  	
  Covenants

  	
   

  
	
  Section
  12.4.

  	
  Liability

  	
   

  
	
  Section
  12.5.

  	
  Outside
  Activities

  	
   

  
	
  Section
  12.6.

  	
  Limits
  on Managing Member’s Powers

  	
   

  
	
  Section
  12.7.

  	
  Exculpation

  	
   

  
	
  Section
  12.8.

  	
  Fiduciary
  Duty

  	
   

  
	
  Section
  12.9.

  	
  Indemnification

  	
   

  
	
  Section 12.10.

  	
  Tax Matters

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  
	
  PAYMENT OF EXPENSES

  
	
   

  	
   

  	
   

  
	
  Section
  13.1.

  	
  Payment
  of LLC Expenses

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  
	
  EFFECT OF DEFERRALS

  
	
   

  	
   

  	
   

  
	
  Section
  14.1.

  	
  Limitation
  on Company Payments

  	
   

  
	
  Section
  14.2.

  	
  Sale
  of Stock in the Event of Deferral of Distributions or Mandatory Deferral Event

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV

  
	
  TRANSFERS OF INTERESTS BY MEMBERS

  
	
   

  	
   

  	
   

  
	
  Section
  15.1.

  	
  Transfer
  of Interests

  	
   

  
	
  Section
  15.2.

  	
  Definitive
  Preferred Securities Certificates; Persons Deemed Preferred Securities
  Holders

  	
   

  
	
  Section
  15.3.

  	
  Registrar
  and Paying Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVI

  
	
  WITHDRAWAL, DISSOLUTION;

  
	
  LIQUIDATION AND DISTRIBUTION OF ASSETS

  
	
   

  	
   

  	
   

  
	
  Section
  16.1.

  	
  Withdrawal
  of Managing Member

  	
   

  



 


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  Section
  16.2.

  	
  Dissolution
  of the LLC

  	
   

  
	
  Section
  16.3.

  	
  Liquidation

  	
   

  
	
  Section
  16.4.

  	
  Distributions
  in Liquidation

  	
   

  
	
  Section
  16.5.

  	
  Rights
  of Non-Managing Members

  	
   

  
	
  Section
  16.6.

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVII

  
	
  AMENDMENTS AND MEETINGS

  
	
   

  	
   

  	
   

  
	
  Section
  17.1.

  	
  General

  	
   

  
	
  Section
  17.2.

  	
  Amendments

  	
   

  
	
  Section
  17.3.

  	
  Amendment
  of Certificate

  	
   

  
	
  Section
  17.4.

  	
  Meetings
  of Members

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVIII

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  Section
  18.1.

  	
  Notices

  	
   

  
	
  Section
  18.2.

  	
  Power
  of Attorney

  	
   

  
	
  Section
  18.3.

  	
  Entire
  Agreement

  	
   

  
	
  Section
  18.4.

  	
  GOVERNING
  LAW

  	
   

  
	
  Section
  18.5.

  	
  Effect

  	
   

  
	
  Section
  18.6.

  	
  Pronouns
  and Number

  	
   

  
	
  Section
  18.7.

  	
  Captions

  	
   

  
	
  Section
  18.8.

  	
  Partial
  Enforceability

  	
   

  
	
  Section
  18.9.

  	
  Counterparts

  	
   

  
	
  Section 18.10.

  	
  Waiver of Partition

  	
   

  
	
  Section 18.11.

  	
  Remedies

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 1

  	
  List of Members

  	
   

  
	
  Annex A

  	
  Form of Preferred Security Certificate

  	
   

  
	
  Exhibit
  A

  	
  Form
  of Indenture for the Company

  	
   

  
	
  Exhibit
  B

  	
  Form
  of Investment Guarantee

  	
   

  



 


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LIMITED
LIABILITY COMPANY AGREEMENT


 


OF



LEHMAN BROTHERS HOLDINGS E-CAPITAL LLC I


 


LIMITED LIABILITY COMPANY
AGREEMENT (this “Agreement”) of Lehman Brothers Holdings E-Capital LLC
I, a Delaware limited liability company (the “LLC”), dated as of August
19, 2005, among Lehman Brothers Holdings Inc., a Delaware corporation, as
managing member (the “Managing Member”), and Lehman Brothers Holdings
E-Capital Trust I, a Delaware statutory trust, as non-managing member (the “Non-Managing
Member”), and such other Persons (as defined herein) who become non-managing
members as provided herein.


 


WHEREAS, the parties hereto are
entering into this Agreement for the purpose of forming a limited liability
company in accordance with the Act (as defined herein);


 


NOW, THEREFORE, in
consideration of the agreements and obligations set forth herein and for other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:


 


ARTICLE I

DEFINED TERMS


 


Section 1.1.                                   Definitions.  Unless the context otherwise requires, the
terms defined in this Article I shall, for the purposes of this Agreement
(including the preamble and recitals hereof), have the meanings herein
specified. Terms used in this Agreement and not otherwise defined herein shall
have the meanings ascribed to such terms in the Declaration of Trust.


 


“Act” means the Delaware
Limited Liability Company Act, 6 Del. Code §18-101 et seq., as the same
may be amended from time to time.


 


“Additional Interest”
means any additional interest payable pursuant to the terms of the Registration
Rights Agreement, dated as of August 19, 2005, by and among the Company, the
LLC, the Trust and the initial purchasers named therein.


 


“Affiliate” means, with
respect to any specified Person, any other Person that directly or indirectly
controls or is controlled by, or is under common control with such specified
Person.  For the purposes of this
definition, “control” when used with respect to any specified Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.


 


“Affiliate Debt Instrument”
has the meaning set forth in Section 9.2(b) hereof.


 


“Agreement” means this
Limited Liability Company Agreement, as it may be amended, modified or
supplemented from time to time.


 





















 


“Benchmark Fiscal Quarter”
has the meaning set forth in Section 6.2(b) hereof.


 


“Business Day” means a
day other than a Saturday or Sunday or a day on which banking institutions in
The City of New York are authorized or required by law, regulation or executive
order to close.


 


“Calculation Date” has
the meaning set forth in Section 6.2(b) hereof.


 


“Capital Account” means
the separate Capital Account maintained for each Member in accordance with
Section 3.3 hereof.


 


“Capital Account Deficit”
means, with respect to each Member, the deficit balance, if any, in such
Member’s Capital Account as of the end of the relevant Fiscal Period, after
giving effect to the following adjustments:


 


(a)                                  credit
to such Capital Account any amounts which such Member is obligated to restore
pursuant to any provision of this Agreement or is deemed to be obligated to
restore pursuant to the penultimate sentences of each of Sections 1.704-2(g)(1)
and 1.704-2(i)(5) of the Treasury Regulations; and


 


(b)                                 debit
to such Capital Account the items described in Sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of
the Treasury Regulations.


 


“Carrying Value” means,
with respect to any asset, the asset’s adjusted basis for federal income tax
purposes, except as follows:


 


(a)  The initial Carrying Value of any asset
contributed by a Member to the LLC shall be the gross fair market value of such
asset at the time of such contribution, as reasonably determined by the
Managing Member.


 


(b)  The Carrying Value of any of the LLC’s assets
distributed to a Member shall be the gross fair market value of such asset on
the date of distribution, as reasonably determined by the Managing Member.


 


(c)  The Carrying Values of all of the LLC’s
assets shall be adjusted to equal their respective gross fair market values, as
reasonably determined by the Managing Member using such reasonable method of
valuation as it may adopt, as of the times listed below:


 


(i)                                     immediately
prior to the acquisition of an additional interest in the LLC by a new or
existing Member in exchange for more than a de minimis Capital Contribution, if
it is determined by the Managing Member that such adjustment is necessary or
appropriate to reflect the relative economic interests of the Members in the
LLC;


 


(ii)                                  immediately
prior to the distribution by the LLC to a Member of more than a de minimis
amount of the LLC’s property as consideration for an interest in the LLC, if it
is determined by the Managing Member that such


 


2





















 


adjustment is
necessary or appropriate to reflect the relative economic interests of the
Members in the LLC;


 


(iii)                               immediately
prior to the liquidation of the LLC within the meaning of Treasury Regulations
Section 1.704-1(b)(2)(ii)(g) (other than by operation of Section
708(b)(1)(B) of the Code); and


 


(iv)                              immediately
prior to such other times as the Managing Member shall reasonably determine
necessary or advisable, in order to comply with Treasury Regulations Section
1.704-1(b) and 1.704-2.


 


(d)  The Carrying Values of the LLC assets shall
be increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Section 734(b) or Section 743(b) of the Code, but only
to the extent that such adjustments are taken into account in determining
Capital Accounts pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(m);
provided, however, that Carrying Values shall not be adjusted
pursuant to this subparagraph (d) to the extent that the Managing Member
determines that an adjustment pursuant to subparagraph (b) or (c) is necessary
or appropriate in connection with a transaction that would otherwise result in
an adjustment pursuant to this subparagraph (d).


 


(e)  If the Carrying Value of any of the LLC’s
assets has been determined or adjusted pursuant to subparagraph (a), (c) or
(d), such Carrying Value shall thereafter be adjusted by the depreciation taken
into account with respect to such asset for purposes of computing Profits and
Losses.


 


“Certificate” means the
Certificate of Formation of the LLC, dated August 11, 2005, which was executed
by the Managing Member and filed in the office of the Secretary of State of the
State of Delaware on August 16, 2005, and all subsequent amendments thereto and
restatements thereof.


 


“Change in Investment
Company Act Law” means any change in law or regulation or a written change
in interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority with the result that the LLC
or Trust is or shall be considered and “investment company” that is required to
be registered under the Investment Company Act.


 


“Closing Date” means the
date on which Trust Preferred Securities are initially issued and sold.


 


“Code” means the
Internal Revenue Code of 1986, as amended from time to time, or any successor
legislation.


 


“Commercially Reasonable
Efforts” by the Company to sell its Common Shares or perpetual preferred
stock means commercially reasonable efforts to complete the offer and sale of
the Common Shares or perpetual preferred stock of the Company to third parties
that are not Affiliates of the Company in public offerings or private
placements; provided, that the Company shall be deemed to have used such
Commercially Reasonable Efforts during a Market


 


3





















 


Disruption
Event regardless of whether the Company makes any offers or sales during such
Market Disruption Event.


 


“Commission” means the
Securities and Exchange Commission.


 


“Common Accreted Amount”
means an amount equal to the initial capital contribution of the Managing
Member (i) increased each quarter (a) at an annual rate of 3-Month LIBOR plus a
margin equal to 2.78% until August 19, 2010 and thereafter at an annual rate of
3-Month LIBOR plus a margin equal to 3.78% times the then Common Accreted
Amount and (b) by any amounts contributed from time to time with respect to the
Managing Member Interest and (ii) decreased each quarter by any distributions
made to the Managing Member.


 


“Common Return” means a
cumulative amount equal to an annual rate of 3-Month LIBOR plus a margin equal
to 2.78% until August 19, 2010 and thereafter an annual rate of 3-Month LIBOR
plus a margin equal to 3.78% accruing from the Closing Date on the Common
Accreted Amount of the Managing Member Interest, in each case on a quarterly
basis.  The Common Return shall be
calculated on the basis of a 360-day year and the actual number of days elapsed
in each quarter.


 


“Common Shares” means any and all shares, interests or other participations
in, and other equivalents (however designated and whether voting or nonvoting)
of the Company’s common stock or common equity interests whether or not
outstanding on the Closing Date, and includes, without limitation, all series
and classes of such common stock.


 


“Company” means Lehman
Brothers Holdings Inc., a Delaware corporation, and any of its successors.


 


“Company Debenture” has
the meaning set forth in Section 9.1(a) hereof.


 


“Covered Person” means:
(a) any officer, director, shareholder, partner, member, representative,
employee or agent of (i) the LLC or (ii) any of the LLC’s Affiliates and (b)
any Holder of Preferred Securities.


 


“Creditor” has the
meaning set forth in Section 13.2(c) hereof.


 


“Declaration of Trust”
means the Declaration of Trust, dated as of August 19, 2005, by and among the
Company, as Sponsor, the Property Trustee, Chase Bank USA, National
Association, as the Delaware Trustee and the Regular Trustees named therein as it may be amended, modified or
supplemented from time to time.


 


“Distribution Payment Date”
has the meaning set forth in Section 6.1(b)(i) hereof.


 


“Eligible Debt Securities”
means negotiable instrument, or other securities of Persons that are not
Affiliates of the Company represented by instruments in registered form that
evidence any of the following: (a) any security issued or guaranteed as to
principal or interest by the United States, or by a Person controlled or
supervised by and acting as an instrumentality of the Government of the United
States pursuant to authority granted by the Congress of the United States, or
any certificate of deposit for any of the foregoing; (b) commercial paper
issued


 


4





















 


pursuant to
Section 3(a)(3) of the Securities Act and having, at the time of the investment
or contractual commitment to invest therein, a rating from each of S&P and
Moody’s in the highest rating category granted by such rating agency and having
a maturity not in excess of nine months; (c) demand deposits, time deposits and
certificates of deposit that are fully insured by the FDIC; (d) repurchase
obligations with respect to any security that is a direct obligation of, or
fully guaranteed by, the Government of the United States of America or any
agency or instrumentality thereof, the obligations of which are backed by the
full faith and credit of the United States of America, in either case entered
into with a depository institution or trust company that is an Eligible
Institution and the deposits of which are insured by the FDIC; and (e) any
other security that is identified as a permitted investment of a finance
subsidiary pursuant to Rule 3a-5 under the Investment Company Act at the time
it is acquired by the LLC.


 


“Eligible Institution”
means a depository institution
organized under the laws of the United States of America or any one of the states
thereof or the District of Columbia (or any domestic branch of a foreign bank)
(1)(i) that has either (A) a long-term unsecured debt rating of AA or better by
S&P and Aa or better by Moody’s or (B) a short-term unsecured debt rating
or a certificate of deposit rating of A-1+ or better by S&P and P-1 or
better by Moody’s and (ii) the deposits of which are insured by the FDIC or
(2)(i) the parent of which has a long-term or short-term unsecured debt rating
that signifies investment grade and (ii) the deposits of which are insured by
the FDIC.


 


“Enforcement Event” has
the meaning set forth in Section 8.1(a) hereof.


 


“Exchange Act” means the
U.S. Securities Exchange Act of 1934, as amended from time to time, or any
successor legislation.


 


“Exchange Offer” means
the Exchange Offer as defined in the Registration Rights Agreement.


 


“Exchange Preferred
Securities” has the meaning set forth in Section 5.1(a) hereof.


 


“FDIC” means the Federal
Deposit Insurance Corporation or any successor thereto.


 


“Fiscal Period” means
each calendar quarter.


 


“Fiscal Year” means (i)
the period commencing upon the formation of the LLC and ending on December 31,
2005, and (ii) any subsequent calendar year.


 


“GAAP” means, at any
date or for any period, U.S. generally accepted accounting principles as in
effect on such date or for such period.


 


“Holder” or “Holder
of Preferred Securities” means a
Non-Managing Member in whose name Preferred Securities are registered on
the books and records of the LLC.


 


“Indemnified Person”
means the Managing Member, any Special Representative, any Affiliate of the
Managing Member or any Special Representative or any officers, directors,


 


5





















 


shareholders,
members, partners, employees, representatives or agents of the Managing Member
or any Special Representative, or any of their respective Affiliates, or any
representative, employee or agent of the LLC.


 


“Indenture” means any
Indenture of the Company, a form of which is attached hereto as Exhibit A,
including any supplemental indenture thereto, and any Investment Affiliate with
respect to Affiliate Debt Instruments, which shall be substantially similar to
the Indenture of the Company.


 


“Independent Financial
Advisor” shall mean a nationally recognized investment banking firm which
shall be designated by the Company and which firm (1) does not (and whose
directors, officers, employees and Affiliates do not) have a direct or indirect
material equity interest in the Company or any of its subsidiaries and (2) is either
(a) ranked among the five largest underwriters of debt or preferred securities
(in terms of U.S. dollar value) in the United States for the immediately
preceding calendar year or (b) is approved by the Holders of a Majority in
Liquidation Preference of Preferred Securities.


 


“Initial Capital Account”
means the amount of the contribution by the Trust and the Managing Member in
Sections 3.1(a) and (b) hereof.


 


“Initial Investments”
means collectively, the Company Debenture and the Eligible Debt Securities to
be purchased with the Initial LLC Proceeds.


 


“Initial LLC Proceeds”
means the aggregate proceeds received by the LLC on the Closing Date from the
sale of the Preferred Securities and the Managing Member Capital Contribution.


 


“Interest” means the entire
limited liability company interest of a Member in the LLC at any particular
time, including, without limitation, its interest in the capital, profits, and
losses of, and distributions from, the LLC.


 


“Investment Affiliate”
means the Company or any corporation, partnership, limited liability company or
other entity (other than the LLC or the Trust) that is controlled by the
Company for purposes of Rule 3a-5 under the Investment Company Act and is not
an investment company by reason of Section 3(a) or 3(b) of the Investment
Company Act or excepted from the definition of investment company by Section
3(c) of the Investment Company Act.


 


“Investment Company Act”
means the Investment Company Act of 1940, as amended from time to time, or any
successor legislation.


 


“Investment Company Event”
means that the Managing Member shall have requested and received an opinion of
nationally recognized independent legal counsel experienced in such matters to
the effect that as a result of
the occurrence on or after the date hereof of a Change in Investment Company
Act Law, the LLC or the Trust is or shall be considered an “investment company”
that is required to be registered under the Investment Company Act.


 


6





















 


“Investment Event of Default”
means an event of default under any Affiliate Debt Instrument.


 


“Investment Guarantee” means any guarantee by the Company with respect to payment
of principal, interest and other payment terms of Affiliate Debt Instruments
that are not issued by the Company, which shall be substantially similar to the
form attached hereto as Exhibit B.


 


“Investment Offer” has
the meaning specified in Section 9.2(b) hereof.


 


 “Liquidator” has the meaning specified
in Section 15.3 hereof.


 


“LLC” has the meaning
set forth in the preamble hereof.


 


“LLC Guarantee” means
the Limited Liability Company Guarantee Agreement dated as of August 19, 2005
by the Company in favor of the Preferred Security Holders with respect to the
Preferred Securities, as amended or supplemented from time to time.


 


“LLC Guarantee Trustee”
means the trustee under the LLC Guarantee.


 


“London Business Day”
means a day other than a Saturday or Sunday on which dealings in deposits in
U.S. dollars are transacted, or with respect to any future date are expected to
be transacted, in the London interbank market.


 


“Majority in Liquidation
Preference of Preferred Securities” means Holders of more than 50% of the
aggregate liquidation preference of all Preferred Securities then outstanding
(excluding any Preferred Securities held by the Company or any of its
Affiliates).


 


“Managing Member” means
the Company and any managing member substituted therefor in accordance with
this Agreement.


 


“Managing Member Capital
Contribution” means the initial contribution by the Managing Member to the
LLC pursuant to Section 3.1(a).


 


“Managing Member Interest”
means the common Interest of the Managing Member in the LLC.


 


“Mandatory Deferral Event”
has the meaning set forth in Section 6.2 hereof.


 


“Market Disruption Event”
means the occurrence or existence of any of the following events or sets of
circumstances:


 


(1)                                  the
Company would be required to obtain the consent or approval of its shareholders
or a regulatory body (including, without limitation, any securities exchange)
or governmental authority to issue such Common Shares or perpetual preferred
stock and such consent or approval has not yet been obtained notwithstanding
the Company’s commercially reasonable efforts to obtain such consent or
approval;


 


7





















 


(2)                                  trading
in securities generally on the New York Stock Exchange, the American Stock
Exchange, the Nasdaq Stock Market or any other national securities, futures or
options exchange or in the over-the-counter market, or trading in any
securities of the Company (or any options or futures contracts related to such
securities) on any exchange or in the over-the-counter market shall have been
suspended or the settlement of such trading generally shall have been materially
disrupted or minimum prices shall have been established on any such exchange or
such market by the Commission, by such exchange or by any other regulatory body
or governmental authority having jurisdiction;


 


(3)                                  a
banking moratorium shall have been declared by federal or state authorities of
the United States such that market trading has been disrupted or ceased;


 


(4)                                  a
material disruption shall have occurred in commercial banking or securities
settlement or clearance services in the United States such that market trading
has been disrupted or ceased;


 


(5)                                  the
United States shall have become engaged in hostilities, there shall have been
an escalation in hostilities involving the United States, there shall have been
a declaration of a national emergency or war by the United States or there
shall have occurred any other substantial, national or international calamity
or crisis such that market trading has been disrupted or ceased;


 


(6)                                  there
shall have occurred such a material adverse change in general domestic or
international economic, political or financial conditions, including without
limitation as a result of terrorist activities, or the effect of international
conditions on the financial markets in the United States shall be such, as to
make it, in the Company’s reasonable judgment, impracticable or inadvisable to
proceed with the offer and sale of our common stock or preferred stock; or


 


(7)                                  an
event occurs and is continuing as a result of which the offering document for
such offer and sale of securities would, in the judgment of the Company,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading and either (a) the disclosure of that event at such time, in the
judgment of the Company, would have a material adverse effect on the business
of the Company or (b) the disclosure relates to a previously undisclosed
proposed or pending material business transaction, the disclosure of which
would impede the ability of the Company to consummate such transaction,
provided that no single suspension period contemplated by this subsection (7)
shall exceed 90 consecutive days and multiple suspension periods contemplated
by this subsection (7) shall not exceed an aggregate of 180 days in any 360-day
period.


 


“Member Nonrecourse Debt”
has the meaning ascribed to “partner nonrecourse debt” in Treasury Regulations
Section 1.704-2(b)(4).


 


“Member Nonrecourse Debt
Minimum Gain” means an amount with respect to each Member Nonrecourse Debt
equal to the Minimum Gain that would result if such Member Nonrecourse Debt
were treated as a nonrecourse liability (as defined in Treasury Regulations


 


8





















 


Section
1.752-1(a)(2)) determined in accordance with Treasury Regulations Section
1.704-2(i)(3).


 


“Member Nonrecourse
Deductions” has the meaning ascribed to “partner nonrecourse deductions” in
Treasury Regulations Section 1.704-2(i)(2).


 


“Members” means the
Managing Members and the Non-Managing Members, collectively, where no
distinction is required by the context in which the term is used.


 


“Minimum Gain” means
“partnership minimum gain” as that term is defined in Treasury Regulations
Section 1.704-2(b)(2) and 1.704-2(d).


 


“Moody’s” means Moody’s
Investors Service, Inc. or any successor thereto.


 


“New Capital Amount”
means, at any date, the net proceeds (after underwriters’ or placement agents’
fees, commissions or discounts and other expenses relating to the issuances)
received by the Company from issuances of its Common Shares or Perpetual
Deferrable Preferred Stock (whether in one or more public offerings registered
under the Securities Act or private placements or other transactions exempt
from registration under the Securities Act) during the period commencing on the
90th day prior to such date, and which are designated by the Company’s board of
directors at or before the time of issuance as available to pay distributions
on the Preferred Securities.


 


“New Debt” has the
meaning set forth in Section 9.2(b) hereof.


 


“Net Profits” means the
excess of all Profits allocated pursuant to Section 4.1(a) hereof (other than
pursuant to Section 4.1(a)(vi)) from the Closing Date over all Losses allocated
pursuant to Section 4.1(b) hereof from the Closing Date.


 


“Non-Managing Member”
means any Person who is admitted to the LLC as a non-managing member pursuant
to the terms of this Agreement, in such Person’s capacity as a non-managing
member of the LLC.


 


“Nonrecourse Deductions”
has the meaning set forth in Treasury Regulations Section 1.704-2(b).  The amount of Nonrecourse Deductions of the
LLC for a Fiscal Period equals the net increase, if any, in the amount of
Minimum Gain of the LLC during that Fiscal Period, determined according to the
provisions of Treasury Regulations Section 1.704-2(c).


 


“Original Preferred
Securities” has the meaning set forth in Section 5.1(a) hereof.


 


“Parity Debt Securities”
has the meaning set forth in Section 14.1 hereof.


 


“Parity Guarantees” has
the meaning set forth in Section 14.1 hereof.


 


“Paying Agent” has the
meaning set forth in Section 14.4(b) hereof.


 


“Payment Notice” has the
meaning set forth in Section 6.4 hereof.


 


9





















 


“Permitted Successor”
has the meaning set forth in Section 14.1(b) hereof.


 


“Perpetual Deferrable
Preferred Stock” means any perpetual preferred stock of the Company with
limitations on the payment of dividends that are at least as restrictive as the
limitations on Preferred Securities distributions described in Section 6.2
hereof.


 


“Person” means a legal
person, including any individual, corporation, estate, partnership, joint
venture, association, joint stock company, limited liability company, trust,
unincorporated association, or government or any agency or political
subdivision thereof, or any other entity of whatever nature.


 


“Power of Attorney”
means the Power of Attorney granted pursuant to Section 17.2 hereof.


 


“Preferred Accreted Amount”
means an amount equal to the initial capital contribution of the Holders of
Preferred Securities (i) increased each quarter at an annual rate of 3-Month
LIBOR plus a margin equal to 0.78% until August 19, 2010 and thereafter at an
annual rate of 3-Month LIBOR plus a margin equal to 1.78% times the then Preferred
Accreted Amount and (ii) decreased each quarter by any distributions made to
Holders of Preferred Securities.


 


“Preferred Return” means
a cumulative amount equal to an annual rate of 3-Month LIBOR plus a margin
equal to 0.78% until August 19, 2010 and thereafter an annual rate of 3-Month
LIBOR plus a margin equal to 1.78% accruing from the Closing Date on the
Preferred Accreted Amount of the Preferred Securities, in each case on a
quarterly basis.  The Preferred Return
shall be calculated on the basis of a 360-day year and the actual number of
days elapsed in each quarter.


 


“Preferred Non-Compounded
Accrual Amount” means an amount for a Fiscal Period that is calculated in
the same manner as the Preferred Return; provided, that it is calculated
on the Initial Capital Account of the Preferred Securities, on a non-compounded
basis and, provided, further, that such amount shall not exceed
the difference between the Net Profits allocated to Holders of the Preferred
Securities over distributions of the Preferred Return to Holders of the
Preferred Securities from the Closing Date. 
In the case of any partial redemption of the Preferred Securities, the
Preferred Non-Compounded Accrual Amount shall be adjusted appropriately.


 


“Preferred Securities”
mean the Interests of the Non-Managing Members with the preference and
designation set forth in Section 5.1 hereof. 
The Preferred Securities shall consist of the Original Preferred
Securities and, if issued, the Exchange Preferred Securities.


 


“Preferred Security Certificate”
means a certificate substantially in the form attached hereto as Annex A,
evidencing the Preferred Securities held by a Non-Managing Member.


 


“Profits” and “Losses”
means, for each Fiscal Period or other period, the taxable income or loss of
the LLC, or particular items thereof, determined in accordance with the
accounting method used by the LLC for U.S. federal income tax purposes with the
following adjustments: (a) all items of income, gain, loss or deduction allocated
pursuant to Section 4.2 or


 


10





















 


Section 4.4
shall not be taken into account in computing such taxable income or loss; (b)
any income of the LLC that is exempt from U.S. federal income taxation and not
otherwise taken into account in computing Profits and Losses shall be added to
such taxable income or loss; (c) if the Carrying Value of any asset differs
from its adjusted tax basis for U.S. federal income tax purposes, any gain or
loss resulting from a disposition of such asset shall be calculated with
reference to such Carrying Value; (d) upon an adjustment to the Carrying Value
(other than an adjustment in respect of depreciation) of any asset, pursuant to
the definition of Carrying Value, the amount of the adjustment shall be
included as gain or loss in computing such taxable income or loss; (e) if the
Carrying Value of any asset differs from its adjusted tax basis for U.S.
federal income tax purposes, the amount of depreciation, amortization or cost
recovery deductions with respect to such asset for purposes of determining
Profits and Losses, if any, shall be an amount which bears the same ratio to
such Carrying Value as the U.S. federal income tax depreciation, amortization
or other cost recovery deductions bears to such adjusted tax basis (provided,
that if the U.S. federal income tax depreciation, amortization or other cost
recovery deduction is zero, the Managing Member may use any reasonable method
for purposes of determining depreciation, amortization or other cost recovery
deductions in calculating Profits and Losses); and (f) except for items in (a)
above, any expenditures of the LLC not deductible in computing taxable income
or loss, not properly capitalizable and not otherwise taken into account in
computing Profits and Losses pursuant to this definition shall be treated as
deductible items.


 


“Property Trustee” means
the entity that acts as such under the Declaration of Trust.


 


“Rating Agency” means
(i) any of S&P, Moody’s, Duff & Phelps Credit Rating Co. and Fitch
Ratings or (ii) any other “nationally recognized statistical rating
organization” as defined by the Commission.


 


“Record Date” means a
date determined as such by the Managing Member; provided, that such date
shall be at least one Business Day prior to the relevant payment dates.


 


“Redemption Date” has
the meaning set forth in Section 7.4(c) hereof.


 


“Redemption Notice” has
the meaning set forth in Section 7.3 hereof.


 


“Redemption Price” has
the meaning set forth in Section 7.1 hereof.


 


“Registrar” has the
meaning set forth in Section 14.4(b) hereof.


 


“Registration
Rights Agreement” means the Registration Rights Agreement, dated as of the date hereof, among the
Company, the LLC, the Trust and the Initial Purchasers named therein, as such
agreement may be amended, modified or supplemented from time to time.


 


“Reinvestment Criteria”
has the meaning specified in Section 9.2(c) hereof.


 


“Required Sale Proceeds”
has the meaning set forth in Section 14.2 hereof.


 


“Securities Act” means
the U.S. Securities Act of 1933, as amended from time to time, or any successor
legislation.


 


11


















 


“S&P” means
Standard & Poor’s Ratings Services or any successor thereof.


 


“Sharing Ratio” has
the meaning set forth in Section 4.1(a)(iv) hereof.


 


“Simple Distribution”
on any Distribution Payment Date means the amounts that accumulated over the
Fiscal Period ending on such Distribution Payment Date at an annual rate of 3-Month
LIBOR plus a margin equal to 0.78% times the Initial Capital Account of the
Preferred Securities until August 19, 2010 and from and after August 19,
2010, an annual rate of 3-Month LIBOR plus a margin equal to 1.78% times the
Initial Capital Account of the Preferred Securities.


 


“Special Event” means
either a Tax Event or an Investment Company Event.


 


“Special Representative”
has the meaning set forth in Section 8.1(a) hereof.


 


“Successor Securities”
has the meaning set forth in Section 2.10 hereof.


 


“Super Majority” has
the meaning set forth in Section 8.2(a)(2) hereof.


 


“Tangible Common
Stockholders’ Equity Amount” means, as of any quarter end and subject to
the adjustments permitted by Section 6.2 hereof, the Company’s common
stockholders’ equity minus identifiable
intangible assets and goodwill, in each case as reflected on the Company’s
consolidated GAAP balance sheet as of such quarter end.


 


“Tax Event” means
that the Managing Member shall have requested and received an opinion of
nationally recognized independent tax counsel experienced in such matters to
the effect that there has been a Tax Action (as defined below) that affects any
of the events described in (i) through (iii) below and that there is
more than an insubstantial risk that (i) the LLC or the Trust is, or will
be, subject to United States federal income tax with respect to income accrued
or received on the Affiliate Debt Instrument or the Eligible Debt Securities, (ii) the
LLC or the Trust is, or will be, subject to more than a de minimis amount of
other taxes, duties or other governmental charges or (iii) interest
payable by an Investment Affiliate with respect to any Affiliate Debt
Instrument issued by such Investment Affiliate to the LLC or the Trust is not,
or shall not be, deductible by such Investment Affiliate for United States
federal income tax purposes.  “Tax
Action” means (a) an amendment to, change in or announced proposed
change in the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein, (b) a
judicial decision interpreting, applying or clarifying such laws or
regulations, (c) an administrative pronouncement or action that represents
an official position (including a clarification of an official position) of the
governmental authority or regulatory body making such administrative
pronouncement or taking such action, or (d) a threatened challenge
asserted in connection with an audit of the Company or any of its subsidiaries,
the LLC, or the Trust, or a threatened challenge asserted in writing against
any other taxpayer that has raised capital through the issuance of securities
that are substantially similar to the Affiliate Debt Instruments (including the
Company Debenture), the Preferred Securities, or the Trust Preferred
Securities, which amendment or change is adopted or which decision,
pronouncement or proposed change is announced or which action, clarification or
challenge occurs on or after the Closing Date related to the issuance of the
Trust Preferred Securities.


 


12





















 


“Tax Matters Member”
means the Managing Member designated as
the “tax matters partner” in Section 12.10(a) hereof.


 


“10% in Liquidation
Preference” means Holders of at least 10% of the aggregate liquidation
preference of the Preferred Securities (excluding any Preferred Securities held
by the Company or any of its Affiliates).


 


“3-Month LIBOR” means
the rate (expressed as a percentage per annum) for deposits in U.S. dollars for
a three-month period that appears on Telerate Page 3750 as of 11:00 a.m.
(London time) on the second London Business Day immediately preceding the first
day of such distribution period.  The term
“Telerate Page 3750” means the display on Bridge Telerate, Inc. on page 3750
or any successor service or page for the purpose of displaying the London
interbank offered rates of major banks.


 


If 3-month LIBOR cannot be
determined as described above, the Managing Member shall select four major
banks in the London interbank market. 
The Managing Member shall request that the principal London offices of
those four selected banks provide their offered quotations to prime banks in
the London interbank market at approximately 11:00 a.m., London time, on
the second London Business Day immediately preceding the first day of such
distribution period.  These quotations
will be for deposits in U.S. dollars for a three-month period.  Offered quotations must be based on a
principal amount equal to an amount that is representative of a single
transaction in U.S. dollars in the market at the time.


 


If two or more quotations
are provided, 3-month LIBOR for the applicable distribution period will be the
arithmetic mean of the quotations.  If
fewer than two quotations are provided, the Managing Member shall select three
major rates quoted by those three major banks in New York City time, on the
second London Business Day immediately preceding the first day of such
distribution period.  The rates quoted
will be for loans in U.S. dollars, for a three-month period.  Rates quoted must be based on a principal
amount equal to an amount that is representative of a single transaction in
U.S. dollars in the market at the time. 
If fewer than three New York City banks selected by the Managing Member
are quoting rates, 3-month LIBOR for the applicable distribution period will be
the same as for the immediately preceding distribution period.


 


All percentages resulting
from any interest rate calculation will be rounded upward or downward, as
appropriate, to the next higher or lower one hundred-thousandth of a percentage
point.


 


 “Trailing Two Quarters Consolidated Net
Income Amount” means, as of the last day of any fiscal quarter, the sum of
the Company’s consolidated net income for the two fiscal quarters ending as of
the last day of such fiscal quarter.


 


“Treasury Regulations”
means the income tax regulations, including temporary and proposed regulations,
promulgated under the Code by the United States Department of the Treasury, as
such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).


 


13





















 


“Trust” means Lehman
Brothers Holdings E-Capital Trust I, a Delaware statutory trust, formed under
the Declaration of Trust.


 


“Trust Common Securities”
means the Trust Common Securities issued by the Trust.


 


“Trust Guarantee”
means the Trust Guarantee Agreement,
dated as of August 19, 2005, entered into by the Company, as Guarantor, for the benefit of the
holders of the Trust Securities.


 


“Trust Preferred
Securities” means the Trust
Preferred Securities issued by the Trust.


 


“Trust Securities”
means, collectively, the Trust Preferred Securities and the Trust Common
Securities.


 


ARTICLE II

GENERAL PROVISIONS


 


Section
2.1.                                   Formation.  The
parties hereto agree to form a limited liability company pursuant to the Act
and agree that the rights, duties and liabilities of the Managing Member and
Non-Managing Members shall be as provided in the Act, except as otherwise
provided herein.  The Managing Member
shall make every reasonable effort to assure that all certificates and
documents are properly executed and shall accomplish all filing, recording,
publishing and other acts necessary or appropriate for compliance with all the
requirements for the continuation of the LLC as a limited liability company
under the Act and under all other laws of the State of Delaware or such other
jurisdictions in which the Managing Member determines that the LLC may conduct
activities or as otherwise deemed advisable by the Managing Member.  Barrett S. DiPaolo is hereby designated as an
“authorized person” (within the meaning of the Act) to execute, deliver and
file with the Secretary of State of the State of Delaware, the
Certificate.  Upon the filing of the
Certificate, Barrett S. DiPaolo’s powers shall cease and the Managing Member
shall thereafter become the “authorized person” (within the meaning of the
Act).


 


Section 2.2                                      Name. 
The name of the LLC is “Lehman Brothers Holdings E-Capital LLC I”, as
such name may be modified from time to time by the Managing Member following
written notice to the Non-Managing Members; provided, that such name
shall contain the words “Limited Liability Company” or the letters “LLC”.


 


Section 2.3.                                   Purposes
of the LLC. 
The purposes of the LLC are (a) to issue Interests in the LLC in
the form of Preferred Securities, (b) to issue Interests in the LLC in the
form of the Managing Member Interest, (c) to receive the Managing Member
Capital Contribution and any additional proceeds contributed by the Managing
Member from time to time with respect to the Managing Member Interest to the
extent permitted herein, (d) to use the Initial LLC Proceeds to purchase, as an investment, the Initial
Investments, (e) to receive interest and
other payments on the Affiliate Debt Instruments and the Eligible Debt
Securities held by the LLC from time to time, (f) to make distributions on
the Preferred Securities and distributions on the Managing Member Interest to
the extent provided herein, (g) subject to the restrictions


 


14





















 


and conditions
contained in this Agreement, from time to time to make additional investments
in Affiliate Debt Instruments and Eligible Debt Securities and to dispose of
any such investments in accordance with the terms hereof and (h) except as
otherwise limited herein, to enter into, make and perform all contracts and
other undertakings, and engage in those activities and transactions as the
Managing Member may reasonably deem necessary or advisable for the carrying out
of the foregoing purposes of the LLC. The LLC may not engage in any other
activities or operations, including, without limitation, the issuance of
indebtedness, except as contemplated by this Section 2.3.


 


Section 2.4.                                   Term.  The term of the LLC shall
commence upon the filing of the Certificate in the Office of the Secretary of
State of the State of Delaware and shall continue until the LLC is dissolved in
accordance with the provisions of this Agreement.


 


Section 2.5.                                   Registered
Agent and Office. 
The LLC’s registered agent and office in Delaware shall be Corporation
Service Company, 2711 Centerville Road, Suite 400, Wilmington, Delaware
19808. At any time, the Managing Member
may designate another registered agent and/or registered office.


 


Section 2.6.                                   Principal
Place of Activity. 
The principal place of activity of the LLC shall be: c/o Lehman Brothers
Holdings Inc., 745 Seventh Avenue, New York, New York 10019. Upon 10 days’
written notice to the Non-Managing Members, the Managing Member may change the
location of the LLC’s principal place of activity; provided, that such
change has no material adverse effect upon any Member.


 


Section 2.7.                                   Managing
Member.  (a) 
The name and address of the Managing Member are as follows:


 


Lehman Brothers Holdings Inc.

745 Seventh Avenue

New York, New York 10019


 


The Managing
Member may change its name or address from time to time, in which event the
Managing Member shall promptly notify the Non-Managing Members of any such
change.


 


(b)                                 Upon
execution of this Agreement, which execution shall be deemed to constitute a
request by the Managing Member that the books and records of the LLC reflect
the Managing Member’s admission as the Managing Member, the Managing Member
shall be admitted to the LLC as a the Managing Member and shall become bound by
this Agreement.


 


Section 2.8.                                   Qualification
to Conduct Activities.  The Managing Member shall cause the LLC to
become qualified, formed or registered under the applicable qualification,
fictitious name or similar laws of any jurisdiction in which the LLC conducts
activities.


 


Section 2.9.                                   Admission
of Holders of Preferred Securities.


 


(a)                                  Upon execution of this Agreement, which execution
shall be deemed to constitute a request by such Person that the books and
records of the LLC reflect such Person’s


 


15





















 


admission
as a Non-Managing Member, such Person shall be admitted to the LLC as a
Non-Managing Member and shall become bound by this Agreement.


 


(b)                                 The name and mailing address of each Member and the
amount contributed by such LLC to the capital of the LLC shall be listed on the
books and records of the LLC. The Managing Member shall be required to update
the books and records from time to time as necessary to accurately reflect such
information.


 


Section 2.10.                             Consolidation,
Merger or Sale of Assets.  The LLC
may not consolidate, amalgamate, merge with or into, or be replaced by, or
convey, transfer or lease its properties and assets substantially as an
entirety to, any corporation or other body, except as permitted pursuant to
this Section 2.10. The LLC may, without the consent of the Holders of the
Preferred Securities, consolidate, amalgamate, merge with or into, or be
replaced by a limited partnership, limited liability company or trust organized
as such under the laws of any state
of the United States of America; provided, that (i) if the LLC is
not the survivor, such successor entity either (x) expressly assumes all of the
obligations of the LLC under the Preferred Securities or (y) substitutes for
the Preferred Securities other securities having substantially the same terms
as the Preferred Securities (the “Successor Securities”) so long as the
Successor Securities are not junior to any other equity securities of the
successor entity, with respect to participation in the profits and
distributions, and in the assets, of the successor entity, (ii) the
issuers of the Affiliate Debt Instruments expressly acknowledge such successor
entity as the holder of the Affiliate Debt Instruments, (iii) such merger,
consolidation, amalgamation or replacement does not cause the Trust Preferred
Securities to be downgraded by any Rating Agency, (iv) such merger,
consolidation, amalgamation or replacement does not adversely affect the
powers, preferences and other special rights of the holders of the Trust
Preferred Securities or the Holders of the Preferred Securities (including any Successor Securities)
in any material respect (other than, in the case of the Preferred Securities,
with respect to any dilution of the Holders’ interest in the new resulting
entity), (v) such successor entity has a purpose substantially identical to that of the LLC, (vi) the
Company guarantees the obligations of such successor entity under the Successor
Securities at least to the extent provided by the LLC Guarantee and (vii) prior
to such merger, consolidation, amalgamation or replacement, the Company has
received an opinion of nationally recognized independent counsel to the LLC
experienced in such matters to the effect that (A) such merger,
consolidation, amalgamation or replacement does not adversely affect the
powers, preferences and other special rights of the holders of the Trust
Preferred Securities or the Holders of the Preferred Securities (including any Successor Securities)
in any material respect (other than, in the case of the Preferred Securities,
with respect to any dilution of the Holders’ interest in the new resulting
entity), (B) such merger, consolidation, amalgamation or replacement
shall not cause either the LLC (or the successor entity) or the Trust to
be classified as an association or a publicly traded partnership taxable as a
corporation for United States federal income tax purposes, (C) following
such merger, consolidation, amalgamation
or replacement, the LLC (or the successor entity) and the Trust shall be
in compliance with the Investment Company Act without registering thereunder as
an investment company, and (D) such merger, consolidation, amalgamation or replacement shall not
adversely affect the limited liability of the Holders of the Preferred
Securities.


 


16





















 


ARTICLE III

CAPITAL CONTRIBUTIONS; REPRESENTATION OF

PREFERRED SECURITY HOLDER’S INTEREST;

CAPITAL ACCOUNTS


 


Section 3.1.                                   Capital
Contributions.


 


(a)                                  Contemporaneous with the issuance of the Preferred
Securities, the Managing Member shall contribute cash to the LLC in an amount
equal to at least 5% of the total capital contributions to the LLC (the “Managing
Member Capital Contribution”) after taking into account the contribution of
the Trust referred to in Section 3.1(b), and receive the Managing Member
Interest.


 


(b)                                 On the Closing Date, the Trust shall, in exchange for
Preferred Securities in the LLC, contribute to the capital of the LLC on behalf
of the Trust an amount in cash equal to the gross proceeds from the sale of the
Trust Securities. On such date, the Trust shall be the sole Non-Managing
Member.


 


(c)                                  No Non-Managing Member shall at any time be required
to make any additional capital contributions to the LLC, except as may be
required by law.


 


Section 3.2.                                   Preferred
Securities Holder’s Interest Represented by Preferred Securities.  A Preferred Securities
Holder’s Interest shall be represented by the Preferred Securities. Each
Preferred Securities Holder’s respective ownership of Preferred Securities
shall be set forth on the books and records of the LLC.


 


Section 3.3.                                   Establishment
and Maintenance of Capital Accounts.  A separate capital account (a “Capital
Account”) shall be established and maintained for each Member.  The Capital Account of each Member shall be
credited with any such Member’s capital contributions, if any, to the LLC, all
Profits allocated to such Member pursuant to Section 4.1 and any items of
income or gain that are specially allocated pursuant to Section 4.2 or Section 4.4;
and shall be debited with all Losses allocated to such Member pursuant to Section 4.1,
any items of loss or deduction of the LLC specially allocated to such Member
pursuant to Section 4.2, and all cash and the Carrying Value of any
property (net of liabilities assumed by such Member and the liabilities to
which such property is subject) distributed by the LLC to such Member.  To the extent not provided for in the
preceding sentence, the Capital Accounts of the Members shall be adjusted and
maintained in accordance with the rules of Treasury Regulations Section 1.704-1(b)(2)(iv),
as the same may be amended or revised. 
Any references in any section of this Agreement to the Capital
Account of a Member shall be deemed to refer to such Capital Account as the
same may be credited or debited from time to time as set forth above.  In the event of any transfer of any Interest
in the LLC in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it relates to
the transferred Interest.


 


Section 3.4.                                   Interest
on Capital Contributions.  Except as provided herein, no Member shall be
entitled to interest on or with respect to any capital contribution to the LLC.


 


Section 3.5.                                   Withdrawal
and Return of Capital Contributions.  No Member shall be entitled to withdraw any
part of such Member’s capital contribution to the LLC. No


 


17





















 


Member shall
be entitled to receive any distributions from the LLC, except as provided in
this Agreement.


 


Section 3.6.                                   Interests
are Personal Property; No Title to Assets. 
Each Member hereby agrees that its Interest in
the LLC shall for all purposes be personal property. No Member shall have an
interest in specific LLC property.


 


ARTICLE IV

ALLOCATIONS


 


Section 4.1.                                   Profits
and Losses.  After giving effect
to the special allocation provisions set forth in Section 4.2 and Section 4.4,
which special allocations shall take precedence over any allocations made
pursuant to this Section 4.1,


 


(a)                                  the LLC’s Profits for each Fiscal Period of the LLC
shall be allocated as follows:


 


(i)                                     FIRST,
to the Managing Member in an amount equal to the excess, if any, of (x) all
Losses, if any, allocated to the Managing Member from the date of issuance of
the Managing Member Interest through and including the close of such Fiscal Period
pursuant to Section 4.1(b)(iii) below over (y) the amount of Profits,
if any, allocated to the Managing Member pursuant to this Section 4.1(a)(i).


 


(ii)                                  SECOND,
to the Holders of Preferred Securities in an amount equal to the excess, if
any, of (x) all Losses, if any, allocated to such Holders from the date of
issuance of the Preferred Securities through and including the close of such
Fiscal Period pursuant to Section 4.1(b)(ii) below over (y) the
amount of Profits, if any, allocated to such Holders pursuant to this Section 4.1(a)(ii) in
all prior Fiscal Periods.


 


(iii)                               THIRD,
to the Holders of the Preferred Securities, an amount of Profits equal to the
excess of (x) the Preferred Return as of the last day of such Fiscal Period
over (y) the amount of Profits allocated to the Holders of the Preferred
Securities pursuant to this Section 4.1(a)(iii) in all prior Fiscal
Periods.


 


(iv)                              FOURTH,
to the Holder of the Managing Member Interest in an amount equal to the excess,
if any, of (x) all Losses, if any, allocated such Holder from the date of
issuance of the Managing Member Interest through and including the close of
such Fiscal Period pursuant to Section 4.1(b)(i) below over (y) the
amount of Profits, if any, allocated to such Holder pursuant to this Section 4.1(a)(iv) in
all prior Fiscal Periods.


 


(v)                                 FIFTH,
to the Holder of the Managing Member Interest, an amount of Profits equal to
the excess of (x) the Common Return of the last day of such Fiscal Period over
(y) the amount of Profits allocated to the Holder of the Managing Member
Interest pursuant to this Section 4.1(a)(v) in all prior Fiscal
Periods.


 


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(vi)                              LAST,
any remaining Profits shall be allocated 50% to the Holders of Preferred
Securities and 50% to the Managing Member (the “Sharing Ratio”).


 


(b)                                 The LLC’s Losses for any Fiscal Period shall be
allocated as follows:


 


(i)                                     FIRST,
to the Managing Member until the balance of the Managing Member’s Capital
Account is reduced to zero.


 


(ii)                                  SECOND,
to the Holders of the Preferred Securities until the Capital Account balances
of such Holders are reduced to zero.


 


(iii)                               THIRD,
any remaining Loss shall be allocated to the Managing Member.


 


(c)                                  Daily Determination. For purposes of determining the Profits, Losses or any
other items allocable to any period, Profits, Losses and any such other items
shall be determined on a daily basis, unless the Managing Member determines
that another method is permissible under Section 704 of the Code and the
Treasury Regulations promulgated thereunder. Unless otherwise specified, such
Profits, Losses or other items shall be determined for each Fiscal Period.


 


Section 4.2.                                   Regulatory
Allocation Provisions.  Notwithstanding any other provision in this Article IV:


 


(a)                                  Minimum Gain Chargeback.  If there is a net
decrease in Minimum Gain or Member Nonrecourse Debt Minimum Gain (determined in
accordance with the principles of Treasury Regulations Sections 1.704-2(d) and
1.704-2(i)) during any LLC taxable year, the Members shall be specially
allocated items of LLC income and gain for such year (and, if necessary,
subsequent years) in an amount equal to their respective shares of such net
decrease during such year, determined pursuant to Treasury Regulations Sections
1.704-2(g) and 1.704-2(i)(5).  The
items to be so allocated shall be determined in accordance with Treasury
Regulations Section 1.704-2(f). 
This Section 4.2(a) is intended to comply with the minimum
gain chargeback requirements in such Treasury Regulations Sections and shall be
interpreted consistently therewith; including that no chargeback shall be
required to the extent of the exceptions provided in Treasury Regulations
Sections 1.704-2(f) and 1.704-2(i)(4).


 


(b)                                 Qualified Income Offset.  If any Member
unexpectedly receives any adjustments, allocations, or distributions described
in Treasury Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6),
items of LLC income and gain shall be specially allocated to such Member in an
amount and manner sufficient to eliminate the deficit balance in such Member’s
Capital Account Deficit created by such adjustments, allocations or
distributions as promptly as possible; provided, that an allocation
pursuant to this Section 4.2(b) shall be made only to the extent that
a Member would have an Capital Account Deficit in excess of such sum after all
other allocations provided for in this Article IV have been tentatively
made as if this Section 4.2(b) were not in this Agreement.  This Section 4.2(b) is intended to
comply with the “qualified income offset” requirement of the Code and shall be
interpreted consistently therewith.


 


19





















 


(c)                                  Gross Income Allocation.  If any Member has an
Capital Account Deficit at the end of any Fiscal Period, each such Member shall
be specially allocated items of LLC income and gain in such an Capital Account
Deficit as quickly as possible; provided, that an allocation pursuant to
this Section 4.2(c) shall be made only if and to the extent that a
Member would have an Capital Account Deficit after all other allocations
provided for in this Article IV have been tentatively made as if Section 4.2(b) and
this Section 4.2(c) were not in this Agreement.


 


(d)                                 Nonrecourse Deductions.  Nonrecourse
Deductions shall be allocated to the Members in proportion to their respective
Capital Accounts.


 


(e)                                  Member Nonrecourse Deductions.  Member
Nonrecourse Deductions for any taxable period shall be allocated to the Member
who bears the economic risk of loss with respect to the liability to which such
Member Nonrecourse Deductions are attributable in accordance with Treasury
Regulations Section 1.704-2(j).


 


(f)                                    Subsequent Allocations.  Any special
allocations of income or gain pursuant to Sections 4.2(b) or 4.2(c) hereof
shall be taken into account in computing subsequent allocations pursuant to Section 4.1
and this Section 4.2(f), so that the net amount of any items so allocated
and all other items allocated to each Member shall, to the extent possible, be
equal to the net amount that would have been allocated to each Member if such
allocations pursuant to Sections 4.2(b) or 4.2(c) had not occurred.


 


Section 4.3.                                   Tax
Allocations. 
For income tax purposes, each item of income, gain, loss and deduction
of the LLC shall be allocated among the Members in the same manner as the
corresponding items of Profits and Losses and specially allocated items are
allocated for Capital Account purposes; provided, that in the case of
any asset the Carrying Value of which differs from its adjusted tax basis for
U.S. federal income tax purposes, income, gain, loss and deduction with respect
to such asset shall be allocated solely for income tax purposes in accordance
with the principles of Sections 704(b) and (c) of the Code (in any
manner determined by the Tax Matters Member) so as to take account of the
difference between Carrying Value and adjusted basis of such asset.  Notwithstanding the foregoing, the Tax
Matters Member shall make such allocations for tax purposes as may be needed to
ensure that allocations are in accordance with the interests of the Members,
within the meaning of the Code and Treasury Regulations.


 


Section 4.4.                                   Additional
Interest Allocation.  Any Additional Interest shall be allocated
solely to the holders of Preferred Securities.


 


Section 4.5.                                   Other
Allocation Provisions.  The foregoing provisions and the other
provisions of this Agreement relating to the maintenance of Capital Accounts
are intended to comply with Treasury Regulations Section 1.704-1(b) and
shall be interpreted and applied in a manner consistent with such
regulations.  Sections 4.1 to 4.4 may be
amended at any time by the Managing Member if necessary, in the opinion of tax
counsel to the LLC, to comply with such regulations, so long as any such
amendment does not materially change the relative economic interests of the
Members.


 


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ARTICLE V

ISSUANCE OF PREFERRED SECURITIES


 


Section 5.1.                                   General
Provisions Regarding Preferred Securities.


 


(a)                                  There is hereby authorized for issuance and sale
300,001 Preferred Securities having an aggregate liquidation preference of
$1,000 per Preferred Security (the “Original Preferred Securities”),
with an aggregate liquidation preference not greater than $300,001,000 and
having the designation, annual distribution rate, liquidation preference,
redemption terms, and other powers, preferences and special rights and
limitations set forth in this Agreement. 
The Original Preferred Securities shall be issued on the date of this
Agreement.


 


(b)                                 In addition, the LLC may issue Preferred Securities
representing an additional class of Preferred Securities to be issued only in
exchange for all or part of the Original Trust Preferred Securities (the “Exchange
Preferred Securities”); provided, however, that the aggregate
number of issued and outstanding Preferred Securities shall not at any time
exceed 300,001, less the number of any Preferred Securities redeemed pursuant
to Article VII.  The Original
Preferred Securities and Exchange Preferred Securities together shall be
designated the “Floating Rate Preferred Securities”.  The Preferred Securities shall be issued in
registered form only.


 


(c)                                  There is hereby authorized for issuance and sale the
Managing Member Interest.  The Managing
Member Interest shall be issued on the date of this Agreement.


 


(d)                                 The LLC may not issue any interests in the LLC other
than the Preferred Securities and the Managing Member Interest; provided,
that the LLC may accept additional capital contributions from the Managing
Member with respect to the Managing Member Interest of funds from the Company
resulting from the sale of the Company’s Common Shares or perpetual preferred
stock for purposes of enabling the payment of distributions, as described in Article XIV,
or from the sale of the Company’s Common Shares or Perpetual Deferrable
Preferred Stock for purposes of the payments in connection with a Mandatory
Deferral Event, as described in Article VI.


 


(e)                                  No Holder shall be entitled as a matter of right to
subscribe for or purchase, or have any preemptive right with respect to, any
part of any new or additional Preferred Securities, or of securities
convertible into any Preferred Securities, whether now or hereafter authorized
and whether issued for cash or other consideration or by way of a distribution.


 


(f)                                    The Holders of Preferred Securities hereby authorize
the LLC Guarantee Trustee to hold the LLC Guarantee on behalf of the Holders of
Preferred Securities. In the event of an appointment of a Special
Representative pursuant to Section 8.1(a), the Special Representative is
hereby authorized on behalf of the Holders of Preferred Securities to take
possession of the LLC Guarantee to enforce the LLC Guarantee on their behalf.
If no Special Representative has been appointed to enforce the LLC Guarantee,
the LLC Guarantee Trustee is hereby authorized on behalf of the Holders of
Preferred Securities to enforce the LLC Guarantee on their behalf, subject to
the rights of the Holders of Preferred Securities pursuant to Section 8.1(d).


 


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The
Holders of Preferred Securities hereby acknowledge and agree to the
subordination provisions in, and other terms of, the LLC Guarantee.


 


(g)                                 If the Original Preferred Securities are exchanged for
Exchange Preferred Securities upon the occurrence of the Exchange Offer in
accordance with the Registration Rights Agreement, the LLC will issue one or
more certificates representing Exchange Preferred Securities in an aggregate
principal amount equal to the principal amount of the Original Preferred
Securities accepted for exchange in the Exchange Offer.  Concurrently
with the issuance of such Exchange Preferred Securities, the LLC will cause any
Original Preferred Securities tendered in the Exchange Offer to be cancelled.


 


ARTICLE VI

DISTRIBUTIONS


 


Section 6.1.                                   Distributions.


 


(a)                                  Any distributions from the LLC shall be made first to
Holders of Preferred Securities up to an amount equal to the Preferred Return
and any Additional Interest, second to the Managing Member with respect to its
Managing Member Interest up to an amount equal to its Common Return, and third,
to Holders of Preferred Securities and the Managing Member in proportion to the
Sharing Ratio, in each case, to the extent such amounts have not been previously
distributed; provided, that no distribution may be made to the Managing
Member if after such distribution, the Capital Account in respect of the
Managing Member Interest would be below the Managing Member Capital
Contribution, except pursuant to Section 16.4.  Any payment of a distribution on a
Distribution Payment Date shall first be allocated to payment of the Simple
Distribution due on that Distribution Payment Date.  Any payment of distributions in excess of the
amount of the Simple Distribution due on that Distribution Payment Date shall
be applied first against any then existing accumulated and unpaid Simple
Distributions, in chronological order, and then against any unpaid Preferred
Return, and then against any unpaid Common Return.  Once a deferred Simple Distribution for any
prior Distribution Payment Date has been paid, that Distribution Payment Date
shall no longer be included for purposes of calculating the 20- and 28-Distribution
Payment Date triggers referred to in Sections 6.2, 6.4, 8.1, 14.2 and 16.2.


 


(b)                                 (i)  Distributions on the Preferred Securities of
the Preferred Non-Compounded Accrual Amount accumulated for the relevant Fiscal
Period shall be payable quarterly in arrears on February 19, May 19, August 19
and November 19 of each year, commencing on November 21, 2005 (each a
“Distribution Payment Date”).  The
Managing Member shall be permitted to make distribution payments dates other
than those listed in the preceding sentence. 
In the event that any date on which any distributions are payable on the
Preferred Securities is not a Business Day and a London Business Day, payment
of such distribution shall be made on the next succeeding day which is a
Business Day and a London Business Day unless such day falls in the next
calendar month, in which case the Distribution Payment Date shall be the
immediately preceding Business Day and London Business Day.  Distributions will accrue to the date that
such distributions are actually paid.


 


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(ii)                                  All
distributions shall be payable to the Holders as they appear on the books and
records of the LLC on the relevant Record Date. If the Trust or the Property
Trustee is the Holder of the Preferred Securities, all distributions of cash
shall be made by wire transfer of same day funds to such Holder by 10:00 a.m.,
New York City time, on the applicable Distribution Payment Date. Distributions
payable on any Preferred Securities that are not punctually paid on any
Distribution Payment Date shall cease to be payable to the Person in whose name
such Preferred Securities are registered on the relevant Record Date, and such
distribution shall instead be payable to the Person in whose name such
Preferred Securities are registered on the special Record Date or other
specified date for payment of such defaulted or accumulated distribution.


 


(c)                                  If the Managing Member shall determine a Simple
Distribution for any Fiscal Period shall not be paid on a scheduled
Distribution Payment Date pursuant to Section 6.3 below, the Managing
Member shall give notice of its determination not to pay such distribution to
the Holders of Preferred Securities.


 


Section 6.2.                                   Mandatory
Deferral.


 


(a)                                  So long as any Mandatory Deferral Event has occurred
and is continuing, the LLC shall not pay any distributions on the Preferred
Securities in excess of the New Capital Amount and shall not pay any
distributions on the Managing Member Interest; provided, that if any
cash proceeds received from the issuance and sale of the Company’s Common
Shares or the Company’s Perpetual Deferrable Preferred Stock are contributed to
the LLC by the Managing Member, the LLC shall pay distributions to the Holders
of the Preferred Securities in the amount of the proceeds received to the
extent such proceeds do not exceed Net Profits allocated to Holders of
Preferred Securities since the Closing Date over distributions of the Preferred
Return to Holders of Preferred Securities since the Closing Date; provided,
however, that the Company may not issue Perpetual Deferrable Preferred
Stock for an amount in excess of $75,000,000 for all Mandatory Deferral Events.


 


(b)                                 A “Mandatory Deferral Event” shall occur if on
any 20th day prior to a Distribution Payment Date (each, a “Calculation
Date”):


 


(i)                                     the
Trailing Two Quarters Consolidated Net Income Amount is zero or a negative
amount for the two fiscal quarter period ending on the last day of the Company’s
fiscal quarter that is two fiscal quarters prior to the most recently completed
fiscal quarter before that Calculation Date; and


 


(ii)                                  the
Tangible Common Stockholders’ Equity Amount as of the end of the Company’s most
recently completed fiscal quarter before that Calculation Date and as of the
end of the Company’s fiscal quarter that is two fiscal quarters before the
Company’s most recently completed fiscal quarter before that calculation date
has declined by 10% or more as compared to the Tangible Common Stockholders’
Equity Amount at the end of the Company’s fiscal quarter ending six quarters
prior to the Company’s most recently completed fiscal quarter before that
Calculation Date (the “Benchmark Fiscal Quarter”).


 


23





















 


(c)                                  If the Company fails either of the tests set forth
under paragraph (b) of this Section 6.2 for any Calculation Date, the restriction on distributions set forth in
paragraph (a) of this Section 6.2 shall continue until the Company is
able to satisfy both tests set forth in paragraph (b) of this Section 6.2
for a Calculation Date and the
Tangible Common Stockholders’ Equity Amount has increased, or has declined by
less than 10%, in either case as compared to the Tangible Common Stockholders’
Equity Amount at the end of the Benchmark Fiscal Quarter for each Calculation
Date as to which restrictions were imposed under Section 6.2(b)(ii);


 


(d)                                 All financial terms used in this Section 6.2
shall be determined in accordance with GAAP as applied to and reflected in the
Company’s consolidated financial statements as of the relevant dates, except (i) that
the Company’s common stockholders’ equity and consolidated net income at any
date and for any period shall be adjusted to exclude extraordinary items,
unusual items and infrequently occurring items as defined in Accounting
Principles Bulletin 30, goodwill impairment as defined in Financial Accounting
Standards Board Statements of Financial Accounting Standards No. 142 and
amounts relating to discontinued operations as defined in Financial Accounting
Standards Board Statements of Financial Accounting Standards No. 144 and (ii) as
provided in the next sentence.  If
because of a change in GAAP that results in a cumulative effect of a change in
accounting principle or a restatement, either (i) the Company’s
consolidated net income is higher or lower than it would have been absent such
change, then, for purposes of calculating the calculations described in
paragraph (b)(i) of this Section 6.2, commencing with the fiscal
quarter for which such changes in GAAP becomes effective, such consolidated net
income shall be calculated on a pro forma basis as if such changes had not
occurred; or (ii) the Tangible Common Stockholders’ Equity Amount as of a
fiscal quarter end is higher or lower than it would have been absent such
change, then, for purposes of the calculations described in paragraph (b)(ii) of
this Section 6.2, the Tangible Common Stockholders’ Equity Amount shall be
calculated on a pro forma basis as if such change had not occurred.


 


(e)                                  If at any relevant date or for any relevant period the
Company is not a reporting company under the Exchange Act, then for any such
relevant date and period the Company shall prepare and post on its website the
consolidated financial statements that the Company would have been required to
file with the Commission had the Company continued to be a reporting company
under the Exchange Act, in each case on or before the dates that the Company
would have been required to file such financial statements had the Company
continued to be an “accelerated filer” within the meaning of Rule 12b-2
under the Exchange Act.


 


(f)                                    The Managing Member shall give notice to the Holders
of the Preferred Securities of a potential Mandatory Deferral Event that could
take effect for a subsequent payment date having a Calculation Date two fiscal
quarters in the future if (i) the Trailing Two Quarters Consolidated Net
Income Amount for the Company’s most recently completed fiscal quarter is zero
or a negative amount and (ii) the Tangible Common Stockholders’ Equity
Amount as of the Company’s most recently completed fiscal quarter has declined
by 10% or more as compared to the Tangible Common Stockholders’ Equity Amount
as of the end of the Company’s fiscal quarter that is four fiscal quarters
prior to the Company’s most recently completed fiscal quarter.  The Managing Member shall cause the LLC to
send any such notice no later than the first payment date following the end of
the Company’s most recently completed fiscal quarter for which the relevant
financial information is available as of which the tests under


 


24





















 


paragraph
(b) of this Section 6.2 indicate that a potential Mandatory Deferral
Event could occur.  Such notice shall be
sent by first class mail, postage prepaid, addressed to the holders of record
of the Preferred Securities at their respective last addresses appearing on the
LLC’s books.  Such notice shall (x) set
forth the results of the Trailing Two Quarters Consolidated Net Income Amount
and the Tangible Common Stockholders’ Equity Amount for the relevant periods and
dates, and (y) state that the LLC may be precluded by the terms of the
Preferred Securities from paying distributions on such Distribution Payment
Date unless the Company, through the generation of earnings or issuance of
Common Shares, increases the Tangible Common Stockholders’ Equity Amount by an
amount specified in such notice by the second payment date after the date of
such notice.


 


(g)                                 By not later than the 15th day prior to each payment
date for which distributions are being deferred by reason of the tests set
forth in paragraph (b) of this Section 6.2, the Company shall give
notice of such deferral by first class mail, postage prepaid, addressed to the
holders of record of the Trust Preferred Securities at their respective last
addresses appearing on the Trust’s books, and the Company shall file a copy of
such notice on Current Report on Form 8-K with the Commission.  Such notice, in addition to stating that
distributions shall be deferred, shall set forth the applicable Trailing Two
Quarters Consolidated Net Income Amount and Tangible Common Stockholders’
Equity Amount and the amount by which the Trailing Two Quarters Consolidated
Net Income Amount and Tangible Common Stockholders’ Equity Amounts must
increase in order for payment of distributions to be resumed.


 


Section 6.3.                                   Optional
Deferral. 
The Managing Member may, in its sole discretion, determine that a
distribution of the Preferred Non-Compounded Accrual Amount shall not be paid
on a scheduled Distribution Date for any Fiscal Period.


 


Section 6.4.                                   Rights
and Remedies Upon Certain Arrearages.  If the full
amount of Simple Distributions on the Preferred Securities is not paid on an
aggregate of 28 Distribution Payment Dates (whether or not consecutive), the
Property Trustee, upon written direction of the Holders of
a Majority in Liquidation Preference of Preferred Securities, shall deliver a
notice (the “Payment Notice”) to the Company stating that it intends to
exercise its rights and remedies under this Agreement, and thereafter shall be
entitled to exercise all rights and remedies under this Agreement, including
under Article VIII and dissolution of the LLC under Article XV
hereof.


 


Section 6.5.                                   Limitations
on Distributions.


 


(a)                                  The LLC shall not make any distribution to any Member
(other than liquidating distributions pursuant to Section 16.4) if
aggregate distributions from the Closing Date would exceed Net Profits
(including Profits allocated pursuant to Section 4.1(a)(vi)) allocated to
such Member from the Closing Date.


 


(b)                                 The LLC shall not make any distribution to any Member
on account of such Member’s Interest if such distribution would violate the Act
or other applicable law.


 


25


















 


Section 6.6.                                   Withholding.  The LLC shall comply with withholding
requirements under federal, state and local law and shall remit amounts
withheld to and file required forms with the applicable jurisdictions. To the
extent that the LLC is required to withhold and pay over any amounts to any
authority with respect to distributions or allocations of income to any Member
or beneficial owner of Interests, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to such Member or beneficial
owner. In the event of any claimed over-withholding, such Member or beneficial
owner of Interests shall be limited to an action against the applicable
jurisdiction. If the amount withheld was not withheld from actual
distributions, the LLC may reduce subsequent distributions to such Member or
beneficial owner of Interests by the amount of such withholding. Each Member
and beneficial owner of Interests agrees to furnish the LLC with any
representations and forms as shall reasonably be requested by the LLC to assist
it in determining the extent of, and in fulfilling, the LLC’s withholding
obligations.


 


ARTICLE VII

REDEMPTION OF PREFERRED SECURITIES


 


Section 7.1.                                   Optional Redemption.  Preferred Securities shall be redeemable at
the option of the Managing Member, in whole or in part, from time to time, on
or after August 19, 2010, upon not less than 30 nor more than 60 days’
notice, at an amount equal to the greater of the Preferred Accreted Amount and
the current Capital Account of such Preferred Securities (the “Redemption
Price”); provided, that if the Preferred Securities are not redeemed
in whole, at least $50,000,000 aggregate liquidation amount of Trust Preferred
Securities (excluding Trust Preferred Securities held by the Company or any of
its Affiliates) remains outstanding immediately after any such partial
redemption; and provided, further, that the LLC may not redeem
the Preferred Securities in part unless (i) distributions of the Preferred
Return since the Closing Date have been paid to the Holders of Preferred
Securities in an amount equal to Net Profits allocated to Holders of Preferred
Securities on or prior to the Redemption Date and (ii) no Enforcement Event
shall have occurred and be continuing.


 


Section 7.2.                                   Mandatory Redemption.  The Preferred Securities shall be redeemed,
in whole or in part, if at any time the Company Debenture or any Affiliate Debt
Instrument is redeemed (except upon its stated maturity) in whole or in part; provided,
that if the Preferred Securities are not redeemed in whole, at least
$50,000,000 aggregate liquidation amount of Trust Preferred Securities
(excluding Trust Preferred Securities held by the Company or any of its
Affiliates) remains outstanding immediately after any such partial redemption;
and provided, further, that the LLC may not redeem the Preferred
Securities in part unless (i) distributions of the Preferred Return since the
Closing Date have been paid to the Holders of Preferred Securities in an amount
equal to Net Profits allocated to Holders of Preferred Securities on or prior
to the Redemption Date and (ii) no Enforcement Event shall have occurred and be
continuing.  Such redemption shall be at
the Redemption Price.  Notice of such
redemption shall be provided upon not less than 30 nor more than 60 days’ prior
notice to the Holders of the Preferred Securities.


 


Section 7.3.                                   Special Event Redemption.  If, at any time, a Special Event shall occur
and be continuing, the Managing Member shall, within 90 days following the
occurrence of such Special Event, elect to (i) redeem the Preferred Securities
in whole (but not in part), upon


 


26





















 


not less than
30 or more than 60 days’ notice at the Redemption Price, (ii) dissolve the LLC
and distribute its assets to the Trust pursuant to Article XV of this Agreement
or (iii) cause the Preferred Securities to remain outstanding; provided,
that, in the case of clause (i) or (ii), if at the time there is available to
the LLC the opportunity to eliminate, within such 90 day period, the Special
Event by taking some ministerial action, including, without limitation, filing
a form or making an election, or pursuing some other similar reasonable measure
that in the sole judgment of the Managing Member has or shall cause no adverse
effect on the LLC, the Trust or the Company or the Holders of the Preferred
Securities and shall involve no material cost, the Managing Member shall pursue
such measure in lieu of redemption or dissolution; and provided, further,
that in the case of clause (iii), the Company shall pay any and all costs and
expenses incurred by or payable by the LLC that are attributable to the Special
Event.


 


Section 7.4.                                   Redemption Procedures.  (a)  Notice
of any redemption of Preferred Securities (a “Redemption Notice”) shall
be given by the LLC by mail to each Holder of Preferred Securities to be
redeemed not fewer than 30 nor more than 60 days before the date fixed for
redemption.  Each Redemption Notice shall
be addressed to the Holders of Preferred Securities at the address of each such
Holder appearing in the books and records of the LLC.  No defect in the Redemption Notice or in the
delivery thereof with respect to any Holder shall affect the validity of the
redemption proceedings with respect to any other Holder.


 


(b)                                 In the event that fewer
than all the outstanding Preferred Securities are to be redeemed, the Preferred
Securities to be redeemed shall be redeemed pro  rata; provided,
that if, as a result of such pro  rata redemption, Holders would
hold fractional interests in the Preferred Securities, the Managing Member may
adjust the amount of the interest of each Holder to be redeemed to avoid such
fractional interests; provided, further, that the LLC shall not
redeem fewer than all of the outstanding Preferred Securities unless
distributions of the Preferred Return since the Closing Date have been paid to
Holders of Preferred Securities in an amount equal to the Net Profits allocated
to Holders of Preferred Securities on or prior to the date of redemption.


 


(c)                                  If the LLC gives a
Redemption Notice (which notice shall be irrevocable), then by 12:00 noon, New
York City time, on the date called for redemption (the “Redemption Date”),
the LLC shall deposit with the Paying Agent funds sufficient to pay the applicable
Redemption Price of the amount of any such Preferred Securities and shall give
to the Paying Agent irrevocable instructions and authority to pay such amounts
to the Holders of Preferred Securities, upon surrender of their certificates,
by check, mailed to the address of the relevant Holder appearing on the books
and records of the LLC on the Redemption Date; provided, however,
that for so long as the Trust or the Property Trustee of the Trust shall hold
the Preferred Securities, payment of cash shall be made by wire in same day
funds to the Holder by 12:00 noon, New York City time, on the Redemption Date.
For these purposes, the applicable Redemption Price shall not include
distributions that are being paid to Holders who were Holders on a relevant Record
Date. Upon satisfaction of the foregoing conditions, then immediately prior to
the close of business on the date of such deposit or payment, all rights of
Holders of such Preferred Securities so called for redemption shall cease,
except the right of the Holders to receive the Redemption Price, but without
interest on such Redemption Price, and from and after the date fixed for
redemption, such Preferred Securities shall not accumulate distributions or
bear interest.


 


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(d)                                 In the event that any
date for redemption of Preferred Securities is not a Business Day and a London
Business Day, payment of the Redemption Price payable on such date shall be
made on the next succeeding day which is a Business Day and a London Business
Day unless such day falls in the next calendar month, in which case such
payment shall be made the immediately preceding Business Day and London
Business Day.  In the event that payment
of the Redemption Price is improperly withheld or refused and not paid by
either the LLC or the Company pursuant to the LLC Guarantee, distributions on
the Preferred Securities called for Redemption shall continue to accumulate, to
the extent that such amounts are legally available for payment, from the original
Redemption Date until the Redemption Price is actually paid.


 


(e)                                  The LLC shall not be
required to register or cause to be registered the transfer of any Preferred
Securities that have been called for redemption.


 


(f)                                    All Preferred Securities
redeemed, purchased or otherwise acquired by the LLC shall be canceled.


 


ARTICLE VIII

ENFORCEMENT EVENTS


 


Section 8.1.                                   Special Representative.


 


(a)                                  If one or more of the
following events shall occur and be continuing (each an “Enforcement Event”):


 


(i)                                     After giving effect to distributions (if any) paid on any
Distribution Payment Date, the
full amount of Simple Distributions on the Preferred Securities is not paid in
full on an aggregate of 28 Distribution Payment Dates (whether or not
consecutive); provided, that a
Payment Notice has been provided to the Company by the Special Representative
acting upon written direction of the Holders of a Majority in Liquidation
Preference of Preferred Securities;


 


(ii)                                  the Company is in default on any of its obligations under the LLC
Guarantee; or


 


(iii)                               there is an Investment Event of Default on any Affiliate Debt
Instrument or a default under any Investment Guarantee,


 


then the Holders of the Preferred Securities, upon the affirmative vote
of a Majority in Liquidation Preference of Preferred Securities, shall have the
right, to the exclusion of the Managing Member, to (x) authorize and direct a
special representative of the LLC and the Non-Managing Members (a “Special
Representative”) to enforce (1) to the maximum extent permitted by
applicable law, the LLC’s rights with respect to the Affiliate Debt Instruments
and the Investment Guarantees, (2) its rights under Section 6.3 hereof and (3)
the rights of the Holders of the Preferred Securities to receive distributions
(only to the extent funds are legally available therefor and as long as no
Mandatory Deferral Event has occurred) on the Preferred Securities and (y)
authorize and direct the LLC Guarantee Trustee to enforce the terms of the LLC
Guarantee.


 


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(b)                                 Upon the occurrence of
any Enforcement Event, the Property Trustee shall act as the Special
Representative of the LLC and the Holders of the Preferred Securities; provided,
that the Property Trustee, acting as Special Representative, shall be entitled
to the benefits and protections afforded to it as Property Trustee under the
Declaration of Trust and, provided, further, that the Property
Trustee, acting as Special Representative, shall not be required to take any
action pursuant to this Agreement until it has actual knowledge of, or has been
notified in writing of, an Enforcement Event. 
The Property Trustee shall cease to be a Special Representative if (1)
distributions of the Preferred Return since the Closing Date have been paid to
Holders of the Preferred Securities in an amount equal to the Net Profits
allocated to Holders of the Preferred Securities, (2) the relevant Investment
Event of Default or default under all Investment Guarantees, as the case may
be, is cured, and (3) the Company is in compliance with all of its obligations
under this Agreement and the LLC Guarantee and the Company, in its capacity as
Managing Member, continues the business of the LLC without dissolution.
Notwithstanding the occurrence of an Enforcement Event, the Company shall
continue as Managing Member and shall retain all rights of the Managing Member
under this Agreement, including, without limitation, the right to defer, in its
sole discretion, the payment of distributions on the Preferred Securities.


 


(c)                                  When the Special
Representative acts to enforce the LLC’s creditors’ rights and other rights
with respect to the Affiliate Debt Instruments and the Investment Guarantees,
the Special Representative acts as an agent of the LLC. When the Special
Representative acts to enforce the rights of the Holders of the Preferred
Securities, the Special Representative acts as an agent of the Holders of the
Preferred Securities. The Special Representative shall not, by virtue of acting
in such capacity, be admitted as a Managing Member or Non-Managing Member in
the LLC or otherwise be deemed to be a Managing Member or Non-Managing Member
in the LLC and shall have no liability for the debts, obligations, or
liabilities of the LLC.


 


(d)                                 In furtherance of the foregoing,
and without limiting the powers of any Special Representative so appointed and
to avoid any doubt concerning the powers of the Special Representative, any
Special Representative, in its own name, in the name of the LLC, in the name of
the Non-Managing Members, or otherwise, may institute, or cause to be
instituted, a proceeding, including, without limitation, any suit in equity, an
action at law or other judicial or administrative proceeding, to enforce on
behalf of the LLC the LLC’s rights directly against the Company or any other
obligor in connection with its obligations to the LLC, and may prosecute such
proceeding to judgment or final decree, and enforce the same against the
Company or any other obligor in connection with such obligations and collect,
out of the property, wherever situated, of the Company or any such other
obligor upon such obligations, the monies adjudged or decreed to be payable in
the manner provided by law. The Company agrees to execute and deliver such
documents as may be necessary, appropriate or convenient for the Special
Representative to enforce the foregoing rights and obligations on behalf and in
the name of the LLC.


 


(e)                                  If the Special
Representative fails to enforce its rights under the Affiliate Debt Instruments
after a Holder of Preferred Securities has made a written request, such Holder
of record of Preferred Securities may to the fullest extent permitted by law
directly institute a legal proceeding against the Company or any other
Investment Affiliate to enforce the rights of


 


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the Special
Representative and the LLC under the Affiliate Debt Instrument without first
instituting any legal proceeding against the Special Representative, the LLC or
any other Person or entity. In any event, if an Enforcement Event has occurred
and is continuing and such event is attributable to the failure of an
Investment Affiliate to make any required payment when due on any Affiliate
Debt Instrument, then a Holder of Preferred Securities may to the fullest
extent permitted by law on behalf of the LLC directly institute a proceeding
against such Investment Affiliate with respect to such Affiliate Debt
Instrument or against the Company with respect to the LLC Guarantee or any
Investment Guarantee for enforcement of payment.  In addition, for so long as the Trust holds
any Preferred Securities, if the Special Representative fails to enforce its
rights on behalf of the LLC under the Affiliate Debt Instruments after a holder
of Trust Preferred Securities has made a written request, a holder of record of
Trust Preferred Securities may to the fullest extent permitted by law on behalf
of the LLC directly institute a legal proceeding against the Investment
Affiliates under the Affiliate Debt Instruments, without first instituting any
legal proceeding against the Property Trustee, the Trust, the Special
Representative or the LLC. In any event, for so long as the Trust is the Holder
of any Preferred Securities, if a Trust Enforcement Event has occurred and is
continuing and such event is attributable to the failure of an Investment
Affiliate to make any required payment when due on any Affiliate Debt
Instrument or the failure of the Company to make any required payment when due
on the LLC Guarantee or any Investment Guarantee, then a holder of Trust
Preferred Securities may to the fullest extent permitted by law on behalf of
the LLC directly institute a proceeding against such Investment Affiliate with
respect to such Affiliate Debt Instrument or against the Company with respect
to the LLC Guarantee or any such Investment Guarantee, in each case for
enforcement of payment. Under no circumstances shall the Special
Representative, any Holder of Preferred Securities or any holder of Trust
Preferred Securities have authority to cause the Managing Member to declare
distributions on the Preferred Securities.


 


Section 8.2.                                   Waiver.


 


(a)                                  The Holders of a Majority
in Liquidation Preference of Preferred Securities may, by vote, on behalf of
the Holders of all of the Preferred Securities, waive any past Enforcement
Event with respect to the Preferred Securities and its consequences; provided,
that, if the underlying Investment Event of Default:


 


(1)                                  is
not waivable under the related Affiliate Debt Instrument, such Enforcement
Event shall also not be waivable; or


 


(2)                                  requires
the consent or vote of the Holders of greater than a simple majority in
principal amount or liquidation preference of the Affiliate Debt Instrument (a “Super
Majority”) to be waived under the related Affiliate Debt Instrument, the
Enforcement Event may only be waived by the vote of the Holders of the same
Super Majority in liquidation amount of the Preferred Securities.


 


Upon such waiver, any such
Enforcement Event shall cease to exist, and
shall be deemed to have been
cured, for every purpose of this Agreement, but no such waiver shall extend to any subsequent or other Enforcement Event
or impair any right consequent thereon.


 


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(b)                                 A waiver of an Investment
Event of Default by the Special Representative, acting at the direction of the
Holders of the Preferred Securities, constitutes a waiver of the corresponding
Enforcement Event.


 


Section 8.3.                                   General Voting.  Neither the Managing Member nor the Special
Representative shall (i) direct the time, method and place of conducting any
proceeding for any remedy available, (ii) waive any Investment Event of Default
that is waivable under the Affiliate Debt Instrument, (iii) exercise any right
to rescind or annul a declaration that the principal of any Affiliate Debt
Instrument that are debt instruments shall be due and payable, (iv) waive the
breach of the covenant by the Company in the LLC Guarantee to restrict certain
payments by the Company and its majority owned subsidiaries in respect of the
Company’s capital stock, or (v) consent to any amendment, modification or
termination of any Affiliate Debt Instrument, where such consent shall be
required from the holder thereof, without, in each case, obtaining the prior
approval of the Holders of a Majority in Liquidation Preference of Preferred
Securities; provided, however, that if the Property Trustee on
behalf of the Trust is the Holder of the Preferred Securities, such waiver,
consent or amendment or other action shall not be effective without the prior
or concurrent approval of at least a majority in liquidation amount of the
outstanding Trust Preferred Securities having a right to vote on such matters.
The Managing Member shall not revoke any action previously authorized or
approved by a vote of the Holders of the Preferred Securities. The Managing
Member shall notify all Holders of the Preferred Securities promptly in writing
of any notice of an Investment Event of Default received with respect to any Affiliate
Debt Instrument.


 


ARTICLE IX

LLC INVESTMENTS


 


Section 9.1.                                   Initial Investments.


 


(a)                                  On the Closing Date, 95%
of the Initial LLC Proceeds shall be invested in a debt instrument of the
Company in an equal principal amount issued pursuant to an Indenture
substantially in the form of Exhibit A attached hereto (the “Company
Debenture”). The LLC shall invest the remaining 5% of the Initial LLC
Proceeds in Eligible Debt Securities (together with the Company Debenture, the “Initial
Investments”).


 


(b)                                 The LLC may purchase the
Company Debenture only (A) upon the acceptance of a written offer setting forth
the terms and conditions on which the Company shall issue the Company Debenture to the LLC, (B) the satisfaction of
the Reinvestment Criteria and (C) receipt of a written representation from the
Company as of the date that the Company Debenture was purchased by the LLC to
the effect that if the Company Debenture were to be rated, at least one Rating
Agency would rate the Company Debenture “investment grade”.  The Company Debenture shall be issued under
an Indenture in substantially the form attached as Exhibit A hereto.


 


Section 9.2.                                   Reinvestment of Payments Received by the Company.


 


(a)                                  The
LLC must at all times invest, or have invested, (i) an amount at least equal to
the aggregate Capital Account balance of the Preferred Securities in Affiliate
Debt


 


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Instruments
and (ii) an amount equal to 5% of the Initial LLC Proceeds (or, if less, equal
to 5% of the aggregate Capital Account balances of the Managing Member Interest
and the Preferred Securities) in Eligible Debt Securities.


 


(b)                                 After the stated maturity
date of the Company Debenture, the LLC may reinvest funds in junior
subordinated notes issued by any Investment Affiliates that meet the
Reinvestment Criteria (the “New Debt”, and together with the Company
Debenture, the “Affiliate Debt Instruments”).  Such New Debt shall be issued under an
Indenture substantially similar to the Indenture attached hereto as Exhibit A with
such other provisions as are customary in indentures with guarantees provided
by a parent company, and shall provide for a guarantee substantially in the
form of Exhibit B attached hereto.  Such reinvestment in New Debt can be made
only upon the acceptance of a written offer setting forth the terms and
conditions on which an Investment Affiliate would be willing to issue the New Debt to the LLC (an “Investment
Offer”).


 


(c)                                  Each Affiliate Debt
Instrument shall satisfy the following criteria (the “Reinvestment Criteria”):
(i) the stated maturity for
such Affiliate Debt Instrument must be no more than 30 years from the date of
its issuance and no later than 60 years following the Closing Date,
(ii) (a) for the three years prior to such reinvestment, there shall have been
no default under any mortgage, indenture or instrument under which there was
issued or guaranteed, or by which there was secured or evidenced, any
indebtedness for money borrowed by the issuer of such Affiliate Debt Instrument
caused by a failure to pay principal of, or interest or premium, if any, on,
such indebtedness when due or that resulted in the acceleration of such
indebtedness prior to its express maturity and (b) no arrearages of dividends
on preferred stock issued by the issuer of the Affiliate Debt Instruments shall
have occurred and is continuing, (iii) the LLC has received an opinion of the
Independent Financial Advisor to the effect that the terms and conditions of
the Affiliate Debt Instrument are at least as favorable as terms that could be
obtained by the LLC in a public offering or private placement under Rule 144A
of a comparable security issued by the relevant Investment Affiliate, (iv) the
applicable Investment Affiliate shall not be deemed to be an investment company
by reason of Section 3(a) or 3(b) of the Investment
Company Act or excepted from the definition of investment
company by Section 3(c) of the Investment Company
Act, (v) any Affiliate Debt Instruments issued by any Investment Affiliates
(other than the Company) must be fully and unconditionally guaranteed (which
may be on a subordinated basis) by the Company (an “Investment Guarantee”),
(vi) the investment in such Affiliate Debt Instrument does not result in a
downgrading of any then existing rating of the Trust Preferred Securities by a
Rating Agency and (vii) the interest payment dates are the same as the interest
payment dates for the Trust Preferred Securities and Preferred Securities.


 


(d)                                 To
the extent available cash is not distributed to the holders of Interests in the
LLC, such amounts may be reinvested in (i) Affiliate
Debt Instruments that meet the Reinvestment Criteria or (ii) Eligible Debt
Securities.


 


(e)                                  If the Independent
Financial Advisor determines that the terms of any Affiliate Debt Instrument do
not satisfy the Reinvestment Criteria, the LLC shall be prohibited from making
any investment in such Affiliate Debt Instrument.


 


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Section 9.3.                                   Sales of Affiliate Debt Instruments.  The LLC may not sell, transfer or otherwise
dispose of any Affiliate Debt Instrument.


 


ARTICLE X

BOOKS OF ACCOUNT, RECORDS AND REPORTS


 


Section 10.1.                             Books and Records.


 


(a)                                  Proper and complete
records and books of account of the LLC shall be kept by the Managing Member,
in which shall be entered fully and accurately all transactions and other
matters relative to the LLC’s investments. The books and records of the LLC,
together with a certified copy of this Agreement and of the Certificate, shall
at all times be maintained at the principal office of the Managing Member and
shall be open to the inspection and examination of the Members or their duly
authorized representatives for any proper purpose reasonably related to its
Interest during reasonable business hours.


 


(b)                                 Notwithstanding any other
provision of this Agreement to the contrary, the Managing Member may, to the
maximum extent permitted by applicable law, keep confidential from the
Non-Managing Members any information with respect to the LLC, the disclosure of
which the Managing Member reasonably believes is not in the best interests of
the LLC, or is adverse to the interests of the LLC, or which the LLC or the
Managing Member is required by law or by an agreement with any Person to keep
confidential.


 


(c)                                  (i)  For so long as the Preferred Securities are
held by the Property Trustee on behalf of the Trust, within one month after the
close of each Fiscal Year, the Managing Member shall transmit to each Member a
statement indicating such Member’s share of each item of LLC income, gain,
loss, deduction or credit, for United States federal income tax purposes, for
such Fiscal Year.


 


(ii)                                  In
the event that the Preferred Securities are no longer held by the Property
Trustee on behalf of the Trust, as soon as reasonably possible after the close
of the Fiscal Year, the Managing Member shall transmit to each Member the
statement referred to in Section 10.1(c)(i) hereof.


 


Section 10.2.                             Accounting Method.  For both financial and tax reporting
purposes, the books and records of the LLC shall be kept on the accrual method
of accounting applied on a consistent basis and shall reflect all LLC
transactions.


 


Section 10.3.                             Annual Audit.  As soon as practical after the end of each
Fiscal Year, but not later than 90 days after such end, the financial
statements of the LLC shall be audited by a firm of independent certified public accountants selected by the
Managing Member in accordance with applicable law. The cost of such audits shall be an expense of the LLC and
shall be paid by the Managing Member.


 


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ARTICLE XI

POWERS, RIGHTS AND DUTIES

OF THE NON-MANAGING MEMBERS


 


Section 11.1.                             Limitations.  The Non-Managing Members shall not
participate in the management or control of the LLC’s investment activity, property
or other assets, nor shall the Non-Managing Members engage in any activities
for the LLC, nor shall the Non-Managing Members have the power to act for or
bind the LLC, such powers being vested solely and exclusively in the Managing
Member (and, upon appointment, and to the extent set forth herein, the Special Representative). The Non-Managing
Members shall have such rights
as are set forth herein and in the LLC Guarantee. The Non-Managing Members
shall have no interest in the properties or assets of the Managing Member, or
any equity therein, or in any proceeds of any sales thereof (which sales shall
not be restricted in any respect), by virtue of acquiring or owning an Interest
in the LLC.


 


Section 11.2.                             Liability.  Subject to the provisions of the Act, no
Non-Managing Member shall be liable for the repayment, satisfaction or
discharge of any debts or other obligations of the LLC in excess of the Capital
Account balance of such Non-Managing Member.


 


Section 11.3.                             Priority.  No Non-Managing Member shall have priority
over any other Non-Managing Member as to allocations or distributions from the
LLC.


 


ARTICLE XII

POWERS, RIGHTS AND DUTIES

OF THE MANAGING MEMBER


 


Section 12.1.                             Authority.  Subject to the provisions of Article VIII with
respect to the Special Representative, the Managing Member shall have exclusive and complete
authority and discretion to manage the operations and affairs of the LLC and to
make all decisions regarding the investment activity of the LLC. Any action
taken by the Managing Member shall constitute the act of and serve to bind the
LLC.  In dealing with the Managing Member
acting on behalf of the LLC no Person shall be required to inquire into the
authority of the Managing Member to bind the LLC. Persons dealing with the LLC
are entitled to rely conclusively on the power and authority of the Managing
Member as set forth in this
Agreement.


 


Section 12.2.                             Powers and Duties of Managing Member.  Subject to the provisions of Article VIII with respect to the Special Representative, the Managing Member shall have all
rights and powers of a Managing Member under
the Act, and shall have all authority,
rights and powers in the management of the LLC’s investment activity to do any
and all other acts and things
necessary, proper, convenient or advisable to effectuate the purposes of
this Agreement, including by way of illustration but not by way of limitation,
the following, to:


 


(a)                                  purchase Affiliate Debt
Instruments and Eligible Debt Securities, as the case may be, without any
further act, vote or approval of any Member and exercise all powers of the LLC,
on behalf of the LLC, in connection with enforcing the LLC’s rights under the
Affiliate Debt Instruments, any Investment Guarantees and the LLC Guarantee;


 


34





















 


(b)                                 issue Preferred
Securities and to admit Non-Managing Members in connection therewith in
accordance with this Agreement;


 


(c)                                  act as registrar and
transfer agent for the Preferred Securities or designate an entity to act as
registrar and transfer agent;


 


(d)                                 establish a Record Date
with respect to all actions to be taken hereunder that require a Record Date be
established, including with respect to distributions and voting rights and to
make determinations as to the payment of distributions, and make or cause to be
made all other required payments to Holders of the Preferred Securities and to
the Managing Member;


 


(e)                                  secure the necessary
goods and services required in performing the Managing Member’s duties for the
LLC;


 


(f)                                    open, maintain and close
bank accounts and to draw checks and other orders for the payment of money;


 


(g)                                 bring or defend, pay,
collect, compromise, arbitrate, resort to legal action, or otherwise adjust
claims or demands of or against the LLC;


 


(h)                                 deposit, withdraw,
invest, pay, retain and distribute the LLC’s funds in a manner consistent with
the provisions of this Agreement;


 


(i)                                     take all action that may
be necessary or appropriate for the preservation and the continuation of the
LLC’s valid existence, rights, franchises and privileges as a limited liability
company under the laws of the State of Delaware and of each other jurisdiction
in which such existence is necessary to protect the limited liability of the
Non-Managing Members or to enable the LLC to invest in the Affiliate Debt
Instruments and Eligible Debt Securities;


 


(j)                                     take all action that the
Managing Member or, upon appointment pursuant to Article VIII, the Special
Representative determines in its sole discretion to be necessary or desirable
to ensure that (i) the LLC is not deemed to be an “investment company” required
to be registered under the Investment Company Act, (ii) any Company Debenture
(or any subsequent Affiliate Debt Instrument that is intended to be classified
as debt) is treated as indebtedness for United States federal income tax
purposes, or (iii) the LLC is not treated as an association, or as a publicly
traded partnership, taxable as a corporation;


 


(k)                                  cause the LLC to enter
into and perform a purchase agreement providing for the sale of the Trust
Preferred Securities to the initial purchasers thereof and the registration
rights agreement providing for the registration of the Trust Preferred
Securities, the Trust Guarantee, the Preferred Securities, the LLC Guarantee
and the Company Debenture;


 


(l)                                     execute and file with the
Commission a registration statement on Form 8-A, including any amendments
thereto, prepared by the Company or its successor entity as


 


35





















 


sponsor of the Trust, relating to the
registration of the Trust Preferred Securities, the Trust Guarantee, the
Preferred Securities, the LLC Guarantee and the Company Debenture under Section
12(b) of the Exchange Act;


 


(m)                               execute and file with the
Commission a registration statement on Form S-3 pertaining to the Trust
Preferred Securities, the Trust Guarantee, the Preferred Securities, the LLC
Guarantee and the Company Debenture, including any amendments thereto; and


 


(n)                                 execute and deliver any
and all documents or instruments, perform all duties and powers and do all
things for and on behalf of the LLC in all matters necessary or desirable or
incidental to the foregoing.


 


Section 12.3.                             Covenants.  The Managing Member shall, for so long as any
Preferred Securities are outstanding: 
(i) remain the sole Managing Member and maintain directly or indirectly
100% ownership of the Managing Member Interest, (ii) cause LLC to remain a
limited liability company and not to be voluntarily dissolved, except as
provided for in this Agreement, (iii) use its commercially reasonable efforts
to assure that LLC will not be an “investment company” for purposes of the
Investment Company Act, (iv) take no action that would be reasonably likely to
cause the LLC to be classified as an association or a publicly traded
partnership taxable as a corporation for United States federal income tax
purposes.


 


Section 12.4.                             Liability.  Except as expressly set forth in this
Agreement or in the LLC Guarantee or any Investment Guarantee, (a) the Managing
Member shall not be personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Non-Managing Members; (b)
the return of such capital contributions (or any return thereon) shall be made
solely from assets of the LLC; and (c) the Managing Member shall not be
required to pay to the LLC or to any Non-Managing Member any deficit in any
Non-Managing Member’s Capital Account upon dissolution, winding up or
otherwise. Other than as expressly provided in this Agreement or under the Act,
no Non-Managing Member shall have the
right to demand or receive property other than cash for its respective Interest
in the LLC. The Managing Member shall be liable to an unlimited extent for the
debts and other obligations of the LLC.


 


Section 12.5.                             Outside Activities.  Any
Member or Affiliate thereof may engage in or possess an interest in other
ventures of any nature or description, independently or with others, similar or
dissimilar to the activities of the LLC, and the LLC and the Members shall have
no rights by virtue of this Agreement in and to such independent ventures or
the income or profits derived therefrom, and the pursuit of any such venture,
even if competitive with the activities of the LLC, shall not be deemed
wrongful or improper. No Member or Affiliate thereof shall be obligated to
present any particular investment opportunity to the LLC even if such
opportunity is of a character that, if presented to the LLC, could be taken by
the LLC, and any Member or Affiliate thereof shall have the right to take for
its own account (individually or as a Member or fiduciary) or to recommend to
others any such particular investment opportunity.


 


Section 12.6.                             Limits on Managing Member’s Powers.  Anything in this Agreement to the contrary
notwithstanding, the Managing Member shall not cause or permit the LLC to:


 


36





















 


(i)                                     acquire any assets other than as expressly provided herein;


 


(ii)                                  do any act that would make it impractical or impossible to carry on
the ordinary activity of the LLC as set forth in Section 2.3;


 


(iii)                               possess LLC property for other than a purpose described in this
Agreement;


 


(iv)                              admit a Person as a Member, except as expressly provided in this
Agreement;


 


(v)                                 make any advances of funds to the Managing Member or its Affiliates,
other than such as represented by the Affiliate Debt Instrument;


 


(vi)                              perform any act that would subject any Non-Managing Member to
liability as a Managing Member in any jurisdiction;


 


(vii)                           engage in any activity that is not consistent with the purposes of
the LLC, as set forth in Section 2.3;


 


(viii)                        without the written consent of the Holders of 662⁄3% in
liquidation preference of the Preferred Securities, have an order for relief
entered with respect to the LLC or commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or consent to the entry of an order for relief in an involuntary case
under any such law, or consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a substantial part of the LLC’s
property, or make any assignment for the benefit of creditors of the LLC; or


 


(ix)                                borrow money or become liable for the borrowings of any third party
or to engage in any financial or other trade or business.


 


Section 12.7.                             Exculpation.  (a)  No
Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the LLC or any
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith on
behalf of the LLC and in a manner such Indemnified Person reasonably believed
to be within the scope of the authority conferred on such Indemnified Person by
this Agreement or by law, except that a Indemnified Person shall be liable for
any such loss, damage or claim incurred by reason of such Indemnified Person’s
gross negligence or willful misconduct with respect to such acts or omissions.


 


(b)                                 An Indemnified Person
shall be fully protected in relying in good faith upon the records of the LLC
and upon such information, opinions, reports or statements presented to the LLC
by any Person as to matters the Indemnified Person reasonably believes are
within such other Person’s professional or expert competence and who has been
selected with reasonable care by or on behalf of the LLC, including
information, opinions, reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts pertinent to the
existence and amount of assets from which distributions to Members might
properly be paid.


 


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Section 12.8.                             Fiduciary Duty.  (a)  To the extent that,
at law or in equity, an Indemnified Person has duties (including fiduciary
duties) and liabilities relating thereto to the LLC or to any other Covered
Person, an Indemnified Person acting under this Agreement shall not be liable to the LLC or to
any other Covered Person for its good faith reliance on the provisions of this
Agreement. The provisions of this Agreement, to the extent that they restrict
the duties and liabilities of an Indemnified Person otherwise existing at law
or in equity, are agreed by the parties hereto to replace such other duties and
liabilities of such Indemnified Person.


 


(b)                                 Unless otherwise
expressly provided herein, (i) whenever a conflict of interest exists or arises
between Covered Persons, or (ii) whether this Agreement or any other agreement
contemplated herein or therein provides that a Indemnified Person shall act in
a manner that is, or provides terms that are, fair and reasonable to the LLC or
any Member, the Indemnified Person shall resolve such conflict of interest,
take such action or provide such terms, considering in each case the relative
interest of each party (including its own interest) to such conflict,
agreement, transaction or situation and the benefits and burdens relating to
such interests, any customary or accepted industry practices, and any
applicable generally accepted accounting practices or principles. In the
absence of bad faith by the Indemnified Person, the resolution, action or term
so made, taken or provided by the Indemnified Person shall not constitute a
breach of this Agreement or any other agreement contemplated herein or of any
duty or obligation of the Indemnified Person at law or in equity or otherwise.


 


(c)                                  Whenever in this
Agreement an Indemnified Person is permitted or required to make a decision (i)
in its “discretion” or under a grant of similar authority, the Indemnified
Person shall be entitled to consider such interests and factors as it desires,
including its own interest, and shall have no duty or obligation to give any
consideration to any interest of or factors affecting the LLC or any other
Person, or (ii) in its “good faith” or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Agreement or by applicable
law.


 


Section 12.9.                             Indemnification.  (a)  To
the fullest extent permitted by applicable
law, the Managing Member shall indemnify and hold harmless each
Indemnified Person from and against any loss, damage or claim incurred by such
Indemnified Person by reason of any act or omission performed or omitted by
such Indemnified Person in good faith on behalf of the LLC and in a manner such
Indemnified Person reasonably believed to be within the scope of authority
conferred on such Indemnified Person by this Agreement, except that no
Indemnified Person shall be entitled to be indemnified in respect of any loss,
damage or claim incurred by such Indemnified Person by reason of gross
negligence or willful misconduct with respect to such acts or omissions; provided,
however, that any indemnity under this Section 12.9 shall be provided
out of and to the extent of LLC assets only, and no Covered Person shall have
any personal liability on account thereof.


 


(b)                                 To the fullest extent
permitted by applicable law, expenses (including legal fees) incurred by an
Indemnified Person in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Managing Member prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt by
the Managing Member of an undertaking by or on behalf of the Indemnified Person
to repay such amount if it


 


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shall be
determined that the Indemnified Person is not entitled to be indemnified as
authorized in Section 12.9(a).


 


Section 12.10.                       Tax Matters.


 


(a)                                  The Managing Member shall
cause to be prepared all federal, state and local tax and information returns
of the LLC for each year for which such returns are required to be filed and
shall cause such returns to be filed. 
The Managing Member shall determine the appropriate treatment of each
item of income, gain, loss, deduction and credit of the LLC and the accounting
methods and conventions under the tax laws of the United States, the several
states and other relevant jurisdictions as to the treatment of any such item or
any other method or procedure related to the preparation of such tax
returns.  The Managing Member shall
determine whether to make or refrain from making the election provided for in
Section 754 of the Code, and any and all other elections permitted by the tax
laws of the United States, the several states and other relevant jurisdictions,
in its sole discretion.  The “tax matters
partner” for purposes of Section 6231(a)(7) of the Code shall be the Managing
Member.  The Managing Member shall have
all of the rights, duties, powers and obligations provided for in Sections 6221
through 6232 of the Code with respect to the Company.


 


(b)                                 The Managing Member and
the Holders of Preferred Securities agree to treat the LLC as a partnership
(other than a publicly traded partnership taxable as a corporation) for all tax
purposes and shall not make any election or take any position inconsistent with
such treatment.


 


ARTICLE XIII

PAYMENT OF EXPENSES


 


Section 13.1.                             Payment
of LLC Expenses.


 


(a)                                  In connection with the
offering, sale and issuance of the Preferred Securities by the LLC, the
Managing Member shall pay all expenses of the LLC, including, but not limited
to, the fees and expenses of the Special Representative, if any, the investment
by the LLC in any Affiliate Debt Instrument (but not any losses related to any
non-payment with respect to such investments) and any taxes (other than
withholding taxes, except to the extent described below), duties, assessments
or governmental charges of whatever nature imposed on the LLC by the United
States, or any other taxing authority, so that the net amounts received and
retained by the LLC after paying such expenses shall be equal to the amounts
the LLC would have received had no such costs or expenses been incurred by or
imposed on the LLC. The Managing Member shall be liable for and shall pay all
such expenses solely out of its own funds. 
In the event that the LLC is unable to offset its withholding tax
obligations against distributions to the applicable Member or beneficial owner
as provided under Section 6.6, the Managing Member shall be liable for, and
reimburse the LLC for, such taxes.


 


(b)                                 The Managing Member shall
indemnify parties and hold each of them harmless against any loss, liability or
expense arising out of or in connection with this Agreement and the LLC
Guarantee.


 


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(c)                                  The foregoing obligations
of the Managing Member are for the benefit of, and shall be enforceable by, any
Person to whom any such debts, obligations, costs, expenses and taxes are owed
(each, a “Creditor”) whether or not such Creditor has received notice
thereof.  Any such Creditor may enforce
such obligations of the Managing Member directly against the Managing Member,
and the Managing Member irrevocably waives any right or remedy to require that
any such Creditor take any action against the LLC or any other Person before
proceeding against the Managing Member.


 


ARTICLE XIV

EFFECT OF DEFERRALS


 


Section 14.1.                             Limitation on Company Payments.  So long as any Preferred Securities are
outstanding, if (a) distributions in an amount equal to the Preferred Return
have not been paid to the holders of Preferred Securities or distributions have
not been paid in full to the holders of the Trust Preferred Securities pursuant
to their terms, (b) an event of default or a deferral period occurs and is
continuing on any Affiliate Debt Instrument or (c) the Company is in default of
any of its obligations under the Trust Guarantee, the LLC Guarantee or any
Investment Guarantee, then, during such period the Company shall not, nor shall
the Company permit any of its subsidiaries to:


 


(1)                                  declare
or pay any dividends or distributions on, or redeem, purchase, acquire or make
a liquidation payment with respect to, any capital stock of the Company;


 


(2)                                  make
any payment of principal, interest or premium, if any, on or repay, repurchase
or redeem any of the Company’s debt securities that rank on a parity with (“Parity
Debt Securities”) or junior in interest to the Company Debenture or any
other Affiliate Debt Instrument issued by the Company; or


 


(3)                                  make
any guarantee payments with respect to any guarantee of the Company of the debt
securities of any subsidiary of the Company if such guarantee ranks on a parity
with (“Parity Guarantees”) or junior in interest to the Company
Debenture or any of such Affiliate Debt Instruments;


 


provided, however, that the following shall be permitted:


 


(a)                                  dividends or
distributions in the form of common stock of the Company;


 


(b)                                 payments under the LLC
Guarantee, the Trust Guarantee or any Investment Guarantee;


 


(c)                                  any declaration of a
dividend in connection with the implementation of a shareholders’ rights plan,
or the issuance of stock under any such plan in the future, or the redemption
or repurchase of any such rights pursuant thereto;


 


(d)                                 purchases of common stock
related to the issuance of common stock or rights under any of the Company’s
benefit plans; and


 


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(e)                                  payments of interest on
any of Parity Debt Securities or payments under any Parity Guarantees in
respect of interest payments on debt securities of any subsidiary of the
Company, in each case ratably and in proportion to the respective amount of (x)
accrued and unpaid interest on such Parity Debt Securities or guaranteed by
such Parity Guarantees, on the one hand, and (y) accumulated and unpaid
distributions (including compounded amounts) on the Preferred Securities, on
the other hand.


 


Section 14.2.                             Sale of Stock in the Event of Deferral of Distributions or Mandatory
Deferral Event. 
So long as any Preferred Securities remain outstanding, if (i) on any
Distribution Payment Date, after giving effect to the distribution (if any)
paid on such Distribution Payment Date, the
full amount of Simple Distributions on the Preferred Securities is not paid on
at least 20 scheduled Distribution Payment Dates (whether or not consecutive), the Company shall use its Commercially Reasonable Efforts to sell
its Common Shares or shares of its perpetual preferred stock or (ii) a
Mandatory Deferral Event has occurred and is continuing, the Company shall use
its Commercially Reasonable Efforts to sell its Common Shares or shares of its
Perpetual Deferrable Preferred Stock, in each case in an amount so that the net
proceeds of such sales shall equal any unpaid Preferred Return on such
Distribution Payment Date (the “Required Sale Proceeds”).  Subject to Section 6.2(a) in the event of the
occurrence of a Mandatory Deferral Event, the Required Sale Proceeds shall be
contributed by the Company to the LLC. 
Notwithstanding the foregoing sentence, if the Company is required to
conduct a sale of its Common Shares and/or perpetual preferred stock in order
to pay amounts due and payable under any instrument that is pari passu with the
Preferred Securities or the Trust Preferred Securities, the Company shall pay
to the LLC an amount of the Required Sale Proceeds, the amount of which payment
shall be ratable and in proportion to the respective amount of (x) accrued or
accumulated and unpaid interest or distributions on such pari passu instrument,
on the one hand, and (y) accumulated and unpaid distributions (including
compounded amounts) on the Preferred Securities, on the other hand.


 


ARTICLE XV

TRANSFERS OF INTERESTS BY MEMBERS


 


Section 15.1.                             Transfer of Interests.


 


(a)                                  Preferred Securities are
freely transferable on the books and records of the LLC.


 


(b)                                 Except as provided in the
next sentence, the Managing Member may not assign or transfer its Interest in
the LLC in whole or in part unless, prior to such assignment or transfer, the
Managing Member has obtained the consent of the Holders of not less than
662⁄3% in liquidation preference of the Preferred Securities. The Managing
Member may assign or transfer its Interest in the LLC without such consent only
to an entity that is the survivor of a merger or consolidation of the Managing
Member in a transaction that meets the requirements of Section 2.10. “Permitted
Successor” shall mean an entity that is an assignee or transferee of the
Interest of the Managing Member as permitted by this Section 14.1(b). The
admission of a Permitted Successor as a Managing Member of the LLC shall be
effective upon the filing of an amendment to the Certificate with the Secretary
of State of the State of Delaware that indicates that the Permitted Successor
has been admitted as a Managing Member of the LLC. If the Managing


 


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Member assigns
its entire Interest, the Managing Member shall cease to be a Managing Member of
the LLC simultaneously with the admission of the Permitted Successor as a
Managing Member of the LLC.  Any such
Permitted Successor is hereby authorized to and shall continue the business of
the LLC without dissolution.


 


(c)                                  Except as provided above,
no Interest shall be transferred, in whole or in part, except in accordance
with the terms and conditions set forth in this Agreement. Any transfer or
purported transfer of any Interest not made in accordance with this Agreement
shall be null and void.


 


Section 15.2.                             Definitive Preferred Securities Certificates; Persons Deemed
Preferred Securities Holders.


 


(a)                                  The LLC shall only issue
definitive Preferred Security Certificates to the Preferred Security Holders.


 


(b)                                 The LLC may treat the
Person in whose name any Preferred Security Certificate shall be registered on
the books and records of the LLC as the sole Holder of such Preferred Security
Certificate and of the Preferred Securities represented by such Preferred
Security Certificate for purposes of receiving distributions and for all other
purposes whatsoever (including, without limitation, tax returns and information
reports) and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Preferred Security Certificate or in the
Preferred Securities represented by such Preferred Security Certificate on the
part of any other Person, whether or not the LLC shall have actual or other
notice thereof.


 


Section 15.3.                             Registrar and Paying Agent.


 


(a)                                  The Managing Member shall
act as Registrar and Paying Agent for the Preferred Securities for so long as
the Preferred Securities are held by the Trust.


 


(b)                                 Except in such case where
the Managing Member shall act as Registrar or Paying Agent pursuant to Section
14.4(a) hereof, the LLC shall maintain in the Borough of Manhattan, City of New
York, State of New York (i) an office or agency where Preferred Securities may
be presented for exchange (“Registrar”) and (ii) an office or agency
where Preferred Securities may be presented for payment (“Paying Agent”).
The Registrar shall keep a register of the Preferred Securities and of their
exchange. The LLC may appoint the Registrar and the Paying Agent and may
appoint one or more coregistrars and one or more additional paying agents in
such other locations as it shall determine. The term “Paying Agent” includes
any additional paying agent. The LLC may change any Paying Agent, Registrar or
coregistrar without prior notice to any Holder. If the LLC fails to appoint or
maintain another entity as Registrar or Paying Agent, the Managing Member shall
act as such.


 


ARTICLE XVI

WITHDRAWAL, DISSOLUTION;

LIQUIDATION AND DISTRIBUTION OF ASSETS


 


Section 16.1.                             Withdrawal of Managing Member.  The Managing Member shall not at any time
retire or withdraw from the LLC except as otherwise permitted hereunder. If the


 


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Managing
Member retires or withdraws in contravention of this Section 16.1, it shall
indemnify, defend and hold harmless the LLC and the other Members from and
against any losses, expenses, judgments, fines, settlements or damages suffered
or incurred by the LLC or such other Members arising out of or resulting from
such retirement or withdrawal.


 


Section 16.2.                             Dissolution of the LLC.


 


(a)                                  The LLC shall not be
dissolved by the admission of Members in accordance with the terms of this
Agreement. The death, withdrawal, bankruptcy or dissolution of a Non-Managing
Member, or the occurrence of any other event which terminates the Interest of a
Non-Managing Member in the LLC, shall not, in and of itself, cause the LLC to
be dissolved and its affairs wound up. To the fullest extent permitted by
applicable law, upon the occurrence of any such event, the Managing Member may,
without any further act, vote on approval of any Member, admit any Person to
the LLC as an additional or substitute Non-Managing Member in the LLC, which
admission shall be effective as of the date of the occurrence of such event,
and the business of the LLC shall be continued without dissolution.


 


(b)                                 The LLC shall be
dissolved and its affairs shall be wound up upon the earliest to occur of any
of the following events:


 


(i)                                     upon the bankruptcy or insolvency of the Managing Member;


 


(ii)                                  upon the assignment by the Managing Member of its entire interest in
the LLC when the assignee is not admitted to the LLC as a managing member of
the LLC in accordance with this Agreement or the filing of a certificate of
dissolution or its equivalent with respect to the Managing Member, or the
revocation of the Managing Member’s charter and the expiration of 90 days after
the date of notice to the Managing Member of revocation without a reinstatement
of its charter, or if any other event occurs that causes the Managing Member to
cease to be a managing member of the LLC under the LLC Act, unless the business
of the LLC is continued in accordance with the LLC Act;


 


(iii)                               the entry of a decree of
judicial dissolution under the Act;


 


(iv)                              the LLC has redeemed or otherwise purchased all of the Preferred
Securities;


 


(v)                                 the written consent of all Members;


 


(vi)                              upon the election of the Managing
Member, following the occurrence and continuation of a Special Event;


 


(vii)                           upon written direction of the Special Representative pursuant to
Section 6.3; or


 


(viii)                        the stated maturity of the Preferred Securities on August 19, 2065.


 


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(c)                                  Upon dissolution of the
LLC, the Liquidator shall promptly notify the Members of such dissolution.


 


Section 16.3.                             Liquidation.


 


(a)                                  In the event of the
dissolution of the LLC for any reason, the Managing Member (or, if the LLC is
dissolved pursuant to Section 16.2(b)(i), (ii) or (iii), then a liquidating
agent appointed by the Holders of a Majority in Liquidation Preference of
Preferred Securities (the Managing Member or such Person so appointed is
hereinafter referred to as the “Liquidator”)) shall commence to wind up
the affairs of the LLC and to liquidate the LLC’s assets; provided, however,
that a reasonable time shall be allowed for the orderly liquidation of the
assets of the LLC and the satisfaction of liabilities to creditors so as to
enable the Members to minimize the normal losses attendant upon liquidation.
The Members shall continue to share all income, losses and distributions during
the period of liquidation in accordance with Articles IV and VI.  Subject to the provisions of this Article XV,
the Liquidator shall have full right and unlimited discretion to determine the
time, manner and terms of any sale or sales of LLC property pursuant to such
liquidation in order to make any distributions in cash to creditors, if any, required
by Section 16.4, giving due regard to the activity and condition of the
relevant market and general financial and economic conditions.  The holders of the Preferred Securities and
the Managing Member Interest shall be entitled to receive all remaining assets
of the LLC in kind distributed in accordance with Section 16.4.


 


(b)                                 The Liquidator shall have
all of the rights and powers with respect to the assets and liabilities of the
LLC in connection with the dissolution and termination of the LLC that the
Managing Member would have with respect to the assets and liabilities of the
LLC during the term of the LLC, and the Liquidator is hereby expressly
authorized and empowered to execute any and all documents necessary or
desirable to effectuate the dissolution and termination of the LLC and the
transfer of any assets.


 


(c)                                  Notwithstanding the
foregoing, a Liquidator that is not a Managing Member shall not, by virtue of
acting in such capacity, be deemed a Member in this LLC and shall not have any
of the economic interests in the LLC of a Member; and such Liquidator may be
compensated for its services to the LLC at normal customary and competitive
rates for its services to the LLC as reasonably determined by all the
Non-Managing Members.


 


Section 16.4.                             Distributions in Liquidation.  The assets of the LLC (or the proceeds
thereof) shall be applied in the following order of priority (and without regard to the non-mandatory
provisions of 18-801 of the Act):


 


(i)                                     FIRST, to creditors of the LLC, including Members who are creditors,
to the extent otherwise permitted by law, in satisfaction of the liabilities of
the LLC (whether by payment or the making of reasonable provisions for payment
thereof), other than liabilities for distributions to Members;


 


(ii)                                  SECOND, following any allocations required under Article IV of the
Agreement, to the Holders of the Preferred Securities an amount equal to the


 


44





















 


positive
Capital Account balance of the Preferred Securities until such Capital Account
balance equals zero; and


 


(iii)                               THIRD, following any allocations required under Article IV of the
Agreement, to the Holder of the Managing Member Interest an amount equal to the
positive Capital Account balance of the Managing Member Interest until such
Capital Account balance equals zero.


 


Section 16.5.                             Rights of Non-Managing Members.  Each Non-Managing Member shall look solely to
the assets of the LLC for all distributions with respect to the LLC and such
Member’s capital contribution (including returns thereof), and such Member’s
share of profits or losses thereof, and shall have no recourse therefor (upon
dissolution or otherwise) against the Company, except under the LLC Guarantee.
No Member shall have any right to demand or receive property other than cash
upon dissolution and termination of the LLC.


 


Section 16.6.                             Termination.  The LLC shall terminate when all of the
assets of the LLC shall have been disposed of and the assets shall have been
distributed as provided in Section 15.4 and the Liquidator has executed and
caused to be filed a certificate of cancellation of the LLC.


 


ARTICLE XVII

AMENDMENTS AND MEETINGS


 


Section 17.1.                             General. 
Any of the Preferred Securities that are owned by the Managing Member or
by any of its Affiliates, either directly or indirectly, shall not be entitled
to vote or consent with respect to any Preferred Security owned by it, and
shall, for purposes of such vote or consent, be treated as if they were not
outstanding; provided, however, that Persons otherwise eligible
to vote to whom the Managing Member or any of its subsidiaries have pledged
Preferred Securities may vote or consent with respect to such pledged Preferred
Securities.


 


Section 17.2.                             Amendments.


 


(a)                                  Except as provided by
Article VIII or this Article XVII, this Agreement may be amended by, and only
by, a written instrument executed by the Managing Member without the consent of
any Non-Managing Member; provided, however, that no amendment
shall be made, and any such purported amendment shall be void and ineffective,
to the extent the result thereof would be to (i) cause the LLC to be treated
for United States federal income tax purposes as an association or a publicly
traded partnership taxable as a corporation or (ii) require the LLC to register
as an investment company under the Investment Company Act.


 


(b)                                 If any proposed amendment
of this Agreement provides for, or the Managing Member otherwise proposes to
effect, any amendment that would (i) change the amount or timing of any
distribution of the Preferred Securities or otherwise adversely affect the
amount of any distribution required to be made in respect of the Preferred
Securities as of a specified date or (ii) restrict the right of a Holder of
Preferred Securities to institute suit for the enforcement of any such payment
on or after such date, then the Holders of outstanding Preferred Securities
shall be entitled to vote on such amendment or


 


45





















 


proposal of
the Managing Member (but not on any other amendment or proposal) as a class and
such amendment or proposal shall not be effective except with the approval of
all Holders of outstanding Preferred Securities.


 


(c)                                  If any proposed amendment
of this Agreement provides for, or the Managing Member otherwise proposes to
effect, (i) any action that would adversely affect the rights, preferences or
privileges of the Holders of the Preferred Securities, whether by way of
amendment of this Agreement or otherwise (including, without limitation, the authorization
or issuance of any Non-Managing Membership interests in the LLC ranking, as to
participation in profits or distributions, or in the assets of the LLC, senior
to the Preferred Securities and any amendment of this Section 17.2) or (ii) the
dissolution, winding up or termination of the LLC, other than as described
under Sections 2.10 and 16.2 of this Agreement, then the Holders of outstanding
Preferred Securities shall be entitled to vote on such amendment or proposal of
the Managing Member (but not on any other amendment or proposal) as a class and
such amendment or proposal shall not be effective except with the approval of
Holders of a Majority in Liquidation Preference of Preferred Securities having
a right to vote on the matter; provided, however, that if the
Property Trustee on behalf of the Trust is the Holder of the Preferred
Securities, any such amendment or proposal shall not be effective without the
prior or concurrent approval of the Holders of a majority in liquidation amount
of the outstanding Trust Preferred Securities having a right to vote on such
matters; provided, further, that no such approval shall be
required if the dissolution, winding up or termination of the LLC is proposed
or initiated upon the initiation of proceedings, or after proceedings have been
initiated, for the dissolution, winding up, liquidation or termination of the
Managing Member.


 


(d)                                 Notwithstanding Section
17.2(c), this Agreement may be amended without the consent of the Holders of
the Preferred Securities to:


 


(i)                                     cure any ambiguity or to correct or supplement any provision in this
Agreement that may be defective or inconsistent with any other provision of
this Agreement;


 


(ii)                                  add to the covenants, restrictions or obligations of the Managing
Member;


 


(iii)                               maintain the status of the LLC as a partnership for U.S. federal
income tax purposes;


 


(iv)                              comply with the requirements of the Commission in order to effect or
maintain qualification of the Declaration of Trust or this Agreement under the
Trust Indenture Act or to ensure that the Trust or the LLC is not required to
register as an investment company under the Investment Company Act;


 


(v)                                 modify, eliminate and add to any provision of this Agreement to such
extent as may be deemed necessary or desirable by the Managing Member; provided,
that such modification, elimination or addition does not have a material
adverse effect on the rights, preferences or privileges of the Holders of the
Preferred Securities; or


 


(vi)                              conform the terms of this Agreement to the terms of the Preferred
Securities and the Managing Member Interest as set forth in the Offering
Memorandum


 


46





















 


dated
August 12, 2005, of the Trust and the Company relating to the Trust Preferred
Securities.


 


Section 17.3.                             Amendment of Certificate.  In the event this Agreement shall be amended
pursuant to Section 16.2, the Managing Member shall amend the Certificate to
reflect such change if it deems such amendment
of the Certificate to be
necessary or appropriate.


 


Section 17.4.                             Meetings of Members.


 


(a)                                  Meetings of the
Non-Managing Members who are Holders may be called at any time by the Managing
Member to consider and act on any matter on which Non-Managing Members are
entitled to act under the terms of this Agreement or the Act. The Managing
Member shall call a meeting of Holders if directed to do so by Holders of no
less than 10% in Liquidation Preference as permitted by this Agreement. Such
direction shall be given by delivering to the Managing Member a request in
writing stating that the signing Non-Managing Members desire to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Non-Managing Members calling a meeting shall specify in writing the
Preferred Security Certificates held by the Non-Managing Members exercising the
right to call a meeting and only those specified Interests shall be counted for
purposes of determining whether the required percentage set forth in the second
sentence of this paragraph has been met. Except to the extent otherwise
provided in this Agreement, the following provisions shall apply to meetings of
Members.


 


(b)                                 Notice of any such
meeting shall be given to all Non-Managing Members having a right to vote
thereat not less than seven Business Days nor more than 60 days prior to the
date of such meeting. Each such notice shall set forth the date, time and place
of the meeting or the date by which such action is to be taken, a description
of any matter proposed for adoption at such meeting on which Holders are
entitled to vote or of such matters upon which written consent is sought and
instructions for the delivery of proxies or written consents.


 


(c)                                  Any action that may be
taken at a meeting of the Non-Managing Members may be taken without a meeting
if a consent in writing setting forth the action so taken is signed by
Non-Managing Members owning not less than the minimum Interests that would be
necessary to authorize or take such action at a meeting in which all
Non-Managing Members having a right to vote thereon were present and voting.
Prompt notice of the taking of action without a meeting shall be given to the
Non-Managing Members entitled to vote who have not consented in writing. The
Managing Member may provide that any written ballot submitted to the
Non-Managing Members for the purpose of taking any action without a meeting
shall be returned to the LLC within a specified time.


 


(d)                                 Each Member may authorize
any Person to act for it by proxy on all matters as to which a Member is entitled
to participate, including waiving notice of any meeting, or voting or
participating at a meeting. Every proxy must be signed by the Member or its
attorney-in-fact. No proxy shall be valid after the expiration of 11 months
from the date thereof unless otherwise provided in the proxy. Every proxy shall
be revocable at the pleasure of the Member executing it. Except as otherwise
provided herein, or pursuant to Section 16.4(f), all matters relating to the
giving, voting or validity of proxies shall be governed by the General 


 


47





















 


Corporation
Law of the State of Delaware relating to proxies, and judicial interpretations
thereunder, as if the LLC were a Delaware corporation and the Non-Managing
Members were stockholders of a Delaware corporation.


 


(e)                                  Each meeting of Members
shall be conducted by the Managing Member or by such other Person that the
Managing Member may designate.


 


(f)                                    The Managing Member may
establish all other reasonable procedures relating to meetings of Non-Managing
Members or the giving of written consents, in addition to those expressly
provided, including notice of time, place or purpose of any meeting at which
any matter is to be voted on by any Members, waiver of any such notice, action
by consent without a meeting, the establishment of a Record Date, quorum
requirements, voting in person or by proxy or any other matter with respect to
the exercise of any such right to vote.


 


(g)                                 No vote or consent of the
Holders of the Preferred Securities shall be required for the LLC to redeem and
cancel Preferred Securities in accordance with this Agreement.


 


(h)                                 Holders of Preferred
Securities shall have no rights to remove or replace the Managing Member.


 


ARTICLE XVIII

MISCELLANEOUS


 


Section 18.1.                             Notices. 
All notices provided for in this Agreement shall be in writing, and
shall be delivered or mailed by first class or registered or certified mail or,
with respect to the LLC and Managing Member, telecopied, as follows:


 


(a)                                  if given to the LLC, in
care of the Managing Member at the LLC’s mailing address set forth below:


 


Lehman Brothers Holdings E-Capital LLC I

c/o Lehman Brothers Holdings Inc. 

1301 Avenue of the Americas

New York, New York 10019

Attention:  Corporate Counsel

Facsimile: (212) 526-0339


 


(b)                                 if
given to the Managing Member, at its mailing address set forth below:


 


Lehman Brothers Holdings Inc. 

1301 Avenue of the Americas

New York, New York 10019

Attention: 
Corporate Counsel

Facsimile: (212) 526-0339


 


(c)                                  if given to any other
Member at the address set forth on the books and records of the LLC.


 


48





















 


Section 18.2.                             Power of Attorney.  Each Holder of a Preferred Security does
hereby constitute and appoint the Managing Member, and if applicable, any Special Representative
appointed pursuant to Section 8.1 of this Agreement, as its true and lawful
representative and attorney-in-fact, in its name, place and stead to make,
execute, sign, deliver and file (a) any amendment of the Certificate required
because of an amendment of this Agreement or in order to effect any change in
the LLC, (b) this Agreement, (c) any amendments to this Agreement and (d) all
such other instruments, documents and certificates which from time to time may
be required by the laws of the United States of America, the State of Delaware
or any other jurisdiction, or any political subdivision or agency thereof, to
effectuate, implement and continue the valid and subsisting existence of the
LLC or to dissolve the LLC for any other purpose consistent with this Agreement
and the transactions contemplated hereby.


 


The power of attorney granted
hereby is coupled with an interest and shall
(a) survive and not be affected
by the subsequent death, incapacity, disability, dissolution,
termination, or bankruptcy of the Holder granting the same or the transfer of
all or any portion of such Holder’s Interest and (b) extend to such Holder’s
successors, assigns and legal representatives.


 


Section 18.3.                             Entire Agreement.  This Agreement constitutes the entire
agreement among the parties. It supersedes any prior agreement or
understandings among them, and it may not be modified or amended in any manner
other than as set forth herein.


 


Section 18.4.                             GOVERNING LAW.  THIS AGREEMENT AND THE RIGHTS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAW OF
THE STATE OF DELAWARE AND ALL RIGHTS AND REMEDIES SHALL BE GOVERNED BY SUCH
LAWS WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.


 


Section 18.5.                             Effect. 
Except as herein otherwise specifically provided, this Agreement shall
be binding upon and inure to the benefit of the parties and their legal
representatives, successors and assigns.


 


Section 18.6.                             Pronouns and Number.  Wherever
from the context it appears appropriate, each term stated in either the
singular or the plural shall include the singular and the plural, and pronouns
stated in either the masculine, feminine or neuter shall include the masculine,
feminine and neuter.


 


Section 18.7.                             Captions.  Captions, headings, and subheadings contained
in this Agreement are included for convenience and identification purposes only
and in no way define, limit or extend the scope or intent of this Agreement or
any provision herein.


 


Section 18.8.                             Partial Enforceability.  If any provision
of this Agreement, or the application of such provision to any Person or circumstance, shall be held invalid,
the remainder of this Agreement, or the application of such provision to
Persons or circumstances other than those to which it is held invalid, shall
not be affected thereby.


 


Section 18.9.                             Counterparts.  This Agreement may contain more than one
counterpart of the signature page and this Agreement may be executed by the
affixing of the


 


49


















 


signature of each of the Members to one of
such counterpart signature pages. All of such counterpart signature pages shall
be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page.


 


Section 18.10.        Waiver of Partition. 
Each Member hereby irrevocably
waives any and all rights (if any) that such Member may have to maintain
any action for partition of any of the LLC’s property.


 


Section 18.11.        Remedies. 
The failure
of any party to seek redress for violation of, or to insist upon the
strict performance of, any provision of this Agreement shall not prevent a
subsequent act, which would have originally constituted a violation, from
having the effect of an original violation. The rights and remedies provided by
this Agreement are cumulative and the use of any one right or remedy by any
party shall not preclude or waive its right to use any or all other remedies.
Said rights and remedies are given in addition to any other rights the parties
may have by law, statute, ordinance or otherwise.


 


50





















 


IN WITNESS
WHEREOF, the parties hereto have executed this
Agreement as of the date first above stated.


 


	
   

  	
  MANAGING
  MEMBER:

  
	
   

  	
   

  
	
   

  	
  Lehman Brothers Holdings Inc.,

  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
     /s/ Barrett S. DiPaolo

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barrett S.
  DiPaolo

  
	
   

  	
   

  	
  Title:

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NON-MANAGING
  MEMBER:

  
	
   

  	
   

  
	
   

  	
  Lehman
  Brothers Holdings E-Capital Trust I

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
      /s/ Barrett S. DiPaolo

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barrett S.
  DiPaolo

  
	
   

  	
   

  	
  Title:

  	
  Regular
  Trustee

  
						



 


51





















 


SCHEDULE 1


 


LIST OF MEMBERS


 


	
  Lehman Brothers Holdings Inc.

  	
   

  	
  MANAGING MEMBER

  
	
   

  	
   

  	
   

  
	
  Lehman Brothers Holdings E-Capital Trust I

  	
   

  	
  NON-MANAGING MEMBER

  



 





















 


ANNEX A


 


FORM OF
PREFERRED SECURITY CERTIFICATE


 


PS-1


 


Certificate Evidencing


 


300,001 Preferred Securities


 


of


 


Lehman Brothers Holdings E-Capital LLC I


 


Floating Rate Preferred Securities


(liquidation preference of $1,000 per
Preferred Security)


 


Lehman Brothers Holdings E-Capital LLC I, a
limited liability company formed under the laws of the State of Delaware (the “LLC”),
hereby certifies that JPMorgan Chase Bank, N.A., a property trustee pursuant to
the Declaration of Trust of Lehman Brothers Holdings E-Capital Trust I, dated
August 19, 2005 (the “Holder”), is the registered owner of preferred
Interests of the LLC representing Non-Managing Member Interests in the LLC
designated the Floating Rate Preferred Securities (liquidation preference of
$1,000 per Preferred Security) (the “Preferred Securities”).  The Preferred Securities are freely
transferable on the books and records of the LLC, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer.  The
designation, rights, powers, privileges, restrictions, preferences and other
terms and provisions of the Preferred Securities represented hereby are set
forth in, issued under and shall in all respects be subject to the provisions
of the Limited Liability Company Agreement of Lehman Brothers Holdings
E-Capital LLC I dated as of August 19, 2005, as the same may be amended from
time to time (the “LLC Agreement”). 
Capitalized terms used herein but not defined shall have the meaning
given them in the LLC Agreement.  The
Holder is entitled to the benefits of the LLC Guarantee to the extent provided
therein.  The LLC shall provide a copy of
the LLC Agreement and the LLC Guarantee to a Holder without charge upon written request to the LLC at its
principal place of business.


 


Upon receipt of this certificate, the Holder
is admitted to the LLC as a Non-Managing
Member, is bound by the LLC Agreement and is entitled to the benefits
thereunder.  Each Holder of a Preferred
Security, by acceptance of this Certificate and each Certificate owner, by
acquisition of a beneficial interest in a Certificate, agrees to treat the
Company Debenture, and any other Affiliate Debt Instruments that are treated as
debt instruments by the relevant Investment Affiliates and by the LLC as indebtedness
for United States federal income tax purposes. 
The Holders of Preferred Securities agree to treat the LLC as a
partnership (other than a publicly traded partnership taxable as a corporation)
for all tax purposes.


 





















 


IN WITNESS WHEREOF, the LLC has executed this
certificate this     th day of
                      ,
2005.


 


	
   

  	
  Lehman
  Brothers Holdings E-Capital LLC I

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: Lehman
  Brothers Holdings Inc.,

  
	
   

  	
   

  	
  as Managing
  Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Barrett S.
  DiPaolo

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (See reverse
  for additional terms)

  
						



 


2





















 


[REVERSE OF SECURITY]


 


Distributions are payable on each Preferred
Security and shall accumulate as described in the LLC Agreement.  Distributions on the Preferred Securities
shall only be made to the extent that the LLC has funds legally available for
the payment of such distributions.


 


Except as otherwise described herein,
distributions on the Preferred Securities shall be cumulative, shall accumulate
from the date of initial issuance and. shall be payable quarterly in
arrears in cash, on February 19, May 19, August 19 and November 19 of each
year, commencing on November 21, 2005, subject to Article VI of the
Agreement.  If the Trust Preferred
Securities are in book-entry-only form, distributions shall be payable to the
Holders of record of Preferred Securities as they appear on the books and
records of the LLC on the relevant Record Dates, which shall be one Business
Day prior to the relevant payment dates. 
If the Trust or the Property Trustee is the Holder of the Preferred
Securities, all distributions of cash shall be made by wire transfer of same
day funds to such Holder by 10:00 a.m., New York City time, on the applicable
Distribution Payment Date.  Distributions
payable on any Preferred Securities that are not punctually paid on any
Distribution Payment Date shall cease to be payable to the Person in whose name
such Preferred Securities are registered on the relevant Record Date, and such
distribution shall instead be payable to the Person in whose name such
Preferred Securities are registered on the special Record Date or other
specified date for payment of such defaulted or accumulated distribution.  If the Trust Preferred Securities are not in
book-entry-only form, the relevant Record Dates shall be as determined by the
Managing Member; provided, that such date shall be at least one Business
Day prior to the relevant payment dates. 
In the event that any date on which
distributions are payable is not a Business Day and a London Business Day,
payment of such distribution shall be made on the next succeeding day which is
a Business Day and a London Business Day unless such day falls in the next
calendar month, in which case the distribution payment date shall be the
immediately preceding Business Day and London Business Day.  Distributions will accrue to the date that
such distributions are actually paid.


 


The Preferred Securities shall be redeemable
as provided in the LLC Agreement.


 


3





















 










 


ASSIGNMENT


 


FOR VALUE RECEIVED, the undersigned assigns
and transfers this Preferred Security Certificate to:


 


	
   

  
	
   

  
	
  (Insert assignee’s social security or tax identification number)

  
	
   

  
	
   

  
	
   

  
	
  (Insert address and zip code of assignee)

  
	
   

  
	
  and
  irrevocably appoints

  
	
   

  
	
   

  	
   agent to

  
	
  transfer
  this Preferred Security Certificate on the books of the LLC. The agent may
  substitute another to act for him or her.

  
	
   

  
	
   

  
	
  Date:

  	
   

  	
   

  
	
  Signature:

  	
   

  	
   

  
	
  (Sign
  exactly as your name appears on the other side of this Preferred Security
  Certificate)

  
					



 





















 


EXHIBIT
A


 


Form of Indenture of Company


 


2





















 


EXHIBIT
B


 


Form of Language for Investment Guarantee


 


Except as otherwise set forth in a
supplemental indenture or provided in or pursuant to a Board Resolution and set
forth in an Officers’ Certificate, the Company hereby unconditionally
guarantees to the Holder of the Securities of each series authenticated and
delivered by the Trustee, and to the Trustee all payments due to the Trustee
from the Affiliates of the Company, and on behalf of each such Holder, the due
and punctual payment of the principal (including any amount in respect of
original issue discount) of, and premium, if any, and interest, if any, on such
Securities and the due and punctual payment of the sinking fund payments, if
any, and analogous obligations, if any, provided for pursuant to the terms of
such Securities, when and as the same shall become due and payable, whether at
maturity or upon redemption or upon declaration of acceleration or otherwise,
according to the terms of such Securities and of the Indenture and this
Supplemental Indenture.  The Company
agrees that in case of default by the Company in the payment of any such
principal (including any amount in respect of original issue discount),
premium, interest, sinking fund payment, or analogous obligation, the Company
shall duly and punctually pay the same, as if such payment were made by the
Company.  The Company hereby agrees that
its obligations hereunder shall be absolute and unconditional, irrespective of
any extension of the time for payment of any such Security, any modification of
any such Security or any supplemental indenture or Board Resolution and
Officers’ Certificate relating thereto, any invalidity, irregularity or
unenforceability of any such Security or the Indenture or this Supplemental
Indenture, any failure or delay to enforce the same or any waiver,
modification, consent or indulgence granted to the Company with respect thereto
by the Holder of such Security or the Trustee, or any other circumstances which
may otherwise constitute a legal or equitable discharge of a surety or
guarantor.


 


The Company further agrees that the
Investment Guarantee herein constitutes a guarantee of payment when due (and
not a guarantee of collection) and waives (to the extent that it may lawfully
do so) any right to require that any resort be had by any Holder or the Trustee
to any security held for payment of the Investment Guarantee.


 


The Company hereby waives (to the extent that
it may lawfully do so) diligence, presentment, demand of payment, filing of
claims with a court in the event of merger or bankruptcy of the Company, any
right to require a demand or proceeding first against the Company, protest or
notice with respect to any such Security or the indebtedness evidenced thereby
and all demands whatsoever, and covenants that this Investment Guarantee shall
not be discharged as to any such Security except by payment in full of the
principal (including any amount payable in respect of original issue discount)
of, and premium, if any, and interest, if any, and payment of the sinking fund
payments, if any, and analogous obligations, if any, thereon.


 


The Company agrees that the Investment Guarantee
with respect to each series of Securities shall remain in full force and effect
until payment in full of all the Securities of such series. The Company further
agrees that the Investment Guarantee herein shall continue to be effective or
be reinstated, as the case may be, if at any time payment, or any part thereof,
of the principal (including any amount payable in respect of original issue
discount) of, and premium, if


 


3





















 


any, and interest, if any, and
payment of the sinking fund payments, if any, and analogous obligations, if
any, on any series of Securities is rescinded or must otherwise be restored by
any Holder or the Trustee upon the bankruptcy or reorganization of the Company
or otherwise.


 


The Company further agrees that, as between
it, on the one hand, and the Holders and the Trustee, on the other hand, (x)
the maturity of the obligations guaranteed hereby may be accelerated for the
purposes of any Investment Guarantee herein, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of the obligations guaranteed hereby, such obligations (whether or
not due and payable) shall forthwith become due and payable by the Company for
the purposes of this Section.


 


The Company shall be subrogated to all rights
of the Holders of the Securities of a series against the Company in respect of
any amounts paid by the Company on account of such Security pursuant to the
provisions of the Investment Guarantees or this Indenture; provided, however,
that the Company agrees that it shall not be entitled to any right of
subrogation in relation to the Holders until payment in full of the principal
(including any amount payable in respect of original issue discount) of, and
premium, if any, and interest, if any, and payment of the sinking fund
payments, if any, and analogous obligations, if any, on all Securities of such
series.  The Company hereby waives (to
the extent that it may lawfully do so) any and all rights to which it may be
entitled, by operation of law or otherwise, upon making any payment hereunder
(i) any right to which it may be entitled to have the assets of the Company
first be used and depleted as payment of the Company’s or the Company’s
obligations hereunder prior to any amounts being claimed from or paid by the
Company hereunder; or (ii) to receive any payment, in the nature of
contribution or for any other reason, from any other obligor with respect to
such payment.


 


4