Exhibit 4.10


 


Execution
Copy


 




 





TRUST GUARANTEE AGREEMENT


 


LEHMAN BROTHERS HOLDINGS E-CAPITAL TRUST I


 




Dated as of August 19, 2005


 





 





















 


CROSS REFERENCE TABLE*


 


	
  Section of Trust

  Indenture Act of

  1939, as amended

  	
   

  	
  Section of

  Guarantee

  Agreement

  
	
  310(a)

  	
   

  	
  4.1(a)

  
	
  310(b)

  	
   

  	
  2.8; 4.1(c)

  
	
  310(c)

  	
   

  	
  Inapplicable

  
	
  311(a)

  	
   

  	
  2.2(b)

  
	
  311(b)

  	
   

  	
  2.2(b)

  
	
  311(c)

  	
   

  	
  Inapplicable

  
	
  312(a)

  	
   

  	
  2.2(a); 2.9

  
	
  312(b)

  	
   

  	
  2.2(b); 2.9

  
	
  312(c)

  	
   

  	
  2.9

  
	
  313(a)

  	
   

  	
  2.3

  
	
  313(b)

  	
   

  	
  2.3

  
	
  313(c)

  	
   

  	
  2.3

  
	
  313(d)

  	
   

  	
  2.3

  
	
  314(a)

  	
   

  	
  2.4

  
	
  314(b)

  	
   

  	
  Inapplicable

  
	
  314(c)

  	
   

  	
  2.5

  
	
  314(d)

  	
   

  	
  Inapplicable

  
	
  314(e)

  	
   

  	
  2.5

  
	
  314(f)

  	
   

  	
  Inapplicable

  
	
  315(a)

  	
   

  	
  3.1(d);
  3.2(a)

  
	
  315(b)

  	
   

  	
  2.7(a)

  
	
  315(c)

  	
   

  	
  3.1(c)

  
	
  315(d)

  	
   

  	
  3.1(d)

  
	
  316(a)

  	
   

  	
  2.6; 5.4(a)

  
	
  316(b)

  	
   

  	
  5.3

  
	
  316(c)

  	
   

  	
  Inapplicable

  
	
  317(a)

  	
   

  	
  2.10

  
	
  317(b)

  	
   

  	
  Inapplicable

  
	
  318(a)

  	
   

  	
  2.1(b)

  



 










*                                         This
Cross-Reference Table does not constitute part of the Agreement and shall not
have any bearing upon the interpretation of any of its terms or provisions.


 


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Table of Contents


 


	
  ARTICLE I

  INTERPRETATION AND DEFINITIONS

  
	
   

  	
   

  	
   

  
	
  SECTION 1.1.

  	
  Interpretation
  and Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  TRUST INDENTURE ACT

  
	
   

  	
   

  	
   

  
	
  SECTION 2.1.

  	
  Trust Indenture
  Act; Application

  	
   

  
	
  SECTION 2.2.

  	
  Lists of Holders
  of Securities

  	
   

  
	
  SECTION 2.3.

  	
  Reports by the
  Trust Guarantee Trustee

  	
   

  
	
  SECTION 2.4.

  	
  Periodic Reports
  to Trust Guarantee Trustee

  	
   

  
	
  SECTION 2.5.

  	
  Evidence of
  Compliance with Conditions Precedent

  	
   

  
	
  SECTION 2.6.

  	
  Events of Default;
  Waiver

  	
   

  
	
  SECTION 2.7.

  	
  Event of Default;
  Notice

  	
   

  
	
  SECTION 2.8.

  	
  Conflicting
  Interests

  	
   

  
	
  SECTION 2.9.

  	
  Disclosure of
  Information

  	
   

  
	
  SECTION 2.10.

  	
  Trust
  Guarantee Trustee May File Proofs of Claim

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  POWERS, DUTIES AND RIGHTS OF

  TRUST GUARANTEE TRUSTEE

  
	
   

  	
   

  	
   

  
	
  SECTION 3.1.

  	
  Powers
  and Duties of the Trust Guarantee Trustee

  	
   

  
	
  SECTION 3.2.

  	
  Certain
  Rights of Trust Guarantee Trustee

  	
   

  
	
  SECTION 3.3.

  	
  Not
  Responsible for Recitals or Issuance of Trust Guarantee

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  TRUST GUARANTEE TRUSTEE

  
	
   

  	
   

  	
   

  
	
  SECTION 4.1.

  	
  Trust
  Guarantee Trustee; Eligibility

  	
   

  
	
  SECTION 4.2.

  	
  Appointment,
  Removal and Resignation of Trust Guarantee Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  GUARANTEE

  
	
   

  	
   

  	
   

  
	
  SECTION 5.1.

  	
  Guarantee

  	
   

  
	
  SECTION 5.2.

  	
  Waiver
  of Notice and Demand

  	
   

  
	
  SECTION 5.3.

  	
  Obligations
  Not Affected

  	
   

  
	
  SECTION 5.4.

  	
  Rights of
  Holders

  	
   

  
	
  SECTION 5.5.

  	
  Guarantee
  of Payment

  	
   

  
	
  SECTION 5.6.

  	
  Subrogation

  	
   

  
	
  SECTION 5.7.

  	
  Independent
  Obligations

  	
   

  



 


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  ARTICLE VI

  SUBORDINATION

  
	
   

  	
   

  	
   

  
	
  SECTION 6.1.

  	
  Ranking

  	
   

  
	
  SECTION 6.2.

  	
  Subordination
  of Common Securities

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  TERMINATION

  
	
   

  	
   

  	
   

  
	
  SECTION 7.1.

  	
  Termination

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  INDEMNIFICATION

  
	
   

  	
   

  	
   

  
	
  SECTION 8.1.

  	
  Exculpation

  	
   

  
	
  SECTION 8.2.

  	
  Indemnification

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  SECTION 9.1.

  	
  Successors
  and Assigns

  	
   

  
	
  SECTION 9.2.

  	
  Amendments

  	
   

  
	
  SECTION 9.3.

  	
  Notices

  	
   

  
	
  SECTION 9.4.

  	
  Benefit

  	
   

  
	
  SECTION 9.5.

  	
  Governing Law

  	
   

  



 


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TRUST
GUARANTEE AGREEMENT


 


This TRUST
GUARANTEE AGREEMENT (the “Trust Guarantee”), dated as of August 19,
2005, is executed and delivered by Lehman Brothers Holdings Inc., a Delaware
corporation (the “Guarantor”), and JPMorgan Chase Bank, N.A., as trustee
(the “Trust Guarantee Trustee”), for the benefit of the Holders (as
defined herein) from time to time of the Trust Securities (as defined herein)
of Lehman Brothers Holdings E-Capital Trust I, a Delaware statutory trust (the “Trust”).


 


WHEREAS,
pursuant to the Declaration of Trust (as defined herein), the Trust is issuing
preferred securities, having a liquidation amount of $1,000 per security,
designated the Floating Rate Enhanced Capital Advantaged Preferred Securities
(the “Original Trust Preferred Securities” and together with the New
Trust Preferred Securities (as defined below), the “Trust Preferred
Securities”) to the Initial Purchasers pursuant to the Purchase Agreement,
and common securities, having a liquidation amount of $1,000 per security and
designated the Trust Common Securities (the “Trust Common Securities”);


 


WHEREAS, the
Original Trust Preferred Securities may be exchanged pursuant to the exchange
offer contemplated by the Registration Rights Agreement for new securities (the
“Exchange Trust Preferred Securities” and together with the Original
Trust Common Securities and the Original Trust Preferred Securities, the “Trust
Securities”);


 


WHEREAS, as
incentive for the Holders to purchase the Trust Securities, the Guarantor
desires irrevocably and unconditionally to agree, to the extent set forth in
this Trust Guarantee, to pay to the Holders of the Trust Securities the
Guarantee Payments (as defined herein) and to make certain other payments on
the terms and conditions set forth herein.


 


NOW,
THEREFORE, in consideration of the purchase by each Holder of Trust Securities,
which purchase the Guarantor hereby agrees shall benefit the Guarantor, the
Guarantor executes and delivers this Trust Guarantee for the benefit of the
Holders.


 


ARTICLE I

INTERPRETATION AND DEFINITIONS


 


SECTION 1.1.                                          Interpretation
and Definitions


 


In
this Trust Guarantee, unless the context otherwise requires:


 


(a)           capitalized terms used in this Trust
Guarantee but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;


 


(b)           capitalized terms used in this Trust
Guarantee but not otherwise defined herein shall have the meanings assigned to
them in the Declaration of Trust or the LLC Agreement, as the case may be;


 


(c)           a term defined anywhere in this Trust
Guarantee has the same meaning throughout;


 





















 


(d)           all references to “the Trust
Guarantee” or “this Trust Guarantee” are to this Trust Guarantee as modified,
supplemented or amended from time to time;


 


(e)           all references in this Trust
Guarantee to Articles and Sections are to Articles and Sections of this Trust
Guarantee, unless otherwise specified;


 


(f)            unless otherwise defined in this
Trust Guarantee, a term defined in the Trust Indenture Act has the same meaning
when used in this Trust Guarantee;


 


(g)           a reference to the singular includes
the plural and vice versa and a reference to any masculine form of a term shall
include the feminine form of such term, as applicable; and


 


(h)           the following terms have the
following meanings:


 


“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.


 


“Business
Day” means any 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.


 


“Covered
Person” means any Holder or beneficial owner of Trust Securities.


 


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


 


“Event of
Default” means a default by the Guarantor on any of its payment or other
obligations under this Trust Guarantee.


 


“Global
Security” means a fully registered, global Trust Preferred Security.


 


“Guarantee
Payments” means the following payments or distributions, without
duplication, with respect to the Trust Securities, to the extent not paid by or
on behalf of the Trust: (i) any accumulated and unpaid distributions on
such Trust Securities to the extent the Trust has sufficient funds available
therefor at the time, (ii) the Redemption Price with respect to any Trust
Securities called for redemption by the Trust to the extent the Trust has
sufficient funds available therefor at the time and (iii) upon a voluntary
or involuntary dissolution, winding up or termination of the Trust (other than
in connection with the redemption of all of the Trust Preferred Securities),
the lesser of (a) the aggregate of the liquidation amount and all
accumulated and unpaid Distributions (as defined in the Declaration of Trust)
on the Trust


 


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Securities to the date of payment, to the
extent the Trust has sufficient funds available therefor at the time and (b) the
amount of assets of the Trust, after satisfaction of all liabilities, remaining
available for distribution to Holders upon dissolution of the Trust (the “Liquidation
Distribution”).


 


“Holder”
means any holder of Trust Securities, as registered on the books and records of
the Trust; provided, however, that, in determining whether the
Holders of the requisite percentage of Trust Preferred Securities have given
any request, notice, consent or waiver hereunder, “Holder” shall not include
the Guarantor or any Affiliate of the Guarantor or any other obligor on the
Trust Securities.


 


“Indemnified
Person” means the Trust Guarantee Trustee, any Affiliate of the Trust
Guarantee Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives, nominees, custodians or agents of the Trust
Guarantee Trustee.


 


“Initial
Purchasers” means Lehman Brothers Inc., Zions Investment Securities, Inc.
and SunTrust Capital Markets, Inc.


 


“LLC”
means Lehman Brothers Holdings E-Capital LLC I, a Delaware limited liability
company.


 


“LLC
Agreement” means the Limited Liability Company Agreement dated as of August 19,
2005 of the LLC.


 


“LLC Preferred
Securities” has the meaning set forth in the preamble to the LLC Guarantee
Agreement by the Company, as guarantor, dated as of August 19, 2005.


 


“Majority
in Liquidation Amount of the Trust Preferred Securities” means, except as
provided in the terms of the Trust Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Preferred Securities, voting
together as a single class, who are the record owners of more than 50% of the
aggregate liquidation amount of all outstanding Trust Preferred
Securities.  In determining whether the
Holders of the requisite amount of Trust Preferred Securities have voted, Trust
Preferred Securities that are owned by the Guarantor or any Affiliate of the
Guarantor or any other obligor on the Trust Securities shall be disregarded for
the purpose of any such determination.


 


“Officers’
Certificate” means, with respect to any Person, a certificate signed on
behalf of such Person by two Authorized Officers of such Person.  Any Officers’ Certificate delivered with
respect to compliance with a condition or covenant provided for in this Trust
Guarantee shall include:


 


(a)           a statement that each officer signing the Officers’
Certificate has read the covenant or condition and the definitions relating
thereto;


 


(b)           a brief statement of the nature and scope of the
examination or investigation undertaken by each officer on behalf of such
Person in rendering the Officers’ Certificate;


 


3





















 


(c)           a statement that each such officer has made such
examination or investigation as, in such officer’s opinion, is necessary to
enable such officer on behalf of such Person to express an informed opinion as
to whether or not such covenant or condition has been complied with; and


 


(d)           a statement as to whether, in the opinion of each such
officer on behalf of such Person, such condition or covenant has been complied
with.


 


“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.


 


“Property
Trustee” means the Trustee meeting the eligibility requirements set forth
in Section 6.3 of the Declaration of Trust until a Successor Property
Trustee has been appointed and has accepted such appointment pursuant to the
terms of the Declaration of Trust and thereafter means each such Successor
Property Trustee.  The Property Trustee
shall initially be JPMorgan Chase Bank, N.A.


 


“Purchase
Agreement” means the Purchase Agreement dated as of August 12, 2005 by
and among the Guarantor, the Trust and the LLC and the Initial Purchasers.


 


“Registration
Rights Agreement” means the Registration Rights Agreement dated as of August 19,
2005 by and among the Guarantor, the Trust and the LLC and the Initial
Purchasers.


 


“Responsible
Officer” means, with respect to the Trust Guarantee Trustee, any officer
with direct responsibility for the administration of this Trust Guarantee and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer’s knowledge of
and familiarity with the particular subject.


 


“Successor
Trust Guarantee Trustee” means a successor Trust Guarantee Trustee
possessing the qualifications to act as Trust Guarantee Trustee under Section 4.1.


 


“Trust
Indenture Act” means the Trust Indenture Act of 1939, as amended from time
to time, or any successor legislation.


 


ARTICLE II

TRUST INDENTURE ACT


 


SECTION 2.1.                                          Trust
Indenture Act; Application


 


(a)           This Trust Guarantee
is subject to the provisions of the Trust Indenture Act that are required to be
part of this Trust Guarantee and shall, to the extent applicable, be governed
by such provisions.


 


4





















 


(b)           If and to the extent
that any provision of this Trust Guarantee limits, qualifies or conflicts with
the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture
Act, such imposed duties shall control.


 


SECTION 2.2.                                          Lists of
Holders of Securities


 


(a)           The Guarantor shall
provide the Trust Guarantee Trustee (i) except while the Trust Preferred
Securities are represented by one or more Global Securities at least one
Business Day prior to the date for payment of distributions, a list, in such
form as the Trust Guarantee Trustee may reasonably require, of the names and
addresses of the Holders of the Trust Preferred Securities (“List of Holders”)
as of the record date relating to the payment of such distributions and (ii) at
any other time, within 30 days of receipt by the Guarantor of a written request
from the Trust Guarantee Trustee for a List of Holders as of a date no more
than 15 days before such List of Holders is given to the Trust Guarantee
Trustee; provided that the Guarantor shall not be obligated to provide
such List of Holders at any time the List of Holders does not differ from the
most recent List of Holders given to the Trust Guarantee Trustee by the
Guarantor.  The Trust Guarantee Trustee
shall preserve, in as current a form as is reasonably practicable, all
information contained in Lists of Holders given to it, provided that the Trust
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.


 


(b)           The Trust Guarantee
Trustee shall comply with its obligations under Sections 311(a), 311(b) and
312(b) of the Trust Indenture Act.


 


SECTION 2.3.                                          Reports by
the Trust Guarantee Trustee


 


Within 60 days
after May 15 of each year, the Trust Guarantee Trustee shall provide to
the Holders of the Trust Securities such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313
of the Trust Indenture Act.  The Trust
Guarantee Trustee shall also comply with the requirements of Section 313(d) of
the Trust Indenture Act.


 


SECTION 2.4.                                          Periodic
Reports to Trust Guarantee Trustee


 


The Guarantor
shall provide to the Trust Guarantee Trustee such documents, reports and
information as required by Section 314(a) of the Trust Indenture Act
(if any) and the compliance certificate required by Section 314(a) of
the Trust Indenture Act in the form, in the manner and at the times required by
Section 314(a) of the Trust Indenture Act.


 


SECTION 2.5.                                          Evidence
of Compliance with Conditions Precedent


 


The Guarantor
shall provide to the Trust Guarantee Trustee such evidence of compliance with
any conditions precedent, if any, provided for in this Trust Guarantee that
relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act.  Any certificate or
opinion required to be given by an officer pursuant to Section 314(c)(1) may
be given in the form of an Officers’ Certificate.


 


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SECTION 2.6.                                          Events of
Default; Waiver


 


The Holders of
a Majority in Liquidation Amount of Trust Preferred Securities may, by vote or
written consent, on behalf of the Holders of all of the Trust Securities, waive
any past Event of Default and its consequences. 
Upon such waiver, any such Event of Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Trust Guarantee, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.


 


SECTION 2.7.                                          Event of
Default; Notice


 


(a)           The Trust Guarantee
Trustee shall, within 90 days after the occurrence of an Event of Default,
transmit by mail, first class postage prepaid, to the Holders of the Trust
Preferred Securities, notices of all Events of Default actually known to a
Responsible Officer of the Trust Guarantee Trustee, unless such defaults have
been cured before the giving of such notice; provided that the Trust
Guarantee Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer of the Trust Guarantee Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders of the Trust Preferred Securities.


 


(b)           The Trust Guarantee
Trustee shall not be deemed to have knowledge of any Event of Default unless
the Trust Guarantee Trustee shall have received written notice, or of which a
Responsible Officer of the Trust Guarantee Trustee charged with the
administration of the Declaration of Trust shall have obtained actual
knowledge.


 


SECTION 2.8.                                          Conflicting
Interests


 


The
Declaration of Trust shall be deemed to be specifically described in this Trust
Guarantee for the purposes of clause (i) of the first proviso contained in
Section 310(b)(1) of the Trust Indenture Act. Nothing herein shall
prevent the Trust Guarantee Trustee from filing with the Commission the
application referred to in the penultimate paragraph of Section 310(b) of
the Trust Indenture Act.  In determining
whether the Trust Guarantee Trustee has a conflicting interest as defined in Section 310(b) of
the Trust Indenture Act with respect to the Trust Securities or the Trust
Guarantee in respect of such Trust Securities, there shall be excluded (i) all
series of securities of any Investment Affiliate issued or issuable under an
Indenture, (ii) this Trust Guarantee and the LLC Guarantee and (iii) (A) the
Declaration of Trust and (B) the LLC Agreement.


 


SECTION 2.9.        Disclosure of Information


 


The disclosure of information as to the names and addresses of the
Holders of the Securities in accordance with Section 312 of the Trust
Indenture Act, regardless of the source from which such information was
derived, shall not be deemed to be a violation of any existing law, or any law
hereafter enacted which does not specifically refer to Section 312 of the
Trust Indenture Act, nor shall the Trust Guarantee Trustee be held accountable
by reason of mailing any material pursuant to a request made under Section 312(b) of the
Trust Indenture Act.


 


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SECTION 2.10.                                    Trust Guarantee
Trustee May File Proofs of Claim


 


Upon the
occurrence of an Event of Default, the Trust Guarantee Trustee is hereby
authorized to (a) recover judgment, in its own name and as trustee of an
express trust, against the Guarantor for the whole amount of any Guarantee
Payments remaining unpaid and (b) file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have its
claims and those of the Holders of the Trust Securities allowed in any judicial
proceedings relative to the Guarantor, its creditors or its property.


 


ARTICLE III

POWERS, DUTIES AND RIGHTS OF

TRUST GUARANTEE TRUSTEE


 


SECTION 3.1.                                          Powers and
Duties of the Trust Guarantee Trustee


 


(a)           This Trust Guarantee
shall be held by the Trust Guarantee Trustee for the benefit of the Holders of
the Trust Securities, and the Trust Guarantee Trustee shall not transfer this
Trust Guarantee to any Person except a Holder of Trust Securities exercising
his or her rights pursuant to Section 5.4(b) or to a Successor Trust
Guarantee Trustee on acceptance by such Successor Trust Guarantee Trustee of
its appointment to act as Successor Trust Guarantee Trustee.  The right, title and interest of the Trust
Guarantee Trustee in and to this Trust Guarantee shall automatically vest in
any Successor Trust Guarantee Trustee, and such vesting and succession of title
shall be effective whether or not conveyance documents have been executed and
delivered pursuant to the appointment of such Successor Trust Guarantee Trustee.


 


(b)           If an Event of
Default actually known to a Responsible Officer of the Trust Guarantee Trustee
has occurred and is continuing, the Trust Guarantee Trustee shall enforce this
Trust Guarantee for the benefit of the Holders of the Trust Securities.


 


(c)           The Trust Guarantee
Trustee, before the occurrence of any Event of Default and after the curing or
waiver of all Events of Default that may have occurred, shall undertake to
perform only such duties as are specifically set forth in this Trust Guarantee,
and no implied covenants shall be read into this Trust Guarantee against the
Trust Guarantee Trustee.  In case an
Event of Default has occurred (that has not been cured or waived pursuant to Section 2.6)
and is actually known to a Responsible Officer of the Trust Guarantee Trustee,
the Trust Guarantee Trustee shall exercise such of the rights and powers vested
in it by this Trust Guarantee, and use the same degree of care and skill in its
exercise thereof, as a prudent Person would exercise or use under the
circumstances in the conduct of his or her own affairs.


 


(d)           No provision of this
Trust Guarantee shall be construed to relieve the Trust Guarantee Trustee from
liability for its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:


 


(i)            prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have occurred:


 


(A)          the duties and obligations of the Trust Guarantee Trustee
shall be determined solely by the express provisions of this Trust Guarantee,
and the Trust


 


7





















 


Guarantee Trustee shall not be liable except
for the performance of such duties and obligations as are specifically set
forth in this Trust Guarantee, and no implied covenants or obligations shall be
read into this Trust Guarantee against the Trust Guarantee Trustee; and


 


(B)           in the absence of bad faith on the part of the Trust
Guarantee Trustee, the Trust Guarantee Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trust Guarantee Trustee and
conforming to the requirements of this Trust Guarantee; but in the case of any
such certificates or opinions that by any provision hereof are specifically
required to be furnished to the Trust Guarantee Trustee, the Trust Guarantee
Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Trust Guarantee;


 


(ii)           the Trust Guarantee Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the Trust
Guarantee Trustee, unless it shall be proved that the Trust Guarantee Trustee
was negligent in ascertaining the pertinent facts upon which such judgment was
made;


 


(iii)          the Trust Guarantee Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a Majority in Liquidation
Amount of Trust Preferred Securities relating to the time, method and place of
conducting any proceeding for any remedy available to the Trust Guarantee
Trustee, or exercising any trust or power conferred upon the Trust Guarantee
Trustee under this Trust Guarantee; and


 


(iv)          no provision of this Trust Guarantee shall require the
Trust Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Trust Guarantee Trustee shall
have reasonable grounds for believing that (A) the repayment of such funds
or liability is not reasonably assured to it under the terms of this Trust
Guarantee or (B) an indemnity, reasonably satisfactory to the Trust
Guarantee Trustee, against such risk or liability is not reasonably assured to
it.


 


SECTION 3.2.                                          Certain
Rights of Trust Guarantee Trustee


 


(a)           Subject to the
provisions of Section 3.1 hereof:


 


(i)            The Trust Guarantee Trustee may conclusively rely, and
shall be fully protected in acting or refraining from acting upon, any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties.


 


(ii)           Any direction or act of the Guarantor contemplated by this
Trust Guarantee shall be sufficiently evidenced by an Officers’ Certificate.


 


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(iii)          Whenever, in the administration of this Trust Guarantee,
the Trust Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Trust Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers’ Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor.


 


(iv)          The Trust Guarantee Trustee shall have no duty to see to
any recording, filing or registration of any instrument (or any rerecording,
refiling or registration thereof).


 


(v)           The Trust Guarantee Trustee may consult with counsel of
its selection, and the advice or opinion of such counsel with respect to legal
matters shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. 
Such counsel may be counsel to the Guarantor or any of its Affiliates
and may include any of its employees. 
The Trust Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Trust Guarantee from any
court of competent jurisdiction.


 


(vi)          The Trust Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Trust Guarantee at
the request or direction of any Holder, unless such Holder shall have provided
to the Trust Guarantee Trustee such security and indemnity, reasonably
satisfactory to the Trust Guarantee Trustee, against the costs, expenses
(including attorneys’ fees and expenses and the expenses of the Trust Guarantee
Trustee’s agents, nominees or custodians) and liabilities that might be
incurred by it in complying with such request or direction, including such
reasonable advances as may be requested by the Trust Guarantee Trustee; provided
that nothing contained in this Section 3.2(a)(vi) shall be taken to
relieve the Trust Guarantee Trustee, upon the occurrence of an Event of
Default, of its obligation to exercise the rights and powers vested in it by
this Trust Guarantee.


 


(vii)         The Trust Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trust Guarantee Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit.


 


(viii)        The Trust Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, nominees, custodians or attorneys, and the Trust Guarantee
Trustee shall not be responsible for any misconduct or negligence on the part
of any agent or attorney appointed with due care by it hereunder.


 


(ix)           Any action taken by the Trust Guarantee Trustee or its
agents hereunder shall bind the Holders, and the signature of the Trust
Guarantee Trustee or its agents


 


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alone shall be sufficient and effective to
perform any such action.  No third party
shall be required to inquire as to the authority of the Trust Guarantee Trustee
to so act or as to its compliance with any of the terms and provisions of this
Trust Guarantee, both of which shall be conclusively evidenced by the Trust
Guarantee Trustee or its agent taking such action.


 


(x)            Whenever in the administration of this Trust Guarantee
the Trust Guarantee Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other action
hereunder, the Trust Guarantee Trustee (i) may request instructions from
the Holders of a Majority in Liquidation Amount of the Trust Preferred
Securities, (ii) may refrain from enforcing such remedy or right or taking
such other until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in accordance with such
instructions.


 


(b)           No provision of this
Trust Guarantee shall be deemed to impose any duty or obligation on the Trust
Guarantee Trustee to perform any act or acts or exercise any right, power, duty
or obligation conferred or imposed on it in any jurisdiction in which it shall
be illegal, or in which the Trust Guarantee Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation.  No permissive power or authority available to
the Trust Guarantee Trustee shall be construed to be a duty.


 


SECTION 3.3.                                          Not
Responsible for Recitals or Issuance of Trust Guarantee


 


The recitals
contained in this Trust Guarantee shall be taken as the statements of the
Guarantor, and the Trust Guarantee Trustee does not assume any responsibility
for their correctness.  The Trust
Guarantee Trustee makes no representations as to the validity or sufficiency of
this Trust Guarantee.


 


ARTICLE IV

TRUST GUARANTEE TRUSTEE


 


SECTION 4.1.                                          Trust
Guarantee Trustee; Eligibility


 


(a)           There shall be at
all times a Trust Guarantee Trustee which shall:


 


(i)            not be an Affiliate of the Guarantor; and


 


(ii)           be a corporation organized and doing business under the
laws of the United States of America or any state or territory thereof or of
the District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee under the
Trust Indenture Act, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least US$50,000,000, and
subject to supervision or examination by federal, state, territorial or
District of Columbia authority.  If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the supervising or examining authority referred to
above, then, for the purposes of this Section 4.1(a)(ii), the combined
capital


 


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and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published.


 


(b)           If at any time the
Trust Guarantee Trustee shall cease to be eligible to so act under Section 4.1(a),
the Trust Guarantee Trustee shall immediately resign in the manner and with the
effect set out in Section 4.2(c).


 


(c)           If the Trust
Guarantee Trustee has or shall acquire any “conflicting interest” within the
meaning of Section 310(b) of the Trust Indenture Act, the Trust
Guarantee Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act.


 


SECTION 4.2.                                          Appointment,
Removal and Resignation of Trust Guarantee Trustee


 


(a)           Subject to Section 4.2(b),
unless an Event of Default shall have occurred and be continuing, the Trust
Guarantee Trustee may be appointed or removed with or without cause at any time
by the Guarantor.


 


(b)           The Trust Guarantee
Trustee shall not be removed in accordance with Section 4.2(a) until
a Successor Trust Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor Trust Guarantee
Trustee and delivered to the Guarantor.


 


(c)           The Trust Guarantee
Trustee appointed to office shall hold office until a Successor Trust Guarantee
Trustee shall have been appointed or until its removal or resignation.  The Trust Guarantee Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing executed by the Trust Guarantee Trustee and delivered to the Guarantor,
which resignation shall not take effect until a Successor Trust Guarantee
Trustee has been appointed and has accepted such appointment by instrument in
writing executed by such Successor Trust Guarantee Trustee and delivered to the
Guarantor and the resigning Trust Guarantee Trustee.


 


(d)           If no Successor
Trust Guarantee Trustee shall have been appointed and accepted appointment as
provided in this Section 4.2 within 60 days after delivery to the
Guarantor of an instrument of removal or resignation, the removed or resigning
Trust Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Trust Guarantee Trustee.  Such court may thereupon, after prescribing
such notice, if any, as it may deem proper, appoint a Successor Trust Guarantee
Trustee.


 


(e)           No Trust Guarantee
Trustee shall be liable for the acts or omissions to act of any Successor Trust
Guarantee Trustee.


 


(f)            Upon termination of
this Trust Guarantee or removal or resignation of the Trust Guarantee Trustee
pursuant to this Section 4.2, the Guarantor shall pay to the Trust
Guarantee Trustee all amounts owing for fees and reimbursement of expenses that
have accrued to the date of such termination, removal or resignation.


 


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ARTICLE V

GUARANTEE


 


SECTION 5.1.                                          Guarantee


 


The Guarantor
irrevocably and unconditionally agrees to pay in full to the Holders the
Guarantee Payments (without duplication of amounts theretofore paid by the
Trust), if, as and when due, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert. 
The Guarantor’s obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by the Guarantor to the Holders or by
causing the Trust to pay such amounts to the Holders.


 


SECTION 5.2.                                          Waiver of
Notice and Demand


 


The Guarantor
hereby waives notice of acceptance of this Trust Guarantee and of any liability
to which it applies or may apply, presentment, demand for payment, any right to
require a proceeding first against the Trust or any other Person before
proceeding against the Guarantor, protest, notice of nonpayment, notice of
dishonor, notice of redemption and all other notices and demands.


 


SECTION 5.3.                                          Obligations
Not Affected


 


The
obligations, covenants, agreements and duties of the Guarantor under this
Guarantee shall be absolute and unconditional and shall remain in full force
and effect until the entire liquidation amount of all outstanding Trust
Securities shall have been paid and such obligation shall in no way be affected
or impaired by reason of the happening from time to time of any event,
including without limitation the following, whether or not with notice to, or
the consent of, the Guarantor:


 


(a)           the release or waiver, by operation of law or otherwise,
of the performance or observance by the Trust of any express or implied
agreement, covenant, term or condition relating to the Trust Securities to be
performed or observed by the Trust;


 


(b)           the extension of time for the payment by the Trust of all
or any portion of the distributions, Redemption Price, Liquidation
Distributions or any other sums payable under the terms of the Trust Securities
or the extension of time for the performance of any other obligation under,
arising out of, or in connection with, the Trust Securities (other than an
extension of time for payment of distributions, Redemption Price, Liquidation
Distributions or other sum payable that results from the extension of any (i) time
for the payment of any distribution on the LLC Preferred Securities or any redemption
or liquidation of the LLC Preferred Securities permitted by the LLC Agreement
or (ii) any interest payment period on any Affiliate Debt Instruments or
any change to the maturity date of any Affiliate Debt Instruments permitted by
any applicable Indenture);


 


(c)           any failure, omission, delay or lack of diligence on the
part of the Property Trustee or the Holders to enforce, assert or exercise any
right, privilege, power or remedy conferred on the Property Trustee or the
Holders pursuant to the terms of the Trust


 


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Securities, or any action on the part of the
Trust granting indulgence or extension of any kind;


 


(d)           the voluntary or involuntary liquidation, dissolution,
sale of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust or
any of the assets of the Trust;


 


(e)           any invalidity of, or defect or deficiency in, the Trust
Securities;


 


(f)            the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or


 


(g)           any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor
hereunder shall be absolute and unconditional under any and all circumstances.


 


There shall be
no obligation of the Trust Guarantee Trustee or the Holders to give notice to,
or obtain consent of, the Guarantor or any other Person with respect to the
happening of any of the foregoing.


 


No setoff,
counterclaim, reduction or diminution of any obligation, or any defense of any
kind or nature that the Guarantor has or may have against any Holder shall be
available hereunder to the Guarantor against such Holder to reduce the payments
to it under this Guarantee.


 


SECTION 5.4.                                          Rights of
Holders


 


(a)           The Holders of a
Majority in Liquidation Amount of the Trust Preferred Securities have the right
to direct the time, method and place of conducting any proceeding for any
remedy available to the Trust Guarantee Trustee in respect of this Trust
Guarantee or to direct the exercise of any trust or power conferred upon the
Trust Guarantee Trustee under this Trust Guarantee.


 


(b)           If the Trust
Guarantee Trustee fails to enforce this Trust Guarantee, then any Holder of
Trust Preferred Securities may, subject to the subordination provisions of Section 6.2,
institute a legal proceeding directly against the Guarantor to enforce the
Trust Guarantee Trustee’s rights under this Trust Guarantee, without first
instituting a legal proceeding against the Trust, the Trust Guarantee Trustee
or any other Person or entity.  In
addition, if the Guarantor has failed to make a Guarantee Payment, a Holder of
Trust Securities may, subject to the subordination provisions of Section 6.2,
directly institute a proceeding against the Guarantor for enforcement of the
Trust Guarantee for such payment to such Holder.  The Guarantor hereby waives any right or
remedy to require that any action on this Trust Guarantee be brought first
against the Trust or any other Person or entity before proceeding directly
against the Guarantor.


 


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SECTION 5.5.                                          Guarantee
of Payment


 


This Trust
Guarantee creates a guarantee of payment and not of collection.


 


SECTION 5.6.                                          Subrogation


 


The Guarantor
shall be subrogated to all (if any) rights of the Holders of Trust Securities
against the Trust in respect of any amounts paid to such Holders by the
Guarantor under this Trust Guarantee; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Trust Guarantee, if, at the time of any such
payment, any amounts are due and unpaid under this Trust Guarantee.  If any amount shall be paid to the Guarantor
in violation of the preceding sentence, the Guarantor agrees to hold such
amount in trust for the Holders and to pay over such amount to the Trust
Guarantee Trustee for the benefit of the Holders.


 


SECTION 5.7.                                          Independent
Obligations


 


The Guarantor
acknowledges that its obligations hereunder are independent of the obligations
of the Trust with respect to the Trust Securities and that the Guarantor shall
be liable as principal and as debtor hereunder to make Guarantee Payments
pursuant to the terms of this Trust Guarantee notwithstanding the occurrence of
any event referred to in subsections 5.3(a) through 5.3(g), inclusive,
hereof.


 


ARTICLE VI

SUBORDINATION


 


SECTION 6.1.                                          Ranking


 


This Trust
Guarantee will constitute an unsecured obligation of the Guarantor and will
rank (i) subordinate and junior in right of payment to all other
liabilities of the Guarantor, (ii) on a parity with the most senior
preferred securities or preference stock now or hereafter issued by the
Guarantor and with any guarantee now or hereafter entered into by the Guarantor
in respect of such senior preferred securities or preference stock of any
Affiliate of the Guarantor and (iii) senior to the Guarantor’s common
stock.


 


SECTION 6.2.                                          Subordination
of Common Securities


 


If a Trust Enforcement Event has occurred and
is continuing under the Declaration of Trust, the rights of the holders of the
Trust Common Securities to receive Guarantee Payments hereunder shall be
subordinated to the rights of the Holders of the Trust Preferred Securities to
receive Guarantee Payments under this Trust Guarantee.


 


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ARTICLE VII

TERMINATION


 


SECTION 7.1.                                          Termination


 


This Trust
Guarantee shall terminate upon (i) full payment of the Redemption Price of
all Trust Securities or (ii) full payment of the amounts payable in
accordance with the Declaration of Trust upon liquidation of the Trust.  Notwithstanding the foregoing, this Trust
Guarantee will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder of Trust Securities must restore payment of any
sums paid under the Trust Securities or under this Trust Guarantee.


 


ARTICLE VIII

INDEMNIFICATION


 


SECTION 8.1.                                          Exculpation


 


(a)           No Indemnified Person
shall be liable, responsible or accountable in damages or otherwise to the
Guarantor 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 in accordance with this Trust Guarantee and in a manner that such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Trust Guarantee or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person’s 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 Guarantor and upon such information, opinions, reports or statements
presented to the Guarantor 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 Guarantor, 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 Holders of Trust Securities might properly be paid.


 


SECTION 8.2.                                          Indemnification


 


The Guarantor
agrees to indemnify each Indemnified Person for, and to hold each Indemnified
Person harmless against any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including the
costs and expenses (including reasonable legal fees and expenses) of defending
itself against, or investigating, any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.  The obligation to indemnify as set forth in
this Section 8.2 shall survive the termination of this Trust Guarantee.


 


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ARTICLE IX

MISCELLANEOUS


 


SECTION 9.1.                                          Successors
and Assigns


 


All guarantees
and agreements contained in this Trust Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the Holders of the Trust Securities then outstanding.


 


SECTION 9.2.                                          Amendments


 


Except with
respect to any changes that do not materially adversely affect the rights of
the Holders (in which case no consent of the Holders will be required), this
Trust Guarantee may not be amended without the prior approval of the Holders of
a Majority in Liquidation Amount of the Trust Preferred Securities voting
together as a single class (excluding any Trust Securities held by the Sponsor
or any of its Affiliates).  The
provisions of Article XI of the Declaration of Trust with respect to
meetings of Holders of Trust Securities apply to the giving of such approval.


 


SECTION 9.3.                                          Notices


 


All notices
provided for in this Trust Guarantee shall be in writing, duly signed by the
party giving such notice, and shall be delivered, telecopied or mailed by first
class mail, as follows:


 


(a)           If given to the
Trust Guarantee Trustee, at the Trust Guarantee Trustee’s mailing address set forth
below (or such other address as the Trust Guarantee Trustee may give notice of
to the Guarantor and the Holders of the Trust Securities):


 


JPMorgan Chase Bank, N.A.


4 New York Plaza


15th Floor


New York, New York  10004


Attention: 
Worldwide Securities Services


Facsimile: (212) 623-6274


 


(b)           If given to the
Guarantor, at the Guarantor’s mailing address set forth below (or such other
address as the Guarantor may give notice of to the Holders of the Trust
Securities):


 


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
Holder of Trust Securities, at the address set forth on the books and records
of the Trust.


 


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All such
notices shall be deemed to have been given when received in person, telecopied
with receipt confirmed, or mailed by first class mail, postage prepaid except
that if a notice or other document is refused delivery or cannot be delivered
because of a changed address of which no notice was given, such notice or other
document shall be deemed to have been delivered on the date of such refusal or
inability to deliver.


 


SECTION 9.4.                                          Benefit


 


This Trust
Guarantee is solely for the benefit of the Holders of the Trust Securities and,
subject to Section 3.1(a), is not separately transferable from the Trust
Securities.


 


SECTION 9.5.                                          Governing
Law


 


THIS TRUST
GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.


 


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THIS TRUST
GUARANTEE is executed as of the day and year first above written.


 


	
   

  	
  LEHMAN BROTHERS HOLDINGS INC.,

  as Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Barrett S. DiPaolo

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Barrett S. DiPaolo

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A.,

  as Trust Guarantee Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tai Bill
  Lee

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Tai Bill Lee

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
						



 


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