Document:

EXHIBIT
10.2

FOURTH
AMENDMENT TO

THIRD
AMENDED AND RESTATED

UNDERWRITING
AND CONTINUING INDEMNITY AGREEMENT

THIS
FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED UNDERWRITING AND CONTINUING
INDEMNITY AGREEMENT, dated as of June 12, 2007 (this “Amendment”), is
entered into by and among (i) GREAT LAKES DREDGE & DOCK CORPORATION, a
Delaware corporation (“HOLDINGS”), and the SUBSIDIARIES of HOLDINGS
signatories hereto (collectively with HOLDINGS, the “INDEMNITORS”), (ii)
TRAVELERS CASUALTY AND SURETY COMPANY, a Connecticut corporation (“TCASC”),
and (iii) TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA, a Connecticut
corporation (“TRAVELERS AMERICA” and together with TCASC, “TRAVELERS”).

W I T N E S S E T H:

WHEREAS,
the INDEMNITORS and TRAVELERS are parties to a certain Third Amended and
Restated Underwriting and Continuing Indemnity Agreement dated as of December
22, 2003, as amended, supplemented or otherwise modified from time to time (as
amended, supplemented and modified, the “Agreement”);

WHEREAS,
the INDEMNITORS have requested TRAVELERS to amend the Agreement; and

WHEREAS,
TRAVELERS is willing to amend the Agreement as provided herein, subject to the
terms and conditions set forth herein;

NOW,
THEREFORE, in consideration of the premises, and intending to be legally bound
hereby, the INDEMNITORS and TRAVELERS hereby agree as follows:

SECTION 1.  DEFINED TERMS.

Capitalized
terms used herein shall, unless otherwise defined herein, have the meanings
provided in the Agreement.

SECTION
2.  AMENDMENTS TO AGREEMENT.

Subject
to satisfaction of the conditions set forth in Section 3 of this
Amendment, the Agreement is hereby amended as follows:

(a)           The definition of “BANK LOAN FACILITY”
appearing in Section 1.1 of the Agreement is hereby amended and restated
in its entirety to read as follows:

“BANK LOAN FACILITY”
means that certain Credit Agreement dated as of June 12, 2007, by and among
HOLDINGS, certain SUBSIDIARIES of HOLDINGS, the financial institutions from
time to time parties thereto and LaSalle Bank National Association, as
Administrative Agent, Sole Lead Arranger, Issuing 

Lender and Swing Line
Leader, and the documents, instruments and agreements executed and delivered in
connection therewith, as all of the same may be amended, restated, supplemented
or otherwise modified from time to time, and any credit agreement or other
agreement or agreements relating to any refinancing, extension, renewal or
replacement, in whole or in part, thereof.

(b)           The definition of “INTERCREDITOR
AGREEMENT” appearing in Section 1.1 of the Agreement is hereby amended
and restated in its entirety to read as follows:

“INTERCREDITOR AGREEMENT”
means that certain Intercreditor Agreement dated as of June 12, 2007, by and
among HOLDINGS, certain SUBSIDIARIES of HOLDINGS, LaSalle Bank National
Association, as Administrative Agent, and TRAVELERS, and the documents,
instruments and agreements executed and delivered pursuant thereto, as all of
the same may be amended, restated, supplemented or otherwise modified from time
to time, and any other intercreditor agreement in replacement thereof which is
in form and substance acceptable to TRAVELERS.

(c)           The definition of “SECURITY AGREEMENT
(EQUIPMENT)” appearing in Section 1.1 of the Agreement is hereby amended
and restated in its entirety to read as follows:

“SECURITY AGREEMENT
(EQUIPMENT)” means the Security Agreement (Equipment) substantially in the form
of Exhibit D hereto, executed and delivered by GLDDC (or any other
INDEMNITOR which executes a VESSEL MORTGAGE after the date hereof) in favor of
TRAVELERS, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

(d)           The definition of “VESSEL MORTGAGES”
appearing in Section 1.1 of the Agreement is hereby amended and restated
in its entirety to read as follows:

“VESSEL MORTGAGES” means,
collectively, (i) the First Preferred Fleet Mortgage substantially in the form
of Exhibit E hereto, executed by GLDDC in favor of TRAVELERS, (ii) the
First Preferred Ship Mortgage substantially in the form of Exhibit F
hereto, executed by GLDDC in favor of TRAVELERS, (iii) the Second Preferred
Fleet Mortgage substantially in the form of Exhibit G hereto, executed
by GLDDC in favor of TRAVELERS, (iv) the Second Preferred Ship Mortgage
substantially in the form of Exhibit H
hereto, executed by GLDDC in favor of TRAVELERS, and (v) any other
fleet mortgages or vessel 

 2
 

mortgages at any time
hereafter executed and delivered by any INDEMNITOR in connection with this
Agreement and the other UNDERWRITING DOCUMENTS; in each case as any of the
foregoing documents may be amended, restated, supplemented or otherwise
modified from time to time.

(e)           Section 1.1 of the Agreement
is hereby further amended by deleting therefrom the definitions of “VESSEL
FINANCING AGREEMENT” and “VESSEL FINANCING COLLATERAL”.

(f)            The definition of “PERMITTED LIENS”
appearing in Section 1.1 of the Agreement is hereby amended by amending and
restating in its entirety clause (r) appearing in such definition to read as
follows:

“(r)          RESERVED.”

(g)           Section 1.1 of the Agreement
is hereby further amended by inserting the following new definition in the
appropriate alphabetical order:

“NOTE INDENTURE
OBLIGATIONS” means all of (a) HOLDINGS’ obligations under and with respect to
the DEBT INDENTURE, including, without limitation, all obligations to pay
principal in an aggregate principal amount not to exceed $175,000,000 under its
7-3/4% Senior Subordinated Notes due 2013, and all interest, premium, fees,
charges, expenses and indemnities with respect thereto, and to effect redemptions,
repurchases and prepayments with respect thereto, in any case, whether fixed,
contingent, matured or unmatured, or (b) HOLDINGS’ obligations under and with
respect to such other unsecured DEBT the net proceeds of which are designated
to be used, and are used reasonably promptly after the incurrence thereof, to
refinance in whole or in part the NOTE INDENTURE OBLIGATIONS described in
clause (a) above; provided, that such refinancing DEBT (i) is in an
aggregate principal amount not greater than the aggregate principal amount of
the DEBT being refinanced plus the amount of any premium required to be
paid thereon and any interest, fees and costs incurred in such refinancing,
(ii) has a final maturity more than 180 days after the Revolving Commitment
Termination Date (as defined in the BANK LOAN FACILITY) and requires no
scheduled payment of principal in cash prior to such date, and (iii) includes
(A) subordination provisions reasonably acceptable to TRAVELERS and (B)
covenants, events of default and other terms and provisions (including
quantities thereof) that are no more restrictive, when taken as a whole, to
HOLDINGS and its SUBSIDIARIES than are (x) in the case of any public issuance
of DEBT to HOLDINGS, customary at the time of such refinancing 

 3
 

of such type for issuers
with a debt rating similar to that of HOLDINGS and (y) in the case of any
private issuance of DEBT to HOLDINGS, as set forth in the DEBT INDENTURE (any
such refinancing as described in this clause (b), a “PERMITTED NOTE REFINANCING”).

(h)           Section 6.12(d) of the
Agreement is hereby amended by deleting the amount “$20,000,000” appearing in
the clause (i) of such section and substituting the amount “$40,000,000” in
place thereof.

(i)            Section 6.12(f) of the
Agreement is hereby amended and restated in its entirety to read as follows:

(f)            (i) DEBT and CONTINGENT LIABILITIES
arising under the BANK LOAN FACILITY; provided, that the aggregate
principal amount of all loans plus the undrawn face amount of all letters of
credit outstanding under the BANK LOAN FACILITY shall at no time exceed
$180,000,000; and (ii) the NOTE INDENTURE OBLIGATIONS;

(j)            Section 6.12(s) of the
Agreement is hereby amended and restated in its entirety to read as follows:

(s)           RESERVED;

(k)           Section 6.12 (t) of the
Agreement is hereby amended by deleting “GLDD Acquisitions Corp.” appearing in
such section and substituting “HOLDINGS” in place thereof.

(l)            The definition of “Cash
Equivalent Investments” appearing in Section 6.15 of the Agreement
is hereby amended by amending and restating in its entirety clause (d)
appearing in such definition to read as follows:

(d)           any certificate of deposit, time
(including eurodollar time deposits) or demand deposit or bankers acceptance,
maturing not more than one year after such time, which is issued by either (i)
a commercial banking institution organized under the laws of the United States
of America or any State thereof or the District of Columbia that has a combined
capital, surplus and undivided profits of not less than $500,000,000, (ii) any
lender under the BANK LOAN FACILITY, or (iii) (A) any branch of any lender
under the BANK LOAN FACILITY, (B) any commercial banking institution organized
under the laws of the United States of America or any State thereof or any
Organization for Economic Cooperation and Development country which has a
combined capital, surplus and undivided profits of not less than $500,000,000
or (C) any financial institution organized under the laws of a country where
HOLDINGS or any of its SUBSIDIARIES is 

 4
 

engaged in a dredging or
construction project to the extent such certificates of deposit, time or demand
deposits (including Eurodollar time deposits) or bankers acceptances are
reasonably necessary in connection with such dredging or construction project;

(m)          Section 6.16(b) of the
Agreement is hereby amended and restated in its entirety to read as follows:

(b)           dividends or other distributions
payable by HOLDINGS not to exceed $5,000,000 in aggregate for all such
dividends or distributions made during any fiscal year; provided, that
both before and after giving effect to such dividends or distributions HOLDINGS
shall be in compliance with the provisions of Section 6.19 and 6.20.

(n)           Section 6.21(a) of the
Agreement is hereby amended by amending and restating the final sentence
appearing in such section in its entirety to read as follows:

Notwithstanding the
foregoing, HOLDINGS and its SUBSIDIARIES shall be permitted to refinance the
NOTE INDENTURE OBLIGATIONS in connection with a PERMITTED NOTE REFINANCING.

(o)           Article VI of the Agreement is
hereby further amended by inserting the following new Section 6.23 at
the end thereof:

SECTION 6.23  APPRAISALS.          Upon the request of TRAVELERS, INDEMNITORS shall provide
updated appraisals of the vessels secured by the VESSEL MORTGAGES at the cost
and expense of the INDEMNITORS; provided, that such request by TRAVELERS
shall not be made any earlier than the five-year anniversary from the date upon
which TRAVELERS last received appraisals on the vessels.

(p)           The Agreement is hereby further
amended by deleting Exhibits D, E and F thereto in their entirety and
substituting therefor Exhibits D, E, F, G and H hereto.

SECTION 3.  CONDITIONS PRECEDENT.

The provisions of this Amendment shall be effective
upon receipt by TRAVELERS of the documents listed below:

(a)                                  this Amendment duly executed by all
parties hereto;

(b)           the VESSEL MORTGAGES duly executed by
the mortgagee party thereto, together with proper documentation releasing all
other LIENS, if any, on the related vessels;

 5
 

(c)           a SECURITY AGREEMENT
(EQUIPMENT) duly executed by each INDEMNITOR party to a VESSEL MORTGAGE and a
Financing Statement (UCC-1) to be filed in the jurisdiction of organization of
GLDDC;

(d)           the INTERCREDITOR
AGREEMENT and the Proceeds Agent Agreement contemplated thereby, duly executed
by the PRINCIPALS, TRAVELERS and the other parties thereto;

(e)           evidence
satisfactory to TRAVELERS that LaSalle Bank National Association, as
administrative agent under the BANK LOAN FACILITY, is in receipt of the
original of the Master Intercompany Demand Note referred to in the PLEDGE
AGREEMENT;

(f)            evidence
satisfactory to TRAVELERS that the DEBT incurred pursuant to the Credit
Agreement dated as of December 17, 2003 by and between GLDDC and General
Electric Capital Corporation, as amended, restated, supplemented or otherwise
modified from time to time, has been repaid and that such Credit Agreement and
all other documents, instruments and agreements executed and delivered pursuant
thereto or related thereto, including, without limitation, all collateral or
security agreements related thereto, have been terminated;

(g)           a favorable opinion
of Winston & Strawn LLP, counsel to the PRINCIPALS and INDEMNITORS,
addressing such legal matters as TRAVELERS may require;

(h)           an officer’s
certificate of HOLDINGS certifying that the BANK LOAN FACILITY is in full force
and effect, and attaching true and correct copy thereof;

(i)            a secretary’s
certificate of each INDEMNITOR (other than LYDON) certifying copies of such
party’s organizational documents, appropriate resolutions authorizing the
execution, delivery and performance of, inter alia, this Agreement, the VESSEL
MORTGAGES to which it is a party, the SECURITY AGREEMENT (EQUIPMENT) to which
it is a party, and the INTERCREDITOR AGREEMENT, and certifying incumbencies and
true signatures of its officers so authorized;

(j)            certificates of
insurance establishing TRAVELERS as a loss payee and/or additional insured on
all insurance policies relating to any tangible property on which TRAVELERS has
a first LIEN under the VESSEL MORTGAGES and the SECURITY AGREEMENT (EQUIPMENT);
and

(k)           such other
information, documents and legal opinions as may be reasonably required by
TRAVELERS.

 6
 

SECTION 4.  REPRESENTATIONS AND WARRANTIES.

To induce TRAVELERS to enter into this Amendment, the
INDEMNITORS represent and warrant to TRAVELERS as of the date hereof and after
giving effect to this Amendment that:

(a)           The representations and warranties
contained in Article V of the Agreement, in Section 4 of each
SECURITY AGREEMENT (A/R), in Section 4 of the SECURITY AGREEMENT
(EQUIPMENT), in Section 4 of the PLEDGE AGREEMENT and in Article I of
each of the VESSEL MORTGAGES, are correct in all material respects on and as of
the date hereof as though made on and as of such date except to the extent
stated to relate to an earlier date, in which case such representation and
warranty shall be correct as of such earlier date.

(b)           SUBSIDIARIES.  Schedule 1 attached hereto and made a
part hereof sets forth a complete and accurate list, as of the date of this
Amendment, of each SUBSIDIARY of HOLDINGS and each SUBSIDIARY set forth on Schedule
1 and designated with an asterisk (“*”) is a wholly-owned SUBSIDIARY of
HOLDINGS.

(c)           REAL PROPERTY.  Schedule 2 attached hereto and made a
part hereof sets forth a complete and accurate list, as of the date of this
Amendment, of the address of any real property owned or leased by each
PRINCIPAL with a net book value in excess of $750,000.

(d)           EQUIPMENT.  Schedule 3 attached hereto and made a
part hereof sets forth a complete and accurate list, as of the date of this
Amendment, of each item of equipment with a net book value in excess of
$750,000 owned or leased by each PRINCIPAL.

(e)           VESSELS.  Schedule 4 attached hereto and made a
part hereof sets forth a complete and accurate list, as of the date of this
Amendment, of all vessels owned of record by any PRINCIPAL with a net book
value in excess of $750,000 and, except as set forth on Schedule 4, each
such vessel has all certificates required under applicable law (except where
the failure could not reasonably be expected to have a MATERIAL ADVERSE
CHANGE), including, without limitation, certificates of documentation, and,
except as set forth on Schedule 4, each such vessel which is a U.S. flag
vessel has been certified by the U.S. Coast Guard, and each such vessel which
is a Republic of the Marshall Islands (“RMI”) vessel has been certified
by the RMI Office of the Maritime Administrator.  Each such certificate is in full force and
effect and each such vessel is in seaworthy and operational condition.  TRAVELERS has (or will have upon proper
filing of the VESSEL MORTGAGES with the U.S. Coast Guard or the RMI Office of
the Maritime Administrator, as applicable) a perfected security interest,
arising pursuant to the VESSEL MORTGAGES, in each vessel set forth on Schedule
4 and designated with an asterisk (“*”).

(f)            No
EVENT OF DEFAULT has occurred and is continuing.

 7
 

SECTION 7.  GENERAL.

(a)           As hereby modified, the Agreement
shall remain in full force and effect and is hereby ratified, approved and
confirmed in all respects.

(b)           This Amendment shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and assigns.

(c)           This Amendment may be executed in any
number of counterparts and by the different parties on separate counterparts,
and each such counterpart shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same Amendment.

(d)           HOLDINGS acknowledges and agrees that
any expense incurred by TRAVELERS in connection herewith and any other
documents referenced herein (if any) and the transactions contemplated hereby,
including reasonable legal fees and out-of-pocket costs and expenses of outside
counsel, shall be fully paid or reimbursed by HOLDINGS.

[Signature Pages Follow]

 

 8

IN WITNESS WHEREOF, this
Amendment has been duly executed by the parties as of the date first written
above.

	
  

  	
   

  	
  GREAT LAKES DREDGE & DOCK CORPORATION

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
  /s/ Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   Deborah A.
  Wensel

  	 

	
   

  	
   

  	
   

  	
  Title:

  	
   Senior Vice
  President, Chief Financial 

  	 

	
   

  	
   

  	
   

  	
   

  	
   Officer and
  Treasurer

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  GREAT LAKES DREDGE & DOCK COMPANY, LLC

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
  /s/ Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   Deborah A.
  Wensel

  	 

	
   

  	
   

  	
   

  	
  Title:

  	
   Senior Vice
  President, Chief Financial

  	 

	
   

  	
   

  	
   

  	
   

  	
   Officer and
  Treasurer

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  LYDON DREDGING & CONSTRUCTION COMPANY, LTD.

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
  /s/ Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   Deborah A.
  Wensel

  	 

	
   

  	
   

  	
   

  	
  Title:

  	
   Vice
  President

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  FIFTY-THREE DREDGING CORPORATION

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
  /s/ Paul E. Dinquel

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   Paul E.
  Dinquel

  	 

	
   

  	
   

  	
   

  	
  Title:

  	
   Vice
  President

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  DAWSON MARINE SERVICES COMPANY

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
  /s/ Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   Deborah A.
  Wensel

  	 

	
   

  	
   

  	
   

  	
  Title:

  	
   Senior Vice
  President, Chief Financial

  	 

	
   

  	
   

  	
   

  	
   

  	
   Officer and
  Treasurer

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  GREAT LAKES CARIBBEAN DREDGING, INC.

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
  /s/ Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   Deborah A.
  Wensel

  	 

	
   

  	
   

  	
   

  	
  Title:

  	
   Senior Vice
  President, Chief Financial

  	 

	
   

  	
   

  	
   

  	
   

  	
   Officer and
  Treasurer

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

							

 

 

	
  

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  NORTH AMERICAN SITE DEVELOPERS, INC.

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
  /s/ Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   Deborah A.
  Wensel

  	 

	
   

  	
   

  	
   

  	
  Title:

  	
   Vice
  President and Treasurer

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  JDC SOIL MANAGEMENT & DEVELOPMENT INC.

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
  /s/ Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   Deborah A.
  Wensel

  	 

	
   

  	
   

  	
   

  	
  Title:

  	
   Senior Vice
  President and Chief

  	 

	
   

  	
   

  	
   

  	
   

  	
   Financial
  Officer

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  NASDI HOLDINGS CORPORATION

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
  /s/ Deborah A. Wensel

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   Deborah A.
  Wensel

  	 

	
   

  	
   

  	
   

  	
  Title:

  	
   Senior Vice
  President, Chief

  	 

	
   

  	
   

  	
   

  	
   

  	
   Financial
  Officer and Treasurer

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

							

 

 

	
  

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  TRAVELERS CASUALTY AND SURETY COMPANY

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
  /s/ Michael Damewood

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   Michael
  Damewood

  	 

	
   

  	
   

  	
   

  	
  Title:

  	
   Attorney-in-Fact

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  TRAVELERS CASUALTY AND SURETY COMPANY OF AMERICA

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
   

  	
  By:

  	
  /s/ Michael Damewood

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   Michael
  Damewood

  	 

	
   

  	
   

  	
   

  	
  Title:

  	
   Attorney-in-FactExhibit 4.01

CUSIP NO. 52520W440

ISIN NO. US52520W4400

	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT: $90

  
	
  No. R-2

  	
   

  	
   

  

 

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTE, SERIES I

FX BASKET-LINKED NOTE
 DUE MAY 29, 2009

THIS
NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY OR A NOMINEE OF THE
DEPOSITORY.  UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(55 WATER STREET, NEW YORK, NEW YORK) TO THE COMPANY (AS DEFINED BELOW) OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND
ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

UNLESS
AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM (A
“CERTIFICATED NOTE”), THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY.

 

 

LEHMAN BROTHERS HOLDINGS
INC., a corporation duly organized and existing under the laws of the State of
Delaware (herein called the “Company,” which term includes any successor
corporation under the Indenture referred to on the reverse hereof), for value
received, hereby promises to pay to CEDE & Co., or registered assigns,
on the Maturity Date, an amount
equal to the Redemption Amount.

The
“Maturity Date” is May 29, 2009, or if such day is not a Business Day, on
the next following Business Day.

The “Redemption Amount” is the amount equal to the sum of the principal
amount of the Notes plus the Additional Amount, if any.

The “Additional Amount” is a single U.S. dollar amount equal the
principal amount of the Notes multiplied by the Participation Rate multiplied
by the Basket Return, provided that
the minimum Additional Amount payable on the Notes shall be zero.

The “Participation Rate” is 240%.

The “Basket Currencies” are the Chinese Renminbi (CNY), the Indonesian
Rupiah (IDR), the Indian Rupee (INR) and the Philippine Peso (PHP).

The “Reference Exchange Rates” are the spot exchange rates for each of
the Basket Currencies quoted against the U.S. dollar, expressed as the number
of units of the Basket Currency per USD 1.

The “Basket Currency Weighting” is 25% for each Basket Currency.

The
“Basket Return” equals a quotient, the numerator of which is the difference of
the Basket Ending Level minus the Basket Starting Level and the denominator of
which is the Basket Starting Level.

The
“Basket Starting Level” is 100.

The
“Basket Ending Level” is equal to 100 multiplied by the sum of 1 plus the sum
of the Weighted Currency Returns.

The
“Weighted Currency Returns” are, for each Basket Currency, the Currency Return
multiplied by the Basket Currency Weighting.

The
“Currency Return” is, for each Basket Currency, a quotient, the numerator of
which is the difference of the Initial Spot Rate minus the Final Spot Rate and
the denominator of which is the Final Spot Rate.

The
“Final Spot Rate” is, for each Basket Currency, the Reference Exchange Rate on
the Valuation Date, determined in accordance with the Spot Rate Source (subject
to the occurrence of a Disruption Event).

The
“Initial Spot Rate” for each Basket Currency is the Reference Exchange Rate for
that Basket Currency determined by the Calculation Agent on the Trade Date in
accordance with the Spot Rate Source, as set forth below:

 

 2
 

 

(i) for CNY, 7.6525,

(ii) for IDR, 8740,

(iii) for INR, 40.25 and

(iv) for PHP, 46.17.

The “Trade Date” is May 24, 2007.

The “Issue Date” is May 31, 2007.

The “Valuation Date” is May 22, 2009; provided that, upon the
occurrence of a Disruption Event with respect to a Basket Currency, the
Valuation Date for the affected Basket Currency may be postponed (as described
in “Disruption Events” below).

If the Calculation Agent determines that a Disruption Event
relating to one or more of the Basket Currencies is in effect on the scheduled
Valuation Date, the Calculation Agent will determine the Basket Return using:

•                                            for each Basket Currency
that did not suffer a Disruption Event on the scheduled Valuation Date, the
Final Spot Rate on the scheduled Valuation Date, and

•                                            for each Basket Currency
that did suffer a Disruption Event on the scheduled Valuation Date, the Final
Spot Rate on the immediately succeeding scheduled Valuation Business Day for
such Basket Currency on which no Disruption Event occurs or is continuing with
respect to such Basket Currency;

provided, however, that if a
Disruption Event has occurred or is continuing with respect to a Basket
Currency on each of the three scheduled Valuation Business Days following the
scheduled Valuation Date, then (a) such third scheduled Valuation Business Day
shall be deemed the Valuation Date for the affected Basket Currency; and (b)
the Calculation Agent will determine the Final Spot Rate for the affected
Basket Currency on such day in accordance with Fallback Rate Observation
Methodology.

For purposes of the above, “scheduled Valuation Business
Day” means a day that is or, in the judgment of the Calculation Agent, should
have been, a Valuation Business Day for the affected Basket Currency.

A “Disruption Event” means any of the following events as determined in
good faith by the Calculation Agent:

(A)                              the occurrence and/or existence of an event on any day that has the
effect of preventing or making impossible the delivery of USD from accounts
inside the country for which a Basket Currency is the lawful currency (such
jurisdiction with respect to such Basket Currency, the “Basket Currency
Jurisdiction”) for that Basket Currency to accounts outside that Basket
Currency Jurisdiction;

 

 3
 

 

(B)                                the occurrence of any event causing the Reference
Exchange Rate for the Basket Currency to be split into dual or multiple
currency exchange rates; or

(C)                                the Final Spot Rate Rate being unavailable for the Basket Currency, or
the occurrence of an event (i) in the Basket Currency Jurisdiction for that
Basket Currency that materially disrupts the market for the Basket Currency or
(ii) that generally makes it impossible to obtain the Final Spot Rate for the
Basket Currency, on the Valuation Date.

A “Valuation
Business Day” means, with respect to each Basket Currency, any day, other than
a Saturday or Sunday, that is neither a legal holiday nor a day on which
commercial banks are authorized or required by law, regulation or executive
order to close (including for dealings in foreign exchange in accordance with
the practice of the foreign exchange market) in the city or jurisdiction
indicated in the table below:

	
  Basket Currency

  	
   

  	
  Valuation Business Day

  	
   

  	
  Principal Financial

  Center

  
	
   

  	
  CNY

  	
   

  	
   

  	
   

  	
  Beijing

  	
   

  	
   

  	
   

  	
  Beijing

  	
   

  
	
   

  	
  IDR

  	
   

  	
   

  	
   

  	
  Singapore

  	
   

  	
   

  	
   

  	
  Jakarta

  	
   

  
	
   

  	
  INR

  	
   

  	
   

  	
   

  	
  Mumbai

  	
   

  	
   

  	
   

  	
  Mumbai

  	
   

  
	
   

  	
  PHP

  	
   

  	
   

  	
   

  	
  Manila

  	
   

  	
   

  	
   

  	
  Manila

  	
   

  

 

The Spot Rate Source for the
CNY is the Chinese Renminbi/U.S. dollar official fixing rate, expressed as the
amount of Chinese Renminbi per one U.S. dollar, for settlement in two Business
Days reported by The State Administration of Foreign Exchange of the People’s
Republic of China, Beijing, which appears on the Reuters Screen SAEC Page
opposite the symbol “USDCNY=“ at approximately 5:00 p.m., Beijing time, on
the Valuation Date or such other relevant date. 
The “Spot Rate Source” for the IDR is the Indonesian Rupiah/U.S. dollar
spot rate at 11:00 a.m., Singapore time, expressed as the amount of
Indonesian Rupiah per one U.S. dollar, for settlement in two Business Days,
reported by the Association of Banks in Singapore which appears on the Reuters
Page ABSIRFIX01 to the right of the caption “Spot” under the column “IDR” at
approximately 11:30 a.m., Singapore time, on the Valuation Date or other
relevant date.  The Spot Rate Source for the
INR is the Indian Rupee/U.S. dollar reference rate, expressed as the amount of
Indian Rupee per one U.S. dollar, for settlement in two Business Days reported
by the Reserve Bank of India which appears on the Reuters Screen RBIB Page at
approximately 2:30 p.m., Mumbai time, or as soon thereafter as practicable
on the Valuation Date or such other relevant date.  The Spot Rate Source for the PHP is the
Philippine Peso/U.S. dollar morning weighted average rate, expressed as the
amount of Philippine Pesos per one U.S. dollar, for settlemetn in one Business
Day reported by the Phillipine Dealing system which appears on the Reuters
Screen PHPESO Page to the right of the caption “AM WT AVE” at approximately
12:30 p.m., Manila time, on the Valuation Date or other relevant date.

The
screen or time of observation indicated in relation to any Spot Rate Source
above shall be deemed to refer to such screen or time of observation as
modified or amended from time to time, or to any substitute screen thereto.

 

 4
 

 

The “Fallback Rate Observation Methodology” means that the reference exchange rate, Final Spot
Rate or other rate, as specified in the applicable pricing supplement, in
respect of a Basket Currency will equal the noon buying rate in New York for
cable transfers in foreign currencies as announced by the Federal Reserve Bank
of New York for customs purposes (the “Noon Buying Rate”) on the relevant
Valuation Date or such other date specified in the applicable pricing
supplement. If the Noon Buying Rate is not announced on that date, the
Reference Exchange Rate, Final Spot Rate or other rate for such Basket Currency
will be calculated on the basis of the arithmetic mean of the applicable spot
quotations received by the Calculation Agent at approximately 10:00 a.m.,
New York City time, on the Valuation Business Day next succeeding the Valuation
Date or such other date specified in the applicable pricing supplement, for the
purchase or sale for deposits in the Basket Currency by the New York offices of
three leading banks engaged in the interbank market (selected in the sole
discretion of the Calculation Agent) (the “Reference Banks”). If fewer than
three Reference Banks provide spot quotations, then the Final Spot Rate or
other rate, as applicable, will be calculated on the basis of the arithmetic
mean of the applicable spot quotations received by the Calculation Agent at
approximately 10:00 a.m., New York City time, on the relevant date from
two Reference Banks (selected in the sole discretion of the Calculation Agent),
for the purchase or sale for deposits in the Basket Currency. If these spot
quotations are available from only one Reference Bank, then the Calculation
Agent, in its sole discretion, will determine whether that quotation is
reasonable to be used. If no spot quotation is available, then the Final Spot
Rate or other rate, as applicable, for such Basket Currency will be determined
by the Calculation Agent in good faith and in a commercially reasonable manner.

A “Business Day”,
notwithstanding any provision in the Indenture, is any day that is not is not a
Saturday or Sunday and that is not a day on which banking institutions in New
York City generally are authorized or obligated by law or executive order to be
closed.

The “Calculation Agent” means
Lehman Brothers Inc.

Except as provided below,
the Redemption Amount may, at the option of the Company, be made by check
mailed to the person entitled thereto at such person’s address as it appears on
the registry books of the Company.

Payment of the Redemption
Amount will be made in immediately available funds in accordance with the
normal procedures of the Trustee (or any duly appointed Paying Agent).

The Company will pay any
administrative costs imposed by banks in making payments in immediately
available funds, but any tax, assessment or governmental charge imposed upon
payments hereunder, including, without limitation, any withholding tax, will be
borne by the Holder hereof.

References herein to “U.S.
dollars” or “U.S.$” or “$” or “USD” are to the coin or currency of the United
States as at the time of payment is legal tender for the payment of public and
private debts.

REFERENCE IS HEREBY MADE TO
THE FURTHER PROVISIONS OF THIS NOTE SET FORTH ON THE REVERSE HEREOF.  SUCH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

 

 5
 

 

This Note shall not be valid or become obligatory for any purpose until
the certificate of authentication hereon shall have been signed by the Trustee
under the Indenture.

 

 6

IN WITNESS WHEREOF, Lehman Brothers Holdings Inc. has
caused this instrument to be signed by its Chairman of the Board, its
President, its Vice Chairman, its Chief Financial Officer, one of its Vice
Presidents or its Treasurer, by manual or facsimile signature under its
corporate seal, attested by its Secretary or one of its Assistant Secretaries
by manual or facsimile signature.

Dated:  June 13, 2007

	
  [SEAL]

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

This is one of the
Securities of the series designated herein referred to in the within-mentioned
Indenture.

	
  CITIBANK, N.A.

  	
   

  
	
    as Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 7

[REVERSE
OF NOTE]

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES, SERIES I
 FX BASKET-LINKED NOTE
 DUE MAY 29, 2009

Section 1.  General.  This Note is one of a duly authorized series
of Notes of the Company designated as the Medium-Term Notes, Series I, FX Basket-Linked Note (herein called
the “Notes”).  The Notes are one of an indefinite
number of series of debt securities of the Company (collectively, the “Securities”)
issued or issuable under and pursuant to an indenture dated as of September 1,
1987, as amended and supplemented (the “Indenture”), duly executed and
delivered by the Company and Citibank, N.A., as Trustee (herein called the “Trustee”),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the holders of
the Securities.  The separate series of
Securities may be issued in various aggregate principal amounts, may mature at
different times, may bear interest (if any) at different rates, may be subject
to different redemption provisions or repurchase rights (if any), may be
subject to different sinking, purchase or analogous funds (if any), may be
subject to different covenants and Events of Default and may otherwise vary as
in the Indenture provided.

Section 2.  Principal
Amount for Indenture Purposes.  For
the purpose of determining whether Holders of the requisite amount of Notes of
this series outstanding under the Indenture have made a demand, given a notice
or waiver or taken any other action, the principal amount of this Note will be
deemed to be the principal amount of this Note then outstanding.

Section 3.  Modification
and Waivers.  The Indenture contains
provisions permitting the Company and the Trustee, with the consent of the
Holders of not less than 66-2/3% in aggregate principal amount of each series
of the Securities at the time Outstanding to be affected, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Securities of all such series; provided, however, that no such
supplemental indenture shall, among other things, (i) change the fixed maturity
of any Security, or reduce the Additional Amount or the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon
or reduce any premium or other amount payable on redemption, or make the
Additional Amount or the principal amount thereof, premium or other amount
payable, if any, or interest thereon payable in any coin or currency other than
that herein above provided, without the consent of the Holder of each Security
so affected, or (ii) change the place of payment on any Security, or impair the
right to institute suit for payment on any Security, or reduce the aforesaid
percentage of Securities, the holders of which are required to consent to any
such supplemental indenture, without the consent of the holders of each
Security so affected.  It is also
provided in the Indenture that, prior to any declaration accelerating the
maturity of any series of Securities, the holders of a majority in aggregate
principal amount of the Securities of such series 

 

Outstanding
may on behalf of the holders of all the Securities of such series waive any
past default or Event of Default under the Indenture with respect to such
series and its consequences, except a default in the payment of interest, if
any, on the Additional Amount or the principal amount, or premium, if any, on
any of the Securities of such series, or in the payment of any sinking fund
installment or analogous obligation with respect to Securities of such
series.  Any such consent or waiver by
the Holder of this Note shall be conclusive and binding upon such Holder and
upon all future holders and owners of this Note and any Notes of this series which
may be issued in exchange or substitution herefor, irrespective of whether or
not any notation thereof is made upon this Note or such other Notes of this
series.

Section 4.  Obligations
Unconditional.  No reference herein
to the Indenture and no provisions of this Note or of the Indenture shall alter
or impair the obligation of the Company, which is absolute and unconditional,
to pay the Additional Amount or the principal amount on this Note at the place,
at the respective times, at the rate, and in the coin or currency herein
prescribed.

Section 5.  Defeasance.  The Indenture contains provisions for the
discharge of the Indenture and defeasance at any time of the indebtedness on
this Note upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Note.

Section 6.  Authorized
Form and Denominations.  The Notes of
this series are issuable in registered form, without coupons.  Each Note will be issued initially as either
a Global Security or a Certificated Note, at the option of the Company, in
denominations of $10 or whole multiples of $10, either at the office or agency
to be designated and maintained by the Company for such purpose in the Borough
of Manhattan, New York City, pursuant to the provisions of the Indenture or at
any of such other offices or agencies as may be designated and maintained by
the Company for such purpose pursuant to the provisions of the Indenture, and
in the manner and subject to the limitations provided in the Indenture, but
without the payment of any service charge, except for any tax or other
governmental charges imposed in connection therewith.  Notes of this series are exchangeable for a
like aggregate principal amount of Notes of this series of a different
authorized denomination, except that Global Securities will not be exchangeable
for Certificated Notes of this series.

Section 7.  Registration
of Transfer.  As provided in the
Indenture and subject to certain limitations as therein set forth, the transfer
of this Note is registrable in the Security Register, upon surrender of this
Note for registration of transfer, at the Corporate Trust Office or agency in a
Place of Payment for this Note, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar requiring such written instrument of transfer duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

If at any time the Depository notifies the Company
that it is unwilling or unable to continue as Depository or if at any time the
Depository shall no longer be eligible under the Indenture, the Company shall
appoint a successor Depository.  If a
successor Depository for the Notes of this series is not appointed by the
Company within 90 days after the Company receives such notice or becomes aware
of such ineligibility, the Company will issue, and the Trustee will 

 

authenticate
and deliver, Notes of this series in definitive form in an aggregate principal
amount equal to the principal amount of this Note.

No service charge shall
be made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.

Prior to due presentment of this Note for registration
of transfer, the Company, the Trustee and any agent of the Company or the
Trustee may treat the person in whose name this Note is registered as the owner
hereof for all purposes, and neither the Company nor the Trustee nor any agent
of the Company or of the Trustee shall be affected by any notice to the
contrary.

Section 8.  Events
of Default.  If an Event of Default
with respect to Notes of this series shall occur and be continuing, the amount
that may be declared due and payable upon any acceleration of the notes will be
determined by the Calculation Agent for the period from and including the Issue
Date to but excluding the date of early repayment and will equal, for each
note, the Redemption Amount, calculated as though the date of early repayment
were the Maturity Date. If a bankruptcy proceeding is commenced in respect of
Lehman Brothers Holdings, the claim of the beneficial owner of a note for the
period from and including the Issue Date to but excluding the date of early
repayment will be capped at the Redemption Amount, calculated as though the
date of the commencement of the proceeding were the Maturity Date.

Section 9.  No
Recourse Against Certain Persons.  No
recourse for the payment of the Additional Amount or for any claim based hereon
or otherwise in respect hereof, and no recourse under or upon any obligation, covenant
or agreement of the Company in the Indenture or any Indenture supplemental
thereto or in any Note, or because of the creation of any indebtedness
represented thereby, shall be had against any incorporator, stockholder,
officer or director, as such, past, present or future, of the Company or of any
successor corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or
by the enforcement of any assessment or penalty or otherwise, all such
liability being, by the acceptance hereof and as part of the consideration for
the issue hereof, expressly waived and released.

Section 10.  Defined
Terms.  All terms used but not
defined in this Note are used herein as defined in the Indenture.

Section 11.  GOVERNING LAW.  THIS NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00125-of-00352.parquet"}]]