Document:

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                                                                  Exhibit 4.31

                    AMENDED AND RESTATED DECLARATION OF TRUST

                    Lehman Brothers Holdings Capital Trust __

                        Dated as of ____________ __, ____

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                              CROSS REFERENCE TABLE

                                                                           Page

310(b)..................................................................32, 33
311(a)......................................................................13
311(b)......................................................................13
312(b)......................................................................13
313(d)......................................................................13
314(a)......................................................................18
314(c)......................................................................13
316(a)..................................................................14, 15
316(c)......................................................................18
317(b)......................................................................22

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                                Table of Contents

                                                                           Page

ARTICLE I INTERPRETATION AND DEFINITIONS.....................................1

      SECTION 1.1.   Interpretation and Definitions..........................1
      Affiliate..............................................................2
      Authorized Officer.....................................................2
      Beneficial Owners......................................................2
      Business Day...........................................................2
      Business Trust Act.....................................................2
      Certificate............................................................2
      Certificate of Trust...................................................2
      Clearstream Banking....................................................2
      Closing Date...........................................................2
      Code ..................................................................2
      Commission.............................................................2
      Common Securities Holder...............................................3
      Common Security........................................................3
      Common Security Certificate............................................3
      Corporate Trust Office.................................................3
      Covered Person.........................................................3
      Debenture Issuer.......................................................3
      Debenture Issuer Indemnified Person....................................3
      Debenture Trustee......................................................3
      Debentures.............................................................3
      Delaware Trustee.......................................................3
      Depositary.............................................................3
      Depositary Participant.................................................3
      Direct Action..........................................................3
      Distribution...........................................................3
      Euroclear..............................................................3
      Exchange Act...........................................................4
      Fiduciary Indemnified Person...........................................4
      Fiscal Year............................................................4
      Global Security........................................................4
      Guarantee..............................................................4
      Holder.................................................................4
      Indemnified Person.....................................................4
      Indenture..............................................................4
      Indenture Event of Default.............................................4
      Investment Company.....................................................4
      Investment Company Act.................................................4
      Investment Company Event...............................................4
      Legal Action...........................................................5

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                                                                           Page

      List of Holders........................................................5
      Majority in Liquidation Amount.........................................5
      New York Stock Exchange................................................5
      Officers' Certificate..................................................5
      Paying Agent...........................................................5
      Payment Amount.........................................................5
      Person.................................................................5
      Preferred Security.....................................................6
      Preferred Security Certificate.........................................6
      Property Account.......................................................6
      Property Trustee.......................................................6
      Pro Rata...............................................................6
      Quorum.................................................................6
      Redemption/Distribution Notice.........................................6
      Redemption Price.......................................................6
      Regular Trustee........................................................6
      Related Party..........................................................6
      Responsible Officer....................................................6
      Rule 3a-5..............................................................6
      Securities.............................................................6
      Securities Act.........................................................6
      Special Event..........................................................6
      Sponsor................................................................7
      Successor Delaware Trustee.............................................7
      Successor Entity.......................................................7
      Successor Property Trustee.............................................7
      Successor Security.....................................................7
      Super Majority.........................................................7
      Tax Event..............................................................7
      10% in Liquidation Amount..............................................7
      Treasury Regulations...................................................7
      Trust .................................................................7
      Trust Enforcement Event................................................7
      Trust Indenture Act....................................................8
      Trustee................................................................8

ARTICLE II TRUST INDENTURE ACT...............................................8

      SECTION 2.1.   Trust Indenture Act; Application........................8
      SECTION 2.2.   Lists of Holders of Securities..........................8
      SECTION 2.3.   Reports by the Property Trustee.........................9
      SECTION 2.4.   Periodic Reports to the Property Trustee................9
      SECTION 2.5.   Evidence of Compliance with Conditions Precedent........9
      SECTION 2.6.   Trust Enforcement Events; Waiver........................9
      SECTION 2.7.   Trust Enforcement Event; Notice........................11

ARTICLE III ORGANIZATION....................................................11

                                      iii
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      SECTION 3.1.   Name and Organization..................................11
      SECTION 3.2.   Office.................................................11
      SECTION 3.3.   Purpose................................................12
      SECTION 3.4.   Authority..............................................12
      SECTION 3.5.   Title to Property of the Trust.........................12
      SECTION 3.6.   Powers and Duties of the Regular Trustees..............13
      SECTION 3.7.   Prohibition of Actions by the Trust and the Trustees...15
      SECTION 3.8.   Powers and Duties of the Property Trustee..............16
      SECTION 3.9.   Certain Duties and Responsibilities of the
                     Property Trustee ......................................18
      SECTION 3.10.  Certain Rights of Property Trustee.....................20
      SECTION 3.11.  Delaware Trustee.......................................22
      SECTION 3.12.  Execution of Documents.................................23
      SECTION 3.13.  Not Responsible for Recitals or Issuance of
                     Securities ............................................23
      SECTION 3.14.  Duration of Trust......................................23
      SECTION 3.15.  Mergers................................................23
      SECTION 3.16.  Property Trustee May File Proofs of Claim..............25

ARTICLE IV SPONSOR..........................................................26

      SECTION 4.1.   Responsibilities of the Sponsor........................26
      SECTION 4.2.   Indemnification and Fees and Expenses of the Trustees..26

ARTICLE V TRUST COMMON SECURITIES HOLDER....................................27

      SECTION 5.1.   Debenture Issuer's Receipt of Common Securities........27
      SECTION 5.2.   Covenants of the Common Securities Holder..............27

ARTICLE VI TRUSTEES.........................................................27

      SECTION 6.1.   Number of Trustees.....................................27
      SECTION 6.2.   Delaware Trustee; Eligibility..........................28
      SECTION 6.3.   Property Trustee; Eligibility..........................28
      SECTION 6.4.   Qualifications of Regular Trustees and Delaware
                     Trustee Generally .....................................29
      SECTION 6.5.   Initial Regular Trustees...............................29
      SECTION 6.6.   Appointment, Removal and Resignation of Trustees.......29
      SECTION 6.7.   Vacancies among Trustees...............................30
      SECTION 6.8.   Effect of Vacancies....................................31
      SECTION 6.9.   Meetings...............................................31
      SECTION 6.10.  Delegation of Power....................................31
      SECTION 6.11.  Merger, Conversion, Consolidation or Succession
                     to Business ...........................................32

ARTICLE VII TERMS OF SECURITIES.............................................32

      SECTION 7.1.   General Provisions Regarding Securities................32
      SECTION 7.2.   Distributions..........................................34
      SECTION 7.3.   Redemption of Securities...............................35
      SECTION 7.4.   Redemption Procedures..................................35

                                       iv
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                                                                           Page

      SECTION 7.5.   Voting Rights of Preferred Securities..................37
      SECTION 7.6.   Voting Rights of Common Securities.....................39
      SECTION 7.7.   Paying Agent...........................................40
      SECTION 7.8.   Listing................................................41
      SECTION 7.9.   Transfer of Securities.................................41
      SECTION 7.10.  Mutilated, Destroyed, Lost or Stolen Certificates......42
      SECTION 7.11.  Deemed Security Holders................................42
      SECTION 7.12.  Global Securities......................................42

ARTICLE VIII DISSOLUTION AND TERMINATION OF TRUST...........................44

      SECTION 8.1.   Dissolution and Termination of Trust...................44
      SECTION 8.2.   Liquidation Distribution Upon Dissolution of
                     the Trust .............................................45

ARTICLE IX LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
           DELAWARE TRUSTEES OR OTHERS .....................................46

      SECTION 9.1.   Liability..............................................46
      SECTION 9.2.   Exculpation............................................46
      SECTION 9.3.   Fiduciary Duty.........................................47
      SECTION 9.4.   Outside Businesses.....................................50

ARTICLE X ACCOUNTING........................................................51

      SECTION 10.1.   Fiscal Year...........................................51
      SECTION 10.2.   Certain Accounting Matters............................51
      SECTION 10.3.   Banking...............................................52
      SECTION 10.4.   Withholding...........................................52

ARTICLE XI AMENDMENTS AND MEETINGS..........................................52

      SECTION 11.1.   Amendments............................................52
      SECTION 11.2.   Meetings of the Holders of Securities;
                      Action by Written Consent ............................55

ARTICLE XII REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE........56

      SECTION 12.1.   Representations and Warranties of the Property
                      Trustee ..............................................56
      SECTION 12.2.   Representations and Warranties of the
                      Delaware Trustee .....................................57

ARTICLE XIII MISCELLANEOUS..................................................57

      SECTION 13.1.   Notices...............................................57
      SECTION 13.2.   Governing Law.........................................58
      SECTION 13.3.   Intention of the Parties..............................59
      SECTION 13.4.   Headings..............................................59
      SECTION 13.5.   Successors and Assigns................................59
      SECTION 13.6.   Partial Enforceability................................59

                                       v
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                                                                           Page

      SECTION 13.7.   Counterparts..........................................59

                                       vi
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                                    EXHIBITS

Exhibit A   Form of Preferred Security Certificate
Exhibit B   Form of Common Security Certificate

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                    AMENDED AND RESTATED DECLARATION OF TRUST

            THIS AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration"),
dated as of _______ __, ____, by and among LEHMAN BROTHERS HOLDINGS INC., a
Delaware corporation, as Sponsor, and __________________, __________________ and
__________________ as the initial Regular Trustees, The Chase Manhattan Bank, as
the initial Property Trustee and Chase Manhattan Bank Delaware, as the initial
Delaware Trustee, not in their individual capacities but solely as Trustees, and
the holders, from time to time, of undivided beneficial ownership interests in
the Trust to be issued pursuant to this Declaration.

            WHEREAS, the Trustees and the Sponsor established Lehman Brothers
Holdings Capital Trust __ (the "Trust"), a business trust under the Business
Trust Act (as defined, together with other capitalized terms, herein) pursuant
to a Declaration of Trust dated as of ____________, 1998, (the "Original
Declaration") and a Certificate of Trust (the "Certificate of Trust") filed with
the Secretary of State of the State of Delaware on ____________, 1998; and

            WHEREAS, the sole purpose of the Trust shall be to issue certain
securities representing undivided beneficial ownership interests in the assets
of the Trust, in exchange for the Debentures issued by the Debenture Issuer and
to engage in only those activities necessary or incidental thereto; and

            WHEREAS, the parties hereto, by this Declaration, amend and restate
each and every term and provision of the Original Declaration.

            NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees hereby declare that all assets contributed to the Trust be held in
trust for the benefit of the Holders, from time to time, of the Securities
representing undivided beneficial ownership interests in the assets of the Trust
issued hereunder, subject to the provisions of this Declaration.

                                   ARTICLE 1

                         INTERPRETATION AND DEFINITIONS

            SECTION 1.1. Interpretation and Definitions.

            Unless the context otherwise requires:

            (a) capitalized terms used in this Declaration but not defined in
the preamble above have the meanings assigned to them in this Section 1.1;a term
defined anywhere in this Declaration has the same meaning throughout;

            (b) all references to "the Declaration" or "this Declaration" are to
this Declaration as modified, supplemented or amended from time to time;

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                                                                               2

            (c) all references in this Declaration to Articles, Sections,
Recitals and Exhibits are to Articles and Sections of, or Recitals and Exhibits
to, this Declaration unless otherwise specified;

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

            (e) 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 a term, as applicable.

            (f) the following terms have the following meanings:

            "Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act or any successor rule thereunder.

            "Authorized Officer" of a Person means any Person that is authorized
to bind such Person.

            "Beneficial Owners" means, for Preferred Securities represented by a
Global Security, the Person who acquires an interest in the Preferred Securities
which is reflected on the records of the Depositary through the Depositary
Participants.

            "Business Day" means any day, other than a Saturday or Sunday, that
is not a day on which banking institutions in the Borough of Manhattan, The City
of New York are authorized or required by law, regulation or executive order to
close.

            "Business Trust Act" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code Section 3801 et seq., as it may be amended from time to time,
or any successor legislation.

            "Certificate" means a Common Security Certificate or a Preferred
Security Certificate.

            "Certificate of Trust" has the meaning specified in the Recitals
hereto.

            "Clearstream Banking" means Clearstream Banking, societe anonyme,
Luxembourg.

            "Closing Date" means the date on which the Preferred Securities are
issued and sold.

            "Code" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor legislation. A reference to a specific section of the
Code refers not only to such specific section but also to any corresponding
provision of any federal tax statute enacted after the date of this Declaration,
as such specific section or corresponding provision is in effect on the date of
application of the provisions of this Declaration containing such reference.

            "Commission" means the Securities and Exchange Commission.

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                                                                               3

            "Common Securities Holder" means Lehman Brothers Holdings Inc., in
its capacity as purchaser and holder of all of the Common Securities issued by
the Trust.

            "Common Security" has the meaning specified in Section 7.1

            "Common Security Certificate" means a definitive certificate in
fully registered form representing a Common Security, substantially in the form
of Exhibit B hereto.

            "Corporate Trust Office" means the principal office of the Property
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Declaration is
located at 450 West 33rd Street, New York, New York 10001.

            "Covered Person" means (a) any officer, director, shareholder,
partner, member, representative, employee or agent of (i) the Trust or (ii) the
Trust's Affiliates; and (b) any Holder.

            "Debenture Issuer" means Lehman Brothers Holdings Inc., in its
capacity as issuer of the Debentures under the Indenture.

            "Debenture Issuer Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee or any Affiliate thereof; or (d) any officer, employee or agent
of the Trust or its Affiliates.

            "Debenture Trustee" means The Chase Manhattan Bank, in its capacity
as trustee under the Indenture until a successor is appointed thereunder, and
thereafter means such successor trustee.

            "Debentures" means the series of debentures to be issued by the
Debenture Issuer under the Indenture and held by the Property Trustee.

            "Delaware Trustee" has the meaning specified in Section 6.2.

            "Depositary" means, with respect to Securities issuable in whole or
in part in the form of one or more Global Securities, a clearing agency
registered under the Exchange Act that is designated to act as Depositary for
such Securities.

            "Depositary Participant" means a member of, or participant in, the
Depositary.

            "Direct Action" has the meaning specified in Section 3.8(e).

            "Distribution" means a distribution payable to Holders of Securities
in accordance with Section 7.2.

            "Euroclear" means Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System.

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                                                                               4

            "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor legislation.

            "Fiduciary Indemnified Person" has the meaning set forth in Section
9.4(b).

            "Fiscal Year" has the meaning specified in Section 10.1.

            "Global Security" means a fully registered, global Preferred
Security Certificate.

            "Guarantee" means the Guarantee Agreement, dated as of _______ __,
____, of the Sponsor in respect of the Securities.

            "Holder" means any holder of Securities, as registered on the books
and records of the Trust; provided, however, that in determining whether the
Holders of the requisite liquidation amount of Preferred Securities have voted
on any matter provided for in this Declaration, then for the purpose of such
determination only (and not for any other purpose hereunder), if the Preferred
Securities remain in the form of one or more Global Securities and if the
Depositary which is the holder of such Global Securities has sent an omnibus
proxy to the Trust assigning voting rights to Depositary Participants to whose
accounts the Preferred Securities are credited on the record date, the term
"Holders" shall mean such Depositary Participants acting at the direction of the
Beneficial Owners.

            "Indemnified Person" means a Debenture Issuer Indemnified Person or
a Fiduciary Indemnified Person.

            "Indenture" means the Indenture, dated as of February 1, 1996,
between the Debenture Issuer and The Chase Manhattan Bank, formerly known as
Chemical Bank, as Trustee, and as amended and supplemented by the First
Supplemental Indenture thereto, dated as of February 1, 1996, and by any other
indenture supplement thereto pursuant to which the Debentures are to be issued
by the Property Trustee.

            "Indenture Event of Default" has the meaning given to the term
"Event of Default" in the Indenture.

            "Investment Company" means an investment company as defined in the
Investment Company Act and the regulations promulgated thereunder.

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

            "Investment Company Event" means the receipt by the Trust of an
opinion of a nationally recognized independent counsel, to the effect that, as a
result of the occurrence of a change in law or regulation or a written change in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Trust is or will be considered
an "investment company" that is required to be registered under the Investment
Company Act, which Change in 1940 Act Law becomes effective on or after the
Closing Date.

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                                                                               5

            "Legal Action" has the meaning specified in Section 3.6(g).

            "List of Holders" has the meaning specified in Section 2.2(a).

            "Majority in Liquidation Amount" means, except as provided in the
terms of the Preferred Securities or by the Trust Indenture Act, Holder(s) of
outstanding Securities, voting together as a single class, or, as the context
may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a class, who are the record
owners of more than 50% of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant class.

            "New York Stock Exchange" means the New York Stock Exchange, Inc. or
any successor thereto.

            "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 Declaration shall include:

            (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;

            (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
acting on behalf of such Person, such condition or covenant has been complied
with; provided, that the term "Officers' Certificate", when used with reference
to Regular Trustees who are natural persons shall mean a certificate signed by
two of the Regular Trustees which otherwise satisfies the foregoing
requirements.

            "Paying Agent" has the meaning specified in Section 3.8(h).

            "Payment Amount" has the meaning specified in Section 7.2(c).

            "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.

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                                                                               6

            "Preferred Security" has the meaning specified in Section 7.1.

            "Preferred Security Certificate" means a definitive certificate in
fully registered form representing a Preferred Security, substantially in the
form of Exhibit A.

            "Property Account" has the meaning specified in Section 3.8(c).

            "Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 6.3.

            "Pro Rata" means pro rata to each Holder of Securities according to
the aggregate liquidation amount of the Securities held by the relevant Holder
in relation to the aggregate liquidation amount of all Securities outstanding.

            "Quorum" means a majority of the Regular Trustees or, if there are
only two Regular Trustees, both of them.

            "Redemption/Distribution Notice" has the meaning specified in
Section 7.4(a) hereto.

            "Redemption Price" means the amount for which the Securities will be
redeemed, which amount will equal (i) the redemption price paid by the Debenture
Issuer to repay or redeem, in whole or in part, the Debentures held by the Trust
which shall include accumulated and unpaid Distributions on such Securities
through the date of their redemption or (ii) such lesser amount as will be
received by the Trust in respect of the Debentures so repaid or redeemed.

            "Regular Trustee" means any Trustee other than the Property Trustee
and the Delaware Trustee.

            "Related Party" means, with respect to the Sponsor, any direct or
wholly owned subsidiary of the Sponsor or any Person that owns, directly or
indirectly, 100% of the outstanding voting securities of the Sponsor.

            "Responsible Officer" means, with respect to the Property Trustee,
any officer with direct responsibility for the administration of this
Declaration 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.

            "Rule 3a-5" means Rule 3a-5 under the Investment Company Act or any
successor rule thereunder.

            "Securities" means the Common Securities and the Preferred
Securities.

            "Securities Act" means the Securities Act of 1933, as amended from
time to time, or any successor legislation.

            "Special Event" means a Tax Event or an Investment Company Event.

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                                                                               7

            "Sponsor" means Lehman Brothers Holdings Inc., a Delaware
corporation, or any successor entity in a merger, consolidation, amalgamation or
replacement by or conveyance, transfer or lease of its properties substantially
as an entirety, in its capacity as sponsor of the Trust.

            "Successor Delaware Trustee" has the meaning specified in Section
6.6(b).

            "Successor Entity" has the meaning specified in Section 3.15(b)(i).

            "Successor Property Trustee" has the meaning specified in Section
6.6(b).

            "Successor Security" has the meaning specified in Section
3.15(b)(i)b.

            "Super Majority" has the meaning specified in Section 2.6(a)(ii).

            "Tax Event" means the receipt by the Trust of an opinion of
independent tax counsel experienced in such matters, to the effect that, as a
result of (a) any amendment to, change in or announced proposed change in the
laws (or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein, or (b) any official
administrative pronouncement, action or judicial decision interpreting or
applying such laws or regulations, which such amendment or change becomes
effective or proposed change, pronouncement, action or decision is announced on
or after the Closing Date, there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days of the date of such opinion, subject to the
United States federal income tax with respect to income received or accrued on
the Debentures, (ii) interest payable by the Debenture Issuer on the Debentures
is not, or within 90 days of the date of such opinion, will not be, deductible
by the Debenture Issuer, in whole or in part, for United States federal income
tax purposes, or (iii) the Trust is, or will be within 90 days of the date of
such opinion, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.

            "10% in Liquidation Amount" means, except as provided in the terms
of the Preferred Securities or by the Trust Indenture Act, Holder(s) of
outstanding Securities, voting together as a single class, or, as the context
may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a class, who are the record
owners of 10% or more of the aggregate liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant class.

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

            "Trust" has the meaning specified in the Recitals hereto.

            "Trust Enforcement Event" in respect of the Securities means an
Indenture Event of Default has occurred and is continuing in respect of the
Debentures.

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                                                                               8

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

            "Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue as a trustee in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with the
provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.

                                   ARTICLE 2

                               TRUST INDENTURE ACT

            SECTION 2.1. Trust Indenture Act; Application.

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

            (b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.

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

            (d) The application of the Trust Indenture Act to this Declaration
shall not affect the Trust's classification as a grantor trust for United States
federal income tax purposes.

            SECTION 2.2. Lists of Holders of Securities.

            (a) Each of the Sponsor and the Regular Trustees on behalf of the
Trust shall provide the Property Trustee (i), except while the Preferred
Securities are represented by one or more Global Securities, at least five
Business Days prior to the date for payment of Distributions, a list, in such
form as the Property Trustee may reasonably require, of the names and addresses
of the Holders of the 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 Trust of a written request from the Property Trustee
for a List of Holders as of a date no more than 15 days before such List of
Holders is given to the Property Trustee; provided that neither the Sponsor nor
the Regular Trustees on behalf of the Trust shall 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 Property Trustee by the Sponsor and the
Regular Trustees on behalf of the Trust. The Property Trustee shall preserve, in
as current a form as is reasonably practicable, all information contained in
Lists of Holders given to it or which it receives in the capacity as Paying
Agent (if acting in such capacity), provided that the Property Trustee may
destroy any List of Holders previously given to it on receipt of a new List of
Holders.

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                                                                               9

            (b) The Property Trustee shall comply with its obligations under,
and shall be entitled to the benefits of, Sections 311(a), 311(b) and 312(b) of
the Trust Indenture Act.

            SECTION 2.3. Reports by the Property Trustee.

            Within 60 days after May 15 of each year (commencing with the year
of the first anniversary of the issuance of the Preferred Securities), the
Property Trustee shall provide to the Holders of the Preferred 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 Property Trustee shall also comply with the requirements of Section 313(d)
of the Trust Indenture Act.

            SECTION 2.4. Periodic Reports to the Property Trustee.

            Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust Indenture Act (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form, in
the manner and at the times required by Section 314 of the Trust Indenture Act.

            SECTION 2.5. Evidence of Compliance with Conditions Precedent.

            Each of the Sponsor and the Regular Trustees on behalf of the Trust
shall provide to the Property Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration 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.

            SECTION 2.6. Trust Enforcement Events; Waiver.

            (a) The Holders of a Majority in Liquidation Amount of the Preferred
Securities may, by vote or written consent, on behalf of the Holders of all of
the Preferred Securities, waive any past Trust Enforcement Event in respect of
the Preferred Securities and its consequences, provided that, if the underlying
Indenture Event of Default:

                  (i) is not waivable under the Indenture, the Trust Enforcement
            Event under the Declaration shall also not be waivable; or

                  (ii) requires the consent or vote of the Holders of greater
            than a majority in principal amount of the Debentures (a "Super
            Majority") to be waived under the Indenture, the related Trust
            Enforcement Event under the Declaration may only be waived by the
            vote or written consent of the Holders of at least the proportion in
            liquidation amount of the Preferred Securities that the relevant
            Super Majority represents of the aggregate principal amount of the
            Debentures outstanding.

            The foregoing provisions of this Section 2.6(a) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of
the Trust Indenture Act

<PAGE>
                                                                              10

is hereby expressly excluded from this Declaration and the Securities, as
permitted by the Trust Indenture Act. Upon such waiver, any such default shall
cease to exist, and any Trust Enforcement Event with respect to the Preferred
Securities arising therefrom shall be deemed to have been cured, for every
purpose of this Declaration and the Preferred Securities, but no such waiver
shall extend to any subsequent or other Trust Enforcement Event with respect to
the Preferred Securities or impair any right consequent thereon. Any waiver by
the Holders of the Preferred Securities of a Trust Enforcement Event with
respect to the Preferred Securities shall also be deemed to constitute a waiver
by the Holders of the Common Securities of any such Trust Enforcement Event with
respect to the Common Securities for all purposes of this Declaration without
any further act, vote, or consent of the Holders of the Common Securities.

            (b) The Holders of a Majority in Liquidation Amount of the Common
Securities may, by vote or written consent, on behalf of the Holders of all of
the Common Securities, waive any past Trust Enforcement Event in respect of the
Common Securities and its consequences, provided that, if the underlying
Indenture Event of Default:

                  (i) is not waivable under the Indenture, except where the
            Holders of the Common Securities are deemed to have waived such
            Trust Enforcement Event under the Declaration as provided below in
            this Section 2.6(b), the Trust Enforcement Event under the
            Declaration shall also not be waivable; or

                  (ii) requires the consent or vote of a Super Majority to be
            waived under the Indenture, except where the Holders of the Common
            Securities are deemed to have waived such Trust Enforcement Event
            under the Declaration as provided below in this Section 2.6(b), the
            Trust Enforcement Event under the Declaration may only be waived by
            the vote or written consent of the Holders of at least the
            proportion in liquidation amount of the Common Securities that the
            relevant Super Majority represents of the aggregate principal amount
            of the Debentures outstanding;

provided further, each Holder of Common Securities will be deemed to have waived
any Trust Enforcement Event and all Trust Enforcement Events with respect to the
Common Securities and the consequences thereof until all Trust Enforcement
Events with respect to the Preferred Securities have been cured, waived or
otherwise eliminated, and until such Trust Enforcement Events with respect to
the Preferred Securities have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the Preferred Securities and only the Holders of the Preferred Securities will
have the right to direct the Property Trustee in accordance with the terms of
the Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu
of Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
Sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Securities, as permitted by the
Trust Indenture Act. Subject to the foregoing provisions of this Section 2.6(b),
upon such cure, waiver or other elimination, any such default shall cease to
exist and any Trust Enforcement Event with respect to the Common Securities
arising therefrom shall be deemed to have been cured for every purpose of this
Declaration, but no such waiver shall extend to any subsequent or other Trust
Enforcement Event with respect to the Common Securities or impair any right
consequent thereon.

<PAGE>
                                                                              11

            (c) A waiver of an Indenture Event of Default by the Property
Trustee at the direction of the Holders of the Preferred Securities constitutes
a waiver of the corresponding Trust Enforcement Event with respect to the
Preferred Securities under this Declaration. The foregoing provisions of this
Section 2.6(c) shall be in lieu of Section 316(a)(1)(B) of the Trust Indenture
Act and such Section 316(a)(1)(B) of the Trust Indenture Act is hereby expressly
excluded from this Declaration and the Securities, as permitted by the Trust
Indenture Act.

            SECTION 2.7. Trust Enforcement Event; Notice.

            (a) The Property Trustee shall, within 90 days after the occurrence
of a Trust Enforcement Event, transmit by mail, first class postage prepaid, to
the Holders of the Securities, notices of all defaults with respect to the
Securities actually known to a Responsible Officer of the Property Trustee,
unless such defaults have been cured before the giving of such notice (the term
"defaults" for the purposes of this Section 2.7(a) being hereby defined to be an
Indenture Event of Default, not including any periods of grace provided for
therein and irrespective of the giving of any notice provided therein); provided
that, except for a default in the payment of principal of (or premium, if any)
or interest on any of the Debentures, the Property Trustee shall be protected in
withholding such notice if and so long as a Responsible Officer of the Property
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of the Securities.

            (b) The Property Trustee shall not be deemed to have knowledge of
any default except:

                  (i) a default under Sections 501(1) and 501(2) of the
            Indenture; or

                  (ii) any default as to which the Property Trustee shall have
            received written notice or of which a Responsible Officer of the
            Property Trustee charged with the administration of this Declaration
            shall have actual knowledge.

                                    ARTICLE 3

                                  ORGANIZATION

            SECTION 3.1. Name and Organization.

            The Trust hereby continued is named "Lehman Brothers Holdings
Capital Trust __" as such name may be modified from time to time by the Regular
Trustees following written notice to the Holders of Securities, the Property
Trustee and the Delaware Trustee. The Trust's activities may be conducted under
the name of the Trust or any other name deemed advisable by the Regular
Trustees.

            SECTION 3.2. Office.

            The address of the principal office of the Trust is c/o Lehman
Brothers Holdings Inc., 3 World Financial Center, New York, New York 10285. On
10 Business Days' written

<PAGE>
                                                                              12

notice to the Holders of Securities, the Property Trustee and the Delaware
Trustee, the Regular Trustees may designate another principal office.

            SECTION 3.3. Purpose.

            The exclusive purposes and functions of the Trust are (a) to issue
Securities in exchange for the Debentures, and (b) except as otherwise limited
herein, to engage in only those other activities necessary or incidental
thereto. The Trust shall not borrow money, issue debt or reinvest proceeds
derived from investments, pledge any of its assets or otherwise undertake (or
permit to be undertaken) any activity that would cause the Trust to be
classified as other than a grantor trust for United States federal income tax
purposes.

            By the acceptance of this Trust, the Trustees, the Sponsor, the
Holders of the Preferred Securities and Common Securities and the Preferred
Securities Beneficial Owners agree to treat the Trust as a grantor trust for
United States federal income tax purposes and not to take any position that is
contrary to such classification.

            SECTION 3.4. Authority.

            Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Regular Trustees shall have
exclusive authority to carry out the purposes of the Trust. An action taken by
the Regular Trustees in accordance with their powers shall constitute the act of
and serve to bind the Trust and an action taken by the Property Trustee on
behalf of the Trust in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Trustees acting on behalf of
the Trust, no Person shall be required to inquire into the authority of the
Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as set forth in this
Declaration.

            (a) Except as expressly set forth in this Declaration and except if
a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.

            (b) Unless otherwise determined by the Regular Trustees, and except
as otherwise required by the Business Trust Act or applicable law, any Regular
Trustee is authorized to execute on behalf of the Trust any documents which the
Regular Trustees have the power and authority to cause the Trust to execute
pursuant to Section 3.6(b), provided, that the registration statements referred
to in Section 3.6(b)(i), including any amendments thereto, shall be signed by or
on behalf of a majority of the Regular Trustees; and

            (c) A Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of signing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.

            SECTION 3.5. Title to Property of the Trust.

<PAGE>
                                                                              13

            Except as provided in Section 3.8 with respect to the Debentures and
the Property Account or as otherwise provided in this Declaration, legal title
to all assets of the Trust shall be vested in the Trust. The Holders shall not
have legal title to any part of the assets of the Trust, but shall have an
undivided beneficial ownership interest in the assets of the Trust.

            SECTION 3.6. Powers and Duties of the Regular Trustees.

            The Regular Trustees shall have the exclusive power, duty and
authority to cause the Trust to engage in the following activities:

            (a) to establish the terms and form of the Preferred Securities and
the Common Securities in the manner specified in Section 7.1 and issue and
exchange the Preferred Securities and the Common Securities in accordance with
this Declaration; provided, however, that the Trust may issue no more than one
series of Preferred Securities and no more than one series of Common Securities,
and, provided further, that there shall be no interests in the Trust other than
the Securities, and the issuance of Securities shall be limited to a one-time,
simultaneous issuance of both Preferred Securities and Common Securities on the
Closing Date;

            (b) in connection with the issue of the Preferred Securities, at the
direction of the Sponsor, to:

                  (i) execute and file an application, prepared by the Sponsor,
            to the New York Stock Exchange or any other national stock exchange
            or the NASDAQ Stock Market for listing of any Preferred Securities,
            the Guarantee and the Debentures;

                  (ii) execute and file with the Commission one or more
            registration statements on the applicable forms prepared by the
            Sponsor, including any amendments thereto, pertaining to the
            Preferred Securities, the Guarantee and the Debentures;

                  (iii) execute and file any documents prepared by the Sponsor,
            or take any acts as determined by the Sponsor to be necessary, in
            order to qualify or register all or part of the Preferred Securities
            in any State in which the Sponsor has determined to qualify or
            register such Preferred Securities for sale; and

                  (iv) negotiate the terms of and execute and enter into an
            underwriting agreement and other related agreements providing for
            the sale of the Preferred Securities;

            (c) to acquire the Debentures in exchange for the issuance of the
Preferred Securities and the Common Securities; provided, however, that the
Regular Trustees shall cause legal title to the Debentures to be held of record
in the name of the Property Trustee for the benefit of the Holders of the
Preferred Securities and the Holders of the Common Securities;

            (d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event; provided that the Regular Trustees
shall consult with the Sponsor

<PAGE>
                                                                              14

and the Property Trustee before taking or refraining from taking any action in
relation to any such Special Event;

            (e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and with
respect to, for the purposes of Section 316(c) of the Trust Indenture Act,
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Preferred Securities and Holders of Common Securities
as to such actions and applicable record dates;

            (f) to take all actions and perform such duties as may be required
of the Regular Trustees pursuant to the terms of this Declaration and the
Securities;

            (g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action or otherwise adjust claims or demands of or against the Trust
("Legal Action"), unless pursuant to Section 3.8(e), the Property Trustee has
the exclusive power to bring such Legal Action;

            (h) subject to Section 6.10, to employ or otherwise engage employees
and agents (who may be designated as officers with titles) and managers,
contractors, advisors and consultants to conduct only those services that the
Regular Trustees have authority to conduct directly, and to pay reasonable
compensation for such services;

            (i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;

            (j) to give the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be executed
by any Regular Trustee;

            (k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;

            (l) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;

            (m) to give prompt written notice to the Holders of the Securities
of any notice received from the Debenture Issuer of its election to defer
payments of interest on the Debentures by extending the interest payment period
under the Debentures as authorized by the Indenture;

            (n) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Preferred
Securities and the Holders of the Common Securities or to enable the Trust to
effect the purposes for which the Trust was created;

            (o) to take any action, not inconsistent with applicable law, that
the Regular Trustees determine in their discretion to be necessary or desirable
in carrying out the purposes

<PAGE>
                                                                              15

and functions of the Trust as set out in Section 3.3 or the activities of the
Trust as set out in this Section 3.6, including, but not limited to:

                  (i) causing the Trust not to be deemed to be an Investment
            Company required to be registered under the Investment Company Act;

                  (ii) causing the Trust to be classified as a grantor trust for
            United States federal income tax purposes; and

                  (iii) cooperating with the Debenture Issuer to ensure that the
            Debentures will be treated as indebtedness of the Debenture Issuer
            for United States federal income tax purposes.

            (p) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to the
Trust to be duly prepared and filed by the Regular Trustees, on behalf of the
Trust; and

            (q) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.

            The Regular Trustees shall exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Regular Trustees shall have no power
to, and shall not, take any action that is inconsistent with the purposes and
functions of the Trust set forth in Section 3.3.

            Subject to this Section 3.6, the Regular Trustees shall have none of
the powers or the authority of the Property Trustee set forth in Section 3.8.

            Any expenses incurred by the Regular Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.

            SECTION 3.7. Prohibition of Actions by the Trust and the Trustees.

            (a) The Trust shall not, and none of the Trustees (including the
Property Trustee) shall cause the Trust to, engage in any activity other than as
required or authorized by this Declaration. In particular, the Trust shall not
and none of the Trustees (including the Property Trustee) shall cause the Trust
to:

                  (i) invest any proceeds received by the Trust from holding the
            Debentures, but shall distribute all such proceeds to Holders of
            Securities pursuant to the terms of this Declaration and of the
            Securities;

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

                  (iii) possess Trust property for other than a Trust purpose;

                  (iv) make any loans or incur any indebtedness;

<PAGE>
                                                                              16

                  (v) possess any power or otherwise act in such a way as to
            vary the Trust assets;

                  (vi) possess any power or otherwise act in such a way as to
            vary the terms of the Securities in any way whatsoever (except to
            the extent expressly authorized in this Declaration or by the terms
            of the Securities);

                  (vii) issue any securities or other evidences of beneficial
            ownership of, or beneficial interest in, the Trust other than the
            Securities;

                  (viii) other than as provided in this Declaration or by the
            terms of the Securities, (A) direct the time, method and place of
            exercising any trust or power conferred upon the Debenture Trustee
            with respect to the Debentures, (B) waive any past default that is
            waivable under the Indenture, (C) exercise any right to rescind or
            annul any declaration that the principal of all the Debentures shall
            be due and payable, or (D) consent to any amendment, modification or
            termination of the Indenture or the Debentures where such consent
            shall be required unless the Trust shall have received an opinion of
            counsel to the effect that such modification will not cause more
            than an insubstantial risk that the Trust will be deemed an
            Investment Company required to be registered under the Investment
            Company Act, or the Trust will be classified as other than a grantor
            trust for United States federal income tax purposes;

                  (ix) take any action inconsistent with the status of the Trust
            as a grantor trust for United States federal income tax purposes; or

                  (x) revoke any action previously authorized or approved by
            vote of the Holders of the Preferred Securities.

            SECTION 3.8. Powers and Duties of the Property Trustee.

            (a) The legal title to the Debentures shall be owned by and held of
record in the name of the Property Trustee in trust for the benefit of the Trust
and the Holders of the Securities. The right, title and interest of the Property
Trustee to the Debentures shall vest automatically in each Person who may
hereafter be appointed as Property Trustee in accordance with Section 6.6. Such
vesting and cessation of title shall be effective whether or not conveyancing
documents with regard to the Debentures have been executed and delivered.

            (b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Regular Trustees or to the Delaware Trustee
(if the Property Trustee does not also act as Delaware Trustee).

            (c) The Property Trustee shall:

                  (i) establish and maintain a segregated non-interest bearing
            trust account (the "Property Account") in the name of and under the
            exclusive control of the Property Trustee on behalf of the Holders
            of the Securities and, upon the receipt of payments of funds made in
            respect of the Debentures held by the

<PAGE>
                                                                              17

            Property Trustee, deposit such funds into the Property Account and
            make payments to the Holders of the Preferred Securities and Holders
            of the Common Securities from the Property Account in accordance
            with Section 7.2. Funds in the Property Account shall be held
            uninvested until disbursed in accordance with this Declaration. The
            Property Account shall be an account that is maintained with a
            banking institution the rating on whose long-term unsecured
            indebtedness is at least equal to the rating assigned to the
            Preferred Securities by a "nationally recognized statistical rating
            organization", within the meaning of Rule 436(g)(2) under the
            Securities Act;

                  (ii) engage in such ministerial activities as shall be
            necessary or appropriate to effect the redemption of the Preferred
            Securities and the Common Securities to the extent the Debentures
            are redeemed or mature; and

                  (iii) upon written notice of distribution issued by the
            Regular Trustees in accordance with the terms of the Securities,
            engage in such ministerial activities as so directed and as shall be
            necessary or appropriate to effect the distribution of the
            Debentures to Holders of Securities upon the occurrence of a Special
            Event.

            (d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of this Declaration and the Securities.

            (e) The Property Trustee shall take any Legal Action which arises
out of or in connection with a Trust Enforcement Event of which a Responsible
Officer of the Property Trustee has actual knowledge or the Property Trustee's
duties and obligations under this Declaration or the Trust Indenture Act;
provided however, that if a Trust Enforcement Event has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay interest, principal or other required payments on the Debentures on the
date such interest, principal or other required payments are otherwise payable
(or in the case of redemption, on the redemption date), then a Holder of
Preferred Securities may directly institute a proceeding against the Debenture
Issuer for enforcement of payment to such Holder of the principal of or interest
on Debentures having a principal amount equal to the aggregate liquidation
amount of the Preferred Securities of such Holder (a "Direct Action") on or
after the respective due date specified in the Debentures.

            (f) The Property Trustee shall continue to serve as a Trustee until
either:

                  (i) the Trust has been completely liquidated and the proceeds
            of the liquidation distributed to the Holders of Securities pursuant
            to the terms of the Securities; or

                  (ii) a Successor Property Trustee has been appointed and has
            accepted that appointment in accordance with Section 6.6.

<PAGE>
                                                                              18

            (g) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if a Trust Enforcement Event actually known to a Responsible
Officer of the Property Trustee occurs and is continuing, the Property Trustee
shall, for the benefit of Holders of the Securities, enforce its rights as
holder of the Debentures subject to the rights of the Holders pursuant to the
terms of such Securities.

            (h) The Property Trustee may authorize one or more Persons (each, a
"Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all Securities and any such
Paying Agent shall comply with Section 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Property Trustee at any time and a successor
Paying Agent or additional Paying Agents may be appointed at any time by the
Property Trustee.

            (i) Subject to this Section 3.8, the Property Trustee shall have
none of the duties, liabilities, powers or the authority of the Regular Trustees
set forth in Section 3.6.

            The Property Trustee shall exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall have no power
to, and shall not, take any action that is inconsistent with the purposes and
functions of the Trust set out in Section 3.3.

            SECTION 3.9. Certain Duties and Responsibilities of the Property
Trustee.

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

            (b) No provision of this Declaration shall be construed to relieve
the Property 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 a Trust Enforcement Event and
            after the curing or waiving of all such Trust Enforcement Events
            that may have occurred:

                        (A)   the duties and obligations of the Property Trustee
                              shall be determined solely by the express
                              provisions of this Declaration and the Property
                              Trustee shall not be liable except for the
                              performance of such duties and obligations as are
                              specifically set forth in this Declaration, and no

<PAGE>
                                                                              19

                              implied covenants or obligations shall be read
                              into this Declaration against the Property
                              Trustee; and

                        (B)   in the absence of bad faith on the part of the
                              Property Trustee, the Property 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 Property Trustee and
                              conforming to the requirements of this
                              Declaration; but in the case of any such
                              certificates or opinions that by any provision
                              hereof are specifically required to be furnished
                              to the Property Trustee, the Property Trustee
                              shall be under a duty to examine the same to
                              determine whether or not they conform to the
                              requirements of this Declaration;

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

                  (iii) the Property Trustee shall not be liable with respect to
            any action taken or omitted to be taken by it without negligence, in
            good faith in accordance with the direction of the Holders of not
            less than a Majority in Liquidation Amount of the Securities
            relating to the time, method and place of conducting any proceeding
            for any remedy available to the Property Trustee, or exercising any
            trust or power conferred upon the Property Trustee under this
            Declaration;

                  (iv) no provision of this Declaration shall require the
            Property 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 it shall have
            reasonable grounds for believing that the repayment of such funds or
            liability is not reasonably assured to it under the terms of this
            Declaration or indemnity reasonably satisfactory to the Property
            Trustee against such risk or liability is not reasonably assured to
            it;

                  (v) the Property Trustee's sole duty with respect to the
            custody, safe-keeping and physical preservation of the Debentures
            and the Property Account shall be to deal with such property in a
            similar manner as the Property Trustee deals with similar property
            for its own account, subject to the protections and limitations on
            liability afforded to the Property Trustee under this Declaration
            and the Trust Indenture Act;

                  (vi) the Property Trustee shall have no duty or liability for
            or with respect to the value, genuineness, existence or sufficiency
            of the Debentures or the payment of any taxes or assessments levied
            thereon or in connection therewith;

<PAGE>
                                                                              20

                  (vii) the Property Trustee shall not be liable for any
            interest on any money received by it except as it may otherwise
            agree with the Sponsor. Money held by the Property Trustee need not
            be segregated from other funds held by it except in relation to the
            Property Account maintained by the Property Trustee pursuant to
            Section 3.8(c)(i) and except to the extent otherwise required by
            law; and

                  (viii) the Property Trustee shall not be responsible for
            monitoring the compliance by the Regular Trustees or the Sponsor
            with their respective duties under this Declaration, nor shall the
            Property Trustee be liable for any default or misconduct of the
            Regular Trustees or the Sponsor.

            SECTION 3.10. Certain Rights of Property Trustee.

            (a) Subject to the provisions of Section 3.9:

                  (i) the Property 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 Sponsor or the Regular
            Trustees contemplated by this Declaration shall be sufficiently
            evidenced by an Officers' Certificate;

                  (iii) whenever in the administration of this Declaration, the
            Property Trustee shall deem it desirable that a matter be proved or
            established before taking, suffering or omitting any action
            hereunder, the Property 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 Sponsor or the Regular Trustees;

                  (iv) the Property Trustee shall have no duty to see to any
            recording, filing or registration of any instrument (including any
            financing or continuation statement or any filing under tax or
            securities laws) or any rerecording, refiling or registration
            thereof;

                  (v) the Property Trustee may consult with counsel of its
            choice or other experts and the advice or opinion of such counsel
            and experts with respect to legal matters or advice within the scope
            of such experts' area of expertise 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
            Sponsor or any of its Affiliates, and may include any of its
            employees. The Property Trustee shall have

<PAGE>
                                                                              21

            the right at any time to seek instructions concerning the
            administration of this Declaration from any court of competent
            jurisdiction;

                  (vi) the Property Trustee shall be under no obligation to
            exercise any of the rights or powers vested in it by this
            Declaration at the request or direction of any Holder, unless such
            Holder shall have provided to the Property Trustee security and
            indemnity, reasonably satisfactory to the Property Trustee, against
            the costs, expenses (including attorneys' fees and expenses and the
            expenses of the Property 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 Property Trustee; provided that, nothing contained
            in this Section 3.10(a) shall be taken to relieve the Property
            Trustee, upon the occurrence of an Trust Enforcement Event, of its
            obligation to exercise the rights and powers vested in it by this
            Declaration;

                  (vii) the Property 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
            Property Trustee, in its discretion, may make such further inquiry
            or investigation into such facts or matters as it may see fit;

                  (viii) the Property Trustee may execute any of the trusts or
            powers hereunder or perform any duties hereunder either directly or
            by or through agents, custodians, nominees or attorneys and the
            Property 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; provided that such agent, custodian, nominee
            or attorney is a U.S. person as defined in Section 7701(a)(30) of
            the Code;

                  (ix) any action taken by the Property Trustee or its agents
            hereunder shall bind the Trust and the Holders of the Securities,
            and the signature of the Property Trustee or its agents alone shall
            be sufficient and effective to perform any such action and no third
            party shall be required to inquire as to the authority of the
            Property Trustee to so act or as to its compliance with any of the
            terms and provisions of this Declaration, both of which shall be
            conclusively evidenced by the Property Trustee's or its agent's
            taking such action;

                  (x) whenever in the administration of this Declaration the
            Property Trustee shall deem it desirable to receive instructions
            with respect to enforcing any remedy or right or taking any other
            action hereunder, the Property Trustee (i) may request instructions
            from the Holders of the Securities which instructions may only be
            given by the Holders of the same proportion in liquidation amount of
            the Securities as would be entitled to direct the Property Trustee
            under the terms of the Securities in respect of such remedy, right
            or action, (ii) may refrain from enforcing such remedy or right or
            taking such other action until such instructions

<PAGE>
                                                                              22

            are received, and (iii) shall be protected in conclusively relying
            on or acting in or accordance with such instructions;

                  (xi) except as otherwise expressly provided by this
            Declaration, the Property Trustee shall not be under any obligation
            to take any action that is discretionary under the provisions of
            this Declaration;

                  (xii) the Property Trustee shall not be liable for any action
            taken, suffered or omitted to be taken by it without negligence, in
            good faith and reasonably believed by it to be authorized or within
            the discretion, rights or powers conferred upon it by this
            Declaration;

                  (xiii) without prejudice to any other rights available to the
            Property Trustee under applicable law, when the Property Trustee
            incurs expenses or renders services in connection with a bankruptcy
            , such expenses (including the fees and expenses of its counsel) and
            the compensation for such services are intended to constitute
            expenses of administration under any bankruptcy law or law relating
            to creditors rights generally;

                  (xiv) the Property Trustee shall not be charged with knowledge
            of a Trust Enforcement Event unless a Responsible Officer of the
            Property Trustee obtains actual knowledge of such event or the
            Property Trustee receives written notice of such event from Holders
            holding more than a Majority in Liquidation Amount of the Preferred
            Securities; and

                  (xv) any action taken by the Property Trustee or its agents
            hereunder shall bind the Trust and the Holders of such Securities,
            and the signature of the Property Trustee or one of its agents shall
            by itself be sufficient and effective to perform any such action and
            no third party shall be required to inquire as to the authority of
            the Property Trustee to so act or as to its compliance with any of
            the terms and provisions of this Declaration, both of which shall be
            conclusively evidenced by the Property Trustee's or its agent's
            taking such action.

            (b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property 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 Property 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 Property Trustee
shall be construed to be a duty.

            SECTION 3.11. Delaware Trustee.

            Notwithstanding any other provision of this Declaration other than
Section 6.2, the Delaware Trustee shall not be entitled to exercise any powers,
nor shall the Delaware Trustee have any of the duties and responsibilities of
the Regular Trustees or the Property Trustee described in this Declaration.
Except as set forth in Section 6.2, the Delaware Trustee shall be a Trustee for
the sole and limited purpose of fulfilling the requirements of Section 3807 of
the

<PAGE>
                                                                              23

Business Trust Act. In the event the Delaware Trustee shall at any time be
required to take any action or perform any duty hereunder with respect to the
Trust, the Delaware Trustee shall be entitled to all of the same rights as the
Property Trustee listed in Section 3.9(b) and Section 3.10.

            SECTION 3.12. Execution of Documents.

            Unless otherwise determined by the Regular Trustees, and except as
otherwise required by the Business Trust Act, any Regular Trustee is authorized
to execute on behalf of the Trust any documents that the Regular Trustees have
the power and authority to execute pursuant to Section 3.6; provided that, the
registration statements referred to in Section 3.6(b)(ii), including any
amendments thereto, shall be signed by or on behalf of a majority of the Regular
Trustees.

            SECTION 3.13. Not Responsible for Recitals or Issuance of
Securities.

            The recitals contained in this Declaration and the Securities shall
be taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations as to
the value or condition of the property of the Trust or any part thereof. The
Trustees make no representations as to the validity or sufficiency of this
Declaration, the Securities, the Debentures or the Indenture.

            SECTION 3.14. Duration of Trust.

            The Trust shall exist until terminated pursuant to the provisions of
Article 8 hereof.

            SECTION 3.15. Mergers.

            (a) The Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any corporation or other body, except as
described in Section 3.15(b) and (c).

            (b) The Trust may, at the request of the Sponsor and with the
consent of the Regular Trustees or, if there are more than two, a majority of
the Regular Trustees and without the consent of the Holders of the Securities,
the Delaware Trustee or the Property Trustee, consolidate, amalgamate, merge
with or into, or be replaced by or convey, transfer or lease its properties
substantially as an entirety to a trust organized as such under the laws of any
State; provided, that:

                  (i) if the Trust is not the successor, such successor entity
            (the "Successor Entity") either:

                        (A)   expressly assumes all of the obligations of the
                              Trust with respect to the Securities; or

                        (B)   substitutes for the Preferred Securities other
                              securities having substantially the same terms as
                              the Preferred Securities (the "Successor
                              Securities") so long as the

<PAGE>
                                                                              24

                              Successor Securities rank the same as the
                              Preferred Securities rank in priority with respect
                              to Distributions and payments upon liquidation,
                              redemption and otherwise;

                  (ii) the Debenture Issuer expressly appoints a trustee of such
            Successor Entity that possesses the same powers and duties as the
            Property Trustee as the holder of the Debentures;

                  (iii) the Preferred Securities or any Successor Securities are
            listed, or any Successor Securities will be listed upon notification
            of issuance, on any national securities exchange or with any other
            or organization on which the Preferred Securities are then listed or
            quoted;

                  (iv) such merger, consolidation, amalgamation, replacement,
            conveyance, transfer or lease does not cause the Preferred
            Securities (including any Successor Securities) to be downgraded by
            any nationally recognized statistical rating organization;

                  (v) such merger, consolidation, amalgamation, replacement,
            conveyance, transfer or lease does not adversely affect the rights,
            preferences and privileges of the Holders of the Preferred
            Securities (including any Successor Securities) in any material
            respect;

                  (vi) such Successor Entity has a purpose identical to that of
            the Trust;

                  (vii) prior to such merger, consolidation, amalgamation,
            replacement, conveyance, transfer or lease the Sponsor has received
            an opinion of independent counsel to the Trust experienced in such
            matters to the effect that:

                        (A)   such merger, consolidation, amalgamation,
                              replacement, conveyance, transfer or lease does
                              not adversely affect the rights, preferences and
                              privileges of the Holders of the Preferred
                              Securities (including any Successor Securities) in
                              any material respect;

                        (B)   following such merger, consolidation,
                              amalgamation, replacement, conveyance, transfer or
                              lease neither the Trust nor the Successor Entity
                              will be required to register as an Investment
                              Company; and

                        (C)   following such merger, consolidation, amalgamation
                              or replacement, the Trust (or the Successor
                              Entity) will continue to be classified as a
                              grantor trust for United States federal income tax
                              purposes;

                  (viii) the Sponsor or any permitted successor or assignee owns
            all of the Common Securities and guarantees the obligations of such
            Successor Entity under

<PAGE>
                                                                              25

            the Successor Securities at least to the extent provided by the
            Securities Guarantee; and

                  (ix) such Successor Entity expressly assumes all of the
            obligations of the Trust with respect to the Trustees.

            (c) Notwithstanding Section 3.15(b), the Trust shall not, except
with the consent of Holders of 100% in aggregate liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by or
convey, transfer or lease its properties and assets substantially as an entirety
to, any other entity or permit any other entity to consolidate, amalgamate,
merge with or into, or replace it, if such consolidation, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the Trust or Successor
Entity to be classified as other than a grantor trust for United States federal
income tax purposes and each Holder of the Securities not to be treated as
owning an undivided interest in the Debentures.

            SECTION 3.16. Property Trustee May File Proofs of Claim.

            In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other similar judicial proceeding relative to the Trust or any other obligor
upon the Securities or the property of the Trust or of such other obligor or
their creditors, the Property Trustee (irrespective of whether any Distributions
on the Securities shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Property Trustee shall
have made any demand on the Trust for the payment of any past due Distributions)
shall be entitled and empowered, to the fullest extent permitted by law, by
intervention in such proceeding or otherwise:

            (a) to file and prove a claim for the whole amount of any
Distributions owing and unpaid in respect of the Securities (or, if the
Securities are original issue discount Securities, such portion of the
liquidation amount as may be specified in the terms of such Securities) and to
file such other papers or documents as may be necessary or advisable in order to
have the claims of the Property Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
and counsel) and of the Holders allowed in such judicial proceeding, and

            (b) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Property Trustee and, in the event the
Property Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Property Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Property Trustee, its
agents and counsel, and any other amounts due the Property Trustee.

            Nothing herein contained shall be deemed to authorize the Property
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement adjustment or compensation affecting the
Securities or the rights of any Holder

<PAGE>
                                                                              26

thereof or to authorize the Property Trustee to vote in respect of the claim of
any Holder in any such proceeding.

                                   ARTICLE 4

                                     SPONSOR

            SECTION 4.1. Responsibilities of the Sponsor.

            In connection with the issue and sale of the Preferred Securities,
the Sponsor shall have the exclusive right and responsibility to engage in the
following activities:

            (a) to prepare for filing by the Trust with the Commission one or
more registration statements on the applicable forms, including any amendments
thereto, pertaining to the Preferred Securities, the Guarantee and the
Debentures;

            (b) to determine the States in which to take appropriate action to
qualify or register for sale all or part of the Preferred Securities and to do
any and all such acts, other than actions which must be taken by the Trust, and
advise the Trust of actions it must take, and prepare for execution and filing
any documents to be executed and filed by the Trust, as the Sponsor deems
necessary or advisable in order to comply with the applicable laws of any such
States;

            (c) to prepare for filing by the Trust an application to the New
York Stock Exchange or any other national stock exchange or the NASDAQ Stock
Market for listing upon notice of issuance of any Preferred Securities, the
Guarantee and the Debentures; and

            (d) to negotiate the terms of an underwriting agreement and other
related agreements providing for the sale of the Preferred Securities.

            SECTION 4.2. Indemnification and Fees and Expenses of the Trustees.

            The Sponsor, in its capacity as Debenture Issuer, agrees to
indemnify the Property Trustee and the Delaware Trustee for, and to hold each of
them harmless against, any loss, liability or expense incurred without
negligence or bad faith on the part of the Property Trustee or the Delaware
Trustee, as the case may be, arising out of or in connection with the acceptance
or administration of the trust or trusts hereunder, including the costs and
expenses of defending either of them against any claim or liability in
connection with the exercise or performance of any of their respective powers or
duties hereunder; the provisions of this Section 4.2 shall survive the
resignation or removal of the Delaware Trustee or the Property Trustee or the
termination of this Declaration.

<PAGE>
                                                                              27

                                   ARTICLE 5

                         TRUST COMMON SECURITIES HOLDER

            SECTION 5.1. Debenture Issuer's Receipt of Common Securities.

            On the Closing Date, the Debenture Issuer will receive all of the
Common Securities and all of the Preferred Securities issued by the Trust in
exchange for the Debentures issued to the Trust by the Debenture Issuer. The
Common Securities will be issued in an amount equal to at least 3% of the
capital of the Trust.

            The aggregate stated liquidation amount of Common Securities
outstanding at any time shall not be less than 3% of the capital of the Trust.

            SECTION 5.2. Covenants of the Common Securities Holder.

            For so long as the Preferred Securities remain outstanding, the
Common Securities Holder will covenant (i) to maintain, directly or indirectly,
100% ownership of the Common Securities, (ii) to cause the Trust to remain a
statutory business trust and not to voluntarily dissolve, wind up, liquidate or
be terminated, except as permitted by this Declaration, (iii) to use its
commercially reasonable efforts to ensure that the Trust will not be an
investment company for purposes of the Investment Company Act, and (iv) to take
no action which would be reasonably likely to cause the Trust to be classified
as other than a grantor trust for United States federal income tax purposes.

                                   ARTICLE 6

                                    TRUSTEES

            SECTION 6.1. Number of Trustees.

            The number of Trustees initially shall be five, and:

            (a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees;

            (b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a Majority in Liquidation
Amount of the Common Securities voting as a class at a meeting of the Holders of
the Common Securities or by written consent in lieu of such meeting; provided
that the number of Trustees shall be at least three; and provided further that
all Trustees shall be U.S. Persons as defined in Section 7701(a)(30) of the Code
and (1) the Delaware Trustee shall be (i) in the case of a natural person, a
person who is a resident of the State of Delaware or (ii) if not a natural
person, an entity which has its principal place of business in the State of
Delaware and otherwise meets the requirements of applicable law; (2) at least
one Regular Trustee is an employee or officer of, or is affiliated with, the
Sponsor; and (3) one Trustee shall be the Property Trustee for so long as this

<PAGE>
                                                                              28

Declaration is required to qualify as an indenture under the Trust Indenture
Act, and such Trustee may also serve as Delaware Trustee if it meets the
applicable requirements; and

            (c) at all times, either or both of the Property Trustee or the
Delaware Trustee must be (i) a bank as defined in Section 581 of the Code or
(ii) a U.S. government-owned agency or U.S. government sponsored enterprise.

            SECTION 6.2. Delaware Trustee; Eligibility.

            If required by the Business Trust Act, one Trustee (which may be the
Property Trustee) (the "Delaware Trustee") shall be either:

            (a) a natural person who is a resident of the State of Delaware; or

            (b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law,

provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.

            SECTION 6.3. Property Trustee; Eligibility.

            (a) There shall at all times be one Trustee (which may be the
Delaware Trustee) which shall act as Property Trustee which shall:

                  (i) not be an Affiliate of the Sponsor; 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 other
            Person permitted by the Commission to act as an institutional
            trustee under the Trust Indenture Act, authorized under such laws to
            exercise corporate trust owners, having a combined capital and
            surplus of at least 50 million U.S. dollars ($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 6.3(a)(ii), the
            combined capital 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 Property Trustee shall cease to be eligible
to so act under Section 6.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 6.6(c).

            (c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in Section 310(b) of the

<PAGE>
                                                                              29

Trust Indenture Act) shall in all respects comply with the provisions of Section
310(b) of the Trust Indenture Act.

            (d) The Guarantee shall be deemed to be specifically described in
this Declaration for purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.

            (e) Nothing herein shall prevent the 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 Trustee
has a conflicting interest as defined in Section 310(b) of the Trust
Indenture Act with respect to the Securities or the Guarantees in respect of
such Securities, there shall be excluded (i) all series of securities issued
or issuable under the Indenture, (ii) (A) the Guarantee Agreement, dated as
of January 26, 1999, executed and delivered by Lehman Brothers Holdings Inc.
and The Chase Manhattan Bank for the benefit of the holders identified
therein of Lehman Brothers Capital Trust I, (B) the Guarantee Agreement,
dated as of April 4, 1999, executed and delivered by Lehman Brothers Holdings
Inc. and The Chase Manhattan Bank for the benefit of the holders identified
herein of Lehman Brothers Capital Trust II and (C) [add future Guarantee
Agreements when executed] and (iii) (A) the Amended and Restated Declaration
of Trust, dated as of January 26, 1999, by and among Lehman Brothers Holdings
Inc., the Regular Trustees named therein, The Chase Manhattan Bank, as
initial Property Trustee and Chase Manhattan Bank Delaware, as initial
Delaware Trustee, (B) the Amended and Restated Declaration of Trust, dated as
of April 4, 1999, by and among Lehman Brothers Holdings Inc., the Regular
Trustees named therein, The Chase Manhattan Bank, as initial Property Trustee
and Chase Manhattan Bank Delaware, as initial Delaware Trustee and (C)
[add future Amended and Related Declarations of Trust when executed].

            SECTION 6.4. Qualifications of Regular Trustees and Delaware Trustee
Generally.

            Each Regular Trustee and the Delaware Trustee (unless the Property
Trustee also acts as Delaware Trustee) shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
Authorized Officers.

            SECTION 6.5. Initial Regular Trustees.

            The initial Regular Trustees shall be:

            ____________, ____________ and ____________, the business address of
all of whom is c/o Lehman Brothers Holdings Inc., 3 World Financial Center, New
York, New York 10285.

            SECTION 6.6. Appointment, Removal and Resignation of Trustees.

            (a) Subject to Section 6.6(b), Trustees may be appointed or removed
without cause at any time:

                  (i) until the issuance of any Securities, by written
            instrument executed by the Sponsor;

                  (ii) after the issuance of any Securities, by vote of the
            Holders of a Majority in Liquidation Amount of the Common Securities
            voting as a class at a meeting of the Holders of the Common
            Securities; and

                  (iii) after the issuance of the Preferred Securities and the
            occurrence of an Indenture Event of Default, by vote of the Holders
            of a majority in Liquidation Amount of the Preferred Securities.

            (b) The Trustee that acts as Property Trustee shall not be removed
in accordance with Section 6.6(a) until a successor Trustee possessing the
qualifications to act as Property Trustee under Section 6.3(a) (a "Successor
Property Trustee") has been appointed and has accepted such appointment by
written instrument executed by such Successor Property Trustee and delivered to
the Regular Trustees and the Sponsor. The Trustee that acts as Delaware Trustee
shall not be removed in accordance with Section 6.6(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under Sections 6.2 and
6.4 (a "Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees and the Sponsor.

<PAGE>
                                                                              30

            (c) A Trustee appointed to office shall hold office until his or its
successor shall have been appointed, until his death or its dissolution or until
his or its removal or resignation. Any Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing signed by
the Trustee and delivered to the Sponsor and the Trust, which resignation shall
take effect upon such delivery or upon such later date as is specified therein;
provided, however, that:

                  (i) No such resignation of the Trustee that acts as the
            Property Trustee shall be effective:

                        (A)   until a Successor Property Trustee has been
                              appointed and has accepted such appointment by
                              instrument executed by such Successor Property
                              Trustee and delivered to the Trust, the Sponsor
                              and the resigning Property Trustee; or

                        (B)   until the assets of the Trust have been completely
                              liquidated and the proceeds thereof distributed to
                              the holders of the Securities; and

                  (ii) no such resignation of the Trustee that acts as the
            Delaware Trustee shall be effective until a Successor Delaware
            Trustee has been appointed and has accepted such appointment by
            instrument executed by such Successor Delaware Trustee and delivered
            to the Trust, the Sponsor and the resigning Delaware Trustee.

            (d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor Property
Trustee, as the case may be, if the Property Trustee or the Delaware Trustee
delivers an instrument of resignation in accordance with this Section 6.6.

            (e) If no Successor Property Trustee or Successor Delaware Trustee,
as the case may be, shall have been appointed and accepted appointment as
provided in this Section 6.6 within 60 days after delivery to the Sponsor and
the Trust of an instrument of resignation or removal, the resigning or removed
Property Trustee or Delaware Trustee, as applicable, may petition any court of
competent jurisdiction for appointment of a Successor Property Trustee or
Successor Delaware Trustee, as applicable. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Property Trustee or Successor Delaware Trustee, as the case may be.

            (f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.

            SECTION 6.7. Vacancies among Trustees.

            If a Trustee ceases to hold office for any reason and the number of
Trustees is not reduced pursuant to Section 6.1, or if the number of Trustees is
increased pursuant to Section 6.1, a vacancy shall occur. A resolution
certifying the existence of such vacancy by the Regular

<PAGE>
                                                                              31

Trustees or, if there are more than two, a majority of the Regular Trustees
shall be conclusive evidence of the existence of such vacancy. The vacancy shall
be filled with a Trustee appointed in accordance with Section 6.6.

            SECTION 6.8. Effect of Vacancies.

            The death, resignation, retirement, removal, bankruptcy,
dissolution, liquidation, incompetence or incapacity to perform the duties of a
Trustee shall not operate to annul the Trust. Whenever a vacancy in the number
of Regular Trustees shall occur, until such vacancy is filled by the appointment
of a Regular Trustee in accordance with Section 6.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.

            SECTION 6.9. Meetings.

            If there is more than one Regular Trustee, meetings of the Regular
Trustees shall be held from time to time upon the call of any Regular Trustee.
Regular meetings of the Regular Trustees may be held at a time and place fixed
by resolution of the Regular Trustees. Notice of any in-person meetings of the
Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 48
hours before such meeting. Notice of any telephonic meetings of the Regular
Trustees shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of a Regular Trustee at a meeting shall constitute a waiver of notice
of such meeting except where a Regular Trustee attends a meeting for the express
purpose of objecting to the transaction of any activity on the ground that the
meeting has not been lawfully called or convened. Unless provided otherwise in
this Declaration, any action of the Regular Trustees may be taken at a meeting
by vote of a majority of the Regular Trustees present (whether in person or by
telephone) and eligible to vote with respect to such matter, provided that a
Quorum is present, or without a meeting by the unanimous written consent of the
Regular Trustees. In the event there is only one Regular Trustee, any and all
action of such Regular Trustee shall be evidenced by a written consent of such
Regular Trustee.

            SECTION 6.10. Delegation of Power.

            (a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any natural person over the age of 21 his, her or
its power for the purpose of executing any documents contemplated in Section 3.6
or making any governmental filing; provided that such person is a U.S. Person as
defined in Section 7701(a)(30) of the Code.

            (b) The Regular Trustees shall have power to delegate from time to
time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.

<PAGE>
                                                                              32

            SECTION 6.11. Merger, Conversion, Consolidation or Succession to
Business.

            Any corporation into which the Property Trustee, the Delaware
Trustee or any Regular Trustee that is not a natural person may be merged or
converted or with such Trustee may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of such Trustee shall be the successor of such Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.

                                   ARTICLE 7

                               TERMS OF SECURITIES

            SECTION 7.1. General Provisions Regarding Securities.

            (a) The Regular Trustees shall on behalf of the Trust issue one
class of preferred securities representing undivided beneficial ownership
interests in the assets of the Trust and one class of common securities
representing undivided beneficial ownership interests in the assets of the
Trust.

            (i) Preferred Securities. The Preferred Securities of the Trust have
      an aggregate liquidation amount with respect to the assets of the Trust of
      _____________ dollars ($_____________) and a liquidation amount with
      respect to the assets of the Trust of $__ per Preferred Security. The
      Preferred Securities are hereby designated for identification purposes
      only as ___% Preferred Securities (the "Preferred Securities"). The
      Preferred Security Certificates evidencing the Preferred Securities shall
      be substantially in the form of Exhibit A to this Declaration, with such
      changes and additions thereto or deletions therefrom as may be required by
      ordinary usage, custom or practice or to conform to the rules of any stock
      exchange on which the Preferred Securities are listed or quoted.

            (ii) Common Securities. The Common Securities of the Trust have an
      aggregate liquidation amount with respect to the assets of the Trust of
      _____________ dollars ($_____________) and a liquidation amount with
      respect to the assets of the Trust of $__ per Common Security. The Common
      Securities are hereby designated for identification purposes only as ___%
      Common Securities (the "Common Securities" and, together with the
      Preferred Securities, the "Securities"). The Common Security Certificates
      evidencing the Common Securities shall be substantially in the form of
      Exhibit B to the Declaration, with such changes and additions thereto or
      deletions therefrom as may be required by ordinary usage, custom or
      practice.

            (b) Payment of Distributions on, and payment of the Redemption Price
upon a redemption of, the Preferred Securities and the Common Securities, as
applicable, shall be made Pro Rata based on the liquidation amount of such
Preferred Securities and Common Securities;

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provided, however, that if on any date on which amounts payable on distribution
or redemption an Indenture Event of Default shall have occurred and be
continuing, no payment of any Distribution on, or Redemption Price of, any of
the Common Securities, and no other payment on account of the redemption,
liquidation or other acquisition of such Common Securities, shall be made unless
payment in full in cash of all accumulated and unpaid Distributions on all of
the outstanding Preferred Securities for all Distribution periods terminating on
or prior thereto, or, in the case of amounts payable on redemption, the full
amount of the Redemption Price for all of the outstanding Preferred Securities
then called for redemption, shall have been made or provided for, and all funds
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, or the Redemption Price of, the Preferred
Securities then due and payable. The Trust shall issue no securities or other
interests in the assets of the Trust other than the Preferred Securities and the
Common Securities.

            (c) The Certificates shall be signed on behalf of the Trust by a
Regular Trustee. Such signature shall be the manual or facsimile signature of
any present or any future Regular Trustee. In case a Regular Trustee of the
Trust who shall have signed any of the Certificates shall cease to be such
Regular Trustee before the Certificates so signed shall be delivered by the
Trust, such Certificates nevertheless may be delivered as though the person who
signed such Certificates had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who, at the
actual date of execution of such Certificate, shall be the Regular Trustees of
the Trust, although at the date of the execution and delivery of the Declaration
any such person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation of
any stock exchange on which Securities may be listed, or to conform to usage.

            A Certificate representing Preferred Securities shall not be valid
until authenticated by the manual signature of an authorized officer of the
Property Trustee. Such signature shall be conclusive evidence that such
Certificate has been authenticated under this Declaration.

            Upon a written order of the Trust signed by one Regular Trustee, the
Property Trustee shall authenticate the Certificates representing Preferred
Securities for original issue. The aggregate number of Preferred Securities
outstanding at any time shall not exceed the liquidation amount set forth in
Section 7.1(a)(i).

            The Property Trustee may appoint an authenticating agent acceptable
to the Trust to authenticate Certificates. An authenticating agent may
authenticate Certificates whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as the
Property Trustee to deal with the Sponsor or an Affiliate of the Sponsor.

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            (d) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.

            (e) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable beneficial ownership interests in the assets of the Trust.

            (f) Every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by, this Declaration and the terms of the Securities, the Guarantee,
the Indenture and the Debentures.

            (g) The holders of the Securities shall have no preemptive rights.

            SECTION 7.2. Distributions.

            (a) As owners of undivided beneficial ownership interests in the
Debentures, holders of Securities shall be entitled to receive cumulative cash
Distributions at the rate per annum of ____% of the stated liquidation amount of
$__ per Security. Pursuant to the Indenture, interest on the Debentures, and as
a result, Distributions payable for any period shall be computed on the basis of
a 360-day year of twelve 30-day months. The amount of distributions payable for
any period shorter than a full quarterly distribution period shall be computed
on the basis of a 30-day month and for periods of less than a month, the actual
number of days elapsed per 30-day month. Subject to Section 7.1(b),
Distributions shall be made on the Preferred Securities and the Common
Securities on a Pro Rata basis. Pursuant to the Indenture, interest on the
Debentures, and as a result distributions on the Securities shall, from the date
of original issue, accrue and be cumulative and shall be payable [quarterly], in
arrears, on each [___________ __, ___________ __, ___________ __ and ___________
__], commencing ___________ __, ____, when, as and if available for payment, by
the Property Trustee, except as otherwise described below. Distributions are
payable only to the extent that payments are made in respect of the Debentures
held by the Property Trustee and to the extent that the Trust has funds
available for the payment of such Distributions in the Property Account.

            (b) Interest on the Debentures not paid on the scheduled payment
date will accrue and compound [quarterly] at the rate of ____% per annum and, as
a result Distributions on the Securities not paid on the scheduled payment date
will accumulate and compound at a rate of __% per annum ("Compounded
Distributions"). "Distributions" shall mean ordinary cumulative distributions
together with any Compounded Distributions.

            (c) If and to the extent that the Debenture Issuer makes a payment
of interest, premium and/or principal on the Debentures held by the Property
Trustee (the amount of any such payment being a "Payment Amount"), the Property
Trustee shall and is directed, to the extent funds are available for that
purpose, to make a Pro Rata distribution of the Payment Amount to Holders,
subject to Section 7.1(b).

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            (d) Distributions on the Securities shall be payable to the Holders
thereof as they appear on the register of the Trust as of the close of business
on the relevant record dates. While the Preferred Securities are represented by
one or more Global Securities, the relevant record dates shall be the close of
business on the Business Day next preceding such Distribution payment date,
unless a different regular record date is established or provided for the
corresponding interest payment date on the Debentures. The relevant record dates
for the Common Securities shall be the same as for the Preferred Securities. If
the Preferred Securities shall not continue to remain represented by one or more
Global Securities, the relevant record dates for the Preferred Securities shall
be selected by the Regular Trustees and shall be at least one Business Day prior
to the relevant payment dates. At all times, the Distribution payment dates
shall correspond to the interest payment dates on the Debentures. Distributions
payable on any Securities that are not punctually paid on any Distribution
payment date, as a result of the Debenture Issuer having failed to make a
payment under the Debentures, shall cease to be payable to the Person in whose
name such Securities are registered on the relevant record date, and such
defaulted Distribution will instead be payable to the Person in whose name such
Securities are registered on the special record date or other specified date
determined in accordance with this Declaration. If any date on which
Distributions are payable on the Securities is not a Business Day, then payment
of the Distribution payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, with the same force and effect as if made on such payment date.

            (e) In the event that there is any money or other property held by
or for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata among the Holders of the Securities.

            SECTION 7.3. Redemption of Securities.

            (a) Upon the repayment or redemption, in whole or in part, of the
Debentures held by the Trust, whether at the stated maturity of the Debentures
or upon earlier redemption as provided in the Indenture, the proceeds from such
repayment or redemption shall be simultaneously applied Pro Rata to redeem
Securities having an aggregate liquidation amount equal to the aggregate
principal amount of the Debentures so repaid or redeemed at the Redemption
Price. Holders shall be given not less than 30 nor more than 60 days notice of
such redemption in accordance with Section 7.4.

            (b) On the date fixed for any distribution of Debentures, upon
dissolution of the Trust, (i) the Securities will no longer be deemed to be
outstanding and (ii) certificates representing Securities will be deemed to
represent the Debentures having an aggregate principal amount equal to the
stated liquidation amount of, and bearing accrued and unpaid distributions equal
to accumulated and unpaid distributions on, such Securities until such
certificates are presented to the Sponsor or its agent for transfer or
reissuance.

            SECTION 7.4. Redemption Procedures.

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            (a) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution Notice"),
which notice shall be irrevocable, will be given by the Trust by mail to each
Holder of Securities to be redeemed or exchanged not fewer than 30 nor more than
60 days before the date fixed for redemption or exchange thereof which, in the
case of a redemption, will be the date fixed for redemption of the Debentures.
For purposes of the calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this Section 7.4(a), a
Redemption/Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to Holders of
Securities. Each Redemption/Distribution Notice shall be addressed to the
Holders of Securities at the address of each such Holder appearing in the
register of the Trust. No defect in the Redemption/Distribution Notice or in the
mailing of either thereof with respect to any Holder shall affect the validity
of the redemption or exchange proceedings with respect to any other Holder.

            (b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Preferred Securities will be redeemed
Pro Rata (subject to Section 7.1(b)) and the Preferred Securities to be redeemed
will be redeemed as described in Section 7.4 below. The Trust may not redeem the
Securities in part unless all accumulated and unpaid Distributions to the date
of redemption have been paid in full on all Securities then outstanding. For all
purposes of this Declaration, unless the context otherwise requires, all
provisions relating to the redemption of Preferred Securities shall relate, in
the case of any Preferred Security redeemed or to be redeemed only in part, to
the portion of the aggregate liquidation amount of Preferred Securities which
has been or is to be redeemed.

            (c) Subject to the Trust's fulfillment of the notice requirements
set forth in Section 7.4(a) above, if Securities are to be redeemed, then (i)
with respect to Preferred Securities represented by one or more Global
Securities, by 12:00 noon, New York City time, on the redemption date (provided
that the Debenture Issuer has paid the Property Trustee a sufficient amount of
cash in connection with the related redemption or maturity of the Debentures),
the Property Trustee will deposit irrevocably with the Depositary or its nominee
(or successor Clearing Agency or its nominee) funds sufficient to pay the
applicable Redemption Price with respect to the Preferred Securities and will
give the Depositary irrevocable instructions and authority to pay the Redemption
Price to the Holders of the Preferred Securities and (ii) with respect to
Securities not represented by one or more Global Securities (provided that the
Debenture Issuer has paid the Property Trustee a sufficient amount of cash in
connection with the related redemption or maturity of the Debentures), the
Paying Agent will pay the relevant Redemption Price to the Holders of such
Securities by check mailed to the address of the relevant Holder appearing on
the register of the Trust on the redemption date. If any date fixed for
redemption of Securities is not a Business Day, then payment of the Redemption
Price payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date fixed for redemption. If
payment of the Redemption Price in respect of any Securities is not paid because
the payment of the Redemption Price on the Debentures is not made, interest will
continue to accrue on the Debentures, and, as a result, Distributions on such
Securities will continue to accumulate at the then applicable rate from the
original redemption date to the actual date of

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payment, in which case the actual payment date will be considered the date fixed
for redemption for purposes of calculating the Redemption Price. For these
purposes, the applicable Redemption Price shall not include Distributions which
are being paid to Holders who were Holders on a relevant record date. If a
Redemption/Distribution Notice shall have been given and funds deposited or paid
as required, then immediately prior to the close of business on the date of such
deposit or payment, Distributions will cease to accumulate on the Securities
called for redemption and all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders to receive the Redemption
Price, but without interest on such Redemption Price, and from and after the
date fixed for redemption, such Securities will cease to be outstanding.

            Neither the Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any Securities that have been
called for redemption, except in the case of any Securities being redeemed in
part, any portion thereof not to be redeemed.

            (d) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), the Debenture Issuer or its
subsidiaries may at any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.

            SECTION 7.5. Voting Rights of Preferred Securities.

            (a) Except as provided under Section 11.1 and this Article 7 and as
otherwise required by the Business Trust Act, the Trust Indenture Act and other
applicable law, the Holders of the Preferred Securities shall have no voting
rights.

            (b) Subject to the requirement of the Property Trustee obtaining a
tax opinion in certain circumstances set forth in Section 7.5(d) below, the
Holders of a Majority in Liquidation Amount of the Preferred Securities voting
separately as a class have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee, or
to direct the exercise of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the Property Trustee, as
Holder of the Debentures, to (i exercise the remedies available to it under the
Indenture as a Holder of the Debentures; (ii consent to any amendment or
modification of the Indenture or the Debentures where such consent shall be
required or (iii) waive any past default and its consequences that is waivable
under Section 513 of the Indenture; provided, however, that if an Indenture
Event of Default has occurred and is continuing, then the Holders of 25% of the
aggregate liquidation amount of the Preferred Securities may direct the Property
Trustee to declare the principal of and interest on the Debentures due and
payable; provided, further, that where a consent or action under the Indenture
would require the consent or act of the Holders of more than a majority of the
aggregate principal amount of Debentures affected thereby, only the Holders of
the percentage of the aggregate stated liquidation amount of the Preferred
Securities which is at least equal to the percentage required under the
Indenture may direct the Property Trustee to give such consent to take such
action.

            (c) If the Property Trustee fails to enforce its rights under the
Debentures after a Holder of Preferred Securities has made a written request,
such Holder of Preferred Securities

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may, to the extent permitted by applicable law, institute a legal proceeding
directly against the Debenture Issuer to enforce the Property Trustee's rights
under the Indenture without first instituting any legal proceeding against the
Property Trustee or any other person or entity. In addition, if a Trust
Enforcement Event has occurred and is continuing and such event is attributable
to the failure of the Debenture Issuer to make any interest, principal or other
required payments when due under the Indenture, then a Holder of Preferred
Securities may directly institute a Direct Action against the Debenture Issuer
on or after the respective due date specified in the Debentures.

            (d) The Property Trustee shall notify all Holders of the Preferred
Securities of any notice of any Indenture Event of Default received from the
Debenture Issuer with respect to the Debentures. Such notice shall state that
such Indenture Event of Default also constitutes a Trust Enforcement Event.
Except with respect to directing the time, method, and place of conducting a
proceeding for a remedy, the Property Trustee shall be under no obligation to
take any of the actions described in clause 7.5(b)(i) and (ii) above unless the
Property Trustee has obtained an opinion of independent tax counsel to the
effect that the Trust will not be classified as an association or publicly
traded partnership taxable as a corporation for United States federal income tax
purposes as a result of such action.

            (e) In the event the consent of the Property Trustee, as the Holder
of the Debentures, is required under the Indenture with respect to any amendment
or modification of the Indenture, the Property Trustee shall request the
direction of the Holders of the Securities with respect to such amendment or
modification and shall vote with respect to such amendment or modification as
directed by not less than 66-2/3% of the aggregate liquidation amount of the
Securities voting together as a single class; provided, however, that where a
consent under the Indenture would require the consent of the Holders of more
than 66-2/3% of the aggregate principal amount of the Debentures, the Property
Trustee may only give such consent at the direction of the Holders of at least
the same proportion in aggregate stated liquidation amount of the Securities.
The Property Trustee shall not take any such action in accordance with the
directions of the Holders of the Securities unless the Property Trustee has
obtained an opinion of independent tax counsel to the effect that the Trust will
not be classified as an association or publicly traded partnership taxable as a
corporation for United States federal income tax purposes as a result of such
action.

            (f) A waiver of an Indenture Event of Default with respect to the
Debentures will constitute a waiver of the corresponding Trust Enforcement
Event.

            (g) Any required approval or direction of Holders of Preferred
Securities may be given at a separate meeting of Holders of Preferred Securities
convened for such purpose, at a meeting of all of the Holders of Securities or
pursuant to written consent. The Regular Trustees shall cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Preferred Securities. Each such notice
shall include a statement setting forth the following information: (i) the date
of such meeting or the date by which such action is to be taken; (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote or of such matter upon which written consent
is sought; and (iii) instructions for the delivery of proxies or consents.

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            (h) No vote or consent of the Holders of Preferred Securities shall
be required for the Trust to redeem and cancel Preferred Securities or
distribute Debentures in accordance with this Declaration and the terms of the
Securities.

            (i) Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent under any of the circumstances described above, any
of the Securities that are owned at such time by the Debenture Issuer, any
Regular Trustee or any entity directly or indirectly controlled by, or under
direct or indirect common control with, the Debenture Issuer or any Trustee,
shall not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if such Securities were not outstanding.

            (j) Subject to Section 7.5(k), Holders of the Preferred Securities
shall have no rights to appoint or remove the Trustees, who may be appointed,
removed or replaced solely by the Common Securities Holder.

            (k) If an Indenture Event of Default has occurred and is continuing,
the Trustees may be removed at such time only by a Majority in Liquidation
Amount of the Preferred Securities.

            SECTION 7.6. Voting Rights of Common Securities.

            (a) Except as provided under Section 6.1(b), this Section 7.6 or
Section 11.1 or as otherwise required by the Business Trust Act, the Trust
Indenture Act or other applicable law or provided by the Declaration, the
Holders of the Common Securities will have no voting rights.

            (b) Subject to Section 7.5(k), the Holders of the Common Securities
shall be entitled, in accordance with Article VI of this Declaration, to vote to
appoint, remove or replace any Trustee or to increase or decrease the number of
Trustees.

            (c) Subject to Section 2.6 and only after all Trust Enforcement
Events with respect to the Preferred Securities have been cured, waived, or
otherwise eliminated and subject to the requirement of the Property Trustee
obtaining a tax opinion in certain circumstances set forth in this paragraph
(c), the Holders of a Majority in Liquidation Amount of the Common Securities
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Property Trustee, or direct the exercise of any
trust or power conferred upon the Property Trustee under this Declaration,
including the right to direct the Property Trustee, as Holder of the Debentures,
to (i) exercise the remedies available to it under the Indenture as a Holder of
the Debentures, (ii) consent to any amendment or modification of the Indenture
or the Debentures where such consent shall be required or (iii) waive any past
default and its consequences that is waivable under Section 513 of the
Indenture; provided, however, that where a consent or action under the Indenture
would require the consent or act of the Holders of more than a majority of the
aggregate principal amount of Debentures affected thereby, only the Holders of
the percentage of the aggregate stated liquidation amount of the Common
Securities which is at least equal to the percentage required under the
Indenture may direct the Property Trustee to have such consent or take such
action. Except with respect to directing the time, method, and place of
conducting a proceeding for a remedy, the Property

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Trustee shall be under no obligation to take any of the actions described in
clause 7.6(c)(i) and (ii) above unless the Property Trustee has obtained an
opinion of independent tax counsel to the effect that, as a result of such
action, for United States federal income tax purposes the Trust will not be
classified as other than a grantor trust.

            (d) If the Property Trustee fails to enforce its rights under the
Debentures after a Holder of Common Securities has made a written request, such
Holder of Common Securities may, to the extent permitted by applicable law,
directly institute a legal proceeding directly against the Debenture Issuer to
enforce the Property Trustee's rights under the Debentures without first
instituting any legal proceeding against the Property Trustee or any other
person or entity.

            (e) A waiver of an Indenture Event of Default with respect to the
Debentures will constitute a waiver of the corresponding Trust Enforcement
Event.

            (f) Any required approval or direction of Holders of Common
Securities may be given at a separate meeting of Holders of Common Securities
convened for such purpose, at a meeting of all of the Holders of Securities or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, or of any
matter on which action by written consent of such Holders is to be taken, to be
mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth the following information: (i) the date of
such meeting or the date by which such action is to be taken; (ii) a description
of any resolution proposed for adoption at such meeting on which such Holders
are entitled to vote or of such matter upon which written consent is sought; and
(iii) instructions for the delivery of proxies or consents.

            (g) No vote or consent of the Holders of the Common Securities will
be required for the Trust to redeem and cancel Common Securities or to
distribute Debentures in accordance with the Declaration and the terms of the
Securities.

            SECTION 7.7. Paying Agent.

            In the event that any Preferred Securities are not in book-entry
only form, the Trust shall maintain in the Borough of Manhattan, City of New
York, State of New York, an office or agency where the Preferred Securities may
be presented for payment ("Paying Agent"). The Trust may appoint the paying
agent and may appoint one or more additional paying agents in such other
locations as it shall determine. The term "Paying Agent" includes any additional
paying agent. The Trust may change any Paying Agent without prior notice to the
Holders. The Trust shall notify the Property Trustee of the name and address of
any Paying Agent not a party to this Declaration. If the Trust fails to appoint
or maintain another entity as Paying Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent. The Property
Trustee shall initially act as Paying Agent for the Securities. In the event the
Property Trustee shall no longer be the Paying Agent, the Regular Trustees shall
appoint a successor (which shall be a bank or trust company acceptable to the
Debenture Issuer) to act as Paying Agent. The Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the Property Trustee and
the Debenture Issuer.

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            SECTION 7.8. Listing.

            The Sponsor shall use its best efforts to cause the Preferred
Securities to be listed for quotation on the New York Stock Exchange.

            SECTION 7.9. Transfer of Securities.

            (a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void.

            (b) Subject to this Article 7, Preferred Securities shall be freely
transferable.

            (c) The Trust shall cause to be kept at the Corporate Trust Office
of the Property Trustee a register (the register maintained in such office being
herein sometimes referred to as the "Security Register") in which, subject to
such reasonable regulations as it may prescribe, the Trust shall provide for the
registration of Preferred Securities and of transfers of Preferred Securities.
The Property Trustee is hereby appointed "Security Registrar" for the purpose of
registering Preferred Securities and transfers of Preferred Securities as herein
provided.

            (d) Upon surrender for registration of transfer of any Security at
an office or agency of the Trust designated for such purpose, the Trust shall
execute, and the Property Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Securities of any
authorized denominations and of a like aggregate principal amount.

            (e) At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denominations and of a like aggregate
principal amount, upon surrender of the Securities to be exchanged at such
office or agency. Whenever any Securities are so surrendered for exchange, the
Trust shall execute, and in the case of Preferred Securities the Property
Trustee shall authenticate and deliver, the Securities which the Holder making
the exchange is entitled to receive.

            (f) Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Trust or the Property
Trustee) be duly endorsed, or be accompanied by a written instrument of transfer
in form satisfactory to the Trust and the Security Registrar duly executed, by
the Holder thereof or his attorney duly authorized in writing.

            (g) No service charge shall be made for any registration of transfer
or exchange of Securities, but the Trust may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities.

            (h) If the Securities are to be redeemed in part, the Trust shall
not be required (A) to issue, register the transfer of or exchange any
Securities during a period beginning at the opening of business 15 days before
the day of the mailing of a notice of redemption of any such

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Securities selected for redemption under Section 7.4 and ending at the close of
business on the day of such mailing, or (B) to register the transfer or exchange
of any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.

            SECTION 7.10. Mutilated, Destroyed, Lost or Stolen Certificates.

            If:

            (a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and

            (b) there shall be delivered to the Regular Trustees such security
or indemnity as may be required by them to keep each of the Trustees, the
Sponsor and the Trust harmless, then, in the absence of notice that such
Certificate shall have been acquired by a bona fide purchaser, any Regular
Trustee on behalf of the Trust shall execute and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like denomination. In connection with the issuance of any new
Certificate under this Section 7.10, the Regular Trustees may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any duplicate Certificate issued
pursuant to this Section shall constitute conclusive evidence of an ownership
interest in the relevant Securities, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.

            SECTION 7.11. Deemed Security Holders.

            The Trustees may treat the Person in whose name any Certificate
shall be registered on the register of the Trust as the sole holder of such
Certificate and of the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes whatsoever and,
accordingly, shall not be bound to recognize any equitable or other claim to or
interest in such Certificate or in the Securities represented by such
Certificate on the part of any Person, whether or not the Trust shall have
actual or other notice thereof.

            SECTION 7.12. Global Securities.

            The Preferred Securities may be issued in the form of one or more
Global Securities. If the Preferred Securities are to be issued in the form of
one or more Global Securities, then the Regular Trustee on behalf of the Trust
shall execute and the Property Trustee shall authenticate and deliver one or
more Global Securities that (i) shall represent and shall be denominated in an
amount equal to the aggregate liquidation amount of all of the Preferred
Securities to be issued in the form of Global Securities and not yet cancelled,
(ii) shall be registered in the name of the Depositary for such Global Security
or Preferred Securities or the nominee of such Depositary, and (iii) shall be
delivered by the Property Trustee to such Depositary or pursuant to such
Depositary's instructions. Global Securities shall bear a legend substantially
to the following effect:

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                                                                              43

            "This Preferred Security is a Global Security within the meaning of
the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company, a New York corporation (the "Depositary"), or a
nominee of the Depositary. This Preferred Security is exchangeable for Preferred
Securities registered in the name of a person other than the Depositary or its
nominee only in the limited circumstances described in the Declaration and no
transfer of this Preferred Security (other than a transfer of this Preferred
Security as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.

            Unless this Preferred Security Certificate is presented by an
authorized representative of the Depositary to Lehman Brothers Holdings Capital
Trust __ or its agent for registration of transfer, exchange or payment, and any
Preferred Security Certificate issued is registered in the name of Cede & Co. or
such other name as registered by an authorized representative of the Depositary
(and any payment hereon is made to Cede & Co. or to such other entity as is
requested by an authorized representative of the Depositary), 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."

            Preferred Securities not represented by a Global Security issued in
exchange for all or a part of a Global Security pursuant to this Section 7.12
shall be registered in such names and in such authorized denominations as the
Depositary, pursuant to instructions from its direct or indirect participants or
otherwise, shall instruct the Property Trustee. Upon execution and
authentication, the Property Trustee shall deliver such Preferred Securities not
represented by a Global Security to the Persons in whose names such definitive
Preferred Securities are so registered.

            At such time as all interests in Global Securities have been
redeemed, repurchased or cancelled, such Global Securities shall be, upon
receipt thereof, cancelled by the Property Trustee in accordance with standing
procedures of the Depositary. At any time prior to such cancellation, if any
interest in Global Securities is exchanged for Preferred Securities not
represented by a Global Security, redeemed, cancelled or transferred to a
transferee who receives Preferred Securities not represented by a Global
Security therefor or any Preferred Security not represented by a Global Security
is exchanged or transferred for part of Global Securities, the principal amount
of such Global Securities shall, in accordance with the standing procedures of
the Depositary, be reduced or increased, as the case may be, and an endorsement
shall be made on such Global Securities by the Property Trustee to reflect such
reduction or increase.

            The Trust and the Property Trustee may for all purposes, including
the making of payments due on the Preferred Securities, deal with the Depositary
as the authorized representative of the Holders for the purposes of exercising
the rights of Holders hereunder. The rights of the owner of any beneficial
interest in a Global Security shall be limited to those established by law and
agreements between such owners and depository participants or Euroclear and
Clearstream Banking; provided, that no such agreement shall give any rights to
any Person against the Trust or the Property Trustee without the written consent
of the parties so affected. Multiple requests and directions from and votes of
the Depositary as holder of Preferred

<PAGE>
                                                                              44

Securities in global form with respect to any particular matter shall not be
deemed inconsistent to the extent they do not represent an amount of Preferred
Securities in excess of those held in the name of the Depositary or its nominee.

            If at any time the Depositary for any Preferred Securities
represented by one or more Global Securities notifies the Trust that it is
unwilling or unable to continue as Depositary for such Preferred Securities or
if at any time the Depositary for such Preferred Securities shall no longer be
eligible under this Section 7.12, the Trust shall appoint a successor Depositary
with respect to such Preferred Securities. If a successor Depositary for such
Preferred Securities is not appointed by the Trust within 90 days after the
Trust receives such notice or becomes aware of such ineligibility, the Trust's
election that such Preferred Securities be represented by one or more Global
Securities shall no longer be effective and the Trust shall execute, and the
Property Trustee will authenticate and deliver, Preferred Securities in
definitive registered form, in any authorized denominations, in an aggregate
liquidation amount equal to the principal amount of the Global Security or
Preferred Securities representing such Preferred Securities in exchange for such
Global Security or Preferred Securities.

            The Trust may at any time and in its sole discretion determine that
the Preferred Securities issued in the form of one or more Global Securities
shall no longer be represented by a Global Security or Preferred Securities. In
such event the Trust shall execute, and the Property Trustee, shall authenticate
and deliver, Preferred Securities in definitive registered form, in any
authorized denominations, in an aggregate liquidation amount equal to the
principal amount of the Global Security or Preferred Securities representing
such Preferred Securities, in exchange for such Global Security or Preferred
Securities.

            Notwithstanding any other provisions of this Declaration (other than
the provisions set forth in Section 7.9), Global Securities may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.

            Interests of beneficial owners in a Global Security may be
transferred or exchanged for Preferred Securities not represented by a Global
Security and Preferred Securities not represented by a Global Security may be
transferred or exchange for Global Securities in accordance with rules of the
Depositary and the provisions of Section 7.9.

                                   ARTICLE 8

                      DISSOLUTION AND TERMINATION OF TRUST

            SECTION 8.1. Dissolution and Termination of Trust.

            (a) The Trust shall dissolve upon the earliest of:

                  (i) the bankruptcy of the Holder of the Common Securities or
            the Sponsor;

<PAGE>
                                                                              45

                  (ii) the filing of a certificate of dissolution or its
            equivalent with respect to the Sponsor; the filing of a certificate
            of cancellation with respect to the Trust after obtaining the
            consent of the Holders of at least a Majority in Liquidation Amount
            of the Securities to the filing of a certificate of cancellation
            with respect to the Trust or the revocation of the Sponsor's charter
            and the expiration of 90 days after the date of revocation without a
            reinstatement thereof;

                  (iii) the entry of a decree of judicial dissolution of the
            Sponsor or the Trust;

                  (iv) the time when all of the Securities shall have been
            called for redemption and the amounts then due shall have been paid
            to the Holders in accordance with the terms of the Securities;

                  (v) upon the election of the Regular Trustees, following the
            occurrence and continuation of a Special Event pursuant to which the
            Trust shall have been dissolved in accordance with the terms of the
            Securities, and all of the Debentures shall have been distributed to
            the Holders of Securities in exchange for all of the Securities;

                  (vi) at the Sponsor's election by notice and direction to the
            Property Trustee to distribute the Debentures to the Holders of the
            Securities in exchange for all of the Securities; provided that the
            Sponsor will be required to obtain an opinion of counsel that the
            distribution of the Debentures will not be taxable to the Holders of
            the Preferred Securities for United States federal income tax
            purposes; or

                  (vii) the time when all of the Regular Trustees and the
            Sponsor shall have consented to dissolution of the Trust provided
            such action is taken before the issuance of any Securities;

            (b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a) and upon completion of the winding up and
liquidation of the Trust, the Trustees shall terminate the Trust by filing a
certificate of cancellation with the Secretary of State of the State of
Delaware.

            (c) The provisions of Section 4.2 and Article 9 shall survive the
termination of the Trust.

            SECTION 8.2. Liquidation Distribution Upon Dissolution of the Trust.

            (a) In the event of any voluntary or involuntary liquidation,
dissolution, or winding-up of the Trust (each a "Liquidation"), the Holders of
the Securities on the date of the Liquidation will be entitled to receive, out
of the assets of the Trust available for distribution to Holders of Securities
after satisfaction of the Trusts' liabilities to creditors, if any,
distributions in cash or other immediately available funds in an amount equal to
the aggregate of the stated liquidation amount of $__ per Security plus
accumulated and unpaid Distributions thereon to the date of payment (such amount
being the "Liquidation Distribution"), unless, in connection with

<PAGE>
                                                                              46

such Liquidation, Debentures in an aggregate stated principal amount equal to
the aggregate stated liquidation amount of, with an interest rate identical to
the distribution rate of, and accrued and unpaid interest equal to accumulated
and unpaid Distributions on, such Securities shall be distributed on a Pro Rata
basis to the Holders of the Securities in exchange for such Securities.

            (b) If, upon any such Liquidation, the Liquidation Distribution can
be paid only in part because the Trust has insufficient assets available to pay
in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro Rata basis. The
Holders of the Common Securities will be entitled to receive distributions upon
any such Liquidation Pro Rata with the Holders of the Preferred Securities
except that if an Indenture Event of Default has occurred and is continuing, the
Preferred Securities shall have a preference over the Common Securities with
regard to such distributions as provided in Section 7.1(b).

                                   ARTICLE 9

                           LIMITATION OF LIABILITY OF
               HOLDERS OF SECURITIES, DELAWARE TRUSTEES OR OTHERS

            SECTION 9.1. Liability.

            (a) Except as expressly set forth in this Declaration, the Guarantee
and the terms of the Securities, the Sponsor:

                  (i) shall not be personally liable for the return of any
            portion of the capital contributions (or any return thereon) of the
            Holders of the Securities which shall be made solely from assets of
            the Trust; and

                  (ii) shall not be required to pay to the Trust or to any
            Holder of Securities any deficit upon dissolution of the Trust or
            otherwise.

            (b) Pursuant to Section 3803(a) of the Business Trust Act, the
Holder of the Common Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware; provided,
however, the Holders of the Common Securities shall be liable for all of the
debts and obligations of the Trust (other than with respect to the Securities)
to the extent not satisfied out of the Trust's assets.

            (c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Preferred Securities shall be entitled to the same limitation of
personal liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware.

            SECTION 9.2. Exculpation.

<PAGE>
                                                                              47

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

            (b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Trust and upon such information, opinions,
reports or statements presented to the Trust 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 Trust, 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 Securities might properly be paid.

            SECTION 9.3. Fiduciary Duty.

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

            (b) Unless otherwise expressly provided herein:

                  (i) whenever a conflict of interest exists or arises between
            any Covered Persons; or

                  (ii) whenever this Declaration or any other agreement
            contemplated herein or therein provides that an Indemnified Person
            shall act in a manner that is, or provides terms that are, fair and
            reasonable to the Trust or any Holder of Securities,

the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.

<PAGE>
                                                                              48

            (c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:

                  (i) in its "discretion" or under a grant of similar authority,
            the Indemnified Person shall be entitled to consider such interests
            and factors as it desires, including its own interests, and shall
            have no duty or obligation to give any consideration to any interest
            of or factors affecting the Trust or any other Person; or

                  (ii) in its "good faith" or under another express standard,
            the Indemnified Person shall act under such express standard and
            shall not be subject to any other or different standard imposed by
            this Declaration or by applicable law.

Indemnification.

                  (iii) The Debenture Issuer shall indemnify, to the full extent
            permitted by law, any Debenture Issuer Indemnified Person who was or
            is a party or is threatened to be made a party to any threatened,
            pending or completed action, suit or proceeding, whether civil,
            criminal, administrative or investigative (other than an action by
            or in the right of the Trust) by reason of the fact that he is or
            was a Debenture Issuer Indemnified Person against expenses
            (including attorney fees), judgments, fines and amounts paid in
            settlement actually and reasonably incurred by him in connection
            with such action, suit or proceeding if he acted in good faith and
            in a manner he reasonably believed to be in or not opposed to the
            best interests of the Trust, and, with respect to any criminal
            action or proceeding, had no reasonable cause to believe his conduct
            was unlawful. The termination of any action, suit or proceeding by
            judgment, order, settlement, conviction or upon a plea of nolo
            contendere or its equivalent, shall not, of itself, create a
            presumption that the Debenture Issuer Indemnified Person did not act
            in good faith and in a manner which he reasonably believed to be in
            or not opposed to the best interests of the Trust, and, with respect
            to any criminal action or proceeding, had reasonable cause to
            believe that his conduct was unlawful.

                  (iv) The Debenture Issuer shall indemnify, to the full extent
            permitted by law, any Debenture Issuer Indemnified Person who was or
            is a party or is threatened to be made a party to any threatened,
            pending or completed action or suit by or in the right of the Trust
            to procure a judgment in its favor by reason of the fact that he is
            or was a Debenture Issuer Indemnified Person against expenses
            (including attorneys' fees) actually and reasonably incurred by him
            in connection with the defense or settlement of such action or suit
            if he acted in good faith and in a manner he reasonably believed to
            be in or not opposed to the best interests of the Trust and except
            that no such indemnification shall be made in respect of any claim,
            issue or matter as to which such Debenture Issuer Indemnified Person
            shall have been adjudged to be liable to the Trust unless and only
            to the extent that the Court of Chancery of Delaware or the court in
            which such action or suit was brought shall determine upon
            application that, despite the adjudication of liability but in view
            of all the circumstances of the case, such person is fairly and

<PAGE>
                                                                              49

            reasonably entitled to indemnity for such expenses which such Court
            of Chancery or such other court shall deem proper.

                  (v) Any indemnification under paragraphs (i) and (ii) of this
            Section 9.4(a) (unless ordered by a court) shall be made by the
            Debenture Issuer only as authorized in the specific case upon a
            determination that indemnification of the Debenture Issuer
            Indemnified Person is proper in the circumstances because he has met
            the applicable standard of conduct set forth in paragraphs (i) and
            (ii). Such determination shall be made (1) by the Regular Trustees
            by a majority vote of a quorum consisting of such Regular Trustees
            who were not parties to such action, suit or proceeding, (2) if such
            a quorum is not obtainable, or, even if obtainable, if a quorum of
            disinterested Regular Trustees so directs, by independent legal
            counsel in a written opinion, or (3) by the Common Security Holder
            of the Trust.

                  (vi) Expenses (including attorneys' fees) incurred by a
            Debenture Issuer Indemnified Person in defending a civil, criminal,
            administrative or investigative action, suit or proceeding referred
            to in paragraphs (i) and (ii) of this Section 9.4(a) shall be paid
            by the Debenture Issuer in advance of the final disposition of such
            action, suit or proceeding upon receipt of an undertaking by or on
            behalf of such Debenture Issuer Indemnified Person to repay such
            amount if it shall ultimately be determined that he is not entitled
            to be indemnified by the Debenture Issuer as authorized in this
            Section 9.4(a). Notwithstanding the foregoing, no advance shall be
            made by the Debenture Issuer if a determination is reasonably and
            promptly made (i) by the Regular Trustees by a majority vote of a
            quorum of disinterested Regular Trustees, (ii) if such a quorum is
            not obtainable, or, even if obtainable, if a quorum of disinterested
            Regular Trustees so directs, by independent legal counsel in a
            written opinion or (iii) the Common Security Holder of the Trust,
            that, based upon the facts known to the Regular Trustees, counsel or
            the Common Security Holder at the time such determination is made,
            such Debenture Issuer Indemnified Person acted in bad faith or in a
            manner that such person did not believe to be in or not opposed to
            the best interests of the Trust, or, with respect to any criminal
            proceeding, that such Debenture Issuer Indemnified Person believed
            or had reasonable cause to believe his conduct was unlawful. In no
            event shall any advance be made in instances where the Regular
            Trustees, independent legal counsel or Common Security Holder
            reasonably determine that such person deliberately breached his duty
            to the Trust or its Common or Preferred Security Holders.

                  (vii) The indemnification and advancement of expenses provided
            by, or granted pursuant to, the other paragraphs of this Section
            9.4(a) shall not be deemed exclusive of any other rights to which
            those seeking indemnification and advancement of expenses may be
            entitled under any agreement, vote of stockholders or disinterested
            directors of the Debenture Issuer or Preferred Security Holders of
            the Trust or otherwise, both as to action in his official capacity
            and as to action in another capacity while holding such office. All
            rights to indemnification under this Section 9.4(a) (a) shall be
            deemed to be provided by

<PAGE>
                                                                              50

            a contract between the Debenture Issuer and each Debenture Issuer
            Indemnified Person who serves in such capacity at any time while
            this Section 9.4(a) is in effect. Any repeal or modification of this
            Section 9.4(a) shall not affect any rights or obligations then
            existing.

                  (viii) The Debenture Issuer or the Trust may purchase and
            maintain insurance on behalf of any person who is or was a Debenture
            Issuer Indemnified Person against any liability asserted against him
            and incurred by him in any such capacity, or arising out of his
            status as such, whether or not the Debenture Issuer would have the
            power to indemnify him against such liability under the provisions
            of this Section 9.4(a).

                  (ix) For purposes of this Section 9.4(a), references to "the
            Trust" shall include, in addition to the resulting or surviving
            entity, any constituent entity (including any constituent of a
            constituent) absorbed in a consolidation or merger, so that any
            person who is or was a director, trustee, officer or employee of
            such constituent entity, or is or was serving at the request of such
            constituent entity as a director, trustee, officer, employee or
            agent of another entity, shall stand in the same position under the
            provisions of this Section 9.4(a) with respect to the resulting or
            surviving entity as he would have with respect to such constituent
            entity if its separate existence had continued.

                  (x) The indemnification and advancement of expenses provided
            by, or granted pursuant to, this Section 9.4(a) shall, unless
            otherwise provided when authorized or ratified, continue as to a
            person who has ceased to be a Debenture Issuer Indemnified Person
            and shall inure to the benefit of the heirs, executors and
            administrators of such a person. The obligation to indemnify as set
            forth in this Section 9.4(a) shall survive the resignation or
            removal of the Delaware Trustee or the Property Trustee or the
            termination of this Declaration.

            (d) The Debenture Issuer agrees to indemnify the (i) Property
Trustee, (ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee
or the Delaware Trustee, and (iv) any officers, directors, shareholders,
members, partners, employees, representatives, custodians, nominees or agents of
the Property Trustee or the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary 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 9.4(b) shall
survive the resignation and removal of the Delaware Trustee or the Property
Trustee and the satisfaction and discharge of this Declaration. In addition, the
Debenture Issuer has agreed in the Indenture to pay the fees and expenses of the
Delaware Trustee and the Property Trustee.

            SECTION 9.4. Outside Businesses.

<PAGE>
                                                                              51

            Any Covered Person, the Sponsor, the Delaware Trustee and the
Property Trustee may engage in or possess an interest in other business ventures
of any nature or description, independently or with others, similar or
dissimilar to the activities of the Trust, and the Trust and the Holders of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the pursuit
of any such venture, even if competitive with the activities of the Trust, shall
not be deemed wrongful or improper. No Covered Person, the Sponsor, the Delaware
Trustee or the Property Trustee shall be obligated to present any particular
investment or other opportunity to the Trust even if such opportunity is of a
character that, if presented to the Trust, could be taken by the Trust, and any
Covered Person, the Sponsor, the Delaware Trustee and the Property Trustee shall
have the right to take for its own account (individually or as a partner or
fiduciary) or to recommend to others any such particular investment or other
opportunity. Any Covered Person, the Delaware Trustee and the Property Trustee
may engage or be interested in any financial or other transaction with the
Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee
or agent for, or act on any committee or body of holders of, securities or other
obligations of the Sponsor or its Affiliates.

                                   ARTICLE 10

                                   ACCOUNTING

            SECTION 10.1. Fiscal Year.

            The fiscal year ("Fiscal Year") of the Trust shall be the calendar
year, or such other year as is required by the Code.

            SECTION 10.2. Certain Accounting Matters.

            (a) At all times during the existence of the Trust, the Regular
Trustees shall keep, or cause to be kept, full books of account, records and
supporting documents, which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon as of the end of each Fiscal
Year of the Trust by a firm of independent certified public accountants selected
by the Regular Trustees.

            (b) The Regular Trustees shall cause to be prepared and delivered to
each of the Holders of Securities, within 90 days after the end of each Fiscal
Year of the Trust, annual financial statements of the Trust, including a balance
sheet of the Trust as of the end of such Fiscal Year, and the related statements
of income or loss.

            (c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, an annual United States federal
income tax information statement, required by the Code, containing such
information with regard to the Securities held by each Holder as is required by
the Code and the Treasury Regulations. Notwithstanding any right

<PAGE>
                                                                              52

under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such statements within 30 days after the
end of each Fiscal Year of the Trust.

            (d) The Regular Trustees shall cause to be duly prepared and filed
with the appropriate taxing authority, an annual United States federal income
tax return, on a Form 1041 or such other form required by United States federal
income tax law, and any other annual income tax returns required to be filed by
the Regular Trustees on behalf of the Trust with any state or local taxing
authority.

            SECTION 10.3. Banking.

            The Trust shall maintain one or more bank accounts in the name and
for the sole benefit of the Trust; provided, however, that all payments of funds
in respect of the Debentures held by the Property Trustee shall be made directly
to the Property Account and no other funds of the Trust shall be deposited in
the Property Account. The sole signatories for such accounts shall be designated
by the Regular Trustees; provided, however, that the Property Trustee shall
designate the signatories for the Property Account.

            SECTION 10.4. Withholding.

            The Trust and the Regular Trustees shall comply with all withholding
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Regular Trustees shall file required forms with
applicable jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the Holder
to applicable jurisdictions. To the extent that the Trust is required to
withhold and pay over any amounts to any authority with respect to distributions
or allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed over withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.

                                   ARTICLE 11

                             AMENDMENTS AND MEETINGS

            SECTION 11.1. Amendments.

            (a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may only be amended by a
written instrument approved and executed by the Sponsor and (i) the Regular
Trustees (or, if there are more than two Regular Trustees, a majority of the
Regular Trustees) and (ii) the Property Trustee if the amendment affects the
rights, powers, duties, obligations or immunities of the Property Trustee; and
(iii) by

<PAGE>
                                                                              53

the Delaware Trustee if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee.

            (b) No amendment shall be made, and any such purported amendment
shall be void and ineffective:

                  (i) unless, in the case of any proposed amendment, the
            Property Trustee shall have first received an Officers' Certificate
            from each of the Trust and the Sponsor that such amendment is
            permitted by, and conforms to, the terms of this Declaration
            (including the terms of the Securities);

                  (ii) unless, in the case of any proposed amendment which
            affects the rights, powers, duties, obligations or immunities of the
            Property Trustee, the Property Trustee shall have first received:

                        (A)   an Officers' Certificate from each of the Trust
                              and the Sponsor that such amendment is permitted
                              by, and conforms to, the terms of this Declaration
                              (including the terms of the Securities) and that
                              all conditions precedent to the execution and
                              delivery of such amendment have been satisfied;
                              and

                        (B)   an opinion of counsel (who may be counsel to the
                              Sponsor or the Trust) that such amendment is
                              permitted by, and conforms to, the terms of this
                              Declaration (including the terms of the
                              Securities) and that all conditions precedent to
                              the execution and delivery of such amendment have
                              been satisfied; and

                  (iii) to the extent the result of such amendment would be to:

                        (A)   cause the Trust to be classified as other than a
                              grantor trust for United States federal income tax
                              purposes;

                        (B)   reduce or otherwise adversely affect the powers of
                              the Property Trustee in contravention of the Trust
                              Indenture Act; or

                        (C)   cause the Trust to be deemed to be an Investment
                              Company required to be registered under the
                              Investment Company Act.

            (c) If the Trust has issued any Securities that remain outstanding:

                  (i) any amendment that would (a) change the amount or timing
            of any distribution of the Securities or otherwise adversely affect
            the amount of any distribution required to be made in respect of the
            Securities as of a specified date or (b) restrict the right of a
            Holder of Securities to institute suit for the

<PAGE>
                                                                              54

            enforcement of any such payment on or after such date, will entitle
            the Holders of such Securities, voting together as a single class,
            to vote on such amendment or proposal and such amendment or proposal
            shall not be effective except with the approval of each of the
            Holders of the Securities affected thereby; and

                  (ii) any amendment that would (a) adversely affect the powers,
            preferences or special rights of the Securities, whether by way of
            amendment to this Declaration or otherwise or (b) result in the
            dissolution, winding-up or termination of the Trust other than
            pursuant to the terms of this Declaration, will entitle the holders
            of the Securities voting together as a single class to vote on such
            amendment or proposal and such amendment or proposal shall not be
            effective except with the approval of 66 2/3% of the Securities
            affected thereby; provided that, if any amendment or proposal
            referred to in clause (a) above would adversely affect only the
            Preferred Securities or the Common Securities, then only the
            affected class will be entitled to vote on such amendment or
            proposal and such amendment or proposal.

            (d) This Section 11.1 shall not be amended without the consent of
all of the Holders of the Securities.

            (e) Article 4 shall not be amended without the consent of the
Holders of a Majority in Liquidation Amount of the Common Securities.

            (f) The rights of the Holders of the Common Securities under Article
5 to increase or decrease the number of, and appoint and remove Trustees shall
not be amended without the consent of the Holders of a Majority in Liquidation
Amount of the Common Securities.

            (g) Notwithstanding Section 11.1(c), this Declaration may be amended
without the consent of the Holders of the Securities, if such amendment does not
adversely affect in any material respect the rights of the holders of the
Securities, to:

                  (i) cure any ambiguity;

                  (ii) correct or supplement any provision in this Declaration
            that may be defective or inconsistent with any other provision of
            this Declaration;

                  (iii) add to the covenants, restrictions or obligations of the
            Sponsor;

                  (iv) conform to any change in Rule 3a-5 of the Investment
            Company Act or written change in interpretation or application of
            Rule 3a-5 of the Investment Company Act by any legislative body,
            court, government agency or regulatory authority; or

                  (v) to modify, eliminate and add to any provision of this
            Declaration to ensure that the Trust will be classified as a grantor
            trust for United States federal income tax purposes at all times
            that any Securities are outstanding or to ensure

<PAGE>
                                                                              55

            that the Trust will not be required to register as an Investment
            Company under the Investment Company Act.

            SECTION 11.2. Meetings of the Holders of Securities; Action by
Written Consent.

            (a) Meetings of the Holders of any class of Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call a
meeting of the Holders of such class if directed to do so by the Holders of at
least 10% in Liquidation Amount of such class of Securities. Such direction
shall be given by delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders of Securities wish to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Holders of Securities calling a meeting shall specify in writing the
Certificates held by the Holders of Securities exercising the right to call a
meeting and only those Securities specified shall be counted for purposes of
determining whether the required percentage set forth in the second sentence of
this paragraph has been met.

            (b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:

                  (i) notice of any such meeting shall be given to all the
            Holders of Securities having a right to vote thereat at least 7 days
            and not more than 60 days before the date of such meeting. Whenever
            a vote, consent or approval of the Holders of Securities is
            permitted or required under this Declaration or the rules of any
            stock exchange on which the Preferred Securities are listed or
            admitted for trading, such vote, consent or approval may be given at
            a meeting of the Holders of Securities. Any action that may be taken
            at a meeting of the Holders of Securities may be taken without a
            meeting if a consent in writing setting forth the action so taken is
            signed by the Holders of Securities owning not less than the minimum
            amount of Securities in liquidation amount that would be necessary
            to authorize or take such action at a meeting at which all Holders
            of Securities having a right to vote thereon were present and
            voting. Prompt notice of the taking of action without a meeting
            shall be given to the Holders of Securities entitled to vote who
            have not consented in writing. The Regular Trustees may specify that
            any written ballot submitted to the Security Holders for the purpose
            of taking any action without a meeting shall be returned to the
            Trust within the time specified by the Regular Trustees;

                  (ii) each Holder of a Security may authorize any Person to act
            for it by proxy on all matters in which a Holder of Securities is
            entitled to participate, including waiving notice of any meeting, or
            voting or participating at a meeting. No proxy shall be valid after
            the expiration of 11 months from the date thereof unless otherwise
            provided in the proxy. Every proxy shall be revocable at the
            pleasure of the Holder of Securities executing such proxy. Except as
            otherwise

<PAGE>
                                                                              56

            provided herein, all matters relating to the giving, voting or
            validity of proxies shall be governed by the General Corporation Law
            of the State of Delaware relating to proxies, and judicial
            interpretations thereunder, as if the Trust were a Delaware
            corporation and the Holders of the Securities were stockholders of a
            Delaware corporation;

                  (iii) each meeting of the Holders of the Securities shall be
            conducted by the Regular Trustees or by such other Person that the
            Regular Trustees may designate; and

                  (iv) unless the Business Trust Act, this Declaration, the
            terms of the Securities, the Trust Indenture Act or the listing
            rules of any stock exchange on which the Preferred Securities are
            then listed for trading, otherwise provides, the Regular Trustees,
            in their sole discretion, shall establish all other provisions
            relating to meetings of Holders of Securities, including notice of
            the time, place or purpose of any meeting at which any matter is to
            be voted on by any Holders of Securities, waiver of any such notice,
            action by consent without a meeting, the establishment of a record
            date, quorum requirements, voting in person or by proxy or any other
            matter with respect to the exercise of any such right to vote.

                                   ARTICLE 12

                       REPRESENTATIONS OF PROPERTY TRUSTEE
                              AND DELAWARE TRUSTEE

            SECTION 12.1. Representations and Warranties of the Property
Trustee.

            The Trustee that acts as initial Property Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Property Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Property Trustee's acceptance of its
appointment as Property Trustee that:

            (a) the Property Trustee is a company duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, with trust power and authority to execute and
deliver, and to carry out and perform its obligations under the terms of, this
Declaration;

            (b) the Property Trustee satisfies the requirements set forth in
Section 6.3(a);

            (c) the execution, delivery and performance by the Property Trustee
of this Declaration have been duly authorized by all necessary corporate action
on the part of the Property Trustee. This Declaration has been duly executed and
delivered by the Property Trustee, and it constitutes a legal, valid and binding
obligation of the Property Trustee, enforceable against it in accordance with
its terms, subject to applicable bankruptcy, reorganization, moratorium,
insolvency and other similar laws affecting creditors' rights

<PAGE>
                                                                              57

generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);

            (d) the execution, delivery and performance of this Declaration by
the Property Trustee do not conflict with or constitute a breach of the articles
of association or incorporation, as the case may be, or the by-laws (or other
similar organizational documents) of the Property Trustee; and

            (e) no consent, approval or authorization of, or registration with
or notice to, any State or federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this Declaration.

            SECTION 12.2. Representations and Warranties of the Delaware
Trustee.

            The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:

            (a) the Delaware Trustee satisfies the requirements set forth in
Section 6.2 and has the power and authority to execute and deliver, and to carry
out and perform its obligations under the terms of, this Declaration and, if it
is not a natural person, is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization;

            (b) the Delaware Trustee has been authorized to perform its
obligations under the Certificate of Trust and this Declaration. This
Declaration under Delaware law constitutes a legal, valid and binding obligation
of the Delaware Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency and
other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at law);
and

            (c) no consent, approval or authorization of, or registration with
or notice to, any State or federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of this Declaration.

                                   ARTICLE 13

                                  MISCELLANEOUS

            SECTION 13.1. Notices.

            All notices provided for in this Declaration shall be in writing,
duly signed by the party giving such notice, and shall be delivered, telecopied
or mailed by registered or certified mail, as follows:

<PAGE>
                                                                              58

            (a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Property Trustee, the Delaware Trustee and the Holders of
the Securities):

            c/o Lehman Brothers Holdings Inc.
            3 World Financial Center
            New York, New York  10285
            Attention: Corporate Counsel
            Telecopy No: (212) 526-3774

            (b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of to
the Regular Trustees, the Property Trustee and the Holders of the Securities):

            Chase Manhattan Bank Delaware
            1201 Market Street
            Wilmington, Delaware  19801
            Attention: Corporate Trustee Administration
            Telecopy No: ________________

            (c) if given to the Property Trustee, at its Corporate Trust Office
(or such other address as the Property Trustee may give notice of to the Regular
Trustees, the Delaware Trustee and the Holders of the Securities).

            (d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice of to the Property Trustee, the Delaware
Trustee and the Trust):

            Lehman Brothers Holdings Inc.
            3 World Financial Center
            New York, New York  10285
            Attention: Corporate Counsel
            Telecopy No: (212) 526-3774

            (e) if given to any other Holder, at the address set forth on the
register of the Trust.

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 13.2. Governing Law.

            This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware.

<PAGE>
                                                                              59

            SECTION 13.3. Intention of the Parties.

            It is the intention of the parties hereto that the Trust be
classified for United States federal income tax purposes as a grantor trust. The
provisions of this Declaration shall be interpreted in a manner consistent with
such classification.

            SECTION 13.4. Headings.

            Headings contained in this Declaration are inserted for convenience
of reference only and do not affect the interpretation of this Declaration or
any provision hereof.

            SECTION 13.5. Successors and Assigns.

            Whenever in this Declaration any of the parties hereto is named or
referred to, the successors and assigns of such party shall be deemed to be
included, and all covenants and agreements in this Declaration by the Sponsor
and the Trustees shall bind and inure to the benefit of their respective
successors and assigns, whether so expressed.

            SECTION 13.6. Partial Enforceability.

            If any provision of this Declaration, or the application of such
provision to any Person or circumstance, shall be held invalid, the remainder of
this Declaration, or the application of such provision to persons or
circumstances other than those to which it is held invalid, shall not be
affected thereby.

            SECTION 13.7. Counterparts.

            This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.

            IN WITNESS WHEREOF, the undersigned have caused these presents to be
executed as of the day and year first above written.

                                    LEHMAN BROTHERS HOLDINGS INC.
                                      as Sponsor and as Common Securities Holder

                                    BY:__________________________________
                                    Name:
                                    Title:

                                    THE CHASE MANHATTAN BANK,
                                      as Property Trustee

                                    BY: __________________________________
                                    Name:
                                    Title:

<PAGE>
                                                                              60

                                    CHASE MANHATTAN BANK DELAWARE,
                                      as Delaware Trustee

                                    BY: __________________________________
                                    Name:
                                    Title:

                                    , as Regular Trustee

                                    , as Regular Trustee

                                    , as Regular Trustee

<PAGE>

                                                                       EXHIBIT A

            [IF THE PREFERRED SECURITY IS TO BE A GLOBAL SECURITY, INSERT THE
FOLLOWING: This Preferred Security is a Global Security within the meaning of
the Declaration hereinafter referred to and is registered in the name of The
Depository Trust Company, a New York corporation (the "Depositary"), or a
nominee of the Depositary. This Preferred Security is exchangeable for Preferred
Securities registered in the name of a person other than the Depositary or its
nominee only in the limited circumstances described in the Declaration and no
transfer of this Preferred Security (other than a transfer of this Preferred
Security as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.

            Unless this Preferred Security Certificate is presented by an
authorized representative of the Depositary to the issuer or its agent for
registration of transfer, exchange or payment, and any Preferred Security
Certificate issued is registered in the name of Cede & Co. or such other name as
registered by an authorized representative of the Depositary (and any payment
hereon is made to Cede & Co. or to such other entity as is requested by an
authorized representative of the Depositary), 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.]

                                 Certificate No. Number of Preferred Securities:

CUSIP No. ____

                   Certificate Evidencing Preferred Securities
                                       of
                    Lehman Brothers Holdings Capital Trust __

                           ____% Preferred Securities
                 (liquidation amount $__ per Preferred Security)

            Lehman Brothers Holdings Capital Trust __, a statutory business
trust formed under the laws of the State of Delaware (the "Trust"), hereby
certifies that Cede & Co. (the "Holder") is the registered owner of ___
preferred securities of the Trust representing undivided beneficial ownership
interests in the assets of the Trust designated the ____% Preferred Securities
(liquidation amount $__ per Preferred Security) (the "Preferred Securities").
The Preferred Securities are transferable on the register of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer as provided in the Declaration (as
defined below). The designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities represented hereby
are issued and shall in all respects be subject to the provisions of the Amended
and Restated Declaration of Trust of the Trust, dated as of _____ __, ____ (as
the same may be amended from time to time (the "Declaration"), among LEHMAN
BROTHERS HOLDINGS INC., as Sponsor, _____________, _______________ and
_________________, as Regular Trustees, THE CHASE MANHATTAN BANK as Property
Trustee, CHASE MANHATTAN BANK DELAWARE, as Delaware Trustee and the holders,
from time to time, of undivided beneficial ownership

<PAGE>
                                                                               2

interests in assets of the Trust. Capitalized terms used herein but not defined
shall have the meaning given them in the Declaration. The Holder is entitled to
the benefits of the Guarantee to the extent described therein. The Sponsor will
provide a copy of the Declaration, the Guarantee and the Indenture to a Holder
without charge upon written request to the Sponsor at its principal place of
business.

            Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.

            By acceptance, the Holder agrees to treat, for United States
federal, state and local income tax purposes, the Debentures as indebtedness and
the Preferred Securities as evidence of undivided indirect beneficial ownership
interests in the Debentures.

            IN WITNESS WHEREOF, the Trust has executed this certificate this
___day of _____, ____.

                                    LEHMAN BROTHERS HOLDINGS
                                      CAPITAL TRUST __

                                    By:______________________________
                                       Name:
                                       Title: Regular Trustee

            This is one of the Securities referred to in the within-mentioned
Declaration.

                                    THE CHASE MANHATTAN BANK,
                                      as Property Trustee

                                    By:______________________________
                                       Name:
                                       Title: Regular Trustee

<PAGE>

                                                                       EXHIBIT B

                      THIS CERTIFICATE IS NOT TRANSFERABLE

                               Certificate No. Number of Common Securities: ____

                    Certificate Evidencing Common Securities
                                       of
                    Lehman Brothers Holdings Capital Trust __

                                Common Securities
                   liquidation amount $__ per Common Security)

            Lehman Brothers Holdings Capital Trust __, a statutory business
trust formed under the laws of the State of Delaware (the "Trust"), hereby
certifies that LEHMAN BROTHERS HOLDINGS INC. (the "Holder") is the registered
owner of common securities of the Trust representing an undivided beneficial
ownership interest in the assets of the Trust designated the ____% Common
Securities (liquidation amount $__ per Common Security) (the "Common
Securities"). The Common Securities are not transferable and any attempted
transfer thereof shall be void. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust,
dated as of _____ __, ____ (as the same may be amended from time to time, the
"Declaration"), among LEHMAN BROTHERS HOLDINGS INC. as Sponsor,
__________________, __________________ and __________________, as Regular
Trustees, THE CHASE MANHATTAN BANK, as Property Trustee, CHASE MANHATTAN BANK
DELAWARE, as Delaware Trustee and the holders, from time to time, of undivided
beneficial ownership interests in assets of the Trust. The Holder is entitled to
the benefits of the Guarantee to the extent described therein. Capitalized terms
used herein but not defined shall have the meaning given them in the
Declaration. The Sponsor will provide a copy of the Declaration, the Guarantee
and the Indenture to the Holder without charge upon written request to the
Sponsor at its principal place of business.

            Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.

            By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of an undivided indirect beneficial ownership interest in the
Debentures.

<PAGE>
                                                                               2

            IN WITNESS WHEREOF, the Trust has executed this certificate this
____ day of _______, ____.

                                    LEHMAN BROTHERS HOLDINGS
                                      CAPITAL TRUST __

                                    By:____________________________________
                                       Name:
                                       Title: Regular Trustee<PAGE>

                                                                    Exhibit 4.32

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

                               GUARANTEE AGREEMENT

                    Lehman Brothers Holdings Capital Trust __

                         Dated as of _______ __, ____

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

<PAGE>

                             CROSS REFERENCE TABLE*

Section of Trust                                                    Section of
Indenture Act of                                                     Guarantee
1939, as amended                                                     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.
<PAGE>

                                TABLE OF CONTENTS

                                                                           Page
-------------------------------------------------------------------------------

ARTICLE 1 INTERPRETATION AND DEFINITIONS.....................................1

      SECTION 1.1 Interpretation and Definitions.............................1

ARTICLE 2 TRUST INDENTURE ACT................................................5

      SECTION 2.1 Trust Indenture Act; Application...........................5

      SECTION 2.2 Lists of Holders of Securities.............................5

      SECTION 2.3 Reports by Guarantee Trustee...............................5

      SECTION 2.4 Periodic Reports to Guarantee Trustee......................5

      SECTION 2.5 Evidence of Compliance with Conditions Precedent...........5

      SECTION 2.6 Guarantee Event of Default; Waiver.........................6

      SECTION 2.7 Guarantee Event of Default; Notice.........................6

      SECTION 2.8 Conflicting Interests......................................6

      SECTION 2.9 Disclosure of Information..................................6

      SECTION 2.10 Guarantee Trustee May File Proofs of Claim................7

ARTICLE 3 POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE.....................7

      SECTION 3.1 Powers and Duties of Guarantee Trustee.....................7

      SECTION 3.2 Certain Rights of Guarantee Trustee........................8

      SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee.....10

ARTICLE 4 GUARANTEE TRUSTEE.................................................10

      SECTION 4.1 Guarantee Trustee; Eligibility............................10

      SECTION 4.2 Appointment, Removal and Resignation of Guarantee Trustee.11

ARTICLE 5 GUARANTEE.........................................................12

      SECTION 5.1 Guarantee.................................................12

      SECTION 5.2 Waiver of Notice and Demand...............................12

      SECTION 5.3 Obligations Not Affected..................................12

      SECTION 5.4 Rights of Holders.........................................13
<PAGE>

                                                                           Page
                                                                           ----

      SECTION 5.5 Guarantee of Payment......................................14

      SECTION 5.6 Subrogation...............................................14

      SECTION 5.7 Independent Obligations...................................14

ARTICLE 6 LIMITATION OF TRANSACTIONS; SUBORDINATION.........................14

      SECTION 6.1 Limitation of Transactions................................14

      SECTION 6.2 Ranking...................................................15

      SECTION 6.3 Subordination of Common Securities........................15

ARTICLE 7 TERMINATION.......................................................15

      SECTION 7.1 Termination...............................................15

ARTICLE 8 INDEMNIFICATION...................................................16

      SECTION 8.1 Exculpation...............................................16

      SECTION 8.2 Indemnification...........................................16

ARTICLE 9 MISCELLANEOUS.....................................................16

      SECTION 9.1 Successors and Assigns....................................16

      SECTION 9.2 Amendments................................................17

      SECTION 9.3 Notices...................................................17

      SECTION 9.4 Benefit...................................................17

      SECTION 9.5 Governing Law.............................................18

<PAGE>

                               GUARANTEE AGREEMENT

            This GUARANTEE AGREEMENT (the "Guarantee"), dated as of _______ __,
_____, is executed and delivered by Lehman Brothers Holdings Inc., a Delaware
corporation (the "Guarantor"), and The Chase Manhattan Bank, as trustee (the
"Guarantee Trustee"), for the benefit of the Holders (as defined herein) from
time to time of the Securities (as defined herein) of Lehman Brothers Holdings
Capital Trust __, a Delaware statutory business trust (the "Trust").

                              W I T N E S S E T H:

            WHEREAS, pursuant to the Declaration (as defined herein), the Trust
may issue up to $________ aggregate liquidation amount of preferred securities,
having a liquidation amount of $___ per security and designated the ___%
Preferred Securities of the Trust (the "Preferred Securities") and up to
$________ aggregate liquidation amount of common securities, having a
liquidation amount of $___ per security and designated the ___% Common
Securities of the Trust (the "Common Securities" and, together with the
Preferred Securities, the "Securities");

            WHEREAS, as incentive for the Holders to purchase the Securities,
the Guarantor desires irrevocably and unconditionally to agree, to the extent
set forth in this Guarantee, to pay to the Holders of the Securities the
Guarantee Payments (as defined herein) and to make certain other payments on the
terms and conditions set forth herein; and that if a Trust Enforcement Event (as
defined herein) has occurred and is continuing, the rights of holders of the
Common Securities to receive Guarantee Payments under this Guarantee are
subordinated to the rights of Holders of Preferred Securities to receive
Guarantee Payments under this Guarantee.

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

                                    SECTION 1

                         INTERPRETATION AND DEFINITIONS

            1.1. Interpretation and Definitions. In this Guarantee, unless the
context otherwise requires:

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

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

            (c) all references to "the Guarantee" or "this Guarantee" are to
      this Guarantee as modified, supplemented or amended from time to time;

<PAGE>
                                                                               2

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

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

            (f) 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 a term, as applicable; and

            (g) the following terms have the following meanings:

            "Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.

            "Business Day" has the meaning specified in the Declaration.

            "Common Securities" has the meaning specified in the Recitals
hereto.

            "Corporate Trust Office" means the principal office of the Guarantee
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Guarantee is located
at 450 West 33rd Street, New York, New York 10001.

            "Covered Person" means a Holder or beneficial owner of Securities.

            "Debentures" means the series of subordinated deferrable interest
debentures to be issued by the Guarantor designated the ___% Subordinated
Deferrable Interest Debentures due 20__ held by the Property Trustee (as defined
in the Declaration) of the Trust.

            "Declaration" means the Amended and Restated Declaration of Trust,
dated as of ______ __, ____, as amended, modified or supplemented from time to
time, among the trustees of the Trust named therein, the Guarantor, as sponsor,
and the Holders, from time to time, of undivided beneficial ownership interests
in the assets of the Trust.

            "Global Security" means a fully registered, global Preferred
Security.

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

            "Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Securities, to the extent not paid by
or on behalf of the Trust: (i) any accumulated and unpaid Distributions (as
defined in the Declaration) that are required to be paid on such Securities to
the extent the Trust has sufficient funds available therefor at the time, (ii)
the redemption price, including all accumulated and unpaid Distributions to the
date of redemption, with respect to any Securities called for redemption by the
Trust, to the extent the Trust shall have sufficient funds available therefor at
the time or (iii) upon a voluntary or involuntary dissolution, winding-up or
termination of the Trust (other than in connection with the

<PAGE>
                                                                               3

distribution of Debentures to the Holders in exchange for Securities as provided
in the Declaration), the lesser of (a) the aggregate of the liquidation amount
and all accumulated and unpaid Distributions on the Securities to the date of
payment, to the extent the Trust has sufficient funds available therefor and (b)
the amount of assets of the Trust remaining available for distribution to
Holders in liquidation of the Trust (in either case, the "Liquidation
Distribution").

            "Guarantee Trustee" means The Chase Manhattan Bank, until a
Successor Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Guarantee and thereafter means each such Successor
Guarantee Trustee.

            "Holder" means any holder of Securities, as registered on the books
and records of the Trust; provided, however, that, in determining whether the
Holders of the requisite percentage of 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
Preferred Securities; and provided further, that in determining whether the
Holders of the requisite liquidation amount of Preferred Securities have voted
on any matter provided for in this Guarantee, then for the purpose of such
determination only (and not for any other purpose hereunder), if the Preferred
Securities remain in the form of one or more Global Certificates (as defined in
the Declaration), the term "Holders" shall mean the holder of the Global
Certificate acting at the direction of the Beneficial Owners (as defined in the
Declaration).

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

            "Indenture" means the Indenture, dated as of February 1, 1996,
between the Guarantor (the "Company") and The Chase Manhattan Bank, formerly
known as Chemical Bank, as trustee, as amended and supplemented by the First
Supplemental Indenture dated as of February 1, 1996, the Second Supplemental
Indenture dated as of January 26, 1999, the Third Supplemental Indenture dated
as of April 20, 1999 and by any other indenture supplemental thereto pursuant to
which the Debentures are to be issued to the Property Trustee (as defined in the
Declaration) of the Trust.

            "Majority in Liquidation Amount" means, except as provided in the
terms of the Preferred Securities or by the Trust Indenture Act, Holder(s) of
outstanding Securities, voting together as a single class, or, as the context
may require, Holders of outstanding Preferred Securities or Holders of
outstanding Common Securities, voting separately as a class, who are the record
owners of more than 50% of the aggregate liquidation amount (including the
stated amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and unpaid Distributions to the date upon which the voting
percentages are determined) of all outstanding Securities of the relevant class.
In determining whether the Holders of the requisite amount of Securities have
voted, Securities which are owned by the Guarantor or any Affiliate of the
Guarantor or any other obligor on the Securities shall be disregarded for the
purpose of any such determination.

<PAGE>
                                                                               4

            "Officers' Certificate" means, with respect to any Person, a
certificate signed on behalf of such Person by two Authorized Officers (as
defined in the Declaration) of such Person. Any Officers' Certificate delivered
with respect to compliance with a condition or covenant provided for in this
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;

            (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
      acting 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.

            "Preferred Securities" has the meaning specified in the Recitals
hereto.

            "Redemption Price" has the meaning specified in the Declaration.

            "Responsible Officer" means, with respect to the Guarantee Trustee,
any officer with direct responsibility for the administration of this 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.

            "Securities" has the meaning specified in the Recitals hereto.

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

            "Trust Enforcement Event" in respect of the Securities means an
Indenture Event of Default (as defined in the Indenture) has occurred and is
continuing in respect of the Debentures.

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

<PAGE>
                                                                               5

                                   SECTION 2

                               TRUST INDENTURE ACT

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

            (b) If and to the extent that any provision of this 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.

      2.2. Lists of Holders of Securities. (a) The Guarantor shall provide the
Guarantee Trustee (i) except while the 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 Guarantee Trustee may
reasonably require, of the names and addresses of the Holders of the 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 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
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 Guarantee Trustee by the Guarantor. The
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 Guarantee Trustee may destroy any List of Holders previously given to
it on receipt of a new List of Holders.

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

      2.3. Reports by Guarantee Trustee. Within 60 days after May 15 of each
year (commencing with the year of the first anniversary of the issuance of the
Securities), the Guarantee Trustee shall provide to the Holders of the
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 Guarantee Trustee shall also comply with the requirements of
Section 313(d) of the Trust Indenture Act.

      2.4. Periodic Reports to Guarantee Trustee. The Guarantor shall provide to
the Guarantee Trustee such documents, reports and information as required by
Section 314(a) (if any) of the Trust Indenture Act 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.

      2.5. Evidence of Compliance with Conditions Precedent. The Guarantor shall
provide to the Guarantee Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this 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.

<PAGE>
                                                                               6

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

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

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

      2.8. Conflicting Interests. The Declaration shall be deemed to be
specifically described in this Guarantee for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the Trust Indenture Act. Nothing
herein shall prevent the 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 Trustee has a conflicting interest as
defined in Section 310(b) of the Trust Indenture Act with respect to the
Securities or the Guarantees in respect of such Securities, there shall be
excluded (i) all series of securities issued or issuable under the Indenture,
(ii) (A) the Guarantee Agreement, dated as of January 26, 1999, executed and
delivered by Lehman Brothers Holdings Inc. and The Chase Manhattan Bank for the
benefit of the holders identified therein of Lehman Brothers Capital Trust I,
(B) the Guarantee Agreement, dated as of April 4, 1999, executed and delivered
by Lehman Brothers Holdings Inc. and The Chase Manhattan Bank for the benefit of
the holders identified herein of Lehman Brothers Capital Trust II and (C) [add
future Guarantee Agreements when executed] and (iii) (A) the Amended and
Restated Declaration of Trust, dated as of January 26, 1999, by and among Lehman
Brothers Holdings Inc., the Regular Trustees named therein, The Chase Manhattan
Bank, as initial Property Trustee and Chase Manhattan Bank Delaware, as initial
Delaware Trustee, (B) the Amended and Restated Declaration of Trust, dated as of
April 4, 1999, by and among Lehman Brothers Holdings Inc., the Regular Trustees
named therein, The Chase Manhattan Bank, as initial Property Trustee and Chase
Manhattan Bank Delaware, as initial Delaware Trustee and (C) [add future Amended
and Related Declarations of Trust when executed].

      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

<PAGE>
                                                                               7

to Section 312 of the Trust Indenture Act, nor shall the 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.

      2.10. Guarantee Trustee May File Proofs of Claim. Upon the occurrence of a
Guarantee Event of Default, the 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 Securities allowed in any judicial proceedings relative to the Guarantor,
its creditors or its property.

                                   SECTION 3

                          POWERS, DUTIES AND RIGHTS OF
                                GUARANTEE TRUSTEE

      3.1. Powers and Duties of Guarantee Trustee.

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

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

            (c) The Guarantee Trustee, before the occurrence of any Guarantee
      Event of Default and after the curing of all Guarantee Events of Default
      that may have occurred, shall undertake to perform only such duties as are
      specifically set forth in this Guarantee, and no implied covenants shall
      be read into this Guarantee against the Guarantee Trustee. In case a
      Guarantee 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 Guarantee Trustee, the Guarantee Trustee shall exercise such of the
      rights and powers vested in it by this 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 Guarantee shall be construed to relieve the
      Guarantee Trustee from liability for its own negligent action, its own
      negligent failure to act, or its own willful misconduct, except that:

<PAGE>
                                                                               8

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

                  (A)   the duties and obligations of the Guarantee Trustee
                        shall be determined solely by the express provisions of
                        this Guarantee, and the Guarantee Trustee shall not be
                        liable except for the performance of such duties and
                        obligations as are specifically set forth in this
                        Guarantee, and no implied covenants or obligations shall
                        be read into this Guarantee against the Guarantee
                        Trustee; and

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

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

                  (iii) the 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 not less than a
            Majority in Liquidation Amount of the Securities relating to the
            time, method and place of conducting any proceeding for any remedy
            available to the Guarantee Trustee, or exercising any trust or power
            conferred upon the Guarantee Trustee under this Guarantee; and

                  (iv) no provision of this Guarantee shall require the
            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 Guarantee
            Trustee shall have reasonable grounds for believing that the
            repayment of such funds or liability is not reasonably assured to it
            under the terms of this Guarantee or if the Guarantee Trustee shall
            have reasonable grounds for believing that an indemnity, reasonably
            satisfactory to the Guarantee Trustee, against such risk or
            liability is not reasonably assured to it under the terms of this
            Guarantee.

      3.2. Certain Rights of Guarantee Trustee. (a) Subject to the provisions of
Section 3.1:

<PAGE>
                                                                               9

                  (i) The 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 Guarantee shall be sufficiently evidenced by an Officers'
            Certificate;

                  (iii) Whenever, in the administration of this Guarantee, the
            Guarantee Trustee shall deem it desirable that a matter be proved or
            established before taking, suffering or omitting any action
            hereunder, the 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 Guarantee Trustee shall have no duty to see to any
            recording, filing or registration or any instrument (or any
            rerecording, refiling or re-registration thereof);

                  (v) The Guarantee Trustee may consult with counsel, 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 Guarantee Trustee shall have the
            right at any time to seek instructions concerning the administration
            of this Guarantee from any court of competent jurisdiction;

                  (vi) The Guarantee Trustee shall be under no obligation to
            exercise any of the rights or powers vested in it by this Guarantee
            at the request or direction of any Holder, unless such Holder shall
            have provided to the Guarantee Trustee such security and indemnity,
            reasonably satisfactory to the Guarantee Trustee, against the costs,
            expenses (including attorneys' fees and expenses and the expenses of
            the 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 Guarantee Trustee; provided, that nothing contained
            in this Section 3.2(a)(vi) shall be taken to relieve the Guarantee
            Trustee, upon the occurrence of a Guarantee Event of Default, of its
            obligation to exercise the rights and powers vested in it by this
            Guarantee;

                  (vii) The 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
            Guarantee Trustee, in its discretion, may make such further inquiry
            or investigation into such facts or matters as it may see fit;

<PAGE>
                                                                              10

                  (viii) The 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
            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 Guarantee Trustee or its agents
            hereunder shall bind the Holders, and the signature of the Guarantee
            Trustee or its agents 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 Guarantee Trustee to so act or as to its
            compliance with any of the terms and provisions of this Guarantee,
            both of which shall be conclusively evidenced by the Guarantee
            Trustee's or its agent's taking such action; and

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

            (b) No provision of this Guarantee shall be deemed to impose any
      duty or obligation on the 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
      Guarantee Trustee shall be unqualified or incompetent to act 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 Guarantee Trustee shall be construed to be a duty.

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

                                   SECTION 4

                                GUARANTEE TRUSTEE

      4.1. Guarantee Trustee; Eligibility.

            (a) There shall be at all times a 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

<PAGE>
                                                                              11

            Columbia, or a corporation or other 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 50 million U.S. dollars ($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 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 Guarantee Trustee shall cease to be eligible
      to so act under Section 4.1(a), the Guarantee Trustee shall immediately
      resign in the manner and with the effect set out in Section 4.2(c).

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

      4.2. Appointment, Removal and Resignation of Guarantee Trustee.

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

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

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

            (d) If no Successor 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 Guarantee Trustee may petition any court of competent
      jurisdiction for appointment of a Successor Guarantee Trustee. Such court
      may thereupon, after prescribing such notice, if any, as it may deem
      proper, appoint a Successor Guarantee Trustee.

<PAGE>
                                                                              12

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

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

                                    SECTION 5

                                    GUARANTEE

      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), 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. Notwithstanding anything to the
contrary herein, the Guarantor retains all of its rights under the Indenture to
(i) extend the interest payment period on the Debentures and the Guarantor shall
not be obligated hereunder to make any Guarantee Payments during any Extension
Period (as defined in the certificate evidencing the Debentures) with respect to
the Distributions (as defined in the Declaration) on the Securities and (ii)
change the maturity date of the Debentures to the extent permitted by the
Indenture.

      5.2. Waiver of Notice and Demand.

            The Guarantor hereby waives notice of acceptance of this 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.

      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
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 Securities to be
      performed or observed by the Trust;

<PAGE>
                                                                              13

            (b) The extension of time for the payment by the Trust of all or any
      portion of the Distributions, Redemption Price, Liquidation Distribution
      or any other sums payable under the terms of the Securities or the
      extension of time for the performance of any other obligation under,
      arising out of, or in connection with the Securities (other than an
      extension of time for payment of Distributions, Redemption Price,
      Liquidation Distribution or other sum payable that results from the
      extension of any interest payment period on the Debentures or any change
      to the maturity date of the Debentures permitted by the 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 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 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 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.

      5.4. Rights of Holders.

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

<PAGE>
                                                                              14

            (b) If the Guarantee Trustee fails to enforce this Guarantee, then
      any Holder of Securities may, subject to the subordination provisions of
      Section 6.2, institute a legal proceeding directly against the Guarantor
      to enforce the Guarantee Trustee's rights under this Guarantee without
      first instituting a legal proceeding against the Trust, the Guarantee
      Trustee or any other person or entity. In addition, if the Guarantor has
      failed to make a Guarantee Payment, a Holder of Securities may, subject to
      the subordination provisions of Section 6.2, directly institute a
      proceeding against the Guarantor for enforcement of the Guarantee for such
      payment to the Holder of the Securities of the principal of or interest on
      the Debentures on or after the respective due dates specified in the
      Debentures, and the amount of the payment will be based on the Holder's
      pro rata share of the amount due and owing on all of the Securities. The
      Guarantor hereby waives any right or remedy to require that any action on
      this Guarantee be brought first against the Trust or any other person or
      entity before proceeding directly against the Guarantor.

      5.5. Guarantee of Payment.

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

      5.6. Subrogation.

            The Guarantor shall be subrogated to all (if any) rights of the
Holders of Securities against the Trust in respect of any amounts paid to such
Holders by the Guarantor under this 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 Guarantee, if at the time of any such payment,
any amounts are due and unpaid under this 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
Guarantee Trustee for the benefit of the Holders.

      5.7. Independent Obligations.

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

                                   SECTION 6

                    LIMITATION OF TRANSACTIONS; SUBORDINATION

      6.1. Limitation of Transactions.

            So long as any Securities remain outstanding, if (i) there shall
have occurred an event of default under the Indenture with respect to the
Debentures, (ii) there shall be a Guarantee Event of Default or (iii) the
Guarantor shall have given notice of its election of an

<PAGE>
                                                                              15

Extension Period as provided in the certificate evidencing the Debentures and
shall not have rescinded such notice, or such Extension Period or any extension
thereof shall be continuing, then the Guarantor shall not, and shall not permit
any subsidiary of the Guarantor, to (x) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of the Guarantor's capital stock or (y) make any payment of
principal, interest or premium, if any, on or repay, repurchase or redeem any
debt securities of the Guarantor that rank on a parity with or junior in
interest to the Debentures or make any guarantee payments with respect to any
guarantee by the Guarantor of the debt securities of any subsidiary of the
Guarantor if such guarantee ranks on a parity with or junior in interest to the
Debentures (other than (a) dividends or distributions in common stock of the
Guarantor, (b) payments under this Guarantee, (c) any declaration of a dividend
in connection with the implementation of a shareholders' rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto, and (d) purchases of common
stock related to the issuance of common stock or rights under any of the
Guarantor's benefit plans).

      6.2. Ranking.

            This 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 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 any
preferred securities of any Affiliate of the Guarantor and (iii) senior to the
Guarantor's common stock. In addition, at all times such obligations will be
structurally subordinated to the liabilities and obligations of the Guarantor's
subsidiaries.

      6.3. Subordination of Common Securities.

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

                                    SECTION 7

                                   TERMINATION

      7.1. Termination.

            This Guarantee shall terminate upon (i) full payment of the
Redemption Price of all Securities, (ii) distribution of the Debentures to the
Holders of all the Securities or (iii) full payment of the amounts payable in
accordance with the Declaration upon liquidation of the Trust. Notwithstanding
the foregoing, this Guarantee will continue to be effective or will be

<PAGE>
                                                                              16

reinstated, as the case may be, if at any time any Holder of Securities must
restore payment of any sums paid under the Securities or under this Guarantee.

                                    SECTION 8

                                 INDEMNIFICATION

      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, liability, expense or claim incurred by reason of
      any act or omission performed or omitted by such Indemnified Person in
      good faith in accordance with this 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 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
      Securities might properly be paid.

      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 Guarantee.

                                    SECTION 9

                                  MISCELLANEOUS

      9.1. Successors and Assigns.

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

<PAGE>
                                                                              17

      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 Guarantee may not be amended without the prior approval of
the Holders of not less than 66-2/3% of the aggregate liquidation amount of the
Securities. The provisions of Section 11.2 of the Declaration with respect to
meetings of, and action by written consent of, the Holders of the Securities
apply to the giving of such approval.

      9.3. Notices.

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

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

                  The Chase Manhattan Bank
                  450 West 33rd Street
                  New York, New York  10001
                  Attention: _________________
                  Telecopy no.: (212) ________

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

                  Lehman Brothers Holdings Inc.
                  1 World Financial Center
                  New York, New York  10281
                  Attention: Corporate Counsel
                  Telecopy no.: (646) 836-0627

            (c) If given to any Holder of Securities, at the address set forth
      on the books and records of the Trust.

            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.

      9.4. Benefit.

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

<PAGE>
                                                                              18

      9.5. Governing Law.

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

<PAGE>
                                                                              19

            IN WITNESS WHEREOF, this Guarantee is executed as of the day and
year first above written.

                                    LEHMAN BROTHERS HOLDINGS INC.,
                                    as Guarantor

                                    By:_______________________________________
                                    Name:
                                    Title:

                                    THE CHASE MANHATTAN BANK
                                    as Guarantee Trustee

                                    By:_______________________________________
                                    Name:
                                    Title:

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