Document:

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                                                                     EXHIBIT 4.1

                           NOVA CHEMICALS CORPORATION

                           RESTRICTED STOCK UNIT PLAN

                       ADOPTED EFFECTIVE SEPTEMBER 9, 2003

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                                TABLE OF CONTENTS

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                                                                        PAGE NO.
<S>                                                                  <C>
      Preamble and Definitions                                              1

      Construction and Interpretation                                       5

      Powers of the Board and Eligibility                                   6

      Restricted Stock Unit Accounts                                        9

      Vesting                                                              10

      Payment Following Vesting                                            12

      Termination and Change of Control                                    14

      Currency                                                             15

      No Rights As Shareholder                                             15

      Administration                                                       16

      Transferability                                                      19
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                           NOVA CHEMICALS CORPORATION
                           RESTRICTED STOCK UNIT PLAN

                                    ARTICLE 1
                            PREAMBLE AND DEFINITIONS

1.1      Name of Plan

         The Plan herein described shall be called the "NOVA Chemicals
         Corporation Restricted Stock Unit Plan" and is referred to herein as
         the "Plan".

1.2      Purpose

         The purpose of the Plan is to promote the long-term interests of the
         Company and its stockholders by strengthening the Company's ability to
         attract, motivate and retain Eligible Employees and Eligible Directors
         upon whose judgment, initiative, and efforts the financial success and
         growth of the business of the Company largely depend, and to provide an
         additional incentive for such individuals through stock ownership and
         other rights that promote and recognize the financial success and
         growth of the Company and create value for shareholders of the Company.

1.3      Definitions

         In and for the purposes of the Plan, except as otherwise expressly
provided:

         (a)      "Applicable Source Deductions" has the meaning set out in
                  Section 10.8 of the Plan.

         (b)      "Award" means a grant under this Plan of Restricted Stock
                  Units.

         (c)      "Board" means the Board of Directors of the Company.

         (d)      "Change of Control" means any change in the holding, direct or
                  indirect, of the securities of the Company as a result of
                  which a person (as defined in the ALBERTA BUSINESS
                  CORPORATIONS ACT), or a group of persons, are in a position to
                  exercise effective control of the Company.

         (e)      "Code" means the United States INTERNAL REVENUE CODE OF 1986,
                  as amended from time to time, and the applicable regulations
                  promulgated thereunder.

         (f)      "Committee" means a committee of Directors appointed by the
                  Board in accordance with Section 3.2 of the Plan.

         (g)      "Committee Guidelines" means the rules, regulations,
                  agreements, policies, guidelines and instruments referred to
                  in Section 10.3 of the Plan.

         (h)      "Common Share" means a common share in the capital of the
                  Company.

         (i)      "Company" means NOVA Chemicals Corporation and includes any
                  successor corporation resulting from any form of corporate
                  reorganization.

         (j)      "Director" means any individual who is a member of the Board.

         (k)      "Dividend Equivalent" has the meaning ascribed to it in
                  Section 4.2 of the Plan.

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         (l)      "EBITDA" means for any period, the consolidated earnings
                  (losses) of the Company before extraordinary items and the
                  cumulative effect of accounting changes, as determined by the
                  Company in accordance with GAAP, and before interest (expenses
                  or income), taxes, depreciation, amortization, non-cash gains
                  and losses from sales of assets other than in the ordinary
                  course of business and non-cash expense charged against
                  earnings.

         (m)      "Eligible Employee or Eligible Director" means an Employee or
                  Non-Employee Director.

         (n)      "Employee" means any employee of the Company or of a
                  subsidiary of the Company.

         (o)      "Employer", in respect of any Employee, means the Company or
                  one of its subsidiaries that is the employer of such Employee.

         (p)      "Exchange Act" means the United States Securities Exchange Act
                  of 1934, as amended from time to time, and the applicable
                  rules and regulations promulgated thereunder.

         (q)      "Fair Market Value" of a Common Share means (i) the last
                  reported sale price at which Common Shares traded on the
                  Toronto Stock Exchange on a particular date; or (ii) if there
                  is no reported sale price at which Common Shares traded on
                  such Exchange on the particular date, then "Fair Market Value"
                  means the last reported sale price at which Common Shares
                  traded on such Exchange prior to the particular date; in the
                  event that the Common Shares are not listed on the Toronto
                  Stock Exchange but are listed on another stock exchange or
                  stock exchanges in Canada or the United States, the foregoing
                  references to the Toronto Stock Exchange shall be deemed to be
                  references to such other stock exchange, or, if more than one,
                  to such one as shall be designated by the Board.

         (r)      "Non-Employee Director" means a Director who is not an
                  Employee.

         (s)      "Participant" means an Employee or a Non-Employee Director who
                  has been selected to receive an Award or who has an
                  outstanding Award granted under the Plan.

         (t)      "Performance Goals" means the performance goals established by
                  the Board in connection with the grant of Restricted Stock
                  Units. In the case of Qualified Performance-Based Awards, (i)
                  such goals shall be based on the attainment of specified
                  levels of one or more of the following measures: revenues,
                  EBITDA margin, earnings per share, sales, net profit after
                  tax, gross profit, operating profit, cash generation, unit
                  volume, return on equity, change in working capital, return on
                  capital, shareholder return, market share or any other
                  objective performance measure established by the Committee,
                  and (ii) such Performance Goals shall be set by the Board
                  within the time period prescribed by Section 162(m) of the
                  Code and related regulations.

         (u)      "Plan" means the NOVA Chemicals Corporation Restricted Stock
                  Unit Plan, as it may from time to time be modified,
                  supplemented or amended and in effect.

         (v)      "Qualified Performance-Based Award" means an award of
                  Restricted Stock Units designated as such by the Board at the
                  time of grant, based upon a determination that (i) the
                  Participant is or may be a "covered employee" within the
                  meaning of Section 162(m)(3) of the Code in the year in which
                  the Company would expect to be able to claim a tax deduction
                  with respect to such Restricted Stock Units and (ii) the Board
                  wishes such Award to qualify for the Section 162(m) Exemption.

         (w)      "Restricted Stock Unit" or "RSU" means a unit credited by
                  means of a bookkeeping entry on the books of the Company to a
                  Participant's account which is granted in accordance with
                  Section 3.3 and administered in accordance with the terms and
                  conditions of the Plan, the value of which on a particular
                  date, shall be equal to the Fair Market Value of a Common
                  Share;

         (x)      "Restricted Stock Unit Account" or "RSU Account" means an
                  account described in Section 4.1 of the Plan.

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         (y)      "Restricted Stock Unit Agreement" has the meaning ascribed to
                  it in Section 3.7 of the Plan.

         (z)      "RSUP Trust Agreement" means the Restricted Stock Unit Plan
                  trust agreement as may be entered into by the Company and an
                  RSUP Trustee, from time to time, and includes any successor or
                  replacement agreement thereof or thereto.

         (aa)     "RSU Guidelines" means the rules, regulations, agreements,
                  policies, guidelines and instruments referred to in Section
                  10.4 of the Plan.

         (bb)     "RSUP Trustee" means the trustee under the RSUP Trust
                  Agreement as the Committee may from time to time designate to
                  act as trustee for the purposes of the Plan.

         (cc)     "Section 16(b)" means Section 16(b) of the Exchange Act.

         (dd)     "Section 162(m) Exemption" means the exemption from the
                  limitation on deductibility imposed by Section 162(m) of the
                  Code that is set forth in Section 162(m)(4)(C) of the Code.

         (ee)     "subsidiary" has the meaning that term had in the ALBERTA
                  BUSINESS CORPORATIONS ACT in effect on the date of adoption of
                  the Plan by the Board.

         (ff)     "Unvested Restricted Stock Units", in respect of any
                  Participant, means Restricted Stock Units recorded in the RSU
                  Account in respect of such Participant which have not yet
                  become vested and have not been forfeited and cancelled as
                  provided in Section 7.1 of the Plan or otherwise cancelled.

         (gg)     "Vested Restricted Stock Units", in respect of any
                  Participant, means Restricted Stock Units recorded in the RSU
                  Account in respect of such Participant which have become
                  vested pursuant to the provisions of the Plan.

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                                    ARTICLE 2
                         CONSTRUCTION AND INTERPRETATION

2.1      Gender, etc.

         In the Plan, references to the masculine include the feminine;
         reference to the singular shall include the plural and vice versa, as
         the context shall require.

2.2      Governing Law

         The validity, construction and effect of the Plan, any rules and
         regulations relating to the Plan, and any determination, designation,
         notice, election or other document contemplated herein shall be
         determined in accordance with the laws of the Province of Alberta and
         the laws of Canada applicable therein.

 2.3     Severability

         If any provision of the Plan or part hereof is determined to be void or
         unenforceable in whole or in part, such determination shall not affect
         the validity or enforcement of any other provision or part thereof.

 2.4     Headings

         Headings wherever used herein are for reference purposes only and do
         not limit or extend the meaning of the provisions herein contained.

 2.5     Language

         The Company and the Participants confirm their desire that this
         document along with all other documents including all notices relating
         hereto, be written in the English language. La Compagnie et les
         employes admissibles confirment leur volonte que ce document de meme
         que tous les documents, y compris tout avis, s'y rattachant soient
         rediges en anglais.

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                                    ARTICLE 3
                       POWERS OF THE BOARD AND ELIGIBILITY

3.1      Powers of the Board

         The Board may from time to time while the Plan is in force:

         (a)      name or designate as a Participant any Eligible Employee or
                  Eligible Director;

         (b)      grant Awards to Participants pursuant to the terms of the
                  Plan;

         (c)      determine the number of Common Shares to be covered by each
                  Award granted hereunder;

         (d)      approve forms of agreement for use under the Plan;

         (e)      determine the terms and conditions (which need not be the same
                  with respect to each Participant), not inconsistent with the
                  terms of the Plan, of any Award granted hereunder. Such terms
                  and conditions include, but are not limited to the vesting
                  criteria (including time and performance criteria) and any
                  vesting period applicable to any Award, any vesting
                  acceleration or waiver of forfeiture restrictions, and any
                  restriction or limitation regarding any grant of Restricted
                  Stock Units relating thereto, based in each case on such
                  factors as the Board, in its sole discretion, shall determine;

         (f)      construe and interpret the terms of the Plan and Awards
                  granted pursuant to the Plan and interpret, administer,
                  reconcile any inconsistency, correct any default and/or supply
                  any omission in the Plan and any instrument or agreement
                  relating to any Award granted under the Plan; provided,
                  however, that the Board may not adjust upwards the amount
                  payable with respect to a Qualified Performance-Based Award or
                  alter the Performance Goals associated therewith;

         (g)      prescribe, amend and rescind rules and regulations relating to
                  the Plan, including rules and regulations relating to
                  sub-plans established for the purpose of qualifying for
                  preferred tax treatment, complying with securities laws or
                  otherwise complying with foreign tax laws;

         (h)      modify or amend each Award; provided, however, that the Board
                  may not adjust upwards the amount payable with respect to a
                  Qualified Performance-Based Award or alter the Performance
                  Goals associated therewith;

         (i)      satisfy withholding tax obligations by withholding from the
                  Common Shares to be purchased upon lapsing of restrictions on
                  Restricted Stock Units that number of Common Shares having a
                  Fair Market Value equal to the amount required to be withheld
                  or if the Restricted Stock Units are paid in cash, withholding
                  the amount required to be withheld from the cash payment. The
                  Fair Market Value of the Common Shares to be withheld shall be
                  determined on the date that the amount of tax to be withheld
                  is to be determined;

         (j)      authorize any person to execute on behalf of the Company any
                  instrument required to effect the grant of an Award previously
                  granted by the Board; and

         (k)      make all other determinations deemed necessary or advisable
                  for administering the Plan.

3.2      Effect of the Board's Decision

         The Board's decisions, determinations and interpretations shall be
         final, binding and conclusive on all Participants, and all other
         persons having an interest herein. No member of the Board shall be
         liable for any action or determination made in good faith with respect
         to the Plan or any award hereunder.

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         Each member of the Board or Committee is indemnified and held harmless
         by the Company against any cost or expense (including any sum paid in
         settlement of a claim with the approval of the Company) arising out of
         any act or omission to act in connection with the Plan to the extent
         permitted by applicable law. This indemnification is in addition to any
         rights of indemnification a Board or Committee member may have as
         director or otherwise under the by-laws of the Corporation, any
         agreement, any vote of shareholders, or disinterested directors, or
         otherwise.

3.3      Committee Recommendations

         The Committee will from time to time while the Plan is in force review
         and recommend for approval by the Board and designation as
         "Participants" Eligible Employees and Eligible Directors whose
         participation in the Plan would, in the opinion of the Committee, be
         consistent with the purposes of the Plan, the number of Restricted
         Stock Units to be awarded to each Participant from time to time, the
         vesting criteria and vesting period applicable to any Award and any
         terms and conditions relating to any Award that are consistent with the
         Plan and that the Committee determines to be appropriate.

3.4      Service Period

         Each Award made to a Participant shall be in respect of services
         performed or to be performed by the Participant in the calendar year in
         which the Award was made.

3.5      Limitation on Rights

         Except as expressly set out herein or in the RSU Guidelines, the
         Committee Guidelines or any agreement referred to in Section 3.7 below,
         nothing in the Plan or in any of the RSU Guidelines, the Committee
         Guidelines or in any agreement referred to in Section 3.7 shall confer
         on any Employee any right to be named or designated as a Participant or
         to be awarded any Restricted Stock Units. Except as may be expressly
         set out herein or in the RSU Guidelines or the Committee Guidelines or
         as required by law, there is no obligation for uniformity of treatment
         of Participants or Eligible Employees and Eligible Directors, or any
         group of Participants or Eligible Employees and Eligible Directors,
         whether based on salary grade or organizational level or otherwise. Any
         Award made to any Participant shall not obligate the Board to make any
         subsequent Award to that Participant.

3.6      Waiver of Eligibility Requirements

         The Committee and the Board may, in their discretion, where the
         Committee or the Board, as the case may be, is of the opinion that it
         is reasonable to do so and it does not adversely affect the rights of
         the Participant under the Plan, waive any restrictions with respect to
         eligibility or participation in the Plan and, notwithstanding the
         provisions of Section 3.1, the Board, in its discretion, may name or
         designate as a Participant any Eligible Employee or Eligible Director
         whose participation in the Plan would, in the opinion of the Board or
         the Committee, be consistent with the purposes of the Plan, and award
         Restricted Stock Units to such Participant.

3.7      Restricted Stock Unit Agreements

         Each Award shall be evidenced by a written agreement executed by the
         Participant that shall specify the number of Awards granted and such
         other provisions as the Board shall determine in its sole discretion (a
         "Restricted Stock Unit Agreement"). A Participant will not be entitled
         to any Award or any benefit of the Plan unless the Participant agrees
         with the Company to be bound by the provisions of the Plan. By entering
         into a Restricted Stock Unit Agreement, each Participant shall be
         deemed conclusively to have accepted and consented to all terms of the
         Plan and all bona fide actions or decisions made by the Board, and the
         Committee in relation to the Plan. Such terms and consent shall also
         apply to and be binding on the legal representatives, beneficiaries and
         successors of each Participant. The Company shall provide each
         Participant with a copy of the Plan.

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3.8      No Right to Employment

         The Plan shall not be interpreted as either an employment or trust
         agreement. Nothing in the Plan nor any RSU Guidelines, Committee
         Guidelines or any Restricted Stock Unit Agreement nor any action taken
         hereunder shall be construed as giving any Participant the right to be
         retained in the continued employ or service of the Company or any of
         its subsidiaries, or giving any Participant or any other person the
         right to receive any benefits not specifically expressly provided in
         the Plan nor shall it interfere in any way with any other right of the
         Company or any subsidiary of the Company to terminate the employment or
         service of any Participant at any time.

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                                    ARTICLE 4
                         RESTRICTED STOCK UNIT ACCOUNTS

4.1      RSU Accounts

         An account will be established, for bookkeeping purposes only, for each
         Participant that is awarded Restricted Stock Units under the Plan, to
         reflect such Participant's interest under the Plan. The account so
         established shall be (a) credited with each number of Restricted Stock
         Units (including, if applicable, fractional Restricted Stock Units)
         awarded under the Plan, and (b) adjusted to reflect (i) additional
         Dividend Equivalents (including, if applicable, fractional Restricted
         Stock Units) required to be credited pursuant to Section 4.2 of the
         Plan, and (ii) the cancellation of all Restricted Stock Units
         (including, if applicable, fractional Restricted Stock Units) with
         respect to which payments are made pursuant to Article 6 or Article 7
         of the Plan, or which are forfeited and/or cancelled pursuant to
         Section 7.1 of the Plan. Neither the Plan nor any of the RSU accounts
         established hereunder shall hold any actual funds or assets.

4.2      Dividend Equivalents

         The RSU Account in respect of each Participant will be credited with
         additional Restricted Stock Units (including, if applicable, fractional
         Restricted Stock Units) ("Dividend Equivalents") on each dividend
         payment date in respect of which cash dividends are paid by the Company
         on the Common Shares. Such Dividend Equivalents will be computed by
         dividing (i) the product obtained by multiplying the amount of the
         dividend declared and paid by the Company on the Common Shares on a per
         share basis (excluding stock dividends, but including dividends which
         may be paid in cash or in shares at the option of the holder) by the
         number of Restricted Stock Units recorded in the RSU Account in respect
         of the Participant on the record date for the payment of such dividend,
         by (ii) the Fair Market Value of a Common Share on the date the
         dividend is paid by the Company.

4.3      Reorganization Adjustments

         In the event

         (a)      of any change in the Common Shares through subdivision,
                  consolidation, reclassification, amalgamation, merger or
                  otherwise, or

         (b)      of any stock dividend to holders of Common Shares, or

         (c)      that as a result of any recapitalization, merger,
                  consolidation or otherwise the Common Shares are converted
                  into or exchangeable for any other shares,

         then in any such case the number of Common Shares available for
         Restricted Stock Units and the number of Common Shares covered by
         outstanding Restricted Stock Units shall be proportionately adjusted by
         the Board to prevent substantial dilution or enlargement of the rights
         granted to, or available for, Participants.

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                                    ARTICLE 5
                                     VESTING

5.1      Vesting - General

         Subject to Sections 5.3 and 5.4, all Restricted Stock Units awarded
         under the Plan shall be subject to a vesting schedule to be determined
         by the Board in its own discretion, and all Dividend Equivalents
         referred to in Section 4.2 shall vest at the time when the Restricted
         Stock Units in respect of which such Dividend Equivalents were credited
         vest.

5.2      Vesting Criteria

         Subject to Section 5.4, the Committee may from time to time while the
         Plan is in force recommend for approval by the Board such vesting
         criteria or periods for Restricted Stock Units to be awarded or
         credited hereunder, including, without limitation, such limitations
         based upon the passage of time after the grant of the Restricted Stock
         Units, the satisfaction of specified performance criteria relating
         generally to the Company or particularly to a Participant or the
         satisfaction or fulfillment of any other conditions (including any
         combination of the foregoing), and such other restrictions or
         conditions in respect thereof as the Committee may in its discretion
         determine to be appropriate, and the Board, in its discretion, may,
         from time to time, approve any such vesting criteria, periods,
         limitations or restrictions.

5.3      Waiver of Vesting Criteria

         Subject to Sections 5.4 and 5.5, the Committee may, in its discretion,
         waive any restrictions with respect to vesting criteria, limitations or
         restrictions with respect to any Participant where in the opinion of
         the Committee it is reasonable to do so and does not prejudice the
         rights of the Participant under the Plan.

5.4      Vesting Restriction

         Notwithstanding any other provision hereof to the contrary, in no event
         will any Restricted Stock Unit vest, nor any payment be made hereunder
         in respect of any Restricted Stock Unit or Dividend Equivalent after
         the end of the calendar year which is three years following the end of
         the year in which the services to which the Award of such Restricted
         Stock Unit relates were performed by the Participant.

5.5      Performance-Based Awards

         The Board may, prior to or at the time of grant, designate an Award as
         a Qualified Performance-Based Award, in which event the Board shall
         condition the grant or vesting, as applicable, of such Award upon the
         attainment of Performance Goals. If the Board does not designate an
         Award as a Qualified Performance-Based Award, it may also condition the
         grant or vesting thereof upon the attainment of Performance Goals.
         Regardless of whether an Award is a Qualified Performance-Based Award,
         the Board may also condition the grant or vesting thereof upon the
         continued service of the Participant. The conditions for grant or
         vesting and the other provisions of the Award (including without
         limitation any applicable Performance Goals) need not be the same with
         respect to each Participant. The Board may not increase the Common
         Shares that would otherwise be payable upon achievement of the
         applicable Performance Goals, but may reduce or eliminate the payments
         except as provided in the terms of the Restricted Stock Unit Agreement.

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                                    ARTICLE 6
                            PAYMENT FOLLOWING VESTING

6.1      Payment Following Vesting

         Following vesting of any Restricted Stock Unit recorded in any RSU
         Account in respect of any Participant, and as soon as practicable after
         vesting, payment of such Vested Restricted Stock Units and any Dividend
         Equivalents shall be as determined by the Committee and as evidenced in
         the Restricted Stock Unit Agreement. Subject to the terms of the Plan,
         the Committee, in its sole discretion, may pay Vested Restricted Stock
         Units and/or Dividend Equivalents in the form of cash or in Common
         Shares (or in any combination thereof) equal to the number of such
         Vested Restricted Stock Units acquired on behalf of the Participant on
         the open market (and/or Dividend Equivalents) multiplied by the Fair
         Market Value of one Common Share as at the date of vesting, net of all
         Applicable Source Deductions, if any, either in a lump sum payment or
         in installments, as the Committee shall determine; provided, however,
         that all payments in respect of an Award shall be made no later than
         December 31 of the third calendar year following the year in which the
         Award was made.

         Any Common Shares paid may be paid subject to any restrictions deemed
         appropriate by the Committee.

6.2      Acquisition of Shares in the Open Market

         a)       Purchases of Common Shares pursuant to the Plan shall be made
                  on the open market by a broker independent from the Company
                  designated by the Participant and who is a member of the
                  Toronto Stock Exchange or, where the Common Shares are not
                  listed on the Toronto Stock Exchange, the stock exchange which
                  is relevant for determining the value of the Restricted Stock
                  Units ("Broker"). Any such designation may be changed from
                  time to time. Upon designation of a Broker or at any time
                  thereafter, the Company may elect to provide the designated
                  Broker with a letter agreement to be executed by the Broker
                  and entered into with the Participant and to which the Company
                  would also be a party, setting forth, inter alia, (i) the
                  Broker's concurrence to being so designated, to act for the
                  Participant's account in accordance with customary usage of
                  the trade with a view to obtaining the best share price for
                  the Participant, and to delivering to the Participant or his
                  representative the share certificate for the Common Shares
                  purchased upon payment by the Company of the purchase price
                  and related reasonable brokerage commission, and (ii) the
                  Company's agreement to notify the Broker of the number of
                  Common Shares to be purchased and to pay the purchase price
                  and the related reasonable brokerage commission, provided
                  however that no terms of said letter agreement shall have the
                  effect of making the Broker or deeming the Broker to be an
                  affiliate of (or not independent from) the Company for
                  purposes of any applicable corporate, securities or stock
                  exchange requirement.

         b)       If the Company enters into an RSUP Trust Agreement, the RSUP
                  Trustee may, but shall not be obligated to, acquire shares of
                  its outstanding Common Shares from time to time in
                  anticipation of the Company's obligation to pay out any Vested
                  Restricted Stock Units and/or Dividend Equivalents under the
                  Plan. The RSUP Trustee may purchase, pursuant to the terms of
                  the RSUP Trust Agreement, a number of Common Shares equal to
                  or less than the number of such Vested Restricted Stock Units
                  and Dividend Equivalents then outstanding under the Plan for
                  which no previous purchases have been made. Such purchases by
                  the RSUP Trustee shall be made in the open market, through the
                  facilities of the Toronto Stock Exchange (or such other
                  exchange as the Committee may designate from time to time),
                  pursuant to the terms of the RSUP Trust Agreement and in
                  accordance with applicable securities laws and exchange rules.

                  Such Common Shares purchased by the RSUP Trustee shall be
                  purchased and held in a trust for the uses and purposes of the
                  Plan in accordance with applicable securities laws and
                  exchange rules.

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                                    ARTICLE 7
                        TERMINATION AND CHANGE OF CONTROL

7.1      Termination of Eligible Employees and Eligible Directors

         Except as otherwise provided in the applicable Restricted Stock Unit
         Agreement, if a Participant ceases to be an Eligible Employee or
         Eligible Director prior to the vesting of the Restricted Stock Units
         because of any reason other than death or retirement, then the
         Restricted Stock Units credited to the Participant's Restricted Stock
         Unit Account shall be forfeited as of the last day of active service
         and the Participant shall not be entitled to any payment with respect
         to the Restricted Stock Unit Award subject to such vesting period,
         unless the Board shall otherwise determine in its sole discretion.

         Unless otherwise provided in the applicable Restricted Stock Unit
         Agreement, if a Participant ceases to be an Eligible Employee or
         Eligible Director prior to the vesting of the Restricted Stock Units by
         reason of death or retirement, the Restricted Stock Units credited to
         the Participant's Restricted Stock Unit Account shall vest on the date
         of death or retirement and the Participant's estate or the Participant
         will be entitled to receive payment in respect of all Vested Restricted
         Stock Units pursuant to the provisions of Article 6 hereof. For the
         purposes of this section 7.1, if an Eligible Director resigns as a
         Director, he will be deemed to have retired from the Company.

7.2      Change of Control

         Notwithstanding anything contained herein to the contrary, if a Change
         of Control should occur at any time, any Restricted Stock Unit that is
         not by its terms then vested shall be deemed to have vested immediately
         prior to such Change of Control and the Participant will be entitled to
         receive payment in respect of all such Vested Restricted Stock Units
         pursuant to the provisions of Article 6 hereof.

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                                    ARTICLE 8
                                    CURRENCY

8.1      Currency

         All references in the Plan to currency refer to lawful currency of
         Canada.

                                    ARTICLE 9
                            NO RIGHTS AS SHAREHOLDER

9.1      No Rights as Shareholder

         For greater certainty, nothing in the Plan, the RSU Guidelines, the
         Committee Guidelines or in any agreement referred to in Section 3.7
         shall confer on any Participant any claim or right to be issued Common
         Shares, on account of Restricted Stock Units credited to the Restricted
         Stock Unit Account of the Participant or otherwise, and under no
         circumstances will Restricted Stock Units confer on any Participant any
         of the rights of a shareholder of the Company including, without
         limitation, the right to exercise any voting rights, dividend
         entitlement, rights of liquidation or other rights attaching to
         ownership of Common Shares.

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                                   ARTICLE 10
                                 ADMINISTRATION

10.1     Common Shares Subject to the Plan

         Subject to the provisions of Section 4.3 of the Plan, the maximum
         aggregate number of Common Shares which may be purchased under the Plan
         is ten million Common Shares.

10.2     Limitations

         No Participant shall be granted more than one million Restricted Stock
         Units during any calendar year.

10.3     Amendment, Suspension, Termination

         The Board may from time to time amend or suspend the Plan in whole or
         in part and may at any time terminate the Plan. No such amendment,
         suspension or termination shall adversely affect the rights of any
         Participant at the time of such amendment, suspension or termination
         with respect to Restricted Stock Units recorded in such Participant's
         Restricted Stock Unit Account without the consent of the affected
         Participant. If the Board terminates the Plan, no new Restricted Stock
         Units will be awarded to any Participant, but previously credited
         Restricted Stock Units shall remain outstanding, be entitled to
         Dividend Equivalents as provided under Section 4.2, and be paid in
         accordance with the terms and conditions of the Plan existing at the
         time of termination. The Plan will finally cease to operate for all
         purposes when the last remaining Participant receives a payment in
         satisfaction of all Restricted Stock Units recorded in the Restricted
         Stock Unit Account in respect of such Participant, or all Restricted
         Stock Units recorded in the Restricted Stock Unit Account in respect of
         such Participant are cancelled pursuant to the provisions hereof.

10.4     RSU Guidelines

         The Committee may from time to time while the Plan is in force
         recommend for approval by the Board such rules, regulations,
         agreements, policies and guidelines in relation to the administration
         of the Plan as the Committee may, in its discretion, determine are
         desirable, including, without limitation, guidelines for awards of
         Restricted Stock Units and the Board, in its discretion, may from time
         to time, approve, amend, rescind or waive any such rules, regulations,
         agreements, policies or guidelines.

10.5     Committee Guidelines

         Subject to the exercise by the Board of the powers and authority of the
         Board as set out herein, and in the Mandate of the Committee and the
         RSU Guidelines from time to time established and in effect, the
         Committee shall have full power and authority to administer and
         interpret, and shall be responsible for the administration of the Plan
         and, subject as aforesaid, the Committee may from time to time
         establish, amend, rescind or waive such rules, regulations, agreements,
         policies, guidelines and instruments and make such determinations and
         take such steps for the administration of the Plan as the Committee, in
         its discretion, may determine are desirable.

10.6     Interpretation

         Any questions arising as to the interpretation and administration of
         the Plan will be determined by the Committee. Absent manifest error,
         the Committee's interpretation of this Plan, and all actions taken by
         the Board and the Committee, pursuant to the powers vested in them
         hereunder, shall be conclusive and binding on all parties concerned,
         including the Company, all other Employers, and each Participant. The
         Committee may correct any defect, supply any omission or reconcile any
         inconsistency in the Plan in such manner and to such extent as it may
         determine is necessary or advisable. The Committee may as to all
         questions of accounting rely conclusively upon any determinations made
         by the auditors or accountants of the Company.

<PAGE>

10.7     Legal Compliance

         The administration of the Plan, including without limitation any
         acquisitions of Common Shares under the Plan, shall be subject to and
         made in conformity with all applicable laws and all applicable
         regulations of a duly constituted authority. Without limiting the
         generality of the foregoing, the Committee may take such steps and
         require such documentation from Participants as the Committee may
         determine are desirable to ensure compliance with all applicable laws
         and legal requirements, including all applicable corporate and
         securities laws and regulations of any country, and any political
         subdivisions thereof, and the by-laws, rules and regulations of any
         stock exchanges or other organized market on which the Common Shares
         may from time to time be listed or posted and any applicable provisions
         of the Code, the INCOME TAX ACT (Canada) and the applicable regulations
         promulgated thereunder, or income tax legislation and regulations of
         any other jurisdiction.

10.8     Tax and Other Source Deductions

         The Company and/or Employer shall withhold and deduct from any payment
         to be made under the Plan a sufficient amount to cover withholding of
         any taxes and other amounts required to be withheld by any American,
         Canadian or foreign federal, provincial, state or local taxing
         authorities ("Applicable Source Deductions") with respect to an Award
         or payment under the Plan. The Company may take such other action as
         the Board or the Committee may consider advisable to enable the
         Company, the Employer and any Participant to satisfy obligations for
         the payment of Applicable Source Deductions relating to any payment to
         be made under the Plan. Each Participant (or the heirs and legal
         representatives of the Participant) shall bear any and all Applicable
         Source Deductions on amounts paid to the Participant (or the heirs and
         legal representatives of the Participant) under the Plan. If the Board,
         or the Committee so determine, the Company and/or the Employer shall
         have the right to require, prior to making any payment under the Plan,
         payment by the recipient of the excess of any Applicable Source
         Deductions over any amounts withheld by the Company and/or the
         Employer, in order to satisfy the tax obligations of the recipient in
         respect of any payment under the Plan. If the Company and/or the
         Employer do not withhold from any payment, or require payment of an
         amount by a recipient, sufficient to satisfy Applicable Source
         Deductions, the Participant shall make reimbursement, on demand, in
         cash, of any amount paid by the Company and/or the Employer in
         satisfaction of any Applicable Source Deductions.

10.9     Record Keeping

         The Company shall keep, or cause to be kept, accurate records of all
         transactions in respect of Participants hereunder and all Restricted
         Stock Units credited to the Restricted Stock Unit Account in respect of
         Participants and may periodically make or cause to be made appropriate
         reports to each Participant concerning the status of the Restricted
         Stock Unit Account in respect of such Participant, which reports will
         include a statement of the closing share price of the Common Shares as
         at the date of such report (or a date as close thereto as may be
         reasonably practicable).

10.10    Employment of Agents

         The Company may from time to time appoint or engage accountants,
         lawyers or other agents or personnel it may consider necessary or
         desirable for the proper administration of the Plan.

<PAGE>

                                    ARTICLE 11
                                 TRANSFERABILITY

11.1     Non-Transferable

         In no event may the rights or interests of a Participant under the Plan
         be assigned, encumbered, pledged, transferred or alienated in any way,
         except to the extent that certain rights may pass to a legal personal
         representative of the Participant upon the death of the Participant, by
         will or by the laws of succession and distribution and as otherwise
         consistent with the specific Plan provisions or as the Committee in its
         sole discretion shall determine. During the life of the Participant,
         any Award shall be vested in only the Participant.QuickLinks
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Exhibit 4(c)    
    

LEHMAN BROTHERS INC.,  

 LEHMAN BROTHERS HOLDINGS INC.,  

 as Guarantor,  

 AND  

 BANK ONE TRUST COMPANY, N.A.,  

 as Trustee  

FORM OF SECOND SUPPLEMENTAL INDENTURE  

 Dated as of                         , 2003  

        SECOND SUPPLEMENTAL INDENTURE, dated as of                         , 2003
(the "Supplemental Indenture"), among LEHMAN BROTHERS INC., a corporation duly organized and
existing under the laws of the State of Delaware (the "Company"), LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and existing under the laws of the State of Delaware, as guarantor
(the "Guarantor"), and BANK ONE TRUST COMPANY, N.A. (as successor in interest to The First National Bank of Chicago), a national banking corporation duly organized and existing under the laws of the
United States, as trustee (the "Trustee"). 

 
 

RECITALS    
    

        The Company has duly authorized the execution and delivery of an Indenture, dated as of March 1, 1996, between the Company and the Trustee, as amended and
supplemented by the First Supplemental Indenture dated as of April 19, 1996, between the Company and the Trustee (together, the "Indenture"), to provide for the issuance from time to time of
its unsecured senior subordinated debentures, notes or other evidences of indebtedness to be issued in one or more series (the "Securities") unlimited as to principal amount, to bear such rates of
interest, to mature at such time or times, to be issued in one or more series and to have such other provisions as in the Indenture provided. 

        The
Guarantor has determined that it is in its best interests to fully and unconditionally guarantee the due and punctual payment of the principal (including any amount in respect of
original issue discount) of, and premium, if any, and interest, if any, on all outstanding and future Securities and the due and punctual payment of the sinking fund payments, if any, and analogous
obligations, if any, provided for pursuant to the terms of such Securities, when and as the same shall become due and payable; 

        The
Company and the Guarantor have duly authorized the execution and delivery of this Supplemental Indenture to provide for the guarantee by the Guarantor of the Securities; 

        All
acts and things necessary to make this Supplemental Indenture a valid agreement of the Company and of the Guarantor, in accordance with its terms and with the terms of the Indenture,
have been done and performed. 

        NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:

        For
and in consideration of the premises, and of the sum of one dollar duly paid to the Company and the Guarantor by the Trustee at the execution and delivery of these presents, the
receipt whereof is hereby acknowledged, the Company and the Guarantor covenant and agree, for the equal and proportionate benefit of all holders of the Securities with the Trustee to supplement the
Indenture as follows: 

Section 1. AMENDMENTS TO THE INDENTURE  

        1.1    Amendment to Section 1.1 of the Indenture.    Section 1.1 of the Indenture is hereby amended by
deleting the definitions of "Board of Directors," "Board Resolution," "Officers' Certificate," "Opinion of Counsel" and "Vice President" and inserting the following definitions, in the appropriate
alphabetical sequence: 

        "Board
of Directors" means the board of directors of the Company or the Guarantor, as the case may be, or any committee of either Board duly authorized to act hereunder or any directors
and/or officers of the Company or the Guarantor, as the case may be, to whom that board or committee shall have delegated its authority. 

        "Board
Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company or the Guarantor, as the case may be, to have been duly adopted by the
Board of Directors and to be in full force and effect on the date of such certification, and delivered to the Trustee. 

 

        "Guarantee"
means the full and unconditional guarantee by the Guarantor set forth in Article 15. 

        "Guarantor"
means Lehman Brothers Holdings Inc., a corporation duly organized and existing under the laws of the State of Delaware. 

        "Guarantor
Order" or "Guarantor Request" means a written request or order signed in the name of the Guarantor by its Chairman of the Board, any Vice Chairman of the Board, its President
or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. 

        "Officers'
Certificate" means a certificate signed by the Chairman of the Board, any Vice Chairman of the Board, the President or a Vice President, and by the Treasurer, and Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Company or the Guarantor, as the case may be, and delivered to the Trustee. 

        "Opinion
of Counsel" means a written opinion of counsel, who may be counsel for or employed by the Company or the Guarantor, as the case may be, and who shall be acceptable to the
Trustee. 

        "Vice
President", when used with respect to the Company, the Guarantor or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or
after the title "vice president." 

        1.2    Amendment to Section 1.2 of the Indenture.    Section 1.2 of the Indenture is hereby amended by
inserting the following paragraph as the new second paragraph thereto: 

        "Upon
any application or request by the Guarantor to the Trustee to take any action under any provision of this Indenture, the Guarantor shall furnish to the Trustee an Officers'
Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion
of such counsel all such conditions precedent, if any, have been complied with, except that in the case of any such application or request as to which the furnishing of such documents is specifically
required by any provision of this Indenture relating to such particular application or request, no additional certificate or opinion need by furnished." 

        1.3    Amendment to Section 1.3 of the Indenture.    Section 1.3 of the Indenture is hereby amended by
inserting the following paragraph as the new third paragraph thereof: 

        "Any
certificate or opinion of an officer of the Guarantor may be based, insofar as it relates to legal matters, upon a certificate or Opinion of Counsel, or representations by counsel,
unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel or representation by counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Guarantor stating that the information with respect to such factual matters is in the
possession of the Guarantor, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are
erroneous." 

        1.4    Amendment to Section 1.5 of the Indenture.    (a) Section 1.5 of the Indenture is hereby
amended by deleting the current section heading thereof and replacing it with the following: 

        "Notices, Etc., to Trustee, Company or Guarantor" 

2

 

        (b)   Section 1.5
of the Indenture is hereby amended by deleting the word "or" at the end of paragraph (1), deleting the period and inserting the word ", or" at
the end of paragraph (2) and inserting the following paragraph as the final paragraph thereof: 

        "(3)
the Guarantor by the Trustee or by any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first-class postage prepaid, to the Guarantor addressed to it
at 745 Seventh Avenue, New York, New York 10019, attention: Treasurer or at any other address previously furnished in writing to the Trustee by the Guarantor." 

        1.5    Amendment to Section 3.1 of the Indenture.    Section 3.1 of the Indenture is hereby amended by
deleting the word "and" at the end of paragraph (14), redesignating paragraph (15) as paragraph (16) and inserting the following paragraph in proper numerical order: 

        "(15)
the terms and provisions of the Guarantee, to the extent that such provisions differ from those set forth herein; and" 

        1.6    Amendment to Section 3.3 of the Indenture.    (a) Section 3.3 of the Indenture is hereby amended
by deleting the word "and" at the end of subparagraph (b), deleting the period and inserting the word "; and" at the end of subparagraph (c) and inserting the following paragraph as the new
subparagraph (d) thereof: 

        "(d)
that the Guarantee of such Securities, when the Securities are authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions
specified in such Opinion of Counsel, will constitute a valid and legally binding obligation of the Guarantor, enforceable in accordance with its terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing." 

        (b)   Section 3.3
of the Indenture is hereby amended by inserting the words "or Guarantee" immediately following the words "No Security" at the beginning of the final
paragraph of the section. 

        1.7    Amendment to Section 3.5 of the Indenture.    Section 3.5 of the Indenture is hereby amended by
deleting the fourth paragraph and inserting in lieu thereof the following paragraph: 

        "All
Securities issued upon any registration of transfer or exchange of Securities shall be the valid obligations of the Company evidencing the same debt, and entitled to the same
benefits under this Indenture (including the Guarantee), as the Securities surrendered upon such registration of transfer or exchange." 

        1.8    Amendment to Section 3.8 of the Indenture.    Section 3.8 of the Indenture is hereby amended by
inserting the words ", the Guarantor" immediately following the words "the Company" in each place such words appear. 

        1.9    Amendment to Section 5.3 of the Indenture.    Section 5.3 of the Indenture is hereby amended by
deleting the final paragraph in its entirety and inserting in lieu thereof the following paragraph: 

        "Any
money deposited with the Trustee of such series or any Paying Agent, or then held by the Company or the Guarantor in trust for the payment of the principal of (and premium, if any)
or interest on any Security of any series and remaining unclaimed for two years after such principal (and premium, if any) or interest has become due and payable shall be paid to the Company on
Company Request or the Guarantor on Guarantor Request, or (if then held by the Company or the Guarantor) shall be discharged from such trust; and the Holder of such Security shall thereafter, as an
unsecured general creditor, look only to the Company and the Guarantor for payment thereof, and all liability of such Trustee or such Paying Agent with respect to such 

3

 

trust
money, and all liability of the Company or the Guarantor as trustee thereof, shall thereupon cease; provided, however, that such Trustee or such
Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on
each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company or the Guarantor." 

        1.10    Amendment to Section 5.6 of the Indenture.    Section 5.6 of the Indenture is hereby amended by
inserting the following paragraphs as the new third, fourth and fifth paragraphs respectively thereof: 

        "The
Guarantor will deliver to the Trustee, within 120 days after the end of each fiscal year of the Guarantor ending after the date hereof, an Officers' Certificate of the
Guarantor, stating whether or not to the best knowledge of the signers thereof the Guarantor is in default in the performance and observance of any of the terms, provisions and conditions of this
Indenture, and if the Guarantor shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge. For purposes of this Section 5.6, any such
default shall be determined without regard to any period of grace or requirement of notice provided under this Indenture. 

        In
addition, the Guarantor shall file with the Trustee written notice of the occurrence of any default or Event of Default within five Business Days of its becoming aware of any such
default or Event of Default. 

        Such
Officers' Certificate or written notice of the Company and the Guarantor may be in the form of one certificate or notice signed by the appropriate officers of the Company and the
Guarantor." 

        1.11    Amendment to Section 6.2 of the Indenture.    Section 6.2 of the Indenture is hereby amended by
inserting the words "or the Guarantor" immediately following the words "including the Company" therein. 

        1.12    Amendment to Section 7.1 of the Indenture.    Section 7.1 of the Indenture is hereby amended by
deleting the reference to subparagraph (g) in the introductory sentence and inserting in lieu thereof a reference to subparagraph (h), by deleting the word "or" at the end of subparagraph
(f) and by inserting the following paragraph immediately prior to the final period at the end of subparagraph (g) thereof: 

        ";
or 

        (h)   the
dissolution or insolvency of the Guarantor or the making of an assignment for the benefit of creditors by the Guarantor or the commencement of any proceedings (by
petition, application, answer, consent or otherwise) by the Guarantor to be adjudicated a bankrupt or for the appointment of a receiver or trustee or similar officer for it or for a substantial part
of its property or for reorganization, an arrangement, composition or other relief under the Bankruptcy Act or the taking of corporate action by the Guarantor for any such purpose, or any marshalling
of the assets or liabilities of the Guarantor or the commencement against the Guarantor of any of the aforementioned proceedings and in such latter case the consent thereto by the Guarantor or its
admission of the material allegations thereof or the continuance of such proceedings undismissed for a period of 60 days." 

        1.13    Amendment to Section 7.11 of the Indenture.    Section 7.11 of the Indenture is hereby amended
by inserting the words ", the Guarantor" immediately following the words "subject to any determination in such proceeding, the Company" therein. 

4

 

        1.14    Amendment to Section 7.16 of the Indenture.    Section 7.16 of the Indenture is hereby amended
by inserting the words "or the Guarantor" immediately following the words "suit instituted by the Company" therein. 

        1.15    Amendment to Section 7.17 of the Indenture.    Section 7.17 of the Indenture is hereby amended
by deleting the words "the Company" in each place of the two places where such words appear and inserting in each place in lieu thereof the words "each of the Company and the Guarantor" 

        1.16    Amendment to Section 9.4 of the Indenture.    (a) Section 9.4 of the Indenture is hereby amended
by deleting the current section heading thereof and replacing it with the following: 

        "Reports by Company and Guarantor" 

        (b)   Section 9.4
of the Indenture is hereby amended by redesignating the first paragraph thereof as subsection (a) and by inserting the following paragraph as
the new subsection (b) thereof: 

        "(b)
The Guarantor shall: 

        (1)   file
with the Trustee for the Securities of each series, within 15 days after the Guarantor is required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the
Guarantor may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934; or, if the Guarantor is not required to file
information, documents or reports pursuant to either of said Sections, then it shall file with such Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by
the Commission, such of the supplementary and periodic information, documents and reports which may be required pursuant to Section 13 of the Securities Exchange Act of 1934 in respect of a
security listed and registered on a national securities exchange as may be prescribed from time to time in such rules and regulations; 

        (2)   file
with such Trustee and the Commission, in accordance with rules and regulations prescribed from time to time by the Commission, such additional information,
documents and reports with respect to compliance by the Guarantor with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and 

        (3)   transmit
by mail to all Holders, as their names and addresses appear in the Security Register, within 30 days after the filing thereof with the Trustee, such
summaries of any information, documents and reports required to be filed by the Guarantor pursuant to paragraphs (1) and (2) of this Section 9.4(b) as may be required by rules and
regulations prescribed from time to time by the Commission. 

        1.17    Amendment to Section 10.1 of the Indenture.    Section 10.1 of the Indenture is hereby amended
by redesignating the first paragraph thereof as subsection (a) and by inserting the following paragraph as the new subsection (b) thereof: 

        "(b)
Nothing contained in this Indenture or in any of the Securities shall prevent any consolidation or merger of the Guarantor with or into any other corporation or corporations
(whether or not affiliated with the Guarantor), or successive consolidations or mergers in which the Guarantor or its successor or successors shall be a party or parties, or shall prevent any sale or
transfer (or successive sales or transfers) of the property and assets of the Guarantor (or of its successor or successors) as an entirety or substantially as an entirety, to any other corporation
(whether or not affiliated with the Guarantor) authorized to acquire the same; provided, however, that
the corporation formed by such consolidation or into which the Guarantor shall have been merged or which shall have acquired such property and assets shall be a corporation organized 

5

 

under
the laws of the United States or of any State thereof; and provided, further, and the Guarantor
hereby covenants and agrees, that upon any such consolidation, merger, sale or transfer, the Guarantee of the due and punctual payment of the principal of (and premium, if any) and interest, if any,
on all of the Securities, according to their tenor, and the due and punctual performance and observance of all the terms, covenants and conditions of this Indenture to be kept or performed by the
Guarantor, shall be expressly assumed, by an indenture supplemental hereto, satisfactory in form to the Trustee for the Securities of each series, executed and delivered to such Trustee by the
corporation formed by such consolidation, or into which the Guarantor shall have been merged, or by the corporation which shall have acquired such property and assets; and in the event of any such
sale or transfer, the predecessor Guarantor shall be released from all liability hereunder and under the Securities and may be dissolved, wound up and liquidated at any time thereafter." 

        1.18    Amendment to Section 10.2 of the Indenture.    Section 10.2 of the Indenture is hereby amended
by redesignating the first and second paragraphs thereof as subsection (a) and by inserting the following two paragraphs as the new subsection (b) thereof: 

        "(b)
In case of any such consolidation, merger, sale or transfer and upon the execution by the successor corporation of an indenture supplemental hereto, as provided in
Section 10.1(b), such successor corporation shall succeed to and be substituted for the Guarantor, with the same effect as if it had been named herein as the party of the first part; and any
order, certificate, statement, request, instructions, advice or resolutions of the Board of Directors or officers of the Guarantor provided for in this Indenture may be made by like officials of such
successor corporation. 

        Nothing
contained in this Indenture or in any of the Securities shall prevent the Guarantor from merging into itself, or acquiring by purchase or otherwise all or any part of the
property of, any other corporation (whether or not affiliated with the Guarantor)." 

        1.19    Amendment to Section 11.1 of the Indenture.    (a) Section 11.1 of the Indenture is hereby
amended by inserting the words "the Guarantor, when authorized by a Board Resolution," immediately following the words "the Company, when authorized by a Board Resolution," in the introductory
sentence thereof. 

        (b)   Section 11.1
of the Indenture is hereby amended by redesignating subparagraphs (3), (4), (5), (6), (7), (8), (9) and (10), respectively, as new
subparagraphs (5), (6), (7), (8), (9), (10), (11) and (12), respectively, and by inserting the following paragraphs in proper numerical order: 

        "(3)
to evidence the succession of another corporation to the Guarantor, and the assumption by any such successor of the covenants of the Guarantor herein and in the Securities, if
applicable; or 

        "(4)
to add to the covenants of the Guarantor for the benefit of the Holders of all or any series of Securities (and if such covenants are to be for the benefit of less than all series
of Securities, stating that such covenants are expressly being included solely for the benefit of such series) or to surrender any right or power herein conferred upon the Guarantor; or" 

        1.20    Amendment to Section 11.2 of the Indenture.    Section 11.2 of the Indenture is hereby amended
by inserting the words "the Guarantor, when authorized by a Board Resolution," immediately following the words "the Company, when authorized by a Board Resolution," in the introductory sentence
thereof. 

Section 2. GUARANTEE  

        2.1    Addition of New Article 15 of the Indenture.    Article 15 of the Indenture is hereby created and
the following shall be inserted therein: 

6

  

 
 

ARTICLE FIFTEEN    
    
    THE GUARANTEES    
    

        Section 15.1    Except
as otherwise set forth in a supplemental indenture or provided in or pursuant to a Board Resolution and set forth in an Officers' Certificate, the
Guarantor hereby unconditionally guarantees to the Holder of the Securities of each series authenticated and delivered by the Trustee, and to the Trustee on behalf of each such Holder, the due and
punctual payment of the principal (including any amount in respect of original issue discount) of, and premium, if any, and interest, if any, on such Securities and the due and punctual payment of the
sinking fund payments, if any, and analogous obligations, if any, provided for pursuant to the terms of such Securities, when and as the same shall become due and payable, whether at maturity or upon
redemption or upon declaration of acceleration or otherwise, according to the terms of such Securities and of the Indenture and this Supplemental Indenture. The Guarantor agrees that in case of
default by the Company in the payment of any such principal (including any amount in respect of original issue discount), premium, interest, sinking fund payment, or analogous obligation, the
Guarantor shall duly and punctually pay the same, as if such payment were made by the Company. The Guarantor hereby agrees that its obligations hereunder shall be absolute and unconditional,
irrespective of any extension of the time for payment of any such Security, any modification of any such Security or any supplemental indenture or Board Resolution and Officers' Certificate relating
thereto, any invalidity, irregularity or unenforceability of any such Security or the Indenture or this Supplemental Indenture, any failure or delay to enforce the same or any waiver, modification,
consent or indulgence granted to the Company with respect thereto by the Holder of such Security or the Trustee, or any other circumstances which may otherwise constitute a legal or equitable
discharge of a surety or guarantor. 

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

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

        The
Guarantor agrees that the Guarantee with respect to each series of Securities shall remain in full force and effect until payment in full of all the Securities of such series. The
Guarantor further agrees that the Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of the principal (including any
amount payable in respect of original issue discount) of, and premium, if any, and interest, if any, and payment of the sinking fund payments, if any, and analogous obligations, if any, on any series
of Securities is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Company or otherwise. 

        The
Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Seven for the purposes of any Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any declaration of acceleration of the obligations guaranteed hereby as 

7

 

provided
in Article Seven, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantor for the purposes of this Section 15.01. 

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

Section 3. MISCELLANEOUS  

        3.1    Continuance of Indenture.    This Supplemental Indenture supplements the Indenture and shall be a part of and
subject to all the terms thereof. The Indenture, as supplemented by this Supplemental Indenture, shall continue in full force and effect. 

        3.2    Defined Terms.    All capitalized terms used in this Supplemental Indenture which are defined in the Indenture,
but not otherwise defined herein, shall have the same meanings assigned to them in the Indenture. 

        3.3    Conflict with Trust Indenture Act.    If any provision of this Supplemental Indenture limits, qualifies or
conflicts with the duties imposed by any of Sections 310 through 317, inclusive, of the Trust Indenture Act through the operation of Section 318(c) thereof, such imposed duties shall control. 

        3.4    Separability Clause.    In case any provision in this Supplemental Indenture shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. 

        3.5    Benefits of Indenture.    Nothing in this Supplemental Indenture, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder and the Holders any benefit or any legal or equitable right, remedy or claim under this Supplemental Indenture. 

        3.6    Governing Law.    This Supplemental Indenture shall be governed by and construed in accordance with the laws of
the State of New York. 

        3.7    The Trustee.    The recitals contained herein shall be taken as the statements of the Company and the
Guarantor, and the Trustee assumes no responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Supplemental Indenture. 

        3.8    Successors and Assigns of Company and Guarantor Bound By Supplemental Indenture.    All the covenants,
stipulations, promises and agreements contained in this Supplemental Indenture by or on behalf of the Company or the Guarantor shall bind their successors and assigns, whether so expressed or not, and
the provisions hereof shall bind the heirs, executors, administrators, successors and assigns of the Holders. 

        3.9    Acts of Board, Committee or Officer of Successor Corporation Valid.    Any act or proceeding by any provision
of this Supplemental Indenture authorized or required to be done or performed by any board, committee or officer of the Company or the Guarantor shall and may be done and performed with like force and
effect by the like board, committee or officer of any corporation that shall at the time be the lawful successor of the Company or the Guarantor, as the case may be. 

        3.10    Counterparts.    This Supplemental Indenture may be executed in any number of counterparts, each of which
shall be an original; but such counterparts shall together constitute but one and the same instrument. 

        Bank
One Trust Company, N.A. hereby accepts the trusts in this Supplemental Indenture declared and provided, upon the terms and conditions hereinabove set forth. 

8

 

        IN
WITNESS WHEREOF, Lehman Brothers Inc. has caused this Supplemental Indenture to be signed and acknowledged by its Chairman of the Board, one of its Vice Chairmen of the Board,
its President, its Treasurer or one of its Vice Presidents, Lehman Brothers Holdings Inc. has caused this Supplemental Indenture to be signed and acknowledged by its Chairman of the Board, one
of its Vice Chairmen of the Board, its President, its Treasurer or one of its Vice Presidents, and Bank One Trust Company, N.A., as Trustee, has caused this Supplemental Indenture to be signed and
acknowledged by one its authorized officers, and its corporate seal to be affixed hereunto, and the same to be attested by one of its authorized officers, as of the day and year first above written. 

	 	 	LEHMAN BROTHERS INC.
	

 	
 	

By:	
 	

    
 Name:

Title:
	

 	
 	

LEHMAN BROTHERS HOLDINGS INC.,

as Guarantor
	

 	
 	

By:	
 	

    
 Name:

Title:
	

 	
 	

BANK ONE TRUST COMPANY, N.A.,

as Trustee
	

 	
 	

By:	
 	

    
 Authorized Officer

9

QuickLinks

Exhibit 4(c)

RECITALS

ARTICLE FIFTEEN THE GUARANTEES

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