Document:

Exhibit 10.1

 

THIRD
AMENDED AND RESTATED

ZENITH
NATIONAL INSURANCE CORP. 2004 RESTRICTED STOCK PLAN

 

(as amended and
restated May 13, 2008)

 

Section 1.              General Purpose of Plan; Definitions.

 

This
plan is the Zenith National Insurance Corp. 2004 Restricted Stock Plan (the “Plan”).
The purpose of the Plan is to enable the Company (as defined below) to attract
and retain highly qualified personnel who will contribute to the Company’s
success and to provide incentives to Participants (as defined below) that are
linked directly to increases in stockholder value and will therefore inure to
the benefit of all stockholders of the Company.

 

For
purposes of the Plan, the following terms shall be defined as set forth below:

 

(a)           “Administrator” means the Board or
the Committee, as appointed by the Board in accordance with Section 2
below.

 

(b)           “Beneficial Owner” shall have the
meaning set forth in Rule 13d-3 under the Exchange Act.

 

(c)           “Board” means the board of
directors of the Company.

 

(d)           “Change in Control” means,
following the Effective Date, one of the following events:

 

(1)           any Person is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company’s
then outstanding securities, excluding any Person who becomes such a Beneficial
Owner in connection with a transaction described in subclause (x) of
clause (3) below; or

 

(2)           the following
individuals cease for any reason to constitute a majority of the number of
directors then serving on the Board:  (i) directors
who, on the date hereof, constitute the Board and (ii) any new director
(other than a director whose initial assumption of office is in connection with
an actual or threatened election contest, including but not limited to a
consent solicitation, relating to the election of directors of the Company)
whose appointment or election by the Board or nomination for election by the
Company’s stockholders was approved or recommended by a vote of a majority of
the directors then still in office who either were directors on the date hereof
or whose appointment, election or nomination for election was previously so
approved or recommended; or

 

(3)           there is
consummated a merger or consolidation of the Company with any other corporation,
other than (x) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, at least 50% of the combined voting power of the
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (y) a
merger or consolidation effected to implement a recapitalization or
reincorporation of the Company (or similar transaction) in which no Person is
or becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company’s
then outstanding securities; or

 

 

(4)           the stockholders of
the Company approve a plan of complete liquidation or dissolution of the
Company or there is consummated the sale or disposition by the Company of all
or substantially all of the Company’s assets, other than a sale or disposition
by the Company of all or substantially all of the Company’s assets to an
entity, of which at least 50% of the combined voting power of its voting
securities is owned by substantially all of the stockholders of the Company
immediately prior to such sale in substantially the same proportions as their
ownership of the Company immediately prior to such sale.

 

(e)           “Committee” means the Compensation
Committee of the Board.  If at any time
or to any extent the Board does not administer the Plan, then the functions of
the Board specified in the Plan shall be exercised by the Committee.

 

(f)            “Company” means Zenith National
Insurance Corp., a Delaware corporation (or any successor corporation).

 

(g)           “Disability” means the inability
of a Participant to substantially perform his or her duties and
responsibilities to the Company or to any Parent or Subsidiary by reason of a
physical or mental disability or infirmity (i) for a continuous period of
six (6) months, or (ii) at such earlier time as the Participant
submits medical evidence satisfactory to the Administrator that the Participant
has a physical or mental disability or infirmity that will likely prevent the
Participant from returning to the performance of the Participant’s work duties
for six (6) months or longer.  The
date of such Disability shall be the last day of such six-month period or the
day on which the Participant submits such satisfactory medical evidence, as the
case may be.

 

(h)           “Effective Date” shall have the
meaning set forth in Section 10.

 

(i)            “Eligible Recipient” means an
employee or director of the Company or of any Parent or Subsidiary.

 

(j)            “Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time.

 

(k)           “Fair Market Value” means, as of
any given date, with respect to any awards granted hereunder, (A) the
closing sale price of a share of Stock on such date on the principal securities
exchange on which the Company’s equity securities are listed or traded, (B) the
fair market value of a share of Stock as determined in accordance with a method
prescribed in the agreement evidencing any award hereunder, or (C) the
fair market value of a share of Stock as otherwise determined by the
Administrator in the good faith exercise of its discretion.

 

(l)            “Parent” means any entity that is
the Beneficial Owner of 50% or more of the combined voting power of all classes
of stock of the Company.

 

(m)          “Participant” means any Eligible
Recipient selected by the Administrator, pursuant to the Administrator’s
authority in Section 2 below, to receive awards of Restricted Stock.

 

(n)           “Person” shall have the meaning
given in Section 3(a)(9) of the Exchange Act, as modified and used in
Sections 13(d) and 14(d) thereof, except that such term shall not
include (i) the Company or any Parent or Subsidiary, (ii) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or any of its affiliates, (iii) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (iv) a
corporation owned, directly or indirectly, by substantially all of the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.

 

(o)           “Plan” shall have the meaning set
forth in the first paragraph of this Section 1.

 

(p)           “Restricted Period” shall have the
meaning set forth in Section 5(f)(i).

 

 

(q)           “Restricted Stock” means shares of
Stock subject to restrictions on sale, transfer, pledge or assignment during a
Restricted Period pursuant to Section 5.

 

(r)            “Restricted Stock Award Agreement”
shall have the meaning set forth in Section 5(d).

 

(s)           “Stock” means the common stock,
par value $1.00 per share, of the Company.

 

(t)            “Subsidiary” means any entity with
respect to which the Company is the Beneficial Owner of 50% or more of the
total combined voting power of all classes of stock of such entity.

 

(u)           “Unrestricted Stock” means
Restricted Stock for which the Restricted Period has lapsed.

 

Section 2.              Administration.

 

The Plan shall be administered in accordance with the
requirements of Rule 16b-3, promulgated under the Exchange Act, by the
Board or, at the Board’s sole discretion, by the Committee, which shall be
appointed by the Board, and which shall serve at the discretion of the Board.

 

The Administrator shall have the power and authority
to grant awards of Restricted Stock to Eligible Recipients pursuant to the
terms of the Plan.  Except as otherwise
provided herein, the Administrator shall have the authority:

 

(a)           to select those Eligible Recipients who
shall be Participants;

 

(b)           to determine whether and to what extent
awards of Restricted Stock are to be granted hereunder to Participants;

 

(c)           to determine the number of shares of
Stock to be covered by each award granted hereunder and the purchase price
thereof; and

 

(d)           to determine the terms and conditions,
not inconsistent with the terms of the Plan, of each award granted hereunder,
including, but not limited to, the restrictions applicable to awards of
Restricted Stock and the conditions under which restrictions applicable to such
awards of Restricted Stock shall lapse.

 

The Administrator shall have the authority, in its
sole discretion, to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Plan as it shall from time to time deem
advisable; to interpret the terms and provisions of the Plan and any award
issued under the Plan (and any agreements relating thereto); and to otherwise
supervise the administration of the Plan.

 

All decisions made by the Administrator pursuant to
the provisions of the Plan shall be final, conclusive and binding on all
persons, including the Company and the Participants.

 

Section 3.              Stock Subject to Plan.

 

The
total number of shares of Stock reserved and available for issuance under the
Plan shall be 995,000 shares.  Such
shares may consist, in whole or in part, of authorized and unissued shares or
treasury shares.  To the extent that any
shares of Stock subject to any award of Restricted Stock granted hereunder are
forfeited, such shares of Stock shall again be available for issuance in
connection with future awards granted under the Plan.

 

In the
event of any merger, reorganization, consolidation, recapitalization, stock
dividend or other change in corporate structure affecting the Stock, an
equitable substitution or proportionate adjustment shall be made in (i) the
aggregate number of shares of Stock reserved for issuance under the 

 

 

Plan, and (ii) the
kind, number and purchase price of shares of Stock subject to outstanding
awards of Restricted Stock granted under the Plan, in each case, as may be
determined by the Administrator, in its sole discretion.  Such other substitutions or adjustments shall
be made as may be determined by the Administrator, in its sole discretion.  In connection with any event described in
this paragraph, the Administrator may provide, in its sole discretion, for the
cancellation of any outstanding awards and payment in cash or other property
therefor.

 

Section 4.              Eligibility.

 

Eligible
Recipients shall be eligible to receive awards of Restricted Stock.  The Participants under the Plan shall be
selected from time to time by the Administrator, in its sole discretion, from
among the Eligible Recipients, and the Administrator shall determine, in its
sole discretion, the number of shares of Stock covered by each such award.

 

Section 5.              Restricted Stock.

 

(a)           General.  Awards of Restricted Stock may be granted
under the Plan. The Administrator shall determine the Eligible Recipients to
whom, and the time or times at which, awards of Restricted Stock shall be made;
the number of shares to be awarded; the price to be paid by the Participant for
the acquisition of Restricted Stock; the Restricted Period (as defined in Section 5(f))
applicable to awards of Restricted Stock, including any applicable performance
objectives; and all other conditions of the awards of Restricted Stock.  The provisions of the awards of Restricted
Stock need not be the same with respect to each Participant.

 

(b)           Purchase
Price.  The Administrator
shall determine the purchase price to be paid for each share of Restricted
Stock; provided, that such per share purchase price shall not be less
than par value.

 

(c)           Form of
Payment.  The purchase price
for an award of Restricted Stock may be paid in cash or its equivalent.  The Administrator may in its discretion allow
payment in the form of (i) shares of unrestricted Stock owned by the
Eligible Recipient for greater than six (6) months, the Fair Market Value
of which on the purchase date is equal to the purchase price of the Restricted
Stock, (ii) cancellation of indebtedness, (iii) services rendered or (iv) any
combination of the foregoing.

 

(d)           Awards and
Certificates.  The
prospective recipient of awards of Restricted Stock shall not have any rights
with respect to any such award unless and until such recipient has executed an
agreement evidencing the award (a “Restricted Stock Award Agreement”)
and has delivered a fully executed copy thereof to the Company within a period
of thirty (30) days (or such other period as the Administrator may specify)
after the award date.

 

(e)           Form of
Restricted Stock. 
The Company may, in its discretion, reflect ownership of Restricted
Stock through the issuance of stock certificates, in book-entry form or any
combination thereof.

 

If the
Company elects to issue stock certificates evidencing shares of Restricted
Stock, the Participant who is granted an award of Restricted Stock shall be
issued a stock certificate in respect of such shares of Restricted Stock.  Such certificates shall be registered in the
name of the Participant and shall bear an appropriate legend referring to the
terms, conditions and restrictions applicable to any such award.  The Company may require that the stock
certificates evidencing Restricted Stock granted hereunder be held in escrow in
the custody of the Company (or as otherwise determined by the Administrator)
until the restrictions thereon have lapsed, and that, as a condition of any
award of Restricted Stock, the Participant shall have delivered to the Company
a stock power, endorsed in blank, relating to the Stock covered by such
award.  Promptly after the Restricted
Period has lapsed without forfeiture in respect of such shares of Restricted
Stock except as the Administrator, in its sole discretion, shall otherwise
determine, certificates for shares of Unrestricted Stock shall be delivered to
the Participant.

 

 

If the
Company elects to reflect Restricted Stock ownership in book-entry form, it
shall establish on its books a Restricted Stock account in
the Participant’s name, and shall credit to such account the number of shares
of the Participant’s Restricted Stock. 
The book entry shares of Restricted Stock shall be subject to the
restrictions described in Section 5(f) until the termination of the
Restricted Period, whereupon the shares of Unrestricted Stock shall promptly be
transferred to the Participant in the form and registration as indicated by the
Participant.

 

(f)            Restrictions
and Conditions. 
The awards of Restricted Stock granted pursuant to this Section 5
shall be subject to the following restrictions and conditions:

 

(i)              Subject to
the provisions of the Plan and the Restricted Stock Award Agreement governing
any such award, during such period as may be established by the Administrator
commencing on the date of grant (the “Restricted Period”), the
Participant shall not be permitted to sell, transfer, pledge or assign shares
of Restricted Stock awarded under the Plan; provided, however,
that the Administrator may, in its sole discretion, provide for the lapse of
such restrictions in installments and may accelerate or waive such restrictions
in whole or in part based on such factors and such circumstances as the
Administrator may determine, in its sole discretion, including, but not limited
to, the attainment of certain performance related goals or the Participant’s
termination of employment or service as a director with the Company or any
Parent or Subsidiary; and provided further that the Administrator shall
not waive such Restricted Period established pursuant to the foregoing, except
in the case of death, disability or retirement of that Participant or the
occurrence of a Change in Control (except that a number of shares equal to ten
percent (10%) of the total shares of Restricted Stock that had been authorized
for award under the Plan are exempt from such waiver restriction).  Subject to the foregoing, the following shall
apply to all awards of Restricted Stock:

 

(1)         with respect
to awards of Restricted Stock granted to employees, except with respect to the
lapse of the Restricted Period upon attainment of specified performance goals,
the Restricted Period shall not lapse earlier than (A) the second (2nd)
anniversary of the date of grant of an award of Restricted Stock with respect
to 50% of the shares of Stock subject to such award and (B) the fourth (4th)
anniversary of the date of grant with respect to the remaining 50% of the
shares of Stock subject to such award;

 

(2)         with respect
to awards of Restricted Stock granted to directors (who are not also
employees), except with respect to the lapse of the Restricted Period upon
attainment of specified performance goals, the Restricted Period shall not
lapse earlier than (A) the first (1st) anniversary of the date
of grant of such award with respect to one-third (1/3) of the shares of Stock
subject to such award, (B) the second (2nd) anniversary of the
date of grant of such award with respect to an additional one-third (1/3) of
the shares of Stock subject to such award and (C) the third (3rd)
anniversary of the date of grant of such award with respect to the remaining
one-third (1/3) of the shares of Stock subject to such award; and

 

(3)         the
Restricted Period shall lapse in full upon the death of the Participant or
termination of the Participant’s employment or service due to Disability.

 

(ii)             Except as
otherwise provided in this Section 5, the Participant shall generally have
the rights of a stockholder of the Company with respect to Restricted Stock
during the Restricted Period.  Unless
otherwise provided in a Restricted Stock Award Agreement, ordinary-course cash
dividends paid with respect to Restricted Stock shall be paid to the
Participant and extraordinary dividends (as determined by the Administrator)
shall be held by the Company, in escrow or as otherwise determined by the Administrator,
until the Restricted Period applicable to such Restricted Stock lapses.  If the Restricted Stock pursuant to which
such extraordinary dividends were paid is forfeited, such dividends shall also
be forfeited and returned to the Company.

 

 

(iii)            The rights
of Participants upon termination of employment or service with the Company or
any Parent or Subsidiary during the Restricted Period applicable to such
Participant’s Restricted Stock shall be set forth in the Restricted Stock Award
Agreement governing the award of such Restricted Stock.

 

Section 6.              Change in Control.

 

Upon a
Change in Control, unless awards of Restricted Stock are assumed by a successor
corporation or equivalent awards are substituted therefor, all awards of
Restricted Stock shall become fully vested and free of restrictions.

 

Section 7.              Amendment and Termination.

 

The
Board may amend, alter or discontinue the Plan, but no amendment, alteration,
or discontinuation shall be made that would impair the rights of a Participant
under any award theretofore granted without such Participant’s consent, or
that, without the approval of the stockholders (as described below), would:

 

(a)           except as provided in Section 3, increase the
total number of shares of Stock reserved for issuance under the Plan;

 

(b)           change the class of persons eligible to participate in
the Plan; or

 

(c)           modify the Plan to materially increase the benefits
accruing to Participants.

 

Notwithstanding
the foregoing, stockholder approval under this Section 7 shall only be required
at such time and under such circumstances as stockholder approval would be
required under stock exchange rules or other applicable law or regulation
with respect to amendment of the Plan.

 

The
Administrator may amend the terms of any award theretofore granted,
prospectively or retroactively, but, subject to Section 3, no such
amendment shall impair the rights of any Participant without his or her
consent.

 

Section 8.              Unfunded Status of Plan.

 

The
Plan is intended to constitute an “unfunded” plan for incentive
compensation.  With respect to any
payments not yet made to a Participant by the Company, nothing contained herein
shall give any such Participant any rights that are greater than those of a
general creditor of the Company.

 

Section 9.              General Provisions.

 

(a)           Shares of Stock shall not be issued pursuant to any
award granted hereunder unless the issuance and delivery of such shares of
Stock pursuant thereto shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act and the requirements of any stock exchange upon which the Stock
may then be listed.

 

(b)           The
Administrator may require each person acquiring shares of Stock hereunder to
represent to and agree with the Company in writing that such person is
acquiring the shares of Stock without a view to distribution thereof.  The certificates for such shares of Stock may
include any legend which the Administrator deems appropriate to reflect any
restrictions on transfer.

 

All
certificates for shares of Stock delivered under the Plan shall be subject to
such stop-transfer orders and other restrictions as the Administrator may deem
advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed, and any applicable federal or state securities law, and the
Administrator may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions.

 

 

(c)           Nothing
contained in the Plan shall prevent the Board from adopting other or additional
compensation arrangements; and such arrangements may be either generally
applicable or applicable only in specific cases.  Neither the adoption of the Plan nor the
grant of an award hereunder shall confer upon any Eligible Recipient any right
to continued employment or service with the Company or any Parent or
Subsidiary, as the case may be, nor shall it interfere in any way with the
right of the Company or any Parent or Subsidiary to terminate the employment or
service of any of its Eligible Recipients at any time.

 

(d)           Each
Participant shall, no later than the date as of which the value of an award
first becomes includible in the gross income of the Participant for federal
income tax purposes, pay to the Company, or make arrangements satisfactory to
the Administrator regarding payment of, any federal, state, or local taxes of
any kind required by law to be withheld with respect to such award.  The obligations of the Company under the Plan
shall be conditional on the making of such payments or arrangements, and the
Company shall, to the extent permitted by law, have the right to deduct any
such taxes from any payment of any kind otherwise due to the Participant.

 

(e)           No member of
the Board or the Administrator, nor any officer or employee of the Company
acting on behalf of the Board or the Administrator, shall be personally liable
for any action, determination, or interpretation taken or made in good faith
with respect to the Plan, and all members of the Board or the Administrator and
each and any officer or employee of the Company acting on their behalf shall,
to the extent permitted by law, be fully indemnified and protected by the
Company in respect of any such action, determination or interpretation.

 

Section 10.            Stockholder Approval; Effective Date
of Plan.

 

The
Plan shall be effective as of the date the Plan is approved by stockholders of
the Company (the “Effective Date”). 
No grant of any award hereunder shall be made prior to stockholder
approval of the Plan.

 

Section 11.            Term of Plan.

 

No
awards of Restricted Stock shall be granted pursuant to the Plan on or after
the tenth (10th) anniversary of the Effective Date, but awards
theretofore granted may extend beyond that date.EXHIBIT 4.01

 

LEHMAN BROTHERS HOLDINGS
INC.

 

AND

 

THE BANK OF NEW YORK

 

as Trustee

 

 

 

SIXTEENTH SUPPLEMENTAL
INDENTURE

 

Dated as of May 9, 2008

 

 

 

 

 

 

THIS SIXTEENTH SUPPLEMENTAL INDENTURE, dated as of May 9,
2008, is between LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized
and existing under the laws of the State of Delaware (the “Company”), and THE
BANK OF NEW YORK (as successor trustee to JPMorgan Chase Bank, N.A.), a banking
corporation duly organized and existing under the laws of the State of New
York, acting as Trustee under the Indenture referred to below (the “Trustee”).

 

W  I 
T  N  E 
S  S  E 
T  H

 

WHEREAS, the Company has duly authorized the
execution and delivery of an Indenture dated as of February 1, 1996 (the “Indenture”),
as amended and supplemented, to provide for the issuance from time to time of
its unsecured notes or other evidences of indebtedness to be issued in one or
more series (the “Securities”), as in the Indenture provided, up to such
principal amount or amounts as may from time to time be authorized in or
pursuant to one or more resolutions of the Board of Directors;

 

WHEREAS, the Company shall issue a series of
Securities entitled the “7.50% Subordinated Notes due 2038” (the “Subordinated
Notes”);

 

WHEREAS, the Company has duly authorized the
execution and delivery of this Sixteenth Supplemental Indenture in order to
provide for certain supplements to the Indenture which shall only be applicable
to the Subordinated Notes;

 

WHEREAS, all acts and things necessary to make this
Sixteenth Supplemental Indenture a valid agreement of the Company according to
its terms have been done and performed, and the execution and delivery of this
Sixteenth Supplemental Indenture have in all respects been duly authorized;

 

NOW, THEREFORE, in consideration of the premises, of
the purchase and acceptance of the Subordinated Notes by the Holders thereof,
and of the sum of one dollar duly paid to it by the Trustee at the execution
and delivery of these presents, the receipt whereof is hereby acknowledged, the
Company covenants and agrees with the Trustee to supplement the Indenture, only
for purposes of the Subordinated Notes, as follows:

 

SECTION 1.   GENERAL TERMS AND
CONDITIONS OF THE SUBORDINATED NOTES

 

1.1           Designation,
Principal Amount and Terms.     There
is hereby authorized and established pursuant to Section 301 of the
Indenture a series of Securities designated the “7.50% Subordinated Notes Due
2038” of the Company. The Subordinated Notes shall be issued initially in an
aggregate principal amount of $2,000,000,000, and shall have the terms provided
for herein, including those set forth in Exhibit A
hereto. The Company may create and issue additional notes ranking
pari passu in right of payment to the Subordinated Notes and otherwise with the
same terms as the Subordinated Notes other than the Issue Date, Issue Price and
the payment of additional interest accruing prior to the Issue Date of such
notes, which notes shall form a single series with the Subordinated Notes. No
such additional notes shall be issued if an Event of Default has occurred with
respect to the Subordinated Notes.

 

1.2           Optional
Redemption.  Pursuant to Section 1101
of the Indenture, The Company may elect to redeem the outstanding Subordinated
Notes, in whole or in part, at any time, at a Redemption Price equal to the
greater of (1) 100% of the principal amount of the Subordinated Notes to
be redeemed or (2) as determined by the Quotation Agent (as defined
below), the sum of the present values of the remaining scheduled payments of
principal and interest on the Subordinated Notes to be redeemed, not including
any portion of such payments of interest accrued as of the applicable
Redemption Date, discounted to the applicable Redemption Date on a semi-annual
basis assuming a 360-day year consisting of twelve 30-day months, at the
Adjusted Treasury Rate (as defined below) plus 20 basis points, plus, in either
case, accrued interest on the Subordinated Notes to be redeemed to the
applicable Redemption Date.

 

“Adjusted Treasury Rate” means the
semi-annual equivalent yield to maturity of a Reference Security whose price,
expressed as a percentage of its principal amount, is equal to the Comparable
Treasury Price.

 

“Reference Security” means a United States
Treasury security which has a maturity comparable to the remaining maturity of
the Securities at the applicable Redemption Date which would be used in
accordance with customary financial practice to price new issues of corporate
debt securities with a maturity comparable to the remaining maturity of the
Subordinated Notes at the applicable Redemption Date, all as determined in the
sole discretion of the Quotation Agent.

 

“Comparable Treasury Price” means the average
of the bid and asked prices for the Reference Security as of 5:00 p.m. on
the third Business Day before the applicable Redemption Date, as provided by
the Reference Dealers. If the Company obtains more than three Reference Dealer
quotations, the Company shall eliminate the highest and the lowest Reference
Dealer quotations and then calculate the average of the remaining Reference
Dealer quotations. If the Company obtains three or fewer Reference Dealer
quotations, the Company shall calculate the average of all the Reference Dealer
quotations and not eliminate any quotations.

 

“Reference Dealers” means the Quotation Agent
and two or more other primary U.S. Government securities dealers in New York
City appointed by the Company. If the Quotation Agent is no longer a primary
U.S. Government securities dealer, the Company shall substitute another primary
U.S. Government securities dealer in its place as a Reference Dealer.

 

“Quotation Agent” means Lehman Brothers Inc.
or its successor.

 

All determinations made by the Quotation Agent shall
be made in good faith and in a commercially reasonable manner by the Quotation
Agent and, absent a determination of a manifest error, shall be conclusive for
all purposes and binding on the Company, the Holders and beneficial owners of
the Subordinated Notes.

 

2

 

1.3           Payment
of Additional Amounts.     The Company
shall pay to a Holder who is a United States Alien (as defined below) such
additional amounts (the “Additional Amounts”) as may be necessary so that every
net payment of principal of and interest on the Subordinated Notes, after
deduction or withholding for or on account of any present or future tax,
assessment or other governmental charge imposed upon such Holder, or by reason
of the making of such payment, by the United States or any taxing authority
thereof or therein, shall not be less than the amount provided for in the
Subordinated Notes to be then due and payable. The Company shall not be
required, however, to make any payment of any Additional Amounts for or on
account of:

 

a)              any tax, assessment or other governmental
charge which would not have been imposed but for (i) the existence of any
present or former connection between such holder (or between a fiduciary,
settlor, beneficiary of, member or shareholder of, or possessor of a power
over, such Holder, if such Holder is an estate, trust, partnership or
corporation) and the United States, including, without limitation, such Holder
(or such fiduciary, settlor, beneficiary, member, shareholder or possessor)
being or having been a citizen or resident or treated as a resident thereof or
being or having been engaged in trade or business or present therein, or having
or having had a permanent establishment therein, or (ii) the presentation
of the Subordinated Notes appertaining thereto for payment on a date more than
10 days after the date on which such payment becomes due and payable or the
date on which payment thereof is duly provided for, whichever occurs later;

 

b)             any estate, inheritance, gift, sales,
transfer, excise, personal property or similar tax, assessment or other
governmental charge;

 

c)              any tax, assessment or other governmental
charge imposed by reason of such Holder’s past or present status as a passive
foreign investment company, a controlled foreign corporation, a personal
holding company or foreign personal holding company with respect to the United
States, or as a corporation which accumulates earnings to avoid United States
federal income tax;

 

d)             any tax, assessment or other governmental
charge which is payable otherwise than by withholding from payment of principal
of, or interest on, the Subordinated Notes;

 

e)              any tax, assessment or other governmental
charge required to be withheld by any paying agent from any payment of
principal of, or interest on, the Subordinated Notes if such payment can be
made without withholding by any other paying agent;

 

f)                any tax, assessment or other governmental
charge which would not have been imposed but for the failure to comply with
certification, information, documentation or other reporting requirements
concerning the nationality, residence, identity or connections with the United
States of the Holder or beneficial owner of the Subordinated Notes, if such
compliance is required by 

 

3

 

statute or by regulation of the United States
Treasury Department as a precondition to relief or exemption from such tax,
assessment or other governmental charge;

 

g)             any tax, assessment or other governmental
charge imposed on interest received by (i) a 10% shareholder (as defined
in Section 871(h)(3)(B) of the United States Internal Revenue Code of
1986, as amended (the “Code”), and the regulations that may be promulgated
thereunder) of the Company of (ii) a controlled foreign corporation with
respect to the Company within the meaning of the Code; or

 

h)             any combination of items (a), (b), (c), (d),
(e), (f) and (g);

 

nor shall any Additional Amounts be paid to
any Holder who is a fiduciary or partnership or other than the sole beneficial
owner of such Subordinated Notes appertaining thereto to the extent that a
beneficiary or settlor with respect to such fiduciary, or a member of such
partnership or a beneficial owner thereof would not have been entitled to the
payment of such Additional Amounts had such beneficiary, settlor, member or
beneficial owner been the Holder of the Subordinated Notes appertaining
thereto.

 

“United States Alien” means any corporation,
partnership, individual or fiduciary that is, as to the United States, a
foreign corporation, a nonresident alien individual, a nonresident fiduciary of
a foreign estate or trust, or a foreign partnership one or more of the members
of which is, as to the United States, a foreign corporation, a nonresident
alien individual or a nonresident fiduciary of a foreign estate or trust.

 

1.4           Redemption Upon a Tax Event.   The Subordinated Notes may be redeemed at
the option of the Company in whole, but not in part, on not more than 60 days’
and not less than 30 days’ notice, on any date on or after the Tax Redemption
Date (as defined below) at a redemption price equal to 100% of the principal
amount of the Subordinated Notes and accrued interest, if any, if the Company
determines that as a result of any change in or amendment to the laws or
treaties, or any regulations or rulings promulgated thereunder, of the United
States or of any political subdivision or taxing authority thereof or therein
affecting taxation, or any proposed change in such laws, treaties or
regulations or rulings, or any change in the official application, enforcement
or interpretation of such laws, treaties or regulations or filings (including a
holding by a court of competent jurisdiction in the United States) or any other
action (other than an action predicated on law generally known on or before the
date specified in such Subordinated Note except for proposals before the
Congress before such date) taken by any taxing authority or a court of
competent jurisdiction in the United States, or the official proposal of any
such action, whether or not such action or proposal was taken or made with
respect to the Company, (A) the Company has or shall become obligated to
pay any Additional Amounts pursuant to Section 1.3 on the Subordinated
Notes or (B) there is a substantial possibility that the Company shall be
required to pay such Additional Amounts. 
Prior to the publication of any notice of redemption pursuant to this
provision, the Company shall deliver to the Trustee (i) an Officers’
Certificate stating that the Company is entitled to effect such redemption and
setting forth a statement of facts showing that the conditions precedent to the
right of the Company so to redeem have occurred, and (ii) an Opinion of
Counsel to such effect based on such statement of facts.  The “Tax Redemption Date” is the date on
which the Company shall or, if applicable, 

 

 

4

 

there is a substantial possibility that the
Company shall, become obligated to pay such Additional Amounts if a payment of
interest were to be made on such date.

 

SECTION 2.   AMENDMENTS TO THE
INDENTURE

 

2.1           Amendment
to Section 101 of the Indenture. 
Section 101 of the Indenture is hereby amended solely with respect
to the Subordinated Notes by adding the following new definitions thereto, in
the appropriate alphabetical sequence:

 

“Excess Proceeds”
has the meaning specified in Section 1412.

 

“Other Financial
Obligations” has the meaning specified in Section 1401.

 

2.2           Amendment
to Section 501 of the Indenture.  Solely
with respect to the Subordinated Notes, clauses (1) through (4) and
(7) of Section 501 of the Indenture shall not apply.

 

2.3           Amendment
to Section 1005 of the Indenture. 
Solely with respect to the Subordinated Notes, Section 1005 of the
Indenture shall not apply.

 

2.4           Amendment
to Section 1401 of the Indenture. 
Section 1401 is hereby amended solely with respect to the
Subordinated Notes by deleting Section 1401 in its entirety and inserting
in lieu thereof the following:

 

“Section 1401.                                            Subordinated
Notes Subordinated to Senior Debt and Other Financial Obligations

 

The Company agrees, and each
Holder of the Subordinated Notes and related coupons by his acceptance thereof
likewise agrees, that the payment of the principal of (and premium, if any) and
interest, if any, on the Subordinated Notes and related coupons is
subordinated, to the extent and in the manner provided in this Article 14,
to the prior payment in full when due of the principal of (and premium, if any)
and interest, if any, on (i) all Senior Debt and (ii) under the
circumstances described in Section 1412, Other Financial Obligations.

 

For purposes of this Article 14,
“Senior Debt” means all obligations (whether now outstanding or hereafter
created, assumed or incurred) for the payment of which the Company is
responsible or liable as obligor, guarantor or otherwise in respect of all
principal of (and premium, if any) and interest if any (including any interest,
if any, accruing subsequent to the commencement of a proceeding in bankruptcy
by or against the Company) on (i) any indebtedness for money borrowed or
evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness
under capitalized leases, (iii) any indebtedness representing the deferred
and unpaid purchase price of any property or business, (iv) indebtedness
for money borrowed by another person that the Company guarantees, and (v) all
deferrals, renewals, extensions and refundings of any such indebtedness or
obligation; provided, that the
following shall not constitute Senior Debt: 
(a) 

 

5

 

indebtedness evidenced by the Subordinated
Notes and related coupons, (b) indebtedness which is expressly made equal
in right of payment with the Subordinated Notes or subordinate and subject in
right of payment to the Subordinated Notes, (c) indebtedness for goods or
materials purchased in the ordinary course of business or for services obtained
in the ordinary course of business or indebtedness consisting of trade
payables, or (d) indebtedness which is subordinated to any obligation of
the type specified in clauses (i) through (v) above.

 

For purposes of this Article 14,
“Other Financial Obligations” means all obligations (whether now outstanding or
hereafter created, assumed or incurred) for the payment of which the Company is
responsible or liable as obligor, guarantor or otherwise in respect of all
principal of (and premium, if any) and interest if any (including any interest,
if any, accruing subsequent to the commencement of a proceeding in bankruptcy
by or against the Company) in respect to derivative products (including without
limitation, interest and foreign exchange rate contracts, commodity contracts
and similar arrangements) except any such obligations that are expressly stated
to have the same rank as or not to be senior to the Subordinated Notes.

 

This Article 14 shall
constitute a continuing offer to all persons who, in reliance upon such
provisions, become holders of, or continue to hold, Senior Debt and Other
Financial Obligations, and such provisions are made for the benefit of the
holders of Senior Debt and Other Financial Obligations, and such holders and/or
each of them may enforce such provisions.”

 

SECTION 3.   ADDITIONAL
PROVISION

 

The following Section 1412 is numbered
to conform with the format of the Standard Provisions:

 

Section 1412.                                                       Subordinated
Notes Subordinated to Prior Payment of all Other Financial Obligations on
Dissolution, Liquidation or Reorganization of the Corporation.

 

Upon the occurrence of any
of the events specified in the first paragraph of Section 1402, the
provisions of Section 1402 shall be given effect to determine the amount
of cash, property or securities which may be payable or deliverable as between
the Holders of Subordinated Notes, on the one hand, and the Holders of Senior
Debt, on the other hand. Solely upon the occurrence of any distribution of the
assets of the Company in connection with the dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or any other marshalling of the assets and liabilities of the Company or
otherwise), if after giving effect to the provisions of Section 1402, any
amount of cash, property or securities shall be available for payment or
distribution in respect of the 

 

6

 

Subordinated Notes (“Excess Proceeds”), then
such Excess Proceeds shall be made available by the receiver, liquidating
trustee or other Person making such payment or distribution of assets, whether
a trustee in bankruptcy, a receiver or liquidating trustee or otherwise, for
the ratable benefit of the Subordinated Notes; provided that if any creditors
in respect of Other Financial Obligations shall not have received payment in
full of all amounts due or to become due on or in respect of Other Financial
Obligations (and provision shall not have been made for such payment in money
or money’s worth), then the amount of Excess Proceeds available for payment or
distribution in respect of Subordinated Notes shall first be applied to pay or
provide for the ratable payment of Other Financial Obligations remaining
unpaid, to the extent necessary to pay all Other Financial Obligations in full,
after giving effect to any concurrent payment or distribution in respect of
Other Financial Obligations. Any Excess Proceeds originally available in
respect of Subordinated Notes remaining after the payment (or provision for
payment) in full of all Other Financial Obligations shall continue to be
available for payment or distribution in respect of Subordinated Notes.

 

If the Holders of
Subordinated Notes, or any of them, shall fail to file a proper claim in the
form required in any proceeding referred to in the first paragraph of Section 1402,
prior to 30 days before the expiration of the time to file such claim or claims
pursuant to the authority granted to the Trustee, then the holders of Other
Financial Obligations are hereby authorized to file an appropriate claim or
claims for and on behalf of the holders of Subordinated Notes in the form
required in any such proceeding. If after giving effect to the provisions of Section 1402,
in the event that, notwithstanding the foregoing provisions of this Section 1412,
upon the occurrence of any of the events described in the first paragraph of Section 1402,
any payment or distribution of assets of the Corporation of any kind or
character in respect of the Subordinated Notes, whether in cash, property or
securities, including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the
Corporation being subordinated to the payment of the Subordinated Notes, shall
be received by the Trustee, any paying agent or the holders of the Subordinated
Notes before all Other Financial Obligations are paid in full, then, subject to
receipt by the Trustee or any paying agent of notice pursuant to Section 1406,
such payment or distribution shall be held in trust for the benefit of and
shall be paid over to the holders of such Other Financial Obligations or their
representative or representatives, ratably as aforesaid for application to the
payment of all Additional Other Financial Obligations remaining unpaid until
all such Other Financial Obligations shall have been paid in full, after giving
effect to any concurrent payment or distribution to the holders of such Other
Financial Obligations.

 

Subject to the payment in
full of all Other Financial Obligations, the holders of the Subordinated Notes
shall be subrogated to the rights of the holders of such Other Financial
Obligations to receive payments or distributions of assets of the Corporation
applicable to such Other Financial Obligations until the 

 

7

 

Subordinated Notes shall be paid in full, and
none of the payments or distributions to the holders of such Other Financial
Obligations to which the holders of the Subordinated Notes or the Trustee would
be entitled except for the provisions of this Article or of payments over,
pursuant to the provisions of this Article, to the holders of such Other
Financial Obligations by the holders of the Subordinated Notes or the Trustee
shall, as between the Corporation, its creditors other than the holders of such
Other Financial Obligations and the holders of the Subordinated Notes, be
deemed to be a payment by the Corporation to or on account of such Other
Financial Obligations; it being understood by the parties hereto that the
provisions of this Section are and are intended solely for the purpose of
defining the relative rights of the holders of the Subordinated Notes, on the
one hand, and the holders of the Other Financial Obligations, on the other
hand.

 

SECTION 4.   MISCELLANEOUS

 

4.1           Note.  Attached hereto as Exhibit A
is a form of the Subordinated Note.

 

4.2           Separability.  In case any provision in this Sixteenth
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.

 

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

 

4.4           The
Trustee.  The Trustee shall not be
responsible in any manner for or in respect of the validity or sufficiency of
this Sixteenth Supplemental Indenture, or for or in respect of the recitals
contained herein, all of which recitals are made by the Company solely.

 

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

 

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

 

4.7           Counterparts.  This Sixteenth Supplemental Indenture may be executed
in any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one and
the same instrument.

 

8

 

IN WITNESS WHEREOF, Lehman Brothers Holdings Inc.
has caused this Sixteenth Supplemental Indenture to be signed and acknowledge
by one of its Vice Presidents, and The Bank of New York, as Trustee, has caused
this Sixteenth Supplemental Indenture to be signed as of the day and year first
above written.

 

	
   

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paolo Tonucci

  
	
   

  	
   

  	
  Name:

  	
  Paolo Tonucci

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Global Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK, as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Chris O’Mahoney

  
	
   

  	
   

  	
  Name:

  	
  Chris O’Mahoney

  
	
   

  	
   

  	
  Title:

  	
  Assistant Vice President

  
						

 

EXHIBIT A

 

[FORM OF FACE OF NOTE]

 

THIS SECURITY IS A GLOBAL SECURITY WITHIN THE
MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS 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 SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE CO., HAS AN INTEREST HEREIN.

 

REPAYMENT OF THE NOTES IS NOT PROTECTED BY ANY
FEDERAL AGENCY OR THE SECURITIES INVESTOR PROTECTION CORPORATION

 

NO.  R-                                                                   $

 

CUSIP
NO. 5249087N4

 

ISIN
NO. US5249087N47

 

LEHMAN BROTHERS HOLDINGS
INC.

 

7.50% SUBORDINATED NOTE
DUE 2038

 

                Lehman
Brothers Holdings Inc., a corporation duly organized and existing under the
laws of the State of Delaware (herein referred to as the “Company”), for value
received, hereby promises to pay to CEDE & CO., or registered assigns,
at the office or agency of the Company in the Borough of Manhattan, the City of
New York, the principal sum of
                                  
DOLLARS on May 11, 2038, in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts, and to pay interest on said principal sum at said
office or agency, in like coin or currency, at the rate per annum specified in
the title of this Note until the principal hereof becomes due and payable, and
on any overdue principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
same rate per annum during the period in which such principal is overdue,
compounded semi-annually, to the registered holder of this Note, until payment
of said principal sum has been made or duly provided for.

 

A-1

 

                The
Stated Maturity of the Note shall be May 11, 2038.  Interest on this Note (computed as set forth
herein) shall be payable semi-annually in arrears on May 11 and November 11
of each year (each an “Interest Payment Date”), commencing November 12,
2008, from the Interest Payment Date next preceding the date of this Note to
which interest has been paid or duly provided for. Interest on this Note shall
be payable to the holder in whose name the Note is registered at the close of
business on the applicable Record Date. The Record Date for any Interest
Payment Date for the Note will be the date, whether or not a Business Day, 15
calendar days immediately preceding the Interest Payment Date. Notwithstanding
the foregoing, any Interest Payment Date that would otherwise be a day that is
not a Business Day shall instead be the next succeeding Business Day, and no
additional interest shall accrue as a result of such delayed payment. Interest
on the Note shall be computed on the basis of a 360-day year of twelve 30-day
months.

 

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

 

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

 

A-2

 

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

 

	
   

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

	
  Attest:

  
	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  

 

 

TRUSTEE’S CERTIFICATE OF
AUTHENTICATION

 

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

 

Dated:

 

	
   

  	
  THE BANK OF NEW YORK,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  

 

A-3

 

[FORM OF REVERSE OF
NOTE]

 

(Reverse of Note)

 

LEHMAN BROTHERS HOLDINGS
INC.

 

 

7.50% SUBORDINATED NOTE,
DUE 2038

 

                This
Note is one of a duly authorized series of Securities of the Company designated
as the 7.50% Subordinated Notes Due 2038 of the Company (herein called the “Notes”),
limited (except as otherwise provided in the Indenture referred to below) in
aggregate principal amount to $2,000,000,000. 
The Notes are one of an indefinite number of series of debt securities
of the Company (herein collectively called the “Securities”), issued or
issuable under and pursuant to an indenture, dated as of February 1, 1996,
as amended and supplemented from time to time and as amended and supplemented
with respect to the Notes herein by the Sixteenth Supplemental Indenture dated
as of May 9, 2008 between the Company and the Trustee (as so amended and
supplemented, the “Indenture”), between the Company and The Bank of New York,
successor trustee to JPMorgan Chase Bank, N.A., as Trustee (herein called the “Trustee”),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a description of rights, limitations of rights, obligations, duties
and immunities thereunder of the Trustee, the Company and the holders of the
Notes.  The separate series of Securities
may be issued in various aggregate principal amounts, may mature at different
times, may bear interest (if any) at different rates, may be subject to
different redemption provisions or repayment or repurchase rights (if any), may
be subject to different sinking, purchase or analogous funds (if any), may be
subject to different covenants and Events of Default, as defined in the
Indenture, and may otherwise vary as provided in the Indenture.

 

                Payment
of the principal of and interest on this Note is, to the extent provided in the
Indenture, subordinated and subject in right of payment to the prior payment in
full when due of the principal of (and premium, if any) and interest, if any,
on all Senior Debt, as defined in the Indenture and this Note is issued subject
to the provisions of the Indenture with respect thereto.  In addition, upon the dissolution,
winding-up, liquidation or reorganization of the Company, this Note is, to the
extent provided in the Indenture, subordinated and subject in right of payment
to the prior payment in full when due of the principal of (and premium, if any)
and interest, if any, on all Other Financial Obligations, as defined in the
Indenture. Each registered holder of this Note, by accepting the same, (a) agrees
to and shall be bound by such provisions, (b) authorizes and expressly
directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to effectuate the subordination so provided and (c) appoints
the Trustee as his or her attorney-in-fact for any and all such purposes.  Each registered holder hereof, by his or her
acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder
of Senior Debt and Other Financial Obligations, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.

 

As provided in the Indenture and subject to certain
limitations therein set forth, the Company may at its option redeem the Notes
in whole or from time to time in part at any time.

 

As provided in the Indenture and subject to
certain limitations therein set forth, the Company will pay to a Holder who is
a United States Alien such Additional Amounts as may be necessary so that every
net payment of principal of and interest on the Notes, after deduction or
withholding for or on account of any present or future tax, assessment or other
governmental charge imposed upon such Holder, or by

 

A-4

 

reason of the making of such
payment, by the United States or any taxing authority thereof or therein, will
not be less than the amount provided for in the Notes to be then due and
payable.

 

As provided in the Indenture and subject to certain
limitations therein set forth, the Notes may be redeemed at the option of the
Company in whole if the Company determines that as a result of any change in or
amendment to the laws or treaties, or any regulations or rulings promulgated
thereunder, of the United States or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any proposed change in such
laws, treaties or regulations or rulings, or any change in the official
application, enforcement or interpretation of such laws, treaties or
regulations or filings (including a holding by a court of competent
jurisdiction in the United States) or any other action (other than an action
predicated on law generally known on or before the date specified in such Note
except for proposals before the Congress before such date) taken by any taxing
authority or a court of competent jurisdiction in the United States, or the
official proposal of any such action, whether or not such action or proposal was
taken or made with respect to the Company, (A) the Company has or will
become obligated to pay any Additional Amounts referred to in the foregoing
paragraph pursuant to the Indenture on the Note or (B) there is a
substantial possibility that the Company will be required to pay such
Additional Amounts.

 

The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the holders of not less than
66-2/3% in aggregate principal amount of each series of the Securities at the
time Outstanding to be affected (each series voting as a class), evidenced as
provided in the Indenture, to execute supplemental indentures adding any
provisions to, or changing in any manner or eliminating any of the provisions
of the Indenture or of any supplemental indenture or modifying in any manner
the rights of the holders of the Securities of all such series; provided,
however, that no such supplemental indenture shall, among other things, (i) change
the fixed maturity of any Security, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon or reduce any
premium payable on redemption, or make the principal thereof, or premium, if
any, or interest thereon payable in any coin or currency other than that hereinabove
provided, or amend the Indenture to modify its provisions relating to the
subordination of each Security in a manner adverse to the holder thereof,
without the consent of the holder of each Security so affected, or (ii) change
the place of payment on any Security, or impair the right to institute suit for
payment on any Security, or reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security so affected.  It is also provided in the Indenture that,
prior to any declaration accelerating the maturity of any series of Securities,
the holders of a majority in aggregate principal amount of the Securities of
such series Outstanding may on behalf of the holders of all the Securities of
such series waive any past default or Event of Default under the Indenture with
respect to such series and its consequences, except a default in the payment of
interest, if any, on or the principal of, or premium, if any, on any of the
Securities of such series.  Any such
consent or waiver by the holder of this Note shall be conclusive and binding
upon such holder and upon all future holders and owners of this Note and any
Notes which may be issued in exchange or substitution herefor, irrespective of
whether or not any notation thereof is made upon this Note or such other Notes.

 

                As
provided in the Indenture and subject to certain limitations therein set forth,
in case an Event
of Default with respect to the Notes shall have occurred and be continuing, the
principal hereof may be declared, and upon such declaration shall become due
and payable, in the manner, with the effect and subject to the conditions
provided in the Indenture.

 

No reference herein to the Indenture and no
provisions of this Note or of the Indenture shall alter or impair the
obligations of the Company, which is absolute and unconditional, to pay the
principal and interest of this Note at the place, at the time and in the coin
or currency herein prescribed.

 

The
Company may omit to comply with any term, provision or condition set forth in Section 801

 

A-5

 

of
the Indenture, and any such omission with respect to such Section shall
not be an Event of Default, in each case with respect to the Notes, provided
that the conditions of Section 1009 of the Indenture have been satisfied.

 

The
covenant set forth in Section 1005 of the Indenture shall not apply to the
Notes.

 

Notwithstanding the provisions of Section 401(a)(B) of
the Indenture, the Company may satisfy and discharge the entire indebtedness on
all the Notes as provided therein only when the Notes are by their terms due
and payable within one year.

 

                The
Company, the Trustee, and any agent of the Company or of the Trustee may deem
and treat the registered holder hereof as the absolute owner of this Note
(whether or not this Note shall be overdue and notwithstanding any notation of
ownership or other writing hereon), for the purpose of receiving payment
hereof, or on account hereof, and for all other purposes, and neither the
Company nor the Trustee nor any agent of the Company or of the Trustee shall be
affected by any notice to the contrary. 
All such payments made to or upon the order of such registered holder
shall, to the extent of the sum or sums paid, effectually satisfy and discharge
liability for moneys payable on this Note.

 

                The
Notes are issuable in registered form without coupons in denominations of
$1,000 and any multiple of $1,000.  At
the option of the holders thereof, either at the office or agency to be
designated and maintained by the Company for such purpose in the Borough of
Manhattan, The City of New York, pursuant to the provisions of the Indenture or
at any of such other offices or agencies as may be designated and maintained by
the Company for such purpose pursuant to the provisions of the Indenture, and
in the manner and subject to the limitations provided in the Indenture, but
without the payment of any service charge, except for any tax or other
governmental charges imposed in connection therewith, Notes may be exchanged
for an equal aggregate principal amount of Notes of like tenor and of other
authorized denominations.

 

As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Note is registrable in the
Security Register, upon surrender of this Note for registration of transfer at
the office or agency of the Company in any place where the principal of this
Note is payable, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the holder hereof or such holder’s attorney duly authorized in
writing, and thereupon one or more new Notes of this series of like tenor and
of authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.

 

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

 

THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

All items used in this Note which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.

 

A-6

 

 

The following abbreviations, when used in the inscription on the face
of the within Note, shall be construed as though they were written out in full
according to applicable laws or regulations:

 

	
  TEN COM –

  	
  as tenants in common

  
	
   

  	
   

  
	
  TEN ENT –

  	
  as tenants by their entireties

  
	
   

  	
   

  
	
  JT TEN –

  	
  as joint tenants with right of survivorship and
  not as tenants in common

  
	
   

  	
   

  
	
  UNIF GIFT MIN ACT – 

  	
   

  	
  Custodian

  	
   

  	
  under Uniform Gifts to

  
	
   

  
	
   

  	
  (Cust)

  	
   

  	
  (Minor)

  	
   

  
	
   

  
	
  Minors Act

  	
   

  	
   

  
	
   

  
	
   

  	
  (State)

  	
   

  
	
   

  
	
  Additional abbreviations may also be used though not in the above
  list.

  
													

 

 

 

A-7

 

ASSIGNMENT

 

	
  FOR VALUE RECEIVED, the undersigned hereby sells,
  assigns and transfers unto

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  

 

 

	
  (Please insert social security or other
  identifying number of Assignee)

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  

 

 

	
  (Name and address of Assignee, including zip code,
  must be printed or typewritten.)

  
	
   

  
	
  the within Note, and all rights thereunder, hereby
  irrevocably constituting and appointing

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  	
  to transfer the said Note on the books of the
  Company, with full power of substitution in the premises.

  
	
   

  

 

	
  Date:

  	
   

  	
   

  

 

	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NOTICE: The signature to this assignment must
  correspond

  
	
   

  	
  with the name as it appears upon the face of the
  within Note in

  
	
   

  	
  every particular, without alteration or
  enlargement or any change whatever.

  
	
   

  	
   

  
	
  Signature(s) Guaranteed:

  	
   

  	
   

  
					

 

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED MEDALLION
SIGNATURE GUARANTEE PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

 

A-8

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