Lehman Preferred Series "J" Preferred (fka LEHJQ)

[DJN]

LEHJQ Liquidation.

Upon our voluntary or involuntary liquidation, dissolution or winding-up, holders of the Preferred Stock are entitled to receive out of our assets that are available for distribution to stockholders, before any distribution is made to holders of common stock or other junior stock, a liquidation distribution in the amount of $2,500.00 per share of Preferred Stock (equivalent to $25.00 per depositary share), plus any declared and unpaid dividends, including, if applicable, a pro rata portion of any declared and unpaid dividends for the then-current dividend period to the date of liquidation, without regard for any undeclared dividends. Distributions will be made pro rata as to the Preferred Stock and any other parity stock and only to the extent of our assets, if any, that are available after satisfaction of all liabilities to our creditors.

The Depositary Shares

Each depositary share will represent 1/100th of a share of Preferred Stock. We will deposit shares of Preferred Stock and depositary receipts evidencing the depositary shares will be issued pursuant to a deposit agreement among us, Computershare Trust Company N.A., as depositary, and the holders from time to time of the depositary receipts. Subject to the terms of the deposit agreement, the depositary shares will be entitled to all the rights and preferences of the Preferred Stock in proportion to the applicable fraction of a share of Preferred Stock represented by such depositary share.

Distributions.

The depositary will distribute all dividends and other cash distributions received on the Preferred Stock to the holders of record of the depositary receipts in proportion to the number of depositary shares held by each holder. The obligation of the depositary to distribute dividends and distributions is subject to the payment of certain charges and expenses of the depositary.

Redemption.

If we redeem the Preferred Stock, in whole or in part, the corresponding depositary shares will also be redeemed. The redemption price per depositary share will be equal to 1/100th of the redemption price per share of Preferred Stock. If less than all the depositary shares are redeemed, we will select either by lot or pro rata those depositary shares to be redeemed. Any shares redeemed will be subject to rounding to prevent fractional depositary shares. The depositary will mail notice of redemption to record holders of the depositary receipts not less than 20 and not more than 60 days prior to the date fixed for redemption of the Preferred Stock and depositary shares. Any redemption of the depositary shares or Preferred Stock will be subject to the limitations described below under "Our Replacement Capital Covenant."

Our Replacement Capital Covenant

At or prior to the initial issuance of the Preferred Stock, we will enter into a replacement capital covenant relating to the depositary shares and the Preferred Stock. The replacement capital covenant only benefits holders of covered debt, as defined under the "Certain Terms of the Replacement Capital Covenant," and is not enforceable by holders of the depositary shares or the Preferred Stock. However, the replacement capital covenant could preclude us from redeeming or purchasing depositary shares or shares of Preferred Stock at a time we might otherwise wish to do so.

In the replacement capital covenant, we covenant not to redeem or purchase, and to cause our subsidiaries not to redeem or purchase, the depositary shares or shares of Preferred Stock before February 15, 2023 (or such later date as we may determine if we decide to extend the term of the replacement capital covenant) except to the extent (i) during the 6 months prior to such redemption or purchase, we have received net proceeds in the amount specified in the replacement capital covenant from the sale of securities that have equity-like characteristics that are the same or more equity-like than the applicable characteristics of the depositary shares and the Preferred Stock at the time of such redemption or purchase (any such securities, "replacement capital securities") or (ii) the depositary shares and the Preferred Stock are exchanged for consideration that includes common stock with a market value of at least 75% of the aggregate liquidation preference of the Preferred Stock or at least an equal aggregate liquidation preference or principal amount of replacement capital securities other than common stock, or a combination thereof.