Lehman Brothers Financial SA (LEHNQ)

[cottonisking]

Continue, "LIMITATION OF TRANSACTIONS; SUBORDINATION" and construction of the CTs' subordinated guarantee document: Two components make up LBHI, "the Guarantor" and "the Guarantor's subsidiaries."

A) The Guarantor is insolvent, therefore the Guarantor do not have a liability for the CTs' subordinated guarantee.

B) The Guarantor's subsidiaries [LBIE,...] is solvent, therefore the Guarantor's subsidiaries [LBIE,...] do have a liability for the CTs' subordinated guarantee.

***** LET THE CTS' SUBORDINATED GUARANTEE SPEAK FOR ITSELF BELOW *****

LBHI added the clauses below to the CTs' subordinated guarantee to clarify their subsidiaries ranking and prove that "LBHI's solvent subsidiaries" have a liability for the CTs' subordinated guarantee:

1) "then the Guarantor shall not, and shall not permit any subsidiary of the Guarantor, to (x) declare... (other than (a) dividends or distributions in common stock of the Guarantor, (b) payments under this Guarantee, (c)"

2) "In addition, at all times such obligations will be structurally subordinated to the liabilities and obligations of the Guarantor's subsidiaries."

$$$$$

"SECTION 6

LIMITATION OF TRANSACTIONS; SUBORDINATION


6.1. Limitation of Transactions.

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of its election of an Extension Period as provided in the certificate evidencing the Debentures and shall not have rescinded such notice, or such Extension Period or any extension thereof shall be continuing, then the Guarantor shall not, and shall not permit any subsidiary of the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



6.2. Ranking.

This Guarantee will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all other liabilities of the Guarantor, (ii) on a parity with the most senior preferred or preference stock now or hereafter issued by the Guarantor and with any guarantee now or hereafter entered into by the Guarantor in respect of any preferred securities of any Affiliate of the Guarantor and (iii) senior to the Guarantor's common stock. In addition, at all times such obligations will be structurally subordinated to the liabilities and obligations of the Guarantor's subsidiaries."

https://www.sec.gov/Archives/edgar/data/806085/000104746903008869/a2105775zex-4_05.htm

Note: LBIE is still in administration in London and made a $37.41 million dividend distribution to its shareholder.