Lehman Brothers Holdings Inc. (fka LEHMQ)

[DJN]

TRUE-- At your option.

LEHPQ: 7.25% Non-Cumulative Perpetual Convertible

Each share of the Preferred Stock will be convertible at any time, at your option, into 20.0509 shares of our common stock (equivalent to an initial conversion price of approximately $49.87 per share of common stock), plus cash in lieu of fractional shares, subject to adjustment as described in this prospectus supplement. The conversion rate will be adjusted as described in this prospectus supplement upon the occurrence of certain other events.