1341853--3/31/2008--Lehman_Brothers_Holdings_E-Capital_Trust

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{investment, property, distribution}

Because payments on the Trust Preferred Securities are dependent upon payments made on the Company Debenture, holders are subject to the risks that may affect Distributions by the LLC may be deferred in Holdings discretion and, in such case, holders will be required to recognize income for U.S. federal income tax purposes in advance of the receipt of cash attributable to such income. The Trust Preferred Securities may be redeemed when prevailing interest rates are relatively low. The Trust Preferred Securities are effectively subordinated to substantially all of Holdings debt. If a mandatory deferral event has occurred and Holdings is unable to sell its common stock or perpetual preferred stock for a period continuing for at least two years, amounts received by the Trust in respect of interest on the Affiliate Debt Instruments accrued from that date will be effectively subordinated to payments on Holding s outstanding preferred stock in the event of its bankruptcy or dissolution. Holdings is a holding company and payments on any Affiliate Debt Instruments issued by Holdings, including the Company Debenture, will only be made from its earnings and assets, and not those of its subsidiaries. Holdings is not required to pay you under the Trust Guarantee or the LLC Guarantee if the Trust or the LLC does not have cash available. Enforcement of certain rights by or on behalf of holders of Trust Preferred Securities may be limited until simple distributions on the LLC Preferred Securities have not been paid in full on an aggregate of 28 payment dates. Holders of the Trust Preferred Securities have limited voting rights. The trading price of the Trust Preferred Securities may be less than the value of such securities and more volatile than other securities. You may suffer a loss if the Affiliate Debt Instruments are distributed to you in exchange for Trust Preferred Securities because market prices for the Trust Preferred Securities or the Affiliate Debt Instruments may not be equal. You could suffer adverse tax consequences if the Trust and the LLC are dissolved and Affiliate Debt Instruments are distributed to holders of Trust Preferred Securities. Alternative tax characterizations of the Trust Preferred Securities are possible. There can be no assurance that an active market for the Trust Preferred Securities will develop. Potential conflicts of interest may exist.

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1341853--3/31/2008--Lehman_Brothers_Holdings_E-Capital_Trust_I