THE CORPORATE LIBRARY

Related Party Transactions and Outside Related Director Information

Lehman Brothers Holdings Inc. (LEH)

2/27/2006 Proxy Information

In the ordinary course of business, the Firm from time to time engages in transactions with other companies or financial institutions whose officers, directors or principals are also executive officers or Directors of the Company. Except as described below, transactions with such companies and financial institutions are conducted on an arm's-length basis and, in the case of companies and financial institutions with which a non-management Director is associated, such transactions otherwise fall within the categorical standards for Director independence set forth above.

To the extent permitted by the Sarbanes-Oxley Act of 2002, Directors and executive officers of the Company and their associates, including family members, from time to time may be or may have been indebted to the Company or its subsidiaries under lending arrangements offered by those companies to the public. For example, such persons may be or may have been indebted to LBI, as customers, in connection with margin account loans, revolving lines of credit and other extensions of credit. Such indebtedness is in the ordinary course of business, is substantially on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unaffiliated third parties who are not employees of the Firm and does not involve a more than normal risk of collectibility or present other unfavorable features. In addition, such executive officers, Directors and associates may engage in transactions in the ordinary course of business involving other goods and services provided by the Firm, such as banking, brokerage, investment and financial advisory products and services (including investment funds), on terms similar to those extended to employees of the Firm generally or, in the case of goods and services provided to non-management Directors (except as described below), on the same terms as provided to unaffiliated third parties who are not employees of the Firm.

In December 2004, a private investment fund managed by the Firm that invests in third-party investment funds purchased a limited partnership interest in a third-party venture capital fund from Dr. Kaufman, a Director of the Company, for $404,000, on the same terms as provided by the Firm to an unaffiliated third party in a contemporaneous transaction.

Directors and qualifying employees and consultants of the Firm who are accredited investors have been provided with the opportunity to invest as limited partners in various investment partnerships that qualify as "employees' securities companies" for purposes of the Investment Company Act of 1940. The investment partnerships provide the participants with an opportunity to make investments in a portfolio of investment opportunities, often together with the Firm's merchant banking, venture capital, real estate, fixed income-related and other funds that are offered to third-party investors, on terms that are generally more favorable than those offered to third-party investors. Beginning in 2002, non-management Directors were no longer permitted to invest in these partnerships.

The Company, either directly or through a subsidiary, is the general partner of these investment partnerships. After returns of capital to the partners, profits are generally distributed 90% to the limited partners and 10% to the general partner. In certain of these investment partnerships, the general partner has made a preferred capital contribution equal to a multiple of the amount of capital contributed by the limited partners. After the amount of the general partner's capital contribution, together with a fixed return thereon (which return varies from month to month and averaged 5.54% for Fiscal 2005), is distributed to the general partner, the limited partners' respective capital contributions are returned and then profits are generally distributed 90% to the limited partners and 10% to the general partner, which essentially provides "leverage" to the limited partners. Beginning in 2002, executive officers were no longer permitted to invest in these partnerships. Instead, the executive officers must invest in separate partnerships that invest on a parallel basis with, and have substantially the same terms as, the employee partnerships but do not include this leverage feature.

The table below sets forth for each of the limited partners listed (1) the amount of distributions of profits from all of the existing investment partnerships during Fiscal 2005, (2) the outstanding balance, as of November 30, 2005, of the aggregate preferred capital contributions made by the general partner of these investment partnerships as a result of investments made by such limited partners and (3) the aggregate amount of unreturned limited partner capital in all of the existing investment partnerships as of November 30, 2005. (See page 30 for table).

3/1/2005 Proxy Information

In the ordinary course of business, the Firm from time to time engages in transactions with other companies or financial institutions whose officers, directors or principals are also executive officers or Directors of the Company. Except as described below, transactions with such companies and financial institutions are conducted on an arm's-length basis and, in the case of companies and financial institutions with which a non-management Director is associated, such transactions otherwise fall within the categorical standards for Director independence set forth above.

To the extent permitted by the Sarbanes-Oxley Act of 2002, Directors and executive officers of the Company and their associates, including family members, from time to time may be or may have been indebted to the Company or its subsidiaries under lending arrangements offered by those companies to the public. For example, such persons may be or may have been indebted to LBI, as customers, in connection with margin account loans, revolving lines of credit and other extensions of credit. Such indebtedness is in the ordinary course of business, is substantially on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unaffiliated third parties who are not employees of the Firm and does not involve a more than normal risk of collectibility or present other unfavorable features. In addition, such executive officers, Directors and associates may engage in transactions in the ordinary course of business involving other goods and services provided by the Firm, such as banking, brokerage, investment and financial advisory products and services (including investment funds), on terms similar to those extended to managing directors of the Firm generally or, in the case of goods and services provided to non-management Directors (except as described below), on the same terms as provided to unaffiliated third parties who are not employees of the Firm.

In December 2004, a private investment fund managed by the Firm that invests in third-party investment funds purchased a limited partnership interest in a third-party venture capital fund from Henry Kaufman, a Director of the Company, for $404,000, on the same terms as provided by the Firm to an unaffiliated third party in a contemporaneous transaction.

Directors and qualifying employees and consultants of the Firm who are accredited investors have been provided with the opportunity to invest as limited partners in various investment partnerships that qualify as "employees' securities companies" for purposes of the Investment Company Act of 1940. These investment partnerships provide the participants with an opportunity to make investments in a portfolio of investment opportunities, often together with the Firm's merchant banking, venture capital, real estate and fixed income-related funds that are offered to third-party investors, on terms that are generally more favorable than those offered to third-party investors. The Company, either directly or through a subsidiary, is the general partner of these investment partnerships.

Lehman Brothers Capital Partners III, L.P. ("Capital Partners III") was established in 1995. The general partner has made preferred capital contributions equal to eight times the amount of capital contributed by the limited partners. The amount of the general partner's capital contribution, together with a fixed return thereon, is generally distributed to the general partner before any distributions are made to the limited partners. The limited partners' respective capital contributions are then returned and subsequent profits, if any, are divided 90% to the limited partners and 10% to the general partner. All general partner and limited partner capital contributions have been returned from Capital Partners III. During Fiscal 2004, Capital Partners III made the following distributions of profits: $571,200 to Mr. Fuld, $408,000 to Mr. Gregory, $163,200 to each of Messrs. Berlind, Kaufman, Russo and Bradley H. Jack (an executive officer during Fiscal 2004) and less than $60,000 to Mr. Goldfarb.

Lehman Brothers Capital Partners IV, L.P. ("Capital Partners IV") was established in 1997. The general partner has made capital contributions equal to 25% of the amount of capital contributed by the limited partners. Recourse financing (which means the general partner could demand payment from the limited partners) for 75% of limited partner contributions was offered to the limited partners by the general partner. A fixed return on the general partner's capital contribution, which return varies from month to month and averaged 3.54% for Fiscal 2004, is generally distributed to the general partner before any other distributions are made. A fixed return at the same rate is then distributed to the limited partners on 75% of their capital contributions. Thereafter, capital contributions are returned to the limited partners and then the general partner, and subsequent profits, if any, are divided 90% to the limited partners and 10% to the general partner. The table below sets forth for each of the limited partners listed (1) the amount of distributions from Capital Partners IV during Fiscal 2004 and (2) the amount of unreturned limited partner capital in Capital Partners IV as of November 30, 2004. The amounts of any related financing provided by the general partner did not exceed $60,000 as of November 30, 2004 for any limited partner listed. (See page 28 of the proxy).

Lehman Brothers Venture Capital Partners I, L.P. ("Venture Capital I"), Lehman Brothers Communications Capital Partners I, L.P. ("Communications Capital I"), Lehman Brothers Venture Capital Partners II, L.P. ("Venture Capital II") and Lehman Brothers Real Estate Capital Partners I, L.P. ("Real Estate Capital I") were established in 1999 to 2001. The general partner has contributed 1% of the capital of each of these partnerships. After returns of capital to the partners, any profits are distributed to the partners in proportion to their capital contributions, except that 10% of the profits of Communications Capital I, Venture Capital II and Real Estate Capital I otherwise distributable to the limited partners are, subject to certain exceptions, distributed to the general partner instead. During Fiscal 2004, Real Estate Capital I made the following distributions: $348,000 to each of Messrs. Fuld, Gregory and Jack (representing $168,000 of profits and $180,000 of returns of capital), $232,000 to each of Messrs. Goldfarb and Russo (representing $112,000 of profits and $120,000 of returns of capital), $69,600 to Mr. O'Meara (representing $33,600 of profits and $36,000 of returns of capital), an aggregate of $92,800 for adult children of Mr. Macomber (representing $44,800 of profits and $48,000 of returns of capital), less than $60,000 to Mr. Beyman and less than $60,000 in the aggregate for the adult children of Ms. Merrill. Venture Capital I, Communications Capital I and Venture Capital II made no distributions in excess of $60,000 in Fiscal 2004 to any of the limited partners named in the table below. The table below sets forth the amounts of unreturned limited partner capital in these partnerships as of November 30, 2004 for each of the limited partners listed. (See page 29 of the proxy).

In November 2004, prior to his becoming an executive officer of the Company, Mr. O'Meara was a limited partner in Lehman Brothers Diversified Private Equity Fund, L.P. ("DPEF"). Qualifying employees (other than executive officers) who are accredited investors are limited partners in DPEF. The general partner committed to make capital contributions to DPEF equal to three times the amount of capital contributed by the limited partners. Two-thirds of the general partner's capital is with recourse to the limited partners. A floating return on the general partner's capital contributions, which averaged approximately 4.37% from DPEF's inception through October 31, 2004, is generally distributed to the general partner before any other distributions are made. Thereafter, capital contributions are returned to the general partner and then to the limited partners, and a preferred return of 5% on the limited partners' capital contributions is subsequently distributed to the limited partners. Additional profits, if any, are divided 88% to the limited partners and 12% to the general partner. Mr. O'Meara was a limited partner in DPEF prior to his becoming an executive officer of the Company. DPEF did not make any distributions to Mr. O'Meara while he was a limited partner. As of October 31, 2004, the amount of the general partner's capital contribution that was recourse to Mr. O'Meara was $73,000. The amount of Mr. O'Meara's unreturned limited partner capital in DPEF as of October 31, 2004 was $100,000. In November 2004, Mr. O'Meara redeemed all of his interests in DPEF.

We have also established other investment partnerships in Fiscal 2004 in which qualifying employees (but not Directors) can participate on terms that are generally more favorable than those offered to third-party investors. Executive officers generally may invest directly in these partnerships. If, however, any of these employee partnerships involve an investment by the general partner that earns a fixed return, which essentially provides "leverage" to the employees (such as DPEF), the executive officers must invest in a separate partnership, which will invest on a parallel basis with, and have substantially the same terms as, the employee partnership but will not include any leverage feature. None of these partnerships formed in Fiscal 2004 made any distributions in Fiscal 2004. The aggregate amount of unreturned limited partner capital in these partnerships as of November 30, 2004 was less than $60,000 for Mr. Beyman, $184,320 for Mr. O'Meara and approximately $579,065 for Mr. Russo. The amount of limited partner capital contributed by executive officers to a new employee partnership formed in December 2004 was less than $60,000 by Mr. O'Meara and $250,000 by Mr. Russo.

2/26/2004 Proxy Information

CERTAIN TRANSACTIONS AND AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS

In the ordinary course of business, the Firm from time to time engages in transactions with other corporations or financial institutions whose officers or directors are also executive officers or Directors of the Company. Except as described below, transactions with such corporations and financial institutions are conducted on an arm's-length basis and, in the case of corporations and financial institutions with which a non-management Director is associated, such transactions otherwise fall within the categorical standards for Director independence set forth above.

To the extent permitted by the Sarbanes-Oxley Act of 2002, Directors and executive officers of the Company and their associates from time to time may be or may have been indebted to the Company or its subsidiaries under lending arrangements offered by those companies to the public. For example, such persons may be or may have been indebted to LBI, as customers, in connection with margin account loans, revolving lines of credit and other extensions of credit. Such indebtedness is in the ordinary course of business, is substantially on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unaffiliated third parties who are not employees of the Firm and does not involve a more than normal risk of collectibility or present other unfavorable features. In addition, such executive officers, Directors and associates may engage in transactions in the ordinary course of business involving other goods and services provided by the Firm, such as banking, brokerage, investment and financial advisory products and services, on terms similar to those extended to employees of the Company generally or, in the case of goods and services provided to non-management Directors (except as described below), on the same terms as provided to unaffiliated third parties who are not employees of the Firm.

Throughout Fiscal 2003, the Company was party to a consulting agreement with Henry Kaufman & Company, Inc. ("HK Company") pursuant to which HK Company provided, upon request, advice to the Firm on global initiatives, economic forecasts and other matters. HK Company received a consulting fee of $12,500 per month. Henry Kaufman, a Director of the Company, is a principal of HK Company. This consulting agreement was terminated at the end of December 2003.

Directors and qualifying employees and consultants of the Firm who are accredited investors have been provided with the opportunity to invest as limited partners in various investment partnerships that qualify as "employees' securities companies" for purposes of the Investment Company Act of 1940. These investment partnerships provide the participants with an opportunity to make investments in a portfolio of investment opportunities, often together with the Firm's merchant banking, venture capital and real estate funds that are offered to third-party investors. The Company, either directly or through a subsidiary, is the general partner of these investment partnerships.