Exhibit 4.01


 


 


CUSIP NO. 52517P7L9


ISIN NO. US52517P7L98


 


REGISTERED                                                                                                                                   FACE
AMOUNT: $15,000,000


No.
R-1


LEHMAN BROTHERS HOLDINGS
INC.

MEDIUM-TERM NOTE, SERIES I

(FIXED RATE)


If the registered owner of
this Note (as indicated below) is The Depository Trust Company (the “Depository”)
or a nominee of the Depository, this Note is a Note in global form (a “Global
Security”) and the following legends are applicable except as specified on the
reverse hereof:


THIS NOTE IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF THE DEPOSITORY OR A NOMINEE OF THE DEPOSITORY.  UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY (AS
DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.


UNLESS AND UNTIL IT IS
EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS GLOBAL
SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A
NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY
OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE
TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.

















 


	
  ISSUE PRICE: $15,000,000

  	
   

  	
  OPTION TO RECEIVE PAYMENTS IN

  	
   

  	
  OPTIONAL REPAYMENT PRICES: N/A

  
	
   

  	
   

  	
  THE SPECIFIED CURRENCY:

  	
   

  	
   

  
	
  ISSUE DATE: October 26, 2007

  	
   

  	
  o
  YES    x NO

  	
   

  	
  OPTIONAL INTEREST RATE RESET:

  
	
   

  	
   

  	
   

  	
   

  	
  o YES   x NO

  
	
  MATURITY DATE: October 26, 2027

  	
   

  	
  SPECIFIED CURRENCY: N/A

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  OPTIONAL RESET DATES: N/A

  
	
  INTEREST RATE: 6.75%

  	
   

  	
  BUSINESS DAY: New York

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  OPTIONAL REDEMPTION:

  
	
  SPREAD: N/A

  	
   

  	
  AMORTIZING NOTE:

  	
   

  	
  o
  YES    x NO

  
	
   

  	
   

  	
  o
  YES    x NO

  	
   

  	
   

  
	
  SPREAD MULTIPLIER: N/A

  	
   

  	
   

  	
   

  	
  INITIAL REDEMPTION DATE: N/A

  
	
   

  	
   

  	
  SINKING FUND: N/A

  	
   

  	
   

  
	
  MAXIMUM INTEREST RATE: N/A

  	
   

  	
   

  	
   

  	
  INITIAL REDEMPTION 

  
	
   

  	
   

  	
  OID NOTE:

  	
   

  	
   

  
	
  MINIMUM INTEREST RATE: N/A

  	
   

  	
  o
  YES    x NO

  	
   

  	
  PERCENTAGE: 
  N/A

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  INTEREST PAYMENT DATES: Semi-

  	
   

  	
  AUTHORIZED DENOMINATIONS: 

  	
   

  	
  APPLICABILITY OF ANNUAL 

  
	
  annually on April 26 and October 26,

  	
   

  	
  $1,000/$1,000

  	
   

  	
  REDEMPTION

  
	
  commencing on April 26, 2008

  	
   

  	
   

  	
   

  	
  PERCENTAGE REDUCTION:

  
	
   

  	
   

  	
  EXTENSION OF MATURITY NOTE:

  	
   

  	
  o
  YES    x NO

  
	
  REGULAR RECORD DATES: Fifteen 

  	
   

  	
  o
  YES    x NO

  	
   

  	
  If yes, state Annual Percentage

  
	
  calendar days immediately preceding the

  	
   

  	
   

  	
   

  	
  Reduction:      %

  
	
  interest payment date.

  	
   

  	
  EXTENSION PERIOD: N/A

  	
   

  	
   

  
	
   

  	
   

  	
  NUMBER OF EXTENSION PERIODS: N/A

  	
   

  	
  EXTENDIBLE NOTE:

  
	
   

  	
   

  	
   

  	
   

  	
  o
  YES    x NO

  
	
  EXCHANGE RATE AGENT: N/A

  	
   

  	
  OPTION TO ELECT REPAYMENT:

  	
   

  	
   

  
	
   

  	
   

  	
  o
  YES    x NO

  	
   

  	
  INITIAL MATURITY DATE: N/A

  
	
  DEPOSITORY: The Depository Trust 

  	
   

  	
   

  	
   

  	
  SPECIAL ELECTION INTERVAL: N/A

  
	
  Company

  	
   

  	
  OPTIONAL REPAYMENT DATES: N/A

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  RENEWABLE IN PART:

  
	
  DUAL CURRENCY NOTE:

  	
   

  	
  SURVIVOR’S OPTION:

  	
   

  	
  o
  YES    x NO

  
	
  o
  YES   x NO

  	
   

  	
  x
  YES  o NO

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  AUTHORIZED RENEWABLE AMOUNTS:

  
	
  OPTION ELECTION DATES: N/A

  	
   

  	
   

  	
   

  	
  N/A

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPTIONAL PAYMENT CURRENCY: 

  	
   

  	
   

  	
   

  	
  SPECIAL ELECTION PERIOD: N/A

  
	
  N/A

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DESIGNATED
  EXCHANGE RATE: N/A

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPTION VALUE
  CALCULATION AGENT:

  	
   

  	
   

  	
   

  	
   

  
	
  N/A

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OTHER PROVISIONS:
  N/A

  	
   

  	
   

  	
   

  	
   

  



 


LEHMAN BROTHERS HOLDINGS
INC., a corporation duly organized and existing under the laws of the State of
Delaware (herein called the “Company”, which term includes any successor
corporation under the Indenture referred to on the reverse hereof), for value
received, hereby promises to pay to Cede & Co., or registered assigns, on
the Maturity Date the Principal Amount hereof (as defined below) and, if so
specified above, to pay interest thereon from the Issue Date specified above or
from the most recent Interest Payment Date specified above to which interest
has been paid or duly provided for at the Interest Rate specified above until
the principal hereof is paid or made available for payment and (to the extent
that the payment of such interest shall be legally enforceable) at such rate
per annum on any overdue principal and premium and on any overdue installment
of interest.  Unless otherwise specified
above, and except as provided in Section 8 on the reverse hereof if this Note
is a Dual Currency Note (as hereinafter defined), payments of principal,
premium, if any, and interest hereon will be made in U.S. dollars; if the
Specified Currency set forth above is a currency other than U.S. dollars (a “Foreign
Currency”), such payments will be made in U.S. dollars based on the equivalent
of that Foreign Currency converted into U.S. dollars in the manner set forth in
Section 2 on the reverse hereof.  If the
Specified Currency is a Foreign Currency and it is so provided above, the
Holder may elect to receive such payments in that Foreign Currency by delivery
of a written request to the Trustee (or to any duly appointed Paying Agent) at
the Corporate Trust Office (as defined below) not later than 10 calendar days
prior to the applicable payment date, and such election will remain in effect
for the Holder until revoked by written notice to the Trustee (or to any such
Paying Agent) at the Corporate Trust Office received not later than 10 calendar
days prior to the applicable payment date; provided,
however, no such election or
revocation may be made if, with respect to this Note, (i) an Event of Default
has occurred, (ii) the Company has exercised any discharge or defeasance
options or (iii) the Company has given a notice of redemption.  In the event the Holder makes any such
election pursuant to the preceding sentence, such election will not be
effective on any transferee of such Holder and such transferee shall be paid in
U.S. dollars unless such transferee makes an election pursuant to the preceding
sentence; provided, however, that such election, if in effect
while funds are on deposit with the Trustee to satisfy and discharge this Note,
will be effective on any such transferee unless otherwise specified above.  The “Principal Amount” of this Note at any
time means (i) if this Note is an OID Note, the Amortized Face Amount at such
time as described in Section 7 on the reverse hereof, (ii) if this Note is an
Amortizing Note, the Outstanding Face Amount at such time as described in
Section 4 on the reverse hereof, (iii) in all other cases, the Face Amount
hereof.


 


2

















 


If this Note is subject to
an Annual Percentage Reduction as specified above, the Redemption Price shall
initially be the Initial Redemption Percentage of the Principal Amount of this
Note on the Initial Redemption Date and shall decline at each anniversary of
the Initial Redemption Date (each such date, a “Redemption Date”) by the Annual
Percentage Reduction of such Principal Amount until the Redemption Price is
100% of such Principal Amount.


In the event of any optional
redemption by the Company, any repayment at the option of the Holder,
acceleration of the maturity of this Note or other prepayment of this Note
prior to the Maturity Date specified, the term “Maturity” when used herein
shall refer, where applicable, to the date of redemption, repayment,
acceleration or other prepayment of this Note.


Except as provided in the
following paragraph, the Company will pay interest semiannually on February 15
and August 15 of each year (unless other Interest Payment Dates are specified
above) (each an “Interest Payment Date”), commencing with the first Interest
Payment Date next succeeding the Issue Date, and at Maturity; provided that any payment of principal,
premium, if any, or interest to be made on any Interest Payment Date or on a
date of Maturity that is not a Business Day shall be made on the next
succeeding Business Day with the same force and effect as if made on such
Interest Payment Date or such date of Maturity, as the case may be, and no
additional interest shall accrue as a result of such delayed payment.  The term “Business Day” means any day, that
is not a Saturday or Sunday, and that is not a day on which banking
institutions in New York City are generally authorized obligated or by law or
executive order to be closed; for notes denominated in pounds sterling only, is also
a London Business Day; for notes having a specified currency other than U.S.
dollars only, other than notes denominated in Euros, is also not a day on which
banking institutions in the principal financial center (as defined below) of
the country of the specified currency generally are authorized or obligated by
law or executive order to close; and for 
notes denominated in Euros, is also a Euro business day. A principal
financial center means the capital city of the country issuing the specified
currency. However, for U.S. dollars, Australian dollars, Canadian dollars and
Swiss francs, the principal financial center will be New York City, Sydney,
Toronto and Zurich, respectively. A “London Business Day” means any day that is not a Saturday or Sunday and on
which dealings in deposits in U.S. dollars are transacted, or with respect to
any future date are expected to be transacted, in the London interbank market
and a “Euro
Business Day” means any day that is not a Saturday or Sunday on which the
Trans-European Automated Real-Time Gross Settlement Express Transfer System is
open.  Each payment of interest
hereon shall include interest accrued through the day before the Interest
Payment Date or date of Maturity, as the case may be.  Unless otherwise specified above, interest on
this Note will be computed on the basis of a 360-day year of twelve 30-day
months.  In no event shall the interest
rate of this Note be higher than the maximum rate permitted by applicable law,
as the same may be modified by United States law of general application.


Unless otherwise specified
above, the interest payable on any Interest Payment Date will, as provided in
the Indenture, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the Regular Record
Date indicated above (whether or not a Business Day) next preceding such Interest
Payment Date; provided that,
notwithstanding any provision of the Indenture to the contrary, interest
payable on any date of Maturity shall be payable to the Person to whom
principal shall be payable; and provided,
further, that, unless otherwise
specified above, in the case of a Note initially issued between a Regular
Record Date and the Interest Payment Date relating to such Regular Record Date,
interest for the period beginning on the Issue Date and ending on such Interest
Payment Date shall be paid on the Interest Payment Date following the next
succeeding Regular Record Date to the registered Holder on such next succeeding
Regular Record Date.


Unless otherwise indicated
above, and except as provided below, if this Note is a Global Security, all
payments of interest on this Note and all principal payments hereon if this
Note is an Amortizing Note (other than interest and, in the case of Amortizing
Notes, principal payable at Maturity) will be made by check (unless otherwise
provided above, from an account at a bank located outside the United States if
such amount is payable in a Foreign Currency); provided
that, if the Holder hereof is the Holder of U.S.$10,000,000 or more in
aggregate Principal Amount of Notes of this series of like tenor and term (or a
Holder of the equivalent thereof in a Foreign Currency determined as provided
in Section 2 on the reverse hereof), such Holder shall be entitled to receive
interest payments (and principal payments, if this Note is an Amortizing Note)
in immediately available funds, but only if complete and appropriate
instructions have been received in writing by the Trustee (or any such Paying
Agent) on or prior to the applicable Regular Record Date.  Simultaneously with any election by the
Holder hereof to receive payments in respect hereof in a Foreign Currency, such
Holder may, if so entitled (as provided above), elect to 


 


3

















 


receive
such payments in immediately available funds by providing complete and
appropriate instructions to the Trustee (or any such Paying Agent), and all
such payments will be made in immediately available funds to an account
maintained by the payee with a bank located outside the United States or as
otherwise provided above.


Unless otherwise indicated
above, and except as provided below if this Note is a Global Security, payments
of principal, premium, if any, and interest payable at Maturity will be made in
immediately available funds (unless otherwise indicated above, payable to an
account at a bank located outside the United States if payable in a Foreign
Currency) upon surrender of this Note at the corporate trust office or agency
of the Trustee (or any duly appointed Paying Agent) maintained for that purpose
in the Borough of Manhattan, New York City (the “Corporate Trust Office”), provided that this Note is presented to
the Trustee (or any such Paying Agent) in time for the Trustee (or any such
Paying Agent) to make such payments in such funds in accordance with its normal
procedures.


Unless otherwise specified
above, if this Note is a Global Security, payments of interest hereon and
principal hereon if this Note is an Amortizing Note (in each case, other than
at Maturity), will be made in same-day funds in accordance with existing
arrangements between the Trustee (or any duly appointed Paying Agent) and the
Depository.  Unless otherwise specified
above, if this Note is a Global Security, any principal, premium and/or
interest payable hereon at Maturity will be paid by wire transfer in immediately
available funds to an account specified by the Depository (which account,
unless otherwise provided above, will be at a bank located outside the United
States if payable in a Foreign Currency).


The Company will pay any
administrative costs imposed by banks in making payments in immediately
available funds, but any tax, assessment or governmental charge imposed upon
payments hereunder, including, without limitation, any withholding tax, will be
borne by the Holder hereof.


References herein to “U.S.
dollars” or “U.S.$” or “$” are to the coin or currency of the United States as
at the time of payment is legal tender for the payment of public and private
debts.


Reference
is hereby made to the further provisions of this Note set forth on the reverse
hereof.  Such further provisions shall
for all purposes have the same effect as if set forth at this place.


This Note shall not be valid
or become obligatory for any purpose until the certificate of authentication
hereon shall have been signed by the Trustee under the Indenture.


 


4

















 


IN WITNESS WHEREOF, Lehman
Brothers Holdings Inc. has caused this instrument to be signed by its Chairman
of the Board, its President, its Chief Financial Officer, one of its Vice
Presidents or its Treasurer, by manual or facsimile signature under its
corporate seal, attested by its Secretary or one of its Assistant Secretaries
by manual or facsimile signature.


Dated: October 26, 2007


	
  [SEAL]

  	
   

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Assistant
  Secretary

  
							



 


 


TRUSTEE’S CERTIFICATE OF
AUTHENTICATION


This is one of the
Securities of the series designated herein referred to in the within-mentioned
Indenture.


	
  CITIBANK, N.A.

  
	
   

  	
  as Trustee

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  
				



 


 


5

















 


[REVERSE OF NOTE]


LEHMAN BROTHERS HOLDINGS
INC.

MEDIUM-TERM NOTES, SERIES I

(Fixed Rate)


Section 1.  General.  This Note is one of a duly authorized series
of Notes of the Company designated as the Medium-Term Notes, Series I (Fixed
Rate) of the Company (herein called the “Notes”).  The Notes are one of an indefinite number of
series of debt securities of the Company (collectively, the “Securities”)
issued or issuable under and pursuant to an indenture dated as of September 1,
1987, as amended and supplemented (the “Indenture”), duly executed and
delivered by the Company and Citibank, N.A., as Trustee (herein called the “Trustee”),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the holders of
the Securities.  The separate series of
Securities may be issued in various aggregate principal amounts, may mature at
different times, may bear interest (if any) at different rates, may be subject
to different redemption provisions or repayment or repurchase rights (if any),
may be subject to different sinking, purchase or analogous funds (if any), may
be subject to different covenants and Events of Default and may otherwise vary
as in the Indenture provided.


Section 2.  Currency
Exchanges and Payments.  If the
Holder elects to receive all or a portion of payments of principal of, premium,
if any, and interest on this Note, if denominated in a Foreign Currency, in
U.S. dollars, the Exchange Rate Agent specified on the face hereof or a
successor thereto (the “Exchange Rate Agent”) will convert such payments into
U.S. dollars. In the event of such an election, payment to the Holder will be
based upon the exchange rate as determined by the Exchange Rate Agent based on
the highest bid quotation in New York City received by such Exchange Rate Agent
at approximately 11:00 a.m., New York City time, on the second Business Day
preceding the applicable payment date from three recognized foreign exchange
dealers (one of which may be the Exchange Rate Agent unless such Exchange Rate
Agent is an affiliate of the Company) for the purchase by the quoting dealer of
the Foreign Currency for U.S. dollars for settlement on such payment date in
the amount of the Foreign Currency payable in the absence of such an election
to such Holder and at which the applicable dealer commits to execute a
contract. If such bid quotations are not available, such payment will be made
in the Foreign Currency. All currency exchange costs will be borne by the
holder of this Note by deductions from such payments.


Unless otherwise specified
on the face hereof, if payment hereon is required to be made in a Foreign
Currency and such currency is unavailable to the Company for making payments
thereof due to the imposition of exchange controls or other circumstances
beyond the Company’s control, or is no longer used by the government of the
country which issued such currency or for the settlement of transactions by
public institutions of or within the international banking community, then the
Company will be entitled to make payments with respect hereto in U.S. dollars
until such Foreign Currency is again available or so used.  The amount so payable on any date in such
Foreign Currency shall be converted into U.S. dollars at a rate determined by
the Exchange Rate Agent on the basis of the noon buying rate in New York City
for cable transfers in the Foreign Currency as certified for customs purposes
by the Federal Reserve Bank of New York (the “Market Exchange Rate”) for such
Foreign Currency on the second Business Day prior to such payment date, or on
such other basis as may be specified on the face hereof.  In the event such Market Exchange Rate is not
then available, the Company will be entitled to make payments in U.S. dollars
(i) if such Foreign Currency is not a composite currency, on the basis of the
most recently available Market Exchange Rate for such Foreign Currency or (ii)
if such Foreign Currency is a composite currency in an amount determined by the
Exchange Rate Agent to be the sum of the results obtained by multiplying the
number of units of each component currency of such composite currency, as of
the most recent date on which such composite currency was used, by the Market
Exchange Rate for such component currency on the second Business Day prior to
such payment date (or if such Market Exchange Rate is not then available, by
the most recently available Market Exchange Rate for such component currency,
or as otherwise specified on the face hereof). 
Any payment in respect hereof made under such circumstances in U.S.
dollars will not constitute an Event of Default under the Indenture.


If the official unit of any
component currency of a composite currency is altered by way of combination or
subdivision, the number of units of that currency as a component shall be
divided or multiplied in the same proportion. 
If two or more component currencies are consolidated into a single
currency, the amounts of those currencies as components shall be replaced by an
amount in such single currency equal to the sum of the amounts of 


 


6

















 


the
consolidated component currencies expressed in such single currency.  If any component currency is divided into two
or more currencies, the amount of that original component currency as a
component shall be replaced by amounts of such two or more currencies having an
aggregate value on the date of division equal to the amount of the former
component currency immediately before such division.


In the event of an official
redenomination of the Specified Currency or the Optional Payment Currency
(including, without limitation, an official redenomination of any such currency
that is a composite currency), the obligations of the Company to make payments
in or with reference to such currency shall, in all cases, be deemed
immediately following such redenomination to be obligations to make payments in
or with reference to that amount of redenominated currency representing the
amount of such currency immediately before such redenomination.  In no event shall any adjustment be made to
any amount payable hereunder as a result of any redenomination of any component
currency of any composite currency (unless such composite currency is itself
officially redenominated).


All determinations referred
to above made by the Exchange Rate Agent shall be at its sole discretion
(except to the extent expressly provided herein that any determination is
subject to approval by the Company) and, in the absence of manifest error,
shall be conclusive for all purposes and binding on the Holder hereof, and the
Exchange Rate Agent shall have no liability therefor.


All currency exchange costs
will be borne by the Holder hereof by deduction from the payments made hereon.


Section 3.  Redemption.  If so specified on the face hereof, the
Company may at its option redeem this Note in whole or from time to time in
part on or after the date designated as the Initial Redemption Date on the face
hereof at either a price based on a constant percentage of the Principal Amount
of this Note as specified on the face hereof or at prices declining from the
premium specified on the face hereof, if any, to 100% of the Principal Amount
hereof, together, in each case, with accrued interest to the Redemption Date.
The Company may exercise such option by causing the Trustee to mail by
first-class mail to the Holder hereof a notice of such redemption at least 30
but not more than 60 days prior to the Redemption Date.  In the event of redemption of this Note in
part only, a new Note or Notes of this series for the unredeemed portion hereof
shall be issued in the name of the Holder hereof upon the cancellation hereof
in accordance with the terms of the Indenture. Unless otherwise specified on
the face hereof, if less than all of the Notes with like tenor and terms to
this Note are to be redeemed, the Notes to be redeemed shall be selected by the
Trustee by such method as the Trustee shall deem fair and appropriate.


Section 4.  Sinking
Funds and Amortizing Notes.  Unless
otherwise specified on the face hereof or unless this Note is an Amortizing
Note, this Note will not be subject to any sinking fund.  If it is specified on the face hereof that
this Note is an Amortizing Note, the Company will make payments combining
principal and interest on the dates and in the amounts set forth in the table
appearing in Schedule I, attached to this Note. 
If this Note is an Amortizing Note, payments made hereon will be applied
first to interest due and payable on each such payment date and then to the
reduction of the Outstanding Face Amount. 
The term “Outstanding Face Amount” means, at any time, the amount of
unpaid principal hereof at such time.


Section 5.  Optional
Repayment.  If so specified on the
face hereof, this Note will be repayable prior to the Maturity Date at the
option of the Holder on the Optional Repayment Dates specified on the face
hereof at the Optional Repayment Prices specified on the face hereof, together
with accrued interest to the applicable Optional Repayment Date.  Unless otherwise specified on the face
hereof, in order for this Note to be so repaid, the Company must receive, at
least 30 but not more than 45 days prior to an Optional Repayment Date, either
(i) this Note with the form below entitled “Option to Elect Repayment” duly
completed or (ii) a telegram, telex, facsimile transmission or letter from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the United
States setting forth the name of the Holder hereof, the Face Amount hereof, the
Face Amount to be repaid, the certificate number hereof or a description of the
tenor and terms of this Note, a statement that the option to elect repayment is
being exercised thereby and a guarantee that this Note with the form below
entitled “Option to Elect Repayment” duly completed will be received by the
Paying Agent not later than five Business Days after the date of such telegram,
telex, facsimile transmission or letter and this Note and form duly completed
are received by the Paying Agent by such fifth Business Day.  Exercise of this repayment option shall be
irrevocable, except as otherwise provided under Section 6 or Section 9.  The repayment option may be exercised by the
Holder of this Note with respect to less than the Face Amount then outstanding 


 


7

















 


provided that the Face
Amount of the Note remaining outstanding after repayment is an authorized
denomination.  Upon such partial
repayment this Note shall be cancelled and a new Note or Notes for the
remaining Face Amount hereof shall be issued in the name of the Holder of this
Note.


Section 6.  Optional
Interest Reset.  If so specified on
the face hereof, the Interest Rate on this Note may be reset at the option of
the Company, in the manner set forth below (unless otherwise specified on the
face hereof), on the Optional Reset Date or Optional Reset Dates specified on
the face hereof.  The Company may
exercise such option by notifying the Trustee in writing of such exercise at
least 45 but not more than 60 days prior to an Optional Reset Date.  Not later than five Business Days after
receipt thereof, the Trustee will mail by first-class mail to the Holder of
this Note a notice (the “Reset Notice”) setting forth (i) the election of the
Company to reset the interest rate, (ii) such new interest rate and (iii) the
provisions, if any, for redemption during the period from such Optional Reset
Date to the next Optional Reset Date or, if there is no such next Optional
Reset Date, to the Maturity Date of this Note (each such period a “Subsequent
Interest Period”), including the date or dates on which or the period or
periods during which and the price or prices at which such redemption may occur
during such Subsequent Interest Period. 
The Reset Notice shall be substantially in the form of Exhibit A to this
Note.  Upon the transmittal by the
Trustee of a Reset Notice to the Holder of this Note, such new interest rate
shall take effect automatically, and, except as modified by the Reset Notice
and as described in the next paragraph, this Note will have the same terms as
prior to the transmittal of such Reset Notice.


Notwithstanding the
foregoing, not later than 20 days prior to an Optional Reset Date, the Company
may, at its option, revoke the interest rate provided for in the Reset Notice
and establish an interest rate that is higher than the interest rate provided
for in the Reset Notice for the Subsequent Interest Period commencing on such
Optional Reset Date by causing the Trustee to mail by first-class mail notice
of such higher interest rate to the Holder of this Note.  Such notice shall be irrevocable and shall be
mailed by the Trustee within five Business Days after receipt thereof.  All Notes with respect to which the interest
rate is reset on an Optional Reset Date will bear such higher interest rate for
the Subsequent Interest Period.


If the Company elects to
reset the interest rate of this Note, the Holder of this Note will have the
option to elect repayment by the Company of this Note, or any portion hereof,
on any Optional Reset Date at a price calculated with reference to the Face
Amount hereof to be repaid, plus any interest accrued to, such Optional Reset
Date.  In order to obtain repayment on an
Optional Reset Date, the Holder must follow the procedures set forth above in
Section 5 for optional repayment except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
prior to such Optional Reset Date and except that, if the Holder has tendered
this Note for repayment pursuant to the Reset Notice, the Holder may, by written
notice to the Trustee, revoke such tender for repayment until the close of
business on the tenth day prior to such Optional Reset Date; provided, however,
that if such day is not a Business Day, then such notice may be given on the
next succeeding Business Day.


Section 7.  Survivor’s
Option.  If so specified on the face
hereof, the Representative (defined below) of a deceased beneficial owner of
this Note shall have the option to elect to require repayment, in whole or from
time to time in part, of such Note following the death of the beneficial owner
(a “Survivor’s Option”). The Survivor’s Option may not be exercised unless the
Note was acquired by the beneficial owner at least six months prior to the
trustee’s receipt of written request for repayment as provided below.


If the Survivor’s Option is
applicable to a Note, upon the valid exercise of the Survivor’s Option, the
Company shall repay the Note (or portion thereof), properly tendered for
repayment by or on behalf of the person (the “Representative”) that has
authority to act on behalf of the deceased beneficial owner of a Note under the
laws of the appropriate jurisdiction (including, without limitation, the
personal representative or executor of the deceased beneficial owner or the
surviving joint owner of the deceased beneficial owner) at a price equal to
100% of the principal amount of the deceased beneficial owner’s beneficial
interest in such Note plus accrued interest to the date of such repayment,
subject to the following limitations:


1.               The Company may, in its sole discretion,
limit the aggregate principal amount of Medium-Term Notes, Series I, without
regard to series or tranches, as to which exercises of the Survivor’s Option
shall be accepted from all deceased beneficial owners in any calendar year (the
“Annual Put Limitation”) to an amount equal to the greater of $1,000,000 or
1.0% of the aggregate principal 


 


8

















 


amount of such notes,
without regard to series or tranches, as of the end of the most recent calendar
year, and (ii) limit the aggregate principal amount of such notes issued prior
to the date hereof, without regard to series or tranches, as to which exercises
of the Survivor’s Option will be accepted in any calendar year from the authorized
representative for any individual deceased beneficial owner to $125,000 (the “Individual
Put Limitation”).


2.               The Company shall not make principal
repayments pursuant to exercise of the Survivor’s Option in amounts that are
less than the minimum authorized denomination, and, in the event that any
partial exercise of the Survivor’s Option or the limitations described in the
preceding sentence would result in the partial repayment of any Note, the
principal amount of such Note remaining Outstanding after repayment must be at
least the minimum authorized denomination.


3.               A valid exercise of the Survivor’s Option
with respect to any Note (or portion thereof) may not be withdrawn.


Each Note (or portion
thereof) that is tendered pursuant to a valid exercise of the Survivor’s Option
shall be accepted in the order of all such exercises that are received by the
Trustee, except for any Note (or portion thereof) the acceptance of which would
contravene (i) the Annual Put Limitation, if applied, or (ii) the Individual
Put Limitation, if applied, with respect to the relevant individual deceased
beneficial owner. If, as of the end of any calendar year, the aggregate
principal amount of Notes (or portions thereof) that have been tendered
pursuant to the valid exercise of the Survivor’s Option during such year has
exceeded either the Annual Put Limitation, if applied, or the Individual Put
Limitation, if applied, for such year, any exercise(s) of the Survivor’s Option
with respect to Notes (or portions thereof) not accepted during such calendar
year because such acceptance would have contravened either such limitation, if
applied, shall be deemed to be tendered in the following calendar year in the
order all such Notes (or portions thereof) were originally tendered. Any Note
(or portion thereof) accepted for repayment pursuant to exercise of the
Survivor’s Option shall be repaid on the first Interest Payment Date that
occurs 20 or more calendar days after the date of such acceptance. In the event
that a Note (or any portion thereof) tendered for repayment pursuant to a valid
exercise of the Survivor’s Option is not accepted, the Trustee shall deliver a
notice by first-class mail to the registered holder thereof, at its last known
address as indicated in the Security Register, that states the reason such Note
(or portion thereof) has not been accepted for payment.


In order for a Survivor’s
Option to be validly exercised with respect to any Note (or portion thereof),
the Trustee must receive from the Representative (i) a written request for
repayment signed by the Representative, and such signature must be guaranteed
by a firm that is a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Program or the Stock
Exchange Medallion Program, (ii) appropriate evidence satisfactory to the
Trustee that (A) the deceased was the beneficial owner of such Note at the time
of death and the interest in such Note was acquired by the deceased beneficial
owner at least six months prior to the Trustee’s receipt of the request for
repayment, (B) the death of such beneficial owner has occurred, and the date of
such death, and (C) the Representative has authority to act on behalf of the
deceased beneficial owner, (iii) if the interest in such Note is held by a
nominee or trustee of, custodian for, or another person in a similar capacity
to, the deceased beneficial owner, evidence satisfactory to the Trustee from
such nominee, trustee, custodian or similar person attesting to the deceased’s
beneficial ownership in such Note, (iv) tax waivers and such other instruments
or documents that the Trustee reasonably requires in order to establish the
validity of the beneficial ownership of the Notes and the claimant’s
entitlement to payment, and (v) any additional information the Trustee requires
to evidence satisfaction of any conditions to the exercise of such Survivor’s
Option or to document beneficial ownership or authority to make the election
and to cause the repayment of such Note. Subject to the Issuer’s right
hereunder to impose an Annual Put Limitation and an Individual Put Limitation,
all questions as to the eligibility or validity of any exercise of the Survivor’s
Option shall be determined by the Trustee, in its sole discretion, which determination
shall be final and binding on all parties.


The death of a person
holding a beneficial ownership interest in a Note: (a) with any person in a
joint tenancy with right of survivorship; or (b) with his or her spouse in
tenancy by the entirety, tenancy in common, as community property or in any
other joint ownership arrangement, shall be deemed the death of a beneficial
owner of that note, and the entire principal amount of the Note held in this
manner shall be subject to repayment by the Issuer upon valid exercise of the
Survivor’s Option; provided, however, that the death of a person
holding a beneficial ownership interest in a Note as tenant in common with a
person other than his or her spouse shall be deemed the 


 


9

















 


death
of a beneficial owner only with respect to the such deceased person’s interests
in the Note, and only the deceased beneficial owner’s percentage interest in
the principal amount of the Note shall be subject to repayment.  If the ownership interest in a Note is held
by a nominee for a beneficial owner or by a custodian under the Uniform Gifts
to Minors Act or Uniform Transfer to Minors Act, or by a trustee of a trust
that is wholly revocable by the beneficial owner, or by a guardian or committee
for a beneficial owner, the death of the beneficial owner of that Note shall
constitute the death of the beneficial owner for purposes of the Survivor’s
Option, if the beneficial ownership interest can be established to the
satisfaction of the Trustee.  In these
cases, the death of the nominee, custodian, trustee, guardian or committee
shall not be deemed the death of the beneficial owner of such Note for purposes
of the Survivor’s Option.


Section
8.  OID Notes.  If this
Note is an OID Note, the amount payable in the event of redemption by the
Company, repayment at the option of the Holder or acceleration of Maturity
shall be the Amortized Face Amount of this Note as of the date of such
redemption, repayment or declaration of acceleration rather than the Face
Amount hereof.  The “Amortized Face
Amount” of this Note shall be the amount equal to (a) the Issue Price (as set
forth on the face hereof) plus (b) the original issue discount amortized from
the Issue Date to the date as of which the Amortized Face Amount is calculated,
which amortization shall be calculated using the “interest method” (computed in
accordance with generally accepted accounting principles in effect on such
date) but in no event shall the Amortized Face Amount of this Note exceed the
Face Amount.


Section 9.  Dual
Currency Notes.  If it is specified
on the face hereof that this Note is a Dual Currency Note, the Company has a
one time option, exercisable on any one of the Option Election Dates specified
on the face hereof in whole, but not in part, with respect to all Dual Currency
Notes issued on the same day and having the same terms as this Note (this “Tranche”),
of thereafter making all payments of principal, premium, if any, and interest
(which payments would otherwise be made in the Specified Currency of such
Notes) in the Optional Payment Currency specified on the face hereof.  If the Company makes such an election, the
amount of Optional Payment Currency payable in respect hereof shall be
determined by the Exchange Rate Agent by converting the amount of Specified
Currency that would otherwise be payable into the Optional Payment Currency at
the Designated Exchange Rate specified on the face hereof.


The Company may exercise
such option by notifying the Trustee of such exercise on or prior to the Option
Election Date.  The Trustee will mail by
first-class mail to each holder of a Note of this Tranche a notice of such
election within five Business Days of the Option Election Date which shall state
(i) the first date, whether an Interest Payment Date and/or the Maturity Date,
on which scheduled payments in the Optional Payment Currency will be made and
(ii) the Designated Exchange Rate.  Any
such notice by the Company, once given, may not be withdrawn.


If this Note is a Dual
Currency Note, unless otherwise specified on the face hereof and
notwithstanding any prior election made by the Company, the amount payable
hereon in the event of any optional redemption by the Company, any repayment at
the option of the Holder, any acceleration of the Maturity of this Note or
other prepayment of this Note prior to the Maturity Date shall be an amount
equal to the Principal Amount hereof otherwise due and payable plus accrued
interest to but excluding the date of redemption, repayment, acceleration or
other prepayment minus the Total Option Value multiplied by a fraction, the
numerator of which is the Principal Amount hereof and the denominator of which
is the aggregate Principal Amount of all Dual Currency Notes of this Tranche.  In no event will such payment be less than
zero. Notwithstanding any prior election made by the Company, such payment
shall be made in the Specified Currency unless otherwise provided on the face
hereof.


The term “Total Option Value”
means, with respect to any Dual Currency Note on any date, an amount
(calculated as of such date by the Option Value Calculation Agent) equal to the
sum of the Option Values (calculated as of such date by the Option Value
Calculation Agent) for all Interest Payment Dates occurring after the date of
calculation up to and including the Maturity Date.  The term “Option Value” means, with respect
to an Interest Payment Date or the Maturity Date, the amount calculated by the
Option Value Calculation Agent to be the arithmetic average of the prices quoted
on the date of calculation by three reference banks (which banks shall be
selected by the Option Value Calculation Agent and shall be reasonably
acceptable to the Company) for the right on the Option Election Date
immediately preceding such Interest Payment Date or Maturity Date to purchase
for value on such Interest Payment Date or Maturity Date from such reference
banks (A) the aggregate amount of the Specified Currency due on such Interest
Payment Date or Maturity Date with respect to all of the Dual Currency


 


10
















 


Notes
of this Tranche in exchange for (B) the amount of the Optional Payment Currency
that would be received if the amount in clause (A) were converted into the
Optional Payment Currency at the Designated Exchange Rate.


All determinations referred
to above made by the Exchange Rate Agent or the Option Value Calculation Agent
shall be at their sole discretion (except to the extent expressly provided
herein that any determination is subject to approval by the Company) and, in
the absence of manifest error, shall be conclusive for all purposes and binding
on the Holder hereof, and neither the Exchange Rate Agent nor the Option Value
Calculation Agent shall have any liability therefor.


Section 10.  Extension
of Maturity Notes.  If it is
specified on the face hereof that this Note is an Extension of Maturity Note,
the Company has the option to extend the Maturity Date hereof for the number of
Extension Periods set forth on the face hereof, each of which Extension Periods
shall be a period of from one to five whole years.  Unless otherwise specified on the face
hereof, the following procedures shall apply if this Note is an Extension of
Maturity Note.


The Company may exercise its
option by notifying the Trustee of such exercise at least 45 but not more than
60 days prior to the Maturity Date hereof in effect prior to the exercise of
such option (the “Original Stated Maturity”). 
Not later than five Business Days after receipt thereof, the Trustee
will mail to the Holder a notice (the “Extension Notice”), first class, postage
prepaid, setting forth (i) the election of the Company to extend the Maturity
Date, (ii) the new Maturity Date, (iii) the Interest Rate applicable to the
Extension Period and (iv) the provisions, if any, for redemption during the
Extension Period, including the date on which or the period or periods during
which and the price at which such redemption may occur during the Extension
Period.  Upon the mailing by the Trustee
of an Extension Notice to the Holder, the Maturity Date hereof shall be extended
automatically, and, except as modified by the Extension Notice and as described
in the next paragraph, this Note will have the same terms as prior to the
mailing of such Extension Notice.


Notwithstanding the
foregoing, not later than 20 days prior to the Original Stated Maturity hereof,
the Company may, at its option, revoke the interest rate provided for in the
Extension Notice and establish a higher interest rate for the Extension Period
by causing the Trustee to mail notice of such higher interest rate, first
class, postage prepaid, to the Holder. 
Such notice shall be irrevocable and shall be mailed by the Trustee
within three Business Days after receipt thereof.  This Note will bear such higher interest rate
for the Extension Period, whether or not tendered for repayment.


If the Company extends the
Maturity Date of this Note, the Holder will have the option to elect repayment
by the Company of this Note, or any portion hereof, on the Original Stated
Maturity at a price calculated with reference to the Face Amount hereof to be
repaid plus any accrued interest to such date. 
In order for this Note to be so repaid on the Original Stated Maturity,
the Holder must follow the procedures set forth in Section 5 hereof for
optional repayment, except that the period for delivery of this Note or
notification to the Trustee shall be at least 25 but not more than 35 days
prior to the Original Stated Maturity and except that the Holder may, by
written notice to the Trustee, revoke any such tender for repayment until the
close of business on the tenth day prior to the Original Stated Maturity; provided, however,
that if such day is not a Business Day, then such notice may be given on the
next succeeding Business Day.


Section 11.  Extendible
Notes.  If it is specified on the
face hereof that this Note is an Extendible Note, this Note will mature on the
Initial Maturity Date specified on the face hereof unless the Maturity of all
or any portion of this Note is extended in accordance with the procedures
described below.


On the Interest Payment Date
occurring in the sixth month (unless a different Special Election Interval is
specified on the face hereof) prior to the Initial Maturity Date hereof (the “Initial
Maturity Extension Date”) and on the Interest Payment Date occurring in each
sixth month (or the last month of each Special Election Interval) after such
Initial Maturity Extension Date (each, together with the Initial Maturity
Extension Date, a “Maturity Extension Date”), the Maturity of this Note will be
extended to the Interest Payment Date occurring in the twelfth month (or, if a
Special Election Interval is specified on the face hereof, the last month in a
period equal to twice the Special Election Interval) after such Maturity
Extension Date, unless the Holder elects to terminate the automatic extension
of the Maturity hereof or any portion hereof as described below.


 


11

















 


If the Holder elects to
terminate the automatic extension of the Maturity of any portion of the
principal amount of this Note during the specified period prior to any Maturity
Extension Date, such portion will become due and payable on the Interest
Payment Date occurring in the sixth month (or the last month in the Special
Election Interval) after such Maturity Extension Date (the “Extended Maturity
Date”).


The Holder may elect to
terminate the automatic extension of the Maturity of this Note, or if so
specified above, any portion hereof, by delivering a notice to such effect to
the Trustee (or any duly appointed Paying Agent) at the Corporate Trust Office
not less than 15 nor more than 30 days prior to such Maturity Extension Date
(unless another period is specified on the face hereof as the “Special Election
Period”).  Such election will be irrevocable
and will be binding upon each subsequent Holder of this Note.  An election to terminate the automatic
extension of the Maturity of this Note may be exercised with respect to less
than the entire Face Amount hereof only if so specified on the face hereof and
only in such Face Amount, or any integral multiple in excess thereof, as is
specified on the face hereof. Notwithstanding the foregoing, the Maturity of
this Note will not be extended beyond the Maturity Date specified on the face
hereof.


Unless otherwise specified
above, any such election to terminate will be effective only if this Note, with
the “Option to Elect Termination of Automatic Extension” included herein duly
executed, is presented to the Trustee (or any duly appointed Paying Agent)
simultaneously with notice of such election (or, in the event notice of such
election, together with a guarantee of delivery within five Business Days, is
transmitted on behalf of the Holder from a member of a national securities
exchange, the National Association of Securities Dealers, Inc. or a commercial
bank or trust company in the United States, within five Business Days of the
date of such notice). As soon as practicable following receipt of this Note the
Trustee (or any duly appointed Paying Agent) shall issue in exchange herefor in
the name of the Holder (i) a Note, in a face amount equal to the face amount of
this Note for which the election to terminate the automatic extension of
Maturity was exercised, with terms identical to those specified herein (except
for the Issue Date and the Initial Interest Rate and except that such Note
shall have a fixed, non-extendable Maturity on the Extended Maturity Date) and
(ii) if such election is made with respect to less than the full Face Amount
hereof, a replacement Renewable Note, in a face amount equal to the Face Amount
of this Note for which no election was made, with terms identical to this Note.


Section 12.  Principal
Amount For Indenture Purposes.  For
the purpose of determining whether Holders of the requisite amount of Notes
outstanding under the Indenture have made a demand, given a notice or waiver or
taken any other action, the outstanding principal amount of this Note will be
deemed to be the Principal Amount, provided, however, if this Note is an OID Note,
the outstanding principal amount of this Note will be deemed to be the amount
of the principal thereof that would be due and payable as of the date of such
determination upon a declaration of acceleration of the maturity thereof.


Section 13.  Modification
and Waivers.  The Indenture contains
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than 66-2/3% in aggregate principal amount of each series
of the Securities at the time Outstanding to be affected, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the holders
of the Securities of all such series; provided, however,
that no such supplemental indenture shall, among other things, (i) extend the
fixed maturity of any Security, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon or reduce any
premium payable on redemption, or make the principal thereof, or premium, if
any, or interest thereon payable in any coin or currency other than that
hereinabove provided, without the consent of the holder of each Security so
affected, or (ii) change the place of payment on any Security, or impair the
right to institute suit for payment on any Security, or reduce the aforesaid
percentage of Securities, the holders of which are required to consent to any
such supplemental indenture, without the consent of the holders of each
Security so affected.  It is also
provided in the Indenture that, prior to any declaration accelerating the
Maturity of any series of Securities, the holders of a majority in aggregate
principal amount of the Securities of such series Outstanding may on behalf of
the holders of all the Securities of such series waive any past default or
Event of Default under the Indenture with respect to such series and its
consequences, except a default in the payment of interest, if any, on or the
principal of, or premium if any, on any of the Securities of such series, or in
the payment of any sinking fund installment or analogous obligation with
respect to Securities of such series. 
Any such consent or waiver by the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future holders and 


 


12

















 


owners of this Note and
any Notes which may be issued in exchange or substitution herefor, irrespective
of whether or not any notation thereof is made upon this Note or such other
Notes.


Section 14.  Obligations
Unconditional.  No reference herein
to the Indenture and no provisions of this Note or of the Indenture shall alter
or impair the obligation of the Company, which is absolute and unconditional,
to pay the principal of, premium, if any, and interest, if any, on this Note at
the place, at the respective times, at the rate, and in the coin or currency
herein prescribed.


Section 15.  Defeasance.  The Indenture contains provisions for the
discharge of the Indenture and defeasance at any time of the indebtedness on
this Note upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Note.


Section 16.  Authorized
Form and Denominations.  The Notes of
this series are issuable in registered form, without coupons.  Unless otherwise set forth on the face
hereof, Notes denominated in U.S. dollars will be issued in Face Amount
denominations of U.S.$100,000 and any integral multiple of U.S.$1,000 in excess
thereof.  Notes denominated in a Foreign
Currency will be issued in the denomination or denominations set forth on the
face hereof.  Each Note will be issued
initially as either a Global Security or a Certificated Note, at the option of
the holders thereof, either at the office or agency to be designated and
maintained by the Company for such purpose in the Borough of Manhattan, New
York City, pursuant to the provisions of the Indenture or at any of such other
offices or agencies as may be designated and maintained by the Company for such
purpose pursuant to the provisions of the Indenture, and in the manner and
subject to the limitations provided in the Indenture, but without the payment
of any service charge, except for any tax or other governmental charges imposed
in connection therewith.  Notes of this
series are exchangeable for a like aggregate Face Amount of Notes of this
series of a different authorized denomination, except that Global Securities
will not be exchangeable for Certificated Notes.


Section 17.  Registration
of Transfer.  As provided in the
Indenture and subject to certain limitations as therein set forth, the transfer
of this Note is registrable in the Security Register, upon surrender of this Note
for registration of transfer, at the Corporate Trust Office or agency in a
Place of Payment for this Note, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar requiring such written instrument of transfer duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of this series, of authorized denominations and for the same
aggregate Face Amount, will be issued to the designated transferee or
transferees.


If this Note is a Global
Security and if at any time the Depository notifies the Company that it is
unwilling or unable to continue as Depository or if at any time the Depository
shall no longer be eligible under the Indenture, the Company shall appoint a
successor Depository.  If a successor
Depository for the Securities of such series is not appointed by the Company
within 90 days after the Company receives such notice or becomes aware of such
ineligibility, the Company will issue, and the Trustee will authenticate and
deliver, Notes in definitive form in an aggregate Face Amount equal to the Face
Amount hereof.


No service charge shall be
made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith.


Prior to due presentment of
this Note for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the person in whose name this Note is
registered as the owner hereof for all purposes, and neither the Company nor
the Trustee nor any agent of the Company or of the Trustee shall be affected by
any notice to the contrary.


Section 18.  Events
of Default.  If an Event of Default
with respect to Notes of this series shall occur and be continuing, the
principal of the Notes of this series may be declared due and payable in the
manner and with the effect provided in the Indenture.  In the event that this Note is an OID Note or
a Dual Currency Note, the amount of principal of this Note that becomes due and
payable upon such acceleration shall be equal to the amount calculated as set
forth in Section 7 or Section 8, respectively, hereof.  Upon payment (i) of the aggregate applicable
amounts of principal of the Notes of this series so declared due and payable
and (ii) of interest on any overdue principal and overdue interest (in each
case to the extent that the payment of such interest shall be legally 


 


13

















 


enforceable), all of the
Company’s obligations in respect of the payment of the principal of and
interest, if any, on the Notes of this series shall terminate.


Section 19.  No
Recourse Against Certain Persons.  No
recourse for the payment of the principal of, premium, if any, or interest on
this Note, or for any claim based hereon or otherwise in respect hereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
the Indenture or any Indenture supplemental thereto or in any Note, or because
of the creation of any indebtedness represented thereby, shall be had against
any incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any assessment or
penalty or otherwise, all such liability being, by the acceptance hereof and as
part of the consideration for the issue hereof, expressly waived and released.


Section 20.  Defined
Terms.  All terms used but not
defined in this Note are used herein as defined in the Indenture.


Section 21.  GOVERNING
LAW.  THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 


 


14

















 


OPTION TO ELECT REPAYMENT


The undersigned owner of
this Note hereby irrevocably elects to have the Company repay the Face Amount
of this Note or portion hereof below designated at (i) the Optional Repayment
Percentage multiplied by the Principal Amount of this Note to be repaid in
respect of such Face Amount plus accrued interest to the Optional Repayment
Date, if this Note is to be repaid pursuant to the Optional Repayment provision
described in Section 5 hereof, or (ii) 100% of the Principal Amount of this
Note to be repaid in respect of such Face Amount plus accrued interest to the
Optional Reset Date, if this Note is to be repaid pursuant to the Optional
Interest Reset provision described in Section 6 hereof or the Extension of
Maturity Notes provision described in Section 9 hereof.  Any such election is irrevocable except as
provided in Section 6 or Section 9 hereof.


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
  Sign exactly as name appears on the front of 

  
	
   

  	
   

  	
  this Note [SIGNATURE GUARANTEED - required

  
	
   

  	
   

  	
  only if Notes are to be issued and delivered 

  
	
   

  	
   

  	
  to other than the registered Holder]

  
	
   

  	
   

  	
   

  
	
  Face Amount to be repaid, if amount to be repaid is less

  	
   

  	
  Fill in for registration of Notes if to be issued otherwise

  
	
  than the Face Amount of this Note (Face Amount

  	
   

  	
  than to the registered Holder:

  
	
  remaining must be an authorized denomination)

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Please print name and address

  
	
   

  	
   

  	
   

  	
     including zip code)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SOCIAL SECURITY OR OTHER TAXPAYER ID 

  
	
   

  	
   

  	
  NUMBER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
												



 


 


15

















 


OPTION TO ELECT TERMINATION
OF AUTOMATIC EXTENSION


The undersigned owner of
this Note hereby irrevocably elects to terminate the automatic extension of
this Note or of the portion of the Face Amount of this Note below
designated.  Any such election is
irrevocable and will be binding on any subsequent Holder hereof.


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
  Sign exactly as name appears on the front of 

  
	
   

  	
   

  	
  this Note [SIGNATURE GUARANTEED - required 

  
	
   

  	
   

  	
  only if Notes are to be issued and delivered 

  
	
   

  	
   

  	
  to other than the registered Holder]

  
	
   

  	
   

  	
   

  
	
  Face Amount to be terminated, if amount to be 

  	
   

  	
  Fill in for registration of Notes if to be issued 

  
	
  terminated is less than the Face Amount of this Note 

  	
   

  	
  otherwise than to the registered Holder:

  
	
  (such Face Amount must be an authorized 

  	
   

  	
   

  
	
  denomination)

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Please print name and address

  
	
   

  	
   

  	
   

  	
     including zip code)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SOCIAL SECURITY OR OTHER TAXPAYER

  
	
   

  	
   

  	
  ID NUMBER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
												



 


16

















 


ABBREVIATIONS


The following abbreviations,
when used in the inscription on the face of this instrument, shall be construed
as though they were written out in full according to applicable laws or
regulations:


	
   

  	
  TEN COM

  	
  –

  	
  as tenants in common

  
	
   

  	
  TEN ENT

  	
  –

  	
  as tenant by the entireties

  
	
   

  	
  JT TEN

  	
  –

  	
  as joint tenants with right of survivorship
  

  
	
   

  	
   

  	
   

  	
  and not as tenants in common

  
	
   

  	
  UNIF GIFT

  	
   

  	
   

  
	
   

  	
  MIN ACT

  	
  –

  	
   

  	
  Custodian

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Cust)

  	
   

  	
  (Minor)

  	
   

  
	
   

  	
   

  	
   

  	
  Under Uniform Gifts to Minors Act

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (State)

  	
   

  
	
   

  
	
  Additional abbreviations may also be used
  though not in the above list.

  



 


FOR VALUE RECEIVED, the
undersigned hereby sell(s), assign(s) and transfer(s) unto


	
   

  
	
  PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

  
	
   

  
	
   

  
	
  Please print or type name and address, including zip code of assignee

  
	
   

  
	
   

  
	
  the within Note of LEHMAN BROTHERS HOLDINGS INC. and all rights
  thereunder and does hereby irrevocably 

  
	
  constitute and appoint

  	
   

  	
  Attorney to transfer the

  
	
  said Note on the books of the within-named Company, with full power
  of substitution in the premises.

  
	
   

  
	
  Dated:

  
	
   

  
	
  SIGNATURE GUARANTEED:

  	
   

  	
   

  
	
   

  	
  NOTICE:  The signature to this 

  
	
   

  	
  assignment must correspond with the 

  
	
   

  	
  name as it appears upon the face of 

  
	
   

  	
  the within Note in every particular, 

  
	
   

  	
  without alteration or enlargement or 

  
	
   

  	
  any change whatsoever.

  
						



 


17
















 


SCHEDULE I


 


Amortization Table


	
  Date

  	
   

  	
  Payment

  



 

















EXHIBIT A


 


RESET NOTICE


LEHMAN BROTHERS HOLDINGS INC.


Medium-Term Notes, Series I


(Fixed Rate)


CUSIP No.                   


Registered Nos.      -      


 


LEHMAN BROTHERS HOLDINGS
INC., a corporation duly organized and existing under the laws of the State of
Delaware (the “Company”), is the issuer of the above-referenced Notes (the “Notes”).  Capitalized terms used herein and not defined
are used as defined in the Notes.


The Company hereby elects to
reset the Interest Rate set forth on the face of the Notes.  On and after                            (1),
the Interest Rate shall be                                 .


Each Holder of a Note has
the option to elect repayment by the Company of such Note, or any portion
thereof, on any Optional Reset Date pursuant to the terms of such Note.  The Notes may be repaid on the dates and at
the prices set forth below:


	
  Date

  	
   

  	
  Redemption
  Price

  



 


IN WITNESS WHEREOF, Lehman
Brothers Holdings Inc. has caused this Reset Notice to be signed by its
Chairman of the Board, its President, its Vice Chairman, its Chief Financial
Officer, one of its Vice Presidents or its Treasurer and to be attested by its
Secretary or one of its Assistant Secretaries.


	
  Dated:

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 


 


 






(1)           Insert
applicable Optional Reset Date.