Exhibit
4.04


 


CUSIP NO. 5252M0AT4


ISIN NO. US5252M0AT41


 


	
  REGISTERED

  	
   

  	
  FACE AMOUNT: $2,000,000

  
	
  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:  $2,000,000

  

  ISSUE DATE: November 14, 2007

  

  MATURITY DATE: November 16, 2037

  

  INTEREST RATE: 7.00%            

  

  SPREAD: N/A

  

  SPREAD MULTIPLIER: N/A

  

  MAXIMUM INTEREST RATE: N/A

  

  MINIMUM INTEREST RATE: N/A

  

  INTEREST PAYMENT DATES: Semi-annually on May 16 and November 16, commencing
  on May 16, 2008

  

  REGULAR RECORD DATES: Fifteen

  calendar days immediately preceding the

  interest payment date.

  

  EXCHANGE RATE AGENT: N/A

  

  DEPOSITORY: The Depository Trust Company

  

  DUAL CURRENCY NOTE:

  o YES   
  x NO

  

  OPTION ELECTION DATES: N/A

  

  OPTIONAL PAYMENT CURRENCY: N/A

  

  DESIGNATED EXCHANGE RATE: N/A

  

  OPTION VALUE CALCULATION AGENT: 

  N/A

  	
  OPTION TO RECEIVE PAYMENTS
  IN 

  THE SPECIFIED CURRENCY: 

  o YES   
  x NO 

  

  SPECIFIED CURRENCY: N/A

  

  BUSINESS DAY: New York

  

  AMORTIZING NOTE:
 o YES   
  x NO

  

  SINKING FUND: N/A

  

  OID NOTE:

  o YES   
  x NO

  

  AUTHORIZED DENOMINATIONS:

  $1,000/$1,000

  

  EXTENSION OF MATURITY NOTE:

  o YES   
  x NO

  

  EXTENSION PERIOD: N/A

  

  NUMBER OF EXTENSION PERIODS: N/A

  

  OPTION TO ELECT REPAYMENT:
 o YES   
  x NO

  

  OPTIONAL REPAYMENT DATES: N/A

  

  SURVIVOR’S OPTION: 

  
 x YES 
  o NO

  	
  OPTIONAL REPAYMENT PRICES:
  N/A

  

  OPTIONAL INTEREST RATE RESET:

  o YES   
  x NO

  

  OPTIONAL RESET DATES: N/A

  

  OPTIONAL REDEMPTION:

  [  ] YES    [X] NO 

  INITIAL REDEMPTION DATE: N/A

  

  INITIAL REDEMPTION 

  PERCENTAGE:  N/A 

  

  APPLICABILITY OF ANNUAL

  REDEMPTION

  PERCENTAGE REDUCTION:
 o YES   
  x NO

  If yes, state Annual Percentage

  Reduction:     %

  

  EXTENDIBLE NOTE:
 o YES   
  x NO

  

  INITIAL MATURITY DATE: N/A

  

  SPECIAL ELECTION INTERVAL: N/A

  

  RENEWABLE IN PART:
 o YES   
  x NO

  

  AUTHORIZED RENEWABLE AMOUNTS: N/A

  

  SPECIAL ELECTION PERIOD: 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 May 16 and November 16 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:
  November 14, 2007

  	
   

  
	
   

  	
   

  
	
  [SEAL]

  	
  LEHMAN
  BROTHERS HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Andrew M.W. Yeung

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Cindy Buckholz

  
	
   

  	
   

  	
  Title:

  	
  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 than the Face Amount of this
  Note (Face Amount remaining must be an authorized denomination)

  	
   

  	
  Fill in for
  registration of Notes if to be issued otherwise than to the registered
  Holder:

  
	
   

  	
   

  	
  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 terminated is less than the Face Amount of
  this Note (such Face Amount must be an authorized denomination)

  	
   

  	
  Fill in for
  registration of Notes if to be issued otherwise than to the registered
  Holder:

  
	
   

  	
   

  	
  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.