Exhibit
4.18


 


	
  REGISTERED

  	
   

  	
  PRINCIPAL
  AMOUNT:

  
	
  No. R-

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  CUSIP NO.

  	
   

  	
  ISIN:

  
				



 


LEHMAN BROTHERS HOLDINGS INC.


MEDIUM-TERM NOTE, SERIES I


RANGERSSM


RISK ADJUSTING EQUITY RANGE SECURITIESSM


PERFORMANCE LINKED TO THE VALUE OF A COMMON
STOCK


 


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 (55 WATER STREET, NEW YORK, NEW
YORK) 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 (A
“CERTIFICATED NOTE”), 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:     % of the Principal

Amount


 


AGGREGATE PRINCIPAL 

AMOUNT:  $


 


AUTHORIZED DENOMINATIONS:


$[1,000] and integral
multiples thereof


 


ISSUE DATE:


 


STATED MATURITY DATE:


 


VALUATION DATE:


 


COUPON RATE:    % per annum


 


ACCRUE TO PAY:


o YES  o NO


 


COUPON PAYMENT DATES:


and      of each year, beginning on


 


REGULAR RECORD DATES:

calendar days prior to each Interest

Payment Date


 


INITIAL VALUE: $


 


THRESHOLD VALUE:


 


INDEX STOCK ISSUER:


 


INDEX STOCK:


 


INITIAL MULTIPLIER:


 


DETERMINATION PERIOD:

Business Days


 


DEPOSITORY: [The
Depository Trust

Company]


 


Currency Exchanges and Payments


 


SPECIFIED CURRENCY:


 


EXCHANGE RATE AGENT:


 


Redemption


 


REDEEMABLE NOTE:


o YES  o NO


 


INITIAL REDEMPTION DATE:


 


REDEMPTION NOTICE PERIOD:

Business Days


 


Sinking Funds and Amortizing Notes


 


SINKING FUND:


 


AMORTIZING NOTE:


o YES  o NO


 


Optional Repurchase


 


OPTIONAL REPURCHASE:


o YES  o NO


 


OPTIONAL REPURCHASE
CUTOFF 

PERIOD:       Business Days


 


Stock Settlement


 


STOCK SETTLEMENT:


o YES  o NO


 


AT MATURITY:


o YES  o NO


 


AT
OPTION OF THE COMPANY:


o YES  o NO


 


AT
OPTION OF THE HOLDER:


o YES  o NO


 


MANDATORY:


o YES  o NO


 


UPON
REPURCHASE:


o YES  o NO


 


AT
OPTION OF THE COMPANY:


o YES  o NO


 


AT
OPTION OF THE HOLDER:


o YES  o NO


 


MANDATORY:


o YES  o NO


 


Optional Interest Reset


 


OPTIONAL INTEREST RATE
RESET:


o YES  o NO


 


OPTIONAL RESET DATES:


 


Discount Notes


 


DISCOUNT NOTE:


o YES  o NO


 


TOTAL AMOUNT OF DISCOUNT:


 


YIELD TO MATURITY:


 


INITIAL ACCRUAL PERIOD
DISCOUNT:


 


DISCOUNT NOTE PREPAYMENT
AMOUNT:


 


Dual Currency Notes


 


DUAL CURRENCY NOTE:


o YES  o NO


 


OPTIONAL PAYMENT


CURRENCY:


 


DESIGNATED EXCHANGE


RATE:


 


OPTION ELECTION DATES:


 


OPTION TO RECEIVE
PAYMENTS


IN THE SPECIFIED
CURRENCY:


o YES  o NO


 


OPTION VALUE CALCULATION


AGENT:


 


DUAL CURRENCY NOTE
PREPAYMENT

AMOUNT:


 


Extension of Maturity Notes


 


EXTENSION OF MATURITY
NOTE:


o YES  o NO


 


EXTENSION PERIOD:


 


NUMBER OF EXTENSION
PERIODS:


 


Extendible Notes


 


EXTENDIBLE NOTE:


o YES  o NO


 


INITIAL MATURITY DATE:


 


SPECIAL ELECTION
INTERVAL:


 


EXTENDIBLE IN PART:


o YES  o NO


 


AUTHORIZED EXTENDIBLE
AMOUNTS:


 


SPECIAL ELECTION PERIOD:


 


Miscellaneous


 


OTHER TERMS:


 

















 


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 Stated Maturity Date for each $1,000 principal
amount of the Notes represented hereby not previously repurchased or redeemed,
an amount equal to the Maturity Payment Amount and, if so specified above, to
make coupon payments on the principal amount hereof from the Issue Date
specified above or from the most recent Coupon Payment Date specified above to
which coupon payments have been paid or duly provided for at the Coupon Rate
specified above until the amount due on the Stated Maturity Date, the Optional
Repurchase Date or the Redemption Date, as the case may be, is paid in full or
made available for payment and (to the extent that the payment of such coupon
payments shall be legally enforceable) at such rate per annum on any overdue
Payment Amount, premium, if any, and overdue installment of coupon payments.


 


Unless
otherwise specified above, and except as provided in Section 9 on the reverse
hereof if this Note is a Dual Currency Note, payments of the applicable Payment
Amount, premium, if any, and coupon payments 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.


 


Except
as provided in the following paragraph, the Company will make coupon payments
on the Coupon Payment Dates specified above, commencing with the first Coupon
Payment Date next succeeding the Issue Date, and on the applicable Principal
Payment Date; provided that any payment of the Payment Amount, premium,
if any, or coupon payments to be made on any Coupon Payment Date or on the
Principal Payment Date that is not a Business Day shall be made on the next
succeeding Business Day, unless the next succeeding Business Day falls in the
next calendar month, in which case payment will be made on the first preceding
Business Day, in each case with the same force and effect as if made on such
Coupon Payment Date or such Principal Payment Date, as the case may be, and,
unless Accrue to Pay is specified on the face of this Note, no additional
coupon payments shall accrue as a result of such delayed payment; provided
further that if the applicable Principal Payment Date is postponed due
to a Market Disruption Event, coupon payments will continue to accrue during
the period from the


 


3

















 


originally scheduled Principal Payment Date
to but excluding the postponed Principal Payment Date. If Accrue to Pay is
specified on the face of this Note, any coupon payment on the Coupon Payment
Date will include coupon payments accrued through the day before the Coupon
Payment Date. Each coupon payment hereon shall include coupon payments accrued
through the day before the Coupon Payment Date or applicable Principal Payment
Date, as the case may be. Unless otherwise specified above, coupon payments on
this Note will be computed on the basis of a 360-day year of twelve 30-day
months or in the case of an incomplete month, the number of days elapsed. In no
event shall the coupon 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 coupon
payments due on any Coupon 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 Coupon Payment Date; provided
that, notwithstanding any provision of the Indenture to the contrary, coupon
payments due on a Principal Payment Date shall be payable to the Person to whom
the related Payment Amount 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 Coupon Payment Date relating to such
Regular Record Date, coupon payments for the period beginning on the Issue Date
and ending on such Coupon Payment Date shall be paid on the Coupon Payment Date
following the next succeeding Regular Record Date to the registered Holder on
such next succeeding Regular Record Date.


 


Unless otherwise specified above and except as
provided below, all coupon payments on this Note may, at the option of the
Company, be made by check mailed to the person entitled thereto at such person’s
address as it appears on the registry books of the Company.


 


Payments of the Payment Amount, premium, if any, and
coupon payments due on the related Principal Payment Date will be made in
immediately available funds 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.


 


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.


 


4

















 


REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS
OF THIS NOTE, INCLUDING THE DEFINITIONS OF CERTAIN TERMS, SET FORTH ON THE
REVERSE HEREOF. SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME
EFFECT AS IF SET FORTH AT THIS PLACE.


 


“RANGERS” and “Risk AdjustiNG Equity Range
Securities” are service marks of Lehman Brothers Inc.


 


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.


 


IN WITNESS WHEREOF, Lehman Brothers Holdings Inc.
has caused this instrument 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, 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:


 


	
  [SEAL]

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  



 


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


RANGERSSM


RISK ADJUSTING EQUITY RANGE SECURITIESSM


PERFORMANCE LINKED TO THE VALUE OF A COMMON
STOCK


 


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, RANGERSSM, Risk AdjustiNG Equity Range SecuritiesSM
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 coupon
payments (if any) at different rates, may be subject to different redemption
provisions 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 coupon payments on this Note, if denominated in a Foreign
Currency, in U.S. dollars, the exchange rate agent specified on the face of
this Note 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 the
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
the 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 of this Note, 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 of this Note. 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 of this Note). 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 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 (i) any redenomination of
any component currency of any composite currency (unless such composite
currency is itself officially redenominated) or (ii) any change in the value of
the specified currency or the Optional Payment Currency relative to any other
currency due solely to fluctuations in exchange rates.


 


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.


 


2

















 


Section 3. Redemption. Unless otherwise
specified on the face of this Note, this Note will not be subject to redemption
by the Company. If it is specified on the face of this Note that this Note is
subject to redemption, 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 of this Note at the Redemption Payment
Amount together with accrued coupon payments to but excluding 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 (the “Redemption Notice”) of such redemption
at least 30 but not more than 60 days (or such other period as is specified as
the “Redemption Notice Period” on the face of this Note) 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 of this Note, if less than
all of the Notes of this series 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 of this Note 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 of this Note that this Note is an Amortizing Note, the
Company will make payments combining Redemption Payment Amount and coupon
payments on the dates and in the amounts set forth in the table appearing in
Schedule I attached to this Note or as otherwise specified on the face of this
Note. If this Note is an Amortizing Note, payments made hereon will be applied
first to coupon payments due and payable on each such payment date and then to
the reduction of the then outstanding principal amount.


 


Section 5. Optional Repurchase. Unless
otherwise specified on the face of this Note, this Note will not be subject to
repurchase by the Company at the option of the Holder. If it is specified on
the face of this Note that this Note is subject to optional repurchase, the
Holder may, at its option, cause the Company to repurchase this Note, subject
to the conditions specified below, on the Optional Repurchase Date at the
Optional Repurchase Amount, together with accrued coupon payments to but
excluding the Optional Repurchase Date.


 


Unless
otherwise specified on the face of this Note, in order for this Note to be so
repurchased, the Trustee must receive, before the earlier of (a) the date the
Company gives notice of its intention to redeem this Note pursuant to Section 3
of this Note or (b) eight Business Days (or such other period as is specified
as the “Optional Repurchase Cutoff Period” on the face of this Note) before the
Stated Maturity Date,
either (i) this Note with the form below entitled “Option to Elect Repurchase”
duly completed or (ii) a telegram, telex, fax 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 then outstanding principal amount of this
Note, the principal amount of this Note 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 repurchase is being exercised thereby and a guarantee that
this Note with the form below entitled “Option to Elect Repurchase” duly
completed will be received by the Paying Agent not later than five Business
Days after the date of such telegram, telex, fax or letter and this Note and
form duly completed are received by the Paying Agent by such fifth


 


3

















 


Business Day. Exercise of this repurchase
option shall be irrevocable, except as otherwise provided under Section 7 of
this Note or Section 10 of this Note. The repurchase option may be
exercised by the Holder of this Note with respect to less than the principal
amount of this Note then outstanding provided that the principal amount of this
Note remaining outstanding after repurchase is an authorized denomination. Upon
such partial repurchase this Note shall be cancelled and a new Note or Notes of
this series for the remaining principal amount of this Note shall be issued in
the name of the Holder of this Note.


 


If this Note is a Global Security, the Holder of
this Note, the nominee of the Depositary, will be the only entity that can
exercise a right to repurchase. In order to ensure that the nominee of the
depositary will timely exercise a right to repurchase relating to this Note,
the Holder must instruct the broker or other direct or indirect participant
through which it holds an interest in this Note to notify the Depositary of its
desire to exercise a right to repurchase.


 


Section
6. Stock Settlement. If “Stock Settlement” on the face of this Note is
checked as applicable, this Note may be settled on the Stated Maturity Date or
any Optional Repurchase Date (but not upon any Redemption, acceleration of the
maturity of this Note or other prepayment of this Note prior to the Stated
Maturity Date unless otherwise specified herein), with shares of Settlement
Value Securities at the Company’s option, at the Holder’s option or
mandatorily, as indicated on the face of this Note.


 


If the Company elects the Stock Settlement option
for settlement of this Note on the Stated Maturity Date, the Company will
provide the Trustee with written notice of the election not less than three
business days prior to the Stated Maturity Date.


 


If
Stock Settlement is applicable, the Company will pay the applicable Payment
Amount, subject to the following paragraph, by delivering, for each $1,000
principal amount of the Notes represented hereby, Settlement Value Securities
having a value on the applicable Valuation Date equal to the applicable Payment
Amount. The Calculation Agent will determine the number and kind of Settlement
Value Securities to be delivered, and whether cash shall be delivered in lieu
of, or in addition to, any Settlement Value Securities, in accordance with the
Calculation Agency Agreement and in performing such calculation, the Calculation Agent will round
down the cash payment to the nearest cent.


 


If
Stock Settlement is applicable and the calculations in the preceding paragraph
result in fractional shares, the applicable Payment Amount shall be paid in
cash in an amount equal to the value of fractional shares based upon the
Closing Prices of the Settlement Value Securities on the applicable Valuation
Date. If the Company determines that it is prohibited from delivering
Settlement Value Securities, or that it would be unduly burdensome to do so,
the Company shall pay the applicable Payment Amount in cash.


 


Section 7. Optional Coupon Reset. If so
specified on the face of this Note, the Coupon 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 of this Note), on the Optional Reset Date or Optional
Reset Dates specified on the face of this Note. 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


 


4

















 


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 coupon rate, (ii) such new coupon 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 Stated Maturity Date of this Note (each such period a “Subsequent Coupon
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 Coupon 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 coupon 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 coupon rate provided for in the Reset Notice and establish a coupon rate
that is higher than the coupon rate provided for in the Reset Notice for the
Subsequent Coupon Period commencing on such Optional Reset Date by causing the
Trustee to mail by first-class mail notice of such higher coupon 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 of this
series with respect to which the coupon rate is reset on an Optional Reset Date
will bear such higher coupon rate for the Subsequent Coupon Period.


 


If the Company elects to reset the coupon rate of
this Note, the Holder of this Note will have the option to elect repurchase by
the Company of this Note, or any portion hereof, on any Optional Reset Date at
a price calculated with reference to (a) the then outstanding principal amount
of this Note, (b) the Maturity Payment Amount calculated as though the Optional
Reset Date were the Stated Maturity Date and the date that is a number of
business days equal to the Determination Period before that date were the
Valuation Date, or (c) such other amount or amounts, in each case as specified
on the face of this Note, plus any coupon payments accrued to, such Optional
Reset Date. In order to obtain repurchase on an Optional Reset Date, the Holder
must follow the procedures set forth above in Section 5 of this Note for
Optional Repurchase 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 repurchase
pursuant to the Reset Notice, the Holder may, by written notice to the Trustee,
revoke such tender for repurchase 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 8. Discount Notes. If this Note is a
Discount Note, the amount payable in the event of Redemption, Optional
Repurchase or acceleration of maturity shall be (i) the Amortized Principal
Amount of this Note as of the Redemption Date, Optional Repurchase Date or date
of such acceleration, as the case may be, rather than the relevant Payment
Amount of this Note or (ii) such other amount as specified on the face of this
Note (such amount, the “Discount Note Prepayment Amount”).


 


Section 9. Dual Currency Notes. If it is
specified on the face of this Note 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 of this Note in whole, but not in part, with


 


5

















 


respect to all Dual Currency Notes of this
series, of thereafter making all payments of Maturity Payment Amount, premium,
if any, and coupon payments (which payments would otherwise be made in the
Specified Currency of such Notes) in the Optional Payment Currency specified on
the face of this Note. 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 of this Note.


 


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 series a
notice of such election within five Business Days of the Option Election Date
which shall state (i) the first date, whether a Coupon Payment Date and/or
the Stated 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,
notwithstanding any prior election made by the Company, the amount payable
hereon in the event of any Redemption, any Optional Repurchase, any acceleration
of the maturity of this Note or other prepayment of this Note prior to the
Stated Maturity Date shall be (a) an amount equal to the amount otherwise due
and payable plus accrued coupon payments to but excluding the Redemption Date,
Optional Repurchase Date, date of acceleration or other prepayment minus
the Total Option Value multiplied by a fraction, the numerator of which is the
then outstanding principal amount of this Note and the denominator of which is
the aggregate principal amount of all Dual Currency Notes of this series then
outstanding or (b) such other amount as specified on the face of this Note
(such amount, the “Dual Currency Note Prepayment Amount”). 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 of this Note.


 


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 of this Note that this Note is an Extension of
Maturity Note, the Company has the option to extend the Stated Maturity Date
for the number of Extension Periods set forth on the face of this Note, each of
which Extension Periods shall be a period of from one to five whole years. Unless
otherwise specified on the face of this Note, 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
Stated 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,


 


6

















 


postage prepaid, setting forth (i) the
election of the Company to extend the Stated Maturity Date, (ii) the new Stated
Maturity Date, (iii) the Coupon 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 Stated 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 coupon rate provided for in the Extension Notice and
establish a higher coupon rate for the Extension Period by causing the Trustee
to mail notice of such higher coupon 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 coupon rate for the Extension Period, whether or not tendered for
repurchase.


 


If the Company extends the Stated Maturity Date of
this Note, the Holder will have the option to elect repurchase by the Company
of this Note, or any portion hereof, on the Original Stated Maturity at a price
calculated with reference to (a) the then outstanding principal amount of this
Note, (b) the Optional Repurchase Amount calculated as though the Original
Stated Maturity were the Stated Maturity Date and the date that is a number of
business days equal to the Determination Period before that date were the
Valuation Date, or (c) such other amount or amounts, in each case as specified
on the face of this Note. 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 of this Note for Optional Repurchase, 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
repurchase 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. Renewable Notes. If it is
specified on the face of this Note that this Note is a Renewable Note, this
Note will mature on the Stated Maturity Date specified on the face of this Note
unless the maturity of all or any portion of this Note is extended in
accordance with the procedures described below.


 


On the Coupon Payment Date occurring in the sixth
month (unless a different Special Election Interval is specified on the face of
this Note) prior to the initial Stated Maturity Date specified on the face of
this Note (the “Initial Maturity Extension Date”) and on the Coupon 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 Stated
Maturity Date of this Note will be extended to the Coupon Payment Date
occurring in the twelfth month (or, if a Special Election Interval is specified
on the face of this Note, 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 extension of the Stated Maturity Date hereof or any portion
hereof as described below.


 


7

















 


If the Holder elects to terminate the extension of
the Stated Maturity Date 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 Coupon Payment Date occurring in the sixth
month (or the last month in the Special Election Interval) after such Maturity
Extension Date (the “Extended Stated Maturity Date”).


 


The Holder may elect to extend the Stated Maturity
Date 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 3 nor more than 15 days prior to such
Maturity Extension Date (unless another period is specified on the face of this
Note as the “Special Election Period”). Such election will be irrevocable and
will be binding upon each subsequent Holder of this Note. An election to extend
the Stated Maturity Date of this Note may be exercised with respect to less
than the entire principal amount of this Note then outstanding only if so
specified on the face of this Note and only in such principal amount, or any
integral multiple in excess thereof, as is specified on the face of this Note. Notwithstanding
the foregoing, the maturity of this Note will not be extended beyond the Stated
Maturity Date specified on the face of this Note.


 


Unless otherwise specified above, any election not
to extend will be effective only if this Note is presented to the Trustee (or
any duly appointed Paying Agent) 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 principal amount of this Note for which no election to extend was
exercised, with terms identical to those specified herein (except for the Issue
Date and the Initial Coupon Rate and except that such Note shall have a fixed,
non-extendable maturity on the Extended Stated Maturity Date) and (ii) if such
election not to extend is made with respect to less than the principal amount
of this Note then outstanding, a replacement Extendible Note, in a face amount
equal to the principal amount of this Note for which an election to extend 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 of this series outstanding under the Indenture have made a
demand, given a notice or waiver or taken any other action, the principal
amount of this Note will be deemed to be the principal amount of this Note then
outstanding; provided, however, if this Note is a Discount 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,


 


8

















 


among other things, (i) change the fixed
maturity of any Security, or reduce the Payment Amount or the principal amount
thereof, or reduce the rate or extend the time of payment of interest thereon
or reduce any premium or other amount payable on redemption, or make the
Payment Amount or the principal amount thereof, premium or other amount
payable, if any, or coupon payments 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
coupon payments, if any, on the Payment Amount, or the principal amount, 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 owners
of this Note and any Notes of this series 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 of this series.


 


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 Payment Amount or principal amount,
premium, if any, and coupon payments, 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. Notes
of this series denominated in U.S. dollars shall be issued in the principal
amount denominations specified on the face of this Note. Notes of this series
denominated in a Foreign Currency will be issued in a denomination
approximately equivalent to Notes of this series denominated in U.S. dollars. Each
Note will be issued initially as either a Global Security or a Certificated
Note, at the option of the Company, 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 principal amount of Notes of this series of a
different authorized denomination, except that Global Securities will not be
exchangeable for Certificated Notes of this series.


 


9

















 


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 principal 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 Notes of this 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 of this series in definitive form in an
aggregate principal amount equal to the principal amount of this Note.


 


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. Unless otherwise provided
on the face of this Note, the amount payable to the Holder hereof upon any
acceleration permitted under the Indenture will be equal to the Maturity
Payment Amount calculated as though the date to which the maturity has been
accelerated were the Stated Maturity Date and the date that is a number of
business days equal to the Determination Period before that date were the
Valuation Date. In any such case, even if Stock Settlement is applicable, the
Notes of this series will be settled in cash. Upon payment (i) of the aggregate
applicable amounts on the Notes of this series so declared due and payable and
(ii) of coupon payments on any overdue Payment Amount and overdue coupon
payments (in each case to the extent that the payment of such coupon payments
shall be legally enforceable), all of the Company’s obligations in respect of
the payment of the Maturity Payment Amount of and coupon payments, if any, on
the Notes of this series shall terminate.


 


Section 19. No Recourse Against Certain Persons.
No recourse for the payment of Payment Amount, premium, if any, or coupon
payments on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or


 


10

















 


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. Tax Treatment. The Company
intends to treat, for all tax purposes, this Note as a cash-settled financial
contract giving rise to capital gain or loss, rather than as a debt instrument.


 


Section 22. GOVERNING LAW. THIS NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


 


Section 23. Definitions. Set forth below are
definitions of certain of the terms used in this Note. The definitions set
forth below are subject to the terms and provisions on the face of this Note. If
any definition below is different than, or inconsistent with, the terms and
provisions on the face of this Note, the terms and provisions on the face shall
prevail.


 


“ADS” shall mean American Depositary Share.


 


“Alternative Redemption Amount” shall mean,
for each $1,000 principal amount of the Notes represented hereby, the product
of (a) $1,000 and (b) the Settlement Value on the applicable Valuation Date
divided by the Initial Value.


 


“AMEX” shall mean the American Stock Exchange
LLC.


 


“Amortized Principal Amount” of this Note at
any time shall mean the amount equal to (a) the Issue Price multiplied by the
then outstanding principal amount of this Note plus (b) that portion of the
difference between the amount calculated pursuant to clause (a) and the
principal amount of this Note that has accrued at the Yield to Maturity set
forth on the face of this Note (computed in accordance with generally accepted
United States bond yield computation principles) at the date as of which the
Amortized Principal Amount is calculated, but in no event shall the Amortized
Principal Amount of this Note exceed the principal amount of this Note.


 


“Average Execution Price” shall mean, for a
security or other property, the average per unit execution price that an
affiliate of the Company receives or pays for such security or property, as the
case may be, to hedge the Company’s obligations under the Notes of this series.


 


“Business Day”, notwithstanding any provision
in the Indenture, shall mean, unless otherwise set forth on the face of this
Note, any day that is not a Saturday, a Sunday or a


 


11

















 


day on which the NYSE, the Nasdaq or the AMEX
is not open for trading or banking institutions or trust companies in New York
City are authorized or obligated by law or executive order to close, and, (a)
if the Specified Currency is a Foreign Currency other than Euros, not a day on
which banking institutions are authorized or required by law to close in the
Principal Financial Center of the country issuing the Foreign Currency and (b)
if the Specified Currency is Euros, a day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer System is open. “Principal
Financial Center” shall mean 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.


 


“Calculation Agency Agreement” shall mean the
Calculation Agency Agreement, dated as of May 30,  2006, between the Company and the Calculation
Agent, as amended from time to time, or any successor calculation agency
agreement.


 


“Calculation Agent” shall mean the person
that has entered into an agreement with the Company providing for, among other
things, the determination of the Settlement Value and the Payment Amount, which
term shall, unless the context otherwise requires, include its successors and
assigns. The initial Calculation Agent shall be Lehman Brothers Inc.


 


“Close of Trading” shall mean, in
respect of any Relevant Exchange or other exchange or quotation system, the
scheduled weekday closing time on a day on which the Relevant Exchange or other
exchange or quotation system is scheduled to be open for trading for its
respective regular trading session, without regard to after hours or any other
trading outside of the regular trading session hours.


 


“Closing Price” shall mean, for each
Settlement Value Security, as determined by the Calculation Agent pursuant to
the Calculation Agency Agreement on any particular day, based on information
reasonably available to it:


 


(1)           if the Settlement Value Security is listed on
a Relevant Exchange, the last reported sale price per share at the Close of
Trading on such day on the Relevant Exchange;


 


(2)           if the Settlement Value Security is not
listed on a national securities exchange or quotation system or is not a Nasdaq
security, and is listed or traded on a bulletin board, the Average Execution
Price per share of the Settlement Value Security; or


 


(3)           as otherwise determined by the Calculation
Agent pursuant to the Calculation Agency Agreement in the circumstances
described in the definition of “Valuation Date” herein.


 


In the case of both (1) and (2) above, if the
Settlement Value Security is listed or quoted on a non-United States Relevant
Exchange or on a non-United States bulletin board, the Closing Price will then
be converted into U.S. dollars using the Official W.M. Reuters Spot Closing
Rate at 11:00 a.m., New York City time. If there are several quotes for the
Official


 


12

















 


W.M. Reuters Spot Closing Rate at that time,
the first quoted rate starting at 11:00 a.m. shall be the rate used. If there
is no such Official W.M. Reuters Spot Closing Rate for a country’s currency at
11:00 a.m., New York City time, the Closing Price shall be converted into U.S.
dollars using the last available U.S. dollar cross-rate quote before 11:00
a.m., New York City time.


 


“common stock” shall mean common stock or any
other equity security (which may be an ADS).


 


“Company” shall have the meaning set forth on
the face of this Note.


 


“Coupon Payment Date” shall have the meaning
set forth on the face of this Note.


 


“Coupon Rate” shall have the meaning set forth
on the face of this Note.


 


“Designated Exchange Rate” shall mean the
exchange rate specified as such on the face of this Note.


 


“Determination Period” shall be the number of
days specified as such on the face of this Note.


 


“Discount Note” shall mean any Note that has
been issued at an Issue Price less than 100%.


 


“Discount Note Prepayment Amount” shall have
the meaning set forth in Section 8 of this Note.


 


“Dual Currency Note” shall mean any Note
designated as such on the face of this Note.


 


“Dual Currency Note Prepayment Amount” shall
have the meaning set forth in Section 9 of this Note.


 


“Exchange Rate Agent” shall have the meaning
set forth in Section 2 of this Note.


 


“Extended Stated Maturity Date” shall have
the meaning set forth in Section 11 of this Note.


 


“Extension Notice” shall have the meaning set
forth in Section 10 of this Note.


 


“Foreign Currency” shall mean any currency
other than U.S. dollars.


 


“Global Security” shall have the meaning set
forth on the face of this Note.


 


“Indenture” shall have the meaning set forth
in Section 1 of this Note.


 


“Index Stock” shall mean the common stock
specified as such on the face of this Note.


 


13

















 


“Index Stock Issuer” shall mean the issuer
specified as such on the face of this Note.


 


“Initial Maturity Extension Date” shall have
the meaning set forth in Section 11 of this Note.


 


“Initial Offering Date” shall mean the date
specified as such on the face of this Note.


 


“Initial
Redemption Date” shall be the date specified as such on the face of this
Note.


 


“Initial Value” shall have the meaning set
forth on the face of this Note.


 


“Issue Date” shall have the meaning set forth
on the face of this Note.


 


“Issue Price” shall mean the price specified
as such on the face of this Note.


 


“Market Disruption Event”, unless
indicated otherwise on the face of this Note, with respect to a Settlement
Value Security shall mean any of the following events has occurred on any day
as determined by the Calculation Agent in accordance with the Calculation
Agency Agreement:


 


(1)           A
material suspension of, or limitation imposed on trading relating to, such
Settlement Value Security by the Relevant Exchange for the security, at any
time during the one-hour period that ends at the Close of Trading on such day,
whether by reason of movements in price exceeding limits permitted by that
Relevant Exchange or otherwise. Limitations on trading during significant
market fluctuations imposed pursuant to NYSE Rule 80B or any applicable rule or
regulation enacted or promulgated by the NYSE, any other exchange, quotation
system or market, any other self regulatory organization or the Securities and
Exchange Commission of similar scope or as a replacement for Rule 80B may
be considered material.


 


(2)           A
material suspension of, or limitation imposed on, trading in futures or options
contracts relating to such Settlement Value Security by the primary exchange or
quotation system on which those futures or options contracts are traded, at any
time during the one-hour period that ends at the Close of Trading on such day,
whether by reason of movements in price exceeding limits permitted by that
primary exchange or quotation system or otherwise.


 


(3)           Any
event, other than an early closure, that disrupts or impairs the ability of
market participants in general to effect transactions in, or obtain market
values for that Settlement Value Security on the Relevant Exchange for that
Settlement Value Security, or in the case of a Settlement Value Security not
listed or quoted in the United States, on the primary exchange, quotation
system or market for such Settlement Value Security, at any time during the one
hour period that ends at the Close of Trading on such day.


 


14

















 


(4)           Any
event, other than an early closure, that disrupts or impairs the ability of
market participants in general to effect transactions in, or obtain market
values for, the futures or options contracts relating to such Settlement Value
Security on the primary exchange or quotation system on which those futures or
options contracts are traded at any time during the one hour period that ends
at the Close of Trading on such day.


 


(5)           The
closure of the Relevant Exchange on which that Settlement Value Security is
traded or the primary exchange or quotation system on which futures or options
contracts relating to that Settlement Value Security are traded prior to its
scheduled closing time unless the earlier closing time is announced by the
exchange or quotation system at least one hour prior to the earlier of (i) the
actual closing time for the regular trading session on the exchanges or
quotation system and (ii) the submission deadline for orders to be entered into
the exchanges or quotation system for execution at the Close of Trading on such
day.


 


“Market Exchange Rate” shall have the meaning
set forth in Section 2 of this Note.


 


“Maturity Extension Date” shall have the
meaning set forth in Section 10 of this Note.


 


“Maturity
Payment Amount” shall mean, for each $1,000 principal amount of
Notes represented hereby, (a) $1,000 or (b) if the Settlement Value on the
applicable Valuation Date is less than the Threshold Value on any Scheduled
Trading Day during the Measurement Period, the lesser of (i) $1,000 and (ii)
the Alternative Redemption Amount.


 


“Measurement Period” shall mean the period from the Initial
Offering Date to and including the applicable Valuation Date.


 


“Multiplier” shall mean, for each Settlement
Value Security, the number of shares or other units (including ADSs) (or
fraction of a share or other unit expressed as a decimal) of such Settlement
Value Security included in the calculation of the Settlement Value on a
particular day, as determined by the Calculation Agent pursuant to the
Calculation Agency Agreement. The initial Multiplier for the Index Stock shall
be 1.0, unless otherwise specified on the face of this Note. The initial
Multiplier for any security which may subsequently become a Settlement Value
Security shall be the number of shares or other units of such security which
are to be included in the calculation of the Settlement Value at the time such
security becomes a Settlement Value Security. Multipliers may be adjusted by
the Calculation Agent in accordance with the Calculation Agency Agreement in
certain circumstances.


 


“Nasdaq” shall mean The Nasdaq Stock Market,
Inc.


 


“Notes” shall have the meaning set forth in
Section 1 of this Note.


 


“NYSE” shall mean The New York Stock
Exchange, Inc.


 


15

















 


“Official W.M. Reuters Spot Closing Rate”
shall mean the closing spot rate published on Reuters page “WMRA” relevant for
a Settlement Value Security.


 


“Option Election Dates” shall mean the
date(s) specified as such on the face of this Note.


 


“Option Value” shall mean, with respect to a
Coupon Payment Date or the Stated 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 Coupon Payment Date or Stated Maturity Date to
purchase for value on such Coupon Payment Date or Stated Maturity Date from
such reference banks (A) the aggregate amount of the Specified Currency due on
such Coupon Payment Date or Stated Maturity Date with respect to all of the
Dual Currency Notes of this series 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.


 


“Optional Payment Currency” shall mean the
currency specified as such on the face of this Note.


 


“Optional Repurchase”
shall mean the option of a Holder to elect to require the Company to
repurchase Notes of this series pursuant to Section 5 of this Note.


 


“Optional
Repurchase Amount” shall equal, for each $1,000 principal amount of the
Notes represented hereby, the Maturity Payment Amount calculated as though the
date of repurchase were the Stated Maturity Date and the date that is a number
of business days equal to the Determination Period before that date were the
Valuation Date, as specified on the face of this Note, or such other amount or
amounts, as specified on the face of this Note.


 


“Optional Repurchase Cutoff Period” shall be
the number of days specified as such on the face of this Note.


 


“Optional Repurchase Date” shall mean the
date specified as such on the face of this Note; provided, however,
if the Calculation Agent determines that a Market Disruption Event with respect
to any Settlement Value Security has occurred on the day that would otherwise
be the applicable Valuation Date, or if the applicable Valuation Date is not a
Scheduled Trading Day, then the Optional Repurchase Date shall be postponed by
a number of Business Days equal to the number of Scheduled Trading Days by
which the applicable Valuation Date is postponed.


 


“Optional Reset Dates” shall be the dates
specified as such on the face of this Note.


 


“Original Stated Maturity” shall have the
meaning set forth in Section 10 of this Note.


 


16

















 


“Payment
Amount” shall mean the Maturity Payment Amount, the Redemption Payment
Amount or the Optional Repurchase Amount, as the case may be.


 


“Principal Payment Date” shall mean the
Stated Maturity Date, the Redemption Date or the Optional Repurchase Date, as
the case may be.


 


“Redemption” shall
mean the option of the Company to redeem, at any time on or after the date
specified on the face of this Note, in whole or from time to time in part, the
Notes of this series pursuant to Section 3 of this Note.


 


“Redemption
Date” shall mean the date specified as such in the notice demanded in
Section 3 of this Note; provided, however, if the Calculation
Agent determines that a Market Disruption Event with respect to any Settlement
Value Security has occurred on a day that would otherwise be the applicable
Valuation Date, or if the applicable Valuation Date is not a Scheduled Trading
Day, then the Redemption Date shall be postponed by a number of Business Days
equal to the number of Scheduled Trading Days by which the applicable Valuation
Date is postponed.


 


“Redemption
Notice” shall mean the notice of redemption mailed to the Holders pursuant
to Section 3 of this Note.


 


“Redemption
Notice Period” shall
have the meaning set forth in Section 3 of this Note.


 


“Redemption
Payment Amount” shall mean, for each $1,000 principal amount of Notes
represented hereby, the
Maturity Payment Amount calculated as though the Redemption Date were the
Stated Maturity Date and the date that is a number of Business Days equal to
the Determination Period before that date were the Valuation Date, as specified
on the face of this Note, or such other amount or amounts as specified on the
face of this Note.


 


“Relevant
Exchange” shall mean for any Settlement Value Security, the primary United
States national securities exchange, quotation system, including any bulletin
board service, or market on which such Settlement Value Security is traded, or
in case such Settlement Value Security is not listed or quoted in the United
States, the primary exchange, quotation system or market for such Settlement
Value Security.


 


“Reset Notice” shall
have the meaning specified in Section 7 of this Note.


 


“Scheduled Trading Day” shall mean any
day on which the Relevant Exchange for a Settlement Value Security is scheduled
to be open for trading for its regular trading session.


 


“Securities” shall have the meaning set forth
in Section 1 of this Note.


 


“Settlement Value” shall mean, when
used with respect to an applicable Valuation Date or any Scheduled Trading Day
on which the Calculation Agent is determining whether the Settlement Value is
less than the Threshold Value, the sum of the products of the Closing Prices
and the applicable Multipliers (as adjusted from time to time by the
Calculation Agent pursuant to the Calculation Agency Agreement prior to the
Close of Trading on such date) for each


 


17

















 


Settlement Value Security on
such date, together with any cash or other property included in the Settlement
Value on such date by the Calculation Agent pursuant to the Calculation Agency
Agreement; provided that if the originally scheduled Valuation Date is
postponed because of the occurrence of a Market Disruption Event, the
Settlement Value will equal (a) the sum of the products of the Closing Prices
on the postponed Valuation Date and the applicable Multipliers for each
Settlement Value Security for which no Market Disruption Event occurred plus
(b) the sum of the products of the average per share execution price an
affiliate of the Company, receives or pays on the postponed Valuation Date upon
the sale or purchase of each Settlement Value Security for which a Market
Disruption Event has occurred which was used to hedge the Company’s obligations
under the Notes and the applicable Multipliers (in case, as adjusted from time
to time by the Calculation Agent pursuant to the Calculation Agency Agreement
prior to the Close of Trading on the postponed Valuation Date), together with
any cash or other property included in the Settlement Value on the Valuation
Date by the Calculation Agent pursuant to the Calculation Agency Agreement. The
Settlement Value and any adjustments thereto, shall be determined by the
Calculation Agent pursuant to the Calculation Agency Agreement.


 


“Settlement Value Securities” shall mean the
securities included in the calculation of the Settlement Value by the
Calculation Agent pursuant to the Calculation Agency Agreement. The Settlement
Value Securities will initially consist of the common stock designated as the
Index Stock on the face of this Note.


 


“Special Election Interval” shall be the
number of days specified as such on the face of this Note.


 


“Special Election Period” shall be the number
of days specified as such on the face of this Note.


 


“Specified Currency” shall mean U.S. dollars
or such other currency as is specified as such on the face of this Note.


 


“Stated Maturity Date” shall mean the date
specified as such on the face of this Note (except as otherwise provided in the
case of an Extension of Maturity Note or an Extendible Note); provided,
that if a Market Disruption Event with respect to one or more of the Settlement
Value Securities occurs on the applicable Valuation Date, or if the applicable
Valuation Date is not a Scheduled Trading Day, then the Stated Maturity Date
shall be postponed by a number of Business Days equal to the number of
Scheduled Trading Days by which the applicable Valuation Date is postponed. In
the event of any acceleration of the maturity of this Note prior to the Stated
Maturity Date specified on the face of this Note, the term “Stated Maturity
Date” when used herein shall refer, where applicable, to the date of
acceleration of this Note.


 


“Stock
Settlement” shall mean the option or right to pay or receive the Maturity
Payment Amount or Optional Repurchase Amount in shares of the Settlement Value
Securities, as set forth in Section 6 of this Note.


 


“Subsequent
Coupon Period” shall have the meaning set forth in Section 7 of this Note.


 


18

















 


“Threshold Value” shall mean the value
specified as such on the face of this Note.


 


“Total Option Value” shall mean, 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 specified on
the face of this Note) for all Coupon Payment Dates occurring after the date of
calculation up to and including the Stated Maturity Date.


 


“Trustee” shall have the meaning set forth in
Section 1 of this Note.


 


“Valuation
Date” shall mean, unless otherwise specified on the face of this Note, (a)
in the case of payment on the Stated Maturity Date, the third Business Day
prior to the Stated Maturity Date, (b) in the case of Redemption, the date that
the Redemption Notice is mailed and (c) in the case of Optional Repurchase, the
date that is a number of Business Days equal to the Determination Period before
the Optional Repurchase Date; provided, however, in each case, if
a Market Disruption Event occurs on any such date as determined by the
Calculation Agent pursuant to the Calculation Agency Agreement, or if such date
is not a Scheduled Trading Day, the Valuation Date shall be postponed to the
next Scheduled Trading Day on which no Market Disruption Event occurs; provided,
further, if a Market Disruption Event occurs on each of the eight
Scheduled Trading Days following the originally scheduled Valuation Date, then
that eighth Scheduled Trading Day shall be deemed the Valuation Date and the
Calculation Agent shall determine, in accordance with the Calculation Agency
Agreement, the Closing Price of the affected Settlement Value Securities, based
upon its estimate of the value of the Settlement Value Security as of the Close
of Trading on that eighth Scheduled Trading Day.


 


“Yield to Maturity” shall mean the percentage
specified as such on the face of this Note.


 


19

















 


OPTION TO ELECT REPURCHASE


 


The undersigned owner of this Note hereby
irrevocably elects to have the Company repurchase the principal amount of this
Note or portion hereof below designated at (i) the Optional Repurchase Amount
plus any accrued coupon payments to but excluding the Optional Repurchase Date,
if this Note is to be repurchased pursuant to the Optional Repurchase provision
described in Section 5 of this Note, or (ii) the price specified pursuant to
the Optional Coupon Reset provision described in Section 7 of this Note or the
Extension of Maturity Notes provision described in Section 10 of this Note.
Any such election is irrevocable except as provided in Section 7 or
Section 10 of this Note. If the repurchase of this Note is pursuant to
Section 5 of this Note and if the undersigned has the option to elect to have
the repurchase settled in stock, the undersigned has indicated below if that
option is being exercised.


 


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
  Sign exactly
  as name appears on the front of this Note [SIGNATURE GUARANTEED - required
  only if Notes of this series are to be issued and delivered to other than the
  registered Holder]

  
	
   

  	
   

  
	
   

  	
   

  
	
  Principal
  Amount to be repurchased, if amount to be repurchased is less than the
  principal amount of this Note (principal amount remaining must be an
  authorized denomination)

  	
   

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

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Please
  print name and address including zip code)

  
	
  $

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Stock Settlement
  option

  	
   

  	
  SOCIAL
  SECURITY OR

  
	
  elected

  	
   

  	
  OTHER
  TAXPAYER ID NUMBER:

  
	
   

  	
   

  	
   

  
	
  o YES  o NO

  	
   

  	
   

  
												



 


20

















 


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 principal 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 of this series are to be issued and delivered to other than the
  registered Holder]

  
	
   

  	
   

  	
   

  	
   

  
	
  Principal
  Amount to be terminated, if amount to be

  terminated is less than the principal amount of this

  Note (such principal amount must be an authorized

  denomination)

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

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
  (Please
  print name and address including zip code)

  
										



 


21

















 


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


 


	
  TEN COM -

  	
  as tenants in common

  	
   

  	
  UNIF GIFT MIN ACT               Custodian

  
	
   

  	
   

  	
   

  	
   

  	
                                           (Cust)                   (Minor)

  
	
  TEN ENT -

  	
  as tenants by the entireties

  	
  under Uniform Gifts to Minors

  	
   

  
	
  JT TEN -

  	
  as joint tenants with right of

  	
  Act

  
	
   

  	
  Survivorship and not as tenants in

  	
   (State)

  
	
   

  	
  common

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
							



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


 


FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers unto


 


PLEASE INSERT
SOCIAL SECURITY OR OTHER


IDENTIFYING
NUMBER OF ASSIGNEE


 


 


(Name and
Address of Assignee, including zip code, must be printed or typewritten.)


 


 


the within
Note of Lehman Brothers Holdings Inc., and all rights thereunder, hereby
irrevocably constituting and appointing


 


 


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


 


	
  Dated:

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  



 


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.


 


	
  Signature(s) Guaranteed:

  
	
   

  
	
   

  
	
   

  	
   

  
	
  THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR
  INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT
  UNIONS WITH MEMBERSHIP IN AN APPROVED MEDALLION SIGNATURE GUARANTEE PROGRAM),
  PURSUANT TO S.E.C. RULE 17Ad-15.

  



 


 


22

















 


Schedule I


 


Amortization Table


 


	
  Date

  	
   

  	
  Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


23

















 


EXHIBIT A


 


RESET NOTICE


 


LEHMAN BROTHERS HOLDINGS INC.


Medium-Term Notes, Series I


RANGERSSM


Risk AdjustiNG Equity Range SecuritiesSM


Performance Linked to the Value of a Common
Stock


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 Coupon Rate set forth on the face of the
Notes. On and after                  (1),
the Coupon Rate shall be                .


 


Each
Holder of a Note has the option to elect repurchase 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.