Exhibit 4.16


 


	
  REGISTERED

  	
  PRINCIPAL
  AMOUNT:

  
	
  No. R-

  	
   

  
	
   

  	
   

  
	
  CUSIP NO.

  	
  ISIN:

  



 


LEHMAN BROTHERS HOLDINGS INC.


 


MEDIUM-TERM NOTE, SERIES I


 


PERFORMANCE LINKED TO THE VALUE OF A COMMON STOCK, A

STOCK INDEX, A BASKET OF COMMON STOCKS OR A BASKET OF STOCK INDICES


 


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:


 


INTEREST RATE:     %
per annum


 


ACCRUE TO PAY:


o YES   o
NO


 


INTEREST PAYMENT DATES:


and    of
each year, beginning on


 


REGULAR RECORD DATES:

calendar days prior to each Interest Payment Date


 


REFERENCE EQUITY:


 


INITIAL MULTIPLIER(S):


 


INITIAL BASE DIVIDEND:


 


MULTIPLIER ADJUSTMENT
DATES FOR CHANGES IN DIVIDENDS:


 


INDEX WEIGHTS:


 


THRESHOLD VALUE:


 


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


 


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:


 


Tax Matters


 


COMPARABLE YIELD:     %
per annum


 


PROJECTED PAYMENT
SCHEDULE:


$    [semi-annually]
and $    due at Stated Maturity which includes the final
interest payment


 


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 pay interest on the principal amount
hereof 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 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 interest shall be legally enforceable) at such rate per
annum on any overdue Payment Amount, premium, if any, and overdue installment
of interest.


 


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 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.


 


Except as provided in the following paragraph, the
Company will pay interest on the Interest Payment Dates specified above,
commencing with the first Interest 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 interest to be made on any Interest
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 Interest 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 interest 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, interest will continue to accrue during the period
from the originally scheduled Principal Payment Date to but excluding the
postponed Principal Payment Date.  If
Accrue to Pay is


 


2

















 


specified on the face of this Note, any payment of
interest on the Interest Payment Date will include interest accrued through the
day before the Interest Payment Date. 
Each payment of interest hereon shall include interest accrued through
the day before the Interest Payment Date or applicable Principal Payment Date,
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 or in the case of an incomplete month, the number
of days elapsed.  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 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 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 specified above and except as
provided below, all payments of interest 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
any interest payable 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.


 


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.


 


3

















 


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

  	
   

  



 


4

















 


 


[REVERSE OF NOTE]


 


LEHMAN BROTHERS HOLDINGS INC.


MEDIUM-TERM NOTES, SERIES I


PERFORMANCE LINKED TO THE VALUE OF A COMMON STOCK, A 

STOCK INDEX, A BASKET OF COMMON STOCKS OR A BASKET OF STOCK INDICES


 


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,
Performance Linked to the Value of a Common Stock, a Stock Index, a Basket of
Common Stocks or a Basket of Stock Indices 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 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 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.


 


2

















 


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


 


Section 3.  Redemption.  Unless otherwise specified on the face of
this Note, 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
interest 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 of this series 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 interest 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 interest 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, at any time until 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 Optional Repurchase
Cutoff Period specified on the face of this Note) before the Stated Maturity
Date, 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 interest to but excluding
the Optional Repurchase Date.


 


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


 


3

















 


completed are received by the Paying Agent by such fifth 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 the Reference Equity specified on the face
of this Note is a single common stock and if “Stock Settlement” on the face of
this Note is checked as applicable, this Note may be settled on the Stated
Maturity Date or on the 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 paragraphs, by
delivering, for each $1,000 principal amount of the Notes represented hereby, (a) in
the case of maturity, Settlement Value Securities having a value on the
applicable Valuation Date equal to the Maturity Payment Amount; and (b) in
the case of any Optional Repurchase, Settlement Value Securities having a value
on the applicable Valuation Date equal to the Optional Repurchase 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.


 


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 and in
performing such calculation, the Calculation Agent will round down the cash
payment to the nearest cent.


 


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.


 


4

















 


Section 7. 
Optional Interest Reset. 
If so specified on the face of this Note, 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 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 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 Stated 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 of
this series 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 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 interest 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


 


5

















 


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 respect to all Dual Currency Notes of this series, of thereafter making
all payments of Maturity Payment Amount, 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 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 an Interest 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 interest 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 hereof 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.


 


6

















 


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 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 Stated Maturity Date, (ii) the new
Stated 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 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 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 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. 
Extendible Notes.  If it is
specified on the face of this Note that this Note is a Extendible 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 Interest 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 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 Stated
Maturity Date of this Note will be extended to the Interest Payment Date occurring
in the twelfth month (or, if a Special Election Interval is


 


7

















 


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.


 


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 Interest 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
Interest 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


 


8

















 


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) 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 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 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 the principal amount, 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.  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
interest on any overdue Payment Amount and overdue interest (in each case to
the extent that the payment of such interest shall be legally enforceable), all
of the Company’s obligations in respect of the payment of the Maturity Payment
Amount 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 Payment
Amount, 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


 


10

















 


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. 
Tax Treatment.  The Company
agrees, and by acceptance of beneficial ownership interest in the Notes of this
series, each Holder of such Notes will be deemed to have agreed, for United
States federal income tax purposes, (i) to treat the Notes of this series
as indebtedness that is subject to Treas. Reg. Sec. 1.1275-4 (the “Contingent
Payment Regulations”) and (ii) to be bound by the Company’s determination
of the “comparable yield” and “projected payment schedule,” within the meaning
of the Contingent Payment Regulations, with respect to the Notes of this
series. The “comparable yield” and the “projected payment schedule”, as
determined by the Company per $1,000 note, are specified on the face of this
Note.


 


Section 21.  Defined Terms.  All terms used but not defined in this Note
are used herein as defined in the Indenture.


 


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 Threshold 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.


 


11

















 


“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 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 Level”, shall mean, when used with respect to any
Relevant Index on any particular day, (a) the closing level of the
Relevant Index on such day as reported by the publisher of the Relevant Index,
as determined and adjusted by the Calculation Agent pursuant to the Calculation
Agency Agreement, or (b) as otherwise determined by the Calculation Agent
pursuant to the Calculation Agency Agreement if the Relevant Index has been
discontinued or in the circumstances described in the definition of the term “Valuation
Date” herein.


 


“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


 


12

















 


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


 


“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.


 


13

















 


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


 


“Index Weight” shall mean, if the Reference Equity set forth on
the face of this Note is a basket of stock indices, for each Relevant Index,
the number by which the Closing Level of such Relevant Index will be multiplied
in order to calculate the Settlement Value on a particular day.  The Index Weight relating to each Relevant
Index included in the Reference Equity shall be as specified on the fact of
this Note.


 


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


 


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


 


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


 


“Interest Rate” shall be the rate specified as such 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 or a Relevant Index 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) In the case of a Settlement Value Security, a material suspension of,
or limitation imposed on trading relating to, such Settlement Value Security,
or (b) in the case of a Relevant Index, a suspension of, or limitation
imposed on trading relating to, the securities that then comprise 20% or more
of such Relevant Index, in each case, by the Relevant Exchange for each such
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 or to such
Relevant Index, as the case may be, 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.


 


14

















 


(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, (a) in the case of a Settlement Value Security, that
Settlement Value Security, or (b) in the case of a Relevant Index, the
securities that then comprise 20% or more of such Relevant Index, in each case
on the Relevant Exchanges for that Settlement Value Security or those
securities, or in the case of a Settlement Value Security or a security not
listed or quoted in the United States, on the primary exchange, quotation
system or market for such Settlement Value Security or security, at any time
during the one hour period that ends at the Close of Trading on such day.


 


(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 or to such Relevant Index, as the case may be, 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, (a) in the case of a Settlement Value Security, the
Relevant Exchange for that Settlement Value Security or the primary exchange or
quotation system on which futures or options contracts relating to that
Settlement Value Security are traded, or (b) in the case of a Relevant
Index, the Relevant Exchanges for securities that then comprise 20% or more of
such Relevant Index or the primary exchange or quotation system on which
futures or options contracts relating to such Relevant Index is traded, in each
case, prior to its scheduled closing time unless the earlier closing time is
announced by the primary 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.


 


If the Reference Equity
specified on the face of this Note is a basket of common stocks or indices, a
Market Disruption Event will occur if a Market Disruption Event occurs with
respect to any of the Settlement Value Securities or Relevant Indices included
in the basket.


 


For purposes of determining
whether a Market Disruption Event has occurred, the relevant percentage
contribution of a security to the level of a Relevant Index will be based on a
comparison of (x) the portion of the level of the Relevant Index attributable
to that security and (y) the overall level of the Relevant Index, in each case
immediately before the occurrence of the Market Disruption Event.


 


“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 11
of this Note.


 


“Maturity Payment Amount” shall mean, for each $1,000 principal
amount of the Notes represented hereby, an amount equal to the greater of (a) $1,000
and (b) the Alternative Redemption Amount.


 


15

















 


“Multiplier” shall mean, if the Reference Equity set forth on
the face of this Note is a common stock or basket of common stocks, 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 relating to each Settlement Value Security initially
included in the Reference Equity shall be specified as such 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.


 


“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 an Interest 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 Interest Payment
Date or Stated Maturity Date to purchase for value on such Interest Payment
Date or Stated Maturity Date from such reference banks (A) the aggregate
amount of the Specified Currency due on such Interest 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 mean, for each $1,000 principal amount of Notes
represented hereby, the Alternative Redemption Amount.


 


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


 


16

















 


“Optional Repurchase Date”
shall mean the eighth Business Day (or such other date as is specified
on the face of this Note) following the Business Day on which the Company
receives a written notice of election to require repurchase of this Note in the
manner specified in Section 5 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.


 


“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 Reference Equity
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 greater of (a) $1,000 and (b) the Alternative
Redemption Amount.


 


“Reference Equity”
shall mean the common stock, stock index, basket of common stocks or basket of
stock indices specified as such 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


 


17

















 


Value Security is not listed or quoted in the United States, the
primary exchange, quotation system or market for such Settlement Value
Security.


 


“Relevant Index”
shall mean, if the Reference Equity specified on the face of this Note is a
stock index or basket of stock indices, any stock index included in the
calculation of the Settlement Value by the Calculation Agent in accordance with
the Calculation Agency Agreement, including any successor or substitute index selected
by the Calculation Agent in accordance with the Calculation Agency Agreement
upon discontinuance of an index. The Relevant Indices will initially consist of
those indices designated as the Reference Equity on the face of this Note.


 


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


 


“Scheduled Trading Day”
means (a) in the case of any Settlement Value Security, any day on which
the Relevant Exchange for such security is scheduled to be open for trading for
its regular trading session and (b) in the case of a Relevant Index, any
day on which the Relevant Index is published by its publisher or otherwise
determined by the Calculation Agent pursuant to the Calculation Agency
Agreement.


 


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


 


“Settlement Value”,
when used with respect to an applicable Valuation Date, shall equal:


 


(1) if the Reference Equity specified on the face of this Note is
a common stock or a basket of common stocks, the sum of the products of the
Closing Prices on the applicable Valuation Date 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 the Valuation
Date) for each Settlement Value Security on the 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;
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 of this
series 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;


 


(2) if the Reference Equity specified on the face of this Note is
a stock index, the Closing Level of the Relevant Index on the Valuation Date;
or


 


18

















 


(3) if the Reference Equity specified on the face of this Note is
a basket of stock indices, the sum of the products of the Closing Levels on the
Valuation Date and the applicable Index Weight  for
each Relevant Index.


 


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, if the Reference Equity specified on the face of
this Note is a common stock or a basket of common stocks, 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 stocks designated as the Reference Equity
on the face of this Note.


 


“Special Election
Interval” shall have the meaning set forth in Section 10 of this Note.


 


“Special Election Period”
shall have the meaning set forth in Section 10 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 or Relevant Indices, as the case
may be, 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 Interest
Period” shall have the meaning set forth in Section 7 of this Note.


 


“Threshold Value”
shall have the meaning set forth 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
specified on the face of this Note) 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 Stated Maturity Date.


 


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


 


19

















 


“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 or the Closing Level of the Relevant
Index, as the case may be, based upon its estimate of the value of the
Settlement Value Security or Relevant Index, 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.


 


20

















 


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 accrued interest 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 Interest
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 of this Note 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

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

  
	
  denomination)

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Please
  print name and address including zip code)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Stock
  Settlement option elected

  	
  SOCIAL
  SECURITY OR

  
	
   

  	
  OTHER
  TAXPAYER ID NUMBER:

  
	
  o YES    o
  NO

  	
   

  	
   

  
										



 

















 


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

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

  
	
  denomination)

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Please
  print name and address including zip code)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SOCIAL
  SECURITY OR OTHER TAXPAYER

  ID NUMBER

  
									



 

















 


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:

  	
   

  	
   

  
	
   

  	
   

  	
  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 signature guarantee medallion
  program), pursuant to SEC rule 17Ad-15.

  	
   

  	
   

  
								



 

















 


Schedule I


 


Amortization Table


 


	
  Date

  	
   

  	
  Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 

















 


EXHIBIT A


 


RESET NOTICE


 


LEHMAN BROTHERS HOLDINGS INC.


Medium-Term Notes, Series I


Performance Linked to the
Value of a Common Stock, a 

Stock Index, a Basket of Common Stocks or a Basket of Stock Indices


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 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.