Exhibit 4.02


 


CUSIP NO. 033609574


 


ISIN NO. XS0336095749


 


	
  REGISTERED

  	
   

  	
  FACE
  AMOUNT: AUD$1,500,000

  
	
  No. R-1

  	
   

  	
   

  



 


LEHMAN BROTHERS HOLDINGS INC.


 


MEDIUM-TERM NOTE, SERIES I


(FIXED RATE)


 






 


 












 




	
  ISSUE PRICE:

  	
   

  	
  DESIGNATED EXCHANGE

  	
   

  	
  OPTIONAL REPAYMENT

  
	
  AUD$1,500,000

  	
   

  	
  RATE: N/A

  	
   

  	
  PRICES: N/A

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ISSUE DATE:
  December 21,

  	
   

  	
  OPTION VALUE

  	
   

  	
  OPTIONAL INTEREST RATE

  
	
  2007

  	
   

  	
  CALCULATION AGENT: N/A

  	
   

  	
  RESET:

  
	
   

  	
   

  	
   

  	
   

  	
  o YES     x NO

  
	
  MATURITY DATE:
  December 21,

  	
   

  	
  OTHER PROVISIONS: N/A

  	
   

  	
   

  
	
  2011, subject to Optional

  	
   

  	
   

  	
   

  	
  OPTIONAL RESET DATES:

  
	
  Redemption; provided that
  if

  	
   

  	
  OPTION TO RECEIVE

  	
   

  	
  N/A

  
	
  such day is not a New York

  	
   

  	
  PAYMENTS IN THE

  	
   

  	
   

  
	
  business day, then such
  day will

  	
   

  	
  SPECIFIED CURRENCY:

  	
   

  	
  OPTIONAL REDEMPTION:

  
	
  be the following New York

  	
   

  	
  N/A

  	
   

  	
  x YES     o NO

  
	
  business day.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SPECIFIED CURRENCY:

  	
   

  	
  OPTIONAL REDEMPTION

  
	
  INTEREST RATE: 8.10%

  	
   

  	
  AUD

  	
   

  	
  PROVISIONS: The Company

  
	
   

  	
   

  	
   

  	
   

  	
  has the right on the 21st
  of each

  
	
  SPREAD: N/A

  	
   

  	
  BUSINESS DAY: New York,

  	
   

  	
  June and December,

  
	
   

  	
   

  	
  Sydney

  	
   

  	
  commencing
  December 21,

  
	
  SPREAD MULTIPLIER: N/A

  	
   

  	
   

  	
   

  	
  2008, provided that the

  
	
   

  	
   

  	
  AMORTIZING NOTE:

  	
   

  	
  Company gives 5 Business
  Days

  
	
  MAXIMUM INTEREST

  	
   

  	
  o YES     x NO

  	
   

  	
  notice to the Holder, to
  call the

  
	
  RATE: N/A

  	
   

  	
   

  	
   

  	
  notes in whole or in part
  at the

  
	
   

  	
   

  	
  SINKING FUND: N/A

  	
   

  	
  redemption price plus
  accrued

  
	
  MINIMUM INTEREST RATE:

  	
   

  	
   

  	
   

  	
  and unpaid interest to the
  call

  
	
  N/A

  	
   

  	
  OID NOTE:

  	
   

  	
  date.

  
	
   

  	
   

  	
  o YES     x NO

  	
   

  	
   

  
	
  INTEREST PAYMENT

  	
   

  	
   

  	
   

  	
  APPLICABILITY OF

  
	
  DATES: Semi-annually on
  the

  	
   

  	
  AUTHORIZED

  	
   

  	
  ANNUAL REDEMPTION

  
	
  21st of June and
  December,

  	
   

  	
  DENOMINATIONS:

  	
   

  	
  PERCENTAGE REDUCTION:

  
	
  commencing June 21,
  2008 and

  	
   

  	
  AUD$1,000/AUD$1,000

  	
   

  	
  o YES     x NO

  
	
  ending on the Maturity
  Date,

  	
   

  	
   

  	
   

  	
  If yes, state Annual
  Percentage

  
	
  subject to Optional
  Redemption

  	
   

  	
  EXTENSION OF MATURITY

  	
   

  	
  Reduction:     %

  
	
   

  	
   

  	
  NOTE:

  	
   

  	
   

  
	
  REGULAR RECORD DATES:

  	
   

  	
  o YES     x NO

  	
   

  	
  EXTENDIBLE NOTE:

  
	
  Fifteen calendar days

  	
   

  	
   

  	
   

  	
  o YES     x NO

  
	
  immediately preceding the

  	
   

  	
  EXTENSION PERIOD: N/A

  	
   

  	
   

  
	
  interest payment date.

  	
   

  	
   

  	
   

  	
  SPECIAL ELECTION

  
	
   

  	
   

  	
  NUMBER OF EXTENSION

  	
   

  	
  INTERVAL: N/A

  
	
  EXCHANGE RATE AGENT:

  	
   

  	
  PERIODS: N/A

  	
   

  	
   

  
	
  N/A

  	
   

  	
   

  	
   

  	
  RENEWABLE IN PART:

  
	
   

  	
   

  	
  OPTION TO ELECT

  	
   

  	
  o YES     x NO

  
	
  DEPOSITORY: Euroclear Bank

  	
   

  	
  REPAYMENT:

  	
   

  	
   

  
	
  S.A./N.V. and Clearstream

  	
   

  	
  o YES     x NO

  	
   

  	
  AUTHORIZED RENEWABLE

  
	
  Banking, société anonyme

  	
   

  	
   

  	
   

  	
  AMOUNTS: N/A

  
	
   

  	
   

  	
  OPTIONAL REPAYMENT

  	
   

  	
   

  
	
  DUAL CURRENCY NOTE:

  	
   

  	
  DATES: N/A

  	
   

  	
  SPECIAL
  ELECTION

  
	
  o YES     x NO

  	
   

  	
   

  	
   

  	
  PERIOD:
  N/A

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPTION ELECTION DATES:

  	
   

  	
   

  	
   

  	
   

  
	
  N/A

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  OPTIONAL PAYMENT

  	
   

  	
   

  	
   

  	
   

  
	
  CURRENCY: N/A

  	
   

  	
   

  	
   

  	
   

  






 


 


2

















 


 


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 Citibank, N.A., London, or registered assigns, on the
Maturity Date the Principal Amount hereof (as defined below) and, if so
specified above, to pay interest thereon from the Issue Date specified above or
from the most recent Interest Payment Date specified above to which interest
has been paid or duly provided for at the Interest Rate specified above until
the principal hereof is paid or made available for payment and (to the extent
that the payment of such interest shall be legally enforceable) at such rate
per annum on any overdue principal and premium and on any overdue instalment of
interest.  Unless otherwise specified
above, and except as provided in Section 8 on the reverse hereof if this
Note is a Dual Currency Note (as hereinafter defined), payments of principal,
premium, if any, and interest hereon will be made in U.S. dollars; if the
Specified Currency set forth above is a currency other than U.S. dollars (a “Foreign
Currency”), such payments will be made in that Foreign Currency. The “Principal
Amount” of this Note at any time means (i) if this Note is an OID Note,
the Amortized Face Amount at such time as described in Section 7 on the
reverse hereof, (ii) if this Note is an Amortizing Note, the Outstanding
Face Amount at such time as described in Section 4 on the reverse hereof, (iii) in
all other cases, the Face Amount hereof.


 


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


 


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


 


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


 


Unless otherwise specified above, the
interest payable on any Interest Payment Date will, as provided in the
Indenture, be paid to the person in whose name this Note (or one or more
predecessor Notes) is registered at the close of business on the Regular Record
Date indicated above (whether or not a Business Day) next preceding such
Interest Payment Date; provided
that, notwithstanding any provision of the Indenture to the contrary, interest
payable on any date of Maturity shall be payable to the Person to whom
principal shall be payable; and provided,


 


 


3

















 


 


further, that, unless
otherwise specified above, in the case of a Note initially issued between a
Regular Record Date and the Interest Payment Date relating to such Regular
Record Date, interest for the period beginning on the Issue Date and ending on
such Interest Payment Date shall be paid on the Interest Payment Date following
the next succeeding Regular Record Date to the registered Holder on such next
succeeding Regular Record Date.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


 


4

















 


 


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


 




	
  Dated: December 21,
  2007

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
  LEHMAN BROTHERS HOLDINGS
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
   

  	
  Assistant Secretary

  






 


TRUSTEE’S CERTIFICATE OF AUTHENTICATION


 


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


 


	
  CITIBANK, N.A., LONDON

  	
   

  
	
  as Authentication Agent

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  	
   

  



 


 


5
















[REVERSE OF NOTE]


 


LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTES, SERIES I

(Fixed Rate)


 


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


 


Section 2.   Currency Exchanges and
Payments.  Unless otherwise specified
on the face hereof, if payment hereon is required to be made in a Foreign
Currency and such currency is unavailable to the Company for making payments
thereof due to the imposition of exchange controls or other circumstances
beyond the Company’s control, or is no longer used by the government of the
country which issued such currency or for the settlement of transactions by
public institutions of or within the international banking community, then the
Company will be entitled to make payments with respect hereto in U.S. dollars
until such Foreign Currency is again available or so used.  The amount so payable on any date in such
Foreign Currency shall be converted into U.S. dollars at a rate determined by
the Exchange Rate Agent on the basis of the noon buying rate in New York City
for cable transfers in the Foreign Currency as certified for customs purposes
by the Federal Reserve Bank of New York (the “Market Exchange Rate”) for such
Foreign Currency on the second Business Day prior to such payment date, or on
such other basis as may be specified on the face hereof.  In the event such Market Exchange Rate is not
then available, the Company will be entitled to make payments in U.S. dollars (i) if
such Foreign Currency is not a composite currency, on the basis of the most
recently available Market Exchange Rate for such Foreign Currency or (ii) if
such Foreign Currency is a composite currency in an amount determined by the
Exchange Rate Agent to be the sum of the results obtained by multiplying the
number of units of each component currency of such composite currency, as of
the most recent date on which such composite currency was used, by the Market
Exchange Rate for such component currency on the second Business Day prior to
such payment date (or if such Market Exchange Rate is not then available, by
the most recently available Market Exchange Rate for such component currency, or
as otherwise specified on the face hereof). 
Any payment in respect hereof made under such circumstances in U.S.
dollars will not constitute an Event of Default under the Indenture.


 


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


 


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


 


 


6

















 


 


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


 


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


 


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


 


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


 


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


 


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


 


 


7

















 


 


periods
during which and the price or prices at which such redemption may occur during
such Subsequent Interest Period.  The
Reset Notice shall be substantially in the form of Exhibit A to this
Note.  Upon the transmittal by the
Trustee of a Reset Notice to the Holder of this Note, such new interest rate
shall take effect automatically, and, except as modified by the Reset Notice
and as described in the next paragraph, this Note will have the same terms as
prior to the transmittal of such Reset Notice.


 


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


 


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


 


Section 7.   OID Notes.  If this Note is an OID Note, the amount
payable in the event of redemption by the Company, repayment at the option of
the Holder or acceleration of Maturity shall be the Amortized Face Amount of
this Note as of the date of such redemption, repayment or declaration of
acceleration rather than the Face Amount hereof.  The “Amortized Face Amount” of this Note
shall be the amount equal to (a) the Issue Price (as set forth on the face
hereof) plus (b) the original issue discount amortized from the Issue Date
to the date as of which the Amortized Face Amount is calculated, which
amortization shall be calculated using the “interest method” (computed in
accordance with generally accepted accounting principles in effect on such
date) but in no event shall the Amortized Face Amount of this Note exceed the
Face Amount.


 


Section 8.   Dual Currency Notes.  If it is specified on the face hereof that
this Note is a Dual Currency Note, the Company has a one time option,
exercisable on any one of the Option Election Dates specified on the face
hereof in whole, but not in part, with respect to all Dual Currency Notes
issued on the same day and having the same terms as this Note (this “Tranche”),
of thereafter making all payments of principal, premium, if any, and interest
(which payments would otherwise be made in the Specified Currency of such
Notes) in the Optional Payment Currency specified on the face hereof.  If the Company makes such an election, the
amount of Optional Payment Currency payable in respect hereof shall be determined
by the Exchange Rate Agent by converting the amount of Specified Currency that
would otherwise be payable into the Optional Payment Currency at the Designated
Exchange Rate specified on the face hereof.


 


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


 


If this Note is a Dual
Currency Note, unless otherwise specified on the face hereof and
notwithstanding any prior election made by the Company, the amount payable
hereon in the event of any optional redemption by the Company, any repayment at
the option of the Holder, any acceleration of the Maturity of this Note or
other prepayment of this Note prior to the Maturity Date shall be an amount
equal to the Principal Amount hereof otherwise due and payable plus accrued
interest to but excluding the date of redemption, repayment, acceleration or
other prepayment minus the Total Option Value multiplied by a fraction, the
numerator of which is the Principal


 


 


8

















 


 


Amount hereof and the
denominator of which is the aggregate Principal Amount of all Dual Currency
Notes of this Tranche.  In no event will
such payment be less than zero. Notwithstanding any prior election made by the
Company, such payment shall be made in the Specified Currency unless otherwise
provided on the face hereof.


 


The term “Total Option Value”
means, with respect to any Dual Currency Note on any date, an amount
(calculated as of such date by the Option Value Calculation Agent) equal to the
sum of the Option Values (calculated as of such date by the Option Value
Calculation Agent) for all Interest Payment Dates occurring after the date of
calculation up to and including the Maturity Date.  The term “Option Value” means, with respect
to an Interest Payment Date or the Maturity Date, the amount calculated by the
Option Value Calculation Agent to be the arithmetic average of the prices
quoted on the date of calculation by three reference banks (which banks shall
be selected by the Option Value Calculation Agent and shall be reasonably
acceptable to the Company) for the right on the Option Election Date
immediately preceding such Interest Payment Date or Maturity Date to purchase
for value on such Interest Payment Date or Maturity Date from such reference
banks (A) the aggregate amount of the Specified Currency due on such
Interest Payment Date or Maturity Date with respect to all of the Dual Currency
Notes of this Tranche in exchange for (B) the amount of the Optional
Payment Currency that would be received if the amount in clause (A) were
converted into the Optional Payment Currency at the Designated Exchange Rate.


 


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


 


Section 9.   Extension of Maturity Notes.  If it is specified on the face hereof that
this Note is an Extension of Maturity Note, the Company has the option to
extend the Maturity Date hereof for the number of Extension Periods set forth
on the face hereof, each of which Extension Periods shall be a period of from
one to five whole years.  Unless
otherwise specified on the face hereof, the following procedures shall apply if
this Note is an Extension of Maturity Note.


 


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


 


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


 


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


 


 


9

















 


 


Section 10.  
Extendible Notes.  If it is
specified on the face hereof that this Note is an Extendible Note, this Note
will mature on the Initial Maturity Date specified on the face hereof unless
the Maturity of all or any portion of this Note is extended in accordance with
the procedures described below.


 


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


 


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


 


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


 


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


 


Section 11.   Principal Amount For
Indenture Purposes.  For the purpose
of determining whether Holders of the requisite amount of Notes outstanding
under the Indenture have made a demand, given a notice or waiver or taken any
other action, the outstanding principal amount of this Note will be deemed to
be the Principal Amount, provided,
however, if this Note is an OID
Note, the outstanding principal amount of this Note will be deemed to be the
amount of the principal thereof that would be due and payable as of the date of
such determination upon a declaration of acceleration of the maturity thereof.


 


Section 12.   Modification and Waivers.  The Indenture contains provisions permitting
the Company and the Trustee, with the consent of the holders of not less than
66-2/3% in aggregate principal amount of each series of the Securities at the
time Outstanding to be affected, evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Securities of all such series; provided,
however, that no such
supplemental indenture shall, among other things, (i) extend the fixed
maturity of any Security, or reduce the principal amount thereof, or reduce the
rate or extend the time of


 


 


10

















 


 


payment
of interest thereon or reduce any premium payable on redemption, or make the
principal thereof, or premium, if any, or interest thereon payable in any coin
or currency other than that hereinabove provided, without the consent of the
holder of each Security so affected, or (ii) change the place of payment
on any Security, or impair the right to institute suit for payment on any
Security, or reduce the aforesaid percentage of Securities, the holders of
which are required to consent to any such supplemental indenture, without the
consent of the holders of each Security so affected.  It is also provided in the Indenture that,
prior to any declaration accelerating the Maturity of any series of Securities,
the holders of a majority in aggregate principal amount of the Securities of
such series Outstanding may on behalf of the holders of all the Securities of
such series waive any past default or Event of Default under the Indenture with
respect to such series and its consequences, except a default in the payment of
interest, if any, on or the principal of, or premium if any, on any of the
Securities of such series, or in the payment of any sinking fund installment or
analogous obligation with respect to Securities of such series.  Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
holders and owners of this Note and any Notes which may be issued in exchange
or substitution herefor, irrespective of whether or not any notation thereof is
made upon this Note or such other Notes.


 


Section 13.   Obligations Unconditional.  No reference herein to the Indenture and no
provisions of this Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of, premium, if any, and interest, if any, on this Note at the place,
at the respective times, at the rate, and in the coin or currency herein
prescribed.


 


Section 14.   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 15.   Authorized Form and
Denominations.  The Notes of this
series are issuable in registered form, without coupons.  Unless otherwise set forth on the face
hereof, Notes denominated in U.S. dollars will be issued in Face Amount
denominations of U.S.$100,000 and any integral multiple of U.S.$1,000 in excess
thereof.  Notes denominated in a Foreign
Currency will be issued in the denomination or denominations set forth on the
face hereof.  Each Note will be issued
initially as either a Global Security or a Certificated Note, at the option of
the holders thereof, either at the office or agency to be designated and maintained
by the Company for such purpose in the Borough of Manhattan, New York City,
pursuant to the provisions of the Indenture or at any of such other offices or
agencies as may be designated and maintained by the Company for such purpose
pursuant to the provisions of the Indenture, and in the manner and subject to
the limitations provided in the Indenture, but without the payment of any
service charge, except for any tax or other governmental charges imposed in
connection therewith.  Notes of this
series are exchangeable for a like aggregate Face Amount of Notes of this
series of a different authorized denomination, except that Global Securities
will not be exchangeable for Certificated Notes.


 


Section 16.   Registration of Transfer.  As provided in the Indenture and subject to
certain limitations as therein set forth, the transfer of this Note is
registrable in the Security Register, upon surrender of this Note for
registration of transfer, at the Corporate Trust Office or agency in a Place of
Payment for this Note, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar
requiring such written instrument of transfer duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more
new Notes of this series, of authorized denominations and for the same
aggregate Face Amount, will be issued to the designated transferee or
transferees.


 


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


 


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


 


 


11

















 


 


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


 


Section 18.   No Recourse Against Certain
Persons.  No recourse for the payment
of the principal of, premium, if any, or interest on this Note, or for any
claim based hereon or otherwise in respect hereof, and no recourse under or
upon any obligation, covenant or agreement of the Company in the Indenture or
any Indenture supplemental thereto or in any Note, or because of the creation
of any indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor corporation, either directly or through the Company
or any successor corporation, whether by virtue of any constitution, statute or
rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of
the consideration for the issue hereof, expressly waived and released.


 


Section 19.   Defined Terms.  All terms used but not defined in this Note
are used herein as defined in the Indenture.


 


Section 20.   GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


 


 


12

















 


 


OPTION TO ELECT REPAYMENT


 


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


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

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

  
	
   

  	
   

  	
   

  	
  Name: 

  	
   

  
	
  AUD$

  	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Please print name and
  address including zip code)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  SOCIAL SECURITY OR OTHER
  TAXPAYER ID NUMBER

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


 


 


13

















 


 


OPTION TO ELECT TERMINATION OF AUTOMATIC
EXTENSION


 


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


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  	
   

  
	
   

  	
   

  	
   

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

  
	
   

  	
   

  	
   

  	
   

  	
   

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

  	
   

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

  
	
   

  	
   

  	
   

  	
  Name: 

  	
   

  
	
  AUD$

  	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (Please print name and
  address including zip code)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  SOCIAL SECURITY OR OTHER
  TAXPAYER ID NUMBER

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  



 


 


14

















 


 


ABBREVIATIONS


 


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


 


	
   

  	
  TEN COM

  	
  –

  	
  as tenants in common

  
	
   

  	
  TEN ENT

  	
  –

  	
  as tenant by the
  entireties

  
	
   

  	
  JT TEN

  	
  –

  	
  as joint tenants with
  right of survivorship and not as tenants in common

  
	
   

  	
  UNIF GIFT

  	
   

  	
   

  
	
   

  	
  MIN ACT

  	
  –

  	
   

  	
  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
  (Cust)

  	
   

  	
  (Minor)

  
	
   

  	
   

  	
   

  	
  Under Uniform Gifts to
  Minors Act

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (State)

  



 


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


 


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

  
	
   

  
	
   

  
	
  PLEASE INSERT SOCIAL
  SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

  
	
   

  
	
   

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

  
	
   

  
	
   

  
	
  the within Note of LEHMAN
  BROTHERS HOLDINGS INC. and all rights thereunder and does hereby irrevocably
  constitute and appoint                                                                                                             
  Attorney to transfer the said Note on the books of the within-named Company,
  with full power of substitution in the premises.

  



 


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SIGNATURE GUARANTEED:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  NOTICE: The signature to
  this

  	
   

  
	
   

  	
   

  	
   

  	
  assignment must correspond
  with the

  	
   

  
	
   

  	
   

  	
   

  	
  name as it appears upon
  the face of

  	
   

  
	
   

  	
   

  	
   

  	
  the within Note in every
  particular,

  	
   

  
	
   

  	
   

  	
   

  	
  without alteration or
  enlargement or

  	
   

  
	
   

  	
   

  	
   

  	
  any change whatsoever.

  	
   

  



 


 


 


15

















 


 


SCHEDULE I


 


 


 


Amortization Table


 




	
  Date

  	
   

  	
  Payment

  






 


 


 
















EXHIBIT
A


 


RESET NOTICE


 


LEHMAN BROTHERS HOLDINGS INC.

Medium-Term Notes, Series I

(Fixed Rate)

CUSIP No.                         

Registered Nos.       -      


 


 


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


 


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


 


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


 


	
   

  	
   

  	
  Date

  	
   

  	
  Redemption Price

  



 


 


 


 


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


 


	
  Dated:

  	
  LEHMAN BROTHERS HOLDINGS
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Title:  

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  



 


 


 


 


 


 


 


 


 


 


 


 


 






(1)           Insert applicable Optional Reset
Date.