Exhibit 4.01


 


CUSIP NO. 5252M0DZ7


ISIN NO. US5252M0DZ73


 


 


	
  REGISTERED

  	
   

  	
  FACE
  AMOUNT: $3,600,000

  
	
  No. R-1

  	
   

  	
   

  



 


LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTE, SERIES I

(FIXED RATE)


 


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


 


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


 


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


 













 


	
   

  	
   

  	
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  ISSUE DATE: March 7, 2008

   

  STATED MATURITY DATE: March 7, 2023, subject to
  Issuer’s Call Option and/or Survivor’s Option

   

  INTEREST RATE: From and including the Issue Date to
  but excluding March 7, 2009: 9.00%. From and including March 7,
  2009 to but excluding the Stated Maturity Date: 9.00% x Interest Accrual
  Factor.

   

  SPREAD: N/A

   

  SPREAD MULTIPLIER: N/A

   

  MAXIMUM INTEREST RATE: N/A

   

  MINIMUM INTEREST RATE: 0.00%

   

  INTEREST PAYMENT DATES: Each March  7,
  June 7, September 7 and December 7, commencing on June 7,
  2008 and ending on the Stated Maturity Date.

   

  REGULAR RECORD DATES: Fifteen calendar days
  immediately preceding the interest payment date.

   

  EXCHANGE RATE AGENT: N/A

   

  DEPOSITORY: The Depository Trust Company

   

  DUAL CURRENCY NOTE:

  [  ] YES   [X] NO

   

  OPTION ELECTION DATES: N/A

   

  OPTIONAL PAYMENT CURRENCY: N/A

   

  DESIGNATED EXCHANGE RATE: N/A

   

  OPTION VALUE CALCULATION AGENT: N/A

   

  OTHER PROVISIONS: N/A

   

  	
   

  	
  INTEREST PERIOD: Quarterly, from and including each
  Interest Payment Date (or the Issue Date, in the case of the first Interest
  Period), to but excluding the next succeeding Interest Payment Date (or the
  Stated Maturity Date, in the case of the final Interest Period).

   

  INTEREST ACCRUAL FACTOR: For any Interest Period, the
  number of calendar days (including non-Business Days) during that Interest
  Period in respect of which 6m USD LIBORREF is greater than or
  equal to the Lower LIBOR Barrier and less than or equal to the Upper LIBOR
  Barrier, divided by the total number of calendar days (including non-Business
  Days) in such Interest Period.

   

  LOWER LIBOR BARRIER: 0.00%

   

  UPPER LIBOR BARRIER: 6.50%

   

  6m USD LIBORREF: For any day within an
  Interest Period, the rate for deposits in U.S. Dollars for a period of 6
  months which appears on Reuters Page LIBOR01 as of 11:00 a.m.
  London time on such day (or if such day is not a London business day, on the
  immediately preceding London business day), subject to the Rate Cut Off.

   

  RATE CUT OFF: 6m USD LIBORREF for any days
  within an Interest Period from and including the fifth Business Day prior to
  an Interest Payment Date will equal 6m USD LIBORREF in effect on the fifth Business Day prior to
  that Interest Payment Date.

   

  OPTION TO RECEIVE PAYMENTS IN THE SPECIFIED
  CURRENCY:[  ] YES   [X] NO

   

  SPECIFIED CURRENCY: N/A

   

  BUSINESS DAY: New York and London

   

  AMORTIZING NOTE:

  [  ] YES   [X] NO

   

  SINKING FUND: N/A

   

  OID NOTE:

  [  ] YES   [X] NO

   

  ISSUE PRICE: N/A

  	
   

  	
  AUTHORIZED DENOMINATIONS: 

  $1,000/$1,000

   

  EXTENSION OF MATURITY NOTE:

  [  ] YES  [X] NO

   

  EXTENSION PERIOD: N/A

   

  NUMBER OF EXTENSION PERIODS: N/A

   

  OPTION TO ELECT REPAYMENT:

  [  ] YES  [X] NO

   

  OPTIONAL REPAYMENT DATES: N/A

   

  SURVIVOR’S OPTION:

   

  [X] YES  [  ] NO

   

  OPTIONAL REPAYMENT PRICES: N/A

   

  OPTIONAL INTEREST RATE RESET:

  [  ] YES  [X] NO

   

  OPTIONAL RESET DATES: N/A

   

  OPTIONAL REDEMPTION:

  [X] YES  [  ] NO

   

  INITIAL REDEMPTION DATE: March 7, 2009.

   

  INITIAL REDEMPTION PERCENTAGE: N/A

   

  APPLICABILITY OF ANNUAL

  REDEMPTION

  PERCENTAGE REDUCTION:

  [  ] YES  [X] NO

  If yes, state Annual Percentage

  Reduction: %

   

  EXTENDIBLE NOTE:

  [  ] YES  [X] NO

   

  INITIAL MATURITY DATE: N/A

   

  SPECIAL ELECTION INTERVAL: N/A

   

  RENEWABLE IN PART:

  [  ] YES  [X] NO

   

  AUTHORIZED RENEWABLE AMOUNTS: 

  N/A

   

  SPECIAL ELECTION PERIOD: N/A

  



 


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


 













 


	
   

  	
   

  	
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makes
any such election pursuant to the preceding sentence, such election will not be
effective on any transferee of such Holder and such transferee shall be paid in
U.S. dollars unless such transferee makes an election pursuant to the preceding
sentence; provided, however, that such election, if in effect
while funds are on deposit with the Trustee to satisfy and discharge this Note,
will be effective on any such transferee unless otherwise specified above. The “Principal
Amount” of this Note at any time means (i) if this Note is an OID Note,
the Amortized Face Amount at such time as described in Section 7 on the
reverse hereof, (ii) if this Note is an Amortizing Note, the Outstanding
Face Amount at such time as described in Section 4 on the reverse hereof, (iii) in
all other cases, the Face Amount hereof.


 


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 quarterly on March 7, June 7,
September 7 and December 7 of each year (unless other Interest
Payment Dates are specified above) (each an “Interest Payment Date”),
commencing with the first Interest Payment Date next succeeding the Issue Date,
and at Maturity; provided that
any payment of principal, premium, if any, or interest to be made on any
Interest Payment Date or on a date of Maturity that is not a Business Day shall
be made on the next succeeding Business Day with the same force and effect as
if made on such Interest Payment Date or such date of Maturity, as the case may
be, and no additional interest shall accrue as a result of such delayed
payment. The term “Business Day” means any day, that is not a Saturday or
Sunday, and that is not a day on which banking institutions in New York City
are generally authorized obligated or by law or executive order to be closed; for notes denominated in pounds sterling
only, is also a London Business Day; for notes having a specified currency
other than U.S. dollars only, other than notes denominated in Euros, is also
not a day on which banking institutions in the principal financial center (as
defined below) of the country of the specified currency generally are
authorized or obligated by law or executive order to close; and for notes
denominated in Euros, is also a Euro business day. A principal financial center
means the capital city of the country issuing the specified currency. However,
for U.S. dollars, Australian dollars, Canadian dollars and Swiss francs, the
principal financial center will be New York City, Sydney, Toronto and Zurich,
respectively. A  “London Business Day”
means any day that is not a Saturday or Sunday and on which dealings in
deposits in U.S. dollars are transacted, or with respect to any future date are
expected to be transacted, in the London interbank market and a “Euro Business
Day” means any day that is not a Saturday or Sunday on which the Trans-European
Automated Real-Time Gross Settlement Express Transfer System is open. Each payment of
interest hereon shall include interest accrued through the day before the
Interest Payment Date or date of Maturity, as the case may be. Unless otherwise
specified above, interest on this Note will be computed on the basis of a
360-day year of twelve 30-day months. In no event shall the interest rate of
this Note be higher than the maximum rate permitted by applicable law, as the
same may be modified by United States law of general application.


 


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


 


Unless otherwise indicated
above, and except as provided below, if this Note is a Global Security, all
payments of interest on this Note and all principal payments hereon if this
Note is an Amortizing Note (other than


 













 


	
   

  	
   

  	
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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.


 













 


	
   

  	
   

  	
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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: March 7, 2008


 


	
  [SEAL]

  	
  LEHMAN BROTHERS HOLDINGS
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Andrew Yeung

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Cindy Buckholz

  
	
   

  	
   

  	
  Title:

  	
  Assistant Secretary

  
							



 


 


TRUSTEE’S CERTIFICATE OF AUTHENTICATION


 


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


 


CITIBANK, N.A.
   as
Trustee


 


 


	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  



 












 


6


 


[REVERSE OF NOTE]


 


LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTES, SERIES I

(Fixed Rate)


 


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


 


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


 


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


 


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


 













 


7


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 













 


8


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 













 


9


 


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


 


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


 


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


 


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


 


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


 


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


 













 


10


 


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


 


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


 


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


 


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


 


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


 


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


 













 


11


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 













 


12


 


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


 


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


 


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


 


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


 


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


 













 


13


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 













 


14


 


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


 


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


 


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


 


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












 


15


 


OPTION TO ELECT REPAYMENT


 


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


 


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  Sign exactly as name appears on the front of 

  this Note [SIGNATURE GUARANTEED - required

  only if Notes are to be issued and delivered 

  to other than the registered Holder]

  
	
   

  	
   

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

  	
  Fill in for registration
  of Notes if to be issued otherwise 

  
	
  than the Face Amount of
  this Note (Face Amount

  	
  than to the registered
  Holder:

  
	
  remaining must be an
  authorized denomination)

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
  Address: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please print name and address

  including zip code)

  	
   

  
	
   

  	
   

  
	
   

  	
  SOCIAL SECURITY OR OTHER
  TAXPAYER ID

  
	
   

  	
  NUMBER

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
										



 













 


16


 


OPTION TO ELECT TERMINATION OF AUTOMATIC
EXTENSION


 


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


 


	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
  Sign exactly as name
  appears on the front of 

  
	
   

  	
  this Note [SIGNATURE
  GUARANTEED - required

  
	
   

  	
  only if Notes are to be
  issued and delivered 

  
	
   

  	
  to other than the
  registered Holder]

  
	
   

  	
   

  
	
  Face Amount to be
  terminated, if amount to be

  	
  Fill in for registration
  of Notes if to be issued otherwise

  
	
  terminated is less than
  the Face Amount of this Note

  	
  than to the registered
  Holder:

  
	
  (such Face Amount must be
  an authorized

  	
   

  
	
  denomination)

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please print name and address

  including zip code)

  	
   

  
	
   

  	
   

  
	
   

  	
  SOCIAL SECURITY OR OTHER
  TAXPAYER

  
	
   

  	
  ID NUMBER

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
									



 













 


17


 


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.

  



 













 


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.