Document:

Exhibit 10.1

 

AMENDMENT NO. 1

 

TO

 

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

 

AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (the “Amendment”), dated as of December 21, 2007, among
United Stationers Supply Co., an Illinois corporation, as the Borrower (the “Borrower”), United Stationers Inc., a Delaware corporation,
as a Credit Party, the Lenders, PNC Bank, National Association and U.S. Bank
National Association, as Syndication Agents, KeyBank National Association and
LaSalle Bank, National Association, as Documentation Agents, and JPMorgan Chase
Bank, National Association, as Agent (the “Agent”).  Defined terms used herein and not otherwise
defined herein shall have the meaning given to them in the Credit Agreement.

 

WHEREAS, the Borrower, the Lenders and the Agent have entered into that
certain Second Amended and Restated Five-Year Revolving Credit Agreement (the “Credit Agreement”) dated as of July 5, 2007 among the
Borrower, United Stationers Inc., the Lenders and the Agent;

 

WHEREAS, pursuant to Section 2.21 of the Credit Agreement, the
Borrower has requested that the Credit Agreement be amended to issue term loans
thereunder in the aggregate principal amount of $200,000,000; and

 

WHEREAS, subject to the terms and conditions hereof, the undersigned
Lenders and the Agent have agreed to the requested changes;

 

NOW, THEREFORE, in consideration of the premises set forth above, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

 

1.  Amendment to the Credit
Agreement.  Effective as of the date
first above written and subject to the execution of this Amendment by the
parties hereto and the satisfaction of the conditions precedent set forth in Section 2
below, the Credit Agreement shall be and hereby is amended as follows:

 

(a)           On the cover page and the first page of
the Credit Agreement, the title of the Credit Agreement shall be changed to the
“Second Amended and Restated Credit Agreement”.

 

(b)           Section 1.1 is hereby
amended as follows:

 

(i)  The definition
of “Advance” is hereby modified by deleting therefrom the two references
to “Revolving”.

 

 

 

 (ii)  The definition of “Business Day”
is hereby modified by replacing the language now contained therein with the
following:

 

“Business Day”
means any day that is not a Saturday, Sunday or other day on which commercial
banks in New York City are authorized or required by law to remain closed;
provided that, when used in connection with a Eurodollar Loan, the term
“Business Day” shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.

 

 (iii)  The definition of “Commitment”
is hereby modified to insert “Revolving” immediately before the reference to
“Loans”.

 

(iv)  The definition
of “Commitment Schedule” is hereby modified to insert the following at
the end thereof:  “and each Lender’s Term
Loan Commitment”.

 

(v)  The definition
of “Credit Extension Date” is hereby modified to insert “of Revolving
Loans” immediately after the reference to “Advance”.

 

(vi)  The definition
of “Eurodollar Loan” is hereby modified to delete therefrom the
reference to “Revolving”.

 

(vii)  The
definition of “Floating Rate Loan” is hereby modified to delete
therefrom the reference to “Revolving”.

 

(viii)  The
definition of “Loan” is hereby modified to add at the end thereof the
following:  “or such Lender’s Term Loan
made pursuant to Sections 2.21 and 2.22.”

 

(ix)  The definition
of “Pro Rata Share” is hereby modified by replacing the language now
contained therein with the following:

 

“Pro Rata Share”
means, with respect to a Lender, a portion equal to a fraction the numerator of
which is the sum of such Lender’s Commitment plus the outstanding principal
balance of such Lender’s Term Loans at such time (in each case, as adjusted
from time to time in accordance with the provisions of this Agreement) and the
denominator of which is the sum of the Aggregate Commitment plus the
outstanding principal balance of all Term Loans at such time, or, if the
Aggregate Commitment has been terminated, a fraction the numerator of which is
the sum of such Lender’s Outstanding Credit Exposure plus the outstanding
principal balance of such Lender’s Term Loans at such time and the denominator
of which is the sum of the Aggregate Outstanding Credit Exposure plus the
outstanding principal balance of all Term Loans at such time.”

 

(x) The definition
of “Type” is hereby modified to delete therefrom the reference to “Revolving”.

 

(c)           Section 1.1 is hereby
further amended by adding the following definitions:

 

“Revolving Percentage”
means, with respect to a Lender, a portion equal to a fraction the numerator of
which is such Lender’s Commitment at such time (in each case, as 

 

 

2

 

 

adjusted from time to
time in accordance with the provisions of this Agreement) and the denominator
of which is the Aggregate Commitment at such time, or, if the Aggregate
Commitment has been terminated, a fraction the numerator of which is such
Lender’s Outstanding Credit Exposure at such time and the denominator of which
is the sum of the Aggregate Outstanding Credit Exposure at such time.

 

“Term Loan Commitment”
shall mean the commitment of each Lender to make Term Loans as set forth on the
Commitment Schedule.

 

“Term Loan Effective
Date” shall mean the date as of which the conditions precedent to the
issuance of the Term Loans as provided in Section 2.21 have been
satisfied.

 

“Term Loan Maturity
Date” shall mean the earlier of (a) July 5, 2012 and (b) the
date of acceleration of the Term Loans pursuant to Section 8.1 hereof.

 

(d)           Sections 2.1.2, 2.4.4, 2.5.1, 2.20.2,
2.20.4, 2.20.5, 2.20.6 and 2.20.10 are hereby amended to delete the references
to “Pro Rata Share” and replace them with references to “Revolving Percentage.”

 

 (e)          Section 2.3(a) is
hereby amended by (i) inserting a reference to “of Revolving Loans”
immediately after the reference to “Advance” and (ii) inserting the
following sentence at the end “Each Advance of Term Loans hereunder shall
consist of Term Loans made from the several Lenders ratably in proportion to
their respective Term Loan Commitments.”

 

(f)            Section 2.6 is hereby
amended by inserting a reference to “of Revolving Loans” immediately after the
reference to “Floating Rate Advance”.

 

(g)           Section 2.8 is hereby
amended to delete the reference to “Revolving” immediately prior to the initial
reference to “Loans”.

 

(h)           Section 2.13 is hereby
amended to delete each reference to “Revolving”.

 

(i)            Section 2.17 is hereby
amended to delete each reference to “Revolving”.

 

(j)            Section 2.18 is hereby
amended to delete each reference to “Revolving”.

 

(k)           Section 2.19 is hereby
amended to delete the references to “Pro Rata Share” and replace them with
references to “pro rata share”, and is further amended to insert “and the Term
Loans” immediately after each reference to “Outstanding Credit Exposure” and is
further amended to delete the reference to “Revolving”.

 

(l)            A new Section 2.22
is hereby added as follows:

 

“Section 2.22.  Term
Loans.  Each Lender agrees to make a
Term Loan to the Borrower on the Term Loan Effective Date in an amount equal to
such Lender’s Term Loan Commitment by making immediately available funds
available to the Agent not later than the time specified by the Agent.  Amounts prepaid or repaid in respect of Term
Loans may not be 

 

 

3

 

 

reborrowed.  The
Borrower shall repay the aggregate outstanding principal balance of the Term
Loans on the Term Loan Maturity Date.”

 

(m)          Section 3.2
is hereby amended to insert “, its Term Loans” immediately after the reference
to “Outstanding Credit Exposure”.

 

(n)           Section 3.3
is hereby amended to delete the reference to “Revolving”.

 

(o)           Section 3.6
is hereby amended to delete the reference to “Revolving”.

 

(p)           Section 6.13.7
is hereby amended to delete the reference to “$20,000,000” and to replace it
with “$40,000,000.”

 

(q)           The Commitment
Schedule to the Credit Agreement is hereby amended by deleting the Commitment Schedule
now attached to the Credit Agreement and substituting therefor the Commitment
Schedule attached to this Amendment.

 

(r)            The Pricing
Schedule to the Credit Agreement is hereby amended by adding at the end of the
first sentence in the last paragraph the following:  “except that, beginning on the Term Loan
Effective Date, the Applicable Margin for Term Loans shall be based on Level V
Status until the receipt of Financials for the fiscal year ending December 31,
2007”.

 

(s)           Schedule 6.13 to the
Credit Agreement is hereby amended to delete Item 3 on Part A thereof and
to delete Part B thereof.

 

2.             Conditions of
Effectiveness.  This Amendment shall
become effective and be deemed effective as of the date hereof, if, and only
if, the Agent shall have received each of the following:

 

(a)           duly executed originals of this
Amendment from the Borrower, the Required Lenders parties to the Credit
Agreement prior to giving effect to this Amendment, each of the Lenders with a
Term Loan Commitment and the Agent;

 

(b)           the Agent shall have received duly
executed originals of a Reaffirmation in the form of Attachment A attached
hereto from each of the Credit Parties identified thereon; and

 

(c)           such other documents, instruments and
agreements as the Agent may reasonably request.

 

3.             Representations
and Warranties of the Borrower.  The
Borrower hereby represents and warrants as follows:

 

(a)  This Amendment and the Credit Agreement as previously
executed and as amended hereby, constitute legal, valid and binding obligations
of the Borrower and are enforceable against the Borrower in accordance with
their terms.

 

 

4

 

 

(b)  Upon the effectiveness of this Amendment, the Borrower hereby
reaffirms all covenants, representations and warranties made in the Credit
Agreement, to the extent the same are not amended hereby, and agrees that all
such covenants, representations and warranties (as so modified) shall be deemed
to have been remade as of the effective date of this Amendment; provided that
to the extent any such representation or warranty is stated in the Credit
Agreement to relate solely to an earlier date, the Borrower affirms solely that
such representation or warranty was true and correct in all material respects
on and as of such earlier date.

 

4.             Reference to the Effect on the Credit Agreement.

 

(a)  Upon the effectiveness of Section 1 hereof, on
and after the date hereof, each reference in the Credit Agreement to “this
Agreement,” “hereunder,” “hereof,” “herein” or words of like import shall mean
and be a reference to the Credit Agreement, as amended hereby.

 

(b)  Except as specifically amended above, the Credit Agreement
and all other documents, instruments and agreements executed and/or delivered
in connection therewith shall remain in full force and effect, and are hereby
ratified and confirmed.

 

(c)  The execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of the Agent or any of the Banks, nor constitute a
waiver of any provision of the Credit Agreement or any other documents,
instruments and agreements executed and/or delivered in connection therewith.

 

5.             Costs and
Expenses.  The Borrower agrees to pay
all reasonable out-of-pocket costs, fees and out-of-pocket expenses (including
attorneys’ fees and expenses charged to the Agent) incurred by the Agent in
connection with the preparation, execution and enforcement of this Amendment.

 

6.             Governing
Law.  This Amendment shall be governed
by and construed in accordance with the internal laws (as opposed to the
conflict of law provisions) of the State of New York.

 

7.             Headings.  Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.

 

8.             Counterparts.  This Amendment may be executed by one or more
of the parties to the Amendment on any number of separate counterparts and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.

 

 

 

5

IN WITNESS WHEREOF, this
Amendment has been duly executed and delivered on the date first above written.

 

 

	
   

  	
  UNITED STATIONERS
  SUPPLY CO.,

  
	
   

  	
  as the Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Victoria J. Reich

  
	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  
	
   

  	
   

  	
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice Information:

  
	
   

  	
   

  
	
   

  	
  One Parkway N. Blvd.,
  Suite 100

  
	
   

  	
  Deerfield, Illinois
  60015-2559

  
	
   

  	
  Attn: General Counsel

  
	
   

  	
  Telephone: (847)
  627-7000

  
	
   

  	
  Facsimile: (847)
  627-7087

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  One Parkway N. Blvd.,
  Suite 100

  
	
   

  	
  Deerfield, Illinois
  60015-2559

  
	
   

  	
  Attn: Chief Financial
  Officer

  
	
   

  	
  Telephone: (847)
  627-2113

  
	
   

  	
  Facsimile: (847)
  627-7113

  
	
   

  	
  and

  
	
   

  	
  Facsimile: (847)
  572-2358

  

 

 

 

 

 

	
   

  	
  UNITED STATIONERS INC.,

  
	
   

  	
  as a Credit Party

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Victoria J. Reich

  
	
   

  	
  Title:

  	
  Senior Vice President
  and Chief

  
	
   

  	
   

  	
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  Notice Information:

  
	
   

  	
   

  
	
   

  	
  One Parkway N. Blvd.,
  Suite 100

  
	
   

  	
  Deerfield, Illinois
  60015-2559

  
	
   

  	
  Attn: General Counsel

  
	
   

  	
  Telephone: (847)
  627-7000

  
	
   

  	
  Facsimile: (847)
  627-7087

  
	
   

  	
   

  
	
   

  	
  With a copy to:

  
	
   

  	
   

  
	
   

  	
  One Parkway N. Blvd.,
  Suite 100

  
	
   

  	
  Deerfield, Illinois
  60015-2559

  
	
   

  	
  Attn: Chief Financial
  Officer

  
	
   

  	
  Telephone: (847)
  627-2113

  
	
   

  	
  Facsimile: (847)
  627-7113

  
	
   

  	
  and

  
	
   

  	
  Facsimile: (847)
  572-2358

  

 

 

 

 

 

	
   

  	
  JPMORGAN CHASE BANK,
  NATIONAL

  
	
   

  	
  ASSOCIATION,
  individually, as an LC Issuer, and as Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  Notice Information:

  
	
   

  	
   

  
	
   

  	
  10 S. Dearborn St.

  
	
   

  	
  Chicago, IL 60603

  
	
   

  	
  Attn: Nathan Bloch

  
	
   

  	
  Telephone: (312)
  325-3094

  
	
   

  	
  Facsimile: (312)
  325-3077

  

 

 

 

 

 

	
   

  	
  PNC BANK, NATIONAL
  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

 

 

	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

 

 

	
   

  	
  KEYBANK NATIONAL
  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

 

 

	
   

  	
  LASALLE BANK, NATIONAL
  ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

 

 

	
   

  	
  RBS CITIZENS, N.A., as
  Lender and as LC Issuer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

 

 

	
   

  	
  FIFTH THIRD BANK
  (CHICAGO), A MICHIGAN BANKING CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

 

 

	
   

  	
  NATIONAL CITY BANK

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title: 

  

 

 

 

 

 

	
   

  	
  UNION
  BANK OF CALIFORNIA, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

 

 

	
   

  	
  ASSOCIATED
  BANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Daniel
  Holzhauer

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

 

 

 

 

	
   

  	
  CAPITAL
  ONE, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

 

 

	
   

  	
  WELLS
  FARGO BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Edmund
  Lester

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  
	
   

  	
   

  	
   

  

 

 

 

 

 

	
   

  	
  CHARTER
  ONE BANK, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

 

 

	
   

  	
  THE
  NORTHERN TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

 

 

	
   

  	
  HSBC
  BANK, USA, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

 

 

	
   

  	
  TD
  BANKNORTH, N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

 

 

	
   

  	
  FIRST
  HAWAIIAN BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

 

 

ATTACHMENT
A

 

REAFFIRMATION

 

Each of the undersigned hereby acknowledges receipt of a copy of
Amendment No. 1 to the Second Amended and Restated Five-Year Revolving
Credit Agreement dated as of July 5, 2007 by and among UNITED STATIONERS
SUPPLY CO. (the “Borrower”), UNITED STATIONERS INC., as a credit party
(the “Parent”), the financial institutions from time to time parties
thereto (the “Lenders”) and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
in its capacity as administrative agent (the “Agent”) (as the same may
be amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), which Amendment No. 1 is dated as of December 21,
2007 (the “Amendment”). 
Capitalized terms used in this Reaffirmation and not defined herein shall
have the meanings given to them in the Credit Agreement.  The undersigned acknowledge and agree that
nothing in the Credit Agreement, the Amendment or any other Loan Document shall
be deemed to require the Agent or any Lender to consent to any future amendment
or other modification to the Credit Agreement or any Loan Document.  Each of the undersigned reaffirms the terms
and conditions of the Guaranty, the Security Agreement, the Intellectual
Property Security Agreements and any other Loan Document executed by it and
acknowledges and agrees that such agreement and each and every such Loan
Document executed by the undersigned in connection with the Credit Agreement
remains in full force and effect and is hereby reaffirmed, ratified and
confirmed.  All references to the Credit
Agreement contained in the above-referenced documents shall be a reference to
the Credit Agreement as so modified by the Amendment and as the same may from
time to time hereafter be amended, modified or restated.

 

Dated:  December 21, 2007

 

	
  LAGASSE, INC. 

  	
   

  	
  UNITED STATIONERS FINANCIAL

  
	
   

  	
   

  	
  SERVICES LLC

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  By:

  	
   

  
	
  Title:

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  UNITED STATIONERS SUPPLY CO.   

  	
   

  	
  UNITED STATIONERS TECHNOLOGY

  
	
   

  	
   

  	
  SERVICES LLC

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  By:

  	
   

  
	
  Title:

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:Exhibit 4.01

 

CUSIP NO. 5252M0AR8

ISIN NO. US5252M0AR84

 

 

	
  REGISTERED

  No. R-1

  	
   

  	
   

  	
   

  	
  FACE
  AMOUNT: $19,000,000

  

 

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTE, SERIES I

(FIXED RATE)

 

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

 

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

 

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

 

 

 

 

	
  ISSUE PRICE: $19,000,000

   

  ISSUE DATE:
  December 28, 2007

   

  MATURITY DATE:
  December 28, 2037 subject to Optional Redemption and/or Survivor’s
  Option

   

  INTEREST RATE: 7.00%

   

  SPREAD: N/A

   

  SPREAD MULTIPLIER: N/A

   

  MAXIMUM INTEREST RATE: N/A

   

  MINIMUM INTEREST RATE: N/A

   

  INTEREST PAYMENT DATES:
  Semi-annually on June 28 and December 28, commencing on
  June 28, 2008

   

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

   

  EXCHANGE RATE AGENT: N/A

   

  DEPOSITORY: The Depository
  Trust Company

   

  DUAL CURRENCY NOTE:

  o YES     x NO

   

  OPTION ELECTION DATES: N/A

   

  OPTIONAL PAYMENT CURRENCY:
  N/A

   

  DESIGNATED EXCHANGE RATE:
  N/A

   

  OPTION VALUE CALCULATION
  AGENT: N/A

   

  OTHER PROVISIONS: N/A

  	
   

  	
  OPTION TO RECEIVE PAYMENTS
  IN THE SPECIFIED CURRENCY:

  o YES     x NO

   

  SPECIFIED CURRENCY: N/A

   

  BUSINESS DAY: New York

   

  AMORTIZING NOTE:

  o YES     x NO

   

  SINKING FUND: N/A

   

  OID NOTE:

  o YES     x NO

   

  AUTHORIZED DENOMINATIONS:
  $1,000/$1,000

   

  EXTENSION OF MATURITY NOTE:

  o YES     x NO

   

  EXTENSION PERIOD: N/A

   

  NUMBER OF EXTENSION
  PERIODS: N/A

   

  OPTION TO ELECT REPAYMENT:

  o YES     x NO

   

  OPTIONAL REPAYMENT DATES:
  N/A

   

  SURVIVOR’S OPTION:

   

  x YES     o NO

   

  	
   

  	
  OPTIONAL REPAYMENT PRICES:
  N/A

   

  OPTIONAL INTEREST RATE
  RESET:

  o YES     x NO

   

  OPTIONAL RESET DATES: N/A

   

  OPTIONAL REDEMPTION:

  x YES     o NO

   

  INITIAL REDEMPTION DATE: On
  each Interest Payment Date Commencing on December 28, 2011

   

  INITIAL REDEMPTION PERCENTAGE:
  N/A

   

  APPLICABILITY OF ANNUAL
  REDEMPTION PERCENTAGE REDUCTION:

  o YES     x NO

  If yes, state Annual
  Percentage Reduction:      %

   

  EXTENDIBLE NOTE:

  o YES     x NO

   

  INITIAL MATURITY DATE: N/A

   

  SPECIAL ELECTION INTERVAL:
  N/A

   

  RENEWABLE IN PART:

  o YES     x NO

   

  AUTHORIZED RENEWABLE
  AMOUNTS: N/A

   

  SPECIAL ELECTION PERIOD:
  N/A

   

  

 

 

LEHMAN BROTHERS HOLDINGS INC., a corporation
duly organized and existing under the laws of the State of Delaware (herein
called the “Company”, which term includes any successor corporation under the
Indenture referred to on the reverse hereof), for value received, hereby
promises to pay to Cede & Co., or registered assigns, on the Maturity
Date the Principal Amount hereof (as defined below) and, if so specified above,
to pay interest thereon from the Issue Date specified above or from the most
recent Interest Payment Date specified above to which interest has been paid or
duly provided for at the Interest Rate specified above until the principal
hereof is paid or made available for payment and (to the extent that the
payment of such interest shall be legally enforceable) at such rate per annum
on any overdue principal and premium and on any overdue installment of
interest.  Unless otherwise specified
above, and except as provided in Section 8 on the reverse hereof if this
Note is a Dual Currency Note (as hereinafter defined), payments of principal,
premium, if any, and interest hereon will be made in U.S. dollars; if the
Specified Currency set forth above is a currency other than U.S. dollars (a “Foreign
Currency”), such payments will be made in U.S. dollars based on the equivalent
of that Foreign Currency converted into U.S. dollars in the manner set forth in
Section 2 on the reverse hereof.  If
the Specified Currency is a Foreign Currency and it is so provided above, the
Holder may elect to receive such payments in that Foreign Currency by delivery
of a written request to the Trustee (or to any duly appointed Paying Agent) at
the Corporate Trust Office (as defined below) not later than 10 calendar days
prior to the applicable payment date, and such election will remain in effect
for the Holder until revoked by written notice to the Trustee (or to any such
Paying Agent) at the Corporate Trust Office received not later than 10 calendar
days prior to the applicable payment date; provided,
however, no such election or
revocation may be made if, with respect to this Note, (i) an Event of
Default has occurred, (ii) the Company has exercised any discharge or
defeasance options or (iii) the Company has given a notice of
redemption.  In the event the Holder
makes any such election pursuant to the preceding sentence, such election will
not be effective on any transferee of such Holder and such transferee shall be
paid in U.S. dollars unless such transferee makes an election pursuant to the
preceding sentence; provided, however, that such election, if in effect
while funds are on deposit with the Trustee to satisfy and discharge this Note,
will be effective on any such transferee unless otherwise specified above.  The “Principal Amount” of this Note at any
time means (i) if this Note is an OID Note, the Amortized Face Amount at
such time as described in Section 7 on the reverse hereof, (ii) if
this Note is an Amortizing Note, the Outstanding

 

2

 

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,
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 

 

3

 

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 28, 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.
   as Trustee

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  	
   

  

 

 

5

 

[REVERSE OF NOTE]

 

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTES, SERIES I

(Fixed Rate)

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

14

 

OPTION TO ELECT REPAYMENT

 

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

 

	
   

  	
   

  	
   

  
	
  Dated:                                                  

  	
   

  	
                                                    
  

  Signature 

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

  
	
   

  	
   

  	
   

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

  	
   

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

  
	
   

  	
   

  	
   

  
	
  $                                                            
  

  	
   

  	
  Name:                                                       
  

  Address:                                                   
  

                                                                     
  

  
	
   

  	
   

  	
   

  	
  (Please
  print name and address including zip code)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SOCIAL SECURITY OR OTHER
  TAXPAYER ID NUMBER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
                                                                   

  

 

 

 

15

 

OPTION TO ELECT TERMINATION OF AUTOMATIC
EXTENSION

 

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

 

	
   

  	
   

  	
   

  
	
  Dated:                                                  

  	
   

  	
                                                    
  

  Signature 

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

  
	
   

  	
   

  	
   

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

  	
   

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

  
	
   

  	
   

  	
   

  
	
  $                                                            

  	
   

  	
  Name:                                                       
  

  Address:                                                   
  

                                                                     
  

  
	
   

  	
   

  	
   

  	
  (Please
  print name and address including zip code)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SOCIAL SECURITY OR OTHER
  TAXPAYER ID NUMBER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
                                                                   

  

 

 

 

16

 

 

ABBREVIATIONS

 

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

 

	
  TEN COM

  	
  -

  	
  as tenants in common

  
	
  TEN ENT

  	
  -

  	
  as tenant by the
  entireties

  
	
  JT TEN

  	
  -

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

  
	
  UNIF GIFT

  	
   

  	
   

  
	
  MIN ACT

  	
  -

  	
   

  	
  Custodian

  	
   

  
	
   

  	
   

  	
  (Cust) 

  	
   

  	
  (Minor)

  
	
   

  	
   

  	
  Under Uniform Gifts to Minors Act

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (State)

  

 

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

 

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

 

                                                                                                                                                                                

PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

 

                                                                                                                                                                                

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

 

                                                                                                                                                                                

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

 

Dated:                                                

 

SIGNATURE GUARANTEED:                                                                                    

NOTICE:  The signature to this 

assignment must correspond with the 

name as it appears upon the face of 

the within Note in every particular, 

without alteration or enlargement or 

any change whatsoever.

 

 

 

17

 

SCHEDULE I

 

Amortization Table

 

	
  Date

  	
   

  	
  Payment

  

 

 

 

EXHIBIT
A

 

RESET NOTICE

 

LEHMAN BROTHERS HOLDINGS INC.

Medium-Term Notes, Series I

(Fixed Rate)

CUSIP No.                         

Registered Nos.       -      

 

 

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

 

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

 

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

 

	
   

  	
   

  	
  Date

  	
   

  	
  Redemption Price

  

 

 

 

 

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

 

	
  Dated:

  	
  LEHMAN BROTHERS HOLDINGS
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
   

  
	
   

  	
   

  	
  Title:  

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)           Insert applicable
Optional Reset Date.

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