Document:

Exhibit 4.03

 

CUSIP
NO. 52520W325

ISIN NO. US52520W3253

 

	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT:
  $15,000,000

  
	
  No. R-1

  	
   

  	
   

  

 

LEHMAN BROTHERS HOLDINGS INC.

 

MEDIUM-TERM NOTE, SERIES I

 

NOTES LINKED TO AN ASIAN CURRENCY BASKET
 DUE JANUARY 29, 2010

 

THIS
NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY OR A NOMINEE OF THE
DEPOSITORY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE &
CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.

 

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

 

 

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, an amount equal to the Redemption Amount.

 

The “Maturity Date” is January 29, 2010,
or if such day is not a Business Day, on the next following Business Day.

 

The “Valuation
Date” is January 26, 2010; provided that, upon the occurrence of a
Disruption Event with respect to a Basket Currency, the Valuation Date for the
affected Basket Currency may be postponed (as described in “Disruption Events”
below).

 

The “Redemption
Amount” is the amount equal to the sum of the principal amount of the Notes,
plus $10, plus the Additional Amount, if any.

 

The “Additional
Amount” is an amount per Note equal to the greater of (a) zero and (b) $10
multiplied by the product of the Basket Return times the Participation Rate.

 

The “Participation
Rate” is 195%.

 

The “Basket
Currencies” are the Indonesian Rupiah (IDR), Indian Rupee (INR), Malaysian
Ringgit (MYR) and Philippine Peso (PHP).

 

The “Basket Return”
is a quotient, the numerator of which is the difference of the Basket Ending
Level minus the Basket Starting Level and the denominator of which is the
Basket Starting Level.

 

The “Basket
Starting Level” is set equal to 100 on the Trade Date.

 

The “Basket Ending
Level” is the Basket closing level on the Valuation Date, equal to the product
of 100 times the sum of 1 plus the sum of the Weighted Currency Returns.

 

The “Weighted
Currency Return” for each Basket Currency is the product of the Currency Return
for such Basket Currency times the Basket Currency Weighting for such Basket
Currency.

 

The “Currency
Return” for each Basket Currency is a quotient, the numerator of which is the
difference of the Initial Spot Rate for such Basket Currency minus the Final
Spot Rate for such Basket Currency and the denominator of which is the Final
Spot Rate for such Basket Currency.

 

The “Final Spot
Rate” for each Basket Currency is the Reference Exchange Rate for that Basket
Currency on the Valuation Date, determined by the Calculation Agent in
accordance with the Spot Rate Source (subject to the occurrence of a Disruption
Event).

 

2

 

The “Weighting” and
“Initial Spot Rate” for each Basket Currency are as follows:

 

	
  Basket

  Currency

  	
   

  	
  Weighting

  	
   

  	
  Initial Spot

  Rate

  	
   

  
	
  IDR

  	
   

  	
  25

  	
  %

  	
  9315

  	
   

  
	
  INR

  	
   

  	
  25

  	
  %

  	
  39.30

  	
   

  
	
  MYR

  	
   

  	
  25

  	
  %

  	
  3.2280

  	
   

  
	
  PHP

  	
   

  	
  25

  	
  %

  	
  40.75

  	
   

  

 

The “Reference
Exchange Rates” are, for each Basket Currency, the spot exchange rates for that
Basket Currency quoted against the U.S. dollar, expressed as the number of
units of the Basket Currency per one USD.

 

The “Issue
Date” is January 31, 2008.

 

If a
Disruption Event relating to one or more of the Basket Currencies is in effect
on the scheduled Valuation Date, the Calculation Agent will determine the
Basket Return using:

 

·                                          for each Basket Currency
that did  not suffer a Disruption Event on the scheduled
Valuation Date, the Final Spot Rate on the scheduled Valuation Date, and

 

·                                          for each Basket Currency
that did suffer a Disruption Event
on the scheduled Valuation Date, the Final Spot Rate on the immediately
succeeding scheduled Valuation Business Day for such Basket Currency on which
no Disruption Event occurs or is continuing with respect to such Basket
Currency;

 

provided, however, that if a
Disruption Event has occurred or is continuing with respect to a Basket
Currency on each of the three scheduled Valuation Business Days following the
scheduled Valuation Date, then (a) such third scheduled Valuation Business
Day shall be deemed the Valuation Date for the affected Basket Currency; and (b) the
Calculation Agent will determine the Final Spot Rate for the affected Basket
Currency on such day in accordance with Fallback Rate Observation Methodology.

 

For
purposes of the above, “scheduled Valuation Business Day” means a day that is
or, in the judgment of the Calculation Agent, should have been, a Valuation
Business Day for the affected Basket Currency.

 

A “Disruption
Event” means any of the
following events with respect to a Basket Currency, as determined in good faith
by the Calculation Agent:

 

(A)                              the occurrence and/or existence of an event on any day that has the
effect of preventing or making impossible the delivery of USD from accounts
inside the Basket Currency Jurisdiction for that Basket Currency to accounts
outside that Basket Currency Jurisdiction;

 

(B)                                the occurrence of any event causing the Reference
Exchange Rate for the Basket Currency to be split into dual or multiple
currency exchange rates; or

 

(C)                                the Final Spot Rate being unavailable for the Basket Currency, or the
occurrence of an event (i) in the Basket Currency Jurisdiction for that
Basket Currency that materially disrupts the market for the Basket 

 

3

 

Currency
or (ii) that generally makes it impossible to obtain the Final Spot Rate
for the Basket Currency, on the Valuation Date.

 

A “Valuation Business Day” means,
with respect to each Basket Currency, any day, other than a Saturday or Sunday,
that is neither a legal holiday nor a day on which commercial banks are
authorized or required by law, regulation or executive order to close
(including for dealings in foreign exchange in accordance with the practice of
the foreign exchange market) in the city or jurisdiction indicated in the table
below:

 

	
  Basket Currency

  	
   

  	
  Screen
  Reference

  	
   

  	
  Valuation
  Business Day

  
	
  IDR

  	
   

  	
  ABSIRFIX01

  	
   

  	
  Singapore

  
	
  INR

  	
   

  	
  RBIB

  	
   

  	
  Mumbai

  
	
  MYR

  	
   

  	
  ABSIRFIX01

  	
   

  	
  Singapore

  
	
  PHP

  	
   

  	
  PDSPESO
  (as successor to PHPESO)

  	
   

  	
  Manila

  

 

The “Spot Rate Source” for the IDR
is the
Indonesian Rupiah/U.S. Dollar spot rate at 11:00 a.m., Singapore time,
expressed as the  amount of Indonesian
Rupiah per one U.S.  Dollar, for settlement in
two Business Days,  reported by the Association of Banks in Singapore which appears on the Reuters Page ABSIRFIX01 to the right of the caption “Spot” under the column “IDR”
at  approximately 11:30 a.m., Singapore time, on the relevant Valuation Date. The Spot Rate Source
for the INR is the Indian Rupee/U.S. dollar reference rate, expressed as the
amount of Indian Rupee per one U.S. dollar, for settlement in two Business Days
reported by the Reserve Bank of India which appears on the Reuters Screen RBIB Page at
approximately 2:30 p.m., Mumbai time, or as soon thereafter as practicable
on the Valuation Date or such other
relevant date.
The Spot Rate Source for the MYR is the Malaysian Ringgit/U.S. Dollar spot rate
at 11:00 a.m., Singapore time, expressed as the amount of Malaysian
Ringgit per one U.S. Dollar, for settlement in two Business Days, reported by
the Association of Banks in Singapore, which appears on the Reuters Page ABSIRFIX01
to the right of the caption “Spot” under the column “MYR” at approximately
11:30 a.m., Singapore time, on the relevant Valuation Date. The Spot Rate
Source for the PHP is the Philippine Peso/U.S. Dollar morning weighted average
rate, expressed as the amount of Philippine Pesos per one U.S. Dollar, for
settlement in one Business Day reported by the Philippine Dealing system which
appears on the Reuters Screen PHPESO Page to the right of the caption “AM
WT AVE” at approximately 12:30 p.m., Manila time, on the relevant
Valuation Date.

 

The screen or time of observation
indicated in relation to any Final Spot Rate above shall be deemed to refer to
such screen or time of observation as modified or amended from time to time, or
to any substitute screen thereto.

 

The “Fallback
Rate Observation Methodology” means
that the Reference Exchange Rate, Final Spot Rate or other rate, as specified
in the applicable pricing supplement, in respect of a basket currency will
equal the noon buying rate in New York for cable transfers in foreign
currencies as announced by the Federal Reserve Bank of New York for customs
purposes (the “Noon Buying Rate”) on the relevant Valuation Date or such other
date specified in the applicable pricing supplement. If the Noon Buying Rate is
not announced on that date, the Reference Exchange Rate, Final Spot Rate or
other rate for such Basket Currency will be calculated on the basis of the
arithmetic mean of the applicable spot quotations received by the 

 

4

 

Calculation Agent at approximately 10:00 a.m., New York City time,
on the Valuation Business Day next succeeding the Valuation Date or such other
date specified in the applicable pricing supplement, for the purchase or sale
for deposits in the basket currency by the New York offices of three leading
banks engaged in the interbank market (selected in the sole discretion of the
Calculation Agent) (the “Reference Banks”). If fewer than three Reference Banks
provide spot quotations, then the Reference Exchange Rate, Final Spot Rate or
other rate, as applicable, will be calculated on the basis of the arithmetic
mean of the applicable spot quotations received by the Calculation Agent at
approximately 10:00 a.m., New York City time, on the relevant date from
two Reference Banks (selected in the sole discretion of the Calculation Agent),
for the purchase or sale for deposits in the Basket Currency. If these spot
quotations are available from only one Reference Bank, then the Calculation
Agent, in its sole discretion, will determine whether that quotation is
reasonable to be used. If no spot quotation is available, then the Reference
Exchange Rate, Final Spot Rate or other rate, as applicable, for such Basket
Currency will be determined by the Calculation Agent in good faith and in a
commercially reasonable manner.

 

A “Business Day”, notwithstanding any
provision in the Indenture, is any day that is not is not a Saturday or Sunday
and that is not a day on which banking institutions in New York City generally
are authorized or obligated by law or executive order to be closed.

 

The “Calculation Agent” means Lehman Brothers
Inc.

 

Except as provided below, the Redemption Amount may, at the option of
the Company, be made by check mailed to the person entitled thereto at such
person’s address as it appears on the registry books of the Company.

 

Payment of the Redemption Amount will be made in immediately available
funds in accordance with the normal procedures of the Trustee (or any duly
appointed Paying Agent).

 

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.$” or “$” or “USD” 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.

 

5

 

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

 

	
  Dated: January 31,
  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

NOTES LINKED TO AN ASIAN CURRENCY BASKET
 DUE JANUARY 29, 2010

 

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

 

Section 2.  Principal Amount for Indenture Purposes.  For the purpose of determining whether
Holders of the requisite amount of Notes of this series outstanding under the
Indenture have made a demand, given a notice or waiver or taken any other
action, the principal amount of this Note will be deemed to be the principal
amount of this Note then outstanding.

 

Section 3.  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) change the fixed maturity of any
Security, or reduce the Additional Amount or the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon or reduce any
premium or other amount payable on redemption, or make the Additional Amount or
the principal amount thereof, premium or other amount payable, if any, or
interest thereon payable in any coin or currency other than that herein above provided,
without the consent of the Holder of each Security so affected, or (ii) change
the place of payment on any Security, or impair the right to institute suit for
payment on any Security, or reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security so affected. It is also
provided in the Indenture that, prior to any declaration accelerating the
maturity of any series of Securities, the holders of a majority in aggregate
principal amount of the Securities of such series 

 

 

Outstanding may on behalf
of the holders of all the Securities of such series waive any past default or
Event of Default under the Indenture with respect to such series and its
consequences, except a default in the payment of interest, if any, on the
Additional Amount or the principal amount, or premium, if any, on any of the
Securities of such series, or in the payment of any sinking fund installment or
analogous obligation with respect to Securities of such series.  Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
holders and owners of this Note and any Notes of this series which may be issued
in exchange or substitution herefor, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes of this series.

 

Section 4.  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
Additional Amount or the principal amount on this Note at the place, at the
respective times, at the rate, and in the coin or currency herein prescribed.

 

Section 5.  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 6.  Authorized Form and Denominations.  The Notes of this series are issuable in
registered form, without coupons. Each Note will be issued initially as either
a Global Security or a Certificated Note, at the option of the Company, in
denominations of $1,000 or whole multiples of $1,000, either at the office or
agency to be designated and maintained by the Company for such purpose in the
Borough of Manhattan, New York City, pursuant to the provisions of the Indenture
or at any of such other offices or agencies as may be designated and maintained
by the Company for such purpose pursuant to the provisions of the Indenture,
and in the manner and subject to the limitations provided in the Indenture, but
without the payment of any service charge, except for any tax or other
governmental charges imposed in connection therewith. Notes of this series are
exchangeable for a like aggregate principal amount of Notes of this series of a
different authorized denomination, except that Global Securities will not be
exchangeable for Certificated Notes of this series.

 

Section 7.  Registration of Transfer.  As provided in the Indenture and subject to
certain limitations as therein set forth, the transfer of this Note is
registrable in the Security Register, upon surrender of this Note for
registration of transfer, at the Corporate Trust Office or agency in a Place of
Payment for this Note, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar
requiring such written instrument of transfer duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more
new Notes of this series, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.

 

If at any time the
Depository notifies the Company that it is unwilling or unable to continue as
Depository or if at any time the Depository shall no longer be eligible under
the Indenture, the Company shall appoint a successor Depository. If a successor
Depository for the Notes of this series is not appointed by the Company within
90 days after the Company receives such notice or becomes aware of such
ineligibility, the Company will issue, and the Trustee will 

 

 

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

 

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

 

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

 

Section 8.  Events of Default.  If an Event of Default with respect to Notes
of this series shall occur and be continuing, the amount that may be declared
due and payable upon any acceleration of the notes will be determined by the
Calculation Agent for the period from and including the Issue Date to but
excluding the date of early repayment and will equal, for each note, the
Redemption Amount, calculated as the date of early repayment were the Maturity
Date. If a bankruptcy proceeding is commenced in respect of Lehman Brothers
Holdings, the claim of the beneficial owner of a note for the period from and
including the Issue Date to but excluding the date of early repayment will be
capped at the Redemption Amount, calculated as though the date of the
commencement of the proceeding were the Maturity Date.

 

Section 9.  No Recourse Against Certain Persons.  No recourse for the payment of the Additional
Amount 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 10.  Defined
Terms.  All terms used but not
defined in this Note are used herein as defined in the Indenture.

 

Section 11.  GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.Exhibit 4.04

 

CUSIP NO. 5252M0CS4

ISIN NO. US5252M0CS40

 

	
  REGISTERED

  	
   

  	
  FACE AMOUNT: $17,061,000

  
	
  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.

 

 

 

ISSUE PRICE:  $17,061,000

ISSUE DATE: January 31, 2008

MATURITY DATE: January 30,
2038, subject to Issuer’s Call Option 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 January 31 and July 31, commencing on July 31, 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 January 31, 2012

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 January 31
and July 31 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:
  January 31, 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

  

 

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 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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
																

 

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 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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
																

 

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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