Document:

Exhibit 4.02

 

CUSIP NO.            

 

	
  REGISTERED

  	
  FACE AMOUNT:

  
	
  No.

  	
   

  

 

If this Note
is an OID Note (as defined below) the following legend is applicable:

 

FOR PURPOSES
OF SECTIONS 1272, 1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE OF
1986, AS AMENDED, THE ISSUE PRICE OF THIS NOTE IS      %
OF ITS PRINCIPAL AMOUNT, AND THE AMOUNT OF ORIGINAL ISSUE DISCOUNT, THE YIELD
TO MATURITY COMPOUNDED              ,
AND THE ISSUE DATE ARE AS SET FORTH BELOW. IN THE CASE OF A NOTE SUBJECT TO THE
RULES OF TREASURY REGULATION SECTION 1.1275-4(b), THE COMPARABLE YIELD AND
PROJECTED PAYMENT SCHEDULE CAN BE OBTAINED BY SUBMITTING A WRITTEN REQUEST
TO: CONTROLLER’S OFFICE, LEHMAN BROTHERS HOLDINGS INC., 745 SEVENTH AVENUE, NEW
YORK, NEW YORK 10019.

 

LEHMAN
BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTE, SERIES H

(FLOATING 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 (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,
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:  $

 

ISSUE DATE:

 

MATURITY DATE:

 

INTEREST RATE:

 

INTEREST RATE
BASIS:

 

SPREAD:

 

SPREAD
MULTIPLIER:

 

MAXIMUM
INTEREST RATE:

 

MINIMUM
INTEREST RATE:

 

INTEREST RESET
DATES:

 

INTEREST RESET
PERIOD:

 

INTEREST
DETERMINATION DATES:

 

INTEREST
PAYMENT DATES:

 

REGULAR RECORD
DATES:

 

EXCHANGE RATE
AGENT:

 

DEPOSITORY:

 

DUAL CURRENCY
NOTE:
o  YES     o  NO

 

OPTION
ELECTION DATES:

 

OPTIONAL
PAYMENT CURRENCY:

 

DESIGNATED
EXCHANGE RATE:

 

OPTION VALUE
CALCULATION AGENT:

 

OTHER
PROVISIONS:

 

OPTION TO
RECEIVE PAYMENTS IN THE SPECIFIED CURRENCY:
o  YES     o  NO

 

SPECIFIED
CURRENCY:

 

BUSINESS DAY:

 

AMORTIZING
NOTE:
o  YES     o  NO

 

SINKING FUND:

 

TOTAL AMOUNT
OF OID:

 

YIELD TO
MATURITY:

 

INITIAL
ACCRUAL PERIOD OID:

 

AUTHORIZED
DENOMINATIONS:

 

EXTENSION OF
MATURITY NOTE:
o  YES     o  NO

 

EXTENSION
PERIOD:

 

NUMBER OF
EXTENSION PERIODS:

 

OPTION TO
ELECT REPAYMENT:
o  YES     o  NO

 

OPTIONAL
REPAYMENT DATES:

 

OPTIONAL
REPAYMENT PRICES:

 

OPTIONAL
INTEREST RATE RESET:
o  YES     o  NO

OPTIONAL RESET
DATES:

 

OPTIONAL
REDEMPTION:
o  YES     o  NO

 

INITIAL
REDEMPTION DATE:

 

INITIAL
REDEMPTION PERCENTAGE:  %

 

APPLICABILITY
OF ANNUAL REDEMPTION PERCENTAGE REDUCTION:
o  YES     o  NO

If yes, state Annual Percentage Reduction: 
%

 

EXTENDIBLE
NOTE:
o  YES     o  NO

 

INITIAL
MATURITY DATE:

 

SPECIAL
ELECTION INTERVAL:

 

RENEWABLE IN
PART:
o  YES     o  NO

 

AUTHORIZED
RENEWABLE AMOUNTS:

 

SPECIAL
ELECTION PERIOD:

 

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            ,
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
rate per annum determined in accordance with the provisions on the reverse
hereof, depending on the Interest Rate Basis specified above, until the
principal hereof is paid or made available for payment and (to the extent that
the payment of such interest shall be legally enforceable) at such rate per annum
on any overdue principal and premium and on any overdue instalment of interest.
Unless otherwise specified above, and except as provided in Section 9 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,

 

2

 

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 8 on the
reverse hereof and (ii) 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.

 

An “OID Note” is any Note (a) that has
been issued at an Issue Price lower, by more than a de minimis amount (as
determined under United States federal income tax rules applicable to
original issue discount), than the Face Amount thereof and (b) any other
Note that for United States federal income tax purposes would be considered an
original issue discount instrument.

 

Except as provided in the following
paragraph, the Company will pay interest on each Interest Payment Date
specified above, 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
additional interest shall accrue as a result of such delayed payment up to, but
excluding, the date of Maturity, except that if this Note is a LIBOR Note or a
EURIBOR Note (as defined in Section 3 on the reverse hereof) and such next
succeeding Business Day falls in the next calendar month, such payment shall be
made on the preceding day that is a Business Day. 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 or obligated by
law or executive order to be closed; for LIBOR notes 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 EURIBOR notes, notes denominated in
Euros or LIBOR notes for which the index currency is Euros only, 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,

 

3

 

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. 
Unless otherwise specified above, the interest payable on each
Interest Payment Date or at Maturity will be the amount of interest accrued
from and including the Issue Date or from and including the last Interest
Payment Date to which interest has been paid, as the case may be, to, but
excluding, such Interest Payment Date or the date of Maturity, as the case may
be; provided, however, that if interest on this Note is reset daily or weekly,
interest payable on each Interest Payment Date will be the amount of interest
accrued from and including the Issue Date or from and excluding the last date
to which interest has been paid, as the case may be, to, and including, the
date 15 calendar days prior to such Interest Payment Date (“Regular Record Date”)
immediately preceding such Interest Payment Date, except that at Maturity the
interest payable will include interest accrued to, but excluding, the date of
Maturity.

 

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 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, each Holder
shall receive interest payments in immediately available funds by check mailed
to such Holder or by wire transfer, but only if complete and appropriate
instructions have been received in writing by the Trustee (or any such Paying
Agent) on or prior to the applicable Regular Record Date. Simultaneously with
any election by the Holder hereof to receive payments in respect hereof in a
Foreign Currency, such Holder may, if so entitled (as provided above), elect to
receive such payments in immediately available funds by providing complete and
appropriate instructions to the Trustee (or any such Paying Agent), and all
such payments will be made in immediately available funds to an account maintained
by the payee with a bank located outside the United States or as otherwise
provided above.

 

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

 

4

 

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 (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.

 

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:

 

[SEAL]

 

	
   

  	
  LEHMAN
  BROTHERS HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Assistant Secretary

  	
   

  
					

 

5

 

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 H

(Floating 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 H
(Floating 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 Issuer) 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

 

7

 

transfers in the Foreign Currency as
certified for customs purposes by the Federal Reserve Bank of New York (the “Market
Exchange Rate”) for such Foreign Currency on the second Business Day prior to
such payment date, or on such other basis as may be specified on the face
hereof.  In the event such Market
Exchange Rate is not then available, the Company will be entitled to make payments
in U.S. dollars (i) if such Foreign Currency is not a composite currency,
on the basis of the most recently available Market Exchange Rate for such
Foreign Currency or (ii) if such Foreign Currency is a composite currency
in an amount determined by the Exchange Rate Agent to be the sum of the results
obtained by multiplying the number of units of each component currency of such
composite currency, as of the most recent date on which such composite currency
was used, by the Market Exchange Rate for such component currency on the second
Business Day prior to such payment date (or if such Market Exchange Rate is not
then available, by the most recently available Market Exchange Rate for such
component currency, or as otherwise specified on the face hereof).  Any payment in respect hereof made under such
circumstances in U.S. dollars will not constitute an Event of Default under the
Indenture.

 

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

 

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

 

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.  Determination
of Interest Rate. For the period from the Issue Date to the first Interest
Reset Date set forth on the face hereof, the interest rate hereon shall be the

 

8

 

Initial Interest Rate
specified on the face hereof. Thereafter, the interest rate hereon will be
reset on each Interest Reset Date; provided, however, that the interest rate in
effect for the ten days immediately prior to Maturity will be that in effect on
the tenth day preceding such Maturity. If any Interest Reset Date would
otherwise be a day that is not a Business Day, the Interest Reset Date shall be
the next day that is a Business Day.  If
this Note is a (1) LIBOR Note and an Interest Reset Date would otherwise
be a day that is not a London Business Day, the Interest Reset Date shall be
the next day that is a London Business Day or (2) EURIBOR Note and an
Interest Reset Date would otherwise be a day that is not a Euro Business Day,
the Interest Reset Date shall be the next day that is a Euro Business Day;
provided that, if this Note is a LIBOR Note or a EURIBOR Note and such Business
Day is in the next succeeding calendar month, the Interest Reset Date shall be
the immediately preceding London Business Day, in the case of a LIBOR Note, or
Euro Business Day, in the case of a EURIBOR Note.  If this Note is a Treasury Rate Note (as
defined below) and an auction date for Treasury bills shall fall on any Reset
Date, then such Interest Reset Date shall instead be the first Business Day
immediately following such auction date. Subject to applicable provisions of
law and except as specified herein, on each Interest Reset Date, the rate of
interest on this Note on and after the first Interest Reset Date shall be the
rate determined in accordance with the provisions of the heading below which
has been designated as the Interest Rate Basis on the face hereof plus or minus
the Spread, if any, specified on the face hereof or multiplied by the Spread
Multiplier, if any, specified on the face hereof.

 

Commercial Paper Rate Notes

 

If the Interest Rate Basis is the Commercial
Paper Rate, this Note is a “Commercial Paper Rate Note.” A Commercial Paper
Rate Note will bear interest at the interest rate calculated with reference to
the Commercial Paper Rate and the Spread and/or Spread Multiplier and will be
subject to the minimum interest rate and the maximum interest rate, if any.
Unless otherwise specified on the face hereof, “Commercial Paper Rate” means,
with respect to any Interest Determination Date, the Money Market Yield
(calculated as described below) of the rate on that date for commercial paper
having the applicable Index Maturity as such rate is published in the
publication entitled “Statistical Release H.15(519), Selected Interest Rates,”
or any successor publication, published by the Board of Governors of the
Federal Reserve System (“H.15(519)”) under the heading “Commercial
Paper––Nonfinancial”. If such rate is not published by 3:00 P.M., New York
City time, on the Calculation Date (as defined below) pertaining to such
Interest Determination Date, then the Commercial Paper Rate shall be the Money
Market Yield of the rate on such Interest Determination Date for commercial
paper having the applicable Index Maturity as published in the daily update
of the Board of Governors of the Federal Reserve System at
http://www.federalreserve.gov/releases/H15/update, or any successor site or
publication (“H.15 Daily Update”) or another recognized electronic source used
for displaying this rate, under the Leading “Commercial Paper––Nonfinancial”.  If such rate is not yet published in
H.15(519), H.15 Daily Update or another recognized electronic source by 3:00 P.M.,
New York City time, on such Calculation Date, then the Commercial Paper Rate
for such Interest Determination Date shall be calculated by the Calculation
Agent and shall be the Money Market Yield of the arithmetic mean of the offered
rates as of 11:00 A.M. New York City time, on such Interest Determination
Date of three leading dealers of commercial paper in New York City selected by
the Calculation Agent after consultation with the Company for commercial paper
having the applicable Index Maturity, placed for industrial issuers whose bond

 

9

 

rating is “AA”, or the equivalent, from a
nationally recognized securities rating agency; provided, however, that if the
dealers selected as aforesaid by the Calculation Agent are not quoting as
mentioned in this sentence, the Commercial Paper Rate for the applicable period
will be the Commercial Paper Rate in effect on such Interest Determination Date.  If
there was no Commercial Paper Rate in effect on such Interest Determination
Date, the Commercial Paper Rate will be the initial interest rate.

 

“Money Market Yield” shall be a yield
calculated in accordance with the following formula:

 

	
  Money Market Yield =

  	
  D X 360

  	
   x 100

  
	
  360 – (D X M)

  

 

where “D”
refers to the per annum rate for the commercial paper, quoted on a bank
discount basis expressed as a decimal; and “M” refers to the actual number of
days in the interest period for which interest is being calculated.

 

Federal Funds (Effective) Rate Notes

 

If the Interest Rate Basis is the Federal
Funds (Effective) Rate, this Note is a “Federal Funds (Effective) Rate Note.” A
Federal Funds (Effective) Rate Note will bear interest at the interest rate
calculated with reference to the Federal Funds (Effective) Rate and the Spread
and/or Spread Multiplier and will be subject to the minimum interest rate or
the maximum interest rate, if any. Unless otherwise specified on the face
hereof, “Federal Funds (Effective) Rate” means, with respect to any Interest
Determination Date, the rate on that day for Federal Funds as published in
H.15(519) under the heading “Federal Funds (Effective),” as displayed on
Moneyline Telerate on page 120, or any successor service or page (“Telerate
Page 120”) or, if not so published by 3:00 P.M., New York City time,
on the Calculation Date pertaining to such Interest Determination Date, the
Federal Funds (Effective) Rate will be the rate on such Interest Determination
Date as published in the H.15 Daily Update, or another recognized electronic
source used for displaying this rate under the heading “Federal Funds
(Effective).” If such rate is not yet published in H.15(519), H.15 Daily
Update, or another recognized electronic source, by 3:00 P.M., New York
City time, on the Calculation Date pertaining to such Interest determination
Date, then the Federal Funds (Effective) Rate for such Interest Determination
Date will be calculated by the Calculation Agent and will be the arithmetic
mean of the rates as of 11:00 A.M., New York City time, on such Interest
Determination Date for the last transactions in overnight Federal Funds
arranged by three leading brokers of Federal Funds transactions in New York
City selected by the Calculation Agent after consultation with the Company;
provided, however, that if the brokers selected as aforesaid by the Calculation
Agent are not quoting as mentioned in this sentence, the Federal Funds
(Effective) Rate for the applicable period will be the Federal Funds Effective
Rate in effect on such Interest Determination Date.  If
there was no Federal Funds (Effective) Rate in effect on such Interest
Determination Date, the Federal Funds (Effective) Rate will be the initial
interest rate.

 

10

 

Federal Funds (Open) Rate Notes

 

If the Interest Rate Basis is the Federal
Funds (Open) Rate, this Note is a “Federal Funds (Open) Rate Note.” A Federal
Funds (Open) Rate Note will bear interest at the interest rate calculated with
reference to the Federal Funds (Open) Rate and the Spread and/or Spread
Multiplier and will be subject to the minimum interest rate or the maximum
interest rate, if any. Unless otherwise specified on the face hereof, “Federal
Funds (Open) Rate” means, with respect to any Interest Determination Date, the
rate on that day for Federal Funds as published in H.15(519) under the heading “Federal
Funds” and opposite the caption “Open” as displayed on Moneyline Telerate on page 5,
or any successor service or page (“Telerate Page 5”), or, if not so
published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the Federal Funds (Open) Rate
will be the rate on such Interest Determination Date as reported by Prebon Yamane
(or successor) on Bloomberg that appears on FEDSPREB Index (“FEDSREB”). If such
rate is not yet published in either Telerate Page 5 or FEDSPREB by 3:00 P.M.,
New York City time, on the Calculation Date pertaining to such Interest
determination Date, then the Federal Funds (Open) Rate for such Interest
Determination Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the rates before 9:00 A.M., New York City time, on such
Interest Determination Date for the last transaction in overnight Federal Funds
arranged by three brokers of Federal Funds transactions in New York City
selected by the Calculation Agent after consultation with the Company;
provided, however, that if fewer than three brokers are selected as mentioned
in this sentence by the Calculation Agent, the Federal Funds (Open) Rate for
the applicable period will be the Federal Funds (Open) Rate in effect on such
Interest Determination Date.  If there was no Federal Funds (Open) Rate in effect on such Interest Determination
Date, the Federal Funds (Open)
Rate will be the Federal Funds (Open) Rate will be the initial interest rate.

 

CD Rate Notes

 

If the Interest Rate Basis is the CD Rate,
this Note is a “CD Rate Note.” A CD Rate Note will bear interest at the
interest rate calculated with reference to the CD Rate and the Spread and/or
Spread Multiplier and will be subject to the minimum interest rate or the
maximum interest rate, if any. Unless otherwise specified on the face hereof, “CD
Rate” means, with respect to any Interest Determination Date, the rate on such
date for negotiable certificates of deposit having the applicable Index
Maturity as published in H.15(519) under the heading “CDs (Secondary Market)”
or, if not so published by 3:00 P.M., New York City time, on the
Calculation Date pertaining to such Interest Determination Date, the CD Rate
will be the rate on such Interest Determination Date for negotiable
certificates of deposit of the applicable Index Maturity as published in the
H.15 Daily Update, or another recognized electronic source used for the purpose
of displaying this rate, under the heading “CDs (Secondary Market)”. If such
rate is not yet published in H.15(519), the H.15 Daily Update or another
recognized electronic source by 3:00 P.M., New York City time, on such
Calculation Date, then the CD Rate for such Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the
secondary market offered rates as of 10:00 A.M., New York City time, on
such Interest Determination Date, of three leading nonbank dealers in
negotiable U.S. dollar certificates of deposit in New York City selected by the
Calculation Agent after consultation with the Company for negotiable
certificates of deposit of major United States money center banks of the
highest credit standing (in the market for negotiable certificates of deposit)
with a remaining maturity

 

11

 

closest to the applicable Index Maturity in a
denomination that is representative for a single transaction in that market at
that time; provided, however, that if the dealers mentioned in this sentence by
the Calculation Agent are not quoting as mentioned in this sentence, the CD
Rate for the applicable period will be the CD Rate in effect on such Interest
Determination Date.  If there was no CD Rate in effect on such
Interest Determination Date, the CD Rate will be the initial interest rate.

 

LIBOR Notes

 

If the Interest Rate Basis is LIBOR, this
Note is a “LIBOR Note.” A LIBOR Note will bear interest at the interest rate
calculated with reference to LIBOR and the Spread and/or Spread Multiplier and
will be subject to the minimum interest rate and maximum interest rate, if any.
Unless otherwise indicated on the face hereof, “LIBOR” means the rate
determined by the Calculation Agent as follows:

 

(a)  With respect to an Interest
Determination Date, LIBOR will be, as specified on the face hereof, either (i) the
arithmetic mean of the offered rates for deposits in U.S. dollars or the applicable
Foreign Currency specified on the face hereof for the period (commencing on the
Interest Reset Date) of the applicable Index Maturity which appears on the
display designated as page “LIBO” on the Reuters Monitor Money Rates
Service, or any successor service or page for the purpose of displaying
London interbank offered rates of major banks (the “Reuters Screen LIBO Page”),
at approximately 11:00 A.M., London time, on such Interest Determination
Date, if at least two such offered rates appear on the Reuters Screen LIBO Page (“LIBOR
Reuters”) (unless Reuters Screen LIBO Page by its
terms provides only for a single rate, in which case such single rate shall be
used), or (ii) the
offered rate for deposits in U.S. dollars or the applicable Foreign Currency
specified on the face hereof for the period (commencing on the Interest Reset
Date) of the applicable Index Maturity which appears on Telerate Page 3750
(as defined below), as applicable, at approximately 11:00 A.M., London
time, on such Interest Determination Date (“LIBOR Telerate”). If neither LIBOR
Reuters nor LIBOR Telerate is specified on the face hereof, LIBOR will be
determined as if LIBOR Telerate had been specified.

 

(b)  With respect to an Interest
Determination Date on which no rate appears on the Reuters Screen LIBO Page or
the Telerate Page 3750, as applicable, as specified in (a)(i) or (a)(ii) above,
as applicable, the Calculation Agent will request the principal London office
of each of four major banks in the London interbank market, as selected by the
Calculation Agent after consultation with the Company, to provide the
Calculation Agent with its offered quotation for deposits in the applicable
currency for the period (commencing on the Interest Reset Date) of the
applicable Index Maturity to prime banks in the London interbank market at
approximately 11:00 A.M., London time, on such Interest Determination Date
in a principal amount that is representative of a single transaction in such
market at such Interest Determination Date. 
If two or more quotations are provided on such Interest Denomination
Date, LIBOR in respect of such Interest Determination Date will be the
arithmetic mean of such quotations. If fewer than two such quotations are
provided, LIBOR in respect of such Interest Determination Date will be the
arithmetic mean of the rates quoted on such Interest Determination Date by
three leading European banks selected by the Calculation Agent after
consultation with the Company for loans in the applicable currency to leading
European banks, for the period (commencing on the Interest Reset Date) of the
applicable Index Maturity in a principal amount that is representative of a

 

12

 

single transaction in such market at such
time, provided, however, that if the European banks selected as aforesaid by
the Calculation Agent are not quoting as mentioned in this sentence, LIBOR for
the applicable period will be LIBOR as in effect on such Interest Determination
Date.  If
there was no LIBOR Rate in effect on such Interest Determination Date, the
LIBOR Rate will be the initial interest rate. If the specified index currency
on such Interest Determination Date is the U.S. dollar, the applicable
principal financial center will be New York City and the approximate time for
which quotes for loans in U.S. dollars would be requested from New York City
banks will be 3:00 p.m., New York City time.

 

The term “Telerate Page 3750” means the
display designated as page “3750” on the Telerate Service, or such other service
or services as may be nominated by the British Bankers’ Association for the
purpose of displaying London interbank offered rates for deposits in U.S.
Dollars, British Pounds Sterling, Swiss Francs, Japanese Yen and Euros.

 

EURIBOR Notes

 

If the Interest Rate Basis is EURIBOR, this
Note is a “EURIBOR Note.” A EURIBOR Note will bear interest at the interest
rate calculated with reference to EURIBOR and the Spread and/or Spread
Multiplier and will be subject to the minimum interest rate or maximum interest
rate, if any. Unless otherwise indicated on the face hereof, “EURIBOR” means
the rate determined by the Calculation Agent as follows:

 

(a)  With respect to an Interest
Determination Date, EURIBOR means the offered rate for deposits in Euros
(commencing on the Interest Reset Date) of the applicable Index Maturity as
sponsored, calculated and published jointly by the European Banking Federation
and ACI––the Financial Market Association or any company established by them
for purposes of establishing those rates having the Index Maturity which
appears on the Moneyline Telerate on page 248 or any successor service use
for the purpose of displaying this rate (“Telerate Page 248”) on such
Interest Determination Date (“EURIBOR Telerate”). If EURIBOR Telerate is not
specified on the face hereof, EURIBOR will be determined as if EURIBOR Telerate
had been specified.

 

(b)  If such rate is not displayed on
Telerate Page 248 as of 11:00 A.M., Brussels time, on the Calculation
Date pertaining to such Interest determination Date, then EURIBOR for such
Interest Determination Date will be determined on the basis of the rates, at
approximately 11:00 A.M., Brussels time, at which Euro deposits having the
relevant Index Maturity, beginning on the relevant interest reset date, and in
an amount representative of a single transaction in Euros in such market are
offered to prime banks in the euro-zone interbank market by the principal
London offices of each of four major banks in that market selected by the
Calculation Agent. The Calculation Agent will request the principal euro-zone
office of each of these banks provide their offered quotations. If at least two
quotations are provided, EURIBOR for such Interest Determination Date will be
the arithmetic mean of the quotations as aforesaid.  If fewer than two quotations are provided as
aforesaid by the Calculation Agent, EURIBOR in respect of such Interest
Determination Date will be the arithmetic mean of the rates quoted for the
leading euro-zone banks quoted at approximately 11:00 A.M., Brussels time
on such Interest Determination Date, by three major banks in the euro-zone
selected by the Calculation Agent for loans in Euros in a principal amount that
is representative of a single transaction in Euros in such

 

13

 

market.  If fewer than three banks
are selected as aforesaid by the Calculation Agent, EURIBOR for the applicable
period will be EURIBOR in effect on such Interest Determination Date. If there was no EURIBOR Rate in effect on
such Interest Determination Date, the EURIBOR Rate will be the initial interest
rate.

 

Prime Rate Notes

 

If the Interest Rate Basis is the Prime Rate,
this Note is a “Prime Rate Note.” A Prime Rate Note will bear interest at the
interest rate calculated with reference to the Prime Rate and the Spread and/or
Spread Multiplier and will be subject to the minimum interest rate and the
maximum interest rate, if any. Unless otherwise specified on the face hereof, “Prime
Rate” means, with respect to any Interest Determination Date, the rate on that
day as published in H.15(519) under the heading “Bank Prime Loan” or, if not so
published by 3:00 P.M., New York City time, on the Calculation Date
pertaining to such Interest Determination Date, the Prime Rate will be the rate
on that day as published in the H.15 Daily Update, or another recognized
electronic source used for the purpose of displaying this rate, under the
heading “Bank Prime Loan.”  If such rate is not yet published in
H.15(519), the H.15 Daily Update or another recognized electronic source by
3:00 P.M., New York City time, on the Calculation Date pertaining to such
Interest Determination Rate, the rate will be determined by the
Calculation Agent and will be the arithmetic mean of the rates of interest publicly
announced by each bank named on the display designated on the Reuters Screen US
PRIME1 Page as each such bank’s prime rate or base lending rate for such
Interest Determination Date, or such other page as may replace such page on
the service for the purpose of displaying prime rates or base lending rates of
major United States banks (the “US PRIME1 Page”), as such bank’s prime rate or
base lending rate as in effect for such Interest Determination Date. If fewer
than four such rates but more than one such rate appear on the US PRIME1 Page for
such Interest Determination Date, the Prime Rate will be determined by the
Calculation Agent and will be the arithmetic mean of the Prime Rates quoted on
the basis of the actual number of days in the year divided by 360 as of the
close of business on such Interest Determination Date by three major banks in
New York City selected by the Calculation Agent after consultation with the
Company; provided, however, that if the banks or trust companies selected as
aforesaid are not quoting as mentioned in this sentence, the Prime Rate for the
applicable period will be the Prime Rate in effect on such Interest
Determination Date.  If there was no Prime Rate in effect on such
Interest Determination Date, the Prime Rate will be the initial interest rate.

 

Treasury Rate Notes

 

If the Interest Rate Basis is the Treasury
Rate, this Note is a “Treasury Rate Note.” A Treasury Rate Note will bear
interest at the interest rate calculated with reference to the Treasury Rate
and the Spread and/or Spread Multiplier and will be subject to the minimum
interest rate and the maximum interest rate, if any. Unless otherwise specified
on the face hereof “Treasury Rate” means, with respect to any Interest
Determination Date, the rate for the auction held on such Interest
Determination Date of U.S. Treasury Securities (“Treasury securities”) having
the applicable Index Maturity as it appears on the display on Moneyline
Telerate page 56 or 57, or any successor page or service, under the
heading “Investment Rate” or, if not so published by 3:00 P.M., New York
City time, on the Calculation Date pertaining to such Interest Determination
Date, the auction average rate for U.S. Treasury Securities (expressed as a
bond

 

14

 

equivalent, on the basis of a year of 365 or
366 days, as applicable, and applied on a daily basis) as otherwise announced
by the United States Department of the Treasury. In the event that the results
of the auction of Treasury securities having the applicable Index Maturity are
not published or reported as provided by 3:00 P.M., New York City time, on
such Calculation Date or if no such auction is held on such Interest
Determination Date, then the Treasury Rate shall be calculated by the Calculation
Agent and shall be the Index Maturity as published in H.15(519) under the
heading “U.S. Government Securities—Treasury Bills (Secondary Market)” or, if such rate is not yet published, in
H.15(519) by 3:00 P.M., New York City time, on the Calculation Date, then
the Treasury Rate shall be the Index Maturity as published in H.15 Daily
Update, or other recognized electronic source used for the purpose of
displaying such rate, under the caption “U.S. Government Securities—Treasury
Bills (Secondary Market).”  If
such Index Maturity is not published in H.15(519), H.15 Daily Update or another
recognized electronic source on the Calculation Date pertaining to such
Interest Determination Date, then the Treasury Rate shall be calculated by the
Calculation Agent and shall be the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on such Interest
Determination Date, of three primary United States government securities
dealers selected by the Calculation Agent after consultation with the Company
for the issue of Treasury securities with a remaining maturity closest to the
applicable Index Maturity (expressed as
a bond equivalent, on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis); provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not quoting as mentioned in
this sentence, the Treasury Rate for the applicable period will be the Treasury
Rate in effect on such Interest Determination Date.  If
there was no Treasury Rate in effect on such Interest Determination Date, the
Treasury Rate will be the initial interest rate.

 

Constant Maturity Treasury Rate Notes

 

If the Interest Rate Basis is the Constant
Maturity Treasury Rate, this Note is a “Constant Maturity Treasury Rate Note.”
A Constant Maturity Treasury Rate Note will bear interest at the interest rate
calculated with reference to the Constant Maturity Treasury Rate (“CMT Rate”)
and the Spread and/or Spread Multiplier and will be subject to the minimum
interest rate and the maximum interest rate, if any. Unless otherwise specified
on the face hereof CMT Rate means, with respect to any Interest Determination
Date, the rate for the applicable Index Maturity specified under the caption “Treasury
Constant Maturities” on the “Designated Constant Maturity Treasury page” (as
defined below) for (1) such Interest Determination Date (if the Designated
Constant Maturity Treasury page is 7051) or (2) the week, or the
month, as set forth on the face hereof, ended immediately preceding the week or
month in which the applicable Calculation Date pertaining to such Interest
Determination Date occurs (if the Constant Maturity Treasury is 7052).  If the CMT Rate is not published as described
above by 3:00 P.M., New York City time, on the Calculation Date pertaining
to such Interest Determination Date, then the CMT Rate shall be the Treasury
Constant Maturity rate as published in H.15(519). If such Treasury Constant
Maturity rate is not published in H.15(519) as provided by 3:00 P.M., New
York City time, on such Calculation Date the CMT Rate will be the
Treasury Constant Maturity rate for the Index Maturity (or other United States
Treasury Rate for the specified Index Maturity) for such Interest Determination
Date published by either the Board of Governors of the Federal Reserve System
or the United States Department of the Treasury that the Calculation Agent
determines is comparable to the rate formerly displayed on the Designated
Constant Maturity Treasury page and published in the relevant
H.15(519).  If the above
information is not available by 3:00 P.M.,

 

15

 

New York City time, the CMT Rate will
be calculated as a yield to maturity of the arithmetic mean of the secondary
market offer side prices as of approximately 3:30 p.m., New York City
time, on such Interest Determination Date reported, according to their written
records, by three primary U.S. government securities dealers in New York City (“Primary
Dealers”). The three Primary Dealers will be selected from five Primary Dealers
selected by the Calculation Agent by eliminating the highest quotation (or, in
the event of equality, one of the highest) and the lowest quotation (or, in the
event of equality, one of the lowest), for the most recently issued direct
noncallable fixed rate U.S. Treasury securities with an original maturity of
approximately the specified Index Maturity and a remaining term to maturity of
not less than such specified index maturity minus one year. If the Calculation
Agent cannot obtain three quotations as described above on the
Calculation Date pertaining to such Interest Determination Date, the CMT Rate will be the yield to maturity
based on the arithmetic mean of the secondary market offer side prices as of
approximately 3:30 p.m., New York City time, on the applicable interest
determination date of three Primary Dealers selected as described above for
U.S. treasury securities with an original maturity of the number of years that
is closest to but not less than the Index Maturity and a remaining term to
maturity closest to the Index Maturity and in an amount of at least $100
million. If two of the aforesaid U.S. treasury securities have remaining terms
to maturity equally close to the Index Maturity, the quotes for the U.S.
Treasury security with the shorter remaining term to maturity will be used on
the Calculation Date pertaining to such Interest Determination Date. If fewer
than five but more than two Primary Dealers are quoting as described above,
then the CMT Rate will be based on the arithmetic mean of the offer prices
obtained and neither the highest nor lowest of those quotes will be eliminated.
If fewer than three primary dealers are quoting as described above, then the
CMT Rate for the new interest rate period will be the same as that for the
immediately preceding interest reset period. If there was no CMT Rate in effect on such Interest Determination Date,
the CMT Rate will be the initial interest rate.

 

“Designated Constant Maturity Treasury page” means
the display on Moneyline Telerate on the page designated on the face hereof, or any successor service
or page for the purpose of displaying Treasury Constant Maturities as
reported in H.15(519). If that page is not specified on the face hereof,
the designated Constant Maturity Treasury page will be 7052, for the most
recent week.

 

If no index maturity is specified on the face hereof, the index maturity will be
2 years.

 

Eleventh
District Cost of Funds Rate Note

 

If the Interest Rate Basis is the Eleventh
District Cost of Funds Rate, this Note is an “Eleventh District Cost of Funds
Rate Note.” An Eleventh District Cost of Funds Rate Note will bear interest at
the interest rate calculated with reference to the Eleventh District Cost of
Funds Rate and the Spread and/or Spread Multiplier and will be subject to the
minimum interest rate or the maximum interest rate, if any. Unless otherwise
specified on the face hereof, “Eleventh District Cost of Funds Rate” means,
with respect to any Interest Determination Date, the rate equal to the monthly
weighted average cost of funds for the calendar month preceding such Interest
Determination Date as displayed under the caption “Eleventh District” on
Moneyline Telerate page 7058 or any successor service or page, for the
purpose of displaying the monthly weighted average cost of funds paid by member
institutions of the Eleventh Federal

 

16

 

Home Loan Bank District (“Telerate Page 7058”) or,
if not so published by 3:00 P.M., New York City time, on the Calculation
Date pertaining to such Interest Determination Date, the Eleventh District Cost
of Funds Rate will be such rate for the prior Interest Reset Period. If there
was no prior interest period, the Eleventh District Cost of Funds Rate Index
will be the initial interest rate.

 

The “Eleventh District Cost of Funds Rate Index”
will be the monthly weighted average cost of funds paid by member institutions
of the Eleventh Federal Home Loan Bank District that the Federal Home Loan Bank
of San Francisco most recently announced as the cost of funds for the calendar
month preceding the date of the announcement.

 

The term “Calculation Date”, for an
interest determination date, means the earlier of (1) the tenth Business Day
after the related Interest Determination Date, or if any such day is not a
Business day, the next Business Day and (2) the Business Day preceding the
applicable interest payment date or the stated maturity, unless otherwise
specified on the face hereof.

 

Notwithstanding the foregoing, the Interest
rate hereof shall not be greater than the Maximum Interest Rate, if any, or
less than the Minimum Interest Rate, if any, shown on the face hereof. The
interest rate on this Note will in no event be higher than the maximum rate
permitted by New York law as the same may be modified by United States law of
general applicability.

 

The Calculation Agent will, upon the request
of the Holder of this Note, provide the interest rate then in effect and, if
determined, the interest rate which will become effective as a result of a
determination made on the most recent Interest Determination Date with respect
to this Note.

 

Unless otherwise specified on the face
hereof, the Interest Determination Date pertaining to an Interest Reset Date
will be (a) the first day preceding such Interest Reset Date for a Prime
Rate Note, Federal Funds (Open) Rate Note and Federal Funds (Effective) Rate
Note and (b) the second Business Day preceding such Interest Reset Date
for a Constant Maturity Treasury Rate Note, Commercial Paper Rate Note
and CD Rate Note. Unless otherwise specified on the face hereof, the Interest
Determination Date relating to a particular Interest Reset Date for an Eleventh
District Cost of Funds Rate Note will be the last working day, in the first
calendar month before that interest reset date, on which the Federal Home Loan
Bank of San Francisco publishes the monthly average cost of funds paid by
member institutions of the Eleventh Federal Home Loan Bank District for the
second calendar month before that Interest Reset Date. Unless otherwise
specified on the face hereof, the Interest Determination Date pertaining to an
Interest Reset Date for a LIBOR Note will be the second London Business Day
preceding such Interest Reset Date. 
Unless otherwise specified on the face hereof, the Interest
Determination Date pertaining to an Interest Reset Date for a EURIBOR Note will
be the second Euro Business Day preceding such Interest Reset Date.  Unless otherwise specified on the face
hereof, the Interest Determination Date pertaining to an Interest Reset Date
for a Treasury Rate Note will be the day of the week in which such Interest
Reset Date falls on which Treasury bills of the applicable Index Maturity would
normally be auctioned. Treasury bills are usually sold at auction on Monday of
each week, unless that day is a legal holiday, in which case the auction is
usually held on the following Tuesday, except that such auction may be held on
the preceding Friday. If, as 

 

17

 

the result of a legal holiday, an auction is
so held on the preceding Friday, such Friday will be the Interest Determination
Date pertaining to the Interest Reset Date occurring in the next succeeding
week.

 

Accrued interest from the Issue Date or from
the last date to which interest has been paid shall be calculated by
multiplying the face amount of this Note by an accrued interest factor. This
accrued interest factor shall be computed by adding the interest factors calculated
for each day from the Issue Date or from the last date to which interest has
been paid, to the date for which accrued interest is being calculated. The
interest factor for each such day is computed by dividing the interest rate
applicable to such date by 360, in the case of Commercial Paper Rate Notes,
Federal Funds (Effective) Rate Notes, Federal Funds (Open) Rate, CD Rate Notes,
LIBOR Notes, EURIBOR Notes, Prime Rate Notes or Eleventh District Cost of Funds
Rate Notes, or by the actual number of days in the year, in the case of
Treasury Rate Notes. The interest rate applicable to any day that is an
Interest Reset Date is the interest rate as determined, in accordance with the
procedures set forth above, with respect to the Interest Determination Date
pertaining to such Interest Reset Date. The interest rate applicable to any
other day is the interest rate for the immediately preceding Interest Reset
Date (or, if none, the Initial Interest Rate).

 

Unless otherwise specified on the face
hereof, all percentages resulting from any calculation of the rate of interest
on this Note will be rounded, if necessary, to the nearest one
hundred-thousandth of a percent (.0000001), with five one-millionths of a
percentage point rounded upward, and all currency amounts used in or resulting
from such calculation will be rounded to the nearest one-hundredth of a unit
(with five one-thousandths of a unit being rounded upwards).

 

Section 4.  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 5.  Sinking
Funds and Amortizing Notes.  Unless
otherwise specified on the face hereof this Note will not be subject to any
sinking fund.

 

Section 6.  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,

 

18

 

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 7 or Section 10.  The repayment option may be exercised by the
Holder of this Note with respect to less than the Face Amount then outstanding
provided that the Face Amount of the Note remaining outstanding after repayment
is an authorized denomination.  Upon such
partial repayment this Note shall be cancelled and a new Note or Notes for the
remaining Face Amount hereof shall be issued in the name of the Holder of this
Note.

 

Section 7.  Optional
Interest Reset or Spread Multiplier Reset. 
If so specified on the face hereof, the Spread and/or Spread Multiplier,
if any, set forth on the face hereof 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 Spread and/or Spread Multiplier, (ii) such new
Spread and/or Spread Multiplier 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 Spread and/or Spread
Multiplier 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 Spread or Spread Multiplier provided for in the Reset Notice and establish
the Spread and/or Spread Multiplier 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 Spread or Spread Multiplier 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

 

19

 

respect to which the Spread and/or Spread
Multiplier is reset on an Optional Reset Date will bear such higher Spread
and/or Spread Multiplier for the Subsequent Interest Period.

 

If the Company elects to reset the Spread
and/or Spread Multiplier 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 6
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 8.  OID
Notes.  If this Note is an OID Note,
unless otherwise specified on the face hereof, 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 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) that portion of the difference
between the Issue Price and the Face Amount hereof that has accrued at the
Yield to Maturity set forth on the face hereof (computed in accordance with
generally accepted United States bond yield computation principles) at the date
as of which the Amortized Face Amount is calculated, 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.

 

20

 

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 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.  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 Extendible 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 Spread and/or
Spread Multiplier applicable to the Extension Period and

 

21

 

(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.

 

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

 

22

 

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,

 

23

 

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 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.

 

24

 

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 8 or Section 9, respectively, hereof.  Upon payment (i) of the aggregate
applicable amounts of principal of the Notes of this series so declared due and
payable and (ii) of interest on any overdue principal and overdue interest
(in each case to the extent that the payment of such interest shall be legally
enforceable), all of the Company’s obligations in respect of the payment of the
principal of and interest, if any, on the Notes of this series shall terminate.

 

Section 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

 

25

 

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.

 

26

 

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 7 hereof or the Extension of Maturity Notes provision
described in Section 10 hereof.  Any
such election is irrevocable except as provided in Section 7 or Section 10
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                          Fill in for
registration of repaid, if amount to be                    Notes if to be issued
otherwise repaid is less than the                                         than
to the registered Holder: Face Amount of this

Note (Face
Amount                         
Name:                             
remaining must be an                      
Address:                          
authorized denomination)                                                     

 

	
   

  	
  (Please
  print name

  
	
  $                                   

  	
  and address
  including

  
	
   

  	
  zip code)

  

 

 

	
   

  	
  SOCIAL SECURITY OR OTHER TAXPAYER 

  ID NUMBER

  
	
   

  	
   

  
	
   

  	
   

  

 

27

 

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                 Fill in for registration of terminated, if
amount to be                  Notes if to
be issued otherwise terminated is less than the                than to the registered Holder:
Face Amount of this

 

Note (such
Face Amount            Name:                             
must be an authorized            
Address:                          
denomination)                             
                      

 

	
   

  	
  (Please
  print name

  
	
  $                                   

  	
  and address
  including

  
	
   

  	
  zip code)

  

 

 

	
   

  	
  SOCIAL SECURITY OR OTHER TAXPAYER

  ID NUMBER

  
	
   

  	
   

  
	
   

  	
   

  

 

28

 

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.

  	
   

  
							

 

29

 

EXHIBIT A

 

RESET NOTICE

 

LEHMAN
BROTHERS HOLDINGS INC.

Medium-Term Notes, Series H

(Floating 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
[Spread] [Spread Multiplier] set forth on the face of the Notes.  On and after                  (1),
the [Spread] [Spread Multiplier] 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.Exhibit 4.03

 

CUSIP NO.

 

	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT: $     

  
	
  No. R-

  	
   

  	
   

  

 

LEHMAN BROTHERS HOLDINGS INC.

 

MEDIUM-TERM NOTE, SERIES H

 

PERFORMANCE LINKED TO THE VALUE OF A COMMON STOCK, A 

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

 

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

 

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

 

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

 

 

ISSUE PRICE:     % of the Principal Amount

 

AGGREGATE PRINCIPAL
AMOUNT:  $

 

AUTHORIZED DENOMINATIONS:

$[1,000] and integral
multiples thereof

 

ISSUE DATE:

 

STATED MATURITY DATE:

 

INTEREST RATE:    % per annum

 

ACCRUE TO PAY:

o YES    o
NO

 

INTEREST PAYMENT DATES:

and of each year,
beginning on

 

REGULAR RECORD DATES:

calendar days prior to each Interest Payment Date

 

REFERENCE EQUITY:

 

INITIAL MULTIPLIER(S):

 

INITIAL BASE DIVIDEND:

 

MULTIPLIER ADJUSTMENT
DATES FOR CHANGES IN DIVIDENDS:

 

INDEX WEIGHTS:

 

THRESHOLD VALUE:

 

DETERMINATION PERIOD:

Business Days

 

DEPOSITORY:

[The Depository Trust
Company]

 

Currency Exchanges and Payments

 

SPECIFIED CURRENCY:

 

EXCHANGE RATE AGENT:

 

Redemption

 

REDEEMABLE NOTE:

ý YES    o
NO

 

INITIAL REDEMPTION DATE:

 

REDEMPTION NOTICE PERIOD:

Business Days

 

Sinking Funds and Amortizing Notes

 

SINKING FUND:

 

AMORTIZING NOTE:

o YES    o
NO

 

Optional Repurchase

 

OPTIONAL REPURCHASE:

ý YES    
o NO

 

OPTIONAL REPURCHASE
CUTOFF PERIOD:

Business Days

 

Stock Settlement

 

STOCK SETTLEMENT:

o YES    o
NO

 

AT
MATURITY:

o YES o
NO

 

UPON
REPURCHASE:

o YES    o
NO

 

AT
OPTION OF THE COMPANY:

o YES    o
NO

 

AT
OPTION OF THE HOLDER:

o YES    o
NO

 

MANDATORY:

o YES    o
NO

 

Optional Interest Reset

 

OPTIONAL INTEREST RATE
RESET:

o YES    o
NO

 

OPTIONAL RESET DATES:

 

OID Notes

 

OID NOTE:

o YES    o
NO

 

TOTAL AMOUNT OF OID:

 

YIELD TO MATURITY:

 

INITIAL ACCRUAL PERIOD
OID:

 

OID NOTE PREPAYMENT
AMOUNT:

 

Dual Currency Notes

 

DUAL CURRENCY NOTE:

o YES    o
NO

 

OPTIONAL PAYMENT CURRENCY:

 

DESIGNATED EXCHANGE RATE:

 

OPTION ELECTION DATES:

 

OPTION TO RECEIVE PAYMENTS
IN THE SPECIFIED CURRENCY:

o YES    o
NO

 

OPTION VALUE CALCULATION AGENT:

 

DUAL CURRENCY NOTE
PREPAYMENT AMOUNT:

 

Extension of Maturity Notes

 

EXTENSION OF MATURITY
NOTE:

o YES    o
NO

 

EXTENSION PERIOD:

 

NUMBER OF EXTENSION
PERIODS:

 

Extendible Notes

 

EXTENDIBLE NOTE:

o YES    o
NO

 

INITIAL MATURITY DATE:

 

SPECIAL ELECTION
INTERVAL:

 

EXTENDIBLE IN PART:

o YES    o
NO

 

AUTHORIZED EXTENDIBLE
AMOUNTS:

 

SPECIAL ELECTION PERIOD:

 

Tax Matters

 

COMPARABLE YIELD:      % per annum

 

PROJECTED PAYMENT
SCHEDULE:

$      semi-annually and $      due at Stated

Maturity which includes the final interest

payment

 

Miscellaneous

 

OTHER TERMS:

 

 

LEHMAN BROTHERS HOLDINGS INC., a corporation duly
organized and existing under the laws of the State of Delaware (herein called the
“Company,” which term includes any successor corporation under the Indenture
referred to on the reverse hereof), for value received, hereby promises to pay
to CEDE & Co., or registered assigns, on the Stated Maturity Date, for
each $1,000 principal amount of the Notes represented hereby not previously
repurchased or redeemed, an amount equal to the Maturity Payment Amount and, if
so specified above, to pay interest on the principal amount hereof from the
Issue Date specified above or from the most recent Interest Payment Date
specified above to which interest has been paid or duly provided for at the
Interest Rate specified above until the amount due on the Stated Maturity Date,
the Optional Repurchase Date or the Redemption Date, as the case may be, is paid
in full or made available for payment and (to the extent that the payment of
such interest shall be legally enforceable) at such rate per annum on any
overdue Payment Amount, premium, if any, and overdue installment of interest.

 

Unless
otherwise specified above, and except as provided in Section 9 on the
reverse hereof if this Note is a Dual Currency Note, payments of the applicable
Payment Amount, premium, if any, and interest hereon will be made in U.S.
dollars; if the Specified Currency set forth above is a currency other than
U.S. dollars (a “Foreign Currency”), such payments will be made in U.S. dollars
based on the equivalent of that Foreign Currency converted into U.S. dollars in
the manner set forth in Section 2 on the reverse hereof.  If the Specified Currency is a Foreign
Currency and it is so provided above, the Holder may elect to receive such
payments in that Foreign Currency by delivery of a written request to the
Trustee (or to any duly appointed Paying Agent) at the Corporate Trust Office
(as defined below) not later than 10 calendar days prior to the applicable
payment date, and such election will remain in effect for the Holder until
revoked by written notice to the Trustee (or to any such Paying Agent) at the
Corporate Trust Office received not later than 10 calendar days prior to the
applicable payment date; provided, however, no such election or
revocation may be made if, with respect to this Note, (i) an Event of
Default has occurred, (ii) the Company has exercised any discharge or defeasance
options or (iii) the Company has given a notice of redemption.  In the event the Holder makes any such
election pursuant to the preceding sentence, such election will not be
effective on any transferee of such Holder and such transferee shall be paid in
U.S. dollars unless such transferee makes an election pursuant to the preceding
sentence; provided, however, that such election, if in effect
while funds are on deposit with the Trustee to satisfy and discharge this Note,
will be effective on any such transferee unless otherwise specified above.

 

Except as provided in the following paragraph, the
Company will pay interest on the Interest Payment Dates specified above,
commencing with the first Interest Payment Date next succeeding the Issue Date,
and on the applicable Principal Payment Date; provided that any payment
of the Payment Amount, premium, if any, or interest to be made on any Interest
Payment Date or on the Principal Payment Date that is not a Business Day shall
be made on the next succeeding Business Day, unless the next succeeding
Business Day falls in the next calendar month, in which case payment will be
made on the first preceding Business Day, in each case with the same force and
effect as if made on such Interest Payment Date or such Principal Payment Date,
as the case may be, and, unless Accrue to Pay is specified on the face of this
Note, no additional interest shall accrue as a result of such delayed payment;
provided further that if the applicable Principal Payment Date is postponed due
to a Market Disruption Event, interest will continue to accrue during the
period from the originally scheduled Principal Payment Date to but

 

2

 

excluding the postponed Principal Payment Date.  If Accrue to Pay is specified on the face of
this Note, any payment of interest on the Interest Payment Date will include
interest accrued through the day before the Interest Payment Date.  Each payment of interest hereon shall include
interest accrued through the day before the Interest Payment Date or applicable
Principal Payment Date, as the case may be. 
Unless otherwise specified above, interest on this Note will be computed
on the basis of a 360-day year of twelve 30-day months or in the case of an
incomplete month, the number of days elapsed. 
In no event shall the interest rate of this Note be higher than the
maximum rate permitted by applicable law, as the same may be modified by United
States law of general application.

 

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

 

Unless
otherwise specified above and except as provided below, all payments of
interest on this Note may, at the option of the Company, be made by check
mailed to the person entitled thereto at such person’s address as it appears on
the registry books of the Company.

 

Payments
of the Payment Amount, premium, if any, and any interest payable on the related
Principal Payment Date will be made in immediately available funds upon
surrender of this Note at the corporate trust office or agency of the Trustee
(or any duly appointed Paying Agent) maintained for that purpose in the Borough
of Manhattan, New York City (the “Corporate Trust Office”), provided that this
Note is presented to the Trustee (or any such Paying Agent) in time for the
Trustee (or any such Paying Agent) to make such payments in such funds in
accordance with its normal procedures.

 

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

 

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

 

REFERENCE
IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE, INCLUDING THE
DEFINITIONS OF CERTAIN TERMS, SET FORTH ON THE REVERSE HEREOF.  SUCH FURTHER PROVISIONS SHALL FOR ALL
PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

 

3

 

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

 

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

 

	
  Dated:

  	
   

  
	
   

  	
   

  
	
  [SEAL]

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

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

 

CITIBANK, N.A.

  as Trustee

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Officer

  	
   

  

 

4

 

[REVERSE OF NOTE]

 

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTES, SERIES H

PERFORMANCE LINKED TO THE VALUE OF A COMMON STOCK, A 

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

 

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

 

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

 

Unless
otherwise specified on the face of this Note, if payment hereon is required to
be made in a Foreign Currency and such currency is unavailable to the Company
for making payments thereof due to the imposition of exchange controls or other
circumstances beyond the Company’s control, or is no longer used by the
government of the country which issued such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then the Company will be entitled to make payments with respect
hereto in

 

 

U.S. dollars until such
Foreign Currency is again available or so used. 
The amount so payable on any date in such Foreign Currency shall be
converted into U.S. dollars at a rate determined by the Exchange Rate Agent on
the basis of the noon buying rate in New York City for cable transfers in the
Foreign Currency as certified for customs purposes by the Federal Reserve Bank
of New York (the “Market Exchange Rate”) for such Foreign Currency on the
second Business Day prior to such payment date, or on such other basis as may
be specified on the face of this Note. 
In the event such Market Exchange Rate is not then available, the
Company will be entitled to make payments in U.S. dollars (i) if such
Foreign Currency is not a composite currency, on the basis of the most recently
available Market Exchange Rate for such Foreign Currency or (ii) if such
Foreign Currency is a composite currency in an amount determined by the
Exchange Rate Agent to be the sum of the results obtained by multiplying the
number of units of each component currency of such composite currency, as of
the most recent date on which such composite currency was used, by the Market
Exchange Rate for such component currency on the second Business Day prior to
such payment date (or if such Market Exchange Rate is not then available, by
the most recently available Market Exchange Rate for such component currency,
or as otherwise specified on the face of this Note).  Any payment in respect hereof made under such
circumstances in U.S. dollars will not constitute an Event of Default under the
Indenture.

 

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

 

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

 

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

 

2

 

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

 

Section 3.  Redemption.  Unless otherwise specified on the face of
this Note, the Company may, at its option, redeem this Note in whole or from
time to time in part on or after the date designated as the Initial Redemption
Date on the face of this Note at the Redemption Payment Amount, together with
accrued interest to but excluding the Redemption Date.

 

The
Company may exercise such option by causing the Trustee to mail by first-class
mail to the Holder hereof a notice (the “Redemption Notice”) of such redemption
at least 30 but not more than 60 days (or such other period as is specified as
the “Redemption Notice Period” on the face of this Note) prior to the
Redemption Date.  In the event of
redemption of this Note in part only, a new Note or Notes of this series for
the unredeemed portion hereof shall be issued in the name of the Holder hereof
upon the cancellation hereof in accordance with the terms of the
Indenture.  Unless otherwise specified on
the face of this Note, if less than all of the Notes of this series are to be
redeemed, the Notes of this series to be redeemed shall be selected by the
Trustee by such method as the Trustee shall deem fair and appropriate.

 

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

 

Section 5.  Optional
Repurchase.  Unless otherwise
specified on the face of this Note, at any time until the earlier of (a) the
date the Company gives notice of its intention to redeem this Note pursuant to Section 3
of this Note or (b) eight Business Days (or such other Optional Repurchase
Cutoff Period specified on the face of this Note) before the Stated Maturity
Date, the Holder may, at its option, cause the Company to repurchase this Note,
subject to the conditions specified below, on the Optional Repurchase Date at
the Optional Repurchase Amount, together with accrued interest to but excluding
the Optional Repurchase Date.

 

In
order for this Note to be so repurchased, the Trustee must receive, before the
earlier of (a) the date the Company gives notice of its intention to
redeem this Note pursuant to Section 3 of this Note or (b) eight
Business Days (or such other period as is specified as the “Optional Repurchase
Cutoff Period” on the face of this Note) before the Stated Maturity Date,
either (i) this Note with the form below entitled “Option to Elect
Repurchase” duly completed or (ii) a telegram, telex, fax or letter from a
member of a national securities exchange or the National Association of
Securities Dealers, Inc. or a commercial bank or trust company in the
United States setting forth the name of the Holder hereof, the then outstanding
principal amount of this Note, the principal amount of this Note to be repaid,
the certificate number hereof or a description of the tenor and terms of this
Note, a statement that the option to elect repurchase is being exercised
thereby and a guarantee that this Note with the form below entitled “Option to
Elect Repurchase” duly completed will be received by the Paying Agent not later
than five Business Days after the date of such telegram, telex, fax or letter
and this Note and form duly

 

3

 

completed are received by
the Paying Agent by such fifth Business Day. 
Exercise of this repurchase option shall be irrevocable, except as
otherwise provided under Section 7 of this Note or Section 10 of this
Note.  The repurchase option may be
exercised by the Holder of this Note with respect to less than the principal
amount of this Note then outstanding provided that the principal amount of this
Note remaining outstanding after repurchase is an authorized denomination.  Upon such partial repurchase this Note shall
be cancelled and a new Note or Notes of this series for the remaining principal
amount of this Note shall be issued in the name of the Holder of this Note.

 

If
this Note is a Global Security, the Holder of this Note, the nominee of the
Depositary, will be the only entity that can exercise a right to
repurchase.  In order to ensure that the
nominee of the depositary will timely exercise a right to repurchase relating
to this Note, the Holder must instruct the broker or other direct or indirect
participant through which it holds an interest in this Note to notify the
Depositary of its desire to exercise a right to repurchase.

 

Section 6.  Stock Settlement.  If the Reference Equity specified on the face
of this Note is a single common stock and if “Stock Settlement” on the face of
this Note is checked as applicable, this Note may be settled on the Stated
Maturity Date or on the Optional Repurchase Date (but not upon any Redemption,
acceleration of the maturity of this Note or other prepayment of this Note
prior to the Stated Maturity Date unless otherwise specified herein), with
shares of Settlement Value Securities at the Company’s option, at the Holder’s
option or mandatorily, as indicated on the face of this Note.

 

If
Stock Settlement is applicable, the Company will pay the applicable Payment
Amount, subject to the following paragraphs, by delivering, for each $1,000
principal amount of the Notes represented hereby, (a) in the case of
maturity, Settlement Value Securities having a value on the applicable
Valuation Date equal to the Maturity Payment Amount; and (b) in the case
of any Optional Repurchase, Settlement Value Securities having a value on the
applicable Valuation Date equal to the Optional Repurchase Amount.  The Calculation Agent will determine the
number and kind of Settlement Value Securities to be delivered, and whether
cash shall be delivered in lieu of, or in addition to, any Settlement Value
Securities, in accordance with the Calculation Agency Agreement.

 

If
Stock Settlement is applicable and the calculations in the preceding paragraph
result in fractional shares, the applicable Payment Amount shall be paid in
cash in an amount equal to the value of fractional shares based upon the
Closing Prices of the Settlement Value Securities on the applicable Valuation
Date.

 

If the
Company determines that it is prohibited from delivering Settlement Value
Securities, or that it would be unduly burdensome to do so, the Company shall
pay the applicable Payment Amount in cash.

 

Section 7.  Optional Interest Reset.  If so specified on the face of this Note, the
Interest Rate on this Note may be reset at the option of the Company, in the
manner set forth below (unless otherwise specified on the face of this Note),
on the Optional Reset Date or Optional Reset Dates specified on the face of
this Note.  The Company may exercise such
option by notifying the Trustee in writing of such exercise at least 45 but not
more than 60 days prior to an Optional Reset Date.  Not later than five Business Days after
receipt thereof, the Trustee will

 

4

 

mail by first-class mail
to the Holder of this Note a notice (the “Reset Notice”) setting forth (i) the
election of the Company to reset the interest rate, (ii) such new interest
rate and (iii) the provisions, if any, for redemption during the period
from such Optional Reset Date to the next Optional Reset Date or, if there is
no such next Optional Reset Date, to the Stated Maturity Date of this Note
(each such period a “Subsequent Interest Period”), including the date or dates
on which or the period or periods during which and the price or prices at which
such redemption may occur during such Subsequent Interest Period.  The Reset Notice shall be substantially in
the form of Exhibit A to this Note. 
Upon the transmittal by the Trustee of a Reset Notice to the Holder of
this Note, such new interest rate shall take effect automatically, and, except
as modified by the Reset Notice and as described in the next paragraph, this
Note will have the same terms as prior to the transmittal of such Reset Notice.

 

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

 

If the
Company elects to reset the interest rate of this Note, the Holder of this Note
will have the option to elect repurchase by the Company of this Note, or any
portion hereof, on any Optional Reset Date at a price calculated with reference
to (a) the then outstanding principal amount of this Note, (b) the
Maturity Payment Amount calculated as though the Optional Reset Date were the
Stated Maturity Date and the date that is a number of business days equal to
the Determination Period before that date were the Valuation Date, or (c) such
other amount or amounts, in each case as specified on the face of this Note,
plus any interest accrued to, such Optional Reset Date.  In order to obtain repurchase on an Optional
Reset Date, the Holder must follow the procedures set forth above in Section 5
of this Note for Optional Repurchase except that the period for delivery or
notification to the Trustee shall be at least 25 but not more than 35 days
prior to such Optional Reset Date and except that, if the Holder has tendered
this Note for repurchase pursuant to the Reset Notice, the Holder may, by
written notice to the Trustee, revoke such tender for repurchase until the
close of business on the tenth day prior to such Optional Reset Date; provided,
however, that if such day is not a Business Day, then such notice may be given
on the next succeeding Business Day.

 

Section 8.  OID Notes.  If this Note is an OID Note, the amount
payable in the event of Redemption, Optional Repurchase or acceleration of
maturity shall be (i) the Amortized Principal Amount of this Note as of
the Redemption Date, Optional Repurchase Date or date of such acceleration, as
the case may be, rather than the relevant Payment Amount of this Note or (ii) such
other amount as specified on the face of this Note (such amount, the “OID Note
Prepayment Amount”).

 

Section 9.  Dual Currency Notes.  If it is specified on the face of this Note
that this Note is a Dual Currency Note, the Company has a one time option,
exercisable on any one of the Option Election Dates specified on the face of
this Note in whole, but not in part, with respect to

 

5

 

all Dual Currency Notes
of this series, of thereafter making all payments of Maturity Payment Amount,
premium, if any, and interest (which payments would otherwise be made in the
Specified Currency of such Notes) in the Optional Payment Currency specified on
the face of this Note.  If the Company
makes such an election, the amount of Optional Payment Currency payable in
respect hereof shall be determined by the Exchange Rate Agent by converting the
amount of Specified Currency that would otherwise be payable into the Optional
Payment Currency at the Designated Exchange Rate specified on the face of this
Note.

 

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

 

If
this Note is a Dual Currency Note, notwithstanding any prior election made by
the Company, the amount payable hereon in the event of any Redemption, any
Optional Repurchase, any acceleration of the maturity of this Note or other prepayment
of this Note prior to the Stated Maturity Date shall be (a) an amount
equal to the amount otherwise due and payable plus accrued interest to but
excluding the Redemption Date, Optional Repurchase Date, date of acceleration
or other prepayment minus the Total Option Value multiplied by a fraction, the
numerator of which is the then outstanding principal amount of this Note and
the denominator of which is the aggregate principal amount of all Dual Currency
Notes of this series then outstanding or (b) such other amount as
specified on the face of this Note (such amount, the “Dual Currency Note
Prepayment Amount”).  In no event will
such payment be less than zero. 
Notwithstanding any prior election made by the Company, such payment
shall be made in the Specified Currency unless otherwise provided on the face
of this Note.

 

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

 

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

 

The
Company may exercise its option by notifying the Trustee of such exercise at
least 45 but not more than 60 days prior to the Stated Maturity Date in effect
prior to the exercise of such option (the “Original Stated Maturity”).  Not later than five Business Days after
receipt thereof, the Trustee will mail to the Holder a notice (the “Extension
Notice”), first class, postage prepaid, setting forth (i) the election of
the Company to extend the Stated Maturity Date, (ii) the

 

6

 

new Stated Maturity Date,
(iii) the Interest Rate applicable to the Extension Period and (iv) the
provisions, if any, for redemption during the Extension Period, including the
date on which or the period or periods during which and the price at which such
redemption may occur during the Extension Period.  Upon the mailing by the Trustee of an
Extension Notice to the Holder, the Stated Maturity Date hereof shall be
extended automatically, and, except as modified by the Extension Notice and as
described in the next paragraph, this Note will have the same terms as prior to
the mailing of such Extension Notice.

 

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

 

If the
Company extends the Stated Maturity Date of this Note, the Holder will have the
option to elect repurchase by the Company of this Note, or any portion hereof,
on the Original Stated Maturity at a price calculated with reference to (a) the
then outstanding principal amount of this Note, (b) the Optional
Repurchase Amount calculated as though the Original Stated Maturity were the
Stated Maturity Date and the date that is a number of business days equal to
the Determination Period before that date were the Valuation Date, or (c) such
other amount or amounts, in each case as specified on the face of this
Note.  In order for this Note to be so
repaid on the Original Stated Maturity, the Holder must follow the procedures
set forth in Section 5 of this Note for Optional Repurchase, except that
the period for delivery of this Note or notification to the Trustee shall be at
least 25 but not more than 35 days prior to the Original Stated Maturity and
except that the Holder may, by written notice to the Trustee, revoke any such
tender for repurchase until the close of business on the tenth day prior to the
Original Stated Maturity; provided, however, that if such day is not a Business
Day, then such notice may be given on the next succeeding Business Day.

 

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

 

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

 

7

 

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

 

The
Holder may elect to extend the Stated Maturity Date of this Note, or if so
specified above, any portion hereof, by delivering a notice to such effect to
the Trustee (or any duly appointed Paying Agent) at the Corporate Trust Office
not less than 3 nor more than 15 days prior to such Maturity Extension Date
(unless another period is specified on the face of this Note as the “Special
Election Period”).  Such election will be
irrevocable and will be binding upon each subsequent Holder of this Note.  An election to extend the Stated Maturity
Date of this Note may be exercised with respect to less than the entire
principal amount of this Note then outstanding only if so specified on the face
of this Note and only in such principal amount, or any integral multiple in
excess thereof, as is specified on the face of this Note.  Notwithstanding the foregoing, the maturity
of this Note will not be extended beyond the Stated Maturity Date specified on
the face of this Note.

 

Unless
otherwise specified above, any election not to extend will be effective only if
this Note is presented to the Trustee (or any duly appointed Paying Agent) as
soon as practicable.  Following receipt
of this Note the Trustee (or any duly appointed Paying Agent) shall issue in
exchange herefor in the name of the Holder (i) a Note, in a face amount
equal to the principal amount of this Note for which no election to extend was
exercised, with terms identical to those specified herein (except for the Issue
Date and the Initial Interest Rate and except that such Note shall have a
fixed, non-extendable maturity on the Extended Stated Maturity Date) and (ii) if
such election not to extend is made with respect to less than the principal
amount of this Note then outstanding, a replacement Extendible Note, in a face
amount equal to the principal amount of this Note for which an election to
extend was made, with terms identical to this Note.

 

Section 12.  Principal Amount for Indenture Purposes.  For the purpose of determining whether
Holders of the requisite amount of Notes of this series outstanding under the
Indenture have made a demand, given a notice or waiver or taken any other
action, the principal amount of this Note will be deemed to be the principal
amount of this Note then outstanding; provided, however, if this Note is 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) change the fixed maturity of any
Security, or reduce the Payment Amount or the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon or reduce any
premium or other amount payable on redemption, or make the Payment

 

8

 

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

 

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

 

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

 

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

 

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

 

9

 

agency in a Place of
Payment for this Note, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar
requiring such written instrument of transfer duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more
new Notes of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

 

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

 

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

 

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

 

Section 18.  Events of Default.  If an Event of Default with respect to Notes
of this series shall occur and be continuing, the principal of the Notes of
this series may be declared due and payable in the manner and with the effect
provided in the Indenture.  Unless
otherwise provided on the face of this Note, the amount payable to the Holder
hereof upon any acceleration permitted under the Indenture will be equal to the
Maturity Payment Amount calculated as though the date to which the maturity has
been accelerated were the Stated Maturity Date and the date that is a number of
business days equal to the Determination Period before that date were the
Valuation Date.  In any such case, even
if Stock Settlement is applicable, the Notes of this series will be settled in
cash.  Upon payment (i) of the
aggregate applicable amounts on the Notes of this series so declared due and
payable and (ii) of interest on any overdue Payment Amount and overdue
interest (in each case to the extent that the payment of such interest shall be
legally enforceable), all of the Company’s obligations in respect of the
payment of the Maturity Payment Amount of and interest, if any, on the Notes of
this series shall terminate.

 

Section 19.  No Recourse Against Certain Persons.  No recourse for the payment of Payment
Amount, premium, if any, or interest on this Note, or for any claim based
hereon or otherwise in respect hereof, and no recourse under or upon any
obligation, covenant or agreement of the Company in the Indenture or any
Indenture supplemental thereto or in any Note, or because of the creation of
any indebtedness represented thereby, shall be had against 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

 

10

 

any assessment or penalty
or otherwise, all such liability being, by the acceptance hereof and as part of
the consideration for the issue hereof, expressly waived and released.

 

Section 20.  Tax Treatment.  The Company agrees, and by acceptance of
beneficial ownership interest in the Notes of this series, each Holder of such
Notes will be deemed to have agreed, for United States federal income tax
purposes, (i) to treat the Notes of this series as indebtedness that is
subject to Treas. Reg. Sec. 1.1275-4 (the “Contingent Payment Regulations”) and
(ii) to be bound by the Company’s determination of the “comparable yield”
and “projected payment schedule,” within the meaning of the Contingent Payment
Regulations, with respect to the Notes of this series. The “comparable yield”
and the “projected payment schedule”, as determined by the Company per $1,000
note, are specified on the face of this Note.

 

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

 

Section 22.  GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

 

Section 23.
Definitions.  Set forth below are
definitions of certain of the terms used in this Note.  The definitions set forth below are subject
to the terms and provisions on the face of this Note.  If any definition below is different than, or
inconsistent with, the terms and provisions on the face of this Note, the terms
and provisions on the face shall prevail.

 

“ADS”
shall mean American Depositary Share.

 

“Alternative Redemption
Amount” shall mean, for each $1,000 principal amount of the Notes
represented hereby, the product of (a) $1,000 and (b) the Settlement
Value on the applicable Valuation Date divided by the Threshold Value.

 

“AMEX” shall mean the
American Stock Exchange LLC.

 

“Amortized Principal Amount”  of this Note at any time shall mean
the amount equal to (a) the Issue Price multiplied by the then outstanding
principal amount of this Note plus (b) that portion of the difference
between the amount calculated pursuant to clause (a) and the principal
amount of this Note that has accrued at the Yield to Maturity set forth on the
face of this Note (computed in accordance with generally accepted United States
bond yield computation principles) at the date as of which the Amortized
Principal Amount is calculated, but in no event shall the Amortized Principal
Amount of this Note exceed the principal amount of this Note.

 

“Average Execution Price”
shall mean, for a security or other property, the average per unit execution
price that an affiliate of the Company receives or pays for such security or
property, as the case may be, to hedge the Company’s obligations under the
Notes of this series.

 

“Business Day”, notwithstanding any provision in the Indenture,
shall mean, unless otherwise set forth on the face of this Note, any day that
is not a Saturday, a Sunday or a day on which the NYSE, the Nasdaq or the AMEX
is not open for trading or banking institutions or trust companies in New York
City are authorized or obligated by law or executive order to

 

11

 

close,
and, (a) if the Specified Currency is a Foreign Currency other than Euros,
not a day on which banking institutions are authorized or required by law to
close in the Principal Financial Center of the country issuing the Foreign
Currency and (b) if the Specified Currency is Euros, a day on which the
Trans-European Automated Real-Time Gross Settlement Express Transfer System is
open.  “Principal Financial Center” shall
mean the capital city of the country issuing the specified currency.  However, for U.S. dollars, Australian
dollars, Canadian dollars and Swiss francs, the Principal Financial Center will
be New York City, Sydney, Toronto and Zurich, respectively.

 

“Calculation
Agency Agreement” shall mean the Calculation Agency Agreement, dated as of May 18,
2005, between the Company and the Calculation Agent, as amended from time to
time, or any successor
calculation agency agreement.

 

“Calculation
Agent” shall mean the person that has entered into an agreement with the
Company providing for, among other things, the determination of the Settlement
Value and the Payment Amount, which term shall, unless the context otherwise
requires, include its successors and assigns. 
The initial Calculation Agent shall be Lehman Brothers Inc.

 

“Close of Trading” shall mean, in respect of any Relevant
Exchange or other exchange or quotation system, the scheduled weekday closing
time on a day on which the Relevant Exchange or other exchange or quotation
system is scheduled to be open for trading for its respective regular trading
session, without regard to after hours or any other trading outside of the
regular trading session hours.

 

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

 

“Closing Price” shall mean, for each Settlement Value Security,
as determined by the Calculation Agent pursuant to the Calculation Agency
Agreement on any particular day, based on information reasonably available to
it:

 

(1) 
if the Settlement Value Security is listed on a Relevant Exchange, the last
reported sale price per share at the Close of Trading on such day on the
Relevant Exchange;

 

(2) 
if the Settlement Value Security is not listed on a national securities
exchange or quotation system or is not a Nasdaq security, and is listed or
traded on a bulletin board, the Average Execution Price per share of the Settlement
Value Security; or

 

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

 

12

 

In
the case of both (1) and (2) above, if the Settlement Value Security
is listed or quoted on a non-United States Relevant Exchange or on a non-United
States bulletin board, the Closing Price will then be converted into U.S.
dollars using the Official W.M. Reuters Spot Closing Rate at 11:00 a.m.,
New York City time.  If there are several
quotes for the Official W.M. Reuters Spot Closing Rate at that time, the first
quoted rate starting at 11:00 a.m. shall be the rate used.  If there is no such Official W.M. Reuters
Spot Closing Rate for a country’s currency at 11:00 a.m., New York City
time, the Closing Price shall be converted into U.S. dollars using the last
available U.S. dollar cross-rate quote before 11:00 a.m., New York City
time.

 

“common stock” shall mean common stock or any other equity
security (which may be an ADS).

 

“Company” shall have the meaning set forth on the face of this
Note.

 

“Designated Exchange Rate” shall mean the exchange rate
specified as such on the face of this Note.

 

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

 

“Dual Currency Note” shall mean any Note designated as such on
the face of this Note.

 

“Dual Currency Note Prepayment Amount” shall have the meaning
set forth in Section 9 of this Note.

 

“Exchange Rate Agent” shall have the meaning set forth in Section 2
of this Note.

 

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

 

“Extension Notice”
shall have the meaning set forth in Section 10 of this Note.

 

“Foreign Currency”
shall mean any currency other than U.S. dollars.

 

“Global Security” shall have the meaning set forth on the face
of this Note.

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

“Interest Rate” shall be the rate specified as such on the face
of this Note.

 

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

 

“Issue Price” shall mean the price specified as such on the face
of this Note.

 

“Market Disruption Event”,
unless indicated otherwise on the face of this Note, with respect to a
Settlement Value Security or a Relevant Index shall mean any of the following
events has occurred on any day as determined by the Calculation Agent in
accordance with the Calculation Agency Agreement:

 

(1) 
(a) In the case of a Settlement Value Security, a material suspension of,
or limitation imposed on trading relating to, such Settlement Value Security,
or (b) in the case of a Relevant Index, a suspension of, or limitation
imposed on trading relating to, the securities that then comprise 20% or more
of such Relevant Index, in each case, by the Relevant Exchange for each such
security, at any time during the one-hour period that ends at the Close of
Trading on such day, whether by reason of movements in price exceeding limits
permitted by that Relevant Exchange or otherwise.  Limitations on trading during significant
market fluctuations imposed pursuant to NYSE Rule 80B or any applicable rule or
regulation enacted or promulgated by the NYSE, any other exchange, quotation
system or market, any other self regulatory organization or the Securities and
Exchange Commission of similar scope or as a replacement for Rule 80B may
be considered material.

 

(2) 
A material suspension of, or limitation imposed on, trading in futures or
options contracts relating to such Settlement Value Security or to such
Relevant Index, as the case may be, by the primary exchange or quotation system
on which those futures or options contracts are traded, at any time during the
one-hour period that ends at the Close of Trading on such day, whether by
reason of movements in price exceeding limits permitted by that primary
exchange or quotation system or otherwise.

 

(3) 
Any event, other than an early closure, that disrupts or impairs the ability of
market participants in general to effect transactions in, or obtain market
values for, (a) in the case of a Settlement Value Security, that
Settlement Value Security, or (b) in the case of a Relevant Index, the
securities that then comprise 20% or more of such Relevant Index, in each case
on the Relevant Exchanges for that Settlement Value Security or those
securities, or in the case of a Settlement Value Security or a security not
listed or quoted in the United States, on the primary exchange, quotation
system or market for such Settlement Value Security or security, at any time
during the one hour period that ends at the Close of Trading on such day.

 

14

 

(4) 
Any event, other than an early closure, that disrupts or impairs the ability of
market participants in general to effect transactions in, or obtain market
values for, the futures or options contracts relating to such Settlement Value
Security or to such Relevant Index, as the case may be, on the primary exchange
or quotation system on which those futures or options contracts are traded at
any time during the one hour period that ends at the Close of Trading on such
day.

 

(5) 
The closure of, (a) in the case of a Settlement Value Security, the
Relevant Exchange for that Settlement Value Security or the primary exchange or
quotation system on which futures or options contracts relating to that
Settlement Value Security are traded, or (b) in the case of a Relevant
Index, the Relevant Exchanges for securities that then comprise 20% or more of
such Relevant Index or the primary exchange or quotation system on which
futures or options contracts relating to such Relevant Index is traded, in each
case, prior to its scheduled closing time unless the earlier closing time is
announced by the primary exchange or quotation system at least one hour prior
to the earlier of (i) the actual closing time for the regular trading
session on the exchanges or quotation system and (ii) the submission
deadline for orders to be entered into the exchanges or quotation system for
execution at the Close of Trading on such day.

 

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

 

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

 

“Market Exchange Rate”
shall have the meaning set forth in Section 2 of this Note.

 

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

 

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

 

“Multiplier” shall mean, if the Reference Equity set forth on
the face of this Note is a common stock or basket of common stocks, for each
Settlement Value Security, the number of shares or other units (including ADSs)
(or fraction of a share or other unit expressed as a decimal) of such Settlement
Value Security included in the calculation of the Settlement Value on a
particular day, as determined by the Calculation Agent pursuant to the
Calculation Agency Agreement.  The
initial Multiplier relating to each Settlement Value Security initially included
in the Reference Equity shall be specified as such on the face of this Note.
The initial Multiplier for any security which may subsequently become a
Settlement Value Security shall be the number of shares or other units of such
security which are to be included in the calculation of the Settlement

 

15

 

Value
at the time such security becomes a Settlement Value Security.  Multipliers may be adjusted by the
Calculation Agent in accordance with the Calculation Agency Agreement in
certain circumstances.

 

“Nasdaq” shall mean The Nasdaq Stock Market, Inc.

 

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

 

“NYSE”
shall mean The New York Stock Exchange, Inc.

 

“Official W.M. Reuters Spot Closing Rate” shall mean the closing
spot rate published on Reuters page ”WMRA” relevant for a Settlement Value
Security.

 

“OID Note” shall mean any Note (a) that
has been issued at an Issue Price less, by more than a de minimis amount
(as determined under United States federal income tax rules applicable to
original issue discount instruments), than 100% and (b) any other Note
that for United States federal income tax purposes would be considered an
original issue discount instrument.

 

“OID Note Prepayment
Amount” shall have the meaning set forth in Section 8 of this Note.

 

“Option Election Dates”
shall mean the date(s) specified as such on the face of this Note.

 

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

 

“Optional Payment
Currency” shall mean the currency specified as such on the face of this
Note.

 

“Optional Repurchase”
shall mean the option of a Holder to elect to require the Company to repurchase
Notes of this series pursuant to Section 5 of this Note.

 

“Optional Repurchase
Amount” shall mean, for each $1,000 principal amount of Notes
represented hereby, the Alternative Redemption Amount.

 

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

 

16

 

“Optional Repurchase Date”
shall mean the eighth Business Day (or such other date as is specified
on the face of this Note) following the Business Day on which the Company
receives a written notice of election to require repurchase of this Note in the
manner specified in Section 5 of this Note; provided, however,
if the Calculation Agent determines that a Market Disruption Event with respect
to any Settlement Value Security has occurred on the day that would otherwise
be the applicable Valuation Date, or if the applicable Valuation Date is not a
Scheduled Trading Day, then the Optional Repurchase Date shall be postponed by
a number of Business Days equal to the number of Scheduled Trading Days by
which the applicable Valuation Date is postponed.

 

“Optional Reset Dates”
shall be the dates specified as such on the face of this Note.

 

“Original Stated Maturity”
shall have the meaning set forth in Section 10 of this Note.

 

“Payment Amount”
shall mean the Maturity Payment Amount, the Redemption Payment Amount or the
Optional Repurchase Amount, as the case may be.

 

“Principal Payment Date”
shall mean the Stated Maturity Date, the Redemption Date or the Optional
Repurchase Date, as the case may be.

 

“Redemption” shall
mean the option of the Company to redeem, at any time on or after the date
specified on the face of this Note, in whole or from time to time in part, the
Notes of this series pursuant to Section 3 of this Note.

 

“Redemption Date”
shall mean the date specified as such in the notice demanded in Section 3
of this Note; provided, however, if the Calculation Agent
determines that a Market Disruption Event with respect to any Reference Equity
has occurred on a day that would otherwise be the applicable Valuation Date, or
if the applicable Valuation Date is not a Scheduled Trading Day, then the
Redemption Date shall be postponed by a number of Business Days equal to the
number of Scheduled Trading Days by which the applicable Valuation Date is
postponed.

 

“Redemption
Notice” shall mean the notice of redemption mailed to the Holders pursuant
to Section 3 of this Note.

 

“Redemption
Notice Period” shall
have the meaning set forth in Section 3 of this Note.

 

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

 

“Reference Equity”
shall mean the common stock, stock index, basket of common stocks or basket of
stock indices specified as such on the face of this Note.

 

“Relevant Exchange”
shall mean, for any Settlement Value Security, the primary United States
national securities exchange, quotation system, including any bulletin board

 

17

 

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

 

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

 

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

 

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

 

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

 

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

 

(1) if the Reference Equity specified on the face of this Note is
a common stock or a basket of common stocks, the sum of the products of the
Closing Prices on the applicable Valuation Date and the applicable Multipliers
(as adjusted from time to time by the Calculation Agent pursuant to the
Calculation Agency Agreement prior to the Close of Trading on the Valuation
Date) for each Settlement Value Security on the Valuation Date, together with
any cash or other property included in the Settlement Value on the Valuation
Date by the Calculation Agent pursuant to the Calculation Agency Agreement;
provided that if the originally scheduled Valuation Date is postponed because
of the occurrence of a Market Disruption Event, the Settlement Value will equal
(a) the sum of the products of the Closing Prices on the postponed
Valuation Date and the applicable Multipliers for each Settlement Value
Security for which no Market Disruption Event occurred plus (b) the sum of
the products of the average per share execution price an affiliate of the
Company receives or pays on the postponed Valuation Date upon the sale or
purchase of each Settlement Value Security for which a Market Disruption Event
has occurred which was used to hedge the Company’s obligations under the Notes
of this series and the applicable Multipliers (in case, as adjusted from time
to time by the Calculation Agent pursuant to the Calculation Agency Agreement
prior to the Close of Trading on the postponed Valuation Date), together with
any cash or other property included in the Settlement Value on the Valuation
Date by the Calculation Agent pursuant to the Calculation Agency Agreement;

 

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

 

18

 

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

 

The Settlement Value, and
any adjustments thereto, shall be determined by the Calculation Agent pursuant
to the Calculation Agency Agreement.

 

“Settlement Value
Securities” shall mean, if the Reference Equity specified on the face of
this Note is a common stock or a basket of common stocks, the securities
included in the calculation of the Settlement Value by the Calculation Agent
pursuant to the Calculation Agency Agreement. The Settlement Value Securities
will initially consist of the common stocks designated as the Reference Equity
on the face of this Note.

 

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

 

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

 

“Specified Currency”
shall mean U.S. dollars or such other currency as is specified as such on the
face of this Note.

 

“Stated Maturity Date”
shall mean the date specified as such on the face of this Note (except as
otherwise provided in the case of an Extension of Maturity Note or an
Extendible Note); provided, that if a Market Disruption Event with respect to
one or more of the Settlement Value Securities or Relevant Indices, as the case
may be, occurs on the applicable Valuation Date, or if the applicable Valuation
Date is not a Scheduled Trading  Day, then the Stated Maturity Date shall be postponed by a number of
Business Days equal to the number of Scheduled Trading Days by which the
applicable Valuation Date is postponed. In the event of any acceleration of the
maturity of this Note prior to the Stated Maturity Date specified on the face
of this Note, the term “Stated Maturity Date” when used herein shall refer,
where applicable, to the date of acceleration of this Note.

 

“Stock Settlement”
shall mean the option or right to pay or receive the Maturity Payment Amount or
Optional Repurchase Amount in shares of the Settlement Value Securities, as set
forth in Section 6 of this Note.

 

“Subsequent Interest
Period” shall have the meaning set forth in Section 7 of this Note.

 

“Threshold Value”
shall have the meaning set forth on the face of this Note.

 

“Total Option Value”
shall mean, with respect to any Dual Currency Note on any date, an
amount (calculated as of such date by the Option Value Calculation Agent
specified on the face of this Note) equal to the sum of the Option Values
(calculated as of such date by the Option Value Calculation Agent) for all
Interest Payment Dates occurring after the date of calculation up to and
including the Stated Maturity Date.

 

19

 

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

 

“Valuation
Date” shall mean, unless otherwise specified on the face of this Note, (a) in
the case of payment on the Stated Maturity Date, the third Business Day prior
to the Stated Maturity Date, (b) in the case of Redemption, the date that
the Redemption Notice is mailed and (c) in the case of Optional
Repurchase, the date that is a number of Business Days equal to the Determination
Period before the Optional Repurchase Date; provided, however, in
each case, if a Market Disruption Event occurs on any such date, as determined
by the Calculation Agent pursuant to the Calculation Agency Agreement, or if
such date is not a Scheduled Trading Day, the Valuation Date shall be postponed
to the next Scheduled Trading Day on which no Market Disruption Event occurs; provided,
further, if a Market Disruption Event occurs on each of the eight
Scheduled Trading Days following the originally scheduled Valuation Date, then
that eighth Scheduled Trading Day shall be deemed the Valuation Date and the
Calculation Agent shall determine, in accordance with the Calculation Agency
Agreement, the Closing Price of the affected Settlement Value Securities or the
Closing Level of the Relevant Index, as the case may be, based upon its
estimate of the value of the Settlement Value Security or Relevant Index, as of
the Close of Trading on that eighth Scheduled Trading Day.

 

“Yield
to Maturity” shall mean the percentage specified as such on the face of
this Note.

 

20

 

OPTION TO ELECT REPURCHASE

 

The
undersigned owner of this Note hereby irrevocably elects to have the Company
repurchase the principal amount of this Note or portion hereof below designated
at (i) the Optional Repurchase Amount plus accrued interest to but
excluding the Optional Repurchase Date, if this Note is to be repurchased
pursuant to the Optional Repurchase provision described in Section 5 of
this Note, or (ii) the price specified pursuant to the Optional Interest
Reset provision described in Section 7 of this Note or the Extension of
Maturity Notes provision described in Section 10 of this Note.  Any such election is irrevocable except as
provided in Section 7 of this Note or Section 10 of this Note.

 

If the
repurchase of this Note is pursuant to Section 5 of this Note and if the undersigned has the option to
elect to have the repurchase settled in stock, the undersigned has indicated
below if that option is being exercised.

 

	
  Dated: 

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

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

  
	
   

  	
   

  
	
   

  	
   

  
	
  Principal Amount to be repurchased, if amount to be repurchased is
  less than the principal amount of this Note 

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

  
	
  (principal amount remaining must be an authorized denomination)

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Please print name and address including zip code)

  
	
   

  	
   

  
	
   

  	
   

  
	
  Stock Settlement option

  elected

  	
  SOCIAL SECURITY OR

  OTHER TAXPAYER ID NUMBER:

  
	
   

  	
   

  	
   

  
	
  o
  YES    o
  NO

  	
   

  	
   

  
									

 

 

OPTION TO ELECT TERMINATION OF AUTOMATIC EXTENSION

 

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

 

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

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

  
	
   

  	
   

  
	
  Principal Amount to be terminated, if amount to be

  terminated is less than the principal amount of this Note

  (such principal amount must be an authorized denomination)

  	
  Fill in for registration of Notes of this series 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 

  
								

 

 

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

 

	
  TEN COM

  	
  —

  	
  as tenants in
  common

  
	
  TEN ENT

  	
  —

  	
  as tenant by the
  entireties

  
	
  JT TEN

  	
  —

  	
  as joint tenants with right of survivorship

  
	
   

  	
   

  	
  and not as tenants in common

  
	
   

  	
   

  	
   

  
	
  UNIF GIFT

  	
   

  	
   

  
	
  MIN ACT

  	
  —

  	
   

  	
  Custodian

  	
   

  	
   

  
	
   

  	
   

  	
  (Cust)

  	
   

  	
  (Minor)

  
	
   

  	
   

  	
  under Uniform Gifts to Minors Act

  
	
   

  	
   

  	
   

  	
  (State)

  
							

 

 

	
   

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

  	
   

  
	
   

  	
   

  	
   

  
	
   

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

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING
  NUMBER OF ASSIGNEE)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (PLEASE PRINT OR TYPE NAME AND ADDRESS, INCLUDING
  ZIP CODE, OF ASSIGNEE)

  	
   

  

 

 

 

 

 

the within Note of LEHMAN
BROTHERS HOLDINGS INC. and all rights thereunder and does hereby irrevocably
constitute and appoint

 

 

	
   

  
	
  Attorney to
  transfer the said Note on the books of the within-named Company, with full
  power of substitution in the premises.

  

 

 

	
  Dated:

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  NOTICE:  The signature to this assignment must correspond
  with the name as it appears upon the face of the within Note in every
  particular, without alteration or enlargement or any change whatsoever.

  	
   

  
							

 

 

	
  Signature(s) Guaranteed:

  
	
   

  
	
   

  
	
   

  	
   

  
	
  The signature(s) should be guaranteed by an eligible
  guarantor institution (banks, stockbrokers, savings and loan associations and
  credit unions with membership in an approved signature guarantee medallion
  program), pursuant to SEC rule 17Ad-15.

  	
   

  
			

 

 

Schedule I

 

Amortization Table

 

	
  Date

  	
   

  	
  Payment

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

EXHIBIT A

 

RESET NOTICE

 

LEHMAN BROTHERS HOLDINGS
INC.

Medium-Term Notes, Series H

Performance Linked to the
Value of a Common Stock, a 

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

CUSIP No. 

Registered Nos.     -    

 

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

 

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

 

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

 

	
  Date

  	
   

  	
  Redemption Price

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

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

 

Dated:

 

	
   

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
    Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
    Title:

  	
   

  	
   

  
						

 

(1) Insert applicable Optional Reset Date.

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