Document:

EXHIBIT 10.2

 

EMPLOYMENT
AGREEMENT

 

The parties to this
Employment Agreement (this “Agreement”), dated as of May 13, 2005, are American
Power Conversion Corporation, a Massachusetts corporation (the “Company”), and
Richard J. Thompson (the “Executive”).  Accordingly,
the parties, intending to be legally bound, as follows:

 

1.                                       Employment.

 

1. 1                              General.  The Company hereby employs the
Executive in the positions and capacities of Senior Vice President - Finance
and Chief Financial Officer, and the Executive hereby accepts such employment,
subject to the terms and conditions herein contained.  In such capacities, the Executive agrees
faithfully to perform (i) such duties and responsibilities as are customary for
an executive with similar titles and positions at similar publicly-traded
companies and (ii) such additional duties (consistent with his positions as
Senior Vice President - Finance and Chief Financial Officer) as may reasonably
be assigned to the Executive from time to time.

 

1.2                                 Full-Time Position.  The
Executive hereby agrees that, during the Employment Term he shall devote all of
his business time, attention and skills to the business and affairs of the
Company and its subsidiaries, except during vacation time as provided by
Section 3.3 hereof and any periods of illness. 
The Executive agrees that, during the Employment Term, he will not seek
employment with another entity.  Subject
to the foregoing, nothing in this Agreement shall restrict the Executive from
(i) managing his personal investments, personal business affairs and other
personal matters, (ii) serving on civic or charitable boards or committees or
(iii) delivering lectures, fulfilling speaking engagements or teaching at
educational institutions; provided that none of such activities, either singly
or in the aggregate, interfere with the performance of his duties under this
Agreement.  The Executive must receive
approval of the Chief Executive Officer and the Board of Directors of the
Company (“Board”) prior to assuming any directorships in accordance with any
applicable policies of the Company.

 

2.                                       Compensation.

 

2.1                                 Salary.  Subject to the terms and
conditions herein contained, during the Employment Term, the Company shall pay
to the Executive, and the Executive shall accept, for all services to be
rendered by him pursuant to this Agreement (including, but not limited to, any
services that may be rendered by him to any subsidiary of the Company and any
services that may be rendered by him as a member of the Board or of the board
of any such subsidiary or any committee(s) thereof) a base salary of $400,000
per annum, and subject to increases, if any, as may be approved from time to
time by the Board or the Compensation and Stock Option Committee of the Board
(the “Compensation Committee”) in its discretion (such amount, together with
any applicable increases, shall be referred to herein as the “Base Salary”).  The Executive’s Base Salary shall be payable
in such installments as are in effect from time to time in accordance with the
regular payroll practices of the Company.

 

2.2                                 Executive Bonus.  In
addition to his Base Salary, the Executive shall be eligible to participate in
the executive bonus program of the Company in respect of each calendar year
during the Employment Term (a “Bonus”), as such Bonus may be awarded pursuant
to, and in accordance with, the terms of the Company’s the executive bonus
program, as then in effect. The Company’s current executive bonus program
provides for the payment of a formulaic percentage

 

 

of base salary actually paid to the executive
for services in a calendar year; provided, however, that for purposes of
computing the Executive’s calendar year 2005 Bonus, the base salary actually
paid to the Executive for calendar year 2005 shall be deemed to be $400,000.

 

2.3                                 Equity Compensation.  As
soon as practicable after the Effective Date, the Executive will be nominated
to the Compensation Committee for (i) an award of 30,000 restricted stock
units, and (ii) a grant of 30,000 stock options, each of which would vest ratably
over a four year period.  In addition,
the Company agrees that the Executive shall, at the sole discretion of the
Compensation Committee, be eligible for additional grants of stock options or
other awards of equity compensation under the terms of any equity incentive
plan maintained by the Company, as then in effect.

 

2.4                                 Sign-on Bonus. 
Provided that the Executive is still employed by the Company, the
Company will pay the Executive a sign-on bonus of (i) $50,000 after the date
that is forty-five (45) days from the Effective Date and (ii) $50,000 after the
date that is six (6) months from the Effective Date.

 

2.5                                 Housing Allowance.  The
Company shall provide the Executive with a housing allowance in the amount of
$2,000 per month for a period of twelve months, subject to extension as agreed
to by the Company, commencing in the month in which the Effective Date falls,
for the Executive to establish suitable housing near the company’s corporate
headquarters in West Kingston, Rhode Island.

 

2.6                                 Relocation Expenses.  In
the event the Company requests that the Executive relocate, the Company will
reimburse the Executive for the reasonable costs incurred in the sale of
Executive’s then existing, and the purchase of Executive’s new, house and the
reasonable costs incurred in the transportation of the Executive’s household
goods to the new house.

 

3.                                       Additional Benefits.

 

3.1                                 Expenses.  The Company shall reimburse
the Executive (upon the submission by him of reasonably itemized accounts
therefor), or advance to the Executive, where appropriate, an amount for such
costs and expenses as the Executive shall reasonably incur (including, among
other things, business travel and business entertainment expenses) in
connection with the performance by him of his duties hereunder in accordance
with the Company’s policy with respect thereto as in effect from time to time
during the Employment Term and reimbursement of amounts paid by him for the
annual planning and preparation of his tax returns in an amount reasonable and
customary for executives of similar status.

 

3.2                                 General Fringe Benefits.  The
Executive shall be entitled to, and the Company shall provide, such fringe
benefits of the Company, with eligibility to commence on the Effective Date, including,
but not limited to, participation in employee health and benefit plans and the
Company’s purchase of health and/or disability insurance, which the Company may
from time to time generally offer its officers during the Employment Term and
for which the Executive is eligible.

 

3.3                                 Employee Time Off.  The
Executive shall be entitled to twenty-two (22) days of time off annually during
the Employment Term in accordance with the Company’s policies and
practices.  The Executive shall provide
the Chief the Executive Officer of the Company with reasonable prior notice of
his planned vacation(s).

 

 

3.4                                 Other Benefits. 
Nothing in this Agreement shall prevent the Company from, or obligate
the Company to, increase compensation (including without limitation any Base
Salary or Bonus), any other payments or any other benefits to the Executive, or
from deciding to provide the Executive with any benefits in addition to those
provided for herein.

 

4.                                       Term of Employment.  The
Executive’s employment hereunder shall commence on May 23, 2005 (the “Effective
Date”) and shall continue for a period of two years from the Effective Date; provided,
however, that commencing on the second anniversary of the Effective Date
and on each subsequent anniversary thereafter (each, a “Renewal Date”), the
term of the Executive’s employment hereunder shall automatically be extended
for one (1) additional year unless, not later than 60 days prior to a Renewal
Date, the Executive or the Company shall have given written notice to the other
that he or it does not wish to extend this Agreement.  The Executive’s employment under this
Agreement shall be subject to earlier termination under Section 5.

 

The period of such
employment is herein referred to as the “Employment Term”.  The scheduled expiration of the Employment
Term shall not be deemed to be a termination of the Employment Term hereunder,
except as provided in Section 5.6.4 hereof.

 

5.                                       Termination.

 

5.1                                 Death.  The Employment Term shall
terminate automatically in the event of the Executive’s death during the
Employment Term and upon such termination, the obligations, duties and
liabilities of the Company to the Executive shall solely be as set forth in
Section 5.6.1 hereof.

 

5.2                                 Disability.  In the event of the Executive’s
failure to perform his duties by reason of his becoming Disabled (as defined
herein) during the Employment Term, the Company shall have the option to
terminate the Employment Term, by giving written notice of such termination to
the Executive, which notice shall specify the effective date of termination.  Upon such termination, the Executive shall
have no further duties hereunder (except as set forth in Section 7 hereof) and
the obligations, duties and liabilities of the Company to the Executive shall
solely be as set forth in Section 5.6.1 hereof. 
For purposes of this Agreement, the term “Disabled” shall mean the
inability of the Executive, for medical reason(s) certified by a physician
selected by the Company and reasonably satisfactory to the Executive, to
substantially perform his duties hereunder for an aggregate of at least 180
days during any period of 365 consecutive days.

 

5.3                                 By the Company for Cause.  The
Company may, at its option, terminate the Employment Term, for any of the
following reasons (each a “Cause”), upon not less than five (5) business days’
prior written notice to the Executive that a meeting of the Board will be held
to consider such action, at which meeting the Executive shall be afforded an
opportunity to be heard (a “Hearing”). If the Board decides to terminate the
Executive at the Hearing, the Executive shall have no further duties hereunder (except
as set forth in Section 7 hereof) and the obligations, duties and liabilities
of the Company to the Executive shall solely be as set forth in Section 5.6.2
hereof:

 

5.3.1                        Violation of Law.  If
the Executive is convicted of or pleads nolo contendere to (i) any misdemeanor
relating to the affairs of the Company or any of its affiliates, (ii) a felony
under Federal or state law, or (iii) a willful violation of any federal or
state securities law.

 

5.3.2                        Failure to Perform.  If,
without the prior express written consent of the Board, the Executive (i) fails
to perform (other than as a result of being Disabled, as to which Section 5.2

 

 

hereof could apply), in any material respect,
any of his duties or obligations to the Company or those duties or actions
reasonably requested by the Board or the Chief Executive Officer of the
Company, fails to observe Company policies, practices or procedures, or
breaches any contract or agreement with the Company, and if such failure or
breach continues for more than thirty (30) days after written notice by the
Company to the Executive specifying the nature of his failure or breach, provided,
however, that if such failure or breach is incapable of being cured, in
the good faith determination of the Board, the Employment Term shall terminate
immediately after the date of the Hearing, (ii) takes actions or omits to take
actions in connection with his duties and/or responsibilities hereunder that
constitute willful misconduct or gross negligence, or (iii) commits any act of
insubordination or disloyalty to the Company, its Board or management.

 

The parties hereto
acknowledge and agree that matters of the business judgment of the Executive or
the economic performance of the Company or any segment thereof shall not be
factors in determining Cause, except to the extent that they involve gross
negligence or willful misconduct as referenced in the foregoing paragraph.

 

5.4                                 By the Company Without Cause.  In
addition (and without prejudice) to its right to terminate the Employment Term
under the provisions of Section 5.3 hereof, the Company may, at its option,
terminate the Employment Term for any reason whatsoever by giving written
notice of termination to the Executive, specifying the date of termination.
Upon such termination, the Executive shall have no further duties hereunder
(except as set forth in Section 7 hereof) and the obligations, duties and
liabilities of the Company to the Executive shall solely be as set forth in
Section 5.6.3 hereof.

 

5.5                                 By the Executive For “Substantial Breach.”  As
used herein, “Substantial Breach” shall mean the Company’s material breach of
this Agreement, including but not limited to, without the Executive’s consent,
the assignment to the Executive of duties or responsibilities inconsistent in a
material and adverse respect with the provisions of this Agreement, a material
diminution of the Executive’s position, authority, responsibilities or benefits
to which he is then entitled hereunder hereof, or the Company’s common stock no
longer being publicly traded under The Nasdaq Stock Market or a national stock
exchange.  In the event that the
Executive wishes to terminate the Employment Term due to a Substantial Breach
by the Company, the Executive shall send a written notice to the Company
notifying the Company of the breach within sixty (60) days of such breach.  If such breach is not corrected within thirty
(30) days after receipt of such notice, then the Executive may, in his sole
discretion, elect to terminate the Employment Term by giving written notice of
such election to the Company within seven (7) days of the end of such thirty
(30) day period, and upon receipt by the Company of such an election, the
Employment Term shall terminate.  Upon
such termination, the Executive shall have no further duties hereunder (except
as set forth in Section 7 hereof) and the obligations, duties and liabilities
of the Company to the Executive shall solely be as set forth in section 5.6.3
hereof.

 

5.6                                 Payments Upon Termination.  In
the event that the Employment Term is terminated hereunder, the Company shall
pay to the Executive the following amounts, and the Company shall thereupon
have no liability or other obligation of any kind or character under or in
connection with this Agreement (the effective date of any such termination is
hereinafter referred to as the “Termination Date”):

 

5.6.1                        Death or Disability.  In
the event that the Employment Term is terminated pursuant to Section 5.1 or
Section 5.2 hereof, the Company shall pay to the Executive or to the Executive’s
executor, administrator, beneficiary or personal representative (the “Representative”),
as the case may be, (i) the Base Salary due and owing through the Termination
Date, payable in

 

 

accordance with the Company’s regular payroll
practices, and (ii) a Bonus under the Company’s executive bonus program which
shall be pro-rated so that the Executive receives a Bonus only for the period
from the first day of the calendar year in which the Termination Date falls
through the Termination Date (the “Pro-Rated Bonus”), provided that such
Pro-Rated Bonus shall be payable in a lump sum by the later of (A) ten (10)
days following the payment of the executive bonus for that calendar year in
accordance with the Company’s executive bonus program, or (B) the date that is
six (6) months following the Termination Date, in accordance with the Company’s
then regular payroll practices.

 

5.6.2                        By the Company for Cause.  In
the event that the Employment Term is terminated pursuant to Section 5.3
hereof, the Company shall pay to the Executive his Base Salary due and owing to
him through the Termination Date payable in accordance with the Company’s
regular payroll practices.

 

5.6.3                        By the Company without Cause or By the
Executive for Substantial Breach.  In the event that the
Employment Term is terminated pursuant to Section 5.4 or Section 5.5 hereof, in
return for a general release in form and substance acceptable to the Company,
the Company shall (i) pay to the Executive his Base Salary due and owing to him
through the Termination Date, payable in accordance with the Company’s regular
payroll practices, and the Pro-Rated Bonus, payable as defined in Section
5.6.1, (ii) pay to the Executive an amount equal to the sum of the Executive’s
then current Base Salary plus the Bonus paid by the Company to the Executive
for the prior calendar year, payable in a lump sum of 6/12ths of such amount
after the date that is six (6) months following the Termination Date and the
remaining 6/12ths in six (6) equal monthly installments commencing in the
seventh month following the Termination Date, in accordance with the Company’s
then regular payroll practices, and (iii) reimburse Executive for his continued
participation in the Company’s group health insurance premiums under COBRA for
a period of twelve (12) months following the Termination Date, with such
reimbursement being payable in a lump sum equal to six (6) monthly COBRA
payments after the date that is six (6) months following the Termination Date
and the remainder in six (6) equal monthly installments commencing in the
seventh month following the Termination Date; provided, however,
that any or all of the foregoing payments may be withheld by the Company if the
Executive is in breach of Section 7 hereof or any other agreement or contract
with the Company.

 

5.6.4                        Non-Renewal By the Employer.  If
the Company shall give notice of non-renewal of the Employment Term in
accordance with the provisions of Section 4 hereof, the Company shall pay to
the Executive an amount equal to the sum of the Executive’s then current Base
Salary plus the Bonus paid by the Company to the Executive for the prior
calendar year, payable in a lump sum of 6/12ths of such amount after the date
that is six (6) months following the end of the Employment Term and the
remaining 6/12ths in six (6) equal monthly installments commencing in the
seventh month following the end of the Employment Term payable in accordance
with the Company’s then regular payroll practices, provided, however,
that any or all of the payments may be withheld from the Executive by the
Company if the Executive is in breach of Section 7 hereof or any other
agreement or contract with the Company.

 

The parties hereto hereby
agree that, for the purposes of this Section 5.6.4, the Termination Date shall
be the date upon which the Executive’s employment hereunder is scheduled to
expire pursuant to Section 4 hereof, unless the parties hereto mutually agree
to an earlier date.

 

 

Upon the payment of the
foregoing amount to the Executive, the Company shall have no liability or other
obligation of any kind or character under or in connection with this Agreement,
except with respect to Section 7 hereof.

 

Following the Executive’s
attainment of the age of 65 years, all obligations and liabilities of the
Company under this Section 5.6.4 in respect of its decision not to renew the
Executive shall forthwith terminate.

 

5.7                                 Change of Control. Executive shall be offered the Company’s
standard form Change-of-Control Severance Agreement in the same form as is
offered to other executives of the Company. 
Executive agrees that in the event of a “Covered Termination” under a
Change-of-Control Severance Agreement executed by the Executive, the Company is
not also obligated to pay to the Executive the amounts set forth in Section
5.6.3. and 5.6.4 hereof.

 

6.                                       Arbitration.

 

6.1                                 General. Any dispute under this Agreement, including those arising out of or
relating to Section 5 hereof, shall be settled by arbitration in accordance
with this Section 6.

 

6.2                                 Commencement. 
Either party may serve upon the other party written notice that the
dispute, specifying the nature thereof, shall be submitted to arbitration.
Within ten (10) days after the service of such notice, each of the parties
shall designate a person as an arbitrator and serve written notice of such
appointment upon the other party. If either party fails within the specified
time to appoint such arbitrator, the other party (if such party shall timely
designate an arbitrator) shall be entitled to appoint both arbitrators. The two
arbitrators so appointed shall appoint a third arbitrator. If the two
arbitrators appointed shall fail to agree upon a third arbitrator within ten
(l0) days after their appointment, then an application may be made by either
party hereto, upon written notice to the other party, to the American
Arbitration Association, or any successor thereto, or if the American
Arbitration Association or its successor shall fail to appoint a third
arbitrator within ten (10) days after such request, then either party may
apply, with written notice to the other, to any court of competent jurisdiction
for the appointment of a third arbitrator, and any such appointment so made
shall be binding upon both parties hereto.

 

6.3                                 Applicable Rules and Procedures.  The
arbitration shall be conducted, to the extent consistent with this Section 6,
in accordance with the then prevailing rules and procedures of the American
Arbitration Association or its successor. The arbitrators shall have the right
to retain and consult experts and competent authorities skilled in the matters
under arbitration, but all consultations shall be made in the presence of both
parties, who shall have full right to cross-examine the experts and authorities.  Unless otherwise agreed by the parties, any
such arbitration shall take place in Rhode Island and shall be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association.

 

6.4                                 Decision.  The arbitrators shall render
their award, upon the concurrence of at least two of their number, not later
than thirty (30) days after the appointment of the third arbitrator.  Their decision and award shall be in writing,
and counterpart copies shall be delivered to each of the parties.  Such decision of the arbitrators shall be
final and binding upon the parties hereto. 
In rendering their award, the arbitrators shall have no power to modify
any of the provisions of this Agreement, and the jurisdiction and power of the
arbitrators are expressly limited accordingly. 
Judgment may be entered on the award of the arbitrators and may, be
enforced in any court having jurisdiction.

 

 

Each of the parties hereto
shall bear all of its/his own fees, costs and expenses, including attorneys’
fees, incurred by it in connection with any arbitration proceeding pursuant to
this Section 6.  Notwithstanding the
foregoing, in the event any party fails to comply with the decision of the
arbitrators and the other party undertakes any action(s) or proceeding(s) to
enforce such compliance, all costs and expenses (including reasonable legal
fees) incurred by the party seeking to enforce such compliance shall be borne
by the party failing to so comply.

 

7.                                       Non-disclosure; Non-compete; Availability.

 

7.1                                 Agreement.  The Executive agrees, as a
condition precedent to the effectiveness of this Agreement, to execute the
Company’s standard form Non-Disclosure, Non-Competition, Non-Solicitation and
Developments Agreement (the “NDA”) that is required of all United States
Employees of the Company.

 

7.2                                 Availability. 
Reasonably subject to his employment commitments elsewhere, the
Executive hereby agrees to make himself available to the Company after the
termination of the Employment Term, at such reasonable time or times as may be
required by the Company in connection with any pending or threatened litigation
or governmental investigation involving the Company, not to exceed five (5)
days in any calendar quarter unless otherwise mutually agreed. The Company shall
advance or reimburse the Executive for any out-of-pocket expenses reasonably
incurred by him in fulfilling his obligations under this Section 7.2 upon the
submission by him of reasonably itemized accounts therefor, and shall pay the
Executive a mutually agreed upon per diem fee for any days in excess of two (2)
hereunder, including reasonable preparation time.

 

8.                                       Miscellaneous Provisions.

 

8.1                                 Withholding.  All payments required to be
made to the Executive by the Company hereunder shall be subject to any applicable
withholding under applicable Federal, state and local income tax laws. Any such
withholding shall be based upon the most recent Form W-4 filed by the Executive
with the Company, and the Executive may from time to time revise such filing.

 

8.2                                 Severability. If in any jurisdiction any term or
provision hereof is adjudicated to be invalid or unenforceable, (i) the
remaining terms and provisions hereof shall be unimpaired, (ii) any such
invalidity or unenforceability in any jurisdiction shall not invalidate, limit
or render unenforceable such provision in any other jurisdiction and (iii) the
invalid or unenforceable term or provision shall, for purposes of such
jurisdiction, be deemed replaced by a term or provision that is valid and
enforceable and that comes closest to expressing the intention of the invalid
or unenforceable term or provision.

 

8.3                                 Indemnification.  The
Company shall indemnify the Executive to the fullest extent permitted by
applicable law and the By-Laws of the Company for all amounts (including
without limitation, judgments, fines, settlement payments, costs, expenses and
attorneys’ fees and expenses) reasonably incurred or paid by the Executive in
connection with any claim, action, suit, investigation or proceeding arising
out of or relating to performance by the Executive of services for, or actions
of the Executive as (or the Executive’s serving in the position of) a director,
officer or employee of, the Company, any subsidiary or affiliate of the Company
or any enterprise at the Company’s request, and shall advance to the Executive
(subject to the Executive’s undertaking to repay any advances if it is
determined that he is not entitled to them) the reasonable costs,

 

 

including attorneys fees, of defending any
such claim.  The provisions of this
Section 8.3 shall survive the termination of this Agreement.

 

8.4                                 Execution in Counterparts.  This
Agreement may be executed in one or more counterparts, and by each of the
parties hereto in separate counterparts, each of which shall be deemed to be an
original but all of which taken together shall constitute one and the same
agreement, and this Agreement shall become effective when one or more
counterparts has been signed by each of the parties hereto and delivered to the
other party hereto.

 

8.5                                 Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed duly given when delivered by hand, or
when delivered if mailed by registered or certified mail or private courier
service, postage prepaid, to the respective addresses as follows:

 

If to the Company, to:

American Power Conversion
Corporation

132 Fairgrounds Road
West Kingston, RI 02892
Attn: Vice President & General
Counsel

 

If to the Executive, to:

Richard J. Thompson

6256 NW 23rd Terrace
Boca Raton, Florida 33496

 

or to such other address(es) as either party
hereto shall have designated by like notice to the other Party hereto.

 

8.6                                 Amendment.  No provision of this Agreement
may be modified, amended or discharged in any manner, except by a written
instrument executed by each of the parties hereto.

 

8.7                                 Entire Agreement.  This
Agreement constitutes the entire agreement of the parties hereto with respect
to the subject matter hereof, and supersedes all prior agreements and
understandings of the parties hereto, oral and written, including all prior or
existing employment agreements.  Each
party hereto hereby acknowledges and agrees that, other than as contained
herein, no other representations or warranties, oral or written, have been
made, expressly or impliedly, by the other party hereto.

 

8.8                                 Applicable Law.  This
Agreement shall be governed by the laws of the Commonwealth of Massachusetts,
without regard to its choice of law provisions.

 

8.9                                 Headings.  The headings contained herein
are for the sole purpose of convenience of reference, and shall not in any way
limit or affect the meaning or interpretation of any of the terms or provisions
of this Agreement.

 

8.10                           Non-assignability.

 

8.10.1                  By the Executive. 
Neither this Agreement nor any right, duty, obligation or interest
hereunder shall be assignable or delegable by the Executive without the Company’s
prior written consent; however, that the Executive may designate any of his
beneficiaries to receive (and such beneficiaries shall receive) any
compensation, payments or other benefits payable

 

 

hereunder upon or after his death, or the
foregoing may be transferred by the laws of descent or distribution.

 

8.10.2                  By the Company.  This
Agreement and all of the Company’s rights and obligations hereunder may be
assigned or transferred by it through a merger, consolidation or other business
combination.  Upon the occurrence of such
a transaction, any such successor company resulting therefrom shall be deemed
to be substituted for all purposes as the Company hereunder.

 

8.11                           Binding Effect; Benefits.  This
Agreement shall inure to the benefit of, and be binding upon, the parties
hereto and their respective heirs, legal representatives, successors and
permitted assigns.

 

8.12                           Waiver.  The failure of either of the
parties hereto at any time to enforce any provision of this Agreement shall not
be deemed or construed to be a waiver of any such or any other provision, nor
to in any way affect the validity of this Agreement or any provision hereof or
the right of either of the parties hereto to thereafter enforce each and every
provision of this Agreement. No waiver of any breach of any of the provisions
of this Agreement shall be effective unless set forth in a written instrument
executed by the party against whom or which enforcement of such waiver is
sought, and no waiver of any such breach shall be construed or deemed to be a
waiver of any other or subsequent breach.

 

8.13                           Capacity, etc.  The
Executive hereby represents and warrants to the Company and the Company hereby
represents and warrants to the Executive that: (i) he (or it) has full power,
authority and capacity to execute and deliver this Agreement, and to perform
his (or its) obligations hereunder, (ii) said execution, delivery and
performance will not (and with the giving of notice or lapse of time, or both,
would not) result in the breach of any agreement or other obligation to which
he (or it) is a party or is otherwise bound and (iii) this Agreement is his (or
its) valid and binding obligation enforceable in accordance with its terms.

 

IN WITNESS WHEREOF, this
Agreement has been executed and delivered by the parties hereto as of the date
first above written.

 

	
   

  	
  AMERICAN POWER CONVERSION

  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Rodger B. Dowdell, Jr.

  	
   

  
	
   

  	
  Title: Chief Executive
  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Richard J. Thompson

  	
   

  
	
   

  	
  Richard J. ThompsonExhibit 4.01

 

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

(FIXED RATE)

 

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

 

THIS
NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY OR A NOMINEE OF THE
DEPOSITORY.  UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (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:

 

SPREAD:

 

SPREAD
MULTIPLIER:

 

MAXIMUM
INTEREST RATE:

 

MINIMUM
INTEREST RATE:

 

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
Interest Rate specified above until the principal hereof is paid or made
available for payment and (to the extent that the payment of such interest
shall be legally enforceable) at such rate per annum on any overdue principal
and premium and on any overdue instalment of interest.  Unless otherwise specified above, and except
as provided in Section 8 on the reverse hereof if this Note is a Dual
Currency Note (as hereinafter defined), payments of principal, premium, if any,
and interest hereon will be made in U.S. dollars; if the Specified Currency set
forth above is a currency other than U.S. dollars (a “Foreign Currency”), such
payments will be made in U.S. dollars based on the equivalent of that Foreign
Currency converted into U.S. dollars in the manner

 

2

 

set forth in Section 2 on the reverse
hereof.  If the Specified Currency is a
Foreign Currency and it is so provided above, the Holder may elect to receive
such payments in that Foreign Currency by delivery of a written request to the
Trustee (or to any duly appointed Paying Agent) at the Corporate Trust Office
(as defined below) not later than 10 calendar days prior to the applicable
payment date, and such election will remain in effect for the Holder until
revoked by written notice to the Trustee (or to any such Paying Agent) at the
Corporate Trust Office received not later than 10 calendar days prior to the
applicable payment date; provided,
however, no such election or
revocation may be made if, with respect to this Note, (i) an Event of
Default has occurred, (ii) the Company has exercised any discharge or
defeasance options or (iii) the Company has given a notice of
redemption.  In the event the Holder
makes any such election pursuant to the preceding sentence, such election will
not be effective on any transferee of such Holder and such transferee shall be
paid in U.S. dollars unless such transferee makes an election pursuant to the
preceding sentence; provided, however, that such election, if in effect
while funds are on deposit with the Trustee to satisfy and discharge this Note,
will be effective on any such transferee unless otherwise specified above.  The “Principal Amount” of this Note at any
time means (i) if this Note is an OID Note, the Amortized Face Amount at
such time as described in Section 7 on the reverse hereof, (ii) if
this Note is an Amortizing Note, the Outstanding Face Amount at such time as
described in Section 4 on the reverse hereof, (iii) in all other
cases, the Face Amount hereof.

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

	
  Dated:

  	
   

  
	
   

  	
   

  
	
  [SEAL]

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Assistant
  Secretary

  
						

 

 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

 

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

 

	
  CITIBANK,
  N.A.

  
	
  as Trustee

  
	
   

  
	
  By:
  

  	
   

  	
   

  
	
   

  	
  Authorized
  Officer

  	
   

  

 

5

 

[REVERSE OF NOTE]

 

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTES, SERIES H

(Fixed Rate)

 

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

 

Section 2.  
Currency Exchanges and Payments. 
If the Holder elects to receive all or a portion of payments of
principal of, premium, if any, and interest on this Note, if denominated in a
Foreign Currency, in U.S. dollars, the Exchange Rate Agent specified on the
face hereof or a successor thereto (the “Exchange Rate Agent”) will convert
such payments into U.S. dollars. In the event of such an election, payment to
the Holder will be based upon the exchange rate as determined by the Exchange
Rate Agent based on the highest bid quotation in New York City received by such
Exchange Rate Agent at approximately 11:00 a.m., New York City time, on
the second Business Day preceding the applicable payment date from three
recognized foreign exchange dealers (one of which may be the Exchange Rate
Agent unless such Exchange Rate Agent is an affiliate of the 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 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

 

6

 

two or more currencies, the amount of that original
component currency as a component shall be replaced by amounts of such two or
more currencies having an aggregate value on the date of division equal to the
amount of the former component currency immediately before such division.

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

repayment this Note shall be cancelled
and a new Note or Notes for the remaining Face Amount hereof shall be issued in
the name of the Holder of this Note.

 

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

 

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

 

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

 

Section 7.  
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 8.  
Dual Currency Notes.  If it is
specified on the face hereof that this Note is a Dual Currency Note, the
Company has a one time option, exercisable on any one of the Option Election
Dates specified on the face hereof in whole, but not in part, with respect to
all Dual Currency Notes issued on the same day and having the same terms as
this Note (this “Tranche”), of thereafter making all payments of principal,
premium, if any, and interest (which payments would otherwise be made in the
Specified Currency of such Notes) in the Optional Payment Currency specified on
the face hereof.  If the Company makes
such an election, the amount of Optional Payment Currency payable in respect
hereof shall be determined by the Exchange Rate Agent by converting the amount
of Specified Currency that would otherwise be payable into the Optional Payment
Currency at the Designated Exchange Rate specified on the face hereof.

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

Section 12.  
Modification and Waivers.  The
Indenture contains provisions permitting the Company and the Trustee, with the
consent of the holders of not less than 66-2/3% in aggregate principal amount
of each series of the Securities at the time Outstanding to be affected,
evidenced as in the Indenture provided, to execute supplemental indentures
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Indenture or of any supplemental indenture or modifying in
any manner the rights of the holders of the Securities of all such series; provided, however,
that no such supplemental indenture shall, among other things, (i) extend
the fixed maturity of any Security, or reduce the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon or reduce any
premium payable on redemption, or make the principal thereof, or premium, if
any, or interest thereon payable in any coin or currency other than that
hereinabove provided, without the consent of the holder of each Security so
affected, or (ii) change the place of payment on any Security, or impair
the right to institute suit for payment on any Security, or reduce the
aforesaid percentage of Securities, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of each Security so affected.  It is also
provided in the Indenture that, prior to any declaration accelerating the
Maturity of any series of Securities, the holders of a majority in aggregate
principal amount of the Securities of such series Outstanding may on behalf of
the holders of all the Securities of such series waive any past default or
Event of Default under the Indenture with respect to such series and its
consequences, except a default in the payment of interest, if any, on or the
principal of, or premium if any, on any of the Securities of such series, or in
the payment of any sinking fund installment or analogous obligation with
respect to Securities of such series. 
Any such consent or waiver by the Holder of this Note shall be
conclusive and binding upon such Holder and upon all future holders and owners
of this Note and any Notes which may be issued in exchange or substitution
herefor, irrespective of whether or not any notation thereof is made upon this
Note or such other Notes.

 

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

 

Section 14.  
Defeasance.  The Indenture
contains provisions for the discharge of the Indenture and defeasance at any
time of the indebtedness on this Note upon compliance by the Company with
certain conditions set forth therein, which provisions apply to this Note.

 

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

 

Section 16.  
Registration of Transfer.  As
provided in the Indenture and subject to certain limitations as therein set
forth, the transfer of this Note is registrable in the Security Register, upon
surrender of this Note for registration of transfer, at the Corporate Trust
Office or agency in a Place of Payment for this Note, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar requiring such written instrument of
transfer duly executed by, the Holder hereof or his attorney duly

 

11

 

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

 

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

 

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

 

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

 

12

 

OPTION TO ELECT REPAYMENT

 

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

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
  Sign
  exactly as name appears on the front of

  
	
   

  	
   

  	
  this
  Note [SIGNATURE GUARANTEED - required

  
	
   

  	
   

  	
  only
  if Notes are to be issued and delivered

  
	
   

  	
   

  	
  to
  other than the registered Holder]

  
	
   

  	
   

  	
   

  
	
  Face
  Amount to be repaid, if amount to be repaid is less than the Face Amount of
  this Note (Face Amount

  	
   

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

  
	
  remaining
  must be an authorized denomination)

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  $                                   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please print name and address

  including zip code)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SOCIAL
  SECURITY OR OTHER TAXPAYER ID

  NUMBER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
										

 

13

 

OPTION TO ELECT TERMINATION OF AUTOMATIC EXTENSION

 

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

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
  Sign
  exactly as name appears on the front of

  
	
   

  	
   

  	
  this
  Note [SIGNATURE GUARANTEED - required

  
	
   

  	
   

  	
  only
  if Notes are to be issued and delivered

  
	
   

  	
   

  	
  to
  other than the registered Holder]

  
	
   

  	
   

  	
   

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

  	
   

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

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  $                                   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please print name and address

  including zip code)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SOCIAL
  SECURITY OR OTHER TAXPAYER

  ID NUMBER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
										

 

14

 

ABBREVIATIONS

 

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

 

	
  TEN
  COM

  	
  -

  	
  as
  tenants in common

  	
   

  	
   

  
	
  TEN
  ENT

  	
  -

  	
  as
  tenant by the entireties

  	
   

  	
   

  
	
  JT
  TEN

  	
  -

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

  	
   

  	
   

  
	
  UNIF
  GIFT

  	
  -

  	
   

  	
   

  	
   

  
	
  MIN
  ACT

  	
  -

  	
   

  	
  Custodian

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Cust)

  	
   

  	
  (Minor)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Under Uniform Gifts to
  Minors Act

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (State)

  	
   

  	
   

  	
   

  

 

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

  
	
   

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

  
	
   

  
	
  PLEASE
  INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

  
	
   

  
	
   

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

  
	
   

  
	
   

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

  
	
  appoint

  	
   

  	
   Attorney to transfer the said Note on the
  books of the within-named 

  
	
  Company,
  with full power of substitution in the premises.

  
	
   

  
	
  Dated:

  	
   

  	
   

  
					

 

	
  SIGNATURE
  GUARANTEED:

  	
   

  	
   

  
	
   

  	
  NOTICE:
  The signature to this

  
	
   

  	
  assignment
  must correspond with the

  
	
   

  	
  name
  as it appears upon the face of

  
	
   

  	
  the
  within Note in every particular,

  
	
   

  	
  without
  alteration or enlargement or

  
	
   

  	
  any
  change whatsoever.

  

 

15

 

SCHEDULE I

 

Amortization Table

 

	
  Date

  	
   

  	
  Payment

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

16

 

EXHIBIT A

 

RESET NOTICE

 

LEHMAN BROTHERS HOLDINGS INC.

Medium-Term Notes, Series H

(Fixed Rate)

CUSIP No.         

Registered Nos.       -      

 

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

 

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

 

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

 

	
  Date

  	
   

  	
  Redemption Price

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

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

 

	
  Dated:

  	
  LEHMAN
  BROTHERS HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

(1)                                  Insert applicable Optional Reset Date.

 

17

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