Document:

Exhibit 4.04

 

	
  CUSIP NO.

  	
   

  
	
   

  	
   

  
	
  REGISTERED

  	
  PRINCIPAL AMOUNT: $

  
	
  No. R-

  	
   

  

 

 LEHMAN
BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTE, SERIES H

YEELDS®

YIELD ENHANCED EQUITY LINKED DEBT SECURITIES

PERFORMANCE LINKED TO THE VALUE OF A COMMON
STOCK

 

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

 

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

 

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

 

 

ISSUE PRICE:     $     per YEELDS

 

PRINCIPAL AMOUNT PER
YEELDS: $

 

AGGREGATE PRINCIPAL 

AMOUNT:  $

 

AUTHORIZED DENOMINATIONS:

$     
and integral multiples thereof

 

ISSUE DATE:

 

STATED MATURITY DATE:

 

COUPON RATE:    % per annum

 

ACCRUE TO PAY:

o YES    o
NO

 

COUPON PAYMENT DATES:

and      of each year, beginning on

 

REGULAR RECORD DATES:

calendar days prior to each Interest Payment Date

 

INITIAL VALUE: $

 

EQUITY CAP PRICE PER
YEELDS: $

 

INDEX STOCK ISSUER:

 

INDEX STOCK:

 

INITIAL MULTIPLIER:

 

IDETERMINATION PERIOD:

Business Days

 

DEPOSITORY: [The
Depository Trust Company]

 

Currency Exchanges and Payments

 

SPECIFIED CURRENCY:

 

EXCHANGE RATE AGENT:

 

Redemption

 

REDEEMABLE NOTE:

o YES    o
NO

 

INITIAL REDEMPTION DATE:

 

REDEMPTION NOTICE PERIOD:

Business Days

 

Sinking Funds and Amortizing Notes

 

SINKING FUND:

 

AMORTIZING NOTE:

o YES    o NO

 

Optional Repurchase

 

OPTIONAL REPURCHASE:

o YES    o
NO

 

OPTIONAL REPURCHASE
CUTOFF 

PERIOD:       Business Days

 

Stock Settlement

 

STOCK SETTLEMENT:

o YES    o
NO

 

AT
MATURITY:

o YES    o
NO

 

UPON
REPURCHASE:

o YES    o
NO

 

AT
OPTION OF THE COMPANY:

o YES    o
NO

 

AT
OPTION OF THE HOLDER:

o YES    o
NO

 

MANDATORY:

o YES    o
NO

 

Optional Interest Reset

 

OPTIONAL INTEREST RATE
RESET:

o YES    o
NO

 

OPTIONAL RESET DATES:

 

OID Notes

 

OID NOTE:

o YES    o
NO

 

TOTAL AMOUNT OF OID:

 

YIELD TO MATURITY:

 

INITIAL ACCRUAL PERIOD
OID:

 

OID NOTE PREPAYMENT
AMOUNT:

 

Dual Currency Notes

 

DUAL CURRENCY NOTE:

o YES    o
NO

 

OPTIONAL PAYMENT CURRENCY:

 

DESIGNATED EXCHANGE RATE:

OPTION ELECTION DATES:

 

OPTION TO RECEIVE
PAYMENTS IN THE SPECIFIED CURRENCY:

o YES    o
NO

 

OPTION VALUE CALCULATION AGENT:

 

DUAL CURRENCY NOTE
PREPAYMENT AMOUNT:

 

Extension of Maturity Notes

 

EXTENSION OF MATURITY
NOTE:

o YES    o
NO

 

EXTENSION PERIOD:

 

NUMBER OF EXTENSION
PERIODS:

 

Extendible Notes

 

EXTENDIBLE NOTE:

o YES    o
NO

 

INITIAL MATURITY DATE:

 

SPECIAL ELECTION
INTERVAL:

 

EXTENDIBLE IN PART:

o YES    o
NO

 

AUTHORIZED EXTENDIBLE
AMOUNTS:

 

SPECIAL ELECTION PERIOD:

 

Miscellaneous

 

OTHER TERMS:

 

 

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

 

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

 

Except as provided in the
following paragraph, the Company will make coupon payments on the Coupon
Payment Dates specified above, commencing with the first Coupon Payment Date
next succeeding the Issue Date, and on the applicable Principal Payment Date;
provided that any payment of the Payment Amount, premium, if any, or coupon
payments to be made on any Coupon Payment Date or on the Principal Payment Date
that is not a Business Day shall be made on the next succeeding Business Day,
unless the next succeeding Business Day falls in the next calendar month, in
which case payment will be made on the first preceding Business Day, in each
case with the same force and effect as if made on such Coupon Payment Date or
such Principal Payment Date, as the case may be, and, unless Accrue to Pay is
specified

 

2

 

on the face of this Note, no
additional coupon payments shall accrue as a result of such delayed payment;
provided further that if the applicable Principal Payment Date is postponed due
to a Market Disruption Event, coupon payments will continue to accrue during
the period from the originally scheduled Principal Payment Date to but
excluding the postponed Principal Payment Date. 
If Accrue to Pay is specified on the face of this Note, any coupon
payment on the Coupon Payment Date will include coupon payments accrued through
the day before the Coupon Payment Date. 
Each coupon payment hereon shall include coupon payments accrued through
the day before the Coupon Payment Date or applicable Principal Payment Date, as
the case may be.  Unless otherwise
specified above, coupon payments on this Note will be computed on the basis of
a 360-day year of twelve 30-day months or in the case of an incomplete month,
the number of days elapsed.  In no event
shall the coupon rate of this Note be higher than the maximum rate permitted by
applicable law, as the same may be modified by United States law of general
application.

 

Unless otherwise specified
above, the coupon payments due on any Coupon 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 Coupon
Payment Date; provided that, notwithstanding any provision of the Indenture to
the contrary, coupon payments due on a Principal Payment Date shall be payable
to the Person to whom the related Payment Amount shall be payable; and
provided, further, that, unless otherwise specified above, in the case of a
Note initially issued between a Regular Record Date and the Coupon Payment Date
relating to such Regular Record Date, coupon payments for the period beginning
on the Issue Date and ending on such Coupon Payment Date shall be paid on the
Coupon Payment Date following the next succeeding Regular Record Date to the
registered Holder on such next succeeding Regular Record Date.

 

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

 

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

 

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

 

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

 

3

 

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

 

YEELDS is a registered
trademark of Lehman Brothers Inc.

 

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

 

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

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [SEAL]

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
					

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

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

 

CITIBANK, N.A.

as Trustee

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  

 

4

 

[REVERSE OF NOTE]

 

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTES, SERIES H

YEELDS®

YIELD ENHANCED EQUITY LINKED DEBT SECURITIES

PERFORMANCE LINKED TO THE VALUE OF A COMMON
STOCK

 

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,
YEELDS®, Yield Enhanced Equity Linked Debt Securities of the Company
(herein called the “Notes” or the “YEELDS”).  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 coupon payments (if any) at different rates, may be
subject to different redemption provisions or repurchase rights (if any), may
be subject to different sinking, purchase or analogous funds (if any), may be
subject to different covenants and Events of Default and may otherwise vary as
in the Indenture provided.

 

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

 

Unless otherwise specified on the face of this Note,
if payment hereon is required to be made in a Foreign Currency and such
currency is unavailable to the Company for making payments thereof due to the
imposition of exchange controls or other circumstances beyond the Company’s
control, or is no longer used by the government of the country which issued
such currency or for the settlement of transactions by public institutions of
or within the international banking community, then the Company will be
entitled to make payments with respect hereto in U.S. dollars until such
Foreign Currency is again available or so used. 
The amount so payable on any date in such Foreign Currency shall be
converted into U.S. dollars at a rate determined by the Exchange Rate Agent on
the basis of the noon buying rate in New York City for cable transfers

 

 

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

 

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

 

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

 

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

 

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

 

2

 

Section 3. 
Redemption.  Unless
otherwise specified on the face of this Note, this Note will not be subject to
redemption by the Company. If it is specified on the face of this Note that
this Note is subject to redemption, the Company may, at its option, redeem this
Note in whole or from time to time in part on or after the date designated as
the Initial Redemption Date on the face of this Note at the Redemption Payment
Amount, together with accrued coupon payments to but excluding the Redemption
Date.

 

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

 

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

 

Section 5. 
Optional Repurchase. 
Unless otherwise specified on the face of this Note, this Note will not
be subject to repurchase by the Company at the option of the Holder. If it is
specified on the face of this Note that this Note is subject to optional
repurchase, the Holder may, at its option, cause the Company to repurchase this
Note, subject to the conditions specified below, on the Optional Repurchase
Date at the Optional Repurchase Amount, together with accrued coupon payments
to but excluding the Optional Repurchase Date.

 

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

 

3

 

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

 

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

 

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

 

If Stock Settlement is applicable, the Company will
pay the applicable Payment Amount, subject to the following paragraph, by
delivering, for each YEELDS represented hereby, Settlement Value Securities
having a value on the applicable Valuation Date equal to the applicable Payment
Amount. The Calculation Agent will determine the number and kind of Settlement
Value Securities to be delivered, and whether cash shall be delivered in lieu
of, or in addition to, any Settlement Value Securities, in accordance with the
Calculation Agency Agreement.

 

If Stock Settlement is applicable and the
calculations in the preceding paragraph result in fractional shares, the
applicable Payment Amount shall be paid in cash in an amount equal to the value
of fractional shares based upon the Closing Prices of the Settlement Value
Securities on the applicable Valuation Date. If the Company determines that it
is prohibited from delivering Settlement Value Securities, or that it would be
unduly burdensome to do so, the Company shall pay the applicable Payment Amount
in cash.

 

Section 7. 
Optional Coupon Reset.  If
so specified on the face of this Note, the Coupon Rate on this Note may be
reset at the option of the Company, in the manner set forth below (unless
otherwise specified on the face of this Note), on the Optional Reset Date or
Optional Reset Dates specified on the face of this Note.  The Company may exercise such option by
notifying the Trustee in writing of such exercise at least 45 but not more than
60 days prior to an Optional Reset Date. 
Not later than five Business Days after receipt thereof, the Trustee
will 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 coupon
rate, (ii) such new coupon rate and (iii) the provisions, if any, for
redemption during the period from such Optional Reset Date to the next Optional
Reset Date or, if there is no such next Optional Reset Date, to the Stated
Maturity Date of this Note (each such period a “Subsequent Coupon Period”),
including the date or dates on which or the period or periods during which and
the price or prices at which such redemption

 

4

 

may occur during such Subsequent Coupon
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 coupon 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 coupon rate provided for in the Reset Notice and establish a coupon rate
that is higher than the coupon rate provided for in the Reset Notice for the
Subsequent Coupon Period commencing on such Optional Reset Date by causing the
Trustee to mail by first-class mail notice of such higher coupon rate to the
Holder of this Note.  Such notice shall
be irrevocable and shall be mailed by the Trustee within five Business Days
after receipt thereof.  All Notes of this
series with respect to which the coupon rate is reset on an Optional Reset Date
will bear such higher coupon rate for the Subsequent Coupon Period.

 

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

 

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

 

Section 9. 
Dual Currency Notes.  If it
is specified on the face of this Note that this Note is a Dual Currency Note,
the Company has a one time option, exercisable on any one of the Option
Election Dates specified on the face of this Note in whole, but not in part,
with respect to all Dual Currency Notes of this series, of thereafter making
all payments of Maturity Payment Amount, premium, if any, and coupon payments
(which payments would otherwise be made in the Specified Currency of such
Notes) in the Optional Payment Currency specified on the face of this
Note.  If the Company makes such an
election, the amount of Optional Payment Currency payable in respect hereof
shall be determined by the Exchange Rate Agent by converting the

 

5

 

amount of Specified Currency that would
otherwise be payable into the Optional Payment Currency at the Designated
Exchange Rate specified on the face of this Note.

 

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

 

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

 

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

 

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

 

The Company may exercise its option by notifying the
Trustee of such exercise at least 45 but not more than 60 days prior to the
Stated Maturity Date 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 Stated Maturity Date, (ii) the
new Stated Maturity Date, (iii) the Coupon Rate applicable to the
Extension Period and (iv) the provisions, if any, for redemption during
the Extension Period, including the date on which or the period or periods
during which and the price at which such redemption may occur during the
Extension Period.  Upon the mailing by
the Trustee of an Extension Notice to the Holder, the Stated Maturity Date
hereof shall be extended automatically, and, except as modified

 

6

 

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 coupon rate provided for in the Extension Notice and
establish a higher coupon rate for the Extension Period by causing the Trustee
to mail notice of such higher coupon rate, first class, postage prepaid, to the
Holder.  Such notice shall be irrevocable
and shall be mailed by the Trustee within three Business Days after receipt
thereof.  This Note will bear such higher
coupon rate for the Extension Period, whether or not tendered for repurchase.

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

Section 13. 
Modification and Waivers. 
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than 66-2/3% in aggregate
principal amount of each series of the Securities at the time Outstanding to be
affected, evidenced as in the Indenture provided, to execute supplemental
indentures adding any provisions to or changing in any manner or eliminating
any of the provisions of the Indenture or of any supplemental indenture or
modifying in any manner the rights of the holders of the Securities of all such
series; provided, however, that no such supplemental indenture
shall, among other things, (i) change the fixed maturity of any Security,
or reduce the Payment Amount or the principal amount thereof, or reduce the
rate or extend the time to make coupon payments thereon or reduce any premium
or other amount payable on redemption, or make the Payment Amount or the
principal amount thereof, premium or other amount payable, if any, or coupon
payments 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

 

8

 

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 coupon
payments, if any, on the Payment Amount or the principal amount, or premium, if
any, on any of the Securities of such series, or in the payment of any sinking
fund installment or analogous obligation with respect to Securities of such
series.  Any such consent or waiver by
the Holder of this Note shall be conclusive and binding upon such Holder and
upon all future holders and owners of this Note and any Notes of this series
which may be issued in exchange or substitution herefor, irrespective of
whether or not any notation thereof is made upon this Note or such other Notes
of this series.

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

Section 21. 
Tax Treatment.  The Company
intends to treat and, by purchasing this Note, the Holder hereof agrees to
treat, for all tax purposes, this Note as a financial contract rather than as a
debt instrument.

 

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

 

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

 

“ADS” shall mean American Depositary Share.

 

“Alternative Redemption Amount” shall mean,
for each YEELDS represented hereby, the product of (a) the principal
amount per YEELDS and (b) the Settlement Value on the applicable Valuation
Date, divided by the Initial Value.

 

“AMEX” shall mean the American Stock Exchange
LLC.

 

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

 

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

 

“Business Day”, notwithstanding any provision
in the Indenture, shall mean, unless otherwise set forth on the face of this Note,
any day that is not a Saturday, a Sunday or a day on which the NYSE, the Nasdaq
or the AMEX is not open for trading or banking institutions or trust companies
in New York City are authorized or obligated by law or executive order to
close, and, (a) if the Specified Currency is a Foreign Currency other than
Euros, not a day on which banking institutions are authorized or required by
law to close in the Principal Financial Center of the country issuing the
Foreign Currency and (b) if the Specified Currency is Euros, a day on
which the Trans-European Automated Real-Time Gross Settlement Express Transfer
System is open.  “Principal Financial
Center” shall mean the capital city of the country issuing the specified
currency.  However, for U.S. dollars,
Australian dollars, Canadian dollars and Swiss francs, the Principal Financial
Center will be New York City, Sydney, Toronto and Zurich, respectively.

 

11

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

“Equity Cap Price per YEELDS” shall have the
meaning set forth on the face of this Note.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Index Stock Issuer” shall mean the issuer
specified as such on the face of this Note.

 

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

 

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

 

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

 

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

 

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

 

“Market Disruption Event”, unless indicated
otherwise on the face of this Note, with respect to a Settlement Value Security
shall mean any of the following events has occurred

 

13

 

on any day as determined by the Calculation
Agent in accordance with the Calculation Agency Agreement:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

14

 

“Maturity Payment Amount” shall mean, for
each YEELDS represented hereby, the lesser of (a) the Alternative
Redemption Amount and (b) the Equity Cap Price.

 

“Multiplier” shall mean, for each Settlement
Value Security, the number of shares or other units (including ADSs) (or
fraction of a share or other unit expressed as a decimal) of such Settlement
Value Security included in the calculation of the Settlement Value on a
particular day, as determined by the Calculation Agent pursuant to the
Calculation Agency Agreement.  The
initial Multiplier for the Index Stock shall be 1.0, unless otherwise specified
on the face of this Note. The initial Multiplier for any security which may
subsequently become a Settlement Value Security shall be the number of shares
or other units of such security which are to be included in the calculation of
the Settlement Value at the time such security becomes a Settlement Value
Security.   Multipliers may be adjusted
by the Calculation Agent in accordance with the Calculation Agency Agreement in
certain circumstances.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

“Optional
Repurchase Amount” shall equal, for each YEELDS represented hereby, the
Maturity Payment Amount calculated as though the date of repurchase were the
Stated Maturity Date and the date that is a number of business days equal to
the Determination Period before that date were the Valuation Date, as specified
on the face of this Note, or such other amount or amounts, as specified on the
face of this Note.

 

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

 

“Optional Repurchase Date” shall mean the
date specified as such on the face of this Note; provided, however, if the
Calculation Agent determines that a Market Disruption Event with respect to any
Settlement Value Security has occurred on the day that would otherwise be the
applicable Valuation Date, or if the applicable Valuation Date is not a
Scheduled Trading Day, then the Optional Repurchase Date shall be postponed by
a number of Business Days equal to the number of Scheduled Trading Days by
which the applicable Valuation Date is postponed.

 

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

 

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

 

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

 

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

 

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

 

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

 

16

 

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

 

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

 

“Redemption Payment Amount” shall mean, for
each YEELDS represented hereby, the Maturity Payment Amount calculated as
though the Redemption Date were the Stated Maturity Date and the date that is a
number of Business Days equal to the Determination Period before that date were
the Valuation Date, as specified on the face of this Note, or such other amount
or amounts as specified on the face of this Note.

 

“Relevant Exchange” shall mean, for any
Settlement Value Security, the primary United States national securities
exchange, quotation system, including any bulletin board service, or market on
which such Settlement Value Security is traded, or in case such Settlement
Value Security is not listed or quoted in the United States, the primary
exchange, quotation system or market for such Settlement Value Security.

 

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

 

“Scheduled Trading Day” shall mean any day on
which the Relevant Exchange for a Settlement Value Security is scheduled to be
open for trading for its regular trading session.

 

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

 

“Settlement Value” shall mean, when used with
respect to an applicable Valuation Date, for each YEELDS represented hereby,
the sum of the products of the Closing Prices and the applicable Multipliers
(as adjusted from time to time by the Calculation Agent pursuant to the
Calculation Agency Agreement prior to the Close of Trading on the Valuation
Date) for each Settlement Value Security on the Valuation Date, together with
any cash or other property included in the Settlement Value on the Valuation
Date by the Calculation Agent pursuant to the Calculation Agency  Agreement; provided that if the
originally scheduled Valuation Date is postponed because of the occurrence of a
Market Disruption Event, the Settlement Value will equal (a) the sum of
the products of the Closing Prices on the postponed Valuation Date and the
applicable Multipliers for each Settlement Value Security for which no Market
Disruption Event occurred plus (b) the sum of the products of the average
per share execution price an affiliate of the Company receives or pays on the
postponed Valuation Date upon the sale or purchase of each Settlement Value
Security for which a Market Disruption Event has occurred which was used to
hedge the Company’s obligations under the Notes of this series and the
applicable Multipliers (in case, as adjusted from time to time by the
Calculation Agent pursuant to the Calculation Agency Agreement prior to the
Close of Trading on the postponed Valuation Date), together with any cash or
other property included in the Settlement Value on the Valuation Date by the
Calculation Agent pursuant to the Calculation Agency Agreement. The Settlement
Value, and any adjustments thereto, shall be determined by the Calculation
Agent pursuant to the Calculation Agency Agreement.

 

“Settlement Value Securities” shall mean the
securities included in the calculation of the Settlement Value by the
Calculation Agent pursuant to the Calculation Agency Agreement. 

 

17

 

The Settlement Value Securities will
initially consist of the common stock designated as the Index Stock on the face
of this Note.

 

“Special Election Interval” shall be the
number of days specified as such on the face of this Note.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Valuation Date” shall mean, unless otherwise
specified on the face of this Note, (a) in the case of payment on the
Stated Maturity Date, the third Business Day prior to the Stated Maturity Date,
(b) in the case of Redemption, the date that the Redemption Notice is
mailed and (c) in the case of Optional Repurchase, the date that is a
number of Business Days equal to the Determination Period before the Optional
Repurchase Date; provided, however, in each case, if a Market Disruption Event
occurs on any such date, as determined by the Calculation Agent

 

18

 

pursuant to the Calculation Agency Agreement,
or if such date is not a Scheduled Trading Day, the Valuation Date shall be
postponed to the next Scheduled Trading Day on which no Market Disruption Event
occurs; provided, further, if a Market Disruption Event occurs on each of the
eight Scheduled Trading Days following the originally scheduled Valuation Date,
then that eighth Scheduled Trading Day shall be deemed the Valuation Date and
the Calculation Agent shall determine, in accordance with the Calculation
Agency Agreement, the Closing Price of the affected Settlement Value Securities
based upon its estimate of the value of the Settlement Value Security as of the
Close of Trading on that eighth Scheduled Trading Day.

 

“YEELDS” shall have the meaning specified on
the face of this Note.

 

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

 

19

 

OPTION TO ELECT REPURCHASE

 

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

 

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

 

	
  Dated: 

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Principal Amount
  to be repurchased, if 

  	
   

  	
  Fill in for
  registration of Notes of this series if to be issued otherwise than

  
	
  amount to be
  repurchased is less than 

  	
   

  	
  to the
  registered Holder:

  
	
  the principal
  amount of this Note 

  	
   

  	
   

  
	
  (principal
  amount remaining must be an 

  	
   

  	
  Name:

  	
   

  	
   

  
	
  authorized
  denomination)

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please print
  name and address including zip code)

  
	
  $                                         

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Stock Settlement
  option

  	
   

  	
   

  
	
  elected

  	
   

  	
  SOCIAL SECURITY
  OR

  
	
   

  	
   

  	
  OTHER TAXPAYER
  ID NUMBER:

  
	
  o
  YES    o
  NO

  	
   

  	
   

  	
   

  
									

 

20

 

OPTION TO ELECT TERMINATION
OF AUTOMATIC EXTENSION

 

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

 

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
  Sign exactly as
  name appears on the front of this Note [SIGNATURE 

  
	
   

  	
   

  	
  GUARANTEED -
  required only if Notes of this series are to be issued and 

  
	
   

  	
   

  	
  delivered to
  other than the registered Holder]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Principal Amount
  to be terminated,

  	
   

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

  
	
  if amount to be
  terminated is less than the 

  	
   

  	
  registered
  Holder:

  
	
  principal amount
  of this Note (such principal 

  	
   

  	
   

  
	
  amount must be
  an authorized denomination)

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $                               

  	
   

  	
  (Please print
  name and address including zip code)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SOCIAL SECURITY
  OR

  
	
   

  	
   

  	
  OTHER TAXPAYER ID
  NUMBER:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
										

 

21

 

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

 

	
  TEN COM -

  	
   

  	
  as tenants in common

  	
   

  	
  UNIF GIFT MIN ACT - 

  	
  Custodian

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Cust)

  	
  (Minor)

  
	
  TEN ENT -

  	
   

  	
  as tenants by the
  entireties

  	
   

  	
  under Uniform Gifts to
  Minors

  
	
  JT TEN -

  	
   

  	
  as joint tenants with
  right of

  	
   

  	
  Act

  
	
   

  	
   

  	
  Survivorship and not as
  tenants in common

  	
   

  	
  (State)

  
								

 

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

 

FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto

 

PLEASE INSERT
SOCIAL SECURITY OR OTHER

IDENTIFYING NUMBER OF ASSIGNEE

 

 

(Name and
Address of Assignee, including zip code, must be printed or typewritten.)

 

 

the within
Note of Lehman Brothers Holdings Inc., and all rights thereunder, hereby
irrevocably constituting and appointing

 

 

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

 

	
  Dated:

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  

 

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

 

Signature(s)
Guaranteed:

 

 

 

	
   

  	
   

  

THE
SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP
IN AN APPROVED MEDALLION SIGNATURE GUARANTEE PROGRAM), PURSUANT TO S.E.C. RULE
17Ad-15.

 

22

 

Schedule I

 

Amortization Table

 

	
  Date

  	
   

  	
  Payment

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

EXHIBIT A

 

RESET NOTICE

 

 

LEHMAN BROTHERS HOLDINGS INC.

Medium-Term Notes, Series H

YEELDS®

Yield Enhanced Equity Linked Debt Securities

Performance Linked to the Value of a Common Stock

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 Coupon Rate
set forth on the face of the Notes.  On
and after                                 
(1), the Coupon Rate shall be                           .

 

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

 

	
  Date

  	
   

  	
  Redemption Price

  

 

 

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

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  
	
   

  	
   

  	
  Title:

  

 

(1)           Insert applicable
Optional Reset Date.Exhibit 4.05

 

CUSIP
NO.

 

	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT: $

  
	
  No. R-

  	
   

  	
   

  

 

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTE, SERIES H

RANGERSSM

RISK ADJUSTING EQUITY RANGE SECURITIESSM

PERFORMANCE LINKED TO THE VALUE OF A COMMON STOCK

 

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

 

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

 

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

 

 

ISSUE PRICE:     %
of the Principal Amount

 

AGGREGATE PRINCIPAL
AMOUNT:  $

 

AUTHORIZED DENOMINATIONS:
$[1,000] and integral multiples thereof

 

ISSUE DATE:

 

STATED MATURITY DATE:

 

COUPON RATE:    %
per annum

 

ACCRUE TO PAY:

o YES    o
NO

 

COUPON PAYMENT DATES: and
of each year, beginning on

 

REGULAR RECORD DATES: calendar
days prior to each Interest Payment Date

 

INITIAL VALUE: $

 

THRESHOLD VALUE:

 

INDEX STOCK ISSUER:

 

INDEX STOCK:

 

INITIAL MULTIPLIER:

 

DETERMINATION PERIOD:
Business Days

 

DEPOSITORY: [The
Depository Trust Company]

 

Currency Exchanges and Payments

 

SPECIFIED CURRENCY:

 

EXCHANGE RATE AGENT:

 

Redemption

 

REDEEMABLE NOTE:

o YES    o
NO

 

INITIAL REDEMPTION DATE:

 

REDEMPTION NOTICE PERIOD:
Business Days

 

Sinking Funds and Amortizing Notes

 

SINKING FUND:

 

AMORTIZING NOTE:

o YES    o
NO

 

Optional Repurchase

 

OPTIONAL REPURCHASE:

o YES    o
NO

 

OPTIONAL REPURCHASE
CUTOFF PERIOD: Business Days

 

Stock Settlement

 

STOCK SETTLEMENT:

o YES    o
NO

 

AT
MATURITY:

o YES o
NO

 

UPON
REPURCHASE:

o YES    
o NO

 

AT
OPTION OF THE COMPANY:

o YES    o
NO

 

AT
OPTION OF THE HOLDER:

o YES    o
NO

 

MANDATORY:

o
YES    o NO

 

Optional Interest Reset

 

OPTIONAL INTEREST RATE
RESET:

o YES    
o NO

 

OPTIONAL RESET DATES:

 

OID Notes

 

OID NOTE:

o YES    
o NO

 

TOTAL AMOUNT OF OID:

 

YIELD TO MATURITY:

 

INITIAL ACCRUAL PERIOD
OID:

 

OID NOTE PREPAYMENT
AMOUNT:

 

Dual Currency Notes

 

DUAL CURRENCY NOTE:

o YES    
o NO

 

OPTIONAL PAYMENT CURRENCY:

 

DESIGNATED EXCHANGE RATE:

 

OPTION ELECTION DATES:

 

OPTION TO RECEIVE
PAYMENTS

 

IN THE SPECIFIED
CURRENCY:

o YES    
o NO

 

OPTION VALUE CALCULATION AGENT:

 

DUAL CURRENCY NOTE
PREPAYMENT AMOUNT:

 

Extension of Maturity Notes

 

EXTENSION OF MATURITY
NOTE:

o YES    o
NO

 

EXTENSION PERIOD:

 

NUMBER OF EXTENSION
PERIODS:

 

Extendible Notes

 

EXTENDIBLE NOTE:

o YES    
o NO

 

INITIAL MATURITY DATE:

 

SPECIAL ELECTION
INTERVAL:

 

EXTENDIBLE IN PART:

o YES    
o NO

 

AUTHORIZED EXTENDIBLE
AMOUNTS:

 

SPECIAL ELECTION PERIOD:

 

Miscellaneous

 

OTHER TERMS::

 

 

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

 

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

 

Except as provided in the following paragraph, the
Company will make coupon payments on the Coupon Payment Dates specified above,
commencing with the first Coupon Payment Date next succeeding the Issue Date,
and on the applicable Principal Payment Date; provided that any payment
of the Payment Amount, premium, if any, or coupon payments to be made on any
Coupon Payment Date or on the Principal Payment Date that is not a Business Day
shall be made on the next succeeding Business Day, unless the next succeeding
Business Day falls in the next calendar month, in which case payment will be
made on the first preceding Business Day, in each case with the same force and
effect as if made on such Coupon Payment Date or such Principal Payment Date,
as the case may be, and, unless Accrue to Pay is specified on the face of this
Note, no additional coupon payments shall accrue as a result of such delayed

 

2

 

payment;
provided  further that if the applicable Principal Payment Date is
postponed due to a Market Disruption Event, coupon payments will continue to
accrue during the period from the originally scheduled Principal Payment Date
to but excluding the postponed Principal Payment Date.  If Accrue to Pay is specified on the face of
this Note, any coupon payment on the Coupon Payment Date will include coupon
payments accrued through the day before the Coupon Payment Date.  Each coupon payment hereon shall include
coupon payments accrued through the day before the Coupon Payment Date or
applicable Principal Payment Date, as the case may be.  Unless otherwise specified above, coupon
payments on this Note will be computed on the basis of a 360-day year of twelve
30-day months or in the case of an incomplete month, the number of days
elapsed.  In no event shall the coupon
rate of this Note be higher than the maximum rate permitted by applicable law,
as the same may be modified by United States law of general application.

 

Unless otherwise specified above, the coupon
payments due on any Coupon 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 Coupon Payment Date; provided
that, notwithstanding any provision of the Indenture to the contrary, coupon
payments due on a Principal Payment Date shall be payable to the Person to whom
the related Payment Amount shall be payable; and provided, further,
that, unless otherwise specified above, in the case of a Note initially issued
between a Regular Record Date and the Coupon Payment Date relating to such
Regular Record Date, coupon payments for the period beginning on the Issue Date
and ending on such Coupon Payment Date shall be paid on the Coupon Payment Date
following the next succeeding Regular Record Date to the registered Holder on
such next succeeding Regular Record Date.

 

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

 

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

 

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

 

3

 

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

 

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

 

“RANGERS” and “Risk AdjustiNG Equity Range
Securities” are service marks of Lehman Brothers Inc.

 

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 Vice Chairman, its Chief Financial Officer, one of its Vice
Presidents or its Treasurer, by manual or facsimile signature under its
corporate seal, attested by its Secretary or one of its Assistant Secretaries
by manual or facsimile signature.

 

	
  Dated:

  	
   

  
	
   

  	
   

  
	
  [SEAL]

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

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

 

	
  CITIBANK, N.A.

  	
   

  
	
   as Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  	
   

  

 

5

 

[REVERSE OF NOTE]

 

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTES, SERIES H

RANGERSSM

RISK ADJUSTING EQUITY RANGE SECURITIESSM

PERFORMANCE LINKED TO THE VALUE OF A COMMON
STOCK

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, RANGERSSM,
Risk AdjustiNG Equity Range SecuritiesSM 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 coupon payments (if any) at different rates, may be
subject to different redemption provisions or repurchase rights (if any), may
be subject to different sinking, purchase or analogous funds (if any), may be
subject to different covenants and Events of Default and may otherwise vary as
in the Indenture provided.

 

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

 

Unless otherwise specified on the face of this Note,
if payment hereon is required to be made in a Foreign Currency and such
currency is unavailable to the Company for making payments thereof due to the
imposition of exchange controls or other circumstances beyond the Company’s
control, or is no longer used by the government of the country which issued
such currency or for the settlement of transactions by public institutions of
or within the international banking community, then the Company will be
entitled to make payments with respect hereto in U.S. dollars until such
Foreign Currency is again available or so used. 
The amount so payable on any date in such Foreign Currency shall be
converted into U.S. dollars at a rate determined by the Exchange Rate Agent on
the basis of the noon buying rate in New York City for cable transfers

 

 

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

 

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

 

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

 

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

 

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

 

2

 

Section 3.  Redemption.  Unless otherwise specified on the face of
this Note, this Note will not be subject to redemption by the Company. If it is
specified on the face of this Note that this Note is subject to redemption, the
Company may, at its option, redeem this Note in whole or from time to time in
part on or after the date designated as the Initial Redemption Date on the face
of this Note at the Redemption Payment Amount together with accrued coupon
payments to but excluding the Redemption Date.

 

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

 

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

 

Section 5.  Optional
Repurchase.  Unless otherwise
specified on the face of this Note, this Note will not be subject to repurchase
by the Company at the option of the Holder. If it is specified on the face of
this Note that this Note is subject to optional repurchase, the Holder may, at
its option, cause the Company to repurchase this Note, subject to the
conditions specified below, on the Optional Repurchase Date at the Optional
Repurchase Amount, together with accrued coupon payments to but excluding the
Optional Repurchase Date.

 

Unless
otherwise specified on the face of this Note, in order for this Note to be so
repurchased, the Trustee must receive, before the earlier of (a) the date the
Company gives notice of its intention to redeem this Note pursuant to Section 3
of this Note or (b) eight Business Days (or such other period as is specified
as the “Optional Repurchase Cutoff Period” on the face of this Note) before the
Stated Maturity Date,
either (i) this Note with the form below entitled “Option to Elect Repurchase”
duly completed or (ii) a telegram, telex, fax or letter from a member of a
national securities exchange or the National Association of Securities Dealers,
Inc. or a commercial bank or trust company in the United States setting forth
the name of the Holder hereof, the then outstanding principal amount of this
Note, the principal amount of this Note to be repaid, the certificate number
hereof or a description of the tenor and terms of this Note, a statement that
the option to elect repurchase is being exercised thereby and a guarantee that
this Note with the form below entitled “Option to Elect Repurchase” duly
completed will be received

 

3

 

by
the Paying Agent not later than five Business Days after the date of such
telegram, telex, fax or letter and this Note and form duly completed are
received by the Paying Agent by such fifth Business Day. Exercise of this
repurchase option shall be irrevocable, except as otherwise provided under
Section 7 of this Note or Section 10 of this Note.  The repurchase option may be exercised by the
Holder of this Note with respect to less than the principal amount of this Note
then outstanding provided that the principal amount of this Note remaining
outstanding after repurchase is an authorized denomination.  Upon such partial repurchase this Note shall
be cancelled and a new Note or Notes of this series for the remaining principal
amount of this Note shall be issued in the name of the Holder of this Note.

 

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

 

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

 

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

 

If
Stock Settlement is applicable and the calculations in the preceding paragraph
result in fractional shares, the applicable Payment Amount shall be paid in
cash in an amount equal to the value of fractional shares based upon the
Closing Prices of the Settlement Value Securities on the applicable Valuation
Date. If the Company determines that it is prohibited from delivering
Settlement Value Securities, or that it would be unduly burdensome to do so,
the Company shall pay the applicable Payment Amount in cash.

 

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

 

4

 

provisions,
if any, for redemption during the period from such Optional Reset Date to the
next Optional Reset Date or, if there is no such next Optional Reset Date, to
the Stated Maturity Date of this Note (each such period a “Subsequent Coupon
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 Coupon 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 coupon 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 coupon rate provided for in the Reset Notice and establish a coupon rate
that is higher than the coupon rate provided for in the Reset Notice for the
Subsequent Coupon Period commencing on such Optional Reset Date by causing the
Trustee to mail by first-class mail notice of such higher coupon rate to the
Holder of this Note.  Such notice shall
be irrevocable and shall be mailed by the Trustee within five Business Days
after receipt thereof.  All Notes of this
series with respect to which the coupon rate is reset on an Optional Reset Date
will bear such higher coupon rate for the Subsequent Coupon Period.

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

The Company may exercise its option by notifying the
Trustee of such exercise at least 45 but not more than 60 days prior to the
Stated Maturity Date 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,

 

6

 

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

 

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

 

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

 

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

 

On the Coupon Payment Date occurring in the sixth
month (unless a different Special Election Interval is specified on the face of
this Note) prior to the initial Stated Maturity Date specified on the face of
this Note (the “Initial Maturity Extension Date”) and on the Coupon Payment
Date occurring in each sixth month (or the last month of each Special Election
Interval) after such Initial Maturity Extension Date (each, together with the
Initial Maturity Extension Date, a “Maturity Extension Date”), the Stated
Maturity Date of this Note will be extended to the Coupon Payment Date
occurring in the twelfth month (or, if a Special Election Interval is specified
on the face of this Note, the last month in a period equal to twice the Special
Election

 

7

 

Interval)
after such Maturity Extension Date, unless the Holder elects to terminate the
extension of the Stated Maturity Date hereof or any portion hereof as described
below.

 

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

 

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

 

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

 

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

 

Section 13.  Modification
and Waivers.  The Indenture contains
provisions permitting the Company and the Trustee, with the consent of the
Holders of not less than 66-2/3% in aggregate principal amount of each series
of the Securities at the time Outstanding to be affected, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the

 

8

 

Securities
of all such series; provided, however, that no such supplemental
indenture shall, among other things, (i) change the fixed maturity of any
Security, or reduce the Payment Amount or the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon or reduce any
premium or other amount payable on redemption, or make the Payment Amount or
the principal amount thereof, premium or other amount payable, if any, or
coupon payments 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 coupon payments, if any, on the Payment Amount, or
the principal amount, or premium, if any, on any of the Securities of such
series, or in the payment of any sinking fund installment or analogous
obligation with respect to Securities of such series.  Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
holders and owners of this Note and any Notes of this series which may be
issued in exchange or substitution herefor, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes of this series.

 

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

 

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

 

Section 16.  Authorized
Form and Denominations.  The Notes of
this series are issuable in registered form, without coupons.  Notes of this series denominated in U.S.
dollars shall be issued in the principal amount denominations specified on the
face of this Note.  Notes of this series
denominated in a Foreign Currency will be issued in a denomination
approximately equivalent to Notes of this series denominated in U.S. dollars.  Each Note will be issued initially as either
a Global Security or a Certificated Note, at the option of the Company, either
at the office or agency to be designated and maintained by the Company for such
purpose in the Borough of Manhattan, New York City, pursuant to the provisions
of the Indenture or at any of such other offices or agencies as may be
designated and maintained by the Company for such purpose pursuant to the
provisions of the Indenture, and in the manner and subject to the limitations
provided in the Indenture, but without the payment of any service charge, except
for any tax or other governmental charges imposed in connection therewith.  Notes of this series are exchangeable for a
like aggregate principal amount of Notes of this series of a different

 

9

 

authorized
denomination, except that Global Securities will not be exchangeable for
Certificated Notes of this series.

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

Section 21.  Tax
Treatment.  The Company intends to
treat, for all tax purposes, this Note as a financial contract rather than as a
debt instrument.

 

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

 

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

 

“ADS” shall mean American Depositary Share.

 

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

 

“AMEX”
shall mean the American Stock Exchange LLC.

 

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

 

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

 

11

 

“Business Day”, notwithstanding any provision
in the Indenture, shall mean, unless otherwise set forth on the face of this
Note, any day that is not a Saturday, a Sunday or a day on which the NYSE, the
Nasdaq or the AMEX is not open for trading or banking institutions or trust
companies in New York City are authorized or obligated by law or executive
order to close, and, (a) if the Specified Currency is a Foreign Currency other
than Euros, not a day on which banking institutions are authorized or required
by law to close in the Principal Financial Center of the country issuing the
Foreign Currency and (b) if the Specified Currency is Euros, a day on which the
Trans-European Automated Real-Time Gross Settlement Express Transfer System is
open.  “Principal Financial Center” shall
mean the capital city of the country issuing the specified currency.  However, for U.S. dollars, Australian
dollars, Canadian dollars and Swiss francs, the Principal Financial Center will
be New York City, Sydney, Toronto and Zurich, respectively.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

“Index Stock Issuer” shall mean the issuer
specified as such on the face of this Note.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(3)           Any event, other than an early
closure, that disrupts or impairs the ability of market participants in general
to effect transactions in, or obtain market values for that Settlement Value
Security on the Relevant Exchange for that Settlement Value Security, or in the
case of a Settlement Value Security not listed or quoted in the United States,
on the primary exchange, quotation system or

 

14

 

market for such
Settlement Value Security, at any time during the one hour period that ends at
the Close of Trading on such day.

 

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

 

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

 

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

 

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

 

“Maturity
Payment Amount” shall mean, for each $1,000 principal amount of
Notes represented hereby, (a) $1,000 or (b) if the Settlement Value on the
applicable Valuation Date is less than the Threshold Value on any Scheduled
Trading Day during the Measurement Period, the lesser of (i) $1,000 and (ii)
the Alternative Redemption Amount.

 

“Measurement Period” shall mean the period from the Initial
Offering Date to and including the applicable Valuation Date.

 

“Multiplier” shall mean, for each Settlement
Value Security, the number of shares or other units (including ADSs) (or
fraction of a share or other unit expressed as a decimal) of such Settlement
Value Security included in the calculation of the Settlement Value on a
particular day, as determined by the Calculation Agent pursuant to the
Calculation Agency Agreement. The initial Multiplier for the Index Stock shall
be 1.0, unless otherwise specified on the face of this Note. The initial
Multiplier for any security which may subsequently become a Settlement Value
Security shall be the number of shares or other units of such security which
are to be included in the calculation of the Settlement Value at the time such
security becomes a Settlement Value Security.  
Multipliers may be adjusted by the Calculation Agent in accordance with
the Calculation Agency Agreement in certain circumstances.

 

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

 

15

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Optional
Repurchase Amount” shall equal, for each $1,000 principal amount of the
Notes represented hereby, the Maturity Payment Amount calculated as though the
date of repurchase were the Stated Maturity Date and the date that is a number
of business days equal to the Determination Period before that date were the
Valuation Date, as specified on the face of this Note, or such other amount or
amounts, as specified on the face of this Note.

 

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

 

16

 

“Optional Repurchase Date” shall mean the
date specified as such on the face of this Note; provided, however,
if the Calculation Agent determines that a Market Disruption Event with respect
to any Settlement Value Security has occurred on the day that would otherwise
be the applicable Valuation Date, or if the applicable Valuation Date is not a
Scheduled Trading Day, then the Optional Repurchase Date shall be postponed by
a number of Business Days equal to the number of Scheduled Trading Days by
which the applicable Valuation Date is postponed.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

“Redemption Payment
Amount” shall mean, for each $1,000 principal amount of Notes represented
hereby, the Maturity
Payment Amount calculated as though the Redemption Date were the Stated
Maturity Date and the date that is a number of Business Days equal to the
Determination Period before that date were the Valuation Date, as specified on
the face of this Note, or such other amount or amounts as specified on the face
of this Note.

 

“Relevant
Exchange” shall mean for any Settlement Value Security, the primary United
States national securities exchange, quotation system, including any bulletin
board service, or market on which such Settlement Value Security is traded, or
in case such Settlement

 

17

 

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

 

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

 

“Scheduled Trading Day” shall mean any
day on which the Relevant Exchange for a Settlement Value Security is scheduled
to be open for trading for its regular trading session.

 

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

 

“Settlement Value” shall mean, when used with respect to an
applicable Valuation Date or any Scheduled Trading Day on which the Calculation
Agent is determining whether the Settlement Value is less than the Threshold
Value, the sum of the products of the Closing Prices and the applicable
Multipliers (as adjusted from time to time by the Calculation Agent pursuant to
the Calculation Agency Agreement prior to the Close of Trading on such date)
for each Settlement Value Security on such date, together with any cash or
other property included in the Settlement Value on such date by the Calculation
Agent pursuant to the Calculation Agency Agreement; provided that if the
originally scheduled Valuation Date is postponed because of the occurrence of a
Market Disruption Event, the Settlement Value will equal (a) the sum of the
products of the Closing Prices on the postponed Valuation Date and the
applicable Multipliers for each Settlement Value Security for which no Market
Disruption Event occurred plus (b) the sum of the products of the average per
share execution price an affiliate of the Company, receives or pays on the
postponed Valuation Date upon the sale or purchase of each Settlement Value
Security for which a Market Disruption Event has occurred which was used to
hedge the Company’s obligations under the Notes and the applicable Multipliers
(in case, as adjusted from time to time by the Calculation Agent pursuant to
the Calculation Agency Agreement prior to the Close of Trading on the postponed
Valuation Date), together with any cash or other property included in the
Settlement Value on the Valuation Date by the Calculation Agent pursuant to the
Calculation Agency Agreement. The Settlement Value and any adjustments thereto,
shall be determined by the Calculation Agent pursuant to the Calculation Agency
Agreement.

 

“Settlement Value Securities” shall mean the
securities included in the calculation of the Settlement Value by the
Calculation Agent pursuant to the Calculation Agency Agreement. The Settlement
Value Securities will initially consist of the common stock designated as the
Index Stock on the face of this Note.

 

“Special Election Interval” shall be the
number of days specified as such on the face of this Note.

 

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

 

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

 

“Stated Maturity Date” shall mean the date
specified as such on the face of this Note (except as otherwise provided in the
case of an Extension of Maturity Note or an Extendible

 

18

 

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

 

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

 

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

 

“Threshold Value” shall mean the value
specified as such on the face of this Note.

 

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

 

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

 

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

 

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

 

19

 

OPTION TO ELECT REPURCHASE

 

The undersigned owner of this Note hereby
irrevocably elects to have the Company repurchase the principal amount of this
Note or portion hereof below designated at (i) the Optional Repurchase Amount
plus any accrued coupon payments to but excluding the Optional Repurchase Date,
if this Note is to be repurchased pursuant to the Optional Repurchase provision
described in Section 5 of this Note, or (ii) the price specified pursuant to
the Optional Coupon Reset provision described in Section 7 of this Note or the
Extension of Maturity Notes provision described in Section 10 of this
Note.  Any such election is irrevocable
except as provided in Section 7 or Section 10 of this Note. If the
repurchase of this Note is pursuant to Section 5 of this Note and if the
undersigned has the option to elect to have the repurchase settled in stock,
the undersigned has indicated below if that option is being exercised.

 

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
  Sign exactly as
  name appears on the front of this Note [SIGNATURE 

  
	
   

  	
   

  	
  GUARANTEED -
  required only if Notes of this series are to be issued 

  
	
   

  	
   

  	
  and delivered to
  other than the registered Holder]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Principal Amount
  to be repurchased, if amount to

  	
   

  	
  Fill in for
  registration of Notes of this series if to be issued otherwise 

  
	
  be repurchased
  is less than the principal amount  

  	
   

  	
  than to the
  registered Holder:

  
	
  of this Note
  (principal amount remaining must

  	
   

  	
   

  
	
  be an authorized
  denomination)

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please print
  name and address including zip code)

  
	
  $                         

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Stock Settlement
  option elected

  	
   

  	
  SOCIAL SECURITY
  OR

  
	
   

  	
   

  	
  OTHER TAXPAYER
  ID NUMBER:

  
	
  o
  YES    o
  NO

  	
   

  	
   

  	
   

  
										

 

20

 

OPTION TO ELECT TERMINATION
OF AUTOMATIC EXTENSION

 

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

 

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
  Sign exactly as
  name appears on the front of this Note [SIGNATURE 

  
	
   

  	
   

  	
  GUARANTEED -
  required only if Notes of this series are to be issued and 

  
	
   

  	
   

  	
  delivered to
  other than the registered Holder]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Principal Amount
  to be terminated, if amount to 

  	
   

  	
  Fill in for
  registration of Notes of this series if to be issued otherwise 

  
	
  be terminated is
  less than the principal amount

  	
   

  	
  than to the
  registered Holder:

  
	
  of this Note
  (such principal amount must be an 

  	
   

  	
   

  
	
  authorized
  denomination)

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  $                          

  	
   

  	
  (Please print
  name and address including zip code)

  
									

 

21

 

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

 

	
  TEN COM -

  	
   

  	
  as tenants in common

  	
   

  	
  UNIF GIFT MIN ACT -              
  Custodian

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Cust)

  	
  (Minor)

  
	
  TEN ENT -

  	
   

  	
  as tenants by the
  entireties

  	
   

  	
  under Uniform Gifts to
  Minors

  
	
  JT TEN -

  	
   

  	
  as joint tenants with
  right of

  	
   

  	
  Act

  
	
   

  	
   

  	
  Survivorship and not as
  tenants in common

  	
   

  	
  (State)

  

 

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

 

 

FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers unto

 

PLEASE INSERT
SOCIAL SECURITY OR OTHER

IDENTIFYING
NUMBER OF ASSIGNEE

 

 

(Name and
Address of Assignee, including zip code, must be printed or typewritten.)

 

 

the within
Note of Lehman Brothers Holdings Inc., and all rights thereunder, hereby
irrevocably constituting and appointing

 

 

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

 

	
  Dated:

  	
   

  	
   

  	
  Signature:

  	
   

  	
   

  

 

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

 

Signature(s)
Guaranteed:

 

 

 

	
   

  	
   

  

THE
SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS,
STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP
IN AN APPROVED MEDALLION SIGNATURE GUARANTEE PROGRAM), PURSUANT TO S.E.C. RULE
17Ad-15.

 

22

 

Schedule I

 

Amortization Table

 

	
  Date

  	
   

  	
  Payment

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

23

 

EXHIBIT A

 

RESET NOTICE

 

LEHMAN BROTHERS HOLDINGS INC.

Medium-Term Notes, Series H

RANGERSSM

Risk AdjustiNG Equity Range SecuritiesSM

Performance Linked to the Value of a Common Stock

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 Coupon Rate
set forth on the face of the Notes.  On
and after                     (1),
the Coupon Rate shall be                              .

 

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

 

	
  Date

  	
  Redemption Price

  

 

 

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

 

	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  
	
   

  	
   

  	
  Title:

  

 

(1)           Insert applicable Optional Reset
Date.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00085-of-00352.parquet"}]]