Document:

Exhibit 4.02

 

CUSIP
NO. 5252M0BM8

ISIN NO. US5252M0BM88

 

	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT:
  $1,167,000

  
	
  No. R-1

  	
   

  	
   

  

 

LEHMAN BROTHERS HOLDINGS INC.

 

MEDIUM-TERM NOTE, SERIES I

 

BUFFERED RETURN ENHANCED NOTES LINKED TO A BASKET OF TEN COMMODITIES AND
TWO COMMODITY INDICES
 DUE FEBRUARY 7, 2012

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

 

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

 

 

LEHMAN BROTHERS HOLDINGS INC., a corporation duly
organized and existing under the laws of the State of Delaware (herein called
the “Company,” which term includes any successor corporation under the
Indenture referred to on the reverse hereof), for value received, hereby
promises to pay to CEDE & Co., or registered assigns, on the Maturity
Date, an amount equal to the Redemption Amount.

 

The “Maturity Date” is February 7, 2012, or if
such day is not a Business Day, on the next following Business Day.

 

The “Valuation Date” is January 31, 2012, or if
such day is not a Valuation Business Day, the immediately preceding Valuation
Business Day; provided that if a Disruption Event is in effect on the scheduled
Valuation Date, the Valuation Date may be postponed.

 

The “Redemption Amount” for each $1,000 note will be a
single U.S. dollar payment on the Maturity Date equal to:

 

(A)    the sum of $1,000 plus the product of
$1,000 times the Basket Return times the Upside Participation Rate, if the
Final Basket Level is greater than the Initial Basket Level;

 

(B)    $1,000, if the Final Basket Level is
equal to or less than the Initial Basket Level but greater than or equal to the
Buffer Level; or

 

(C)    the sum of $1,000 plus the product of
$1,000 times the sum of the Basket Return plus the Protection Percentage, if
the Final Basket Level is less than the Buffer Level.

 

The “Component Commodities” and “Commodity Weightings”
are as follows:

 

	
  Component Commodities

  	
   

  	
  Component

  Weighting

  	
   

  
	
  Light sweet
  crude oil (“Crude Oil”)

  	
   

  	
  15

  	
  %

  
	
  Henry Hub
  natural gas (“Natural Gas”)

  	
   

  	
  10

  	
  %

  
	
  Reformulated
  gasoline blendstock for oxygen blending (“RBOB Gasoline”)

  	
   

  	
  5

  	
  %

  
	
  No. 2 fuel
  heating oil (“Heating Oil”)

  	
   

  	
  5

  	
  %

  
	
  High Grade
  Primary Aluminium (“Aluminum”)

  	
   

  	
  7

  	
  %

  
	
  Copper – Grade A
  (“Copper”)

  	
   

  	
  7

  	
  %

  
	
  Primary Nickel (“Nickel”)

  	
   

  	
  6

  	
  %

  
	
  Special High Grade Zinc (“Zinc”)

  	
   

  	
  5

  	
  %

  
	
  Standard Lead (“Lead”)

  	
   

  	
  5

  	
  %

  
	
  Gold (“Gold”)

  	
   

  	
  5

  	
  %

  

 

2

 

	
  S&P GSCI
  Livestock Index Excess Return (“GSCI® Livestock”) calculated and
  published by the Index Sponsor, subject to adjustment in accordance with
  Index Adjustment below

  	
   

  	
  10

  	
  %

  
	
  S&P GSCI
  Agriculture Index Excess Return (“GSCI® Agriculture”) calculated and
  published by the Index Sponsor, subject to adjustment in accordance with
  Index Adjustment below

  	
   

  	
  20

  	
  %

  

 

The “Upside Participation Rate” is 132%.

 

The “Protection Percentage” is 20.0%.

 

The “Buffer Level” is the product of 80.0% times the
Initial Basket Level.

 

The “Basket Return” is a quotient, the numerator of
which is the difference of the Final Basket Level minus the Initial Basket
Level and the denominator of which is the Initial Basket Level, expressed as a
percentage rounded to three decimal places.

 

The “Final Basket Level” is the product of 100 times
the sum of 1 plus the sum of the Weighted Component Commodity Returns.

 

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

 

The “Trade Date” is January 31, 2008.

 

The “Issue Date” is February 7, 2008.

 

The “Weighted Component Commodity Returns” are, for
each Component Commodity, the product of the Component Weighting times a
quotient, the numerator of which is the difference of the Final Commodity Price
minus the Initial Commodity Price and the denominator of which is the Initial
Commodity Price for such Component Commodity.

 

The “Initial Commodity Prices” for each Component
Commodity are as follows:

 

	
  Component

  Commodity

  	
   

  	
  Initial Commodity Price

  	
   

  
	
  Crude Oil

  	
   

  	
  US$

  	
  91.75

  	
   

  
	
  Natural Gas

  	
   

  	
  US$

  	
  8.0740

  	
   

  
	
  RBOB Gasoline

  	
   

  	
  US$

  	
  2.3091

  	
   

  
	
  Heating Oil

  	
   

  	
  US$

  	
  2.5345

  	
   

  
	
  Aluminum

  	
   

  	
  US$

  	
  2,643.00

  	
   

  
	
  Copper

  	
   

  	
  US$

  	
  7,170.50

  	
   

  
	
  Nickel

  	
   

  	
  US$

  	
  27,550.00

  	
   

  

 

3

 

	
  Zinc

  	
   

  	
  US$

  	
  2,392

  	
   

  
	
  Lead

  	
   

  	
  US$

  	
  2,741.50

  	
   

  
	
  Gold

  	
   

  	
  US$

  	
  923.25

  	
   

  
	
  GSCI® Livestock

  	
   

  	
   

  	
  315.4630

  	
   

  
	
  GSCI® Agriculture

  	
   

  	
   

  	
  87.7365

  	
   

  

 

The “Final
Commodity Price” is, for each Component Commodity, the Commodity Price on the
Valuation Date.

 

The “Commodity
Price” for each Component Commodity is as follows:

 

	
  Component

  Commodity

  	
   

  	
  Commodity
  Price

  
	
  Crude Oil Natural Gas
  RBOB Gasoline Heating Oil

  	
   

  	
  For each of Crude Oil,
  Natural Gas, RBOB Gasoline and Heating Oil, the official settlement price of
  the first nearby month futures contract (or, in the case of the last trading
  day of the first nearby month contract, the second nearby month contract) for
  that Component Commodity, expressed (a) in the case of Crude Oil, as the
  U.S. dollar price per barrel, (b) in the case of Natural Gas, as the
  U.S. dollar price per million British thermal units (Btu), and (c) in
  the case of RBOB Gasoline and Heating Oil, as the U.S. dollar price per
  gallon, in each case as made public by the Relevant Exchange for that
  Component Commodity (subject to the occurrence of a Disruption Event).

  
	
  Aluminum Copper Nickel
  Zinc Lead

  	
   

  	
  For each of Aluminum,
  Copper, Nickel, Zinc and Lead, the official settlement price of that
  Component Commodity for cash delivery, expressed as the 

  

 

4

 

	
   

  	
   

  	
  U.S. dollar price per
  metric ton of the Component Commodity, as made public by the Relevant
  Exchange for that Component Commodity (subject to the occurrence of a
  Disruption Event).

  
	
  Gold

  	
   

  	
  The official afternoon
  fixing price of Gold, stated in U.S. dollars per troy ounce, as calculated
  and quoted by the London Bullion Market Association (the “LBMA”)
  (subject to the occurrence of a Disruption Event).

  
	
  GSCI® Livestock GSCI®
  Agriculture

  	
   

  	
  For each of GSCI®
  Livestock and GSCI® Agriculture (each an “Index” and collectively the
  “Indices”), the closing level of that Index, as determined and
  published by the Index Sponsor (subject to the occurrence of a Disruption
  Event), rounded to four decimal places.

  

 

The “Relevant
Exchange” for each Component Commodity is as follows:

 

	
  Component Commodity

  	
   

  	
  Relevant Exchange

  
	
  Crude Oil

  	
   

  	
  The NYMEX Division, or
  its successor, of the New York Mercantile Exchange, Inc. (“NYMEX”)

  
	
  Natural Gas

  	
   

  	
  NYMEX

  
	
  RBOB Gasoline

  	
   

  	
  NYMEX

  
	
  Heating Oil

  	
   

  	
  NYMEX

  
	
  Aluminum

  	
   

  	
  London Metal Exchange
  (“LME”)

  
	
  Copper

  	
   

  	
  LME

  
	
  Nickel

  	
   

  	
  LME

  
	
  Zinc

  	
   

  	
  LME

  
	
  Lead

  	
   

  	
  LME

  

 

5

 

	
  Gold

  	
   

  	
  The market in London on
  which members of the LBMA quote prices for the buying and selling of Gold.

  

 

A “Valuation Business Day” is a day, as determined in
good faith by the Calculation Agent, on which (a) the Relevant Exchange
for each Component Commodity and (b) each organized exchange or market of
trading for any Index Contract, is scheduled to be (or, but for the occurrence
of a Disruption Event, would have been) open for trading
during its regular trading session (notwithstanding the Relevant Exchange or
organized exchange or market, as applicable, closing prior to its scheduled
closing time).

 

The “Index Sponsor” is Standard & Poor’s, a
division of the McGraw-Hill Companies.

 

If a Disruption Event identified in clauses (A), (B) or
(C) below relating to one or more Component Commodities (other than the
Indices) is in effect on the scheduled Valuation Date, the Calculation Agent
will calculate the Final Basket Level using:

 

·                       for each such Component Commodity that did not suffer
a Disruption Event on the scheduled Valuation Date, the Final Commodity Price
for that Component Commodity on the scheduled Valuation Date, and

 

·                       for each such Component Commodity that
did suffer a Disruption Event on the scheduled Valuation Date, the Final
Commodity Price on the immediately succeeding trading day for such Component
Commodity on which no Disruption Event occurs or is continuing with respect to
such Component Commodity;

 

provided however that if a Disruption Event has occurred or is
continuing with respect to a Component Commodity on each of the three scheduled
trading days following the scheduled Valuation Date, then (a) that third
scheduled trading day shall be deemed the Valuation Date for the affected
Component Commodity; and (b) the Calculation Agent will determine the
Final Commodity Price for the affected Component Commodity on such day in its
sole and absolute discretion taking into account the latest available quotation
for the Commodity Price for the affected Component Commodity and any other
information that in good faith it deems relevant.

 

If a Disruption Event identified in clauses (D) or
(E) below relating to one or more Component Commodities (other than Gold
or the Indices) is in effect on the Valuation Date, the Calculation Agent will
determine the Final Commodity Price for the affected Component Commodity on the
scheduled Valuation Date in its sole and absolute discretion taking into
account the latest available quotation for the Commodity Price for the affected
Component Commodity and any other information that in good faith it deems
relevant.

 

With respect to any Component Commodity that is an
Index, if a Disruption Event relating to one or more futures contracts then
included in the Index or any Successor Index (each such contract, an “Index
Contract”) is in effect on the scheduled Valuation Date, the Calculation Agent
will calculate the Final Commodity Price for such Index or Successor Index in good faith in accordance with the formula for and method
of calculating the Index or Successor Index last in effect prior to
commencement of the Disruption Event, using:

 

6

 

·                       for each Index Contract that did not
suffer a Disruption Event on the scheduled Valuation Date, the settlement price
on the applicable organized exchange or market of trading for such Index
Contract on the scheduled Valuation Date, and

 

·                       for each Index Contract that did suffer a Disruption
Event on the scheduled Valuation Date, the settlement price on the organized
exchange or market of trading for such Index Contract on the immediately
succeeding trading day on which no Disruption Event occurs or is continuing
with respect to such Index Contract;

 

provided however that if a Disruption Event has occurred or is
continuing with respect to such Index Contract on each of the three scheduled
trading days following the scheduled Valuation Date, then (a) that third
scheduled trading day shall be deemed the Valuation Date for such Index
Contract and (b) the Calculation Agent will determine the price for such
Index Contract on such day in its sole and absolute discretion taking into
account the latest available quotation for the price for such Index Contract
and any other information that in good faith it deems relevant.

 

A “Disruption Event” (a) for a Component
Commodity other than an Index, any of the following events with respect to that
Component Commodity or (b) with respect to an Index any of the following
events with respect to an Index Contract, in each case as determined in good
faith by the Calculation Agent:

 

(A)                              the suspension of or material limitation
on trading in the Component Commodity or Index Contract, or futures contracts
or options related to the Component Commodity or Index Contract, on the
Relevant Exchange for that Component Commodity or organized exchange or market
of trading for the Index Contract;

 

(B)                                either (i) the failure of trading to
commence, or permanent discontinuance of trading, in the Component Commodity or
Index Contract, or futures contracts or options related to the Component
Commodity or Index Contract, on the Relevant Exchange for that Component
Commodity or organized exchange or market of trading for that Index Contract,
or (ii) the disappearance of, or of trading in, the Component Commodity or
Index Contract;

 

(C)                                the failure of the Relevant Exchange for
the Component Commodity or organized exchange or market of trading for that
Index Contract to publish the official daily settlement price of the Component
Commodity or Index Contract for that day (or the information necessary for
determining the settlement price); and

 

solely with respect to Component Commodities other
than Gold or any Index (or any Index Contract then comprising an Index or any
Successor Index),

 

(D)                               the occurrence since the Trade Date of a
material change in the content, composition, or constitution of the Component
Commodity; or

 

7

 

(E)                                 the
occurrence since the Trade Date of a material change in the formula for or the
method of calculating the settlement price of the Component Commodity.

 

For the
purpose of determining whether a Disruption Event for a Component Commodity or
an Index Contract has occurred:

 

(1)                                  a
limitation on the hours in a trading day and/or number of days of trading will
not constitute a Disruption Event if it results from an announced change in the
regular business hours of the Relevant Exchange for the Component Commodity or
organized exchange or market of trading for that Index Contract;

 

(2)                                  a
suspension in trading in a Component Commodity on the Relevant Exchange for
that Component Commodity or in an Index Contract on the organized exchange or
market of trading for that Index Contract (without taking into account any
extended or after-hours trading session), by reason of a price change
reflecting the maximum permitted price change from the previous trading day’s
settlement price will constitute a Disruption Event; and

 

(3)                                  a
suspension of or material limitation on trading on a Relevant Exchange for a
Component Commodity or an organized exchange or market of trading for an Index
Contract will not include any time when the Relevant Exchange for that
Component Commodity or an organized exchange or market of trading for that
Index Contract is closed for trading under ordinary circumstances.

 

For
purposes of calculating the Final Basket Level in the event of a Disruption
Event relating to one or more Component Commodities or Index Contracts in
accordance with the above, “trading day” means a day, as determined in good
faith by the Calculation Agent, on which trading is generally conducted on the
Relevant Exchange applicable to the affected Component Commodity or on the
organized exchange or market of trading for the affected Index Contract.

 

If an
Index Unavailability Event is in effect on the scheduled Valuation Date (and no
Disruption Event is then in effect), the Calculation Agent will determine the
Final Commodity Price for the affected Index on the Valuation Date in good
faith in accordance with the formula for and method of calculating the Index
last in effect prior to commencement of the Index Unavailability Event, using
the closing price for each Index Contract most recently constituting the Index
on the organized exchange or market of trading for that Index Contract.

 

An “Index
Unavailability Event” means that an Index is not calculated and published by
the Index Sponsor or any Successor Index is not calculated and published by the
sponsors thereof.

 

8

 

If the Index Sponsor discontinues publication of an
Index and the Index Sponsor or another entity publishes a successor or
substitute index that the Calculation Agent determines, in its sole discretion,
to be comparable to the discontinued Index (such index, a “Successor Index”),
then the Final Commodity Price for such Index will be determined by reference
to the level of such Successor Index at the close of trading on the organized
exchange or market of trading for any futures contract (or any combination
thereof) included in the Successor Index last to close on the Valuation Date;
provided, however, that the Calculation Agent, in its sole discretion, may make
such adjustments as it deems necessary to the level of the Successor Index so
that the level of the Successor Index reflects the same level as that of the
discontinued Index before it was discontinued. 
Upon any selection by the Calculation Agent of a Successor Index, the
Calculation agent will cause written notice thereof to be promptly furnished to
the trustee, to the Issuer and to the holders of the notes.

 

If the Index Sponsor discontinues publication of an
Index prior to, and such discontinuation is continuing on, the Valuation Date,
and the Calculation Agent determines, in its sole discretion, that no Successor
Index is available at such time, then the Calculation Agent will determine the
Final Commodity Price for such Index on the Valuation Date.  The Final Commodity Price for such Index will
be computed by the Calculation Agent in accordance with the formula for and
method of calculating the Index last in effect prior to such discontinuation,
using the settlement prices at the close of trading on the Valuation Date on
the organized exchange or market of trading for any futures contract (or any
combination thereof) then included in the Index (or, if trading in any such
futures contract has been materially suspended or materially limited, its good
faith estimate of the settlement price that would have prevailed but for such
suspension or limitation).

 

If at any time the method of calculating an Index or a
Successor Index, or the level thereof, is, in the good faith judgment of the
Calculation Agent, changed or modified in a material respect, the Calculation
Agent may (but is not obligated to) make such adjustments to the Index or
Successor Index or their respective methods of calculation as, in the good
faith judgment of the Calculation Agent, may be necessary in order to arrive at
a level of a commodity index comparable to the Index or such Successor Index,
as the case may be, as if such changes or modifications had not been made, and
the Calculation Agent will calculate the Final Commodity Price for such Index
or Successor Index with reference to the Index or such Successor Index as
adjusted.  Accordingly, if the method of
calculating the Index or a Successor Index is modified or rebased so that the
level of the Index or Successor Index is a fraction or multiple of what it
would have been if it had not been modified or rebased, then the Calculation
Agent will adjust the level of the Index or Successor Index in order to arrive
at a level of the Index or Successor Index as if it has not been modified or
rebased.

 

The “Calculation Agent” means Lehman Brothers
Commodity Services Inc, the determinations and calculations of which will be
binding absent manifest error.

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

10

 

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:  February 7, 2008

 

	
  [SEAL]

  	
   

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Andrew M.W. Yeung

  
	
   

  	
   

  	
   

  	
  Title:   Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Cindy Buckholz

  
	
   

  	
   

  	
   

  	
  Title:   Assistant Secretary

  
						

 

 

TRUSTEE’S CERTIFICATE OF
AUTHENTICATION

 

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

 

	
  CITIBANK, N.A.

  
	
  as Trustee

  
	
   

  
	
   

  
	
  By: 

  	
   

  	
   

  
	
        Authorized
  Officer

  

 

11

 

[REVERSE
OF NOTE]

 

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES,
SERIES I

BUFFERED RETURN ENHANCED NOTES LINKED TO A
BASKET OF TEN COMMODITIES AND TWO COMMODITY INDICES  
 DUE FEBRUARY 7, 2012

 

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

 

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

 

Section 3.  Modification and Waivers.  The Indenture contains provisions permitting the
Company and the Trustee, with the consent of the Holders of not less than
66-2/3% in aggregate principal amount of each series of the Securities at the
time Outstanding to be affected, evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Securities of all such series; provided, however, that no such supplemental
indenture shall, among other things, (i) change the fixed maturity of any
Security, or reduce the Redemption 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 Redemption Amount or
the principal amount thereof, premium or other amount payable, if any, or
interest thereon payable in any coin or currency other than that herein above
provided, without the consent of the Holder of each Security so affected, or (ii) change
the place of payment on any Security, or impair the right to institute suit for
payment on any Security, or reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security so affected.  It is also provided in the Indenture that,
prior to any declaration accelerating the maturity of any series of Securities,

 

 

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

 

Section 4.  Obligations Unconditional.  No reference herein to the Indenture and no
provisions of this Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay any
Redemption Amount on this Note at the place, at the respective times, at the
rate, and in the coin or currency herein prescribed.

 

Section 5.  Defeasance.  The Indenture contains provisions for the
discharge of the Indenture and defeasance at any time of the indebtedness on
this Note upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Note.

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

Section 9.  No Recourse Against Certain Persons.  No recourse for the payment of the Redemption
Amount or for any claim based hereon or otherwise in respect hereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
the Indenture or any Indenture supplemental thereto or in any Note, or because
of the creation of any indebtedness represented thereby, shall be had against
any incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.

 

Section 10.  Defined
Terms.  All terms used but not
defined in this Note are used herein as defined in the Indenture.

 

Section 11.  GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.Exhibit 4.03

 

CUSIP NO. 5252M0DE4

ISIN NO. US5252M0DE45

 

	
  REGISTERED

  	
   

  	
  FACE
  AMOUNT: $5,000,000

  
	
  No. R-1

  	
   

  	
   

  

 

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTE, SERIES I

(FIXED RATE)

 

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

 

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

 

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

 

 

ISSUE
PRICE: $5,000,000

 

ISSUE DATE: February 7, 2008

 

MATURITY DATE: February 7, 2038, subject
to Issuer’s Call Option and/or Survivor’s Option

 

INTEREST RATE: 7.00%

 

SPREAD: N/A

 

SPREAD MULTIPLIER: N/A

 

MAXIMUM INTEREST RATE: N/A

 

MINIMUM INTEREST RATE: N/A

 

INTEREST PAYMENT DATES: Semi-annually on
February 7 and August 7, commencing on August 7, 2008

 

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

 

EXCHANGE RATE AGENT: N/A

 

DEPOSITORY: The Depository Trust Company

 

DUAL CURRENCY NOTE:  o  YES  x  NO

 

OPTION ELECTION DATES: N/A

 

OPTIONAL PAYMENT CURRENCY: N/A

 

DESIGNATED EXCHANGE RATE: N/A

 

OPTION VALUE CALCULATION AGENT:  N/A

 

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

 

SPECIFIED CURRENCY: N/A

 

BUSINESS DAY: New York

 

AMORTIZING NOTE:  o  YES  x  NO

 

SINKING FUND: N/A

 

OID NOTE: 
o  YES  x   NO

 

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

 

EXTENSION OF MATURITY NOTE:  o  YES  x  NO

 

EXTENSION PERIOD: N/A

 

NUMBER OF EXTENSION PERIODS: N/A

 

OPTION TO ELECT REPAYMENT:  o  YES  x  NO

 

OPTIONAL REPAYMENT DATES: N/A

 

SURVIVOR’S OPTION:  x  YES  o  NO

 

OPTIONAL REPAYMENT PRICES: N/A

 

OPTIONAL INTEREST RATE RESET:  o  YES  x  NO

 

OPTIONAL RESET DATES: N/A

 

OPTIONAL REDEMPTION:  x  YES  o  NO

 

INITIAL REDEMPTION DATE: February 7, 2010

 

INITIAL REDEMPTION PERCENTAGE: N/A

 

APPLICABILITY OF ANNUAL REDEMPTION PERCENTAGE
REDUCTION:  o  YES  x  NO  If yes, state Annual Percentage Reduction:    %

 

EXTENDIBLE NOTE:   o  YES  x  NO

 

INITIAL MATURITY DATE: N/A

 

SPECIAL ELECTION INTERVAL: N/A

 

RENEWABLE IN PART:  o  YES  x  NO

 

AUTHORIZED RENEWABLE AMOUNTS:  N/A

 

SPECIAL ELECTION PERIOD: N/A

 

OTHER PROVISIONS: N/A

 

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

 

2

 

Face Amount at such time as
described in Section 4 on the reverse hereof, (iii) in all other
cases, the Face Amount hereof.

 

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

 

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

 

Except as provided in the following
paragraph, the Company will pay interest semiannually on February 7 and August 7
of each year (unless other Interest Payment Dates are specified above) (each an
“Interest Payment Date”), commencing with the first Interest Payment Date next
succeeding the Issue Date, and at Maturity; provided
that any payment of principal, premium, if any, or interest to be made on any
Interest Payment Date or on a date of Maturity that is not a Business Day shall
be made on the next succeeding Business Day with the same force and effect as
if made on such Interest Payment Date or such date of Maturity, as the case may
be, and no additional interest shall accrue as a result of such delayed
payment.  The term “Business Day” means
any day, that is not a Saturday or Sunday, and that is not a day on which
banking institutions in New York City are generally authorized obligated or by
law or executive order to be closed; for notes denominated in pounds sterling only, is also
a London Business Day; for notes having a specified currency other than U.S.
dollars only, other than notes denominated in Euros, is also not a day on which
banking institutions in the principal financial center (as defined below) of
the country of the specified currency generally are authorized or obligated by
law or executive order to close; and for 
notes denominated in Euros, is also a Euro business day. A principal financial
center means the capital city of the country issuing the specified currency.
However, for U.S. dollars, Australian dollars, Canadian dollars and Swiss
francs, the principal financial center will be New York City, Sydney, Toronto
and Zurich, respectively. A ‘‘London Business Day’’ means any day that is not a
Saturday or Sunday and on which dealings in deposits in U.S. dollars are
transacted, or with respect to any future date are expected to be transacted,
in the London interbank market and a ‘‘Euro Business Day’’ means any day that
is not a Saturday or Sunday on which the Trans-European Automated Real-Time
Gross Settlement Express Transfer System is open.  Each payment of interest
hereon shall include interest accrued through the day before the Interest
Payment Date or date of Maturity, as the case may be.  Unless otherwise specified above, interest on
this Note will be computed on the basis of a 360-day year of twelve 30-day
months.  In no event shall the interest
rate of this Note be higher than the maximum rate permitted by applicable law,
as the same may be modified by United States law of general application.

 

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

 

Unless otherwise indicated above, and except
as provided below, if this Note is a Global Security, all payments of interest
on this Note and all principal payments hereon if this Note is an Amortizing
Note (other than interest and, in the case of Amortizing Notes, principal
payable at Maturity) will be made by check (unless otherwise provided above,
from an account at a bank located outside the United States if such amount is
payable in a Foreign Currency); provided
that, if the Holder hereof is the Holder of U.S.$10,000,000 or more in
aggregate Principal Amount of Notes of this series of like tenor and term (or a
Holder of the equivalent thereof in a Foreign Currency determined as provided
in Section 2 on the reverse hereof), such Holder shall be entitled to
receive interest payments (and principal payments, if this Note is an
Amortizing Note) in immediately available funds, but only if 

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

	
  Dated: February 7,
  2008

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [SEAL]

  	
   

  	
   

  	
  LEHMAN BROTHERS HOLDINGS
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Andrew Yeung

  
	
   

  	
   

  	
   

  	
   

  	
  Title:Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name: Cindy Buckholz

  
	
   

  	
   

  	
   

  	
   

  	
  Title: Assistant Secretary

  

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

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

 

	
  CITIBANK, N.A.

  
	
    as
  Trustee

  
	
   

  
	
   

  
	
  By: 

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  
	
   

  

 

5

 

[REVERSE OF NOTE]

 

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTES, SERIES I

(Fixed Rate)

 

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

 

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

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11

 

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

 

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

 

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

 

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

 

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

 

12

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

14

 

OPTION TO
ELECT REPAYMENT

 

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

 

	
  Dated:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  Sign exactly as name appears on the front of

  this Note [SIGNATURE GUARANTEED - required

  only if Notes are to be issued and delivered

  to other than the registered Holder]

  
	
   

  	
   

  
	
  Face Amount
  to be repaid, if amount to be repaid is less

  than the Face Amount of this Note (Face Amount

  remaining must be an authorized denomination)

  	
  Fill in for
  registration of Notes if to be issued otherwise

  than to the registered Holder:

  
	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
  Address: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please
  print name and address

      including zip code)

  
	
   

  	
   

  
	
   

  	
  SOCIAL
  SECURITY OR OTHER TAXPAYER ID

  NUMBER 

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
								

 

15

 

OPTION TO ELECT TERMINATION OF
AUTOMATIC EXTENSION

 

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

 

	
  Dated: 

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  Sign exactly as name appears on the front of

  this Note [SIGNATURE GUARANTEED - required

  only if Notes are to be issued and delivered

  to other than the registered Holder]

  
	
   

  	
   

  
	
  Face Amount
  to be terminated, if amount to be

  terminated is less than the Face Amount of this Note

  (such Face Amount must be an authorized denomination)

  	
  Fill in for
  registration of Notes if to be issued otherwise

  than to the registered Holder:

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (Please
  print name and address

     including zip code)

  
	
   

  	
   

  
	
   

  	
  SOCIAL
  SECURITY OR OTHER TAXPAYER

  ID NUMBER 

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
								

 

16

 

ABBREVIATIONS

 

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

 

	
  TEN COM

  	
  -

  	
  as tenants
  in common

  
	
  TEN ENT

  	
  -

  	
  as tenant by
  the entireties

  
	
  JT TEN

  	
  -

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

  
	
  UNIF GIFT

  	
   

  
	
  MIN ACT

  	
  -

  	
   

  	
  Custodian

  	
   

  	
   

  
	
   

  	
   

  	
  (Cust)

  	
   

  	
  (Minor)

  	
   

  
	
   

  	
   

  	
  Under Uniform Gifts to Minors Act

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (State)

  	
   

  

 

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

 

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

 

 

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER OF ASSIGNEE

 

 

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

 

 

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

 

	
  Dated:

  	
   

  	
   

  
	
   

  
	
  SIGNATURE
  GUARANTEED:

  	
   

  	
   

  
	
   

  	
  NOTICE: The
  signature to this

  
	
   

  	
  assignment
  must correspond with the

  
	
   

  	
  name as it
  appears upon the face of

  
	
   

  	
  the within
  Note in every particular,

  
	
   

  	
  without
  alteration or enlargement or

  
	
   

  	
  any change
  whatsoever.

  
						

 

17

 

SCHEDULE I

 

Amortization Table

 

	
  Date

  	
  Payment

  

 

 

EXHIBIT
A

 

RESET NOTICE

 

LEHMAN BROTHERS HOLDINGS INC.

Medium-Term Notes, Series I

(Fixed Rate)
 CUSIP
No.               

Registered Nos.      -     

 

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

 

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

 

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

 

	
   

  	
  Date

  	
  Redemption
  Price

  
	
   

  	
   

  

 

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

 

	
  Dated:

  	
   

  	
  LEHMAN
  BROTHERS HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
									

 

(1)                                  Insert
applicable Optional Reset Date.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00136-of-00352.parquet"}]]