Exhibit 4.01


 


CUSIP
NO. 5252M0FV4


ISIN NO. US5252M0FV42


 


	
  REGISTERED

  	
  PRINCIPAL AMOUNT:
  $6,150,000

  



No. R-1


 


LEHMAN BROTHERS HOLDINGS INC.


 


MEDIUM-TERM NOTE, SERIES I


 


100% PRINCIPAL PROTECTED NOTES


LINKED TO COMBATS I
 DUE MAY 29, 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 May 29, 2012, or if such day is not a
Business Day, on the next succeeding Business Day; provided
that, if as a result of a Market Disruption Event the Valuation Date
is postponed so that it falls less than three Business Days prior to the
scheduled Maturity Date, the Maturity Date will be the third Business Day
following the postponed Valuation Date for the affected Index Contract.


 


The “Valuation Date” is May 22, 2012, or if such day is not a scheduled
Strategy Business Day, the immediately preceding Strategy Business Day; provided that if a Market Disruption Event is in effect for
one or more Index Contracts on the scheduled Valuation Date, the Valuation Date
may be postponed (as described below).


 


The “Redemption Amount” for each note will be a
single U.S. dollar payment on the Maturity Date equal to the principal amount
of the note plus the Additional Amount, if any.


 


The “Additional Amount” is, for each note, a single
U.S. dollar amount equal to the principal amount of the notes multiplied by:


 


(A)  the product of the Strategy Performance times the Participation
Rate, if the Final Strategy Level is greater than the Initial Strategy Level;
or


 


(B)   0%, if the Final Strategy Level is equal to or less than the
Initial Strategy Level.


 


The “Participation Rate” is 165%.


 


The “Strategy Performance” is a quotient, the
numerator of which is the difference of the Final Strategy Level minus the
Initial Strategy Level and the denominator of which is the Initial Strategy
Level.


 


The “Initial Strategy Level” is 124.3644, which is
the Strategy Level on the Trade Date.


 


The “Final Strategy Level” is the Strategy Level on
the Valuation Date (subject to the occurrence of a Market Disruption Event or a
Strategy Unavailability Event).


 


The “Strategy Level” is the closing value of the
Strategy, as determined and published by the Strategy Sponsor, rounded to four
decimal places.


 


The “Strategy” is The Lehman Brothers Commodity
Based Alpha Trading Strategies I (“ComBATS I”) calculated by the Strategy
Sponsor, subject to adjustment in the event of a Strategy Adjustment as
described below.  ComBATS I is designed
to be a monthly resetting market neutral alpha strategy that reflects the difference
between the monthly returns on a basket consisting of ten Lehman Brothers
Commodity Index Pure Beta (“LBCI Pure Beta”) Excess Return single commodity
sub-indices (each an “LBCIPB Component Sub-Index”, and 


 





















 


collectively the “LBCIPB Basket”) and the monthly returns
on a basket consisting of the corresponding Lehman Brothers Commodity Index (“LBCI”)
Excess Return single commodity sub-indices for the same ten commodities (each
an “LBCI Component Sub-Index”, and collectively the “LBCI Basket”) –
essentially, a long position in the LBCIPB Basket and a short position in the
LBCI Basket.


 


The “Strategy Sponsor” is Lehman Brothers Inc.


 


The “Trade Date” is May 22, 2008.


 


The “Issue Date” is May 29, 2008.


 


A “Strategy Business Day” is a day, as determined in
good faith by the Calculation Agent, on which trading is generally conducted on
the Relevant Exchange for each Index Contract underlying a both the LBCIPB
Component Sub-Index and the LBCI Component Sub-Index.


 


If a Market Disruption Event relating to one or more
LBCIPB Component Sub-Indices or LBCI Component Sub-Indices (each a “Component
Sub-Index” and collectively the “Component Sub-Indices”) is in effect on the
scheduled Valuation Date, the Calculation Agent will calculate the Strategy
Level for such date in good faith in accordance with the formula for and method
of calculating the Strategy last in effect prior to commencement of the Market
Disruption Event, using:


 


·                                          for each such Component
Sub-Index that did not suffer a Market Disruption Event on the scheduled
Valuation Date, the closing level of that Component Sub-Index, calculated and
published by the LBCIPB Calculation Agent or the LBCI Sponsor, as the case may be,
on the scheduled Valuation Date, and


 


·                                          for each such Component
Sub-Index that did suffer a Market Disruption Event on the scheduled Valuation
Date, the closing level of that Component Sub-Index, calculated and published
by the LBCIPB Calculation Agent or LBCI Sponsor, as the case may be, on the
immediately succeeding trading day for such Component Sub-Index on which no
Market Disruption Event occurs or is continuing with respect to such Component
Sub-Index;


 


provided however that if a Market
Disruption Event has occurred or is continuing with respect to a Component
Sub-Index on each of the five scheduled trading days following the scheduled
Valuation Date, then (a) such fifth scheduled trading day shall be deemed
the Valuation Date for such Component Sub-Index; and (b) the Calculation
Agent will determine the closing level for such Component Sub-Index on such
fifth scheduled trading day in good faith in accordance with the formula for
and method of calculating the Component Sub-Index last in effect prior to
commencement of the Market Disruption Event using a price for the Index
Contract applicable to such Component Sub-Index on such fifth scheduled Index
Business Day determined by the Calculation Agent in its sole and absolute
discretion taking into account the latest available quotation for the price of
the relevant Index Contract and any other information that in good faith it
deems relevant.


 


A “Market Disruption Event” for a Component
Sub-Index means any of the following events, in each case as determined in good
faith by the Calculation Agent:


 





















 


(A)                              the termination or
suspension of or material limitation or disruption in the trading on the
applicable Relevant Exchange of the Index Contract for that Component
Sub-Index;


 


(B)                                the settlement price on the applicable Relevant
Exchange of the Index Contract for that Component Sub-Index has increased or
decreased by an amount equal to the maximum permitted price change from the
previous day’s settlement price; or


 


(C)                                the settlement price of the Index Contract for that
Component Sub-Index is not published by the applicable Relevant Exchange.


 


Notwithstanding the foregoing, the following events
will not constitute a Market Disruption Event for a Component Sub-Index:


 


(1)                                  a limitation on the hours
in a trading day and/or number of days of trading, if it results from an
announced change in the regular business hours of the applicable Relevant
Exchange of the Index Contract for that Component Sub-Index; or


 


(2)                                  a decision to permanently
discontinue trading in the Index Contract for that Component Sub-Index or
options or futures contracts relating to that Index Contract of the related
Component Sub-Index.


 


For the avoidance of doubt, a Market
Disruption Event arising in relation to an Index Contract shall constitute a
Market Disruption Event for both the LBCIPB Component Sub-Index and LBCI
Component Sub-Index which that Index Contract underlies.


 


“Index Contract” means the commodity contract
then underlying each Component Sub-Index.


 


“Relevant Exchange” means any organized
exchange or market of trading for the Index Contract.


 


“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 Index Contract for the affected
Component Sub-Index.


 


If a Strategy Unavailability Event is in
effect on the scheduled Valuation Date (and no Market Disruption Event is then
in effect), the Calculation Agent will determine the Strategy Level on the
Valuation Date in good faith in accordance with the formula for and method of
calculating the Strategy in effect on the Valuation Date, using the closing
level of each Component Sub-Index, as calculated and published by the LBCIPB
Calculation Agent or the LBCI Sponsor, as the case may be, on the Valuation
Date.


 


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


 


A “Strategy Adjustment” means any one of the
following:


 

















 


(A)                              If
the Strategy Sponsor discontinues publication of the Strategy and the Strategy
Sponsor or another entity publishes a successor or substitute strategy that the
Calculation Agent determines, in its sole discretion, to be comparable to the
discontinued Strategy (such index, a “Successor Strategy”), then the Strategy
Level on any Strategy Business Day will be determined by reference to the
closing level of such Successor Strategy on the relevant Strategy Business
Day.  Upon any selection by the Calculation
Agent of a Successor Strategy, the Calculation Agent will cause written notice
thereof to be promptly furnished to the trustee of the notes, to the Issuer and
to the holders of the notes.


 


(B)                                If
the Strategy Sponsor discontinues publication of the Strategy prior to, and
such discontinuation is continuing on, the Valuation Date, and the Calculation
Agent determines, in its sole discretion, that no Successor Strategy is
available at such time, then the Calculation Agent will determine the Final Strategy
Level on the Valuation Date.  The Final
Strategy Level will be computed by the Calculation Agent in accordance with the
formula for and method of calculating the Strategy last in effect prior to such
discontinuation, using the settlement price of the Index Contract for such
Component Sub-Index (or, if trading in such Index 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) at the
close of trading on the Relevant Exchange for such Index Contract, as
calculated and published by the LBCIPB Calculation Agent or the LBCI Sponsor,
as the case may be, on the Valuation Date.


 


(3)                                  If
at any time the method of calculating the Strategy or a Successor Strategy, 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 Strategy or Successor Strategy 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 strategy comparable to such Strategy or Successor Strategy, as the
case may be, as if such changes or modifications had not been made, and the
Calculation Agent will calculate the Final Strategy Level for such Strategy or
Successor Strategy with reference to the Strategy or Successor Strategy as
adjusted.  Accordingly, if the method of
calculating a Strategy or a Successor Strategy is modified or rebased so that
the level of such Strategy or Successor Strategy 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 such Strategy or Successor Strategy
in order to arrive at a level of the Strategy or Successor Strategy 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.


 

















 


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


 


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).


 


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.


 

















 


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: May 29,
  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

  	
   

  



 

















 


[REVERSE
OF NOTE]


 


LEHMAN BROTHERS
HOLDINGS INC.


MEDIUM-TERM NOTES,
SERIES I


100% PRINCIPAL PROTECTED NOTES LINKED TO COMBATS I  
 DUE 
MAY 29, 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,
100% Principal Protected Notes Linked to ComBATS I (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 $50,000 and integral
multiples of $10,000 in excess 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 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 Original 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 Original 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.