Exhibit
4.04


 


CUSIP
NO. 52517P6P1


ISIN NO. US52517P6P12


 


REGISTERED                                                                        PRINCIPAL
AMOUNT: $144,330,000


No. R-1


 


 


LEHMAN BROTHERS HOLDINGS INC.


MEDIUM-TERM NOTE, SERIES I


BUFFERED RETURN-ENHANCED NOTES LINKED TO A
BASKET OF LBCI PURE

BETA EXCESS RETURN SUB-INDICES
 DUE NOVEMBER 2, 2011


 


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 at Maturity.


                The “Maturity Date” is November 11, 2011, or if such
day is not a Business Day, on the next following Business Day.


                The
“Valuation Date” is October 26, 2011, or if such day is not an Index Business
Day, the immediately preceding Index Business Day; provided
that if a Market Disruption Event is in effect on the scheduled Valuation Date,
the Valuation Date may be postponed (as described below).


                The
“Redemption Amount at Maturity” for each note will be a single U.S. dollar
payment on the Maturity Date equal to the principal amount of the notes
multiplied by:


(A)  100% plus the product of the Basket Return
times the Upside Participation Rate, if the Final Basket Level is greater than
the Initial Basket Level; or


(B)  100%, if the Final Basket Level is equal to
or less than the Initial Basket Level but greater than or equal to the Buffer
Level;


(C)  100% plus the sum of the Basket Return plus
the Protection Percentage, if the Final Basket Level is less than the Buffer
Level;


The “Component Sub-Indices” and “Component
Weightings” are as follows:




	
  Component Sub-Index

  	
   

  	
  Component
  

  Weighting

  
	
  LBCI Pure Beta Natural Gas Excess Return

  (“LBCIPB Natural Gas”)

  	
   

  	
  10.00%

  
	
  LBCI Pure Beta Crude Oil Excess Return 

  (“LBCIPB WTI Crude”)

  	
   

  	
  5.00%

  
	
  LBCI Pure Beta Brent Excess Return (“LBCIPB

  Brent Crude”)

  	
   

  	
  5.00%

  
	
  LBCI Pure Beta Unleaded Gas Excess Return

  (“LBCIPB Gasoline”)

  	
   

  	
  3.00%

  
	
  LBCI Pure Beta Heating Oil Excess Return

  (“LBCIPB Heating Oil”)

  	
   

  	
  2.00%

  
	
  LBCI Pure Beta Live Cattle Excess Return

  (“LBCIPB Live Cattle”)

  	
   

  	
  4.00%

  
	
  LBCI Pure Beta Lean Hogs Excess Return

  (“LBCIPB Lean Hogs”)

  	
   

  	
  2.00%

  
	
  LBCI Pure Beta Wheat Excess Return (“LBCIPB

  Wheat”)

  	
   

  	
  4.00%

  
	
  LBCI Pure Beta Corn Excess Return (“LBCIPB

  Corn”)

  	
   

  	
  6.00%

  
	
   

  	
   

  	
   

  






 


 


2

















 


 




	
  Component Sub-Index

  	
   

  	
  Component

  Weighting

  
	
  LBCI Pure Beta Soybeans Excess Return

  (“LBCIPB Soybeans”)

  	
   

  	
  7.00%

  
	
  LBCI Pure Beta Soybean Oil Excess Return

  (“LBCIPB Soybean Oil”)

  	
   

  	
  3.00%

  
	
  LBCI Pure Beta Aluminum Excess Return

  (“LBCIPB Aluminum”)

  	
   

  	
  7.50%

  
	
  LBCI Pure Beta Copper Excess Return (“LBCIPB

  Copper”)

  	
   

  	
  7.50%

  
	
  LBCI Pure Beta Zinc Excess Return (“LBCIPB

  Zinc”)

  	
   

  	
  4.00%

  
	
  LBCI Pure Beta Nickel Excess Return (“LBCIPB

  Nickel”)

  	
   

  	
  6.00%

  
	
  LBCI Pure Beta Gold Excess Return (“LBCIPB

  Gold”)

  	
   

  	
  9.50%

  
	
  LBCI Pure Beta Silver Excess Return (“LBCIPB

  Silver”)

  	
   

  	
  2.50%

  
	
  LBCI Pure Beta Sugar Excess Return (“LBCIPB 

  Sugar”)

  	
   

  	
  4.00%

  
	
  LBCI Pure Beta Cotton Excess Return (“LBCIPB

  Cotton”)

  	
   

  	
  4.00%

  
	
  LBCI Pure Beta Coffee Excess Return (“LBCIPB

  Coffee”)

  	
   

  	
  4.00%

  






The “Upside Participation Rate”
is 181%.


The “Protected Percentage” is
20%.


The “Buffer Level” is 80% of 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 “Initial Basket Level” is set
to 100 on the Trade Date.


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


The “Trade Date” is October 26,
2007.


The “Issue Date” is November 2,
2007.


The “Weighted
Component Sub-Index Returns” are, for each Component Sub-Index, the product of
the Component Weighting times a quotient, the numerator of which is the 


 


3





















difference of the Final Index
Value minus the Initial Index Value and the denominator of which is the Initial
Index Value for such Component Sub-Index.


The “Initial
Index Values” for each Component Sub-Index are as follows:




	
  Component Sub-Index

  	
   

  	
  Initial
  Index Value

  
	
  LBCIPB Natural Gas

  	
   

  	
  69.4364

  
	
  LBCIPB WTI Crude

  	
   

  	
  104.0448

  
	
  LBCIPB Brent Crude

  	
   

  	
  102.7882

  
	
  LBCIPB Gasoline

  	
   

  	
  124.83

  
	
  LBCIPB Heating Oil

  	
   

  	
  94.7922

  
	
  LBCIPB Live Cattle

  	
   

  	
  105.4617

  
	
  LBCIPB Lean Hogs

  	
   

  	
  105.8668

  
	
  LBCIPB Wheat

  	
   

  	
  194.8825

  
	
  LBCIPB Corn

  	
   

  	
  134.3649

  
	
  LBCIPB Soybeans

  	
   

  	
  142.7296

  
	
  LBCIPB Soybean Oil

  	
   

  	
  140.0817

  
	
  LBCIPB Aluminum

  	
   

  	
  103.0509

  
	
  LBCIPB Copper

  	
   

  	
  122.5884

  
	
  LBCIPB Zinc

  	
   

  	
  108.4202

  
	
  LBCIPB Nickel

  	
   

  	
  197.7906

  
	
  LBCIPB Gold

  	
   

  	
  118.272

  
	
  LBCIPB Silver

  	
   

  	
  123.2873

  
	
  LBCIPB Sugar

  	
   

  	
  54.4007

  
	
  LBCIPB Cotton

  	
   

  	
  102.943

  
	
  LBCIPB Coffee

  	
   

  	
  101.0169

  






The “Final
Index Value” is, for each Component Sub-Index, the Index Value of the Component
Sub-Index on the Valuation Date.


The “Index
Value” is, for each Component Sub-Index, the closing level of that Component
Sub-Index, as determined and published by the Index Sponsor (subject to the
occurrence of a Market Disruption Event or an Index Unavailability Event),
rounded to four decimal places.


 


 


4





















A “Valuation
Index 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 Component Sub-Index.


If a
Market Disruption Event relating to one or more Component Sub-Indices is in
effect on the scheduled Valuation Date, the Calculation Agent will calculate
the Final Basket Level using:


•                                            for each such Component Sub-Index that did not suffer a Market
Disruption Event on the scheduled Valuation Date, the Final Index Level for
that Component Sub-Index 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 Final Index Level 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 eight scheduled
trading days following the scheduled Valuation Date, then (a) that eighth
scheduled trading day shall be deemed the Valuation Date for the affected
Component Sub-Index; and (b) the Calculation Agent will determine the Final
Index Value for the affected Component Sub-Index on such 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 on such eighth 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 Index
Contract applicable to such Component Sub-Index 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:


 


5





















(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 purposes of the above, (a) “Index
Contract” means the commodity contract then underlying each Component Sub-Index
or any Successor Sub-Index; (b) “Relevant Exchange” means any organized
exchange or market of trading for the Index Contract then included in the
Component Sub-Index or any Successor Sub-Index; and (c) “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 an Index Unavailability
Event for any Component Sub-Index is in effect on the scheduled Valuation Date
(and no Market Disruption Event is then in effect for that Component
Sub-Index), the Calculation Agent will determine the Final Index Value for the
affected Component Sub-Index on the Valuation Date 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 Index Unavailability Event, using the
closing price on the Valuation Date for the Index Contract for the Component
Sub-Index on the Relevant Exchange for that Index Contract.


An “Index Unavailability Event” for a
Component Sub-Index means that the Component Sub-Index is not calculated and
published by the Index Sponsor or any Successor Sub-Index is not calculated and
published by the sponsors thereof.


If the Index Sponsor discontinues publication
of a Component Sub-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 Component Sub-Index (such
index, a “Successor Sub-Index”), then the Final Index Value for such Component
Sub-Index will be determined by reference to the level of such Successor
Sub-Index at the close of trading on the Relevant Exchange or market of the
Index Contract for that Successor Sub-Index 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 Sub-Index so
that the level of the Successor Sub-Index reflects the same level as that of
the discontinued Component Sub-Index before it was discontinued.  Upon any selection by the Calculation Agent
of a Successor Sub-Index for any Component Sub-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 a Component Sub- Index prior to, and such discontinuation is continuing on,
the Valuation Date, and the Calculation Agent determines, in its sole
discretion, that no Successor Sub-Index is available at such time, then the
Calculation Agent will determine the Final Index Value for such Component
Sub-Index on the Valuation Date.  The
Final Index Value for such Component Sub-Index will be computed by the


 


6

















Calculation Agent in accordance with the formula for and method of
calculating such Component Sub-Index 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 on the
Valuation Date.


If at any time the method of calculating a
Component Sub-Index or a Successor Sub-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 Component Sub-Index or Successor Sub-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 such Component Sub-Index or Successor Sub-Index,
as the case may be, as if such changes or modifications had not been made, and
the Calculation Agent will calculate the Final Index Value for such Component
Sub-Index or Successor Sub-Index with reference to the Component Sub-Index or
Successor Sub-Index as adjusted.  Accordingly,
if the method of calculating a Component Sub-Index or a Successor Sub-Index is
modified or rebased so that the level of such Component Sub-Index or Successor
Sub-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
such Component Sub-Index or Successor Sub-Index in order to arrive at a level
of the Component Sub-Index or Successor Sub-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 at
Maturity 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 at Maturity 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.


 


7

















                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.


 


8

















                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:  November 2, 2007


 


[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

  



 


9
















 


[REVERSE
OF NOTE]


 


 


LEHMAN BROTHERS
HOLDINGS INC.


MEDIUM-TERM NOTES,
SERIES I


BUFFERED RETURN-ENHANCED NOTES LINKED TO A BASKET
OF LBCI PURE BETA EXCESS

RETURN SUB-INDICES
 DUE 
NOVEMBER 2, 2011


                                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 LBCI Pure Beta Excess Return Sub-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 at Maturity 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 at
Maturity 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 at
Maturity 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 at Maturity 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 $10,000 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 Original Issue Date to
but excluding the date of early repayment and will equal, for each note, the
Redemption Amount at Maturity, 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 at Maturity, 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 at Maturity 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.