Exhibit 4.03


 


	
  CUSIP NO. 52517P2V2

  	
   

  
	
  ISIN NO. US52517P2V26

  	
   

  
	
   

  	
   

  
	
  REGISTERED

  	
                                                                            PRINCIPAL
  AMOUNT: $961,000

  
	
  No. R-1

  	
   

  



 


LEHMAN BROTHERS HOLDINGS INC.


 


MEDIUM-TERM NOTE, SERIES I


 


NOTES LINKED TO A BASKET OF COMMODITIES
 DUE JANUARY 11, 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 January 11, 2011,
or if such day is not a Business Day, on the next following Business Day.


 


The
“Valuation Date” is January 4, 2011, 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 (as described
below).


 


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


 


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


 


(B)  $1,000, if the Final Basket Level is equal to or
less than the Initial Basket Level.


 


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


 




	
  Component Commodities

  	
   

  	
  Component

  Commodity

  Weighting

  	
   

  
	
  Light sweet crude oil (“Crude Oil”)

  	
   

  	
  10%

  	
   

  
	
  Brent crude oil (“Brent Crude Oil”)

  	
   

  	
  10%

  	
   

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

  	
   

  	
  10%

  	
   

  
	
  Copper — Grade A (“Copper”)

  	
   

  	
  10%

  	
   

  
	
  Primary Nickel (“Nickel”)

  	
   

  	
  10%

  	
   

  
	
  Special High Grade Zinc
  (“Zinc”)

  	
   

  	
  10%

  	
   

  
	
  Coffee Robusta (“Coffee”)

  	
   

  	
  10%

  	
   

  
	
  Cocoa (“Cocoa”)

  	
   

  	
  10%

  	
   

  
	
  Class III milk (“Milk”)

  	
   

  	
  10%

  	
   

  
	
  Number 2 wheat (“Wheat”)

  	
   

  	
  10%

  	
   

  






 


The “Participation Rate” is 110%.


 


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.


 


 


 


2

















 


 


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


 


The
“Trade Date” is January 7, 2008.


 


The
“Issue Date” is January 11, 2008.


 


The
“Weighted Component Commodity Returns” are, for each Component Commodity, the
product of the Component Commodity 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 Price” and “Relevant Exchange” for each Component Commodity
are as follows:


 




	
  Component 

  Commodity

  	
   

  	
  Initial Commodity 

  Price

  	
   

  	
  Relevant Exchange

  	
   

  
	
  Crude Oil

  	
   

  	
  $95.09

  	
   

  	
  The NYMEX Division, or its successor, of the

  New York Mercantile Exchange, Inc.

  (“NYMEX”)

  	
   

  
	
  Brent Crude Oil

  	
   

  	
  $94.39

  	
   

  	
  The Intercontinental Exchange (“ICE”)

  	
   

  
	
  Heating Oil

  	
   

  	
  $2.5935

  	
   

  	
  NYMEX

  	
   

  
	
  Copper

  	
   

  	
  $6,915.50

  	
   

  	
  London Metals Exchange (“LME”)

  	
   

  
	
  Nickel

  	
   

  	
  $27,905.00

  	
   

  	
  LME

  	
   

  
	
  Zinc

  	
   

  	
  $2,475.50

  	
   

  	
  LME

  	
   

  
	
  Coffee

  	
   

  	
  $1,951.00

  	
   

  	
  Euronext.liffe (“LIFFE”)

  	
   

  
	
  Cocoa

  	
   

  	
  $2,131.00

  	
   

  	
  The New York Board of Trade (“NYBOT”)

  	
   

  
	
  Milk

  	
   

  	
  $19.28

  	
   

  	
  CME Group (“CME”) (as successor to The

  Chicago Board of Trade and the Chicago

  Mercantile Exchange)

  	
   

  
	
  Wheat

  	
   

  	
  $9.0300

  	
   

  	
  CME

  	
   

  






 


The
“Final Commodity Price” is, for each Component Commodity, the Commodity Price of
the Component Commodity on the Valuation Date, subject to the occurrence of a
Disruption Event.


 


A
“Valuation Business Day” is a day, as determined in good faith by the
Calculation Agent, on which the Relevant Exchange for each Component Commodity
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).


 


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


 


 


3





















 


·                                          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 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.


 


A
“Disruption Event” for a Component Commodity means any of the following events,
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 futures contracts or options related to the
  Component Commodity, on the Relevant Exchange for that Component Commodity;

  
	
   

  	
   

  	
   

  
	
   

  	
  (B)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (C)

  	
  the
  failure of the Relevant Exchange for the Component Commodity to publish the
  official daily settlement price of the Component Commodity for that day (or
  the information necessary for determining the settlement price); and

  
	
   

  	
   

  	
   

  
	
   

  	
  (D)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (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.

  



 


 


4




















 


For
the purpose of determining whether a Disruption Event for a Component Commodity
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;


 


(2)                                  a
suspension in trading in a Component Commodity on the Relevant Exchange for
that Component Commodity (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 will not include any time when the Relevant Exchange for
that Component Commodity 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 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.


 


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.


 


 


5

















 


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.


 


 


6

















 


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:  January 11, 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

  



 


 


7
















[REVERSE
OF NOTE]


 


 


LEHMAN BROTHERS
HOLDINGS INC.


MEDIUM-TERM NOTES,
SERIES I


NOTES LINKED TO A
BASKET OF COMMODITIES 

DUE JANUARY 11, 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, Notes Linked to a Basket of Commodities
(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 $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 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.