Exhibit 4.01


 


CUSIP
NO. 5252M0AN7


ISIN NO. US525M0AN70


 


	
  REGISTERED

  	
   

  	
  PRINCIPAL
  AMOUNT: $3,000,000

  
	
  No. R-1

  	
   

  	
   

  



 


LEHMAN BROTHERS HOLDINGS INC.


 


MEDIUM-TERM NOTE, SERIES I


 


FX BASKET-LINKED NOTE
 DUE NOVEMBER 13, 2009


 


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
November 13, 2009, or if such day is not a Business Day, on the next following
Business Day.


 


The “Valuation
Date” is November 6, 2009; provided that,
upon the occurrence of a Disruption Event with respect to a Reference Currency,
the Valuation Date for the affected Reference Currency may be postponed (as
described in “Disruption Events” below).


 


The “Redemption
Amount” is the amount equal to the sum of the principal amount of the Notes
plus the Additional Amount, if any.


 


The “Additional
Amount” is a single U.S. dollar amount equal to the principal amount of the
Notes multiplied by the product of the Leverage times greatest of the Basket
Returns of (a) Basket 1, (b) Basket 2 and (c) Basket 3; provided
that the minimum Additional Amount payable on the notes shall be zero.


 


The “Leverage”
is 145%.


 


Basket 1
consists of the Brazilian Real (BRL), Argentine Peso (ARS) and Mexican Peso
(MXN), each with a weighting of 33.34%, 33.33% and 33.33%, respectively. Basket
2 consists of Turkish Lira (TRY), Hungarian Forint (HUF), Israeli Shekel (ILS)
and Russian Ruble (RUB), each with a weighting of 25%. Basket 3 consists of
Indonesian Rupiah (IDR), Singapore Dollar (SGD), Malaysian Ringgit (MYR) and
Indian Rupee (INR), each with a weighting of 25%. Each such currency is a “Reference
Currency.”


 


The “Basket Return” for each Basketn
equals the sum of the Weighted Currency Returns for the Reference Currencies in
that Basketn.


 


The “Weighted Currency Return” for each Reference
Currency in each Basketn is the product of the Weighting for such
Reference Currency times a quotient, the numerator of which is the difference
of the Initial Reference Currency Rate for such Reference Currency minus the
Settlement Rate for such Reference Currency and the denominator of which is the
Settlement Rate for such Reference Currency.


 


The “Initial Reference Currency Rate” and “Weighting”
for each Reference Currency in each Basketn are as follows:


 


	
  Basketn

  	
   

  	
  Reference

  Currency

  	
   

  	
  Initial

  Reference

  Currency

  Rate

  	
   

  	
  Weighting

  	
   

  
	
  Basket 1 

  	
   

  	
  BRL

  	
   

  	
  1.7325

  	
   

  	
  33.34

  	
  %

  
	
   

  	
  ARS

  	
   

  	
  3.1335

  	
   

  	
  33.33

  	
  %

  
	
   

  	
  MXN

  	
   

  	
  10.6639

  	
   

  	
  33.33

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Basket 2 

  	
   

  	
  TRY

  	
   

  	
  1.1727

  	
   

  	
  25

  	
  %

  
	
   

  	
  HUF

  	
   

  	
  173.38

  	
   

  	
  25

  	
  %

  



 


2

















 


	
   

  	
   

  	
  ILS

  	
   

  	
  3.9350

  	
   

  	
  25

  	
  %

  
	
   

  	
   

  	
  RUB

  	
   

  	
  24.6209

  	
   

  	
  25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Basket 3 

  	
   

  	
  IDR

  	
   

  	
  9179

  	
   

  	
  25

  	
  %

  
	
   

  	
  SGD

  	
   

  	
  1.4513

  	
   

  	
  25

  	
  %

  
	
   

  	
  MYR

  	
   

  	
  3.3544

  	
   

  	
  25

  	
  %

  
	
   

  	
  INR

  	
   

  	
  39.29

  	
   

  	
  25

  	
  %

  



 


The “Settlement Rate” for each Reference Currency is
the Reference Exchange Rate on the Valuation Date, determined in accordance
with the applicable Settlement Rate Option (subject to the occurrence of a
Disruption Event).


 


The “Reference Exchange Rates” are the spot exchange
rates for each of the Reference Currencies quoted against the U.S. dollar
expressed as number of currency units per USD 1.


 


The “Issue Date” is November 13, 2007.


 


If the Calculation Agent determines that a
Disruption Event relating to one or more of the Reference Currencies is in
effect on the scheduled Valuation Date, the Calculation Agent will determine
the Basket Return using:


 


•                                          for each Reference
Currency that did not suffer a Disruption Event on the scheduled Valuation
Date, the Settlement Rate on the scheduled Valuation Date, and


 


•                                          for each Reference
Currency that did suffer a Disruption Event on the scheduled Valuation Date,
the Settlement Rate on the immediately succeeding scheduled Valuation Business
Day for such Reference Currency on which no Disruption Event occurs or is
continuing with respect to such Reference Currency;


 


provided, however, that if a
Disruption Event has occurred or is continuing with respect to a Reference
Currency on each of the three scheduled Valuation Business Days following the
scheduled Valuation Date, then (a) such third scheduled Valuation Business Day
shall be deemed the Valuation Date for the affected Reference Currency; and (b)
the Calculation Agent will determine the Settlement Rate for the affected
Reference Currency on such day in accordance with Fallback Rate Observation
Methodology.


 


For purposes of the above, “scheduled Valuation
Business Day” means a day that is or, in the judgment of the Calculation Agent,
should have been, a Valuation Business Day for the affected Reference Currency.


 


A “Disruption Event” means any of the following events as determined in
good faith by the Calculation Agent:


 


(A)                              the occurrence and/or existence of an event on any
day that has the effect of preventing or making impossible the delivery of USD
from accounts inside the country for which a Reference Currency is the lawful
currency 


 


3

















 


(such jurisdiction with respect to such Reference Currency,
the “Reference Currency Jurisdiction”) for that Reference Currency to accounts
outside that Reference Currency Jurisdiction;


 


(B)                                the occurrence of any
event causing the Reference Exchange Rate for the Reference Currency to be
split into dual or multiple currency exchange rates; or


 


(C)                                the Settlement Rate being unavailable for the
Reference Currency, or the occurrence of an event (i) in the Reference Currency
Jurisdiction for that Reference Currency that materially disrupts the market
for the Reference Currency or (ii) that generally makes it impossible to obtain
the Settlement Rate for the Reference Currency, on the Valuation Date.


 


A
“Valuation Business Day” means, with respect to each Reference Currency, any
day, other than a Saturday or Sunday, that is neither a legal holiday nor a day
on which commercial banks are authorized or required by law, regulation or
executive order to close (including for dealings in foreign exchange in accordance
with the practice of the foreign exchange market) in the city or jurisdiction
indicated in the table below:


 


	
  Reference

  Currency

  	
   

  	
  Screen

  Reference

  	
   

  	
  Valuation

  Business Day

  
	
  BRL

  	
   

  	
  BRFR

  	
   

  	
  Brazilia, Rio de Janiero or
  São Paulo; and New York

  
	
  ARS

  	
   

  	
  ARS=

  	
   

  	
  Buenos Aires and New York

  
	
  MXN

  	
   

  	
  MEX01

  	
   

  	
  Mexico City and New York

  
	
  TRY

  	
   

  	
  The EUR/TRY rate on ECB37 divided by the EUR/USD rate on
  ECB37

  	
   

  	
  TARGET and New York

  
	
  HUF

  	
   

  	
  The EUR/HUF rate on ECB37 divided by the EUR/USD rate on
  ECB37

  	
   

  	
  TARGET and New York

  
	
  ILS

  	
   

  	
  FXIL

  	
   

  	
  Tel Aviv and New York

  
	
  RUB

  	
   

  	
  EMTA

  	
   

  	
  Moscow and New York

  
	
  IDR

  	
   

  	
  ABSIRFIX01

  	
   

  	
  Singapore and New York

  



 


4

















 


	
  SGD

  	
   

  	
  ABSIRFIX01

  	
   

  	
  Singapore and New York

  
	
  MYR

  	
   

  	
  ABSIRFIX01

  	
   

  	
  Singapore and New York

  
	
  INR

  	
   

  	
  RBIB

  	
   

  	
  Mumbai and New York

  



 


The “Settlement Rate Option” for the BRL is the
Brazilian Real/U.S. dollar offered rate for U.S. dollars, expressed as the
amount of Brazilian Reals per one U.S. dollar, for settlement in two Business
Days reported by the Banco Central do Brasil on SISBACEN Data System under
transaction code PTAX-800 (“Consulta de Cambio” or Exchange Rate Inquiry),
Option 5 (“Cotacoes para Contabilidade” or Rates for Accounting Purposes),
which appears on Reuters Screen BRFR Page under the caption “Dolar PTAX” at
approximately 6:30 pm Sao Paolo time on the Valuation Date or such other
relevant date. The Settlement Rate Option for ARS is the Argentine Peso/U.S.
dollar official fixing rate, expressed as the amount of Argentine Pesos per one
U.S. dollar for settlement on the same day (or, if that day is not a business
day in Buenos Aires and New York, for settlement on the first succeeding day
that is a business day in both Buenos Aires and New York) which appears on the
Reuters Screen ARS= page at the close of business in Buenos Aires on the
Valuation Date or such other relevant date. The Settlement Rate Option for the MXN
Reference Exchange Rate is the Mexican Peso/U.S. dollar official fixing rate,
expressed as the amount of Mexican Pesos per one U.S. dollar, for settlement in
two business days reported by Banco de Mexico which appears on Reuters Screen
MEX01 Page under the heading “USDMXNFIX=“ at the close of business in Mexico
City on the Valuation Date or such other relevant date.


 


The Settlement Rate Option
for the TRY is the TRY/EUR Fixing Rate divided by the USD/EUR Fixing Rate. The
Settlement Rate Option for the TRY is the EUR/TRY Fixing Rate divided by the
EUR/USD Fixing Rate. The “EUR/TRY Fixing Rate” is the Euro/Turkish Lira fixing
rate, expressed as the amount of Euro per one Turkish Lira which appears on
Reuters Screen ECB37 to the right of the caption “TRY” at approximately 2:15
p.m., Central European time, on the Valuation Date or such other relevant date.
The “EUR/USD Fixing Rate” is the Euro/U.S. dollar fixing rate, expressed as the
amount of Euro per one U.S. dollar which appears on Reuters Screen ECB37 to the
right of the caption “USD” at approximately 2:15 p.m., Central European time,
on the Valuation Date or such other relevant date. The Settlement Rate Option
for the HUF is the EUR/HUF Fixing Rate divided by the EUR/USD Fixing Rate. The “EUR/HUF
Fixing Rate” is the Euro/Hungarian Forint fixing rate, expressed as the amount
of Euro per one Hungarian Forint which appears on Reuters Screen ECB37 to the
right of the caption “HUF” at approximately 2:15 p.m., Central European time,
on the Valuation Date or such other relevant date. The Settlement Rate Option
for the ILS is the Israeli Shekel/U.S. dollar Specified Rate, expressed as the
amount of Israeli Shekels per one U.S. dollar, for settlement in two Business
Days which appears on the Reuters Screen FXIL under the heading “USD/ILS” to
the right of the caption “1700” at approximately 5.00 p.m., Tel Aviv time, on
Valuation Date or such other relevant date. The Settlement Rate Option for the
RUB is the Russian Ruble/U.S. dollar Specified Rate, expressed as the amount of
Russian Rubles per one U.S. dollar, for settlement in one Business Day,
calculated by the Chicago Mercantile Exchange (“CME”) and as published on CME’s
website, which appears on the Reuters Screen EMTA Page, at approximately 1:30
p.m., Moscow time, on the Valuation Date or such other relevant date.


 


5

















 


The Settlement Rate Option
for the IDR is the Indonesian Rupiah/U.S. dollar spot rate at 11:00 a.m.,
Singapore time, expressed as the amount of Indonesian Rupiah per one U.S.
dollar, for settlement in two Business Days reported by the Association of
Banks in Singapore which appears on the Reuters Page ABSIRFIX01 to the right of
the caption “Spot” under the column “IDR” at approximately 11:30 a.m.,
Singapore time, on the on the Valuation Date or such other relevant date. The
Settlement Rate Option for the SGD is the Singapore Dollar/U.S. dollar spot
rate at 11:00 a.m., Singapore time, expressed as the amount of Singapore Dollar
per one U.S. dollar, for settlement in two Business Days, reported by the
Association of Banks in Singapore which appears on the Reuters Page ABSIRFIX01
to the right of the caption “Spot” under the column “SGD” at approximately
11:30 a.m., Singapore time, on the Valuation Date or such other relevant date. The
Settlement Rate Option for the MYR is the Malaysian Ringgit/U.S. dollar spot
rate, expressed as the amount of Malaysian Ringgit per one U.S. dollar, for
settlement in two Business Days reported by the Association of Banks in
Singapore, which appears on the Reuters Page ABSIRFIX01 to the right of the
caption “Spot” under the column “MYR” at approximately 11:30 a.m. Singapore
time on the Valuation Date or such other relevant date. The Settlement Rate
Option for the INR is the Indian Rupee/U.S. dollar reference rate, expressed as
the amount of Indian Rupee per one U.S. dollar, for settlement in two Business
Days reported by the Reserve Bank of India which appears on the Reuters Screen
RBIB Page at approximately 2:30 p.m., Mumbai time, or as soon thereafter as
practicable on the on the Valuation Date or such other relevant date.


 


The term “Business Day”
solely as used in any Settlement Rate Option described above shall mean any
day, other than a Saturday or Sunday, that is neither a legal holiday nor a day
on which commercial banks are authorized or required by law, regulation or
executive order to close (including for dealings in foreign exchange in
accordance with the practice of the foreign exchange market) in the Principal
Financial Center for both (a) the Reference Currency and (b) the currency
against which the Reference Currency is quoted (the “base currency”) in
accordance with the Reference Exchange Rate specified in the applicable pricing
supplement, in each case as specified for the applicable Reference Currency or
base currency in the table above; provided that where the Turkish Lira or
Hungarian Forint is the Reference Currency or the base currency “business day”
for the Turkish Lira or Hungarian Forint as the Reference Currency or the base
currency shall mean any day on which the Trans-European Automated Real-Time
Gross Settlement Express Transfer (TARGET) System is open.


 


The
screen or time of observation indicated in relation to any Settlement Rate
Option above shall be deemed to refer to such screen or time of observation as
modified or amended from time to time, or to any substitute screen thereto.


 


The “Fallback Rate Observation Methodology” means that the reference exchange rate, Settlement
Rate or other rate, as specified in the applicable pricing supplement, in
respect of a reference currency will equal the noon buying rate in New York for
cable transfers in foreign currencies as announced by the Federal Reserve Bank
of New York for customs purposes (the “Noon Buying Rate”) on the relevant
Valuation Date or such other date specified in the applicable pricing
supplement. If the Noon Buying Rate is not announced on that date, the
Reference Exchange Rate, Settlement Rate or other rate for such Reference
Currency will be calculated on the basis of the arithmetic mean of the
applicable spot quotations received by the Calculation Agent at approximately
10:00 a.m., New York City time, on the Valuation Business Day next
succeeding the Valuation Date or such other date specified in the applicable
pricing supplement, for the purchase or sale for deposits in the reference
currency by the New York 


 


6

















 


offices
of three leading banks engaged in the interbank market (selected in the sole
discretion of the Calculation Agent) (the “Reference Banks”). If fewer than
three Reference Banks provide spot quotations, then the Reference Exchange
Rate, Settlement Rate or other rate, as applicable, will be calculated on the
basis of the arithmetic mean of the applicable spot quotations received by the
Calculation Agent at approximately 10:00 a.m., New York City time, on the
relevant date from two Reference Banks (selected in the sole discretion of the
Calculation Agent), for the purchase or sale for deposits in the Reference
Currency. If these spot quotations are available from only one Reference Bank,
then the Calculation Agent, in its sole discretion, will determine whether that
quotation is reasonable to be used. If no spot quotation is available, then the
Reference Exchange Rate, Settlement Rate or other rate, as applicable, for such
Reference Currency will be determined by the Calculation Agent in good faith
and in a commercially reasonable manner.


 


A “Business Day”, notwithstanding any provision in the Indenture, is
any day that is not 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.


 


The “Calculation Agent” means Lehman Brothers Inc.


 


Except as provided below, the 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 the 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.


 


7

















 


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 13, 2007


 


	
  [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

  



 


8

















 


[REVERSE OF NOTE]


 


LEHMAN BROTHERS HOLDINGS INC.


MEDIUM-TERM NOTES, SERIES I


FX BASKET-LINKED NOTE
 DUE NOVEMBER 13, 2009


 


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, FX Basket-Linked Note
(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 Additional 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
Additional 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 Additional 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 the
Additional Amount or the principal 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 Additional 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.