Exhibit 4.01


 


EXECUTION VERSION


 


 


LEHMAN
BROTHERS HOLDINGS INC.


 


AND


 


THE BANK OF
NEW YORK


 


as Trustee


 


 










 


FIFTEENTH
SUPPLEMENTAL INDENTURE


 


Dated as of December 21,
2007


 


 










 


 





















 


THIS FIFTEENTH SUPPLEMENTAL INDENTURE, dated
as of December 21, 2007, is between LEHMAN BROTHERS HOLDINGS INC., a
corporation duly organized and existing under the laws of the State of Delaware
(the “Company”), and THE BANK OF NEW YORK (as successor trustee to JPMorgan
Chase Bank, N.A.), a banking corporation duly organized and existing under the
laws of the State of New York, acting as Trustee under the Indenture referred
to below (the “Trustee”).


 


W  I  T 
N  E  S 
S  E  T 
H


 


WHEREAS, the Company has duly authorized the
execution and delivery of an Indenture dated as of February 1, 1996 (the “Indenture”),
as amended and supplemented, to provide for the issuance from time to time of
its unsecured notes or other evidences of indebtedness to be issued in one or
more series (the “Securities”), as in the Indenture provided, up to such
principal amount or amounts as may from time to time be authorized in or
pursuant to one or more resolutions of the Board of Directors;


 


WHEREAS, the Company shall issue a series of
Securities entitled the “6.75% Subordinated Notes due 2017” (the “Subordinated
Notes”);


 


WHEREAS, the Company has duly authorized the
execution and delivery of this Fifteenth Supplemental Indenture in order to
provide for certain supplements to the Indenture which shall only be applicable
to the Subordinated Notes;


 


WHEREAS, all acts and things necessary to
make this Fifteenth Supplemental Indenture a valid agreement of the Company
according to its terms have been done and performed, and the execution and
delivery of this Fifteenth Supplemental Indenture have in all respects been
duly authorized;


 


NOW, THEREFORE, in consideration of the
premises, of the purchase and acceptance of the Subordinated Notes by the
Holders thereof, and of the sum of one dollar duly paid to it by the Trustee at
the execution and delivery of these presents, the receipt whereof is hereby
acknowledged, the Company covenants and agrees with the Trustee to supplement
the Indenture, only for purposes of the Subordinated Notes, as follows:


 


SECTION 1.   GENERAL
TERMS AND CONDITIONS OF THE SUBORDINATED NOTES


 


1.1           Designation, Principal Amount and Terms.     There is hereby authorized and established
pursuant to Section 301 of the Indenture a series of Securities designated
the “6.75% Subordinated Notes Due 2017” of the Company. The Subordinated Notes
shall be issued initially in an aggregate principal amount of $1,500,000,000,
and shall have the terms provided for herein, including those set forth in Exhibit A hereto. The Company may
create and issue additional notes ranking pari passu in right of payment to the
Subordinated Notes and otherwise with the same terms as the Subordinated Notes
other than the Issue Date, Issue Price and the payment of additional interest
accruing prior to the Issue Date of such notes, which notes shall form a single
series with the Subordinated Notes. No such additional notes shall be issued if
an Event of Default has occurred with respect to the Subordinated Notes.


 

















 


1.2           Optional Redemption.  Pursuant to Section 1101 of the
Indenture, The Company may elect to redeem the outstanding Subordinated Notes,
in whole or in part, at any time, at a Redemption Price equal to the greater of
(1) 100% of the principal amount of the Subordinated Notes to be redeemed
or (2) as determined by the Quotation Agent (as defined below), the sum of
the present values of the remaining scheduled payments of principal and
interest on the Subordinated Notes to be redeemed, not including any portion of
such payments of interest accrued as of the applicable Redemption Date,
discounted to the applicable Redemption Date on a semi-annual basis assuming a
360-day year consisting of twelve 30-day months, at the Adjusted Treasury Rate
(as defined below) plus 20 basis points, plus, in either case, accrued interest
on the Subordinated Notes to be redeemed to the applicable Redemption Date.


 


“Adjusted Treasury Rate” means
the semi-annual equivalent yield to maturity of a Reference Security whose
price, expressed as a percentage of its principal amount, is equal to the
Comparable Treasury Price.


 


“Reference Security” means a
United States Treasury security which has a maturity comparable to the
remaining maturity of the Securities at the applicable Redemption Date which
would be used in accordance with customary financial practice to price new
issues of corporate debt securities with a maturity comparable to the remaining
maturity of the Subordinated Notes at the applicable Redemption Date, all as
determined in the sole discretion of the Quotation Agent.


 


“Comparable Treasury Price”
means the average of the bid and asked prices for the Reference Security as of
5:00 p.m. on the third Business Day before the applicable Redemption Date,
as provided by the Reference Dealers. If the Company obtains more than three
Reference Dealer quotations, the Company shall eliminate the highest and the
lowest Reference Dealer quotations and then calculate the average of the
remaining Reference Dealer quotations. If the Company obtains three or fewer
Reference Dealer quotations, the Company shall calculate the average of all the
Reference Dealer quotations and not eliminate any quotations.


 


“Reference Dealers” means the
Quotation Agent and two or more other primary U.S. Government securities
dealers in New York City appointed by the Company. If the Quotation Agent is no
longer a primary U.S. Government securities dealer, the Company shall
substitute another primary U.S. Government securities dealer in its place as a
Reference Dealer.


 


“Quotation Agent” means Lehman
Brothers Inc. or its successor.


 


All
determinations made by the Quotation Agent shall be made in good faith and in a
commercially reasonable manner by the Quotation Agent and, absent a
determination of a manifest error, shall be conclusive for all purposes and
binding on the Company, the Holders and beneficial owners of the Subordinated
Notes.


 


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1.3           Payment of
Additional Amounts.     The Company
shall pay to a Holder who is a United States Alien (as defined below) such
additional amounts (the “Additional Amounts”) as may be necessary so that every
net payment of principal of and interest on the Subordinated Notes, after
deduction or withholding for or on account of any present or future tax,
assessment or other governmental charge imposed upon such Holder, or by reason
of the making of such payment, by the United States or any taxing authority
thereof or therein, shall not be less than the amount provided for in the
Subordinated Notes to be then due and payable. The Company shall not be
required, however, to make any payment of any Additional Amounts for or on
account of:


 


a)              any tax, assessment or other governmental
charge which would not have been imposed but for (i) the existence of any
present or former connection between such holder (or between a fiduciary,
settlor, beneficiary of, member or shareholder of, or possessor of a power
over, such Holder, if such Holder is an estate, trust, partnership or
corporation) and the United States, including, without limitation, such Holder
(or such fiduciary, settlor, beneficiary, member, shareholder or possessor)
being or having been a citizen or resident or treated as a resident thereof or
being or having been engaged in trade or business or present therein, or having
or having had a permanent establishment therein, or (ii) the presentation
of the Subordinated Notes appertaining thereto for payment on a date more than
10 days after the date on which such payment becomes due and payable or the
date on which payment thereof is duly provided for, whichever occurs later;


 


b)             any estate, inheritance, gift, sales, transfer,
excise, personal property or similar tax, assessment or other governmental
charge;


 


c)              any tax, assessment or other governmental
charge imposed by reason of such Holder’s past or present status as a passive
foreign investment company, a controlled foreign corporation, a personal
holding company or foreign personal holding company with respect to the United
States, or as a corporation which accumulates earnings to avoid United States
federal income tax;


 


d)             any tax, assessment or other governmental
charge which is payable otherwise than by withholding from payment of principal
of, or interest on, the Subordinated Notes;


 


e)              any tax, assessment or other governmental
charge required to be withheld by any paying agent from any payment of
principal of, or interest on, the Subordinated Notes if such payment can be
made without withholding by any other paying agent;


 


f)                any tax, assessment or other governmental
charge which would not have been imposed but for the failure to comply with
certification, information, documentation or other reporting requirements
concerning the nationality, residence, identity or connections with the United
States of the Holder or beneficial owner of the Subordinated Notes, if such
compliance is required by


 


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statute or by regulation of the United States
Treasury Department as a precondition to relief or exemption from such tax,
assessment or other governmental charge;


 


g)             any tax, assessment or other governmental
charge imposed on interest received by (i) a 10% shareholder (as defined
in Section 871(h)(3)(B) of the United States Internal Revenue Code of
1986, as amended (the “Code”), and the regulations that may be promulgated
thereunder) of the Company of (ii) a controlled foreign corporation with
respect to the Company within the meaning of the Code; or


 


h)             any combination of items (a), (b), (c), (d),
(e), (f) and (g);


 


nor shall any Additional
Amounts be paid to any Holder who is a fiduciary or partnership or other than
the sole beneficial owner of such Subordinated Notes appertaining thereto to
the extent that a beneficiary or settlor with respect to such fiduciary, or a
member of such partnership or a beneficial owner thereof would not have been
entitled to the payment of such Additional Amounts had such beneficiary,
settlor, member or beneficial owner been the Holder of the Subordinated Notes
appertaining thereto.


 


“United States Alien” means any
corporation, partnership, individual or fiduciary that is, as to the United
States, a foreign corporation, a nonresident alien individual, a nonresident
fiduciary of a foreign estate or trust, or a foreign partnership one or more of
the members of which is, as to the United States, a foreign corporation, a
nonresident alien individual or a nonresident fiduciary of a foreign estate or
trust.


 


1.4           Redemption Upon a
Tax Event.   The Subordinated Notes
may be redeemed at the option of the Company in whole, but not in part, on not
more than 60 days’ and not less than 30 days’ notice, on any date on or after
the Tax Redemption Date (as defined below) at a redemption price equal to 100%
of the principal amount of the Subordinated Notes and accrued interest, if any,
if the Company determines that as a result of any change in or amendment to the
laws or treaties, or any regulations or rulings promulgated thereunder, of the
United States or of any political subdivision or taxing authority thereof or
therein affecting taxation, or any proposed change in such laws, treaties or
regulations or rulings, or any change in the official application, enforcement
or interpretation of such laws, treaties or regulations or filings (including a
holding by a court of competent jurisdiction in the United States) or any other
action (other than an action predicated on law generally known on or before the
date specified in such Subordinated Note except for proposals before the
Congress before such date) taken by any taxing authority or a court of
competent jurisdiction in the United States, or the official proposal of any
such action, whether or not such action or proposal was taken or made with
respect to the Company, (A) the Company has or shall become obligated to
pay any Additional Amounts pursuant to Section 1.3 on the Subordinated
Notes or (B) there is a substantial possibility that the Company shall be
required to pay such Additional Amounts. 
Prior to the publication of any notice of redemption pursuant to this
provision, the Company shall deliver to the Trustee (i) an Officers’
Certificate stating that the Company is entitled to effect such redemption and
setting forth a statement of facts showing that the conditions precedent to the
right of the Company so to redeem have occurred, and (ii) an Opinion of
Counsel to such effect based on such statement of facts.  The “Tax Redemption Date” is the date on
which the Company shall or, if applicable,


 


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there is a substantial
possibility that the Company shall, become obligated to pay such Additional
Amounts if a payment of interest were to be made on such date.


 


SECTION 2.   AMENDMENTS
TO THE INDENTURE


 


2.1           Amendment to Section 101 of the Indenture.  Section 101 of the Indenture is hereby
amended solely with respect to the Subordinated Notes by adding the following
new definitions thereto, in the appropriate alphabetical sequence:


 


“Excess
Proceeds” has the meaning specified in Section 1412.


 


“Other
Financial Obligations” has the meaning specified in Section 1401.


 


2.2           Amendment to Section 501 of the Indenture.  Solely with respect to the Subordinated Notes,
clauses (1) through (4) and (7) of Section 501 of the
Indenture shall not apply.


 


2.3           Amendment to Section 1005 of the Indenture.  Solely with respect to the Subordinated
Notes, Section 1005 of the Indenture shall not apply.


 


2.4           Amendment to Section 1401 of the Indenture.  Section 1401 is hereby amended solely
with respect to the Subordinated Notes by deleting Section 1401 in its
entirety and inserting in lieu thereof the following:


 


“Section 1401.                                            Subordinated Notes Subordinated to Senior Debt and Other Financial
Obligations


 


The Company
agrees, and each Holder of the Subordinated Notes and related coupons by his
acceptance thereof likewise agrees, that the payment of the principal of (and
premium, if any) and interest, if any, on the Subordinated Notes and related
coupons is subordinated, to the extent and in the manner provided in this Article 14,
to the prior payment in full when due of the principal of (and premium, if any)
and interest, if any, on (i) all Senior Debt and (ii) under the
circumstances described in Section 1412, Other Financial Obligations.


 


For purposes
of this Article 14, “Senior Debt” means all obligations (whether now
outstanding or hereafter created, assumed or incurred) for the payment of which
the Company is responsible or liable as obligor, guarantor or otherwise in
respect of all principal of (and premium, if any) and interest if any
(including any interest, if any, accruing subsequent to the commencement of a
proceeding in bankruptcy by or against the Company) on (i) any
indebtedness for money borrowed or evidenced by bonds, notes, debentures or
similar instruments, (ii) indebtedness under capitalized leases, (iii) any
indebtedness representing the deferred and unpaid purchase price of any property
or business, (iv) indebtedness for money borrowed by another person that
the Company guarantees, and (v) all deferrals, renewals, extensions and
refundings of any such indebtedness or obligation; provided, that the following shall not constitute Senior Debt:


 


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(a) indebtedness evidenced
by the Subordinated Notes and related coupons, (b) indebtedness which is
expressly made equal in right of payment with the Subordinated Notes or
subordinate and subject in right of payment to the Subordinated Notes, (c) indebtedness
for goods or materials purchased in the ordinary course of business or for
services obtained in the ordinary course of business or indebtedness consisting
of trade payables, or (d) indebtedness which is subordinated to any
obligation of the type specified in clauses (i) through (v) above.


 


For purposes
of this Article 14, “Other Financial Obligations” means all obligations
(whether now outstanding or hereafter created, assumed or incurred) for the
payment of which the Company is responsible or liable as obligor, guarantor or
otherwise in respect of all principal of (and premium, if any) and interest if
any (including any interest, if any, accruing subsequent to the commencement of
a proceeding in bankruptcy by or against the Company) in respect to derivative
products (including without limitation, interest and foreign exchange rate
contracts, commodity contracts and similar arrangements) except any such
obligations that are expressly stated to have the same rank as or not to be
senior to the Subordinated Notes.


 


This Article 14
shall constitute a continuing offer to all persons who, in reliance upon such
provisions, become holders of, or continue to hold, Senior Debt and Other
Financial Obligations, and such provisions are made for the benefit of the
holders of Senior Debt and Other Financial Obligations, and such holders and/or
each of them may enforce such provisions.”


 


SECTION 3.   ADDITIONAL
PROVISION


 


The following Section 1412
is numbered to conform with the format of the Standard Provisions:


 


Section 1412.                                                                          Subordinated Notes Subordinated to Prior Payment of all Other Financial
Obligations on Dissolution, Liquidation or Reorganization of the Corporation.


 


Upon the
occurrence of any of the events specified in the first paragraph of Section 1402,
the provisions of Section 1402 shall be given effect to determine the
amount of cash, property or securities which may be payable or deliverable as
between the Holders of Subordinated Notes, on the one hand, and the Holders of
Senior Debt, on the other hand. Solely upon the occurrence of any distribution
of the assets of the Company in connection with the dissolution, winding up,
liquidation or reorganization of the Company (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or any other marshalling of the assets and liabilities of the Company or
otherwise), if after giving effect to the provisions of Section 1402, any
amount of cash, property or securities shall be available for payment or
distribution in respect of the


 


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Subordinated Notes (“Excess
Proceeds”), then such Excess Proceeds shall be made available by the receiver,
liquidating trustee or other Person making such payment or distribution of
assets, whether a trustee in bankruptcy, a receiver or liquidating trustee or
otherwise, for the ratable benefit of the Subordinated Notes; provided that if
any creditors in respect of Other Financial Obligations shall not have received
payment in full of all amounts due or to become due on or in respect of Other
Financial Obligations (and provision shall not have been made for such payment
in money or money’s worth), then the amount of Excess Proceeds available for
payment or distribution in respect of Subordinated Notes shall first be applied
to pay or provide for the ratable payment of Other Financial Obligations
remaining unpaid, to the extent necessary to pay all Other Financial
Obligations in full, after giving effect to any concurrent payment or
distribution in respect of Other Financial Obligations. Any Excess Proceeds
originally available in respect of Subordinated Notes remaining after the
payment (or provision for payment) in full of all Other Financial Obligations
shall continue to be available for payment or distribution in respect of
Subordinated Notes.


 


If the Holders
of Subordinated Notes, or any of them, shall fail to file a proper claim in the
form required in any proceeding referred to in the first paragraph of Section 1402,
prior to 30 days before the expiration of the time to file such claim or claims
pursuant to the authority granted to the Trustee, then the holders of Other
Financial Obligations are hereby authorized to file an appropriate claim or
claims for and on behalf of the holders of Subordinated Notes in the form
required in any such proceeding. If after giving effect to the provisions of Section 1402,
in the event that, notwithstanding the foregoing provisions of this Section 1412,
upon the occurrence of any of the events described in the first paragraph of Section 1402,
any payment or distribution of assets of the Corporation of any kind or
character in respect of the Subordinated Notes, whether in cash, property or
securities, including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the
Corporation being subordinated to the payment of the Subordinated Notes, shall
be received by the Trustee, any paying agent or the holders of the Subordinated
Notes before all Other Financial Obligations are paid in full, then, subject to
receipt by the Trustee or any paying agent of notice pursuant to Section 1406,
such payment or distribution shall be held in trust for the benefit of and
shall be paid over to the holders of such Other Financial Obligations or their
representative or representatives, ratably as aforesaid for application to the
payment of all Additional Other Financial Obligations remaining unpaid until all
such Other Financial Obligations shall have been paid in full, after giving
effect to any concurrent payment or distribution to the holders of such Other
Financial Obligations.


 


Subject to the
payment in full of all Other Financial Obligations, the holders of the
Subordinated Notes shall be subrogated to the rights of the holders of such
Other Financial Obligations to receive payments or distributions of assets of
the Corporation applicable to such Other Financial Obligations until the


 


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Subordinated Notes shall be
paid in full, and none of the payments or distributions to the holders of such
Other Financial Obligations to which the holders of the Subordinated Notes or
the Trustee would be entitled except for the provisions of this Article or
of payments over, pursuant to the provisions of this Article, to the holders of
such Other Financial Obligations by the holders of the Subordinated Notes or
the Trustee shall, as between the Corporation, its creditors other than the
holders of such Other Financial Obligations and the holders of the Subordinated
Notes, be deemed to be a payment by the Corporation to or on account of such
Other Financial Obligations; it being understood by the parties hereto that the
provisions of this Section are and are intended solely for the purpose of
defining the relative rights of the holders of the Subordinated Notes, on the
one hand, and the holders of the Other Financial Obligations, on the other
hand.


 


SECTION 4.   MISCELLANEOUS


 


4.1           Note. 
Attached hereto as Exhibit A
is a form of the Subordinated Note.


 


4.2           Separability. 
In case any provision in this Fifteenth Supplemental Indenture shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.


 


4.3           Continuance of Indenture.  This Fifteenth Supplemental Indenture
supplements the Indenture and shall be a part of and subject to all the terms
thereof.  The Indenture, as supplemented
by this Fifteenth Supplemental Indenture, shall continue in full force and
effect.


 


4.4           The Trustee. 
The Trustee shall not be responsible in any manner for or in respect of
the validity or sufficiency of this Fifteenth Supplemental Indenture, or for or
in respect of the recitals contained herein, all of which recitals are made by
the Company solely.


 


4.5           Governing Law. 
This Fifteenth Supplemental Indenture shall be governed by and construed
in accordance with the laws of the State of New York.


 


4.6           Defined Terms. 
All capitalized terms used in this Fifteenth Supplemental Indenture
which are defined in the Indenture, but not otherwise defined herein, shall
have the same meanings assigned to them in the Indenture.


 


4.7           Counterparts. 
This Fifteenth Supplemental Indenture may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same
instrument.


 


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IN WITNESS WHEREOF, Lehman Brothers Holdings
Inc. has caused this Fifteenth Supplemental Indenture to be signed and
acknowledge by one of its Vice Presidents, and The Bank of New York, as
Trustee, has caused this Fifteenth Supplemental Indenture to be signed as of
the day and year first above written.


 


	
   

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paolo Tonucci

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Paolo Tonucci

  
	
   

  	
   

  	
  Title:

  	
  Vice President and Global Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NEW YORK, as Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph Powell

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Joseph Powell

  
	
   

  	
   

  	
  Title:

  	
  Assistant Vice President

  
					



 

















 


EXHIBIT A


 


[FORM OF FACE OF NOTE]


 


THIS SECURITY IS A GLOBAL SECURITY WITHIN THE
MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME
OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY. THIS SECURITY IS EXCHANGEABLE FOR
SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO
TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY
THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY
TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED
EXCEPT IN LIMITED CIRCUMSTANCES.


 


UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY 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
HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE CO., HAS AN INTEREST HEREIN.


 


REPAYMENT OF THE NOTES IS NOT PROTECTED BY ANY
FEDERAL AGENCY OR THE SECURITIES INVESTOR PROTECTION CORPORATION


 


	
  NO. R-

  	
  $

  



 


CUSIP
NO. 5249087M6


 


ISIN
NO. US5249087M63


 


LEHMAN BROTHERS HOLDINGS
INC.


 


6.75% SUBORDINATED NOTE
DUE 2017


 


                Lehman
Brothers Holdings Inc., a corporation duly organized and existing under the
laws of the State of Delaware (herein referred to as the “Company”), for value
received, hereby promises to pay to CEDE & CO., or registered assigns,
at the office or agency of the Company in the Borough of Manhattan, the City of
New York, the principal sum of                                   
DOLLARS on December 28, 2017, in such coin or currency of the United
States of America as at the time of payment shall be legal tender for the
payment of public and private debts, and to pay interest on said principal sum
at said office or agency, in like coin or currency, at the rate per annum
specified in the title of this Note until the principal hereof becomes due and
payable, and on any overdue principal and (to the extent that payment of such
interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum during the period in which such principal
is overdue, compounded semi-annually, to the registered holder of this Note,
until payment of said principal sum has been made or duly provided for.


 


A-1

















 


The Stated Maturity of the Note shall be December 28,
2017.  Interest on this Note (computed as
set forth herein) shall be payable semi-annually in arrears on June 28 and
December 28 of each year (each an “Interest Payment Date”), commencing June 30,
2008, from the Interest Payment Date next preceding the date of this Note to
which interest has been paid or duly provided for. Interest on this Note shall
be payable to the holder in whose name the Note is registered at the close of
business on the applicable Record Date. The Record Date for any Interest
Payment Date for the Note will be the date, whether or not a Business Day, 15
calendar days immediately preceding the Interest Payment Date. Notwithstanding
the foregoing, any Interest Payment Date that would otherwise be a day that is
not a Business Day shall instead be the next succeeding Business Day, and no
additional interest shall accrue as a result of such delayed payment. Interest
on the Note shall be computed on the basis of a 360-day year of twelve 30-day
months.


 


REFERENCE IS 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 THOUGH FULLY 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 referred to on the reverse hereof.


 


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


 


	
   

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
					



 


TRUSTEE’S CERTIFICATE OF
AUTHENTICATION


 


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


 


Dated:


 


	
   

  	
  THE BANK OF NEW YORK,

  	
   

  
	
   

  	
  as Trustee

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  	
   

  



 


A-3

















 


[FORM OF REVERSE OF
NOTE]


 


(Reverse of Note)


 


LEHMAN BROTHERS HOLDINGS
INC.


 


 


6.75% SUBORDINATED NOTE,
DUE 2017


 


This Note is one of a duly authorized series of
Securities of the Company designated as the 6.75% Subordinated Notes Due 2017
of the Company (herein called the “Notes”), limited (except as otherwise
provided in the Indenture referred to below) in aggregate principal amount to
$1,500,000,000.  The Notes are one of an
indefinite number of series of debt securities of the Company (herein
collectively called the “Securities”), issued or issuable under and pursuant to
an indenture, dated as of February 1, 1996, as amended and supplemented
from time to time and as amended and supplemented with respect to the Notes
herein by the Fifteenth Supplemental Indenture dated as of December 21,
2007 between the Company and the Trustee (as so amended and supplemented, the “Indenture”),
between the Company and The Bank of New York, successor trustee to JPMorgan
Chase Bank, N.A., as Trustee (herein called the “Trustee”), to which Indenture
and all indentures supplemental thereto reference is hereby made for a
description of rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, the Company and the holders of the
Notes.  The separate series of Securities
may be issued in various aggregate principal amounts, may mature at different
times, may bear interest (if any) at different rates, may be subject to
different redemption provisions or repayment or repurchase rights (if any), may
be subject to different sinking, purchase or analogous funds (if any), may be
subject to different covenants and Events of Default, as defined in the
Indenture, and may otherwise vary as provided in the Indenture.


 


Payment of the principal of and interest on this
Note is, to the extent provided in the Indenture, subordinated and subject in
right of payment to the prior payment in full when due of the principal of (and
premium, if any) and interest, if any, on all Senior Debt, as defined in the
Indenture and this Note is issued subject to the provisions of the Indenture
with respect thereto.  In addition, upon
the dissolution, winding-up, liquidation or reorganization of the Company, this
Note is, to the extent provided in the Indenture, subordinated and subject in
right of payment to the prior payment in full when due of the principal of (and
premium, if any) and interest, if any, on all Other Financial Obligations, as
defined in the Indenture. Each registered holder of this Note, by accepting the
same, (a) agrees to and shall be bound by such provisions, (b) authorizes
and expressly directs the Trustee on his or her behalf to take such action as
may be necessary or appropriate to effectuate the subordination so provided and
(c) appoints the Trustee as his or her attorney-in-fact for any and all
such purposes.  Each registered holder
hereof, by his or her acceptance hereof, hereby waives all notice of the
acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Debt and Other Financial Obligations,
whether now outstanding or hereafter incurred, and waives reliance by each such
holder upon said provisions.


 


As provided in the Indenture and subject to certain
limitations therein set forth, the Company may at its option redeem the Notes
in whole or from time to time in part at any time.


 


As provided in the Indenture and subject to
certain limitations therein set forth, the Company will pay to a Holder who is
a United States Alien such Additional Amounts as may be necessary so that every
net payment of principal of and interest on the Notes, after deduction or
withholding for or on account of any present or future tax, assessment or other
governmental charge imposed upon such Holder, or by


 


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reason of the making of such
payment, by the United States or any taxing authority thereof or therein, will
not be less than the amount provided for in the Notes to be then due and
payable.


 


As provided in the Indenture and subject to certain
limitations therein set forth, the Notes may be redeemed at the option of the
Company in whole if the Company determines that as a result of any change in or
amendment to the laws or treaties, or any regulations or rulings promulgated
thereunder, of the United States or of any political subdivision or taxing
authority thereof or therein affecting taxation, or any proposed change in such
laws, treaties or regulations or rulings, or any change in the official
application, enforcement or interpretation of such laws, treaties or
regulations or filings (including a holding by a court of competent
jurisdiction in the United States) or any other action (other than an action
predicated on law generally known on or before the date specified in such Note
except for proposals before the Congress before such date) taken by any taxing
authority or a court of competent jurisdiction in the United States, or the
official proposal of any such action, whether or not such action or proposal
was taken or made with respect to the Company, (A) the Company has or will
become obligated to pay any Additional Amounts referred to in the foregoing
paragraph pursuant to the Indenture on the Note or (B) there is a
substantial possibility that the Company will be required to pay such
Additional Amounts.


 


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 (each series voting as a class), evidenced as
provided in the Indenture, 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 principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon or reduce any
premium payable on redemption, or make the principal thereof, or premium, if
any, or interest thereon payable in any coin or currency other than that
hereinabove provided, or amend the Indenture to modify its provisions relating
to the subordination of each Security in a manner adverse to the holder thereof,
without the consent of the holder of each Security so affected, or (ii) change
the place of payment on any Security, or impair the right to institute suit for
payment on any Security, or reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security so affected.  It is also provided in the Indenture that,
prior to any declaration accelerating the maturity of any series of Securities,
the holders of a majority in aggregate principal amount of the Securities of
such series Outstanding may on behalf of the holders of all the Securities of
such series waive any past default or Event of Default under the Indenture with
respect to such series and its consequences, except a default in the payment of
interest, if any, on or the principal of, or premium, if any, on any of the
Securities of such series.  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 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.


 


As provided in the Indenture and subject to certain
limitations therein set forth, in case an Event of Default with respect to the Notes shall have
occurred and be continuing, the principal hereof may be declared, and upon such
declaration shall become due and payable, in the manner, with the effect and
subject to the conditions provided in the Indenture.


 


No reference herein to the Indenture and no
provisions of this Note or of the Indenture shall alter or impair the
obligations of the Company, which is absolute and unconditional, to pay the
principal and interest of this Note at the place, at the time and in the coin
or currency herein prescribed.


 


The
Company may omit to comply with any term, provision or condition set forth in Section 801


 


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of
the Indenture, and any such omission with respect to such Section shall
not be an Event of Default, in each case with respect to the Notes, provided
that the conditions of Section 1009 of the Indenture have been satisfied.


 


The
covenant set forth in Section 1005 of the Indenture shall not apply to the
Notes.


 


Notwithstanding the provisions of Section 401(a)(B) of
the Indenture, the Company may satisfy and discharge the entire indebtedness on
all the Notes as provided therein only when the Notes are by their terms due
and payable within one year.


 


The Company, the Trustee, and any agent of the
Company or of the Trustee may deem and treat the registered holder hereof as
the absolute owner of this Note (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon), for the
purpose of receiving payment hereof, or on account hereof, and for all other
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.  All such payments made to or upon the order
of such registered holder shall, to the extent of the sum or sums paid,
effectually satisfy and discharge liability for moneys payable on this Note.


 


The Notes are issuable in registered form without
coupons in denominations of $1,000 and any multiple of $1,000.  At the option of the holders thereof, either
at the office or agency to be designated and maintained by the Company for such
purpose in the Borough of Manhattan, The City of New York, 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 may be exchanged for an equal aggregate principal amount of
Notes of like tenor and of other authorized denominations.


 


As provided in the Indenture and subject to certain
limitations 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
office or agency of the Company in any place where the principal of this Note
is payable, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the holder hereof or such holder’s attorney duly authorized in
writing, and thereupon one or more new Notes of this series of like tenor and
of authorized denominations and for the same aggregate principal amount will be
issued to the designated transferee or transferees.


 


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


 


THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.


 


All items used in this Note which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.


 


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


 


	
  TEN COM -

  	
  as tenants in common

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  TEN ENT -

  	
  as tenants by their entireties

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  JT TEN -

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

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  UNIF GIFT MIN ACT -

  	
   

  	
                        
  Custodian
                      
  under Uniform Gifts to

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (Cust)

  	
  (Minor)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minors Act

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (State)

  	
   

  	
   

  	
   

  
								



 


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


 


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ASSIGNMENT


 


FOR VALUE RECEIVED, the undersigned hereby sells,
assigns and transfers unto


 


 


 


 


(Please insert social security or other identifying
number of Assignee)


 


 


 


 


 


(Name and address of Assignee, including zip code,
must be printed or typewritten.)


 


the within Note, and all rights thereunder, hereby
irrevocably constituting and appointing


 


 


 


                          
to transfer the said Note on the books of the Company, with full power of
substitution in the premises.


 


	
  Date:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NOTICE: The signature to this assignment must
  correspond

  
	
   

  	
   

  	
  with the name as it appears upon the face of the
  within Note in

  
	
   

  	
   

  	
  every particular, without alteration or
  enlargement or any change whatever.

  
	
   

  	
   

  	
   

  
	
  Signature(s) Guaranteed:

  	
   

  	
   

  
							



 


THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED MEDALLION
SIGNATURE GUARANTEE PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.


 


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