Exhibit 4.01


 


CUSIP
NO. 5252M0DU8


ISIN NO. US5252M0DU86


 


	
  REGISTERED

  	
  PRINCIPAL AMOUNT:
  $1,200,000

  



No. R-1


 


LEHMAN BROTHERS HOLDINGS INC.


 


MEDIUM-TERM NOTE, SERIES I


 


FX BASKET-LINKED NOTE
 DUE MARCH 2, 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 March 2, 2009, or if such day is not a Business Day, on
the next following Business Day.


 


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


 


The “Adjustment
Amount” is a single U.S. dollar amount equal the principal amount of the Notes
multiplied by (A) the product of the Leverage times the Basket Return, if
the Basket Return is greater than or equal to zero; (B) the Basket Return,
if the Basket Return is greater than –10.00% and less than zero; or (C) –10.00%,
if the Basket Return is less than or equal to –10.00%; provided
that the minimum Adjustment Amount shall be –10.00%.


 


The “Leverage”
is 150%.


 


The “Reference
Currencies” are the Chinese Renminbi (CNY), Indian Rupee (INR), Russian Ruble
(RUB), Australian Dollar (AUD) and New Zealand Dollar (NZD).


 


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


 


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


 


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


 




	
  Reference 

  Currency

  	
   

  	
  Weighting

  	
   

  	
  Initial

  Reference 

  Currency Rate

  	
   

  
	
  CNY

  	
   

  	
  20

  	
  %

  	
  7.1503

  	
   

  
	
  INR

  	
   

  	
  20

  	
  %

  	
  40.07

  	
   

  
	
  RUB

  	
   

  	
  20

  	
  %

  	
  24.5288

  	
   

  
	
  AUD

  	
   

  	
  20

  	
  %

  	
  0.91815

  	
   

  
	
  NZD

  	
   

  	
  20

  	
  %

  	
  0.79895

  	
   

  






 


2





















 


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, for AUD and NZD, the spot exchange rates for each of
AUD and NZD quoted against the U.S. dollar, expressed as the number of USD per
unit of the Reference Currency. The Reference Exchange Rates for CNY, INR and
RUB are the spot exchange rate for each of CNY, INR and RUB, respectively,
quoted against the U.S. dollar, expressed as the number of units of the
Reference Currency per one USD.


 


The “Valuation
Date” is February 23, 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 “Issue
Date” is February 28, 2008.


 


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 (x) the delivery of USD from accounts inside the Reference
Currency Jurisdiction for that Reference Currency to accounts outside that
Reference Currency Jurisdiction; or (y) for CNY and 


 


3





















 


INR only, the conversion of the Reference Currency into USD
through customary legal channels;


 


(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

  
	
  CNY

  	
   

  	
  SAEC

  	
   

  	
  Beijing

  
	
  INR

  	
   

  	
  RBIB

  	
   

  	
  Mumbai

  
	
  RUB

  	
   

  	
  EMTA

  	
   

  	
  Moscow

  
	
  AUD

  	
   

  	
  USDAUDFIXM=WM*

  (as substitute for 1FEE)

  	
   

  	
  London

  
	
  NZD

  	
   

  	
  USDNZDFIXM=WM*

  (as substitute for 1FEE)

  	
   

  	
  London

  



 






*As
observed at approximately 4:00 p.m. London time


 


The
“Settlement Rate Option” for the CNY is the Chinese Renminbi/U.S. Dollar
official Beijing fixing rate, expressed as the amount of Chinese Renminbi per
one U.S. Dollar, for settlement in two Business Days reported by The State
Administration of Foreign Exchange of the People’s Republic of China, Beijing,
which appears on the Reuters Screen SAEC Page opposite the symbol “USDCNY=”
at approximately 5:00 p.m., Beijing time, on the relevant Valuation
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 relevant Valuation 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 relevant Valuation
Date.  The Settlement Rate Option for the
AUD is the U.S. Dollar/Australian Dollar official fixing rate, expressed as the
amount of U.S. Dollars per one Australian Dollar, for settlement in two
Business Days reported


 


4

















 


by the Federal Reserve Bank
of New York which appears on Reuters Screen 1FEE to the right of the caption “AUD”
at approximately 12.00 p.m., New York time, on the relevant Valuation
Date.  The Settlement Rate for the NZD is
the New Zealand Dollar/U.S. Dollar official fixing rate, expressed as the
amount of New Zealand Dollars per one U.S. Dollar, for settlement in two
Business Days reported by the Federal Reserve Bank of New York which appears on
Reuters Screen 1FEE to the right of the caption “NZD” at approximately 12.00 p.m.,
New York time, on the relevant Valuation 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 Basket Currency
and (b) the currency against which the Basket 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
Basket Currency or base currency in the table above.


 


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 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.


 


5

















 


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.


 


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:
  February 28, 2008

  	
   

  
	
   

  	
   

  
	
  [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

  



 


7

















 


[REVERSE
OF NOTE]


 


LEHMAN BROTHERS
HOLDINGS INC.


MEDIUM-TERM NOTES,
SERIES I


FX BASKET-LINKED NOTE
 DUE MARCH 2, 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 Adjustment 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 Adjustment 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
Adjustment 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
Adjustment 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 integral
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 Adjustment
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.