Exhibit 4.01


	
  CUSIP NO. 52517PY47

  	
   

  	
   

  
	
  ISIN NO. US52517PY479

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  REGISTERED

  	
   

  	
  PRINCIPAL
  AMOUNT: $4,210,000

  
	
  No. R-1

  	
   

  	
   

  
	
   

  
	
   

  
	
   

  
	
   

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MEDIUM-TERM
  NOTE, SERIES I

  	
   

  
					



 


BUFFERED RETURN ENHANCED NOTES LINKED TO A
BASKET OF TEN

COMMODITIES AND TWO COMMODITY INDICES
 DUE NOVEMBER 24, 2010


THIS
NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY OR A NOMINEE OF THE
DEPOSITORY.  UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55
WATER STREET, NEW YORK, NEW YORK) TO THE COMPANY (AS DEFINED BELOW) OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND
ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.


UNLESS
AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM (A
“CERTIFICATED NOTE”), THIS GLOBAL SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A
WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY.













 


LEHMAN
BROTHERS HOLDINGS INC., a corporation duly organized and existing under the
laws of the State of Delaware (herein called the “Company,” which term includes
any successor corporation under the Indenture referred to on the reverse
hereof), for value received, hereby promises to pay to CEDE & Co., or
registered assigns, on the Maturity Date, an amount equal to the
Redemption Amount at Maturity.


The “Maturity Date” is November 24, 2010, or if such day is
not a Business Day, on the next following Business Day.


The “Valuation
Date” is November 17, 2010, or if such day is not a Valuation Business Day, the
immediately preceding Valuation Business Day; provided that if a Disruption
Event is in effect on the scheduled Valuation Date, the Valuation Date may be
postponed.


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


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


(B)  $1,000, if the Final Basket Level is equal to
or less than the Initial Basket Level but greater than or equal to the Buffer
Level; or


(C)  the sum of $1,000 plus the product of $1,000
times the sum of the Basket Return plus the Protection Percentage, if the Final
Basket Level is less than the Buffer Level.


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




	
  Component Commodities

  	
   

  	
  Component

  Weighting

  	
   

  
	
  Light sweet crude oil
  (“Crude Oil”)

  	
   

  	
  15%

  	
   

  
	
  Henry Hub natural gas
  (“Natural Gas”)

  	
   

  	
  10%

  	
   

  
	
  Reformulated
  gasoline blendstock for oxygen blending (“RBOB Gasoline”)

  	
   

  	
  5%

  	
   

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

  	
   

  	
  5%

  	
   

  
	
  High Grade Primary
  Aluminium (“Aluminum”)

  	
   

  	
  7%

  	
   

  
	
  Copper — Grade A (“Copper”)

  	
   

  	
  7%

  	
   

  
	
  Primary Nickel
  (“Nickel”)

  	
   

  	
  6%

  	
   

  
	
  Special High Grade Zinc (“Zinc”)

  	
   

  	
  5%

  	
   

  
	
  Standard Lead (“Lead”)

  	
   

  	
  5%

  	
   

  
	
  Gold (“Gold”)

  	
   

  	
  5%

  	
   

  







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  Component Commodities

  	
   

  	
  Component

  Weighting

  	
   

  
	
  S&P GSCI Livestock Index
  Excess Return (“GSCI® Livestock”) calculated and published by the
  Index Sponsor, subject to adjustment in accordance with Index Adjustment
  below

  	
   

  	
  10%

  	
   

  
	
  S&P GSCI
  Agriculture Index Excess Return (“GSCI® Agriculture”) calculated and
  published by the Index Sponsor, subject to adjustment in accordance with
  Index Adjustment below

  	
   

  	
  20%

  	
   

  






The “Upside
Participation Rate” is 187%.


The “Protection Percentage” is 20.0%.


The “Buffer Level” is the product of 80.0% times the
Initial Basket Level.


The “Basket Return” is a quotient, the numerator of which
is the difference of the Final Basket Level minus the Initial Basket Level and
the denominator of which is the Initial Basket Level, expressed as a percentage
rounded to three decimal places.


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


The “Initial Basket Level” is set to 100 on the Trade Date.


The “Trade Date” is the May 17, 2007.


The “Issue Date” is May 24, 2007.


The “Weighted Component Commodity Returns” are, for each
Component Commodity, the product of the Component Weighting times a quotient,
the numerator of which is the difference of the Final Commodity Price minus the
Initial Commodity Price and the denominator of which is the Initial Commodity
Price for such Component Commodity.


The “Initial Commodity Prices” for each Component Commodity
are as follows:




	
  Component

  Commodity

  	
   

  	
  Initial Commodity

  Price

  	
   

  
	
  Crude Oil

  	
   

  	
  US$64.86

  	
   

  
	
  Natural Gas

  	
   

  	
  US$8.075

  	
   

  
	
  RBOB Gasoline

  	
   

  	
  US$2.4366

  	
   

  
	
  Heating Oil

  	
   

  	
  US$1.9292

  	
   

  
	
  Aluminum

  	
   

  	
  US$2,760.5

  	
   

  
	
  Copper

  	
   

  	
  US$7,455

  	
   

  







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  Nickel

  	
   

  	
  US
  $52,490

  	
   

  
	
  Zinc

  	
   

  	
  US$3,670

  	
   

  
	
  Lead

  	
   

  	
  US$2,005

  	
   

  
	
  Gold

  	
   

  	
  US$656.75

  	
   

  
	
  GSCI® Livestock

  	
   

  	
  378.3157

  	
   

  
	
  GSCI® Agriculture

  	
   

  	
  60.9566

  	
   

  






The “Final
Commodity Price” is, for each Component Commodity, the Commodity Price on the
Valuation Date.


The “Commodity Price” for each Component Commodity is as
follows:




	
  Component Commodity

  	
   

  	
  Commodity
  Price

  
	
  Crude Oil

  Natural Gas

  RBOB

  Gasoline

  Heating Oil

  	
   

  	
  For each of Crude Oil, Natural Gas, RBOB Gasoline
  and Heating Oil, the official settlement price of the first nearby month
  futures contract (or, in the case of the last trading day of the first nearby
  month contract, the second nearby month contract) for that Component
  Commodity, expressed (a) in the case of Crude Oil, as the U.S. dollar price
  per barrel, (b) in the case of Natural Gas, as the U.S. dollar price per
  million British thermal units (Btu), and (c) in the case of RBOB Gasoline and
  Heating Oil, as the U.S. dollar price per gallon, in each case as made public
  by the Relevant Exchange for that Component Commodity (subject to the
  occurrence of a Disruption Event).

  
	
  Aluminum

  Copper

  Nickel

  	
   

  	
  For each of Aluminum, Copper, Nickel, Zinc and Lead,
  the official settlement price of that Component

  






 



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  Zinc

  Lead

  	
  Commodity for cash delivery, expressed as the U.S.
  dollar price per metric ton of the Component Commodity, as made public by the
  Relevant Exchange for that Component Commodity (subject to the occurrence of
  a Disruption Event).

  
	
  Gold

  	
  The official afternoon fixing price of Gold, stated
  in U.S. dollars per troy ounce, as calculated and quoted by the London
  Bullion Market Association (the “LBMA”) (subject to the occurrence of
  a Disruption Event).

  
	
  GSCI®

  Livestock

  GSCI®

  Agriculture

  	
  For each of GSCI®
  Livestock and GSCI® Agriculture (each an “Index” and collectively the
  “Indices”), the closing level of that Index, as determined and
  published by the Index Sponsor (subject to the occurrence of a Disruption
  Event), rounded to four decimal places.

  






The “Relevant
Exchange” for each Component Commodity is as follows:




	
  Component

  Commodity

  	
   

  	
  Relevant Exchange

  
	
  Crude Oil

  	
   

  	
  The NYMEX Division, or
  its successor, of the New York Mercantile Exchange, Inc. (“NYMEX”)

  
	
  Natural Gas

  	
   

  	
  NYMEX

  
	
  RBOB Gasoline

  	
   

  	
  NYMEX

  
	
  Heating Oil

  	
   

  	
  NYMEX

  
	
  Aluminum

  	
   

  	
  London Metal Exchange
  (“LME”)

  
	
  Copper

  	
   

  	
  LME

  
	
  Nickel

  	
   

  	
  LME

  
	
  Zinc

  	
   

  	
  LME

  






 



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  Lead

  	
   

  	
  LME

  
	
  Gold

  	
   

  	
  The market in London on
  which members of the LBMA quote prices for the buying and selling of Gold.

  






A “Valuation
Business Day” is a day, as determined in good faith by the Calculation Agent,
on which (a) the Relevant Exchange for each Component Commodity and (b) each
organized exchange or market of trading for any Index Contract, is scheduled to
be (or, but for the occurrence of a Disruption Event, would have been) open for
trading during its regular trading session (notwithstanding the Relevant
Exchange or organized exchange or market, as applicable, closing prior to its
scheduled closing time).


The “Index
Sponsor” is Standard & Poor’s, a division of the McGraw-Hill Companies.


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


·                                          for each such Component
Commodity that did not suffer a Disruption Event on the scheduled Valuation
Date, the Final Commodity Price for that Component Commodity on the scheduled
Valuation Date, and


·                                          for each such Component
Commodity that did suffer a Disruption Event on the scheduled Valuation Date,
the Final Commodity Price on the immediately succeeding trading day for such
Component Commodity on which no Disruption Event occurs or is continuing with
respect to such Component Commodity;


provided however that if a
Disruption Event has occurred or is continuing with respect to a Component
Commodity on each of the three scheduled trading days following the scheduled
Valuation Date, then (a) that third scheduled trading day shall be deemed the
Valuation Date for the affected Component Commodity; and (b) the Calculation
Agent will determine the Final Commodity Price for the affected Component
Commodity on such day in its sole and absolute discretion taking into account
the latest available quotation for the Commodity Price for the affected
Component Commodity and any other information that in good faith it deems
relevant.


If a Disruption Event identified in clauses (D) or (E)
below relating to one or more Component Commodities (other than Gold or the
Indices) is in effect on the Valuation Date, the Calculation Agent will
determine the Final Commodity Price for the affected Component Commodity on the
scheduled Valuation Date in its sole and absolute discretion taking into
account the latest available quotation for the Commodity Price for the affected
Component Commodity and any other information that in good faith it deems
relevant.


With respect to any Component Commodity that is an Index,
if a Disruption Event relating to one or more futures contracts then included
in the Index or any Successor Index (each such contract, an “Index Contract”)
is in effect on the scheduled Valuation Date, the Calculation Agent will calculate
the Final Commodity Price for such Index or Successor Index in



 6
 









 


good
faith in accordance with the formula for and method of calculating the Index or
Successor Index last in effect prior to commencement of the Disruption Event,
using:


·                                          for each Index Contract
that did not suffer a Disruption Event on the scheduled Valuation Date, the
settlement price on the applicable organized exchange or market of trading for
such Index Contract on the scheduled Valuation Date, and


·                                          for each Index Contract
that did suffer a Disruption Event on the scheduled Valuation Date, the
settlement price on the organized exchange or market of trading for such Index
Contract on the immediately succeeding trading day on which no Disruption Event
occurs or is continuing  with respect to
such Index Contract;


provided however that if a
Disruption Event has occurred or is continuing with respect to such Index
Contract on each of the three scheduled trading days following the scheduled
Valuation Date, then (a) that third scheduled trading day shall be deemed the
Valuation Date for such Index Contract and (b) the Calculation Agent will
determine the price for such Index Contract on such day in its sole and
absolute discretion taking into account the latest available quotation for the
price for such Index Contract and any other information that in good faith it
deems relevant.


A “Disruption Event” (a) for a Component Commodity other
than an Index, any of the following events with respect to that Component
Commodity or (b) with respect to an Index any of the following events with
respect to an Index Contract, in each case as determined in good faith by the
Calculation Agent:


(A)                              the suspension of or material limitation on trading
in the Component Commodity or Index Contract, or futures contracts or options
related to the Component Commodity or Index Contract, on the Relevant Exchange
for that Component Commodity or organized exchange or market of trading for
that Index Contract;


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


(C)                                the failure of the Relevant Exchange for the
Component Commodity or organized exchange or market of trading for that Index
Contract to publish the official daily settlement price of the Component
Commodity or Index Contract for that day (or the information necessary for
determining the settlement price); and solely with respect to Component
Commodities other than Gold or any Index (or any Index Contract then comprising
an Index or any Successor Index),



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


(E)                                 the occurrence since the
Trade Date of a material change in the formula for or the method of calculating
the settlement price of the Component Commodity.


For the purpose of determining whether a Disruption Event
for a Component Commodity or an Index Contract has occurred:


(1)                                  a limitation on the hours
in a trading day and/or number of days of trading will not constitute a
Disruption Event if it results from an announced change in the regular business
hours of the Relevant Exchange for the Component Commodity or organized
exchange or market of trading for that Index Contract;


(2)                                  a suspension in trading in
a Component Commodity on the Relevant Exchange for that Component Commodity or
in an Index Contract on the organized exchange or market of trading for that
Index Contract (without taking into account any extended or after-hours trading
session), by reason of a price change reflecting the maximum permitted price
change from the previous trading day’s settlement price will constitute a
Disruption Event; and


(3)                                  a suspension of or
material limitation on trading on a Relevant Exchange for a Component Commodity
or an organized exchange or market of trading for an Index Contract will not
include any time when the Relevant Exchange for that Component Commodity or an
organized exchange or market of trading for that Index Contract is closed for
trading under ordinary circumstances.


For purposes of calculating the Final Basket Level
in the event of a Disruption Event relating to one or more Component
Commodities or Index Contracts in accordance with the above, “trading day”
means a day, as determined in good faith by the Calculation Agent, on which
trading is generally conducted on the Relevant Exchange applicable to the
affected Component Commodity or on the organized exchange or market of trading
for the affected Index Contract.


If an Index Unavailability Event is in effect on the
scheduled Valuation Date (and no Disruption Event is then in effect), the
Calculation Agent will determine the Final Commodity Price for the affected
Index on the Valuation Date in good faith in accordance with the formula for
and method of calculating the Index last in effect prior to commencement of the
Index Unavailability Event, using the closing price for each Index Contract
most recently constituting the Index on the organized exchange or market of
trading for that Index Contract.


An “Index Unavailability Event” means that an Index
is not calculated and published by the Index Sponsor or any Successor Index is
not calculated and published by the sponsors thereof.



 8
 









 


If the Index Sponsor discontinues publication of an Index and the Index
Sponsor or another entity publishes a successor or substitute index that the
Calculation Agent determines, in its sole discretion, to be comparable to the
discontinued Index (such index, a “Successor Index”), then the Final Commodity
Price for such Index will be determined by reference to the level of such
Successor Index at the close of trading on the organized exchange or market of
trading for any futures contract (or any combination thereof) included in the
Successor Index last to close on the Valuation Date; provided, however, that
the Calculation Agent, in its sole discretion, may make such adjustments as it
deems necessary to the level of the Successor Index so that the level of the
Successor Index reflects the same level as that of the discontinued Index
before it was discontinued.  Upon any
selection by the Calculation Agent of a Successor Index, the Calculation agent
will cause written notice thereof to be promptly furnished to the trustee, to
the Issuer and to the holders of the notes.


If the Index Sponsor discontinues publication of an Index prior to, and
such discontinuation is continuing on, the Valuation Date, and the Calculation
Agent determines, in its sole discretion, that no Successor Index is available
at such time, then the Calculation Agent will determine the Final Commodity
Price for such Index on the Valuation Date. 
The Final Commodity Price for such Index will be computed by the
Calculation Agent in accordance with the formula for and method of calculating
the Index last in effect prior to such discontinuation, using the settlement
prices at the close of trading on the Valuation Date on the organized exchange
or market of trading for any futures contract (or any combination thereof) then
included in the Index (or, if trading in any such futures contract has been
materially suspended or materially limited, its good faith estimate of the
settlement price that would have prevailed but for such suspension or
limitation).


If at any time the method of calculating an Index or a Successor Index,
or the level thereof, is, in the good faith judgment of the Calculation Agent,
changed or modified in a material respect, the Calculation Agent may (but is
not obligated to) make such adjustments to the Index or Successor Index or
their respective methods of calculation as, in the good faith judgment of the
Calculation Agent, may be necessary in order to arrive at a level of a
commodity index comparable to the Index or such Successor Index, as the case
may be, as if such changes or modifications had not been made, and the
Calculation Agent will calculate the Final Commodity Price for such Index or
Successor Index with reference to the Index or such Successor Index as
adjusted.  Accordingly, if the method of
calculating the Index or a Successor Index is modified or rebased so that the
level of the Index or Successor Index is a fraction or multiple of what it
would have been if it had not been modified or rebased, then the Calculation
Agent will adjust the level of the Index or Successor Index in order to arrive
at a level of the Index or Successor Index as if it has not been modified or
rebased.


The “Calculation Agent” means Lehman Brothers
Commodity Services Inc, the determinations and calculations of which will be
binding absent manifest error.


Except as provided below, any Redemption Amount at
Maturity may, at the option of the Company, be made by check mailed to the
person entitled thereto at such person’s address as it appears on the registry
books of the Company.



 9
 









 


Payment of any Redemption Amount at Maturity will be
made in immediately available funds in accordance with the normal procedures of
the Trustee (or any duly appointed Paying Agent).


The Company will pay any administrative costs
imposed by banks in making payments in immediately available funds, but any
tax, assessment or governmental charge imposed upon payments hereunder,
including, without limitation, any withholding tax, will be borne by the Holder
hereof.


References herein to “U.S.
dollars” or “U.S.$” or “$” or “USD” are to the coin or currency of the United
States as at the time of payment is legal tender for the payment of public and
private debts.


REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF
THIS NOTE SET FORTH ON THE REVERSE HEREOF. 
SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS
IF SET FORTH AT THIS PLACE.


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.



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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 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:  May 24, 2007


	
  [SEAL]

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Barrett S. DiPaolo

  	
   

  
	
   

  	
   

  	
  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

  	
   

  	
   

  



 



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[REVERSE OF NOTE]


LEHMAN BROTHERS
HOLDINGS INC.


MEDIUM-TERM NOTES,
SERIES I


BUFFERED RETURN ENHANCED NOTES LINKED TO A
BASKET OF TEN COMMODITIES AND TWO

COMMODITY INDICES  
 DUE 
NOVEMBER 24, 2010


Section
1.  General.  This Note is one of a duly authorized series
of Notes of the Company designated as the Medium-Term Notes, Series I, Buffered Return Enhanced Notes Linked to a
Basket of Ten Commodities and Two Commodity Indices (herein called the “Notes”).  The
Notes are one of an indefinite number of series of debt securities of the
Company (collectively, the “Securities”) issued or issuable under and pursuant
to an indenture dated as of September 1, 1987, as amended and supplemented (the
“Indenture”), duly executed and delivered by the Company and Citibank, N.A., as
Trustee (herein called the “Trustee”), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Securities.  The separate series of Securities may be
issued in various aggregate principal amounts, may mature at different times,
may bear interest (if any) at different rates, may be subject to different
redemption provisions or repurchase rights (if any), may be subject to
different sinking, purchase or analogous funds (if any), may be subject to
different covenants and Events of Default and may otherwise vary as in the
Indenture provided.


Section
2.  Principal Amount for Indenture
Purposes.  For the purpose of
determining whether Holders of the requisite amount of Notes of this series
outstanding under the Indenture have made a demand, given a notice or waiver or
taken any other action, the principal amount of this Note will be deemed to be
the principal amount of this Note then outstanding.


Section
3.  Modification and Waivers.  The Indenture contains provisions permitting
the Company and the Trustee, with the consent of the Holders of not less than
66-2/3% in aggregate principal amount of each series of the Securities at the
time Outstanding to be affected, evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Securities of all such series; provided, however, that no such supplemental
indenture shall, among other things, (i) change the fixed maturity of any Security,
or reduce the Redemption Amount at Maturity or the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon or reduce any
premium or other amount payable on redemption, or make the Redemption Amount at
Maturity or the principal amount thereof, premium or other amount payable, if
any, or interest thereon payable in any coin or currency other than that herein
above provided, without the consent of the Holder of each Security so affected,
or (ii) change the place of payment on any Security, or impair the right to
institute suit for payment on any Security, or reduce the aforesaid percentage
of Securities, the holders of which are required to consent to any such
supplemental indenture, without the consent of the holders of each Security so
affected.  It is also provided in the
Indenture that, prior to any declaration accelerating the













 


maturity of any
series of Securities, the holders of a majority in aggregate principal amount
of the Securities of such series Outstanding may on behalf of the holders of
all the Securities of such series waive any past default or Event of Default
under the Indenture with respect to such series and its consequences, except a
default in the payment of interest, if any, on the Redemption Amount at
Maturity or the principal amount, or premium, if any, on any of the Securities
of such series, or in the payment of any sinking fund installment or analogous
obligation with respect to Securities of such series.  Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
holders and owners of this Note and any Notes of this series which may be
issued in exchange or substitution herefor, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes of this series.


Section
4.  Obligations Unconditional.  No reference herein to the Indenture and no
provisions of this Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay any
Redemption Amount at Maturity on this Note at the place, at the respective
times, at the rate, and in the coin or currency herein prescribed.


Section
5.  Defeasance.  The Indenture contains provisions for the
discharge of the Indenture and defeasance at any time of the indebtedness on
this Note upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Note.


Section
6.  Authorized Form and Denominations.  The Notes of this series are issuable in
registered form, without coupons.  Each
Note will be issued initially as either a Global Security or a Certificated
Note, at the option of the Company, in denominations of $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 at Maturity, calculated as the date of early repayment were
the Maturity Date. If a bankruptcy proceeding is commenced in respect of Lehman
Brothers Holdings, the claim of the beneficial owner of a note for the period
from and including the Issue Date to but excluding the date of early repayment
will be capped at the Redemption Amount at Maturity, calculated as though the
date of the commencement of the proceeding were the Maturity Date.


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


Section
10.  Defined Terms.  All terms used but not defined in this Note
are used herein as defined in the Indenture.


Section
11.  GOVERNING
LAW.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.