Exhibit 4.08


 


CUSIP
NO. 5252M0AH0


ISIN NO. US5252M0AH0


 


	
  REGISTERED

  	
  PRINCIPAL
  AMOUNT: $2,136,000

  



No. R-1


 


LEHMAN BROTHERS HOLDINGS INC.


 


MEDIUM-TERM NOTE, SERIES I


 


FX BASKET-LINKED NOTE
 DUE NOVEMBER 30, 2009




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


 


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


 

















 


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


 


The “Maturity Date” is November 30, 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 sum of the principal amount of the Notes
plus the Additional Amount, if any.


 


The “Additional
Amount” is a single U.S. dollar amount equal the principal amount of the Notes
multiplied by the product of the Leverage times the Basket Return; provided that the minimum Additional Amount payable on the
notes shall be zero.


 


The “Leverage”
is 250%.


 


The “Reference
Currencies” are the Brazilian Real (BRL), Russian Ruble (RUB), Indian Rupee
(INR), Chinese Renminbi (CNY) and South Korean Won (KRW).


 


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


 


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


 


	
  Reference

  Currency

  	
   

  	
  Weighting

  	
   

  	
  Initial

  Reference

  Currency Rate

  	
   

  
	
  BRL

  	
   

  	
  20

  	
  %

  	
  1.8501

  	
   

  
	
  RUB

  	
   

  	
  20

  	
  %

  	
  24.3242

  	
   

  
	
  INR

  	
   

  	
  20

  	
  %

  	
  39.85

  	
   

  
	
  CNY

  	
   

  	
  20

  	
  %

  	
  7.3872

  	
   

  
	
  KRW

  	
   

  	
  20

  	
  %

  	
  928.20

  	
   

  



 


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


 


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


 


2





















 


The “Valuation
Date” is November 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 November 30, 2007.


 


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


 


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


 


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


 


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


 


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


 


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


 


(A)                              the occurrence and/or existence of an event on any
day that has the effect of preventing or making impossible the delivery of USD
from accounts inside the country for which a Reference Currency is the lawful
currency (such jurisdiction with respect to such Reference Currency, the “Reference
Currency Jurisdiction”) for that Reference Currency to accounts outside that
Reference Currency Jurisdiction;


 


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


 


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


 


3





















 


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


 


	
  Reference

  Currency

  	
   

  	
  Screen

  Reference

  	
   

  	
  Valuation

  Business

  Day

  	
   

  
	
  BRL

  	
   

  	
  BRFR

  	
   

  	
  Brazilia,

  Rio de

  Janiero or

  São Paulo

  	
   

  
	
  RUB

  	
   

  	
  EMTA

  	
   

  	
  Moscow

  	
   

  
	
  INR

  	
   

  	
  RBIB

  	
   

  	
  Mumbai

  	
   

  
	
  CNY

  	
   

  	
  SAEC

  	
   

  	
  Beijing

  	
   

  
	
  KRW

  	
   

  	
  KFTC18

  	
   

  	
  Seoul

  	
   

  



 


The “Settlement
Rate Option” for the BRL is the Brazilian Real/U.S. dollar offered rate for
U.S. dollars, expressed as the amount of Brazilian Reals per one U.S. dollar,
for settlement in two Business Days reported by the Banco Central do Brasil on
SISBACEN Data System under transaction code PTAX-800 (“Consulta de Cambio” or Exchange
Rate Inquiry), Option 5 ( “Cotacoes para Contabilidade” or Rates for Accounting
Purposes), which appears on Reuters Screen BRFR Page under the caption “Dolar
PTAX” at approximately 6:30 pm Sao Paolo time on the Valuation Date or such
other relevant date.  The Settlement Rate Option for the RUB is the
Russian Ruble/U.S. Dollar Specified Rate, expressed as the amount of Russian
Rubles per one U.S. Dollar, for settlement in one Business Day, calculated by
the Chicago Mercantile Exchange (“CME”) and as published on CME’s website,
which appears on the Reuters Screen EMTA Page, at approximately 1:30 p.m.,
Moscow time, on the Valuation Date or such other relevant date.  The Settlement Rate Option for the INR is the
Indian Rupee/U.S. dollar reference rate, expressed as the amount of Indian
Rupee per one U.S. dollar, for settlement in two Business Days reported by the
Reserve Bank of India which appears on the Reuters Screen RBIB Page at
approximately 2:30 p.m., Mumbai time, or as soon thereafter as practicable on
the on the Valuation Date or such other relevant date.  The
Settlement Rate Option for the CNY is the Chinese Renminbi/U.S. dollar official
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 Valuation Date or other such relevant date. The
Settlement Rate Option for the KRW is the South Korean Won/U.S. dollar market
average rate, expressed as the amount of South Korean Won per one U.S. dollar,
for settlement in two Business Days reported by the Korea Financial Telecommunications
and Clearing Corporation, which appears on the Reuters Screen KFTC18 Page top
the right of the caption “USD Today” that is available at approximately 5:30
p.m., Seoul time, on the Valuation Date or as soon thereafter as practicable,
but in no event later than 9:00 a.m., Seoul time, on the first Business Day
following the relevant Valuation Date.


 


4

















 


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.


 


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.


 


5

















 


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:  November 30, 2007


 


	
  [SEAL]

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Andrew
  Yeung

  
	
   

  	
   

  	
  Title:   Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Cindy
  Buckholz

  
	
   

  	
   

  	
  Title:   Assistant Secretary

  



 


 


TRUSTEE’S CERTIFICATE OF AUTHENTICATION


 


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


 


CITIBANK, N.A.


  as Trustee


 


 


	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Officer

  	
   

  



 


7

















 


[REVERSE OF NOTE]


 


LEHMAN BROTHERS HOLDINGS INC.


MEDIUM-TERM NOTES, SERIES I


FX BASKET-LINKED NOTE
 DUE NOVEMBER 30, 2009


 


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


 


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


 


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


 

















 


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


 


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


 


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


 


Section
6.  Authorized Form and Denominations.  The Notes of this series are issuable in
registered form, without coupons.  Each
Note will be issued initially as either a Global Security or a Certificated
Note, at the option of the Company, in denominations of $1,000 or whole
multiples of $1,000, either at the office or agency to be designated and
maintained by the Company for such purpose in the Borough of Manhattan, New
York City, pursuant to the provisions of the Indenture or at any of such other
offices or agencies as may be designated and maintained by the Company for such
purpose pursuant to the provisions of the Indenture, and in the manner and
subject to the limitations provided in the Indenture, but without the payment
of any service charge, except for any tax or other governmental charges imposed
in connection therewith.  Notes of this
series are exchangeable for a like aggregate principal amount of Notes of this
series of a different authorized denomination, except that Global Securities
will not be exchangeable for Certificated Notes of this series.


 


Section
7.  Registration of Transfer.  As provided in the Indenture and subject to
certain limitations as therein set forth, the transfer of this Note is
registrable in the Security Register, upon surrender of this Note for
registration of transfer, at the Corporate Trust Office or agency in a Place of
Payment for this Note, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar
requiring such written instrument of transfer duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more
new Notes of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.


 


If at
any time the Depository notifies the Company that it is unwilling or unable to
continue as Depository or if at any time the Depository shall no longer be
eligible under the Indenture, the Company shall appoint a successor
Depository.  If a successor Depository
for the Notes of this series is not appointed by the Company within 90 days
after the Company receives such notice or becomes aware of such ineligibility,
the Company will issue, and the Trustee will authenticate and deliver, Notes of
this series in definitive form in an aggregate principal amount equal to the principal
amount of this Note.


 

















 


No
service charge shall be made for any such registration of transfer or exchange,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith.


 


Prior
to due presentment of this Note for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the person in
whose name this Note is registered as the owner hereof for all purposes, and
neither the Company nor the Trustee nor any agent of the Company or of the
Trustee shall be affected by any notice to the contrary.


 


Section
8.  Events of Default.  If an Event of Default with respect to Notes
of this series shall occur and be continuing, the amount that may be declared
due and payable upon any acceleration of the notes will be determined by the
Calculation Agent for the period from and including the Issue Date to but
excluding the date of early repayment and will equal, for each note, the
Redemption Amount, calculated as the date of early repayment were the Maturity
Date. If a bankruptcy proceeding is commenced in respect of Lehman Brothers
Holdings, the claim of the beneficial owner of a note for the period from and
including the Issue Date to but excluding the date of early repayment will be
capped at the Redemption Amount, calculated as though the date of the
commencement of the proceeding were the Maturity Date.


 


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


 


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


 


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