Exhibit 4.01


 


	
  CUSIP NO. 52517P6K2

  	
   

  
	
  ISIN NO. US52517P6K25

  	
   

  
	
   

  	
   

  
	
  REGISTERED

  	
  PRINCIPAL AMOUNT: $2,415,000

  
	
  No. R-1

  	
   

  



 


LEHMAN BROTHERS HOLDINGS INC.


 


MEDIUM-TERM NOTE, SERIES I


 


THREE-YEAR NOTES LINKED TO THE DOW JONES-AIG
COMMODITY INDEX EXCESS RETURN
 DUE NOVEMBER 29, 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 29, 2010, or if such day is not a Business Day, on the next following
Business Day; provided that, if as a result of
a Market Disruption Event the Valuation Date for one or more Index Contracts is
postponed so that it falls less than three Business Days prior to the scheduled
Maturity Date, the Maturity Date will be the third Business Day following the
latest occurring postponed Valuation Date.


 


The
“Valuation Date” is November 19, 2010, or if such day is not an Index Business
Day, the immediately preceding Index Business Day; provided that if a Market
Disruption Event is in effect for one or more Index Contracts on the scheduled
Valuation Date, the Valuation Date may be postponed as described below.


 


The “Redemption Amount at Maturity” for each $10,000
note will be a single U.S. dollar payment on the Maturity Date equal to $10,000
multiplied by the Adjusted Performance.


 


The “Adjusted Performance” is:


 


(A) the sum of 100% plus the product of the Participation Rate times
the difference of the Index Return minus 1, if the Final Index Value is greater
than the Initial Index Value;


 


(B) 100%, if the Final Index Value is less than or equal to the Initial
Index Value but greater than or equal to the Buffer Level; or


 


(C) the sum of 20% plus the Index Return, if the Final Index Value is
less than the Buffer Level.


 


The “Initial Index Value” is 182.345, which is equal to the closing
level of the Index on the Trade Date, as determined and published by the Index
Sponsors, rounded to three decimal places.


 


The “Index Return” is a quotient, the numerator of which is the Final
Index Value and the denominator of which is the Initial Index Value.


 


The “Trade Date” is the November 20, 2007.


 


The “Issue Date” is the November 28, 2007.


 


The “Final Index Value” will be the closing value of the Index on the
Valuation Date, as determined and published by the Index Sponsors (subject to
the occurrence of a Market Disruption Event or an Index Unavailability Event),
rounded to three decimal places.


 


The “Participation Rate” is 145.0%.


 


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The
“Buffer Level” is 145.876, which is equal to the product of the Initial Index
Value times 80%.


 


An “Index Business Day” is a day, as determined in good faith by the
Calculation Agent, on which trading is generally conducted on the Relevant
Exchange for each Index Contract then comprising the Index or any Successor
Index.


 


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 “Index” is the Dow Jones-AIG Commodity IndexSM Excess
Return published and calculated by the Index Sponsors, subject to adjustment as
described below.


 


The “Index Sponsors” are Dow Jones & Company Inc., AIG
International, Inc. and AIG Financial Products Corp.


 


The “Index Contracts” means the commodities contracts underlying the
Index or any Successor Index.


 


The “Relevant Exchange” means any organized exchange or market of
trading for any futures contract (or any combination thereof) included in the
Index or any Successor Index.


 


If a Market Disruption Event relating to one or more
Index Contracts is in effect on the scheduled Valuation Date, the Calculation
Agent will calculate the Final Index Value in good faith in accordance with the
formula for and method of calculating the Index last in effect prior to
commencement of the Market Disruption Event, using:


 


•                            for each Index Contract
that did not suffer a Market Disruption Event on the scheduled Valuation Date,
the settlement price on the applicable Relevant Exchange of such Index Contract
on the scheduled Valuation Date, and


 


•                            for each Index Contract
that did suffer a Market Disruption Event on the scheduled Valuation Date, the
settlement price of such Index Contract on the applicable Relevant Exchange on
the immediately succeeding trading day on which no Market Disruption Event
occurs or is continuing with respect to such Index Contract;


 


provided however that if a Market
Disruption Event has occurred or is continuing with respect to such Index
Contract on each of the eight scheduled trading days following the scheduled
Valuation Date, then (a) the eighth 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 eighth scheduled trading
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 “Market Disruption Event” means any of the
following events as determined in good faith by the Calculation Agent:


 


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(A)     the termination
or suspension of, or material limitation or disruption in the trading on a
Relevant Exchange of any Index Contract;


 


(B)      the settlement
price on a Relevant Exchange of any Index Contract has increased or decreased
by an amount equal to the maximum permitted price change from the previous day’s
settlement price; or


 


(C)      the settlement price of any Index Contract is not published
by the Relevant Exchange.


 


Notwithstanding the foregoing,
the following events will not constitute Market Disruption Events:


 


(1)       a limitation on the hours in a trading day and/or number of
days of trading, if it results from an announced change in the regular business
hours of the Relevant Exchange; or


 


(2)       a decision to permanently discontinue trading in the Index
Contract or options or futures contracts relating to the Index or the Index
Contract.


 


If an Index Unavailability Event is in effect on the
scheduled Valuation Date (and no Market Disruption Event is then in effect),
the Calculation Agent will determine the Final Index Value 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 on the Relevant Exchanges of each Index Contract.


 


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


 


If the Index Sponsors discontinue publication
of the Index and the Index Sponsors 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 Index Value will be determined by reference to the level of such
Successor Index at the close of trading on the Relevant Exchange or market of
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 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 Company
and to the Holders of the notes.


 


If the Index Sponsors discontinue publication
of the 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 Index Value on the Valuation Date.  The Final Index Value 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 on the Relevant Exchanges (or, if trading in an Index Contract has been
materially suspended or materially limited, its good


 


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faith estimate of the settlement price that would have prevailed but
for such suspension or limitation) at the close of trading on the Valuation
Date.


 


If at any time the method of calculating the
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 Index Value
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 in absence of 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.


 


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: November 28, 2007

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [SEAL]

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Andrew M.W.
  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

  	
   

  	
   

  



 


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[REVERSE OF NOTE]


 


LEHMAN BROTHERS HOLDINGS INC.


MEDIUM-TERM NOTES, SERIES I


THREE-YEAR NOTES LINKED TO THE DOW JONES-AIG
COMMODITY INDEX EXCESS RETURN  
 DUE NOVEMBER 29, 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, Three-Year
Notes Linked to the Dow Jones-AIG Commodity Index Excess Return (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 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 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 $10,000 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 the Company, 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 Redemption
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.