Exhibit 4.01


 


	
  CUSIP NO. 5252M0AZ0

  	
   

  	
   

  
	
  ISIN NO. US5252M0AZ01

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  REGISTERED

  	
   

  	
  PRINCIPAL
  AMOUNT: $1,042,000

  



No. R-1


 


LEHMAN BROTHERS HOLDINGS INC.


 


MEDIUM-TERM NOTE, SERIES I


 


FX BASKET-LINKED NOTE
 DUE DECEMBER 7, 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 December 7,
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 290%.


 


The “Reference Currencies” are the South Korean Won (KRW), Indonesian
Rupiah (IDR), Indian Rupee (INR), Malaysian Ringgit (MYR) and Singapore Dollar
(SGD.


 


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

  	
   

  
	
  KRW

  	
   

  	
  20

  	
  %

  	
  929.90

  	
   

  
	
  IDR

  	
   

  	
  20

  	
  %

  	
  9378

  	
   

  
	
  INR

  	
   

  	
  20

  	
  %

  	
  39.77

  	
   

  
	
  MYR

  	
   

  	
  20

  	
  %

  	
  3.3712

  	
   

  
	
  SGD

  	
   

  	
  20

  	
  %

  	
  1.4474

  	
   

  



 


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 29, 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 December 5, 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 (x) 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, or (y) the conversion of SGD 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


 


3





















 


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

  
	
  KRW

  	
   

  	
  KFTC18

  	
   

  	
  Seoul

  
	
  IDR

  	
   

  	
  ABSIRFIX01

  	
   

  	
  Singapore

  
	
  INR

  	
   

  	
  RBIB

  	
   

  	
  Mumbai

  
	
  MYR

  	
   

  	
  ABSIRFIX01

  	
   

  	
  Singapore

  
	
  SGD

  	
   

  	
  ABSIRFIX01

  	
   

  	
  Singapore

  



 


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 to
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. The Settlement Rate Option for the IDR
is the Indonesian Rupiah/U.S. dollar spot rate at 11:00 a.m., Singapore
time, expressed as the amount of Indonesian Rupiah per one U.S. dollar, for
settlement in two Business Days, reported by the Association of Banks in
Singapore which appears on the Reuters Page ABSIRFIX01 to the right of the
caption “Spot” under the column “IDR” at approximately 11:30 a.m.,
Singapore 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 on the Valuation Date or such other relevant date. The Settlement Rate Option for the MYR is
the Malaysian Ringgit/U.S. dollar spot rate at 11:00 a.m., Singapore time,
expressed as the amount of Malaysian Ringgit per one U.S. dollar, for
settlement in two Business Days, reported by the Association of Banks in
Singapore, which appears on the Reuters Page ABSIRFIX01 to the right of
the caption “Spot” under the column “MYR” at approximately 11:30 a.m.,
Singapore time, on the relevant Valuation Date. The Settlement Rate Option for
the SGD is the Singapore Dollar/U.S. dollar spot rate at 11:00 a.m.,
Singapore time, expressed as the amount of Singapore Dollar per one U.S.
dollar, for settlement in two Business Days, reported by the Association of
Banks in Singapore which appears on the Reuters Page ABSIRFIX01 to the
right of the caption “Spot” under the column “SGD” at approximately 11:30 a.m.,
Singapore time, on the relevant Valuation Date.


 


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.


 


4





















 


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.


 


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.


 


5

















 


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:  December 5, 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 DECEMBER 7, 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.