Exhibit 4.01


CUSIP
NO. 52517P5Q0


ISIN NO. US52517P5Q04


 


	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT:
  $2,500,000

  
	
  No. R-1

  	
   

  	
   

  



 


 


 


LEHMAN BROTHERS HOLDINGS INC.


MEDIUM-TERM NOTE, SERIES I


FX BASKET-LINKED NOTE
 DUE SEPTEMBER 28, 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 September 28, 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 300%.


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


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

  	
   

  	
  25%

  	
   

  	
  1.8650

  
	
  RUB

  	
   

  	
  25%

  	
   

  	
  25.0533

  
	
  INR

  	
   

  	
  25%

  	
   

  	
  39.87

  
	
  CNY

  	
   

  	
  25%

  	
   

  	
  7.5050

  



 


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.


 


 


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The “Valuation Date” is September 22, 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 September 27, 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.


 


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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

  	
   

  	
  Valuatioen 

  Business 

  Day

  
	
  BRL

  	
   

  	
  BRL

  	
   

  	
  Brazilia, 

  Rio de 

  Janiero or 

  São
  Paulo

  
	
  RUB

  	
   

  	
  EMTA

  	
   

  	
  Moscow

  
	
  INR

  	
   

  	
  RBIB

  	
   

  	
  Mumbai

  
	
  CNY

  	
   

  	
  SAEC

  	
   

  	
  Beijing

  



 


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
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 


 


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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.


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: September 27,
  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

  
	
   

  	
   

  



 


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[REVERSE
OF NOTE]


 


 


LEHMAN BROTHERS
HOLDINGS INC.


MEDIUM-TERM NOTES,
SERIES I


FX BASKET-LINKED NOTE
 DUE SEPTEMBER 28, 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 


 


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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.


 


 


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