Exhibit 4.04


 


	
  CUSIP
  NO. 52517P6G1

  	
   

  	
   

  
	
  ISIN NO. US52517P6G13

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT:
  $2,351,000

  
	
  No. R-1

  	
   

  	
   

  



 


 


LEHMAN BROTHERS HOLDINGS INC.


MEDIUM-TERM NOTE, SERIES I


THREE-YEAR NOTES LINKED TO THE LBCI EQUAL
WEIGHT EXCESS RETURN
 DUE SEPTEMBER 28, 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 September 28, 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 September 22, 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” for each note will be a single U.S.
dollar payment on the Maturity Date equal to the product of the principal
amount of the notes times the Adjusted Performance Factor.


The Adjusted Performance Factor is equal to:


(A)  the sum of 100%
plus the product of the Participation Rate times the difference of the Index
Performance 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 Performance, if the Final Index Value is less than the Buffer
Level.


The “Index Performance” is equal to the quotient of the
Final Index Value divided by the Initial Index Value.


The “Participation Rate” is 120%.


The “Buffer Level” is 85.3806, equal to the product of the
Initial Index Value times 80%.


The “Initial Index Value” is 106.7258, equal to the closing value of
the Index on the Trade Date, as determined and published by the Index Sponsor,
rounded to four decimal places.


The “Trade Date” is the September 25, 2007.


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


 


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


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 Lehman Brothers Commodity Index Equal Weight Excess
Return calculated and published by the Index Sponsor, subject to adjustment, as
described below.


The “Index Sponsor” is Lehman Brothers Inc.


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 Sponsor or any Successor Index is not calculated and
published by the sponsors thereof.


If Lehman Brothers Inc. discontinues
publication of the Index and Lehman Brothers Inc. 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 Lehman Brothers Inc. discontinues
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 of the Index Contracts (or, if
trading in the relevant futures contracts has been materially


 


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suspended or materially limited, its good faith estimate of the closing
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
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:  September 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

  	
   

  
	
   

  	
   

  



 


 


6






 












 


[REVERSE
OF NOTE]


 


 


LEHMAN BROTHERS
HOLDINGS INC.


MEDIUM-TERM NOTES,
SERIES I


THREE-YEAR NOTES LINKED TO THE LBCI EQUAL
WEIGHT EXCESS RETURN  
 DUE 
JULY 13, 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 LBCI Equal
Weight 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.