Document:

Exhibit 4.04

 

CUSIP
NO. 5252M0BR7

ISIN NO. US5252M0BR75

 

	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT:
  $688,000

  

No. R-1

 

LEHMAN BROTHERS HOLDINGS INC.

 

MEDIUM-TERM NOTE, SERIES I

 

NOTES LINKED TO A BASKET OF COMMODITIES
 DUE FEBRUARY 14, 2012

 

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 February 14, 2012,
or if such day is not a Business Day, on the next following Business Day.

 

The “Valuation
Date” is February 7, 2012, or if such day is not a Valuation Business
Day, the immediately preceding Valuation Business Day; provided
that if a Disruption Event is in effect on the scheduled Valuation Date, the
Valuation Date may be postponed (as described below).

 

The “Redemption
Amount at Maturity” for each $1,000 note will be a single U.S. dollar payment
on the Maturity Date equal to:

 

(A)            $1,000, plus the product of
$1,000 times the Basket Return times the Participation Rate, if the Final
Basket Level is greater than the Initial Basket Level; or

 

(B)              $1,000, if the Final Basket Level
is equal to or less than the Initial Basket Level.

 

The “Component
Commodities” and “Component Commodity Weightings” are as follows:

 

	
  Component Commodities

  	
   

  	
  Component

  Commodity

  Weighting

  	
   

  
	
  Light sweet
  crude oil (“Crude Oil”)

  	
   

  	
  10

  	
  %

  
	
  Brent crude oil
  (“Brent Crude Oil”)

  	
   

  	
  10

  	
  %

  
	
  No. 2 fuel heating oil (“Heating Oil”)

  	
   

  	
  10

  	
  %

  
	
  Copper – Grade A (“Copper”)

  	
   

  	
  10

  	
  %

  
	
  Primary Nickel (“Nickel”)

  	
   

  	
  10

  	
  %

  
	
  Special High Grade Zinc (“Zinc”)

  	
   

  	
  10

  	
  %

  
	
  Gold (“Gold”)

  	
   

  	
  10

  	
  %

  
	
  Cocoa (“Cocoa”)

  	
   

  	
  10

  	
  %

  
	
  Class III milk (“Milk”)

  	
   

  	
  10

  	
  %

  
	
  Soybeans (“Soybeans”)

  	
   

  	
  10

  	
  %

  

 

The “Participation
Rate” is 110%.

 

The “Basket
Return” is a quotient, the numerator of which is the difference of the Final
Basket Level minus the Initial Basket Level and the denominator of which is the
Initial Basket Level, expressed as a percentage rounded to three decimal
places.

 

The “Initial
Basket Level” is set to 100 on the Trade Date.

 

2

 

The “Final
Basket Level” is the product of 100 times the sum of 1 plus the sum of the Weighted
Component Commodity Returns.

 

The “Trade
Date” is February 8, 2008.

 

The “Issue
Date” is February 14, 2008.

 

The “Weighted
Component Commodity Returns” are, for each Component Commodity, the product of
the Component Commodity Weighting times a quotient, the numerator of which is
the difference of the Final Commodity Price minus the Initial Commodity Price
and the denominator of which is the Initial Commodity Price for such Component
Commodity.

 

The “Initial
Commodity Price” and “Relevant Exchange” for each Component Commodity are as
follows:

 

	
  Component

  Commodity

  	
   

  	
  Initial Commodity

  Price

  	
   

  	
  Relevant Exchange

  	
   

  
	
  Crude Oil

  	
   

  	
  $

  	
  91.77

  	
   

  	
  The NYMEX Division, or its successor, of the New
  York Mercantile Exchange, Inc. (“NYMEX”)

  	
   

  
	
  Brent Crude Oil

  	
   

  	
  $

  	
  91.94

  	
   

  	
  The Intercontinental Exchange (“ICE”)

  	
   

  
	
  Heating Oil

  	
   

  	
  $

  	
  2.5541

  	
   

  	
  NYMEX

  	
   

  
	
  Copper

  	
   

  	
  $

  	
  7,612.00

  	
   

  	
  London Metals Exchange (“LME”)

  	
   

  
	
  Nickel

  	
   

  	
  $

  	
  27,355.00

  	
   

  	
  LME

  	
   

  
	
  Zinc

  	
   

  	
  $

  	
  2,345.00

  	
   

  	
  LME

  	
   

  
	
  Gold

  	
   

  	
  $

  	
  916.25

  	
   

  	
  The market in London
  on which members of the London Bullion Market Association (“LBMA”) quote
  prices for the buying and selling of Gold.

  	
   

  
	
  Cocoa

  	
   

  	
  $

  	
  2,378.00

  	
   

  	
  The New York Board of Trade (“NYBOT”)

  	
   

  
	
  Milk

  	
   

  	
  $

  	
  17.27

  	
   

  	
  CME Group (“CME”) (as successor to The Chicago Board
  of Trade and the Chicago Mercantile Exchange)

  	
   

  
	
  Soybeans

  	
   

  	
  $

  	
  1,339.00

  	
   

  	
  CME

  	
   

  

 

The “Final
Commodity Price” is, for each Component Commodity, the Commodity Price of the
Component Commodity on the Valuation Date, subject to the occurrence of a
Disruption Event.

 

A “Valuation
Business Day” is a day, as determined in good faith by the Calculation Agent,
on which the Relevant Exchange for each Component Commodity is scheduled to be
(or, but for the occurrence of a Disruption Event, would have been) open for
trading during its regular trading session (notwithstanding the Relevant
Exchange or organized exchange or market, as applicable, closing prior to its
scheduled closing time).

 

If a
Disruption Event identified in clauses (A), (B) or (C) below relating
to one or more Component Commodities is in effect on the scheduled Valuation
Date, the Calculation Agent will calculate the Final Basket Level using:

 

3

 

·                                         for each such Component Commodity that did not suffer a Disruption
Event on the scheduled Valuation Date, the Final Commodity Price for that
Component Commodity on the scheduled Valuation Date, and

 

·                                         for each such Component Commodity that did suffer a Disruption Event on
the scheduled Valuation Date, the Final Commodity Price on the immediately
succeeding trading day for such Component Commodity on which no Disruption
Event occurs or is continuing with respect to such Component Commodity;

 

provided however that if a Disruption Event has occurred or is continuing with
respect to a Component Commodity on each of the three scheduled trading days
following the scheduled Valuation Date, then (a) that third scheduled
trading day shall be deemed the Valuation Date for the affected Component
Commodity; and (b) the Calculation Agent will determine the Final
Commodity Price for the affected Component Commodity on such day in its sole
and absolute discretion taking into account the latest available quotation for
the Commodity Price for the affected Component Commodity and any other
information that in good faith it deems relevant.

 

If a Disruption Event identified
in clauses (D) or (E) below relating to one or more Component
Commodities (other than Gold) is in effect on the Valuation Date, the
Calculation Agent will determine the Final Commodity Price for the affected
Component Commodity on the scheduled Valuation Date in its sole and absolute
discretion taking into account the latest available quotation for the Commodity
Price for the affected Component Commodity and any other information that in
good faith it deems relevant.

 

A “Disruption
Event” for a Component Commodity means any of the following events, in each
case as determined in good faith by the Calculation Agent:

 

(A)                             the
suspension of or material limitation on trading in the Component Commodity or
futures contracts or options related to the Component Commodity, on the
Relevant Exchange for that Component Commodity;

 

(B)                               either (i) the
failure of trading to commence, or permanent discontinuance of trading, in the
Component Commodity, or futures contracts or options related to the Component
Commodity, on the Relevant Exchange for that Component Commodity, or (ii) the
disappearance of, or of trading in, the Component Commodity;

 

(C)                               the failure of the Relevant
Exchange for the Component Commodity to publish the official daily settlement
price of the Component Commodity for that day (or the information necessary for
determining the settlement price); and

 

(D)                              solely
with respect to Component Commodities other than Gold, the occurrence since the
Trade Date of a material change in the content, composition, or constitution of
the Component Commodity; or

 

(E)                                solely
with respect to Component Commodities other than Gold, the occurrence since the
Trade Date of a material change in the formula for or 

 

4

 

the method of calculating the settlement price of the
Component Commodity.

 

For the
purpose of determining whether a Disruption Event for a Component Commodity has
occurred:

 

(1)                                 a limitation on the hours in a trading day and/or number of days of
trading will not constitute a Disruption Event if it results from an announced
change in the regular business hours of the Relevant Exchange for the Component
Commodity;

 

(2)                                 a
suspension in trading in a Component Commodity on the Relevant Exchange for
that Component Commodity (without taking into account any extended or
after-hours trading session), by reason of a price change reflecting the
maximum permitted price change from the previous trading day’s settlement price
will constitute a Disruption Event; and

 

(3)                                 a
suspension of or material limitation on trading on a Relevant Exchange for a
Component Commodity will not include any time when the Relevant Exchange for
that Component Commodity is closed for trading under ordinary circumstances.

 

For purposes of calculating the Final Basket Level in the event of a
Disruption Event relating to one or more Component Commodities in accordance
with the above, “trading day” means a day, as determined in good faith by the
Calculation Agent, on which trading is generally conducted on the Relevant
Exchange applicable to the affected Component Commodity.

 

The “Calculation Agent” means Lehman Brothers Commodity Services Inc,
the determinations and calculations of which will be binding absent 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.

 

5

 

REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF
THIS NOTE SET FORTH ON THE REVERSE HEREOF. 
SUCH FURTHER PROVISIONS SHALL FOR ALL PURPOSES HAVE THE SAME EFFECT AS
IF SET FORTH AT THIS PLACE.

 

This Note shall not be valid or become obligatory for
any purpose until the certificate of authentication hereon shall have been
signed by the Trustee under the Indenture.

 

6

 

IN WITNESS
WHEREOF, Lehman Brothers Holdings Inc. has caused this instrument to be signed
by its Chairman of the Board, its President, its Vice Chairman, its Chief
Financial Officer, one of its Vice Presidents or its Treasurer, by manual or
facsimile signature under its corporate seal, attested by its Secretary or one
of its Assistant Secretaries by manual or facsimile signature.

 

Dated:  February 14, 2008

 

	
  [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

  

 

7

 

[REVERSE
OF NOTE]

 

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES,
SERIES I

NOTES LINKED TO A BASKET OF COMMODITIES  
 DUE FEBRUARY 14, 2012

 

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, Notes Linked to a Basket of Commodities
(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 at Maturity 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 at Maturity 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 Original Issue Date to
but excluding the date of early repayment and will equal, for each note, the
Redemption Amount at Maturity, 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 Original Issue Date to but excluding the date of early
repayment will be capped at the Redemption Amount at Maturity, 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 at Maturity 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.Exhibit 4.05

 

CUSIP
NO. 5252M0DK0

ISIN NO. US5252M0DK05

 

	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT: $14,600,000

  

No. R-1

 

LEHMAN BROTHERS HOLDINGS INC.

 

MEDIUM-TERM NOTE, SERIES I

 

PRINCIPAL PROTECTED NOTES LINKED TO MARQCUS PORTFOLIO A (USD) INDEX

DUE FEBRUARY 16, 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.

 

The “Maturity Date” is February 16,
2010, 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, rounded to the nearest whole U.S. cent.

 

The “Additional
Amount” is, for each note, a single U.S. dollar payment calculated by the
Calculation Agent equal to the principal amount of the note multiplied by:

 

(A) Leverage x Index Return, if the Index Return is greater than
0.0%; or

 

(B) 0%, if the Index Return is equal to or less than 0.0%.

 

The “Leverage” is 150%.

 

The “Trade
Date” is February 8, 2008.

 

The “Issue
Date” is February 14, 2008.

 

The “Valuation
Date” is February 8, 2010, or if such day is not an Index Business Day,
the immediately preceding Index Business Day; provided that if the Final Index
Level is not available on the scheduled Valuation Date due to Index
Unavailability, as described under “Index Unavailability” below, the Valuation
Date may be postponed (as described below).

 

The “Index” is
the Lehman Brothers Macro Quantitative Currency Trading Strategies (“MarQCuS”)
Portfolio A (USD) Index, calculated and published by the Index Calculation Agent.

 

The “Index
Return” is a quotient, the numerator of which is the Final Index Level minus
the Initial Index Level and the denominator of which is the Initial Index
Level, expressed as a percentage.

 

The “Final
Index Level” is the closing value of the Index on the Valuation Date, as
calculated by the Index Calculation Agent (subject to the occurrence of Index
Unavailability).

 

The “Initial
Index Level” is 193.82, which is equal to the closing value of the Index on the
Trade Date, as calculated by the Index Calculation Agent.

 

The “Index
Level” is the closing level of the Index, as calculated by the Index
Calculation Agent and published on the Price Source, subject to adjustment in
accordance with the Index Adjustment below.

 

An “Index
Business Day” is a day on which commercial banks are open, including for
dealings in foreign exchange in accordance with market practice of the foreign
exchange market, in both London and New York.

 

2

 

“Index
Unavailability” means that the Index Level for the Valuation Date is not
published on the Price Source.

 

	
  MarQCuS Index

  	
   

  	
  Bloomberg
  Page

  (Price Source) *

  	
   

  	
  Reuters
  Page

  (Fallback Price Source) *

  
	
  Forward
  Bias G10 Index

  	
   

  	
  LBMQMFG
  <INDEX>

  	
   

  	
  .LBMQMFG

  
	
  Forward
  Bias Emerging Market (EM) Index

  	
   

  	
  LBMQMFE
  <INDEX>

  	
   

  	
  .LBMQMFE

  
	
  TurnRate
  Index and

  	
   

  	
  LBMQMTR
  <INDEX>

  	
   

  	
  .LBMQMTR

  
	
  Major/Miner
  Index

  	
   

  	
  LBMQMMM
  <INDEX>

  	
   

  	
  .LBMQMMM

  
	
  CoBALT
  Index LBFX GBP

  	
   

  	
  LBMQMCO
  <INDEX>

  	
   

  	
  .LBMQMCO

  
	
  RAFT
  Index

  	
   

  	
  LBMQMRF
  <INDEX>

  	
   

  	
  .LBMQMRF

  

 

For purposes of calculating the MarQCuS Portfolio A Index, the term “Price
Source” and “Fallback Price Source” includes any (a) successor page to
or (b) solely in the event the Index Calculation Agent determines in good
faith that the indicated Bloomberg or Reuters pages is no longer a materially
accurate source for the level of any MarQCuS Index, any replacement page for,
to the indicated Bloomberg and Reuters pages, respectively, on which the level
of the relevant MarQCuS Index may be published, as determined in the Index
Calculation Agent acting in good faith.

 

If the
Index Calculation Agent determines in good faith that the Index Level for the
Valuation Date was not published on the Price Source, the Calculation Agent
will determine the Final Index Level using the Index Level published on the
Fallback Price Source for such Valuation Date. 
If the Index Calculation Agent determines in good faith that the Index
Level for the Valuation Date was also not published on the Fallback Price
Source, the Calculation Agent will calculate the Index Return using as the
Final Index Level the Index Level published for the first Index Business Day
succeeding the scheduled Valuation Date; provided however that if no Index
Level is published on the Price Source or Fallback Price Source for each of the
three scheduled Index Business Days following the scheduled Valuation Date,
then (a) the third scheduled Index Business Day shall be deemed the
Valuation Date and (b) the Calculation Agent will determine the Final
Index Level on such third scheduled Index Business Day 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, taking in to account
the latest available Index Level and any other information that it deems relevant.

 

If the
Index Calculation Agent discontinues publication of the Index prior to, and
such discontinuation is continuing on, the Valuation Date, and the Index
Calculation Agent or another entity publishes a successor or substitute index
that the Calculation Agent determines in good faith to be comparable to the
discontinued Index (such index, a “Successor Index”), then the Final Index
Level will be determined by reference to the closing level of such Successor
Index on the Valuation Date; provided, however, that the Calculation Agent may
make such adjustments as it deems necessary, acting in good faith, 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

 

3

 

Agent will cause written notice
thereof to be promptly furnished to the trustee, to the Issuer and to the
holders of the notes.

 

If the
Index Calculation Agent discontinues publication of the Index prior to, and
such discontinuation is continuing on, the Valuation Date, and the Calculation
Agent determines in good faith that no Successor Index is available at such
time, then the Calculation Agent will determine the Final Index Level on the
Valuation Date.  The Final Index Level
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,
taking in to account the latest available Index Level and any other information
that it deems relevant.

 

In the
event that there is any error in relation to the calculation or publication of
the Final Index Level and the Index Calculation Agent publishes an adjustment
or correction to such Final Index Level on or prior to the Business Day
immediately preceding the Maturity Date, the Calculation Agent will calculate
the Redemption Amount using the Final Index Level as so adjusted or corrected.

 

If the Calculation
Agent, acting in good faith, determines that the Index has been or will be
rebased on or prior to the Valuation Date, the Index as so rebased will be used
for purposes of calculating the Redemption Amount; provided, however, that the
Calculation Agent may make such adjustments it considers necessary, if any, to
the level of the Index so rebased so that the Final Index Level reflects the
same Index Level for the Index on the Valuation Date before such rebasing.

 

If the
Index Calculation Agent, acting in good faith, determines that on any Index
Business Day that a component MarQCuS Index (a) is no longer available or (b) has
been materially modified and such modification will have a materially adverse
effect on the MarQCuS Portfolio A Index, the Index Calculation Agent shall
remove or replace such affected component MarQCuS Index with an alternative
index or rate, variable or other component, and may make such adjustments to
the level of such replacement index or rate, variable or other component as it
considers necessary so that the level of the MarQCuS Portfolio A Index after
such removal or replacement reflects a similar level to that calculated prior
to the removal or replacement, acting in good faith.  Following the removal or replacement of a component
MarQCuS Index, the Index Calculation Agent will promptly publish a notice which
specifies the component MarQCuS Index removed or replaced and any designated
replacement thereof.

 

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.

 

The “Index Calculation Agent” means Lehman Brothers International
(Europe).

 

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.

 

4

 

Payment of any 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.

 

5

 

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:  February 14, 2008

 

	
  [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

PRINCIPAL PROTECTED NOTES LINKED TO MARQCUS PORTFOLIO A (USD) INDEX
 DUE FEBRUARY 16, 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,
Principal Protected Notes Linked to MarQCuS Portfolio A (USD) Index (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 $100,000 or integral
multiples of $100,000, 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 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.

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