Document:

Exhibit 4.03

 

CUSIP
NO. 52523J446

ISIN NO. US52523J4461

 

	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT:
  $1,320,500

  

No. R-1

 

LEHMAN BROTHERS HOLDINGS INC.

 

MEDIUM-TERM NOTE, SERIES I

 

NOTES LINKED TO AN ASIAN CURRENCY BASKET
 DUE MARCH 31, 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 March 31, 2010,
or if such day is not a Business Day, on the next following Business Day.

 

The “Valuation
Date” is March 26, 2010; provided that, upon the occurrence of a
Disruption Event with respect to a Basket Currency, the Valuation Date for the
affected Basket Currency may be postponed (as described in “Disruption Events”
below).

 

The “Redemption
Amount” is:

 

(A) If
the Basket Return is greater than zero, an amount per Note equal to $10 plus
the product of $10 times the Participation Rate times the Basket Return.

 

(B) If
the Basket Return is equal to or less than zero, an amount per Note equal to
$10 plus the product of $10 times the Basket Return; provided that if the
Basket Return is equal to or less than zero, the principal amount of Notes will
decrease 1% for every 1% that the Basket Return is below zero.

 

The “Participation
Rate” is 440%.

 

The “Basket
Currencies” are the Malaysian Ringgit (MYR), Indonesian Rupiah (IDR), Indian
Rupee (INR) and Philippine Peso (PHP).

 

The “Basket Return”
is a quotient, the numerator of which is the difference of the Basket Ending
Level minus the Basket Starting Level and the denominator of which is the
Basket Starting Level.

 

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

 

The “Basket Ending
Level” is the Basket closing level on the Valuation Date, equal to the product
of 100 times the sum of 1 plus the sum of the Weighted Currency Returns.

 

The “Weighted
Currency Return” for each Basket Currency is the product of the Currency Return
for such Basket Currency times the Basket Currency Weighting for such Basket
Currency.

 

The “Currency
Return” for each Basket Currency is a quotient, the numerator of which is the
difference of the Initial Spot Rate for such Basket Currency minus the Final
Spot Rate for such Basket Currency and the denominator of which is the Final
Spot Rate for such Basket Currency.

 

The “Final Spot
Rate” for each Basket Currency is the Reference Exchange Rate for that Basket
Currency on the Valuation Date, determined by the Calculation Agent in
accordance with the Spot Rate Source (subject to the occurrence of a Disruption
Event).

 

 

2

 

 

The “Weighting”
and “Initial Spot Rate” for each Basket Currency are as follows:

 

	
  Basket Currency

  	
   

  	
  Weighting

  	
   

  	
  Initial
  Spot Rate

  
	
  MYR

  	
   

  	
  25

  	
  %

  	
  3.1997

  
	
  IDR

  	
   

  	
  25

  	
  %

  	
  9212

  
	
  INR

  	
   

  	
  25

  	
  %

  	
  40.15

  
	
  PHP

  	
   

  	
  25

  	
  %

  	
  41.801

  

 

The “Reference
Exchange Rates” are, for each Basket Currency, the spot exchange rates for that
Basket Currency quoted against the U.S. dollar, expressed as the number of
units of the Basket Currency per one USD.

 

The “Issue
Date” is March 31, 2008.

 

If a
Disruption Event relating to one or more of the Basket Currencies is in effect
on the scheduled Valuation Date, the Calculation Agent will determine the
Basket Return using:

 

·                                          for each
Basket Currency that did  not suffer a Disruption Event on the scheduled Valuation Date, the Final
Spot Rate on the scheduled Valuation Date, and

 

·                                          for each
Basket Currency that did suffer a
Disruption Event on the scheduled Valuation Date, the Final Spot Rate on the
immediately succeeding scheduled Valuation Business Day for such Basket
Currency on which no Disruption Event occurs or is continuing with respect to
such Basket Currency;

 

provided, however, that if a Disruption Event has occurred or is continuing
with respect to a Basket 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 Basket Currency; and (b) the Calculation Agent will determine the
Final Spot Rate for the affected Basket 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 Basket Currency.

 

A “Disruption
Event” means any of the following events with respect to a Basket Currency, 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 Basket Currency
Jurisdiction for that Basket Currency to accounts outside that Basket Currency
Jurisdiction;

 

 

3

 

 

(B)                                the occurrence of any event causing the Reference Exchange Rate for the
Basket Currency to be split into dual or multiple currency exchange rates; or

 

(C)                                the Final Spot Rate
being unavailable for the Basket Currency, or the occurrence of an event (i) in
the Basket Currency Jurisdiction for that Basket Currency that materially
disrupts the market for the Basket Currency or (ii) that generally makes
it impossible to obtain the Final Spot Rate for the Basket Currency, on the
Valuation Date.

 

A “Valuation Business Day” means,
with respect to each Basket 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:

 

	
  Basket
  Currency

  	
   

  	
  Screen Reference

  	
   

  	
  Valuation Business Day

  
	
  MYR

  	
   

  	
  ABSIRFIX01

  	
   

  	
  Singapore

  
	
  IDR

  	
   

  	
  ABSIRFIX01

  	
   

  	
  Singapore

  
	
  INR

  	
   

  	
  RBIB

  	
   

  	
  Mumbai

  
	
  PHP

  	
   

  	
  PDSPESO
  (as successor to PHPESO)

  	
   

  	
  Manila

  

 

The Spot
Rate Source for the MYR is the Malaysian Ringgit/U.S. Dollar spot rate at 11:00 a.m.,
Singapore time, expressed as the amount of Malaysian Ringgit per one U.S.
Dollar, for settlement in two Business Days, reported by the Association of
Banks in Singapore, which appears on the Reuters Page ABSIRFIX01 to the
right of the caption “Spot” under the column “MYR” at approximately 11:30 a.m.,
Singapore time, on the relevant Valuation Date. 
The “Spot Rate Source” for the IDR is the
Indonesian Rupiah/U.S. Dollar spot rate at 11:00 a.m., Singapore time,
expressed as the  amount of Indonesian Rupiah per
one U.S.  Dollar, for settlement in two Business Days,  reported by the Association of Banks in Singapore
which appears on the Reuters Page ABSIRFIX01 to the right of the caption “Spot” under the column “IDR” at  approximately
11:30 a.m., Singapore time, on the
relevant Valuation Date.  The Spot Rate
Source 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 Spot Rate Source for the PHP is the Philippine Peso/U.S. Dollar
morning weighted average rate, expressed as the amount of Philippine Pesos per
one U.S. Dollar, for settlement in one Business Day reported by the Philippine
Dealing system which appears on the Reuters Screen PHPESO Page to the
right of the caption “AM WT AVE” at approximately 12:30 p.m., Manila time,
on the relevant Valuation Date.

 

The screen or time of observation
indicated in relation to any Final Spot Rate above shall be deemed to refer to
such screen or time of observation as modified or amended from time to time, or
to any substitute screen thereto.

 

 

4

 

 

The “Fallback
Rate Observation Methodology” means that the Reference Exchange
Rate, Final Spot Rate or other rate, as specified in the applicable pricing
supplement, in respect of a basket currency will equal the noon buying rate in
New York for cable transfers in foreign currencies as announced by the Federal
Reserve Bank of New York for customs purposes (the “Noon Buying Rate”) on the
relevant Valuation Date or such other date specified in the applicable pricing
supplement. If the Noon Buying Rate is not announced on that date, the
Reference Exchange Rate, Final Spot Rate or other rate for such Basket 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 basket 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, Final Spot 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 Basket
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, Final Spot Rate or other rate, as applicable, for such
Basket 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.

 

 

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: March 31,
  2008

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [SEAL]

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Andrew Yeung

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Cindy Buckholz

  
	
   

  	
   

  	
  Title:

  	
  Assistant Secretary

  

 

 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

 

This is one of the
Securities of the series designated herein referred to in the within-mentioned
Indenture.

 

	
  CITIBANK, N.A.

  
	
  as
  Trustee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Officer

  	
   

  

 

 

7

 

 

[REVERSE
OF NOTE]

 

 

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES,
SERIES I

NOTES LINKED TO AN ASIAN CURRENCY BASKET
 DUE MARCH 31, 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,
Notes Linked to an Asian Currency Basket (herein called the “Notes”).  The
Notes are one of an indefinite number of series of debt securities of the
Company (collectively, the “Securities”) issued or issuable under and pursuant
to an indenture dated as of September 1, 1987, as amended and supplemented
(the “Indenture”), duly executed and delivered by the Company and Citibank,
N.A., as Trustee (herein called the “Trustee”), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and the holders of the Securities.  The separate series of Securities may be
issued in various aggregate principal amounts, may mature at different times,
may bear interest (if any) at different rates, may be subject to different
redemption provisions or repurchase rights (if any), may be subject to
different sinking, purchase or analogous funds (if any), may be subject to
different covenants and Events of Default and may otherwise vary as in the
Indenture provided.

 

Section 2.  Principal
Amount for Indenture Purposes.  For
the purpose of determining whether Holders of the requisite amount of Notes of
this series outstanding under the Indenture have made a demand, given a notice
or waiver or taken any other action, the principal amount of this Note will be
deemed to be the principal amount of this Note then outstanding.

 

Section 3.  Modification
and Waivers.  The Indenture contains
provisions permitting the Company and the Trustee, with the consent of the
Holders of not less than 66-2/3% in aggregate principal amount of each series
of the Securities at the time Outstanding to be affected, evidenced as in the
Indenture provided, to execute supplemental indentures adding any provisions to
or changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or modifying in any manner the rights of the
holders of the Securities of all such series; provided, however, that no such
supplemental indenture shall, among other things, (i) change the fixed
maturity of any Security, or reduce the Additional Amount or the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon or reduce any premium or other amount payable on redemption, or make
the Additional Amount or the principal amount thereof, premium or other amount
payable, if any, or interest thereon payable in any coin or currency other than
that herein above provided, without the consent of the Holder of each Security
so affected, or (ii) change the place of payment on any Security, or
impair the right to institute suit for payment on any Security, or reduce the
aforesaid percentage of Securities, the holders of which are required to
consent to any such supplemental indenture, without the consent of the holders
of each Security so affected.  It is also
provided in the Indenture that, prior to any declaration accelerating the
maturity of any series of Securities, the holders of a majority in aggregate
principal amount of the Securities of such series 

 

 

 

 

Outstanding may on behalf
of the holders of all the Securities of such series waive any past default or
Event of Default under the Indenture with respect to such series and its
consequences, except a default in the payment of interest, if any, on the Additional
Amount or the principal amount, or premium, if any, on any of the Securities of
such series, or in the payment of any sinking fund installment or analogous
obligation with respect to Securities of such series.  Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
holders and owners of this Note and any Notes of this series which may be
issued in exchange or substitution herefor, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes of this series.

 

Section 4.  Obligations
Unconditional.  No reference herein
to the Indenture and no provisions of this Note or of the Indenture shall alter
or impair the obligation of the Company, which is absolute and unconditional,
to pay the Additional Amount or the principal amount on this Note at the place,
at the respective times, at the rate, and in the coin or currency herein
prescribed.

 

Section 5.  Defeasance.  The Indenture contains provisions for the
discharge of the Indenture and defeasance at any time of the indebtedness on
this Note upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Note.

 

Section 6.  Authorized Form and
Denominations.  The Notes of this
series are issuable in registered form, without coupons.  Each Note will be issued initially as either
a Global Security or a Certificated Note, at the option of the Company, in
denominations of $1,000 or whole multiples of $1,000, either at the office or
agency to be designated and maintained by the Company for such purpose in the
Borough of Manhattan, New York City, pursuant to the provisions of the
Indenture or at any of such other offices or agencies as may be designated and
maintained by the Company for such purpose pursuant to the provisions of the
Indenture, and in the manner and subject to the limitations provided in the
Indenture, but without the payment of any service charge, except for any tax or
other governmental charges imposed in connection therewith.  Notes of this series are exchangeable for a
like aggregate principal amount of Notes of this series of a different
authorized denomination, except that Global Securities will not be exchangeable
for Certificated Notes of this series.

 

Section 7.  Registration
of Transfer.  As provided in the
Indenture and subject to certain limitations as therein set forth, the transfer
of this Note is registrable in the Security Register, upon surrender of this
Note for registration of transfer, at the Corporate Trust Office or agency in a
Place of Payment for this Note, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar requiring such written instrument of transfer duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

 

If at any time the Depository notifies the Company that it is unwilling
or unable to continue as Depository or if at any time the Depository shall no
longer be eligible under the Indenture, the Company shall appoint a successor
Depository.  If a successor Depository
for the Notes of this series is not appointed by the Company within 90 days
after the Company receives 

 

 

 

 

such notice or becomes
aware of such ineligibility, the Company will issue, and the Trustee will
authenticate and deliver, Notes of this series in definitive form in an
aggregate principal amount equal to the principal amount of this Note.

 

No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection
therewith.

 

Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
person in whose name this Note is registered as the owner hereof for all
purposes, and neither the Company nor the Trustee nor any agent of the Company
or of the Trustee shall be affected by any notice to the contrary.

 

Section 8.  Events of
Default.  If an Event of Default with
respect to Notes of this series shall occur and be continuing, the amount that
may be declared due and payable upon any acceleration of the notes will be
determined by the Calculation Agent for the period from and including the Issue
Date to but excluding the date of early repayment and will equal, for each
note, the Redemption Amount, calculated as the date of early repayment were the
Maturity Date. If a bankruptcy proceeding is commenced in respect of Lehman
Brothers Holdings, the claim of the beneficial owner of a note for the period
from and including the Issue Date to but excluding the date of early repayment
will be capped at the Redemption Amount, calculated as though the date of the
commencement of the proceeding were the Maturity Date.

 

Section 9.  No Recourse
Against Certain Persons.  No recourse
for the payment of the Additional Amount or for any claim based hereon or
otherwise in respect hereof, and no recourse under or upon any obligation,
covenant or agreement of the Company in the Indenture or any Indenture
supplemental thereto or in any Note, or because of the creation of any
indebtedness represented thereby, shall be had against any incorporator,
stockholder, officer or director, as such, past, present or future, of the
Company or of any successor corporation, either directly or through the Company
or any successor corporation, whether by virtue of any constitution, statute or
rule of law or by the enforcement of any assessment or penalty or
otherwise, all such liability being, by the acceptance hereof and as part of
the consideration for the issue hereof, expressly waived and released.

 

Section 10.  Defined Terms.  All terms used but not defined in this Note
are used herein as defined in the Indenture.

 

Section 11.  GOVERNING
LAW.  THIS NOTE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.Exhibit 4.04

 

CUSIP
NO. 52523J438

ISIN NO. US52523J4388

 

	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT:
  $12,024,370

  

No. R-1

 

LEHMAN BROTHERS HOLDINGS INC.

 

MEDIUM-TERM NOTE, SERIES I

 

NOTES LINKED TO AN ASIAN CURRENCY BASKET
 DUE MARCH 31, 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 March 31, 2010, or if such
day is not a Business Day, on the next following Business Day.

 

The “Valuation
Date” is March 26, 2010; provided that, upon the occurrence of a
Disruption Event with respect to a Basket Currency, the Valuation Date for the
affected Basket Currency may be postponed (as described in “Disruption Events”
below).

 

The “Redemption
Amount” is the amount equal to the sum of the principal amount of the Notes,
plus $10, plus the Additional Amount, if any.

 

The “Additional
Amount” is an amount per Note equal to the greater of (a) zero and (b) $10
multiplied by the product of the Basket Return times the Participation Rate.

 

The “Participation
Rate” is 195%.

 

The “Basket
Currencies” are the Indonesian Rupiah (IDR), Indian Rupee (INR), Malaysian
Ringgit (MYR) and Philippine Peso (PHP).

 

The “Basket Return”
is a quotient, the numerator of which is the difference of the Basket Ending
Level minus the Basket Starting Level and the denominator of which is the
Basket Starting Level.

 

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

 

The “Basket Ending
Level” is the Basket closing level on the Valuation Date, equal to the product
of 100 times the sum of 1 plus the sum of the Weighted Currency Returns.

 

The “Weighted
Currency Return” for each Basket Currency is the product of the Currency Return
for such Basket Currency times the Basket Currency Weighting for such Basket
Currency.

 

The “Currency
Return” for each Basket Currency is a quotient, the numerator of which is the
difference of the Initial Spot Rate for such Basket Currency minus the Final
Spot Rate for such Basket Currency and the denominator of which is the Final
Spot Rate for such Basket Currency.

 

The “Final Spot
Rate” for each Basket Currency is the Reference Exchange Rate for that Basket
Currency on the Valuation Date, determined by the Calculation Agent in
accordance with the Spot Rate Source (subject to the occurrence of a Disruption
Event).

 

The “Weighting”
and “Initial Spot Rate” for each Basket Currency are as follows:

 

	
  Basket 

  Currency

  	
   

  	
  Weighting

  	
   

  	
  Initial Spot 

  Rate

  
	
  IDR

  	
   

  	
  25

  	
  %

  	
  9212

  

 

2

 

	
  INR

  	
   

  	
  25

  	
  %

  	
  40.15

  
	
  MYR

  	
   

  	
  25

  	
  %

  	
  3.1997

  
	
  PHP

  	
   

  	
  25

  	
  %

  	
  41.801

  

 

The “Reference
Exchange Rates” are, for each Basket Currency, the spot exchange rates for that
Basket Currency quoted against the U.S. dollar, expressed as the number of
units of the Basket Currency per one USD.

 

The “Issue
Date” is March 31, 2008.

 

If a
Disruption Event relating to one or more of the Basket Currencies is in effect
on the scheduled Valuation Date, the Calculation Agent will determine the
Basket Return using:

 

·                                          for each Basket Currency that did  not suffer a Disruption Event on the scheduled
Valuation Date, the Final Spot Rate on the scheduled Valuation Date, and

 

·                                          for each Basket Currency
that did suffer a Disruption Event on the scheduled
Valuation Date, the Final Spot Rate on the immediately succeeding scheduled
Valuation Business Day for such Basket Currency on which no Disruption Event
occurs or is continuing with respect to such Basket Currency;

 

provided, however, that if a Disruption Event has occurred or is continuing
with respect to a Basket 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 Basket Currency; and (b) the Calculation Agent will determine the
Final Spot Rate for the affected Basket 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 Basket Currency.

 

A “Disruption
Event” means any of the following events with respect to a Basket Currency, 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 Basket Currency
Jurisdiction for that Basket Currency to accounts outside that Basket Currency
Jurisdiction;

 

(B)                                the
occurrence of any event causing the Reference
Exchange Rate for the Basket Currency to be split into dual or multiple
currency exchange rates; or

 

(C)                                the Final Spot Rate being
unavailable for the Basket Currency, or the occurrence of an event (i) in
the Basket Currency Jurisdiction for that Basket Currency that materially disrupts the market for the Basket 

 

3

 

Currency
or (ii) that generally makes it impossible to obtain the Final Spot Rate
for the Basket Currency, on the Valuation Date.

 

A “Valuation Business Day” means,
with respect to each Basket 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:

 

	
  Basket Currency

  	
   

  	
  Screen
  Reference

  	
   

  	
  Valuation
  Business Day

  
	
  IDR

  	
   

  	
  ABSIRFIX01

  	
   

  	
  Singapore

  
	
  INR

  	
   

  	
  RBIB

  	
   

  	
  Mumbai

  
	
  MYR

  	
   

  	
  ABSIRFIX01

  	
   

  	
  Singapore

  
	
  PHP

  	
   

  	
  PDSPESO
  (as successor to PHPESO)

  	
   

  	
  Manila

  

 

The “Spot Rate Source” for the IDR
is the Indonesian Rupiah/U.S. Dollar spot rate at 11:00 a.m.,
Singapore time, expressed as the  amount of
Indonesian Rupiah per one U.S.  Dollar,
for settlement in two Business Days,  reported
by the Association of Banks in Singapore which appears on
the Reuters Page ABSIRFIX01 to the right of the caption “Spot” under the column “IDR” at  approximately
11:30 a.m., Singapore time, on the
relevant Valuation Date.  The Spot Rate
Source 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 Spot Rate Source for the MYR is the Malaysian Ringgit/U.S. Dollar
spot rate at 11:00 a.m., Singapore time, expressed as the amount of
Malaysian Ringgit per one U.S. Dollar, for settlement in two Business Days,
reported by the Association of Banks in Singapore, which appears on the Reuters
Page ABSIRFIX01 to the right of the caption “Spot” under the column “MYR”
at approximately 11:30 a.m., Singapore time, on the relevant Valuation
Date.  The Spot Rate Source for the PHP
is the Philippine Peso/U.S. Dollar morning weighted average rate, expressed as
the amount of Philippine Pesos per one U.S. Dollar, for settlement in one
Business Day reported by the Philippine Dealing system which appears on the
Reuters Screen PHPESO Page to the right of the caption “AM WT AVE” at approximately
12:30 p.m., Manila time, on the relevant Valuation Date.

 

The screen or time of observation
indicated in relation to any Final Spot Rate 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, Final Spot Rate or other rate, as specified in the applicable pricing
supplement, in respect of a basket currency will equal the noon buying rate in
New York for cable transfers in foreign currencies as announced by the Federal
Reserve Bank of New York for customs purposes (the “Noon Buying Rate”) on the
relevant Valuation Date or such other date specified in the applicable pricing supplement.
If the Noon Buying Rate is not announced on that date, the Reference Exchange Rate, Final Spot Rate or other rate for such
Basket Currency will be calculated on the basis of the arithmetic mean of the
applicable spot quotations received by the 

 

4

 

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 basket 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, Final Spot 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 Basket
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, Final Spot Rate or other rate, as applicable, for such
Basket 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.

 

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: March 31,
  2008

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [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

  

 

6

 

[REVERSE
OF NOTE]

 

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES,
SERIES I

NOTES LINKED TO AN ASIAN CURRENCY BASKET
 DUE MARCH 31, 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,
Notes Linked to an Asian Currency Basket (herein called the “Notes”).  The
Notes are one of an indefinite number of series of debt securities of the
Company (collectively, the “Securities”) issued or issuable under and pursuant
to an indenture dated as of September 1, 1987, as amended and supplemented
(the “Indenture”), duly executed and delivered by the Company and Citibank,
N.A., as Trustee (herein called the “Trustee”), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities
thereunder of the Trustee, the Company and the holders of the Securities.  The separate series of Securities may be
issued in various aggregate principal amounts, may mature at different times,
may bear interest (if any) at different rates, may be subject to different
redemption provisions or repurchase rights (if any), may be subject to
different sinking, purchase or analogous funds (if any), may be subject to
different covenants and Events of Default and may otherwise vary as in the
Indenture provided.

 

Section 2.  Principal Amount for Indenture Purposes.  For the purpose of determining whether
Holders of the requisite amount of Notes of this series outstanding under the
Indenture have made a demand, given a notice or waiver or taken any other
action, the principal amount of this Note will be deemed to be the principal
amount of this Note then outstanding.

 

Section 3.  Modification and Waivers.  The Indenture contains provisions permitting
the Company and the Trustee, with the consent of the Holders of not less than
66-2/3% in aggregate principal amount of each series of the Securities at the
time Outstanding to be affected, evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Securities of all such series; provided, however, that no such supplemental
indenture shall, among other things, (i) change the fixed maturity of any
Security, or reduce the Additional Amount or the principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon or reduce any
premium or other amount payable on redemption, or make the Additional Amount or
the principal amount thereof, premium or other amount payable, if any, or
interest thereon payable in any coin or currency other than that herein above
provided, without the consent of the Holder of each Security so affected, or (ii) change
the place of payment on any Security, or impair the right to institute suit for
payment on any Security, or reduce the aforesaid percentage of Securities, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Security so affected.  It is also provided in the Indenture that,
prior to any declaration accelerating the maturity of any series of Securities,
the holders of a majority in aggregate principal amount of the Securities of
such series 

 

 

Outstanding may on behalf
of the holders of all the Securities of such series waive any past default or
Event of Default under the Indenture with respect to such series and its
consequences, except a default in the payment of interest, if any, on the
Additional Amount or the principal amount, or premium, if any, on any of the
Securities of such series, or in the payment of any sinking fund installment or
analogous obligation with respect to Securities of such series.  Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
holders and owners of this Note and any Notes of this series which may be
issued in exchange or substitution herefor, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes of this series.

 

Section 4.  Obligations Unconditional.  No reference herein to the Indenture and no
provisions of this Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
Additional Amount or the principal amount on this Note at the place, at the
respective times, at the rate, and in the coin or currency herein prescribed.

 

Section 5.  Defeasance.  The Indenture contains provisions for the
discharge of the Indenture and defeasance at any time of the indebtedness on
this Note upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Note.

 

Section 6.  Authorized Form and Denominations.  The Notes of this series are issuable in
registered form, without coupons.  Each
Note will be issued initially as either a Global Security or a Certificated
Note, at the option of the Company, in denominations of $1,000 or whole
multiples of $1,000, either at the office or agency to be designated and
maintained by the Company for such purpose in the Borough of Manhattan, New
York City, pursuant to the provisions of the Indenture or at any of such other
offices or agencies as may be designated and maintained by the Company for such
purpose pursuant to the provisions of the Indenture, and in the manner and
subject to the limitations provided in the Indenture, but without the payment
of any service charge, except for any tax or other governmental charges imposed
in connection therewith.  Notes of this
series are exchangeable for a like aggregate principal amount of Notes of this
series of a different authorized denomination, except that Global Securities
will not be exchangeable for Certificated Notes of this series.

 

Section 7.  Registration of Transfer.  As provided in the Indenture and subject to
certain limitations as therein set forth, the transfer of this Note is
registrable in the Security Register, upon surrender of this Note for
registration of transfer, at the Corporate Trust Office or agency in a Place of
Payment for this Note, duly endorsed by, or accompanied by a written instrument
of transfer in form satisfactory to the Company and the Security Registrar
requiring such written instrument of transfer duly executed by, the Holder
hereof or his attorney duly authorized in writing, and thereupon one or more
new Notes of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

 

If at any time the
Depository notifies the Company that it is unwilling or unable to continue as
Depository or if at any time the Depository shall no longer be eligible under
the Indenture, the Company shall appoint a successor Depository.  If a successor Depository for the Notes of
this series is not appointed by the Company within 90 days after the Company receives

 

 

such notice or becomes
aware of such ineligibility, the Company will issue, and the Trustee will
authenticate and deliver, Notes of this series in definitive form in an
aggregate principal amount equal to the principal amount of this Note.

 

No service charge
shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith.

 

Prior to due
presentment of this Note for registration of transfer, the Company, the Trustee
and any agent of the Company or the Trustee may treat the person in whose name
this Note is registered as the owner hereof for all purposes, and neither the
Company nor the Trustee nor any agent of the Company or of the Trustee shall be
affected by any notice to the contrary.

 

Section 8.  Events of Default.  If an Event of Default with respect to Notes
of this series shall occur and be continuing, the amount that may be declared
due and payable upon any acceleration of the notes will be determined by the
Calculation Agent for the period from and including the Issue Date to but
excluding the date of early repayment and will equal, for each note, the
Redemption Amount, calculated as the date of early repayment were the Maturity
Date. If a bankruptcy proceeding is commenced in respect of Lehman Brothers
Holdings, the claim of the beneficial owner of a note for the period from and
including the Issue Date to but excluding the date of early repayment will be
capped at the Redemption Amount, calculated as though the date of the
commencement of the proceeding were the Maturity Date.

 

Section 9.  No Recourse Against Certain Persons.  No recourse for the payment of the Additional
Amount or for any claim based hereon or otherwise in respect hereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
the Indenture or any Indenture supplemental thereto or in any Note, or because
of the creation of any indebtedness represented thereby, shall be had against
any incorporator, stockholder, officer or director, as such, past, present or
future, of the Company or of any successor corporation, either directly or
through the Company or any successor corporation, whether by virtue of any
constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.

 

Section 10.  Defined
Terms.  All terms used but not defined
in this Note are used herein as defined in the Indenture.

 

Section 11.  GOVERNING LAW.  THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

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