Document:

Exhibit
4.01

 

	
  CUSIP NO. 52517P5L1

  	
   

  
	
  ISIN NO. US52517P5L17

  	
   

  
	
   

  	
   

  
	
  REGISTERED

  	
  PRINCIPAL AMOUNT:
  $347,000

  
	
  No. R-1

  	
   

  

 

 

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTE, SERIES I

NOTES LINKED TO AN ASIAN CURRENCY BASKET
 DUE MAY 1, 2009

 

THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY OR A NOMINEE OF THE DEPOSITORY. 
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE
COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM (A “CERTIFICATED NOTE”), THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY
OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY
OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.

 

                                LEHMAN BROTHERS
HOLDINGS INC., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the “Company,” which term includes any
successor corporation under the Indenture referred to on the reverse hereof),
for value received, hereby promises to pay to CEDE & Co., or registered
assigns, on the Maturity Date, an amount equal to the
Redemption Amount.

                                The
“Maturity Date” is May 1, 2009, or if such day is not a Business Day, on the
next following Business Day.

The “Valuation
Date” is April 27, 2009; 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 $1,000, plus the Additional Amount, if any.

The “Additional
Amount” is an amount per Note equal to the greater of (a) zero and (b) $1,000
multiplied by the product of the Basket Return times the Participation Rate.

The “Participation
Rate” is 200%.

The “Basket”
is the Indonesian Rupiah (IDR), the Indian Rupee (INR), the Malaysian Ringgit
(MYR) and the Singapore Dollar (SGD), each a “Basket Currency” and collectively
the “Basket Currencies”.

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

  	
   

  
	
  MYR

  	
   

  	
  25

  	
  %

  	
  3.3491

  	
   

  
	
  IDR

  	
   

  	
  25

  	
  %

  	
  9144

  	
   

  
	
  INR

  	
   

  	
  25

  	
  %

  	
  39.51

  	
   

  
	
  SGD

  	
   

  	
  25

  	
  %

  	
  1.4547

  	
   

  

 

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 USD 1.

The “Issue Date” is November 1, 2007.

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 calculate 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 (x) 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, or
(y) for SGD only, the conversion of the Reference Currency into USD through
customary legal channels;

(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

  
	
  SGD

  	
   

  	
  ABSIRFIX01

  	
   

  	
  Singapore

  

 

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 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.

 

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: November
  1, 2007

  
	
   

  
	
  [SEAL]

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Andrew
  Yeung

  
	
   

  	
   

  	
  Title: Vice
  President

  
	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Name: Cindy
  Buckholz

  
	
   

  	
   

  	
  Title:Assistant
  Secretary

  

 

 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

 

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

 

	
  CITIBANK, N.A.

  
	
   as Trustee

  
	
   

  
	
  By:

  	
   

  
	
   

  	
  Authorized Officer

  

 

 

[REVERSE
OF NOTE]

 

 

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES,
SERIES I

NOTES LINKED TO AN ASIAN CURRENCY BASKET
 DUE MAY 1, 2009

 

                                Section 1.  General.  This Note is one of a duly authorized series
of Notes of the Company designated as the Medium-Term Notes, Series I, 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 4.02

 

	
  CUSIP NO. 52517P6V8

  	
   

  
	
  ISIN NO. US52517P6V89

  	
   

  
	
   

  	
   

  
	
  REGISTERED

  	
  PRINCIPAL AMOUNT:
  $247,000

  
	
  No. R-1

  	
   

  

 

 

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTE, SERIES
I

NOTES LINKED TO A BASKET OF COMMODITIES
 DUE NOVEMBER 1, 2010

 

THIS NOTE IS A GLOBAL SECURITY WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY OR A NOMINEE OF THE DEPOSITORY. 
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) TO THE
COMPANY (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART
FOR NOTES IN CERTIFICATED FORM (A “CERTIFICATED NOTE”), THIS GLOBAL SECURITY
MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE
DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER
NOMINEE OF THE DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.

 

                                LEHMAN BROTHERS
HOLDINGS INC., a corporation duly organized and existing under the laws of the
State of Delaware (herein called the “Company,” which term includes any
successor corporation under the Indenture referred to on the reverse hereof),
for value received, hereby promises to pay to CEDE & Co., or registered
assigns, on the Maturity Date, an amount equal to the
Redemption Amount at Maturity.

                                The
“Maturity Date” is November 1, 2010, or if such day is not a Business Day, on
the next following Business Day.

The “Valuation
Date” is October 25, 2010, 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”)

  	
   

  	
  20

  	
  %

  
	
  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

  	
  %

  
	
  Platinum (“Platinum”)

  	
   

  	
  10

  	
  %

  
	
  Number 2 yellow corn (“Corn”)

  	
   

  	
  10

  	
  %

  
	
  Number 2 wheat (“Wheat”)

  	
   

  	
  10

  	
  %

  

The “Participation
Rate” is 115%.

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.

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 October 26, 2007.

The “Issue
Date” is November 1, 2007.

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” for each Component Commodity are as follows:

	
  Component Commodity

  	
   

  	
  Initial Commodity Price

  	
   

  
	
  Crude Oil

  	
   

  	
  91.86

  	
   

  
	
  Heating Oil

  	
   

  	
  2.4325

  	
   

  
	
  Copper

  	
   

  	
  7,860.50

  	
   

  
	
  Nickel

  	
   

  	
  31,550.00

  	
   

  
	
  Zinc

  	
   

  	
  2,878.00

  	
   

  
	
  Gold

  	
   

  	
  779.15

  	
   

  
	
  Platinum

  	
   

  	
  1,454.00

  	
   

  
	
  Corn

  	
   

  	
  3.7200

  	
   

  
	
  Wheat

  	
   

  	
  8.0000

  	
   

  

The “Final
Commodity Price” is, for each Component Commodity, the Commodity Price of the
Component Commodity on the Valuation Date.

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:

•                                            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 or Platinum) 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 or
Platinum, 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 or
Platinum, the occurrence since the Trade Date of a material change in the
formula for or 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.

                                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.

 

 

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: November
  1, 2007

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [SEAL]

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Andrew
  M.W. Yeung

  
	
   

  	
   

  	
  Title:Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Name: Cindy
  Buckholz

  
	
   

  	
   

  	
  Title:Assistant
  Secretary

  

 

 

 

 

 

 

 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

 

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

 

	
  CITIBANK, N.A.

  	
   

  
	
   as Trustee

  	
   

  
	
   

  
	
  By: 

  	
   

  
	
   

  	
  Authorized Officer

  
			

 

 

[REVERSE
OF NOTE]

 

 

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES,
SERIES I

NOTES LINKED TO A BASKET OF COMMODITIES  
 DUE 
NOVEMBER 1, 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 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.

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