Document:

Exhibit
4.03

CUSIP
NO. 52517P2Y6

ISIN NO. US52517P2Y64

REGISTERED                                                                                                                        PRINCIPAL
AMOUNT: $1,051,000

No. R-1

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTE,
SERIES I

BASE METALS BASKET BONUS NOTE
 DUE JUNE 29, 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 June 29, 2010, or if such day is not a Business
Day, on the next following Business Day.

The “Redemption Amount” is a single U.S. dollar payment on the Maturity
Date per $1,000 note equal to the following:

(A)  the sum of $1,000 plus the
product of $1,000 times the Basket Return, if the Basket Return is greater than
50.000%;

(B)  the sum of $1,000 plus the
product of $1,000 times 50.0%, if the Basket Return is greater than –25.000%
but equal to or less than 50.000%; or

(C)  the sum of $1,000 plus the
product of $1,000 times the sum of the Basket Return and 25.0%, if the Basket
Return is less than or equal to –25.000%.

The “Basket Return” is the sum of the Weighted Component Commodity
Returns, expressed as a percentage (rounded to three decimal places).

The “Component Commodities” are Copper, Nickel, Aluminum and Zinc.

 “Copper” is Copper — Grade A.

“Nickel” is Primary Nickel.

“Aluminum” is High Grade Primary Aluminum.

“Zinc” is Special High Grade Zinc.

The “Weighted Component Commodity Return” is, for each Component
Commodity, the Component Commodity Weighting for such Component Commodity
multiplied by a quotient, the numerator of which is the difference between the
Final Commodity Price for such Component Commodity and the Commodity Strike for
such Component Commodity and the denominator of which is the Commodity Strike
for such Component Commodity.

The “Weighting” for each Component Commodity is 25%.

The “Commodity Strike” is, for each Component Commodity, the Commodity
Price on the date hereof, as set forth below:

	
  Component 

  Commodity

  	
   

  	
  Commodity Strike

  	
   

  
	
  Copper

  	
   

  	
  $

  	
  7,510

  	
   

  
	
  Nickel

  	
   

  	
  $

  	
  37,605

  	
   

  
	
  Aluminum

  	
   

  	
  $

  	
  2,659.5

  	
   

  
	
  Zinc

  	
   

  	
  $

  	
  3,525

  	
   

  

 

 2
 

The “Trade Date” is June 22, 2007.

The “Issue Date” is June 29, 2007.

The “Valuation Date” is June
22, 2010; provided that, upon the occurrence of a Disruption Event with respect
to a Component Commodity, the Valuation Date for the affected Component
Commodity may be postponed.

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

The “Commodity Price” is,
for each Component Commodity, the official settlement price of that Component
Commodity for cash delivery, expressed as the U.S. dollar price per metric ton
of the Component Commodity, as made public by the Relevant Exchange (subject to
the occurrence of a Disruption Event).

The “Relevant Exchange” is,
for each Component Commodity, the London Metal Exchange, or its successor, or
if the London Metal Exchange is no longer the principal exchange or trading
market for a Component Commodity or options or futures contracts for such
Component Commodity, such other exchange or principal trading market for the
relevant Component Commodity as determined in good faith by the Calculation
Agent which serves as the source of prices for that Component Commodity, and
any principal exchanges where options or futures contracts on that Component
Commodity are traded.

If the Calculation Agent determines that 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 Basket Return using:

·                                          for each 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 Component Commodity that did suffer a
Disruption Event on the scheduled Valuation Date, the Final Commodity Price on
the immediately succeeding Exchange Business 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 Exchange Business Days following the scheduled Valuation Date, then
(a) that third Exchange Business 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.

 3
 

If a Disruption Event identified in clauses (D) or (E)
below relating to one or more Component Commodities 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, 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;

(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, or (ii) the disappearance of, or of trading in, the Component
Commodity;

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

(D)                               the occurrence since the Trade Date of a material
change in the content, composition, or constitution of the Component Commodity;
or

(E)                                 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
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;

(2)                                  a suspension in trading on the Relevant Exchange
(without taking into account any extended or after-hours trading session), in a
Component Commodity 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)                                  suspension of or material limitation on trading on
the Relevant Exchange will not include any time when the Relevant Exchange is
closed for trading under ordinary circumstances.

An “Exchange Business Day” is a
day, as determined in good faith by the Calculation Agent, on which the
Relevant Exchange is scheduled to be (or, but for the 

 4
 

occurrence of a Disruption Event, would have been)
open for trading during its regular trading session (notwithstanding the
Relevant Exchange closing prior to its scheduled closing time).

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
Commodity Services 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:  June 29, 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

  	
   

  

 

 6

[REVERSE OF NOTE]

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTES, SERIES I
 BASE METALS BASKET BONUS NOTE
 DUE JUNE 29, 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, Base Metals Basket Bonus Note (herein
called the “Notes”).  The Notes are one of an indefinite
number of series of debt securities of the Company (collectively, the “Securities”)
issued or issuable under and pursuant to an indenture dated as of September 1,
1987, as amended and supplemented (the “Indenture”), duly executed and
delivered by the Company and Citibank, N.A., as Trustee (herein called the “Trustee”),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the holders of
the Securities.  The separate series of
Securities may be issued in various aggregate principal amounts, may mature at
different times, may bear interest (if any) at different rates, may be subject
to different redemption provisions or repurchase rights (if any), may be
subject to different sinking, purchase or analogous funds (if any), may be
subject to different covenants and Events of Default and may otherwise vary as
in the Indenture provided.

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

Section
3.  Modification and Waivers.  The Indenture contains provisions permitting
the Company and the Trustee, with the consent of the Holders of not less than
66-2/3% in aggregate principal amount of each series of the Securities at the
time Outstanding to be affected, evidenced as in the Indenture provided, to
execute supplemental indentures adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of any
supplemental indenture or modifying in any manner the rights of the holders of
the Securities of all such series; provided, however, that no such supplemental
indenture shall, among other things, (i) change the fixed maturity of any
Security, or reduce the Redemption 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 Redemption 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
Redemption Amount or the principal amount, or premium, if any, on any of the
Securities of such series, or in the payment of any sinking fund installment or
analogous obligation with respect to Securities of such series.  Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
holders and owners of this Note and any Notes of this series which may be
issued in exchange or substitution herefor, irrespective of whether or not any
notation thereof is made upon this Note or such other Notes of this series.

Section
4.  Obligations Unconditional.  No reference herein to the Indenture and no
provisions of this Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
Redemption 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 the Company, the
claim of the beneficial owner of a note for the period from and including the
Issue Date to but excluding the date of early repayment will be capped at the
Redemption Amount, calculated as though the date of the commencement of the
proceeding were the Maturity Date.

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

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

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

CUSIP NO. 52517P2T7

ISIN NO. US52517P2T79

REGISTERED                                                                                                                        PRINCIPAL
AMOUNT: $521,000

No. R-1

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTE, SERIES I

FX BASKET-LINKED NOTE
 DUE DECEMBER 29, 2008

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 December 29, 2008, or if such day is not a Business Day, on
the next following Business Day.

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

The “Additional Amount” is a single U.S. dollar amount per $1,000 Note
equal the greater of (a) zero and (b) the product of $1,000 times the Basket
Return times the Participation Rate.

The “Participation Rate” is 270%.

The “Basket” is the Indonesian rupiah (IDR), Indian rupee (INR),
Malaysian ringgit (MYR) and Singapore dollar (SGD) (each a “Basket Currency”
and, collectively, the “Basket Currencies”).

The “Basket Return” is a
percentage equal to 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”
was set to 100 on the Trade Date.

The “Basket Ending Level” is
the Basket closing level on the Valuation Date, which is 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 Basket Currency
Weighting for such Basket Currency times the Currency Return for such Basket
Currency.

The “Basket Currency
Weighting” for each Basket Currency is as follows:

	
  Basket 

  Currency

  	
   

  	
  Basket 

  Currency 

  Weighting

  	
   

  
	
  MYR

  	
   

  	
  25

  	
  %

  
	
  IDR

  	
   

  	
  25

  	
  %

  
	
  INR

  	
   

  	
  25

  	
  %

  
	
  SGD

  	
   

  	
  25

  	
  %

  

 

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.

 2
 

The “Final Spot Rate” is, for each Basket Currency,
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 “Initial Spot Rate” is, for each Basket
Currency, the Reference Exchange Rate for that Basket Currency determined by
the Calculation Agent on the Trade Date as set forth below:

	
  Basket 

  Currency

  	
   

  	
  Initial Spot 

  Rate

  	
   

  
	
  MYR

  	
   

  	
  3.4765

  	
   

  
	
  IDR

  	
   

  	
  9,080

  	
   

  
	
  INR

  	
   

  	
  40.87

  	
   

  
	
  SGD

  	
   

  	
  1.5378

  	
   

  

 

The “Reference Exchange Rates” are the spot exchange
rates for each of the Basket Currencies quoted against the U.S. dollar
expressed as number of units of the Basket Currency per USD 1.

The “Valuation Date” is December 23, 2008; 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 “Trade Date” is June 26, 2007.

The “Issue Date” is June 29, 2007.

If the Calculation Agent determines that 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.

 3
 

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 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 (x) the delivery of USD from accounts
inside the country for which a Basket Currency is the lawful currency (such
jurisdiction with respect to such Basket Currency, the “Basket Currency
Jurisdiction”) for that Basket Currency to accounts outside that Basket
Currency Jurisdiction; or (y) for SGD only, the conversion of the Basket
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 “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 Valuation Date or such other relevant 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,
expressed as the amount of Malaysian Ringgit per one 

 4
 

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 Valuation Date
or such other relevant date.  The “Spot Rate Source” for the SGD is the Singapore Dollar/U.S.
dollar spot rate at 11:00 a.m., Singapore time, expressed as the amount of
Singapore Dollar 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 “SGD” at
approximately 11:30 a.m., Singapore time, on the Valuation Date or such other
relevant date.

The
screen or time of observation indicated in relation to any Spot Rate Source
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.

 5
 

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.

 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:  June 29, 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

  	
   

  

 

 7

[REVERSE OF NOTE]

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTES, SERIES I
 FX BASKET-LINKED NOTE
 DUE DECEMBER 29, 2008

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

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

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

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

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

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

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

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

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

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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