Document:

Exhibit
4.01

	
  

  	
  CUSIP NO. 52517P3A7

  	
   

  	
   

  
	
   

  	
  ISIN NO. US52517P3A79

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  

  	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT: $50,000

  
	
   

  	
  No. R-3

  	
   

  	
   

  

 

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 the amount equal to the sum of the principal amount of the Notes
plus the Supplemental Redemption Amount, if any.

The “Supplemental
Redemption Amount” is a single U.S. dollar payment calculated by the
Calculation Agent equal to the principal amount of the Notes multiplied by:

(A)  the Basket Return, if the Basket Return is
greater than 30.000%;

(B)   30.000%, if the Basket
Return is greater than –8.000% but equal to or less than 30.000%; or

(C)  0%, if the Basket Return is less than or
equal to –8.000%.

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

  

 

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  Aluminum

  	
   

  	
  $2,659.5

  
	
  Zinc

  	
   

  	
  $3,525

  

 

The “Original Trade Date” is June 22, 2007.

The “Original Issue Date” is June 29, 2007.

The “Valuation Date” is five Exchange Business Days
prior to the Maturity Date; 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 Original Trade Date of a material
change in the content, composition, or constitution of the Component Commodity;
or

(E)                                 the occurrence since the Original 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 Supplemental Redemption Amount, if any,
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 Supplemental 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.

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

	
  Dated: July 12, 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 Supplemental 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 Supplemental 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

 7
 

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 Supplemental 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 Supplemental 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

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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, 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 Original 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 Supplemental 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.

 9Exhibit
4.02

CUSIP NO. 52517P3X7
 ISIN NO. US52517P3X72

	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT: $500,000

  
	
  No. R-1

  	
   

  	
   

  

 

LEHMAN BROTHERS HOLDINGS INC.

MEDIUM-TERM NOTE, SERIES I

THREE-YEAR NOTES LINKED TO THE LBCI
AGRICULTURE INDEX TOTAL RETURN
 DUE JULY 13, 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 July 13, 2010, or if such day is not
a Business Day, on the next following Business Day; provided
that, if as a result of a Market Disruption Event the Valuation Date
for one or more Index Contracts is postponed so that it falls less than three
Business Days prior to the scheduled Maturity Date, the Maturity Date will be
the third Business Day following the latest occurring postponed Valuation Date.

The “Valuation
Date” is July 6, 2010, or if such day is not an Index Business Day, the
immediately preceding Index Business Day; provided that if a Market Disruption
Event is in effect for one or more Index Contracts on the scheduled Valuation
Date, the Valuation Date may be postponed as described below.

The “Redemption Amount at Maturity” for each $10,000 note
will be a single U.S. dollar payment on the Maturity Date equal to $10,000
multiplied by the difference of the Index Performance minus the Adjustment Percentage.

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

The “Initial Index Value” is 120.1300, equal to the closing level of
the Index on the Trade Date, as determined and published by the Index Sponsor,
rounded to four decimal places.

The “Trade Date” is the July 6, 2007.

The “Issue Date” is the July 13, 2007.

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

The “Adjustment Percentage” is 0.75%.

An “Index Business Day” is a day, as determined in good faith by the
Calculation Agent, on which trading is generally conducted on the Relevant
Exchange for each Index Contract then comprising the Index or any Successor
Index.

A “Business Day”,
notwithstanding any provision in the Indenture, is any day that is not is not a
Saturday or Sunday and that is not a day on which banking institutions in New
York City generally are authorized or obligated by law or executive order to be
closed.

The “Index” is the Lehman Brothers Commodity Index Agriculture Total
Return (also referred to herein as the “LBCI Agriculture Index Total Return”)
calculated and published by the Index Sponsor, subject to adjustment as
described below.

 2
 

The “Index Sponsor” is Lehman Brothers Inc.

The “Index Contracts” means the commodities contracts underlying the
Index or any Successor Index.

The “Relevant Exchange” means any organized exchange or market of
trading for any futures contract (or any combination thereof) included in the
Index or any Successor Index.

If a Market Disruption Event relating to one or more Index
Contracts is in effect on the scheduled Valuation Date, the Calculation Agent
will calculate the Final Index Value in good faith in accordance with the
formula for and method of calculating the Index last in effect prior to
commencement of the Market Disruption Event, using:

•                                            for each Index Contract
that did not suffer a Market Disruption Event on the scheduled Valuation Date,
the settlement price on the applicable Relevant Exchange of such Index Contract
on the scheduled Valuation Date, and

•                                            for each Index Contract
that did suffer a Market Disruption Event on the scheduled Valuation Date, the
settlement price of such Index Contract on the applicable Relevant Exchange on
the immediately succeeding trading day on which no Market Disruption Event
occurs or is continuing  with respect to
such Index Contract;

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

A “Market Disruption Event” means any of the following
events as determined in good faith by the Calculation Agent:

(A)                              the termination or suspension of, or material limitation or disruption
in the trading on a Relevant Exchange of any Index Contract;

(B)                                the settlement price on a Relevant Exchange of any Index Contract has
increased or decreased by an amount equal to the maximum permitted price change
from the previous day’s settlement price; or

(C)                                the settlement price of any Index Contract is not
published by the Relevant Exchange.

Notwithstanding
the foregoing, the following events will not constitute Market Disruption
Events:

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(1)                                  a limitation on the hours
in a trading day and/or number of days of trading, if it results from an
announced change in the regular business hours of the Relevant Exchange; or

(2)                                  a decision to permanently
discontinue trading in the Index Contract or options or futures contracts
relating to the Index or the Index Contract.

If an Index Unavailability Event is in effect on the
scheduled Valuation Date (and no Market Disruption Event is then in effect),
the Calculation Agent will determine the Final Index Value on the Valuation
Date in good faith in accordance with the formula for and method of calculating
the Index last in effect prior to commencement of the Index Unavailability
Event using the closing price on the Relevant Exchanges of each Index Contract.

An “Index Unavailability Event” means that the Index is not
calculated by the Index Sponsor or any Successor Index is not calculated and
published by the sponsors thereof.

If Lehman Brothers Inc.
discontinues publication of the Index and Lehman Brothers Inc. or another
entity publishes a successor or substitute index that the Calculation Agent
determines, in its sole discretion, to be comparable to the discontinued Index
(such index, a “Successor Index”), then the Final Index Value will be
determined by reference to the level of such Successor Index at the close of
trading on the Relevant Exchange or market of the Successor Index last to close
on the Valuation Date; provided, however, that the Calculation Agent, in its
sole discretion, may make such adjustments as it deems necessary to the level
of the Successor Index so that the level of the Successor Index reflects the
same level as that of the Index before it was discontinued.  Upon any selection by the Calculation Agent
of a Successor Index, the Calculation agent will cause written notice thereof
to be promptly furnished to the trustee, to the Company and to the Holders of
the notes.

If Lehman Brothers Inc.
discontinues publication of the Index prior to, and such discontinuation is
continuing on, the Valuation Date, and the Calculation Agent determines, in its
sole discretion, that no Successor Index is available at such time, then the
Calculation Agent will determine the Final Index Value on the Valuation
Date.  The Final Index Value will be
computed by the Calculation Agent in accordance with the formula for and method
of calculating the Index last in effect prior to such discontinuation, using
the settlement prices on the Relevant Exchanges (or, if trading in an Index
Contract has been materially suspended or materially limited, its good faith
estimate of the settlement price that would have prevailed but for such
suspension or limitation) at the close of trading on the Valuation Date.

If at any time the method of calculating the Index or a Successor Index,
or the level thereof, is, in the good faith judgment of the Calculation Agent,
changed or modified in a material respect, the Calculation Agent may (but is
not obligated to) make such adjustments to the Index or Successor Index or
their respective methods of calculation as, in the good faith judgment of the
Calculation Agent, may be necessary in order to arrive at a level of a
commodity index comparable to the Index or such Successor Index, as the case
may be, as if such changes or modifications had not been made, and the
Calculation Agent will calculate the Final Index Value with reference to the
Index or such Successor Index as adjusted. 
Accordingly, if the method of calculating the Index or a Successor Index
is modified or rebased so that the level of the Index or Successor Index is a
fraction or multiple of what it would have been if it had not been modified 

 4
 

or rebased, then the Calculation Agent will adjust the level of the
Index or Successor Index in order to arrive at a level of the Index or Successor
Index as if it has not been modified or rebased.

The “Calculation Agent” means
Lehman Brothers Inc., the determinations and calculations of which will be
binding in absence of manifest error.

Except as provided below, any Redemption Amount at Maturity
may, at the option of the Company, be made by check mailed to the person
entitled thereto at such person’s address as it appears on the registry books
of the Company.

Payment of any Redemption Amount at Maturity will be made
in immediately available funds in accordance with the normal procedures of the
Trustee (or any duly appointed Paying Agent).

The Company will pay any administrative costs imposed by
banks in making payments in immediately available funds, but any tax,
assessment or governmental charge imposed upon payments hereunder, including,
without limitation, any withholding tax, will be borne by the Holder hereof.

References herein to “U.S. dollars” or “U.S.$” or “$” or “USD”
are to the coin or currency of the United States as at the time of payment is
legal tender for the payment of public and private debts.

Reference is hereby made to the further provisions of this
Note set forth on the reverse hereof. 
Such further provisions shall for all purposes have the same effect as
if set forth at this place.

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

 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:  July 13, 2007

	
  [SEAL]

  	
   

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
  Andrew M.W. Yeung

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
   

  	
  Cindy Buckholz

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  	
  Assistant Secretary

  

 

 

 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

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

	
  CITIBANK, N.A.

  	
   

  	
   

  
	
  as Trustee

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Authorized Officer

  	
   

  	
   

  

 

 6

[REVERSE
OF NOTE]

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES, SERIES I
 THREE-YEAR NOTES LINKED TO THE LBCI
AGRICULTURE INDEX TOTAL RETURN
 DUE 
JULY 13, 2010

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

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

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

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

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

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

Section 6.  Authorized
Form and Denominations.  The Notes of
this series are issuable in registered form, without coupons.  Each Note will be issued initially as either
a Global Security or a Certificated Note, at the option of the Company, in
denominations of $10,000 or whole multiples of $10,000, 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.

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