Document:

Exhibit 4.01

 

CUSIP
NO. 5252M0EF0

ISIN NO. US5252M0EF01

 

 

	
  REGISTERED

  	
  PRINCIPAL
  AMOUNT: $3,671,000

  
	
  No. R-1

  	
   

  

 

LEHMAN BROTHERS HOLDINGS INC.

 

MEDIUM-TERM NOTE, SERIES I

 

NOTES LINKED TO A BASKET OF TEN COMMODITIES AND TWO COMMODITY

INDICES
 DUE MARCH 28, 2012

 

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

 

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

 

 

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

 

The “Maturity Date”
is March 28, 2012, or if such day is not a Business Day, on the next
following Business Day.

 

The “Valuation
Date” is March 21, 2012, or if such day is not a Valuation Business Day,
the immediately preceding Valuation Business Day; provided that if a Disruption
Event is in effect on the scheduled Valuation Date, the Valuation Date may be
postponed.

 

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

 

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

 

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

 

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

 

	
  Component
  Commodities

  	
   

  	
  Component Weighting

  	
   

  
	
  Light
  sweet crude oil (“Crude Oil”)

  	
   

  	
  15

  	
  %

  
	
  Henry
  Hub natural gas (“Natural Gas”)

  	
   

  	
  10

  	
  %

  
	
  Reformulated
  gasoline blendstock for oxygen blending (“RBOB Gasoline”)

  	
   

  	
  5

  	
  %

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

  	
   

  	
  5

  	
  %

  
	
  High
  Grade Primary Aluminium (“Aluminum”)

  	
   

  	
  7

  	
  %

  
	
  Copper
  — Grade A (“Copper”)

  	
   

  	
  7

  	
  %

  
	
  Primary Nickel (“Nickel”)

  	
   

  	
  6

  	
  %

  
	
  Special High Grade Zinc (“Zinc”)

  	
   

  	
  5

  	
  %

  
	
  Standard
  Lead (“Lead”)

  	
   

  	
  5

  	
  %

  
	
  Gold (“Gold”)

  	
   

  	
  5

  	
  %

  
	
  S&P GSCI Livestock
  Index Excess Return (“GSCI® Livestock”) calculated and published by
  the Index Sponsor, subject to adjustment in accordance with Index Adjustment
  below

  	
   

  	
  10

  	
  %

  

 

2

 

	
  Component
  Commodities

  	
   

  	
  Component Weighting

  	
   

  
	
  S&P GSCI
  Agriculture Index Excess Return (“GSCI® Agriculture”) calculated and
  published by the Index Sponsor, subject to adjustment in accordance with
  Index Adjustment below

  	
   

  	
  20

  	
  %

  

 

The “Upside
Participation Rate” is 121%.

 

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

 

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

 

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

 

The “Trade Date”
is March 20, 2008.

 

The “Issue Date”
is March 28, 2008.

 

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

 

The “Initial
Commodity Prices” for each Component Commodity are as follows:

 

	
  Component
  Commodity

  	
   

  	
  Initial Commodity Price

  
	
  Crude
  Oil

  	
   

  	
  US$101.84

  
	
  Natural
  Gas

  	
   

  	
  US$9.0650

  
	
  RBOB
  Gasoline

  	
   

  	
  US$2.6051

  
	
  Heating
  Oil

  	
   

  	
  US$2.9772

  
	
  Aluminum

  	
   

  	
  US$2,762.00

  
	
  Copper

  	
   

  	
  US$7,789.00

  
	
  Nickel

  	
   

  	
  US$28,285.00

  
	
  Zinc

  	
   

  	
  US$2,260.00

  
	
  Lead

  	
   

  	
  US$2,650.00

  
	
  Gold

  	
   

  	
  US$925.75

  
	
  GSCI® Livestock

  	
   

  	
  288.9341

  
	
  GSCI® Agriculture

  	
   

  	
  86.9735

  

 

3

 

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

 

The “Commodity
Price” for each Component Commodity is as follows:

 

	
  Component
  Commodity

  	
   

  	
  Commodity Price

  
	
  Crude Oil

  Natural Gas

  RBOB

  Gasoline

  Heating Oil

  	
   

  	
  For each of Crude Oil,
  Natural Gas, RBOB Gasoline and Heating Oil, the official settlement price of
  the first nearby month futures contract (or, in the case of the last trading
  day of the first nearby month contract, the second nearby month contract) for
  that Component Commodity, expressed (a) in the case of Crude Oil, as the
  U.S. dollar price per barrel, (b) in the case of Natural Gas, as the
  U.S. dollar price per million British thermal units (Btu), and (c) in
  the case of RBOB Gasoline and Heating Oil, as the U.S. dollar price per
  gallon, in each case as made public by the Relevant Exchange for that
  Component Commodity (subject to the occurrence of a Disruption Event).

  
	
  Aluminum 

  Copper 

  Nickel 

  Zinc 

  Lead

  	
   

  	
  For each of Aluminum,
  Copper, Nickel, Zinc and Lead, 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 for that Component Commodity (subject to the occurrence of a
  Disruption Event).

  

 

4

 

	
  Gold

  	
   

  	
  The official afternoon
  fixing price of Gold, stated in U.S. dollars per troy ounce, as calculated
  and quoted by the London Bullion Market Association (the “LBMA”)
  (subject to the occurrence of a Disruption Event).

  
	
  GSCI® Livestock

  GSCI® Agriculture

  	
   

  	
  For each of GSCI®
  Livestock and GSCI® Agriculture (each an “Index” and collectively the
  “Indices”), the closing level of that Index, as determined and
  published by the Index Sponsor (subject to the occurrence of a Disruption
  Event), rounded to four decimal places.

  

 

The “Relevant
Exchange” for each Component Commodity is as follows:

 

	
  
  Component
  Commodity

  

  	
   

  	
  
  Relevant
  Exchange

  

  
	
  Crude Oil

  	
   

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

  
	
  Natural Gas

  	
   

  	
  NYMEX

  
	
  RBOB Gasoline

  	
   

  	
  NYMEX

  
	
  Heating Oil

  	
   

  	
  NYMEX

  
	
  Aluminum

  	
   

  	
  London Metal Exchange
  (“LME”)

  
	
  Copper

  	
   

  	
  LME

  
	
  Nickel

  	
   

  	
  LME

  
	
  Zinc

  	
   

  	
  LME

  
	
  Lead

  	
   

  	
  LME

  
	
  Gold 

  	
   

  	
  The market in London on
  which members of the LBMA quote prices for the buying and selling of Gold.

  

 

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

 

5

 

trading session (notwithstanding
the Relevant Exchange or organized exchange or market, as applicable, closing
prior to its scheduled closing time).

 

The “Index
Sponsor” is Standard & Poor’s, a division of the McGraw-Hill
Companies.

 

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

 

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

 

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

 

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

 

If a
Disruption Event identified in clauses (D) or (E) below relating to
one or more Component Commodities (other than Gold or the Indices) 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.

 

With
respect to any Component Commodity that is an Index, if a Disruption Event
relating to one or more futures contracts then included in the Index or any
Successor Index (each such contract, an “Index Contract”) is in effect on the
scheduled Valuation Date, the Calculation Agent will calculate the Final
Commodity Price for such Index or Successor Index in good faith in accordance with
the formula for and method of calculating the Index or Successor Index last in
effect prior to commencement of the Disruption Event, using:

 

·                                          for each Index Contract that did not suffer a Disruption Event on the
scheduled Valuation Date, the settlement price on the applicable organized
exchange or market of trading for such Index Contract on the scheduled
Valuation Date, and

 

·                                          for each Index Contract that did suffer a Disruption Event on the
scheduled Valuation Date, the settlement price on the organized exchange

 

6

 

or market
of trading for such Index Contract on the immediately succeeding trading day on
which no Disruption Event occurs or is continuing  with respect to such Index Contract;

 

provided however that if a Disruption Event has occurred or is continuing with
respect to such Index Contract on each of the three scheduled trading days following
the scheduled Valuation Date, then (a) that third scheduled trading day
shall be deemed the Valuation Date for such Index Contract and (b) the
Calculation Agent will determine the price for such Index Contract on such 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 “Disruption
Event” is (a) for a Component Commodity other than an Index, any of the
following events with respect to that Component Commodity or (b) with
respect to an Index, any of the following events with respect to an Index
Contract, in each case as determined in good faith by the Calculation Agent:

 

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

 

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

 

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

 

solely
with respect to Component Commodities other than Gold or any Index (or any
Index Contract then comprising an Index or any Successor Index),

 

(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 for a Component Commodity or
an Index Contract has occurred:

 

7

 

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

 

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

 

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

 

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

 

If an
Index Unavailability Event is in effect on the scheduled Valuation Date (and no
Disruption Event is then in effect), the Calculation Agent will determine the
Final Commodity Price for the affected Index 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 for each Index Contract most recently constituting the Index
on the organized exchange or market of trading for that Index Contract.

 

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

 

If the Index Sponsor discontinues publication of an Index and the Index
Sponsor 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 Commodity
Price for such Index will be determined by reference to the level of such
Successor Index at the close of trading on the organized exchange or market of
trading for any futures contract (or any combination thereof) included in 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 discontinued Index
before it was discontinued.  Upon any
selection by the Calculation Agent of a Successor Index,

 

8

 

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

 

If the Index Sponsor discontinues publication of an 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 Commodity
Price for such Index on the Valuation Date. 
The Final Commodity Price for such Index 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 at the close of trading on the Valuation Date on the organized exchange
or market of trading for any futures contract (or any combination thereof) then
included in the Index (or, if trading in any such futures 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).

 

If at any time the method of calculating an 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 Commodity Price for such Index or Successor
Index 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 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 Commodity Services Inc,
the determinations and calculations of which will be binding absent manifest
error.

 

Except as provided below, any 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 any Redemption Amount will be made in immediately available
funds in accordance with the normal procedures of the Trustee (or any duly
appointed Paying Agent).

 

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

 

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

 

9

 

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.

 

10

 

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

 

	
  Dated: March 28,
  2008

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [SEAL]

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Andrew M.W. Yeung

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Cindy Buckholz

  
	
   

  	
   

  	
  Title:

  	
  Assistant Secretary

  
					

 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

 

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

 

	
  CITIBANK, N.A.

  	
   

  
	
   

  	
  as Trustee

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  
					

 

 

11

 

[REVERSE
OF NOTE]

 

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES,
SERIES I

NOTES LINKED TO A BASKET OF TEN COMMODITIES AND TWO COMMODITY INDICES  
 DUE MARCH 28, 2012

 

Section 1.  General.  This Note is one of a duly authorized series
of Notes of the Company designated as the Medium-Term Notes, Series I, Notes Linked to a Basket of Ten Commodities
and Two Commodity Indices (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 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 $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 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 4.02

 

CUSIP
NO. 5252M0EE3

ISIN NO. US5252M0EE36

 

	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT:
  $1,821,000

  

No. R-1

 

LEHMAN BROTHERS HOLDINGS INC.

 

MEDIUM-TERM NOTE, SERIES I

 

BUFFERED RETURN ENHANCED NOTES LINKED TO A BASKET OF TEN 

COMMODITIES AND TWO COMMODITY INDICES
 DUE MARCH 28, 2012

 

 

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

 

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

 

 

 

 

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

 

The “Maturity Date” is March 28, 2012,
or if such day is not a Business Day, on the next following Business Day.

 

The “Valuation Date” is March 21,
2012, or if such day is not a Valuation Business Day, the immediately preceding
Valuation Business Day; provided that if a Disruption Event is in effect on the
scheduled Valuation Date, the Valuation Date may be postponed.

 

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

 

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

 

(B)              $1,000, if the Final Basket Level is equal to or less than the Initial
Basket Level but greater than or equal to the Buffer Level; or

 

(C)              the sum of $1,000 plus the product of $1,000 times the sum of the
Basket Return plus the Protection Percentage, if the Final Basket Level is less
than the Buffer Level.

 

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

 

	
  Component
  Commodities

  	
   

  	
  Component Weighting

  	
   

  
	
  Light
  sweet crude oil (“Crude Oil”)

  	
   

  	
  15

  	
  %

  
	
  Henry
  Hub natural gas (“Natural Gas”)

  	
   

  	
  10

  	
  %

  
	
  Reformulated
  gasoline blendstock for oxygen blending (“RBOB Gasoline”)

  	
   

  	
  5

  	
  %

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

  	
   

  	
  5

  	
  %

  
	
  High
  Grade Primary Aluminium (“Aluminum”)

  	
   

  	
  7

  	
  %

  
	
  Copper
  — Grade A (“Copper”)

  	
   

  	
  7

  	
  %

  
	
  Primary Nickel (“Nickel”)

  	
   

  	
  6

  	
  %

  
	
  Special High Grade Zinc (“Zinc”)

  	
   

  	
  5

  	
  %

  
	
  Standard
  Lead (“Lead”)

  	
   

  	
  5

  	
  %

  
	
  Gold (“Gold”)

  	
   

  	
  5

  	
  %

  

 

 

2

 

 

	
  Component
  Commodities

  	
   

  	
  Component Weighting

  	
   

  
	
  S&P GSCI Livestock
  Index Excess Return (“GSCI® Livestock”) calculated and published by
  the Index Sponsor, subject to adjustment in accordance with Index Adjustment
  below

  	
   

  	
  10

  	
  %

  
	
  S&P GSCI
  Agriculture Index Excess Return (“GSCI® Agriculture”) calculated and
  published by the Index Sponsor, subject to adjustment in accordance with
  Index Adjustment below

  	
   

  	
  20

  	
  %

  

 

The “Upside
Participation Rate” is 167%.

 

The “Protection
Percentage” is 20.0%.

 

The “Buffer
Level” is the product of 80.0% times the Initial Basket Level.

 

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

 

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

 

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

 

The “Trade
Date” is March 20, 2008.

 

The “Issue
Date” is March 28, 2008.

 

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

 

The “Initial
Commodity Prices” for each Component Commodity are as follows:

 

	
  Component
  Commodity

  	
   

  	
  Initial Commodity Price

  
	
  Crude
  Oil

  	
   

  	
  US$101.84

  
	
  Natural
  Gas

  	
   

  	
  US$9.0650

  
	
  RBOB
  Gasoline

  	
   

  	
  US$2.6051

  
	
  Heating
  Oil

  	
   

  	
  US$2.9772

  
	
  Aluminum

  	
   

  	
  US$2,762.00

  
	
  Copper

  	
   

  	
  US$7,789.00

  
	
  Nickel

  	
   

  	
  US$28,285.00

  

 

 

3

 

 

	
  Component
  Commodity

  	
   

  	
  Initial Commodity Price

  
	
  Zinc

  	
   

  	
  US$2,260.00

  
	
  Lead

  	
   

  	
  US$2,650.00

  
	
  Gold

  	
   

  	
  US$925.75

  
	
  GSCI® Livestock

  	
   

  	
  288.9341

  
	
  GSCI® Agriculture

  	
   

  	
  86.9735

  

 

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

 

The “Commodity
Price” for each Component Commodity is as follows:

 

	
  Component
  Commodity

  	
   

  	
  Commodity Price

  
	
  Crude Oil 

  Natural Gas 

  RBOB Gasoline 

  Heating Oil

  	
   

  	
  For each of Crude Oil,
  Natural Gas, RBOB Gasoline and Heating Oil, the official settlement price of
  the first nearby month futures contract (or, in the case of the last trading
  day of the first nearby month contract, the second nearby month contract) for
  that Component Commodity, expressed (a) in the case of Crude Oil, as the
  U.S. dollar price per barrel, (b) in the case of Natural Gas, as the
  U.S. dollar price per million British thermal units (Btu), and (c) in
  the case of RBOB Gasoline and Heating Oil, as the U.S. dollar price per gallon,
  in each case as made public by the Relevant Exchange for that Component
  Commodity (subject to the occurrence of a Disruption Event).

  
	
  Aluminum 

  Copper 

  Nickel Zinc 

  Lead

  	
   

  	
  For each of Aluminum,
  Copper, Nickel, Zinc and Lead, the official settlement price of that
  Component Commodity for cash delivery, expressed as the

  

 

 

4

 

 

	
   

  	
   

  	
  U.S. dollar price per
  metric ton of the Component Commodity, as made public by the Relevant
  Exchange for that Component Commodity (subject to the occurrence of a
  Disruption Event).

  
	
  Gold

  	
   

  	
  The official afternoon
  fixing price of Gold, stated in U.S. dollars per troy ounce, as calculated
  and quoted by the London Bullion Market Association (the “LBMA”)
  (subject to the occurrence of a Disruption Event).

  
	
  GSCI® Livestock 

  GSCI® Agriculture

  	
   

  	
  For each of GSCI®
  Livestock and GSCI® Agriculture (each an “Index” and collectively the
  “Indices”), the closing level of that Index, as determined and
  published by the Index Sponsor (subject to the occurrence of a Disruption
  Event), rounded to four decimal places.

  

 

The “Relevant
Exchange” for each Component Commodity is as follows:

 

	
  Component
  Commodity

  	
   

  	
  Relevant
  Exchange

  
	
  Crude Oil

  	
   

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

  
	
  Natural Gas

  	
   

  	
  NYMEX

  
	
  RBOB Gasoline

  	
   

  	
  NYMEX

  
	
  Heating Oil

  	
   

  	
  NYMEX

  
	
  Aluminum

  	
   

  	
  London Metal Exchange
  (“LME”)

  
	
  Copper

  	
   

  	
  LME

  
	
  Nickel

  	
   

  	
  LME

  
	
  Zinc

  	
   

  	
  LME

  
	
  Lead

  	
   

  	
  LME

  

 

 

5

 

 

	
  Gold

  	
   

  	
  The market in London on
  which members of the LBMA quote prices for the buying and selling of Gold.

  

 

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

 

The “Index
Sponsor” is Standard & Poor’s, a division of the McGraw-Hill
Companies.

 

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

 

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

 

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

 

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

 

If a
Disruption Event identified in clauses (D) or (E) below relating to
one or more Component Commodities (other than Gold or the Indices) 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.

 

With
respect to any Component Commodity that is an Index, if a Disruption Event
relating to one or more futures contracts then included in the Index or any
Successor Index (each such contract, an “Index Contract”) is in effect on the
scheduled Valuation Date, the Calculation Agent will calculate the Final
Commodity Price for such Index or Successor Index in good faith in accordance with
the formula for and method of calculating the Index or Successor Index last in
effect prior to commencement of the Disruption Event, using:

 

 

6

 

 

·                                          for each Index Contract that did not suffer a Disruption Event on the
scheduled Valuation Date, the settlement price on the applicable organized
exchange or market of trading for such Index Contract on the scheduled
Valuation Date, and

 

·                                          for each Index Contract that did suffer a Disruption Event on the
scheduled Valuation Date, the settlement price on the organized exchange or
market of trading for such Index Contract on the immediately succeeding trading
day on which no Disruption Event occurs or is continuing  with respect to such Index Contract;

 

provided however that if a Disruption Event has occurred or is continuing with
respect to such Index Contract on each of the three scheduled trading days
following the scheduled Valuation Date, then (a) that third scheduled
trading day shall be deemed the Valuation Date for such Index Contract and (b) the
Calculation Agent will determine the price for such Index Contract on such 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 “Disruption
Event” is (a) for a Component Commodity other than an Index, any of the
following events with respect to that Component Commodity or (b) with
respect to an Index, any of the following events with respect to an Index
Contract, in each case as determined in good faith by the Calculation Agent:

 

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

 

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

 

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

 

solely
with respect to Component Commodities other than Gold or any Index (or any
Index Contract then comprising an Index or any Successor Index),

 

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

 

 

7

 

 

(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 for a Component Commodity or
an Index Contract has occurred:

 

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

 

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

 

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

 

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

 

If an
Index Unavailability Event is in effect on the scheduled Valuation Date (and no
Disruption Event is then in effect), the Calculation Agent will determine the
Final Commodity Price for the affected Index 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 for each Index Contract most recently constituting the Index
on the organized exchange or market of trading for that Index Contract.

 

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

 

 

8

 

 

If the Index Sponsor discontinues publication of an Index and the Index
Sponsor 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 Commodity
Price for such Index will be determined by reference to the level of such
Successor Index at the close of trading on the organized exchange or market of
trading for any futures contract (or any combination thereof) included in 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 discontinued 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 Issuer and to the holders of the notes.

 

If the Index Sponsor discontinues publication of an 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 Commodity
Price for such Index on the Valuation Date. 
The Final Commodity Price for such Index 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 at the close of trading on the Valuation Date on the organized exchange
or market of trading for any futures contract (or any combination thereof) then
included in the Index (or, if trading in any such futures 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).

 

If at any time the method of calculating an 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 Commodity Price for such Index or
Successor Index 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 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 Commodity Services Inc,
the determinations and calculations of which will be binding absent manifest
error.

 

Except as provided below, any 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 any Redemption Amount will be made in immediately available
funds in accordance with the normal procedures of the Trustee (or any duly
appointed Paying Agent).

 

 

9

 

 

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.

 

 

10

 

 

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

 

	
  Dated: March 28,
  2008

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [SEAL]

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Andrew M.W. Yeung

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Cindy Buckholz

  
	
   

  	
   

  	
  Title:

  	
  Assistant Secretary

  

 

 

 

TRUSTEE’S
CERTIFICATE OF AUTHENTICATION

 

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

 

	
  CITIBANK, N.A.

  	
   

  
	
  as
  Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Officer

  	
   

  

 

 

11

 

 

[REVERSE
OF NOTE]

 

 

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES,
SERIES I

BUFFERED RETURN ENHANCED NOTES LINKED TO A BASKET OF TEN COMMODITIES AND
TWO 

COMMODITY INDICES  
 DUE MARCH 28, 2012

 

 

Section 1.  General.  This Note is one of a duly authorized series
of Notes of the Company designated as the Medium-Term Notes, Series I, Buffered Return Enhanced Notes Linked to a
Basket of Ten Commodities and Two Commodity Indices (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 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 $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 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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