Free Writing Prospectus

Price to Public

Underwriting Discount

Proceeds to Us

Term sheet no. 1 to
Prospectus dated May 30, 2006
Prospectus supplement dated May 30, 2006
Product supplement no. 820-I dated March 26, 2008
Underlying supplement no. 910 dated April 23, 2008
Registration Statement no. 333-134553
Dated April 25, 2008
Rule 433

Lehman Brothers Holdings Inc. Notes Linked to the S&P 500^® Financials Index

These Return Optimization Securities with Partial Protection Linked to the S&P 500^® Financials Index (the “Notes”) provide potentially enhanced returns based on the positive performance of the S&P 500^® Financials Index (the “Index”) as well as protection, at maturity of the Notes, of 20% of your principal. The Notes are designed to enhance returns in a moderate-return environment – meaning an environment in which stocks generally experience no more than moderate appreciation. If the Index Return is positive, at the maturity of the Notes you will receive your principal plus a return equaling 200% of the Index Return, up to the Maximum Gain, providing you with an opportunity to outperform the Index. If the Index Return is less than or equal to 0% and equal to or greater than -20%, at maturity of the Notes you will receive your principal amount. If the Index Return is less than -20%, at maturity you will lose 1% of your principal for every 1% decline in the Index Return beyond 20%. Partial principal protected investments can help reduce portfolio risk while maintaining an increased exposure to equities. The partial principal protection feature applies only at maturity. Investing in the Notes is subject to significant risks, including potential loss of up to 80% of your principal, and a capped appreciation at maturity.

Features

Growth Potential—Investors receive enhanced upside participation in the performance of the Index up to the Maximum Gain, which will be between 37% and 41% (the actual Maximum Gain will be determined on the Trade Date).

Partial Protection of Principal—At maturity of the Notes, investors will receive a cash payment equal to at least 20% of their invested principal.

Key Dates¹


Trade Date		May 12, 2008
Settlement Date		May 15, 2008
Final Valuation Date		May 12, 2010
Maturity Date		May 17, 2010

In the event we make any change to the expected Trade Date and Settlement Date, the Final Valuation Date and the Maturity Date will be changed so that the stated term of the Notes remains the same.

We are offering Return Optimization Securities with Partial Protection Linked to the S&P 500^® Financials Index. The return on the Notes, if any, is subject to, and will not exceed, the predetermined Maximum Gain. The Maximum Gain will be between 37% and 41% and will be determined on the Trade Date. The Notes are offered at a minimum investment of $1,000 in denominations of $10 and integral multiples of $10 in excess thereof.

See “Additional Information about Lehman Brothers Holdings Inc. and the Notes” on page 2. The Notes offered will have the terms specified in the base prospectus dated May 30, 2006, the MTN prospectus supplement dated May 30, 2006, product supplement no. 820-I dated March 26, 2008, underlying supplement no. 910 dated April 23, 2008 and this term sheet. See “Key Risks” on page 6, the more detailed “Risk Factors” beginning on page SS-1 of product supplement no. 820-I for risks related to an investment in the Notes and “Risk Factors” beginning on page US-1 of underlying supplement no. 910 for risks related to the Index.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Notes or passed upon the accuracy or the adequacy of this term sheet, the accompanying base prospectus, MTN prospectus supplement, product supplement no. 820-I, underlying supplement no. 910 or any other related prospectus supplements, or any other relevant terms supplement. Any representation to the contrary is a criminal offense. The Notes are not deposit liabilities of Lehman Brothers Holdings Inc. and are not FDIC insured.

Lehman Brothers Holdings Inc. has filed a registration statement (including a base prospectus) with the U.S. Securities and Exchange Commission, or SEC, for this offering. Before you invest, you should read this term sheet together with the base prospectus, as supplemented by the MTN prospectus supplement relating to our Series I medium-term notes of which the Notes are a part, and the more detailed information contained in product supplement no. 820-I (which supplements the description of the general terms of the Notes) and underlying supplement no. 910 (which describes the Index, including risk factors specific to it). Buyers should rely upon the base prospectus, the MTN prospectus supplement, product supplement no. 820-I, underlying supplement no. 910, this term sheet, any other relevant terms supplement and any other relevant free writing prospectus for complete details. To the extent that there are any inconsistencies among the documents listed below, this term sheet shall supersede product supplement no. 820-I, which shall, likewise, supersede the base prospectus and the MTN prospectus supplement. You should carefully consider, among other things, the matters set forth in “Risk Factors” in the accompanying product supplement no. 820-I and “Risk Factors” in the accompanying underlying supplement no. 910, as the Notes involve risks not associated with conventional debt securities. We urge you to consult your investment, legal, tax, accounting and other advisors before you invest in the Notes. You may get these documents and other documents Lehman Brothers Holdings Inc. has filed for free by searching the SEC online database (EDGAR^®) at www.sec.gov, with “Lehman Brothers Holdings Inc.” as a search term or through the links below, or by calling UBS Financial Services Inc. toll-free at 1-877-827-2010 or Lehman Brothers Inc. toll-free at 1-888-603-5847.

You may access these documents on the SEC website at www.sec.gov as follows (or if such address has changed, by reviewing our filings for the relevant date on the SEC website):

References to “Lehman Brothers,” “we,” “our” and “us” refer only to Lehman Brothers Holdings Inc. and not to its consolidated subsidiaries. In this document, “Notes” refers to the Return Optimization Securities with Partial Protection Linked to the S&P 500^® Financials Index that are offered hereby, unless the context otherwise requires.

The Notes may be suitable for you if, among other considerations:

^¨

You believe that the Index will appreciate moderately—meaning that you believe the Index will appreciate over the term of the Notes and that such appreciation, as leveraged by the Leverage Factor, is unlikely to exceed the indicative Maximum Gain at maturity

^¨

You are willing to make an investment that is concentrated in the U.S. financial sector

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You seek an investment that offers partial principal protection when the Notes are held to maturity

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You are willing to risk losing up to 80% of your investment if the Index level declines from the Trade Date to the Valuation Date by more than the Protection Percentage

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You are willing to invest in the Notes notwithstanding that their return will be limited to a Maximum Gain of between 37% and 41% (the actual Maximum Gain will be determined on the Trade Date)

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You are willing to hold the Notes to maturity and are aware that there may be little or no secondary market for the Notes

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You do not seek current income from this investment

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You are willing to forgo dividends paid on the stocks included in the Index

The Notes may not be suitable for you if, among other considerations:

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You do not believe the Index will appreciate over the term of the Notes, or you believe the leveraged Index Return at maturity will be greater than the Maximum Gain

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You are unable or unwilling to hold the Notes to maturity

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You seek an investment that is 100% principal protected

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You seek an investment whose return is not subject to a cap that is equivalent to the Maximum Gain, which will be between 37% and 41% (the actual Maximum Gain will be determined on the Trade Date)

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You prefer the lower risk, and therefore accept the potentially lower returns, of fixed income investments with comparable maturities and credit ratings

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You seek current income from your investments

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You seek an investment for which there will be an active secondary market

The suitability considerations identified above are not exhaustive. Whether or not the Notes are a suitable investment for you will depend on your individual circumstances, and you should reach an investment decision only after you and your investment, legal, tax, accounting, and other advisors have carefully considered the suitability of an investment in the Notes in light of your particular circumstances. You should also review carefully the “Key Risks” on page 6, “Risk Factors” in product supplement no. 820-I, underlying supplement no. 910 and the MTN prospectus supplement for risks related to an investment in the Notes.

Indicative Terms


Issuer		Lehman Brothers Holdings Inc. (A+/A1/AA-)¹

Issue Price		$10 per Note

Term		2 years

Index		The S&P 500^® Financials Index (Ticker: S5FINL) (the “Index”)

Leverage Factor		2

Protection Percentage		20%

Maximum Gain		37% to 41%. The actual Maximum Gain will be determined on the Trade Date.

Payment at Maturity (per $10)		If the Index Return (as defined below) is positive, you will receive a cash payment, per $10 Note principal amount, equal to: $10 + [$10 × (Index Return × Leverage Factor)] provided, however, that in no event will you receive an amount greater than $10 + ($10 × the Maximum Gain). If the Index Return is between 0% and -20% inclusive, you will receive the principal amount of your Notes at maturity. If the Index Return is less than -20%, you will receive a cash payment, per $10 Note principal amount, equal to: $10 + [$10 × (Index Return + Protection Percentage)] *If the Index Return is lower than -20%, you could lose up to $8 per $10 Note principal amount.*

Index Return		Index Ending Level - Index Starting Level
		Index Starting Level

Index Starting Level		The closing level of the Index on the Trade Date

Index Ending Level		The closing level of the Index on the Final Valuation Date

CUSIP		52523J206

ISIN		US52523J2069

Determining Payment Upon a Call or Maturity

LOGO

If the Index Return is less than -20%, you will lose 1% of the principal amount of your Notes for every 1% that the Index Return is below -20%. Accordingly, your Payment at Maturity per $10 Note principal amount will be calculated as follows:

$10 + [$10 × (Index Return + 20%)]

In this scenario, you could lose up to 80% of your principal, depending on how much the Index declines.

Lehman Brothers Holdings Inc. intends to treat, and by purchasing a Note, for all tax purposes, you agree to treat, a Note as a cash-settled financial contract, rather than as a debt instrument. Subject to certain limitations, and based on certain factual representations received from us, in the opinion of Sidley Austin LLP, it is reasonable to treat a Note as a cash-settled financial contract for U.S. federal income tax purposes. Pursuant to this agreed upon treatment of the Notes, you will not be required to accrue any income on a Note prior to a sale, exchange or other disposition of a Note prior to maturity or the maturity of a Note. In addition, pursuant to this agreed upon treatment of the Notes, any gain or loss recognized by you upon a sale, exchange or other disposition of a Note or at maturity should be treated as long-term capital gain or loss if you have held such Note for more than one year as of the date of such sale, exchange or other disposition of the Note or maturity.

Recent Tax Law Developments. On December 7, 2007, the Internal Revenue Service released a Notice indicating that the Internal Revenue Service and the Treasury Department are considering and seeking comments as to whether holders of instruments similar to the Notes should be required to accrue income on a current basis over the term of the Notes, regardless of whether any payments are made prior to maturity. In addition, the Notice provides that the Internal Revenue Service and the Treasury Department are considering related issues, including, among other things, whether gain or loss from such instruments should be treated as ordinary or capital, whether foreign holders of such instruments should be subject to withholding tax, whether the tax treatment of such instruments should vary depending upon the nature of the underlying asset, and whether such instruments should be subject to the special “constructive ownership rules” contained in Section 1260 of the Internal Revenue Code of 1986, as amended. It is not possible to predict what changes, if any, will be adopted, or when they will take effect. Any such changes could affect the amount, timing and character of income, gain or loss in respect of the Notes, possibly with retroactive effect. Holders are urged to consult their tax advisors concerning the impact of the Notice on their investment in the Notes. Subject to future developments with respect to the foregoing, Lehman Brothers Holdings Inc. intends to continue to treat the Notes for U.S. federal income tax purposes in accordance with the treatment described in the accompanying product supplement no. 820-I under the headings “Risk Factors” and “Certain U.S. Federal Income Tax Consequences.”

See “Certain U.S. Federal Income Tax Consequences” in the accompanying product supplement no. 820-I.

An investment in the Notes involves significant risks not associated with an investment in conventional floating rate or fixed rate medium-term notes. Some of these risks are summarized below and are explained in more detail in the “Risk Factors” section of the accompanying product supplement no. 820-I and in the “Risk Factors” section of the accompanying underlying supplement no. 910, which you are urged to read. You should reach an investment decision only after you have carefully considered with your advisors the suitability of an investment in the Notes in light of your particular circumstances.

The S&P 500^® Financials Index, a subset of the S&P 500^®Index, is published by Standard & Poor’s (“S&P”), a division of The McGraw-Hill Companies, Inc. The Index is a float-adjusted, capitalization-weighted index, which as of March 31, 2008 was composed of 92 companies, designed to effectively represent the performance of the U.S. financial sector. The companies that make up the Index account for a large percentage of the market capitalization of the U.S. financial sector and represent the sector’s diverse sub-sectors, such as banking, mortgage finance, consumer finance, specialized finance, investment banking and brokerage, asset management and custody, corporate lending, insurance and financial investment and real estate, including REITs.

You can obtain the level of the S&P 500^® Financials Index at any time from the Bloomberg Financial Markets page “S5FINL <Index> <GO>“ or from the S&P website at www.standardandpoors.com.

The information on the S&P 500^® Financials Index provided in this document should be read together with the discussion under the heading “The S&P 500^® Financials Index” beginning on page US-3 of underlying supplement no. 910. Information contained in the S&P website referenced above is not incorporated by reference in, and should not be considered a part of, this term sheet.

The following scenario analysis and examples reflect the Leverage Factor of 2 and the Protection Percentage of 20% and assume an Index Starting Level of 345.70, a Maximum Gain of 39% (the midpoint of the range of 37% to 41%) and a range of Index Returns from +50% to –50%. The actual Index Starting Level and Maximum Gain will be set on the Trade Date.

Example 1—The level of the Index increases from the Index Starting Level of 345.70 to an Index Ending Level of 362.99. Because the Index Ending Level is 362.99 and the Index Starting Level is 345.70, the Index Return is 5%, calculated as follows:

Because the Index Return is 5%, the Payment at Maturity is equal to $11.00 per $10 Note principal amount calculated as follows:

Example 2—The level of the Index increases from the Index Starting Level of 345.70 to an Index Ending Level of 432.13. Because the Index Ending Level is 432.13 and the Index Starting Level is 345.70 the Index Return is 25%, calculated as follows:

Because the Index Return is 25% and the Leverage Factor is 2, the return on the Note would be equal to 50%, but it is subject to the Maximum Gain of 39%. Therefore, the Payment at Maturity is equal to $13.90 per $10 Note principal amount, calculated as follows:

Example 3—The level of the Index decreases from the Index Starting Level of 345.70 to an Index Ending Level of 328.42. Because the Index Ending Level is 328.42 and the Index Starting Level is 345.70, the Index Return is -5%, calculated as follows:

Because the Index Return is -5%, the absolute value of which is less than the Protection Percentage, the Payment at Maturity is equal to $10.00 per $10 Note principal amount (a zero return).

Example 4—The level of the Index decreases from the Index Starting Level of 345.70 to an Index Ending Level of 259.28. Because the Index Ending Level is 259.28 and the Index Starting Level is 345.70 the Index Return is -25%, calculated as follows:

Because the Index Return is equal to -25%, the absolute value of which is more than the Protection Percentage, you will lose 1% of principal for each 1% that the Index Return exceeds the Protection Percentage and the Payment at Maturity is equal to $9.50 per $10 (a loss of 5%) Note principal amount calculated as follows:

We will agree to sell to UBS Financial Services Inc. and Lehman Brothers Inc. (together, the “Agents”), and the Agents will agree to purchase, all of the Notes at the price indicated on the cover of the pricing supplement, the document that will be filed pursuant to Rule 424(b) containing the final pricing terms of the Notes. UBS Financial Services Inc. may allow a concession not in excess of the underwriting discount to its affiliates.

We have agreed to indemnify the Agents against liabilities, including liabilities under the Securities Act of 1933, as amended, or to contribute to payments that the Agents may be required to make relating to these liabilities as described in the MTN prospectus supplement and the base prospectus. We have agreed that UBS Financial Services Inc. may sell all or a part of the Notes that it purchases from us to its affiliates at the price that will be indicated on the cover of the pricing supplement that will be available in connection with the sales of the Notes.

Subject to regulatory constraints, Lehman Brothers Inc. has agreed to use reasonable efforts to make a market in the Notes for so long as the Notes are outstanding.

We or our affiliate will enter into swap agreements or related hedge transactions with one of our other affiliates or unaffiliated counterparties in connection with the sale of the Notes and the Agents and/or an affiliate may earn additional income as a result of payments pursuant to the swap or related hedge transactions.