Exhibit 4.02


 


CUSIP
NO. 52517P4R9


ISIN NO. US52517P4R95


 


	
  REGISTERED

  	
   

  	
  PRINCIPAL
  AMOUNT: $3,960,000

  
	
  No. R-1

  	
   

  	
   

  



 


LEHMAN BROTHERS HOLDINGS INC.


 


MEDIUM-TERM NOTE, SERIES I


 


CRUDE OIL-LINKED DUAL PARTICIPATION NOTES
 DUE NOVEMBER 14, 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 at Maturity.


 


The “Maturity Date” is November
14, 2012, or if such day is not a Business Day, on the next following Business
Day.


 


The “Valuation Date” is
November 7, 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 (as described below).


 


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


 


(A)  $1,000 times the Upside Participation Rate
times the Crude Oil Return, if the Crude Oil Return is greater than or equal to
0.000%; or


 


(B)  $1,000 times the Downside Return Rate times
the product of –1 times the Crude Oil Return, if the Crude Oil Return is less
than 0.000%.


 


“Crude Oil” is light sweet crude oil.


 


The “Upside Participation Rate” is 150%.


 


The “Downside Return Rate” is 50%.


 


The
“Crude Oil Return” is a quotient, the numerator of which is the difference of
the Final Crude Oil Price minus the Crude Oil Strike and the denominator of
which is the Crude Oil Strike, expressed as a percentage rounded to three
decimal places.


 


The “Upsize Trade Dates” are November 9, 2007 and November
13, 2007.


 


The “Original Trade Date” is November 7, 2007.


 


The “Issue Date” is November 14, 2007.


 


The “Crude Oil Contract” is 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 Crude Oil traded on the
Relevant Exchange.


 


The “Crude Oil Price” is the official settlement
price of the Crude Oil Contract, expressed as the U.S. dollar price per barrel
of Crude Oil, as made public by the Relevant Exchange (subject to the
occurrence of a Disruption Event).


 


The “Final Crude Oil Price” is the Crude Oil Price
on the Valuation Date.


 


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The
“Crude Oil Strike” is $ 96.37 (equal to the Crude Oil Price on the Original
Trade Date).


 


The “Relevant Exchange” is the NYMEX Division, or its
successor, of the New York Mercantile Exchange, Inc., or its successor; or, if
NYMEX is no longer the principal exchange or trading market for Crude Oil
options or futures contracts, such other exchange or principal trading market
for Crude Oil as determined in good faith by the Calculation Agent which serves
as the source of prices for Crude Oil, and any principal exchanges where
options or futures contracts on Crude Oil are traded.


 


An “Exchange Business Day” is a day, as determined
by the Calculation Agent, on which the Relevant Exchange 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 closing prior to its scheduled closing time).


 


If a Disruption Event identified in clauses (A), (B)
or (C) below has occurred and is in effect on the scheduled Valuation Date, the
Calculation Agent will calculate the Final Crude Oil Price on the immediately
succeeding Exchange Business Day on which no Disruption Event occurs or is
continuing; provided however that if a Disruption
Event has occurred or is continuing on each of the three scheduled Exchange
Business Days following the scheduled Valuation Date, then (a) that third
scheduled Exchange Business Day shall be deemed the Valuation Date; and (b) the
Calculation Agent will determine the Final Crude Oil Price on such day in its
sole and absolute discretion taking into account the latest available quotation
for the Crude Oil Price and any other information that in good faith it deems
relevant.


 


If a Disruption Event identified in clauses (D) or
(E) is in effect on the scheduled Valuation Date, the Calculation Agent will determine
the Final Crude Oil Price on the scheduled Valuation Date in its sole and
absolute discretion taking into account the latest available quotation for the
Crude Oil Price and any other information that in good faith it deems relevant.


 


A
“Disruption Event” 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 Crude Oil Contract or Crude Oil, or futures contracts or options related
to the Crude Oil Contract or Crude Oil, on the Relevant Exchange;


 


(B)                                either (i) the failure of trading to commence, or
permanent discontinuance of trading, in the Crude Oil Contract or Crude Oil, or
futures contracts or options related to the Crude Oil Contract or Crude Oil, on
the Relevant Exchange, or (ii) the disappearance of, or of trading in, Crude
Oil;


 


(C)                                the failure of the Relevant Exchange to publish the
official daily settlement price for that day for the Crude Oil Contract (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 Crude Oil or
the Crude Oil Contract; or


 


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(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 Crude Oil Contract.


 


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
the Crude Oil Contract, 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
the Relevant Exchange will not include any time when the Relevant Exchange is
closed for trading under ordinary circumstances.


 


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


 


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


 


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


 


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


 


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


 


REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF
THIS NOTE SET FORTH ON THE REVERSE HEREOF. SUCH FURTHER PROVISIONS SHALL FOR
ALL PURPOSES HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.


 


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


 


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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: November
  14, 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

  	
   

  
					



 


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[REVERSE OF NOTE]


 


LEHMAN BROTHERS HOLDINGS INC.


MEDIUM-TERM NOTES, SERIES I


CRUDE OIL-LINKED DUAL PARTICIPATION NOTES

 DUE NOVEMBER 14, 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, Crude Oil-Linked Dual Participation Notes (herein called the “Notes”). The Notes are one of an indefinite
number of series of debt securities of the Company (collectively, the “Securities”)
issued or issuable under and pursuant to an indenture dated as of September 1,
1987, as amended and supplemented (the “Indenture”), duly executed and
delivered by the Company and Citibank, N.A., as Trustee (herein called the “Trustee”),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and the holders of
the Securities. The separate series of Securities may be issued in various
aggregate principal amounts, may mature at different times, may bear interest
(if any) at different rates, may be subject to different redemption provisions
or repurchase rights (if any), may be subject to different sinking, purchase or
analogous funds (if any), may be subject to different covenants and Events of
Default and may otherwise vary as in the Indenture provided.


 


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


 


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


 

















 


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


 


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


 


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


 


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


 


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


 


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


 

















 


authenticate and deliver,
Notes of this series in definitive form in an aggregate principal amount equal
to the principal amount of this Note.


 


No
service charge shall be made for any such registration of transfer or exchange,
but the Company may require payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith.


 


Prior
to due presentment of this Note for registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the person in
whose name this Note is registered as the owner hereof for all purposes, and
neither the Company nor the Trustee nor any agent of the Company or of the
Trustee shall be affected by any notice to the contrary.


 


Section
8. Events of Default. If an Event of Default with respect to Notes of
this series shall occur and be continuing, the amount that may be declared due
and payable upon any acceleration of the notes will be determined by the
Calculation Agent for the period from and including the Issue Date to but
excluding the date of early repayment and will equal, for each note, the
Redemption Amount at Maturity, calculated as the date of early repayment were
the Maturity Date. If a bankruptcy proceeding is commenced in respect of Lehman
Brothers Holdings, the claim of the beneficial owner of a note for the period
from and including the Issue Date to but excluding the date of early repayment
will be capped at the Redemption Amount at Maturity, calculated as though the
date of the commencement of the proceeding were the Maturity Date.


 


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


 


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


 


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