Exhibit 4.02


	
  CUSIP NO. 52517P3R0

  	
   

  	
   

  
	
  ISIN NO. US52517P3R05

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  REGISTERED

  	
   

  	
  PRINCIPAL AMOUNT: $5,000,000

  
	
  No. R-1

  	
   

  	
   

  



 


LEHMAN BROTHERS HOLDINGS INC.


MEDIUM-TERM NOTE, SERIES I


FX BASKET-LINKED NOTE
 DUE SEPTEMBER 26, 2008


This
Note is a Global Security within the meaning of the Indenture hereinafter
referred to and is registered in the name of the Depository or a nominee of the
Depository.  Unless this certificate is
presented by an authorized representative of The Depository Trust Company (55
Water Street, New York, New York) to the Company (as defined below) or its
agent for registration of transfer, exchange or payment and any certificate
issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment is made to Cede & Co., any transfer, pledge or other use hereof
for value or otherwise by or to any person is wrongful since the registered
owner hereof, Cede & Co., has an interest herein.


Unless
and until it is exchanged in whole or in part for Notes in certificated form (a
“Certificated Note”), this Global Security may not be transferred except as a
whole by the Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository or by the
Depository or any such nominee to a successor depository or a nominee of such
successor depository.













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


The
“Maturity Date” is September 26, 2008, or if such day is not a Business Day, on
the next following Business Day.


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


The “Additional Amount” is a single U.S. dollar amount equal the
principal amount of the Notes multiplied by:


(A) 0.0%, if the Basket Return is less
than or equal to 0.0;


(B) 11.5%, if the Basket Return is
greater than 0.0 but less than 0.115; or


(C) 11.5% plus the product of the
Leverage times the difference of the Basket Return minus 0.115, if the Basket
Return is greater than or equal to 0.115.


The “Leverage” is 150%.


The “Reference Currencies” are the Brazilian Real (BRL), Hungarian
Forint (HUF), Indian Rupee (INR), Indonesian Rupiah (IDR), Mexican Peso (MXN)
and Turkish Lira (TRY).


The “Basket Return” equals
the sum of the Weighted Currency Returns.


The “Weighted
Currency Return” for each Reference Currency is the product of the Weighting
for such Reference Currency times a quotient, the numerator of which is the
difference of the Initial Reference Currency Rate for such Reference Currency
minus the Settlement Rate for such Reference Currency and the denominator of
which is the Initial Reference Currency Rate for such Reference Currency.


The “Weighting”
and “Initial Reference Currency Rate” for each Reference Currency are as
follows:


	
  Reference

  Currency

  	
   

  	
  Weighting

  	
   

  	
  Initial

  Reference

  Currency Rate

  	
   

  
	
  BRL

  	
   

  	
  16.7

  	
  %

  	
  1.8627

  	
   

  
	
  HUF

  	
   

  	
  16.7

  	
  %

  	
  177.93

  	
   

  
	
  IDR

  	
   

  	
  16.7

  	
  %

  	
  9058

  	
   

  
	
  INR

  	
   

  	
  16.7

  	
  %

  	
  40.20

  	
   

  
	
  MXN

  	
   

  	
  16.7

  	
  %

  	
  10.7935

  	
   

  
	
  TRY

  	
   

  	
  16.7

  	
  %

  	
  1.2739

  	
   

  



 



 2
 









The “Settlement Rate” for each Reference Currency is
the Reference Exchange Rate on the Valuation Date, determined in accordance
with the applicable Settlement Rate Option (subject to the occurrence of a
Disruption Event).


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


The “Valuation Date” is September 22, 2008; provided that, upon the
occurrence of a Disruption Event with respect to a Reference Currency, the
Valuation Date for the affected Reference Currency may be postponed (as
described in “Disruption Events” below).


The “Issue Date” is July 26, 2007.


If the Calculation Agent determines that a
Disruption Event relating to one or more of the Reference Currencies is in
effect on the scheduled Valuation Date, the Calculation Agent will determine
the Basket Return using:


·                                          for each Reference
Currency that did not suffer a Disruption Event on the scheduled Valuation
Date, the Settlement Rate on the scheduled Valuation Date, and


·                                          for each Reference
Currency that did suffer a Disruption Event on the scheduled Valuation Date,
the Settlement Rate on the immediately succeeding scheduled Valuation Business
Day for such Reference Currency on which no Disruption Event occurs or is
continuing with respect to such Reference Currency;


provided, however, that if a
Disruption Event has occurred or is continuing with respect to a Reference
Currency on each of the three scheduled Valuation Business Days following the
scheduled Valuation Date, then (a) such third scheduled Valuation Business Day
shall be deemed the Valuation Date for the affected Reference Currency; and (b)
the Calculation Agent will determine the Settlement Rate for the affected
Reference Currency on such day in accordance with Fallback Rate Observation
Methodology.


For purposes of the above, “scheduled Valuation Business
Day” means a day that is or, in the judgment of the Calculation Agent, should
have been, a Valuation Business Day for the affected Reference Currency.


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


(A)                             the occurrence and/or existence of an event on any day that has the
effect of preventing or making impossible (x) the delivery of USD from accounts
inside the country for which a Reference Currency is the lawful currency (such
jurisdiction with respect to such Reference Currency, the “Reference Currency
Jurisdiction”) for that Reference Currency to accounts outside that Reference
Currency Jurisdiction; or (y) for MXN and TRY only, the



 3
 









conversion of the Reference
Currency into USD through customary legal channels;


(B)                              the occurrence of any event causing the Reference
Exchange Rate for the Reference Currency to be split into dual or multiple
currency exchange rates; or


(C)                              the Settlement Rate being unavailable for the Reference Currency, or
the occurrence of an event (i) in the Reference Currency Jurisdiction for that
Reference Currency that materially disrupts the market for the Reference
Currency or (ii) that generally makes it impossible to obtain the Settlement
Rate for the Reference Currency, on the Valuation Date.


A “Valuation
Business Day” means, with respect to each Reference Currency, any day, other
than a Saturday or Sunday, that is neither a legal holiday nor a day on which
commercial banks are authorized or required by law, regulation or executive
order to close (including for dealings in foreign exchange in accordance with
the practice of the foreign exchange market) in the city or jurisdiction
indicated in the table below:


	
  Reference Currency

  	
   

  	
  Screen
  Reference

  	
   

  	
  Valuation
  Business Day

  
	
  BRL

  	
   

  	
  BRFR

  	
   

  	
  Brazilia, Rio de Janiero or São
  Paulo

  
	
  HUF

  	
   

  	
  The EUR/HUF fixing rate on ECB37 divided by the
  EUR/USD fixing rate on ECB37

  	
   

  	
  TARGET

  
	
  INR

  	
   

  	
  RBIB

  	
   

  	
  Mumbai

  
	
  IDR

  	
   

  	
  ABSIRFIX01

  	
   

  	
  Singapore

  
	
  MXN

  	
   

  	
  USDMXNFIX=

  	
   

  	
  Mexico City

  
	
  TRY

  	
   

  	
  The EUR/TRY fixing rate on ECB37 divided by the
  EUR/USD fixing rate on ECB37

  	
   

  	
  TARGET

  



 


The “Settlement Rate Option” for the BRL is the
Brazilian Real/U.S. dollar offered rate for U.S. dollars, expressed as the
amount of Brazilian Reals per one U.S. dollar, for settlement in two Business
Days reported by the Banco Central do Brasil on SISBACEN Data System under
transaction code PTAX-800 (“Consulta de Cambio” or Exchange Rate Inquiry),
Option 5 ( “Cotacoes para Contabilidade” or Rates for Accounting Purposes),
which appears on Reuters Screen BRFR Page under the caption “Dolar PTAX” at
approximately 6:30 pm Sao Paolo time on the Valuation Date or such other
relevant date.  The Settlement Rate Option for the HUF is the
EUR/HUF Fixing Rate divided by the EUR/USD Fixing Rate.  The “EUR/HUF Fixing Rate” is the
Euro/Hungarian Forint fixing rate, expressed as the amount of Euro per one
Hungarian Forint which appears on Reuters Screen ECB37 to the right of the
caption “HUF” at approximately 2:15 p.m., Central European time, on the
Valuation Date or such other relevant date. 
The “EUR/USD Fixing Rate” is the Euro/U.S. dollar fixing rate, expressed
as the amount of Euro per one U.S. dollar which appears on Reuters Screen ECB37
to the right of the caption “USD” at approximately 2:15 p.m., Central European
time, on the Valuation Date or such other relevant date.  The
Settlement Rate Option for the INR is the Indian Rupee/U.S. dollar reference
rate, expressed as the amount of Indian Rupee per one U.S. dollar, for
settlement in two Business



 4
 









Days reported by the Reserve
Bank of India which appears on the Reuters Screen RBIB Page at approximately
2:30 p.m., Mumbai time, or as soon thereafter as practicable on the on
the Valuation Date or such other relevant date.    The Settlement Rate Option
for the IDR is the Indonesian Rupiah/U.S. dollar spot rate at 11:00 a.m.,
Singapore time, expressed as the amount of Indonesian Rupiah per one U.S.
dollar, for settlement in two Business Days reported by the Association of
Banks in Singapore which appears on the Reuters Page ABSIRFIX01 to the right of
the caption “Spot” under the column “IDR” at approximately 11:30 a.m.,
Singapore time, on the on the Valuation Date or such other relevant date.  The
Settlement Rate Option for the MXN Reference Exchange Rate is the Mexican
Peso/U.S. dollar official fixing rate, expressed as the amount of Mexican Pesos
per one U.S. dollar, for settlement in two business days reported by Banco de
Mexico which appears on Reuters Screen MEX01 Page under the heading “USDMXNFIX=“
at the close of business in Mexico City on the Valuation Date or such
other relevant date.  The Settlement Rate Option for the TRY is the
EUR/TRY Fixing Rate divided by the EUR/USD Fixing Rate.  The “EUR/TRY Fixing Rate” is the Euro/Turkish
Lira fixing rate, expressed as the amount of Euro per one Turkish Lira which
appears on Reuters Screen ECB37 to the right of the caption “TRY” at
approximately 2:15 p.m., Central European time, on the Valuation Date or such
other relevant date.  The term “business
day” solely as used in any Settlement Rate Option described above shall mean
any day, other than a Saturday or Sunday, that is neither a legal holiday nor a
day on which commercial banks are authorized or required by law, regulation or
executive order to close (including for dealings in foreign exchange in
accordance with the practice of the foreign exchange market) in the Principal
Financial Center for both (a) the Reference Currency and (b) the
currency against which the Reference Currency is quoted (the “base currency”)
in accordance with the Reference Exchange Rate specified in the applicable
pricing supplement, in each case as specified for the applicable Reference
Currency or base currency in the table below; provided that where the Turkish
Lira or Hungarian Forint is the Reference Currency or the base currency “business
day” for the Turkish Lira or Hungarian Forint as the Reference Currency or the
base currency shall mean any day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System is open.


The
screen or time of observation indicated in relation to any Settlement Rate
Option above shall be deemed to refer to such screen or time of observation as
modified or amended from time to time, or to any substitute screen thereto.


The “Fallback Rate Observation Methodology” means that the reference exchange rate, Settlement
Rate or other rate, as specified in the applicable pricing supplement, in
respect of a reference currency will equal the noon buying rate in New York for
cable transfers in foreign currencies as announced by the Federal Reserve Bank
of New York for customs purposes (the “Noon Buying Rate”) on the relevant
Valuation Date or such other date specified in the applicable pricing
supplement. If the Noon Buying Rate is not announced on that date, the
Reference Exchange Rate, Settlement Rate or other rate for such Reference
Currency will be calculated on the basis of the arithmetic mean of the
applicable spot quotations received by the Calculation Agent at approximately
10:00 a.m., New York City time, on the Valuation Business Day next
succeeding the Valuation Date or such other date specified in the applicable
pricing supplement, for the purchase or sale for deposits in the reference
currency by the New York offices of three leading banks engaged in the
interbank market (selected in the sole discretion of the Calculation Agent)
(the “Reference Banks”). If fewer than three Reference Banks provide spot
quotations, then the Reference Exchange Rate, Settlement Rate or other rate, as
applicable, will be calculated on the basis of the arithmetic mean of the
applicable spot quotations received



 5
 









by the Calculation Agent at
approximately 10:00 a.m., New York City time, on the relevant date from
two Reference Banks (selected in the sole discretion of the Calculation Agent),
for the purchase or sale for deposits in the Reference Currency. If these spot
quotations are available from only one Reference Bank, then the Calculation
Agent, in its sole discretion, will determine whether that quotation is
reasonable to be used. If no spot quotation is available, then the Reference
Exchange Rate, Settlement Rate or other rate, as applicable, for such Reference
Currency will be determined by the Calculation Agent in good faith and in a commercially
reasonable manner.


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


The “Calculation Agent” means
Lehman Brothers Inc.


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


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


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


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


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


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



 6
 









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


	
  Dated: July 26, 2007

  	
   

  
	
   

  	
   

  
	
  [SEAL] 

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
              
  Name: Andrew Yeung

  
	
   

  	
              
  Title:   Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
              
  Name: Cindy Buckholz

  
	
   

  	
              
  Title:   Assistant Secretary

  



 


TRUSTEE’S
CERTIFICATE OF AUTHENTICATION


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


	
  CITIBANK, N.A.

  
	
   as Trustee

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Officer

  



 



 7















[REVERSE OF NOTE]


LEHMAN BROTHERS
HOLDINGS INC.


MEDIUM-TERM NOTES,
SERIES I


FX BASKET-LINKED NOTE
 DUE SEPTEMBER 26, 2008


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


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


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













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


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


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


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


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


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













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


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


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


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


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


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


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