Exhibit 4.02


 


	
  CUSIP NO. 5252M0AB3

  	
   

  
	
  ISIN NO. US5252M0AB33

  	
   

  
	
   

  	
   

  
	
  REGISTERED

  	
  PRINCIPAL AMOUNT: $3,749,000

  
	
  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 MAY 31, 2011


 


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 May
31, 2011, or if such day is not a Business Day, the next succeeding Business
Day.


 


The
“Valuation Date” is May 23, 2011, 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 at Maturity” 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 177%.


 


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 the November 21, 2007.


 


The “Issue Date” is November 29, 2007.


 


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$

  	
  97.29

  	
   

  
	
  Natural Gas

  	
   

  	
  US$

  	
  7.550

  	
   

  
	
  RBOB Gasoline

  	
   

  	
  US$

  	
  2.4371

  	
   

  
	
  Heating Oil

  	
   

  	
  US$

  	
  2.6874

  	
   

  
	
  Aluminum

  	
   

  	
  US$

  	
  2,467.00

  	
   

  
	
  Copper

  	
   

  	
  US$

  	
  6,535.50

  	
   

  
	
  Nickel

  	
   

  	
  US $

  	
  29,610.00

  	
   

  






 


3

















 




	
  Zinc

  	
   

  	
  US$

  	
  2,245.00

  	
   

  
	
  Lead

  	
   

  	
  US$

  	
  2,980.00

  	
   

  
	
  Gold

  	
   

  	
  US$

  	
  798.00

  	
   

  
	
  GSCI® Livestock

  	
   

  	
   

  	
  338.1173

  	
   

  
	
  GSCI®
  Agriculture

  	
   

  	
   

  	
  75.37081

  	
   

  






 


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” (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 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).


 


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: November 29, 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

  	
   

  	
   

  



 


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 MAY 31, 2011


 


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 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.