Document:

Exhibit 4.02

 

CUSIP
NO. 5252M0BG1

ISIN NO. US5252M0BG11

 

REGISTERED                                                                                                                        PRINCIPAL
AMOUNT: $1,026,000

No. R-1

 

LEHMAN BROTHERS
HOLDINGS INC.

 

MEDIUM-TERM NOTE,
SERIES I

 

NOTES LINKED TO AN INDIA AND CHINA CURRENCY BASKET
 DUE JANUARY 11, 2012

 

 

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

 

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

 

 

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

 

The “Maturity Date” is January 11, 2012, or if such day is not a
Business Day, on the next following Business Day.

 

The “Valuation Date” is January 5, 2012;
provided that, upon the occurrence of a Disruption Event with respect to a
Basket Currency, the Valuation Date for the affected Basket Currency may be
postponed (as described in “Disruption Events” below).

 

The “Redemption Amount” is the amount equal
to the sum of the principal amount of the Notes of $1,000, plus the Additional
Amount, if any.

 

The “Additional Amount” is an amount per Note
equal to the greater of (a) zero and (b) $1,000 multiplied by the
product of the Basket Return times the Participation Rate.

 

The “Participation Rate” is 160%.

 

The “Basket” is the Indian Rupee (INR) and
the Chinese Renminbi (CNY), each a “Basket Currency” and collectively the
“Basket Currencies”.

 

The “Basket
Return” is a quotient, the numerator of which is the difference of the Basket
Ending Level minus the Basket Starting Level and the denominator of which is
the Basket Starting Level.

 

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

 

The “Basket Ending
Level” is the Basket closing level on the Valuation Date, equal to the product
of 100 times the sum of 1 plus the sum of the Weighted Currency Returns.

 

The “Weighted
Currency Return” for each Basket Currency is the product of the Currency Return
for such Basket Currency times the Basket Currency Weighting for such Basket
Currency.

 

The “Currency
Return” for each Basket Currency is a quotient, the numerator of which is the
difference of the Initial Spot Rate for such Basket Currency minus the Final
Spot Rate for such Basket Currency and the denominator of which is the Final
Spot Rate for such Basket Currency.

 

The “Final Spot
Rate” for each Basket Currency is the Reference Exchange Rate for that Basket
Currency on the Valuation Date, determined by the Calculation Agent in
accordance with the Spot Rate Source (subject to the occurrence of a Disruption
Event).

 

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

 

 

2

 

 

	
  Basket Currency

  	
   

  	
  Weighting

  	
   

  	
  Initial Spot Rate

  
	
  INR

  	
   

  	
  50%

  	
   

  	
  39.28

  
	
  CNY

  	
   

  	
  50%

  	
   

  	
  7.2695

  

 

The “Reference Exchange Rates” are, for each Basket
Currency, the spot exchange rates for that Basket Currency quoted against the
U.S. dollar, expressed as the number of units of the Basket Currency per one
USD.

 

The “Issue
Date” is January 11, 2008.

 

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

 

·                                          for each Basket Currency that did  not suffer a Disruption Event on the scheduled
Valuation Date, the Final Spot Rate on the scheduled Valuation Date, and

 

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

 

provided, however, that if a Disruption Event has occurred or is continuing
with respect to a Basket 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 Basket Currency; and (b) the Calculation Agent will determine the
Final Spot Rate for the affected Basket 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 Basket Currency.

 

A “Disruption Event” means any of the following events
with respect to a Basket Currency, 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 Basket Currency Jurisdiction for that
Basket Currency to accounts outside that Basket Currency Jurisdiction, or (y) the
conversion of the Basket Currency into USD through customary legal channels;

 

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

 

 

3

 

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

 

A
“Valuation Business Day” means, with respect to each Basket 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:

 

	
  Basket Currency

  	
   

  	
  Screen Reference

  	
   

  	
  Valuation Business Day

  
	
  INR

  	
   

  	
  RBIB

  	
   

  	
  Mumbai

  
	
  CNY

  	
   

  	
  SAEC

  	
   

  	
  Beijing

  

 

The “Spot Rate Source” 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 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 Trade
Date or Valuation Date, as applicable. 
The Spot Rate Source for the CNY is the Chinese Renminbi/U.S. Dollar
official Beijing fixing rate, expressed as the amount of Chinese Renminbi per
one U.S. Dollar, for settlement in two Business Days reported by The State
Administration of Foreign Exchange of the People’s Republic of China, Beijing,
which appears on the Reuters Screen SAEC Page opposite the symbol
“USDCNY=” at approximately 5:00 p.m., Beijing time, on the relevant
Valuation Date.  The term “business day”
solely as used in any Spot Rate Source 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 Basket Currency and (b) the
currency against which the Basket 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 Basket Currency or
base currency in the table above.

 

The
screen or time of observation indicated in relation to any Final Spot Rate
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,
Final Spot Rate or other rate, as specified in the applicable pricing
supplement, in respect of a basket 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, Final Spot Rate or other rate for such Basket 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 

 

 

4

 

supplement, for the purchase or
sale for deposits in the basket 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,
Final Spot Rate or other rate, as applicable, 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
relevant date from two Reference Banks (selected in the sole discretion of the
Calculation Agent), for the purchase or sale for deposits in the Basket 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, Final Spot Rate or other rate, as applicable, for such
Basket 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.

 

5

 

 

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:  January 11, 2008

 

	
  [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

  	
   

  	
   

  
						

 

6

 

[REVERSE
OF NOTE]

 

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES,
SERIES I

NOTES LINKED TO AN INDIA AND CHINA CURRENCY BASKET
 DUE JANUARY 11, 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, 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.Exhibit 4.03

 

	
  CUSIP NO. 52517P2V2

  	
   

  
	
  ISIN NO. US52517P2V26

  	
   

  
	
   

  	
   

  
	
  REGISTERED

  	
                                                                            PRINCIPAL
  AMOUNT: $961,000

  
	
  No. R-1

  	
   

  

 

LEHMAN BROTHERS HOLDINGS INC.

 

MEDIUM-TERM NOTE, SERIES I

 

NOTES LINKED TO A BASKET OF COMMODITIES
 DUE JANUARY 11, 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 January 11, 2011,
or if such day is not a Business Day, on the next following Business Day.

 

The
“Valuation Date” is January 4, 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 (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:

 

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

 

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

 

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

 

	
  Component Commodities

  	
   

  	
  Component

  Commodity

  Weighting

  	
   

  
	
  Light sweet crude oil (“Crude Oil”)

  	
   

  	
  10%

  	
   

  
	
  Brent crude oil (“Brent Crude Oil”)

  	
   

  	
  10%

  	
   

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

  	
   

  	
  10%

  	
   

  
	
  Copper — Grade A (“Copper”)

  	
   

  	
  10%

  	
   

  
	
  Primary Nickel (“Nickel”)

  	
   

  	
  10%

  	
   

  
	
  Special High Grade Zinc
  (“Zinc”)

  	
   

  	
  10%

  	
   

  
	
  Coffee Robusta (“Coffee”)

  	
   

  	
  10%

  	
   

  
	
  Cocoa (“Cocoa”)

  	
   

  	
  10%

  	
   

  
	
  Class III milk (“Milk”)

  	
   

  	
  10%

  	
   

  
	
  Number 2 wheat (“Wheat”)

  	
   

  	
  10%

  	
   

  

 

The “Participation Rate” is 110%.

 

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

 

 

 

2

 

 

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

 

The
“Trade Date” is January 7, 2008.

 

The
“Issue Date” is January 11, 2008.

 

The
“Weighted Component Commodity Returns” are, for each Component Commodity, the
product of the Component Commodity 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 Price” and “Relevant Exchange” for each Component Commodity
are as follows:

 

	
  Component 

  Commodity

  	
   

  	
  Initial Commodity 

  Price

  	
   

  	
  Relevant Exchange

  	
   

  
	
  Crude Oil

  	
   

  	
  $95.09

  	
   

  	
  The NYMEX Division, or its successor, of the

  New York Mercantile Exchange, Inc.

  (“NYMEX”)

  	
   

  
	
  Brent Crude Oil

  	
   

  	
  $94.39

  	
   

  	
  The Intercontinental Exchange (“ICE”)

  	
   

  
	
  Heating Oil

  	
   

  	
  $2.5935

  	
   

  	
  NYMEX

  	
   

  
	
  Copper

  	
   

  	
  $6,915.50

  	
   

  	
  London Metals Exchange (“LME”)

  	
   

  
	
  Nickel

  	
   

  	
  $27,905.00

  	
   

  	
  LME

  	
   

  
	
  Zinc

  	
   

  	
  $2,475.50

  	
   

  	
  LME

  	
   

  
	
  Coffee

  	
   

  	
  $1,951.00

  	
   

  	
  Euronext.liffe (“LIFFE”)

  	
   

  
	
  Cocoa

  	
   

  	
  $2,131.00

  	
   

  	
  The New York Board of Trade (“NYBOT”)

  	
   

  
	
  Milk

  	
   

  	
  $19.28

  	
   

  	
  CME Group (“CME”) (as successor to The

  Chicago Board of Trade and the Chicago

  Mercantile Exchange)

  	
   

  
	
  Wheat

  	
   

  	
  $9.0300

  	
   

  	
  CME

  	
   

  

 

The
“Final Commodity Price” is, for each Component Commodity, the Commodity Price of
the Component Commodity on the Valuation Date, subject to the occurrence of a
Disruption Event.

 

A
“Valuation Business Day” is a day, as determined in good faith by the
Calculation Agent, on which the Relevant Exchange for each Component Commodity
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).

 

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

 

 

3

 

·                                          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 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.

 

A
“Disruption Event” for a Component Commodity means any of the following events,
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 futures contracts or options related to the
  Component Commodity, on the Relevant Exchange for that Component Commodity;

  
	
   

  	
   

  	
   

  
	
   

  	
  (B)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (C)

  	
  the
  failure of the Relevant Exchange for the Component Commodity to publish the
  official daily settlement price of the Component Commodity for that day (or
  the information necessary for determining the settlement price); and

  
	
   

  	
   

  	
   

  
	
   

  	
  (D)

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

  
	
   

  	
   

  	
   

  
	
   

  	
  (E)

  	
  the occurrence since the Trade Date of a material change
  in the formula for or the method of calculating the settlement price of the
  Component Commodity.

  

 

 

4

 

For
the purpose of determining whether a Disruption Event for a Component Commodity
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;

 

(2)                                  a
suspension in trading in a Component Commodity on the Relevant Exchange for
that Component Commodity (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 will not include any time when the Relevant Exchange for
that Component Commodity 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 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.

 

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.

 

 

5

 

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:  January 11, 2008

 

	
  [SEAL]

  	
  LEHMAN BROTHERS
  HOLDINGS INC.

  

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Andrew M.W.
  Yeung

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Cindy Buckholz

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Assistant
  Secretary

  	
   

  

 

TRUSTEE’S CERTIFICATE OF AUTHENTICATION

 

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

 

CITIBANK, N.A.

	
  as Trustee

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Authorized
  Officer

  

 

 

7

[REVERSE
OF NOTE]

 

 

LEHMAN BROTHERS
HOLDINGS INC.

MEDIUM-TERM NOTES,
SERIES I

NOTES LINKED TO A
BASKET OF COMMODITIES 

DUE JANUARY 11, 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, Notes Linked to a Basket of Commodities
(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 Original 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 Original 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.

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