Exhibit 4.01


LEHMAN BROTHERS HOLDINGS INC.


15.3% Reverse Exchangeable Notes Linked to the
Common Stock of Smith & Wesson Holding 


Corporation due August 28, 2007


 


	
  Number R-1

  	
   

  	
  $614,000

  
	
  ISIN US524908VF42

  	
   

  	
  CUSIP 524908VF4

  



 


See Reverse for Certain Definitions


THIS SECURITY (THIS “SECURITY”) IS A
GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE THEREOF.  UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR
IN PART FOR SECURITIES IN CERTIFICATED FORM, THIS 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 SUCH 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. 
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TO LEHMAN BROTHERS HOLDINGS INC. OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.


LEHMAN BROTHERS HOLDINGS INC., a corporation
duly organized and existing under the laws of the State of Delaware
(hereinafter called the “Company”), for value received, hereby promises
to pay to CEDE & CO. or registered assigns, at the office or agency of the
Company in the Borough of Manhattan, The City of New York, on the Maturity
Date, in such coin or currency of the United States of America at the time of
payment shall be legal tender for the payment of public and private debts, for
each $1,000 principal amount of the Securities represented hereby, an amount
equal to the Payment at Maturity and to make coupon payments on the principal
amount hereof, as provided below under “Coupon Payments.”


Any amount payable on the Maturity Date
hereon will be paid only upon presentation and surrender of this Security.


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













 


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:    February
28, 2007


	
  [SEAL]

  	
   

  	
  LEHMAN BROTHERS HOLDINGS INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ James J. Killerlane III

  	
   

  
	
   

  	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attest:

  	
  /s/ Aaron Guth 

  	
   

  
	
   

  	
   

  	
   

  	
  Assistant Secretary

  
						



 


TRUSTEE’S CERTIFICATE OF AUTHENTICATION


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


	
  CITIBANK, N.A.

  	
   

  	
   

  
	
  as Trustee

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Wafaa Orfy 

  	
   

  	
   

  
	
  Authorized Officer

  	
   

  	
   

  
				



 


 



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Reverse of Security


This Security is one of a duly authorized
series of Securities of the Company designated as 15.3% Reverse Exchangeable
Notes Linked Common Stock of Smith & Wesson Holding Corporation Due August
28, 2007 (herein called the “Securities”).  The Company may, without the consent of the
holders of the Securities, create and issue additional notes ranking equally
with the Securities and otherwise similar in all respects so that such further
notes shall be consolidated and form a single series with the Securities;
provided that no additional notes can be issued if an Event of Default has
occurred with respect to the Securities. 
This series of Securities is one of an indefinite number of series of
debt securities of the Company, issued and to be issued under an indenture,
dated as of September 1, 1987, as amended (herein called the “Indenture”),
duly executed and delivered by the Company and Citibank N.A., as trustee
(herein called the “Trustee”, which term includes any successor trustee
under the Indenture), 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 Company, the
Trustee and the Holders of the Securities.


The Payment at Maturity and the amount to be
paid on each Coupon Payment Date, at the request of the Trustee, shall be
determined by the Calculation Agent pursuant to the Calculation Agency
Agreement.  The Trustee shall fully rely
on the determination by the Calculation Agent of the Payment at Maturity and
the amount to be paid on each Coupon Payment Date and shall have no duty to
make any such determination.  The Calculation Agent
will provide written notice to the Trustee at its New York office, on which
notice the Trustee may conclusively rely, of the Payment at Maturity and the
amount to be paid on each Coupon Payment Date on or prior to 11:00 a.m. on the
Business Day preceding the Maturity Date and each Coupon Payment Date.


All calculations with respect to the Initial Share Price, the Price or
Closing Price, as applicable, of the Reference Stock during the Monitoring
Period, the Final Share Price and the Payment at Maturity will be rounded to
the nearest ten-thousandth, with five one hundred-thousandths rounded upward (e.g., .76545 would be rounded up to .7655); and all dollar
amounts paid on the aggregate principal amount of Securities per Holder will be
rounded to the nearest cent, with one-half cent rounded upward.


This Security is not subject to any sinking
fund.


If an Event of Default with respect to the
Securities shall occur and be continuing, the amounts payable on all of the
Securities may be declared due and payable in the manner and with the effect
provided in the Indenture.  The amount payable
to the Holder hereof upon any acceleration permitted under the Indenture will
be equal to the Payment at Maturity calculated as though the date of
acceleration were the Maturity Date, and the third Business Day immediately
preceding the date of acceleration were the Observation Date, plus, if
applicable, any accrued and unpaid coupon payments on the Securities. Upon any
acceleration of the Securities, any coupon payment will be calculated on the
basis of a 360-day year of twelve 30-day months and the actual number of days
elapsed from and including the previous Coupon Payment Date for which a coupon
payment was made.  If the maturity of the
Securities is accelerated because of an Event of Default, the Company shall, or
shall cause the Calculation Agent to, provide written notice to the Trustee at
its New York office, on which notice the Trustee may conclusively rely, and to
The Depository Trust Company of the cash amount due with respect to the
Securities as promptly as possible and in no event later than two Business Days
after the date of acceleration.












The Indenture contains
provisions permitting the Company and the Trustee, with the consent of the
holders of not less than 662¤3% in aggregate
principal amount of each series of Securities at the time Outstanding to be
affected (each series voting as a class), 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 principal amount thereof, or
reduce the rate or extend the time of payment of interest thereon, if any, or
reduce any premium payable on redemption, or make the principal thereof, or
premium, if any, or interest thereon, if any, payable in any coin or currency other
than that hereinabove 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, or the
principal of, 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 Security shall be
conclusive and binding upon such Holder and upon all future holders and owners
of this Security and any Securities which may be issued in exchange or
substitution hereof, irrespective of whether or not any notation thereof is
made upon this Security or such other Securities.


No reference herein to the Indenture and no
provision of this Security or of the Indenture shall alter or impair the obligation
of the Company, which is absolute and unconditional, to pay the Payment at
Maturity and coupon payments with respect to this Security.


The Securities are issuable in denominations
of $1,000 and any whole multiples of $1,000.


The Company, the Trustee, and any agent of
the Company or of the Trustee may deem and treat the registered holder (the “Holder”)
hereof as the absolute owner of this Security (whether or not this Security
shall be overdue and notwithstanding any notation of ownership or other writing
hereon), for the purpose of receiving payment hereof, or on account hereof, and
for all other 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.  All such payments made to or upon the order
of such registered holder shall, to the extent of the sum or sums paid,
effectually satisfy and discharge liability for moneys payable on this
Security.


No recourse for the payment of the principal
of, premium, if any, or interest on this Security, 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 Security, 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 



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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.


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


The Company intends to treat, and by
purchasing this Security, the Holder agrees to treat, for all tax purposes,
this Security as a financial contract, rather than as a debt instrument.


THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.


Definitions


Set forth below are definitions of the terms
used in this Security.


 “Business
Day”, notwithstanding any provision in the Indenture, shall mean any day
that is not a Saturday or Sunday and that is not a day on which banking
institutions in the City of New York are authorized or obligated by law to
close.


“Calculation Agency Agreement” shall
mean the Calculation Agency Agreement, dated as of December 21, 2006 between
the Company and the Calculation Agent, as amended from time to time, or any
successor calculation agency agreement.


“Calculation Agent” shall mean the
person that has entered into an agreement with the Company providing for, among
other things, the determination of the Payment at Maturity, which term shall,
unless the context otherwise requires, include its successors and assigns.  The initial Calculation Agent shall be Lehman
Brothers Inc.


“Cash Value” shall mean the amount in cash equal to the product of (1)
$1,000 divided by the Initial Share Price and (2) the Final Share Price.


“Closing Price” of one share of
the Reference Stock (or one unit of any other security for which a Closing
Price must be determined) on any Trading Day means:


·                  if the Reference Stock (or any such other security)
is listed or admitted to trading on a national securities exchange, the last
reported sale price, regular way, of the principal trading session on such day
on the principal United States securities exchange registered under the
Securities Exchange Act of 



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1934, as amended (the “Exchange Act”), on which the
Reference Stock (or any such other security) is listed or admitted to trading,


·                  if the Reference Stock (or any such other security)
is listed or admitted to trading on any national securities exchange but the
last reported sale price is not available pursuant to the preceding bullet
point, the last reported sale price of the principal trading session on the
over-the-counter market as reported on the Nasdaq National Market or the OTC
Bulletin Board Service (the “OTC Bulletin Board”) operated by the National
Association of Securities Dealers, Inc. (“NASD”) on such day;


·                  if the Reference Stock (or any such other
security)  is not listed or admitted to
trading on any national securities exchange but is included in the OTC Bulletin
Board, the last reported sale price of the principal trading session on the OTC
Bulletin Board on such day; or


·                  if, because of a Market Disruption Event or
otherwise, the last reported sale price for the Reference Stock (or any such
other security) is not available pursuant to the preceding bullet points, the
mean, as determined by the Calculation Agent, of the bid prices for the
Reference Stock (or any such other security) obtained from as many recognized
dealers in such security, but not exceeding three, as will make such bid prices
available to the Calculation Agent.  Bids
of any of the Company’s affiliates may be included in the calculation of such
mean, but only to the extent that any such bid is not the highest or the lowest
of the bids obtained.


The term OTC Bulletin Board will include any
successor service thereto.


“Company” shall have the meaning set
forth on the face of this Security.


“Coupon Payment Date” shall mean the 28th day of each
month, commencing on March 28, 2007 to, and including, the Maturity Date.  If any Coupon Payment Date falls on a day
that is not a business day, then any payment required to be made on such Coupon
Payment Date will instead be made on the next succeeding Business Day following
such scheduled Coupon Payment Date, unless that day falls in the next calendar
month, in which case the Coupon Payment Date will be the first preceding day
that is a Business Day.


“Coupon Period” is the period
beginning on, and including, the issue date of the Securities and ending on,
but excluding, the first Coupon Payment Date, and each successive period
beginning on, and including, a Coupon Payment Date and ending on, but excluding, the next succeeding
Coupon Payment Date.


“Coupon Rate” shall mean 15.3% per annum.


“Final Share Price” shall equal the
Closing Price of the Reference Stock on the Observation Date.


“Holder” shall have
the meaning set forth on the reverse of this Security.



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“Indenture” shall
have the meaning set forth on the reverse of this Security.


“Initial Share Price” shall equal the
Closing Price of the Reference Stock on the Pricing Date, divided by the Stock
Adjustment Factor. The Initial Share Price of the Reference Stock shall
initially be $12.90.


 “Market
Disruption Event” means, with respect to the
Reference Stock (or any other security for which a Closing Price must be
determined):


(1)           the occurrence or existence of a suspension, absence or
material limitation of trading of the Reference Stock (or such security) on the
primary market for the Reference Stock (or such security) at any time during
the one hour period preceding the close of the principal trading session in
such market;


(2)           a breakdown or failure in the price and trade reporting
systems of the primary market for the Reference Stock (or such security) as a
result of which the reported trading prices for the Reference Stock (or such
security) during the last one hour period preceding the close of the principal
trading session in such market are materially inaccurate;


(3)           the occurrence or existence of a suspension, absence or
material limitation of trading on the primary market for trading in futures or
options contracts related to the Reference Stock (or such security), if
available, at any time during the last one hour period preceding the close of
the principal trading session in the applicable market; or


(4)           a decision to permanently discontinue trading in the
relevant futures or options contracts,


in each case as determined by the Calculation
Agent in its sole discretion.


For the purpose of determining whether a Market
Disruption Event has occurred:


(1)           a limitation on the hours or number
of days of trading will not constitute a Market Disruption Event
if it results from an announced change in the regular business hours of the
Relevant Exchange or market for the Reference Stock,


(2)           limitations pursuant to the rules of any Relevant Exchange
similar to NYSE Rule 80B (or any applicable rule or regulation enacted or
promulgated by the NYSE, any other U.S. self-regulatory organization, the Securities
Exchange Commission or any other relevant authority of scope similar to NYSE
Rule 80B as determined by the Calculation Agent in its sole discretion) on
trading during significant market fluctuations will constitute a suspension,
absence or material limitation of trading,


(3)           a suspension of trading in futures or options contracts on
the Reference Stock (or such security) by the primary securities market trading
in such contracts, if available, by reason of:


·                  a price change exceeding limits set by such securities exchange or
market,


·                  an imbalance of orders relating to such contracts, or



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·                  a disparity in bid and ask quotes relating to such contracts


will,
in each such case, constitute a suspension, absence or material limitation of
trading in futures or options contracts related to the Reference Stock (or such
security); and


(4)           a “suspension, absence
or material limitation of trading” on the primary securities market on which
futures or options contracts related to the Reference Stock (or such other
security) are traded will not include any time when such securities market is
itself closed for trading under ordinary circumstances.


“Maturity Date” shall
mean August 28, 2007, unless that day is not a Business Day, in which case the
amount equal to the Payment at Maturity will be made on the next succeeding
Business Day following August 28, 2007; provided, that if due to a
non-Trading Day or a Market Disruption Event, the Observation Date is postponed so that it falls
less than three Business Days prior to the scheduled Maturity Date, the
Maturity Date will be the third Business Day following the Observation Date, as
postponed.


“Monitoring Period”
shall mean the period from, and including, the Pricing Date to, and including,
the Observation Date.


“NYSE” shall mean
The New York Stock Exchange, Inc.


“Observation Date” shall mean August
23, 2007, provided, that if the Observation Date is
not a Trading Day or if there is a Market Disruption Event on such day, the
Calculation Agent will determine the Final Share Price by reference to the Closing
Price of the Reference Stock on the next Trading Day for the Reference Stock on
which there is not a Market Disruption Event; provided,
however, if a Market Disruption Event with respect to the Reference
Stock occurs on each of the eight Trading Days following the originally
scheduled Observation Date, then the Calculation Agent shall determine the
Final Share Price based upon the mean, as determined by the
Calculation Agent, of three bid prices for the Reference Stock obtained from recognized dealers in such security on that eighth
Trading Day.


“Payment at Maturity”, as calculated
by the Calculation Agent, for each $1,000 principal amount Security shall equal
$1,000 plus any accrued and unpaid coupon payments unless:


(i)             the Final Share Price is less than the Initial Share Price; and


(ii)          a Trigger Event has occurred.


If the conditions described in
(i) and (ii) are both satisfied, the Payment at Maturity shall be, instead of
$1,000 for each $1,000 principal amount Security, the number of shares of the
Reference Stock equal to the Physical Delivery Amount plus any cash that the
Company will pay in lieu of fractional shares in an amount equal to the product
of the Final Share Price multiplied by such fractional amount, plus any accrued
and unpaid coupon payments. However, the Company may elect, in lieu of
delivering the Physical Delivery Amount, to pay the Cash Value of the Physical
Delivery Amount.



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The
Company may designate any of its affiliates to deliver any shares of the
Reference Stock pursuant to the terms of the Securities and the Company shall
be discharged of any obligation to deliver such shares of the Reference Stock
to the extent of such performance by its affiliates.


“Physical Delivery Amount” shall mean the number of shares of
the Reference Stock, per $1,000 principal amount of the Securities, equal to
$1,000 divided by the Initial Share Price.


“Place of Payment” shall mean the place or places
where the Payment at Maturity on the Securities is payable.


“Price” of one share of the Reference Stock (or one unit of any other security for which
a Price must be determined) on any Trading Day means:


·                  if the Reference Stock (or any such other security)
is listed or admitted to trading on a national securities exchange, the highest
intraday bid price on such day on the principal United States securities
exchange registered under the Exchange Act, on which the Reference Stock (or
any such other security) is listed or admitted to trading;


·                  if the Reference Stock (or any such other security)
is not listed or admitted to trading on any national securities exchange but is
included in the OTC Bulletin Board, the highest reported bid price reported on
the OTC Bulletin Board on such day; or


·                  if a bid price is not available pursuant to the preceding bullet points, the mean, as
determined by the Calculation Agent, of the bid prices for the Reference Stock
(or any such other security) obtained from as many recognized
dealers in such security, but not exceeding three, as will make such bid prices
available to the Calculation Agent. Bids of any of the Company’s affiliates may
be included in the calculation of such mean, but only to the extent that any
such bid is not the highest of the bids obtained.


The term OTC Bulletin Board will include any
successor service thereto.


“Pricing Date” shall mean February 23, 2007.


“Reference Stock” shall be the common stock of Smith &
Wesson Holding Corporation (NASDAQ: SWHC).


“Relevant Exchange” for the Reference Stock
shall mean the primary U.S. exchange or market for trading for the Reference Stock.


“Securities”
shall have the meaning set forth on the reverse of this Security.


“Security”
shall have the meaning set forth on the face of this Security.



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“Stock Adjustment Factor” for the Reference Stock
shall initially equal 1.0, subject to adjustment under certain circumstances as
described under “Anti-dilution Adjustments” below.


“Trading Day” means a day, as determined by the Calculation Agent, on which trading is generally conducted on the
NYSE, the American Stock Exchange (the “AMEX”), the Nasdaq Global Select
Market, the Nasdaq Global Market, the Chicago Mercantile Inc., the Chicago
Board Options Exchange, Incorporated and in the over-the-counter market for
equity securities in the United States.


“Trigger Event” shall
occur if, on any Trading Day during the Monitoring Period, the Closing Price of
the Reference Stock is below the Trigger Price.


“Trigger Price” shall equal a dollar amount that represents 70% of the applicable Initial Share Price
in effect on such Trading Day. The Trigger Price of the Reference Stock shall
initially be $9.03.


“Trustee” shall
have the meaning set forth on the reverse of this Security.


All terms used but not defined in this Security are
used herein as defined in the Calculation Agency Agreement or the Indenture.


Calculation Agent


The Calculation
Agent will determine, among other things, the Initial Share Price, the Trigger
Price, the Closing Price of the Reference Stock on any Trading Day during the
Monitoring Period, the Stock Adjustment Factor, anti-dilution adjustments and
reorganization events, the selection of any Successor Reference Stock, the
Final Share Price, the amount of any coupon payment payable on any Coupon
Payment Date and the Payment at Maturity, as well as, in determining whether a
Trigger Event has occurred and whether the Final Share Price is below the
Initial Share Price. In addition, the Calculation Agent will determine whether
there has been a Market Disruption Event and whether a day is a Coupon Payment
Date. All determinations made by the Calculation Agent will be at the sole
discretion of the Calculation Agent and will, in the absence of manifest error,
be conclusive for all purposes and binding on Holders and the Company. The
Company may appoint a different Calculation Agent from time to time after the
date of the original issue of the Securities without the Holders’ consent and
without notifying Holders.


Anti-dilution Adjustments


The Stock Adjustment Factor is subject to
adjustment by the Calculation Agent as a result of the anti-dilution and
reorganization adjustments described in this section.


No adjustments to the Stock Adjustment Factor
will be required unless the Stock Adjustment Factor adjustment would require a
change of at least 0.1% in the Stock Adjustment Factor then in effect. A Stock
Adjustment Factor resulting from any of the adjustments specified in this
section will be rounded to the nearest one ten-thousandth with five one hundred-thousandths being rounded
upward. The Calculation Agent will not be required to make any 



 8
 









adjustments to the Stock Adjustment Factor after the
close of business on the Business Day immediately preceding the Maturity Date.


No adjustments to the Stock Adjustment Factor
will be required other than those specified below.


The Calculation Agent shall be solely
responsible for (1) the determination and calculation of any adjustments to the
Stock Adjustment Factor and of any related determinations and calculations with
respect to any distributions of stock, other securities or other property or
assets, including cash, in connection with any corporate event described in
this section, and (2) the determination of the Successor Reference Stock, and its
determinations and calculations shall be conclusive absent manifest error.


The Company will, within ten Business Days
following the occurrence of an event that requires an adjustment to the Stock
Adjustment Factor (other than as a result of a Reorganization Event as
described below), or if the Company is not aware of this occurrence, as soon as
practicable after becoming so aware, provide notice to the Calculation Agent,
which shall provide written notice to the trustee, which shall provide notice
to Holders of the occurrence of this event and, if applicable, a statement in
reasonable detail setting forth such adjusted Stock Adjustment Factor.


Stock Splits and Reverse Stock Splits


If the Reference Stock is subject to a stock
split or reverse stock split, then once any split has become effective, the
Stock Adjustment Factor relating to the Reference Stock will be adjusted so
that the new Stock Adjustment Factor shall equal the product of:


·                  the prior Stock Adjustment Factor for the Reference Stock, and


·                  the number of shares which a holder of one
share of the Reference Stock before the effective date of that stock split or
reverse stock split would have owned or been entitled to receive immediately
following the applicable effective date.


Stock Dividends or Distributions


If the Reference Stock is subject to a (i)
stock dividend, i.e., issuance of additional shares of the Reference Stock,
that is given ratably to all holders of shares of the Reference Stock, or (ii)
distribution of shares of the Reference Stock as a result of the triggering of
any provision of the corporate charter of the issuer of the Reference Stock, then, once the dividend has become
effective and the shares are trading ex-dividend, the Stock Adjustment Factor
for the Reference Stock will be adjusted so that the new Stock Adjustment
Factor for the Reference Stock shall equal the prior Stock Adjustment Factor
for the Reference Stock plus the product of:


·                  the prior Stock Adjustment Factor for the Reference Stock, and


·                  the number of additional shares issued in the stock dividend with respect to one
share of the Reference Stock.



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Non-cash Distributions


If the issuer of the Reference Stock
distributes shares of capital stock, evidences of indebtedness or other assets
or property of the issuer of the Reference Stock to holders of the Reference
Stock (other than (i) dividends, distributions and rights or warrants referred
to under “—Stock Splits and Reverse Stock Splits” and “—Stock Dividends or
Distributions” above and (ii) cash distributions or dividends referred under “—Cash
Dividends or Distributions” below), then, once the distribution has become
effective and the shares are trading ex-dividend, the Stock Adjustment Factor
for the Reference Stock will be adjusted so that the new Stock Adjustment
Factor for the Reference Stock shall equal the product of:


·                  the prior Stock Adjustment Factor for the Reference Stock, and


·                  a fraction, the numerator of which is the
Current Market Price of the Reference Stock and the denominator of which is the
amount by which such Current Market Price exceeds the Fair Market Value of such distribution; provided that if the Fair
Market Value of such distribution equals or exceeds the Current Market Price of
such Reference Stock, the Calculation Agent shall determine in its sole
discretion the appropriate adjustment to the Stock Adjustment Factor for such
Reference Stock.


The “Current Market Price” of the Reference
Stock means the arithmetic average of the Closing Price of the Reference Stock
for the ten Trading Days prior to the Trading Day immediately preceding the
ex-dividend date of the distribution requiring an adjustment to the Stock
Adjustment Factor for the Reference Stock.


The “ex-dividend date” shall mean the first Trading Day on which transactions
in the Reference Stock trade on the Relevant Exchange without the right to
receive that distribution.


The “Fair Market Value” of any such distribution means the value of such
distribution on the ex-dividend date for such distribution, as determined by
the Calculation Agent. If such distribution consists of property traded on the
ex-dividend date on a U.S. national securities exchange, the Fair Market Value
will equal the Closing Price of such distributed property on such ex-dividend
date.


Notwithstanding the foregoing, a distribution
on the Reference Stock described in clause (a), (d) or (e) of the section
entitled “—Reorganization Events” below that also would require an adjustment
under this section shall not cause an adjustment to the Stock Adjustment Factor
of the Reference Stock and shall only be treated as a Reorganization Event (as defined below) pursuant to clause (a), (d)
or (e) under the section entitled “—Reorganization Events.” A distribution on
the Reference Stock described in the section entitled “—Issuance of
Transferable Rights or Warrants” that also would require an adjustment under
this section shall only cause an adjustment pursuant to the section entitled “—Issuance
of Transferable Rights or Warrants.”


Cash Dividends or Distributions


If the issuer of the Reference Stock pays
dividends or makes other distributions consisting exclusively of cash to all
holders of the Reference Stock during any fiscal quarter 



 10
 









during the term of the notes, in an aggregate amount
that, together with other such dividends or distributions made during such
quarterly fiscal period, exceeds the Dividend Threshold, then, once the
dividend or distribution has become effective and the shares are trading
ex-dividend, the Stock Adjustment Factor for the Reference Stock will be adjusted
so that the new Stock Adjustment Factor for the Reference Stock shall equal the
product of:


·                  the prior Stock Adjustment Factor for the
Reference Stock, and


·                  a fraction, the numerator of which is the
Current Market Price of the Reference Stock and the denominator of which is the
amount by which such Current Market Price exceeds the amount in cash per share
the issuer of the Reference Stock distributes to holders of Reference Stock in
excess of the Dividend Threshold; provided that if the amount in cash per share
of such dividend or distribution equals or exceeds the Current Market Price of
the Reference Stock, the Calculation Agent shall determine in its sole
discretion the appropriate adjustment to the Stock Adjustment Factor for the
Reference Stock.


“Dividend Threshold” shall mean the amount of
any cash dividend or cash distribution distributed per share of the Reference
Stock that exceeds the immediately preceding cash dividend or other cash
distribution, if any, per share of the Reference Stock by more than 10% of the
Closing Price of the Reference Stock on the Trading Day immediately preceding
the ex-dividend date.


Issuance of Transferable Rights or Warrants


If the issuer of the Reference Stock issues
transferable rights or warrants to all holders of the Reference Stock to
subscribe for or purchase the Reference Stock, including new or existing rights
to purchase the Reference Stock at an exercise price per share less than the
closing price of the Reference Stock on both (i) the date the exercise price of
such rights or warrants is determined and (ii) the expiration date of such
rights and warrants pursuant to a shareholder’s rights plan or arrangement, and
if the expiration date of such rights or warrants precedes the Maturity Date,
then the Stock Adjustment Factor for the Reference Stock will be adjusted on
the business day immediately following
the issuance of such transferable rights or warrants so that the new Stock
Adjustment Factor for the Reference Stock shall equal the prior Stock
Adjustment Factor for the Reference Stock plus the product of:


·                  the prior Stock Adjustment Factor for the
Reference Stock, and


·                  the number of shares of the Reference Stock
that can be purchased with the cash value of such warrants or rights
distributed on one share of the Reference Stock.


The number of shares that can be purchased
will be based on the Closing Price of the Reference Stock on the date the new Stock Adjustment Factor for the Reference Stock is
determined. The cash value of such warrants or rights, if the warrants or
rights are traded on a U.S. national securities exchange, will equal the
Closing Price of such warrant or right, or, if the warrants or rights are not
traded on a U.S. national securities exchange, will be determined by 



 11
 









the Calculation Agent and will equal the average
(mean) of the bid prices obtained from three dealers at 3:00 p.m., New York
City time, on the date the new Stock Adjustment Factor for the Reference Stock
is determined, provided that if only two such bid prices are available, then
the cash value of such warrants or rights will equal the average (mean) of such
bids and if only one such bid is available, then the cash value of such
warrants or rights will equal such bid.


Reorganization Events


If prior to the maturity date,


(a)          there occurs any
reclassification or change of  the
Reference Stock, including, without limitation, as a result of the issuance of
tracking stock by the issuer of the Reference Stock,


(b)         the issuer of the
Reference Stock, or any surviving entity or subsequent surviving entity of the
issuer of the Reference Stock (a “Successor Entity”), has been subject to a
merger, combination or consolidation and is not the surviving entity,


(c)          any statutory
exchange of securities of the issuer of the Reference Stock or any Successor
Entity with another corporation occurs, other than pursuant to clause (b)
above,


(d)         the issuer of the
Reference Stock is liquidated or is subject to a proceeding under any
applicable bankruptcy, insolvency or other similar law,


(e)          the issuer of the
Reference Stock issues to all of its shareholders equity securities of an
issuer other than the issuer of the Reference Stock, other than in a
transaction described in clauses (b), (c) or (d) above (a “Spin-off Event”), or


(f)            a tender or
exchange offer or going-private transaction is commenced for all the
outstanding shares of the issuer of the Reference Stock and is consummated for
all or substantially all of such shares, as determined by the Calculation Agent
in its sole discretion (an event in clauses (a) through (f), a “Reorganization
Event”),


then,
instead of adjusting the Stock Adjustment Factor for the Reference Stock, the
Calculation Agent, in its sole discretion without consideration for the
interests of investors, shall either:


(A)
determine a Successor Reference Stock (as defined below) to the Reference Stock
that experiences any such Reorganization Event (the “Original Reference Stock”)
after the close of the principal trading session on the Trading Day immediately
prior to the effective date of such Reorganization Event in accordance with the
following paragraph (each successor reference stock as so determined, a “Successor
Reference Stock” and such successor reference stock issuer, a “Successor
Reference Stock Issuer”); or



 12















 


(B)        deem the Closing
Price and the Stock Adjustment Factor of the Original Reference Stock on the
Trading Day immediately prior to the effective date of such Reorganization
Event to be the Closing Price (in the case of daily monitoring) or Price (in
the case of continuous monitoring) and Stock Adjustment Factor of the Original
Reference Stock on every remaining Trading Day to, and including, the last
Trading Day in the Monitoring Period.


Upon the
determination by the Calculation Agent of the Successor Reference Stock
pursuant to clause (A) of the preceding sentence, references in this Security
to such “Reference Stock” shall no longer be deemed to refer to the Original
Reference Stock and shall be deemed instead to refer to any such Successor
Reference Stock for all purposes, and references in Security to “issuer” of the
Original Reference Stock shall be deemed to be to the Successor Reference Stock
Issuer.


Upon the selection
of the Successor Reference Stock by the Calculation Agent pursuant to clause
(A) of the preceding sentence:


(i)             the Initial Share
Price for the Successor Reference Stock will be the Closing Price of the
Successor Reference Stock on the Trading Day immediately following the
effective date of the Reorganization Event multiplied by the Initial Share
Price of the Original Reference Stock and divided by the Closing Price of the
Original Reference Stock on the Trading Day immediately prior to the effective
date of such Reorganization Event;


(ii)          the Trigger Price
for the Successor Reference Stock will be an amount that represents the same
percentage of the Initial Share Price for the Successor Reference Stock as the
percentage of the Initial Share Price of the Original Reference Stock
represented by the Trigger Price of the Original Reference Stock, as determined
by the Calculation Agent; and


(iii)
the Stock Adjustment Factor for the Successor Reference Stock shall be 1.0,
subject to adjustment for certain corporate events related to the Successor
Reference Stock in accordance with “— Anti-dilution Adjustments.”


For the avoidance of doubt, in the case of an
issuance by the issuer of the Reference Stock to all of its shareholders of
equity securities of an issuer other than the issuer of the Reference Stock as
described in clause (e) above, if the Closing
Price of the Reference Stock as of the effective date of such issuance does not
increase or decline by at least 50% from the Initial Share Price of the
Reference Stock, such issuance shall not constitute a Reorganization Event and
no adjustments shall be made under this “— Reorganization Events” section.
Instead, the Reference Stock will be subject to adjustments as described under “—
Non-cash Distributions” above.


The “Successor
Reference Stock” will be the common stock of a U.S. company selected by the
Calculation Agent from among the common stocks of U.S. companies then
registered to trade on the NYSE, Nasdaq
Global Select Market or Nasdaq Global Market that is not
already the Reference Stock, with the same primary Standard Industrial
Classification Code (“SIC Code”) as the Original Reference Stock that, in the
sole discretion of the Calculation 



 13
 









Agent, is the most comparable to the Original
Reference Stock, taking into account such factors as the Calculation Agent
deems relevant, including, without limitation, market capitalization, dividend
history and stock price volatility; provided,  however,
that a Successor Reference Stock will not be any stock that is subject to a
trading restriction under the trading restriction policies of the Company or any
of its affiliates that would materially limit the ability of the Company or any
of its affiliates to hedge the notes with respect to such stock (a “Hedging
Restriction”); provided  further  that if the Successor Reference Stock cannot be
identified as set forth above for which a Hedging Restriction does not exist,
the Successor Reference Stock will be selected by the Calculation Agent from
the largest market capitalization stock of a U.S. company within the same
Division and Major Group classification (as defined by the Office of Management
and Budget) as the primary SIC Code for the Original Reference Stock.


Following a Reorganization Event in which a
Successor Reference Stock is selected, the Stock Adjustment Factor of the
Successor Reference Stock will be subject to adjustment as described above
under this “Anti-dilution Adjustments” section, and, if no Successor Reference
Stock is selected, the Original Reference Stock Issuer will, upon a subsequent Reorganization Event, be
subject to the election by the Calculation Agent described in clause (A) and
(B) of the first paragraph under “— Anti-dilution Adjustments — Reorganization
Events.”


The Company will, or will cause the
Calculation Agent to, provide written notice to the Trustee, to the Company and
to The Depository Trust Company (“DTC”) within thirty business days immediately
following the effective date of any Reorganization Event, of the Successor
Reference Stock Issuer, the Successor Reference Stock, the Trigger Price and
the Initial Share Price for such Successor Reference Stock, as well as the
Original Reference Stock
so replaced. The Company expects that such notice will be passed on to Holders
in accordance with the standard rules and procedures of DTC and its direct and
indirect participants.


Coupon
Payments


For each Coupon
Period for each $1,000 principal amount Security, the coupon payment for each
Coupon Period will be calculated as follows:


$1,000 x Coupon Rate x (number of days in the Coupon Period
/ 360),


where the number of days will be calculated
on the basis of a year of 360 days with twelve months of thirty days each.


Coupon payments
will be made at the Coupon Rate. Coupon payments will accrue from, and
including, the issue date of the Securities to, but excluding, the Maturity
Date. Coupon payments will be paid in arrears on each Coupon Payment Date to,
and including, the Maturity Date, to the Holders at the close of business on
the date 15 calendar days prior to that Coupon Payment Date, whether or not
such fifteenth calendar day is a Business Day. If the Maturity Date is adjusted
as the result of a Market Disruption Event, the coupon payment due on the
Maturity Date will be made on the Maturity Date as adjusted, with the same
force and effect as if the Maturity Date had not been adjusted, but no
additional coupon payment will accrue or be payable as a result of the delayed
payment.



 14
 









The following abbreviations, when used in the
inscription on the face of the within Security, shall be construed as though
they were written out in full according to applicable laws or regulations:


	
  TEN COM —

  	
  as tenants in common

  	
  UNIF GIFT MIN ACT —

  	
   

  	
  Custodian

  	
   

  	 

	
  

  	
   

  	
  (Cust)

  	
   

  	
  (Minor)

  	 

	
  TEN ENT —

  	
  as tenants by the entireties

  	
  under Uniform Gifts to Minors

  	 

	
  JT TEN —

  	
  as joint tenants with right of

  	
  Act 

  	
   

  	
   

  
	
   

  	
  Survivorship and not as tenants in 

  	
  (State)

  	 

	
   

  	
  common

  	
   

  	 

	
   

  	
   

  	
   

  	 

										



Additional abbreviations may also be used
though not in the above list.






 


FOR VALUE RECEIVED, the undersigned hereby
sells, assigns and transfers unto


	
  PLEASE INSERT SOCIAL
  SECURITY OR OTHER

  
	
  IDENTIFYING
  NUMBER OF ASSIGNEE

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  
	
   

  
	
  (Name and
  Address of Assignee, including zip code, must be printed or typewritten.)

  
	
   

  
	
   

  
	
  the within
  Security, and all rights thereunder, hereby irrevocably constituting and
  appointing

  
	
   

  
	
   

  
	
  to transfer the
  said Security on the books of the Company, with full power of substitution in
  the premises.

  
	
   

  
	
           Dated:

  
	
   

  
	
   

  	
   

  
	
   

  	
   

  
			



NOTICE: The
signature to this assignment must correspond with the name as it appears upon
the face of the within Security in every particular, without alteration or
enlargement or any change whatever.


Signature(s) Guaranteed:


	
  

  
	
   

  	
   

  



THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN
ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED MEDALLION
SIGNATURE GUARANTEE PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.



 15