Document:

exv4w2

 

Exhibit 4.2

INTERNATIONAL LEASE FINANCE CORPORATION

MEDIUM-TERM NOTE, SERIES R

(FLOATING RATE)

			
	 	 	 
	REGISTERED
	 	REGISTERED

No. FLR-

CUSIP-

If this Security is registered in the name of The Depository Trust Company (the “Depositary”) (55
Water Street, New York, New York) or its nominee, this Security may not be transferred except as a
whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the
Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary unless and until this Security is
exchanged in whole or in part for Debt Securities in definitive form. Unless this certificate is
presented by an authorized representative of the Depositary to the Company 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 Depositary 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.

REQUIRED TERMS

DESIGNATION:

PRINCIPAL AMOUNT:

ISSUE PRICE:

ORIGINAL ISSUE DATE:

STATED MATURITY:

INTEREST RATE BASIS OR BASES:

INITIAL INTEREST RATE:

INTEREST PAYMENT DATES:

INTEREST RATE RESET PERIOD:

INDEX MATURITY:

 

 

PRESET TERMS

INTEREST RESET DATES:

INTEREST DETERMINATION DATES:

CALCULATION DATES:

REGULAR RECORD DATES:

OPTIONAL TERMS

SPREAD:

SPREAD
MULTIPLIER: %

MAXIMUM INTEREST RATE:

MINIMUM INTEREST RATE:

OVERDUE RATE:

REDEEMABLE ON OR AFTER:

OPTIONAL REPAYMENT DATE:

FIXED INTEREST RATE:

FIXED RATE COMMENCEMENT DATE:

REPURCHASE PRICE (for

Discount Securities):

OPTIONAL RESET DATES:

EXTENSION PERIODS:

FINAL MATURITY:

OTHER PROVISIONS:

 

 

          INTERNATIONAL LEASE FINANCE CORPORATION, a California corporation (hereinafter called the
“Company,” which term includes any successor corporation under the Indenture, as hereinafter
defined), for value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum set forth above at Stated Maturity shown above and to pay interest thereon from the
Original Issue Date shown above or from the most recent Interest Payment Date (as hereinafter
defined) to which interest has been paid or duly provided for, in arrears on the Interest Payment
Dates set forth above (“Interest Payment Dates”), until the principal hereof is paid or made
available for payment, and on Stated Maturity, commencing with the Interest Payment Date next
succeeding the Original Issue Date, at the rate per annum determined in accordance with the
provisions below, depending on the Interest Rate Basis or Bases specified above. Interest will be
payable on each Interest Payment Date and at Stated Maturity or upon redemption or optional
repayment. Interest will be payable to the Holder at the close of business on the Regular Record
Date which, unless otherwise specified above, shall be the fifteenth calendar day (whether or not a
Business Day (as defined below)) immediately preceding the related Interest Payment Date; provided,
however, that interest payable at Stated Maturity or upon redemption or optional repayment will be
payable to the person to whom principal is payable and (to the extent that the payment of such
interest shall be legally enforceable) at the Overdue Rate, if any, per annum set forth above on
any overdue principal and premium and on any overdue installment of interest. If the Original
Issue Date is between a Regular Record Date and the next succeeding Interest Payment Date, the
first payment of interest hereon will be made on the Interest Payment Date following the next
succeeding Regular Record Date to the Holder on such next Regular Record Date.

          Payment of the principal, and premium, if any, and interest payable at Stated Maturity or upon
redemption or optional repayment of this Security will be made in immediately available funds at
the corporate trust office or agency of the Trustee in New York, New York, provided that this
Security is presented to the Trustee in time for the Trustee to make such payments in such funds in
accordance with its normal procedures. Interest (other than interest payable at Stated Maturity or
upon redemption or optional repayment) will be paid by check mailed to the address of the person
entitled thereto as it appears in the Security Register on the applicable Regular Record Date or,
at the option of the Company, by wire transfer to an account maintained by such person with a bank
located in the United States. Notwithstanding the foregoing, (1) the Depositary or its nominee, if
it is the registered Holder of this Security, will be entitled to receive payments of interest
(other than at Stated Maturity or upon redemption or optional repayment) by wire transfer to an
account maintained by such Holder with a bank located in the United States, and (2) a Holder of
$10,000,000 or more in aggregate principal amount of Securities having the same Interest Payment
Date will, upon receipt on or prior to the Regular Record Date preceding an applicable Interest
Payment Date by the Trustee of written instructions from such Holder, be entitled to receive
payments of interest (other than at Stated Maturity or upon redemption or optional repayment) by
wire transfer to an account maintained by such Holder with a bank located in the United States.
Such instructions shall remain in effect with respect to payments of interest made to such Holder
on subsequent Interest Payment Dates unless revoked or changed by written instructions received by
the Trustee from such Holder, provided that any such written revocation or change which is received
by the Trustee after a Regular Record Date and before the related Interest Payment Date shall not
be effective with respect to the interest payable on such Interest Payment Date.

          This Security is one of a duly authorized issue of Medium-Term Notes, Series R of the Company
(herein called the “Securities”), issued and to be issued under an Indenture dated as of August 1,
2006 (as may be amended from time to time, herein called the “Indenture”) between the Company and
Deutsche Bank Trust Company Americas, as trustee (herein called the “Trustee,” which term includes
any successor trustee under the Indenture), to which the Indenture and all indentures supplemental
thereto reference is hereby made for a statement of the respective rights, limitation of rights,
duties and immunities thereunder of the Company, the Trustee and the Holders of the Securities and
of the terms upon which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof. The Securities of this series may be
issued from time to time at varying maturities, interest rates and other terms as may be designated
with respect to a Security.

          After the completion of the issuance for which this Security is a part, the Company may, from
time to time, reopen such issuance and issue additional Securities with the same terms (including
maturity and interest payment terms) as this Security. After such additional Securities are
issued, they will be fungible with this Security.

 

 

          
The interest rate borne by this Security shall be determined as follows:

	 
	 	•	 	Unless this Security is designated as a “Floating Rate/Fixed Rate Note,” an “Inverse
Floating Rate Note” or as having an Addendum attached, this Security shall be
designated as a “Regular Floating Rate Note” and, except as described below or as
specified on the face hereof, bear interest at the rate determined by reference to the
Interest Rate Basis or Bases specified on the face hereof (a) plus or minus the Spread,
if any, specified on the face hereof and/or (b) multiplied by the Spread Multiplier, if
any, specified on the face hereof. Commencing on the first Interest Reset Date (as
defined below), the rate at which interest on this Security shall be payable shall be
reset as of each Interest Reset Date; provided, however, that the interest rate in
effect for the period from the Original Issue Date to the first Interest Reset Date
shall be the Initial Interest Rate specified on the face hereof.
	 
	 	•	 	If this Security is designated as a “Floating Rate/Fixed Rate Note,” then, except as
described below or as specified on the face hereof, this Security shall bear interest
at the rate determined by reference to the Interest Rate Basis or Bases specified on
the face hereof (a) plus or minus the Spread, if any, specified on the face hereof
and/or (b) multiplied by the Spread Multiplier, if any, specified on the face hereof.
Commencing on the first Interest Reset Date, the rate at which interest on this
Security shall be payable shall be reset as of each Interest Reset Date; provided,
however, that the interest rate in effect for the period from the Original Issue Date
to the first Interest Reset Date shall be the Initial Interest Rate specified on the
face hereof and the interest rate in effect commencing on the Fixed Rate Commencement
Date specified on the face hereof to Stated Maturity shall be the Fixed Interest Rate,
if such rate is specified on the face hereof or, if no such Fixed Interest Rate is so
specified, the interest rate in effect hereon on the day immediately preceding the
Fixed Rate Commencement Date.
	 
	 	•	 	If this Security is designated as an “Inverse Floating Rate Note,” then, except as
described below or as specified on the face hereof, this Security shall bear interest
equal to the Fixed Interest Rate specified on the face hereof minus the rate determined
by reference to the Interest Rate Basis or Bases specified on the face hereof (a) plus
or minus the Spread, if any, specified on the face hereof and/or (b) multiplied by the
Spread Multiplier, if any, specified on the face hereof; provided, however, that,
unless otherwise specified on the face hereof, the interest rate hereon shall not be
less than zero during any Interest Rate Reset Period (as defined below). Commencing on
the first Interest Reset Date, the rate at which interest on this Security is payable
shall be reset as of each Interest Reset Date; provided, however, that the interest
rate in effect for the period from the Original Issue Date to the first Interest Reset
Date shall be the Initial Interest Rate specified on the face hereof.

          Notwithstanding the foregoing, if this Security is designated as having an Addendum attached
as specified on the face hereof, this Security shall bear interest in accordance with the terms
described in such Addendum and as specified on the face hereof.

          Except as set forth above or as specified on the face hereof, the interest rate in effect on
each day shall be (1) if such day is an Interest Reset Date, the interest rate determined as of the
Interest Determination Date (as defined below) immediately preceding such Interest Reset Date or
(2) if such day is not an Interest Reset Date, the interest rate determined as of the Interest
Determination Date immediately preceding the most recent Interest Reset Date.

Unless otherwise specified on the face hereof:

(1) The “Interest Reset Date” shall be, if the Interest Rate Reset Period specified
on the face hereof is (i) daily, each Business Day; (ii) weekly, the Wednesday of
each week (except if the applicable Interest Rate Basis is the Treasury Rate which
shall reset on the Tuesday of each week); (iii) monthly, the third Wednesday of each
month (except if the applicable Interest Rate Basis is

 

 

the Eleventh District Cost of Funds Rate which shall reset on the first calendar day
of the month); (iv) quarterly, the third Wednesday of March, June, September and
December of each year, (v) semiannually, the third Wednesday of the two months
specified on the face hereof; and (vi) annually, the third Wednesday of the month
specified on the face hereof. If any Interest Reset Date would otherwise be a day
that is not a Business Day, such Interest Reset Date shall be postponed to the next
succeeding day that is a Business Day, unless LIBOR is an applicable Interest Rate
Basis, in which case, if such Business Day falls in the next succeeding calendar
month, such Interest Reset Date shall be the immediately preceding Business Day.

(2) The “Interest Determination Date” with respect this Security shall be: (i) if
the applicable Interest Rate Basis is the CD Rate or the CMT Rate, the second
Business Day immediately preceding the applicable Interest Reset Date; (ii) if the
applicable Interest Rate Basis is the Commercial Paper Rate, the Federal Funds Rate
or the Prime Rate, the Business Day immediately preceding the applicable Interest
Reset Date; (iii) if the applicable Interest Rate Basis is the Eleventh District
Cost of Funds Rate, the last working day of the month immediately preceding the
applicable Interest Reset Date on which the Federal Home Loan Bank of San Francisco
publishes the Index (as defined below); (iv) if the applicable Interest Rate Basis
is LIBOR, the second London Business Day (as defined below) immediately preceding
the applicable Interest Reset Date and (v) if the applicable Interest Rate Basis is
the Treasury Rate, the day in the week in which the applicable Interest Reset Date
falls on which day Treasury Bills (as defined below) are normally auctioned;
provided, however, that if an auction is held on the Friday of the week preceding
the applicable Interest Reset Date, the Interest Determination Date will be such
preceding Friday. If the interest rate on this Security is determined by reference
to two or more Interest Rate Bases, the Interest Determination Date shall be the
second Business Day prior to the applicable Interest Reset Date for this Security on
which each Interest Rate Basis is determinable. Each Interest Rate Basis will be
determined on such date, and the applicable interest rate will take effect on the
applicable Interest Reset Date.

(3) The “Calculation Date,” if applicable, pertaining to any Interest Determination
Date will be the earlier of (1) the tenth calendar day after such Interest
Determination Date, or, if such day is not a Business Day, the next succeeding
Business Day or (2) the Business Day immediately preceding the applicable Interest
Payment Date or Stated Maturity, as the case may be.

          Unless otherwise specified on the face hereof, the interest rate with respect to each Interest
Rate Basis shall be determined in accordance with the following provisions:

Determination of CD Rate

          If the Interest Rate Basis with respect to this Security is the CD Rate, such rate shall be
determined by the Calculation Agent appointed as agent by the Company to calculate the rates of
interest applicable to securities including this Security (the “Calculation Agent”) in accordance
with the following provisions:

          “CD Rate” means the rate on the date for negotiable certificates of deposit having the Index
Maturity specified on the face hereof as published by the Board of Governors of the Federal Reserve
System in “H.15(519)” (as defined below), under the heading “CDs (Secondary Market).”

          The Interest Determination Date relating to a CD Rate Note or any Floating Rate Note for which
the interest rate is determined with reference to the CD Rate is referred to herein as a “CD Rate
Interest Determination Date.”

          The following procedures will be followed if the CD Rate cannot be determined as described
above:

 

 

	 	•	 	If the rate is not published by 3:00 P.M., New York City time, on the related
Calculation Date, the rate on the CD Rate Interest Determination Date for negotiable
certificates of deposit of the Index Maturity specified on the face hereof as published
in H.15 Daily Update (as defined below) or the other recognized electronic source used
for the purpose of displaying the rate under the caption “CDs (secondary market)” will
apply.
	 
	 	•	 	If the rate is not yet published in either H.15(519), H.15 Daily Update or other
recognized electronic source by 3:00 P.M., New York City time on the related
Calculation Date, the CD Rate for the CD Rate Interest Determination Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the secondary
market offered rates as of 10:00 A.M., New York City time on the related Calculation
Date, of three leading nonbank dealers in negotiable United States dollar certificates
of deposit in The City of New York (which may include one or more of the agents or
their affiliates). The secondary market offered rates will be selected by the
Calculation Agent for negotiable certificates of deposit of major United States money
center banks for negotiable certificates of deposit with a remaining maturity closest
to the Index Maturity designated on the face hereof and be in an amount that is
representative for a single transaction in that market at that time.
	 
	 	•	 	If the dealers so selected by the Calculation Agent are not quoting as set forth
above, the CD Rate for the CD Rate Interest Determination Date will be that CD Rate in
effect on the CD Rate Interest Determination Date.

          “Index Maturity” means the period to maturity of the instrument or obligation with respect to
which the related Interest Rate Basis or Bases will be calculated.

          “H.15(519)” means the designated weekly statistical release, or any successor publication,
published by the Board of Governors of the Federal Reserve System.

          “H.15 Daily Update” means the daily update of H.15(519), available through the world-wide-web
site of the Board of Governors of the Federal Reserve System at
http://www.federalreserve.gov/releases/h15/update, or any successor site or publication.

Determination of CMT Rate

          If the Interest Rate Basis with respect to this Security is the CMT Rate, such rate will be
determined by the Calculation Agent in accordance with the following provisions:

          The Interest Determination Date relating to a CMT Rate Note or any Floating Rate Note for
which the interest rate is determined with reference to the CMT Rate will be referred to herein as
the “CMT Rate Interest Determination Date.”

          “CMT Rate” means:

(1) if CMT Reuters Page FRBCMT is specified on the face hereof:

     (a) the percentage equal to the yield for United States Treasury securities at
“constant maturity” having the Index Maturity specified on the face hereof as
published in H.15(519) under the caption “Treasury Constant Maturities”, as the
yield is displayed on Reuters (or any successor service) on page FRBCMT (or any
other page as may replace the specified page on that service) (“Reuters Page FRBCMT
“), for the CMT Rate Interest Determination Date, or

     (b) if the rate referred to in clause (a) does not so appear on Reuters Page
FRBCMT, the percentage equal to the yield for United States Treasury securities at
“constant maturity” having

 

 

the Index Maturity specified on the face hereof and for the CMT Rate Interest
Determination Date as published in H.15(519) under the caption “Treasury Constant
Maturities”, or

     (c) if the rate referred to in clause (b) does not so appear in H.15(519), the
rate on the CMT Rate Interest Determination Date for the period of the Index
Maturity specified on the face hereof as may then be published by either the Federal
Reserve System Board of Governors or the United States Department of the Treasury
that the Calculation Agent determines to be comparable to the rate which would
otherwise have been published in H.15(519), or

     (d) if the rate referred to in clause (c) is not so published, the rate on the
CMT Rate Interest Determination Date calculated by the Calculation Agent as a yield
to maturity based on the arithmetic mean of the secondary market bid prices at
approximately 3:30 P.M., New York City time, on that CMT Rate Interest Determination
Date of three leading primary United States government securities dealers in The
City of New York (which may include the agents or their affiliates) (each, a
“Reference Dealer”), selected by the Calculation Agent from five Reference Dealers
selected by the Calculation Agent and eliminating the highest quotation, or, in the
event of equality, one of the highest, and the lowest quotation or, in the event of
equality, one of the lowest, for United States Treasury securities with an original
maturity equal to the Index Maturity specified on the face hereof, a remaining term
to maturity no more than 1 year shorter than that Index Maturity and in a principal
amount that is representative for a single transaction in the securities in that
market at that time, or

     (e) if fewer than five but more than two of the prices referred to in clause
(d) are provided as requested, the rate on the CMT Rate Interest Determination Date
calculated by the Calculation Agent based on the arithmetic mean of the bid prices
obtained and neither the highest nor the lowest of the quotations shall be
eliminated, or

     (f) if fewer than three prices referred to in clause (d) are provided as
requested, the rate on the CMT Rate Interest Determination Date calculated by the
Calculation Agent as a yield to maturity based on the arithmetic mean of the
secondary market bid prices as of approximately 3:30 P.M., New York City time, on
that CMT Rate Interest Determination Date of three Reference Dealers selected by the
Calculation Agent from five Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation or, in the event of equality, one of the highest
and the lowest quotation or, in the event of equality, one of the lowest, for United
States Treasury securities with an original maturity greater than the Index Maturity
specified on the face hereof, a remaining term to maturity closest to that Index
Maturity and in a principal amount that is representative for a single transaction
in the securities in that market at that time, or

     (g) if fewer than five but more than two prices referred to in clause (f) are
provided as requested, the rate on the CMT Rate Interest Determination Date
calculated by the Calculation Agent based on the arithmetic mean of the bid prices
obtained and neither the highest nor the lowest of the quotations will be
eliminated, or

     (h) if fewer than three prices referred to in clause (f) are provided as
requested, the CMT Rate in effect on the CMT Rate Interest Determination Date.

(2) if CMT Reuters Page FEDCMT is specified on the face hereof:

     (a) the percentage equal to the one-week or one-month, as specified on the face
hereof, average yield for United States Treasury securities at “constant maturity”
having the Index Maturity specified on the face hereof as published in H.15(519)
opposite the caption “Treasury Constant Maturities”, as the yield is displayed on
Reuters (or any successor service) (on page FEDCMT or any other page as may replace
the specified page on that service) (“Reuters Page

 

 

FEDCMT “), for the week or month, as applicable, ended immediately preceding the
week or month, as applicable, in which the CMT Rate Interest Determination Date
falls, or

     (b) if the rate referred to in clause (a) does not so appear on Reuters Page
FEDCMT, the percentage equal to the one-week or one-month, as specified on the face
hereof, average yield for United States Treasury securities at “constant maturity”
having the Index Maturity specified on the face hereof and for the week or month, as
applicable, preceding the CMT Rate Interest Determination Date as published in
H.15(519) opposite the caption “Treasury Constant Maturities,” or

     (c) if the rate referred to in clause (b) does not so appear in H.15(519), the
one-week or one-month, as specified on the face hereof, average yield for United
States Treasury securities at “constant maturity” having the Index Maturity
specified on the face hereof as otherwise announced by the Federal Reserve Bank of
New York for the week or month, as applicable, ended immediately preceding the week
or month, as applicable, in which the CMT Rate Interest Determination Date falls, or

     (d) if the rate referred to in clause (c) is not so published, the rate on the
CMT Rate Interest Determination Date calculated by the Calculation Agent as a yield
to maturity based on the arithmetic mean of the secondary market bid prices at
approximately 3:30 P.M., New York City time, on that CMT Rate Interest Determination
Date of three Reference Dealers selected by the Calculation Agent from five
Reference Dealers selected by the Calculation Agent and eliminating the highest
quotation, or, in the event of equality, one of the highest, and the lowest
quotation or, in the event of equality, one of the lowest, for United States
Treasury securities with an original maturity equal to the Index Maturity specified
on the face hereof, a remaining term to maturity no more than 1 year shorter than
that Index Maturity and in a principal amount that is representative for a single
transaction in the securities in that market at that time, or

     (e) if fewer than five but more than two of the prices referred to in clause
(d) are provided as requested, the rate on the CMT Rate Interest Determination Date
calculated by the Calculation Agent based on the arithmetic mean of the bid prices
obtained and neither the highest nor the lowest of the quotations shall be
eliminated, or

     (f) if fewer than three prices referred to in clause (d) are provided as
requested, the rate on the CMT Rate Interest Determination Date calculated by the
Calculation Agent as a yield to maturity based on the arithmetic mean of the
secondary market bid prices as of approximately 3:30 P.M., New York City time, on
that CMT Rate Interest Determination Date of three Reference Dealers selected by the
Calculation Agent from five Reference Dealers selected by the Calculation Agent and
eliminating the highest quotation or, in the event of equality, one of the highest
and the lowest quotation or, in the event of equality, one of the lowest, for United
States Treasury securities with an original maturity greater than the particular
Index Maturity, a remaining term to maturity closest to that Index Maturity and in a
principal amount that is representative for a single transaction in the securities
in that market at the time, or

     (g) if fewer than five but more than two prices referred to in clause (f) are
provided as requested, the rate on the CMT Rate Interest Determination Date
calculated by the Calculation Agent based on the arithmetic mean of the bid prices
obtained and neither the highest or the lowest of the quotations will be eliminated,
or

     (h) if fewer than three prices referred to in clause (f) are provided
as requested, the CMT Rate in effect on that CMT Rate Interest Determination Date.

          If two United States Treasury securities with an original maturity greater than the Index
Maturity specified on the face hereof have remaining terms to maturity equally close to the that
Index Maturity, the quotes for

 

 

the United States Treasury security with the shorter original remaining term to maturity will be
used.

Determination of Commercial Paper Rate

          If the Interest Rate Basis with respect to this Security is the Commercial Paper Rate, such
rate shall be determined by the Calculation Agent in accordance with the following provisions:

          “Commercial Paper Rate” means the Money Market Yield (as defined below) on the date of the
rate for commercial paper having the Index Maturity specified on the face hereof as published in
H.15(519) under the caption “Commercial Paper — Non-Financial.”

          The Interest Determination Date relating to a Commercial Paper Rate Note or any Floating Rate
Note for which the interest rate is determined with reference to the Commercial Paper Rate will be
referred to herein as the “Commercial Paper Rate Interest Determination Date.”

          The following procedures will be followed if the Commercial Paper Rate cannot be determined as
described above:

	 	•	 	In the event the rate is not published by 3:00 P.M., New York City time, on the
related Calculation Date then the Commercial Paper Rate will be the Money Market Yield
(as defined below) on the Commercial Paper Rate Interest Determination Date of the rate
for commercial paper having the Index Maturity specified on the face hereof, as
published in H.15 Daily Update, or the other recognized electronic source used for the
purpose of displaying the rate under the caption “Commercial Paper — Non-Financial.”
An Index Maturity of one month will be deemed equivalent to an Index Maturity of 30
days and an Index Maturity of three months will be deemed to be equivalent to an Index
Maturity of 90 days.
	 
	 	•	 	If by 3:00 P.M., New York City time, on the related Calculation Date, the rate is
not yet published in H.15(519), H15 Daily Update or another other recognized electronic
source, then the Commercial Paper Rate on the Interest Determination Date will be
calculated by the Calculation Agent and will be the Money Market Yield of the
arithmetic mean of the offered rates at approximately 11:00 A.M., New York City time,
on the Commercial Paper Rate Interest Determination Date of three leading dealers
United States dollar commercial paper in The City of New York (which may include one or
more of the agents or their affiliates). The quotations will be selected by the
Calculation Agent for commercial paper having the Index Maturity designated on the face
hereof placed for an industrial issuer whose bond rating is “AA,” or the equivalent,
from a nationally recognized rating agency.
	 
	 	•	 	If the dealers selected by the Calculation Agent are not quoting as provided above,
the Commercial Paper Rate will be that Commercial Paper Rate in effect on the
Commercial Paper Rate Interest Determination Date.

          “Money Market Yield” means a yield (expressed as a percentage rounded to the nearest
one-hundredth of a percent, with five one-thousandths of a percent rounded upwards) calculated by
the following formula:

	 	 	 	 	 	 	 	 	 
	Money Market Yield

	 	=
	 	D x 360
	 	×
	 	100
	 	 	 
	 	 	360 — (D x M)	 	 

where “D” is the applicable per annum rate for commercial paper
quoted on a bank discount basis and expressed as a decimal, and “M”
refers to the actual number of days in the applicable Interest Reset
Period.

 

 

Determination of Eleventh District Cost of Funds Rate

          If the Interest Rate Basis with respect to this Security is the Eleventh District Cost of
Funds Rate, such rate shall be determined by the Calculation Agent in accordance with the following
provisions:

          “Eleventh District Cost of Funds Rate” means the rate equal to the monthly weighted average
cost of funds for the calendar month immediately preceding the month in which the Eleventh District
Cost of Funds Rate Interest Determination Date (as defined below) falls, as set forth under the
caption “11th Dist COFI” on Reuters (or any successor service) on page COFI/ARMS (or any other page
as may replace the specified page on that service) (“Reuters Page COFI/ARMS”) as of 11:00 A.M., San
Francisco time, on the Eleventh District Cost of Funds Rate Interest Determination Date.

          An Interest Determination Date relating to an Eleventh District Cost of Funds Rate Note or any
Floating Rate Note for which the interest rate is determined with reference to the Eleventh
District Cost of Funds Rate will be referred to herein as an “Eleventh District Cost of Funds Rate
Interest Determination Date.”

          The following procedures will be followed if the Eleventh District Cost of Funds Rate cannot
be determined as described above:

	 	•	 	If the rate does not appear on Reuters Page COFI/ARMS on any related Eleventh
District Cost of Funds Rate Interest Determination Date, the Eleventh District Cost of
Funds Rate for the Eleventh District Cost of Funds Rate Interest Determination Date
will be the monthly weighted average costs of funds paid by member institutions of the
Eleventh Federal Home Loan Bank District that was most recently announced (the “Index”)
by the Federal Home Loan Bank of San Francisco as the cost of funds for the calendar
month immediately preceding the date of the announcement.
	 
	 	•	 	If the Federal Home Loan Bank of San Francisco fails to announce the rate for the
calendar month immediately preceding the Eleventh District Cost of Funds Rate Interest
Determination Date, then the Eleventh District Cost of Funds Rate determined as of the
Eleventh District Cost of Funds Rate Interest Determination Date will be the Eleventh
District Cost of Funds Rate in effect on the Eleventh District Cost of Funds Rate
Interest Determination Date.

Determination of Federal Funds Rate

          If the Interest Rate Basis with respect to this Security is the Federal Funds Rate, such rate
shall be determined by the Calculation Agent in accordance with the following provisions:

          “Federal Funds Rate” means the rate on the date for federal funds as published in H.15(519)
opposite the heading “Federal Funds (Effective)”, as the rate is displayed on Reuters (or any
successor service) on page FEDFUNDS1 under the heading “EFFECT” (or any other page as may replace
the page on the service) (“Reuters Page FEDFUNDS1”).

          An Interest Determination Date relating to a Federal Funds Rate Note or any Floating Rate Note
for which the interest rate is determined with reference to the Federal Funds Rate will be referred
to herein as a “Federal Funds Rate Interest Determination Date.”

          The following procedures will be followed if the Federal Funds Rate cannot be determined as
described above:

	 	•	 	If the rate does not appear on Reuters Page FEDFUNDS1 or is not so published by 3:00
P.M. New York City time, on the related Calculation Date, the rate on the Federal Funds
Rate Interest Determination Date as published in H.15 Daily Update, or the other
recognized electronic source used for the purpose of displaying the rate, under the
caption “Federal Funds (Effective)” will be used.

 

 

	 	•	 	If by 3:00 P.M., New York City time, on the related Calculation Date the rate does
not appear on Reuters Page FEDFUNDS1 or is not yet published in H.15(519), H.15 Daily
Update or other recognized electronic source, then the Federal Funds Rate on the
Federal Funds Rate Interest Determination Date will be calculated by the Calculation
Agent and will be the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged by three leading brokers of
United States dollar federal funds transactions in The City of New York (which may
include one or more of the agents or their affiliates) selected by the Calculation
Agent prior to 9:00 A.M., New York City time, on that Federal Funds Rate Interest
Determination Date.
	 
	 	•	 	If the brokers selected by the Calculation Agent are not quoting as provided above,
the Federal Funds Rate determined as of the Federal Funds Rate Interest Determination
Date will be the Federal Funds Rate in effect on that Federal Funds Rate Interest
Determination Date.

Determination of LIBOR

          If the Interest Rate Basis with respect to this Security is LIBOR, such rate shall be
determined by the Calculation Agent in accordance with the following provisions:

          An Interest Determination Date relating to a LIBOR Note or any Floating Rate Note for which
the interest rate is determined with reference to LIBOR will be referred to herein as a “LIBOR
Interest Determination Date”.

     (a) Upon a LIBOR Interest Determination Date, the LIBOR rate will be the rate for deposits in
the Designated LIBOR Currency (as defined below) having the Index Maturity specified on the face
hereof, commencing on the Interest Reset Date, that appears on the Designated LIBOR Page (as
defined below) as of 11:00 A.M., London time, on the LIBOR Interest Determination Date.

     (b) With respect to a LIBOR Interest Determination Date on which fewer than two offered
rates appear, or no rate appears, as the case may be, on the Designated LIBOR Page, LIBOR will
be determined according to the procedures described below:

	 	•	 	The Calculation Agent will request the principal London offices of each of four
major reference banks (which may include affiliates of the agents) in the London
interbank market, as selected by the Calculation Agent, to provide the Calculation
Agent with its offered quotation for deposits in the Designated LIBOR Currency for the
period of the Index Maturity specified on the face hereof, commencing on the applicable
Interest Reset Date, to prime banks in the London interbank market at approximately
11:00 A.M., London time, on the LIBOR Interest Determination Date and in a principal
amount that is representative for a single transaction in the Designated LIBOR Currency
in the market at the time.
	 
	 	•	 	If at least two quotations are so provided, then LIBOR on the LIBOR Interest
Determination Date will be the arithmetic mean of the quotations.
	 
	 	•	 	If fewer than two quotations are so provided, then LIBOR on the LIBOR Interest
Determination Date will be the arithmetic mean of the rates quoted at approximately
11:00 A.M., in the applicable principal financial center, on the LIBOR Interest
Determination Date by three major banks (which may include affiliates of the agents) in
the principal financial center selected by the Calculation Agent for loans in the
Designated LIBOR Currency to leading European banks, having the Index Maturity
specified on the face hereof and in a principal amount that is representative for a
single transaction in the Designated LIBOR Currency in the market at the time.

 

 

	 	•	 	If the banks so selected by the Calculation Agent are not quoting as provided above,
LIBOR determined as of the LIBOR Interest Determination Date will be LIBOR in effect on
that LIBOR Interest Determination Date.

          “Designated LIBOR Currency” means the currency specified on the face hereof as to which LIBOR
shall be calculated or, if no currency is specified on the face hereof, United States dollars.

          “Designated LIBOR Page” means the display on the Reuters 3000 Xtra Service (or any successor
service) on the “LIBOR 01” page or “LIBOR 02” page, as specified on the face hereof (or any other
page as may replace the page on the service) for the purpose of displaying the London interbank
rates of major banks for the Designated LIBOR Currency.

Determination of Prime Rate

          If the Interest Rate Basis with respect to this Security is the Prime Rate, such rate shall be
determined by the Calculation Agent in accordance with the following provisions:

          “Prime Rate” means the rate on the date as published in H.15(519) under the heading “Bank
Prime Loan.”

          An Interest Determination Date relating to a Prime Rate Note or any Floating Rate Note for
which the interest rate is determined with reference to the Prime Rate will be referred to herein
as a “Prime Rate Interest Determination Date.”

          The following procedures will be followed if the Prime Rate cannot be determined as described
above:

	 	•	 	If the rate is not published in H.15(519) prior to 3:00 P.M., New York City time, on
the related Calculation Date, the rate on the Prime Rate Interest Determination Date as
published in H.15 Daily Update, or other recognized electronic source used for the
purpose of displaying the rate, under the caption “Bank Prime Loan” will be used.
	 
	 	•	 	If the rate is not published prior to 3:00 P.M., New York City time, on the related
Calculation Date, in H.15(519), or H.15 Daily Update or another recognized electronic
source, then the Prime Rate will be the arithmetic mean of the rates of interest
publicly announced by each bank that appears on the Reuters Page USPRIME1 (as defined
below) as the bank’s prime rate or base lending rate as in effect for that Prime Rate
Interest Determination Date, as determined by the Calculation Agent.
	 
	 	•	 	If fewer than four rates appear on the Reuters Page USPRIME1 for the Prime Rate
Interest Determination Date, the Prime Rate will be calculated by the Calculation Agent
and will be the arithmetic mean of the prime rates or base lending rates quoted on the
basis of the actual number of days in the year divided by a 360-day year as of the
close of business on the Prime Rate Interest Determination Date by three major banks in
The City of New York (which may include affiliates of the agents) selected by the
Calculation Agent.
	 
	 	•	 	If the banks or trust companies selected are not quoting as provided above, the
Prime Rate determined for the Prime Rate Interest Determination Date will be that Prime
Rate in effect on the Prime Rate Interest Determination Date.

          “Reuters Page USPRIME1” means the display on the Reuters 3000 Xtra Service, on the “USPRIME1”
page (or the other page as may replace the USPRIME1 page on that service for the purpose of
displaying prime rates or base lending rates of major United States banks).

 

 

Determination of Treasury Rate

          If the Interest Rate Basis with respect to this Security is the Treasury Rate, such rate shall
be determined by the Calculation Agent in accordance with the following provisions:

          An Interest Determination Date relating to a Treasury Rate Note or any Floating Rate Note for
which the interest rate is determined by reference in the Treasury Rate shall be referred to herein
as a “Treasury Rate Interest Determination Date.”

          “Treasury Rate” means:

(1) the rate from the auction held on the Treasury Rate Interest Determination Date
(the “Auction”) of direct obligations of the United States (“Treasury Bills”) having
the Index Maturity specified on the face hereof under the caption “INVEST RATE” on
the display on Reuters (or any successor service) on page USAUCTION10 (or any other
page as may replace that page on that service) (“Reuters Page USAUCTION10”) or page
USAUCTION11 (or any other page as may replace that page on that service) (“Reuters
Page USAUCTION11”), or

(2) if the rate referred to in clause (1) is not so published by 3:00 P.M., New York
City time, on the related Calculation Date, the Bond Equivalent Yield (as defined
below) of the auction rate of the applicable Treasury Bills as announced by the
United States Department of the Treasury, or

(3) if the rate referred to in clause (2) is not so announced by the United States
Department of the Treasury, or if the Auction is not held, the Bond Equivalent
Yield of the rate on the Treasury Rate Interest Determination Date of the applicable
Treasury Bills as published in H.15(519) under the caption “U.S. Government
Securities/Treasury Bills/Secondary Market”, or

(4) if the rate referred to in clause (3) not so published by 3:00 P.M., New York
City time, on the related Calculation Date, the rate on the Treasury Rate Interest
Determination Date of the applicable Treasury Bills as published in H.15 Daily
Update, or another recognized electronic source used for the purpose of displaying
the applicable rate, under the caption “U.S. Government Securities/Treasury
Bills/Secondary Market”, or

(5) if the rate referred to in clause (4) is not so published by 3:00 P.M., New York
City time, on the related Calculation Date, the rate on the Treasury Rate Interest
Determination Date calculated by the Calculation Agent as the Bond Equivalent Yield
of the arithmetic mean of the secondary market bid rates, as of approximately 3:30
P.M., New York City time, on that Treasury Rate Interest Determination Date, of
three primary United States government securities dealers (which may include the
agents or their affiliates) selected by the Calculation Agent, for the issue of
Treasury Bills with a remaining maturity closest to the Index Maturity specified on
the face hereof, or

(6) if the dealers so selected by the Calculation Agent are not quoting as mentioned
in clause (5), the Treasury Rate in effect on the Treasury Rate Interest
Determination Date.

          “Bond Equivalent Yield” means a yield (expressed as a percentage) calculated in accordance
with the following formula:

	 	 	 	 	 	 	 	 	 
	Bond Equivalent Yield

	 	=
	 	D x N
	 	×
	 	100
	 	 	 
	 	 	360 — (D x M)	 	 

where “D” refers to the applicable per annum rate for Treasury Bills quoted on a bank discount
basis and expressed as a decimal, “N” refers to 365 or 366, as the case may be, and “M” refers to
the actual number of days in the applicable Interest Reset Period.

 

 

          Notwithstanding the foregoing, the interest rate hereon shall not be greater than the Maximum
Interest Rate, if any, or less than the Minimum Interest Rate, if any, shown on the face hereof.
The Calculation Agent shall calculate the interest rate on this Security in accordance with the
foregoing on each Interest Determination Date.

          The interest rate on this Security will in no event be higher than the maximum rate permitted
by New York or California law as the same may be modified by the United States law of general
applicability.

          The Calculation Agent will, upon the request of the Holder of this Security, provide to such
Holder the interest rate hereon then in effect and, if different, the interest rate which will
become effective as of the next applicable Interest Reset Date.

          If any Interest Payment Date specified on the face hereof would otherwise be a day that is not
a Business Day, the Interest Payment Date shall be postponed to the next day that is a Business
Day, except that if (1) the rate of interest on this Security shall be determined in accordance
with the provisions of the heading “Determination of LIBOR” above, and (2) such Business Day is in
the next succeeding calendar month, such Interest Payment Date shall be the immediately preceding
Business Day. “Business Day” means any day that is not a Saturday or Sunday and that, in The City
of New York (and, if the rate of interest on this Security shall be determined in accordance with
the provisions of the heading “Determination of LIBOR” above, the City of London), is not a day on
which banking institutions are generally authorized or obligated by law to close.

          Interest payments for this Security will include interest accrued from and including the date
of issue or from and including the last date in respect of which interest has been paid, as the
case may be, to, but excluding, the Interest Payment Date or Stated Maturity, as the case may be.
Accrued interest hereon from the Original Issue Date or from the last date to which interest hereon
has been paid, as the case may be, shall be an amount calculated by multiplying the face amount
hereof by an accrued interest factor. Such accrued interest factor shall be computed by adding the
interest factor calculated for each day from the Original Issue Date or from the last date to which
interest shall have been paid, as the case may be, to the date for which accrued interest is being
calculated. The interest factor for each such day shall be computed by dividing the interest rate
(expressed as a decimal) applicable to such day by 360, in case the Interest Rate Basis of this
Security is the CD Rate, Commercial Paper Rate, Eleventh District Cost of Funds Rate, Federal Funds
Rate, Prime Rate or LIBOR, or by the actual number of days in the year in the case the Interest
Rate Basis of this Security is the CMT Rate or the Treasury Rate.

          On each Optional Reset Date, if any, specified on the face hereof, the Company has the option
to reset the Spread and the Spread Multiplier. If no date or dates for such reset are set forth on
the face hereof, this Security will not be subject to such reset. The Company may exercise such
option by notifying the Trustee of such exercise at least 45 but not more than 60 days prior to an
Optional Reset Date. Not later than 40 days prior to such Optional Reset Date, the Trustee will
mail to the Holder hereof a notice (the “Reset Notice”), first class, postage prepaid. The Reset
Notice will indicate whether the Company has elected to reset the Spread or Spread Multiplier and
if so, (1) such new Spread or Spread Multiplier, as the case may be; and (2) the provisions, if
any, for redemption during the period from such Optional Reset Date to the next Optional Reset Date
or, if there is no such next Optional Reset Date, to Stated Maturity (each such period a
“Subsequent Interest Period”), including the date or dates on which or the period or periods during
which and the price or prices at which such redemption may occur during such Subsequent Interest
Period.

          Notwithstanding the foregoing, the Company may, at its option, revoke the Spread or Spread
Multiplier as provided for in the Reset Notice, and establish a Spread or Spread Multiplier that is
higher (or lower if this Security is designated an Inverse Floating Rate Note) than the Spread or
Spread Multiplier provided for in the relevant Reset Notice for the Subsequent Interest Period
commencing on such Optional Reset Date, by causing the Trustee to mail, not later than 20 days
prior to an Optional Reset Date (or, if the day is not a Business Day, on the immediately
succeeding Business Day), a notice of such new Spread or Spread Multiplier to the Holder hereof.
Such notice will be irrevocable. The Company must notify the Trustee of its intentions to revoke
such Reset Notice at least 25 days prior to such Optional Reset Date. If the Spread or Spread
Multiplier hereof is reset on an Optional Reset Date and the Holder hereof has not tendered this
Security for repayment (or has validly revoked any such

 

 

tender) pursuant to the next succeeding paragraph, such Holder will bear such new Spread or Spread
Multiplier for the Subsequent Interest Period.

          If the Company elects to reset the Spread or Spread Multiplier as described above, the Holder
hereof will have the option to elect repayment hereof by the Company on any Optional Reset Date at
a price equal to the aggregate principal amount hereof outstanding on, plus any interest accrued
to, such Optional Reset Date. In order to exercise such option, the Holder hereof must follow the
procedures set forth below for optional repayment, except that (1) the period for delivery of this
Security or notification to the Trustee will be at least 25 but not more than 35 days prior to such
Optional Reset Date and (2) a Holder who has tendered for repayment pursuant to a Reset Notice may,
by written notice to the Trustee, revoke any such tender until the close of business on the tenth
day prior to such Optional Reset Date.

          The Company may extend the Stated Maturity of this Security for the number of periods of whole
years from one to five, if any, specified on the face hereof under Extension Periods up to but not
beyond the Final Maturity Date specified on the face hereof. If no period or periods for such
extension are set forth on the face hereof, this Security will not be subject to such extension and
will finally mature on the Stated Maturity specified on the face hereof. The Company may exercise
such option by notifying the Trustee of such exercise at least 45 but not more than 60 days prior
to the old Stated Maturity. Not later than 40 days prior to the old Stated Maturity, the Trustee
will mail to the Holder hereof a notice (the “Extension Notice”), first class, postage prepaid.
The Extension Notice will set forth (1) the election of the Company to extend the Stated Maturity;
(2) the new Stated Maturity; (3) the Spread or Spread Multiplier applicable to the Extension
Period; and (4) the provisions, if any, for redemption during the Extension Period, including the
date or dates on which or the period or periods during which and the price or prices at which such
redemption may occur during the Extension Period. Upon the mailing by such Trustee of an Extension
Notice to the Holder hereof, the Stated Maturity shall be extended automatically, and, except as
modified by the Extension Notice and as described in the next paragraph, this Security will have
the same terms as prior to the mailing of such Extension Notice.

          Notwithstanding the foregoing, not later than 20 days prior to the old Stated Maturity, the
Company may, at its option, revoke the Spread or Spread Multiplier provided for in the Extension
Notice and establish a higher (or lower if this Security is designated an Inverse Floating Rate
Note) Spread or Spread Multiplier for the Extension Period, by causing the Trustee to mail notice
of such new Spread or Spread Multiplier, as the case may be, first class, postage prepaid, to the
Holder hereof. Such notice will be irrevocable. In such case, this Security will bear such new
Spread or Spread Multiplier for the Extension Period, whether or not tendered for repayment.

          If the Company extends the Stated Maturity, the Holder hereof will have the option to elect
repayment hereof by the Company on the old Stated Maturity at a price equal to the principal amount
hereof, plus any interest accrued and unpaid to such date. In order to exercise such option, the
Holder hereof must follow the procedures set forth for optional repayment, except that (1) the
period for delivery of this Security or notification to the Trustee will be at least 25 but not
more than 35 days prior to the old Stated Maturity and (2) a Holder who has tendered for repayment
pursuant to an Extension Notice may, by written notice to the Trustee, revoke any such tender for
repayment until the close of business on the tenth day before the old Stated Maturity.

          Unless otherwise indicated on the face of this Security, this Security may not be redeemed
prior to Stated Maturity. If so indicated on the face of this Security, this Security may be
redeemed, at the option of the Company, on any date on or after the date set forth on the face
hereof, either in whole or from time to time in part at a redemption price equal to 100% of the
principal amount redeemed, together with interest accrued and unpaid thereon to the date of
redemption. Notice of redemption shall be mailed to the Holders of the Securities designated for
redemption at their addresses as the same shall appear in the Security Register not less than 30
and not more than 60 days prior to the date of redemption, subject to all the conditions and
provisions of the Indenture. In the event of any redemption, the Company will not be required to
(1) issue, register the transfer of, or exchange any Security during a period beginning at the
opening of business 15 days before any selection of Securities to be redeemed and ending at the
close of business on the date of mailing of the relevant notice of redemption or (2) register the
transfer or exchange of any Security, or any portion thereof, called for redemption, except the
unredeemed portion of any

 

 

Security being redeemed in part. Only a new Security or Securities for the amount of the
unredeemed portion hereof shall be issued in the name of the Holder upon the cancellation hereof.

          If so provided on the face of this Security, the Security will be subject to repayment at the
option of the Holder on the date or dates so indicated on the face hereof. If no date or dates for
such repayment are set forth on the face hereof, this Security will not be repayable at the option
of the Holder prior to Stated Maturity. On an optional repayment date, if any, this Security will
be repayable in whole or in part in increments of $1,000 at the option of the Holder at a price
equal to 100% of the principal amount to be repaid, together with interest thereon payable to the
date of repayment, if not more than 60 nor less than 30 days prior to the date or dates of
repayment set forth on the face hereof, the Company receives either (a) the Security with the form
entitled “Option to Elect Repayment” on the reverse of the Security duly completed or (b) a
telegram, telex, facsimile transmission or letter from a member of a national securities exchange
or the National Association of Securities Dealers, Inc. or a commercial bank or a trust company in
the United States of America stating the name of the Holder of the Security, the principal amount
of the Security, the amount of the Security to be repaid, a statement that the option to elect
repayment is being exercised, and a guarantee that the Security to be repaid with the form entitled
“Option to Elect Repayment” on the reverse of the Security duly completed will be received by the
Company within five Business Days after the date of the telegram, telex, facsimile transmission or
letter, and the security and form duly completed are so received by the Company. Any notice of
this effect received by the Company will be irrevocable. The final and binding determination of
all questions as to the validity, eligibility (including time of receipt) and acceptance of this
Security for repayment will be made by the Company. In the event of repayment of this Security in
part only, a new Security for the unrepaid portion hereof shall be issued in the name of the Holder
hereof upon the surrender hereof.

          If an Event of Default with respect to Securities of this series shall occur and be
continuing, the principal of the Securities of the series may be declared due and payable in the
manner and with the effect provided in the Indenture.

          Unless otherwise specified on the face hereof, if (1) this Security is issued with original
issue discount (as defined in the Internal Revenue Code of 1986, as amended)( the “Code”), and (2)
the principal hereof is declared to be due and payable immediately, the amount of principal due and
payable with respect hereto shall be limited to the Principal Amount hereof multiplied by the sum
of the Issue Price hereof (expressed as a percentage of the Principal Amount hereof); plus the
aggregate portions of the original issue discount (consisting of the excess of the amounts
considered as part of the “stated redemption price at maturity” of the Security within the meaning
of Section 1273(a)(2) of the Code, whether denominated as principal or interest, over the Issue
Price), which have accrued pursuant to Section 1272 of the Code (without regard to Section
1272(a)(7) of the Code) from the date of issuance of the Security to the date of determination; and
minus any amount paid from the date of issuance up to the date of determination which is considered
part of the “stated redemption price at maturity” of the Security.

          The Indenture permits, with certain exceptions as therein provided, the amendment thereof and
the modification of the rights and obligations of the Company and the rights of the Holders of the
Securities of each series to be affected under the Indenture at any time by the Company and the
Trustee with the consent of the Holders of not less than a majority in principal amount of the
Securities at the time outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of not less than a majority in principal amount of the
outstanding Securities of any series to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder
and upon all future Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Security.

          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 principal of, premium, if any, and interest on this Security at the times, places and rate, and
in the coin or currency, herein prescribed. However, the Indenture limits Holder’s rights to
enforce the Indenture and this Security.

 

 

          This Security is exchangeable only if (1) the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for this Global Security or if at any time the
Depositary ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as
amended, and a successor Depositary is not appointed within the time specified in the Indenture, or
(2) the Company in its sole discretion determines that all Global Securities of the same series as
this Security shall be exchangeable for definitive Securities of differing denominations
aggregating a like amount in registered form. If this Security is exchangeable pursuant to the
preceding sentence, it shall be exchangeable for definitive Securities of differing denominations
aggregating a like amount in registered form in denominations of $1,000 and integral multiples of
$1,000 in excess thereof, bearing interest at the same rate or pursuant to the same formula, having
the same date of issuance, redemption provisions, if any, Stated Maturity and other terms.

          The Depositary will not sell, assign, transfer or otherwise convey any beneficial interest in
this Security unless such beneficial interest is in an amount equal to $1,000 or an integral
multiple of $1,000 in excess thereof. The Depositary, by accepting this Security, agrees to be
bound by such provision.

          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
payable in connection therewith.

          Prior to due presentment of this Security 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
Security is registered as the owner hereof for all purposes, whether or not this Security be
overdue and none of the Company, the Trustee or any such agent shall be affected by notice to the
contrary.

          All percentages resulting from any calculation on this Security will be rounded to the nearest
one hundred-thousandth, with five one-millionths rounded upwards
(e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting
from such calculation on this Security will be rounded to the nearest cent (with one-half cent
being rounded upwards).

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

          All terms used in this Security which are defined in the Indenture shall have the meanings
assigned to them in the Indenture.

 

 

          IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed under its
corporate seal as of the Dated Date set forth on the face hereof.

	 	 	 	 	 
	[Seal] 	INTERNATIONAL LEASE FINANCE CORPORATION

 	 
	 	By:  	
 	 
	 	 	Chairman of the Board 	 
	 	 	 	 
	 
	 	
President 	 
	 

Attest:

 

                        Secretary

          Unless the certificate of authentication hereon has been executed by Deutsche Bank Trust
Company Americas, the Trustee under the Indenture, or its successor thereunder, by the manual
signature of one of its authorized signatories or authorized Authenticating Agents, this Note shall
not be entitled to any benefits under the Indenture, or be valid or obligatory for any purpose.

CERTIFICATE OF AUTHENTICATION

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

Date of Registration:

	 	 	 	 	 
	 	 DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Trustee

 	 
	 	By	 	 
	 	 	 	Authorized Signatory	 
	 	 	 
	 	 	 

 

	 	 	 	 	 

[FORM OF ASSIGNMENT]

ABBREVIATIONS

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

TEN COM —  as tenants in common

TEN ENT —  as tenants by the entireties

JT TEN  —  as joint tenants with right of survivorship and not as tenants in common

 

	UNIF GIFT MIN ACT — 	 	 	 	 	Custodian 	 	 	 
	

	 	 

(Cust)
	 	
	 	 

(Minor)
	 	  

	 	 	 	 	 
	under Uniform Gifts to Minors Act
	 	 	 	 
	 

	 	(State)	 	 

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

 

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

	 	 	 	 
	Please insert Social Security or Other
	 	 
	Identifying Number of Assignee

	 	 	 

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF ASSIGNEE

 

 

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

                                                            
                     Attorney to transfer said Note 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 written on the face of the within instrument
in every particular, without alteration or enlargement,
or any change whatever.

 

          OPTION TO ELECT REPAYMENT

          The undersigned hereby irrevocably requests and instructs the Company to repay the within
Security (or portion thereof specified below) pursuant to its terms at a price equal to the
principal amount thereof, together with interest to the repayment date, to the undersigned.

          The undersigned acknowledges that for the within Security to be repaid, the Company must
receive at the offices or agencies of the Trustee in The City of New York, during the period
specified in this Security (1) the Security with this “Option to Elect Repayment” form duly
completed, or (2) a telegram, telex, facsimile or letter from a member of a national securities
exchange or the National Association of Securities Dealers, Inc. or a commercial bank or a trust
company in the United States of America setting forth the name of the Holder of the Security, the
principal amount of the Security, the amount of the Security to be repaid, a statement that the
option to elect repayment is being exercised thereby and a guarantee that the Security to be repaid
with the “Option to Elect Repayment” form duly completed will be received by the Company not later
than five Business Days after the date of such telegram, telex, facsimile transmission or letter
and such Security and form duly completed are received by the Company by such fifth Business Day.
Any such notice received by the Company during the period specified in this Security shall be
irrevocable.

          If less than the entire principal amount of the within Security is to be repaid, specify the
portion thereof (which shall be $1,000 or an integral multiple thereof) which the Holder elects to
have repaid: $________; and specify the denomination or denominations (which shall be $1,000
or an integral multiple thereof) of the Security or Securities to be issued to the Holder for the
portion of the within Security not being repaid (in the absence of any such specification, one such
Security will be issued for the portion not being repaid): $________.

Dated:

	 	 	 
	 

	 	 
	 

	 	Note: The signature to this Option to Elect
Repayment 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.exv10w1

 

Exhibit 10.1

SOLECTRON CORPORATION

ROOP KAYLAN LAKKARAJU EMPLOYMENT AGREEMENT

     This Employment Agreement (the “Agreement”) is made by and between Solectron Corporation (the
“Company”), and Roop Kaylan Lakkaraju (“Executive”) as of April 17, 2007 (the “Effective Date”).

     1. Duties and Scope of Employment.

          (a) Positions and Duties. Executive will serve as the Company’s Senior Vice President
& Interim Chief Financial Officer, reporting to the Company’s Interim President and Chief Executive
Officer (the “CEO”). Executive will render such business and professional services in the
performance of Executive’s duties, consistent with Executive’s position within the Company, as will
reasonably be assigned to Executive by the CEO or the CEO’s designate or successor. The period of
Executive’s employment under this Agreement is referred to herein as the “Employment Term.”

          (b) Obligations. During the Employment Term, Executive will devote Executive’s full
business efforts and time to the Company. For the duration of the Employment Term, Executive
agrees not to actively engage in any other employment, occupation or consulting activity for any
direct or indirect remuneration without the prior approval of the Board of Directors of the Company
(the “Board”) (which approval will not be unreasonably withheld); provided, however, that Executive
may, without the approval of the Board, serve in any capacity with any civic, educational or
charitable organization, provided such services do not interfere with Executive’s obligations to
Company.

     2. Employee Benefits. During the Employment Term, Executive will be eligible to
participate in accordance with the terms of all Company employee benefit plans, policies and
arrangements that are applicable to other senior executives of the Company, as such plans, policies
and arrangements and terms may exist from time to time.

     3. At-Will Employment. Executive and the Company agree that Executive’s employment
with the Company constitutes “at-will” employment. Executive and the Company acknowledge that this
employment relationship may be terminated at any time, upon written notice to the other party, with
or without good cause or for any or no cause, at the option either of the Company or Executive.
However, as described in this Agreement, Executive may be entitled to severance benefits depending
upon the circumstances of Executive’s termination of employment.

     4. Compensation.

          (a) Base Salary. During the Employment Term, the Company will pay Executive an annual
salary of $385,008 commencing as of April 14, 2007 as compensation for his services (the “Base
Salary”). The Base Salary will be paid through payroll periods that are consistent with the
Company’s normal payroll practices, but in all events will not be less frequent than once per
month.

 

 

Executive’s salary will be subject to review and adjustments will be made based upon the
Company’s normal performance review practices.

          (b) Bonuses. Executive may participate in any bonus plan or similar arrangement the
Company may have in place that is applicable to other senior executives of the Company, on such
terms and conditions as the Executive Compensation and Management Resources Committee of the Board
(the “Committee”) may determine from time to time in its discretion. Executive’s target annual
bonus shall be 100 percent of Executive’s Base Salary, payable upon achievement of goals and
objectives established by the CEO and subject to Committee review, adjustment and approval. In
addition, Executive will receive a one-time performance bonus in the amount of $150,000 (the
“Special Bonus”) on April 18, 2007; provided; however, Executive shall repay a prorated portion of
the Special Bonus to the Company if Executive’s employment with the Company is terminated for Cause
or Executive voluntarily terminates his employment relationship with the Company (other than for
Good Reason, death or disability) prior to September 1, 2008. Such prorated portion shall equal:
(i) $150,000 multiplied by (ii) the quotient of (x) the number of days between Executive’s
termination date and September 1, 2008 and (y) the total number of days between April 18, 2007 and
September 1, 2008.

          (c) Deferred Compensation. Unless Executive’s employment has been terminated, the
Company shall contribute $100,000 (the “Contribution Amount”) to the account of Executive under the
Company’s Executive Deferred Compensation Plan on October 15, 2007. This contribution shall fully
vest and shall be no longer subject to forfeiture upon the earlier to occur of (i) Executive’s
employment termination pursuant to the provisions of Sections 5(a) or 5(b) or (ii) October 15,
2008. If Executive’s employment is terminated pursuant to Section 5(b), prior to October 15, 2007,
the Contribution Amount will be added to the severance amounts payable to Executive under Section
5(b)(i).

          (d) Stock Options. Executive will be eligible to receive options to purchase the
Company’s common stock pursuant to any plans or arrangements it may have in effect from time to
time. The Committee will determine in its discretion whether Executive will be granted any such
option or options and the terms of any such option or options in accordance with the terms of any
applicable plan or arrangement that may be in effect from time to time. Subject to the approval of
the Executive Compensation and Management Resources Committee, on April 17, 2007, Executive will be
entitled to receive a discounted option grant to purchase 300,000 shares of the Company’s common
stock with an exercise price of $0.001 per share, and such exercise price will be waived in lieu
of services to be provided by Executive. Such discounted option shall be deemed exercised on the
date of grant and the restricted shares of common stock shall vest 50% on April 10, 2008 and 50% on
April 10, 2009. .

     5. Severance.

          (a) Involuntary Termination other than for Cause, Death or Disability Prior to a Change of
Control or After Twelve Months Following a Change of Control. If the Company terminates
Executive’s employment with the Company without Executive’s consent and for a reason other than
Cause, Executive becoming Disabled or Executive’s death, any of which occur prior to a Change of
Control or after twelve (12) months following a Change of Control and Executive signs

 

 

and delivers to the Company a separation agreement and release of claims in a form
satisfactory to the Company, then promptly following such termination of employment, or, if later,
the effective date of the separation agreement and release of claims, Executive will receive the
following severance from the Company:

          (i) Accrued Compensation. Executive will be entitled to receive all accrued vacation,
expense reimbursements and any other benefits due to Executive through the date of termination of
employment in accordance with the Company’s then existing employee benefit plans, policies and
arrangements.

          (ii) Severance Payment. Executive will be paid continuing payments of severance pay
at a rate equal to Executive’s Base Salary rate, as then in effect, and Executive’s target bonus
for the year of termination, for a period of twelve (12) months plus one additional month for every
full year Executive has been employed with the Company as of the date of such termination, not to
exceed twenty-four (24) months (the “Severance Payment Period”), from the date of such termination,
to be paid periodically in accordance with the Company’s normal payroll policies; provided,
however, that if during the Severance Payment Period Executive engages in Competition or breaches
the covenants in Section 12 or in the separation agreement, all payments pursuant to this
subsection will immediately cease

          (iii) Continued Employee Benefits. Executive will receive Company-paid coverage
during the Severance Payment Period for Executive and Executive’s eligible dependents under the
Company’s Benefit Plans; provided, however, that if during the Severance Payment Period Executive
engages in Competition or breaches the covenants in Section 12 or in the separation agreement, all
Company-paid coverage pursuant to this subsection will immediately cease.

          (iv) Payments or Benefits Required by Law. Executive will receive such other
compensation or benefits from the Company as may be required by law (for example, “COBRA” coverage
under Section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”)).

     (b) Involuntary Termination other than for Cause or Resignation for Good Reason within
Twelve Months of a Change of Control. If within twelve (12) months following a Change of
Control (i) Executive resigns from his or her employment with the Company (or any parent or
subsidiary of the Company) for Good Reason or (ii) the Company (or any parent or subsidiary of the
Company) terminates Executive’s employment for other than Cause, and Executive signs and delivers
to the Company a separation agreement and release of claims in a form satisfactory to the Company,
then promptly following such termination of employment, or, if later, the effective date of the
separation agreement and release of claims, Executive will receive the following severance from the
Company:

          (i) Severance Payment. For a period of twenty-four (24) months following Executive’s
termination of employment (the “Change of Control Severance Payment Period”), Executive will be
paid continuing payments of severance pay equal to Executive’s average Base Salary rate for the two
years prior to such termination, and Executive’s average annual target bonus for the two years
prior to such termination, to be paid in equal installments periodically in

 

 

accordance with the Company’s normal payroll practices; provided, however, that if Executive
has been employed in this position for less than two years prior to such termination, for a period
of twenty-four (24) months following such termination, Executive will be paid continuing payments
of severance pay equal to Executive’s average Base Salary rate for the period Executive was
actually employed with the Company in this position, and Executive’s average annual target bonus
for the period Executive was actually employed with the Company in this position, to be paid in
equal installments periodically in accordance with the Company’s normal payroll practices;
provided, further, that in the event Executive engages in Competition or breaches the covenants in
Section 12 or in the separation agreement during the Change of Control Severance Payment Period,
all payments pursuant to this subsection will immediately cease.

          (ii) Equity Awards. Executive’s then outstanding options to purchase shares of the
Company’s Common Stock (whether granted on, before or after the date of this Agreement) (the
“Options”) will immediately vest and become exercisable as to 100% of the shares subject to such
Options. Additionally, shares of the Company’s Common Stock then held by Executive subject to a
Company repurchase or reacquisition right (whether issued on, before or after the date of this
Agreement) (the “Restricted Stock”) will immediately vest and have such Company right of repurchase
or reacquisition lapse as to 100% of such shares. Additionally, Executive will have a period of
three (3) months following such termination of employment to exercise Executive’s Options, but in
no event beyond the original maximum term of the Option. In all other respects the Options and
Restricted Stock will continue to be bound by and subject to the terms of their respective
agreements.

          (iii) Continued Employee Benefits. Executive will receive Company-paid coverage for a
period of thirty-six (36) months for Executive and Executive’s eligible dependents under the
Company’s Benefit Plans; provided, however, that in the event Executive engages in Competition or
breaches the covenants in Section 12 or in the separation agreement during the thirty-six month
period following such termination, all Company-paid coverage pursuant to this subsection will
immediately cease.

          (iv) Payments or Benefits Required by Law. Executive will receive such other
compensation or benefits from the Company as may be required by law (for example, “COBRA” coverage
under Section 4980B of the Code).

     (c) Other Terminations. If Executive voluntarily terminates Executive’s employment
with the Company (other than for Good Reason within twelve (12) months of a Change of Control) or
if the Company terminates Executive employment with the Company for Cause, then Executive will (i)
receive the Base Salary through the date of termination of employment, (ii) receive all accrued
vacation, expense reimbursements and any other benefits due to Executive through the date of
termination of employment in accordance with established Company plans, policies and arrangements,
and (iii) not be entitled to any other compensation or benefits (including, without limitation,
accelerated vesting of stock options) from the Company except to the extent provided under the
applicable stock option agreement(s) or as may be required by law (for example, “COBRA” coverage
under Section 4980B of the Code).

 

 

          (d) Termination due to Death or Disability. If Executive’s employment with the
Company is terminated due to Executive’s death or Executive’s becoming Disabled, then Executive or
Executive’s estate (as the case may be) will (i) receive the Base Salary through the date of
termination of employment, (ii) receive all accrued vacation, expense reimbursements and any other
benefits due to Executive through the date of termination of employment in accordance with
Company-provided or paid plans, policies and arrangements, and (iii) not be entitled to any other
compensation or benefits from the Company except to the extent required by law (for example,
“COBRA” coverage under Section 4980B of the Code).

          (e) Section 409A. Any cash severance to be paid pursuant to Sections 4(b), 5(a)(ii)
and 5(b)(i) will not be paid during the six-month period following Executive’s termination of
employment, unless the Company reasonably determines that paying such amounts immediately following
Executive’s termination of employment would not result the imposition of additional tax under
Section 409A of the Code (“Section 409A”), in which case such amounts shall be paid in accordance
with normal payroll practices. If no cash severance is paid to Executive as a result of the
previous sentence, on the first day following such six-month period, the Company will pay Executive
a lump-sum amount equal to the cumulative amounts that would have otherwise been paid to Executive
pursuant to Sections 5(a)(ii) and 6(b)(i). Thereafter, Executive will receive his cash severance
payments pursuant to Sections 5(a)(ii) and 6(b)(i) in accordance with the Company’s normal payroll
practices.

     6. Golden Parachute Excise Tax.

          (a) In the event it will be determined that any payment or distribution by the Company or
other amount with respect to the Company to or for the benefit of Executive, whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section 6 (a “Payment”),
is (or will be) subject to the excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the “Code”) or any interest or penalties are (or will be) incurred by Executive
with respect to the excise tax imposed by Section 4999 of the Code with respect to the Company (the
excise tax, together with any interest and penalties, are hereinafter collectively referred to as
the “Excise Tax”), Executive will be entitled to receive an additional cash payment (a “Gross-Up
Payment”) from the Company in an amount equal to the sum of the Excise Tax and an amount sufficient
to pay the cumulative Excise Tax and all cumulative income taxes (including any interest and
penalties imposed with respect to such taxes) relating to the Gross-Up Payment so that the net
amount retained by Executive is equal to all payments to which Employee is entitled pursuant to the
terms of this Agreement (excluding the Gross-Up Payment) or otherwise less income taxes (but not
reduced by the Excise Tax or by income taxes attributable to the Gross-Up Payment).

          (b) Subject to the provisions of Section 6(c), all determinations required to be made under
this Section 6, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at the determination, will be made
by a nationally recognized certified public accounting firm selected by the Company with the
consent of Executive, which should not unreasonably be withheld (the “Accounting Firm”) which will
provide detailed supporting calculations both to the Company and Executive within 30 days after the
receipt of notice from Executive that there has been a Payment, or

 

 

such earlier time as is requested by the Company. All fees and expenses of the Accounting
Firm will be borne solely by the Company. The Company, as determined in accordance with this
Section 6, will pay any Gross-Up Payment to Executive within five days after the receipt of the
Accounting Firm’s determination. If the Accounting Firm determines that no Excise Tax is payable
by Executive, it will so indicate to Executive in writing. Any determination by the Accounting
Firm will be binding upon the Company and Executive. As a result of uncertainty in the application
of Section 4999 of the Code at the time of the initial determination by the Accounting Firm, it is
possible that Gross-Up Payments that the Company should have made will not have been made (an
“Underpayment”), consistent with the calculations required to be made hereunder. In the event the
Company exhausts its remedies in accordance with Section 6(c) and Executive thereafter is required
to make a payment of any Excise Tax, the Accounting Firm will determine the amount of Underpayment
that has occurred and the Underpayment will be promptly paid by the Company to or for the benefit
of Executive.

          (c) Executive will notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require a Gross-Up Payment (that has not already been paid by the
Company). The notification will be given as soon as practicable but no later than ten business
days after Executive is informed in writing of the claim and will apprise the Company of the nature
of the claim and the date on which the claim is requested to be paid. Executive will not pay the
claim prior to the expiration of the 30-day period following the date on which Executive gives
notice to the Company or any shorter period ending on the date that any payment of taxes with
respect to the claim is due. If the Company notifies Executive in writing prior to the expiration
of the 30-day period that it desires to contest the claim, Executive will:

               (i) give the Company any information reasonably requested by the Company relating to the
claim;

               (ii) take any action in connection with contesting the claim as the Company will reasonably
request in writing from time to time, including, without limitation, accepting legal representation
with respect to the claim by an attorney reasonably selected by the Company;

               (iii) cooperate with the Company in good faith in order effectively to contest the claim; and

               (iv) permit the Company to participate in any proceedings relating to the claim.

          (d) The Company will bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with the contest and will indemnify and hold
Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of the representation and payment of costs and
expenses. Without limitation of the forgoing provisions of this Section 6, the Company will
control all proceedings taken in connection with the contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings, and conferences with the taxing
authority in respect of the claim and may, at its sole option, either direct Executive to pay the
tax claimed and

 

 

sue for a refund or contest the claim in any permissible manner, and Executive agrees to
prosecute the contest to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company will determine. If the Company
directs Executive to pay the claim and sue for a refund, the Company will advance the amount of the
payment to Executive, on an interest-free basis, and will indemnify and hold Executive harmless, on
an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect
thereto) imposed with respect to the advance or with respect to any imputed income with respect to
the advance; and any extension of the statute of limitations relating to payment of taxes for the
taxable year of Executive with respect to which the contested amount is claimed to be due will be
limited solely to the contested amount. The Company’s control of the contest will be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and Executive will be
entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.

          If, after the receipt by Executive of an amount advanced by the Company pursuant to Section
6(d), Executive becomes entitled to receive any refund with respect to the claim, Executive will,
subject to the Company’s compliance with the requirements of Section 6(d), promptly pay to the
Company the amount of the refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by Executive of an amount advanced by the Company
pursuant to this Section 6(d), a determination is made that Executive will not be entitled to any
refund with respect to the claim and the Company does not notify Executive in writing of its intent
to contest the denial of refund prior to the expiration of 30 days after the determination, then
the advance will be forgiven and will not be required to be repaid and the amount of the advance
will offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

     7. Definition of Terms. The following terms referred to in this Agreement will have
the following meanings:

          (a) Benefit Plans. “Benefit Plans” means plans, policies or arrangements that the
Company sponsors (or participates in) and that immediately prior to Executive’s termination of
employment provide Executive and/or Executive’s eligible dependents with medical, dental, vision
and/or financial counseling benefits. Benefit Plans do not include any other type of benefit
(including, but not by way of limitation, disability, life insurance or retirement benefits). A
requirement that the Company provide Executive and Executive’s eligible dependents with coverage
under the Benefit Plans will not be satisfied unless the coverage is no less favorable than that
provided to Executive and Executive’s eligible dependents immediately prior to Executive’s
termination of employment. Notwithstanding any contrary provision of this Section 7, but subject
to the immediately preceding sentence, the Company may, at its option, satisfy any requirement that
the Company provide coverage under any Benefit Plan by instead providing coverage under a separate
plan or plans providing coverage that is no less favorable or by paying Executive a lump sum
payment sufficient to provide Executive and Executive’s eligible dependents with equivalent
coverage under a third party plan that is reasonably available to Executive and Executive’s
eligible dependents.

          (b) Cause. “Cause” means (i) a willful failure by Executive to substantially perform
Executive’s duties as an employee, other than a failure resulting from the Executive’s

 

 

complete or partial incapacity due to physical or mental illness or impairment, (ii) a willful
act by Executive that constitutes gross misconduct and that is injurious to the Company, (iii)
circumstances where Executive willfully imparts material confidential information relating to the
Company or its business to competitors or to other third parties other than in the course of
carrying out Executive’s duties, (iv) a material and willful violation by Executive of a federal or
state law or regulation applicable to the business of the Company or (v) Executive’s conviction or
plea of guilty or no contest to a felony. No act or failure to act by Executive will be considered
“willful” unless committed without good faith and without a reasonable belief that the act or
omission was in the Company’s best interest.

          (c) Change of Control. “Change of Control” means the occurrence of any of the
following:

               (i) the sale, lease, conveyance or other disposition of all or substantially all of the
Company’s assets to any “person” (as such term is used in Section 13(d) of the Securities Exchange
Act of 1934, as amended), entity or group of persons acting in concert;

               (ii) any person or group of persons becoming the “beneficial owner” (as defined in
Rule 13d-3
under said Act), directly or indirectly, of securities of the Company representing 30% or more of
the total voting power represented by the Company’s then outstanding voting securities;

               (iii) a merger or consolidation of the Company with any other corporation, other than a merger
or consolidation that would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or its controlling entity) at least 50% of the total
voting power represented by the voting securities of the Company or such surviving entity (or its
controlling entity) outstanding immediately after such merger or consolidation; or

               (iv) a contest for the election or removal of members of the Board that results in the removal
from the Board of at least 33% of the incumbent members of the Board.

          (d) Competition. “Competition” will mean Executive’s direct or indirect engagement in
(whether as an employee, consultant, agent, proprietor, principal, partner, stockholder, corporate
officer, director or otherwise), or ownership interest in or participation in the financing,
operation, management or control of, any person, firm, corporation or business that competes with
Company or is a customer of the Company.

          (e) Disability. “Disability” will mean that Executive has been unable to perform the
principal functions of Executive’s duties due to a physical or mental impairment, but only if such
inability has lasted or is reasonably expected to last for at least six months. Whether Executive
has a Disability will be determined by the Board based on evidence provided by one or more
physicians selected by the Board.

          (f) Good Reason. “Good Reason” means (without Executive’s consent) (i) a material
reduction in Executive’s title, authority, status, or responsibilities, (ii) a material breach by

 

 

the Company of its obligations as an employee, or (iii) a relocation of Executive’s principal
place of employment by more than twenty five (25) miles. With respect to a termination of
employment that occurs during the six (6) month period immediately following a Change of Control,
clause (i) of the preceding sentence will be applied by replacing the word “reduction” with the
word “change.”

     8. Term of Agreement. This Agreement will have an initial term of two (2) years
commencing on the Effective Date. On the second anniversary of the Effective Date and on each
annual anniversary of the Effective Date thereafter, this Agreement automatically will renew for an
additional term of one year unless at least three (3) months prior to such anniversary, Executive
or the Company gives the other party written notice that the Agreement will not be renewed.
Notwithstanding the foregoing provisions of this paragraph, in the event of a Change of Control,
the term of this Agreement will extend through the one-year anniversary of such Change of Control.
Additionally, on the anniversary of such Change of Control and each annual anniversary of the
Change of Control thereafter, this Agreement automatically will renew for an additional term of one
year unless at least three (3) months prior to such anniversary, Executive or the Company gives the
other party written notice that the Agreement will not be renewed.

     If Executive incurs a termination of employment that entitles Executive to receive the
payments and benefits described in Section 5, this Agreement will not terminate until all of
Executive’s and the Company’s obligations under the Agreement have been satisfied. For avoidance
of doubt, the expiration of this Agreement upon the provision of notice as provided in this Section
8 by either party will not by itself entitle Executive to any payments or benefits described in
Section 5(a) or (b).

     9. Successors.

          (a) The Company’s Successors. Any successor to the Company (whether direct or
indirect and whether by purchase, merger, consolidation, liquidation or otherwise) to all or
substantially all of the Company’s business and/or assets will assume the obligations under this
Agreement and agree expressly to perform the obligations under this Agreement in the same manner
and to the same extent as the Company would be required to perform such obligations in the absence
of a succession. For all purposes under this Agreement, the term “Company” will include any
successor to the Company’s business and/or assets which executes and delivers the assumption
agreement described in this Section 9(a) or which becomes bound by the terms of this Agreement by
operation of law.

          (b) Executive’s Successors. The terms of this Agreement and all rights of Executive
hereunder will inure to the benefit of, and be enforceable by, Executive’s personal or legal
representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

     10. Notices. All notices, requests, demands and other communications called for
hereunder will be in writing and will be deemed given (i) on the date of delivery if delivered
personally, (ii) one (1) day after being sent by a well established commercial overnight service,
or (iii) four (4) days after being mailed by registered or certified mail, return receipt
requested, prepaid and addressed to the parties or their successors at the following addresses, or
at such other addresses as the parties may later designate in writing:

 

 

If to the Company:

Solectron Corporation

847 Gibraltar Drive

Milpitas, CA 95035

Attn: Chairman, Executive Compensation and Management Resources Committee of the
Board of Directors

If to Executive:

Roop Kaylan Lakkaraju

at the last residential address known by the Company.

     11. Severability. In the event that any provision hereof becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue
in full force and effect without said provision.

     12. Non-Solicitation. For a period beginning on the Effective Date and ending one
year after the Executive ceases to be employed by the Company or, if longer, upon the completion of
the Severance Payment Period if Executive is entitled to severance under Section 5(a) or the Change
of Control Severance Payment Period if Executive is entitled to receive severance under Section
5(b), Executive, directly or indirectly, whether as employee, owner, sole proprietor, partner,
director, member, consultant, agent, founder, co-venturer or otherwise, will: (i) not solicit,
induce or influence any person to leave employment with the Company; or (ii) not directly or
indirectly solicit business from any of the Company’s customers and users on behalf of any business
that directly competes with the principal business of the Company.

     13. Entire Agreement. This Agreement constitutes the entire agreement of the parties
hereto and supersedes in their entirety all prior representations, understandings, undertakings or
agreements (whether oral or written and whether expressed or implied) of the parties with respect
to the subject matter hereof. No future agreements between the Company and Executive may supersede
this Agreement, unless they are in writing and specifically mention this Section 13.

     14. Arbitration.

          (a) General. In consideration of Executive’s service to the Company, its promise to
arbitrate all employment related disputes and Executive’s receipt of the compensation, pay raises
and other benefits paid to Executive by the Company, at present and in the future, Executive agrees
that any and all controversies, claims, or disputes with anyone (including the Company and any
employee, officer, director, shareholder or benefit plan of the Company in their capacity as such
or otherwise) arising out of, relating to, or resulting from Executive’s service to the Company
under this Agreement or otherwise or the termination of Executive’s service with the Company,
including any breach of this Agreement, will be subject to binding arbitration under the
Arbitration Rules set forth in California Code of Civil Procedure Section 1280 through 1294.2,
including Section 1283.05 (the “Rules”) and pursuant to California law. Disputes which Executive
agrees to arbitrate, and

 

 

thereby agrees to waive any right to a trial by jury, include any statutory claims under state
or federal law, including, but not limited to, claims under Title VII of the Civil Rights Act of
1964, the Americans with Disabilities Act of 1990, the Age Discrimination in Employment Act of
1967, the Older Workers Benefit Protection Act, the California Fair Employment and Housing Act, the
California Labor Code, claims of harassment, discrimination or wrongful termination and any
statutory claims. Executive further understands that this Agreement to arbitrate also applies to
any disputes that the Company may have with Executive.

          (b) Procedure. Executive agrees that any arbitration will be administered by the
American Arbitration Association (“AAA”) and that a neutral arbitrator will be selected in a manner
consistent with its National Rules for the Resolution of Employment Disputes. The arbitration
proceedings will allow for discovery according to the rules set forth in the National Rules for the
Resolution of Employment Disputes or California Code of Civil Procedure. Executive agrees that the
arbitrator will have the power to decide any motions brought by any party to the arbitration,
including motions for summary judgment and/or adjudication and motions to dismiss and demurrers,
prior to any arbitration hearing. Executive agrees that the arbitrator will issue a written
decision on the merits. Executive also agrees that the arbitrator will have the power to award any
remedies, including attorneys’ fees and costs, available under applicable law. Executive
understands the Company will pay for any administrative or hearing fees charged by the arbitrator
or AAA except that Executive will pay the first $125.00 of any filing fees associated with any
arbitration Executive initiates. Executive agrees that the arbitrator will administer and conduct
any arbitration in a manner consistent with the Rules and that to the extent that the AAA’s
National Rules for the Resolution of Employment Disputes conflict with the Rules, the Rules will
take precedence.

          (c) Remedy. Except as provided by the Rules, arbitration will be the sole, exclusive
and final remedy for any dispute between Executive and the Company. Accordingly, except as provided
for by the Rules, neither Executive nor the Company will be permitted to pursue court action
regarding claims that are subject to arbitration. Notwithstanding, the arbitrator will not have the
authority to disregard or refuse to enforce any lawful Company policy, and the arbitrator will not
order or require the Company to adopt a policy not otherwise required by law, which the Company has
not adopted.

          (d) Availability of Injunctive Relief. In addition to the right under the Rules to
petition the court for provisional relief, Executive agrees that any party may also petition the
court for injunctive relief where either party alleges or claims a violation of this Agreement or
the Confidentiality Agreement or any other agreement regarding trade secrets, confidential
information, nonsolicitation or Labor Code §2870. In the event either party seeks injunctive
relief, the prevailing party will be entitled to recover reasonable costs and attorneys’ fees.

          (e) Administrative Relief. Executive understands that this Agreement does not
prohibit Executive from pursuing an administrative claim with a local, state or federal
administrative body such as the Department of Fair Employment and Housing, the Equal Employment
Opportunity Commission or the workers’ compensation board. This Agreement does, however, preclude
Executive from pursuing court action regarding any such claim.

 

 

          (f) Voluntary Nature of Agreement. Executive acknowledges and agrees that Executive
is executing this Agreement voluntarily and without any duress or undue influence by the Company or
anyone else. Executive further acknowledges and agrees that Executive has carefully read this
Agreement and that Executive has asked any questions needed for Executive to understand the terms,
consequences and binding effect of this Agreement and fully understand it, including that Executive
is waiving Executive’s right to a jury trial. Finally, Executive agrees that Executive has been
provided an opportunity to seek the advice of an attorney of Executive’s choice before signing this
Agreement.

     15. No Oral Modification, Cancellation or Discharge. This Agreement may be changed or
terminated only in writing (signed by Executive and the Company).

     16. Waiver of Breach. The waiver of a breach of any term or provision of this
Agreement, which must be in writing, will not operate as or be construed to be a waiver of any
other previous or subsequent breach of this Agreement.

     17. Headings. All captions and section headings used in this Agreement are for
convenient reference only and do not form a part of this Agreement.

     18. Withholding. The Company is authorized to withhold, or cause to be withheld, from
any payment or benefit under this Agreement the full amount of any applicable withholding taxes.

     19. Governing Law. This Agreement will be governed by the laws of the State of
California (with the exception of its conflict of laws provisions).

     20. Acknowledgment. Executive acknowledges that he has had the opportunity to discuss
this matter with and obtain advice from Executive’s private attorney, has had sufficient time to,
and has carefully read and fully understands all the provisions of this Agreement, and is knowingly
and voluntarily entering into this Agreement.

     21. Counterparts. This Agreement may be executed in counterparts, and each
counterpart will have the same force and effect as an original and will constitute an effective,
binding agreement on the part of each of the undersigned.

[Signature Page to Follow]

 

 

     IN WITNESS WHEREOF, the undersigned have executed this Agreement on the respective dates set
forth below:

	 	 	 	 	 
	 

	 	EXECUTIVE	 	 
	 
	 	 	 	 
	 

	 	 	 	Date:
	 

	 	 	 	 
	 

	 	Roop Kaylan Lakkaraju	 	 
	 
	 	 	 	 
	 

	 	SOLECTRON CORPORATION	 	 
	 
	 	 	 	 
	 

	 	 	 	Date:
	 

	 	 	 	 
	 

	 	Kevin O’Connor	 	 
	 	 	Executive Vice President & Chief Administrative Officer

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