Document:

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                                                                    EXHIBIT 10.2

EMPLOYMENT AGREEMENT OF B. CLYDE PRESLAR DATED JULY 22, 2005 (INCLUDING
CONFIDENTIALITY AND RESTRICTIVE COVENANTS)

July 22, 2005

CLYDE PRESLAR
PRIVATE AND CONFIDENTIAL

Dear Clyde,

I am very pleased that you have decided to join the Cott Corporation team. This
letter will outline some of the terms and conditions of your employment with
Cott Corporation. Please note that this is not a contract of employment or a
promise of employment for any specific term.

Your title will be Executive Vice President and Chief Financial Officer and you
will report to me in my capacity as President & Chief Executive Officer. Your
start date is yet to be agreed.

Your base salary will be $330,000 per year paid on a semi-monthly basis. Your
performance evaluations and salary reviews will generally be conducted on an
annual basis and any increase would be a part of the annual review process.

You will be entitled to participate in the Cott Executive bonus plan. In summary
this plan would entitle you to a target bonus of 100% of your base salary and
provides for the opportunity to earn bonus beyond the 100% amount, up to a level
of 200% of your base salary, based on Company and personal performance. Bonus
awards for performance above 100% of your bonus will be paid in Cott Corp.
shares. These shares will be held in trust in the Executive Investment Share
Purchase Plan and vest over a 3-year period. For further details of the trust
please contact Sher Zaman, Director of Corporate Human Resources at our Toronto
Queen's Quay office.

For the year 2005 your bonus payment will be effective from 1st July 2005 (6
months).

You will receive a car allowance equivalent to $16,000 per year.

On commencement of employment and within your first pay payment you will also be
eligible for a Sign On Bonus of $285,000 (less appropriate withholdings). Please
note that the Sign On Bonus is payable back to the company (on a pro-ratad
basis) should you leave the company within 12 months.

You will be expected to relocate to Tampa, Florida within 6 (six) months of your
start date. A copy of the relocation details are attached. For the first six
months of your employment Cott will pay for accommodation and weekly travel from
your home to Tampa, FLA for you or your wife.

Subject to approval of the Cott Corporation Human Resources and Compensation
Committee, on your date of hire you will be granted 100,000 stock options with
the strike price determined at the close of the Toronto Stock Exchange on the
last trading day before your start date. These options will vest over a period
of (3) three years, at a rate of 30%, 30%, and 40% at the end of years (1) one,
(2) two, and 3 (three) respectively.

If your employment is terminated then please refer to the attached document.

Effective on your date of hire you will be eligible for Cott's Benefit Program.
Our Benefit Program includes health, disability and life insurance benefits. You
should note that our health insurance plan does have a pre-existing illness
provision, which limits the amount payable for pre-existing illnesses for 12
consecutive months beginning on your enrollment date. However, if you have been
covered for health insurance by your prior employer, you may have

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creditable prior coverage. In order to help determine that please provide a
HIPAA certificate from your prior employer. Employee contributions are required
for our Program. Once you are eligible to participate in the Cott Cafeteria Plan
(discussed below), your contributions will be deducted from your paycheck on a
pre-tax basis.

On your start date with Cott, you will be eligible to participate in Cott's
Cafeteria Plan. Benefits provided under our Cafeteria Plan are pre-tax
deductions for medical premiums, a Health Care Reimbursement Account and a
Dependent Care Reimbursement Account. If you participate in the Cafeteria Plan,
payroll deductions for the benefits you select under the plan are made on a
pre-tax basis. Please review the Summary Plan Description for additional
information.

In addition, on the first day of a quarter following at least six months of
employment, you will be eligible for Cott's 401 (K) Savings and Retirement Plan.
You will also be eligible to participate in the Employee Share Purchase Plan
after completing ninety (90) days of employment. Your regular annual entitlement
of four (4) weeks vacation will commence in 2005. You are encouraged to take
your vacation time in the calendar year it is earned. All earned vacation must
be taken by March 31st of the year following the one, which it is earned;
otherwise it may be forfeited. If you should leave the Company, the value of any
unearned vacation taken by you will be considered a debt to the Company.

PLEASE SEE THE ENCLOSED CHECKLIST OF FORMS AND DATES THE FORMS ARE DUE TO BE
TURNED IN TO HR DEPARTMENT.

To comply with the Immigration Reform and Control Act of 1986, the company must
verify your identity and authorization to work in the United States. Therefore,
please bring with you on your first day, either one original document from the
list A or one original document from the list B and one original document from
the list C. Acceptable documents are listed on the backside of the enclosed INS
Form I-9. If you have any difficulty in this regard, please call me immediately.

Upon acceptance of this offer, you acknowledge and agree that Cott has the right
to disclose confidential information regarding you to any third party as
required by law.

Clyde, I am excited about having you join us. You have a lot to contribute to
our company. I know that you can look forward to joining a dynamic and
challenging organization with rewarding career opportunities. PLEASE INDICATE
YOUR ACCEPTANCE OF THIS OFFER BY RETURNING ONE SIGNED ORIGINAL OF BOTH THE OFFER
LETTER AND CONFIDENTIALITY AGREEMENT TO ME.

Yours truly,

/s/ John Sheppard
John Sheppard
President & Chief Executive Officer

Attached:  Relocation Policy
           Confidentiality Agreement

I accept this offer of employment and the terms identified herein.

/S/ B. CLYDE PRESLAR                                   22 JULY, 2005
--------------------                                   -------------
CLYDE PRESLAR                                          DATE

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TERMINATION OF EMPLOYMENT

TERMINATION BY THE CORPORATION FOR JUST CAUSE

Cott may terminate this Agreement and your employment hereunder without payment
of any compensation either by way of anticipated earnings or damages of any kind
at any time for Just Cause or your death.

"Just Cause" shall mean:

  I.   gross misconduct or dishonesty in the discharge of your duties hereunder;

 II.   theft, misappropriation or fraud against the company or its property;

III.   alcoholism or addiction to a substance which materially impairs your
       ability to perform your duties hereunder;

 IV.   wilful breach of fiduciary duties;

  V.   gross negligence in the performance of your duties; or

 VI.   if you commit  a wilful and material breach of this Agreement,

unless, in the case of an act or omission described in clause (iv) or (v) above,
you remedy same, after notice from the Cott, within a period which is reasonable
in the circumstances.

TERMINATION BY THE EMPLOYER WITHOUT CAUSE.

If your employment is terminated by Cott, including delivery by Cott of a Notice
of Termination, for any reason other than for Just Cause then Cott shall pay
forthwith to you directly a lump sum amount (less appropriate withholdings)
equal to:

24 months' of (A) Current Base Salary, (B) Bonus (based on current year targets
capped at 100% payout)

TERMINATION UPON A CHANGE OF CONTROL.

If, following a Change in Control, your employment is terminated without Just
Cause, you shall be entitled to the payments described above also. Also,
immediately following a Change in Control, all amounts, entitlements or benefits
in which you are a participant and are not vested shall become fully vested.

For the purposes of this agreement, a "Change of Control" shall mean: (i) the
occurrence, at any time during the Term of any person or group of persons acting
jointly or in concert acquiring more than 50% of the outstanding voting shares
in the Corporation, whether by way of takeover bid, merger, amalgamation or
otherwise; (ii) a sale by the Corporation of all or substantially all of the
Corporation's undertaking and assets; or (iii) the voluntary liquidation,
dissolution or winding-up of the Corporation, in connection with which a
distribution is made to the holders of the Corporation's common shares.

RETURN OF PROPERTY. Upon any termination of employment, you shall forthwith
deliver or cause to be delivered to the company all books, documents, computer
disks, and diskettes and other electronic data, effects, money, securities, or
other property belonging to the company or for which the company is liable to
others, which are in the possession, charge, control or custody of yourself.

RELEASE. You acknowledge and agree that the payments described above shall be in
full satisfaction of all terms of termination of your employment, including
termination pay and severance pay pursuant to the Employment Standards Act
(Ontario) as amended from time to time. You shall not be entitled to any further
termination payments, damages or compensation whatsoever. As condition precedent
to any payments being made you agrees to deliver to the company prior to any
such payment, a full and final release from all actions or claims in connection
therewith in favour of the company, its affiliates, subsidiaries, directors,
officers, employees and agents, in the form satisfactory to the company, acting
reasonably.

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RELOCATION ASSISTANCE

Please find details about the relocation assistance available as part of this
offer of employment.

HOME FINDING TRIP

Employees will be reimbursed for reasonable expenses, submitted on an approved
expense report including receipts for those expenses incurred during a 3 x 5-day
home finding trip. All travel must be booked through the company travel agency.
These expenses may include:

o    Round trip economy class (coach fare) airfare by commercial travel for
     employee and spouse. Other family members may be included with prior
     approval from the employee's Manager.

o    Car rental, parking and toll charges (if applicable).

o    Lodging, meals, telephone, laundry charges, Hotel and meal expenses should
     be consistent with Cott's travel and expense policy.

IN-TRANSIT TRAVEL

Reimbursement will be made for reasonable one-way travel. If upon arrival in the
new location you are required to spend a night in a hotel reimbursement of one
night's lodging plus meal expenses for the employee and family will be
reimbursed.

HOME SELLING EXPENSES:

In the event that the employee owns a property that is not a vacation or income
producing property, and it is deemed to be the employee's principal residence,
Cott will reimburse for the customary, non recurring, legally required selling
costs incurred for those items that would normally be paid by the seller.
Specifically these are;

     o    Real Estate commission (not to exceed 6% unless the rate is
          customarily higher in the employee's area).

     o    Attorney's fees related to the closing or escrow.

     o    Land transfer taxes.

     o    Mortgage loan pre-payment penalty fees to a maximum of three months.

     o    Recording and processing fees

     o    Title insurance fees

     o    Inspection fees (termite, well/water, structural) up to $500.00

     o    Up to $250.00 for professional services associated with the sale
          including additional required surveys.

HOME PURCHASE EXPENSES

The following are the customary, non-recurring, and legally required purchase
costs you will be reimbursed for related to the purchase of a home at the new
location. This reimbursement applies to employees who were homeowners at the
prior location. Cott will reimburse the following customary closing costs
incurred for those items that are normally paid by the buyer:

     o    Appraisal and/or Title insurance fees

     o    Document preparation fees

     o    Recording fees

     o    Real estate transfer tax

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     o    Survey fees

     o    Inspection fees (termite, well/water, structural) up to $500.00

     o    All mortgage application fees

     o    Land transfer taxes

     o    Loan origination fee up to 1%.

     o    Notary fees

The closing expenses which are not eligible for reimbursement by Cott include:
interest buy down points, hazard, fire, flood or any other type of homeowner
insurance premiums, prorated interest on mortgage, prorated rent, prorated
utility billings, home warranties, mortgage finder's fee, closing costs on
construction loans, building permits and/or inspections required by governmental
agencies.

DUPLICATE CARRYING COSTS

In the event the new property closes before the sale of the principal residence,
Cott will reimburse duplicate carrying costs, specifically, mortgage, interest
and property taxes for a period of up to 90 days. You are strongly encouraged to
coordinate the closing and purchase dates. Duplicate carrying costs will be
reimbursed on the lesser of the two properties.

PHYSICAL GOODS MOVE

Cott has contracted with several professional moving carriers to transport
personal and household goods to the new home. The following services will be
covered:

o    Packing, loading and shipment of your personal and household belongings
     from your principal residence to your new residence or to storage.

o    Insurance required to protect the household and personal belongings during
     the move. This will be arranged through the moving company.

The following items are NOT covered:

     o    Boats, trailers, recreational vehicles, mobile homes, pets, satellite
          dishes, large gym or fitness equipment, workshop equipment, large
          machinery, live plants, perishable items, chemicals, lumber, firewood,
          paint, playground equipment, hot tubs, storage sheds, disassembly or
          assembly of equipment/items, crating (unless prior approval granted)
          and special services e.g., piano tuning.

SHIPMENT OF VEHICLES

Transportation of up to a maximum of two (2) family automobiles to the new
location by the most economical means available are included, however, if
relocation is to another continent, this provision may not apply.

STORAGE

Through our moving carriers, Cott will pay for the cost of storing household
goods for a period not to exceed sixty (60) days. Cott will pay for the movement
of goods out of storage and into a permanent residence. This includes
warehouse-handling costs in and out of storage and delivery out of storage.

INSURANCE

Insurance for your household goods while in transit will be provided through a
designated insurance provider or directly through the moving carrier. This
insurance covers your household goods through packing, transit, storage
in-transit and unloading. All claims should be filed directly with the moving
carrier and/or insurance provider.

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TEMPORARY LIVING EXPENSES

Temporary living expenses may be reimbursed if you are required to report to
your new assignment, or to vacate your former residence before your new
residence is available. You may be reimbursed for:

     o    Reasonable and actual lodging/rent, meals, laundry and telephone
          charges for a period not to exceed 6 months.

     o    For temporary housing, other than hotels, you are encouraged to submit
          grocery bills instead of restaurant receipts.

     o    Weekly travel from your home to Tampa, FLA for you or your wife.

LEASE CANCELLATION EXPENSES

Before approving any lease cancellation reimbursement for either accommodation
or vehicles, the hiring Manager and the Senior Vice President, Corporate
Resources must agree upon and approve the reasonableness of the expenses.
Settlement of a leased home or apartment or vehicle may be based on one of the
following:

     o    The amount to be paid to the landlord/leasing company for cancellation
          of the lease.

     o    Such other equitable arrangements as agreed to by Cott.

RELOCATION ALLOWANCE

Cott will provide a relocation allowance of 1 months salary (net) payable after
the move has been completed. This allowance is generally used to cover the
incidental costs incurred during a relocation for which the employee is not
required to retain receipts. This allowance may be used for such things as:

o    Utilities hook-up and connection charges.

o    Appliance hook-up.

o    Drivers' licensing when relocating to a different province/state/country.

o    Transportation of pets.

o    Installation/removal or cleaning of drapes and/or carpeting.

o    Extra labour such as maid service.

o    Shipment of other personal vehicles not included with the personal
     belongings, such as boats, recreational vehicles.

3.7  TERMINATION OF EMPLOYMENT

In the event that your employment is terminated whether voluntarily or
involuntarily with Cott within 12 months of your start date you will forfeit any
remaining Relocation Policy benefits as of the date of termination.

If Cott terminates you within 12 months of joining, Cott will provide you with
an option to transfer back to your place of origin. Your relocation will include
those items listed above (but will exclude the relocation allowance) that are in
keeping with your original relocation assistance.

3.8  EXPENSE REPORT

During your relocation you will be required to track your expenses for those
items other than those covered by the relocation allowance. Such expenses as the
house-hunting trip, temporary housing, family travel, etc., will be submitted
for reimbursement on a Relocation Expense Report. This is the only expense
report that will be approved for relocation expenses. Relocation expenses must
never be mixed with regular business expenses. Completed expense reports should
be signed by your manager and then submitted to Kitty Howard - Compensation
Manager, Columbus, GA. Reimbursement to the employee may take 4-6 weeks from the
initial submission of a claim.

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CONFIDENTIALITY UNDERTAKING AND RESTRICTIVE COVENANT

TO:     Cott Beverages Inc. ("Cott"), its subsidiaries, parents, affiliates and
        associated companies (collectively and individually, the "Corporation")

FROM:   CLYDE PRESLAR (the "Executive")

--------------------------------------------------------------------------------

FOR GOOD AND VALUABLE CONSIDERATION, including without limitation the
Executive's employment with the Corporation and the wages and salary and other
benefits received and to be received by the Executive in respect of such
employment, and in particular, but without limitation, the grant to the
Executive of options to purchase common shares of Cott Corporation, the receipt
and sufficiency of which consideration the Executive hereby acknowledges:

1.   CONFIDENTIALITY

The Executive acknowledges that in the course of carrying out, performing and
fulfilling his obligations to the Corporation, the Executive has had and will
have access to and has been and will be entrusted with information that would
reasonably be considered confidential to the Corporation, the disclosure of
which to competitors of the Corporation or to the general public, will be highly
detrimental to the best interests of the Corporation. Such information
("Confidential Information") includes, without limitation, trade secrets,
know-how, marketing plans and techniques, cost and pricing figures, customer
lists, supplier lists, software, and information relating to employees,
suppliers, customers and persons in contractual relationships with the
Corporation. Except as may be required in the course of carrying out his duties
to the Corporation, the Executive covenants and agrees that he will not
disclose, so long as he is employed by the Corporation or at any time
thereafter, any of such Confidential Information to any person, other than to
the directors, officers, employees or agents of the Corporation that have a need
to know such Confidential Information, nor shall the Executive use or exploit,
directly or indirectly, such Confidential Information for any purpose other than
for the purposes of the Corporation, nor will he disclose nor use for any
purpose, other than for those of the Corporation any other information which he
may acquire during his employment with respect to the business and affairs of
the Corporation. Notwithstanding all of the foregoing, the Executive shall be
entitled to disclose such Confidential Information if required pursuant to a
subpoena or order issued by a court, arbitrator or governmental body, agency or
official, provided that the Executive shall first have:

(a)  notified the Corporation;

(b)  consulted with the Corporation on the advisability of taking steps to
     resist such requirements; and

(c)  if the disclosure is required or deemed advisable, cooperate with the
     Corporation in an attempt to obtain an order or other assurance that such
     Confidential Information will be accorded confidential treatment.

2.   INVENTIONS

The Executive acknowledges and agrees that all right, title and interest in and
to any information, trade secrets, advances, discoveries, improvements, research
materials and data bases made or conceived by the Executive prior to or during
his employment relating to the business or affairs of the Corporation, shall
belong exclusively to the Corporation. The Executive waives any and all moral
rights he may have in respect of any such items and acknowledges that all of
them shall be considered to be "works for hire" and owned by the Corporation. In
connection with the foregoing, the Executive agrees to execute any assignments
and/or acknowledgements as may be requested by the Corporation from time to
time.

3.   CORPORATE OPPORTUNITIES

Any business opportunities related to the business of the Corporation which
become known to the Executive during his employment must be fully disclosed and
made available to the Corporation by the Executive, and the Executive

<PAGE>

agrees not to take or attempt to take any action if the result would be to
divert from the Corporation any opportunity which is within the scope of its
business.

4.   PROPERTY

Upon termination of the Executive's employment, for whatever reason, the
Executive will return to the Corporation all property belonging to the
Corporation, including without limitation, all Confidential Information, keys,
manuals, customer lists, computer software and hardware, correspondence, files,
records (howsoever maintained), money, cards and supplies which may be in the
Executive's possession or control.

5.   RESTRICTIVE COVENANTS

(a)  The Executive will not at any time, without the prior written consent of
     the Corporation, during the Term of this Agreement or for a period of 24
     months after the termination of this Agreement or the Executive's
     employment (regardless of the reason for such termination), either
     individually or in partnership, jointly or in conjunction with any other
     person or persons, firm, association, syndicate, company or corporation,
     whether as agent, shareholder, employee, consultant, or in any manner
     whatsoever, directly or indirectly:

     (i)  anywhere in the Territory, engage in, carry on or otherwise have any
          interest in, advise, lend money to, guarantee the debts or obligations
          of, permit the Executive's name to be used in connection with any
          business which is competitive to the Business or which provides the
          same or substantially similar services as the Business;

     (ii) for the purpose of competing with any business of the Corporation,
          solicit, interfere with, accept any business from or render any
          services to anyone who is a client or a prospective client of the
          Corporation or any Affiliate at the time the Executive ceased to be
          employed by the Corporation or who was a client during the 12 months
          immediately preceding such time;

     (iii) solicit or offer employment to any person employed or engaged by the
          Corporation or any Affiliate at the time the Executive ceased to be
          employed by the Corporation or who was an employee during the 12 month
          period immediately preceding such time.

(b)  For the purposes of this Agreement:

     (i)  "Territory" shall mean Canada, the United States, Mexico and the
          United Kingdom;

     (ii) "Business" shall mean the business of manufacturing, selling and
          distributing non-alcoholic beverages.

(c)  Nothing in this Agreement, shall prohibit or restrict the Executive from
     holding or becoming beneficially interested in up to one (1%) percent of
     any class of securities in any corporation provided that such class of
     securities are listed on a recognized stock exchange in Canada or the
     United States.

6.   GENERAL PROVISIONS

(a)  The Executive acknowledges and agrees that in the event of a breach of the
     covenants, provisions and restrictions in this Undertaking, the
     Corporation's remedy in the form of monetary damages will be inadequate and
     that the Corporation shall be and is hereby authorized and entitled, in
     addition to all other rights and remedies available to it, to apply for and
     obtain from a court of competent jurisdiction interim and permanent
     injunctive relief and an accounting of all profits and benefits arising out
     of such breach.

(b)  The parties acknowledge that the restrictions in this Undertaking are
     reasonable in all of the circumstances. If any of the restrictions are
     determined to be unenforceable as going beyond what is reasonable in the
     circumstances for the protection of the interests of the Corporation but
     would be valid, for example, if the scope of their time periods or
     geographic areas were limited, the parties consent to the court making such

<PAGE>

     modifications as may be required and such restrictions shall apply with
     such modifications as may be necessary to make them valid and effective.

(c)  Each and every provision of Sections 1, 2, 3, 4 and 5 and this Section 6
     shall survive the termination of the Executive's employment (regardless of
     the reason for such termination).

(d)  This Undertaking will be construed and interpreted in accordance with the
     laws of the State of Florida and the federal laws of the United States
     applicable therein.

EXECUTED AS OF THIS 22ND DAY OF JULY, 2005.

/S/ B. CLYDE PRESLAR   L/S
---------------------------
CLYDE PRESLAREXHIBIT 4(b)(20)

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED
FORM, THIS NOTE 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 THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY AND ANY PAYMENT IS
MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, SINCE THE REGISTERED OWNER HEREOF,
CEDE & CO., HAS AN INTEREST HEREIN.

REGISTERED                                         $ [  ]

No. FL-01                                          CUSIP #[ ]

                         THE BEAR STEARNS COMPANIES INC.

                           MEDIUM-TERM NOTE, SERIES B

                            PRINCIPAL PROTECTED NOTES
                   LINKED TO THE PHLX HOUSING SECTOR INDEX((SM))
                              DUE NOVEMBER 7, 2008

Interest Rate: *

Original Issue Date:  November 7, 2005          Redeemable On and After: N/A

Maturity Date:        November 7, 2008          Optional Repayment Date(s): N/A

Minimum
Denominations:        $1,000, increased in multiples of $1,000

* The Company will not make any periodic payments of interest or any other
payments on the Notes until Maturity. At Maturity, the Company will pay the Cash
Settlement Value (as defined below).

<PAGE>

            THE BEAR STEARNS COMPANIES INC., a Delaware corporation (the
"Company"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the Cash Settlement Value on the maturity date shown above
(the "Maturity Date").

            Payment of the Cash Settlement Value shall be made at the office or
agency of the Trustee (as defined below) maintained for that purpose in the
Borough of Manhattan, The City of New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for the
payment of public and private debt.

            The Cash Settlement Value due at Maturity will be paid at Maturity
in immediately available funds against presentation of this Note at the office
or agency of the Trustee maintained for that purpose in the Borough of
Manhattan, The City of New York.

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

            This Note shall be governed by and construed in accordance with the
laws of the State of New York.

            This Note is one of the series of Medium-Term Notes, Series B, of
the Company.

            Unless the certificate of authentication hereon has been executed by
JPMorgan Chase Bank, N.A. (formerly, The Chase Manhattan Bank), the Trustee
under the Indenture, or its successor thereunder by the manual signature of one
of its authorized signatories, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.

                                      -2-
<PAGE>

            IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed under its corporate seal.

Dated:

                                       THE BEAR STEARNS COMPANIES INC.

                                       By:
                                          ------------------------------------
                                            Executive Vice President and
                                            Chief Financial Officer

ATTEST:

-------------------------
Secretary

[Corporate Seal]

                          CERTIFICATE OF AUTHENTICATION

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

                                       JPMORGAN CHASE BANK, N.A., as Trustee

                                       By:
                                          -----------------------------
                                          Authorized Signature

                                      -3-
<PAGE>

                                [Reverse of Note]

                         THE BEAR STEARNS COMPANIES INC.

                           MEDIUM-TERM NOTE, SERIES B

                            PRINCIPAL PROTECTED NOTES

                   LINKED TO THE PHLX HOUSING SECTOR INDEX(SM)

                              DUE NOVEMBER 7, 2008

            This Note is one of a duly authorized issue of debentures, notes or
other evidences of indebtedness (hereinafter called the "Securities") of the
Company of the series hereinafter specified, all such Securities issued and to
be issued under the Indenture dated as of May 31, 1991, as amended (herein
called the "Indenture") between the Company and JPMorgan Chase Bank, N.A.
(formerly, The Chase Manhattan Bank), as trustee (herein called the "Trustee,"
which term includes any successor trustee under the Indenture), to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and limitations of rights thereunder of the
Company, the Trustee and the Holders of the Securities, and the terms upon which
the Securities are, and are to be, authenticated and delivered. As provided in
the Indenture, Securities may be issued in one or more series, which different
series may be issued in various aggregate principal amounts, may mature at
different times, may bear interest, if any, at different rates, may be subject
to different redemption provisions, if any, may be subject to different
repayment provisions, if any, may be subject to different sinking, purchase or
analogous funds, if any, may be subject to different covenants and Events of
Default and may otherwise vary as in the Indenture provided or permitted. This
Note is one of the series of the Securities designated as Medium-Term Notes,
Series B (the "Notes"). The Notes of this series may be issued at various times
with different maturity dates, redemption dates and different principal
repayment provisions, may bear interest at different rates and may otherwise
vary, all as provided in the Indenture.

Certain Definitions

Index:....................... means the PHLX Housing Sector Index(SM) (index
                              symbol "HGX"), as published by the Philadelphia
                              Stock Exchange (the "PHLX").

Calculation Agent:........... means The Bear Stearns Companies Inc.

Index Business Day:.......... means a day, as determined by the Calculation
                              Agent, on which the Index or any Successor Index
                              is calculated and published and on which
                              securities comprising more than 80% of the value
                              of the Index on such day are capable of being
                              traded on their relevant exchanges.

                                      -4-
<PAGE>

Index Closing Level:......... means the closing value of the Index on each Index
                              Business Day.

Initial Index Level:......... equals 485.59.

Final Index Level:........... will be determined by the Calculation Agent and
                              equals the closing value of the Index on October
                              31, 2008, the "Calculation Date," or, if that day
                              is not an Index Business Day, on the next Index
                              Business Day.

Maturity Date:............... means November 7, 2008.

Cash Settlement Value

            At Maturity, the Company shall pay the "Cash Settlement Value," as
follows:

            (i)   If, at maturity, the Final Index Level is less than or equal
                  to the Initial Index Level, the Cash Settlement Value will
                  range between $1,000 and $1,357.00 and will equal the
                  principal amount of Notes plus the lesser of:

                        o     $357.00, and

<TABLE>
<S>                                               <C>
                                      --                                                 --
                                      |                                                   |
                                      |           Initial Index Level - Final Index Level |
                        o     $1000 X | 102.00% X --------------------------------------- |
                                      |                     Initial Index Level           |
                                      |                                                   |
                                      --                                                 --
</TABLE>

            (ii)  If, at maturity, the Final Index Level is greater than the
                  Initial Index Level, the Cash Settlement Value will be $1,000.
                  Since the Notes are principal protected if held to maturity,
                  in no event will the Cash Settlement Value be less than $1000.

Discontinuance of the Index

            If PHLX discontinues publication of the Index and PHLX or another
entity publishes a Successor Index or substitute index that the Calculation
Agent determines, in its sole discretion, to be comparable to the discontinued
Index (the new index being referred to as a "Successor Index"), then the Index
Closing Levels will be determined by reference to the Successor Index at the
close of trading on the relevant exchange or market for the Successor Index on
the date that the Index Closing Level is to be determined.

            Upon any selection by the Calculation Agent of a Successor Index,
the Calculation Agent will cause notice to be furnished to the Company and the
Trustee, who will provide notice of the selection of the Successor Index to the
Holders of the Notes.

            If PHLX discontinues publication of the Index prior to, and such
discontinuance is continuing on, the date that the Index Closing Level is to be
determined and the Calculation Agent determines that no Successor Index is
available at such time, then, on such date, the

                                      -5-
<PAGE>

Calculation Agent will calculate the appropriate closing levels. The Index
Closing Level will be computed by the Calculation Agent in accordance with the
formula for and method of calculating the Index last in effect prior to such
discontinuance, using the closing level (or, if trading in the relevant
securities has been materially suspended or materially limited, its good faith
estimate of the closing level that would have prevailed but for such suspension
or limitation) at the close of the principal trading session on such date of
each security most recently comprising the Index on the primary organized U.S.
exchange or trading system on which such securities trade. "Closing level"
means, with respect to any security on any date, the last reported sales price
regular way on such date or, if no such reported sale takes place on such date,
the average of the reported closing bid and asked price regular way on such
date, in either case on the primary organized U.S. exchange or trading system on
which such security is then listed or admitted to trading.

            If a Successor Index is selected, or the Calculation Agent
calculates a value as a substitute for the Index as described above, that
Successor Index or its closing level will be used as a substitute for the Index
for all purposes, including for purposes of determining whether an Index
Business Day or Market Disruption Event has occurred or exists.

Adjustments to the Index

            If at any time the method of calculating the Index or a Successor
Index, or the Index Closing Level thereof, is changed in a material respect, or
if the Index or a Successor Index is in any other way modified so that such
index does not, in the opinion of the Calculation Agent, fairly represent the
level of the Index or such Successor Index had such changes or modifications not
been made, then, from and after such time, the Calculation Agent will, at the
close of business in New York City on the date that the Index Closing Level is
to be determined, make such calculations and adjustments as, in its good faith
judgment, may be necessary in order to arrive at a level of a stock index
comparable to the Index or such Successor Index, as the case may be, as if such
changes or modifications had not been made. The Calculation Agent will calculate
the Index Closing Level with reference to the Index or such Successor Index, as
adjusted. If the method of calculating the Index or a Successor Index is
modified so that the level of such index is a fraction of what it would have
been if it had not been modified (for example, due to a split in such index),
then the Calculation Agent will adjust such index in order to arrive at a level
of the Index or such Successor Index as if it had not been modified (for
example, as if such split had not occurred).

Market Disruption Events

            If there is a market disruption event (a "Market Disruption Event")
on the date with respect to which the Final Index Level is to be determined, the
Final Index Level will be determined on the basis of the first succeeding Index
Business Day on which there is no Market Disruption Event. In no event, however,
will the date with respect to which the Final Index Level is determined be a
date that is more than two Index Business Days following the original date that,
but for the Market Disruption Event, would have been utilized to determine the
Final Index Level. In that case, the second Index Business Day will be deemed to
be the Calculation Date, notwithstanding the Market Disruption Event and the
Calculation Agent will determine the level of the Index on that second Index
Business Day in accordance with the formula for and method of calculating the
Index in effect prior to the Market Disruption Event using the

                                      -6-
<PAGE>

exchange traded price of each security in the Index (or, if trading in any such
security has been materially suspended or materially limited, the Calculation
Agent's good faith estimate of the exchange traded price that would have
prevailed but for such suspension or limitation) as of that second Index
Business Day.

            A Market Disruption Event means any of the following events, as
determined by the Calculation Agent, in its sole discretion:

      o     the occurrence or existence of a suspension, absence or material
            limitation of trading for more than two hours of trading, or during
            the one-half hour period preceding the close of trading on the
            relevant exchange in 20% or more of the stocks which then comprise
            the Index, or any Successor Index (without taking into account any
            extended or after-hours trading session);

      o     a breakdown or failure in the price and trade reporting systems of
            any relevant exchange as a result of which the reported trading
            prices for stocks then constituting 20% or more of the level of the
            Index, or any Successor Index, during the last one hour preceding
            the close of the principal trading session on such relevant exchange
            are materially inaccurate;

      o     the occurrence or existence of a suspension, absence or material
            limitation of trading, in each case, on any major U.S. exchange for
            more than two hours of trading, or during the one-half hour period
            preceding the close of the principal trading session on such market,
            whether by reason of movements in price otherwise exceeding levels
            permitted by the relevant exchange or otherwise, in option or
            futures contracts or exchange traded funds related to the Index, or
            any Successor Index; or

      o     the occurrence or existence of a suspension, absence, limitation,
            cancellation or repudiation of trading for more than two hours of
            trading, or during the one-half hour period preceding the close of
            trading on the relevant exchange in 20% or more of any options
            contracts relating to the stocks which then comprise 20% or more of
            the value of the Index.

                  For purposes of the above definition:

      (a)   a limitation on the hours in a trading day and/or number of days of
            trading will not constitute a Market Disruption Event if it results
            from an announced change in the regular business hours of the
            relevant exchange, and

      (b)   for purposes of clause (a) above, any limitations on trading during
            significant market fluctuations under New York Stock Exchange
            ("NYSE") Rule 80B, or any applicable rule or regulation enacted or
            promulgated by the NYSE or any other self regulatory organization or
            the Securities and Exchange Commission of similar scope as
            determined by the Calculation Agent, will be considered "material."

                                      -7-
<PAGE>

Redemption; Defeasance

            The Notes are not subject to redemption before Maturity, and are not
subject to defeasance.

Events of Default and Acceleration

            If an Event of Default with respect to any Notes has occurred and is
continuing, then the amount payable to the beneficial owner of a Note, upon any
acceleration permitted by the Notes will be equal to the Cash Settlement Value
as though the date of early repayment were the Maturity Date of the Notes,
adjusted by an amount equal to any losses, expenses and costs to the Company of
unwinding any underlying or related hedging or funding arrangements, all as
determined by the Calculation Agent in its sole and absolute discretion.

Same-Day Settlement and Payment

            Payment of the Cash Settlement Value will be made in immediately
available funds, so long as the Notes are maintained in book-entry form.

Calculation Agent

            All determinations made by the Calculation Agent will be at the sole
discretion of the Calculation Agent and will, in the absence of manifest error,
be conclusive for all purposes and binding on the Company and Holders of the
Notes.

General

            If so specified on the face of this Note, this Note may be redeemed
by the Company on and after the date so indicated on the face hereof. If no such
date is set forth on the face hereof, this Note may not be redeemed prior to
Maturity. On and after such date, if any, from which this Note may be redeemed,
this Note may be redeemed in whole or in part in increments of $1,000, at the
option of the Company, at a redemption price equal to 100% of the principal
amount to be redeemed, together with interest thereon payable to the Redemption
Date, on notice given, unless otherwise specified on the face hereof, not more
than 60 nor less than 30 days prior to the Redemption Date. If less than all the
Outstanding Notes having such terms as specified by the Company are to be
redeemed, the particular Notes to be redeemed shall be selected by the Trustee
not more than 60 days prior to the Redemption Date from the Outstanding Notes
having such terms as specified by the Company not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate. The
notice of such redemption shall specify which Notes are to be redeemed. In the
event of redemption of this Note, in part only, a new Note or Notes in
authorized denominations for the unredeemed portion hereof shall be issued in
the name of the Holder hereof upon the surrender hereof.

            If so specified on the face of this Note, this Note will be subject
to repayment at the option of the Holder hereof on the Optional Repayment
Date(s). If no Optional Repayment Date is set forth on the face hereof, this
Note may not be repaid at the option of the Holder prior

                                      -8-
<PAGE>

to Maturity. On and after the Optional Repayment Date, if any, from which this
Note may be repaid at the option of the Holder, this Note shall be repayable in
whole or in part in increments of $1,000 at a repayment price equal to 100% of
the principal amount to be repaid, together with interest thereon payable to the
Optional Repayment Date. For this Note to be repaid in whole or in part at the
option of the Holder hereof, the Trustee must receive not less than 30 nor more
than 60 days prior to the Optional Repayment Date (i) this Note with the form
entitled "Option to Elect Repayment," which appears below, duly completed or
(ii) a telegram, telex, facsimile transmission or a letter from a member of a
national securities exchange or the National Association of Securities Dealers,
Inc. or a commercial bank or trust company in the United States of America
setting forth the name of the Holder of this Note, the principal amount of this
Note, the certificate number of this Note or a description of this Note's tenor
or terms, the principal amount of this Note to be repaid, a statement that the
option to elect repayment is being exercised thereby and a guarantee that this
Note with the form entitled "Option to Elect Repayment," which appears below,
duly completed, will be received by the Trustee no later than five Business Days
after the date of such telegram, telex, facsimile transmission or letter and
this Note and such form duly completed are received by the Trustee by such fifth
Business Day. Exercise of the repayment option shall be irrevocable.

            If any Event of Default with respect to the Notes shall occur and be
continuing, the Trustee or the Holders of not less than 25% in principal amount
of the Outstanding Notes may declare the principal of all the Notes due and
payable in the manner and with the effect provided in the Indenture.

            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 66-2/3% in aggregate principal amount of the
Securities at the time Outstanding of each series affected thereby. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities of each series at
the time Outstanding, on behalf of the Holders of all Securities of each 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 Note shall be conclusive and binding
upon such Holder and upon future Holders of this Note and of any Note 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 Note.

            Holders of Securities may not enforce their rights pursuant to the
Indenture or the Securities except as provided in the Indenture. No reference
herein to the Indenture and no provision of this Note or the Indenture shall
alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the Cash Settlement Value with respect to this Note at the
time, place, and rate, and in the coin or currency, herein prescribed.

            As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Note may be registered on the Security
Register of the Company, upon surrender of this Note for registration of
transfer at the office or agency of the Company in the Borough of Manhattan, The
City of New York, duly endorsed by, or accompanied by a written

                                      -9-
<PAGE>

instrument of transfer in form satisfactory to the Company, and this Note duly
executed by, the Holder hereof or by his attorney duly authorized in writing and
thereupon one or more new Notes, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

            The Notes are issuable only in registered form without coupons in
denominations of $1,000 or any amount in excess thereof which is an integral
multiple of $1,000. As provided in the Indenture and subject to certain
limitations therein set forth, this Note is exchangeable for a like aggregate
principal amount of Notes of different authorized denomination as requested by
the Holder surrendering the same.

            No service charge will 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 the due presentment of this Note for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Note is registered as the owner hereof
for all purposes, whether or not this Note be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice of the contrary.

            The Cash Settlement Value payable with respect to this Note shall in
no event be higher than the maximum rate, if any, permitted by applicable law.

            All capitalized terms used in this Note and not otherwise defined
herein shall have the meanings assigned to them in the Indenture.

                                      -10-
<PAGE>

                     ____________________________________

                                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.

                     ____________________________________

                          OPTION TO ELECT REPAYMENT

            The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion thereof specified below) pursuant to its
terms on ____________, 20___ (the "Optional Repayment Date") at a price equal to
the principal amount thereof, together with interest to the Optional Repayment
Date, to the undersigned at

________________________________________________________________________________

________________________________________________________________________________
       (Please print or typewrite name and address of the undersigned.)

            For this Note to be repaid the Trustee must receive at 4 New York
Plaza, New York, New York 10004, Attention: Debt Operations - 13th Floor, or at
such other place or places of which the Company shall from time to time notify
the Holder of this Note, not more than 60 days nor less than 30 days prior to
the Optional Repayment Date, this Note with this "Option to Elect Repayment"
form duly completed.

                                      -11-
<PAGE>

            If less than the entire principal amount of this Note is to be
repaid, specify the portion thereof (which shall be increments of $1,000) which
the Holder elects to have repaid: $_________________; and specify the
denomination or denominations (which, unless a different minimum denomination is
set forth on the face hereof, shall be $25,000 or an integral multiple of $1,000
in excess of $25,000) of the Notes to be issued to the Holder for the portion of
this Note not being repaid (in the absence of any such specification, one such
Note will be issued for the portion not being repaid): $________________.

Date:_________________                       ________________________________
                                             Note: The signature to this Option
                                             to Elect Repayment must correspond
                                             with the same as written upon the
                                             face of this Note in every
                                             particular without alteration or
                                             enlargement.

                     ____________________________________

                                  ASSIGNMENT
                                  ----------

                     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:_______________________       ____________________________________________

_______________________________________
            (Signature Guarantee)

                                      -12-

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