Document:

exv10w01

 

Exhibit 10.1

ADDENDUM TO EMPLOYMENT LETTER

     This ADDENDUM (this “Addendum”) is made as of the 7th day of May, 2006 between
Fisher Scientific International Inc., a Delaware corporation having its primary place of business
at Liberty Lane, Hampton, New Hampshire 03842 (the “Company”) and Mr. Thomas L. Rea (the
“Executive”).

     The Company’s severance obligations to the Executive are governed by a letter agreement dated
as of the 22nd day of December, 1997 (the “Employment Letter”). The Company and the
Executive have agreed to execute this Addendum to the Employment Letter to provide additional
severance payments and benefits in the event that the Executive’s employment is terminated under
certain circumstances within the two year period following a Change in Control, as more fully
described below. Capitalized terms used but not otherwise defined in this Addendum shall have the
meaning set forth in Section 6.

	1.	 	Upon a termination of employment by the Executive for Good Reason or by the Company without
Cause, in either case within two (2) years immediately following a Change in Control of the
Company, then in lieu of any severance payments set forth in the Employment Letter (but not in
lieu of the provisions of the Employment Letter with respect to the distribution of shares
from the rabbi trust), the Executive shall be entitled to receive and the Company shall
provide to the Executive those payments and benefits set forth in Section 2 of this Addendum.
Notwithstanding anything in this Addendum to the contrary, if a Change in Control of the
Company occurs and if the Executive’s employment with the Company is terminated prior to the
date on which the Change in Control of the Company occurs, and if there is a reasonable basis
that such termination of employment (1) was at the request of a third party that has taken
steps reasonably calculated to effect a Change in Control of the Company or (2) otherwise
arose in connection with or anticipation of a Change in Control of the Company and in each of
(1) and (2) a Change in Control occurs within one (1) year following the Executive’s
termination of employment as set forth in this Section 1, then such termination of employment
shall be treated as a termination of the Executive’s employment following a Change in Control
of the Company and the Executive shall be entitled to receive the compensation and benefits
set forth in Section 2 of this Addendum.
	 
	2.	 	Upon a termination of employment as described in Section 1 of this Addendum, the Executive
shall be entitled to receive and the Company shall provide to the Executive the following
payments and benefits:

	 	(a)	 	a lump sum payment, within five (5) days of the Revocation Date (except with
respect to deferred compensation payments described under Accrued Obligations, which
shall be paid in accordance with their terms, subject to Section 5 of this Addendum),
equal to the sum of: (1) two and a half (2.5) times the sum of (i) Executive’s then
current Annual Base Salary (or if greater, the Executive’s Annual Base Salary in effect
immediately prior to the Change in Control), plus (ii) the cash value of Executive’s
target annual incentive compensation for the year in

 

 

	 	 	 	which the termination of employment occurs (the “Annual Bonus”), plus (2) the
Accrued Obligations, provided that any accrued but unpaid annual incentive payments
for previous years shall be determined based upon actual Company results and not
reduced for individual performance, plus (3) the product of (x) the Annual Bonus and
(y) a fraction, the numerator of which is the number of days in the fiscal year in
which the date of termination of employment occurs through such date of termination
and the denominator of which is 365, plus (4) an amount equal to the total value of
two and a half (2.5) years of matching contributions made by the Company on behalf
of Executive under the Company’s tax qualified defined contribution plan (and under
any non-qualified defined contribution plan providing matching contributions) at a
matching level equal to the level of participation of the Executive prior to the
date of termination, plus any Company matching contributions under such plans
forfeited as of the Date of Termination;
	 
	 	(b)	 	the Company shall continue to provide the Executive and his eligible
dependents, for a period of two and a half (2.5) years following the date of
termination (the “Severance Period”) of employment (but not beyond the maximum date
upon which the provision of such benefits would become subject to the provisions of
Section 409A of the Code), with medical, dental, vision, life insurance and accidental
death and dismemberment insurance, in a manner and timing consistent with the benefit
and welfare plans, policies and programs, executive services, perquisites and insurance
plans or programs in which the Executive participates in effect immediately prior to
the time of the Change in Control of the Company (or any successor benefit and welfare
plans, policies and programs, executive services, perquisites and insurance plans or
programs, to the extent more favorable to the Executive) and such benefits, and costs
to the Executive of such coverage, shall be no less favorable to the Executive than as
in effect as of the Change in Control of the Company and shall not be affected by any
subsequent employment of the Executive. As of the Date of Termination, Executive shall
be fully vested in any account balance, matching and all other benefits under any
non-qualified defined contribution plans. Following the end of the two and a half
(2.5) year period during which medical benefits are provided, the Executive shall be
eligible for continued health coverage under “COBRA” as if the Executive’s employment
with the Company had terminated as of the end of such period. In the event the
Executive is ineligible, for whatever reason, to continue to be so covered with respect
to any of the above-referenced plans or programs, the Company shall provide
substantially the cash value of purchasing essentially equivalent coverage through
other sources;
	 
	 	(c)	 	the Executive shall be entitled to receive all benefits set forth under the
terms and conditions of the Fisher Scientific International Inc. Executive Retirement
and Savings Program (the “Retirement and Savings Program”) including, without
limitation, those set forth in Article VII thereof with respect to medical benefits.
For purposes of calculating the Executive’s retirement benefits under the Retirement
and Savings Program, the Executive shall be deemed to have

 

 

	 	 	 	completed two and one-half additional years of Credited Service (as defined in the
Retirement and Savings Program) and received the amounts payable under Section 2(a)
of this Addendum ratably during the Severance Period as compensation includable in
Highest Average Earnings for such period. The provisions of the preceding sentence
will not affect the Executive’s elections with respect to the commencement of
benefit payments pursuant to Article IV of the Executive Retirement and Savings
Program;
	 
	 	(d)	 	within five (5) days of the Revocation Date, the Company shall provide the
Executive with a $20,000 cash payment, which may be used by the Executive for
outplacement services; and
	 
	 	(e)	 	to the extent accrued but not theretofore paid or provided, the Company shall
timely pay or provide to the Executive any other amounts or benefits required to be
paid or provided or that the Executive is eligible to receive under any plan, program,
policy or practice or contract or agreement of the Company.

	3.	 	Any termination by the Company for Cause, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party hereto. For purposes of this
Addendum, a “Notice of Termination” means a written notice which:

	 	(a)	 	indicates the specific termination provision in this Addendum relied upon;
	 
	 	(b)	 	to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s employment
under the provision so indicated; and
	 
	 	(c)	 	if the date of termination is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than thirty (30) days
after the giving of such notice).

	 	 	In the event the Executive provides the Company with a Notice of Termination for Good
Reason, the Company shall have thirty (30) days to cure the circumstances that the Executive
alleges constitute Good Reason; and if so cured, no Good Reason shall be deemed to have
occurred hereunder. The failure by the Executive or the Company to set forth in the Notice
of Termination any fact or circumstance which contributes to a showing of Good Reason or
Cause shall not waive any right of the Executive or the Company, respectively, hereunder or
preclude the Executive or the Company, respectively, from asserting such fact or
circumstance in enforcing the Executive’s or the Company’s rights hereunder.

 

 

	4.	 	Notwithstanding anything herein to the contrary, no payments shall be made or benefits
provided to the Executive under this Addendum unless the Executive shall have executed a
customary release and waiver of claims (the “Release”) and the last day of any applicable
revocation period (“Revocation Date”) under such Release shall have expired.
	 
	5.	 	This Addendum is intended to comply with the provisions of Section 409A of the Code in such a
way that the Executive will not be subject to taxation in advance of the related distribution,
excise taxes or underpayments, penalties as a result of the timing or form of the payments to
the Executive. Notwithstanding anything to the contrary contained herein, if the Executive is
a Specified Employee (as defined in Section 409A of the Code) at the time he would otherwise
be entitled to receive any specific payment hereunder, no distributions shall be made with
respect to that specific payment until the earliest date which does not result in the
imposition of a penalty under Section 409A(a)(2) of the Code. All other payments which do not
result in any additional payments, liability or penalties shall be made as specified. To the
extent any payment is delayed, interest will accrue at the rate of the United States five-year
Treasury rate plus 2 percent on such delayed payment and be paid to the Executive at the same
time as the delayed payment is made.
	 
	6.	 	For purposes of this Addendum, the following definitions shall apply:

	 	(a)	 	“Accrued Obligations” shall mean (i) the Executive’s Annual Base Salary through
the Date of Termination; (ii) any previous years’ regular annual bonus, to the extent
earned but not previously paid; (iii) any earned but unpaid previous years’ Annual
Bonus(es); (iv) payment for any accrued vacation; and (v) any compensation previously
deferred by the Executive (together with any accrued interest or earnings thereon) as
provided by the terms of such deferred compensation plan or program.
	 
	 	(b)	 	“Annual Base Salary” shall mean the Executive’s annual base salary as in effect
on the date hereof, as it may be increased from time to time, provided, however, that
the Annual Base Salary shall be determined without taking into account any reduction in
salary effected due to the Executive’s participation in the Company’s Restricted Stock
Unit Purchase Program under the Company’s 2005 Equity and Incentive Plan.
	 
	 	(c)	 	“Board” shall mean the Board of Directors of the Company.
	 
	 	(d)	 	“Cause” shall mean:

	 	(i)	 	the willful and continued failure of the Executive to perform
substantially the Executive’s duties hereunder with the Company or one of its
affiliates

 

 

	 	 	 	(other than any such failure resulting from incapacity due to physical or
mental illness), after a written demand for substantial performance is
delivered to the Executive by the Vice Chairman or the Chief Executive
Officer which specifically identifies the manner in which the Vice Chairman
or Chief Executive Officer believes that the Executive has not substantially
performed the Executive’s duties, or
	 
	 	(ii)	 	the willful engaging by the Executive in illegal conduct or
gross misconduct that is materially and demonstrably injurious to the Company.

	 	 	 	For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered “willful” unless it is done, or omitted to be done,
by the Executive in bad faith or without reasonable belief that the Executive’s
action or omission was in the best interests of the Company. Any act, or failure to
act, based upon authority given by the Board, the direction of the Vice Chairman or
the Chief Executive Officer or based upon the advice of counsel for the Company
shall be conclusively presumed to be done, or omitted to be done, by the Executive
in good faith and in the best interests of the Company, unless such authority,
direction or advice is in violation of applicable law, regulation, Company policy or
the Company’s most current Code of Conduct.
	 
	 	(e)	 	“Change in Control” of the Company shall have the meaning set forth in the
Fisher Scientific International Inc. 2005 Equity and Incentive Plan, as that plan is in
effect on the date hereof.
	 
	 	(f)	 	“Code” shall mean the Internal Revenue Code of 1986, as amended.
	 
	 	(g)	 	“Good Reason” shall mean any of the following:

	 	(i)	 	a material adverse change in the Executive’s position, duties,
offices, titles, reporting requirements or responsibilities with the Company as
in effect immediately prior to a Change in Control of the Company;
	 
	 	(ii)	 	a reduction by the Company in the Executive’s remuneration as
in effect immediately prior to the time of a Change in Control of the Company,
unless a similar reduction is applied to all similarly situated executives or
the Company’s failure to increase (within twelve (12) months of the Executive’s
last increase in base salary) the Executive’s base salary after a Change in
Control of the Company in an amount similar to other similarly situated
executives at the Company receiving an increase in base salary after the Change
in Control;

 

 

	 	(iii)	 	any failure by the Company to continue in effect any material
plan or arrangement, including without limitation benefit and incentive plans,
in which the Executive is participating immediately prior to the time of a
Change in Control of the Company (hereinafter referred to as “Plans”), unless
the Company provides for the Executive to participate in replacement benefit
and incentive plans that are no less favorable in the aggregate than the Plans,
or the taking of any action by the Company which would materially adversely
affect the Executive’s participation in or reduce the Executive’s benefits
under any such Plan or replacement plan or provide the Executive with less
favorable fringe benefits in the aggregate as compared to those enjoyed by the
Executive immediately prior to the time of a Change in Control of the Company;
	 
	 	(iv)	 	the Executive’s relocation to any place more than fifty (50)
miles from the location at which the Executive performed Executive’s duties
immediately prior to the time of a Change in Control of the Company, except for
required travel by the Executive on the Company’s business to an extent
substantially consistent with the Executive’s business travel obligations
immediately prior to the time of a Change in Control of the Company;
	 
	 	(v)	 	any failure by the Company to provide the Executive on an
annual basis with the number of annual vacation or paid leave days to which the
Executive is entitled on an annual basis immediately prior to the time of a
Change in Control of the Company;
	 
	 	(vi)	 	any material breach by the Company of any provision of the
Employment Letter or any other material agreement with the Executive;
	 
	 	(vii)	 	any failure by the Company to obtain the assumption of this
Employment Letter by any successor or assign of the Company; or
	 
	 	(viii)	 	any purported termination of the Executive’s employment which is not effected
pursuant to a Notice of Termination and for purposes of this Employment Letter,
no such purported termination shall be effective.

	 	 	 	For purposes of this definition, none of the actions described in clauses (i)
through (viii) above shall constitute “Good Reason” with respect to the Executive if
it was an isolated and inadvertent action not taken in bad faith by the Company and
if it is remedied by the Company within five (5) business days after receipt of
written notice thereof given by the Executive. The Executive may terminate
Executive’s employment for Good Reason at any time after a Change in Control either
by resignation or by retirement (if eligible).

 

 

	7.	 	Except as supplemented by this Addendum, the terms and provisions of the Employment Letter
shall remain in full force and effect.

     The Executive has hereunto set the Executive’s hand and, pursuant to the authorization from
its Board, the Company has caused this Addendum to be executed in its name on its behalf, all as of
the day and year first above written.

                                                                
                

THOMAS L. REA

FISHER SCIENTIFIC INTERNATIONAL INC.

By:LEHMAN BROTHERS HOLDINGS INC.

                     Limited Principal Protection RAPIDS(SM)
       (Return Accelerated PortfolIo Debt Securities) Due January 26, 2008
                        Linked to the Nikkei 225(SM) Index

Number R-1                                                         $3,350,000.00
ISIN US524908SG61                                                CUSIP 524908SG6

See Reverse for Certain Definitions

THIS SECURITY (THIS "SECURITY") IS A GLOBAL SECURITY WITHIN THE MEANING OF THE
INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY
OR A NOMINEE THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
SECURITIES IN CERTIFICATED FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS
A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE
DEPOSITORY TO SUCH DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY OR BY THE
DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITORY. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TO LEHMAN BROTHERS HOLDINGS INC. OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE &
CO., HAS AN INTEREST HEREIN.

          LEHMAN BROTHERS HOLDINGS INC., a corporation duly organized and
existing under the laws of the State of Delaware (hereinafter called the
"Company"), for value received, hereby promises to pay to CEDE & CO. or
registered assigns, at the office or agency of the Company in the Borough of
Manhattan, The City of New York, on the Stated Maturity Date, in such coin or
currency of the United States of America at the time of payment shall be legal
tender for the payment of public and private debts, for each $1,000 principal
amount of the Securities represented hereby, an amount equal to the Maturity
Payment Amount. THE SECURITIES REPRESENTED HEREBY SHALL NOT BEAR ANY INTEREST.

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

                                                                               2

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

          "RAPIDS" is a service mark of the Company. "Nikkei" and "Nikkei 225"
are the service marks of Nihon Keizai Shimbun, Inc. ("NKS") and will be licensed
for use by Lehman Brothers Holdings Inc. The Securities, linked to the
performance of the Nikkei 225 Index, are not sponsored, endorsed, sold or
promoted by NKS, and NKS makes no representation regarding the advisability of
investing in the Securities.

          This Security shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been signed by the
Trustee under the Indenture referred to on the reverse hereof.

                                                                               3

          IN WITNESS WHEREOF, LEHMAN BROTHERS HOLDINGS INC. has caused this
instrument to be signed by its Chairman of the Board, its Vice Chairman, its
President, its Chief Financial Officer, one of its Vice Presidents or its
Treasurer, by manual or facsimile signature under its corporate seal, attested
by its Secretary or one of its Assistant Secretaries by manual or facsimile
signature.

Dated: July 26, 2006                       LEHMAN BROTHERS HOLDINGS INC.

                                           By: /s/ James J. Killerlane III
                                               ---------------------------------
                                               Name: James J. Killerlane III
                                               Title: Vice President

                                           Attest: /s/ Jin Lee
                                                   -----------------------------
                                                   Name: Jin Lee
                                                   Title: Assistant Secretary

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

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

Dated: July 26, 2006

CITIBANK, N.A.
  as Trustee

By: /s/ Wafaa Orfy
    ----------------------------
    Name:  Wafaa Orfy
    Title: Authorized Signatory

                                                                               4

                               Reverse of Security

          This Security is one of a duly authorized series of Securities of the
Company designated as Limited Principal Protection RAPIDS(SM) (Return
Accelerated PortfolIo Debt Securities) Due January 26, 2008 Linked to the Nikkei
225(SM) Index (herein called the "Securities"). The Company may, without the
consent of the holders of the Securities, create and issue additional notes
ranking equally with the Securities and otherwise similar in all respects so
that such further notes shall be consolidated and form a single series with the
Securities; provided that no additional notes can be issued if an Event of
Default has occurred with respect to the Securities. This series of Securities
is one of an indefinite number of series of debt securities of the Company,
issued and to be issued under an indenture, dated as of September 1, 1987, as
amended (herein called the "Indenture"), duly executed and delivered by the
Company and Citibank N.A., as trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities.

          The Maturity Payment Amount, at the request of the Trustee, shall be
determined by the Calculation Agent pursuant to the Calculation Agency
Agreement.

          All percentages resulting from any calculation with respect to the
Securities will be rounded at the Calculation Agent's discretion.

          The Trustee shall fully rely on the determination by the Calculation
Agent of the Maturity Payment Amount and shall have no duty to make any such
determination.

          This Security is not subject to any sinking fund.

          If an Event of Default with respect to the Securities shall occur and
be continuing, the amounts payable on all of the Securities may be declared due
and payable in the manner and with the effect provided in the Indenture. The
amount payable to the Holder hereof upon any acceleration permitted under the
Indenture will be equal to the Maturity Payment Amount calculated as though the
date of acceleration was the Stated Maturity Date and the date three Business
Days prior thereto was the Valuation Date.

          The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than 66?% in aggregate
principal amount of each series of Securities at the time Outstanding to be
affected (each series voting as a class), evidenced as in the Indenture
provided, to execute supplemental indentures adding any provisions to, or
changing in any manner or eliminating any of the provisions of the Indenture or
of any supplemental indenture or modifying in any manner the rights of the
holders of the Securities of all such series; provided, however, that no such
supplemental indenture shall, among other things, (i) change the fixed maturity
of any Security, or reduce the principal amount thereof, or reduce the rate or
extend the time of payment of interest thereon, if any, or reduce any premium
payable on redemption, or make the principal thereof, or premium, if any, or
interest thereon, if any, payable in any coin or currency other than that
hereinabove provided, without the consent of the holder of each Security so
affected, or (ii) change the place of payment on any Security, or

                                                                               5

impair the right to institute suit for payment on any Security, or reduce the
aforesaid percentage of Securities, the holders of which are required to consent
to any such supplemental indenture, without the consent of the holders of each
Security so affected. It is also provided in the Indenture that, prior to any
declaration accelerating the maturity of any series of Securities, the holders
of a majority in aggregate principal amount of the Securities of such series
Outstanding may on behalf of the holders of all the Securities of such series
waive any past default or Event of Default under the Indenture with respect to
such series and its consequences, except a default in the payment of interest,
if any, or the principal of, or premium, if any, on any of the Securities of
such series, or in the payment of any sinking fund installment or analogous
obligation with respect to Securities of such series. Any such consent or waiver
by the Holder of this Security shall be conclusive and binding upon such Holder
and upon all future holders and owners of this Security and any Securities which
may be issued in exchange or substitution hereof, irrespective of whether or not
any notation thereof is made upon this Security or such other Securities.

          No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal amount with respect to this
Security.

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

          The Company, the Trustee, and any agent of the Company or of the
Trustee may deem and treat the registered holder (the "Holder") hereof as the
absolute owner of this Security (whether or not this Security shall be overdue
and notwithstanding any notation of ownership or other writing hereon), for the
purpose of receiving payment hereof, or on account hereof, and for all other
purposes and neither the Company nor the Trustee nor any agent of the Company or
of the Trustee shall be affected by any notice to the contrary. All such
payments made to or upon the order of such registered holder shall, to the
extent of the sum or sums paid, effectually satisfy and discharge liability for
moneys payable on this Security.

          No recourse for the payment of the principal of, premium, if any, or
interest on this Security, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any indenture supplemental thereto or in any
Security, or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, stockholder, officer or director, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issue hereof, expressly waived
and released.

          As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
Corporate Trust Office or agency in a Place of Payment for this Security, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Securities of

                                                                               6

this series or of like tenor and of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees.

          The Company intends to treat, and by purchasing this Security, the
Holder agrees to treat, for all tax purposes, this Security as a cash-settled
financial contract giving rise to capital gain or loss, rather than as a debt
instrument.

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

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

          "AMEX" shall mean the American Stock Exchange LLC.

          "Business Day", notwithstanding any provision in the Indenture, shall
mean any day that is not a Saturday, a Sunday or a day on which the NYSE, Nasdaq
or AMEX is not open for trading or banking institutions or trust companies in
the City of New York are authorized or obligated by law or executive order to
close.

          "Calculation Agency Agreement" shall mean the Calculation Agency
Agreement, dated as of July 26, 2006, between the Company and the Calculation
Agent, as amended from time to time, or any successor calculation agency
agreement.

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

          "Close of Trading" shall mean, in respect of any Relevant Exchange,
the scheduled weekday closing time on a day on which the Relevant Exchange is
scheduled to be open for trading for its respective regular trading session,
without regard to after hours or any other trading outside of the regular
trading session hours.

          "Closing Index Level" shall mean, with respect to any day, in the case
of the Index or the Successor Index, the closing level of the Index or the
Successor Index, as the case may be, as reported by NKS or the publisher of the
Successor Index, as the case may be, on such day or as determined by the
Calculation Agent pursuant to the Calculation Agency Agreement.

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

          "Final Index Level" shall equal the Closing Index Level on the
Valuation Date.

          "Final Index Return" shall equal the following:

                     Final Index Level - Initial Index Level
                     ---------------------------------------
                               Initial Index Level

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

                                                                               7

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

          "Index" shall mean the Nikkei 225(SM) Index, as calculated, published
and disseminated by NKS.

          "Initial Index Level" shall equal 14821.26, the Closing Index Level on
July 21, 2006.

          "Market Disruption Event", with respect to the Index or any Successor
Index shall mean any of the following events has occurred on any day as
determined by the Calculation Agent in its sole discretion:

     (1) A material suspension of or limitation imposed on trading relating to
     the securities that then comprise 20% or more of the Index or any Successor
     Index, by the Relevant Exchanges on which those securities are traded, at
     any time during the one-hour period that ends at the Close of Trading on
     such day, whether by reason of movements in price exceeding limits
     permitted by that Relevant Exchange or otherwise.

     (2) A material suspension of, or limitation imposed on, trading in futures
     or options contracts relating to the Index or any Successor Index by the
     primary exchange or quotation system on which those futures or options
     contracts are traded, at any time during the one-hour period that ends at
     the Close of Trading on such day, whether by reason of movements in price
     exceeding limits permitted by the exchanges or otherwise.

     (3) Any event, other than an early closure, that disrupts or impairs the
     ability of market participants in general to effect transactions in, or
     obtain market values for, the securities that then comprise 20% or more of
     the Index or any Successor Index on the Relevant Exchanges on which those
     securities are traded, at any time during the one-hour period that ends at
     the Close of Trading on that day.

     (4) Any event, other than an early closure, that disrupts or impairs the
     ability of market participants in general to effect transactions in, or
     obtain market values for, the futures or options contracts relating to the
     Index or any Successor Index on the primary exchange or quotation system on
     which those futures or options contracts are traded at any time during the
     one-hour period that ends at the Close of Trading on that day.

     (5) The closure of the Relevant Exchanges on which securities that then
     comprise 20% or more of the Index or any Successor Index are traded or on
     which futures or options contracts relating to the Index or any Successor
     Index are traded prior to its scheduled closing time unless the earlier
     closing time is announced by the Relevant Exchanges at least one hour prior
     to the earlier of (i) the actual closing time for the regular trading
     session on the Relevant Exchanges and (ii) the submission deadline for
     orders to be entered into the Relevant Exchanges for execution at the Close
     of Trading on that day.

For purposes of determining whether a Market Disruption Event has occurred, the
relevant percentage contribution of a security to the level of the Index or any
Successor Index will be based on a comparison of (x) the portion of the level of
the Index or Successor Index attributable

                                                                               8

to that security and (y) the overall level of the Index or Successor Index, in
each case immediately before the occurrence of the Market Disruption Event.

          "Maturity Payment Amount" for each $1,000 principal amount of
Securities, shall equal:

          o    If the Final Index Return is greater than or equal to zero, the
               lesser of:

               (a)  $1,260; and

               (b)  $1,000 + ($2,000 x the Final Index Return).

          o    If the Final Index Return is less than zero and the Final Index
               Level is equal to or greater than the Threshold Level, $1,000.

          o    If the Final Index Return is less than zero and the Final Index
               Level is less than the Threshold Level,

                                    Final Index Level
                           $1,000 x -----------------
                                     Threshold Level

          If requested by the Trustee, the Maturity Payment Amount shall be
determined by the Calculation Agent pursuant to the Calculation Agency
Agreement.

          "Nasdaq" shall mean The Nasdaq Stock Market, Inc.

          "NKS" shall mean Nihon Keizai Shimbun, Inc.

          "NYSE" shall mean The New York Stock Exchange, Inc.

          "Place of Payment" shall mean the place or places where the principal
of (and premium, if any) and interest, if any, on the Securities are payable.

          "Relevant Exchange" shall mean, for any security (or any combination
thereof then underlying the Index or any Successor Index), the primary exchange,
quotation system (which includes bulletin board services) or other market of
trading for such security.

          "Scheduled Trading Day" shall mean any day on which both the Tokyo
Stock Exchange and the Osaka Securities Exchange are scheduled to be open for
trading for their respective regular trading sessions.

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

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

          "Stated Maturity Date" shall mean January 26, 2008 (or if January 26,
2008 is not a Business Day, on the next Business Day); provided, that if the
Valuation Date is postponed, the Stated Maturity Date shall be the third
Business Day following the date that the Final Index Level on the postponed
Valuation Date is determined.

                                                                               9

          "Successor Index" shall mean such successor or substitute index as the
Calculation Agent may select pursuant to the Calculation Agency Agreement upon
discontinuance of the Index.

          "Threshold Level" shall mean 13339.13, as it may be adjusted from time
to time by the Calculation Agent to the extent it believes appropriate, in a
manner consistent with the adjustments to the method of calculation of the Index
or a Successor Index described in the Calculation Agency Agreement.

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

          "Valuation Date" shall mean January 23, 2008; provided, that if a
Market Disruption Event occurs on such day or if such day is not a Scheduled
Trading Day, then the Valuation Date shall be the next following Scheduled
Trading Day on which no Market Disruption Event occurs; provided, however, if a
Market Disruption Event occurs on each of the eight Scheduled Trading Days
following the originally scheduled Valuation Date, then (a) that eighth
Scheduled Trading Day shall be deemed the Valuation Date and (b) the Calculation
Agent shall determine the Final Index Level based upon its good faith estimate
of the level of the Index on that eighth Scheduled Trading Day.

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

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

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

TEN COM - as tenants in common      UNIF GIFT MIN ACT - ______ Custodian ______
                                                        (Cust)           (Minor)
TEN ENT - as tenants by the         under Uniform Gifts to Minors
          entireties
JT TEN  - as joint tenants with     Act ______________________________________
          right of Survivorship                  (State)
          and not as tenants in
          common

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

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

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

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE

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

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

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

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

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

          Dated:

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

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

Signature(s) Guaranteed:

-----------------------------
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND

CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED MEDALLION SIGNATURE GUARANTEE
PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00107-of-00352.parquet"}]]