EXHIBIT 1.10
CALCULATION AGENCY AGREEMENT
AGREEMENT, dated as of June 29, 2001, between Lehman
Brothers Holdings Inc. (the "Company") and Lehman Brothers Inc., as Calculation
Agent.
WHEREAS, the Company has authorized the issuance of up to
$40,000,000 aggregate principal amount of Prudential Research Universe
Diversified Equity NotesSM, PRUDENTSSM Due December 29, 2004 (the "Securities");
WHEREAS, the Securities will be issued under an Indenture
Agreement dated as of September 1, 1987, between the Company and Citibank, N.A.,
as Trustee (the "Trustee"), as supplemented and amended by supplemental
indentures dated as of November 25, 1987, November 27, 1990, September 13, 1991,
October 4, 1993, October 1, 1995, and June 26, 1997, and incorporating Standard
Multiple Series Indenture Provisions dated July 30, 1987, as amended November
16, 1987 (collectively, the "Indenture"); and
WHEREAS, the Company requests the Calculation Agent to perform
certain services described herein in connection with the Securities;
NOW THEREFORE, the Company and the Calculation Agent agree as
follows:
1. Appointment of Agent. The Company hereby appoints Lehman Brothers Inc.
as Calculation Agent and Lehman Brothers Inc. hereby accepts such appointment as
the Company's agent for the purpose of performing the services hereinafter
described upon the terms and subject to the conditions hereinafter mentioned.
2. Calculations and Information Provided. In response to a request made by
the Trustee for a determination of the Maturity Payment Amount due at Stated
Maturity of the Securities, the Calculation Agent shall determine the Maturity
Payment Amount due at Stated Maturity and notify the Trustee of its
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determination. The Calculation Agent shall also be responsible for (a) the
determination of the Level of the Underlying Basket on each Calculation Date,
(b) the determination of the Average Level of the Underlying Basket, (c)
determining if any adjustments to the Underlying Basket and/or the Multipliers
should be made and (d) whether a Market Disruption Event has occurred. The
Calculation Agent shall notify the Trustee of any such adjustment or if a Market
Disruption Event has occurred. In addition, the Calculation Agent shall provide
information to the American Stock Exchange ("AMEX") that is necessary for the
AMEX's daily calculation and dissemination of the level of the Underlying Basket
if the AMEX is unable to obtain such information. Annex A hereto sets forth the
procedures the Calculation Agent will use to determine the information described
in this Section 1.
3. Calculations. Any calculation or determination by the Calculation Agent
pursuant hereto shall (in the absence of manifest error) be final and binding.
Any calculation made by the Calculation Agent hereunder shall, at the Trustee's
request, be made available at the Corporate Trust Office.
4. Fees and Expenses. The Calculation Agent shall be entitled to reasonable
compensation for all services rendered by it as agreed to between the
Calculation Agent and the Company.
5. Terms and Conditions. The Calculation Agent accepts its oblig ations
herein set out upon the terms and conditions hereof, including the following,
to all of which the Company agrees:
(i) in acting under this Agreement, the Calculation Agent is acting
solely as an independent expert and not as agent of the Company
and does not assume any obligation toward, or any relationship of
agency or trust for or with, any of the holders of the
Securities;
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(ii) unless otherwise specifically provided herein, any order,
certificate, notice, request, direction or other communication
from the Company or the Trustee made or given under any provision
of this Agreement shall be sufficient if signed by any person who
the Calculation Agent reasonably believes to be a duly authorized
officer or attorney-in-fact of the Company or the Trustee, as the
case may be;
(iii) the Calculation Agent shall be obliged to perform only
such duties as are set out specifically herein and any
duties necessarily incidental thereto;
(iv) the Calculation Agent, whether acting for itself or in any other
capacity, may become the owner or pledgee of Securities with the
same rights as it would have had if it were not acting hereunder
as Calculation Agent; and
(v) the Calculation Agent shall incur no liability hereunder except
for loss sustained by reason of its gross negligence or wilful
misconduct.
6. Resignation; Removal; Successor. (a) The Calculation Agent may at any time
resign by giving written notice to the Company of such intention on its part,
specifying the date on which its desired resignation shall become effective,
subject to the appointment of a successor Calculation Agent and acceptance of
such appointment by such successor Calculation Agent, as hereinafter provided.
The Calculation Agent hereunder may be removed at any time by the filing with it
of an instrument in writing signed by or on behalf of the Company and specifying
such removal and the date when it shall become effective. Such resignation or
removal shall take effect upon the appointment by the Company, as hereinafter
provided, of a successor Calculation Agent and the acceptance of such
appointment by such successor Calculation Agent. In the event a successor
Calculation Agent has not been appointed and has not accepted its duties within
90 days of the Calculation Agent's notice of resignation, the Calculation Agent
may apply to any court of competent jurisdiction for the designation of a
successor Calculation Agent.
(b) In case at any time the Calculation Agent shall resign, or
shall be removed, or shall become incapable of acting, or shall be adjudged
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bankrupt or insolvent, or make an assignment for the benefit of its creditors or
consent to the appointment of a receiver or custodian of all or any substantial
part of its property, or shall admit in writing its inability to pay or meet its
debts as they mature, or if a receiver or custodian of it or all or any
substantial part of its property shall be appointed, or if any public officer
shall have taken charge or control of the Calculation Agent or of its property
or affairs, for the purpose of rehabilitation, conservation or liquidation, a
successor Calculation Agent shall be appointed by the Company by an instrument
in writing, filed with the successor Calculation Agent. Upon the appointment as
aforesaid of a successor Calculation Agent and acceptance by the latter of such
appointment, the Calculation Agent so superseded shall cease to be Calculation
Agent hereunder.
(c) Any successor Calculation Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor, to the Company and to the
Trustee an instrument accepting such appointment hereunder and agreeing to be
bound by the terms hereof, and thereupon such successor Calculation Agent,
without any further act, deed or conveyance, shall become vested with all the
authority, rights, powers, trusts, immunities, duties and obligations of such
predecessor with like effect as if originally named as Calculation Agent
hereunder, and such predecessor, upon payment of its charges and disbursements
then unpaid, shall thereupon become obligated to transfer, deliver and pay over,
and such successor Calculation Agent shall be entitled to receive, all moneys,
securities and other property on deposit with or held by such predecessor, as
Calculation Agent hereunder.
(d) Any corporation into which the Calculation Agent hereunder
may be merged or converted or any corporation with which the Calculation Agent
may be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Calculation Agent shall be a party, or any
corporation to which the Calculation Agent shall sell or otherwise transfer all
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or substantially all of the assets and business of the Calculation Agent shall
be the successor Calculation Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
7. Certain Definitions. Terms not otherwise defined herein or in Annex A
hereto are used herein as defined in the Indenture or the Securities.
8. Indemnification. The Company will indemnify the Calculation Agent
against any losses or liability which it may incur or sustain in connection with
its appointment or the exercise of its powers and duties hereunder except such
as may result from the gross negligence or wilful misconduct of the Calculation
Agent or any of its agents or employees. The Calculation Agent shall incur no
liability and shall be indemnified and held harmless by the Company for or in
respect of any action taken or suffered to be taken in good faith by the
Calculation Agent in reliance upon written instructions from the Company.
9. Notices. Any notice required to be given hereunder shall be delivered in
person, sent (unless otherwise specified in this Agreement) by letter, telex or
facsimile transmission or communicated by telephone (confirmed in a writing
dispatched within two Business Days), (a) in the case of the Company, to it at
Three World Financial Center, New York, New York 10285 (facsimile: (212)
526-3772) (telephone: (212) 526-4841), Attention: Legal Counsel, (b) in the case
of the Calculation Agent, to it at Three World Financial Center, 200 Vesey
Street, New York, New York 10285-0600 (facsimile: (212) 526-2755) (telephone:
(212) 526-0900), Attention: Equity Derivatives Trading and (c) in the case of
the Trustee, to it at 111 Wall Street, 5th Floor, New York, New York 10043
(facsimile: (212) 657-3836) (telephone: (212) 657-7805), Attention: Corporate
Trust Department or, in any case, to any other address or number of which the
party receiving notice shall have notified the party giving such notice in
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writing. Any notice hereunder given by telex, facsimile or letter shall be
deemed to be served when in the ordinary course of transmission or post, as the
case may be, it would be received.
10. Governing Law. This Agreement shall be governed by and continued in
accordance with the laws of the State of New York.
11. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
12. Benefit of Agreement. This Agreement is solely for the benefit of the
parties hereto and their successors and assigns, and no other person shall
acquire or have any rights under or by virtue hereof.
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IN WITNESS WHEREOF, this Calculation Agency Agreement has been
entered into as of the day and year first above written.
LEHMAN BROTHERS HOLDINGS INC.
By: /s/ Barrett S. DiPaolo
--------------------------------------------------
Name: Barrett S. DiPaolo
Title: Vice President
LEHMAN BROTHERS INC.,
as Calculation Agent
By: /s/ Barrett S. DiPaolo
--------------------------------------------------
Name: Barrett S. DiPaolo
Title: Vice President
ANNEX A
1. The Underlying Basket.
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The Prudential Securities Investment Policy Committee, based on
recommendations from the Prudential Securities Equity Research Department, has
selected a portfolio of twenty publicly traded common stocks and other equity
securities that it believes to be an attractive investment over the term of the
notes (the "Underlying Basket"). The Underlying Basket initially consists of the
20 securities identified in the Prospectus.
The Underlying Basket represents a weighted portfolio of the twenty
common stocks and other equity securities included in the Underlying Basket, as
adjusted by certain extraordinary corporate events involving the issuers of the
Underlying Securities as described herein. Except as set forth below, the
Underlying Securities in the Underlying Basket shall remain constant for the
term of the Securities.
2. Determination of the Maturity Payment Amount.
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The Calculation Agent shall determine the Level of the Underlying
Basket on each Calculation Date, the Average Level of the Underlying Basket and
the Maturity Payment Amount payable for each Security.
The amount payable at Stated Maturity for each $1,000 principal amount
of Securities (the "Maturity Payment Amount") shall equal the greater of (a)
$1,000 and (b) the Alternative Redemption Amount.
3. Multipliers.
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The Multiplier relating to each Underlying Security is the number of
shares (including fractional shares, expressed as a decimal) of such Underlying
Security included in the Underlying Basket. The initial Multipliers for the
Underlying Securities are as set forth in the Prospectus. The Multipliers with
respect to each Underlying Security shall remain constant for the term of the
notes unless adjusted for certain extraordinary corporate events as described
below. Each Multiplier shall be rounded at the Calculation Agent's discretion.
4. Adjustments to the Multipliers and the Underlying Basket.
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Adjustments to a Multiplier and the Underlying Basket shall be made in
the following circumstances. For purposes of these adjustments, except as noted
below, American Depository Receipts ("ADRs") are treated like common stock if a
comparable adjustment to the foreign shares underlying the ADRs is made pursuant
to the terms of the depository agreement for the ADRs or if the holders of ADRs
are entitled to receive property in respect of the underlying foreign share.
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(a) If an Underlying Security is subject to a stock split or reverse stock
split, then once the split has become effective, the Multiplier relating to the
Underlying Security shall be adjusted. The Multiplier shall be adjusted to equal
the product of the number of shares outstanding of the Underlying Security after
the split with respect to each share of such Underlying Security immediately
prior to effectiveness of the split and the prior Multiplier.
(b) If an Underlying Security is subject to an extraordinary stock dividend or
extraordinary stock distribution that is given equally to all holders of shares,
then once the Underlying Security is trading ex-dividend, the Multiplier for
such Underlying Security shall be increased by the product of the number of
shares of such Underlying Security issued with respect to one share of such
Underlying Security and the prior Multiplier.
(c) If the issuer of an Underlying Security, or if an Underlying Security is an
ADR, the foreign issuer of the underlying foreign share is being liquidated or
dissolved or is subject to a proceeding under any applicable bankruptcy,
insolvency or other similar law, such Underlying Security shall continue to be
included in the Underlying Basket so long as the primary exchange, trading
system or market is reporting a market price for the Underlying Security. If a
market price, including a price on a bulletin board service, is no longer
available for an Underlying Security, then the value of the Underlying Security
shall equal zero for so long as no market price is available, and no attempt
shall be made to find a replacement stock or increase the level of the
Underlying Basket to compensate for the deletion of such Underlying Security.
(d) If the issuer of an Underlying Security, or if an Underlying Security is an
ADR, the foreign issuer of the underlying foreign share, has been subject to a
merger or consolidation and is not the surviving entity and holders of the
Underlying Security are entitled to receive cash, securities, other property or
a combination thereof in exchange for the Underlying Security, then the
following shall be included in the Underlying Basket:
(i) To the extent cash is received, the Underlying Basket
shall include the amount of the cash consideration at the time holders
are entitled to receive the cash consideration (the "M&A Cash
Component"), plus accrued interest. Interest shall accrue beginning the
first London Business Day after the day that holders are entitled to
receive the cash consideration until the Stated Maturity (the "M&A Cash
Component Interest Accrual Period"). Interest shall accrue on the M&A
Cash Component at a rate equal to the London Interbank Offered Rate
("LIBOR") with a term corresponding to the M&A Cash Component Interest
Accrual Period.
(ii) To the extent that equity securities that are traded or
listed on an exchange, trading system or market are received, once the
exchange for the new securities has become effective, the former
Underlying Security shall be removed from the Underlying Basket and the
new security shall be added to the Underlying Basket as a new
Underlying Security. The Multiplier for the new Underlying Security
shall equal the product of the last value of the Multiplier of the
original Underlying Security and the number of securities of the new
Underlying Security exchanged with respect to one share of the original
Underlying Security.
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(iii) To the extent that equity securities that are not traded
or listed on an exchange, trading system or market or non-equity
securities or other property (other than cash) are received, the
Calculation Agent shall determine the "Fair Market Value" of the
securities or other property received based on the Average Execution
Price. The Underlying Basket shall include an amount of cash equal to
the product of the Multiplier of the Underlying Security and the Fair
Market Value (the "M&A Sale Component"). The Underlying Basket shall
also include accrued interest on the M&A Sale Component. Interest shall
accrue beginning the first London Business Day after the day that an
affiliate of Holdings sells the securities or other property used to
hedge Holdings' obligations under the Securities until the Stated
Maturity (the "M&A Sale Component Interest Accrual Period"). Interest
shall accrue at a rate equal to LIBOR with a term corresponding to the
M&A Sale Component Interest Accrual Period.
(e) If all of an Underlying Security of an issuer is converted into or exchanged
for the same or a different number of shares of any class or classes of common
stock other than the Underlying Security, whether by capital reorganization,
recapitalization or reclassification or otherwise, then, once the conversion has
become effective, the former Underlying Security shall be removed from the
Underlying Basket and the new common stock shall be added to the Underlying
Basket as a new Underlying Security. The Multiplier for each new Underlying
Security shall equal the product of the last value of the Multiplier of the
original Underlying Security and the number of shares of the new Underlying
Security issued with respect to one share of the original Underlying Security.
(f) If the issuer of an Underlying Security issues to all of its shareholders
common stock or another equity security that is traded or listed on an exchange,
trading system or market of an issuer other than itself, then the new common
stock or other equity security shall be added to the Underlying Basket as a new
Underlying Security. The multiplier for the new Underlying Security shall equal
the product of the last value of the Multiplier with respect to the original
Underlying Security and the number of shares of the new Underlying Security with
respect to one share of the original Underlying Security.
(g) If an ADR is no longer listed or admitted to trading on a United States
securities exchange or trading system registered under the Securities Exchange
Act or is no longer a security quoted on the NASDAQ Stock Market, Inc. then the
foreign share underlying the ADR shall be deemed added to the Underlying Basket
as a new Underlying Security. The initial Multiplier for that new Underlying
Security shall equal the last value of the Multiplier for the ADR multiplied by
the number of underlying foreign shares represented by a single ADR.
(h) If an Underlying Security is subject to an extraordinary dividend or an
extraordinary distribution, including upon liquidation or dissolution, of cash,
equity securities that are not traded or listed on an exchange, trading system
or market, non-equity securities or other property of any kind which is received
equally by all holders of such Underlying Security, then the Underlying Basket
shall include the following:
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(i) To the extent cash is entitled to be received, the
Underlying Basket shall include on each day after the time that the
Underlying Security trades ex-dividend until the date the cash
consideration is entitled to be received, the present value of the cash
to be received, discounted at a rate equal to LIBOR, with a term
beginning that day and ending on the date that the cash is entitled to
be received (the "PV Extraordinary Cash Component"). When the cash
consideration is received, the PV Extraordinary Cash Component will be
deleted from the Underlying Basket and the Underlying Basket shall
include the amount of the cash consideration (the "Extraordinary Cash
Component"), plus accrued interest. Interest shall accrue on the
Extraordinary Cash Component beginning the first London Business Day
after the day that holders are entitled to receive the Extraordinary
Cash Component until the Stated Maturity (the "Extraordinary Cash
Component Interest Accrual Period"). Interest shall accrue at a rate
equal to LIBOR with a term corresponding to the Extraordinary Cash
Component Interest Accrual Period.
(ii) To the extent that equity securities that are not traded
or listed on an exchange, trading system or market or non-equity
securities or other property (other than cash) is received, the
Calculation Agent shall determine the fair market value of the
securities or other property received based on the Closing Price and
the Underlying Basket shall include an amount of cash equal to the
product of the Multiplier of the Underlying Security and the fair
market value (the "Extraordinary Sale Component"). The Underlying
Basket shall also include accrued interest on the Extraordinary Sale
Component. Interest shall accrue beginning the first London Business
Day after the day that an affiliate of Holdings sells the securities or
other property used to hedge Holdings' obligations under the Securities
until the Stated Maturity (the "Extraordinary Sale Component Interest
Accrual Period"). Interest shall accrue at a rate equal to LIBOR with a
term corresponding to Extraordinary Sale Component Interest Accrual
Period.
The payment of an ordinary cash dividend by an issuer of an Underlying
Security from current income or retained earnings shall not result in an
adjustment to the Multiplier.
No adjustments of any Multiplier of an Underlying Security shall be
required unless the adjustment would require a change of at least .1% (.001) in
the Multiplier then in effect. The Multiplier resulting from any of the
adjustments specified above shall be rounded at the Calculation Agent's
discretion.
5. Determination of Daily Level of the Underlying Basket.
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If the AMEX is unable to obtain certain information necessary for its
daily calculation and dissemination of the level of the Underlying Basket, the
Calculation Agent shall provide the necessary information as follows below.
In order to determine the value of an Underlying Security that is
listed on a non-United States exchange, trading system or market (the "Foreign
Value"), the Calculation Agent shall, once per Trading Day, value the Underlying
Security using the most recent sales price of such Underlying Security available
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from the primary exchange, trading system or market in the Underlying Security's
home market, quoted as of the Close of Trading.
In order to convert the Foreign Value into U.S. dollars, the Calculation
Agent shall use the Official W.M. Reuters Spot Closing Rate. If there are
several quotes for the Official W.M. Reuters Spot Closing Rate, the first quoted
rate starting at 11:00 A.M. shall be the rate used. If there is no such Official
W.M. Reuters Spot Closing Rate for a country's currency at 11:00 A.M., New York
City time, the Foreign Value shall be determined using the last available U.S.
dollar cross-rate quote before 11:00 A.M., New York City time.
In order to determine the value of an Underlying Security that is listed or
quoted on a bulletin board service, the Calculation Agent shall use the average
of the midpoint of the bid and ask prices provided by three market makers in
that Underlying Security. The Calculation Agent shall obtain the bid and ask
prices promptly upon the opening of trading on that Trading Day at 9:30 A.M.,
New York City time or at such other time as the Calculation Agent determines.
The Calculation Agent shall provide AMEX with the value of the M&A Cash
Component, the M&A Sale Component, the PV Extraordinary Cash Component, the
Extraordinary Cash Component and the Extraordinary Sale Component as soon as
such values are available. The Calculation Agent shall, once per Trading Day,
provide AMEX with the interest accrued on the Cash Included in the Underlying
Basket.
6. Definitions.
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Set forth below are some of the terms used in this Annex A to the
Calculation Agent Agreement.
"ADRs" shall have the meaning assigned thereto in paragraph 5.
"Alternative Redemption Amount" shall mean the product of (a)
the Issue Price and (b) the Average Level of the Underlying Basket divided by
100.
"AMEX" shall mean the American Stock Exchange.
"Average Level of the Underlying Basket" shall mean the
arithmetic average of the Level of the Underlying Basket on each of the
Calculation Dates.
"Average Execution Price" for a security or other property
shall mean the average execution price that an affiliate of the Company receives
or pays for such security or property, as the case may be, to hedge the
Company's obligations under the Securities.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which either the NYSE or the AMEX is not open for securities
trading or commercial banks in New York City are authorized or required by law
or executive order to remain closed.
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"Calculation Agent" shall mean the person that has entered
into an agreement with the Company providing for, among other things, the
determination of the Level of the Underlying Basket and the Maturity Payment
Amount, which term shall, unless the context otherwise requires, include its
successors and assigns. The initial Calculation Agent is Lehman Brothers Inc.
"Calculation Date" shall mean each of September 26, 2001,
December 26, 2001, March 26, 2002, June 26, 2002, September 26, 2002, December
26, 2002, March 26, 2003, June 26, 2003, September 26, 2003, December 26, 2003,
March 26, 2004, June 26, 2004, September 26, 2004 and December 26, 2004.
If any of these dates is not a Business Day, the Level of the
Underlying Basket on the next date on which the Level of the Underlying Basket
can be calculated will be used.
"Cash Included in the Underlying Basket" shall mean the M&A
Cash Component, the M&A Sale Component, the PV Extraordinary Cash Component, the
Extraordinary Cash Component, the Extraordinary Sale Component, and interest
accrued thereon as provided for herein.
"Close of Trading" shall mean 4:00 p.m., New York City time.
"Closing Price" means the following, determined by the
Calculation Agent based on information reasonably available to it:
(i) If the Underlying Security is listed on a United States
national securities exchange or trading system or is a NASDAQ Stock
Market, Inc. security, the last reported sale price at the Close of
Trading, regular way, on such day, on the primary securities exchange
registered under the Securities Exchange Act of 1934 on which such
Underlying Security is listed or admitted to trading or NASDAQ Stock
Market, Inc., as the case may be.
(ii) If the Underlying Security is listed on a non-United
States securities exchange, trading system (other than a bulletin
board) or market, the last reported sale price at the Close of Trading,
regular way, on such day, on the primary exchange, trading system or
market on which such Underlying Security is listed or admitted to
trading, as the case may be. The Closing Price shall then be converted
into U.S. dollars using the Official W.M. Reuters Spot Closing Rate.
(iii) If the Underlying Security is not listed on a national
securities exchange or trading system or is not a NASDAQ Stock Market,
Inc. security, and is listed or traded on a bulletin board, the Average
Execution Price of the Underlying Security. If such Underlying Security
is listed or traded on a non-United States bulletin board, the Closing
Price will then be converted into U.S. dollars using the Official W.M.
Reuters Spot Closing Rate.
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(iv) If a Market Disruption Event has occurred for an
Underlying Security on a day on which the Closing Price for such
Underlying Security is to be calculated, the Closing Price for such
Underlying Security shall initially be determined using the Closing
Price for such Underlying Security on the next preceding Trading Day on
which a Market Disruption Event did not occur. Once the Market
Disruption Event has ceased, the Closing Price of such Underlying
Security shall then be adjusted to equal the Average Execution Price of
the Underlying Security.
"Extraordinary Cash Component" shall have the meaning assigned
thereto in paragraph 4(h)(i).
"Extraordinary Cash Component Interest Accrual Period" shall
have the meaning assigned thereto in paragraph 4(h)(i).
"Extraordinary Sale Component" shall have the meaning assigned
thereto in paragraph 4(h)(ii).
"Extraordinary Sale Component Interest Accrual Period" shall
have the meaning assigned thereto in paragraph 4(h)(ii).
"Foreign Value" shall have the meaning assigned thereto in
paragraph 5.
"Issue Price" shall mean $1,000.
"Level of the Underlying Basket", when used with respect to
any Calculation Date shall equal the sum of (a) the sum of the products of the
Closing Prices and the applicable Multipliers for each Underlying Security for
which a Market Disruption Event does not occur on such Calculation Date, (b) if
a Market Disruption Event occurs for an Underlying Security on such Calculation
Date, the product of the Closing Price for such Underlying Security and the
Multiplier for such Underlying Security and (c) any Cash included in the
Underlying Basket on such Calculation Date.
"M&A Cash Component" shall have the meaning assigned thereto
in paragraph 4(d)(i).
"M&A Cash Component Interest Accrual Period" shall have the
meaning assigned thereto in paragraph 4(d)(i).
"M&A Sale Component" shall have the meaning assigned thereto
in paragraph 4(d)(ii).
"M&A Sale Component Interest Accrual Period" shall have the
meaning assigned thereto in paragraph 5(d)(ii).
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"Market Disruption Event" with respect to an Underlying
Security means any of the following events as determined by the Calculation
Agent:
(i) A suspension, absence or material limitation of trading of
such Underlying Security has occurred on that day, in each case, for
more than two hours of trading or during the one-half hour period
preceding the Close of Trading on the primary organized U.S. exchange
or trading system on which such Underlying Security is traded or, in
the case of an Underlying Security not listed or quoted in the United
States, on the primary exchange, trading system or market for such
Underlying Security. Limitations on trading during significant market
fluctuations imposed pursuant to NYSE Rule 80B or any applicable rule
or regulation enacted or promulgated by the NYSE, any other exchange,
trading system, or market, any other self regulatory organization or
the Securities and Exchange Commission of similar scope or as a
replacement for Rule 80B, may be considered material. Notwithstanding
the first sentence of this paragraph, a Market Disruption Event for an
Underlying Security traded on a bulletin board means a suspension,
absence or material limitation of trading of such Underlying Security
for more than two hours or during the one hour period preceding 4:00
p.m., New York City time.
(ii) A suspension, absence or material limitation has occurred
on that day, in each case, for more than two hours of trading or during
the one-half hour period preceding the Close of Trading in options
contracts related to such Underlying Security, whether by reason of
movements in price exceeding levels permitted by an exchange, trading
system or market on which options contracts related to such Underlying
Security are traded or otherwise.
(iii) Information is unavailable on that date, through a
recognized system of public dissemination of transaction information,
for more than two hours of trading or during the one-half hour period
preceding the Close of Trading, of accurate price, volume or related
information in respect of such Underlying Security or in respect of
options contracts related to such Underlying Security, in each case
traded on any major U.S. exchange or trading system or in the case of
Underlying Securities of a non-U.S. issuer, the primary non-U.S.
exchange, trading system or market.
For purposes of determining whether a Market Disruption Event has
occurred:
(i) a limitation on the hours or number of days of trading
shall not constitute a Market Disruption Event if it results from an
announced change in the regular business hours of the relevant
exchange, trading system or market;
(ii) any suspension in trading in an option contract on an
Underlying Security by a major securities exchange, trading system or
market by reason of (a) a price change violating limits set by such
securities market, (b) an imbalance of orders relating to those
contracts, or (c) a disparity in bid and ask quotes relating to those
contracts shall constitute a Market Disruption Event notwithstanding
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that the suspension or material limitation is less than two hours;
(iii) a suspension or material limitation on an exchange,
trading system or in a market shall include a suspension or material
limitation of trading by one class of investors provided that the
suspension continues for more than two hours of trading or during the
last one-half hour period preceding the Close of Trading on the
relevant exchange, trading system or market but shall not include any
time when the relevant exchange, trading system or market is closed for
trading as part of that exchange's, trading system's or market's
regularly scheduled business hours; and
(iv) "Trading systems" include bulletin board services.
"Maturity Payment Amount" shall have the meaning assigned
thereto in paragraph 2.
"Multiplier" shall have the meaning assigned thereto in
paragraph 3.
"NYSE" shall mean the New York Stock Exchange.
"Official W.M. Reuters Spot Closing Rates" shall mean the
closing spot rates published on Reuters page "WMRA" relevant for such Underlying
Security.
"Prospectus" shall mean the prospectus, dated June 21, 2001,
as supplemented by the prospectus supplement, dated June 26, 2001, of the
Company relating to the Securities.
"PV Extraordinary Cash Component" shall have the meaning
assigned thereto in paragraph 4(h)(i).
"Stated Maturity" shall mean December 29, 2004, or if a Market
Disruption Event occurs on December 29, 2004 (or if December 29, 2004 is not a
Business Day, on the next Business Day on which the Level of the Underlying
Basket can be calculated), the third Business Day after the date that an
affiliate of the Company completes the sale of the Underlying Security with
respect to which such Market Disruption Event occurred to hedge the Company's
obligations under the Securities.
"Trading Day" shall mean a day on which trading generally is
conducted on the NYSE, AMEX and NASDAQ Stock Market, Inc. and in the
over-the-counter market for equity securities as determined by the Calculation
Agent.
"Underlying Securities" shall mean the securities included
in the Underlying Basket from time to time.