Exhibit 1.10
CALCULATION AGENCY AGREEMENT
CALCULATION AGENCY AGREEMENT, dated as of August 14, 2001 (the
"Agreement"), between Lehman Brothers Holdings Inc. (the "Company") and Lehman
Brothers Inc., as Calculation Agent.
WHEREAS, the Company has authorized the issuance of
$10,000,000 aggregate principal amount of Portfolio RANGERSSM, Portfolio Risk
AdjustiNG Equity Range SecuritiesSM Notes Due August 14, 2003 (the
"Securities")*;
WHEREAS, the Securities will be issued under an Indenture,
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. The Calculation Agent shall
determine (a) the Maturity Payment Amount on the Calculation Date, (b) the
Starting Price of each of the Underlying Equity Securities in the Basket, (c)
the Ending Price of each of the Underlying Equity Securities in the Basket, (d)
the Adjusted Value for each of the Underlying Equity Securities in the Basket,
(e) the sum of the Adjusted Values for all of the Underlying Equity Securities
in the Basket, (f) the Starting Multipliers and Ending Multipliers for each of
the Underlying Equity Securities in the Basket, (g) any required adjustments to
the Multipliers of the Underlying Equity Securities in the Basket and (h)
whether a Market Disruption Event has occurred. The Calculation Agent shall
notify the Trustee of all such determinations and any such adjustment or if a
Market Disruption Event has occurred. Annex A hereto sets forth the procedures
the Calculation Agent will use to determine the information described in this
Section 2.
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.
* "RANGERS" and "Risk AdjustiNG Equity Range Securities" are servicemarks of
Lehman Brothers Inc.
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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 obligations
herein set out upon the terms and conditions hereof, including the following, to
all of which the Company agrees:
(a) in acting under this Agreement, the Calculation Agent is
acting solely as an independent expert 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;
(b) 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;
(c) the Calculation Agent shall be obliged to perform only
such duties as are set out specifically herein and any duties
necessarily incidental thereto;
(d) 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
(e) 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.
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(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
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
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)
526-3774) (telephone: (212) 526-1936), 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
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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
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.
IN WITNESS WHEREOF, this Agreement has been entered into as of the day and
year first above written.
LEHMAN BROTHERS HOLDINGS INC.
By: ___________________________
Name: Oliver Budde
Title: Vice President
LEHMAN BROTHERS INC.,
as Calculation Agent
By: __________________________
Name: Oliver Budde
Title: Vice President
ANNEX A
1. The Basket.
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The Basket shall be composed of the Underlying Equity
Securities (the "Basket").
2. Determination of the Maturity Payment Amount.
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The Calculation Agent shall determine the amount payable on
the Stated Maturity Date for each $1,000 principal amount of Securities (the
"Maturity Payment Amount"). The Maturity Payment Amount shall equal the sum of
the Adjusted Values of each Underlying Equity Security. In the event that the
Calculation Agent makes an Ending Price Adjustment due to the occurrence of a
Market Disruption Event, the payment by the Company of the Maturity Payment
Amount will be postponed until the date three Business Days after the date of
determination of any such Ending Price Adjustment.
3. Multipliers for the Common Stocks in the Basket.
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The multiplier for each Underlying Equity Security in the
Basket shall be the number of shares, or fraction of a share, of each Underlying
Equity Security included in the Basket (the "Multiplier"). The Multiplier shall
be adjusted from time to time during the term of the Securities to give effect
to the extraordinary corporate transactions described below in Section 4. The
price used to determine the Starting Multiplier for each Underlying Equity
Security shall be determined based on the Average Execution Price for each
Underlying Equity Security. The Starting Multiplier for each Underlying Equity
Security in the Basket will remain constant unless adjusted. No adjustment to a
Multiplier will be required unless the adjustment would require a change of at
least 0.1% in the Multiplier then in effect. Each Multiplier, and any
adjustments to a Multiplier, will be rounded at the Calculation Agent's
discretion.
4. Adjustments to the Common Stocks in the Basket.
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Adjustments to the Underlying Equity Securities included in
the Basket will be made (i) by adjusting the Multiplier then in effect for an
Underlying Equity Security in the Basket, (ii) by adding new Underlying Equity
Securities, other securities or cash to the Basket and/or (iii) by removing
Underlying Equity Securities in the Basket, each as described below. For
purposes of these adjustments, except as noted below, ADRs are treated like
Underlying Equity Securities if a comparable adjustment to the foreign shares
underlying the ADRs is made pursuant to the terms of the depositary arrangement
for the ADRs or if holders of ADRs are entitled to receive property in respect
of the underlying foreign shares.
o If an Underlying Equity Security is subject to a stock split or reverse
stock split, then once the split has become effective, the Multiplier then
in effect relating to that Underlying Equity Security will be adjusted. The
Multiplier will be adjusted to equal the product of the number of shares
outstanding after the split with respect to each share immediately prior to
effectiveness of the split and the prior Multiplier.
o If an Underlying Equity Security is subject to an extraordinary stock
dividend or extraordinary stock distribution in common stock that is given
equally to all holders of shares, then once the Underlying Equity Security
is trading ex-dividend, the Multiplier will be increased by the product of
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the number of shares issued with respect to one share and the prior
Multiplier.
o If the issuer of an Underlying Equity Security, or, if an Underlying Equity
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, the Underlying
Equity Security will continue to be included in the Basket so long as the
primary exchange, trading system or market is reporting a market price for
the Underlying Equity Security. If a market price, including a price on a
bulletin board service, is no longer available for an Underlying Equity
Security included in the Basket, then the value of that Underlying Equity
Security will equal zero for so long as no market price is available, and
no attempt will be made to find a replacement stock or increase the Basket
to compensate for the deletion of that Underlying Equity Security.
o If the issuer of an Underlying Equity Security, or, if an Underlying Equity
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 issuer's common stock are entitled to receive cash,
securities, other property or a combination of those in exchange for their
common stock, then the following will be included in the Basket:
o To the extent cash is received, the Basket will include the amount of the
cash consideration at the time holders are entitled to receive the cash
consideration, plus accrued interest. Interest will accrue beginning on the
first London Business Day after the day on which holders receive the cash
consideration until the Stated Maturity Date. Interest will accrue at a
rate equal to LIBOR with a term corresponding to the interest accrual
period stated in the preceding sentence.
o 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 Equity Security
will be removed from the Basket and the new securities will be added to the
Basket. The Multiplier for the new securities will equal the product of the
last value of the Multiplier of the original Underlying Equity Security and
the number of securities of the new security exchanged with respect to one
share of the original Underlying Equity Security.
o 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 will
determine the fair market value of the securities or other property
received and the Basket will include an amount of cash equal to the product
of the Multiplier and the fair market value. The Basket will also include
accrued interest on that amount. Interest will accrue beginning on the
first London Business Day after the day that an affiliate of the Company
sells the securities or other property used to hedge the Company's
obligations under the notes until the Stated Maturity Date. Interest will
accrue at a rate equal to LIBOR with a term corresponding to the interest
accrual period stated in the preceding sentence.
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o If all of the shares of the class of common stock of which an Underlying
Equity Security is a part are converted into or exchanged for the same or a
different number of shares of any class or classes of common stock other
than that class of common stock of which the Underlying Equity Security is
a part, whether by capital reorganization, recapitalization or
reclassification, then, once the conversion has become effective, the
former Underlying Equity Security will be removed from the Basket and the
new common stock will be added to the Basket as an Underlying Equity
Security. The Multiplier for each new Underlying Equity Security added to
the Basket will equal the product of the last value of the Multiplier of
the original Underlying Equity Security and the number of shares of the new
Underlying Equity Security issued with respect to one share of the original
Underlying Equity Security.
o If the issuer of an Underlying Equity Security in the Basket, or if an
Underlying Equity Security is an ADR, the issuer of the underlying foreign
share, 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 will be added to the Basket as an Underlying Equity Security. The
Multiplier for the new Underlying Equity Security will equal the product of
the last value of the Multiplier with respect to the original Underlying
Equity Security and the number of shares of the new Underlying Equity
Security issued with respect to one share of the original Underlying Equity
Security.
o If an ADR is no longer listed or admitted to trading on a United States
securities exchange registered under the Securities Exchange Act of 1934 or
is no longer a security quoted on the Nasdaq, then the foreign share
underlying the ADR will be deemed to be a new common stock included in the
Basket. The initial Multiplier for that new Underlying Equity Security will
equal the last value of the Multiplier for the ADR multiplied by the number
of underlying foreign shares represented by a single ADR.
o If an Underlying Equity 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 the class of common stock
of which the Underlying Equity Security is a part, then the Basket will
include the following:
o To the extent cash is entitled to be received, the Basket will include on
each day after the time that the Underlying Equity 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. When the cash consideration is
received, the Basket will include the amount of the cash consideration,
plus accrued interest. Interest will accrue beginning the first London
Business Day after the day that holders receive the cash consideration
until the Stated Maturity Date. Interest will accrue at a rate equal to
LIBOR with a term corresponding to the interest accrual period stated in
the preceding sentence.
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o 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 will
determine the fair market value of the securities or other property
received and the Basket will include an amount of cash equal to the product
of the Multiplier and the fair market value. The Basket will also include
accrued interest on that amount. Interest will accrue beginning on the
first London Business Day after the day that an affiliate of the Company
sells the securities or other property used to hedge the Company's
obligations under the notes until the Stated Maturity Date. Interest will
accrue at a rate equal to LIBOR with a term corresponding to the interest
accrual period stated in the preceding sentence.
o If similar corporate events occur with respect to the issuer of an equity
security other than an Underlying Equity Security that is included in the
Basket, adjustments similar to the above will be made for that equity
security. In addition, if any other corporate events occur with respect to
the issuer of an Underlying Equity Security included in the Basket,
adjustments will be made to reflect the economic substance of those events.
The payment of an ordinary cash dividend from current income or retained
earnings will not result in an adjustment to the Multiplier.
5. Definitions.
Set forth below are the terms used in the Agreement and in
this Annex A.
"ADR" shall mean American depositary receipt.
"AMEX" shall mean the American Stock Exchange.
"Adjusted Value" shall mean, with respect to each Underlying
Equity Security:
(a) if the Ending Price is greater than or equal to the
Starting Price, the lesser of:
(i) $175; and
(ii) the product obtained by multiplying (A) $100 by
(B) the quotient obtained by dividing the Ending
Price by the Starting Price by (C) the quotient
obtained by dividing the Ending Multiplier by the
Starting Multiplier;
or
(b) if the Ending Price is less than the Starting Price, the
lesser of:
(i) $100; and
(ii) the product obtained by multiplying (A) $100 by
(B) the quotient obtained by dividing the Ending
Price by 75% of the Starting Price by (C) the
quotient obtained by dividing the Ending
Multiplier by the Starting Multiplier.
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"Average Execution Price" shall mean, for a security or other
property, 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.
"Basket" shall have the meaning set forth in Section 1 of this
Annex A.
"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 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.
"Calculation Date" shall mean three Business Days prior to the
Stated Maturity Date; provided that if a Market Disruption Event occurs on such
date, the Calculation Date shall be the previous Business Day on which there was
not a Market Disruption Event.
"Close of Trading" shall mean 4:00 p.m., New York City time.
"Company" shall have the meaning set forth in the preamble to
this Agreement.
"Ending Multiplier" shall mean, for each Underlying Equity
Security, the Starting Multiplier for such Underlying Equity Security adjusted
for the occurrence from time to time, prior to the Close of Trading on the
Calculation Date, of any of the extraordinary corporate transactions described
in Section 4 of this Annex A.
"Ending Price" shall mean, for each Underlying Equity
Security, as determined by the Calculation Agent based on information reasonably
available to it, subject to any Ending Price Adjustment:
(i) If the Underlying Equity Security is listed on a United
States national securities exchange or trading system or is a Nasdaq
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 Equity
Security is listed or admitted to trading or on Nasdaq, as the case may
be.
(ii) If the Underlying Equity 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 Equity Security is listed or
admitted to trading, as the case may be. The Ending Price shall then be
converted into U.S. dollars using the Official W.M. Reuters Spot
Closing Rate.
(iii) If the Underlying Equity Security is not listed on a
national securities exchange or trading system or is not a Nasdaq
security, and is listed or traded on a bulletin board, the Average
Execution Price of the Underlying Equity Security. If such Underlying
Equity Security is listed or traded on a non-United States bulletin
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board, the Ending Price will then be converted into U.S. dollars using
the Official W.M. Reuters Spot Closing Rate.
(iv) If a Market Disruption Event has occurred for an
Underlying Equity Security on a day on which the Ending Price for such
Underlying Equity Security is to be calculated, the Ending Price for
such Underlying Equity Security shall initially be determined using the
Ending Price for such Underlying Equity Security on the next preceding
Trading Day on which a Market Disruption Event did not occur. Once the
Market Disruption Event has ceased, the Ending Price of such Underlying
Equity Security shall then be adjusted to equal the Average Execution
Price of the Underlying Equity Security.
"Ending Price Adjustment" shall mean an adjustment made by the
Calculation Agent to an Underlying Equity Security's initial Ending Price due to
the occurrence of a Market Disruption Event three Business Days prior to the
Stated Maturity Date. An Ending Price Adjustment shall adjust such initial
Ending Price, once such Market Disruption Event ceases to exist, to equal the
Average Execution Price received upon the sale of that Underlying Equity
Security.
"Indenture" shall have the meaning set forth in the preamble
to this Agreement.
"LIBOR" shall mean London Interbank Offered Rate.
"London Business Day" shall mean shall mean any day in the
United Kingdom that is not a Saturday, a Sunday or a day on which the London
Stock Exchange is not open for trading or banking institutions or trust
companies in the City of London are authorized or obligated by law or
parliamentary order to close.
"Market Disruption Event", on any day, shall mean any of the
following events as determined by the Calculation Agent:
(i) A suspension, absence or material limitation of trading in
an Underlying Equity 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 that security is traded or, in the case of
an Underlying Equity Security not listed or quoted in the United
States, on the primary exchange, trading system or market for that
security. Limitations on trading during significant market fluctuations
imposed pursuant to the rules of any primary organized U.S. exchange or
trading system similar 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 a security
traded on a bulletin board means a suspension, absence or material
limitation of trading of that security for more than two hours or
during the one-hour period preceding the Close of Trading.
(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 an Underlying Equity Security, whether by reason
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of movements in price exceeding levels permitted by an exchange,
trading system or market on which such options contracts 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 an Underlying Equity Security or in respect
of options contracts related to an Underlying Equity Security, in each
case traded on any major U.S. exchange or trading system or, in the
case of securities of a non-U.S. issuer, traded on 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 options contract on an
Underlying Equity 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
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 set forth in
Section 2 of this Annex A.
"Multiplier" shall have the meaning set forth in Section 3 of
this Annex A.
"Nasdaq" shall mean The Nasdaq Stock Market, Inc.
"NYSE" shall mean the New York Stock Exchange.
"Official W.M. Reuters Spot Closing Rate" shall mean the
closing spot rate published on Reuters page "WMRA" relevant for an Underlying
Equity Security.
"Prospectus Supplement" shall mean the prospectus supplement,
dated August 9, 2001, issued by the Company relating to $10,000,000 aggregate
principal amount of the Securities.
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"Starting Multiplier" shall mean, for each Underlying Equity
Security, the Multiplier required so that such Underlying Equity Security
represented on August 9, 2001 approximately 10.0% of the Basket on a U.S. dollar
weighted basis, which Multiplier shall be the Multiplier set forth opposite the
name of such Underlying Equity Security in the table under the caption "The
Basket" on page S-18 of the Prospectus Supplement.
"Starting Price" shall mean, for each Underlying Equity
Security, the price set forth opposite the name of such Underlying Equity
Security in the table under the caption "The Basket" on page S-18 of the
Prospectus Supplement.
"Stated Maturity Date" shall mean August 14, 2003.
"Trading Day" shall mean a day on which trading generally is
conducted on the NYSE, AMEX and Nasdaq and in the over-the-counter market for
equity securities, as determined by the Calculation Agent.
"Trustee" shall have the meaning set forth in the preamble to
this Agreement.
"Underlying Equity Securities" shall mean the securities
included in the Basket from time to time and shall initially be the following
10 common stocks: Amgen Inc., Cisco Systems, Inc., Dell Computer
Corporation, Gemstar--TV Guide International, Inc., Intel Corporation, Maxim
Integrated Products, Inc., Microsoft Corporation, Oracle Corporation,
QUALCOMM Incorporated and Sun Microsystems, Inc. The Underlying Equity
Securities shall be adjusted only by the Calculation Agent pursuant to this
Agreement.