CALCULATION AGENCY AGREEMENT
CALCULATION AGENCY AGREEMENT, dated as of July 2, 2002 (the "Agreement"),
between Lehman Brothers Holdings Inc. (the "Company") and Lehman Brothers Inc.,
as Calculation Agent.
WHEREAS, the Company has authorized the issuance of up to $11,500,000
aggregate principal amount of 10 Uncommon Values(R) Index RANGERS PlusSM, Risk
AdjustiNG Equity Range Securities PlusSM Notes Due July 2, 2004* (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. 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 such
Maturity Payment Amount and notify the Trustee of its determination. The
Calculation Agent shall also be responsible for (a) the determination of
the Index Level on each Calculation Date, (b) the determination of the
Rollover Closing Level of the 10 Uncommon Values Index for each
Twelve-Month Period, (c) determining if any adjustments to the 10 Uncommon
Values Index 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 10 Uncommon Values Index
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 2.
* "10 Uncommon Values" is a registered trademark of, and "RANGERS Plus"
and "Risk AdjustiNG Equity Range Securities Plus" are service marks of,
Lehman Brothers Inc.
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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 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 745 Seventh Avenue, New York, New
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York 10019 (facsimile: (646) 758-3204) (telephone: (212) 526-7000),
Attention: Treasurer, with a copy to 399 Park Avenue, New York, New York
10022 (facsimile: (212) 526-0357) (telephone: (212) 526-7000), Attention:
Corporate Secretary, (b) in the case of the Calculation Agent, to it at 745
Seventh Avenue, New York, New York 10019 (facsimile: (646) 758-4942)
(telephone: (212) 526-7000), 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 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:__________________________
Name: Oliver Budde
Title: Vice President
LEHMAN BROTHERS INC.,
as Calculation Agent
By:__________________________
Name: Oliver Budde
Title: Vice President
ANNEX A
1. 10 Uncommon Values Index.
Each year, the Investment Policy Committee of Lehman Brothers Inc.,
with the assistance of its Equity Research Department, selects a portfolio of 10
common stocks or other equity securities that it believes are attractive
investments over the year for which they are chosen (the "10 Uncommon Values").
The "10 Uncommon Values Index" represents an equal dollar-weighted
portfolio of the common stocks or other equity securities of the ten companies
underlying the 10 Uncommon Values for each Twelve-Month Period during the period
beginning on the date of announcement of the 10 Uncommon Values in 2002 and
ending on the Stated Maturity, as adjusted by certain extraordinary corporate
events involving the issuers of the Index Securities as described herein. The
announcement of the ten common stocks that shall make up the 10 Uncommon Values
Index shall be made on or about July 1 (such date of announcement, the
"Announcement Day") of each year preceding the initial issuance of and during
the term of the Securities. Except as set forth below, the Index Securities in
the 10 Uncommon Values Index shall remain constant for each Twelve-Month Period.
2. Determination of the Maturity Payment Amount.
The Calculation Agent shall determine the Ending Index Level 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 be the following:
If the Ending Index Level of the 10 Uncommon Values Index is greater
than or equal to 100 (the index level of the 10 Uncommon Values Index on June
27, 2002), the lesser of:
(1) $1,190; and
(2) $1,000 x Ending Index Level
100
If the Ending Index Level of the 10 Uncommon Values Index is less than
100, the lesser of:
(1) $1,000; and
(2) $1,000 x Ending Index Level
80
3. Determination of the Rollover Closing Level of the 10 Uncommon Values
Index.
The Calculation Agent shall determine the Rollover Closing Level of the
10 Uncommon Values Index for each Twelve-Month Period after the Close of Trading
on the Trading Date prior
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to each Announcement Day (the "Rollover Determination Date"). The "Rollover
Closing Level" shall equal the sum of (a) the sum of the products of the Closing
Prices and the applicable Multipliers for each Index Security and (b) the Cash
Included in the 10 Uncommon Values Index at the Closing of Trading, in each case
on the Rollover Determination Date. The Rollover Closing Level shall then be
assumed to be used to buy, on the ensuing Announcement Day, equal dollar amounts
of the ten common stocks that shall initially be the Index Securities for the
next Twelve-Month Period at each Index Security's Average Execution Price.
4. Multipliers.
The Multiplier relating to each Index Security is the number of shares
(including fractional shares, expressed as a decimal) of such Index Security
included in the 10 Uncommon Values Index. The Multipliers shall be determined by
the Calculation Agent and shall be based on each Index Security's Average
Execution Price. The number of shares of an Index Security constituting the
"Multiplier" for such Index Security shall equal the number of shares (or
fraction of one share) of such Index Security that, when multiplied by the
Average Execution Price for such Index Security, results in the Index Security
initially accounting on the Announcement Day for 10% of the level of 10 Uncommon
Values Index on an equal dollar-weighted basis. The Multipliers with respect to
each Index Security shall remain constant for the Twelve-Month Period that such
Index Security is part of the 10 Uncommon Values Index unless adjusted for
certain extraordinary corporate events as described below. Each Multiplier shall
be rounded at the Calculation Agent's discretion.
5. Adjustments to the Multipliers and the 10 Uncommon Values Index.
Adjustments to a Multiplier and the 10 Uncommon Values Index 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.
(a) If an Index Security is subject to a stock split or reverse stock split,
then once the split has become effective, the Multiplier relating to the Index
Security shall be adjusted. The Multiplier shall be adjusted to equal the
product of the number of shares outstanding of the Index Security after the
split with respect to each share of such Index Security immediately prior to
effectiveness of the split and the prior Multiplier.
(b) If an Index Security is subject to an extraordinary stock dividend or
extraordinary stock distribution that is given equally to all holders of shares,
then once the Index Security is trading ex-dividend, the Multiplier for such
Index Security shall be increased by the product of the number of shares of such
Index Security issued with respect to one share of such Index Security and the
prior Multiplier.
(c) If the issuer of an Index Security, or if an Index Security is an ADR, the
issuer of the underlying foreign share is being liquidated or dissolved or is
subject to a proceeding under
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any applicable bankruptcy, insolvency or other similar law, such Index Security
shall continue to be included in the 10 Uncommon Values Index so long as the
primary exchange, trading system or market is reporting a market price for the
Index Security. If a market price, including a price on a bulletin board
service, is no longer available for an Index Security, then the value of the
Index 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 10 Uncommon Values Index to compensate for the deletion of such Index
Security.
(d) If the issuer of an Index Security, or if an Index Security is an ADR, the
issuer of the underlying foreign share, has been subject to a merger or
consolidation and is not the surviving entity and holders of the Index Security
are entitled to receive cash, securities, other property or a combination
thereof in exchange for the Index Security, then the following shall be included
in the 10 Uncommon Values Index:
(i) To the extent cash is received, the 10 Uncommon Values Index 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 next Announcement Day (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 Index Security shall be
removed from the 10 Uncommon Values Index and the new security shall be
added to the 10 Uncommon Values Index as a new Index Security. The
Multiplier for the new Index Security shall equal the product of the last
value of the Multiplier of the original Index Security and the number of
securities of the new Index Security exchanged with respect to one share of
the original Index Security.
(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 10 Uncommon Values Index
shall include an amount of cash equal to the product of the Multiplier of
the Index Security and the Fair Market Value (the "M&A Sale Component").
The 10 Uncommon Values Index 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 next Announcement Day (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.
A-3
(e) If all of an Index 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 Index Security, whether by capital reorganization,
recapitalization or reclassification or otherwise, then, once the conversion has
become effective, the former Index Security shall be removed from the 10
Uncommon Values Index and the new common stock shall be added to the 10 Uncommon
Values Index as a new Index Security. The Multiplier for each new Index Security
shall equal the product of the last value of the Multiplier of the original
Index Security and the number of shares of the new Index Security issued with
respect to one share of the original Index Security.
(f) If the issuer of an Index 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 10 Uncommon Values Index as
a new Index Security. The multiplier for the new Index Security shall equal the
product of the last value of the Multiplier with respect to the original Index
Security and the number of shares of the new Index Security with respect to one
share of the original Index 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 10 Uncommon Values
Index as a new Index Security. The initial Multiplier for that new Index
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 Index 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 Index Security, then the 10 Uncommon Values Index
shall include the following:
(i) To the extent cash is entitled to be received, the 10 Uncommon Values
Index shall include on each day after the time that the Index 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
10 Uncommon Values Index and the 10 Uncommon Values Index 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 next Announcement Day (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.
A-4
(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 Average Execution Price and the 10
Uncommon Values Index shall include an amount of cash equal to the
product of the Multiplier of the Index Security and the fair market
value (the "Extraordinary Sale Component"). The 10 Uncommon Values
Index 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 next Announcement Day (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.
(iii)If similar corporate events occur with respect to the issuer of an
equity security other than common stock that is included in the 10
Uncommon Values Index, adjustments similar to the above will be made
for that equity security.
The payment of an ordinary cash dividend by an issuer of an Index
Security from current income or retained earnings shall not result in an
adjustment to the Multiplier.
No adjustments of any Multiplier of an Index 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.
6. Determination of Daily Level of the 10 Uncommon Values.
If the AMEX is unable to obtain certain information necessary for its
daily calculation and dissemination of the level of the 10 Uncommon Values
Index, the Calculation Agent shall provide the necessary information as follows
below.
In order to determine the value of an Index 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 Index Security
using the most recent sales price of such Index Security available from the
primary exchange, trading system or market in the Index 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.
A-5
In order to determine the value of an Index 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 Index 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 10 Uncommon
Values Index.
7. Definitions.
Set forth below are the terms used in this Annex A to the Calculation
Agency Agreement.
"ADRs" shall have the meaning assigned thereto in paragraph
5.
"AMEX" shall mean the American Stock Exchange.
"Announcement Day" shall have the meaning assigned thereto in
paragraph 1.
"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", notwithstanding the Indenture,
notwithstanding the Indenture, shall mean any day that is not a Saturday, a
Sunday or a day on which the NYSE, NASDAQ NMS 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 Index Level and 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
Stated Maturity.
"Cash Included in the 10 Uncommon Values Index" 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:
A-6
(i) If the Index 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 Index Security is listed
or admitted to trading or NASDAQ Stock Market, Inc., as the case may
be.
(ii) If the Index 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
Index Security is listed or admitted to trading, as the case may be.
The Closing Price will then be converted into U.S. dollars using the
Official W.M. Reuters Spot Closing Rate.
(iii) If the Index 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 Index Security. If such Index 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.
(iv) If a Market Disruption Event has occurred for an Index Security on a
day on which the Closing Price for such Index Security is to be
calculated, the Closing Price for such Index Security shall initially
be determined using the Closing Price for such Index 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 Index Security shall then be adjusted to equal the Average
Execution Price of the Index Security. The Rollover Closing Level and
the resulting Multipliers shall then be recalculated and adjusted
accordingly.
"Ending Index Level" shall equal the sum of (a) the sum of
the products of the Closing Prices and the applicable Multipliers for each Index
Security for which a Market Disruption Event does not occur on the Calculation
Date, (b) if a Market Disruption Event occurs for an Index Security on the
Calculation Date, the product of the Closing Price for such Index Security and
the Multiplier for such Index Security and (c) any cash included in the 10
Uncommon Values Index on the Calculation Date.
"Extraordinary Cash Component" shall have the meaning
assigned thereto in paragraph 5(h)(i).
"Extraordinary Cash Component Interest Accrual Period" shall
have the meaning assigned thereto in paragraph 5(h)(i).
"Extraordinary Sale Component" shall have the meaning
assigned thereto in paragraph 5(h)(ii).
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"Extraordinary Sale Component Interest Accrual Period" shall
have the meaning assigned thereto in paragraph 5(h)(ii).
"Foreign Value" shall have the meaning assigned thereto in
paragraph 6.
"Index Securities" shall mean the securities included in the
10 Uncommon Values Index from time to time.
"Issue Price" shall mean $1,000.
"M&A Cash Component" shall have the meaning assigned thereto
in paragraph 5(d)(i).
"M&A Cash Component Interest Accrual Period" shall have the
meaning assigned thereto in paragraph 5(d)(i).
"M&A Sale Component" shall have the meaning assigned thereto
in paragraph 5(d)(ii).
"M&A Sale Component Interest Accrual Period" shall have the
meaning assigned thereto in paragraph 5(d)(ii).
"Market Disruption Event" with respect to an Index Security
means any of the following events as determined by the Calculation Agent:
(i) A suspension, absence or material limitation of trading of such
Index 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 Index Security is traded
or, in the case of an Index Security not listed or quoted in the
United States, on the primary exchange, trading system or market
for such Index 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 Index Security
traded on a bulletin board means a suspension, absence or
material limitation of trading of such Index 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 Index Security, whether by
reason of movements in price exceeding levels permitted by an
exchange, trading system or market on which such options
contracts are traded or otherwise.
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(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 Index Security or in
respect of options contracts related to such Index Security, in
each case traded on any major U.S. exchange or trading system or
in the case of Index 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 options contract on an Index
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 assigned
thereto in paragraph 2.
"Multiplier" shall have the meaning assigned thereto in
paragraph 4.
"Nasdaq" shall mean The Nasdaq Stock Market, Inc.
"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 Index
Security.
"PV Extraordinary Cash Component" shall have the meaning
assigned thereto in paragraph 5(h)(i).
"Rollover Closing Level" shall have the meaning assigned
thereto in paragraph 3.
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"Rollover Determination Date" shall have the meaning assigned
thereto in paragraph 3.
"Stated Maturity" shall mean July 2, 2004 or if a Market
Disruption Event occurs on June 29, 2004, on the third Business Day after the
date that an affiliate of the Company completes the sale of all Index Securities
with respect to which a 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 the Nasdaq and in the over-the-counter market
for equity securities as determined by the Calculation Agent.
"Twelve-Month Period" shall mean the period beginning on an
Announcement Day and ending (i) in the case of 2002 and 2003, at the Close of
Trading on the Trading Day prior to the next Announcement Day, and (ii) in the
case of 2004, the Stated Maturity.
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