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
$[23,000,000] aggregate principal amount of 10 Uncommon Values(R) Index SUNS(R),
Stock Upside Note Securities(R) Notes Due July 2, 2005* (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 LehmanBrothers 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 Measurement Date, (b) the determination of the
Capped Annual Returns for each Measurement Date, (c) the determination of
the Rollover Closing Level of the 10 Uncommon Values Index for each
Measurement Period, (d) determining if any adjustments to the 10 Uncommon
Values Index and/or the Multipliers should be made and (e) 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", "Stock Upside Note Securities" and "SUNS"
are registered trademarks 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. 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 Measurement 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 Measurement Period.
2. Determination of the Maturity Payment Amount.
The Calculation Agent shall determine the Capped Annual Returns for
each of the Measurement Dates, the Index Level on each Measurement Date 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. 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 Measurement Period after the Close of Trading
on the Trading Date prior 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 Measurement 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
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on each Index Security's AverageExecution 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
Measurement 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 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:
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(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.
(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
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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
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.
(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.
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(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.
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 the Agreement and in this Annex
A.
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"ADRs" shall have the meaning assigned thereto in paragraph 5.
"Agreement" shall have the meaning set forth in the preamble
to this Agreement.
"Alternative Redemption Amount" shall mean, with respect to
each $1,000 principal amount of Securities, the product of:
(1) $1,000; and
(2) 1 + the sum of the Capped Annual Returns for three annual Measurement
Periods.
"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 any provision in the
Indenture, shall mean any day that is not a Saturday, a Sunday or a day on which
the NYSE, the Nasdaq or the 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.
"Capped Annual Return", when used with respect to any
Measurement Period, shall mean the lesser of:
(x) Ending Index Level - Starting Index Level; and
Starting Index Level
(y) [ ]%.
"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:
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(i) If the Index Security is listed on a United States national securities
exchange, 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 or trading system registered under the Securities Exchange Act of 1934
on which such Index Security is listed or admitted to trading or Nasdaq, 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 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 any
Measurement Date, 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.
"Company" shall have the meaning set forth in the preamble to
this Agreement.
"Ending Index Level" shall mean, for any Measurement Period,
the Index Level on the Measurement Date at the end of that Measurement Period.
"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).
"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.
"Indenture" shall have the meaning set forth in the preamble
to this Agreement.
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"Index Level", when used with respect to any Measurement Date,
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 such Measurement Date, (b) if a Market Disruption Event
occurs for an Index Security on such Measurement 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 such Measurement
Date.
"Index Securities" shall mean the securities included in the
10 Uncommon Values Index from time to time.
"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, 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 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 set forth in
Section 2 of this Annex A.
"Measurement Date" shall mean, (a) when used with respect to
the first and second annual Measurement Periods, the Trading Day immediately
prior to the Announcement Day occurring in 2003 and 2004, respectively and (b)
when used with respect to the measurement date for the third annual Measurement
Date, June __, 2005.
"Measurement Period" shall mean each of the following three
periods: (a) the period commencing on June 27, 2002 and ending at the Close of
Trading on the Measurement Date occurring in 2003 (sometimes referred to as the
"first annual Measurement Period"); (b) the period commencing on the
Announcement Day occurring in 2003 and ending at the Close of Trading on the
Measurement Date occurring in 2004 (sometimes referred to as the "second annual
Measurement Period"); and (c) the period commencing on the Announcement Day
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occurring in 2004 and ending at the Close of Trading on June , 2005 (sometimes
referred to as the "third annual Measurement Period").
"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.
"Rollover Determination Date" shall have the meaning assigned
thereto in paragraph 3.
"Starting Index Level" shall mean (a) when used with respect
to the first Measurement Period, 100 and (b) when used with respect to any other
Measurement Period, the Ending Index Level for the Measurement Period.
"Stated Maturity" shall mean July 2, 2005, or if a Market
Disruption Event occurs on June 29, 2005, on the third Business Day after the
date that an affiliate of the Company completes the sale of each Index Security
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.
"Trustee" shall have the meaning set forth in the preamble to
this Agreement.
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