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EXHIBIT 10.3
EXCHANGE RIGHT
This Exchange Right is granted by PIMCO Advisors L.P., a Delaware
limited partnership ("PIMCO Advisors") on November 4, 1997 (the "Grant Date") to
the registered holders from time to time (the "Noteholders") of the 6% Senior
Notes due December 1, 2037 ("Notes") of Oppenheimer Group, Inc., a Delaware
corporation ("Opgroup"). Capitalized terms not defined herein are defined in the
Amended and Restated Partnership Agreement of PIMCO Advisors, that certain
Agreement and Plan of Merger, dated November 4, 1997, to which PIMCO Advisors is
a party, or the Certificate of Long-Term Indemnity Indebtedness issued by
Opgroup on November 4, 1997 (the "Certificate").
Section 1. Exchange of Notes for Class A LP Units.
(a) Each Noteholder shall have the right, at his option,
at any time and from time to time, during the period beginning at the opening of
business on November 5, 1997 and ending at the close of business on the later of
(i) December 1, 2007, or (ii) the sixtieth day after the cancellation of the
Certificate pursuant to its terms, to exchange his Notes, in whole or in part,
at the rate of one Class A LP Unit for each $33a in principal amount of Notes
surrendered for exchange (the "Exchange Rate"), in each case as of the close of
business on the day such Notes are surrendered for exchange.
(b) In order to exercise this Exchange Right, the
Noteholder (the "Exchanging Noteholder") shall surrender the Notes to be
exchanged, duly endorsed to the order of PIMCO Advisors, at the principal office
of PIMCO Advisors, accompanied by (i) written notice in the form of the Exchange
Notice attached hereto as Exhibit A, and (ii) if the Exchanging Noteholder is
not a Partner of PIMCO Advisors, a duly executed Admission Application.
(c) No payment shall be made or credit given for interest
accrued but not paid on Notes surrendered for exchange.
(d) As promptly as practicable after the surrender of
Notes for exchange, PIMCO Advisors shall issue and deliver at its principal
office to the Exchanging Noteholder, or mail to the Exchanging Noteholder at the
address noted on the Exchange Notice, a certificate for the number of full Class
A LP Units issuable upon exchange for such Notes, and any fractional Class A LP
Unit which would otherwise be issued upon such exchange shall be settled as
provided in Section 1(f).
(e) The Exchanging Noteholder will become the holder of
record of the Class A LP Units issued in the exchange as of the close of
business on the day the Notes are surrendered for exchange, accompanied by a
duly executed Exchange Notice, and if required, a duly executed Admission
Application.
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(f) In lieu of any fractional Class A LP Unit which would
otherwise be issued upon an exchange, PIMCO Advisors shall pay to the Exchanging
Noteholder cash equal to (i) such fractional interest times (ii) the Unit Price.
(g) PIMCO Advisors shall at all times reserve and keep
available, free from preemptive rights, solely for the purpose of effecting the
Exchange Right, the full number of Class A LP Units deliverable upon exchange of
all outstanding Notes not held by PIMCO Advisors.
(h) PIMCO Advisors represents and warrants to the
Noteholders that any Class A LP Units issued in exchange for Notes shall be
validly issued, fully paid and nonassessable.
(i) PIMCO Advisors will pay any and all documentary stamp
or similar issue or transfer taxes payable in respect of the issuance or
delivery of Class A LP Units to an Exchanging Noteholder in exchange for his
Notes.
Section 2. Adjustment for Recapitalizations.
If, at any time after the Grant Date, PIMCO Advisors shall effect a
Recapitalization affecting Class A LP Units, the Exchange Rate in effect at the
opening of business on the day following the record date or effective date for
the Recapitalization shall be adjusted so that each Noteholder shall be entitled
thereafter to receive upon exchange of his Notes the number of Class A LP Units
(including fractional interests) that such Noteholder would have owned or
received had he exchanged his Notes for Class A LP Units (including fractional
interests) immediately prior to the record date or effective date for the
Recapitalization. Any Class A LP Units issued in a Recapitalization after the
record date, if any, for such Recapitalization shall be issuable to an
Exchanging Noteholder on the effective date of such Recapitalization.
Section 3. Adjustment for Transactions.
(a) If, at any time after the Grant Date, PIMCO Advisors
shall be a party to a transaction, including without limitation a Restructuring,
a merger or consolidation, a sale of all or substantially all of the Partnership
Assets, or an exchange of all or substantially all of the Partnership Interests,
but excluding a transaction to which Section 2 applies, in each case as a result
of which Class A LP Units held by Public Unitholders are exchanged for or
converted into cash, securities or other property (each, a "Transaction"), each
Noteholder shall be entitled thereafter to receive upon exchange of his Notes
the cash, securities and other property ("Transaction Consideration") that such
Noteholder would have received had he exchanged his Notes for Class A LP Units
(including fractional interests) (and, in the case of a Restructuring, been a
Public Unitholder) immediately prior to the record date or effective date for
the Transaction. Any Transaction Consideration delivered after the record date,
if any, for a
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Transaction shall be issuable to an Exchanging Noteholder on the effective date
of such Transaction
(b) PIMCO Advisors shall not enter into any Transaction
unless the terms of the Transaction are consistent with the provisions of
Section 3(a), and PIMCO Advisors and the issuer of the Transaction Consideration
have entered into an agreement for the benefit of the Noteholders granting to
each Noteholder the right to exchange his Notes for the Transaction
Consideration that he would have received had he exchanged his Notes for Class A
LP Units (including fractional interests) (and, in the case of a Restructuring,
been a Public Unitholder) immediately prior to the record date or effective date
for the Transaction, on terms substantially equivalent to the terms of this
Exchange Right.
Section 4. Other Adjustments.
If, at any time after the Grant Date, PIMCO Advisors shall take any
action affecting the Class A LP Units other than an action described in Section
2 or 3, that would adversely affect this Exchange Right, the Exchange Rate and
the cash, securities or other property to be delivered upon exercise of this
Exchange Right may be adjusted in such manner, if any, and at such time as the
General Partners may determine to be equitable under the circumstances;
provided, that if the Indemnity Trustees object to such determination by notice
mailed to PIMCO Advisors at its principal office within thirty days after notice
of such action is mailed to the Indemnity Trust pursuant to Section 6(a), an
independent nationally recognized investment banking firm retained by PIMCO
Advisors and reasonably acceptable to the Indemnity Trustees shall determine an
equitable adjustment to this Exchange Right, the Exchange Rate and the cash,
securities, or other property to be delivered upon exercise of this Exchange
Right, and such determination shall be conclusive and binding on PIMCO Advisors
and the Noteholders.
Section 5. Successive Adjustments.
The provisions of Sections 2, 3 and 4 shall apply similarly to
successive Recapitalizations, Transactions and actions described in Section 4.
Section 6. Notices to Noteholders.
(a) If any Recapitalization or Transaction or action
described in Section 4 is proposed to occur, PIMCO Advisors shall cause to be
mailed to the Indemnity Trust at the address specified pursuant to the Merger
Agreement, and to each Noteholder at his address as shown on the records of
Opgroup, as promptly as practicable, a notice stating the record date or
effective date for the proposed Recapitalization or Transaction or action, and
describing in general terms the proposed Recapitalization or Transaction or
action.
(b) If the Exchange Rate is adjusted, or there is a change
in the cash, securities or other property to be delivered upon an exchange,
PIMCO Advisors shall cause to be mailed to
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the Indemnity Trust at the address specified pursuant to the Merger Agreement,
and to each Noteholder at his address as shown on the records of Opgroup, as
promptly as practicable, a notice stating the effective date for such adjustment
or change, and stating the adjusted Exchange Rate or describing the change, as
the case may be.
(c) Failure to give or receive a notice described in
Section 6(a) or (b) or any defect in such notice shall not affect the validity
of the Recapitalization or Transaction or action which gives rise to such
notice.
Section 7. General.
(a) This Exchange Right is granted for the express benefit
of the Noteholders, and may be altered or amended only with the prior written
consent of PIMCO Advisors and the Indemnity Trust.
(b) This Exchange Right shall be deemed to be a contract
made under the laws of the State of Delaware, and shall be construed in
accordance with the internal laws of the State of Delaware, without regard to
the principles of conflict of laws.
IN WITNESS WHEREOF, PIMCO Advisors has executed this Exchange Right
in New York, New York on the Grant Date.
PIMCO Advisors L.P.
By /s/ KENNETH M. POOVEY
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Kenneth M. Poovey
Executive Vice President
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EXHIBIT A
EXCHANGE NOTICE
To: PIMCO Advisors L.P.:
This Exchange Notice is given pursuant to that certain Exchange
Right granted by PIMCO Advisors L.P. ("PIMCO Advisors") to the registered
holders from time to time of the 6% Senior Notes due December 1, 2037 ("Notes")
of Oppenheimer Group, Inc., a Delaware corporation. Capitalized terms not
defined herein are defined in the Amended and Restated Partnership Agreement of
PIMCO Advisors.
Pursuant to the terms of the Exchange Right, the undersigned (the
"Exchanging Noteholder") hereby irrevocably elects to exchange
$__________________
in principal amount of Notes for Class A LP Units (the "Exchange Units").
Accompanying this Exchange Notice are Notes (the "Tendered Notes") in such
aggregate principal amount, duly endorsed or assigned to PIMCO Advisors.
The certificate evidencing the Exchange Units and a check payable to
the Exchanging Noteholder in the amount of any cash settlement for a fractional
interest in a Class A LP Units should be mailed to the following address:
________________________________________
________________________________________
________________________________________
The Exchanging Noteholder represents and warrants to PIMCO Advisors
that he is transferring good and marketable title to the Tendered Notes to PIMCO
Advisors, free and clear of any liens, encumbrances or adverse claims.
Unless a registration statement under the Securities Act covering
the Exchange Units is effective on the date of the exchange:
(i) The Exchanging Noteholder represents and warrants to
PIMCO Advisors (A) that he is acquiring the Exchange Units for his own account
for investment and not on behalf of or for the benefit of any other Person, and
not with a view to, or for offer or sale in
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connection with, any distribution thereof (within the meaning of the Securities
Act) that would violate the Securities Act, and (B) that he will not sell or
transfer the Exchange Units unless (1) such sale or transfer is registered under
the Securities Act or (2) the Exchanging Noteholder provides to PIMCO Advisors
an opinion of counsel to the effect that the Exchanging Noteholder may sell the
Exchange Units without registration under the Securities Act.
(ii) The Exchanging Noteholder acknowledges that he has
been given access to and reviewed such documents and information (including
publicly filed reports) regarding PIMCO Advisors as he has deemed appropriate,
and he has been given the opportunity to ask questions of and to obtain
documents from representatives of PIMCO Advisors regarding its operations and
the terms and conditions of issuance of the Exchange Units and the merits and
risks of acquiring the same, and all such questions and documents have been
answered and provided to his full satisfaction
Executed in _________________________________ on___________________________
(City and State) (Date)
_________________________________
(Signature)
_________________________________
(Printed Name)
_________________________________
Signature Guarantee:(1)
_______________________
1 All signatures shall be guaranteed by a bank or trust company
having an office or correspondent in the United States or a broker or dealer
which is a member of a registered securities exchange or the National
Association of Securities Dealers, Inc.
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