EXHIBIT 1.10
CALCULATION AGENCY AGREEMENT
CALCULATION AGENCY AGREEMENT, dated as of October 5, 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 up to $8,625,000
aggregate principal amount of RAPIDS(sm), Return Accelerated PortfolIo Debt
Securities Notes Due November 5, 2002 (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 Value of each of the Underlying Equity Securities in the Basket, (c)
the Ending Value 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.
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* "RAPIDS" is a servicemark 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 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,
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200 Vesey Street, New York, New York 10285-0600 (facsimile: (212) 526-2755)
(telephone: (212) 526-0900), Attention: Equity Derivatives Trading and (c) in
the case of the Trustee, to it at 111 Wall Street, 5th Floor, New York, New York
10043 (facsimile: (212) 657-3836) (telephone: (212) 657-7805), Attention:
Corporate Trust Department or, in any case, to any other address or number of
which the party receiving notice shall have notified the party giving such
notice in 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 Agreement has been entered into as of
the day and year first above written.
LEHMAN BROTHERS HOLDINGS INC.
By: ___________________________
Name: Barrett S. DiPaolo
Title: Vice President
LEHMAN BROTHERS INC.,
as Calculation Agent
By: __________________________
Name: Barrett S. DiPaolo
Title: Vice President
ANNEX A
1. The Basket.
The Basket shall be composed of the Underlying Equity Securities (the
"Basket").
2. Determination of the Maturity Payment Amount.
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.
The multiplier for each Underlying Equity Security in the Basket shall
be the number of shares or other units (including ADRs) (or fraction of a share
or other unit expressed as a decimal) of such 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.
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
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will be increased by the product of 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.
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.
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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 Value is greater than or equal to the Starting Value,
the lesser of:
(i) $132; and
(ii) the product obtained by multiplying (A) $100 by (B)
2 x Ending Value
( ---------------- - 1);
Starting Value
or
(b) if the Ending Value is less than the Starting Value:
the product obtained by multiplying (A) $100 by (B) the
quotient obtained by dividing the Ending Value by the
Starting Value.
"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.
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"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
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.
"Ending Value" shall mean the Ending Price, plus any cash or
other equity securities attributable to one share or unit of the Underlying
Equity Security as described in Section 4 of Annex A of the Calculation Agency
Agreement, multiplied by the Ending Multiplier.
"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
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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.
(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 October 2, 2001, issued by the Company relating to $7,500,000 aggregate
principal amount of the Securities.
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"Starting Multiplier" shall mean, for each Underlying Equity
Security, the following:
Underlying Equity Security Starting Multiplier (number of shares)
-------------------------- --------------------------------------
American International Group, Inc. 1.274697
AOL Time Warner Inc. 3.039514
Citigroup Inc. 2.366864
Exxon Mobil Corporation 2.500625
General Electric Corporation 2.628121
Intel Corporation 5.117707
Internal Business Machines Corporation 1.066439
Microsoft Corporation 1.885014
Pfizer Inc. 2.409639
Wal-Mart Stores, Inc. 1.923077
"Starting Value" shall mean $100 for each Underlying Equity
Security.
"Stated Maturity Date" shall mean November 5, 2002.
"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: American International Group, Inc., AOL Time Warner Inc.,
Citigroup Inc., Exxon Mobil Corporation, General Electric Corporation, Intel
Corporation, International Business Machines Corporation, Microsoft Corporation,
Pfizer Inc. and Wal-Mart Stores, Inc. The Underlying Equity Securities shall be
adjusted only by the Calculation Agent pursuant to this Agreement.