EXHIBIT 99 (B)
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE
THEREOF. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO A NOMINEE OF DTC
OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY. UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC TO XXXXXXX XXXXX & CO., INC. OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
REGISTERED PRINCIPAL AMOUNT
NO. R- CUSIP No. 59018Y AA9 $
XXXXXXX XXXXX & CO., INC.
MEDIUM-TERM NOTE,
SERIES B
7% Stock-Linked Notes due July 8, 2002
(Linked to the performance of the common stock of The Gap, Inc.) (the "Notes")
XXXXXXX XXXXX & CO., INC., a Delaware corporation (hereinafter referred
to as the "Company", which term includes any successor corporation under the
Indenture herein referred to), for value received, hereby promises to pay and
discharge each Note evidenced hereby on July 8, 2002 (the "Maturity Date") by
delivering to CEDE & CO., or registered assigns with respect to the principal
amount hereof,
DOLLARS ($ ), an amount equal to the lesser of (i) the Capped Value
(as defined below) or (ii) the product of the Exchange Ratio and the average
(arithmetic mean) Market Price of Gap Common Stock for the first five
Calculation Days during the Calculation Period, provided, however, (a) if
there are fewer than five Calculation Days in the Calculation Period with
respect to Gap Common Stock, then the amount payable at the Maturity Date
shall be calculated using the average of the Market Prices of Gap Common Stock
on those Calculation Days, and (b) if there is only one Calculation Day, then
the amount payable at the Maturity Date shall be the Market Price of Gap
Common Stock on that Calculation Day, and (c) if no Calculation Days occur
during the Calculation Period with respect to Gap Common Stock, then the
amount payable shall be calculated using the Market Price of Gap Common Stock
determined on the last scheduled Calculation Day in the Calculation Period,
regardless of the occurrence of a Market Disruption Event on that day; plus
accrued and unpaid interest through but excluding the Maturity Date, or as
such terms are defined below, and determined in accordance with the provisions
set forth below, and to pay interest on the principal amount hereof from July
7, 2000, or from the most recent date in respect of which interest has been
paid or duly provided for, semiannually in arrears on January 7 and July 7, in
each year (each an "Interest Payment Date"), commencing January 7, 2001, at
the rate of 7% per annum (the "Interest Rate"), computed on the basis of a
360-day year of twelve 30-day months, until the principal amount is paid or
duly made available for payment. The interest so payable and punctually paid
or duly provided for on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the fifteenth day (whether or
not a Business Day) next preceding such Interest Payment Date. Any such
interest which is payable, but is not punctually paid or duly provided for on
any Interest Payment Date, shall forthwith cease to be payable to the
registered Holder on such Regular Record Date, and may be paid to the Person
in whose name this Note (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given
to the Holder of the Notes not less than ten days prior to such Special Record
Date, or may be paid at any time in any other lawful manner, as more fully
provided in such Indenture. The Notes will be issued in minimum denominations
of U.S.$1,000 and integral multiples thereof.
Payment of interest and the amounts payable at maturity (as described
below) with respect to this Note shall be made at the office or agency of the
Company maintained for that purpose in the Borough of Manhattan, The City of
New York, in such coin or currency of the United States of America as at the
time of payment is legal tender for payment of public and private debts. The
Company shall, or shall cause the Calculation Agent to, pay U.S. Dollars at
the Maturity Date to the Trustee for delivery to the Holder of the Notes in
respect of such payments.
As used herein:
"AMEX" means the American Stock Exchange.
"Business Day" means any day other than a Saturday or Sunday that is
neither a legal holiday nor a day on which banking institutions are authorized
or required by law or regulation to close in The City of New York.
"Calculation Agent" means Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx & Xxxxx
Incorporated ("MLPF&S"). All determinations made by the Calculation Agent
shall be at the sole discretion of the Calculation Agent and, absent a
manifest error, shall be conclusive for all purposes and binding on the
Company and beneficial owners of the Notes.
"Calculation Day" means, with respect to Gap Common Sstock, any Trading
Day during the Calculation Period on which a Market Disruption Event has not
occurred.
"Calculation Period" means the period from and including the eighth
scheduled Calculation Day prior to the maturity date to and including the
third scheduled Calculation Day prior to the maturity date.
"Capped Value" means $1,840.
"Exchange Ratio" means multiplied by the Share Multiplier.
"Gap" means The Gap, Inc., a Delaware corporation.
"Gap Common Stock" means the common stock of The Gap, Inc., a Delaware
corporation.
"Market Disruption Event" means:
(i) a suspension, absence, including the absence of an official
closing price, or material limitation of trading of Gap Common Stock on
the NYSE for more than two hours of trading or during the one-half hour
period preceding or at the close of trading, as determined by the
Calculation Agent in its sole discretion; or the suspension or material
limitation on the primary market for trading in options contracts related
to Gap Common Stock, if available, during the one-half hour period
preceding or at the close of trading in the applicable market, in each
case as determined by the Calculation Agent in its sole discretion; and
(ii) a determination by the Calculation Agent in its sole discretion
that the event described in clause (i) above materially interfered with
the ability of the Company or any of its affiliates to unwind all or a
material portion of the hedge with respect to the Notes.
For purposes of determining whether a Market Disruption Event has
occurred: (1) a limitation on the hours or number of days of trading will
not constitute a Market Disruption Event if it results from an announced
change in the regular business hours of the relevant exchange, (2) a
decision to permanently discontinue trading in the relevant options
contract will not constitute a Market Disruption Event, (3) limitations
pursuant to any rule or regulation enacted or promulgated by the NYSE, or
other regulatory organization with jurisdiction over the NYSE, on trading
during significant market fluctuations will constitute a suspension or
material limitation of trading in Gap Common Stock, (4) a suspension of
trading in an options contract on Gap Common Stock by the primary
securities market trading in such options, if available, by reason of (a)
a price change exceeding limits set by such securities exchange or
market, (b) an imbalance of orders relating to such contracts or (c) a
disparity in bid and ask quotes relating to such contracts will
constitute a suspension or material limitation of trading in options
contracts related to Gap Common Stock, and (5) a suspension, absence or
material limitation of trading on the primary securities market on which
options contracts related to Gap Common Stock are traded will not include
any time when such securities market is itself closed for trading under
ordinary circumstances.
If the Transaction Value includes securities other than Gap Common
Stock, then the above definition shall be revised to include each such
security in the same manner as Gap Common Stock is considered in
determining whether a Market Disruption Event exists. The definition of
Market Disruption Event shall only consider those securities included in
determining the Transaction Value, and thus if Gap Common Stock is not
included in the determination of the Transaction Value, then Gap Common
Stock shall not be considered in determining whether a Market Disruption
Event exists.
"Market Price" means, for any date of determination on any Trading Day,
the official closing price, in the afternoon session, as applicable, of one
share of Gap Common Stock as reported by the principal exchange on which Gap
Common Stock is traded on that date as determined by the Calculation Agent. If
the official closing price is not available for any reason, including, without
limitation, the occurrence of a Market Disruption Event, the Market Price for
Gap Common Stock for any date shall be the arithmetic mean, as determined by
the Calculation Agent, of the bid prices for the security obtained from as
many dealers in the security, but not exceeding three, as will make the bid
prices available to the Calculation Agent after 3:00 p.m., local time in the
principal market, on the date.
"NYSE" means the New York Stock Exchange.
"Share Multiplier" means 1 initially.
"Trading Day" means a day on which the NYSE, the AMEX and the Nasdaq
Stock Market are open for trading as determined by the Calculation Agent.
Dilution and Reorganization Adjustments
The Share Multiplier used to calculate the Exchange Ratio on any date of
determination is subject to adjustment by the Calculation Agent as a result of
the dilution and reorganization adjustments described in this section.
Stock splits and reverse splits
1. If Gap Common Stock is subject to a stock split or reverse stock
split, then once such split has become effective, the Share Multiplier will be
adjusted to equal the product of the prior Share Multiplier and the number of
shares which a holder of one share of Gap Common Stock before the effective
date of such stock split or reverse stock split would have owned or been
entitled to receive immediately following the applicable effective date.
Stock dividends
2. If Gap Common Stock is subject to a stock dividend (i.e., issuance of
additional shares of Gap Common Stock) that is given ratably to all holders of
shares of Gap Common Stock, then once such shares are trading ex-dividend, the
Share Multiplier will be adjusted so that the new Share Multiplier shall equal
the prior Share Multiplier plus the product of: (a) the number of shares of
Gap Common Stock issued with respect to one share of Gap Common Stock, and (b)
the prior Share Multiplier.
Extraordinary dividends
1. There will be no adjustments to the Share Multiplier to reflect cash
dividends or distributions paid, if any, with respect to Gap Common Stock
other than distributions described under paragraph 1, clause (e) of the
section entitled "---Reorganization Events" below and Extraordinary Dividends
as described below.
2. An "Extraordinary Dividend" means, with respect to a cash dividend or
other distribution with respect to Gap Common Stock to the extent such
dividend or other distribution exceeds the immediately preceding
non-Extraordinary Dividend for Gap Common Stock by an amount equal to at least
10% of the Market Price of Gap Common Stock on the Trading Day preceding the
ex-dividend date with respect to such Extraordinary Dividend (the "ex-dividend
date"). If an Extraordinary Dividend occurs with respect to Gap Common Stock,
the Share Multiplier will be adjusted on the ex-dividend date with respect to
such Extraordinary Dividend so that the new Share Multiplier will equal the
product of: (a) the then current Share Multiplier multiplied by (b) a
fraction, the numerator of which is the closing price per share of Gap Common
Stock on the Trading Day preceding the ex-dividend date, and the denominator
of which is the amount by which the closing price on the Trading Day preceding
the ex-dividend date exceeds the Extraordinary Dividend Amount.
3. The "Extraordinary Dividend Amount" with respect to an Extraordinary
Dividend for Gap Common Stock will equal: (1) in the case of cash dividends or
other distributions that constitute quarterly dividends, the amount per share
of such Extraordinary Dividend minus the amount per share of the immediately
preceding non-Extraordinary Dividend, or (2) in the case of cash dividends or
other distributions that do not constitute quarterly dividends, the amount per
share of such Extraordinary Dividend.
4. To the extent an Extraordinary Dividend is not paid in cash, the value
of the non-cash component will be determined by the Calculation Agent, whose
determination shall be conclusive. A distribution on Gap Common Stock
described in paragraph 1, clause (e) of the section entitled
"---Reorganization Events" below that also constitutes an Extraordinary
Dividend shall cause an adjustment to the Share Multiplier pursuant only to
paragraph 1, clause (e) under the section entitled "---Reorganization Events".
Issuance of Transferable Rights or Warrants
1. If Gap issues transferable rights or warrants to all holders of Gap
Common Stock to subscribe for or purchase Gap Common Stock, including new or
existing rights to purchase Gap Common Stock pursuant to a shareholder's
rights plan or arrangement, once a triggering event shall have occurred
thereunder, at an exercise price per share less than the closing price of one
share of Gap Common Stock on: (a) the date the exercise price of such rights
or warrants is determined and (b) the expiration date of such rights or
warrants, then, in each case, if the expiration date of such rights or
warrants precedes the Maturity Date, then the Share Multiplier will be
adjusted to equal the product of the prior Share Multiplier and a fraction,
the numerator of which shall be the number of shares of Gap Common Stock
outstanding immediately prior to such issuance plus the number of additional
shares of Gap Common Stock so offered for subscription or purchase pursuant to
such rights or warrants and the denominator of which shall be the number of
shares of Gap Common Stock outstanding immediately prior to such issuance plus
the number of additional shares of Gap Common Stock which the aggregate
offering price of the total number of shares of Gap Common Stock so offered
for subscription or purchase pursuant to such rights or warrants would
purchase at the closing price of one share of Gap Common Stock on the
expiration date of such rights or warrants, which shall be determined by
multiplying such total number of shares offered by the exercise price of such
rights or warrants and dividing the product so obtained by such closing price.
Reorganization Events
1. If before the Maturity Date of the notes, (a) there occurs any
reclassification or change of Gap Common Stock, (b) Gap or any surviving
entity or subsequent surviving entity of Gap (a "Successor Entity"), has been
subject to a merger, combination or consolidation and is not the surviving
entity, (c) any statutory exchange of securities of Gap or any Successor
Entity with another corporation occurs, other than pursuant to clause (b)
above, (d) Gap is liquidated, (e) Gap issues to all of its shareholders equity
securities of an issuer other than Gap, other than in a transaction described
in clauses (b), (c) or (d) above (a "Spin-off Event"), or (f) a tender or
exchange offer is consummated for all the outstanding shares of Gap (any such
event in clauses (a) through (f) a "Reorganization Event"), then the Market
Price shall be equal to the Reorganization Event Value.
2. The "Reorganization Event Value" shall be determined by the
Calculation Agent and shall equal (i) the Transaction Value related to the
relevant Reorganization Event, plus (ii) in the event described in paragraph
3, clause (1) below only, interest on the Transaction Value accruing from the
date of the payment or delivery of the consideration, if any, received in
connection with the Reorganization Event until the Maturity Date at a fixed
interest rate determined on the date of the payment equal to the interest rate
that would be paid on a standard senior non-callable debt security of ML&Co.
with a term equal to the remaining term of the notes.
3. "Transaction Value" means the sum of the following: (1) for any cash
received in a Reorganization Event, an amount equal to the amount of cash
received per share of Gap Common Stock multiplied by the Share Multiplier in
effect on the date all of the holders of shares of Gap Common Stock have
agreed or have become irrevocably obligated to exchange those shares, (2) for
any property other than cash or securities received in a Reorganization Event,
the market value, as determined by the Calculation Agent, of such property
received for each share of Gap Common Stock at the date of the receipt of the
property multiplied by the then current Share Multiplier, (3) for any security
received in a Reorganization Event, an amount equal to (a) the average Market
Price per share of that security for the five scheduled Trading Days ending on
and including the third scheduled Trading Day immediately prior to the
maturity date multiplied by (b) the quantity of that security received for
each share of Gap Common Stock multiplied by the then current Share
Multiplier, and (4) for any security received in the case of a Spin-off Event,
in addition to the shares of Gap Common Stock, an amount equal to (a) the
average Market Price per share of that security for the five scheduled Trading
Days ending on and including the third scheduled Trading Day immediately prior
to the maturity date multiplied by (b) the quantity of that security received
for each share of Gap Common Stock multiplied by the then current Share
Multiplier. The Share Multiplier with respect to these securities shall equal
the product of the Share Multiplier in effect for Gap Common Stock at the time
of the issuance of these securities multiplied by the number of shares of
these securities issued with respect to one share of Gap Common Stock. The
Share Multiplier of any such securities will be subject to the same
adjustments as that of the Share Multiplier of Gap Common Stock.
"Exchange Property" means the securities, cash or any other assets
distributed in any such Reorganization Event, including, in the case of a
Spin-off Event, the share of Gap Common Stock with respect to which the
spun-off security was issued.
For purposes of this section, in the case of a consummated tender or
exchange offer for all Exchange Property of a particular type, Exchange
Property shall be deemed to include the amount of cash or other property paid
by the offeror in the tender or exchange offer for the Exchange Property, in
an amount determined on the basis of the rate of exchange in such tender or
exchange offer. In the event of a tender or exchange offer with respect to
Exchange Property in which an offeree may elect to receive cash or other
property, Exchange Property shall be deemed to include the kind and amount of
cash and other property received by offerees who elect to receive cash.
Adjustments to the Share Multiplier
No adjustments to the Share Multiplier will be required unless such Share
Multiplier adjustment would require a change of at least 0.1% in the Share
Multiplier then in effect. The Share Multiplier resulting from any of the
adjustments specified above will be rounded to the nearest one thousandth with
five ten-thousandths being rounded upward.
No adjustments to the Share Multiplier will be required other than those
specified above. However, ML&Co. may, at its sole discretion, cause the
Calculation Agent to make additional adjustments to the Share Multiplier to
reflect changes occurring in relation to Gap Common Stock or any other
Exchange Property in other circumstances where ML&Co. determines that it is
appropriate to reflect such changes. The required adjustments specified above
do not cover all events that could affect the closing price of Gap Common
Stock, including, without limitation, a partial tender or exchange offer for
Gap Common Stock.
MLPF&S, as Calculation Agent, shall be solely responsible for the
determination and calculation of any adjustments to the Share Multiplier and
of any related determinations and calculations with respect to any
distributions of stock, other securities or other property or assets,
including cash, in connection with any corporate event described above, and
its determinations and calculations with respect thereto shall be conclusive
absent manifest error.
All percentages resulting from any calculation on the Notes will be
rounded to the nearest one hundred-thousandth of a percentage point, with five
one-millionths of a percentage point rounded upwards (e.g., 9.876545% (or
.09876545) would be rounded to 9.87655% (or .0987655)) and all dollar amounts
used in or resulting from such calculation will be rounded to the nearest cent
with one-half cent being rounded upwards.
ML&Co. will, within ten Business Days following the occurrence of an
event that requires an adjustment to the Share Multiplier, or if ML&Co. is not
aware of such occurrence, as soon as practicable after becoming so aware,
provide written notice to the Trustee, which shall provide notice to the
holders of the notes of the occurrence of such event and, if applicable, a
statement in reasonable detail setting forth the adjusted Share Multiplier.
General
Unless the certificate of authentication hereon has been executed by or
on behalf of The Chase Manhattan Bank, the Trustee for this Note under the
Indenture, or its successor thereunder, by the manual signature of one of its
authorized officers, this Note shall not be entitled to any benefit under the
Indenture or be valid or obligatory for any purpose.
This Note is one of a duly authorized issue of Securities (hereinafter
called the "Securities") of the Company designated as its Medium-Term Notes,
Series B (the "Notes"). The Securities are issued and to be issued under an
indenture (the "Indenture") dated as of October 1, 1993, between the Company
and The Chase Manhattan Bank, as trustee (herein called the "Trustee," which
term includes any successor Trustee under the Indenture), to which Indenture
and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights thereunder of the Company, the Trustee and
the Holder of the Notes and the terms upon which the Notes are to be
authenticated and delivered. The terms of individual Notes may vary with
respect to interest rates or interest rate formulas, issue dates, maturity,
redemption, repayment, currency of payment and otherwise as provided in the
Indenture.
The Notes are issuable only in registered form without coupons in
denominations, unless otherwise specified above, of $1,000 and integral
multiples thereof. References to payment "per Note" refer to each $1,000
principal amount of this Note. As provided in the Indenture and subject to
certain limitations therein set forth, the Notes are exchangeable for a like
aggregate principal amount of Notes as requested by the Holder surrendering
the same. If (a) the Depository is at any time unwilling or unable to continue
as depository and a successor depository is not appointed by the Company
within 60 days, (b) the Company executes and delivers to the Trustee a Company
Order to the effect that this Note shall be exchangeable or (c) an Event of
Default has occurred and is continuing with respect to the Notes, this Note
shall be exchangeable for Notes in definitive form of like tenor and of an
equal aggregate principal amount, in authorized denominations. Such definitive
Notes shall be registered in such name or names as the Depository shall
instruct the Trustee. If definitive Notes are so delivered, the Company may
make such changes to the form of this Note as are necessary or appropriate to
allow for the issuance of such definitive Notes.
This Note is not subject to any sinking fund.
If an Event of Default (as defined in the Indenture) with respect to the
Note has occurred and is continuing, the amount payable to a beneficial owner
of a Note upon any acceleration permitted by the Notes will be determined by
the Calculation Agent as if the date of early repayment were the Maturity Date
of the Notes.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of 66-2/3% in aggregate principal amount of the
Securities at the time Outstanding, as defined in the Indenture, of each
series affected thereby. The Indenture also contains provisions permitting the
Holders of specified percentages in aggregate principal amount of the
Securities of each series at the time Outstanding, on behalf of the Holders of
all the Securities of each series, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
the Notes shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of
such consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the interest on, and such amounts as are
payable upon redemption or exchange or at maturity (as described above) with
respect to, this Note and any interest on any overdue amount thereof at the
time, place and rate, and in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations set forth
therein and on the face hereof, the transfer of this Note may be registered on
the Security Register of the Company, upon surrender of this Note for
registration of transfer at the office or agency of the Company in the Borough
of Manhattan, The City of New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company duly
executed by, the Holder hereof or by his or her attorney duly authorized in
writing, and thereupon one or more new Notes of authorized denominations and
for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
No service charge shall be made for any such registration of transfer or
exchange, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Indenture and the Notes shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used in this Note which are defined in the Indenture shall have
the meanings assigned to them in the Indenture.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated: July , 2000
CERTIFICATE OF AUTHENTICATION Xxxxxxx Xxxxx & Co., Inc.
This is one of the Securities of the [Copy of Seal]
series designated therein
referred to in the within-mentioned
Indenture.
The Chase Manhattan Bank, as Trustee By:
Treasurer
By: Attest:
Authorized Officer Secretary
