Convertible financial instruments with contingent payments
First Claim
1. A method performed with respect to a stock company, shares of stock of the company trading at a price, the method further performed with respect to a holder of a financial instrument, the instrument having a market price, the method comprising the steps of:
- issuing the financial instrument indicative of a principal amount at maturity and receiving an issue price therefor;
promising, pursuant to the financial instrument, to repay said principal upon predetermined conditions and according to a predetermined term;
promising, pursuant to the financial instrument, to convert the instrument into a number of shares of stock of the company;
promising, pursuant to the financial instrument, to make a payment to the holder with respect to passage of a time interval in the event the market price of the instrument is in a predetermined relationship to an accreted value thereof, the accreted value defined as the issue price of the instrument plus an economic accrual of a portion of a difference between the issue price and the principal amount at maturity; and
converting the instrument upon request.
20 Assignments
0 Petitions
Accused Products
Abstract
A convertible financial instrument provides incentives to holders to keep the instruments outstanding so that issuers maintain flexibility and control over the maturity date of the instrument and the manner in which it is settled. The instrument may provide issuers with the ability to deduct an amount for tax purposes that approximates the true economic cost of the financial instrument. The instrument may contain a provision calling for contingent payments (which may include, for example, contingent interest, preferred distributions, contingent principal, dividends, and other pay-outs) to the holder in some circumstances, which may be based on formulae calculations. For example, this may occur when the trading value of the convertible instrument exceeds a pre-determined value such as, for example, a certain percentage of the accreted value of the convertible instrument, or, for example, another circumstance that may trigger a contingent payment may be when the price of another financial instrument (e.g., the underlying security, the reference security, etc.) is below, higher than, or equal to a pre-determined value.
90 Citations
95 Claims
-
1. A method performed with respect to a stock company, shares of stock of the company trading at a price, the method further performed with respect to a holder of a financial instrument, the instrument having a market price, the method comprising the steps of:
-
issuing the financial instrument indicative of a principal amount at maturity and receiving an issue price therefor;
promising, pursuant to the financial instrument, to repay said principal upon predetermined conditions and according to a predetermined term;
promising, pursuant to the financial instrument, to convert the instrument into a number of shares of stock of the company;
promising, pursuant to the financial instrument, to make a payment to the holder with respect to passage of a time interval in the event the market price of the instrument is in a predetermined relationship to an accreted value thereof, the accreted value defined as the issue price of the instrument plus an economic accrual of a portion of a difference between the issue price and the principal amount at maturity; and
converting the instrument upon request. - View Dependent Claims (2, 3, 4, 5, 6, 7, 8, 9)
-
-
10. A financial instrument issued by a stock company and held by a holder, shares of stock of the company trading at a price, the instrument having a market price, the instrument comprising:
-
provision obligating the company to repay the principal according to a predetermined term;
a provision making the instrument convertible into a predetermined number of shares of stock of the company at a predetermined conversion price;
a provision obligating the company to make a payment to the holder with respect to passage of a time interval in the event the market price of the instrument is in a predetermined relationship to an accreted value thereof, the accreted value defined as the issue price of the instrument plus an economic accrual of a portion of a difference between the issue price and the principal amount at maturity. - View Dependent Claims (11, 12, 13, 14, 15, 16, 17)
-
-
18. An offering document offering a financial instrument issued by a stock company and held by a holder, shares of stock of the company trading at a price, the instrument having a market price, the instrument comprising:
-
a provision obligating the company to repay the principal according to a predetermined term;
a provision making the instrument convertible into a predetermined number of shares of stock of the company at a predetermined conversion price;
a provision obligating the company to make a payment to the holder with respect to passage of a time interval in the event the market price of the instrument is in a predetermined relationship to an accreted value thereof, the accreted value defined as the issue price of the instrument plus an economic accrual of a portion of a difference between the issue price and the principal amount at maturity. - View Dependent Claims (19, 20, 21, 22, 23, 24, 25)
-
-
26. A method performed with respect to a stock company, shares of stock of the company trading at a price, the method further performed with respect to a holder of a financial instrument, the instrument having a market price, the method comprising the steps of:
-
issuing the financial instrument indicative of a principal amount at maturity and receiving an issue price therefor;
promising, pursuant to the financial instrument, to repay said principal upon predetermined conditions and according to a predetermined term;
promising, pursuant to the financial instrument, to convert the instrument into a number of shares of stock of the company;
promising, pursuant to the financial instrument, to make a payment to the holder with respect to a contingency, the contingency a function of the market price of the instrument;
converting the instrument upon request; and
taking a tax deduction based upon a yield at which the issuer would issue a fixed-rate, nonconvertible debt instrument comparable to the financial instrument. - View Dependent Claims (27, 28, 29, 30, 31, 32, 33, 34)
-
-
35. An offering document offering a financial instrument comprising issued by a stock company and held by a holder, shares of stock of the company trading at a price, the instrument having a market price, the instrument comprising:
-
a provision obligating the company to repay the principal according to a predetermined term;
a provision making the instrument convertible into a predetermined number of shares of stock of the company at a predetermined conversion price;
a provision obligating the company to make a payment to the holder upon a contingency;
the offering document further comprising an indication that the issuer will report income to the holder based upon a yield at which the issuer would issue a fixed-rate, nonconvertible debt instrument comparable to the financial instrument. - View Dependent Claims (36, 37, 38, 39, 40, 41, 42, 43)
-
-
44. A method performed with respect to a stock company, shares of stock of the company trading at a price, the method further performed with respect to a holder of a financial instrument, the instrument having a market price, the method comprising the steps of:
-
issuing the financial instrument indicative of a principal amount at maturity and receiving an issue price therefor;
promising, pursuant to the financial instrument, to repay said principal upon predetermined conditions and according to a predetermined term;
promising, pursuant to the financial instrument, to convert the instrument into a number of shares of stock of the company;
promising, pursuant to the financial instrument, to make a payment to the holder with respect to a contingency, the contingency a function of the market price of the instrument or the market price of the stock, wherein the payment is made with respect to passage of a time interval in the event the market price of the instrument or the market price of the stock is in a predetermined relationship to a principal amount;
converting the instrument upon request; and
taking a tax deduction based upon a yield at which the issuer would issue a fixed-rate, nonconvertible debt instrument comparable to the financial instrument. - View Dependent Claims (45, 46, 47, 48, 49, 50, 51)
-
-
52. An offering document offering a financial instrument comprising issued by a stock company and held by a holder, shares of stock of the company trading at a price, the instrument having a market price, the instrument comprising:
-
a provision obligating the company to repay the principal according to a predetermined term;
a provision making the instrument convertible into a predetermined number of shares of stock of the company at a predetermined conversion price;
a provision obligating the company to make a payment to the holder with respect to passage of a time interval in the event the market price of the instrument is in a predetermined relationship to an accreted value thereof, the accreted value defined as the issue price of the instrument plus an economic accrual of a portion of a difference between the issue price and the principal amount at maturity;
the offering document further comprising an indication that the issuer will report income to the holder based upon a yield at which the issuer would issue a fixed-rate, nonconvertible debt instrument comparable to the financial instrument. - View Dependent Claims (53, 54, 55, 56, 57, 58, 59)
-
-
60. A method performed with respect to a financial instrument defined with respect to an underlying security, the underlying security trading at a price, the method further performed with respect to a holder of the financial instrument, the instrument having a market price, the method comprising the steps of:
-
issuing the financial instrument and receiving an issue price therefor;
promising, pursuant to the financial instrument, to convert the instrument into a number of the underlying securities, or to exchange the instrument for a number of the underlying securities;
promising, pursuant to the financial instrument, to make a payment to the holder with respect to passage of a time interval in the event the market price of the instrument is in a predetermined relationship to an issue price, a principal amount or a liquidation preference; and
converting or exchanging the instrument upon request. - View Dependent Claims (61)
-
-
62. A financial instrument held by a holder, the instrument having a market price, the instrument comprising:
-
a provision making the instrument convertible or exchangeable into a predetermined number of an underlying security at a predetermined conversion or exchange price;
a provision obligating the company to make a payment to the holder with respect to passage of a time interval in the event the market price of the instrument is in a predetermined relationship to an accreted value thereof, the accreted value defined as the issue price of the instrument plus an economic accrual of a portion of a difference between the issue price and the principal amount at maturity. - View Dependent Claims (63, 64, 65, 66, 67, 68)
-
-
69. An offering document offering a financial instrument held by a holder, the instrument having a market price, the instrument comprising:
-
provision making the instrument convertible or exchangeable into a predetermined number of an underlying security at a predetermined conversion or exchange price;
a provision obligating the company to make a payment to the holder with respect to passage of a time interval in the event the market price of the instrument is in a predetermined relationship to an accreted value thereof, the accreted value defined as the issue price of the instrument plus an economic accrual of a portion of a difference between the issue price and the principal amount at maturity. - View Dependent Claims (70, 71, 72, 73, 74, 75)
-
-
76. A method performed with respect to a financial instrument defined with respect to an underlying security, the underlying security trading at a price, the method further performed with respect to a holder of the financial instrument, the instrument having a market price, the method comprising the steps of:
-
issuing the financial instrument and receiving an issue price therefor;
promising, pursuant to the financial instrument, to convert the instrument into a number of the underlying securities, or to exchange the instrument for a number of the underlying securities;
promising, pursuant to the financial instrument, to make a payment to the holder upon the occurrence of a contingency of economic significance that is not remote or incidental; and
converting or exchanging the instrument upon request.
-
-
77. A financial instrument relating to an underlying security, the underlying security trading at a price, the instrument having a market price, the instrument comprising:
-
a provision making the instrument convertible or exchangeable into a predetermined number of the underlying security at a predetermined conversion or exchange price;
a provision obligating the company to make a payment to the holder with respect to passage of a time interval in the event the market price of the instrument is in a predetermined relationship to an accreted value thereof, the accreted value defined as the issue price of the instrument plus an economic accrual of a portion of a difference between the issue price and the principal amount at maturity. - View Dependent Claims (78, 79, 80, 81, 82, 83)
-
-
84. An offering document offering a financial instrument relating to an underlying security, the underlying security trading at a price, the instrument having a market price, the instrument comprising:
-
a provision making the instrument convertible or exchangeable into a predetermined number of the underlying security at a predetermined conversion or exchange price;
a provision obligating the company to make a payment to the holder with respect to passage of a time interval in the event the market price of the instrument is in a predetermined relationship to an accreted value thereof, the accreted value defined as the issue price of the instrument plus an economic accrual of a portion of a difference between the issue price and the principal amount at maturity. - View Dependent Claims (85, 86, 87, 88, 89, 90)
-
-
91. A method performed with respect to a stock company, shares of stock of the company trading at a price, the method further performed with respect to a holder of a financial instrument, the instrument having a market price, the method comprising the steps of:
-
issuing the financial instrument indicative of a principal amount at maturity and receiving an issue price therefor;
promising, pursuant to the financial instrument, to repay said principal upon predetermined conditions and according to a predetermined term;
promising, pursuant to the financial instrument, to convert the instrument into a number of shares of stock of the company;
promising, pursuant to the financial instrument, to make a payment to the holder with respect to a contingency;
converting the instrument upon request; and
taking a tax deduction based upon a yield at which the issuer would issue a fixed-rate, nonconvertible debt instrument comparable to the financial instrument.
-
-
92. An offering document offering a financial instrument relating a stock company, shares of stock of the company trading at a price, the instrument having a market price, the instrument comprising:
-
a provision obligating the company to repay the principal according to a predetermined term;
a provision making the instrument convertible into a predetermined number of shares of stock of the company at a predetermined conversion price;
a provision obligating the company to make a payment to the holder with respect to a contingency;
the offering document further comprising an indication that the issuer will report income to the holder based upon a yield at which the issuer would issue a fixed-rate, nonconvertible debt instrument comparable to the financial instrument.
-
-
93. A method performed with respect to an entity, the method further performed with respect to a holder of a financial instrument, the instrument having a market price, the method comprising the steps of:
-
issuing the financial instrument indicative of a principal amount at maturity and receiving an issue price therefor;
promising, pursuant to the financial instrument, to repay said principal upon predetermined conditions and according to a predetermined term;
promising, pursuant to the financial instrument, to exchange the instrument for a number of shares of stock of a company;
promising, pursuant to the financial instrument, to make a payment to the holder with respect to a contingency;
exchanging the instrument upon request; and
taking a tax deduction based upon a yield at which the issuer would issue a fixed-rate, nonconvertible debt instrument comparable to the financial instrument. - View Dependent Claims (94)
-
-
95. An offering document offering a financial instrument, the instrument having a market price, the instrument comprising:
-
a provision making the instrument exchangeable into a predetermined number of shares of stock of a company;
a provision obligating the company to make a payment to the holder with respect to a contingency;
the offering document further comprising an indication that the issuer will report income to the holder based upon a yield at which the issuer would issue a fixed-rate, nonconvertible debt instrument comparable to the financial instrument.
-
Specification