Convertible financial instruments with contingent payments
First Claim
1. A financial instrument system comprising:
- a memory storing financial instrument data associated with 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; and
a processor in communication with the memory and operable to;
calculate a repayment obligation according to a provision of the instrument obligating the company to repay the principal according to a predetermined term;
calculate a stock conversion according to a provision of the instrument making the instrument convertible into a predetermined number of shares of stock of the company at a predetermined conversion price;
calculate a payment obligation according to a provision of the instrument 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 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.
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.
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Citations
63 Claims
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1. A financial instrument system comprising:
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a memory storing financial instrument data associated with 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; and a processor in communication with the memory and operable to; calculate a repayment obligation according to a provision of the instrument obligating the company to repay the principal according to a predetermined term; calculate a stock conversion according to a provision of the instrument making the instrument convertible into a predetermined number of shares of stock of the company at a predetermined conversion price; calculate a payment obligation according to a provision of the instrument 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 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 (2, 3, 4, 5, 6, 7, 8)
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9. An offering document system comprising:
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a memory storing financial instrument data associated with 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; and a processor in communication with the memory and operable to; calculate a repayment obligation according to a provision of the instrument obligating the company to repay the principal according to a predetermined term; calculate a stock conversion according to a provision of the instrument making the instrument convertible into a predetermined number of shares of stock of the company at a predetermined conversion price; calculate a payment obligation according to a provision of the instrument 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 (10, 11, 12, 13, 14, 15, 16)
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17. An offering document system comprising:
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a memory storing offering document data associated with 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; and a processor in communication with the memory and operable to; calculate a repayment obligation according to a provision of the instrument obligating the company to repay the principal according to a predetermined term; calculate a stock conversion according to a provision of the instrument making the instrument convertible into a predetermined number of shares of stock of the company at a predetermined conversion price; calculate a payment obligation according to a provision of the instrument 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 (18, 19, 20, 21, 22, 23, 24, 25)
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26. An offering document system comprising:
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a memory storing financial instrument data associated with 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; and a processor in communication with the memory and operable to; calculate a repayment obligation according to a provision of the instrument obligating the company to repay the principal according to a predetermined term; calculate a stock conversion according to a provision of the instrument making the instrument convertible into a predetermined number of shares of stock of the company at a predetermined conversion price; calculate a payment obligation according, to a provision of the instrument 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 (27, 28, 29, 30, 31, 32, 33)
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34. A financial instrument system comprising:
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a memory storing financial instrument data associated with a financial instrument held by a holder, the instrument having a market price; and a processor in communication with the memory and operable to; calculate a security conversion or exchange according to a provision of the instrument making the instrument convertible or exchangeable into a predetermined number of an underlying security at a predetermined conversion or exchange price; calculate a payment obligation according to a provision of the instrument 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 (35, 36, 37, 38, 39, 40)
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41. An offering document system comprising:
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a memory storing financial instrument data associated with an offering document offering a financial instrument held by a holder, the instrument having a market price; and a processor in communication with the memory and operable to; calculate a security conversion or exchange according to a provision of the instrument making the instrument convertible or exchangeable into a predetermined number of an underlying security at a predetermined conversion or exchange price; calculate a payment obligation according to a provision of the instrument 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 (42, 43, 44, 45, 46, 47)
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48. A financial instrument system comprising:
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a memory storing financial instrument data associated with a financial instrument relating to an underlying security, the underlying security trading at a price, the instrument having a market price; and a processor in communication with the memory and operable to; calculate a security conversion or exchange according to a provision of the instrument making the instrument convertible or exchangeable into a predetermined number of the underlying security at a predetermined conversion or exchange price; calculate a payment obligation according to a provision of the instrument 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 (49, 50, 51, 52, 53, 54)
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55. An offering document system comprising:
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a memory storing financial instrument data associated with 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; and a processor in communication with the memory and operable to; calculate a security conversion or exchange according to a provision of the instrument making the instrument convertible or exchangeable into a predetermined number of the underlying security at a predetermined conversion or exchange price; calculate a payment obligation according to a provision of the instrument 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 (56, 57, 58, 59, 60, 61)
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62. An offering document system comprising:
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a memory storing financial instrument data associated with 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; and a processor in communication with the memory and operable to; calculate a repayment obligation according to a provision of the instrument obligating the company to repay the principal according to a predetermined term; calculate a stock conversion according to a provision of the instrument making the instrument convertible into a predetermined number of shares of stock of the company at a predetermined conversion price; calculate a payment obligation according to a provision of the instrument 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.
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63. An offering document system comprising:
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a memory storing financial instrument data associated with an offering document offering a financial instrument, the instrument having a market price; and a processor in communication with the memory and operable to; calculate a stock exchange according to a provision of the instrument making the instrument exchangeable into a predetermined number of shares of stock of a company; calculate a payment obligation according to a provision of the instrument 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.
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Specification