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Top-off and make-whole provisions will taint the equity classification of the instrument and are particularly difficult to detect. You should carefully evaluate any provision that results in a payment based upon trading prices of the entity’s stock or a stock index. These payments are often determine several months after settlement and the language may not be included in the freestanding instrument itself, but in a Securities Purchase Agreement or some other agreement with the counterparty issued before, concurrently with, or subsequent to the instrument being evaluated.

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