Appendix: Google Market Prospectuses
IEM PROSPECTUS: GOOGLE_LIN GOOGLE IPO MARKET CAPITALIZATION LINEAR MARKET
On Tuesday, June 29, 2004, at 1:00pm CDT, the Iowa Electronic Market (IEM) will open trading in a market based on the market capitalization value (closing price multiplied by the number of Class A and Class B shares outstanding) of Google Inc.’s stock at the end of the first day of trading on the stock exchange named in Google’s S-1 filing.
Two contracts with linear payoff rules will trade in this market. The liquidation value of the first (up) contract will increase from $0.00 to $1.00 as Google’s market capitalization increases from $0 billion to $100 billion. The second (down) contract will have a liquidation value that decreases from $1.00 to $0.00 as Google’s market capitalization increases from $0 billion to $100 billion.
This document describes that market and should be viewed as a supplement to the Trader's Manual. Except as specified in this prospectus, trading rules for this market are the same as those specified in the Trader's Manual for the Iowa Electronic Market.
The contracts traded in this market have the payoff structure shown in column 2 of the following table:
Code Contract Description
Contract Description = $0 if the IPO does not take place by March 31, 2005; = (Market Cap bil.)/100 billion if $0 bil. < Market Cap <= $100 bil; = $1 if Market Cap > $100 bil. = $1 if the IPO does not take place by March 31, 2005; = ($100 bil.-Market Cap)/100 billion if $0 bil. < Market Cap <= $100 bil; = $0 if Market Cap > $100 bil.
DETERMINATION OF LIQUIDATION VALUES
This is a linear market. Each security will have a liquidation value based on the exact market capitalization achieved on the first trading day on the market named in Google Inc.’s S-1 filing to the SEC. For example, if there are (hypothetically) 100 million shares of Class “A” and Class “B” stock and the closing price on the first trading day is $210.00, then market capitalization is $210 x 100 million = $21.0 billion. Each share of IPO_UP will pay $0.210 (=(21)/100 ) and each share of IPO_DN will pay $0.790 (=(100-21)/100).
The print edition of the Wall Street Journal will be the official source for the closing price of Google stock and the final, completed S-1 filing (that is, the last filing – including any re-filings — prior to the IPO) with the SEC will be the source for the outstanding number of shares
The judgment of the IEM Directors will be final in resolving questions of interpretation and typographical or clerical errors.