<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 6, 1996
SECURITIES ACT FILE NO. 333-325
INVESTMENT COMPANY ACT FILE NO. 811-7499
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
FORM N-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. 3 /X/
POST-EFFECTIVE AMENDMENT NO. / /
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /X/
AMENDMENT NO. 3 /X/
--------------
DOLE FOOD AUTOMATIC
COMMON EXCHANGE SECURITY TRUST
(Exact Name of Registrant as Specified in its Charter)
C/O GOLDMAN, SACHS & CO.
85 BROAD STREET
NEW YORK, NEW YORK 10004
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (212) 902-1000
KENNETH L. JOSSELYN
85 BROAD STREET
NEW YORK, NEW YORK 10004
(Name and Address of Agent for Service)
COPIES TO:
Robert E. Buckholz, Jr., Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
--------------
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If any securities being registered on this form will be offered on a delayed
or continuous basis in reliance on Rule 415 under the Securities Act of 1933,
other than securities offered in connection with a dividend reinvestment plan,
check the following box. / /
/ / This form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act and the Securities Act
registration statement number of the earlier effective registration statement
for the same offering is 33- .
--------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
DOLE FOOD AUTOMATIC COMMON EXCHANGE SECURITY TRUST
CROSS-REFERENCE SHEET
(PURSUANT TO RULE 404(C) UNDER THE SECURITIES ACT OF 1933)
PART A & B OF PROSPECTUS*
<TABLE>
<CAPTION>
ITEM NUMBER CAPTION LOCATION IN PROSPECTUS
- ------------- --------------------------------------------------- ---------------------------------------------------
<C> <S> <C>
1. Outside Front Cover................................ Front Cover Page
2. Inside Front and Outside Back Cover Page........... Front Cover Page; Inside Front Cover Page; Outside
Back Cover Page
3. Fee Table and Synopsis............................. Prospectus Summary; Fee Table
4. Financial Highlights............................... Not Applicable
5. Plan of Distribution............................... Front Cover Page; Prospectus Summary; Underwriting
6. Selling Shareholders............................... Not Applicable
7. Use of Proceeds.................................... Use of Proceeds; Investment Objective and Policies
8. General Description of the Registrant.............. Front Cover Page; Prospectus Summary; The Trust;
Investment Objective and Policies; Risk Factors
9. Management......................................... Management and Administration of the Trust
10. Capital Stock, Long-Term Debt and Other
Securities........................................ Investment Objective and Policies; Description of
the Securities; Certain Federal Income Tax
Considerations
11. Defaults and Arrears on Senior Securities.......... Not Applicable
12. Legal Proceedings.................................. Not Applicable
13. Table of Contents of the Statement of Additional
Information....................................... Not Applicable
14. Cover Page......................................... Not Applicable
15. Table of Contents.................................. Not Applicable
16. General Information and History.................... The Trust
17. Investment Objective and Policies.................. Investment Objective and Policies
18. Management......................................... Management and Administration of the Trust
19. Control Persons and Principal Holders of
Securities........................................ Management and Administration of the Trust
20. Investment Advisory and Other Services............. Management and Administration of the Trust
21. Brokerage Allocation and Other Practices........... Investment Objective and Policies
22. Tax Status......................................... Certain Federal Income Tax Considerations
23. Financial Statements............................... Statement of Assets and Liabilities
</TABLE>
- ------------------------
* Pursuant to the General Instructions to Form N-2, all information required
to be set forth in Part B: Statement of Additional Information has been
included in Part A: The Prospectus. Information required to be included in
Part C is set forth under the appropriate item so numbered in Part C of this
Registration Statement.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAW OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 6, 1996
2,500,000 SHARES
DOLE FOOD AUTOMATIC
COMMON EXCHANGE SECURITY TRUST
$ . AUTOMATIC COMMON EXCHANGE SECURITIES
(SUBJECT TO EXCHANGE INTO SHARES OF COMMON STOCK OF DOLE FOOD COMPANY, INC.)
--------------
Each of the $ . Automatic Common Exchange Securities (the "Securities") of
Dole Food Automatic Common Exchange Security Trust (the "Trust") represents the
right to receive an annual distribution of $ . , and will be exchanged for
between 0. shares and 1 share of common stock, no par value (the "Common
Stock"), of Dole Food Company , Inc. (the "Company") on August 15, 1999 (the
"Exchange Date"). The annual distribution of $ . per Security is payable
quarterly on each February 15, May 15, August 15 and November 15, commencing
November 15, 1996. The Securities are not subject to redemption.
The Trust is a newly organized, finite-term Trust established to purchase
and hold a portfolio of stripped U.S. Treasury securities maturing on a
quarterly basis through the Exchange Date, and a forward purchase contract (the
"Contract") with an existing shareholder (the "Seller") of the Company relating
to the Common Stock. The Trust's investment objective is to provide each holder
of Securities with a quarterly distribution of $ . per Security and, on the
Exchange Date, a number of shares of Common Stock per Security equal to the
Exchange Rate. The Exchange Rate is equal to (i) if the Current Market Price is
less than $ . (the "Appreciation Threshold Price") but equal to or greater
than $ . (the "Initial Price"), a number (or fractional number) of shares of
Common Stock per Security having a value (determined at the Current Market
Price) equal to the Initial Price, (ii) if the Current Market Price is equal to
or greater than the Appreciation Threshold Price, 0. shares of Common Stock per
Security and (iii) if the Current Market Price is less than the Initial Price, 1
share of Common Stock per Security, subject in each case to adjustment in
certain events. Holders otherwise entitled to receive fractional shares in
respect of their aggregate holdings of Securities will receive cash in lieu
thereof. The "Initial Price" is $ . per share of Common Stock. The "Current
Market Price" means the average Closing Price per share of Common Stock for the
20 Trading Days immediately prior to, but not including, the Exchange Date. In
lieu of delivery of the Common Stock, the Seller may elect under the Contract to
pay cash on the Exchange Date in an amount equal to the then current market
value of the number of shares of the Common Stock determined under the above
formula (the "Cash Settlement Alternative"). To the extent the Seller elects the
Cash Settlement Alternative, holders of Securities will receive cash instead of
Common Stock on the Exchange Date. Holders otherwise entitled to receive
fractional shares in respect of their aggregate holdings of Securities will
receive cash in lieu thereof.
Holders of Securities will receive distributions at a higher annual rate
than the current annual dividends paid on the Common Stock. There is no
assurance, however, that the yield on the Securities will be higher than the
dividend yield on the Common Stock over the term of the Trust. In addition, the
opportunity for equity appreciation afforded by an investment in the Securities
is less than that afforded by an investment in the Common Stock because holders
of Securities will realize no equity appreciation if, on the Exchange Date, the
Current Market Price of the Common Stock is below the Appreciation Threshold
Price, and less than all of the appreciation if at that time the Current Market
Price is above the Appreciation Threshold Price. Holders of Securities will
realize the entire decline in equity value if the Current Market Price is less
than the price to public per Security shown below.
The Company is not affiliated with the Trust.
Application will be made to list the Securities on the New York Stock
Exchange under the symbol DLA. Prior to this offering there has been no public
market for the Securities. The last reported sale price of the Common Stock on
the New York Stock Exchange on August 2, 1996, was $40.00 per share.
(CONTINUED ON NEXT PAGE)
SEE "RISK FACTORS" ON PAGE 16 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN
FACTORS RELEVANT TO AN INVESTMENT IN THE SECURITIES.
-------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO PUBLIC SALES LOAD(1) PROCEEDS TO THE TRUST(2)
--------------- -------------- ------------------------
<S> <C> <C> <C>
Per Security....................................................... $ $ (4) $
Total(3)........................................................... $ $ (4) $
</TABLE>
- --------------------------
(1) The Company and the Seller have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933.
See "Underwriting".
(2) Expenses of the offering, which are payable by Goldman, Sachs & Co. and the
Seller, are estimated to be $219,000.
(3) The Trust has granted to the Underwriters an option for 30 days to purchase
up to an additional 375,000 Securities at the price to the public per
Security, solely to cover over-allotments. If the option is exercised in
full, the total Price to Public, Sales Load and Proceeds to the Trust will
be $ , $ , $ , respectively. See
"Underwriting".
(4) In light of the fact that the proceeds of the sale of the Securities will be
used in part by the Trust to purchase the Contract from the Seller, the
Underwriting Agreement provides that the Seller will pay to the Underwriters
as compensation ("Underwriters' Compensation") $ . per Security. See
"Underwriting".
----------------
The Securities are offered severally by the Underwriters, as specified
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that certificates for the
Securities will be ready for delivery through the Facilities of the Depository
Trust Company, on or about August , 1996.
GOLDMAN, SACHS & CO.
---------
The date of this Prospectus is August , 1996.
<PAGE>
The Trust has adopted a policy that the Contract may not be disposed of
during the term of the Trust. The Trust will continue to hold the Contract
despite any significant decline in the market price of the Common Stock or
adverse changes in the financial condition of the Company.
This Prospectus sets forth concisely information about the Trust that a
prospective investor ought to know before investing. Potential investors are
advised to read this Prospectus and to retain it for future reference.
The Securities may be a suitable investment for those investors who are able
to understand the unique nature of the Trust and the economic characteristics of
the Contract and the U.S. Treasury securities held by the Trust.
The Trust will be a grantor trust for federal income tax purposes and each
holder of Securities will be treated as the owner of its pro rata portions of
the stripped U.S. Treasury securities and the Contract. For a discussion of the
principal United States federal income tax consequences of ownership of
Securities, see "Certain Federal Income Tax Considerations".
THE TRUST IS A NEWLY ORGANIZED CLOSED-END INVESTMENT COMPANY WITH NO
PREVIOUS HISTORY OF PUBLIC TRADING. TYPICAL CLOSED-END FUND SHARES FREQUENTLY
TRADE AT A PREMIUM TO OR DISCOUNT FROM NET ASSET VALUE. THIS CHARACTERISTIC OF
INVESTMENTS IN A CLOSED-END INVESTMENT COMPANY IS A RISK SEPARATE AND DISTINCT
FROM THE RISK THAT THE TRUST'S NET ASSET VALUE WILL DECREASE. THE TRUST CANNOT
PREDICT WHETHER ITS SHARES WILL TRADE AT, BELOW OR ABOVE NET ASSET VALUE. THE
RISK OF PURCHASING INVESTMENTS IN A CLOSED-END COMPANY THAT MIGHT TRADE AT A
DISCOUNT MAY BE GREATER FOR INVESTORS WHO WISH TO SELL THEIR INVESTMENTS SOON
AFTER COMPLETION OF AN INITIAL PUBLIC OFFERING.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES OR
THE COMMON STOCK AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, THE
PACIFIC STOCK EXCHANGE OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
2
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY OF THE PROVISIONS RELATING TO THE SECURITIES DOES NOT PURPORT
TO BE COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY THE DETAILED INFORMATION
APPEARING ELSEWHERE IN THIS PROSPECTUS. CERTAIN TERMS USED IN THIS SUMMARY ARE
DEFINED ELSEWHERE IN THIS PROSPECTUS.
THE TRUST
GENERAL. The Trust is a newly organized, finite-term trust. The Trust will
be registered as a non-diversified closed-end management investment company
under the Investment Company Act of 1940 (the "Investment Company Act"). Under
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
applicable to grantor trusts, the Trustees will not have the power to vary the
investments held by the Trust.
INVESTMENT OBJECTIVE AND POLICIES. The Trust will purchase and hold a
portfolio of stripped U.S. Treasury securities maturing on a quarterly basis
through the Exchange Date and the Contract with the Seller obligating the
Seller, on the Exchange Date, to deliver to the Trust a number of shares of
Common Stock equal to the product of the Exchange Rate times the initial number
of shares subject to the Contract (or the Current Market Price thereof). It is
the Trust's investment objective to provide the holders of Securities
("Holders") with a quarterly distribution of $. per Security (which amount
equals the pro rata portion of the fixed quarterly cash distributions from the
proceeds of the maturing U.S. Treasury securities) and, on the Exchange Date, a
number of shares of Common Stock per Security equal to the Exchange Rate or, if
the Seller elects the Cash Settlement Alternative, an amount in cash equal to
the Current Market Price thereof. The Exchange Rate is equal to (i) if the
Current Market Price is less than the Appreciation Threshold Price but equal to
or greater than the Initial Price, a number (or fractional number) of shares of
Common Stock per Security having a value (determined at the Current Market
Price) equal to the Initial Price, (ii) if the Current Market Price is equal to
or greater than the Appreciation Threshold Price, 0. shares of Common Stock per
Security and (iii) if the Current Market Price is less than the Initial Price, 1
share of Common Stock per Security, subject in each case to adjustment in
certain events. This provides the Trust with the potential for a portion of any
capital appreciation above the Appreciation Threshold Price on the Common Stock,
but no protection from depreciation of the Common Stock. Holders otherwise
entitled to receive fractional shares in respect of their aggregate holdings of
Securities will receive cash in lieu thereof. See "Investment Objective and
Policies -- Trust Termination".
The purchase price under the Contract is equal to $ per share of
Common Stock initially subject thereto and $ (2,500,000 shares of
Common Stock) in the aggregate and is payable to the Seller by the Trust at the
closing of the offering of the Securities. The obligations of the Seller under
the Contract will be secured by a pledge of the Common Stock or, at the election
of the Seller, by substitute collateral consisting of short-term, direct
obligations of the U.S. Government. See "Investment Objective and Policies --
The Contract -- Collateral Arrangements; Acceleration".
THE OFFERING
The Trust is offering 2,500,000 Securities to the public at a purchase price
of $ per Security (which is equal to the last reported sale price of
the Common Stock on the date of the Offering) through Goldman, Sachs & Co.
("Goldman Sachs" or the "Underwriters"). In addition, the Underwriters have been
granted options to purchase up to 375,000 additional Securities solely for the
purpose of covering over-allotments. See "Underwriting".
THE SECURITIES
GENERAL. The Securities are designed to provide investors with a higher
distribution per Security than the dividend currently paid per share on the
Common Stock. The annual distribution on the Securities is $ per share.
Based on the current annual dividend rate of $.40 per share of Common Stock, the
annual per share distribution per Security is $ greater than the
current annual per share dividend rate on the Common Stock. Future declarations
of dividends on the Common Stock by the Company and the amount of such dividends
are discretionary with its Board of Directors
3
<PAGE>
and subject to legal and other factors. Such further declarations will
necessarily depend on the Company's future earnings, financial condition,
capital requirements and other factors. Quarterly distributions on the
Securities will consist solely of the cash received from the U.S. Treasury
securities. The Trust will not be entitled to any dividends that may be declared
on the Common Stock.
Holders will receive distributions at a higher annual rate than the current
annual dividends paid on the Common Stock. There is no assurance, however, that
the yield on the Securities will be higher than the dividend yield on the Common
Stock over the term of the Trust. In addition, the opportunity for equity
appreciation afforded by an investment in the Securities is less than that
afforded by an investment in the Common Stock because Holders will realize no
equity appreciation if, on the Exchange Date, the Current Market Price of the
Common Stock is below the Appreciation Threshold Price (which represents an
appreciation of % of the Initial Price). Moreover, because a Holder will
only receive 0. shares of Common Stock per Security (or the current Market Price
thereof) if the Current Market Price exceeds the Appreciation Threshold Price,
Holders will only be entitled to receive upon exchange % of any appreciation
of the value of the Common Stock in excess of the Appreciation Threshold Price.
Holders of Securities will realize the entire decline in equity value if the
Current Market Price is less than the price to public per Security shown on the
cover page hereof.
DISTRIBUTIONS. Holders are entitled to receive distributions at the rate
per Security of $ per annum or $ per quarter, payable
quarterly on each , , and or, if any such date is not a
business day, on the next succeeding business day, to Holders of record as of
each , , and , respectively. The first
distribution will be payable on , 1996 to Holders of record as of
, 1996. See "Investment Objective and Policies -- General".
MANDATORY EXCHANGE. On the Exchange Date, each outstanding Security will be
exchanged automatically for between 0. shares and 1 share of Common Stock,
subject to adjustment in the event of certain dividends or distributions,
subdivisions, splits, combinations, issuances of certain rights or warrants or
distributions of certain assets with respect to the Common Stock. In lieu of
delivery of the Common Stock, the Seller may elect under the Contract to pay
cash on the Exchange Date in an amount equal to the then Current Market Price of
such number of shares of the Common Stock (the "Cash Settlement Alternative").
If the Seller elects the Cash Settlement Alternative, Holders will receive cash
instead of Common Stock on the Exchange Date. In addition, in the event of a
merger of the Company into another entity, or the liquidation of the Company, or
in certain related events, Holders would receive consideration in the form of
cash or Marketable Securities (as defined below under the caption "Investment
Objective and Policies -- The Contract -- Dilution Adjustments") rather than
shares of Common Stock. Further, the occurrence of certain defaults by the
Seller under the Contract or the collateral arrangements would cause the
acceleration of the Contract and the exchange of each Security for an amount of
shares of Common Stock (or Marketable Securities), cash, or a combination
thereof, in respect of the shares of Common Stock and the U.S. Treasury
Securities. See "Investment Objective and Policies -- The Contract -- Collateral
Arrangements; Acceleration"; "-- The U.S. Treasury Securities" and "-- Trust
Termination".
VOTING RIGHTS. Holders will have the right to vote on matters affecting the
Trust, as described below under the caption "Description of the Securities", but
will have no voting rights with respect to the Common Stock prior to receipt of
shares of Common Stock by the Holders as a result of the exchange of the
Securities for the Common Stock on the Exchange Date. See "Investment Objective
and Policies -- The Company" and "Description of the Securities".
THE COMPANY
The Company is engaged in the business of food production and distribution.
The Company is one of the largest companies engaged in the worldwide sourcing,
growing, processing, distributing and marketing of high quality, branded fresh
produce. The Company sources, grows, processes or markets fruits, vegetables,
nuts and beverages in the following locations: North America, Latin America,
Asia and Europe.
4
<PAGE>
Reference is made to the accompanying prospectus of the Company (pages A-1
through A-6 hereto) which describes the Company and the shares of Common Stock
of the Company deliverable to the Holders upon mandatory exchange of the
Securities on the Exchange Date. The Company is not affiliated with the Trust
and will not receive any of the proceeds from the sale of the Securities. The
Company prospectus relates to an aggregate of 2,500,000 shares of Common Stock
(plus an additional 375,000 shares that may be delivered upon exercise of the
Underwriters' over-allotment option).
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The Trust will be treated as a grantor trust for federal income tax
purposes. Accordingly, each Holder will be treated for federal income tax
purposes as the owner of its pro rata portion of the U.S. Treasury securities
and the Contract, and income received (including original issue discount treated
as received) by the Trust will generally be treated as income of the Holders.
The U.S. Treasury securities held by the Trust will be treated for federal
income tax purposes as having "original issue discount" that will accrue over
the term of the U.S. Treasury securities. It is currently anticipated that a
substantial portion of each quarterly cash distribution to the Holders will be
treated as a tax-free return of the Holders' investment in the U.S. Treasury
securities and therefore will not be considered current income for federal
income tax purposes. However, a Holder (whether on the cash or accrual method of
tax accounting) must recognize currently as income original issue discount on
the U.S. Treasury securities as it accrues. A Holder will have taxable gain or
loss upon receipt of cash in lieu of Common Stock distributed upon termination
of the Trust. Each Holder's basis in its Common Stock will be equal to its basis
in its pro rata portion of the Contract less the portion of such basis allocable
to any shares of Common Stock for which cash is received. See "Certain Federal
Income Tax Considerations".
ALTERNATIVE FEDERAL INCOME TAX CHARACTERIZATIONS
Holders should also be aware that there are alternative characterizations of
the assets of the Trust which could require Holders to include more interest in
income than they would include in income under the analysis set out above. See
"Certain Federal Income Tax Considerations".
MANAGEMENT AND ADMINISTRATION OF THE TRUST
The Trust will be internally managed and will not have an investment
adviser. The administration of the Trust will be overseen by three Trustees. The
day-to-day administration of the Trust will be carried out by The Bank of New
York (or its successor) as trust administrator (the "Administrator"). The Bank
of New York (or its successor) will also act as custodian (the "Custodian") for
the Trust's assets and as paying agent (the "Paying Agent"), registrar and
transfer agent with respect to the Securities. Except as aforesaid, The Bank of
New York has no other affiliation with, and is not engaged in any other
transaction with, the Trust. See "Management and Administration of the Trust".
LIFE OF THE TRUST
The Trust will terminate automatically on or shortly after the Exchange
Date. Promptly after the Exchange Date the shares of Common Stock or cash, as
the case may be, to be exchanged for the Securities and other remaining Trust
assets, if any, will be distributed pro rata to Holders. See "Investment
Objective and Policies -- Trust Termination".
RISK FACTORS
The Trust will not be managed in the traditional sense. The Trust has
adopted a policy that the Contract may not be disposed of during the term of the
Trust and that the U.S. Treasury securities held by the Trust may not be
disposed of prior to the earlier of their respective maturities and the
termination of the Trust. The Trust will continue to hold the Contract despite
any significant decline in the market price of the Common Stock or adverse
changes in the financial condition of the Company. See "Risk Factors -- Internal
Management; No Portfolio Management" and "Management and Administration of the
Trust -- Trustees".
Holders will receive distributions at a higher annual rate than the current
annual dividends paid on the Common Stock. There is no assurance, however, that
the yield on the Securities will be higher than the dividend yield on the Common
Stock over the term of the Trust. In addition, the opportunity for equity
5
<PAGE>
appreciation afforded by an investment in the Securities is less than that
afforded by an investment in the Common Stock because Holders will realize no
equity appreciation if at the Exchange Date the Current Market Price of the
Common Stock is below the Appreciation Threshold Price (which represents an
appreciation of % of the Initial Price). Moreover, because a Holder will
only receive 0. shares of Common Stock per Security (or the Current Market Price
thereof) if the Current Market Price exceeds the Appreciation Threshold Price,
Holders will only be entitled to receive upon exchange % of any appreciation
of the value of the Common Stock in excess of the Appreciation Threshold Price.
Holders of Securities will realize the entire decline in equity value if the
Current Market Price is less than the price to public per Security shown on the
cover page hereof.
The Trust is classified as a "non-diversified" investment company under the
Investment Company Act. Consequently, the Trust is not limited by the Investment
Company Act in the proportion of its assets that may be invested in the
securities of a single issuer. Since the only securities held by the Trust will
be the U.S. Treasury securities and the Contract, the Trust may be subject to
greater risk than would be the case for an investment company with diversified
investments. See "Investment Objective and Policies" and "Risk Factors --
Non-Diversified Status".
The trading prices of the Securities in the secondary market will be
directly affected by the trading prices of the Common Stock in the secondary
market. Trading prices of Common Stock will be influenced by the Company's
operating results and prospects and by economic, financial and other factors and
market conditions.
Holders of the Securities will not be entitled to any rights with respect to
the Common Stock (including, without limitation, voting rights and rights to
receive any dividends or other distributions in respect thereof) unless and
until such time, if any, as the Seller shall have delivered shares of Common
Stock pursuant to the Contract at the Exchange Date.
LISTING
Application will be made to list the Securities on the New York Stock
Exchange (the "NYSE") under the symbol DLA.
FEES AND EXPENSES
In light of the fact that the proceeds of the sale of the Securities will be
used in part by the Trust to purchase the Contract from the Seller, the
Underwriting Agreement provides that the Seller will pay Underwriters'
Compensation to the Underwriters of $ . per Security. See "Underwriting".
Estimated organization costs of the Trust in the amount of $10,000 and estimated
costs of the Trust in connection with the initial registration and public
offering of the Securities in the amount of $103,000 will be paid by Goldman
Sachs. Other estimated costs of the Trust in connection with the public offering
of the Securities in the amount of $116,000 will be paid by the Seller. Each of
the Administrator, the Custodian and the Paying Agent, and each Trustee will be
paid by Goldman Sachs at the closing of the offering of the Securities a
one-time, up-front amount in respect of its ongoing fees and, in the case of the
Administrator, anticipated expenses of the Trust (estimated to be $300,000 in
the aggregate), over the term of the Trust. Goldman Sachs have agreed to pay any
on-going expenses of the Trust in excess of these estimated amounts and to
reimburse the Trust for any amounts it may be required to pay as indemnification
to any Trustee, the Administrator, the Custodian or the Paying Agent. See
"Management and Administration of the Trust -- Estimated Expenses".
Regulations of the Securities and Exchange Commission ("SEC") applicable to
closed-end investment companies designed to assist investors in understanding
the costs and expenses that an investor will bear directly or indirectly require
the presentation of Trust expenses in the following format. Because the Trust
will not bear any fees or expenses, investors will not bear any direct expenses.
The only expenses that an investor might be considered to be bearing indirectly
are (i) the Underwriters' Compensation payable by the Seller with respect to
such investor's Securities and (ii) the ongoing expenses of
6
<PAGE>
the trust (including fees of the Administrator, Custodian, Paying Agent and
Trustees), estimated at $100,000 per year, payable by Goldman Sachs at the
closing of the offering. See "Investment Objective and Policies -- General".
INVESTOR TRANSACTION EXPENSES
<TABLE>
<S> <C>
Sales Load (as a percentage of offering price)........................ %
Dividend Reinvestment and Cash Purchase Plan Fees..................... N/A
</TABLE>
ANNUAL EXPENSES
<TABLE>
<S> <C>
Management Fees........................................................ 0%
Other Expenses......................................................... %
--
Total Annual Expenses.............................................. %
--
--
</TABLE>
SEC regulations also require that closed-end investment companies present an
illustration of cumulative expenses (both direct and indirect) that an investor
would bear. The example is required to factor in the applicable Sales Load and
to assume, in addition to a 5% annual return, the reinvestment of all
distributions at net asset value. INVESTORS SHOULD NOTE THAT THE ASSUMPTION OF A
5% ANNUAL RETURN DOES NOT ACCURATELY REFLECT THE FINANCIAL TERMS OF THE TRUST.
SEE "INVESTMENT OBJECTIVE AND POLICIES -- GENERAL." ADDITIONALLY, THE TRUST DOES
NOT PERMIT THE REINVESTMENT OF DISTRIBUTIONS.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
- ---------------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
You would bear the following expenses (I.E., the applicable sales load and
allocable portion of ongoing expenses paid by Goldman Sachs and the Seller)
on a $1,000 investment, assuming a 5% annual return........................ $ $
</TABLE>
7
<PAGE>
THE TRUST
The Trust is a newly organized New York trust and is registered as a
closed-end investment company under the Investment Company Act. The Trust was
formed on January 18, 1996 pursuant to a trust agreement dated as of such date
and amended and restated as of August , 1996. The address of the Trust is 85
Broad Street, New York, New York 10004 (telephone no. (212) 902-1000).
USE OF PROCEEDS
The net proceeds of this offering will be used on or shortly after the date
on which this offering is completed to purchase a fixed portfolio comprised of
stripped U.S. Treasury securities with face amounts and maturities corresponding
to the quarterly distributions payable with respect to the Securities and the
payment dates thereof, and to pay the purchase price under the Contract to the
Seller.
INVESTMENT OBJECTIVE AND POLICIES
GENERAL
The Trust will purchase and hold a portfolio of stripped U.S. Treasury
securities maturing on a quarterly basis through the Exchange Date and the
Contract relating to the Common Stock of the Company. The Trust's investment
objective is to provide each Holder with a quarterly cash distribution of $ .
per Security (which amount equals the pro rata portion of the fixed quarterly
distributions from the proceeds of the maturing U.S. Treasury securities held by
the Trust) and, on the Exchange Date, a number of shares of Common Stock per
Security equal to the Exchange Rate or, if the Seller elects the Cash Settlement
Alternative, an amount in cash equal to the Current Market Price thereof. The
Exchange Rate is equal to (i) if the Current Market Price is less than the
Appreciation Threshold Price but equal to or greater than the Initial Price, a
number (or fractional number) of shares of Common Stock per Security equal to
the Initial Price divided by the Current Market Price (i.e., the value of such
shares of Common Stock (determined at the Current Market Price) shall equal the
Initial Price), (ii) if the Current Market Price is equal to or greater than the
Appreciation Threshold Price, 0. shares of Common Stock per Security and (iii)
if the Current Market Price is less than the Initial Price, 1 share of Common
Stock per Security, subject in each case to adjustment in certain events. See
"-- The Contract -- Dilution Adjustments". For purposes of the preceding clause
(i) the Exchange Rate will be rounded upward or downward to the nearest 1/10,000
(or if there is not a nearest 1/10,000, to the next lower 1/10,000). Holders
otherwise entitled to receive fractional shares in respect of their aggregate
holdings of Securities will receive cash in lieu thereof. See "-- Trust
Termination". The Current Market Price per share of Common Stock means the
average Closing Price (as defined below) of a share of Common Stock on the 20
Trading Days (as defined below) immediately prior to but not including the
Exchange Date. The Closing Price of the Common Stock on any date of
determination means the daily closing sale price (or, if no closing sale price
is reported, the last reported sale price) of the Common Stock as reported on
the NYSE Consolidated Tape on such date of determination or, if the Common Stock
is not listed for trading on the NYSE on any such date, as reported in the
composite transactions for the principal United States securities exchange on
which the Common Stock is so listed, or if the Common Stock is not so listed on
a United States national or regional securities exchange, as reported by The
Nasdaq National Market or, if the Common Stock is not so reported, the last
quoted bid price for the Common Stock in the over-the-counter market as reported
by the National Quotation Bureau or similar organization, provided that if any
event that results in an adjustment to the number of shares of Common Stock
deliverable under the Contract as described under "-- The Contract -- Dilution
Adjustments" occurs prior to the Exchange Date, the Closing Price as determined
pursuant to the foregoing will be appropriately adjusted to reflect the
occurrence of such event. A "Trading Day" means a day on which the Common Stock
(A) is not suspended from trading on any national or regional securities
exchange or association or over-the-counter market at the close of business and
(B) has traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of such security.
8
<PAGE>
A fundamental policy of the Trust is to invest at least 70% of its total
assets in the Contract. The Trust has also adopted a fundamental policy that the
Contract may not be disposed of during the term of the Trust and that the U.S.
Treasury securities held by the Trust may not be disposed of prior to the
earlier of their respective maturities and the termination of the Trust. The
foregoing investment objective and policies are fundamental policies of the
Trust that may not be changed without the approval of a majority of the Fund's
outstanding Securities. A "majority of the Fund's outstanding Securities" means
the lesser of (i) 67% of the Securities represented at a meeting at which more
than 50% of the outstanding Securities are represented, and (ii) more than 50%
of the outstanding Securities.
The value of the Common Stock (or cash or Marketable Securities received in
lieu thereof) that will be received by Holders in respect of the Securities on
the Exchange Date may be more or less than the amount paid for the Securities
offered hereby.
For illustrative purposes only, the following chart shows the number of
shares of Common Stock that a Holder would receive for each Security at various
Current Market Prices. The chart assumes that there would be no adjustments to
the number of shares of Common Stock deliverable under the Contract by reason of
the occurrence of any of the events described under "-- The Contract --Dilution
Adjustments". There can be no assurance that the Current Market Price will be
within the range set forth below. Given the Initial Price of $ per Securityand
the Appreciation Threshold Price of $ , a Holder would receive in connection
with the exchange of Securities on the Exchange Date the following number of
shares of Common Stock:
<TABLE>
<CAPTION>
CURRENT MARKET PRICE NUMBER OF SHARES
OF COMMON STOCK OF COMMON STOCK
--------------------- ---------------------
<S> <C>
</TABLE>
The following table sets forth information regarding the distributions to be
received on the U.S. Treasuries, the portion of each year's distributions that
will constitute a return of capital for federal income tax purposes and the
amount of original issue discount accruing on the U.S. Treasuries with respect
to a Holder who acquires its Securities at the issue price from an Underwriter
pursuant to the original offering. See "Certain Federal Income Tax
Considerations -- Recognition of Interest on the U.S. Treasury Securities".
<TABLE>
<CAPTION>
ANNUAL GROSS
ANNUAL GROSS DISTRIBUTIONS FROM ANNUAL RETURN OF ANNUAL INCLUSION OF
DISTRIBUTIONS FROM U.S. TREASURIES CAPITAL PER ORIGINAL ISSUE DISCOUNT
YEAR U.S. TREASURIES PER SECURITY SECURITY IN INCOME PER SECURITY
- ----------------------------- ------------------ ------------------ ----------------- -----------------------
<S> <C> <C> <C> <C>
1996......................... $ $ $ $
1997.........................
1998.........................
1999.........................
</TABLE>
The annual distribution of $ per Security is payable quarterly on each
February 15, May 15, August 15 and November 15, commencing November 15, 1996.
Quarterly distributions on the Securities will consist solely of the cash
received from the U.S. Treasury securities. The Trust will not be entitled to
any dividends that may be declared on the Common Stock. See "Management and
Administration of the Trust -- Distributions".
ENHANCED YIELD; LESS EQUITY APPRECIATION THAN COMMON STOCK; NO DEPRECIATION
PROTECTION
Holders will receive distributions at a higher annual rate than the current
annual dividends paid on the Common Stock. However, there is no assurance that
the yield on the Securities will be higher than the dividend yield on the Common
Stock over the term of the Trust. In addition, the opportunity for equity
appreciation afforded by an investment in the Securities is less than that
afforded by an investment in the Common Stock because Holders will realize no
equity appreciation if, on the Exchange Date, the Current
9
<PAGE>
Market Price of the Common Stock is below the Appreciation Threshold Price
(which represents an appreciation of % of the Initial Price). Moreover,
because Holders will only receive 0. shares of Common Stock per Security (or the
Current Market Price thereof) if the Current Market Price exceeds the
Appreciation Threshold Price, Holders will only be entitled to receive upon
exchange % (the percentage equal to the Initial Price divided by the
Appreciation Threshold Price) of any appreciation of the value of the Common
Stock in excess of the Appreciation Threshold Price. Holders of Securities will
realize the entire decline in value if the Current Market Price is less than the
price to public per Security shown on the cover page hereof.
THE COMPANY
The Company is engaged in the business of food production and distribution.
The Company is one of the largest companies engaged in the worldwide sourcing,
growing, processing, distributing and marketing of high quality, branded fresh
produce. The Company sources, grows, processes or markets fruits, vegetables,
nuts and beverages in the following locations: North America, Latin America,
Asia and Europe.
The shares of Common Stock are traded on the New York Stock Exchange and the
Pacific Stock Exchange. The following table sets forth, for the calendar
quarters indicated, the reported high and low sales prices of the shares of
Common Stock on the New York Stock Exchange Composite Tape and the cash
dividends per share of Common Stock. As of , 1996, there were
record holders of the Common Stock, including The Depository Trust Company,
which holds shares of Common Stock on behalf of an indeterminate number of
beneficial owners.
<TABLE>
<CAPTION>
DIVIDEND
HIGH LOW PER SHARE
--------- --------- ---------
<S> <C> <C> <C>
1994
1st Quarter........................... $ 35 1/2 $ 26 3/8 $.10
2nd Quarter........................... 34 1/2 26 1/4 .10
3rd Quarter........................... 30 3/4 26 1/4 .10
4th Quarter........................... 28 3/8 22 1/2 .10
1995
1st Quarter........................... 28 1/2 23 .10
2nd Quarter........................... 31 27 3/4 .10
3rd Quarter........................... 35 1/8 28 3/8 .10
4th Quarter(1)........................ 38 5/8 34 1/8 .10
1996
1st Quarter........................... 42 7/8 33 7/8 .10
2nd Quarter........................... 43 36 3/4 .10
3rd Quarter (through July 29, 1996)... 43 3/4 38 1/4
</TABLE>
- ------------------------
(1) On December 28, 1995, the Company completed the separation of its real
estate and resorts entity, Castle & Cooke, Inc. ("Castle") from its food
business. In connection with the distribution, each Company shareholder of
record on December 20, 1995 received a dividend of one share of Castle
common stock for every three shares of the Company's common stock.
Holders will not be entitled to rights with respect to the Common Stock
(including, without limitation, voting rights and rights to receive dividends or
other distributions in respect thereof) until receipt of shares of Common Stock
by the Holders as a result of the exchange of the Securities for the Common
Stock on the Exchange Date.
Reference is made to the accompanying prospectus of the Company, dated
August , 1996 (pages A-1 through A-6 hereto) which describes the Company and
the shares of Common Stock deliverable to the Holders upon mandatory exchange of
the Securities on the Exchange Date. The Company is not affiliated with the
Trust and will not receive any of the proceeds from the sale of the Securities.
The Company prospectus relates to an aggregate of 2,500,000 shares of Common
Stock (plus an additional 375,000 shares that may be delivered upon exercise of
the Underwriters' over-allotment option).
10
<PAGE>
THE CONTRACT
GENERAL. The Trust will enter into the Contract with the Seller obligating
the Seller to deliver to the Trust on the Exchange Date a number of shares of
Common Stock equal to the product of the Exchange Rate times the initial number
of shares of Common Stock subject to the Contract. The aggregate initial number
of shares of Common Stock under the Contract will equal the aggregate number of
Securities offered hereby (subject to increase in the event the Underwriters
exercise their overallotment option). The Contract also provides that the Seller
may deliver to the Trust on the Exchange Date, at the Seller's option, an amount
of cash equal to the value of the Common Stock deliverable pursuant to the
Contract (the "Cash Settlement Alternative"). If the Seller elects to deliver
cash in lieu of shares of Common Stock, he would be required to deliver cash in
respect of all shares deliverable pursuant to the Contract.
The purchase price of the Contract was arrived at by arm's-length
negotiation between the Trust and the Seller taking into consideration factors
including the price, expected dividend level and volatility of the Common Stock,
current interest rates, the term of the Contract, current market volatility
generally, the collateral security pledged by the Seller, the value of other
similar instruments and the costs and anticipated proceeds of the offering of
the Securities. All matters relating to the administration of the Contract will
be the responsibility of either the Administrator or the Custodian.
DILUTION ADJUSTMENTS. The Exchange Rate is subject to adjustment if the
Company shall (i) pay a stock dividend or make a distribution with respect to
the Common Stock in shares of such stock, (ii) subdivide or split its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares, or (iv) issue by reclassification
of its shares of Common Stock any shares of other common stock of the Company.
In any such event, the Exchange Rate shall be multiplied by a dilution
adjustment equal to the number of shares of Common Stock (or, in the case of a
reclassification referred to in clause (iv) above, the number of shares of other
common stock of the Company issued pursuant thereto), or fraction thereof, that
a shareholder who held one share of Common Stock immediately prior to such event
would be entitled solely by reason of such event to hold immediately after such
event.
In addition, if the Company shall issue rights or warrants to all holders of
Common Stock entitling them to subscribe for or purchase shares of Common Stock
at a price per share less than the Then-Current Market Price of the Common Stock
(as defined below) (other than rights to purchase Common Stock pursuant to a
plan for the reinvestment of dividends or interest) then the Exchange Rate shall
be multiplied by a dilution adjustment equal to a fraction, of which the
numerator shall be the number of shares of Common Stock outstanding immediately
prior to the time (determined as described below) the adjustment is calculated
by reason of the issuance of such rights or warrants plus the number of
additional shares offered for subscription or purchase pursuant to such rights
or warrants, and of which the denominator shall be the number of shares of
Common Stock outstanding immediately prior to the time such adjustment is
calculated plus the number of additional shares that the aggregate offering
price of the shares so offered for subscription or purchase would purchase at
the Then-Current Market Price. To the extent that, after expiration of such
rights or warrants, the shares offered thereby shall not have been delivered,
the Exchange Rate shall be further adjusted to equal the Exchange Rate that
would have been in effect had the foregoing adjustment been made upon the basis
of delivery of only the number of shares of Common Stock actually delivered. The
"Then-Current Market Price" of the Common Stock means the average Closing Price
per share of Common Stock for a Calculation Period of five Trading Days
immediately prior to the time such adjustment is calculated (or, in the case of
an adjustment calculated at the opening of business on the business day
following a record date, as described below, immediately prior to the earlier of
the time such adjustment is calculated and the related "ex-date" on which the
shares of Common Stock first trade regular way on their principal market without
the right to receive the relevant dividend, distribution or issuance); provided
that if no Closing Price for the Common Stock is determined for one or more (but
not all) of such Trading Days, such Trading Day shall be disregarded in the
calculation of the Then-Current Market Price (but no additional Trading Days
shall be
11
<PAGE>
added to the Calculation Period). If no Closing Price for the Common Stock is
determined for any of such Trading Days, the most recently available Closing
Price for the Common Stock prior to such five Trading Days shall be the
Then-Current Market Price.
Further, if the Company shall pay a dividend or make a distribution to all
holders of Common Stock, in either case, of evidences of its indebtedness or
other non-cash assets (excluding any stock dividends or distributions in shares
of Common Stock) or issue to all holders of Common Stock rights or warrants to
subscribe for or purchase any of its securities (other than rights or warrants
referred to in the previous paragraph), then the Exchange Rate shall be
multiplied by a dilution adjustment equal to a fraction, of which the numerator
shall be the Then-Current Market Price per share of Common Stock, and the
denominator shall be such price less the fair market value (as determined by a
nationally recognized independent investment banking firm retained for this
purpose by the Administrator) as of the time the adjustment is calculated of the
portion of such evidences of indebtedness, non-cash assets or rights or warrants
payable in respect of one share of Common Stock.
Further, if the Company distributes cash (other than any Permitted Dividend
(as defined below), any cash distributed in consideration of fractional shares
of Common Stock and any cash distributed in a Reorganization Event (as defined
below) ("Excluded Distributions")), by dividend or otherwise, to all holders of
Common Stock or makes an Excess Purchase Payment (as defined below) then the
Exchange Rate shall be multiplied by a dilution adjustment equal to a fraction,
of which the numerator shall be the Then-Current Market Price on the record date
in respect of such distribution and of which the denominator shall be such price
less the amount of such distribution applicable to one share of Common Stock
that would not be a Permitted Dividend (or in the case of an Excess Purchase
Payment, less the aggregate amount of such Excess Purchase Payment divided by
the number of outstanding shares of Common Stock on such record date). For
purposes of these adjustments, (a) the term "Permitted Dividend" means any
quarterly cash dividend in respect of the Common Stock, other than a quarterly
cash dividend that exceeds the immediately preceding quarterly cash dividend,
and then only to the extent that the per share amount of such dividend results
in an annualized dividend yield on the Common Stock in excess of 12 1/2% and (b)
the term "Excess Purchase Payment" means the excess, if any, of (i) the cash and
the value (as determined by a nationally recognized independent investment
banking firm retained for this purpose by the Administrator, whose determination
shall be conclusive) of all other consideration paid by the Company with respect
to one share of Common Stock acquired in a tender offer or exchange offer by the
Company over (ii) the Then-Current Market Price per share of Common Stock.
If any adjustment in the Exchange Rate is required to be calculated as
described above, corresponding adjustments to the Initial Price and the
Appreciation Threshold Price shall be calculated.
Dilution adjustments shall be effected: (i) in the case of any dividend,
distribution or issuance described above, at the opening of business on the
business day following the record date for determination of holders of Common
Stock entitled to receive such dividend, distribution or issuance or, if the
announcement of any such dividend, distribution or issuance is after such record
date, at the time such dividend, distribution or issuance shall be announced by
the Company; (ii) in the case of any subdivision, split, combination or
reclassification described above, on the effective date of such transaction;
(iii) in the case of any Excess Purchase Payment for which the Company shall
announce, at or prior to the time it commences the relevant share repurchase,
the repurchase price for such shares to be repurchased, on the date of such
announcement; and (iv) in the case of any other Excess Purchase Payment, on the
date that the holders of Common Stock become entitled to payment with respect
thereto. There will be no adjustment under the Contract in respect of any
dividends, distributions, issuances or repurchases that may be declared or
announced after the Exchange Date. If any announcement or declaration of a
record date in respect of a dividend, distribution, issuance or repurchase shall
subsequently be cancelled by the Company, or such dividend, distribution,
issuance or repurchase shall fail to receive requisite approvals or shall fail
to occur for any other reason, then the Exchange Rate shall be further adjusted
to equal the Exchange Rate that would have been in effect had the adjustment for
such dividend, distribution, issuance or repurchase not been made. All
adjustments described herein
12
<PAGE>
shall be rounded upward or downward to the nearest 1/10,000 (or if there is not
a nearest 1/10,000, to the next lower 1/10,000). No adjustment in the Exchange
Rate shall be required unless such adjustment would require an increase or
decrease of at least one percent therein; provided, however, that any
adjustments which by reason of the foregoing are not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
In the event of (A) any consolidation or merger of the Company, or any
surviving entity or subsequent surviving entity of the Company (a "Company
Successor"), with or into another entity (other than a merger or consolidation
in which the Company is the continuing corporation and in which the Common Stock
outstanding immediately prior to the merger or consolidation is not exchanged
for cash, securities or other property of the Company or another corporation),
(B) any sale, transfer, lease or conveyance to another corporation of the
property of the Company or any Company Successor as an entirety or substantially
as an entirety, (C) any statutory exchange of securities of the Company or any
Company Successor with another corporation (other than in connection with a
merger or acquisition) or (D) any liquidation, dissolution or winding up of the
Company or any Company Successor (any such event described in clause (A), (B),
(C) or (D), a "Reorganization Event"), the Exchange Rate will be adjusted such
that, on the Exchange Date, each Holder will receive for each Security cash in
an amount equal to (i) if the Transaction Value (as defined below) is less than
the Appreciation Threshold Price but equal to or greater than the Initial Price,
the Initial Price, (ii) if the Transaction Value is greater than or equal to the
Appreciation Threshold Price, 0. multiplied by the Transaction Value and (iii)
if the Transaction Value is less than the Initial Price, the Transaction Value.
Notwithstanding the foregoing, to the extent that any Marketable Securities (as
defined below) are received by holders of Common Stock in such Reorganization
Event, then in lieu of delivering cash as provided above, the Seller may at his
option deliver a proportional amount of such Marketable Securities. If a Seller
elects to deliver Marketable Securities, Holders will be responsible for the
payment of any and all brokerage and other transaction costs upon the sale of
such securities.
"Transaction Value" means (i) for any cash received in any such
Reorganization Event, the amount of cash received per share of Common Stock,
(ii) for any property other than cash or Marketable Securities received in any
such Reorganization Event, an amount equal to the market value on the date the
Reorganization Event is consummated of such property received per share of
Common Stock as determined by a nationally recognized independent investment
banking firm retained for this purpose by the Administrator and (iii) for any
Marketable Securities received in any such Reorganization Event, an amount equal
to the average Closing Price per share of such securities on the 20 Trading Days
immediately prior to the Exchange Date multiplied by the number of such
securities received for each share of Common Stock; provided that if no Closing
Price for such Marketable Securities is determined for one or more (but not all)
of such Trading Days, such Trading Days shall be disregarded in the calculation
of such average Closing Price (but no additional Trading Days shall be added to
the Calculation Period). If no Closing Price for the Marketable Securities is
determined for all such Trading Days, the calculation in the preceding clause
(iii) shall be based on the most recently available Closing Price for the
Marketable Securities prior to such 20 Trading Days. The number of shares of
Marketable Securities included in the calculation of Transaction Value for
purposes of the preceding clause (iii) shall be subject to adjustment if a
dilution event of the type described above shall occur with respect to the
issuer of the Marketable Securities between the time of the Reorganization Event
and the Exchange Date.
"Marketable Securities" means any common equity securities listed on a U.S.
national securities exchange or reported by The Nasdaq National Market.
No dilution adjustments will be made for events, other than those described
above, such as offerings of Common Stock (other than through the issuance of
rights or warrants described above) for cash or in connection with acquisitions.
COLLATERAL ARRANGEMENTS; ACCELERATION. The Seller's obligations under the
Contract will be secured by a security interest in the maximum number of shares
of Common Stock subject to the Contract
13
<PAGE>
(subject to adjustment in accordance with the dilution adjustment provisions of
the Contract, described above) pursuant to a Collateral Agreement between such
Seller and The Bank of New York, as collateral agent (the "Collateral Agent").
Unless the Seller is in default in its obligations under the Security and Pledge
Agreement, the Seller will be permitted to substitute for the pledged shares of
Common Stock collateral consisting of short-term, direct obligations of the U.S.
Government. Any U.S. Government obligations pledged as substitute collateral
will be required to have an aggregate market value at the time of substitution
and at daily mark-to-market valuations thereafter of not less than 150% (or,
from and after any Insufficiency Determination that shall not be cured by the
close of business on the tenth business day thereafter, as described below,
200%) of the product of the market price of the Common Stock at the time of each
valuation times the number of shares of Common Stock for which such obligations
are being substituted. The Collateral Agreement will provide that, in the event
of a Reorganization Event, the Seller will pledge as alternative collateral any
Marketable Securities received by it in respect of the maximum number of shares
of Common Stock subject to the Contract at the time of the Reorganization Event,
plus U.S. Government obligations having an aggregate market value when pledged
and at daily mark-to-market valuations thereafter of not less than 150% of the
Seller's Cash Delivery Obligations. The Seller's "Cash Delivery Obligations"
shall be the Transaction Value of any consideration other than Marketable
Securities received by the Seller in respect of the maximum number of shares
subject to the Contract at the time of the Reorganization Event. The number of
shares of Marketable Securities required to be pledged shall be subject to
adjustment if any event requiring a dilution adjustment under the Contract shall
occur. The Seller will be permitted to substitute U.S. Government obligations
for Marketable Securities pledged at the time of or after any Reorganization
Event. Any U.S. Government obligations so substituted will be required to have
an aggregate market value at the time of substitution and at daily
mark-to-market valuations thereafter of not less than 150% (or, from and after
any Insufficiency Determination that shall not be cured by the close of business
on the tenth business day thereafter, as described below, 200%) of the product
of the market price per share of Marketable Securities at the time of each
valuation times the number of shares of Marketable Securities for which such
obligations are being substituted. The Collateral Agent will promptly pay over
to the Seller any dividends, interest, principal or other payments received by
the Collateral Agent in respect of any collateral, including any substitute
collateral, unless the Seller is in default of its obligations under the
Collateral Agreement, or unless the payment of such amount to the Seller would
cause the collateral to become insufficient under the Collateral Agreement. The
Seller shall have the right to vote any pledged shares of Marketable Securities
for so long as such shares are owned by him and pledged under the Collateral
Agreement, including after an event of default under the Contract or the
Collateral Agreement.
If the Collateral Agent shall determine (an "Insufficiency Determination")
that U.S. Government obligations pledged as substitute collateral shall fail to
meet the foregoing requirements at any valuation, or that the Seller has failed
to pledge additional collateral required as a result of a dilution adjustment
increasing the maximum number of shares of Common Stock or shares of Marketable
Securities subject to the Contract, and such failure shall not be cured by the
close of business on the tenth business day after such determination, then,
unless a Collateral Event of Default (as defined below) under the Collateral
Agreement shall have occurred and be continuing, the Collateral Agent shall
commence (i) sales of the collateral consisting of U.S. Government obligations
and (ii) purchases, using the proceeds of such sales, of shares of Common Stock
or shares of Marketable Securities, in an amount sufficient to cause the
collateral to meet the requirements under the Collateral Agreement. The
Collateral Agent shall discontinue such sales and purchases if at any time a
Collateral Event of Default under the Collateral Agreement shall have occurred
and be continuing. A "Collateral Event of Default" under the Collateral
Agreement shall mean, at any time, (A) if no U.S. Government obligations shall
be pledged as substitute collateral at such time, failure of the collateral to
consist of at least the maximum number of shares of Common Stock subject to the
Contract at such time (or, if a Reorganization Event shall have occurred at or
prior to such time, failure of the collateral to include the maximum number of
shares of any Marketable Securities required to be pledged as described above);
(B) if any U.S. Government obligations shall be pledged as substitute collateral
for shares of Common Stock (or shares of Marketable Securities) at such time,
failure of such U.S. Government obligations to have a market value at such time
14
<PAGE>
of at least 105% of the market price per share of Common Stock (or the
then-current market price per share of Marketable Securities, as the case may
be) times the difference between (x) the maximum number of shares of Common
Stock (or shares of Marketable Securities) subject to the Contract at such time
and (y) the number of shares of Common Stock (or shares of Marketable
Securities) pledged as collateral at such time; and (C) at any time after a
Reorganization Event in which consideration other than Marketable Securities
shall have been delivered, failure of the U.S. Government obligations pledged in
respect of the Cash Delivery Obligations to have a market value at such time of
at least 105% of the Cash Delivery Obligations, if such failure shall not be
cured within ten business days after notice thereof is delivered to the Seller.
The occurrence of a Collateral Event of Default under the Collateral
Agreement, or the bankruptcy or insolvency of the Seller, will cause an
automatic acceleration of the Seller's obligations under the Contract. In any
such event, the Seller will become obligated to deliver shares of Common Stock
(or, after a Reorganization Event, Marketable Securities or cash or a
combination thereof) having an aggregate value equal to the "Aggregate
Acceleration Value" under the Contract. The Aggregate Acceleration Value will be
based on an "Acceleration Value" determined by the Administrator on the basis of
quotations from independent dealers. Each quotation will be for the amount that
would be paid to the relevant dealer in consideration of an agreement between
the Trust and such dealer that would have the effect of preserving the Trust's
rights to receive Common Stock (or, after a Reorganization Event, the
alternative consideration provided under the Contract) under a portion of the
Contract that corresponds to an initial number of shares of Common Stock equal
to 1,000. The Administrator will request quotations from four nationally
recognized independent dealers on or as soon as reasonably practicable following
the date of acceleration. If four quotations are provided, the Acceleration
Value will be the arithmetic mean of the two quotations remaining after
disregarding the highest and lowest quotations. If two or three quotations are
provided, the Acceleration Value will be the arithmetic mean of such quotations.
If one quotation is provided, the Acceleration Value will be equal to such
quotation. The Aggregate Acceleration Value will be computed by dividing the
Acceleration Value by 1,000 and multiplying the quotient by the initial number
of shares of Common Stock subject to the Contract, except that, if no quotations
are provided, the Aggregate Acceleration Value will be (A) the Current Market
Price per share of Common Stock on the acceleration date times the number of
shares of Common Stock that would be required to be delivered on such date under
the Contract if the Exchange Date were redefined to be the acceleration date or
(B) after a Reorganization Event, the value of the alternative consideration
that would be required to be delivered on such date under the Contract if the
Exchange Date were redefined to be the acceleration date. Upon the occurrence of
a Collateral Event of Default or the bankruptcy or insolvency of the Seller, the
Common Stock (or, after a Reorganization Event, Marketable Securities or cash or
a combination thereof) deliverable for each Security will be based solely on the
Aggregate Acceleration Value described above for the Contract.
Upon any acceleration, the Collateral Agent will distribute to the Trust,
for distribution pro rata to the Holders, the Aggregate Acceleration Value in
the form of shares of Common Stock then pledged, or cash generated from the
liquidation of U.S. Government obligations then pledged, or a combination
thereof (or, after a Reorganization Event, in the form of Marketable Securities
then pledged, cash generated from the liquidation of U.S. Government obligations
then pledged, or a combination thereof). In addition, in the event that by the
Exchange Date any substitute collateral has not been replaced by Common Stock
(or, after a Reorganization Event, cash or Marketable Securities) sufficient to
meet the obligations under the Contract, the Collateral Agent will distribute to
the Trust for distribution pro rata to the Holders the market value of the
Common Stock required to be delivered thereunder, in the form of any shares of
Common Stock then pledged by the Seller plus cash generated from the liquidation
of U.S. Government obligations then pledged by the Seller (or, after a
Reorganization Event, the market value of the alternative consideration required
to be delivered thereunder, in the form of any Marketable Securities then
pledged, plus any cash then pledged, plus cash generated from the liquidation of
U.S. Government obligations then pledged). See "-- Trust Termination".
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DESCRIPTION OF SELLER. The Seller is David H. Murdock, as trustee of the
David H. Murdock Living Trust dated May 28, 1986, as amended. Reference is made
to the caption "Selling Shareholder" in the Company prospectus for information
about the Seller.
THE U.S. TREASURY SECURITIES
The Trust will purchase and hold a series of zero-coupon ("stripped") U.S.
Treasury securities with face amounts and maturities corresponding to the
distributions payable with respect to the Securities and the payment dates
thereof. Up to 20% of the Trust's total assets may be invested in these U.S.
Treasury Securities. In the event that the Contract is accelerated or disposed
of as described under the caption "Management Administration of the Trust --
Trustees", then any such U.S. Treasury securities then held in the Trust shall
be liquidated by the Administrator and distributed pro rata to the Holders,
together with the amounts distributed upon acceleration or any consideration
received by the Trust upon disposition of the Contract. See "-- Collateral
Arrangements; Acceleration" and "-- Trust Termination".
TEMPORARY INVESTMENTS
For cash management purposes, the Trust may invest the proceeds of the U.S.
Treasury securities and any other cash held by the Trust in short-term
obligations of the U.S. Government maturing no later than the business day
preceding the next following distribution date. Not more than 5% of the Trust's
total assets will be invested in such short-term obligations or held in cash at
any one time.
INVESTMENT RESTRICTIONS
As a matter of fundamental policy, the Trust may not purchase any securities
or instruments other than the U.S. Treasury securities, the Contract and the
Common Stock or other assets received pursuant to the Contract and, for cash
management purposes, short-term obligations of the U.S. Government; issue any
securities or instruments except for the Securities; make short sales or
purchase securities on margin; write put or call options; borrow money;
underwrite securities; purchase or sell real estate, commodities or commodities
contracts including futures contracts; or make loans. The Trust also has adopted
a fundamental policy that the Contract may not be disposed of during the term of
the Trust and that the U.S. Treasury securities held by the Trust may not be
disposed of prior to the earlier of their respective maturities and the
termination of the Trust.
Because of the foregoing limitations, the Trust's investments will be
concentrated in the food production and distribution industry, which is the
industry in which the Company operates. The Trust is not permitted to purchase
restricted securities.
TRUST TERMINATION
The Trust will terminate automatically on or shortly after the Exchange
Date. Alternatively, in the event that the Contract is accelerated, then any
U.S. Treasury securities then held in the Trust shall be liquidated by the
Administrator and distributed pro rata to the Holders, together with the amounts
distributed upon acceleration, and the Trust shall be terminated. See "--
Collateral Arrangements; Acceleration" and "-- The U.S. Treasury Securities".
RISK FACTORS
INTERNAL MANAGEMENT; NO PORTFOLIO MANAGEMENT
The Trust will be internally managed by its Trustees and will not have any
separate investment adviser. It is a fundamental policy of the Trust that the
Contract may not be disposed of during the term of the Trust and that the U.S.
Treasury securities held by the Trust may not be disposed of prior to the
earlier of their respective maturities and the termination of the Trust. As a
result, the Trust will continue to hold the Contract despite significant
declines in the market price of the Common Stock or adverse changes in the
financial condition of the Company (or, after a Reorganization Event, comparable
developments affecting any Marketable Securities or the issuer thereof). The
Trust will not be managed like a typical closed-end investment company.
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LIMITED APPRECIATION POTENTIAL; COMMON STOCK DEPRECIATION RISK
The Trust anticipates that on the Exchange Date it will receive the Common
Stock deliverable pursuant to the Contract, which it will then distribute to
Holders. Although the yield on the Securities is higher than the current
dividend yield on the Common Stock, there is no assurance that the yield on the
Securities will be higher than the dividend yield on the Common Stock over the
term of the Trust. In addition, because the Contract calls for the Seller to
deliver less than the full number of shares of Common Stock subject to the
Contract where the Current Market Price exceeds the Initial Price (and therefore
less than one full share of Common Stock for each outstanding Security), the
Securities have more limited appreciation potential than the Common Stock.
Therefore, the Securities may trade below the value of the Common Stock if the
Common Stock appreciates in value. The value of the Common Stock to be received
by Holders on the Exchange Date (and any cash received in lieu thereof) may be
less than the amount paid for the Securities. Holders of Securities will realize
the entire decline in value if the Current Market Price is less than the price
to public per Security shown on the cover page hereof.
DILUTION ADJUSTMENTS; SHAREHOLDER RIGHTS
The number of shares of Common Stock that Holders are entitled to receive at
the termination of the Trust is subject to adjustment for certain events arising
from stock splits and combinations, stock dividends and certain other actions of
the Company that modify its capital structure. See "Investment Objective and
Policies -- The Contract -- Dilution Adjustments". The number of shares to be
received by Holders may not be adjusted for other events, such as offerings of
Common Stock for cash or in connection with acquisitions, that may adversely
affect the price of the Common Stock and, because of the relationship of the
amount to be received pursuant to the Contract to the price of the Common Stock,
such other events may adversely affect the trading price of the Securities.
There can be no assurance that the Company will not take any of the foregoing
actions, or that it will not make offerings of, or that major shareholders will
not sell any, Common Stock in the future, or as to the amount of any such
offerings or sales. In addition, until the receipt of the Common Stock by
Holders as a result of the exchange of the Securities for the Common Stock,
Holders will not be entitled to any rights with respect to the Common Stock
(including without limitation voting rights and the rights to receive any
dividends or other distributions in respect thereof).
TRADING VALUE; LISTING
The Trust is a newly organized closed-end investment company with no
previous operating history and the Securities are innovative securities. It is
not possible to predict how the Securities will trade in the secondary market.
The trading price of the Securities may vary considerably prior to the Exchange
Date due to, among other things, fluctuations in the price of the Common Stock
(which may occur due to changes in the Company's financial condition, results of
operations or prospects, or because of complex and interrelated political,
economic, financial and other factors that can affect the capital markets
generally, the stock exchanges or quotation systems on which the Common Stock is
traded and the market segment of which the Company is a part) and fluctuations
in interest rates and other factors that are difficult to predict and beyond the
Trust's control. The Trust believes, however, that because of the yield on the
Securities and the formula for determining the number of shares of Common Stock
to be delivered on the Exchange Date, the Securities will tend to trade at a
premium to the market value of the Common Stock to the extent the Common Stock
price falls and at a discount to the market value of the Common Stock to the
extent the Common Stock price rises.
Shares of closed-end investment companies frequently trade at a premium to
or discount from net asset value. This characteristic of investments in a
closed-end investment company is a risk separate and distinct from the risk that
the Trust's net asset value will decrease. The Trust cannot predict whether its
shares will trade at, below or above net asset value. The risk of purchasing
investments in a closed-end company that might trade at a discount may be
greater for investors who wish to sell their investments soon after completion
of an initial public offering because for those investors, realization of a gain
or loss on their investments is likely to be more dependent upon the existence
of a premium or discount than upon portfolio performance.
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Goldman Sachs currently intend, but are not obligated, to make a market in
the Securities. There can be no assurance that a secondary market will develop
or, if a secondary market does develop, that it will provide the Holders with
liquidity of investment or that it will continue for the life of the Securities.
Application will be made to list the Securities on the NYSE. Assuming the
acceptance of such application, there can be no assurance that the Securities
will not later be delisted or that trading in the Securities on the NYSE will
not be suspended. In the event of a delisting or suspension of trading on such
exchange, the Trust will apply for listing of the Securities on another national
securities exchange or for quotation on another trading market. If the
Securities are not listed or traded on any securities exchange or trading
market, or if trading of the Securities is suspended, pricing information for
the Securities may be more difficult to obtain, and the price and liquidity of
the Securities may be adversely affected.
NON-DIVERSIFIED STATUS
The Trust is considered non-diversified under the Investment Company Act,
which means that the Trust is not limited in the proportion of its assets that
may be invested in the obligations of a single issuer. Since the only securities
or instruments held or received by the Trust will be U.S. Treasury securities
and the Contract or other assets consistent with the terms of the Contract, the
Trust may be subject to greater risk than would be the case for an investment
company with diversified investments.
BOOK-ENTRY-ONLY ISSUANCE
The Depositary Trust Company ("DTC") will act as securities depository for
the Securities. The information in this section concerning DTC and DTC's
book-entry system is based upon information obtained from DTC. The Securities
offered hereby will be issued only as fully-registered securities registered in
the name of Cede & Co. (as nominee for DTC). One or more fully-registered global
Security certificates will be issued, representing in the aggregate the total
number of Securities, and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its participants ("Participants") deposit with DTC. DTC
also facilities the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, thereby eliminating
the need for physical movement of securities certificates. Direct Participants
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). Access to
the DTC system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants").
Purchases of Securities within the DTC system must be made by or through
Direct Participants, which will receive a credit for the Securities on DTC's
records. The ownership interest of each actual purchaser of a Security
("Beneficial Owner") is in turn to be recorded on the Direct or Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchases, but Beneficial Owners are expected to receive
written confirmations providing details of the transactions, as well as periodic
statements of their holdings, from the Direct or Indirect Participants through
which the Beneficial Owners purchased Securities. Transfers of ownership
interests in Securities are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership interests in Securities,
except upon a resignation of DTC.
DTC has no knowledge of the actual Beneficial Owners of the Securities;
DTC's records reflect only the identity of the Direct Participants to whose
accounts such Securities are credited, which may or may not be the Beneficial
Owners. The Participants will remain responsible for keeping account of their
holdings on behalf of their customers.
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Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Payments on the Securities will be made to DTC. DTC's practice is to credit
Direct Participants' accounts on the relevant payment date in accordance with
their respective holdings shown on DTC's records unless DTC has reason to
believe that it will not receive payments on such payment date. Payments by
Participants to Beneficial Owners will be governed by standing instructions and
customary practices and will be the responsibility of such Participant and not
of DTC or the Trust, subject to any statutory or regulatory requirements as may
be in effect from time to time. Payment of dividends to DTC is the
responsibility of the Trust, disbursement of such payments to Direct
Participants is the responsibility of DTC, and disbursement of such payments to
the Beneficial Owners is the responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner in a global Security will not
be entitled to receive physical delivery of Securities. Accordingly, each
Beneficial Owners must rely on the procedures of DTC to exercise any rights
under the Securities.
DTC may discontinue providing its services as securities depository with
respect to the Securities at any time by giving reasonable notice to the Trust.
Under such circumstances, in the event that a successor securities depository is
not obtained, certificates representing the Securities will be printed and
delivered.
RISK RELATING TO BANKRUPTCY OF SELLER
The Trust believes that the Contract constitutes a "securities contract" for
purposes of the Bankruptcy Code, performance of which would not be subject to
the automatic stay provisions of the Bankruptcy Code in the event of bankruptcy
of the Seller. It is, however, possible that the Contract will be determined not
to qualify as a "securities contract" for this purpose, in which case the
Seller's bankruptcy may cause a delay in settlement of the Contract, or
otherwise subject the Contract to the bankruptcy proceedings, which could
adversely affect the timing of exchange or amount received by the Holders in
respect of the Securities.
DESCRIPTION OF THE SECURITIES
Each Security represents an equal proportional interest in the Trust, and a
total of Securities will be issued. Upon liquidation of the Trust, Holders are
entitled to share pro rata in the net assets of the Trust available for
distribution. The Securities have no preemptive, redemption or conversion
rights. Securities are fully paid and nonassessable by the Trust. The only
securities that the Trust is authorized to issue are the Securities offered
hereby and those sold to the initial Holder referred to below. See
"Underwriting".
Holders are entitled to a full vote for each Security held on all matters to
be voted on by Holders and are not able to cumulate their votes in the election
of Trustees. The Trustees of the Trust have been selected initially by Goldman
Sachs, as the initial Holder of Securities of the Trust. The Trust intends to
hold annual meetings as required by the rules of the NYSE. The Trustees may call
special meetings of Holders for action by Holder vote as may be required by
either the Investment Company Act or the Trust Agreement. The Holders have the
right, upon the declaration in writing or vote of more than two-thirds of the
outstanding Securities, to remove a Trustee. The Trustees will call a meeting of
Holders to vote on the removal of a Trustee upon the written request of the
Holders of record of 10% of the Securities or to vote on other matters upon the
written request of the Holders of record of 51% of the Securities (unless
substantially the same matter was voted on during the preceding 12 months). The
Trust will also assist in communications with other Holders as required by the
Investment Company Act.
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MANAGEMENT AND ADMINISTRATION OF THE TRUST
TRUSTEES
The Trust will be internally managed by three Trustees. Under the provisions
of the Code applicable to grantor trusts, the Trustees will not have the power
to vary the investments held by the Trust. It is a fundamental policy of the
Trust that the Contract may not be disposed of during the term of the Trust and
that the U.S. Treasury Securities held by the Trust may not be disposed of prior
to the earlier of their respective maturities and termination of the Trust.
The names of the persons who have been elected by Goldman Sachs, the initial
Holder of the Trust, and who will serve as the Trustees are set forth below. The
positions and the principal occupations of the individual Trustees during the
past five years are also set forth below.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME, AGE AND ADDRESS TITLE DURING PAST FIVE YEARS
- ------------------------------------ ---------------------- ------------------------------
<S> <C> <C>
Donald J. Puglisi, 50 MANAGING TRUSTEE Professor of Finance
Department of Finance University of Delaware
University of Delaware
Newark, DE 18716
William R. Latham III, 51 TRUSTEE Professor of Economics
Department of Economics University of Delaware
University of Delaware
Newark, DE 18716
James B. O'Neill, 57 TRUSTEE Professor of Economics
Center for Economic Education & University of Delaware
Entrepreneurship
University of Delaware
Newark, DE 18716
</TABLE>
Each Trustee who is not a director, officer or employee of any Underwriter
or the Administrator, or of any affiliate thereof, will be paid by the Seller,
on behalf of the Trust, in respect of its annual fee and anticipated
out-of-pocket expenses, a one-time, up-front fee of $10,800. The Trust's
Managing Trustee will also receive an additional up-front fee of $3,600 for
serving in that capacity. The Trustees will not receive, either directly or
indirectly, any compensation, including any pension or retirement benefits, from
the Trust. None of the Trustees receives any compensation for serving as a
trustee or director of any other affiliated investment company.
ADMINISTRATOR
The day-to-day affairs of the Trust will be managed by The Bank of New York
as Trust Administrator pursuant to an Administration Agreement. Under the
Administration Agreement, the Trustees have delegated most of their operational
duties to the Administrator, including without limitation, the duties to: (i)
receive invoices for expenses incurred by the Trust; (ii) with the approval of
the Trustees, engage legal and other professional advisors (other than the
independent public accountants for the Trust); (iii) instruct the Paying Agent
to pay distributions on Securities as described herein; (iv) prepare and mail,
file or publish all notices, proxies, reports, tax returns and other
communications and documents, and keep all books and records, for the Trust; (v)
at the direction of the Trustees, institute and prosecute legal and other
appropriate proceedings to enforce the rights and remedies of the Trust; and
(vi) make all necessary arrangements with respect to meetings of Trustees and
any meetings of Holders. The Administrator, however, will not select the
independent public accountants for the Trust or sell or otherwise dispose of the
Trust assets (except in connection with an acceleration of the Contract or the
settlement of the Contract at the Exchange Date and upon termination of the
Trust).
The Administration Agreement may be terminated by either the Trust or the
Administrator upon 60 days' prior written notice, except that no termination
shall become effective until a successor Administrator has been chosen and has
accepted the duties of the Administrator.
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Except for its roles as Administrator, Custodian, Paying Agent, registrar
and transfer agent for the Trust, The Bank of New York has no other affiliation
with, and is not engaged in any other transactions with, the Trust.
The address of the Administrator is 101 Barclay Street, New York, NY 10286.
CUSTODIAN
The Trust's custodian (the "Custodian") is The Bank of New York pursuant to
a custodian agreement (the "Custodian Agreement"). In the event of any
termination of the Custodian Agreement by the Trust or the resignation of the
Custodian, the Trust must engage a new Custodian to carry out the duties of the
Custodian as set forth in the Custodian Agreement. Pursuant to the Custodian
Agreement, all net cash received by the Trust will be invested by the Custodian
in short-term U.S. Treasury securities maturing on or shortly before the next
quarterly distribution date. The Custodian will also act as collateral agent
under the Collateral Agreement and will hold a perfected security interest in
the Common Stock and U.S. Government obligations or other assets consistent with
the terms of the Contract.
PAYING AGENT
The transfer agent, registrar and paying agent (the "Paying Agent") for the
Securities is The Bank of New York pursuant to a paying agent agreement (the
"Paying Agent Agreement"). In the event of any termination of the Paying Agent
Agreement by the Trust or the resignation of the Paying Agent, the Trust will
use its best efforts to engage a new Paying Agent to carry out the duties of the
Paying Agent.
INDEMNIFICATION
The Trust will indemnify each Trustee, the Paying Agent, the Administrator
and the Custodian, with respect to any claim, liability, loss or expense
(including the costs and expenses of the defense against any claim or liability)
that it may incur in acting as Trustee, Paying Agent, Administrator or
Custodian, as the case may be, except in the case of willful misfeasance, bad
faith, gross negligence or reckless disregard of their respective duties or
where applicable law prohibits such indemnification. Goldman Sachs has agreed to
reimburse the Trust for any amounts it may be required to pay as indemnification
to any Trustee, the Administrator, the Custodian or the Paying Agent. Goldman
Sachs will in turn be reimbursed by the Seller for all such reimbursements paid
by it.
DISTRIBUTIONS
The Trust intends to distribute to Holders on a quarterly basis an amount
equal to $ . per Security (which amount equals the pro rata portion of the
fixed quarterly cash distributions from the proceeds of the maturing U.S.
Treasury securities held by the Trust). The first distribution, reflecting the
Trust's operations from the date of this offering, will be made on November 15,
1996 to Holders of record as of November 1, 1996. Thereafter, distributions will
be made on February 15, May 15, August 15 and November 15 of each year to
Holders of record as of each February 1, May 1, August 1 and November 1,
respectively. A portion of each such distribution will be treated as a tax-free
return of the Holder's investment. See "Investment Objective and Policies --
General" and "Certain Federal Income Tax Considerations -- Recognition of
Interest on the U.S. Treasury Securities".
Upon termination of the Trust, as described under the caption "Investment
Objective and Policies -- Trust Termination", each Holder will receive any
remaining net assets of the Trust.
The Trust does not permit the reinvestment of distributions.
ESTIMATED EXPENSES
At the closing of this offering Goldman Sachs will pay to each of the
Administrator, the Custodian and the Paying Agent, and to each Trustee, a
one-time, up-front amount in respect of its fee and, in the case of the
Administrator, anticipated expenses of the Trust over the term of the Trust. The
anticipated Trust expenses to be borne by the Administrator include, among other
things, expenses for legal and independent accountants' services, costs of
printing proxies, Securities certificates and Holder reports, expenses of the
Trustees, fidelity bond coverage, stock exchange listing fees and expenses of
qualifying the Securities for sale in the various states. Organization costs of
the Trust in the amount of $10,000 and
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estimated costs of the Trust in connection with the initial registration and
public offering of the Securities in the amount of $103,000 will be paid by
Goldman Sachs. Other estimated costs of the Trust in connection with the public
offering of the Securities in the amount of $115,000 will be paid by the Seller.
The amount payable to the Administrator in respect of ongoing expenses of
the Trust was determined based on estimates made in good faith on the basis of
information currently available to the Trust, including estimates furnished by
the Trust's agents. There cannot, however, be any assurance that actual
operating expenses of the Trust will not be substantially more than this amount.
Any excess expenses will be paid by Goldman Sachs or, in event of their failure
to pay such amounts, the Trust.
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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary of the principal United States federal income tax
consequences of ownership of Securities is based upon the opinion of Sullivan &
Cromwell, special tax counsel to the Trust. It deals only with Securities held
as capital assets by a Holder who acquires its Securities at the issue price
from an Underwriter pursuant to the original offering, and not with special
classes of Holders, such as dealers in securities or currencies, banks, life
insurance companies, persons who are not United States Holders (as defined
below), persons that hold Securities that are part of a hedging transaction,
straddle or conversion transaction, or persons whose functional currency is not
the U.S. dollar. The summary is based on the Internal Revenue Code of 1986, as
amended (the "Code"), its legislative history, existing and proposed regulations
thereunder, published rulings and court decisions, all as currently in effect
and all subject to change at any time, perhaps with retroactive effect.
Prospective purchasers of Securities should consult their own tax advisors
concerning the consequences, in their particular circumstances, under the Code
and the laws of any other taxing jurisdiction, of ownership of Securities.
A United States Holder is a beneficial owner who or that is (i) a citizen or
resident of the United States, (ii) a domestic corporation or (iii) otherwise
subject to United States federal income taxation on a net income basis in
respect of Securities.
Holders should also be aware that there are alternative characterizations of
the assets of the Trust which could result in different federal income tax
consequences. See "Alternative Characterizations" below. While Sullivan &
Cromwell does not believe these alternative characterizations should apply for
federal income tax purposes, there can be no assurance in this regard, and
Holders should consult their tax advisors concerning the risks associated with
alternative characterizations. The following discussion assumes that no such
alternative characterizations will apply.
TAX STATUS OF THE TRUST. The Trust will be treated as a grantor trust for
federal income tax purposes, and each Holder will be considered the owner of its
pro rata portions of the stripped U.S. Treasury securities and the Contract in
the Trust under the grantor trust rules of the Code. Income received by the
Trust will be treated as income of the Holders in the manner set forth below.
RECOGNITION OF INTEREST ON THE U.S. TREASURY SECURITIES. The U.S. Treasury
securities in the Trust will consist of stripped U.S. Treasury securities. A
Holder will be required to treat its pro rata portion of each U.S. Treasury
security in the Trust as a bond that was originally issued on the date the
Holder purchased its Securities at an original issue discount equal to the
excess of the Holder's pro rata portion of the amounts payable on such U.S.
Treasury security over the Holder's tax basis therefor (determined as described
below). The amount of such excess, however, will constitute only a portion of
the total amounts payable in respect of U.S. Treasury securities held by the
Trust and, consequently, a substantial portion of each quarterly cash
distribution to the Holders will be treated as a tax-free return of the Holders'
investment in the U.S. Treasury securities and will not be considered current
income for federal income tax purposes. See "Investment Objective and Policies
- -- General".
A Holder (whether on the cash or accrual method of tax accounting) will be
required to include original issue discount (other than original issue discount
on short-term U.S. Treasury securities as defined below) in income for federal
income tax purposes as it accrues on a constant yield basis. The Trust expects
that more than 20% of the Holders will be accrual basis taxpayers, in which case
original issue discount on any short-term U.S. Treasury security (I.E., any U.S.
Treasury security with a maturity of one year or less from the date it is
purchased) held by the Trust also will be required to be included in income by
the Holders as it is accrued. Unless a Holder elects to accrue the original
issue discount on a short-term U.S. Treasury security according to a constant
yield method based on daily compounding, such original issue discount will be
accrued on a straight-line basis. The Holder's tax basis in a U.S. Treasury
security will be increased by the amounts of any original issue discount
included in income by the Holder with respect to such U.S. Treasury security.
TAX BASIS OF THE U.S. TREASURY SECURITIES AND THE CONTRACT. A Holder's tax
basis in the Contract and the U.S. Treasury securities, respectively, will equal
its pro rata portion of the amounts paid for them by the Trust. It is currently
anticipated that % and % of the net proceeds of the offering will be used
by the Trust to purchase the U.S. Treasury securities and as payments for the
Contract, respectively.
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<PAGE>
TREATMENT OF THE CONTRACT. Each Holder will be treated as having entered
into a pro rata portion of the Contract and, at the Exchange Date, as having
received a pro rata portion of the Common Stock or cash, Marketable Securities
or a combination thereof delivered to the Trust.
DISTRIBUTION OF THE COMMON STOCK. The delivery of Common Stock pursuant to
the Contract will not be taxable to the Holders. Each Holder's basis in its
Common Stock will be equal to its basis in its pro rata portion of the Contract
less the portion of such basis allocable to any fractional shares of Common
Stock for which cash is received. A Holder will recognize capital gain or loss
upon receipt of cash in lieu of fractional shares of Common Stock distributed
upon termination of the Trust equal to the difference between the amount of cash
received and the basis of such fractional share. The holding period for the
Common Stock will begin on the date it is acquired.
DISTRIBUTION OF CASH OR MARKETABLE SECURITIES. If the Seller elects the
Cash Settlement Alternative or, as a result of a Reorganization Event, cash,
Marketable Securities, or a combination of cash and Marketable Securities is
delivered pursuant to the Contract, a Holder will recognize capital gain or loss
upon receipt equal to the difference between the amount of cash received, and
its basis in its pro rata portion of the Contract allocable to any shares for
which such cash was received. Any gain or loss will be capital gain or loss and,
if the Holder has held the Securities for more than one year, such gain or loss
will be long-term capital gain or loss. A Holder's basis in any Marketable
Securities received will be equal to its basis in its pro rata portion of the
Contract less the portion of such basis allocable to any shares of Common Stock
for which cash or fractional shares of Marketable Securities were received. See
"Investment Objective and Policies -- The Contract".
SALE OF SECURITIES. Upon a sale of all or some of a Holder's Securities, a
Holder will be treated as having sold its pro rata portions of the U.S. Treasury
securities and the Contract underlying the Securities. The selling Holder will
recognize gain or loss equal to the difference between the amount realized and
the Holder's aggregate tax bases in its pro rata portions of the U.S. Treasury
securities and the Contract. Any gain or loss will be long-term capital gain or
loss if the Holder has held the Securities for more than one year.
ALTERNATIVE CHARACTERIZATIONS. Sullivan & Cromwell believes the Contract
should be treated for federal income tax purposes as a prepaid forward contract
for the purchase of a variable number of shares of Common Stock. The Internal
Revenue Service could conceivably take the view that the Contract should be
treated as a loan to the Seller in exchange for a contingent debt obligation of
the Seller. If the Internal Revenue Service were to prevail in making such an
assertion and the Contract is entered into on or after August 13, 1996, a Holder
might be required to include original issue discount in income over the life of
the Securities based on the excess of the anticipated value of the Common Stock
to be received in respect of the Contract over the amount paid for the Contract.
In addition, regardless of when the Contract is entered into, a Holder would be
required to include interest (rather than capital gain) in income on the
Exchange Date in an amount equal to the excess, if any, of the value of the
Common Stock received on the Exchange Date (or the proceeds from prior
disposition of the Contract) over the aggregate of the basis of the Contract and
any interest on the Contract previously included in income (or might be entitled
to an ordinary deduction to the extent of interest previously included in income
and not ultimately received). The Internal Revenue Service could also
conceivably take the view that a Holder should simply include in income as
interest the amount of cash actually received each year in respect of the
Securities.
BACKUP WITHHOLDING AND INFORMATION REPORTING. The payments of principal and
interest (including original issue discount) on, and the proceeds received from
the sale of, Securities may be subject to U.S. backup withholding tax at the
rate of 31% if the Holder thereof fails to supply an accurate taxpayer
identification number or otherwise to comply with applicable U.S. information
reporting or certification requirements. Any amounts so withheld will be allowed
as a credit against such Holder's U.S. federal income tax liability and may
entitle such Holder to a refund, provided that the required information is
furnished to the Internal Revenue Service.
After the end of each calendar year, the Trust will furnish to each record
Holder of Securities an annual statement containing information relating to the
payments on the U.S. Treasury securities received by the Trust. The Trust will
also furnish annual information returns to each record Holder of the Securities
and to the Internal Revenue Service.
24
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the Trust
has agreed to sell to Goldman Sachs, as Underwriters, and the Underwriters, have
agreed to purchase from the Trust 2.500,000 Securities.
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to take and pay for all of the Securities offered
hereby, if any are taken.
The Underwriters propose to offer the Securities in part directly to the
public at the price to the public set forth on the cover page of this Prospectus
and in part to certain securities dealers at such price less a concession of
$ per Security. The Underwriters may allow, and such dealers may re-allow, a
concession not in excess of $ per Security to certain brokers and dealers.
After the Securities are released for sale to the public, the offering price and
other selling terms may from time to time be varied by the Underwriters.
In light of the fact that proceeds from the sale of the Securities will be
used by the Trust to purchase the Contract from the Seller, the Underwriting
Agreement provides that the Seller will pay to the Underwriters the
Underwriters' Compensation of $ per Security.
The Trust has granted the Underwriters an option exercisable for 30 calendar
days after the date of this Prospectus to purchase up to an aggregate of 375,000
additional Securities solely to cover over-allotments, if any. If the
Underwriters exercise their over-allotment option, they will receive the
Underwriters' Compensation referred to above for each Security so purchased. In
addition, in connection with any such exercise, the Underwriters have severally
agreed, subject to certain conditions, to purchase approximately the same
percentage thereof that the number of the Securities to be purchased by each of
them, as shown in the foregoing table, bears to the 2,500,000 Securities
initially offered.
The Seller and the Company have agreed that, during the period beginning
from the date of this Prospectus and continuing to and including the date 180
days, in the case of the Seller, and 90 days, in the case of the Company, after
the date of this Prospectus, they will not offer, sell, contract to sell or
otherwise dispose of any Common Stock or other securities of the Company (other
than pursuant to employee stock option plans existing, or on the conversion or
exchange of convertible or exchangeable securities outstanding, on the date of
this Prospectus) which are substantially similar to the Common Stock or which
are convertible or exchangeable into Common Stock or other securities which are
substantially similar to the Common Stock, without the prior written consent of
Goldman Sachs.
The Securities will be a new issue of securities with no established trading
market. Application has been made to list the Securities on the New York Stock
Exchange. Goldman Sachs have advised the Company that they intend to make a
market in the Securities, but they are not obligated to do so and may
discontinue market making at any time without notice. No assurance can be given
as to the liquidity of the trading market for the Securities.
The Company and the Seller have agreed to indemnify the Underwriters against
certain liabilities, including certain liabilities under the Securities Act of
1933. The Underwriters have agreed to pay certain expenses of the Trust.
One Security has been subscribed for by Goldman Sachs at an aggregate
purchase price of $100,000. No Securities will be sold to the public until the
Securities subscribed for have been purchased and the purchase price thereof
paid in full to the Trust.
VALIDITY OF SECURITIES
The validity of the Securities will be passed upon for the Trust and the
Underwriters by their counsel, Sullivan & Cromwell, 125 Broad Street, New York,
New York 10004.
25
<PAGE>
EXPERTS
The financial statement included in this Prospectus has been audited by
Coopers & Lybrand L.L.P., independent accountants, as stated in their opinion
appearing herein, and has been so included in reliance upon such opinion given
upon the authority of that firm as experts in accounting and auditing.
FURTHER INFORMATION
The Trust has filed with the Securities and Exchange Commission, Washington,
D.C. 20549, a Registration Statement under the Securities Act of 1933, as
amended, with respect to the Securities offered hereby. Further information
concerning the Securities and the Trust may be found in the Registration
Statement of which this Prospectus constitutes a part. The Registration
Statement may be inspected without charge at the Commission's office in
Washington, D.C., and copies of all or any part thereof may be obtained from
such office after payment of the fees prescribed by the Commission.
26
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Securityholders of
Dole Food Automatic Common Exchange Security Trust:
We have audited the accompanying statement of assets and liabilities of Dole
Food Automatic Common Exchange Security Trust as of August 5, 1996. This
financial statement is the responsibility of the Trust's management. Our
responsibility is to express an opinion on this financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of assets and liabilities is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement. An
audit also includes assessing the accounting principles used and significant
estimates made by the Trust's management, as well as evaluating the overall
financial statement presentation. We believe that our audit of the financial
statement provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of Dole Food Automatic Common
Exchange Security Trust, as of August 5, 1996 in conformity with generally
accepted accounting principles.
COOPERS & LYBRAND L.L.P.
New York, New York
August 5, 1996
27
<PAGE>
DOLE FOOD AUTOMATIC COMMON EXCHANGE SECURITY TRUST
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 5, 1996
ASSETS
<TABLE>
<S> <C>
Cash............................................................................. $ 100,000
---------
Total assets................................................................. $ 100,000
---------
---------
LIABILITIES
.......................................................................... $ 0
---------
NET ASSETS
Balance applicable to 1 Security outstanding..................................... $ 100,000
---------
---------
Net asset value per Security..................................................... $ 100,000
---------
---------
</TABLE>
- ------------------------
(1) Dole Food Automatic Common Exchange Security Trust (the "Trust") was
established on August 1, 1996 and has had no operations to date other than
matters relating to its organization and registration as a non-diversified,
closed-end management investment company under the Investment Company Act of
1940. Costs incurred in connection with the organization of the Trust will
be paid by Goldman, Sachs & Co.
(2) The Trust proposes to sell Automatic Common Exchange Securities (the
"Securities") to the public pursuant to a Registration Statement on Form N-2
under the Securities Act of 1933, as amended, and the Investment Company Act
of 1940, as amended.
The Trust is a newly organized, finite-term trust established to purchase
and hold a portfolio of stripped U.S. treasury securities and a forward
purchase contract with an existing shareholder of Dole Food relating to the
common stock of Dole Food Company, Inc. The trust will be internally managed
and will not have an investment adviser. The administration of the trust,
which will be overseen by the trustees, will be carried out by The Bank of
New York as trust administrator. The Bank of New York will also serve as
custodian, paying agent, registrar and transfer agent with respect to the
Securities. Ongoing fees and anticipated expenses for the term of the trust
will be paid for by Goldman, Sachs & Co.
(3) The Trust issued 1 Security on August 5, 1996 to Goldman, Sachs & Co. in
consideration for the aggregate purchase price of $100,000.
The Amended and Restated Trust Agreement provides that prior to the
offering, the Trust will split the outstanding Security to be effected on
the date that the price and underwriting discount of the Securities being
offered to the public is determined, but prior to the sale of the Securities
to Goldman, Sachs & Co. The initial Security will be split into the smallest
whole number of Securities that would result in the per Security amount
recorded as shareholders' equity after effecting the split not exceeding the
Public Offering price per Security.
28
<PAGE>
- ----------------------------------------------
--------------------------------------------
- ----------------------------------------------
--------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL.
--------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary................................. 3
The Trust.......................................... 8
Use of Proceeds.................................... 8
Investment Objective and Policies.................. 8
Risk Factors....................................... 16
Description of the Securities...................... 19
Management and Administration of the Trust......... 20
Certain Federal Income Tax Considerations.......... 23
Underwriting....................................... 25
Validity of Securities............................. 25
Experts............................................ 26
Further Information................................ 26
Report of Independent Accountants.................. 27
Statement of Assets and Liabilities................ 28
</TABLE>
--------------
UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE SECURITIES, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
2,500,000 SHARES
DOLE FOOD AUTOMATIC
COMMON EXCHANGE
SECURITY TRUST
$ . AUTOMATIC COMMON
EXCHANGE SECURITIES
-----------
PROSPECTUS
-----------
GOLDMAN, SACHS & CO.
- ----------------------------------------------
----------------------------------------------
- ----------------------------------------------
----------------------------------------------
<PAGE>
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
<TABLE>
<S> <C> <C>
(a) Financial Statements
Part A -- Report of Independent Accountants.
Statement of Assets and Liabilities.
Part B -- None.
Exhibits
(b)
2.a.(i)
Trust Agreement*
2.a.(ii)
Form of Amended and Restated Trust Agreement
2.d
Form of Specimen Certificate of Automatic Common Exchange
Security*
(included in Exhibit 2.a.(ii))
2.h
Form of Underwriting Agreement*
2.j
Form of Custodian Agreement*
2.k.(i)
Form of Administration Agreement*
2.k.(ii)
Form of Paying Agent Agreement*
2.k.(iii)
Form of Purchase Contract*
2.k.(iv)
Form of Collateral Agreement*
2.k.(v)
Form of Fund Expense Agreement*
2.k.(vi)
Form of Fund Indemnity Agreement*
2.l
Opinion and Consent of Counsel to the Trust*
2.n.(i)
Tax Opinion of Counsel to the Trust (Consent contained in
Exhibit 2.n.(i))*
2.n.(iii)
Consent of Independent Public Accountants
2.n.(iv)
Consents to Being Named as Trustee
2.p
Form of Subscription Agreement*
2.r
Financial Data Schedule
2.s
Power of Attorney
</TABLE>
- ------------------------
* Previously Filed.
ITEM 25. MARKETING ARRANGEMENTS
See the Form of Underwriting Agreement filed as Exhibit 2.h to this
Registration Statement.
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be incurred in
connection with the offering described in this Registration Statement:
<TABLE>
<S> <C>
Registration fees.............................................. $ 37,920
New York Stock Exchange listing fee............................ 20,315
Printing (other than certificates)............................. 40,000
Fees and expenses of qualification under state securities laws
(excluding fees of counsel)................................... 5,000
Accounting fees and expenses................................... 3,000
Legal fees and expenses........................................ 100,000
NASD fees...................................................... 11,497
Miscellaneous.................................................. 1,268
----------
Total...................................................... $ 219,000
----------
----------
</TABLE>
C-1
<PAGE>
ITEM 27. PERSON CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Prior to January 18, 1996 the Trust had no existence. As of the effective
date, the Trust will have entered into a Subscription Agreement for 1 Security
with Goldman, Sachs & Co. and an Underwriting Agreement with respect to
2,500,000 Securities with Goldman, Sachs & Co.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
NUMBER OF RECORD
TITLE OF CLASS HOLDERS
- ---------------------------------------------------------------------------- ---------------------
<S> <C>
Automatic Common Exchange Securities........................................ 1
</TABLE>
ITEM 29. INDEMNIFICATION
The Underwriting Agreement, filed as Exhibit 2.h to this Registration
Statement, provides for indemnification to the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act").
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to trustees, officers and controlling persons of the
Registrant, pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a trustee, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Not Applicable.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
The Trust's accounts, books and other documents are currently located at the
offices of the Registrant, c/o Goldman, Sachs & Co., 85 Broad Street, New York,
New York 10004 and at the offices of The Bank of New York, the Registrant's
Administrator, Custodian, paying agent, transfer agent and registrar.
ITEM 32. MANAGEMENT SERVICES
Not applicable.
ITEM 33. UNDERTAKINGS
(a) The Registrant hereby undertakes to suspend offering of its units until
it amends its prospectus if (1) subsequent to the effective date of its
Registration Statement, the net asset value declines more than 10 percent from
its net asset value as of the effective date of the Registration Statement or
(2) the net asset value increases to an amount greater than its net proceeds as
stated in the prospectus.
(b) The Registrant hereby undertakes that (i) for the purpose of determining
any liability under the Securities Act, the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon Rule
430A and contained in a form of prospectus filed by the Registrant under Rule
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective; (ii) for the purpose of
determining any liability under the Securities Act, each post-effective
amendment that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of the securities at that time shall be deemed to be the initial bona
fide offering thereof.
C-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
the Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of New York, State of New York, on the 6th
day of August, 1996.
DOLE FOOD AUTOMATIC COMMON
EXCHANGE SECURITY TRUST
By: /s/ JOHN P. MCNULTY*
-----------------------------------
John P. McNulty
TRUSTEE
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following person, in
the capacities and on the date indicated.
<TABLE>
<C> <S> <C>
NAME TITLE DATE
- ------------------------------------------------------ ------------------------------------- ------------------
Principal Executive Officer,
/s/ JOHN P. MCNULTY* Principal Financial Officer,
------------------------------------------- Principal Accounting Officer and August 6, 1996
John P. McNulty Trustee
*By /s/ PAUL EFRON
--------------------------------------
Paul Efron
ATTORNEY-IN-FACT
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL PAGE
NUMBER DESCRIPTION NUMBER
- --------- ------------------------------------------------------------------------------------------- ---------------
<S> <C> <C>
2.a.(i) Trust Agreement*
2.a.(ii) Form of Amended and Restated Trust Agreement
2.d Form of Specimen Certificate of Automatic Common Exchange Security*
(included in Exhibit 2.a.(ii))
2.h Form of Underwriting Agreement*
2.j Form of Custodian Agreement*
2.k.(i) Form of Administration Agreement*
2.k.(ii) Form of Paying Agent Agreement*
2.k.(iii) Form of Purchase Contract*
2.k.(iv) Form of Collateral Agreement*
2.k.(v) Form of Fund Expense Agreement*
2.k.(vi) Form of Fund Indemnity Agreement*
2.l Opinion and Consent of Counsel to the Trust*
2.n.(i) Tax Opinion of Counsel to the Trust (Consent contained in Exhibit 2.n.(i))*
2.n.(iii) Consent of Independent Public Accountants
2.n.(iv) Consents to Being Named as Trustee
2.p Form of Subscription Agreement*
2.r Financial Data Schedule
2.s Power of Attorney
</TABLE>
- ------------------------
* Previously Filed.
<PAGE>
Draft of July 30, 1996
AMENDED AND RESTATED
TRUST AGREEMENT
CONSTITUTING
DOLE FOOD AUTOMATIC
COMMON EXCHANGE SECURITY TRUST
Dated as of August__, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
ARTICLE II
TRUST DECLARATION; PURPOSES, POWERS
AND DUTIES OF THE TRUSTEES; ADMINISTRATION
SECTION 2.1 Declaration of Trust; Purposes of the
Trust........................................... 6
SECTION 2.2 General Powers and Duties of the
Trustees........................................ 6
SECTION 2.3 Portfolio Acquisition............................. 8
SECTION 2.4 Portfolio Administration.......................... 8
SECTION 2.5 Manner of Sales................................... 11
SECTION 2.6 Limitations on Trustees' Powers................... 11
ARTICLE III
ACCOUNTS AND PAYMENTS
SECTION 3.1 The Trust Account................................. 12
SECTION 3.2 Payment of Fees and Expenses...................... 12
SECTION 3.3 Distributions to Holders.......................... 12
SECTION 3.4 Segregation....................................... 13
SECTION 3.5 Investments....................................... 13
ARTICLE IV
REDEMPTION
SECTION 4.1 Redemption........................................ 13
ARTICLE V
ISSUANCE OF CERTIFICATES;
REGISTRY; TRANSFER OF SECURITIES
SECTION 5.1 Form of Certificate............................... 14
SECTION 5.2 Transfer of Securities; Issuance,
Transfer and Interchange of
Certificates.................................... 14
SECTION 5.3 Replacement of Certificates....................... 15
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE VI
ISSUANCE OF THE CONTRACT
SECTION 6.1 Execution of the Contract......................... 16
ARTICLE VII
TRUSTEES
SECTION 7.1 Trustees.......................................... 16
SECTION 7.2 Vacancies......................................... 16
SECTION 7.3 Powers............................................ 17
SECTION 7.4 Meetings.......................................... 17
SECTION 7.5 Resignation and Removal........................... 18
SECTION 7.6 Liability......................................... 18
SECTION 7.7 Compensation...................................... 19
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Meetings of Holders............................... 19
SECTION 8.2 Books and Records; Reports........................ 20
SECTION 8.3 Termination....................................... 21
SECTION 8.4 Amendment and Waiver.............................. 21
SECTION 8.5 Accountants....................................... 23
SECTION 8.6 Nature of Holder's Interest....................... 24
SECTION 8.7 New York Law to Govern............................ 24
SECTION 8.8 Notices........................................... 24
SECTION 8.9 Severability...................................... 25
SECTION 8.10 Counterparts...................................... 25
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT
This Amended and Restated Trust Agreement, dated as of August __,
1996 (the "Trust Agreement"), by and between Goldman Sachs & Co., as sponsor
(the "Sponsor"), and ________________,__________________ and _______________ as
trustees (the "Trustees"), constituting Dole Food Automatic Common Exchange
Security Trust (the "Trust") .
W I T N E S S E T H:
WHEREAS, the Sponsor and John P. McNulty, as trustee, have
previously entered into a Trust Agreement dated as of January 18, 1996 (the
"Original Agreement"), creating Dole Food Automatic Common Exchange Security
Trust;
WHEREAS, the parties hereto desire to amend and restate the Original
Agreement in certain respects; and
WHEREAS, the Trust has previously issued to the Sponsor one Security
in consideration of the aggregate purchase price therefor of $100,000 in
satisfaction of the requirements of Section 14(a)(1) under the Investment
Company Act (as defined hereinafter);
NOW, THEREFORE, the parties hereto agree to amend and restate the
Original Agreement as provided herein. Upon the execution and delivery of
copies hereof by the parties hereto, the Original Agreement will be
automatically amended and restated in its entirety to read as provided herein.
ARTICLE I
DEFINITIONS
Whenever used in this Trust Agreement, the following words and
phrases shall have the meanings listed below. Any reference to any agreement
shall be a reference to such agreement as supplemented or amended from time to
time.
"ACCELERATION AMOUNT NOTICE" - An Acceleration Amount Notice as
defined in the Contract.
"ACCELERATION VALUE" - The Acceleration Value as defined in the
Contract.
"ADDITIONAL PURCHASE PRICE" - The Additional Purchase Price as
defined in the Contract.
<PAGE>
"AGGREGATE ACCELERATION VALUE" - The Aggregate Acceleration Value
as defined in the Contract.
"ADMINISTRATION AGREEMENT" - The Administration Agreement, dated
as of the date hereof, between the Administrator and the Trustees, and any
substitute agreement therefor entered into pursuant to Section 2.2(a) hereof.
"ADMINISTRATOR" - The Bank of New York or its successor as
permitted under Section 6.1 of the Administration Agreement or appointed
pursuant to Section 2.2(a) hereof.
"BUSINESS DAY" - A day on which the New York Stock Exchange, Inc.
is open for trading that is not a day on which banks in The City of New York are
authorized or obligated by law to close.
"CASH SETTLEMENT ALTERNATIVE" - The Cash Settlement Alternative as
defined in the Contract.
"CERTIFICATE" - Any certificate evidencing the ownership of
Securities substantially in the form of Exhibit A hereto.
"CODE" - The Internal Revenue Code of 1986, as amended from time
to time; each reference herein to any section of the Code or any regulation
thereunder shall constitute a reference to any successor provision thereto.
"COLLATERAL AGENT" - The Bank of New York or its successor as
permitted under the Collateral Agreement.
"COLLATERAL AGREEMENT" - The Collateral Agreement between the
Collateral Agent, the Seller and the other parties thereto, securing the
Seller's obligations under the Contract, substantially in the form of Exhibit B
hereto.
"COMMENCEMENT DATE" - The day on which the Underwriting Agreement
is executed.
"COMMISSION" - The United States Securities and Exchange
Commission.
"COMMON STOCK" - Common Stock, no par value, of Dole Food Company,
Inc.
"COMPANY" - Dole Food Company, Inc., a Hawaii corporation.
-2-
<PAGE>
"CONTRACT" - The forward purchase contract entered into by the
Trustees, the Seller and the other parties thereto, substantially in the form of
Exhibit C hereto.
"CURRENT MARKET PRICE" - Current Market Price as defined in the
Contract.
"CUSTODIAN" - The Bank of New York or its successor as permitted
under paragraph 11 of the Custodian Agreement or appointed pursuant to Section
2.2(a) hereof.
"CUSTODIAN AGREEMENT" - The Custodian Agreement, dated as of the
date hereof, between the Custodian and the Trustees, and any substitute
agreement therefor entered into pursuant to Section 2.2(a) hereof.
"DEPOSITARY" - The Depository Trust Company, or any successor
thereto.
"DISTRIBUTION DATE" - Each ________, ________, ________ and
________ of each year commencing ________, 1996, to and including ________ __,
____ or if any such date is not a Business Day, then the first Business Day
thereafter.
"EXCESS PURCHASE PAYMENT" - Excess Purchase Payment as defined
under the Contract.
"EVENT OF DEFAULT" - An Event of Default as defined in the
Contract.
"EXCHANGE" - The delivery by the Trustees to the Holders of Shares
(or, if the seller elects the Cash Settlement Alternative under the Contract,
the amount in cash specified in the Contract as payable in respect thereof) in
mandatory exchange for the Securities on the Exchange Date.
"EXCHANGE DATE" - ________ __, ____.
"EXCHANGE RATE" - The Exchange Rate as defined in the Contract.
"FIRM PURCHASE PRICE" - The Firm Purchase Price as defined in the
Contract.
"FIRST TIME OF DELIVERY" - The First Time of Delivery as defined
in the Underwriting Agreement.
"HOLDER" - The registered owner of any Security as recorded on the
books of the Paying Agent.
-3-
<PAGE>
"INDEPENDENT DEALERS" - Independent Dealers as defined in the
Contract.
"INDEMNITY AGREEMENT" - The Fund Indemnity Agreement dated as of
the date hereof between the Trustees and the Sponsor substantially in the form
of Exhibit D hereto.
"INVESTMENT COMPANY ACT" - The Investment Company Act of 1940, as
amended from time to time; each reference herein to any section of such Act or
any rule or regulation thereunder shall constitute a reference to any successor
provision thereto.
"MANAGING TRUSTEE" - The Trustee designated the Managing Trustee
by resolution of the Trustees.
"MARKETABLE SECURITIES" - Marketable Securities as defined in the
Contract.
"ORIGINAL AGREEMENT" - The meaning specified in the recitals
hereof.
"PARTICIPANT" - A Person having a book-entry only system account
with the Depositary.
"PAYING AGENT" - The Bank of New York or its successor as
permitted under Section 6.6 of the Paying Agent Agreement or appointed pursuant
to Section 2.2(a) hereof.
"PAYING AGENT AGREEMENT" - The Paying Agent Agreement, dated as of
the date hereof, between the Paying Agent and the Trustees, and any substitute
agreement therefor entered into pursuant to Section 2.2(a) hereof.
"PERSON" - An individual, a partnership, a corporation, a trust,
an unincorporated association, a joint venture or other entity or a government
or any agency or political subdivision thereof.
"PROSPECTUS" - The prospectus relating to the Trust constituting a
part of the Registration Statement, as first filed with the Commission pursuant
to Rule 497(b) or (h) under the Securities Act, and as subsequently amended or
supplemented by the Trust.
"QUARTERLY DISTRIBUTION" - $______ per Security paid to each
Holder on each Distribution Date.
"RECORD DATE" - Each ________, ________, ________, and ________ of
each year commencing ________, 1996.
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"REGISTRATION STATEMENT" - Registration Statement on Form N-2
(Registration No. 333-325) of the Trust, as amended.
"REORGANIZATION EVENT" - A Reorganization Event as defined in the
Contract.
"SECOND TIME OF DELIVERY" - The Second Time of Delivery as defined
in the Underwriting Agreement.
"SECURITIES ACT" - The Securities Act of 1933, as amended from
time to time.
"SECURITY" - $.___ Automatic Common Exchange Security of the Trust
evidencing a Holder's undivided interest in the Trust and right to receive a pro
rata distribution upon liquidation of the Trust Estate.
"SELLER" - The person named as Seller in the Contract.
"SHARES" - Shares of Common Stock to be exchanged by the Trustees
for the Securities on the Exchange Date.
"TEMPORARY INVESTMENTS" - Direct short-term U.S. government
obligations, as specified from time to time by the Trustees or through standing
instructions from the Trustees to the Administrator or the Paying Agent.
"TRANSFER AGENT AND REGISTRAR" - The First National Bank of
Boston, as Transfer Agent and Registrar for the Common Stock.
"TREASURY SECURITIES" - The meaning specified in Section 2.3(b)
hereof.
"TRUST ACCOUNT" - The account created pursuant to Section 3.1
hereof.
"TRUST ESTATE" - The Contract and the Treasury Securities held at
any time by the Trust, together with any Temporary Investments held at any time
pursuant to Section 3.5 hereof, and any proceeds thereof or therefrom and any
other moneys held at any time in the Trust Account.
"UNDERWRITERS" - The Underwriters named in the Underwriting
Agreement.
"UNDERWRITING AGREEMENT" - The Underwriting Agreement as described
in the Prospectus.
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ARTICLE II
TRUST DECLARATION; PURPOSES, POWERS
AND DUTIES OF THE TRUSTEES; ADMINISTRATION
SECTION 2.1 DECLARATION OF TRUST; PURPOSES OF THE TRUST. The
Sponsor hereby creates the Trust in order that it may acquire the Treasury
Securities, enter into the Contract, issue and sell to the Sponsor and the
Underwriters the Securities, hold the Trust Estate in trust for the use and
benefit of all present and future Holders and otherwise carry out the terms and
conditions of this Trust Agreement, all for the purpose of achieving the
investment objectives set forth in the Prospectus. The Trustees hereby declare
that they will accept and hold the Trust Estate in trust for the use and benefit
of all present and future Holders. The Sponsor has heretofore deposited with
the Trustees the sum of $10 to accept and hold in trust hereunder until the
issuance and sale of the Securities to the Underwriters, whereupon such sum
shall be donated to an organization satisfying the requirements of Section
170(c)(2) of the Code selected by unanimous consent of the Trustees.
SECTION 2.2 GENERAL POWERS AND DUTIES OF THE TRUSTEES. In
furtherance of the provisions of Section 2.1 hereof, the Sponsor authorizes and
directs the Trustees:
(a) to enter into and perform (and, in accordance with Section
8.4(a) hereof, amend), the Contract, the Collateral Agreement, the
Underwriting Agreement, the Indemnity Agreement, the Custodian Agreement,
the Administration Agreement and the Paying Agent Agreement and to perform
all obligations of the Trustees (including the obligation to provide
indemnity hereunder and thereunder) and enforce all rights and remedies of
the Trust under each of such agreements; and if any of the Custodian
Agreement, the Administration Agreement, the Collateral Agreement and the
Paying Agent Agreement terminates, or the agent of the Trust thereunder
resigns or is discharged, to appoint a substitute agent and enter into a
new agreement with such substitute agent containing provisions
substantially similar to those contained in the agreement being
terminated; provided that in any such new agreement (i) the Custodian and
the Paying Agent shall each be a commercial bank or trust company
organized and existing under the laws of the United States of America or
any state therein, shall have full trust powers and shall have minimum
capital, surplus and retained earnings of not less than $100,000,000; and
(ii) the Administrator and the Collateral Agent shall each be a reputable
financial
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institution qualified in all respects to carry out its obligations under
the Administration Agreement or the Collateral Agreement, as the case may
be;
(b) to hold the Trust Estate in trust, to create and administer the
Trust Account, to direct payments received by the Trust to the Trust
Account and to make payments out of the Trust Account as set forth in
Article III hereof;
(c) to issue and sell to the Underwriters an aggregate of up to
______ Securities (including those Securities subject to the
over-allotment option of the Underwriters provided for in the Underwriting
Agreement) pursuant to the Underwriting Agreement and as contemplated by
the Prospectus; provided, however, that subsequent to the determination of
the public offering price per Security and related underwriting discount
for the Securities to be sold to the Underwriters but prior to the sale of
the Securities to the Underwriters, the Securities originally issued to
the Sponsor shall be split into a greater number of Securities so that
immediately following such split the value of each Security held by the
Sponsor will equal the aforesaid public offering price less the related
underwriting discount;
(d) to select independent public accountants and, subject to the
provisions of Section 8.5 hereof, to engage such independent public
accountants;
(e) to engage legal counsel and, to the extent required by Section
2.4 hereof, to engage professional advisors and pay reasonable
compensation thereto;
(f) to defend any action commenced against the Trustees or the
Trust and to prosecute any action which the Trustees deem necessary to
protect the Trust and the rights and interests of Holders, and to pay the
costs thereof;
(g) to arrange for the bonding of officers and employees of the
Trust as required by Section 17(g) of the Investment Company Act and the
rules and regulations thereunder;
(h) to delegate any and all of its powers and duties hereunder as
contemplated by the Custodian Agreement, the Paying Agent Agreement and
the Administration Agreement, to the extent permitted by applicable law;
and
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(i) to adopt and amend bylaws, and take any and all such other
actions as necessary or advisable to carry out the purposes of the Trust,
subject to the provisions hereof and applicable law, including, without
limitation, the Investment Company Act.
SECTION 2.3 PORTFOLIO ACQUISITION. In furtherance of the
provisions of Section 2.1 hereof, the Sponsor further specifically authorizes
and directs the Trustees:
(a) to enter into the Contract with respect to the Shares subject
thereto with the Seller on the Commencement Date for settlement on the
date or dates provided thereunder and, subject to satisfaction of the
conditions set forth in the Contracts, to pay the Firm Purchase Price and
the Additional Purchase Price, if any, thereunder with the proceeds of the
sale of the Securities, net of underwriting commissions and other expenses
payable in connection with the public offering of the Securities as
described in Section 3.2 hereof and net of the purchase price paid for the
Treasury Securities as provided in paragraph (b) below; and, subject to
the adjustments and exceptions set forth in the Contract, the Contract
shall entitle the Trust to receive from the Seller on the Exchange Date
the Shares subject thereto (or, if the Seller elects the Cash Settlement
Alternative under the Contract, the amount in cash specified in the
Contract in respect thereof) so that the Trust may execute the Exchange
with the Holders; and
(b) to purchase for settlement at the First Time of Delivery, and
at the Second Time of Delivery, as appropriate, with the proceeds of the
sale the Securities, net of underwriting commissions and other expenses
payable in connection with the public offering of the Securities, U.S.
Treasury securities from such brokers or dealers as the Trustees shall
designate in writing to the Administrator having the terms set forth on
Schedule I hereto ("Treasury Securities").
SECTION 2.4 PORTFOLIO ADMINISTRATION. In furtherance of the
provisions of Section 2.1 hereof, the Sponsor further specifically authorizes
and directs the Trustees:
(a) DETERMINATION OF DILUTION OR MERGER ADJUSTMENTS. Upon
receipt of any notice pursuant to Section 5.4(b) of the Contract of an
event requiring an adjustment to the Exchange Rate, or upon otherwise
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acquiring knowledge of such an event, to calculate the required adjustment
and furnish notice thereof to the Collateral Agent and the Seller, or to
request from the Seller such further information as may be necessary to
calculate or effect the required adjustment;
(b) SELECTION OF INDEPENDENT INVESTMENT BANK. Upon receipt of
notice of (i) the occurrence of a Reorganization Event in which property
other than cash or Marketable Securities is to be received in respect of
the Common Stock as described in Section 6.2 of the Contract or (ii) an
Excess Purchase Payment in which the Company has paid or will pay
consideration other than cash as described in Section 6.1(d) of the
Contract, to select and retain a nationally recognized investment banking
firm to determine the market value of such property as provided in the
Contract, and to deliver to the Seller notice pursuant to Section 8.1 of
the Contract identifying the firm proposed to be selected and retained,
and to consult with the Seller on such selection and retention as provided
in such Section 8.1;
(c) ACCELERATION. Upon receipt of any notice pursuant to Section
5.4(a) of the Contract or pursuant to Section 6(a) of the Collateral
Agreement that a Collateral Event of Default has occurred, or upon
otherwise acquiring notice that an Event of Default has occurred, to
request quotations from Independent Dealers, compute Acceleration Value
and Aggregate Acceleration Value and deliver an Acceleration Amount
Notice, in each case with respect to the Contract, all as described in
Article VII of the Contract;
(d) DETERMINATION OF EXCHANGE DATE AMOUNTS. To calculate, on the
Exchange Date, the number of Shares (or, if the Seller elects the Cash
Settlement Alternative under the Contract, the amount in cash) required to
be delivered by the Seller under Section 1.1 of the Contract or, if a
Reorganization Event shall have occurred, the amount of cash required to
be delivered by the Seller, and the number of Marketable Securities
permitted to be delivered by the Seller in lieu of all or a portion of
such cash, all as provided in Section 6.2 of the Contract; and to furnish
notice of the amounts so determined to the Collateral Agent and the
Seller;
(e) DISTRIBUTION OF EXCHANGE CONSIDERATION. Unless a
Reorganization Event shall have occurred (in which event distribution of
proceeds shall be governed
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by Section 8.3 below) or the Seller elects the Cash Settlement Alternative
under the Contract (in which event the cash received in respect thereof
shall be distributed pro rata to the Holders of Securities):
(i) DETERMINATION OF FRACTIONAL SHARES. To determine,
on the Exchange Date: (A) for each Holder of Securities, such
Holder's pro rata share of the total number of Shares delivered to
the Trustees under the Contract on the Exchange Date; and (B) the
number of fractional Shares allocable to each Holder (including, in
the case of the Depositary, fractional shares allocable to
beneficial owners of Securities who own through Participants) and in
the aggregate;
(ii) CASH FOR FRACTIONAL SHARES. To sell, in the
principal market therefor, on the Exchange Date, a number of Shares
equal to the aggregate number of fractional Shares determined
pursuant to clause (i) (B) above, rounded down to the nearest
integral number; and to determine the difference between (A) the
aggregate proceeds of such sale (net of any brokerage or related
expenses) and (B) the product of the number of Shares so sold and
the Current Market Price; and, in accordance with the Indemnity
Agreement, to pay such difference, if positive, to Goldman, Sachs &
Co., or to request payment of such difference, if negative, from
Goldman, Sachs & Co.;
(iii) DELIVERY OF SHARES. To deliver the remaining Shares
to the Transfer Agent and Registrar on the Exchange Date, with
instructions that such Shares be re-registered and re-issued as
follows: (A) for and in the name of each Holder (other than the
Depositary) who holds Securities in definitive form, the Transfer
Agent and Registrar shall be instructed to issue definitive
certificates representing a number of Shares equal to such Holder's
pro rata share of the total delivered to the Trustees under the
Contract, rounded down to the nearest integral number; (B) the
Transfer Agent and Registrar Shares shall be instructed to transfer
all remaining Shares to the account of the Custodian held through
the Depositary, who shall then be instructed to transfer and credit
such Shares to each Participant who holds Securities, with each
Participant receiving its pro rata share of the total Shares
delivered to the Trust on the
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Exchange Date, reduced by the aggregate fractional shares allocable
to such Participant;
(iv) DISTRIBUTION OF CASH IN RESPECT OF FRACTIONAL
SHARES. To distribute to each Holder of Securities cash in the
amount of: (A) the fraction of a Share, if any, allocable to such
Holder as determined pursuant to clause (i) (B) above; times (B) the
Current Market Price; and
(v) RECORD DATE. The distributions described in this
paragraph (e) shall be made to Holders of record as of the close of
business on the Business Day preceding the Exchange Date.
SECTION 2.5 MANNER OF SALES. Any sale of Trust property
permitted under Section 8.3(c) hereof shall be made through such executing
brokers or to such dealers as the Trustees, seeking best price and execution for
the Trust, shall designate in writing to the Paying Agent, taking into account
such factors as price, commission, size of order, difficulty of execution and
brokerage skill required.
SECTION 2.6 LIMITATIONS ON TRUSTEES' POWERS. The Trustees are
not permitted:
(a) to purchase or hold any securities or instruments except for
the Shares, the Contract, the Treasury Securities, the Temporary
Investments contemplated by Section 3.5 hereof and, in the event of a
Reorganization Event, Marketable Securities;
(b) to dispose of the Contract prior to the Exchange Date;
(c) to issue any securities or instruments except for the
Securities, or to issue any Securities other than the Securities sold to
the Sponsor and the Securities to be sold pursuant to the Underwriting
Agreement and until such Securities have been so purchased and paid for in
full;
(d) to make short sales or purchases on margin;
(e) to write put or call options;
(f) to borrow money;
(g) to underwrite securities;
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(h) to purchase or sell real estate, commodities or commodities
contracts;
(i) to purchase restricted securities;
(j) to make loans; or
(k) to take any action, or direct or permit the Administrator, the
Paying Agent or the Custodian to take any action, that would vary the
investment of the Holders within the meaning of Treasury Regulation
Section 301.7701-4(c), or otherwise take any action or direct or permit
any action to be taken that would or could cause the Trust not to be a
"grantor trust" under the Code.
ARTICLE III
ACCOUNTS AND PAYMENTS
SECTION 3.1 THE TRUST ACCOUNT. The Trustees shall, upon issuance
of the Securities, establish with the Paying Agent an account to be called the
"Trust Account". All moneys received by the Trustees in respect of the
Contract, the Treasury Securities and any Temporary Investments held pursuant to
Section 3.5 hereof, all moneys received from the sale of the Securities to the
Sponsor, and any proceeds from the sale to the Underwriters of the Securities
after the purchase of the Contract and the Treasury Securities and the payment
of the Trust's expenses described in Section 3.2 hereof shall be credited to the
Trust Account.
SECTION 3.2 PAYMENT OF FEES AND EXPENSES. The Administrator is
authorized to pay from the Trust Account out of the net proceeds of the sale of
the Securities, the fees and expenses of the Trust incurred in connection with
the offering of the Securities and the costs and expenses incurred in the
organization of the Trust.
SECTION 3.3 DISTRIBUTIONS TO HOLDERS. On or shortly after each
Distribution Date the Trustees shall distribute to each Holder of record at the
close of business on the preceding Record Date, at the post office address of
the Holder appearing on the books of the Trust or Paying Agent or by any other
means mutually agreed upon by the Holder and the Trustees, an amount equal to
such Holder's pro rata share of the Quarterly Distribution computed as of the
close of business on such Distribution Date.
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SECTION 3.4 SEGREGATION. All moneys and other assets deposited
or received by the Trustees hereunder shall be held by them in trust as part of
the Trust Estate until required to be disbursed or otherwise disposed of in
accordance with the provisions of this Trust Agreement, and the Trustees shall
handle such moneys and other assets in such manner as shall constitute the
segregation and holding in trust within the meaning of the Investment Company
Act.
SECTION 3.5 INVESTMENTS. To the extent necessary to enable the
Paying Agent to make the next succeeding Quarterly Distribution, any moneys
deposited with or received by the Trustees in the Trust Account shall be
invested as soon as possible by the Paying Agent in Temporary Investments
maturing no later than the Business Day preceding the next following
Distribution Date. Except as otherwise specifically provided herein or in the
Paying Agent Agreement, the Paying Agent shall not have the power to sell,
transfer or otherwise dispose of any Temporary Investment prior to the maturity
thereof, or to acquire additional Temporary Investments. The Paying Agent shall
hold any Temporary Investments to its maturity and shall apply the proceeds
thereof upon maturity to the payment of the next succeeding Quarterly
Distribution. All such Temporary Investments shall be selected from time to
time by the Trustees or pursuant to standing instructions from the Trustees to
the Administrator, and the Administrator and/or Paying Agent shall have no
liability to the Trust or any Holder or any other Person with respect to any
such Temporary Investment. Any interest or other income received on any moneys
in the Trust Account shall, upon receipt thereof, be deposited into the Trust
Account. Notwithstanding the foregoing, not more than 5% of the assets of the
Trust may be held at any time in the form of cash and Temporary Investments, and
the Trustees shall distribute cash, or liquidate Temporary Investments and
distribute the proceeds thereof, if, when and to the extent needed to maintain
compliance with the foregoing restriction.
ARTICLE IV
REDEMPTION
SECTION 4.1 REDEMPTION. The Trustees shall have no right or
obligation to redeem Securities.
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ARTICLE V
ISSUANCE OF CERTIFICATES; REGISTRY; TRANSFER OF SECURITIES
SECTION 5.1 FORM OF CERTIFICATE. Each Certificate evidencing
Securities shall be countersigned manually or in facsimile by the Managing
Trustee and executed manually by the Paying Agent in substantially the form of
Exhibit A hereto with the blanks appropriately filled in, shall be dated the
date of execution and delivery by the Paying Agent and shall represent a
fractional undivided interest in the Trust, the numerator of which fraction
shall be the number of Securities set forth on the face of such Certificate and
the denominator of which shall be the total number of Securities outstanding at
that time. All Securities shall be issued in registered form and shall be
numbered serially.
Pending the preparation of definitive Certificates, the Trustees may
execute and the Paying Agent shall authenticate and deliver temporary
Certificates (printed, lithographed, typewritten or otherwise reproduced, in
each case in form satisfactory to the Paying Agent). Temporary Certificates
shall be issuable as registered Certificates substantially in the form of the
definitive Certificates but with such omissions, insertions and variations as
may be appropriate for temporary Certificates, all as may be determined by the
Trustees with the concurrence of the Paying Agent. Every temporary Certificate
shall be executed by the Managing Trustee and be authenticated by the Paying
Agent upon the same conditions and in substantially the same manner, and with
like effect, as the definitive Certificates. Without unreasonable delay the
Managing Trustee shall execute and shall furnish definitive Certificates and
thereupon temporary Certificates may be surrendered in exchange therefor without
charge at each office or agency of the Paying Agent and the Paying Agent shall
authenticate and deliver in exchange for such temporary Certificates definitive
Certificates for a like aggregate number of Securities. Until so exchanged, the
temporary Certificates shall be entitled to the same benefits hereunder as
definitive Certificates.
SECTION 5.2 TRANSFER OF SECURITIES; ISSUANCE, TRANSFER AND
INTERCHANGE OF CERTIFICATES. Securities may be transferred by the Holder
thereof by presentation and surrender of properly endorsed Certificates at the
office of the Paying Agent, accompanied by such documents executed by the Holder
or his authorized attorney as the Paying Agent deems necessary to evidence the
authority of the person making the transfer. Certificates issued pursuant to
this
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Trust Agreement are interchangeable for one or more other Certificates in an
equal aggregate number of Securities and all Certificates issued as may be
requested by the Holder and deemed appropriate by the Paying Agent shall be
issued in denominations of one Security or any multiple thereof. The Paying
Agent may deem and treat the person in whose name any Security shall be
registered upon the books of the Paying Agent as the owner of such Security for
all purposes hereunder and the Paying Agent shall not be affected by any notice
to the contrary. The transfer books maintained by the Paying Agent for the
purposes of this Section 5.2 hereof shall include the name and address of the
record owners of the Securities and shall be closed in connection with the
termination of the Trust pursuant to Section 8.3 hereof.
A sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any such transfer shall be paid to the Paying
Agent by the Holder. A Holder may be required to pay a fee for each new
Certificate to be issued pursuant to the preceding paragraph in such amount as
may be specified by the Paying Agent and approved by the Trustees.
All Certificates cancelled pursuant to this Trust Agreement may be
voided by the Paying Agent in accordance with the usual practice of the Paying
Agent or in accordance with the instructions of the Trustees; provided, however,
that the Paying Agent shall not be required to destroy cancelled Certificates.
The Paying Agent may adopt other reasonable rules and regulations
for the registration, transfer and tender of Securities as it may, in its
discretion, deem necessary.
SECTION 5.3 REPLACEMENT OF CERTIFICATES. In case any Certificate
shall become mutilated or be destroyed, stolen or lost, the Paying Agent shall
execute and deliver a new Certificate in exchange and substitution therefor upon
the Holder's furnishing the Paying Agent with proper identification and
satisfactory indemnity, complying with such other reasonable regulations and
conditions as the Paying Agent may prescribe and paying such expenses and
charges, including any bonding fee, as the Paying Agent may incur or reasonably
impose; provided that if the Trust has terminated or is in the process of
terminating, the Paying Agent, in lieu of issuing such new Certificate, may,
upon the terms and conditions set forth herein, make the distributions set forth
in Section 8.3(c) hereof. Any mutilated Certificate shall be duly surrendered
and cancelled before any duplicate Certificate shall be issued in exchange and
substitution therefor. Upon issuance of any duplicate Certificate pur-
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suant to this Section 5.3 hereof, the original Certificate claimed to have
been lost, stolen or destroyed shall become null and void and of no effect,
and any bona fide purchaser thereof shall have only such rights as are
afforded under Article 8 of the Uniform Commercial Code to a Holder
presenting a Certificate for transfer in the case of an overissue.
ARTICLE VI
ISSUANCE OF THE CONTRACT
SECTION 6.1 Execution of the Contract. The Contract shall be
countersigned manually or in facsimile by the Managing Trustee and executed
manually by the Seller and shall be dated the date of execution and delivery by
the Seller.
ARTICLE VII
TRUSTEES
SECTION 7.1 Trustees. The Trust shall have three Trustees who
shall initially be elected by the Sponsor. One Trustee shall be the Managing
Trustee and, as such, is authorized to execute documents and instruments on
behalf of the Trust. The Managing Trustee will be appointed by resolution of
the Trustees. Each Trustee shall serve until the next regular annual or special
meeting of Holders called for the purpose of electing Trustees and, then, until
such Trustee's successor is duly elected and qualified. Holders may not
cumulate their votes in the election of Trustees. Each Trustee shall not be
considered to have qualified for the office unless such Trustee shall agree to
be bound by the terms of this Trust Agreement and shall evidence his consent by
executing this Trust Agreement or a supplement hereto.
SECTION 7.2 Vacancies. Any vacancy in the office of a Trustee may
be filled in compliance with Sections 10 and 16 of the Investment Company Act by
the vote, within thirty days, of the remaining Trustees; provided that if
required by Section 16 of the Investment Company Act, the Trustees shall
forthwith cause to be held as promptly as possible and in any event within sixty
days (unless the Commission by order shall extend such period) a meeting of
Holders for the purpose of electing Trustees in compliance with Sections 10 and
16 of the Investment Company Act. Until a vacancy in the office of any Trustee
is filled as
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provided above, the remaining Trustees in office, regardless of their number,
shall have the powers granted to the Trustees and shall discharge all the duties
imposed upon the Trustees by this Trust Agreement. Election shall be by the
affirmative vote of Holders of a majority of the Securities entitled to vote
present in person or by proxy at a special meeting of Holders called for the
purpose of electing any Trustee. Each individual Trustee shall be at least 21
years of age and shall not be under any legal disability. No Trustee who is an
"interested person", as defined in the Investment Company Act, may assume office
if it would cause the composition of the Trustees of the Trust not to be in
compliance with the percentage limitations on interested persons in Section 10
of the Investment Company Act. Trustees need not be Holders. Notice of the
appointment or election of a successor Trustee shall be mailed promptly after
acceptance of such appointment by the successor Trustee to each Holder.
SECTION 7.3 POWERS. The Trust will be managed solely by the
Trustees, who will, subject to the provisions of Article II hereof, have
complete and exclusive control over the management, conduct and operation of the
Trust's business, and shall have the rights, powers and authority of a board of
directors of a corporation organized under New York law. The Trustees shall
have fiduciary responsibility for the safekeeping and use of all funds and
assets of the Trust and shall not employ, or permit another to employ, such
funds or assets in any manner except for the exclusive benefit of the Trust and
except in accordance with the terms of this Trust Agreement. Subject to the
continuing supervision of the Trustees and as permitted by applicable law, the
functions of the Trust shall be performed by the Custodian, the Paying Agent,
the Administrator and such other entities engaged to perform such functions as
the Trustees may determine, including, without limitation, any or all
administrative functions.
SECTION 7.4 MEETINGS. Meetings of the Trustees shall be held
from time to time upon the call of any Trustee on not less than 48 hours' notice
(which may be waived by any or all of the Trustees in writing either before or
after such meeting or by attendance at the meeting unless the Trustee attends
the meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting has not been lawfully called or
convened). The Trustees shall act either by majority vote of the Trustees
present at a meeting at which at least a majority of the Trustees then in office
are present or by a unanimous written consent of the Trustees without a meeting.
Except as otherwise required under the Investment Company Act, all
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or any of the Trustees may participate in a meeting of the Trustees by means of
a conference telephone call or similar communications equipment by means of
which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to such communications equipment shall
constitute presence in person at such meeting.
SECTION 7.5 RESIGNATION AND REMOVAL. Any Trustee may resign and
be discharged of the trust created by the Trust Agreement by executing an
instrument in writing resigning as Trustee, filing the same with the
Administrator and sending notice thereof to the remaining Trustees, and such
resignation shall become effective immediately unless otherwise specified
therein. Any Trustee may be removed in the event of incapacity by vote of the
remaining Trustees and for any reason by written declaration or vote of the
Holders of more than 66 2/3% of the outstanding Securities, notice of which vote
shall be given to the remaining Trustees and the Administrator. The
resignation, removal or failure to reelect any Trustee shall not cause the
termination of the Trust.
SECTION 7.6 LIABILITY. The Trustees shall not be liable to the
Trust or any Holder for any action taken or for refraining from taking any
action except in the case of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties of their office. Specifically, without
limitation, the Trustees shall not be responsible for or in respect of the
recitals herein or the validity or sufficiency of this Trust Agreement or for
the due execution hereof by any other Person, or for or in respect of the
validity or sufficiency of Securities or certificates representing Securities
and shall in no event assume or incur any liability, duty or obligation to any
Holder or to any other Person, other than as expressly provided for herein. The
Trustees may employ agents, attorneys, administrators, accountants and auditors,
and shall not be answerable for the default or misconduct of any such Persons if
such Persons shall have been selected with reasonable care. Action in good
faith may include action taken in good faith in accordance with an opinion of
counsel. In no event shall any Trustee be personally liable for any expenses
with respect to the Trust. Each Trustee shall be indemnified from the Trust
Account with respect to any claim, liability, loss or expense incurred in acting
as Trustee of the Trust, including the costs and expenses of the defense against
any such claim or liability, except in the case of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties of his office.
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<PAGE>
SECTION 7.7 COMPENSATION. Each Trustee, other than a Trustee who
is a director, officer or employee of the Sponsor, any Underwriter, or the
Administrator or any affiliate thereof, shall receive a one-time, up-front fee
of [$10,800], in respect of its annual fee and anticipated out-of-pocket
expenses. In addition, the Managing Trustee shall receive an additional
one-time, up-front fee of [$3,600] for serving in such capacity. The Trustees
will not receive any pension or retirement benefits. In the event of the
resignation or removal of a Trustee, such Trustee shall remit to the Trust the
portion of its fee ratable for the period from the day of such resignation or
removal through the Exchange Date.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 MEETINGS OF HOLDERS. The Trustees shall not hold
annual or regular meetings of Holders except as set forth herein. A special
meeting may be called at any time by the Trustees or upon petition of Holders of
not less than 51% of the Securities outstanding (unless substantially the same
matter was voted on during the preceding 12 months), and shall be called as
provided in Section 7.2 hereof (or as otherwise required by the Investment
Company Act and the rules and regulations thereunder, including, without
limitation, when requested by the Holders of not less than 10% of the Securities
outstanding for the purposes of voting upon the question of the removal of any
Trustee or Trustees). The Trustees shall establish, and notify the Holders in
writing of, the record date for each such meeting which shall be not less than
10 nor more than 50 days before the meeting date. Holders at the close of
business on the record date will be entitled to vote at the meeting. The
Administrator shall, as soon as possible after any such record date (or prior to
such record date if appropriate), mail by first class mail to each Holder a
notice of meeting and a proxy statement and form of proxy in the form approved
by the Trustees and complying with the Investment Company Act and the rules and
regulations thereunder. Except as otherwise specified herein or in any
provision of the Investment Company Act and the rules and regulations
thereunder, any action may be taken by vote of Holders of a majority of the
Securities outstanding present in person or by proxy if Holders of a majority of
Securities outstanding on the record date are so represented. Each Security
shall have one vote and may be voted in person or by duly executed proxy. Any
proxy may be revoked by notice in writing, by a subsequently dated proxy or by
voting in person at the
-19-
<PAGE>
meeting, and no proxy shall be valid after eleven months following the date of
its execution.
SECTION 8.2 BOOKS AND RECORDS; REPORTS. (a) The Trustees shall
keep a certified copy or duplicate original of this Trust Agreement on file at
the office of the Trust and the office of the Administrator available for
inspection at all reasonable times during its usual business hours by any
Holder. The Trustees shall keep proper books of record and account for all the
transactions under this Trust Agreement at the office of the Trust and the
office of the Administrator, and such books and records shall be open to
inspection by any Holder at all reasonable times during usual business hours.
The Trustees shall retain all books and records in compliance with Section 31 of
the Investment Company Act and the rules and regulations thereunder.
(b) With each payment to Holders the Paying Agent shall set forth,
either in the instruments by means of which payment is made or in a separate
statement, the amount being paid from the Trust Account expressed as a dollar
amount per Security and the other information required under Section 19 of the
Investment Company Act and the rules and regulations thereunder. The Trustees
shall prepare and file or distribute reports as required by Section 30 of the
Investment Company Act and the rules and regulations thereunder. The Trustees
shall prepare and file such reports as may from time to time be required to be
filed or distributed to Holders under any applicable state or Federal statute or
rule or regulation thereunder, and shall file such tax returns as may from time
to time be required under any applicable state or Federal statute or rule or
regulation thereunder. One of the Trustees shall be designated by resolution of
the Trustees to make the filings and give the notices required by Rule 17g-1
under the Investment Company Act.
(c) In calculating the net asset value of the Trust as required by
the Investment Company Act, (i) the Treasury Securities will be valued at the
mean between the last current bid and asked prices or, if quotations are not
available, as determined in good faith by the Trustees, (ii) short-term
investments having a maturity of 60 days or less will be valued at cost with
accrued interest or discount earned included in interest receivable and (iii)
the Contract will be valued at the mean of the bid prices received by the
Administrator from at least three independent broker-dealer firms unaffiliated
with the Trust to be named by the Trustees who are in the business of making
bids on financial instruments similar to the Contract and with terms comparable
thereto.
-20-
<PAGE>
SECTION 8.3 TERMINATION. (a) This Trust Agreement and the Trust
created hereby shall terminate upon the earliest of (i) the date 90 days after
the execution of this Trust Agreement if (x) the Securities have not theretofore
been issued or (y) the net worth of the Trust is not at least $100,000 at such
time, (ii) the date of the repayment, sale or other disposition, as the case may
be, of all of the Contract, the Treasury Securities and any other securities
held hereunder, (iii) the date 10 Business Days after the Exchange Date (or, if
the Contracts shall be accelerated pursuant to Article VIII thereof, 10 Business
Days after the date on which the Trust shall receive the Shares then required to
be delivered by the Seller, or the proceeds of any sale of collateral pursuant
to Section 8(c) of the Collateral Agreement), and (iv) the date which is 21
years less 91 days after the death of the last survivor of all of the
descendants of Joseph P. Kennedy living on the date hereof. The Trust is
irrevocable, the Sponsor has no right to withdraw any assets constituting a
portion of the Trust Estate, and the dissolution of the Sponsor shall not
operate to terminate the Trust. The death or incapacity of any Holder shall not
operate to terminate this Trust Agreement, nor entitle his legal representatives
or heirs to claim an accounting or to take any action or proceeding in any court
for a partition or winding up of the Trust, and shall not otherwise affect the
rights, obligations and liabilities of the parties hereto.
(b) Written notice of any termination shall be sent to Holders
specifying the record date for any distribution to Holders and the time of
termination as determined by the Trustees, upon which the books maintained by
the Paying Agent pursuant to Section 5.2 hereof shall be closed.
(c) For purposes of termination under Sections 8.3(a)(ii), (iii)
and (iv) hereof, within five Business Days after such termination, the Trustees
shall, subject to any applicable provisions of law, effect the sale of any
remaining property of the Trust, and the Paying Agent shall distribute pro rata
as soon as practicable thereafter to each Holder, upon surrender for
cancellation of its Certificates, its interest in the Trust Estate. Together
with the distribution to the Holders, the Trustees shall furnish the Holders
with a final statement as of the date of the distribution of the amount
distributable with respect to each Security.
SECTION 8.4 AMENDMENT AND WAIVER. (a) This Trust Agreement, and
any of the agreements referred to in Section 2.2(a) hereof, may be amended from
time to time by the Trustees for any purpose prior to the issuance and sale to
-21-
<PAGE>
the Underwriters of the Securities and thereafter without the consent of any of
the Holders (i) to cure any ambiguity or to correct or supplement any provision
contained herein or therein which may be defective or inconsistent with any
other provision contained herein or therein; (ii) to change any provision hereof
or thereof as may be required by applicable law or the Commission or any
successor governmental agency exercising similar authority; or (iii) to make
such other provisions in regard to matters or questions arising hereunder or
thereunder as shall not materially adversely affect the interests of the Holders
(as determined in good faith by the Trustees, who may rely on an opinion of
counsel).
(b) This Trust Agreement may also be amended from time to time by
the Trustees (or the performance of any of the provisions of the Trust Agreement
may be waived) with the consent by the required vote of the Holders in
accordance with Section 8.1 hereof; provided that this Trust Agreement may not
be amended (i) without the consent by vote of the Holders of all Securities then
outstanding, so as to increase the number of Securities issuable hereunder above
the number of Securities specified in Section 2.2(c) hereof or such lesser
number as may be outstanding at any time during the term of this Trust
Agreement, (ii) to reduce the interest in the Trust represented by Securities
without the consent of the Holders of such Securities, (iii) if such amendment
is prohibited by the Investment Company Act or other applicable law, (iv)
without the consent by vote of the Holders of all Securities then outstanding,
if such amendment would effect a change in the voting requirements set forth in
Section 8.1 hereof or this Section 8.4, or (v) without the consent by vote of
the Holders of the lesser of (x) 67% or more of the Securities represented at a
special meeting of Holders, if more than 50% of the Securities outstanding are
represented at such meeting, and (y) more than 50% of the Securities
outstanding, if such amendment would effect a change in Section 2.1 or 2.6
hereof.
(c) Promptly after the execution of any amendment, the Trustees
shall furnish written notification of the substance of such amendment to each
Holder.
(d) Notwithstanding subsections (a) and (b) of this Section 8.4 no
amendment hereof shall permit the Trust, the Trustees, the Administrator, the
Paying Agent or the Custodian to take any action or direct or permit any Person
to take any action that (i) would vary the investment of Holders within the
meaning of Treasury Regulation Section 301.7701-4(c), or (ii) would or could
cause the Trust, or
-22-
<PAGE>
direct or permit any action to be taken that would or could cause the Trust, not
to be a "grantor trust" under the Code.
SECTION 8.5 ACCOUNTANTS.
(a) The Trustees shall, in accordance with Section 30 of the
Investment Company Act, file annually with the Commission such information,
documents and reports as investment companies having securities registered on a
national securities exchange are required to file annually pursuant to Section
13(a) of the Securities Exchange Act of 1934, as amended, and the rules and
regulations issued thereunder. The Trustees shall transmit to the Holders, at
least semi-annually, the reports required by Section 30(d) of the Investment
Company Act and the rules and regulations thereunder, including, without
limitation, a balance sheet accompanied by a statement of the aggregate value of
investments on the date of such balance sheet, a list showing the amounts and
values of such investments owned on the date of such balance sheet, and a
statement of income for the period covered by the report. Financial statements
contained in such annual reports shall be accompanied by a certificate of
independent public accounts based upon an audit not less in scope or procedures
than that which independent public accountants would ordinarily make for the
purpose of presenting comprehensive and dependable financial statements and
shall contain such information as the Commission may prescribe. Each such
report shall state that such independent public accountants have verified
investments owned, either by actual examination or by receipt of a certificate
from the Custodian.
(b) The independent public accountants referred to in subsection
(a) above shall be selected at a meeting held within thirty days before or after
the beginning of the fiscal year by the vote, cast in person, of a majority of
the Trustees who are not "interested persons" as defined in the Investment
Company Act and such selection shall be submitted for ratification at the first
meeting of Holders to be held as set forth in Section 8.1 hereof, and thereafter
as required by the Investment Company Act and the rules and regulations
thereunder. The employment of any independent public accountant for the Trust
shall be conditioned upon the right of the Holders by a vote of the lesser of
(i) 67% or more of the Securities present at a special meeting of Holders, if
Holders of more than 50% of Securities outstanding are present or represented by
proxy at such meeting or (ii) more than 50% of the Securities outstanding to
terminate such employment at any time without penalty.
-23-
<PAGE>
(c) The foregoing provisions of this Section 8.5 are in addition to
any applicable requirements of the Investment Company Act and the rules and
regulations thereunder.
SECTION 8.6 NATURE OF HOLDER'S INTEREST. Each Holder holds at
any given time a beneficial interest in the Trust Estate, but does not have any
right to take title or possession of any portion of the Trust Estate. Each
Holder expressly waives any right he may have under any rule of law, or the
provisions of any statute, or otherwise, to require the Trustees at any time to
account, in any manner other than as expressly provided in this Trust Agreement,
for the Shares, the Contract, the Treasury Securities or other assets or moneys
from time to time received, held and applied by the Trustees hereunder. No
Holder shall have any right except as provided herein to control or determine
the operation and management of the Trust or the obligations of the parties
hereto. Nothing set forth herein or in the certificates representing Securities
shall be construed to constitute the Holders from time to time as partners or
members of an association.
SECTION 8.7 NEW YORK LAW TO GOVERN. This Trust Agreement is
executed and delivered in the State of New York, and all laws or rules of
construction of the State of New York shall govern the rights of the parties
hereto and the Holders and the construction, validity and effect of the
provisions hereof.
SECTION 8.8 NOTICES. Any notice, demand, direction or
instruction to be given to the Sponsor hereunder shall be in writing and shall
be duly given if mailed or delivered to Goldman, Sachs & Co., 85 Broad Street,
New York, New York 10004, Attention: ________, or at such other address as shall
be specified by the Sponsor to the other parties hereto in writing. Any notice,
demand, direction or instruction to be given to the Trust and the Trustees
hereunder shall be in writing and shall be duly given if mailed or delivered to
the Trust at 101 Barclay Street, New York, New York 10286 and to each Trustee at
such Trustee's address set forth beneath its signature below, or such other
address as shall be specified to the other parties hereto by such party in
writing. Any notice to be given to a Holder shall be duly given if mailed,
first class postage prepaid, or by such other substantially equivalent means as
the Trustees may deem appropriate, or delivered to such Holder at the address of
such Holder appearing on the registry of the Paying Agent.
-24-
<PAGE>
SECTION 8.9 SEVERABILITY. If any one or more of the covenants,
agreements, provisions or terms of this Trust Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
and terms of this Trust Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Trust Agreement or of the
Certificates, or the rights of the Holders thereof.
SECTION 8.10 COUNTERPARTS. This Trust Agreement may be executed
in counterparts, and as so executed will constitute one agreement, binding on
all of the parties hereto.
-25-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed.
_______________________________
(Goldman, Sachs & Co.)
TRUSTEES:
__________________________________
Name:
Address:
_________________________________
Name:
Address:
_________________________________
Name:
Address:
-26-
<PAGE>
Schedule I
TREASURY SECURITIES
All terms specified are for stripped principal or interest
components of U.S. Treasury debt obligations.
STRIPS Payment Date Aggregate Face Amount, per Security, Payable
at Payment Date
<PAGE>
Exhibit A
THIS CERTIFICATE IS ISSUED UNDER AND IS SUBJECT TO THE TERMS, PROVISIONS AND
CONDITIONS OF THE TRUST AGREEMENT REFERRED TO BELOW TO WHICH THE HOLDER OF THIS
CERTIFICATE BY VIRTUE OF THE ACCEPTANCE HEREOF ASSENTS AND IS BOUND.
$___. AUTOMATIC COMMON EXCHANGE SECURITIES
DOLE FOOD AUTOMATIC COMMON EXCHANGE
SECURITY TRUST
CUSIP NO. _______
NO. _____ _______________ SHARES
THIS CERTIFIES THAT _____________________________________________ IS THE
RECORD OWNER OF ____________________ $___ AUTOMATIC COMMON EXCHANGE SECURITIES
OF DOLE FOOD AUTOMATIC COMMON EXCHANGE SECURITY TRUST CONSTITUTING FRACTIONAL
UNDIVIDED INTERESTS IN DOLE FOOD AUTOMATIC COMMON EXCHANGE SECURITY TRUST, A
TRUST CREATED UNDER THE LAWS OF THE STATE OF NEW YORK PURSUANT TO A TRUST
AGREEMENT BETWEEN GOLDMAN, SACHS & CO. AND THE TRUSTEES NAMED THEREIN. THIS
CERTIFICATE IS ISSUED UNDER AND IS SUBJECT TO THE TERMS, PROVISIONS AND
CONDITIONS OF THE TRUST AGREEMENT TO WHICH THE HOLDER OF THIS CERTIFICATE BY
VIRTUE OF THE ACCEPTANCE HEREOF ASSENTS AND IS BOUND, A COPY OF WHICH TRUST
AGREEMENT IS AVAILABLE AT THE OFFICE OF THE TRUST'S ADMINISTRATOR AND PAYING
AGENT, THE BANK OF NEW YORK, 101 BARCLAY STREET, NEW YORK, NEW YORK. THIS
CERTIFICATE IS TRANSFERABLE AND INTERCHANGEABLE BY THE REGISTERED OWNER IN
PERSON OR BY HIS DULY AUTHORIZED ATTORNEY AT THE OFFICE OF THE PAYING AGENT UPON
SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED OR ACCOMPANIED BY A WRITTEN
INSTRUMENT OF TRANSFER AND ANY OTHER DOCUMENTS THAT THE PAYING AGENT MAY REQUIRE
FOR TRANSFER, IN FORM SATISFACTORY TO THE PAYING AGENT AND PAYMENT OF THE FEES
AND EXPENSES PROVIDED IN THE TRUST AGREEMENT.
THIS CERTIFICATE IS NOT VALID UNLESS MANUALLY COUNTERSIGNED BY THE
PAYING AGENT.
<PAGE>
WITNESS THE FACSIMILE SIGNATURE OF THE MANAGING TRUSTEE.
Dole Food Automatic Common
Exchange Security Trust
DATED:
By
-----------------------------
Managing Trustee
COUNTERSIGNED:
The Bank of New York,
as Paying Agent
By
--------------------------
Authorized Signature
-2-
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
--------------
We consent to the inclusion of this registration statement on Form N-2
(Securities Act File No. 333-325 and Investment Company Act File No. 311-7499)
of our report dated August 5, 1996, on our audit of the statement of assets and
liabilities of Dole Food Automatic Common Exchange Security Trust. We also
consent to the reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
New York, New York
August 6, 1996
<PAGE>
CONSENT TO BEING NAMED AS TRUSTEE
The undersigned hereby consents to being named in the Registration Statement
on Form N-2 of Dole Food Automatic Common Exchange Security Trust (the "Trust")
and any amendments thereto, as a person about to become a Trustee of the Trust.
Dated: August 6, 1996
/s/ JAMES B. O'NEILL
--------------------------------------
James B. O'Neill
<PAGE>
CONSENT TO BEING NAMED AS TRUSTEE
The undersigned hereby consents to being named in the Registration Statement
on Form N-2 of Dole Food Automatic Common Exchange Security Trust (the "Trust")
and any amendments thereto, as a person about to become a Trustee of the Trust.
Dated: August 6, 1996
/s/ WILLIAM R. LATHAM, III
--------------------------------------
William R. Latham, III
<PAGE>
CONSENT TO BEING NAMED AS TRUSTEE
The undersigned hereby consents to being named in the Registration Statement
on Form N-2 of Dole Food Automatic Common Exchange Security Trust (the "Trust")
and any amendments thereto, as a person about to become a Trustee of the Trust.
Dated: August 6, 1996
/s/ DONALD J. PUGLISI
--------------------------------------
Donald J. Puglisi
<PAGE>
Exhibit 2.s
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that John P. McNulty, as Trustee of
the Dole Food Automatic Common Exchange Security Trust (the "Trust") does
hereby make, constitute and appoint Paul S. Efron, Jeffrey S. Nordhaus, Tara
E. Connolly and Lynn M. Swanson of 85 Broad Street, New York, New York his
true and lawful attorneys, to execute and deliver in his name as Trustee of
the Trust and on behalf of the Trust, the Registration Statement on Form N-2
and the New York Stock Exchange Listing Application for the Automatic Common
Exchange Securities (the "Securities") of the Trust and any other documents
pertaining to the registration of the Securities and such listing
application, giving and granting unto said attorneys-in-fact full power and
authority to act in the premises as fully and to all intents and purposes as
John P. McNulty might or could do if personally present, hereby ratifying and
confirming all that said attorneys-in-fact shall fully do or cause to be
done by virtue hereof.
I hereby acknowledge and declare that the said Paul S. Efron, Jeffrey S.
Nordhaus, Tara E. Connolly and Lynn M. Swanson attorneys-in-fact for John P.
McNulty, constituted by these present, are hereby directed and authorized to
sign such documents and any other instruments or paper necessary or proper in
connection with the exercise of the powers conferred on them by these presents
with the signature of said attorneys-in-fact, in the form and chirography as
follows:
Paul Efron /s/ Paul Efron
------------------------------
Jeffrey Nordhaus /s/ Jeffrey Nordaus
------------------------------
Tara E. Connolly /s/ Tara E. Connolly
------------------------------
Lynn M. Swanson /s/ Lynn M. Swanson
------------------------------
IN WITNESS WHEREOF, the undersigned has duly subscribed these presents
this 2nd day of August, 1996.
/s/ John P. McNulty
-------------------------------
John P. McNulty
As Trustee of Dole Food Automatic Common
Exchange Security Trust
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DOLE
FOOD AUTOMATIC COMMON EXCHANGE TRUST STATEMENT OF ASSETS AND LIABILITIES
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> AUG-5-1996
<PERIOD-END> AUG-5-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 100,000
<RECEIVABLES> 0
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100,000
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100,000
<SHARES-COMMON-STOCK> 1
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 100,000
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 100,000
<PER-SHARE-NAV-BEGIN> 100,000
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 100,000
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
