<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 12, 1999
SECURITIES ACT FILE NO. 333-77547
INVESTMENT COMPANY ACT FILE NO. 811-9319
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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM N-2
[X] REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[X] PRE-EFFECTIVE AMENDMENT NO. 2
[ ] POST-EFFECTIVE AMENDMENT NO.
AND/OR
[X] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 2
----------------------
AMERITRADE AUTOMATIC
COMMON EXCHANGE SECURITY TRUST
(Exact Name of Registrant as Specified in 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, ESQ.
85 BROAD STREET
NEW YORK, NEW YORK 10004
(Name and Address of Agent for Service)
Copies to:
JOHN EVANGELAKOS, ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004
(212)558-4000
----------------------
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. [ ]
It is proposed that this filing will become effective when declared
effective pursuant to section 8(c).
If appropriate, check the following box:
[ ] This amendment designates a new effective date for a previously filed
registration statement.
[ ] 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 333- .
----------------------
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
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PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES BEING REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C>
Trust Automatic Common Exchange Securities.................. $150,000,000 $41,700(2)
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Of which $2,780 has previously been paid.
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 HEREAFTER 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.
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<PAGE> 2
AMERITRADE AUTOMATIC COMMON EXCHANGE SECURITY TRUST
CROSS-REFERENCE SHEET
(PURSUANT TO RULE 481(A) 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. Cover Pages; Other Offering Information... Front Cover Page; Underwriting
3. Fee Table and Synopsis.................... Prospectus Summary
4. Financial Highlights...................... Not Applicable
5. Plan of Distribution...................... Front Cover Page; Prospectus Summary;
Underwriting
6. Selling Shareholders...................... Not Applicable
7. Use of Proceeds........................... Prospectus Summary -- The Trust's
Investment Policies; 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................................ 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................................ The Trust
19. Control Persons and Principal Holders of
Securities.............................. The Trust
20. Investment Advisory and Other Services.... 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>
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* 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> 3
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 LAWS OF ANY SUCH STATE.
Subject to Completion. Dated July 12, 1999.
4,000,000 Securities
AMERITRADE AUTOMATIC COMMON EXCHANGE SECURITY TRUST
$ Trust Automatic Class A Common Exchange Securities (TRACES(TM/SM))
(Subject to exchange into Shares of Class A Common Stock of Ameritrade Holding
Corporation)
----------------------
The $ Trust Automatic Common Exchange Securities are a new series
of securities issued by the Ameritrade Automatic Common Exchange Security Trust.
The Trust will pay quarterly distributions of $ on each Security. On
July , 2002, the Trust will exchange each Security for:
- Between 0. shares and one share of Class A Common Stock of
Ameritrade Holding Corporation.
If the Underwriters elect to purchase any additional Securities from the
Trust as described below and in this prospectus, on July , 2002 the Trust will
exchange each Security for either:
- Between 0. shares and one share of Class A Common Stock of Ameritrade
Holding Corporation, or
- A combination of shares and cash.
The number of shares or amount of cash that will be delivered in exchange
for each Security will be based on the price of the Class A Common Stock during
the twenty business days before July , 2002.
Under the circumstances described in this prospectus, some of the shares or
cash may be delivered between July , 2002 and October , 2002 instead of on
July , 2002. In that case, holders of the Securities may receive part of the
cash or shares on July , 2002 and the rest between July , 2002 and
October , 2002.
This is the first issuance of Securities by the Trust. As a result, there
is currently no public market for the Securities. The Trust will apply to list
the Securities on the Nasdaq National Market under the symbol " ".
There is no minimum required purchase of Securities in this offering.
The Class A Common Stock is currently quoted on the Nasdaq National Market
under the symbol "AMTD". The last reported sale price of the Class A Common
Stock on the Nasdaq National Market on July 9, 1999, was $38.13 per share. The
Company is not affiliated with the Trust.
The Trust is a newly organized, finite term closed-end investment company.
Shares of this type of fund frequently trade at a discount from net asset value.
This risk is separate from the risk that the Trust's net asset value will fall.
The Trust cannot predict whether the Securities 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 this offering.
----------------------
Consider carefully the "risk factors" beginning on page 28 of this
prospectus.
----------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY OTHER REGULATORY
BODY HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------------
This prospectus sets forth concisely information about the Trust that you
should know before investing. You are advised to read this prospectus and to
retain it for future reference. Additional information about the Trust has been
filed with the Securities and Exchange Commission and is available upon written
or oral request and without charge. See "Further Information".
<TABLE>
<CAPTION>
PER SECURITY TOTAL
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<S> <C> <C>
Initial Public Offering Price............................... $ $
Sales Load.................................................. Not applicable Not applicable
Proceeds to the Trust....................................... $ $
</TABLE>
The Underwriters may, under certain circumstances, purchase up to an
additional 600,000 Securities from the Trust at the Initial Public Offering
Price.
The Underwriters expect to deliver the Securities against payment in New
York, New York on July , 1999.
GOLDMAN, SACHS & CO. CREDIT SUISSE FIRST BOSTON
Prospectus dated , 1999.
<PAGE> 4
PROSPECTUS SUMMARY
This summary is not a complete description of the Trust or the Securities.
It does not contain all the information that may be important to you. To
understand this offering fully, you must read this entire prospectus carefully,
including the Risk Factors beginning on page 28.
This prospectus includes a Glossary, beginning on page 38. You should refer
to the Glossary if you wish to understand the terms used in this prospectus in
detail.
THE TRUST
The Trust is a newly organized trust that exists only to offer the
Securities. The Trust's only activities will be to issue the Securities and to
invest in the U.S. Treasury securities and stock purchase contracts described in
this prospectus.
THE TRUST'S INVESTMENT OBJECTIVE
The Trust's investment objective is to give the holder of each Security a
quarterly cash distribution of $ and, on July , 2002 (the "Exchange
Date"), between 0. and 1 shares of Class A Common Stock (or a combination of
shares and cash equal to the value of some of those shares). The number of
shares, or amount of cash, that a holder will receive in exchange for a single
Security will vary, depending on the average market price of the Class A Common
Stock over the twenty business days before the Exchange Date.
- If the average market price is less than $ but equal to or
greater than $ , the holder of each Security will receive the
number of shares of Class A Common Stock that has a value equal to
$ .
- If the average market price is equal to or greater than $ , the
holder of each Security will receive 0. shares of Class A Common
Stock.
- If the average market price is less than $ , the holder of each
Security will receive one share of Class A Common Stock.
This formula will be adjusted if the Company takes certain steps that
combine, split or dilute the value of the Class A Common Stock. If this formula
would require the Trust to deliver a fraction of a share of Class A Common Stock
to any holder, the Trust will instead deliver cash equal to the value of that
fraction of a share.
Because of this formula, the holders of the Securities will receive part of
any increase in the value of the Class A Common Stock above $ .
However, the holders of the Securities will not receive any increase in the
value of the Class A Common Stock unless that value rises higher than
$ . The holders will bear the entire amount of any decrease in the
value of the Class A Common Stock.
For more detail, please see "Investment Objective and Policies".
THE TRUST'S INVESTMENT POLICIES
To achieve its investment objective, the Trust will invest all the proceeds
of the Securities in:
- "Stripped" U.S. Treasury securities that will mature during each quarter
through July , 2002. The Trust will use the payments it receives as
these U.S. Treasury securities mature to pay the quarterly distributions
on the Securities.
- Stock purchase contracts (the "Contracts") with one or more stockholders
of the Company (each of which is referred to as a "Seller"). One of the
Contracts (the "Extendible Contract") will become effective only if the
Underwriters exercise their option to acquire up to an additional 600,000
Securities from the Trust at the initial public offering
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<PAGE> 5
price set forth on the cover page of this prospectus, and relates to up
to 600,000 shares of Class A Common Stock deliverable on the Exchange
Date in connection with the exercise of that option. Each Seller will be
required to deliver shares of Class A Common Stock to the Trust on the
Exchange Date. Alternatively, the Seller under the Extendible Contract
may choose to deliver the equivalent amount of cash. If the Sellers
perform their obligations, these Contracts will provide the Trust with
the shares of Class A Common Stock or cash that the Trust must deliver to
the holders of the Securities on the Exchange Date.
The Seller under the Extendible Contract has the right to extend the
Exchange Date under its Contract to October , 2002. If the Seller extends the
Exchange Date under the Extendible Contract, that Seller will not be required to
deliver the shares of Class A Common Stock or cash under the Extendible Contract
until October , 2002. However, the Seller can then, under the circumstances
discussed more in detail in this prospectus, accelerate the delivery of shares
or cash to any date between July , 2002 and October , 2002. If the Seller
under the Extendible Contract extends or accelerates the Exchange Date the
holders of the Securities will not receive the corresponding portion of the
shares or cash until the extended or accelerated Exchange Date, and the number
of shares or amount of cash included in that delivery would be calculated as of
the extended or accelerated Exchange Date. However, the holders of the
Securities would receive an additional, partial cash distribution on the
Securities for the period of the delay.
In some circumstances, the holders of the Securities may receive cash or
other common equity securities instead of or in addition to the Class A Common
Stock. For more detail, please see "-- The Securities -- Modifications to
Delivery Requirements".
Each Seller will pledge collateral to the Trust to secure that Seller's
obligations under its Contract. The collateral will initially be the shares of
Class A Common Stock that the Seller must deliver under the Contract. However,
if a Seller complies with its obligations under its Contract and its pledge, the
Seller may pledge U.S. Treasury securities instead of the shares of Class A
Common Stock.
The Trust is a grantor trust for purposes of the U.S federal tax laws and
will not change its investments, even if the value of the Contracts or the Class
A Common Stock falls significantly or the financial condition of the Company
suffers.
For more detail, please see "Investment Objective and Policies".
THE OFFERING
The Trust is offering 4,000,000 Securities to the public at a purchase
price of $ per Security. The Securities are being offered through Goldman,
Sachs & Co. ("Goldman Sachs"), 85 Broad Street, New York, New York 10004 and
Credit Suisse First Boston, 11 Madison Avenue New York, New York 10010 (the
"Underwriters").
In addition, the Trust has granted the Underwriters an option to purchase
up to 600,000 additional Securities. These Securities may be used only to cover
over-allotments. For more detail, please see "Underwriting".
THE SECURITIES
The Trust will pass through to the holders of the Securities all payments
that it receives on the U.S. Treasury securities that it purchases with the
proceeds of the Securities. Similarly, the Trust will deliver to the holders of
the Securities all shares of Class A Common Stock, cash or other securities,
that it receives from the Sellers under the Contracts.
DISTRIBUTIONS. The holder of each Security will receive a distribution of
$ each quarter. The Trust will pay these distributions on each January
, April , July and
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<PAGE> 6
October . However, if the Trust would be required to make a distribution on a
Saturday, Sunday or legal holiday, the Trust will pay that distribution on the
next business day instead. The Trust will make each payment to the holder of the
Security whose name appears in the Trust's books on the business day before the
applicable payment date. The first distribution will be payable on October ,
1999 to holders of record on the previous business day.
The only source of cash for the quarterly distributions on the Securities
will be the cash received from the U.S. Treasury securities purchased by the
Trust with the proceeds of the Securities. Part of each year's distributions on
the Securities will be treated as a return of capital under the U.S. federal
income tax laws. For more detail, please see "Description of Securities --
Distributions -- Tax Treatment of Distributions" and "Certain Federal Income Tax
Considerations".
EXCHANGE FOR CLASS A COMMON STOCK. On the Exchange Date, each Security will
be exchanged automatically for between 0. shares and one share of Class A
Common Stock, as determined by the formula described under "-- The Trust's
Investment Objective". However, if the Seller under the Extendible Contract
delivers cash instead of Class A Common Stock under the Extendible Contract, the
holders of the Securities will receive cash instead of some of the Class A
Common Stock. The amount of cash will be based on the average market price of
the Class A Common Stock during the twenty business days before the cash is
delivered. The number of shares of Class A Common Stock or amount of cash that
will be delivered in exchange for the Securities will be adjusted if the Company
takes certain actions that have the effect of combining, splitting or diluting
the value of the Class A Common Stock.
MODIFICATIONS TO DELIVERY REQUIREMENTS. In some circumstances, the holders
of the Securities may receive cash, other common equity securities or other
property instead of or in addition to the Class A Common Stock, or the holders
of the Securities may receive some or all of the Class A Common Stock, cash or
other securities on a date other than July , 2002:
- The Exchange Date for all of the shares and cash may be extended and then
accelerated by the Seller under the Extendible Contract as described
above. In this case, the holders of the Securities would not receive some
or all of the shares and cash until the extended or accelerated date, but
the holders would receive an additional, partial cash distribution on the
Securities for the period of delay. For further detail, please see
"Investment Objective and Policies -- The Contracts -- Extension and
Acceleration of the Exchange Date at the Option of a Seller".
- The Seller under the Extendible Contract may elect to deliver cash
instead of Class A Common Stock. If the Seller under the Extendible
Contract decides to deliver cash instead of Class A Common Stock, it may
do so in connection with a "rollover offering" -- that is, an offering of
securities that refinances the Securities. If the Seller under the
Extendible Contract completes a rollover offering, the Seller will
deliver the cash by the fifth business day after completing that
offering. In this case, the holders of the Securities would not receive
some or all of the cash payable on exchange of the Securities until the
Seller pays it to the Trust. For further detail, please see "Investment
Objective and Policies -- The Contracts -- Cash Settlement; Rollover
Offerings".
- If the Company merges with another entity, the Company is liquidated, or
certain similar events occur, holders of Securities may receive other
common equity securities, cash or other property equal to the value of
the other consideration received by the Company's stockholders in that
transaction, rather than shares of Class A Common Stock. If at least 30%
of the consideration received by the Company's stockholders in the merger
consists of cash or cash equivalents, then the Sellers will be required
to deliver any consideration other than common equity securities to the
Trust within five business days after the Sellers receive that
consideration. On the Exchange Date, the Sellers would be required to
deliver the common equity securities included in the merger
consideration. In this case, the
4
<PAGE> 7
holders of the Securities would receive cash or other property
representing part of the merger consideration on a date before the
scheduled Exchange Date, and common equity securities representing the
rest of the merger consideration on the Exchange Date.
Instead of delivering any non-cash consideration at the time of the
merger, a Seller may choose to deliver cash equal to the value of those
assets. Similarly, instead of delivering the common equity securities on
the Exchange Date, a Seller may choose to deliver cash equal to the value
of those securities. For further detail, please see "Investment Objective
and Policies -- The Contracts -- Reorganization Events".
- If the Company declares a dividend consisting of the shares of common
stock of another issuer, the Sellers will be required to deliver on the
Exchange Date the shares received in the dividend, together with the
Class A Common Stock. In this case, the holders of Securities will
receive both shares of Class A Common Stock and shares of the other
issuer, or cash equal to the value of those shares. For further detail,
please see "Investment Objective and Policies -- The
Contracts -- Spin-Off Distributions".
- If a Seller defaults under its Contract or its collateral arrangements,
that Seller's Contract would be accelerated. In this case, the holder of
each Security would then receive an early distribution of the shares of
Class A Common Stock, cash or other common equity securities, instead of
receiving the Class A Common Stock, cash or other securities that would
otherwise be delivered on the Exchange Date. For further detail, please
see "Investment Objective and Policies -- The Contracts -- Collateral
Arrangements; Acceleration Upon Default By a Seller".
For more detail, please see "Investment Objective and Policies".
VOTING RIGHTS. Holders will have the right to vote on changes to the terms
of the Securities, on the replacement of the trustees of the Trust and the
Trust's custodian, paying agent, transfer agent, registrar and other agents, and
on other matters affecting the Trust, as described below under the caption
"Description of Securities". However, holders of the Securities will not have
any voting rights with respect to the Class A Common Stock until they actually
receive shares of Common Stock in exchange for the Securities. For more detail,
please see "Description of Securities -- Voting".
LISTING. The Trust will apply to list the Securities on the Nasdaq National
Market under the symbol .
THE COMPANY
Ameritrade Holding Corporation (the "Company"), founded in 1975, is a
leading provider of online discount brokerage services that provides its retail
brokerage services through its wholly-owned subsidiaries Ameritrade and
Accutrade. The Company also provides clearing and execution services to
Ameritrade and Accutrade, as well as to independent broker-dealers and other
entities, through its subsidiary Advanced Clearing, and provides wholesale
discount brokerage services to depository institutions through its subsidiary
AmeriVest.
The Company has prepared a prospectus that describes the Company and the
Class A Common Stock (the "Company Prospectus"). The Company Prospectus appears
as Annex A to this prospectus. The Company files reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"), as
described below under "Where You Can Find More Information on Ameritrade". The
Company is not affiliated with the Trust and will not receive any of the
proceeds from the sale of the Securities.
5
<PAGE> 8
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The Trust will be treated as a grantor trust under the U.S. federal income
tax laws. This means that under these laws, each holder will be treated as if it
owned directly its proportionate share of the assets held by the Trust.
Similarly, income and original issue discount received by the Trust will
generally be treated as income of the holders.
Under the U.S. federal income tax laws, the U.S. Treasury securities held
by the Trust will be treated as having "original issue discount" that will
accrue over the term of the U.S. Treasury securities. However, when the Trust
actually receives cash on these U.S. Treasury securities, these cash payments
will not be included in the holders' income. Instead, these payments will reduce
the holders' aggregate tax basis in the Securities. A holder will have taxable
gain or loss if the Trust receives cash instead of Class A Common Stock.
Holders should be aware that the Trust's assets could be characterized
differently under the federal income tax laws. Other characterizations could
require holders to include more interest in income than they would under the
analysis outlined above. For more detail, please see "Certain Federal Income Tax
Considerations".
RISK FACTORS
An investment in the Securities involves risk. Some of the risks of an
investment in the Securities are described under "Risk Factors", beginning on
page 28. These risks include the following:
- The Trust will not dispose of the Contracts even if the price of the
Class A Common Stock falls significantly or the financial condition of
the Company suffers. The holders will bear the entire amount of any
decrease in the value of the Class A Common Stock.
- Similarly, the Trust will not dispose of the U.S. Treasury securities
before they mature or the Trust terminates, whichever comes first, even
if their value falls significantly.
- If the price of Class A Common Stock rises, a holder of a Security will
not receive all of this increase in value. Holders will not receive any
of this increase if the average market price of the Class A Common Stock
at the Exchange Date is below $ . Holders will receive only %
of any increase in the value of the Class A Common Stock over
$ . On the other hand, holders of Securities will bear all of
any decrease in the value of the Class A Common Stock.
- Distributions on the Securities will remain fixed. To the extent
dividends are paid on the Class A Common Stock, the distributions on the
Securities may be lower than the dividends paid on the Class A Common
Stock.
- The number of shares of Class A Common Stock or amount of cash that
holders may receive on the Exchange Date will be adjusted if the Company
takes certain actions that have the effect of combining, splitting or
diluting the value of the Class A Common Stock. The number of shares to
be received by holders may not be adjusted for other events that may
adversely affect the price of the Class A Common Stock, such as offerings
of Class A Common Stock for cash or in connection with acquisitions.
- The only assets held by the Trust will be the U.S. Treasury securities
and the Contracts. An investment in the Trust will be riskier than an
investment in an investment company with diversified investments.
- The trading prices of the Securities in the secondary market will be
directly affected by the trading prices of the Class A Common Stock in
the secondary market. The trading prices of the Class A Common Stock will
be influenced by the Company's operating results and prospects and by
economic, financial and other factors and market conditions. The trading
6
<PAGE> 9
prices of the Securities will also be affected by fluctuations in interest rates
and other factors that are difficult to predict and beyond the Trust's control.
- There can be no assurance that a secondary market will develop for the
Securities. If a secondary market does develop, there can be no assurance
that it will provide the holders with liquidity for their investment or
that it will continue for the life of the Securities.
- Holders of the Securities will not be entitled to any rights with respect
to the Class A Common Stock unless they actually receive Class A Common
Stock in exchange for the Securities. For example, holders of Securities
will not be entitled to vote the shares of Class A Common Stock or
receive dividends.
FEES AND EXPENSES
UNDERWRITERS' COMPENSATION. The Sellers will compensate the Underwriters
for the offering of the Securities because a significant portion of the proceeds
of the sale of the Securities will be used by the Trust to purchase the
Contracts from the Sellers. The Underwriting Agreement requires the Sellers to
pay the Underwriters $ for each Security sold in the offering.
ORGANIZATIONAL AND OFFERING COSTS. The Trust's organizational costs will be
approximately $10,000. The Trust's costs in connection with the offering of the
Securities will be approximately $ . The Sellers will pay these
organizational and offering costs.
COSTS OF OTHER SERVICE PROVIDERS. At the closing of the offering of the
Securities, the Sellers will make a one-time, up-front payment to the Trust's
administrator, custodian, paying agent and trustees as compensation for their
services to the Trust. The Sellers will also pay the Trust's administrator
$ to cover the Trust's anticipated expenses. The Sellers will pay any
ongoing expenses of the Trust above these estimated amounts and the Sellers will
reimburse the Trust for any amounts it may pay as indemnification to the Trust's
administrator, custodian, paying agent or any trustee. If the Sellers do not pay
these expenses and obligations, the Trust will have to pay them, and this will
reduce the amount available to distribute to holders.
DISCLOSURE REQUIRED BY THE SECURITIES AND EXCHANGE COMMISSION. The SEC
requires the Trust to present its expenses in the following format. The SEC has
stated that it intends this requirement to assist investors in understanding the
various costs and expenses that an investor in the Securities will bear directly
or indirectly.
Because the Trust will not bear any fees or expenses, investors will not
bear any expenses directly.
<TABLE>
<S> <C>
INVESTOR TRANSACTION EXPENSES
Maximum Sales Load (as a percentage of Initial Public
Offering Price)........................................... %(a)
Dividend Reinvestment and Cash Purchase Plan Fees........... N/A
ANNUAL EXPENSES (AS A PERCENTAGE OF NET ASSETS)
Management Fees(b).......................................... 0%
Other Expenses(c)........................................... 0%
-----
Total Annual Expenses(c).......................... 0%
=====
</TABLE>
- ---------------
(a) See "Underwriting".
(b) See "The Trust". The Trust will be internally managed; consequently, there
will be no separate investment advisory fee paid by the Trust. The Chase
Manhattan Bank will act as the administrator of the Trust.
(c) The organizational costs of the Trust in the amount of $10,000,
compensation payable to the Trust's administrator, custodian, paying agent
and trustees in the amount of $ and approximately $ in
costs in connection with the offering of the Securities will be paid
7
<PAGE> 10
by the Sellers. Anticipated ongoing expenses of the Trust over the term of
the Trust, estimated to be approximately $ , as well as any
unanticipated operating expenses of the Trust, will also be paid by the
Sellers. See "The Trust -- Expenses of the Trust". Absent these
arrangements, the Trust's "Other Expenses" and "Total Annual Expenses"
would be approximately % of the Trust's net assets.
The SEC also requires that closed-end investment companies present an
illustration of cumulative expenses (both direct and indirect) that an investor
would bear. The example must factor in the applicable Sales Load and must assume
that investors will receive a 5% annual return and will reinvest all
distributions at net asset value. PLEASE NOTE THAT THE ASSUMPTION OF A 5% ANNUAL
RETURN DOES NOT ACCURATELY REFLECT THE TRUST'S TERMS. SEE "INVESTMENT OBJECTIVE
AND POLICIES". ALSO, THE TRUST DOES NOT PERMIT HOLDERS TO REINVEST THE
DISTRIBUTIONS ON THE SECURITIES.
<TABLE>
<CAPTION>
EXAMPLE 1 YEAR 3 YEARS
- ------- ------ -------
<S> <C> <C>
You would bear the following expenses on a $10,000
investment, including the applicable Sales Load of $300
and assuming
(1) no annual expenses and (2) a 5% annual return
throughout the period..................................... $300 $300
</TABLE>
8
<PAGE> 11
THE TRUST
CREATION AND FORM OF THE TRUST
The Trust is a newly organized New York trust. It is a registered,
non-diversified, closed-end management investment company under the Investment
Company Act of 1940 (the "Investment Company Act"). The Trust was formed on
April 30, 1999 under a trust agreement, which was amended and restated as of
July , 1999 to reflect the terms of this offering (the "Trust Agreement"). The
Trust's address is 85 Broad Street, New York, New York 10004 (telephone no.
(212) 902-1000).
THE TRUSTEES
The Trust will be internally managed by three trustees (the "Trustees").
One of the Trustees will be designated as the Trust's "Managing Trustee". The
Trustees will be responsible for the Trust's general management and operations.
However, the Trustees will not have the power to vary the investments held by
the Trust. See "Investment Objective and Policies". The Sellers will pay each
Trustee, on behalf of the Trust, a one-time, up-front fee to cover the Trustee's
annual fee and anticipated out-of-pocket expenses. The Managing Trustee will
also receive an additional up-front fee for serving in that capacity.
Goldman Sachs, as the Trust's sponsor and the initial holder of the Trust's
Securities, has elected three individuals to serve as the Trustees. Their names,
ages, addresses and titles, their principal occupations during the past five
years and their compensation are as follows:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
DURING
NAME, AGE AND ADDRESS TITLE PAST FIVE YEARS COMPENSATION
- --------------------- ----- ---------------------- ------------
<S> <C> <C> <C>
Donald J. Puglisi, 53..... Managing Trustee Professor of Finance $14,400
Department of Finance University of Delaware
University of Delaware
Newark, DE 19716
William R. Latham, 54..... Trustee Professor of Economics $10,800
Department of Economics University of Delaware
University of Delaware
Newark, DE 19716
James B. O'Neill, 59...... Trustee Professor of Economics $10,800
Center for Economic University of Delaware
Education &
Entrepreneurship
University of Delaware
Newark, DE 19716
</TABLE>
None of the Trustees is an "interested person" of the Trust as defined in
the Investment Company Act. Furthermore, none of the Trustees is a director,
officer or employee of any Underwriter or of the Trust's administrator, or of
any affiliate of any Underwriter or the Trust's administrator. Each of the
Trustees serves as a trustee of other similar trusts, but none of the Trustees
receives any compensation for serving as a trustee or director of any other
affiliated investment company.
OTHER SERVICE PROVIDERS
ADMINISTRATOR. The Trust's day-to-day affairs will be managed by The Chase
Manhattan Bank as Administrator under an Administration Agreement, dated as of
July , 1999 (the
9
<PAGE> 12
"Administration Agreement"). Under the Administration Agreement, the Trustees
have delegated most of their operational duties to the Administrator, including
the duties to:
- receive and pay invoices for expenses incurred by the Trust;
- with the approval of the Trustees, engage legal and other professional
advisors (other than the independent public accountants for the Trust);
- instruct the Trust's paying agent to pay the distributions on the
Securities;
- prepare, mail, file and publish all notices, proxies, reports, tax
returns and other documents for the Trust, or direct the Trust's paying
agent to do so, and keep the Trust's books and records;
- select and engage an independent investment banking firm (after
consultation with the Sellers), when the Trust is required to do so under
the Contracts;
- at the direction of the Trustees, institute and prosecute legal and other
appropriate proceedings to enforce the Trust's rights and remedies, but
the Administrator is required to do so only if it receives any indemnity
that it requests; and
- make all necessary arrangements for meetings of the Trustees and any
meetings of holders.
The Administrator will not select the independent public accountants for
the Trust. The Administrator also will not sell any of the Trust's assets, or
permit any other agent of the Trust to do so, except when the Contracts require
the Trust to make a delivery, when the Trust is required to sell fractional
shares, when the collateral agreements securing the Contracts require the Trust
to sell collateral posted by a Seller, and when the Trust terminates.
CUSTODIAN. The Trust's assets will be held by The Chase Manhattan Bank as
the Trust's custodian (the "Custodian") under a Custodian Agreement, dated as of
July , 1999 (the "Custodian Agreement").
COLLATERAL AGENT. The Custodian will also act as collateral agent (the
"Collateral Agent") under the collateral agreements among the Collateral Agent,
the Trust and each of the Sellers (the "Collateral Agreements"). The Collateral
Agent will hold a perfected security interest in the Class A Common Stock and
U.S. Government obligations or other assets pledged by the Sellers under the
Collateral Agreements. If any of the Sellers defaults under its Contract or
Collateral Agreement, it will be the Collateral Agent that sells the collateral
posted by that Seller and pays the proceeds of that sale to the Custodian for
distribution to the holders of the Securities.
PAYING AGENT. ChaseMellon Shareholder Services, L.L.C. will serve as the
transfer agent, registrar and paying agent (the "Paying Agent") for the
Securities under a Paying Agent Agreement, dated as of July , 1999 (the
"Paying Agent Agreement").
OTHER INFORMATION CONCERNING THE TRUST'S AGENTS. The Administrator, the
Custodian, the Collateral Agent and the Paying Agent each have the right to
resign at any time on 60 days' notice to the Trust. The Trustees have the right
to remove any of these agents of the Trust at any time on 60 days' notice or
immediately if the agent defaults under the applicable agreement or the
Investment Company Act, suffers a bankruptcy, merges without the Trust's
consent, or under several other circumstances. In order to ensure that all the
agents of the Trust are the same financial institution or affiliate financial
institutions, if any of these agents resigns or is removed, the appointment of
each of the other agents automatically terminates. However, no resignation or
removal of any of these agents will be effective until a successor is appointed.
If any of these agents resigns or is removed, the Trustees are required to
appoint a successor with the qualifications specified in the Trust Agreement.
10
<PAGE> 13
Except for their respective roles as Administrator, Custodian, Collateral
Agent and Paying Agent, The Chase Manhattan Bank and ChaseMellon Shareholder
Services, L.L.C. have no other affiliation with, and are not engaged in any
other transactions with, the Trust.
INDEMNIFICATION
The Trust will indemnify each Trustee, the Administrator, the Custodian,
the Collateral Agent and the Paying Agent against any liabilities or costs
(including the reasonable costs of defending against any liability) that it may
incur in acting in that capacity, except for willful misfeasance, bad faith,
gross negligence or reckless disregard of their respective duties or where
applicable law prohibits that indemnification. The Sellers have agreed to
reimburse the Trust for any amounts it may be required to pay under these
indemnifications. If the Sellers do not pay these amounts, the Trust will have
to pay them, and this will reduce the amount available to distribute to holders.
EXPENSES OF THE TRUST
At the closing of the offering of the Securities, the Sellers will pay to
the Administrator, the Custodian, the Collateral Agent and the Paying Agent a
one-time, up-front payment of $ to cover their fees and the Trustees'
compensation described above. The Sellers will also pay the Administrator a
one-time, up-front payment of $ to cover the Trust's anticipated
expenses. The anticipated Trust expenses to be paid by the Administrator out of
this amount include, among other things:
- expenses for legal and independent accountants' services;
- costs of printing proxies, Securities certificates and holder reports;
and
- fidelity bond coverage for the Trustee.
In addition, the Sellers will pay the costs of organizing the Trust in the
amount of $10,000 and estimated costs in connection with the initial
registration and public offering of the Securities in the amount of $ .
The amount that the Sellers will pay to the Administrator to cover the
Trust's ongoing expenses 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. It is possible, however, that the actual
operating expenses of the Trust will be substantially more than this amount. The
Sellers have agreed to pay any excess expenses beyond this amount. If the
Sellers do not pay those excess expenses, the Trust will have to pay them, and
this will reduce the amount available to distribute to holders.
TRUST TERMINATION
The Trust will terminate automatically ten business days after the final
Exchange Date. However, if all Contracts are accelerated, then the Trust will
terminate 10 business days after the Class A Common Stock, cash or other common
equity securities required to be delivered under the last Contract are
delivered. If the Trust terminates before all the distributions on the
Securities have been paid, the Trust's Administrator will sell any U.S. Treasury
securities then held in the Trust and distribute the proceeds pro rata to the
holders of the Securities, together with the shares or cash delivered under the
Contracts.
VALUATION FOR INVESTMENT COMPANY ACT PURPOSES
In calculating the Trust's net asset value as required by the Investment
Company Act, the Trust Agreement provides that (1) the U.S. Treasury securities
held by the Trust will be valued at the mean between the last current bid and
asked prices or, if quotations are not available, as
11
<PAGE> 14
determined in good faith by the Trustees, (2) 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 (3) the Contracts will be
valued on the basis of the bid price received by the Trust for the Contracts, or
any portion of the Contracts covering not less than 1,000 shares, from an
independent broker-dealer firm unaffiliated with the Trust to be named by the
Trustees who is in the business of making bids on financial instruments similar
to the Contracts and with comparable terms, or if such a bid quotation is not
available, as determined in good faith by the Trustees.
INVESTMENT COMPANY ACT EXEMPTION
The SEC has issued an order that exempts the Trust from the requirements of
Section 12(d)(1) of the Investment Company Act that restrict the amount of
Securities that registered investment companies could otherwise own.
Accordingly, registered investment companies may hold Securities in excess of
the limits imposed by Sections 12(d)(1)(A)(i) and 12(d)(1)(C) of the Investment
Company Act. However, any such investment company will be required to vote its
Securities in proportion to the votes of all other holders.
USE OF PROCEEDS
The net proceeds of this offering will be used immediately upon the closing
of this offering to:
- purchase a portfolio of stripped U.S. Treasury securities with face
amounts and maturities corresponding to the quarterly distributions
payable with respect to the Securities; and
- pay the purchase price to the Sellers under the Contracts.
INVESTMENT OBJECTIVE AND POLICIES
This prospectus includes a Glossary that states the definitions given to
some of the capitalized terms used in this prospectus in the Contracts, the
Trust Agreement and the Collateral Agreement. You should refer to the Glossary
if you wish to understand the terms used in this prospectus in detail. Some of
these definitions are summarized in the descriptions below.
INVESTMENT OBJECTIVE, POLICIES AND RESTRICTIONS; FUNDAMENTAL POLICIES
The Trust's investment objective is to give the holder of each Security a
quarterly cash distribution of $ and, on the Exchange Date, between
0. and 1 shares of Class A Common Stock (or cash equal to the value of some of
those shares). The number of shares, or amount of cash, that a holder will
receive in exchange for a single Security will vary, depending on the average
market price of the Class A Common Stock over the twenty business days before
the Exchange Date. The value of the Class A Common Stock (or cash or Marketable
Securities received in lieu of Class A Common Stock) that will be received by a
holder under the Securities may be more or less than the amount the holder paid
for the Securities.
To achieve its investment objective, the Trust will use the proceeds of the
Securities to buy and hold:
- a portfolio of stripped U.S. Treasury securities that will mature during
each quarter through July , 2002; and
- the Contracts.
12
<PAGE> 15
The Trust has adopted the following fundamental policies:
- the Trust will invest at least 70% of its total assets in the Contracts;
- the Contracts may not be disposed of during the term of the Trust;
- the U.S. Treasury securities held by the Trust may not be disposed of
before the earliest of their respective maturities, the occurrence of a
Reorganization Event where the consideration does not include any
Marketable Securities, a default by a Seller under its Contract, and the
termination of the Trust; and
- the Trust may not purchase any securities or instruments other than the
U.S. Treasury securities, the Contracts and the Class A Common Stock or
other assets received pursuant to the Contracts and, for cash management
purposes, the short-term obligations of the U.S. Government described
under "-- Temporary Investments" below; issue any securities or
instruments except for the Securities; make short sales or purchases on
margin; write put or call options; borrow money; underwrite securities;
purchase or sell real estate, commodities or commodities contracts; make
loans (other than the purchase of stripped U.S. Treasury securities as
described in this prospectus); or take any action that would or could
cause the Trust not to be a "grantor trust" for purposes of the U.S.
federal income tax laws.
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
Trust's outstanding Securities. A "majority of the Trust'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.
Because of the foregoing limitations, the Trust's investments will be
concentrated in the discount brokerage industry, which is the industry in which
the Company operates. The Trust is not permitted to purchase restricted
securities.
THE COMPANY AND THE CLASS A COMMON STOCK
The Company, founded in 1975, is a leading provider of online discount
brokerage services that provides its retail brokerage services through its
wholly-owned subsidiaries Ameritrade and Accutrade. The Company also provides
clearing and execution services to Ameritrade and Accutrade, as well as to
independent broker-dealers and other entities, through its subsidiary Advanced
Clearing, and provides wholesale discount brokerage services to depository
institutions through its subsidiary AmeriVest.
The Company provides technology-based brokerage services to retail
investors through a variety of electronic mediums, primarily the Internet. The
Company provides services to a broad market of self-directed retail investors
who are value conscious. The Company's goal is to provide its online discount
brokerage customers the best execution using the best information at the best
value. The Company was the first brokerage firm to offer touch-tone trading in
1988 and the first to offer trading over the Internet in 1994.
The key elements of the Company's business strategy are to:
- Establish Ameritrade as the dominant brand in online trading
- Focus on online discount brokerage services
- Expand its capacity and infrastructure to meet expected increases in
trading volume
- Continue to offer innovative technologies and service enhancements to its
customers
- Be the lowest cost provider of quality brokerage services
13
<PAGE> 16
- Expand its access to international customers
The Company completed the initial public offering of the Class A Common
Stock on March 7, 1997, at a price per share of $1.25. Since March 4, 1997, the
Class A Common Stock has been quoted on the Nasdaq National Market under the
symbol "AMTD." The following table shows for the periods indicated the high and
low sales prices per share of the Class A Common Stock as reported by the Nasdaq
National Market. These prices reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not necessarily represent actual
transactions. These prices reflect the two-for-one stock splits effective August
18, 1998 and February 22, 1999 and the three-for-one stock split effective July
2, 1999. The Company has never paid dividends on the Class A Common Stock. As of
July 9, 1999, there were 333 record holders of the Class A Common Stock,
including The Depository Trust Company, which holds shares of Class A Common
Stock on behalf of an indeterminate number of beneficial owners.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
FISCAL YEAR ENDED SEPTEMBER 26, 1997
Second Quarter (since March 4, 1997)...................... $ 1.88 $ 1.35
Third Quarter............................................. 1.53 0.98
Fourth Quarter............................................ 2.24 1.22
FISCAL YEAR ENDED SEPTEMBER 25, 1998
First Quarter............................................. 3.25 1.50
Second Quarter............................................ 2.59 1.86
Third Quarter............................................. 2.74 1.91
Fourth Quarter............................................ 4.47 2.16
FISCAL YEAR ENDED SEPTEMBER 24, 1999
First Quarter............................................. 6.50 1.88
Second Quarter............................................ 22.50 5.00
Third Quarter............................................. 62.79 19.54
Fourth Quarter (through July 9, 1999)..................... 43.50 26.83
</TABLE>
Holders will not be entitled to any rights with respect to the Class A
Common Stock (including voting rights and rights to receive dividends or other
distributions on the Class A Common Stock) unless they actually receive shares
of Class A Common Stock in exchange for the Securities.
The Company files reports, proxy statements and other information with the
SEC, as described below under "Where You Can Find More Information on
Ameritrade". The Company is not affiliated with the Trust and will not receive
any of the proceeds from the sale of the Securities.
THE CONTRACTS
The Trust will enter into a Contract with each Seller obligating that
Seller to deliver to the Trust on the Exchange Date a number of shares of Class
A Common Stock equal to the product of the Exchange Rate (as defined below)
times the initial number of shares of Class A Common Stock covered by that
Contract. The Extendible Contract will become effective only if the Underwriters
exercise their option to acquire up to an additional 600,000 Securities from the
Trust at the initial public offering price set forth on the cover page of this
prospectus, and relates to up to 600,000 shares of Class A Common Stock
deliverable on the Exchange Date in connection with the exercise of that option.
The aggregate initial number of shares of Class A Common Stock under the
Contracts will equal the aggregate number of Securities offered by this
prospectus (and will be increased if the Underwriters exercise their
over-allotment option).
14
<PAGE> 17
The aggregate purchase price that the Trust will pay under all the
Contracts will be $ . The Trust will pay $ of this purchase
price on the closing date of this offering (and, with respect to the Extendible
Contract, $ on the closing date for the exercise of the Underwriters'
over-allotment option). This purchase price was arrived at by arm's-length
negotiation between the Trust and the Sellers, taking into consideration factors
including the price, the expected dividend level and volatility of the Class A
Common Stock, current interest rates, the term of the Contracts, current market
volatility generally, the collateral pledged by the Sellers, the value of other
similar instruments and the costs and anticipated proceeds of the offering of
the Securities.
Each Contract provides that if the Seller under that Contract delivers
Securities to the Trust on or before the Exchange Date, the Seller's obligation
to deliver Class A Common Stock (or cash) will be proportionately reduced. The
delivery of Securities in partial or complete satisfaction of a Seller's
obligations will not, however, affect the amount of Class A Common Stock or cash
that will be received by the holder of each Security that remains outstanding on
the Exchange Date.
All matters relating to the administration of the Contracts will be the
responsibility of either the Administrator or the Custodian.
THE EXCHANGE RATE. The "Exchange Rate" will be calculated by a formula
based on the "Average Market Price" of the Class A Common Stock on the Exchange
Date:
- If the Average Market Price is less than $ (the "Appreciation
Threshold Price") but equal to or greater than $ (the "Initial
Price"), the Exchange Rate will be the number of shares of Class A Common
Stock having a value (determined at the Average Market Price) equal to
the Initial Price.
- If the Average Market Price is equal to or greater than the Appreciation
Threshold Price, the Exchange Rate will be shares of Class A
Common Stock.
- If the Average Market Price is less than the Initial Price, the Exchange
Rate will be one share of Class A Common Stock.
This formula will be adjusted if the Company takes certain steps that combine,
split or dilute the value of the Class A Common Stock. See "-- The
Contracts -- Dilution Adjustments". 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). If this formula would require the Trust to deliver a
fraction of a share of Class A Common Stock to any holder, the Trust will
instead deliver cash equal to the value of that fraction of a share.
The "Average Market Price" per share of Class A Common Stock on any date
means the average Closing Price of a share of Class A Common Stock on the 20
Trading Days immediately before but not including that date. The Average Market
Price will be calculated in a different manner if a Seller carries out a
Rollover Offering (as defined below), as described under "-- Cash Settlement;
Rollover Offerings".
The "Closing Price" of the Class A Common Stock (or any other common equity
security) on any date means the closing sale price (or, if no closing sale price
is reported, the last reported sale price) of that security as reported on the
NYSE Consolidated Tape on that date or, if the security is not listed for
trading on the NYSE on that date, as reported in the composite transactions for
the principal United States national or regional securities exchange on which
the security is so listed, or if the security is not listed on a United States
national or regional securities exchange on that date, as reported by the Nasdaq
National Market or, if the security is not reported by that market on that date,
the last quoted bid price for the security in the over-the-counter market as
reported by the National Quotation Bureau or any similar organization. However,
if any event that results in an adjustment to the number of shares of Class A
Common
15
<PAGE> 18
Stock deliverable under the Contracts, as described under "-- The
Contracts -- Dilution Adjustments", occurs before the Exchange Date, the Closing
Price as determined pursuant to the foregoing will be appropriately adjusted to
reflect the occurrence of that event.
A "Trading Day" for any common equity security means a day on which the
security (A) is not suspended from trading on any United States 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 United States national
or regional securities exchange or association or over-the-counter market that
is the primary market for the trading of that security.
For illustrative purposes only, the following chart shows the number of
shares of Class A Common Stock that a holder would receive for each Security at
various Average Market Prices. The chart assumes that there would be no
adjustments to the number of shares of Class A Common Stock deliverable under
the Contracts by reason of the occurrence of any of the events described under
"-- The Contracts -- Dilution Adjustments" and that the Exchange Dates under all
of the Contracts occur on the same date. There can be no assurance that the
Average Market Price on the Exchange Date will be within the range set forth
below. Given the Initial Price of $ per Security and 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
Class A Common Stock:
<TABLE>
<CAPTION>
NUMBER OF SHARES
AVERAGE MARKET PRICE OF CLASS A COMMON STOCK
OF CLASS A COMMON STOCK PER SECURITY
- ----------------------- -----------------------
<S> <C>
</TABLE>
EXTENSION AND ACCELERATION OF THE EXCHANGE DATE AT THE OPTION OF A
SELLER. The Seller under the Extendible Contract has the right to extend the
Exchange Date under the Extendible Contract to October , 2002. If the Seller
extends the Exchange Date, the Seller will not be required to deliver the shares
of Class A Common Stock or cash under the Extendible Contract until October ,
2002. However, once the Seller under the Extendible Contract extends the
Exchange Date, the Seller can then accelerate the delivery of shares or cash to
any date between July , 2002 and October , 2002 in connection with a
Rollover Offering. If the Seller under the Extendible Contract extends or
accelerates the Exchange Date, the holders of the Securities will not receive
the corresponding portion of the shares or cash until the extended or
accelerated Exchange Date, and the number of shares and amount of cash included
in that delivery would be calculated as of the extended or accelerated Exchange
Date. However, the holders of the Securities would receive an additional,
partial cash distribution on the Securities on the extended or accelerated
Exchange Date.
The amount of the additional, partial distribution that would be paid on
the Securities would be a portion of the regular quarterly distribution on the
Securities proportionate to the number of shares of Class A Common Stock covered
by the Extendible Contract. For example, if the Exchange Date is extended to
October , 2002 for half the shares or cash deliverable on the Exchange Date,
the additional distribution would be equal to half the regular quarterly
distribution. If the final Exchange Date falls between July , 2002 and October
, 2002, the additional distribution will be pro-rated both to reflect the
number of securities covered by the extended and accelerated Extendible Contract
and the number of days by which the Exchange Date is extended. For example, if
the Exchange Date for half the shares or cash deliverable on the Exchange Date
is extended to October , 2002 and then accelerated to September , 2002
(i.e., two-thirds of the time between July , 2002 and October , 2002), the
additional distribution would be equal to two-thirds of one-half (or one-third)
of the regular quarterly distribution.
16
<PAGE> 19
CASH SETTLEMENT; ROLLOVER OFFERINGS. The Seller under the Extendible
Contract may elect to deliver cash, instead of shares of Class A Common Stock,
on the Exchange Date (whether or not extended or accelerated) under its
Contract. If the Seller under the Extendible Contract chooses to deliver cash
instead of shares of Class A Common Stock, the amount of that cash will be equal
to the value, based on the Average Market Price at the Exchange Date, of the
number of shares that the Seller would otherwise be required to deliver on the
Exchange Date.
The Seller under the Extendible Contract may choose to deliver cash,
instead of shares of Class A Common Stock, in connection with a "Rollover
Offering". A "Rollover Offering" is a reoffering or refinancing of Securities
effected by the Seller not earlier than July , 2002, by means of a completed
public offering or offerings or another similar offering (which may include one
or more exchange offers) by or on behalf of the Seller. If the Seller under the
Extendible Contract chooses to carry out a Rollover Offering, the "Average
Market Price" will be the Closing Price per share of Class A Common Stock on the
Trading Day immediately before the date that the Rollover Offering is priced
(the "Pricing Date") or, if the Rollover Offering is priced after 4:00 p.m., New
York City time, on the Pricing Date, the Closing Price per share on the Pricing
Date.
If the Seller under the Extendible Contract carries out a Rollover Offering
that is consummated on or before the Exchange Date, the cash payable by the
Seller will be delivered to the Trust within five Trading Days of the Exchange
Date (which may be extended and accelerated as described above), instead of on
the Exchange Date itself. Accordingly, the holders of the Securities may not
receive the cash deliverable in exchange for the Securities until the fifth
Trading Day after the Exchange Date.
DILUTION ADJUSTMENTS. The Exchange Rate will be adjusted if the Company (1)
pays a stock dividend or makes a distribution with respect to the Class A Common
Stock in shares of that stock, (2) subdivides or splits its outstanding shares
of Class A Common Stock, (3) combines its outstanding shares of Class A Common
Stock into a smaller number of shares, or (4) issues by reclassification of its
shares of Class A Common Stock any shares of other common stock of the Company.
In any such event, the Exchange Rate will be adjusted as follows: for each share
of Class A Common Stock that would have been deliverable under a Security upon
exchange before the adjustment, the holder of that Security will receive the
number of shares of Class A Common Stock (or, in the case of a reclassification
referred to in clause (4) above, the number of shares of other common stock of
the Company issued pursuant to that reclassification), or the fraction of such
shares, that a stockholder who held one share of Class A Common Stock
immediately before that event would be entitled solely by reason of that event
to hold immediately after that event.
In addition, if the Company issues rights or warrants to all holders of
Class A Common Stock entitling them to purchase shares of Class A Common Stock
at a price per share less than the Then-Current Market Price (as defined below)
of the Class A Common Stock (other than rights to purchase Class A Common Stock
pursuant to a plan for the reinvestment of dividends or interest), then the
Exchange Rate will be adjusted pursuant to the following formula:
<TABLE>
<S> <C>
A = E X OS + AS
-------
OS + PS
</TABLE>
where
ER= the Exchange Rate before the adjustment;
OS= the number of shares of Class A Common Stock outstanding immediately
before the time (determined as described below) the adjustment is
effected by reason of the issuance of those rights or warrants;
17
<PAGE> 20
AS= the number of additional shares of Class A Common Stock offered for
purchase pursuant to those rights or warrants; and
PS= the number of additional shares of Class A Common Stock that the
aggregate offering price of the total number of shares of Class A
Common Stock so offered for purchase would purchase at the Then-Current
Market Price.
To the extent that, after expiration of those rights or warrants, any of the
shares of Class A Common Stock offered by such rights or warrants are not
actually delivered, the Exchange Rate will be further adjusted to equal the
Exchange Rate that would have been in effect if the foregoing adjustment had
been made upon the basis of delivery of only the number of shares of Class A
Common Stock actually delivered.
The "Then-Current Market Price" of the Class A Common Stock, for the
purpose of making any dilution adjustment, means the average Closing Price per
share of Class A Common Stock for the five Trading Days immediately before the
time that adjustment is effected (or, in the case of an adjustment effected at
the opening of business on the business day after a record date, as described
below, immediately before the earlier of the time the adjustment is effected and
the related "ex-date" on which the shares of Class A Common Stock first trade
regular way on their principal market without the right to receive the relevant
dividend, distribution or issuance).
In addition, if the Company pays a dividend or makes a distribution to all
holders of Class A Common Stock of evidences of its indebtedness or other
non-cash assets (excluding any stock dividends or distributions in shares of
Class A Common Stock described above and any Spin-Off Distributions (as defined
below)) or issues to all holders of Class A Common Stock rights or warrants to
subscribe for or purchase any of its securities (other than rights or warrants
referred to in the second paragraph of this subsection), then the Exchange Rate
will be adjusted pursuant to the following formula:
<TABLE>
<S> <C>
A = ER X T
-----
T - V
</TABLE>
where
ER= the Exchange Rate before the adjustment;
T = the Then-Current Market Price per share of Class A Common Stock; and
V = 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 effected of the portion
of those evidences of indebtedness, non-cash assets or rights or
warrants applicable to one share of Class A Common Stock.
In addition, if the Company distributes cash, other than any Permitted
Dividend (as defined below), any cash distributed in consideration of fractional
shares of Class A Common Stock and any cash distributed in a Reorganization
Event (as defined below), by dividend or otherwise, to all holders of Class A
Common Stock or makes an Excess Purchase Payment (as defined below), then the
Exchange Rate will be adjusted pursuant to the following formula:
<TABLE>
<S> <C>
A = ER X T
-----
T - D
</TABLE>
where
ER= the Exchange Rate before the adjustment;
T = the Then-Current Market Price per share of Class A Common Stock on the
record date for that distribution; and
18
<PAGE> 21
D = the amount of that distribution applicable to one share of Class A
Common Stock that would not be a Permitted Dividend or, in the case of
an Excess Purchase Payment, the aggregate amount of that Excess
Purchase Payment divided by the number of outstanding shares of Class A
Common Stock on that record date.
For purposes of these adjustments,
(a)the term "Permitted Dividend" means any quarterly cash dividend on the
Class A 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 that dividend results in an
annualized dividend yield on the Class A Common Stock above %; and
(b)the term "Excess Purchase Payment" means the excess, if any, of (1) the
cash and the value (as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Administrator)
of all other consideration paid by the Company with respect to one share
of Class A Common Stock acquired in a tender offer or exchange offer by
the Company, over (2) the Then-Current Market Price per share of Class A
Common Stock.
If any adjustment in the Exchange Rate must be made pursuant to the
formulas described above, corresponding adjustments will be made to the Initial
Price and the Appreciation Threshold Price.
Dilution adjustments will be effected: (1) in the case of any dividend,
distribution or issuance described above, as of the opening of business on the
business day after the record date for determination of holders of Class A
Common Stock entitled to receive that dividend, distribution or issuance or, if
the announcement of any such dividend, distribution or issuance is after that
record date, at the time that dividend, distribution or issuance is announced by
the Company; (2) in the case of any subdivision, split, combination or
reclassification described above, on the effective date of that transaction; (3)
in the case of any Excess Purchase Payment for which the Company announces, at
or before the time it commences the relevant share repurchase, the repurchase
price for those shares to be repurchased, on the date of that announcement; and
(4) in the case of any other Excess Purchase Payment, on the date that the
holders of Class A Common Stock become entitled to payment with respect to that
Excess Purchase Payment. There will be no adjustment under the Contracts for any
dividends, distributions, issuances or repurchases that may be declared or
announced after the Exchange Date.
If an adjustment is made because the Company announces or declares a record
date for a dividend, distribution, issuance or repurchase, and the dividend,
distribution, issuance or repurchase does not actually occur, then the Exchange
Rate will be further adjusted to equal the Exchange Rate that would have been in
effect if the adjustment for that dividend, distribution, issuance or repurchase
had not been made. If an adjustment is made because the Company announces a
share repurchase, and the Company reduces the repurchase price or repurchases
fewer shares than announced, then upon completion of that share repurchase, the
Exchange Rate will be further adjusted to equal the Exchange Rate that would
have been in effect if the adjustment for that repurchase had been based on the
actual price and amount repurchased. All dilution adjustments 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). No adjustment in the Exchange Rate will
be required unless that adjustment would require an increase or decrease of at
least one percent in the Exchange Rate. However, any adjustments that are not
required to be made because of this limit will be carried forward and taken into
account in any subsequent adjustment.
19
<PAGE> 22
REORGANIZATION EVENTS. If a Reorganization Event occurs, each Seller will
be required to deliver on the Exchange Date, in lieu of each share of Class A
Common Stock subject to that Seller's Contract, cash in an amount equal to:
- 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.
- If the Transaction Value is greater than or equal to the Appreciation
Threshold Price, 0. multiplied by the Transaction Value.
- If the Transaction Value is less than the Initial Price, the Transaction
Value.
This amount of cash is referred to as the "Basic Reorganization Event Amount".
If the consideration received by the holders of Class A Common Stock in the
Reorganization Event (the "Merger Consideration") includes Marketable
Securities, the Sellers may choose to deliver those Marketable Securities on the
Exchange Date in lieu of delivering the cash value of those Marketable
Securities as described above. If the Sellers choose to deliver Marketable
Securities on the Exchange Date, the holders of the Securities will be
responsible for paying all brokerage and other transaction costs when they
resell those securities.
Notwithstanding the foregoing, if at least 30% of the Merger Consideration
consists of cash or cash equivalents (a "Cash Merger"), then delivery of the
Merger Consideration, other than any consideration consisting of Marketable
Securities, will be accelerated as follows. The Sellers will be required:
- within five business days after the Sellers receive the Merger
Consideration, to deliver to the Trust the portion of the Merger
Consideration, other than Marketable Securities, calculated as described
below (the "Accelerated Portion") (and the Trust will promptly distribute
this property to the holders of the Securities); and
- on the Exchange Date, to deliver to the Trust the number of Marketable
Securities calculated as described below.
Instead of delivering any non-cash consideration at the time of a merger,
the Sellers may choose to deliver cash equal to the Value of those assets.
Similarly, instead of delivering Marketable Securities on the Exchange Date, the
Sellers may choose to deliver cash equal to the value, based on the Average
Market Price at the Exchange Date, of the number of Marketable Securities that
the Sellers would otherwise be required to deliver on the Exchange Date.
The Accelerated Portion per Security will be the portion of the Merger
Consideration, other than Marketable Securities, that has a Value (as defined
below) equal to the amount determined pursuant to the following formula:
<TABLE>
<S> <C>
AP = BREA X OC
---------
TV
</TABLE>
where:
AP = the Value of the Accelerated Portion;
BREA = the Basic Reorganization Event Amount;
OC = the Value of the portion of the Merger Consideration received in
exchange for a single share of Class A Common Stock that consists of
assets other than Marketable Securities; and
TV = the Transaction Value.
20
<PAGE> 23
The number of Marketable Securities that the Trust will be required to
deliver on the Exchange Date in exchange for each Security will be determined by
applying the Exchange Rate, adjusted as described below, to the Average Market
Price of the Marketable Securities on the Exchange Date. To calculate the
Exchange Rate, the Initial Price will be adjusted pursuant to the following
formula:
<TABLE>
<S> <C>
A = IP X MS
---
TV
</TABLE>
where
IP = the Initial Price before the adjustment;
MS = the Value of a share of the Marketable Securities; and
TV = the Transaction Value.
Similarly, the Appreciation Threshold Price will be adjusted pursuant to
the following formula:
<TABLE>
<S> <C>
A = ATP X MS
---
TV
</TABLE>
where
ATP= the Appreciation Threshold Price before the adjustment;
MS = the Value of a share of the Marketable Securities; and
TV = the Transaction Value.
The Exchange Rate will be adjusted pursuant to the following formula:
<TABLE>
<S> <C>
A = ER X SC
---
MS
</TABLE>
where
ER= the Exchange Rate (computed on the basis of the adjusted Initial Price
and Appreciation Threshold Price and the Average Market Price of the
Marketable Securities);
SC= the aggregate Value of the Marketable Securities included in the Merger
Consideration received in exchange for a single share of Class A Common Stock;
and
MS= the Value of a share of the Marketable Securities.
For purposes of the foregoing formulas, "Value" means (1) in respect of
cash, the amount of such cash; (2) in respect of any property other than cash or
Marketable Securities, an amount equal to the market value on the date the
Reorganization Event is consummated (as determined by a nationally recognized
independent investment banking firm retained for this purpose by the
Administrator); and (3) in respect of any share of Marketable Securities, an
amount equal to the average Closing Price per share of those Marketable
Securities for the 20 Trading Days immediately before the date the
Reorganization Event is consummated.
A "Reorganization Event" is (1) 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 Class A Common Stock outstanding immediately before the merger or
consolidation is not exchanged for cash, securities or other property of the
Company or another corporation), (2) 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, (3) 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 (4) any liquidation,
dissolution or winding up of the Company or any Company Successor.
21
<PAGE> 24
"Transaction Value" means the sum of (1) for any cash received in the
Reorganization Event, the amount of such cash received per share of Class A
Common Stock, (2) for any property other than cash or Marketable Securities
received in the Reorganization Event, an amount equal to the market value on the
date the Reorganization Event is consummated of the property received per share
of Class A Common Stock (as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Administrator) and (3)
for any Marketable Securities received in the Reorganization Event, an amount
equal to the average Closing Price per share of those Marketable Securities for
the 20 Trading Days immediately before the Exchange Date (or, in the case of a
Cash Merger, for the 20 Trading Days immediately before the date the
Reorganization Event is consummated) multiplied by the number of those
Marketable Securities received for each share of Class A Common Stock.
The number of shares of Marketable Securities included in the calculation
of Transaction Value for purposes of the preceding clause (3) will be adjusted
if a dilution event of the type described under "-- Dilution Adjustments" occurs
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 (whether voting
or non-voting) listed on a U.S. national or regional 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 Class A Common Stock (other than through the
issuance of rights or warrants described above) for cash or in connection with
acquisitions.
SPIN-OFF DISTRIBUTIONS. If the Company makes a "Spin-Off Distribution"
during the term of the Contracts, then the Seller under each Contract will be
required to deliver on the Exchange Date, together with each share of Class A
Common Stock delivered under the Contract, the number of Marketable Securities
distributed in respect of a single share of Class A Common Stock in that
Spin-Off Distribution. After the Company makes such a distribution, the "Closing
Price" of Class A Common Stock, for purposes of calculating the Exchange Rate
and for all other purposes under the Contracts, will be determined by reference
to (A) the Closing Price per share of the Class A Common Stock and (B) the
product of (x) the Closing Price per share of the spun-off Marketable Securities
and (y) the number of shares of such Marketable Securities distributed per share
of Class A Common Stock in the Spin-Off Distribution. The number of shares of
Marketable Securities that the Seller is required to deliver, and the formula
for determining the "Closing Price" in the preceding sentence, will be adjusted
if any event that would, if it had occurred with respect to the Class A Common
Stock or the Company, have required an adjustment pursuant to the provisions
described under "-- Dilution Adjustments" occurs with respect to those
Marketable Securities or their issuer between the time of the Spin-Off
Distribution and the Exchange Date.
A "Spin-Off Distribution" means a distribution by the Company to holders of
Class A Common Stock of Marketable Securities issued by an issuer other than the
Company.
COLLATERAL ARRANGEMENTS; ACCELERATION UPON DEFAULT BY A SELLER. Each
Seller's obligations under the Contract between that Seller and the Trust
initially will be secured by a security interest in the maximum number of shares
of Class A Common Stock deliverable under that Contract (adjusted in accordance
with the dilution adjustment provisions of that Contract, described above),
pursuant to a Collateral Agreement among the Trust, that Seller and the
Collateral Agent.
If a Reorganization Event occurs, the Collateral Agreements will require
each Seller to pledge as alternative collateral all Marketable Securities
deliverable in such event in exchange for the maximum number of shares of Class
A Common Stock deliverable under that Seller's Contract at the time of the
Reorganization Event, plus cash in an amount equal to 100% of that Seller's Cash
Delivery Obligations (as defined below). Instead of delivering cash, the Seller
may choose to
22
<PAGE> 25
deliver U.S. Government obligations with an aggregate market value, when pledged
and at daily mark-to-market valuations after that time, of not less than 105% of
those Cash Delivery Obligations. The Collateral Agent will be required, under
the Collateral Agreements, to invest any such cash in U.S. Treasury securities
maturing on or before July , 2002. A Seller's "Cash Delivery Obligations" will
be the Transaction Value of any Merger Consideration, other than Marketable
Securities, in respect of the maximum number of shares covered by its Contract
at the time of the Reorganization Event. The number of shares of Marketable
Securities required to be pledged will be adjusted if any event requiring a
dilution adjustment under the Contracts occurs. If the Reorganization Event is a
Cash Merger, the collateral in respect of a Seller's Cash Delivery Obligations
will be released when the Seller delivers the Accelerated Portion.
If the Company makes a Spin-Off Distribution, the Collateral Agreements
will require each Seller to pledge as additional collateral all Marketable
Securities deliverable in such distribution in respect of the maximum number of
shares of Class A Common Stock deliverable under that Seller's Contract at the
time of such Spin-Off Distribution. The number of these Marketable Securities
required to be pledged will also be adjusted if any event requiring a dilution
adjustment under the Contracts occurs.
Unless a Seller is in default in its obligations under its Collateral
Agreement, the Seller will be permitted to substitute for the pledged shares of
Class A Common Stock collateral consisting of short-term, direct obligations of
the U.S. Government. A Seller may substitute short-term, direct U.S. Government
obligations in substitution for the pledged shares of Marketable Securities at
any time. Any U.S. Government obligations pledged as substitute collateral for
the Class A Common Stock, or for Marketable Securities received in a
Reorganization Event or Spin-Off Distribution, will be required to have an
aggregate market value at the time of delivery and at daily mark-to-market
valuations after that time of not less than 150% (or, from and after any
Insufficiency Determination that is not cured by the close of business on the
next business day, as described below, 200%) of the product of the market price
of the Class A Common Stock or Marketable Securities at the time of each
valuation times the number of shares of Class A Common Stock or Marketable
Securities for which those obligations are being substituted.
The Collateral Agent will promptly pay over to each Seller any dividends,
interest, principal or other payments received by the Collateral Agent on any
collateral pledged by that Seller, including any substitute collateral, unless
that Seller is in default in its obligations under its Collateral Agreement, or
unless the payment of that amount to that Seller would cause the collateral to
become insufficient under its Collateral Agreement. Each Seller will have the
right to vote any pledged shares of Marketable Securities for so long as those
shares are owned by it and pledged under its Collateral Agreement, unless an
event of default occurs under that Seller's Contract or Collateral Agreement.
If the Collateral Agent determines (an "Insufficiency Determination") that
the collateral pledged by any Seller fails to meet the foregoing requirements at
any valuation, and that failure is not cured by the close of business on the
business day after that determination, then, unless a Collateral Event of
Default (as defined below) under that Collateral Agreement has occurred and is
continuing, the Collateral Agent will commence (1) sales of the collateral
consisting of U.S. Government obligations and (2) purchases, using the proceeds
of those sales, of shares of Class A Common Stock or Marketable Securities in an
amount sufficient to cause the collateral to meet the requirements under that
Collateral Agreement. The Collateral Agent will discontinue those sales and
purchases if a Collateral Event of Default occurs under the Seller's Collateral
Agreement.
A "Collateral Event of Default" under a Seller's Collateral Agreement
means, at any time, (A) if no U.S. Government obligations are pledged as
substitute collateral at that time, failure of the collateral to include at
least the maximum number of shares of Class A Common Stock covered by the
Seller's Contract at that time (or, if a Reorganization Event or Spin-Off
23
<PAGE> 26
Distribution has occurred at or before that 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 are pledged
as substitute collateral for shares of Class A Common Stock (or shares of
Marketable Securities) at that time, failure of those U.S. Government
obligations to have a market value at that time of at least 105% of the market
price per share of Class A Common Stock (or Shares of Marketable Securities)
times the difference between (x) the maximum number of shares of Class A Common
Stock (or shares of Marketable Securities) deliverable under that Seller's
Contract at that time and (y) the number of shares of Class A Common Stock (or
shares of Marketable Securities) pledged as collateral at that time; and (C) at
any time after a Reorganization Event in which consideration other than
Marketable Securities was delivered, failure of any U.S. Government obligations
pledged as collateral for Cash Delivery Obligations to have a market value at
that time of at least 105% of those Cash Delivery Obligations, if that failure
is not cured within one business day after notice of that failure is delivered
to that Seller.
If a Collateral Event of Default occurs under a Seller's Collateral
Agreement, or a Seller suffers a bankruptcy or insolvency, Seller's obligations
under its Contract will automatically be accelerated. In that event, that Seller
will become obligated to deliver the number of shares of Class A Common Stock
(or, after a Reorganization Event or Spin-Off Distribution, the Marketable
Securities or cash or a combination of Marketable Securities and cash
deliverable instead of or in addition to those shares of Class A Common Stock)
then deliverable under that Seller's Contract, or any U.S. Government
obligations then pledged as collateral for the Seller's obligations.
If a Seller's Contract is accelerated, (1) the Collateral Agent will
distribute to the Trust, for distribution pro rata to the holders of the
Securities, the shares of Class A Common Stock and Marketable Securities then
pledged by the defaulting Seller and/or cash generated from the sale of U.S.
Government obligations then pledged by the defaulting Seller and (2) the
Custodian will sell a proportionate amount of stripped U.S. Treasury securities
acquired by the Trust at the closing of this offering and then held by the
Trust, and distribute the proceeds pro rata to the holders. After any
distribution in accordance with the previous sentence, the number of shares of
Class A Common Stock or Marketable Securities, as applicable, deliverable to
holders on the Exchange Date will be proportionately reduced. In addition, if,
by the Exchange Date, any substitute collateral has not been replaced by Class A
Common Stock (or, after a Reorganization Event or Spin-Off Distribution, cash or
Marketable Securities, as applicable) sufficient to meet the Seller's
obligations under any Contract, the Collateral Agent will distribute to the
Trust for distribution pro rata to the holders the market value of the Class A
Common Stock and Marketable Securities required to be delivered under that
Contract, in the form of any shares of Class A Common Stock or Marketable
Securities then pledged by that Seller plus cash generated from the sale of U.S.
Government obligations then pledged by that Seller (or, after a Reorganization
Event, the market value of the alternative consideration required to be
delivered under that Contract, in the form of any Marketable Securities then
pledged, plus any cash then pledged, plus cash generated from the sale of U.S.
Government obligations then pledged).
CALCULATION OF MARKET PRICES. In calculating any market price, including
any Average Market Price, Then-Current Market Price, Value or Transaction Value:
- If no Closing Price for the Class A Common Stock is determined for one or
more (but not all) of the Trading Days during the relevant period, those
Trading Days will be disregarded in the calculation of the market price.
No additional Trading Days will be added to the calculation period.
- If no Closing Price for the Class A Common Stock is determined for any of
the Trading Days during the relevant period, the market price will be the
most recently available Closing Price for the Class A Common Stock before
that period began.
24
<PAGE> 27
THE SELLERS. The Sellers are J. Joe Ricketts, individually, and one or more
entities established for his benefit. J. Joe Ricketts, individually is the
Seller under the Extendible Contract. Please see "TRACES Stockholders" in the
Company Prospectus for information about the Sellers.
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 under
the Securities. See "Description of Securities -- Distributions". Up to 30% of
the Trust's total assets may be invested in these U.S. Treasury securities. If
any Contract is accelerated, then a proportionate amount of those U.S. Treasury
securities then held in the Trust will be sold by the Administrator and the
proceeds of that sale will be distributed pro rata to the holders, together with
the amounts distributed upon acceleration. See "-- Collateral Arrangements;
Acceleration Upon Default By a Seller" and "The Trust -- Trust Termination".
If the Seller under the Extendible Contract extends the Exchange Date, it
will be required to deliver additional U.S. Treasury securities to the Trust to
pay that Seller's additional, partial distribution described above under "-- The
Contract -- Extension and Acceleration of the Exchange Date at the Option of a
Seller". If the Seller under the Extendible Contract later accelerates the
Exchange Date, the Seller will be required to repurchase those additional U.S.
Treasury securities from the Trust on or before the Exchange Date, at a price
equal to that Seller's unpaid distributions on the Securities through the
Exchange Date.
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
before the next distribution date. Under the Paying Agent Agreement, the Paying
Agent is responsible for investing, as instructed by the Trustees, all such cash
that is not paid to cover Trust expenses in short-term U.S. Treasury securities
maturing on or shortly before the next quarterly distribution date. Not more
than 5% of the Trust's total assets will be invested in those short-term
obligations or held in cash at any one time.
DESCRIPTION OF SECURITIES
Each Security represents an equal proportional interest in the Trust, and a
total of 4,000,000 Securities will be issued (assuming that the Underwriters do
not exercise their over-allotment option). The Securities have no preemptive,
redemption or conversion rights. The 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".
DISTRIBUTIONS
AMOUNT AND TIMING. The Trust intends to distribute to holders on a
quarterly basis an amount equal to $ per Security. This 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
will be made on October , 1999 to holders of record as of the preceding
business day. Distributions will then be made on January , April , July
and October of each year to holders of record as of the preceding business
day. Part of each distribution will be treated as a tax-free return of the
holder's investment. See "-- Tax Treatment of Distributions" and "Certain
Federal Income Tax Considerations -- Recognition of Original Issue Discount on
the U.S. Treasury Securities".
25
<PAGE> 28
Upon termination of the Trust, as described under the caption "The
Trust -- Trust Termination", each holder will receive any remaining net assets
of the Trust.
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 Class A Common Stock. See "Risk
Factors -- Shareholder Rights".
The Trust does not permit the reinvestment of distributions.
TAX TREATMENT OF DISTRIBUTIONS. The following table sets forth information
regarding the distributions to be received on the stripped U.S. Treasury
securities described under "Investment Objective and Policies" above (assuming
that the Underwriters do not exercise their over-allotment option), the portion
of each year's distributions that will constitute a return of capital for U.S.
federal income tax purposes and the amount of original issue discount accruing
(assuming a yield-to-maturity accrual election in respect of any short-term U.S.
Treasury securities) on those U.S. Treasury securities with respect to a holder
that acquires its Securities at the issue price from an Underwriter pursuant to
the original offering. See "Certain Federal Income Tax
Considerations -- Recognition of Original Issue Discount on the U.S. Treasury
Securities".
<TABLE>
<CAPTION>
ANNUAL GROSS ANNUAL GROSS
DISTRIBUTIONS DISTRIBUTIONS FROM
FROM U.S. TREASURY ANNUAL RETURN OF ANNUAL INCLUSION OF
U.S. TREASURY SECURITIES CAPITAL PER ORIGINAL ISSUE DISCOUNT
YEAR SECURITIES PER SECURITY SECURITY IN INCOME PER SECURITY
- ---- ------------- ------------------ ---------------- -----------------------
<S> <C> <C> <C> <C>
1999......................
2000......................
2001......................
2002......................
</TABLE>
VOTING
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 have been selected initially by Goldman
Sachs, as the Trust's sponsor and the initial holder of the Trust's Securities.
The Trust intends to hold annual meetings as required by the rules of the Nasdaq
National Market. 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
previous 12 months). The Trustees will establish, and notify the holders in
writing of, the record date for each such meeting. The record date must 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
Trust will also assist in communications with other holders as required by the
Investment Company Act.
BOOK-ENTRY-ONLY ISSUANCE
The Depository 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
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,
26
<PAGE> 29
and will be deposited with DTC or ChaseMellon Shareholder Services, L.L.C., as
DTC's custodian.
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 facilitates the settlement among Participants of securities transactions,
such as transfers and pledges, in deposited securities through electronic
computerized book-entry changes in Participants' accounts, 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 a
Direct Participant, 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 those 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.
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 that payment date. Payments by
Participants to Beneficial Owners will be governed by standing instructions and
customary practices and will be the responsibility of that 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 those payments to Direct
Participants is the responsibility of DTC, and disbursement of those payments to
the Beneficial Owners is the responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial Owner of an interest in a global
Security will not be entitled to receive physical delivery of Securities.
Accordingly, each Beneficial Owner 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 those circumstances, if a
27
<PAGE> 30
successor securities depository is not obtained, certificates representing the
Securities will be printed and delivered in accordance with DTC's instructions.
RISK FACTORS
INTERNAL MANAGEMENT; NO PORTFOLIO MANAGEMENT AND NO CHANGE IN ASSETS
The Trust will not be managed like a typical closed-end investment company.
The Trust will be internally managed by its Trustees and will not have any
separate investment adviser.
The Trust will not dispose of the Contracts even if the price of the Class
A Common Stock falls significantly or the financial condition of the Company
suffers (or if, after a Reorganization Event or Spin-Off Distribution,
comparable developments occur affecting any Marketable Securities or the issuer
of those Marketable Securities).
Similarly, the Trust will not dispose of the U.S. Treasury securities held
by the Trust before they mature or the Trust terminates, whichever comes first,
even if their value falls significantly.
LIMITED OPPORTUNITY FOR INCREASE IN VALUE; RISK OF DECREASE IN VALUE OF CLASS A
COMMON STOCK
Because the Contracts allow the Sellers to deliver less than a full share
of Class A Common Stock for each outstanding Security if the Average Market
Price is higher than the Initial Price, the Securities have more limited
appreciation potential than the Class A Common Stock. If the price of Class A
Common Stock rises, a holder of a Security will not receive all of this increase
in value. Holders will not receive any of this increase if the average market
price of the Class A Common Stock at the Exchange Date is below $ .
Holders will receive only % of any increase in the value of the Class A Common
Stock over $ . On the other hand, holders of Securities will bear all
of any decrease in the value of the Class A Common Stock. The value of the Class
A Common Stock to be received by holders on the Exchange Date (and any cash
received in lieu of those shares) may be less than the amount paid for the
Securities. Furthermore, the Securities may trade below the value of the Class A
Common Stock if the Class A Common Stock appreciates in value.
FIXED RATE OF DISTRIBUTIONS
The distributions on the Securities will be at a fixed rate for the entire
term of the Trust. To the extent dividends are paid on the Class A Common Stock
distributions on the Securities may be lower than the dividends paid on the
Class A Common Stock.
DILUTION ADJUSTMENTS
The number of shares of Class A Common Stock that holders are entitled to
receive at the termination of the Trust will be adjusted for some events, like
stock splits and combinations, stock dividends and certain other actions of the
Company that modify its capital structure. See "Investment Objective and
Policies -- The Contracts -- Dilution Adjustments". The number of shares to be
received by holders may not be adjusted for other events, such as offerings of
Class A Common Stock for cash or in connection with acquisitions, that may
adversely affect the price of the Class A Common Stock. These 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 Class A Common Stock, or that major stockholders will not sell
any Class A Common Stock, in the future, or as to the amount of any such
offerings or sales.
28
<PAGE> 31
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. The only assets held by
the Trust will be the U.S. Treasury securities and the Contracts, and
potentially a small amount of other short-term investments. As a result, an
investment in the Trust will be riskier than an investment in an investment
company with diversified investments.
TRADING VALUE AFFECTED BY CLASS A COMMON STOCK PRICE AND OTHER FACTORS
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 prices of the Securities in the secondary market will be
directly affected by the trading prices of the Class A Common Stock in the
secondary market. The trading prices of the Class A Common Stock may fluctuate,
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 Class A Common Stock is traded and
the market segment of which the Company is a part. The trading price of the
Securities may also fluctuate due to, among other things, 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 Class A
Common Stock to be delivered on the Exchange Date, the Securities will tend to
trade at a premium to the market value of the Class A Common Stock if the Class
A Common Stock price falls and at a discount to the market value of the Class A
Common Stock if the Class A Common Stock price rises. There can, however, be no
assurance that the Securities will trade at a premium to the market value of the
Class A Common Stock.
Shares of closed-end investment companies frequently trade at a 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 fall. 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 investment 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.
LIMITED TRADING MARKET FOR SECURITIES
Goldman Sachs currently intends, but is 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.
Goldman Sachs may stop making a market in the Securities at any time without
notice. The Trust will apply to list the Securities on the Nasdaq National
Market. If that application is accepted, there can be no assurance that the
Securities will not later be delisted or that trading in the Securities on the
Nasdaq National Market will not be suspended. If the Securities are delisted or
suspended from trading on that exchange, the Trust will apply for listing of the
Securities on another national or regional 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.
29
<PAGE> 32
SHAREHOLDER RIGHTS
Holders of the Securities will not be entitled to any rights with respect
to the Class A Common Stock unless and until they actually receive Class A
Common Stock in exchange for the Securities. For example, holders of Securities
will not be entitled to vote the shares of Class A Common Stock or receive
dividends.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion of the principal United States federal income tax
consequences of ownership of Securities represents the opinion of Sullivan &
Cromwell, 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, traders that elect to mark
to market, 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 under the Code, published rulings and court decisions,
all as currently in effect and all subject to change or different interpretation
at any time, perhaps with retroactive effect. It should be noted that the Trust
has not sought a ruling from the Internal Revenue Service with respect to the
federal income tax consequences of ownership of Securities, and the Internal
Revenue Service is not required to agree with the opinion of Sullivan &
Cromwell.
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 STATE, LOCAL OR OTHER TAXING JURISDICTION, OF OWNERSHIP OF
SECURITIES.
A "United States Holder" is a beneficial owner of Securities who or that is
(1) a citizen or resident of the United States, (2) a domestic corporation, (3)
an estate the income of which is subject to United States federal income tax
without regard to its source or (4) a trust if a court within the United States
is able to exercise primary supervision over the administration of the trust and
one or more United States persons have the authority to control all substantial
decisions of the trust.
Holders should be aware that there are alternative characterizations of the
Trust's assets 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, under the grantor trust rules of the Code, each
holder will be considered the owner of its pro rata portions of the stripped
U.S. Treasury securities and the Contracts in the Trust. Income received by the
Trust will be treated as income of the holders in the manner set forth below.
RECOGNITION OF ORIGINAL ISSUE DISCOUNT 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 initially acquired by the Trust as a bond that was originally
issued on the date the Trust acquired such security. A holder will include
original issue discount in income over the life of the U.S. Treasury securities
in an amount equal to the holder's pro rata portion of the excess of the amounts
payable on those U.S. Treasury securities over the amount paid for the U.S.
Treasury securities by the Trust. The amount of that
30
<PAGE> 33
excess will constitute only part of the total amounts payable in respect of U.S.
Treasury securities held by the Trust, however. 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
"Description of Securities -- Distributions -- Tax Treatment of Distributions".
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, that original issue discount will be
accrued on a straight-line basis.
EXTENSION OF THE EXCHANGE DATE. Holders should not be required to include
any amounts in income upon the Trust's receipt of additional U.S. Treasury
securities as a result of an extension of the Exchange Date under the Extendible
Contract and should not be required to include any original issue discount in
respect of such U.S. Treasury securities. See "Investment Objective and
Policies -- The Contracts".
Although there is no direct authority for the treatment of the cash
distribution paid on the Securities on the extended Exchange Date, it is likely
that such distribution should not be considered income to a holder upon receipt,
but instead should be considered to reduce a holder's basis with respect to such
holder's pro rata portion of the Extendible Contract held by the Trust, by
analogy to the treatment of rebates or option premiums. If this treatment is
respected, receipt of the cash distribution on the extended Exchange Date will
increase the amount of gain (or decrease the amount of loss) recognized by a
holder on a sale or other disposition of the Extendible Contract (including a
disposition pursuant to cash settlement of the Extendible Contract) or on a
subsequent sale or other disposition of the Class A Common Stock delivered
pursuant to the Extendible Contract. Because there can be no assurance that the
Internal Revenue Service will agree with this characterization of the cash
distribution paid on the extended Exchange Date, holders are urged to consult
their tax advisors concerning the tax consequences of receiving such payment.
TAX BASIS OF THE U.S. TREASURY SECURITIES AND THE CONTRACTS. A holder's
initial tax basis in the Contracts 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 Contracts, respectively. A holder's tax basis in the
U.S. Treasury securities will be increased by the amounts of original issue
discount included in income in respect of U.S. Treasury securities and decreased
by each amount of cash received in respect of U.S. Treasury securities.
TREATMENT OF THE CONTRACTS. Each holder will be treated as having entered
into a pro rata portion of the Contracts and, at the Exchange Date under each
Contract, as having received a pro rata portion of the Class A Common Stock or
cash, Marketable Securities or a combination of Class A Common Stock, Marketable
Securities and cash delivered to the Trust.
DISTRIBUTION OF THE CLASS A COMMON STOCK. The delivery of Class A Common
Stock to the Trust pursuant to the Contracts and the Trust's distribution of
Class A Common Stock to the holders will not be taxable to the holders. Each
holder's basis in its Class A Common Stock will be equal to its basis in its pro
rata portion of the Contracts which are settled in Class A Common Stock less the
portion of that basis allocable to any fractional shares of Class A Common Stock
for which cash is received. A holder will recognize short-term capital gain or
loss upon receipt by
31
<PAGE> 34
the Trust of cash in lieu of fractional shares of Class A Common Stock equal to
the difference between the holder's allocable portion of the amount of cash
received and the holder's basis in those fractional shares. The holding period
for the Class A Common Stock will begin on the day after it is acquired by the
Trust.
DISTRIBUTION OF CASH. If the Trust receives cash upon settlement of the
Contracts, a holder will recognize capital gain or loss equal to the difference
between the holder's allocable portion of the amount of cash received and the
holder's basis in the Contracts settled for cash. Any gain or loss will be
capital gain or loss which is taxable to holders as described below under
"-- Sale of Securities".
SALE OF SECURITIES. A holder who sells Securities will be treated as having
sold its pro rata portions of the U.S. Treasury securities and the Contracts
underlying the Securities. As a result, the holder will recognize capital 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 Contracts. Any gain or loss will be long-term capital gain or loss if the
holder has held the Securities for more than one year. Long-term capital gain of
an individual holder will be subject to a maximum tax rate of 20%.
ALTERNATIVE CHARACTERIZATIONS. Sullivan & Cromwell believes the Contracts
should be treated for federal income tax purposes as prepaid forward contracts
for the purchase of a variable number of shares of Class A Common Stock.
The Internal Revenue Service could conceivably seek to treat the Contracts
differently. The Internal Revenue Service might, for example, seek to treat the
cash paid to the Sellers pursuant to the Contracts as loans to the Sellers in
exchange for contingent debt obligations of the Sellers. If the Internal Revenue
Service were to prevail in making such an assertion, a holder might be required
to include original issue discount in income over the life of the Securities at
a market rate of interest for the Seller, taking account of all the relevant
facts and circumstances. In addition, 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 Class A Common Stock received
on the Exchange Date (or the proceeds from cash settlement of the Contracts)
over the aggregate of the basis of the Contracts and any interest on the
Contracts 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) and any gain or loss attributable to the sale of the
Contracts could be treated as ordinary income or loss. The Internal Revenue
Service could also conceivably take the view that a holder should include in
income the amount of cash actually received each year on the Securities.
BACKUP WITHHOLDING AND INFORMATION REPORTING. The payments of principal and
original issue discount on the U.S. Treasury securities, and the proceeds
received from cash settlement of the Contracts or the sale of Securities, may be
subject to U.S. backup withholding tax at the rate of 31% if the holder of those
Securities 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 that
holder's U.S. federal income tax liability and may entitle that 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.
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<PAGE> 35
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement, the
Trust has agreed to sell to each of the Underwriters named below, and each of
such Underwriters has severally agreed to purchase from the Trust, the
respective number of Securities set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SECURITIES
----------- ----------
<S> <C>
Goldman, Sachs & Co. .......................................
Credit Suisse First Boston Corporation......................
----------
Total.................................................. 4,000,000
==========
</TABLE>
Securities sold by the Underwriters to the public will initially be offered
at the initial public offering price set forth on the cover of this prospectus.
Any Securities sold by the Underwriters to securities dealers may be sold at a
discount of up to $ per Security from the initial public offering price. Any
such securities dealers may resell any Securities purchased from the
Underwriters to certain other brokers or dealers at a discount of up to $
per Security from the initial public offering price. If all the Securities are
not sold at the initial public offering price, the Underwriters may change the
initial public offering price and the other selling terms. The sales load of
$ per Security is equal to % of the initial public offering price.
Investors must pay for any Securities purchased in the initial public offering
on or before July , 1999.
In connection with the offering, the Underwriters may purchase and sell
Securities in the open market. These transactions may include short sales,
stabilizing transactions and purchases to cover positions created by short
sales. Short sales involve the sale by the Underwriters of a greater number of
Securities than it is required to purchase in the offering. Stabilizing
transactions consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the Securities while
the offering is in progress.
These activities by the Underwriters may stabilize, maintain or otherwise
affect the market price of the Securities. As a result, the price of the
Securities may be higher than the price that otherwise might exist in the open
market. If these activities are commenced, they may be discontinued by the
Underwriters at any time. These transactions may be effected on the Nasdaq
National Market, in the over-the-counter market or otherwise.
In light of the fact that proceeds from the sale of the Securities will be
used by the Trust to purchase the Contracts from the Sellers, the Underwriting
Agreement provides that the Sellers 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 600,000 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.
The Company and the Sellers have generally agreed that, during the period
beginning from the date of this prospectus and continuing to and including the
date 90 days after the date of this prospectus, they will not offer, sell,
contract to sell or otherwise dispose of any Class A Common Stock or other
securities that are substantially similar to the Class A Common Stock, including
but not limited to any securities that are convertible or exchangeable for, or
that represent the right to receive, Class A Common Stock or any such
substantially similar securities, or enter into any swap, option future, forward
or other agreement that transfers, in whole or in part, the economic
consequences of ownership of Class A Common Stock or such other substantially
similar securities, without the prior written consent of Goldman Sachs and
except as otherwise provided in the Underwriting Agreement.
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<PAGE> 36
The Securities will be a new issue of securities with no established
trading market. Application will be made to list the Securities on the Nasdaq
National Market under the symbol " ". Goldman Sachs has advised the
Company that it intends to make a market in the Securities, but it is 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.
Goldman Sachs has informed the Trust that it does not expect sales to any
accounts over which it exercises discretionary authority to exceed 5% of the
total Securities offered by this prospectus.
The Company and the Sellers have agreed to indemnify the Underwriters
against certain liabilities, including certain liabilities under the Securities
Act of 1933.
Goldman Sachs has subscribed for one Security at a purchase price of
$100.00. Goldman Sachs will surrender this Security upon the closing of the
offering made by this prospectus. No Securities will be sold to the public until
the Securities subscribed for have been purchased and the purchase price of the
Securities paid in full to the Trust.
VALIDITY OF SECURITIES
The validity of the Securities will be passed upon by Sullivan & Cromwell,
New York, New York.
EXPERTS
The financial statement included in this prospectus has been audited by
Pricewaterhouse-Coopers LLP, independent accountants, as stated in their opinion
appearing herein, and has been so included in reliance upon that opinion given
upon the authority of that firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION ON THE TRUST
The Trust has filed with the Securities and Exchange Commission a
Registration Statement under the Securities Act of 1933 with respect to the
Securities. You can find more information concerning the Securities and the
Trust in the Registration Statement of which this prospectus is a part. You may
read and copy the Registration Statement at the SEC's office in Washington, D.C.
Please call the SEC at 1-800-SEC-0330 for more information on their copy
charges. The Registration Statement is also available on the SEC's website
(http://www.sec.gov). The Securities will be listed on the NYSE and you may
inspect information concerning the Trust and the Securities at the offices of
the Nasdaq National Market, 1735 K Street, N.W., Washington, D.C. 20006.
34
<PAGE> 37
WHERE YOU CAN FIND MORE INFORMATION ON AMERITRADE
The Company files reports, proxy statements and other information with the
Securities and Exchange Commission. Its filings are available over the Internet
at the SEC's web site (http://www.sec.gov). You may also read and copy any
document the Company files with the SEC at the SEC's public reference rooms at:
- 450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20549;
- Seven World Trade Center
13th Floor
New York, New York 10048; and
- Citicorp Center
500 West Madison Street
Suite 1400
Chicago, Illinois 60601.
Please call the SEC at 1-800-SEC-0330 for more information on the public
reference room and their copy charges. You may also inspect the reports and
other information the Company files with the SEC at the offices of the Nasdaq
National Market, 1735 K Street, N.W., Washington, D.C. 20006.
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<PAGE> 38
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Securityholders of
Ameritrade Automatic Class A Common Exchange Security Trust:
In our opinion, the accompanying statement of assets and liabilities
presents fairly, in all material respects, the financial position of Ameritrade
Automatic Class A Common Exchange Security Trust (the "Trust") as of June 28,
1999, in conformity with generally accepted accounting principles. 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 of this financial statement in accordance with
generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates
made by the Trust's management and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
/s/ Pricewaterhouse Coopers LLP
New York, New York
July 9, 1999
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<PAGE> 39
AMERITRADE AUTOMATIC COMMON EXCHANGE SECURITY TRUST
STATEMENT OF ASSETS AND LIABILITIES
JUNE 28, 1999
<TABLE>
<S> <C>
ASSETS
Cash........................................................ $100
----
Total assets................................................ $100
====
LIABILITIES
NET ASSETS.................................................. $ 0
----
Balance applicable to 1 Security outstanding................ $100
----
Net asset value per Security................................ $100
====
</TABLE>
- ---------------
(1) Ameritrade Automatic Common Exchange Security Trust (the "Trust") was
established on April 30, 1999 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, as amended. Costs incurred in connection with the Trust's organization
will be paid by the Sellers referred to below.
(2) The Trust proposes to sell Trust 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.
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 stockholders of Ameritrade Holding Corporation (the
"Sellers") relating to the Class A Common Stock of Ameritrade Holding
Corporation. The Trust will be internally managed and will not have an
investment adviser. The Trust's administration, which will be overseen by
the trustees, will be carried out by The Chase Manhattan Bank as
administrator of the Trust. The Chase Manhattan Bank will also serve as the
Trust's custodian, and its affiliate, ChaseMellon Shareholder Services,
L.L.C., will serve as 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 the Sellers.
(3) The Trust issued one Security on June 28, 1999 to Goldman, Sachs & Co. in
consideration for a purchase price of $100. The Trust Agreement provides
that before the offering, the Trust will split the outstanding Security as
of the date that the price and underwriting discount of the Securities being
offered to the public is determined, but before the sale of the Securities
to the Underwriters. 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.
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<PAGE> 40
GLOSSARY
"Administration Agreement" means the Administration Agreement, dated as of
July , 1999, between the Trust and The Chase Manhattan Bank, as Administrator.
"Administrator" means The Chase Manhattan Bank (or its successor) in its
capacity as Administrator under the Administration Agreement.
"Appreciation Threshold Price" means $ , subject to adjustment as
described under "-- The Contracts -- Dilution Adjustments".
"Average Market Price" per share of Class A Common Stock or Marketable
Securities on any date means the average Closing Price per share of Class A
Common Stock or Marketable Securities for the Calculation Period consisting of
the 20 Trading Days immediately prior to but not including such date; provided
that if no Closing Price for the Class A Common Stock or 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 the Average Market Price (but no
additional Trading Days will be added to the Calculation Period). If no Closing
Price for the Class A Common Stock or Marketable Securities may be determined
for any of such Trading Days, the Average Market Price shall be the Closing
Price for the Class A Common Stock or Marketable Securities for the most recent
Trading Day prior to such 20 Trading Days for which a Closing Price for the
Class A Common Stock or Marketable Securities may be determined pursuant to the
definition of "Closing Price". Notwithstanding the foregoing, for purposes of
determining the payment required upon cash settlement of a Contract in
connection with a Rollover Offering, "Average Market Price" means the Closing
Price per share of Class A Common Stock or Marketable Securities on the Trading
Day immediately prior to the date that the Rollover Offering is priced (the
"Pricing Date") or, if the Rollover Offering is priced after 4:00 p.m., New York
City time, on the Pricing Date, the Closing Price per share on the Pricing Date.
"Beneficial Owner" means an actual purchaser of a Security, which will not
receive written confirmation from DTC of its purchases of Securities but which
is expected to receive written confirmations providing details of the
transactions, as well as periodic statements of its holdings, from the Direct or
Indirect Participants through which the Beneficial Owner purchased Securities.
"Calculation Period" means any period of Trading Days for which an average
security price must be determined pursuant to the Contracts.
"Cash Delivery Obligations" means, at any time, (1) if no Reorganization
Event has occurred, zero, and (2) from and after any Reorganization Event, the
Transaction Value of any Consideration other than Marketable Securities included
in the Merger Consideration in such Reorganization Event, multiplied by the
maximum number of shares of Class A Common Stock covered by the Contracts at the
time of the Reorganization Event; provided that if the Reorganization Event is a
Cash Merger, the Sellers' Cash Delivery Obligation will be zero after the
Sellers deliver the Accelerated Portion as required under the Contracts.
"Class A Common Stock" means the Class A Common Stock, par value $0.01 per
share, of the Company.
"Closing Price" of any common equity security (including the Class A Common
Stock or any Marketable Securities) on any date of determination means the
closing sale price (or, if no closing sale price is reported, the last reported
sale price) of such common equity security as reported on the NYSE Consolidated
Tape on such date of determination or, if such common equity security is not
listed for trading on the NYSE on such date, as reported in the composite
transactions for the principal United States national or regional securities
exchange on which such common equity security is so listed, or if such common
equity security is not so listed on a United States national or regional
securities exchange on such date, as reported by the Nasdaq
38
<PAGE> 41
National Market or, if such common equity security is not so reported on such
date, the last quoted bid price for such common equity security in the
over-the-counter market as reported by the National Quotation Bureau or any
similar organization; provided that if any event that results in an adjustment
to the number of shares of Class A Common Stock or Marketable Securities
deliverable under the Contracts, as described under "-- The
Contracts -- Dilution Adjustments", occurs during any Calculation Period, the
Closing Price as determined pursuant to the foregoing for each Trading Day in
the Calculation Period occurring prior to the date on which such adjustment is
effected will be appropriately adjusted to reflect the occurrence of such event.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agent" means The Chase Manhattan Bank (or its successor) in its
capacity as Collateral Agent under the Collateral Agreements.
"Collateral Agreements" means the Collateral Agreements, dated as of July
, 1999, among the Sellers, The Chase Manhattan Bank, as Collateral Agent, and
the Trust, securing the Sellers' obligations under their respective Contracts.
"Collateral Event of Default" under any Seller's Collateral Agreement
means, at any time, (1) if no U.S. Government obligations are pledged as
substitute collateral at or before that time, failure of the collateral to
include at least the maximum number of shares of Class A Common Stock covered by
that Seller's Contract at that time (or, if a Reorganization Event or Spin-Off
Distribution has occurred at or before that time, failure of the collateral to
include the maximum number of shares of any Marketable Securities required to be
pledged as described under "Investment Objective and Policies -- The
Contracts -- Collateral Arrangements; Acceleration Upon Default By a Seller"
above); (2) if any U.S. Government obligations are pledged as substitute
collateral for shares of Class A Common Stock (or shares of Marketable
Securities deliverable pursuant to the Contracts) at that time, failure of those
U.S. Government obligations to have a market value at that time of at least 105%
of the market price per share of Class A Common Stock (or shares of Marketable
Securities, as the case may be) times the difference between (x) the maximum
number of shares of Class A Common Stock (or shares of Marketable Securities)
covered by that Contract at that time and (y) the number of shares of Class A
Common Stock (or shares of Marketable Securities) pledged as collateral at that
time; and (3) at any time after a Reorganization Event in which consideration
other than Marketable Securities has been delivered, failure of any U.S.
Government obligations pledged as collateral for Cash Delivery Obligations to
have a market value at that time of at least 105% of those Cash Delivery
Obligations, if that failure is not cured within one business day after notice
of that failure is delivered to that Seller.
"Company" means Ameritrade Holding Corporation, a Delaware corporation.
"Company Successor" means a surviving entity or subsequent surviving entity
of the Company.
"Contracts" means the forward purchase contracts between the Sellers and
the Trust relating to the Class A Common Stock.
"Custodian" means The Chase Manhattan Bank (or its successor) in its
capacity as Custodian under the Custodian Agreement.
"Custodian Agreement" means the Custodian Agreement, dated as of July ,
1999, between the Trust and The Chase Manhattan Bank, as Custodian.
"Direct Participants" means Participants of DTC, including brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations, that are direct Participants of DTC.
"DTC" means The Depository Trust Company.
39
<PAGE> 42
"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 final) of all other consideration paid by the Company with respect to one
share of Class A Common Stock acquired in a tender offer or exchange offer by
the Company, over (ii) the Then-Current Market Price per share of Class A Common
Stock.
"Exchange Date" means July , 2002, subject to extension and acceleration
by the Sellers under their respective Contracts.
"Exchange Rate" means the rate of exchange of Class A Common Stock for
Securities on the Exchange Date, and will be determined as follows (adjusted in
certain events):
(i) If the Average Market Price is less than the Appreciation
Threshold Price but equal to or greater than the Initial Price, the
Exchange Rate will be a fraction (rounded upward or downward to the nearest
1/10,000th or, if there is not a nearest 1/10,000th, to the next lower
1/10,000th) equal to the Initial Price divided by the Average Market Price.
(ii) If the Average Market Price is equal to or greater than the
Appreciation Threshold Price, the Exchange Rate will be 0. shares
of Class A Common Stock.
(iii) If the Average Market Price is less than the Initial Price, the
Exchange Rate will be one share of Class A Common Stock.
"Extendible Contract" means the Contract between J. Joe Ricketts,
individually, and the Trust.
"holders" means the registered holders of the Securities.
"Indirect Participants" means Participants of DTC, 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.
"Initial Price" means $ , subject to adjustment as described under
"-- The Contracts -- Dilution Adjustments".
"Insufficiency Determination" means a determination by the Collateral Agent
that the collateral pledged by any Seller fails to meet the requirements
described under "Investment Objective and Policies -- The
Contracts -- Collateral Arrangements; Acceleration Upon Default By a Seller".
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"majority of the Trust'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.
"Managing Trustee" means the Trustee designated to serve as Managing
Trustee.
"Marketable Securities" means any common equity securities (whether voting
or non-voting) listed on a U.S. national or regional securities exchange or
reported by the Nasdaq National Market.
"NYSE" means the New York Stock Exchange, Inc.
"Participants" means participants of DTC.
"Paying Agent" means ChaseMellon Shareholder Services, L.L.C. (or its
successor) in its capacity as transfer agent, registrar and paying agent under
the Paying Agent Agreement.
40
<PAGE> 43
"Paying Agent Agreement" means the Paying Agent Agreement, dated as of July
, 1999, between the Trust and ChaseMellon Shareholder Services, L.L.C., as
transfer agent, registrar and paying agent.
"Permitted Dividend" means any quarterly cash dividend in respect of the
Class A 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 Class A Common Stock in excess of %.
"Pricing Date" means the date that a Rollover Offering is priced.
"Reorganization Event" means (1) any consolidation or merger of the
Company, or any Company Successor, with or into another entity (other than a
consolidation or merger in which the Company is the continuing corporation and
in which the Class A Common Stock outstanding immediately prior to the
consolidation or merger is not exchanged for cash, securities or other property
of the Company or another corporation), (2) 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, (3) any statutory
exchange of securities of the Company or any Company Successor with another
corporation (other than in connection with a consolidation or merger referred to
in clause (1)) or (4) any liquidation, dissolution or winding up of the Company
or any Company Successor.
"Rollover Offering" means a reoffering or refinancing of Securities
effected not earlier than July , 2002, by means of a completed public offering
or offerings, or another similar offering (which may include one or more
exchange offers), by or on behalf of the Sellers under the Extendible Contract.
"SEC" means the Securities and Exchange Commission.
"Securities" means the Trust's $ Trust Automatic Class A Common
Exchange Securities.
"Sellers" means J. Joe Ricketts, individually, and one or more entities
established for his benefit.
"Spin-Off Distribution" means a distribution by the Company to holders of
Class A Common Stock of Marketable Securities issued by an issuer other than the
Company.
"Then-Current Market Price" of the Class A Common Stock, for the purpose of
applying any adjustment described in "Investment Objective and Policies -- The
Contracts -- Dilution Adjustments", means the average Closing Price per share of
Class A Common Stock for the Calculation Period consisting of five Trading Days
immediately prior to the time such adjustment is effected (or, in the case of an
adjustment effected at the opening of business on the business day after a
record date, immediately prior to the earlier of the time such adjustment is
effected and the related ex-date); provided that if no Closing Price for the
Class A Common Stock is determined for one or more (but not all) of such Trading
Days, such Trading Days will be disregarded in the calculation of the
Then-Current Market Price (but no additional Trading Days will be added to the
Calculation Period). If no Closing Price for the Class A Common Stock may be
determined for any of such Trading Days, the Then-Current Market Price shall be
the Closing Price for the Class A Common Stock for the most recent Trading Day
prior to five Trading Days for which a Closing Price for the Class A Common
Stock may be determined pursuant to the definition of "Closing Price". The
ex-date with respect to any dividend, distribution or issuance shall mean the
first date on which the shares of Class A Common Stock trade regular way on
their principal market without the right to receive such dividend, distribution
or issuance.
"Trading Day" in respect of any common equity security means a day on which
such common equity security (1) is not suspended from trading on any United
States national or regional securities exchange or association or
over-the-counter market at the close of business
41
<PAGE> 44
and (2) has traded at least once on the United States national or regional
securities exchange or association or over-the-counter market that is the
primary market for the trading of that security.
"Transaction Value" means, with respect to any Reorganization Event, the
sum of: (1) for any cash received in such Reorganization Event, the amount of
such cash received per share of Class A Common Stock; (2) for any property other
than cash or Marketable Securities received in such Reorganization Event, an
amount equal to the market value on the date such Reorganization Event is
consummated of such property received per share of Class A Common Stock as
determined by a nationally recognized independent investment banking firm
retained for this purpose by the Administrator, whose determination shall be
final; and (3) for any Marketable Securities received in such Reorganization
Event, an amount equal to the average Closing Price per share of these
Marketable Securities for the Calculation Period of 20 Trading Days immediately
prior to the Exchange Date (or, in the case of a Cash Merger, for the 20 Trading
Days immediately before the date the Reorganization Event is consummated),
multiplied by the number of such Marketable Securities received for each share
of Class A Common Stock; provided that if no Closing Price for such Marketable
Securities may be 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 may be determined for
any of such Trading Days, the calculation in the preceding clause (iii) will be
based on the Closing Price for the Marketable Securities for the most recent
Trading Day prior to such 20 Trading Days for which a Closing Price for the
Marketable Securities may be determined pursuant to the definition of "Closing
Price".
"Trust" means the Ameritrade Automatic Class A Common Exchange Security
Trust.
"Trust Agreement" means the trust agreement dated as of April 30, 1999
pursuant to which the Trust was formed, as amended and restated as of July ,
1999.
"Trustees" means the three trustees who will internally manage the Trust.
"Underwriters" means Goldman, Sachs & Co., the Underwriters of the
Securities.
"Underwriters' Compensation" means the compensation of $ per Security
payable to the Underwriters by the Sellers pursuant to the Underwriting
Agreement.
"United States Holder" means a beneficial owner of Securities who or that
is (1) a citizen or resident of the United States, (2) a domestic corporation,
(3) an estate the income of which is subject to United States federal income tax
without regard to its source or (4) a trust if a court within the United States
is able to exercise primary supervision over the administration of the trust and
one or more United States persons have the authority to control all substantial
decisions of trust.
"Value" means (i) in respect of cash, the amount of such cash; (ii) in
respect of any property other than cash or Marketable Securities, an amount
equal to the market value on the date the Reorganization Event is consummated
(as determined by a nationally recognized independent investment banking firm
retained for this purpose by the Administrator); and (iii) in respect of any
share of Marketable Securities, an amount equal to the average Closing Price per
share of those Marketable Securities for the 20 Trading Days immediately before
the date the Reorganization Event is consummated; provided that if no Closing
Price for such Marketable Securities may be 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 may be determined for any of such Trading Days, the calculation in
the preceding clause (iii) will be based on the Closing Price for the Marketable
Securities for the most recent Trading Day prior to such 20 Trading Days for
which a Closing Price for the Marketable Securities may be determined pursuant
to the definition of "Closing Price".
42
<PAGE> 45
- ------------------------------------------------------
- ------------------------------------------------------
No dealer, salesperson or other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell only the Securities offered hereby, but only under
circumstances and in jurisdictions where it is lawful to do so. The information
contained in this prospectus is current only as of its date.
----------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary................... 2
The Trust............................ 9
Use of Proceeds...................... 12
Investment Objective and Policies.... 12
Description of Securities............ 25
Risk Factors......................... 28
Certain Federal Income Tax
Considerations..................... 30
Underwriting......................... 33
Validity of Securities............... 34
Experts.............................. 34
Where You Can Find More Information
on the Trust....................... 34
Where You Can Find More Information
on Ameritrade...................... 35
Report of Independent Accountants.... 36
Statement of Assets and
Liabilities........................ 37
Glossary............................. 38
</TABLE>
----------------------
Through and including , 1999 (the 25th day after the date of
this prospectus), all dealers effecting transactions in these Securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to a dealer's obligation to deliver a prospectus
when acting as an underwriter and with respect to an unsold allotment or
subscription.
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
4,000,000 Securities
AMERITRADE AUTOMATIC
COMMON EXCHANGE
SECURITY TRUST
$ Trust Automatic
Common Exchange
Securities (TRACES(TM/SM))
----------------------------
PROSPECTUS
----------------------------
GOLDMAN, SACHS & CO.
CREDIT SUISSE FIRST BOSTON
- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 46
PART C
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
<TABLE>
<S> <C>
Part A -- Report of Independent Accountants. Statement of Assets and
Liabilities.
Part B -- None.
</TABLE>
(b) Exhibits
<TABLE>
<C> <S>
2.a.(i) Trust Agreement*
2.a.(ii) Form of Amended and Restated Trust Agreement
2.d Form of Specimen Certificate of $ Trust 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 and Consent of Counsel to the Trust**
2.n.(ii) Consent of Independent Public Accountants
2.n.(iii) Consents to Being Named as Trustee
2.p Form of Subscription Agreement**
2.r Financial Data Schedule**
</TABLE>
- ---------------
* Previously filed.
** To be filed by amendment.
ITEM 25. MARKETING ARRANGEMENTS
See the Form of Underwriting Agreement to be 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........................................... $ 41,700
Nasdaq National Market listing fee.......................... *
Printing.................................................... $ 90,000
Fees and expenses of qualification under state securities
laws (excluding fees of counsel).......................... $ 0
Accounting fees and expenses................................ $ 96,500
Legal fees and expenses..................................... $200,000
NASD fees................................................... $ 15,500
Miscellaneous............................................... $ 10,000
--------
Total....................................................... $ *
========
</TABLE>
- ---------------
* To be filed by amendment
C-1
<PAGE> 47
ITEM 27. PERSON CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Before April 30, 1999 the Trust had no existence. As of the effective date,
the Trust will have entered into a Subscription Agreement for one Security with
Goldman, Sachs & Co. and an Underwriting Agreement with Goldman, Sachs & Co.
with respect to the Securities offered by the prospectus.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
<TABLE>
<CAPTION>
NUMBER OF
RECORD
TITLE OF CLASS HOLDERS
- -------------- ---------
<S> <C>
$ Trust Automatic Common Exchange Securities.......... 1
</TABLE>
ITEM 29. INDEMNIFICATION
The Underwriting Agreement, to be filed as Exhibit 2.h to this Registration
Statement, provides for indemnification of the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended
(the "Securities Act").
The Amended and Restated Trust Agreement filed as Exhibit 2.a.(ii) to this
Registration Statement provides for indemnification to each Trustee against any
claim or liability incurred in acting as Trustee of the Trust, except in the
case of willful misfeasance, bad faith, gross negligence or reckless disregard
of the Trustee's duties. The Custodian Agreement, Administration Agreement and
Paying Agent Agreement filed as Exhibits 2.j, 2.k.(i) and 2.k.(ii) to this
Registration Statement provide for indemnification to the Custodian,
Administrator and Paying Agent against any loss or expense incurred in the
performance of their obligations under the respective agreements, unless such
loss or expense is due to willful misfeasance, bad faith, gross negligence or
reckless disregard of their obligations. The Fund Indemnity Agreement filed as
Exhibit 2.k.(vi) to this Registration Statement provides that the Sellers will
indemnify the Trust for certain indemnification expenses incurred under the
Trust Agreement, the Custodian Agreement, the Administration Agreement and the
Paying Agent Agreement.
Insofar as indemnification for liability 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. If 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 Chase Manhattan Bank, the
Registrant's administrator.
C-2
<PAGE> 48
ITEM 32. MANAGEMENT SERVICES
Not applicable.
ITEM 33. UNDERTAKINGS
(a) The Registrant hereby undertakes to suspend offering of the Securities
until it amends its prospectus if (1) subsequent to the effective date of its
Registration Statement, the net asset value falls 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-3
<PAGE> 49
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 12th
day of July, 1999.
AMERITRADE AUTOMATIC COMMON
EXCHANGE SECURITY TRUST
By: /s/ PAUL S. EFRON
----------------------------------
Paul S. Efron
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>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ PAUL S. EFRON Principal Executive Officer, July 12, 1999
- ----------------------------------------------------- Principal Financial Officer,
Paul S. Efron Principal Accounting Officer and
Trustee
</TABLE>
<PAGE> 50
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.a.(i) Trust Agreement*
2.a.(ii) Form of Amended and Restated Trust Agreement
2.d Form of Specimen Certificate of $ Trust 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 and Consent of Counsel to the Trust**
2.n.(ii) Consent of Independent Public Accountants
2.n.(iii) Consents to Being Named as Trustee
2.p Form of Subscription Agreement**
2.r Financial Data Schedule**
</TABLE>
- ---------------
* Previously filed.
** To be filed by amendment.
<PAGE> 1
EXHIBIT 2.a. (ii)
================================================================================
AMENDED AND RESTATED
TRUST AGREEMENT
CONSTITUTING
AMERITRADE AUTOMATIC COMMON EXCHANGE SECURITY TRUST
--------------------------------------------
DATED AS OF , 1999
--------------------------------------------
===============================================================================
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS; INTERPRETATION
<S> <C>
Section 1.1. Defined Terms...............................................................................1
Section 1.2. Interpretation..............................................................................6
ARTICLE II
TRUST DECLARATION; PURPOSES, POWERS
AND DUTIES OF THE TRUSTEES; ADMINISTRATION
Section 2.1. Declaration of Trust; Purposes of the Trust; Resignation and Appointment
of Trustees......................................................................................6
Section 2.2. General Powers and Duties of the Trustees...................................................7
Section 2.3. Portfolio Acquisition.......................................................................8
Section 2.4. Portfolio Administration....................................................................9
Section 2.5. Manner of Sales............................................................................13
Section 2.6. Limitations on Trustees' Powers............................................................13
ARTICLE III
ACCOUNTS AND PAYMENTS
Section 3.1. The Trust Account..........................................................................14
Section 3.2. Payment of Fees and Expenses...............................................................14
Section 3.3. Distributions to Holders...................................................................14
Section 3.4. Segregation................................................................................15
Section 3.5. Temporary Investments......................................................................15
ARTICLE IV
REDEMPTION
Section 4.1. Redemption.................................................................................15
ARTICLE V
ISSUANCE OF CERTIFICATES; REGISTRY; TRANSFER OF SECURITIES
Section 5.1. Form of Certificate........................................................................15
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C>
Section 5.2. Transfer of Securities; Issuance, Transfer and Interchange of Certificates.................16
Section 5.3. Replacement of Certificates................................................................17
ARTICLE VI
EXECUTION OF THE CONTRACT
Section 6.1. Execution of the Contract[S]...............................................................18
ARTICLE VII
TRUSTEES
Section 7.1. Trustees...................................................................................18
Section 7.2. Vacancies..................................................................................18
Section 7.3. Powers.....................................................................................19
Section 7.4. Meetings...................................................................................19
Section 7.5. Resignation and Removal....................................................................19
Section 7.6. Liability..................................................................................19
Section 7.7. Compensation...............................................................................20
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Meetings of Holders........................................................................20
Section 8.2. Books and Records; Reports.................................................................21
Section 8.3. Termination................................................................................21
Section 8.4. No Assumption of Liability.................................................................22
Section 8.5. Amendment and Waiver.......................................................................22
Section 8.6. Accountants................................................................................23
Section 8.7. Nature of Holder's Interest................................................................24
Section 8.8. Governing Law; Severability................................................................24
Section 8.9. Notices....................................................................................24
Section 8.10. Entire Agreement...........................................................................25
Section 8.11. Non-Assignability..........................................................................25
Section 8.12. No Third Party Rights; Successors and Assigns..............................................25
Section 8.13. Counterparts...............................................................................25
</TABLE>
<PAGE> 4
Exhibits
Exhibit A - Form of Certificate Evidencing the Securities
Exhibit B - Form of Collateral Agreement
Exhibit C - Form of Contract
Exhibit D - Form of Expense Agreement
Exhibit E - Form of Indemnity Agreement
<PAGE> 5
AMENDED AND RESTATED TRUST AGREEMENT
AMENDED AND RESTATED TRUST AGREEMENT, dated as of , 1999,
among Goldman, Sachs & Co., as sponsor (the "Sponsor"), Paul S. Efron, as the
prior trustee, and [Name], [Name] and [Name], as trustees (the "Trustees"),
constituting Ameritrade Automatic Common Exchange Security Trust (the "Trust").
W I T N E S S E T H:
WHEREAS, the Sponsor and Paul S. Efron, as trustee, have previously
entered into a Trust Agreement, dated as of April 30, 1999 (the "Original
Agreement"), creating Ninth Automatic Common Exchange Security Trust; and
WHEREAS, upon the execution of this Agreement, Paul S. Efron wishes to
resign as trustee and the Sponsor wishes to appoint the Trustees as the trustees
of the Trust; and
WHEREAS, the parties hereto wish to change the name of the Trust to
Ameritrade Automatic Common Exchange Security Trust; and
WHEREAS, the parties hereto wish to amend and restate the Original
Agreement in certain other respects; and
WHEREAS, the Trust has previously issued to the Sponsor one Security in
consideration of a purchase price of $[ ];
NOW, THEREFORE, the parties hereto agree to amend and restate the
Original Agreement as provided in this Agreement and, upon the execution and
delivery of this Agreement by the parties to this Agreement, the Original
Agreement will be automatically amended and restated in its entirety to read as
provided in this Agreement.
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1. Defined Terms. As used in this Agreement, the following
terms have the following meanings:
"Accelerated Portion" has the meaning specified in the Contract.
"Additional Purchase Price" has the meaning specified in the Contract.
<PAGE> 6
"Administration Agreement" means the Administration Agreement,
dated as of June 7, 1999, between the Administrator and the Trust, and
any substitute agreement therefor entered into pursuant to Section
2.2(a).
"Administrator" means The Chase Manhattan Bank, or its
successor as permitted under Article IV of the Administration Agreement
or appointed pursuant to Section 2.2(a).
"Agreement" means this Amended and Restated Trust Agreement.
"Average Market Price" has the meaning specified in the
Contract.
"Business Day" means a day on which the New York Stock
Exchange, Inc. is open for trading and that is not a day on which
commercial banks in The City of New York are authorized or obligated by
law to close.
"Cash Merger" has the meaning specified in the Contract.
"Cash Settlement Alternative" has the meaning specified in the
Contract.
"Certificate" means any certificate evidencing the ownership
of Securities substantially in the form of Exhibit A.
"Class A Common Stock" means the Class A Common Stock par
value $0.01 per share, of the Company
"Code" means the Internal Revenue Code of 1986.
"Collateral Agent" means The Chase Manhattan Bank, or its
successor as permitted under Article VIII of the Collateral Agreement
or appointed pursuant to Section 2.2(a).
"Collateral Agreement" means the Collateral Agreement, dated
as of June 7, 1999, among Seller[S], the Collateral Agent and the
Trust, securing Seller[S]'S [Sellers'] obligations under the Contract,
substantially in the form of Exhibit B.
"Commencement Date" means the day on which the Underwriting
Agreement is executed.
"Commission" means the United States Securities and Exchange
Commission.
"Company" means Ameritrade Holding Corporation, a Delaware
corporation.
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<PAGE> 7
"Contract" means the Purchase Agreement, dated as of , 1999,
entered into by the Trust with the Seller[S], substantially in the form
of Exhibit C. [REVISE AS NECESSARY]
"Custodian" means The Chase Manhattan Bank, or its successor
as permitted under Section 11 of the Custodian Agreement or appointed
pursuant to Section 2.2(a).
"Custodian Agreement" means the Custodian Agreement, dated as
of , 1999, between the Custodian and the Trust, and any substitute
agreement therefor entered into pursuant to Section 2.2(a).
"Depositary" means The Depository Trust Company, or any
successor depositary appointed pursuant to Section 5.1.
"Distribution Date" means January , each April , July , and
October of each year, commencing October , 1999, to and including
the Exchange Date, or if any such date is not a Business Day, then the
first Business Day thereafter.
"Excess Purchase Payment" has the meaning specified in the
Contract.
"Exchange" means the delivery of Stock by the Trustees to the
Holders, subject to the adjustments and exceptions set forth in the
Contract (or, if Seller[S] elect the Cash Settlement Alternative, 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" has the meaning specified in the Contract.
"Exchange Rate" has the meaning specified in the Contract.
"Expense Agreement" means the Fund Expense Agreement, dated as
of , 1999, among Seller[S], The Chase Manhattan Bank, as Service
Provider, and the Trust substantially in the form of Exhibit D.
"Event of Default" has the meaning specified in the Contract.
"Firm Purchase Price" has the meaning specified in the
Contract.
"First Time of Delivery" has the meaning specified in the
Underwriting Agreement.
"Holder" means the registered owner of any Security as
recorded on the books of the Paying Agent.
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<PAGE> 8
"Indemnity Agreement" means the Fund Indemnity Agreement,
dated as of , 1999, among Seller[S], The Chase Manhattan Bank, as
Service Provider, and the Trust substantially in the form of Exhibit E.
"Investment Company" means an investment company as defined in
Section 3 of the Investment Company Act.
"Investment Company Act" means 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" means the Trustee designated as the
Managing Trustee by resolution of the Trustees.
"Marketable Securities" has the meaning specified in the
Contract.
"Merger Consideration" has the meaning specified in the
Contract.
"Original Agreement" has the meaning specified in the recitals
to this Agreement.
"Participant" means a Person having a book-entry only system
account with the Depositary.
"Paying Agent" means ChaseMellon Shareholder Services, L.L.C.,
or its successor as permitted under Section 6.6 of the Paying Agent
Agreement or appointed pursuant to Section 2.2(a).
"Paying Agent Agreement" means the Paying Agent Agreement,
dated as of , 1999, between the Paying Agent and the Trust, and any
substitute agreement therefor entered into pursuant to Section 2.2(a).
"Person" means an individual, a partnership, a corporation, a
limited liability company, a trust, an unincorporated association, a
joint venture or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
"Prospectus" means the prospectus relating to the Securities
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" means $ per Security paid to each
Holder on each Distribution Date.
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<PAGE> 9
"Record Date" means the Business Day preceding each
Distribution Date.
"Registration Statement" means the Registration Statement on
Form N-2 (Registration Nos. 333- and 811- ) of the Trust, as amended.
"Reorganization Event" has the meaning specified in the
Contract.
"Second Time of Delivery" has the meaning specified in the
Underwriting Agreement.
"Securities Act" means the Securities Act of 1933.
"Security" means a $ Trust 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[S]" means .
"Spin-Off Distribution" has the meaning specified in the
Contract.
"Sponsor" has the meaning specified in the preamble to this
Agreement.
"Stock" means Class A Common Stock to be exchanged by the
Trustees for the Securities on the Exchange Date; provided that after a
Spin-Off Distribution, all references to "Stock" shall include the
Stock distributed in such event; and provided further that after any
Reorganization Event, all references to "Stock" shall refer to the
Marketable Securities received in such event in lieu of referring to
the Class A Common Stock.
"Temporary Investments" means direct short-term U.S.
government obligations, as specified from time to time as provided in
Section 3.5.
"Transfer Agent and Registrar" means, at any time, the
transfer agent and registrar for the Class A Common Stock or Marketable
Securities, as applicable, at such time.
"Treasury Securities" means the U.S. Government Securities
purchased by the Trustees at the First Time of Delivery and, if
applicable, the Second Time of Delivery as provided in Section 2.3(b)
and, if applicable, the U.S. Government Securities delivered to the
Trust by Seller[S] pursuant to Section 2.3(e) of the Contract.
"Trust" has the meaning specified in the preamble to this
Agreement.
"Trust Account" means the account created pursuant to Section
3.1.
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<PAGE> 10
"Trust Estate" means the Contract and the U.S. Government
Securities held at any time by the Trust, together with any Temporary
Investments held at any time pursuant to Section 3.5, and any proceeds
of or from such U.S. Government Securities or Temporary Investments and
any other moneys held at any time in the Trust Account.
"Trustees" has the meaning specified in the preamble to this
Agreement.
"Underwriters" means the Underwriters named in the
Underwriting Agreement. [REVISE AS NECESSARY]
"Underwriting Agreement" means the Underwriting Agreement,
dated , 1999, as described in the Prospectus. [REVISE AS NECESSARY]
"U.S. Government Securities" means direct obligations of the
United States of America.
Section 1.2. Interpretation.
(a) When a reference is made in this Agreement to Articles, Sections,
Exhibits or Schedules, such reference is to Articles or Sections of, or Exhibits
or Schedules to, this Agreement unless otherwise indicated.
(b) The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement, and shall not be
deemed to limit or otherwise affect any of the provisions of this Agreement.
(c) Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(d) Any reference to any statute, regulation or agreement shall be a
reference to such statute, regulation or agreement as supplemented or amended
from time to time.
ARTICLE II
TRUST DECLARATION; PURPOSES, POWERS
AND DUTIES OF THE TRUSTEES; ADMINISTRATION
Section 2.1. Declaration of Trust; Purposes of the Trust;
Resignation and Appointment of Trustees.
(a) 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, receive and redeliver additional U.S.
Government Securities upon an extension of the Exchange Date pursuant to the
Contract, hold the Trust Estate
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<PAGE> 11
in trust for the use and benefit of all present and future Holders, and
otherwise carry out the terms and conditions of this 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.
(b) Paul S. Efron hereby resigns as trustee of the Trust, in accordance
with the provisions of Section 4 of the Original Agreement, and the Sponsor, as
the sole holder of any beneficial interest in the Trust as of the date of this
Agreement, hereby accepts the resignation of Paul S. Efron and appoints [Name],
[Name] and [Name] to be the Trustees of the Trust under this Agreement.
(c) Upon the execution of this Agreement, the name of the Trust shall
be changed to Ameritrade Automatic Common Exchange Securities Trust.
Section 2.2. General Powers and Duties of the Trustees. In furtherance
of the provisions of Section 2.1, the Sponsor authorizes and directs the
Trustees:
(a) to enter into and perform (and, in accordance with Section
8.5, amend) the Contract, the Collateral Agreement, the Underwriting
Agreement, the Expense 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 (or, in the case of the initial
Paying Agent, a limited liability company affiliate with such a
commercial bank or trust company), 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 institution qualified in all
respects to carry out its obligations under the Administration
Agreement or the Collateral Agreement, as the case may be;
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<PAGE> 12
(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;
(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
Security 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; [REVISE AS NECESSARY]
(d) to select independent public accountants and, subject to
the provisions of Section 8.5, to engage such independent public
accountants;
(e) to engage legal counsel and, to the extent required by
Section 2.4, 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 Collateral Agreement, the Custodian Agreement,
the Paying Agent Agreement and the Administration Agreement, to the
extent permitted by applicable law; and
(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 of this Agreement and applicable law,
including, without limitation, the Investment Company Act.
Section 2.3. Portfolio Acquisition. In furtherance of the
provisions of Section 2.1, the Sponsor further specifically authorized and
directs the Trustees:
(a) to enter into the Contract with Seller[S] on the
Commencement Date for settlement on the date or dates provided
thereunder and, subject to satisfaction of the conditions set forth in
the Contract, to pay the Firm Purchase
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<PAGE> 13
Price and the Additional Purchase Price, if any, thereunder with the
proceeds of the sale of the Securities, net of the fees and expenses
of the Trust incurred in connection with the public offering of the
Securities and the costs and expenses incurred in connection with the
organization of the Trust as described in the first sentence of
Section 3.2 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 Seller[S] on the Exchange Date
the Stock subject thereto (or, if Seller[S] elects the Cash Settlement
Alternative, the amount in cash specified in the Contract) so that the
Trust may execute the Exchange with the Holders; and
(b) to purchase for settlement (i) at the First Time of
Delivery, with the proceeds of the sale of the Securities issued by the
Trust at such First Time of Delivery, U.S. Government Securities having
the terms set forth on Schedule I(a), from such brokers or dealers as
the Trustees shall designate in writing to the Administrator, and (ii)
at the Second Time of Delivery, if any, with the proceeds of the sale
of the Securities issued by the Trust at such Second Time of Delivery,
U.S. Government Securities that, through the scheduled payment of
principal and interest in accordance with their terms, will provide,
not later than one Business Day before each Distribution Date cash in
an amount as close as practicable to (but in no event less than) the
product of $ and the Additional Share Base Amount (after taking into
account any prior payments under such U.S. Government Securities and
any prior distributions made by the Trust), and otherwise having such
terms as may be determined by the Sponsor (which terms shall be set
forth on a new Schedule I(b), which shall be attached to and form a
part of this Agreement from and after such Second Time of Delivery),
from such brokers or dealers as the Trustees shall designate in writing
to the Administrator.
Section 2.4. Portfolio Administration. In furtherance of the provisions
of Section 2.1, the Sponsor further specifically authorizes and directs the
Trustees:
(a) Determination of Dilution, Merger or Acceleration
Adjustments. Upon receipt of any notice pursuant to Section 5.1(d)(ii)
of the Contract of an event requiring an adjustment to the Exchange
Rate, or upon otherwise acquiring knowledge of such an event, to
calculate the required adjustment and furnish notice thereof to the
Collateral Agent and Seller[S], or to request from Seller[S] 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 Class A Common Stock as described in Section 6.2 of the
Contract, (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, or (iii) the declaration or payment of a
dividend or distribution to all holders of Class A Common Stock of
evidences of
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<PAGE> 14
its indebtedness or other non-cash assets or the issuance
of Class A Common Stock rights or warrants as described in Section
6.1(c) of the Contract, to retain the nationally recognized investment
banking firm selected by the Administrator to determine the market
value of such property as provided in the Contract, and to deliver to
Seller[S] notice pursuant to Section 8.1 of the Contract identifying
the firm proposed to be selected and retained, and to cause the
Administrator to consult with Seller[S] on such selection and retention
as provided in such Section 8.1;
(c) Application to List Securities. If the Securities are
delisted or suspended from trading on the [NEW YORK STOCK EXCHANGE],
Inc., to apply for listing of the Securities on another national or
regional securities exchange or for quotation on another trading
market;
(d) Additional U.S. Government Securities. To accept
additional U.S. Government Securities delivered to the Trust in
connection with an extension of the Exchange Date at Seller[S]'[S]
election in accordance with Section 2.3(c) of the Contract, and to
redeliver such U.S. Government Securities in connection with an
acceleration of the Exchange Date at Seller[S]'[S] election in
accordance with Section 2.3(f) of the Contract;
(e) Delivery of Cash Settlement Alternative Election Notice to
Holders of Securities. Upon receipt of a notice from Seller[S] of its
election of the Cash Settlement Alternative, as provided by Section
2.3(d) of the Contract, of the extension of the Exchange Date, as
provided by Section 2.3(e) of the Contract, or of the acceleration of
the Exchange Date, as provided by Section 2.3(f) of the Contract, to
give notice of such election, extension or acceleration as provided in
the Contract;
(f) Acceleration. In the event (i) an acceleration of the
Contract shall occur due to an Event of Default as provided in Article
VII of the Contract, or (ii) a Cash Merger shall occur in which all of
the Merger Consideration is included in the Accelerated Portion, to
liquidate or cause the Custodian to liquidate all the Treasury
Securities;
(g) Determination of Amounts to be Delivered under the
Contract. (i) To calculate, on the Exchange Date, upon the acceleration
of Seller[S]'[S] obligations under the Contract pursuant to Section 7.1
of the Contract and upon the occurrence of a Cash Merger, the number of
shares of Stock or amount in cash required to be delivered by Seller[S]
under the Contract on such date or as a result of such event, and (ii)
to furnish notice of the amounts so determined to the Collateral Agent
and Seller[S];
(h) Distribution of Exchange Consideration. Unless a
Reorganization Event shall occur in which the Merger Consideration does
not include any Marketable Securities (in which event the distribution
of proceeds shall be
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<PAGE> 15
governed by Section 2.4(i) or 2.4(j), as applicable) or Seller[S] elect
[s] the Cash Settlement Alternative (in which event the distribution of
proceeds shall be governed by Section 2.4(i)), or the Contract shall be
accelerated pursuant to Section 7.1 of the Contract (in which event the
distribution of proceeds shall be governed by Section 2.4(k)):
(i) Determination of Fractional Stock. To determine,
on the Exchange Date: (A) for each Holder of Securities, such
Holder's pro rata share of the total number of shares of Stock
delivered to the Trustees under the Contract on the Exchange
Date; and (B) the number of fractional shares of Stock
allocable to each Holder (including, in the case of the
Depositary, fractional Stock allocable to beneficial owners of
Securities who own through Participants) and in the aggregate;
(ii) Cash for Fractional Stock. To sell, in the
principal market therefor, on the Exchange Date, a number of
shares of Stock equal to the aggregate number of fractional
shares of Stock 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 of Stock so sold and the Average
Market Price; and, in accordance with Section 2.3 of the
Indemnity Agreement, to pay such difference, if positive, to
Seller[S], or to request payment of such difference, if
negative, from Seller[S];
(iii) Delivery of Stock. To deliver the remaining
Stock to the Transfer Agent and Registrar for such Stock on
the Exchange Date, with instructions that such Stock 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 for such Stock shall be instructed to issue
definitive certificates representing a number of shares of
Stock equal to such Holder's pro rata share of the total
delivered to the Trust under the Contract on the Exchange
Date, rounded down to the nearest integral number; (B) the
Transfer Agent and Registrar shall be instructed to transfer
all remaining Stock to the account of the Custodian held
through the Depositary, who shall then be instructed to
transfer and credit such Stock to each Participant who holds
Securities, with each Participant receiving its pro rata share
of the total delivered to the Trust under the Contract on the
Exchange Date, reduced by the aggregate fractional Stock
allocable to beneficial owners of Securities who own through
such Participant;
(iv) Distribution of Cash in Respect of Fractional
Stock. 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 Average Market Price;
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<PAGE> 16
(v) Record Date. The distributions described in this
paragraph (g) shall be made to Holders of record as of the
close of business on the Business Day preceding the Exchange
Date; and
(vi) Reorganization Events. If a Reorganization Event
occurs in which the Merger Consideration includes Marketable
Securities, this Section 2.4(h) shall relate to the portion of
the Merger Consideration that consists of Marketable
Securities.
(i) Distribution of Cash Upon Seller[S]'[S] Election of Cash
Settlement Alternative or Following a Reorganization Event. If
Seller[S] elect[s] the Cash Settlement Alternative, or if Seller[S]
[is] [are] required or elect[s] to deliver cash on the Exchange Date
following a Reorganization Event pursuant to Section 6.2(a) of the
Contract, to distribute to each Holder of record as of the close of
business on the Business Day preceding the Exchange Date such Holder's
pro rata share of any cash received by the Trust from the Seller[S] in
connection therewith;
(j) Distribution of Accelerated Portion. If a Cash Merger
shall occur, to distribute promptly to each Holder of record as of the
close of business on the Business Day preceding the distribution date
such Holder's pro rata share of the Accelerated Portion delivered under
the Contract together with, if applicable, such Holder's pro rata share
of the proceeds of the liquidation of the Treasury Securities pursuant
to Section 2.4(f); and
(k) Distribution of Cash and Stock Received upon Acceleration
of Exchange Date Following a Default by Seller[S] . If the obligations
of Seller[S] [is] [are] accelerated pursuant to Section 7.1 of the
Contract:
(i) Determination of Fractional Stock. To determine,
on the Business Day following the date on which Seller[S] or
the Collateral Agent delivers Class A Common Stock and
Marketable Securities to the Trust, as provided in Section 7.1
of the Contract or Section 7.1 of the Collateral Agreement:
(A) for each Holder of Securities, such Holder's pro rata
share of the total number of shares of Stock delivered to the
Trustees under the Contract on such date; and (B) the number
of fractional shares of Stock allocable to each Holder
(including, in the case of the Depositary, fractional Stock
allocable to beneficial owners of Securities who own through
Participants) and in the aggregate;
(ii) Cash for Fractional Stock. To sell, in the
principal market therefor, on the Business Day following the
date on which Seller[S] or the Collateral Agent delivers Class
A Common Stock and Marketable Securities to the Trust, a
number of shares of Stock equal to the aggregate number of
fractional shares of Stock determined pursuant to clause
(i)(B) above, rounded down to the nearest integral number; and
to
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<PAGE> 17
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 of Stock so sold and
the Average Market Price; and, in accordance with Section 2.3
of the Indemnity Agreement, to pay such difference, if
positive, to Seller[S], or to request payment of such
difference, if negative, from Seller[S] or from the Collateral
Agent from the proceeds of the collateral under the Collateral
Agreement;
(iii) Delivery of Stock. To deliver the remaining
Stock to the Transfer Agent and Registrar for such Stock the
Business Day following the date on which Seller[S] or the
Collateral Agent delivers Class A Common Stock and Marketable
Securities to the Trust, with instructions that such Stock 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 for such Stock shall be instructed to issue
definitive certificates representing a number of shares of
Stock equal to such Holder's pro rata share of the total
delivered to the Trust under the Contract on the Exchange
Date, rounded down to the nearest integral number; (B) the
Transfer Agent and Registrar for such Stock shall be
instructed to transfer all remaining Stock to the account of
the Custodian held through the Depositary, who shall then be
instructed to transfer and credit such Stock to each
Participant who holds Securities, with each Participant
receiving its pro rata share of the total delivered to the
Trust under the Contract on such Business Day, reduced by the
aggregate fractional Stock allocable to beneficial owners of
Securities who own through such Participant;
(iv) Distribution of Cash in Respect of Fractional
Stock and Treasury Securities. To distribute to each Holder of
Securities (x) 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 Average Market Price,
together with (y) such Holder's pro rata share of the proceeds
of the liquidation of the Treasury Securities pursuant to
Section 2.4(f); and
(v) Record Date. The distributions described in this
paragraph (h) shall be made to Holders of record as of the
close of business on the Business Day following the date on
which Seller[S] or the Collateral Agent delivers Class A
Common Stock and Marketable Securities to the Trust.
Section 2.5. Manner of Sales. Any sale of Trust property permitted or
required under this Agreement 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.
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Section 2.6. Limitations on Trustees' Powers. The Trustees are not
permitted:
(a) to purchase or hold any securities or instruments except
for the Stock, the Contract, the Treasury Securities, any additional
U.S. Government Securities delivered to the Trust in connection with an
extension of the Exchange Date pursuant to Section 2.3(e) of the
Contract, the Temporary Investments contem plated by Section 3.5 and,
in the event of a Reorganization Event or a Spin-Off Distribution,
Marketable Securities or any other property received in such event;
(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;
(h) to purchase or sell real estate, commodities or
commodities contracts;
(i) to purchase restricted securities;
(j) to make loans (other than the purchase of the Treasury
Securities pursuant to Section 2.3); 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, any other U.S. Government Securities delivered to the
Trust and any Temporary
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Investments held pursuant to Section 3.5, all moneys received from the sale of
the Securities to the Sponsor, and any proceeds from the sale to the
Underwriters of the Securities remaining after the purchase of the Contract and
the Treasury Securities shall be credited to the Trust Account.
Section 3.2. Payment of Fees and Expenses. If so directed by Seller[S],
the Administrator is authorized to pay, from the amounts payable to Seller[S]
pursuant to the Contract, the fees and expenses of the Trust incurred in
connection with the public offering of the Securities and the costs and expenses
incurred in connection with the organization of the Trust. In addition, the
Administrator is authorized to pay, from the assets of the Trust, the fees and
expenses of the Trust incurred in connection with the public offering of the
Securities and the costs and expenses incurred in connection with the
organization and operation of the Trust, to the extent that such fees, costs and
expenses are not paid by third parties.
Section 3.3. Distributions to Holders. On 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 Paying Agent or by any other means mutually agreed upon by the
Holder and the Trust, an amount equal to the Quarterly Distribution with respect
to all Securities held by such Holder computed as of the close of business on
such Distribution Date.
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 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. Temporary 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 Investment 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 the payment or
performance of 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
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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.
ARTICLE V
ISSUANCE OF CERTIFICATES; REGISTRY; TRANSFER OF SECURITIES
Section 5.1. Form of Certificate.
(a) Each Certificate evidencing Securities shall be executed manually
or in facsimile by the Managing Trustee and countersigned manually by the Paying
Agent in substantially the form of Exhibit A with the blanks appropriately
filled in, shall be dated the date of countersignature 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.
(b) The Certificates delivered to the Underwriters at the First Time of
Delivery and the Second Time of Delivery (if any) will be issued in the form of
a global Certificate or Certificates representing the Securities issued to the
Underwriters, to be delivered to the Depositary, or its custodian, by or on
behalf of the Trust. Such Certificate or Certificates shall initially be
registered on the books and records of the Trust in the name of Cede & Co., the
nominee of the Depositary, and no beneficial owner of such Securities will
receive a definitive Certificate representing such beneficial owner's interest
in such Securities, except as provided in the next paragraph. Unless and until
definitive, fully registered Certificates have been issued pursuant to the next
paragraph, the Trust shall be entitled to deal with the Depositary for all
purposes of this Agreement as the Holder and the sole holder of the Certificates
and shall have no obligation to the beneficial owners thereof, and none of the
Trust, the Trustees, or any agent of the Trust or the Trustees shall have any
liability with respect to or responsibility for the records of the Depositary.
(c) If the Depositary elects to discontinue its services as securities
depository, then definitive Certificates shall be prepared by the Trustees as
provided above. Upon surrender of the global Certificate or Certificates
accompanied by registration
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instructions, the Trustees shall cause definitive Certificates to be delivered
to the beneficial owners in accordance with the instructions of the Depositary.
Neither the Trustees nor the Trust shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions.
(d) Pending the preparation of definitive Certificates, the Managing
Trustee may execute and the Paying Agent shall countersign 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 countersigned manually 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 to the
Paying Agent 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 countersign 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.
(a) 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 Agreement are
interchangeable for one or more other Certificates in an equal aggregate number
of Securities and all Certificates issued 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 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.
(b) 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.
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(c) All Certificates canceled pursuant to this 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 canceled Certificates.
(d) 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 of the Trustees and the Paying Agent, 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). Any mutilated Certificate shall be
duly surrendered and canceled before any duplicate Certificate shall be issued
in exchange and substitution therefor. Upon issuance of any duplicate
Certificate pursuant to this Section 5.3, 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 as in effect in the State of New
York to a Holder presenting a Certificate for transfer in the case of an
overissue.
ARTICLE VI
EXECUTION OF THE CONTRACT
Section 6.1. Execution of the Contract[S]. [The] [Each] Contract[S]
shall be executed manually or in facsimile by the Managing Trustee and executed
manually by [THE] Seller[S] [party thereto] and shall be dated the date of
execution and delivery by [THE] Seller[S] [party thereto].
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
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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. 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 regular
annual or special meeting of Holders called for the purpose of electing any
Trustee. 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 Agreement and shall
evidence his consent by executing this Agreement or a supplement hereto. 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.
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 special meeting
of Holders for the purpose of electing Trustees in compliance with Sections 10
and 16 of the Investment Company Act. Any Trustee elected at such a meeting
shall have the qualifications specified in Section 7.1. Until a vacancy in the
office of any Trustee is filled as 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
Agreement. 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, 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 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
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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 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 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 taking any action 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 Agreement or for the due
execution hereof by any other Person, or for or in respect of the validity or
sufficiency of Securities or the 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 Estate 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.
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
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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 hold annual meetings
of Holders to elect Trustees as provided in Section 7.1. 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 (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 meeting,
and no proxy shall be valid after eleven months following the date of its
execution. Any Investment Company owning Securities in excess of the limits
imposed by Sections 12(d)(1)(A)(i) and 12(d)(1)(C) of the Investment Company Act
shall vote its Securities in proportion to the votes of all other Holders.
Section 8.2. Books and Records; Reports.
(a) The Trustees shall keep a certified copy or duplicate original of this
Agreement on file at the office of the Trust, which shall be located at 450 West
33rd Street, New York, New York 10001, 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 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
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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 on the basis of the bid price received by the Trust
in respect of the Contract, or any portion thereof covering not less than 1,000
shares of Stock, from an independent broker-dealer firm unaffiliated with the
Trust to be named by the Trustees who is in the business of making bids on
financial instruments similar to the Contract and with terms comparable thereto,
or if such a bid quotation is not available, as determined in good faith by the
Trustees.
Section 8.3. Termination.
(a) This Agreement and the Trust created hereby shall terminate upon
the earliest of (i) the date 90 days after the execution of this Agreement if
(x) the Securities have not theretofore been issued to the Underwriters under
the Underwriting Agreement or (y) the net worth of the Trust is not at least
$100.00 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 Contract shall be accelerated pursuant to Article VII
thereof or if Section 6.2 thereof results in the acceleration of all the
obligations of Seller[S], 10 Business Days after the date on which the Trust
shall receive the Stock or other consideration then required to be delivered by
Seller[S], or the proceeds of any sale of collateral pursuant to Section 7.3 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
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death or incapacity of any Holder shall not operate to terminate this
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 shall be closed.
(c) For purposes of termination under Sections 8.3(a)(ii), (iii) and (iv),
within five Business Days after such termination, the Trustees shall, subject to
any applicable provisions of law, effect or cause the Custodian to 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. No Assumption of Liability. By executing this Agreement, none
of the Trustees assumes any personal liability under this Agreement except as
expressly set forth in this Agreement.
Section 8.5. Amendment and Waiver.
(a) This Agreement, and any of the agreements referred to in Section
2.2(a), may be amended from time to time by the Trustees for any purpose prior
to the issuance and sale to 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 govern mental 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 Agreement, and any of the agreements referred to in Section
2.2(a), may also be amended from time to time by the Trustees (or the
performance of any of the provisions of this Agreement or any of such other
agreements may be waived) with the consent by the required vote of the Holders
in accordance with Section 8.1; provided that this Agreement may not be amended,
(i) without the consent by vote of the Holders of all Securities then
outstanding, to increase the number of Securities issuable under this Agreement
above the number of Securities specified in Section 2.2(c) or such lesser number
as may be outstanding at any time during the term of this Agreement, (ii) to
reduce the interest in the Trust represented by any Security without the consent
of the
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Holder of such Security, (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 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.
(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 of this Agreement or the Agreements referred to in Section 2.2(a)
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 the Holders within the meaning of Treasury
Regulation Section 301.7701-4(c), or (ii) would or could cause the Trust, 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.
Section 8.6. 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
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8.1, 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.
(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 8.7. 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 Agreement, for the Stock,
the Contract, the Treasury Securities or other assets or monies 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 shall be construed to constitute the Holders
from time to time as partners or members of an association.
Section 8.8. Governing Law; Severability. This 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. To the
extent permitted by law, the unenforceability or invalidity of any provision or
provisions of this Agreement shall not render any other provision or provisions
contained in this Agreement unenforceable or invalid.
Section 8.9. Notices.
(a) All notices and other communications provided for in this Agreement,
unless otherwise specified, shall be in writing and shall be given at the
addresses set forth in the following sentence or at such other addresses as may
be designated by notice duly given in accordance with this Section 8.9 to each
other party to this Agreement. Until such notice is given, (i) notices to
Sponsor shall be directed to it at Goldman, Sachs & Co., 85 Broad Street, New
York, New York 10004, Attention: Registration Department; (ii) notices to the
Trust shall be directed to it in care of the Administrator for Purchaser, The
Chase Manhattan Bank, 450 West 33rd Street, New York, New York 10001, Telecopier
No. (212) 946-3638, Attention: Pledged Collateral Control Services and to each
Trustee at the address specified in clause (iii) of this paragraph; (iii)
notices to the Trustees shall be directed to the Trustees at [850 Library
Avenue, Suite 204, Newark Delaware 19715, Telecopier No. (302) 738-7210,
Attention: Donald J. Puglisi] or the applicable Trustee and (iv) notices to any
Holder shall be duly given if mailed, first class
-25-
<PAGE> 30
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.
(b) Each notice given pursuant to Section 8.9(a) shall be effective (i) if
sent by certified mail (return receipt requested), 72 hours after being
deposited in the United States mail, postage prepaid; (ii) if given by telex or
telecopier, when such telex or telecopied notice is transmitted (with electronic
confirmation of transmission or verbal confirmation of receipt); or (iii) if
given by any other means, when delivered at the address specified in this
Section 8.9.
Section 8.10. Entire Agreement. Except as expressly set forth in this
Agreement, this Agreement constitutes the entire agreement among the parties
with respect to the subject matter of this Agreement and supersedes all prior
agreements, understandings and negotiations, both written and oral, among the
parties with respect to the subject matter of this Agreement.
Section 8.11. Non-Assignability. This Agreement and the rights and
obligations of the parties under this Agreement may not be assigned or delegated
by either party without the prior written consent of the other party, and any
purported assignment without such consent shall be void.
Section 8.12. No Third Party Rights; Successors and Assigns. This Agreement
is not intended and shall not be construed to create any rights in any person
other than Sponsor, the Trustees and the Holders and their respective successors
and assigns and no other person shall assert any rights as third party
beneficiary under this Agreement. Whenever any of the parties to this Agreement
is referred to, such reference shall be deemed to include the successors and
assigns of such party. All the covenants and agreements in this Agreement
contained by or on behalf of Sponsor and the Trustees shall bind, and inure to
the benefit of, their respective successors and assigns whether so expressed or
not, and shall be enforceable by and inure to the benefit of the Trustees and
their successors and assigns.
Section 8.13. Counterparts. This Agreement may be executed, acknowledged
and delivered in any number of counterparts, each of which shall be an original,
but all of which shall constitute a single agreement, with the same effect as if
the signatures on each such counterpart were upon the same instrument.
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<PAGE> 31
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Trust Agreement to be duly executed and delivered as of the date
hereof.
THE SPONSOR:
Goldman, Sachs & Co.,
as Sponsor
By:
-----------------------------------------
THE RETIRING TRUSTEE:
---------------------------------------------
Paul S. Efron
THE TRUSTEES:
By:
-----------------------------------------
[Donald J. Puglisi,]
as Trustee
Address: [Department of Economics
University of Delaware
Newark, Delaware 19716]
By:
-----------------------------------------
[William R. Latham III,]
as Trustee
Address: [Department of Economics
University of Delaware
Newark, Delaware 19716]
By:
-----------------------------------------
[James B. O'Neill,]
as Trustee
Address: [Department of Economics
University of Delaware
Newark, Delaware 19716]
<PAGE> 32
Schedule I(a)
TREASURY SECURITIES
All terms specified are for stripped principal or
interest components of U.S. Treasury debt
obligations.
<TABLE>
<CAPTION>
FIRST TIME OF DELIVERY
- -----------------------------------------------------------------------------------------------------------------------
PAR ZERO-COUPON RATE PRICE COST CUSIP
STRIP
<S> <C> <C> <C> <C> <C>
- --------------- ---------------------------- ------------ ------------- ---------------------- ----------------------
- --------------- ---------------------------- ------------ ------------- ---------------------- ----------------------
- --------------- ---------------------------- ------------ ------------- ---------------------- ----------------------
- --------------- ---------------------------- ------------ ------------- ---------------------- ----------------------
- --------------- ---------------------------- ------------ ------------- ---------------------- ----------------------
- --------------- ---------------------------- ------------ ------------- ---------------------- ----------------------
- --------------- ---------------------------- ------------ ------------- ---------------------- ----------------------
- --------------- ---------------------------- ------------ ------------- ---------------------- ----------------------
- --------------- ---------------------------- ------------ ------------- ---------------------- ----------------------
- --------------- ---------------------------- ------------ ------------- ---------------------- ----------------------
- --------------- ---------------------------- ------------ ------------- ---------------------- ----------------------
- --------------- ---------------------------- ------------ ------------- ---------------------- ----------------------
- --------------- ---------------------------- ------------ ------------- ---------------------- ----------------------
</TABLE>
SETTLEMENT DATE: , 1999 [FIRST TIME OF DELIVERY]
<PAGE> 33
Schedule I(b)
TREASURY SECURITIES
All terms specified are for stripped principal or
interest components of U.S. Treasury debt
obligations.
<TABLE>
<CAPTION>
SECOND TIME OF DELIVERY
- -----------------------------------------------------------------------------------------------------------------
PAR ZERO-COUPON RATE PRICE COST CUSIP
STRIP
<S> <C> <C> <C> <C> <C>
- --------------- ------------------------ ------------ ----------------- ---------------------- ----------------
- --------------- ------------------------ ------------ ----------------- ---------------------- ----------------
- --------------- ------------------------ ------------ ----------------- ---------------------- ----------------
- --------------- ------------------------ ------------ ----------------- ---------------------- ----------------
- --------------- ------------------------ ------------ ----------------- ---------------------- ----------------
- --------------- ------------------------ ------------ ----------------- ---------------------- ----------------
- --------------- ------------------------ ------------ ----------------- ---------------------- ----------------
- --------------- ------------------------ ------------ ----------------- ---------------------- ----------------
- --------------- ------------------------ ------------ ----------------- ---------------------- ----------------
- --------------- ------------------------ ------------ ----------------- ---------------------- ----------------
- --------------- ------------------------ ------------ ----------------- ---------------------- ----------------
- --------------- ------------------------ ------------ ----------------- ---------------------- ----------------
- --------------- ------------------------ ------------ ----------------- ---------------------- ----------------
</TABLE>
SETTLEMENT DATE:
<PAGE> 34
Exhibit A
Form of Certificate Evidencing the Securities
Unless this certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to Ameritrade
Automatic Common Exchange Security Trust or its agent for registration of
transfer, exchange, or payment, and any certificate issued is registered in the
name of [Cede & Co.] (or in such other name as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, [Cede & Co.], has an interest herein. This certificate may be exchanged
by an authorized representative of DTC in whole or in part for securities in
definitive form, registered in the names of such holders as such representative
of DTC shall specify, in which case, a new certificate will be issued in the
name of [Cede & Co.] (or in such other name as is requested by such authorized
representative of DTC) representing the securities not issued in definitive
form.
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.
$ TRUST AUTOMATIC COMMON EXCHANGE SECURITIES
AMERITRADE AUTOMATIC COMMON EXCHANGE SECURITY TRUST
CUSIP NO.
NO. _______ ____________ Stock
THIS CERTIFIES THAT [CEDE & CO.] IS THE RECORD OWNER OF ____________ OF
THE $ TRUST AUTOMATIC COMMON EXCHANGE SECURITIES OF AMERITRADE AUTOMATIC COMMON
EXCHANGE SECURITY TRUST CONSTITUTING FRACTIONAL UNDIVIDED INTERESTS IN
AMERITRADE AUTOMATIC COMMON EXCHANGE SECURITY TRUST, A TRUST CREATED UNDER THE
LAWS OF THE STATE OF NEW YORK PURSUANT TO A TRUST AGREEMENT AMONG 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, 450 WEST 33RD STREET, NEW YORK, NEW YORK 10001.
THIS CERTIFICATE IS TRANSFERABLE AND EXCHANGEABLE 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> 35
WITNESS THE FACSIMILE SIGNATURE OF THE MANAGING TRUSTEE.
AMERITRADE AUTOMATIC
COMMON EXCHANGE SECURITY
TRUST
DATED:
By:
---------------------------------
[Name]
Managing Trustee
COUNTERSIGNED:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
as Paying Agent
By:
---------------------------------------
Authorized Signature
<PAGE> 1
EXHIBIT 2.j
- --------------------------------------------------------------------------------
CUSTODIAN AGREEMENT
Between
THE CHASE MANHATTAN BANK,
As Custodian,
and
AMERITRADE AUTOMATIC COMMON EXCHANGE SECURITY TRUST
------------------------------------
Dated as of , 1999
------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS; INTERPRETATION
<S> <C> <C>
Section 1.1. Defined Terms...............................................................................1
Section 1.2. Interpretation..............................................................................2
ARTICLE II
APPOINTMENT OF CUSTODIAN
Section 2.1. Appointment of Custodian; Acceptance of Appointment.........................................2
Section 2.2. Transfer of Assets..........................................................................3
Section 2.3. Authorized Actions..........................................................................3
Section 2.4. Asset Disposition; Examinations.............................................................3
Section 2.5. Rights of Set-Off; Banker's Lien............................................................3
ARTICLE III
THE CUSTODIAN
Section 3.1. Conditions to Duties of the Custodian.......................................................4
Section 3.2. Merger......................................................................................4
Section 3.3. Compensation................................................................................4
Section 3.4. Trust Agreement Validity....................................................................4
Section 3.5. Litigation Obligations, Costs and Indemnity.................................................4
Section 3.6. Indemnification.............................................................................4
Section 3.7. Section 17(f) Qualification.................................................................5
ARTICLE IV
RESIGNATION AND REMOVAL OF CUSTODIAN
Section 4.1. Removal.....................................................................................5
Section 4.2. Resignation.................................................................................6
Section 4.3. Appointment of Successor....................................................................6
Section 4.4. Effectiveness of Resignation or Removal.....................................................6
Section 4.5. Acceptance by Successor.....................................................................6
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE V
MISCELLANEOUS
<S> <C> <C>
Section 5.1. Term of Agreement...........................................................................6
Section 5.2. No Assumption of Liability..................................................................6
Section 5.3. Notices.....................................................................................7
Section 5.4. Governing Law; Severability.................................................................7
Section 5.5. Amendments; Waivers.........................................................................7
Section 5.6. Non-Assignability...........................................................................7
Section 5.7. Provisions of Law to Control................................................................7
Section 5.8. No Third Party Rights; Successors and Assigns...............................................8
Section 5.9. Counterparts................................................................................8
</TABLE>
-ii-
<PAGE> 4
CUSTODIAN AGREEMENT
CUSTODIAN AGREEMENT, dated as of , 1999, between The Chase
Manhattan Bank, a New York banking corporation (the "Custodian"), and AMERITRADE
Automatic Common Exchange Security Trust, a trust organized under the laws of
the State of New York under and by virtue of an Amended and Restated Trust
Agreement, dated as of , 1999 (such trust and the trustees thereof
acting in their capacity as such being referred to in this Agreement as the
"Trust").
WITNESSETH:
WHEREAS, the Trust is a non-diversified, closed-end management
investment company, as defined in the Investment Company Act of 1940 (the
"Investment Company Act"), formed to purchase and hold certain U.S. treasury
securities (the "Treasury Securities"), to enter into and hold [a] forward
purchase contract[S] (the "Contract[S]") [REVISE AS NECESSARY] with an existing
shareholder of Ameritrade Holding Corporation (the "Company"), and to issue $
Trust Automatic Common Exchange Securities (the "Securities") to the public in
accordance with the terms and conditions of the Trust Agreement referred to
below; and
WHEREAS, the Trust desires to engage the services of the Custodian to
perform certain custodial duties and provide certain related services for the
Trust under the Trust Agreement and the Investment Company Act; and
WHEREAS, the Custodian is qualified and willing to assume such duties
and provide such services, subject to the supervision of the Trustees, on the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, the parties, intending to be bound, agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1. Defined Terms.
(a) Capitalized terms used and not otherwise defined in this Agreement
have the respective meanings specified in the Trust Agreement.
(b) As used in this Agreement, the following terms have the following
meanings:
"Agreement" means this Custodian Agreement.
"Assets" has the meaning specified in Section 2.1.
<PAGE> 5
"Company" has the meaning specified in the recitals to this
Agreement.
"Contract[S]" has the meaning specified in the recitals to this
Agreement. [REVISE AS NECESSARY]
"Custodian" has the meaning specified in the preamble to this
Agreement.
"Investment Company Act" has the meaning specified in the recitals
to this Agreement.
"Securities" has the meaning specified in the recitals to this
Agreement.
"Treasury Securities" has the meaning specified in the recitals to
this Agreement.
"Trust" has the meaning specified in the preamble to this
Agreement.
"Trust Agreement" means the Amended and Restated Trust
Agreement, dated as of o, 1999, constituting the Trust.
Section 1.2. Interpretation.
(a) When a reference is made in this Agreement to Articles, Sections,
Exhibits or Schedules, such reference shall be to Articles or Sections of, or
Exhibits or Schedules to, this Agreement unless otherwise indicated.
(b) The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions of this Agreement.
(c) Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(d) Any reference to any statute, regulation or agreement shall be a
reference to such statute, regulation or agreement as supplemented or amended
from time to time.
ARTICLE II
APPOINTMENT OF CUSTODIAN
Section 2.1. Appointment of Custodian; Acceptance of Appointment. The
Trust hereby appoints the Custodian, and the Custodian accepts such appointment,
as custodian of all of the property, including but not limited to, the
Contract[S], the Treasury Securities, any U.S. Government Securities delivered
to the Trust in connection with an
-2-
<PAGE> 6
extension of the Exchange Date, the Temporary Investments, any cash and any
other property at any time owned or held by the Trust (collectively, the
"Assets").
Section 2.2. Transfer of Assets. The Trust hereby deposits the Assets
with the Custodian and the Custodian hereby accepts such into its custody and
the Trust shall deliver to the Custodian all of the Assets, including all
monies, securities and other property received by the Trust at any time during
the period of this Agreement, subject to the following terms and conditions. The
Custodian hereby agrees that it shall hold the Assets in a segregated custody
account, separate and distinct from all other accounts, in accordance with
Section 17(f) of, and in such manner as shall constitute the segregation and
holding in trust within the meaning of, the Investment Company Act and the rules
and regulations thereunder. The Trustees authorize the Custodian, for any Assets
held hereunder, to use the services of any United States securities depository
permitted to perform such services for registered investment companies and their
custodians under Rule 17f-4 under the Investment Company Act and which have been
approved by the Trustees, including but not limited to, The Depository Trust
Company and the Federal Reserve Book Entry System. The Custodian shall invest
monies on deposit in such custody account in the Temporary Investments at the
instruction of the Paying Agent in accordance with Section 3.5 of the Trust
Agreement.
Section 2.3. Authorized Actions. The Custodian shall take such actions
with respect to the Assets as are directed in writing, in accordance with the
provisions of Section 5.3 of this Agreement, by the Trustees or by any officer
of the Administrator or the Paying Agent and received by the Custodian from time
to time.
Section 2.4. Asset Disposition; Examinations. The Custodian shall have
no power or authority to assign, hypothecate, pledge or otherwise dispose of the
Assets, except pursuant to a written direction in accordance with Section 2.3 of
this Agreement and then only for the account of the Trust. The Assets shall be
subject to no lien or charge of any kind in favor of the Custodian for itself or
for any other Person claiming through the Custodian. The Custodian shall permit
actual examination of the Assets by the Trust's independent public accountant at
the end of each annual and semi-annual fiscal period of the Trust and at least
one other time during the fiscal year of the Trust chosen by such independent
public accountant and shall permit the inspection of the Assets by the
Commission through its employees or agents during the normal business hours of
the Custodian upon reasonable request.
Section 2.5. Rights of Set-Off; Banker's Lien. The Custodian hereby
waives all rights of set-off or banker's lien it may have with respect to the
Assets held by it as Custodian hereunder.
-3-
<PAGE> 7
ARTICLE III
THE CUSTODIAN
Section 3.1. Conditions to Duties of the Custodian. The provisions of
Section 8.1(a) of the Collateral Agreement shall apply, mutatis mutandis, to the
Custodian in the performance of its duties hereunder as if it were the
Collateral Agent acting under the Collateral Agreement.
Section 3.2. Merger. Any corporation or association into which the
Custodian may be converted or merged or with which it may be consolidated, or to
which it may sell or transfer its agency business and assets as a whole or
substantially as a whole, or any corporation or association resulting from any
such conversion, merger, consolidation, sale or transfer to which it is a party,
shall be and become the successor Custodian hereunder without the execution or
filing of any instrument or any further act, deed or conveyance on the part of
any of the parties hereto, provided that such corporation or association meets
the requirements set forth in the Trust Agreement.
Section 3.3. Compensation. For services to be rendered by the Custodian
pursuant to this Agreement, the Custodian shall receive only such fees and
expenses as shall be paid to it pursuant to the terms of the Indemnity Agreement
and shall have no recourse to the assets of the Trust for the payment of any
such amounts.
Section 3.4. Trust Agreement Validity. The Custodian shall not be
responsible for the validity or sufficiency of the Trust Agreement or the due
execution thereof, or for the form, character, genuineness, sufficiency, value
or validity of any of the Assets and the Custodian shall in no event assume or
incur any liability, duty or obligation to any Holder or to the Trustees, other
than as expressly provided for in this Agreement. The Custodian shall not be
responsible for or in respect of the validity of any signature by or on behalf
of the Trustees.
Section 3.5. Litigation Obligations, Costs and Indemnity. The Custodian
shall not be under any obligation to appear in, prosecute or defend any action
which in its opinion may involve it in expense or liability, unless it shall be
furnished with such reasonable security and indemnity against such expense or
liability as it may require.
Section 3.6. Indemnification. The Trust shall indemnify and hold the
Custodian harmless from and against any loss, damages, cost or expense
(including the costs of investigation, preparation for and defense of legal
and/or administrative proceedings related to a claim against it and reasonable
attorneys' fees and disbursements), liability or claim incurred by reason of any
inaccuracy in information furnished to the Custodian by the Trust, or any act or
omission in the course of, connected with or arising out of any services to be
rendered hereunder, provided that the Custodian shall not be indemnified and
held harmless from and against any such loss, damages, cost, expense, liability
or claim incurred by reason of its willful misfeasance, bad faith or gross
negligence in the performance of its duties, or its reckless disregard of its
duties and obligations
-4-
<PAGE> 8
hereunder. Such indemnity shall survive the resignation, removal or discharge
of the Custodian and the termination of this Agreement.
Section 3.7. Section 17(f) Qualification. The Custodian hereby
represents that it is qualified to act as a custodian under Section 17(f) of the
Investment Company Act.
ARTICLE IV
RESIGNATION AND REMOVAL OF CUSTODIAN
Section 4.1. Removal.
(a) Subject to Section 4.4, the Trust may remove the Custodian by
written notice at any time if any of the following events shall occur:
(i) If the Custodian shall violate any provision of this
Agreement, the Trust Agreement or the Investment Company Act and, after
notice of such violation, shall not cure such default within 30 days;
or
(ii) If the Custodian ceases to meet the requirements set
forth in Section 2.2(a) of the Trust Agreement; or
(iii) If the Custodian shall be adjudged bankrupt or insolvent
by a court of competent jurisdiction, or a receiver, conservator,
liquidator, or trustee shall be appointed for or with respect to the
Custodian, or for all or substantially all of its property, or a court
of competent jurisdiction shall approve any petition filed against the
Custodian for its reorganization, and such adjudication or order shall
remain in force or unstayed for a period of 30 days; or
(iv) If the Custodian shall institute proceedings for
voluntary bankruptcy, or shall file a petition seeking reorganization
under the Federal bankruptcy laws, or for relief under any law for the
relief of debtors, or shall consent to the appointment of a receiver or
conservator for or in respect of the Custodian for all or substantially
all of its property, or shall make a general assignment for the benefit
of its creditors, or shall admit in writing its inability to pay its
debts generally as they become due; or
(v) Upon the voluntary or involuntary dissolution of the
Custodian or, unless the Trust shall have given its prior written
consent thereto, the merger or consolidation of the Custodian with any
other entity; or
(vi) At any time upon 60 days' prior written notice.
If any of the events specified in clauses (ii), (iii), (iv) or (v) of this
Section 4.1(a) shall occur, the Custodian shall give immediate written notice
thereof to the Trust.
-5-
<PAGE> 9
(b) The Custodian shall be removed immediately upon (i) termination of
the Trust Agreement, (ii) termination of the Paying Agent Agreement, (iii)
termination of the Collateral Agreement, (iv) termination of the Administration
Agreement, or (v) the resignation or removal of the Paying Agent, the Collateral
Agent or the Administrator.
Section 4.2. Resignation. The Custodian may at any time resign by
giving 60 days' written notice by registered or certified mail to the Trust in
accordance with the provisions of Section 5.3. Such resignation shall take
effect upon the appointment of a successor Custodian by the Trust.
Section 4.3. Appointment of Successor. If the Custodian hereunder shall
resign or be removed, a successor may be appointed by the Trust by an instrument
or concurrent instruments in writing signed by the Trustees. Every such
successor Custodian appointed pursuant to the provisions of this Agreement shall
satisfy the requirements set forth in Section 2.2(a) of the Trust Agreement.
Section 4.4. Effectiveness of Resignation or Removal. No resignation or
removal of the Custodian shall be effective until a successor Custodian shall
have been appointed and shall have accepted the duties of the Custodian. If,
within 30 days after notice by the Custodian to the Trust or by the Trust to the
Custodian of any such resignation or removal, no successor Custodian shall have
been selected and accepted the duties of the Custodian, the Custodian may apply
to a court of competent jurisdiction for the appointment of a successor
Custodian.
Section 4.5. Acceptance by Successor. Every successor Custodian
appointed hereunder shall execute, acknowledge and deliver to its predecessor
and also to the Trust an instrument in writing accepting such appointment
hereunder, whereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the estates, properties, rights,
powers, duties and obligations of its predecessors. Such predecessor shall,
nevertheless, on the written request of its successor or the Trust, execute and
deliver an instrument transferring to such successor all the estates,
properties, rights and powers of such predecessor hereunder. Every predecessor
Custodian shall forthwith deliver all records or other property of the Trust
then in its possession or custody to its successor.
ARTICLE V
MISCELLANEOUS
Section 5.1. Term of Agreement. This Agreement shall continue in effect
until the completion of the liquidation of the Trust in accordance with Section
8.3(c) of the Trust Agreement.
Section 5.2. No Assumption of Liability. By executing this Agreement,
none of the Trustees assumes any personal liability hereunder.
-6-
<PAGE> 10
Section 5.3. Notices.
(a) All notices and other communications provided for in this
Agreement, unless otherwise specified, shall be in writing (including
transmittals by telex or telecopier) given at the addresses set forth in the
following sentences or at such other addresses as may be designated by notice
duly given in accordance with this Section 5.3 to each other party hereto. Until
such notice is given, (i) notices to the Custodian shall be directed to it at
The Chase Manhattan Bank, 450 West 33rd Street, New York, New York 10001,
Telecopier No. (212) 946-3638, Attention: Pledged Asset Control Services; and
(ii) notices to the Trust or the Trustees shall be directed to the Trustees at
[850 Library Avenue, Suite 204, Newark, Delaware 19711, Telecopier:
(302) 738-7210].
(b) Each such notice given pursuant to Section 5.3(a) shall be
effective (i) if sent by certified mail (return receipt requested), 72 hours
after being deposited in the United States mail, postage prepaid; (ii) if given
by telex or telecopier, when such telex or telecopied notice is transmitted
(with electronic confirmation of transmission or verbal confirmation of
receipt); or (iii) if given by any other means, when delivered at the address
specified in this Section 5.3.
Section 5.4. Governing Law; Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
To the extent permitted by law, the unenforceability or invalidity of any
provision or provisions of this Agreement shall not render any other provision
or provisions contained in this Agreement unenforceable or invalid.
Section 5.5. Amendments; Waivers. Any provision of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Custodian and the Trust or, in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies provided in this
Agreement shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 5.6. Non-Assignability. This Agreement and the rights and
obligations of the parties hereunder may not be assigned or delegated by either
party without the prior written consent of the other party, and any purported
assignment without such consent shall be void.
Section 5.7. Provisions of Law to Control. This Agreement shall be
subject to the applicable provisions of the Investment Company Act and the rules
and regulations of the Commission thereunder. To the extent that any provisions
contained in this Agreement conflict with any applicable provisions of the
Investment Company Act or such rules and regulations, the latter shall control.
-7-
<PAGE> 11
Section 5.8. No Third Party Rights; Successors and Assigns. This
Agreement is not intended and shall not be construed to create any rights in any
person other than the Custodian and the Trust and their respective successors
and assigns and no person shall assert any rights as third party beneficiary
hereunder. Whenever any of the parties hereto is referred to, such reference
shall be deemed to include the successors and assigns of such party. All the
covenants and agreements contained in this Agreement by or on behalf of the
Custodian and the Trust shall bind, and inure to the benefit of, their
respective successors and assigns whether so expressed or not, and shall be
enforceable by and inure to the benefit of the Trust and its successors and
assigns.
Section 5.9. Counterparts. This Agreement may be executed, acknowledged
and delivered in any number of counterparts, each of which shall be an original,
but all of which shall constitute a single agreement, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
-8-
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have caused this Custodian
Agreement to be duly executed and delivered as of the first date set forth
above.
THE CUSTODIAN
THE CHASE MANHATTAN BANK,
as Custodian
By:
------------------------
Name:
Title:
THE TRUST:
AMERITRADE AUTOMATIC COMMON
EXCHANGE SECURITY TRUST
By:
------------------------
[Name],
as Trustee
By:
------------------------
[Name],
as Trustee
By:
------------------------
[Name],
as Trustee
<PAGE> 1
EXHIBIT 2.k.(i)
================================================================================
ADMINISTRATION AGREEMENT
Between
THE CHASE MANHATTAN BANK,
As Administrator,
and
AMERITRADE AUTOMATIC COMMON EXCHANGE SECURITY TRUST
---------------------------
Dated as of , 1999
---------------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS; INTERPRETATION
<S> <C>
Section 1.1. Defined Terms...............................................................................1
Section 1.2. Interpretation..............................................................................2
ARTICLE II
APPOINTMENT OF ADMINISTRATOR
Section 2.1. Appointment of Administrator; Acceptance of Appointment.....................................2
Section 2.2. Services of Administrator...................................................................3
Section 2.3. Power of Attorney...........................................................................4
Section 2.4. Delivery of Certain Documents...............................................................4
ARTICLE III
THE ADMINISTRATOR
Section 3.1. Conditions to Duties of the Administrator...................................................4
Section 3.2. Merger. ....................................................................................5
Section 3.3. Compensation................................................................................5
Section 3.4. Indemnification.............................................................................5
ARTICLE IV
RESIGNATION AND REMOVAL OF ADMINISTRATOR
Section 4.1. Removal.....................................................................................6
Section 4.2. Resignation.................................................................................6
Section 4.3. Appointment of Successor....................................................................7
Section 4.4. Effectiveness of Resignation or Removal.....................................................7
Section 4.5. Acceptance by Successor.....................................................................7
ARTICLE V
RECORDS AND REPORTS
Section 5.1. Books and Records; Inspection and Copying...................................................7
Section 5.2. Access to Information.......................................................................7
</TABLE>
-i-
<PAGE> 3
<TABLE>
ARTICLE VI
MISCELLANEOUS
<S> <C>
Section 6.1. Term of Agreement ..........................................................................8
Section 6.2. No Assumption of Liability..................................................................8
Section 6.3. Notices.....................................................................................8
Section 6.4. Governing Law; Severability.................................................................8
Section 6.5. Amendments; Waivers.........................................................................8
Section 6.6. Non-Assignability...........................................................................9
Section 6.7. Provisions of Law to Control................................................................9
Section 6.8. No Third Party Rights; Successors and Assigns...............................................9
Section 6.9. Counterparts................................................................................9
</TABLE>
-ii-
<PAGE> 4
ADMINISTRATION AGREEMENT
ADMINISTRATION AGREEMENT, dated as of , 1999, between The Chase
Manhattan Bank, a New York banking corporation (the "Administrator"), and
Ameritrade Automatic Common Exchange Security Trust, a trust organized under the
laws of the State of New York under and by virtue of an Amended and Restated
Trust Agreement, dated as of o, 1999 (such trust and the trustees thereof acting
in their capacity as such being referred to in this Agreement as the "Trust").
WITNESSETH:
WHEREAS, the Trust is a non-diversified, closed-end management
investment company, as defined in the Investment Company Act of 1940 (the
"Investment Company Act"), formed to purchase and hold certain U.S. treasury
securities (the "Treasury Securities"), to enter into and hold [a] forward
purchase contract[S] (the "Contract[S]") [REVISE AS NECESSARY] with an existing
shareholder of Ameritrade Holding Corporation (the "Company") and to issue $
Trust Automatic Common Exchange Securities (the "Securities") to the public in
accordance with the terms and conditions of the Trust Agreement referred to
below; and
WHEREAS, the Trust desires to engage the services of the Administrator
to assume certain duties and responsibilities of the Trustees of the Trust under
the Trust Agreement and the Investment Company Act and to undertake certain
services on behalf of and subject to the supervision of the Trustees as provided
in this Agreement; and
WHEREAS, the Administrator is qualified and willing to assume such
duties and responsibilities and to undertake to render such services, subject to
the supervision of the Trustees, on the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, the parties, intending to be bound, agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1. Defined Terms.
(a) Capitalized terms used and not otherwise defined in this Agreement
have the respective meanings specified in the Trust Agreement.
(b) As used in this Agreement, the following terms have the following
meanings:
<PAGE> 5
"Administrator" has the meaning specified in the preamble to
this Agreement.
"Agreement" means this Administration Agreement.
"Company" has the meaning specified in the recitals to this
Agreement.
"Contract[S]" has the meaning specified in the recitals to
this Agreement.
"Indemnification Expenses" has the meaning specified in the
Indemnity Agreement.
"Investment Company Act" has the meaning specified in the
recitals to this Agreement.
"Securities" has the meaning specified in the recitals to this
Agreement.
"Treasury Securities" has the meaning specified in the
recitals to this Agreement.
"Trust" has the meaning specified in the preamble to this
Agreement.
"Trust Agreement" means the Amended and Restated Trust
Agreement, dated as of , 1999, constituting the Trust.
Section 1.2. Interpretation.
(a) When a reference is made in this Agreement to Articles, Sections,
Exhibits or Schedules, such reference is to Articles or Sections of, or Exhibits
or Schedules to, this Agreement unless otherwise indicated.
(b) The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions of this Agreement.
(c) Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(d) Any reference to any statute, regulation or agreement is a
reference to such statute, regulation or agreement as supplemented or amended
from time to time.
-2-
<PAGE> 6
ARTICLE II
APPOINTMENT OF ADMINISTRATOR
Section 2.1. Appointment of Administrator; Acceptance of Appointment.
The Trust hereby appoints the Administrator, and the Administrator hereby
accepts such appointment, to provide the services enumerated in this Agreement.
Section 2.2. Services of Administrator. Subject to the supervision of
the Trustees, the Administrator shall effect the matters set forth further in
Sections 2.3, 2.4 and 2.5 of the Trust Agreement, to the extent such
responsibilities can lawfully be delegated to the Administrator; provided,
however, that the Administrator shall not (i) render investment advisory
services to the Trust as defined in the Investment Company Act or the Investment
Advisers Act of 1940; (ii) have the power to sell the Contract[S] or the
Treasury Securities except as provided in Sections 2.5 of the Trust Agreement;
or (iii) have the power to select the independent public accountants for the
Trust. Additionally, the Administrator shall be responsible for rendering the
following services:
(a) if so directed by the Seller, instruct the Paying Agent to
pay, from the amounts payable to the Seller pursuant to the
Contract[S], the fees and expenses of the Trust incurred in connection
with the public offering of the Securities and the costs and expenses
incurred in connection with the organization of the Trust;
(b) instruct the Paying Agent to effect the transactions set
forth in Sections 2.3, 2.4 and 2.5 and Article III of the Trust
Agreement;
(c) with the approval of the Trustees, engage legal and other
professional advisors, subject to clause 2.2(iii) above;
(d) when the Trust is required to select and engage an
independent investment banking firm under the Contract[S], to select
and engage such a firm, subject to the requirements of the Contract[S]
(including Section 8.1 thereof) and inform the Trustees promptly after
making such selection and engagement;
(e) receive all demands, bills and invoices for expenses
incurred by or on behalf of the Trust, and pay the same, or cause the
Paying Agent to pay the same, out of moneys paid to the Administrator
pursuant to the Expense Agreement but in no event out of any assets of
the Trust, except as provided in Section 2.2(a), and give notice to the
Seller (as defined in the Expense Agreement) of any claim for
Indemnification Expenses or any threatened claim for Indemnification
Expenses as provided in Section 2.4(b) of the Indemnity Agreement;
-3-
<PAGE> 7
(f) (i) prepare and mail, file or publish, or, as appropriate,
direct the Paying Agent to prepare and mail, file or publish, any
notices, proxies, reports and other communications required to be
mailed or published pursuant to the Trust Agreement or the Investment
Company Act, (ii) keep (or cause to be kept) all the books and records
of the Trust (other than those to be kept by the Paying Agent), and
(iii) prepare (or cause to be prepared) and, as necessary, file (or
cause to be filed) any and all reports, returns and other documents as
required under the Investment Company Act, the Securities Exchange Act
of 1934, or the Code, or, as reasonably requested by the Trustees,
under any other applicable laws, rules or regulations or otherwise;
provided, however, that responsibility for the adequacy and accuracy of
any such notices, proxies, reports, communications, books, records,
returns and other documents shall be that of the Trustees; and provided
further, however, that the Administrator shall have no liability for
the adequacy or accuracy of such notices, proxies, reports,
communications, books, records, returns and other documents;
(g) at the request of the Trustees and upon being furnished
with such reasonable security and indemnity against any related expense
or liability as the Administrator may require, institute and prosecute,
in accordance with the instructions of the Trustees, legal or other
appropriate proceedings to enforce any and all rights and remedies of
the Trust;
(h) receive and review on behalf of the Trust all notices,
reports, certificates and other documents regarding the Contract[S] and
the Treasury Securities;
(i) make all necessary arrangements with respect to meetings
of Trustees and meetings of Holders, including, without limitation, the
preparation of notices, proxies and minutes, subject to the approval of
Trustees; and
(j) in conjunction with the Trustees, determine and publish,
in such manner as the Trustees shall direct in writing, the Trust's net
asset value in accordance with the Trust's policy as set forth in the
Prospectus.
Section 2.3. Power of Attorney. The Trust hereby appoints the
Administrator, acting through any duly appointed officer, as its
attorney-in-fact and agent for the purpose of performing the duties prescribed
in Section 2.2(f)(iii) and 2.2(i).
Section 2.4. Delivery of Certain Documents. The Trust will deliver to
the Administrator, promptly following the execution of this Agreement: (a) a
complete conformed copy of the registration statement of the Trust under the
Securities Act and the Investment Company Act, including all amendments,
exhibits and schedules thereto and (b) the EDGAR access codes (Central Index
Key, CIK Confirmation Code, Password and Password Modification Access Code)
employed to file such registration statement.
-4-
<PAGE> 8
ARTICLE III
THE ADMINISTRATOR
Section 3.1. Conditions to Duties of the Administrator. The provisions
of Section 8.1(a) of the Collateral Agreement shall apply, mutatis mutandis, to
the Administrator in the performance of its duties hereunder as if it were the
Collateral Agent acting under the Collateral Agreement. Without limiting the
generality of such provisions, the Administrator (i) at its own cost, may select
and employ independent accountants acceptable to the Trustees (other than the
independent public accountants referred to in clause 2.2(iii) of this Agreement
and Section 2.2(d) of the Trust Agreement) to keep the financial books and
records of the Trust, to prepare the financial statements of the Trust and to
prepare Trust tax returns, and (ii) should the Trustees fail to do so, may
select and engage attorneys acceptable to the Trustees to prepare annual,
semiannual and periodical reports, notices of meetings and proxy statements,
annual reports to Holders of the Securities and other documents required under
the Investment Company Act or the Securities Exchange Act of 1934.
Section 3.2. Merger. Any corporation or association into which the
Administrator may be converted or merged or with which it may be consolidated,
or to which it may sell or transfer its agency business and assets as a whole or
substantially as a whole, or any corporation or association resulting from any
such conversion, merger, consolidation, sale or transfer to which it is a party,
shall be and become the successor Administrator hereunder without the execution
or filing of any instrument or any further act, deed or conveyance on the part
of any of the parties hereto, provided that such corporation or association
meets the requirements set forth in the Trust Agreement.
Section 3.3. Compensation.
(a) For services to be rendered by the Administrator pursuant to this
Agreement, and for the payment of Trust expenses pursuant to Section 2.2(e) of
this Agreement, the Administrator shall receive only such fees and expenses as
shall be paid to it pursuant to the terms of the Expense Agreement and shall
have no recourse to the assets of the Trust for the payment of any such amounts.
(b) If and to the extent that the Trust shall request the Administrator
to render services for the Trust, other than those to be rendered by the
Administrator hereunder, and if the Administrator agrees to render such
services, such additional services shall be compensated separately on terms to
be agreed upon between the Administrator and the Trust from time to time.
Section 3.4. Indemnification. The Trust shall indemnify and hold the
Administrator harmless from and against any loss, damages, cost or expense
(including the costs of investigation, preparation for and defense of legal
and/or administrative proceedings related to a claim against it and reasonable
attorneys' fees and disbursements), liability or claim incurred by reason of any
inaccuracy in information
-5-
<PAGE> 9
furnished to the Administrator by the Trust, or any act or omission in the
course of, connected with or arising out of any services to be rendered
hereunder, provided that the Administrator shall not be indemnified and held
harmless from and against any such loss, damages, cost, expense, liability or
claim incurred by reason of its willful misfeasance, bad faith or gross
negligence in the performance of its duties, or its reckless disregard of its
duties and obligations hereunder. Such indemnity shall survive the resignation,
removal or discharge of the Administrator and the termination of this Agreement.
ARTICLE IV
RESIGNATION AND REMOVAL OF ADMINISTRATOR
Section 4.1. Removal.
(a) Subject to Section 4.4, the Trust may remove the Administrator by
written notice at any time if any of the following events shall occur:
(i) If the Administrator shall violate any provision of this
Agreement, the Trust Agreement or the Investment Company Act and, after
notice of such violation, shall not cure such default within 30 days;
or
(ii) If the Administrator ceases to meet the requirements set
forth in Section 2.2(a) of the Trust Agreement; or
(iii) If the Administrator shall be adjudged bankrupt or
insolvent by a court of competent jurisdiction, or a receiver,
conservator, liquidator, or trustee shall be appointed for or with
respect to the Administrator, or for all or substantially all of its
property, or a court of competent jurisdiction shall approve any
petition filed against the Administrator for its reorganization, and
such adjudication or order shall remain in force or unstayed for a
period of 30 days; or
(iv) If the Administrator shall institute proceedings for
voluntary bankruptcy, or shall file a petition seeking reorganization
under the Federal bankruptcy laws, or for relief under any law for the
relief of debtors, or shall consent to the appointment of a receiver or
conservator for or in respect of the Administrator for all or
substantially all of its property, or shall make a general assignment
for the benefit of its creditors, or shall admit in writing its
inability to pay its debts generally as they become due; or
(v) Upon the voluntary or involuntary dissolution of the
Administrator or, unless the Trust shall have given its prior written
consent thereto, the merger or consolidation of the Administrator with
any other entity; or
(vi) At any time upon 60 days' prior written notice.
-6-
<PAGE> 10
If any of the events specified in clauses (ii), (iii), (iv) or (v) of this
Section 4.1(a) shall occur, the Administrator shall give immediate written
notice thereof to the Trust.
(b) Subject to Section 4.4, the Administrator shall be removed
immediately upon (i) termination of the Trust Agreement, (ii) termination of the
Paying Agent Agreement, (iii) termination of the Collateral Agreement, (iv)
termination of the Custodian Agreement, or (v) the resignation or removal of the
Paying Agent, the Collateral Agent or the Custodian.
Section 4.2. Resignation. Subject to Section 4.4, the Administrator may
at any time resign by giving 60 days' written notice by registered or certified
mail to the Trust in accordance with the provisions of Section 6.3. Such
resignation shall take effect upon the appointment of a successor Administrator
by the Trust.
Section 4.3. Appointment of Successor. If the Administrator hereunder
shall resign or be removed, a successor may be appointed by the Trust by an
instrument or concurrent instruments in writing signed by the Trustees. Every
such successor Administrator appointed pursuant to the provisions of this
Agreement shall satisfy the requirements set forth in Section 2.2(a) of the
Trust Agreement.
Section 4.4. Effectiveness of Resignation or Removal. No resignation or
removal of the Administrator shall be effective until a successor Administrator
shall have been appointed and shall have accepted the duties of the
Administrator. If, within 30 days after notice by the Administrator to the Trust
or by the Trust to the Administrator of any such resignation or removal, no
successor Administrator shall have been selected and accepted the duties of the
Administrator, the Administrator may apply to a court of competent jurisdiction
for the appointment of a successor Administrator.
Section 4.5. Acceptance by Successor. Every successor Administrator
appointed hereunder shall execute, acknowledge and deliver to its predecessor
and also to the Trust an instrument in writing accepting such appointment
hereunder, whereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the estates, properties, rights,
powers, duties and obligations of its predecessors. Such predecessor shall,
nevertheless, on the written request of its successor or the Trust, execute and
deliver an instrument transferring to such successor all the estates,
properties, rights and powers of such predecessor hereunder. Every predecessor
Administrator shall forthwith deliver all records or other property of the Trust
then in its possession or custody to its successor.
ARTICLE V
RECORDS AND REPORTS
Section 5.1. Books and Records; Inspection and Copying. The
Administrator shall keep (or cause to be kept) appropriate, and reasonably
detailed and accurate,
-7-
<PAGE> 11
books and records of all its activities pursuant to this Agreement. The Trustees
shall have the right to inspect such books and records during the
Administrator's normal business hours upon reasonable request, and to make
copies of the same at the expense of the Trust.
Section 5.2. Access to Information. The Administrator shall make
available to each of the Trustees all information it receives and compiles with
respect to the Contract[S] and the Treasury Securities, the monies available to
the Trust, the financial condition of the Trust and all other relevant matters
concerning the Trust.
ARTICLE VI
MISCELLANEOUS
Section 6.1. Term of Agreement. This Agreement shall continue in effect
until the completion of the liquidation of the Trust in accordance with Section
8.3(c) of the Trust Agreement.
Section 6.2. No Assumption of Liability. By executing this Agreement,
none of the Trustees assumes any personal liability hereunder.
Section 6.3. Notices.
(a) All notices and other communications provided for in this
Agreement, unless otherwise specified, shall be in writing (including
transmittals by telex or telecopier) given at the addresses set forth in the
following sentences or at such other addresses as may be designated by notice
duly given in accordance with this Section 9.3 to each other party hereto. Until
such notice is given, (i) notices to the Administrator shall be directed to it
at The Chase Manhattan Bank, 450 West 33rd Street, New York, New York 10001,
Telecopier No. (212) 946-3638, Attention: Collateral Management Services; (ii)
notices to the Trust or the Trustees shall be directed to the Trustees at [850
Library Avenue, Suite 204, Newark, Delaware 19711, Telecopier: (302) 738-7210];
and (iii) notices to Seller[S] shall be directed to it at , Telecopier .
(b) Each such notice given pursuant to Section 6.3(a) shall be
effective (i) if sent by certified mail (return receipt requested), 72 hours
after being deposited in the United States mail, postage prepaid or five days
after being deposited in the mail of another country, postage prepaid; (ii) if
given by telex or telecopier, when such telex or telecopied notice is
transmitted (with electronic confirmation of transmission or verbal confirmation
of receipt); or (iii) if given by any other means, when delivered at the address
specified in this Section 6.3.
Section 6.4. Governing Law; Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
To the extent permitted by law, the unenforceability or invalidity of any
provision or provisions of this
-8-
<PAGE> 12
Agreement shall not render any other provision or provisions contained in this
Agreement unenforceable or invalid.
Section 6.5. Amendments; Waivers. Any provision of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Administrator and the Trust or, in
the case of a waiver, by the party against whom the waiver is to be effective.
No failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies provided in this
Agreement shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 6.6. Non-Assignability. This Agreement and the rights and
obligations of the parties hereunder may not be assigned or delegated by either
party without the prior written consent of the other party, and any purported
assignment without such consent shall be void.
Section 6.7. Provisions of Law to Control. This Agreement shall be
subject to the applicable provisions of the Investment Company Act and the rules
and regulations of the Commission thereunder. To the extent that any provisions
contained in this Agreement conflict with any applicable provisions of the
Investment Company Act or such rules and regulations, the latter shall control.
Section 6.8. No Third Party Rights; Successors and Assigns. This
Agreement is not intended and shall not be construed to create any rights in any
person other than the Administrator and the Trust and their respective
successors and assigns and no person shall assert any rights as third party
beneficiary hereunder. Whenever any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party.
All the covenants and agreements contained in this Agreement by or on behalf of
the Administrator and the Trust shall bind, and inure to the benefit of, their
respective successors and assigns whether so expressed or not, and shall be
enforceable by and inure to the benefit of the Trust and its successors and
assigns.
Section 6.9. Counterparts. This Agreement may be executed, acknowledged
and delivered in any number of counterparts, each of which shall be an original,
but all of which shall constitute a single agreement, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
-9-
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this Administration
Agreement to be duly executed and delivered as of the first date set forth
above.
THE ADMINISTRATOR:
THE CHASE MANHATTAN BANK,
as Administrator
By:
------------------------------
Name:
Title:
THE TRUST:
AMERITRADE AUTOMATIC COMMON
EXCHANGE SECURITY TRUST
By:
------------------------------
[Name],
as Trustee
By:
------------------------------
[Name],
as Trustee
By:
------------------------------
[Name],
as Trustee
<PAGE> 1
EXHIBIT 2.k.(ii)
================================================================================
PAYING AGENT AGREEMENT
Between
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.,
As Paying Agent,
and
AMERITRADE AUTOMATIC COMMON EXCHANGE SECURITY TRUST
------------------------------
Dated as of , 1999
------------------------------
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
DEFINITIONS; INTERPRETATION
<S> <C>
Section 1.1. Defined Terms...............................................................................1
Section 1.2. Interpretation..............................................................................2
ARTICLE II
PAYING AGENT
Section 2.1. Appointment of Paying Agent; Acceptance of Appointment......................................2
Section 2.2. Certificates and Notices....................................................................3
Section 2.3. Payments and Investments....................................................................3
Section 2.4. Instructions from Administrator.............................................................3
ARTICLE III
TRANSFER AGENT AND REGISTRAR
Section 3.1. Original Issue of Certificates..............................................................3
Section 3.2. Registry of Holders.........................................................................4
Section 3.3. Registration of Transfer of the Securities..................................................4
Section 3.4. Lost Certificates...........................................................................4
Section 3.5. Disposition of Canceled Certificates; Records...............................................4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE TRUST
Section 4.1. Representations and Warranties of the Trust.................................................4
ARTICLE V
DUTIES AND RIGHTS OF PAYING AGENT
Section 5.1. Duties......................................................................................5
Section 5.2. Conditions to the Duties of the Paying Agent................................................5
Section 5.3. Merger......................................................................................6
Section 5.4. Disclaimer..................................................................................6
Section 5.5. Compensation................................................................................6
Section 5.6. Indemnification.............................................................................6
</TABLE>
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<PAGE> 3
ARTICLE VI
RESIGNATION AND REMOVAL OF THE PAYING AGENT
<TABLE>
<S> <C>
Section 6.1. Removal.....................................................................................7
Section 6.2. Resignation.................................................................................8
Section 6.3. Appointment of Successor....................................................................8
Section 6.4. Effectiveness of Resignation or Removal.....................................................8
Section 6.5. Acceptance by Successor.....................................................................8
Section 6.6. Survival....................................................................................8
ARTICLE VII
MISCELLANEOUS
Section 7.1. Term of Agreement...........................................................................8
Section 7.2. No Assumption of Liability..................................................................9
Section 7.3. Notices.....................................................................................9
Section 7.4. Governing Law; Severability.................................................................9
Section 7.5. Amendments; Waivers.........................................................................9
Section 7.6. Non-Assignability...........................................................................9
Section 7.7. Provisions of Law to Control...............................................................10
Section 7.8. No Third Party Rights; Successors and Assigns..............................................10
Section 7.9. Counterparts...............................................................................10
</TABLE>
-ii-
<PAGE> 4
PAYING AGENT AGREEMENT
PAYING AGENT AGREEMENT, dated as of , 1999, between ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability company (the
"Paying Agent"), and Ameritrade Automatic Common Exchange Security Trust, a
trust organized under the laws of the State of New York under and by virtue of
an Amended and Restated Trust Agreement, dated as of , 1999 (such trust and the
trustees thereof acting in their capacity as such being referred to in this
Agreement as the "Trust").
WITNESSETH:
WHEREAS, the Trust is a non-diversified, closed-end management
investment company, as defined in the Investment Company Act of 1940 (the
"Investment Company Act"), formed to purchase and hold certain U.S. treasury
securities (the "Treasury Securities"), to enter into and hold [a] forward
purchase contract[S] (the "Contract[S]") with an existing shareholder [REVISE AS
NECESSARY] of Ameritrade Holding Corporation (the "Company") and to issue $
Trust Automatic Common Exchange Securities (the "Securities") to the public in
accordance with the terms and conditions of the Trust Agreement referred to
below; and
WHEREAS, the Trust desires to engage the services of the Paying Agent
to assume certain duties and responsibilities as the transfer agent, registrar
and paying agent with respect to the Securities upon the terms and conditions of
this Agreement; and
WHEREAS, the Paying Agent is qualified and willing to assume such
duties and responsibilities, subject to the supervision of the Trustees, on the
terms and conditions set forth in this Agreement;
NOW, THEREFORE, the parties, intending to be bound, agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1. Defined Terms.
(a) Capitalized terms used and not otherwise defined in this Agreement
have the respective meanings specified in the Trust Agreement.
(b) As used in this Agreement, the following terms have the following
meanings:
"Agreement" means this Paying Agent Agreement.
<PAGE> 5
"Company" has the meaning specified in the recitals to this
Agreement.
"Contract[S]" has the meaning specified in the recitals to
this Agreement.
"Investment Company Act" has the meaning specified in the
recitals to this Agreement.
"Paying Agent" has the meaning specified in the preamble to
this Agreement.
"Securities" has the meaning specified in the recitals to this
Agreement.
"Treasury Securities" has the meaning specified in the
recitals to this Agreement.
"Trust" has the meaning specified in the preamble to this
Agreement.
"Trust Agreement" means the Amended and Restated Trust
Agreement, dated as of , 1999, constituting the Trust.
Section 1.2. Interpretation.
(a) When a reference is made in this Agreement to Articles, Sections,
Exhibits or Schedules, such reference is to Articles or Sections of, or Exhibits
or Schedules to, this Agreement unless otherwise indicated.
(b) The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement and shall not be
deemed to limit or otherwise affect any of the provisions of this Agreement.
(c) Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(d) Any reference to any statute, regulation or agreement is a
reference to such statute, regulation or agreement as supplemented or amended
from time to time.
ARTICLE II
PAYING AGENT
Section 2.1. Appointment of Paying Agent; Acceptance of Appointment.
The Trust hereby appoints the Paying Agent, and the Paying Agent hereby accepts
such appointment, to provide the services enumerated in this Agreement. The
Paying Agent agrees to act in accordance with its standard procedures and the
written instructions of the Administrator and the provisions set forth in this
Article II as Paying Agent with
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<PAGE> 6
respect to the Securities. Without limiting the generality of the foregoing,
ChaseMellon Shareholder Services, L.L.C., as Paying Agent, agrees that it shall
establish and maintain the Trust Account as provided in the Trust Agreement,
subject to the provisions of Section 2.3.
Section 2.2. Certificates and Notices. The Trustees shall deliver, or
cause to be delivered, to the Paying Agent the certificates and notices required
to be delivered to the Paying Agent pursuant to the Trust Agreement, and the
Paying Agent shall mail or publish such certificates or notices as required by
the Trust Agreement, but the Paying Agent shall have no responsibility to
confirm or verify the accuracy of certificates or notices of the Trustees so
delivered.
Section 2.3. Payments and Investments. The Paying Agent shall make
payments out of the Trust Account as provided for in Article III of the Trust
Agreement. The Paying Agent shall effect the transactions set forth in Sections
2.3, 2.4, 2.5 and 8.3 of the Trust Agreement upon receipt of written
instructions to do so from the Administrator and shall invest monies on deposit
in the Trust Account in Temporary Investments in accordance with Section 3.5 of
the Trust Agreement. Except as otherwise specifically provided in this Agreement
or in the Trust 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 Investment to its maturity and shall apply the proceeds
thereof upon maturity to the payment of the next succeeding Quarterly
Distribution on the Securities. All such Temporary Investments shall be selected
from time to time by the Trustees or by the Administrator pursuant to standing
instructions from the Trustees to the Administrator, and the Paying Agent shall
have no liability to the Trust or any Holder or any other Person with respect to
the payment or performance of any such Temporary Investment.
Section 2.4. Instructions from Administrator. The Paying Agent shall
receive and execute all written instructions from the Administrator.
ARTICLE III
TRANSFER AGENT AND REGISTRAR
Section 3.1. Original Issue of Certificates. On the date the Securities
are originally issued and sold pursuant to the Underwriting Agreement,
certificates for the Securities shall be issued by the Trust, and, at the
request of the Trustees, registered in such names and such denominations as the
Underwriters shall have previously requested of the Trustees, executed manually
or in facsimile by the Managing Trustee and countersigned manually by the Paying
Agent. At no time shall the aggregate number of Securities represented by such
countersigned certificates exceed the number of then outstanding Securities.
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<PAGE> 7
Section 3.2. Registry of Holders. The Paying Agent shall maintain a
registry of the Holders of the Securities. In case of any written request or
demand for the inspection of the registry of the Trust or any other books in the
possession of the Paying Agent, the Paying Agent will notify the Trustees and
secure instructions as to whether to permit or refuse such inspection; provided,
however, that the Paying Agent reserves the right to exhibit the transfer books
or other books to any Person if it is advised by its counsel that its failure to
do so would be unlawful.
Section 3.3. Registration of Transfer of the Securities. The Paying
Agent shall register Securities for transfer or exchange, and shall countersign
and deliver new certificates in the name of the designated transferee or
transferees, upon surrender of the old certificates as provided in Section 5.2
of the Trust Agreement.
Section 3.4. Lost Certificates. The Paying Agent shall issue and
register replacement certificates for certificates represented to have been
destroyed, stolen or lost or for mutilated certificates, in each case as
provided in Section 5.3 of the Trust Agreement. Any request by the Trustees to
the Paying Agent to issue a replacement or new certificate pursuant to this
Section 3.4 shall be deemed to be a representation and warranty by the Trust to
the Paying Agent that such issuance will comply with any applicable provisions
of the law and the Trust Agreement and resolutions of the Trustees.
Section 3.5. Disposition of Canceled Certificates; Records. The Paying
Agent shall retain certificates that have been canceled in transfer or in
exchange and accompanying documentation in accordance with applicable rules and
regulations of the Commission for six calendar years from the date of such
cancellation, and shall make such records available during this period at any
time, or from time to time, for reasonable periodic, special, or other
examinations by representatives of the Commission and the Board of Governors of
the Federal Reserve System. Thereafter such records shall not be destroyed by
the Paying Agent but will be safely stored for possible future reference. In
case of any request or demand for the inspection of the register of the Trust or
any other books in the possession of the Paying Agent, the Paying Agent will
notify the Trustees and seek to secure instructions as to permitting or refusing
such inspection; provided, however, that the Paying Agent reserves the right to
exhibit the register or other records to any person in case it is advised by its
counsel that its failure to do so would (i) be unlawful, or (ii) expose it to
liability, unless the Trustees shall have offered indemnification satisfactory
to the Paying Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE TRUST
Section 4.1. Representations and Warranties of the Trust. The Trust
represents and warrants to the Paying Agent that:
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<PAGE> 8
(a) the Trust is a validly existing trust under the laws of
the State of New York and the Trustees have full power under the Trust
Agreement to execute and deliver this Agreement on behalf of the Trust
and to authorize, create and issue the Securities;
(b) this Agreement has been duly and validly authorized,
executed and delivered by the Trust and constitutes the valid and
binding agreement of the Trust enforceable against the Trust in
accordance with its terms, subject as to such enforceability to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to
general equitable principles;
(c) the form of the certificate evidencing the Securities
complies with all applicable laws of the State of New York;
(d) the Securities have been duly and validly authorized,
executed and delivered by the Trust and are validly issued;
(e) the offer and sale of the Securities has been registered
under the Securities Act and the Trust has been registered under the
Investment Company Act and no further action by or before any
governmental body or authority of the United States or of any state
thereof is required in connection with the execution and delivery of
this Agreement or the issuance of the Securities;
(f) the execution and delivery of this Agreement and the
issuance and delivery of the Securities do not and will not conflict
with, violate or result in a breach of, the terms, conditions or
provisions of, or constitute a default under, the Trust Agreement, any
law or regulation, any order or decree of any court or public authority
having jurisdiction over the Trust, or any mortgage, indenture,
contract[S], agreement or undertaking to which the Trust is a party or
by which it is bound; and
(g) no taxes are payable upon or in respect of the execution
of this Agreement or the issuance of the Securities.
ARTICLE V
DUTIES AND RIGHTS OF PAYING AGENT
Section 5.1. Duties. The Paying Agent is acting solely as agent for the
Trust hereunder and owes no fiduciary duties to any other Person by reason of
this Agreement.
Section 5.2. Conditions to the Duties of the Paying Agent. The
provisions of Section 8.1(a) of the Collateral Agreement shall apply, mutatis
mutandis, to the Paying
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<PAGE> 9
Agent in the performance of its duties hereunder as if it were the Collateral
Agent acting under the Collateral Agreement.
Section 5.3. Merger. Any corporation, association or limited liability
company into which the Paying Agent may be converted or merged or with which it
may be consolidated, or to which it may sell or transfer its agency business and
assets as a whole or substantially as a whole, or any corporation, association
or limited liability company resulting from any such conversion, merger,
consolidation, sale or transfer to which it is a party, shall be and become the
successor Paying Agent hereunder without the execution or filing of any
instrument or further act, deed or conveyance on the part of any of the parties
hereto, provided that such corporation, association or limited liability company
meets the requirements set forth in the Trust Agreement, and provided further
that the Trustees have given their prior written consent to the Administrator
with respect to any such merger, conversion, consolidation, sale or transfer.
Section 5.4. Disclaimer. The Paying Agent makes no representation as to
(a) the first two recitals of this Agreement or (b) the validity or adequacy of
the Securities.
Section 5.5. Compensation. For services to be rendered by the Paying
Agent pursuant to this Agreement, the Paying Agent shall receive only such fees
and expenses as shall be paid to it pursuant to the terms of the Expense
Agreement and the Indemnity Agreement and shall have no recourse to the assets
of the Trust for the payment of any such amounts.
Section 5.6. Indemnification. The Trust shall indemnify and hold the
Paying Agent harmless from and against any loss, damages, cost or expense
(including the costs of investigation, preparation for and defense of legal
and/or administrative proceedings related to a claim against it and reasonable
attorneys' fees and disbursements), liability or claim incurred by reason of any
inaccuracy in information furnished to the Paying Agent by the Trust, or any act
or omission in the course of, connected with or arising out of any services to
be rendered hereunder, provided that the Paying Agent shall not be indemnified
and held harmless from and against any such loss, damages, cost, expense,
liability or claim incurred by reason of its willful misfeasance, bad faith or
gross negligence in the performance of its duties, or its reckless disregard of
its duties and obligations hereunder. In no case will the Paying Agent be liable
for special, indirect, incidental or consequential loss or damages of any kind
whatsoever (including but not limited to lost profits), even if the Paying Agent
has been advised of the possibility of such damages.
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<PAGE> 10
ARTICLE VI
RESIGNATION AND REMOVAL OF THE PAYING AGENT
Section 6.1. Removal.
(a) Subject to Section 6.4, the Trust may remove the Paying Agent by
written notice at any time if any of the following events shall occur:
(i) If the Paying Agent shall violate any provision of this
Agreement, the Trust Agreement or the Investment Company Act and, after
notice of such violation, shall not cure such default within 30 days;
or
(ii) If the Paying Agent ceases to meet the requirements set
forth in Section 2.2(a) of the Trust Agreement; or
(iii) If the Paying Agent shall be adjudged bankrupt or
insolvent by a court of competent jurisdiction, or a receiver,
conservator, liquidator, or trustee shall be appointed for or with
respect to the Paying Agent, or for all or substantially all of
its property, or a court of competent jurisdiction shall approve any
petition filed against the Paying Agent for its reorganization, and
such adjudication or order shall remain in force or unstayed for a
period of 30 days; or
(iv) If the Paying Agent shall institute proceedings for
voluntary bankruptcy, or shall file a petition seeking reorganization
under the Federal bankruptcy laws, or for relief under any law for the
relief of debtors, or shall consent to the appointment of a receiver or
conservator for or in respect of the Paying Agent for all or
substantially all of its property, or shall make a general assignment
for the benefit of its creditors, or shall admit in writing its
inability to pay its debts generally as they become due; or
(v) Upon the voluntary or involuntary dissolution of the
Paying Agent or, unless the Trust shall have given its prior written
consent thereto, the merger or consolidation of the Paying Agent with
any other entity; or
(vi) at any time upon 60 days' prior written notice.
If any of the events specified in clauses (ii), (iii), (iv) or (v) of this
Section 6.1(a) shall occur, the Paying Agent shall give immediate written notice
thereof to the Trust.
(b) Subject to Section 6.4, the Paying Agent shall be removed
immediately upon (i) termination of the Trust Agreement, (ii) termination of the
Administration Agreement, (iii) termination of the Collateral Agreement, (iv)
termination of the Custodian Agreement, or (v) the resignation or removal of the
Administrator, the Collateral Agent or the Custodian.
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<PAGE> 11
Section 6.2. Resignation. Subject to Section 6.4, the Paying Agent may
at any time resign by giving 60 days' written notice by registered or certified
mail to the Trust in accordance with the provisions of Section 6.3. Such
resignation shall take effect upon the appointment of a successor Paying Agent
by the Trust.
Section 6.3. Appointment of Successor. If the Paying Agent hereunder
shall resign or be removed, a successor may be appointed by the Trust by an
instrument or concurrent instruments in writing signed by the Trustees. Every
such successor Paying Agent appointed pursuant to the provisions of this
Agreement shall satisfy the requirements set forth in Section 2.2(a) of the
Trust Agreement.
Section 6.4. Effectiveness of Resignation or Removal. No resignation or
removal of the Paying Agent shall be effective until a successor Paying Agent
shall have been appointed and shall have accepted the duties of the Paying
Agent. If, within 30 days after notice by the Paying Agent to the Trust or by
the Trust to the Paying Agent of any such resignation or removal, no successor
Paying Agent shall have been selected and accepted the duties of the Paying
Agent, the Paying Agent may apply to a court of competent jurisdiction for the
appointment of a successor Paying Agent, and the Trust shall pay all fees and
expenses, including but not limited to the cost of legal counsel, reasonably
incurred by the Paying Agent in applying to such court for the appointment of a
successor Paying Agent.
Section 6.5. Acceptance by Successor. Every successor Paying Agent
appointed hereunder shall execute, acknowledge and deliver to its predecessor
and also to the Trust an instrument in writing accepting such appointment
hereunder, whereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the estates, properties, rights,
powers, duties and obligations of its predecessors. Such predecessor shall,
nevertheless, on the written request of its successor or the Trust, execute and
deliver an instrument transferring to such successor all the estates,
properties, rights and powers of such predecessor hereunder. Every predecessor
Paying Agent shall forthwith deliver to the Trust or to any successor Paying
Agent as requested by the Trust (i) copies of all books and records maintained
by it and (ii) any funds deposited with the Paying Agent by the Trust.
Section 6.6. Survival. The Trust's representations, warranties,
covenants and obligations to the Paying Agent under Article IV and Sections 5.5
and 5.6 shall survive the termination of this Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Term of Agreement. This Agreement shall continue in effect
until the completion of the liquidation of the Trust in accordance with Section
8.3(c) of the Trust Agreement.
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<PAGE> 12
Section 7.2. No Assumption of Liability. By executing this Agreement,
none of the Trustees assumes any personal liability hereunder.
Section 7.3. Notices.
(a) All notices and other communications provided for in this
Agreement, unless otherwise specified, shall be in writing (including
transmittals by telex or telecopier) given at the addresses set forth in the
following sentences or at such other addresses as may be designated by notice
duly given in accordance with this Section 7.3 to each other party hereto. Until
such notice is given, (i) notices to the Paying Agent shall be directed to it at
ChaseMellon Shareholder Services, L.L.C., 450 West 33rd Street, New York, New
York 10001, Telecopier No. (212) 947-7628, Attention [Robert Kavanagh]; and (ii)
notices to the Trust or the Trustees shall be directed to the [Trustees at 850
Library Avenue, Suite 204, Newark, Delaware 19711, Telecopier: (302) 738-7210]
with a copy to the Administrator at The Chase Manhattan Bank, 450 West 33rd
Street, New York, New York 10001, Telecopier No. (212) 946-3638, Attention:
Pledged Asset Control Services.
(b) Each such notice given pursuant to Section 7.3(a) shall be
effective (i) if sent by certified mail (return receipt requested), 72 hours
after being deposited in the United States mail, postage prepaid; (ii) if given
by telex or telecopier, when such telex or telecopied notice is transmitted
(with electronic confirmation of transmission or verbal confirmation of
receipt); or (iii) if given by any other means, when delivered at the address
specified in this Section 7.3.
Section 7.4. Governing Law; Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
To the extent permitted by law, the unenforceability or invalidity of any
provision or provisions of this Agreement shall not render any other provision
or provisions contained in this Agreement unenforceable or invalid.
Section 7.5. Amendments; Waivers. Any provision of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Paying Agent and the Trust or, in
the case of a waiver, by the party against whom the waiver is to be effective.
No failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies provided in this
Agreement shall be cumulative and not exclusive of any rights or remedies
provided by law. The Trustees shall notify the Paying Agent of any change in the
Trust Agreement prior to the effective date of any such change.
Section 7.6. Non-Assignability. This Agreement and the rights and
obligations of the parties hereunder may not be assigned or delegated by either
party without the prior written consent of the other party, and any purported
assignment without such consent shall be void.
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<PAGE> 13
Section 7.7. Provisions of Law to Control. This Agreement shall be
subject to the applicable provisions of the Investment Company Act and the rules
and regulations of the Commission thereunder. To the extent that any provisions
contained in this Agreement conflict with any applicable provisions of the
Investment Company Act or such rules and regulations, the latter shall control.
Section 7.8. No Third Party Rights; Successors and Assigns. This
Agreement is not intended and shall not be construed to create any rights in any
person other than the Paying Agent and the Trust and their respective successors
and assigns and no person shall assert any rights as third party beneficiary
hereunder. Whenever any of the parties hereto is referred to, such reference
shall be deemed to include the successors and assigns of such party. All the
covenants and agreements contained in this Agreement by or on behalf of the
Paying Agent and the Trust shall bind, and inure to the benefit of, their
respective successors and assigns whether so expressed or not, and shall be
enforceable by and inure to the benefit of the Trust and its successors and
assigns.
Section 7.9. Counterparts. This Agreement may be executed, acknowledged
and delivered in any number of counterparts, each of which shall be an original,
but all of which shall constitute a single agreement, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Paying Agent
Agreement to be duly executed and delivered as of the first date set forth
above.
THE PAYING AGENT:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C., as Paying Agent
By:
--------------------------------
Name:
Title:
THE TRUST:
AMERITRADE AUTOMATIC COMMON
EXCHANGE SECURITY TRUST
By:
--------------------------------
[Name]
as Trustee
By:
--------------------------------
[Name]
as Trustee
By:
--------------------------------
[Name]
as Trustee
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<PAGE> 1
EXHIBIT 2.k.(iii)
================================================================================
PURCHASE AGREEMENT
Between
,
As Seller
and
AMERITRADE AUTOMATIC COMMON EXCHANGE SECURITY TRUST,
As Purchaser
--------------------------------------------
Dated as of , 1999
--------------------------------------------
================================================================================
<PAGE> 2
Table of Contents
<TABLE>
<CAPTION>
Page
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ARTICLE I
DEFINITIONS; INTERPRETATION
<S> <C>
Section 1.1. Defined Terms.................................................................2
Section 1.2. Interpretation................................................................8
ARTICLE II
SALE AND PURCHASE
Section 2.1. Sale and Purchase.............................................................8
Section 2.2. Purchase Price................................................................9
Section 2.3. Payment for and Delivery of Contract Stock....................................9
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of Seller.....................................12
Section 3.2. Representations and Warranties of Purchaser..................................12
ARTICLE IV
CONDITIONS TO PURCHASER'S OBLIGATIONS
Section 4.1. Condition to Delivery of Firm Purchase Price.................................12
Section 4.2. Condition to Delivery of Additional Purchase Price...........................12
ARTICLE V
COVENANTS
Section 5.1. Covenants of Seller..........................................................12
Section 5.2. Further Assurances...........................................................13
ARTICLE VI
ADJUSTMENTS TO EXCHANGE RATE, APPRECIATION THRESHOLD PRICE,
INITIAL PRICE AND CLOSING PRICE; REORGANIZATION EVENTS
Section 6.1. Dilution Adjustments.........................................................14
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
Section 6.2. Adjustment for Consolidation, Merger or Other Reorganization Event.........17
Section 6.3. Spin-Off Distributions.....................................................18
Section 6.4. Adjustments with Respect to Marketable Securities..........................18
ARTICLE VII
ACCELERATION UPON AN EVENT OF DEFAULT
Section 7.1. Events of Default..........................................................19
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Adjustments of Exchange Rate; Selection of Independent Investment
Banking Firm............................................................20
Section 8.2. No Assumption of Liability.................................................20
Section 8.3. Notices....................................................................20
Section 8.4. Governing Law; Severability................................................20
Section 8.5. Entire Agreement...........................................................20
Section 8.6. Amendments; Waivers........................................................21
Section 8.7. Non-Assignability..........................................................21
Section 8.8. No Third Party Rights; Successors and Assigns..............................21
Section 8.9. Counterparts...............................................................21
</TABLE>
Exhibits
Exhibit A - Form of Certificate for Extension of Exchange Date
-ii-
<PAGE> 4
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of , 1999, between [REVISE AS
NECESSARY] ("Seller"), and Ameritrade Automatic Common Exchange Security Trust,
a trust organized under the laws of the State of New York under and by virtue of
an Amended and Restated Trust Agreement, dated as of , 1999 (such trust and the
trustees thereof acting in their capacity as such being referred to in this
Agreement as "Purchaser").
WITNESSETH:
WHEREAS, Seller owns Class A Common Stock, par value $0.01 per share
(the "Class A Common Stock"), of Ameritrade Holding Corporation, a Delaware
corporation (the "Company"); and
WHEREAS, Purchaser has filed with the Securities and Exchange
Commission a registration statement on Form N-2 contemplating the offering of up
to - $- Trust Automatic Common Exchange Securities (the "Securities"), the terms
of which contemplate delivery by Purchaser to the holders of such Securities of
a number of shares of Class A Common Stock (or, in certain circumstances, cash
in lieu of such Stock) on the Exchange Date referred to below; and
WHEREAS, Seller has agreed, pursuant to the Collateral Agreement,
dated as of -, 1999 (the "Collateral Agreement"), among Seller, as Pledgor, The
Chase Manhattan Bank, as collateral agent, and Purchaser to grant to the
Collateral Agent, for the benefit of Purchaser, a security interest in Class A
Common Stock and, in certain circumstances, certain other collateral to secure
the obligations of Seller under this Agreement; and
WHEREAS, Purchaser has agreed, pursuant to an underwriting agreement,
dated -, 1999 (the "Underwriting Agreement"), among Purchaser, Seller, the
Company, and Goldman Sachs & Co., as representatives of the several underwriters
named in such agreement (the "Underwriters"), to issue and sell to the
Underwriters an aggregate of - Securities (the "Firm Securities") and, at the
Underwriters' option, up to - additional Securities (such additional Securities
as the Underwriters shall actually purchase pursuant to the Underwriting
Agreements, the "Optional Securities") to cover overallotments; [REVISE AS
NECESSARY]
NOW, THEREFORE, the parties to this Agreement, intending to be bound,
agree as follows:
<PAGE> 5
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1. Defined Terms. As used in this Agreement, the following
terms have the following meanings:
"Accelerated Portion" means, in relation to any Cash Merger, the
portion of the Merger Consideration, other than Marketable Securities,
that has a Value equal to the amount determined by multiplying the
Basic Reorganization Event Amount by a fraction, the numerator of
which is the Value of the portion of the Merger Consideration
delivered in exchange for a single share of Class A Common Stock that
consists of assets other than Marketable Securities, and the
denominator of which is the aggregate Transaction Value of the Merger
Consideration received in exchange for a single Share of Class A
Common Stock.
"Additional Purchase Price" has the meaning specified in Section
2.2(b).
"Additional Stock Base Amount" means a number equal to the number of
Optional Securities that the Underwriters elect to purchase under the
Underwriting Agreement.
"Additional Stock" has the meaning specified in Section 2.1(b).
"Additional Treasury Securities" means the U.S. Government Securities
purchased by Purchaser pursuant to section 2.3(b)(ii) of the Trust
Agreement for settlement at the Second Time of Delivery.
"Administrator" means The Chase Manhattan Bank, administrator for
Purchaser under the Administration Agreement, dated as of [Date],
between the Administrator and Purchaser, or its successor in such
capacity, or any other Administrator appointed pursuant to the Trust
Agreement.
"Agreement" means this Purchase Agreement.
"Appreciation Threshold Price" has the meaning specified in Section
2.1(c).
"Average Market Price" per share of Class A Common Stock or share of
Marketable Securities on any date means the average Closing Price of a
share of Class A Common Stock or share of Marketable Securities for
the Calculation Period consisting of the 20 Trading Days immediately
prior to but not including such date; provided that if no Closing
Price for the Class A Common Stock or Marketable Securities is
determined for one or more (but
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<PAGE> 6
not all) of such Trading Days, such Trading Days shall be disregarded
in the calculation of the Average Market Price (but no additional
Trading Days shall be added to the Calculation Period). If no Closing
Price for the Class A Common Stock or Marketable Securities may be
determined for any of such Trading Days, the Average Market Price
shall be the Closing Price for the Class A Common Stock or Marketable
Securities for the most recent Trading Day prior to such 20 Trading
Days for which a Closing Price for the Class A Common Stock or
Marketable Securities may be determined pursuant to the definition of
"Closing Price". Notwithstanding the foregoing, for purposes of
determining the payment required upon cash settlement of this
Agreement in connection with a Rollover Offering, "Average Market
Price" means the Closing Price per share of Class A Common Stock or
share of Marketable Securities on the Trading Day immediately
preceding the date that the Rollover Offering is priced (the "Pricing
Date") or, if the Rollover Offering is priced after 4:00 P.M., New
York City time, on the Pricing Date, the Closing Price per share on
the Pricing Date.
"Basic Reorganization Event Amount" has the meaning provided in
Section 6.2(a).
"Business Day" means a day on which the NYSE is open for trading and
that is not a day on which commercial banks in The City of New York
are authorized or obligated by law to close.
"Calculation Period" means any period of Trading Days for which an
average security price must be determined pursuant to this Agreement.
"Cash Merger" has the meaning specified in Section 6.2(b).
"Cash Settlement Alternative" has the meaning provided in Section
2.3(d).
"Class A Common Stock" has the meaning specified in the recitals to
this Agreement.
"Closing Price" of any common equity security on any date of
determination means the closing sale price (or, if no closing sale
price is reported, the last reported sale price) of such common equity
security as reported on the NYSE Consolidated Tape on such date of
determination or, if such common equity security is not listed for
trading on the NYSE on such date, as reported in the composite
transactions for the principal United States national or regional
securities exchange on which such common equity security is so listed,
or if such common equity security is not so listed on a United States
national or regional securities exchange on such date, as reported by
the NASDAQ National Market or, if such common equity security is not
so reported on such date, the last quoted bid
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price for such common equity security in the over-the-counter market
as reported by the National Quotation Bureau or any similar
organization; provided that if any event that results in an adjustment
to the number of Class A Common Stock or Stock of Marketable
Securities deliverable under this Agreement pursuant to Article VI
occurs during any Calculation Period, the Closing Price as determined
pursuant to the foregoing for each Trading Day in the Calculation
Period occurring prior to the day on which such adjustment is effected
will be adjusted in accordance with Article VI to reflect the
occurrence of such event.
"Collateral Agent" means The Chase Manhattan Bank, in its capacity as
Collateral Agent under the Collateral Agreement, or its successor in
such capacity, or any other Collateral Agent appointed pursuant to the
Trust Agreement.
"Collateral Agreement" has the meaning specified in the recitals to
this Agreement.
"common equity security" means any security of any class of capital
stock (whether voting or non-voting) that has no preference in respect
of dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the issuer of
such capital stock and that is not subject to redemption by the issuer
of such capital stock.
"Company" has the meaning specified in the recitals to this Agreement.
"Company Successor" has the meaning specified in Section 6.2.
"Contract Stock" has the meaning specified in Section 2.1(b).
"Custodian" means The Chase Manhattan Bank, as custodian for Purchaser
under the Custodian Agreement, dated as of [Date], between the
Custodian and Purchaser, or its successor in such capacity, or any
other Custodian appointed pursuant to the Trust Agreement.
"Dilution Adjustment" means any fraction or number by which the
Exchange Rate shall be multiplied pursuant to Section 6.1(a), (b), (c)
or (d).
"Event of Default" has the meaning specified in Section 7.1.
"Excess Purchase Payment" means the excess, if any, of (x) 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 final) of all other
consideration paid by the Company with respect to one Share of Class A
Common Stock acquired in
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a tender offer or exchange offer by the Company, over (y) the Then-
Current Market Price of the Class A Common Stock.
"Exchange Date" means [CLOSING DATE], 2002, subject to (i) extension
by Seller pursuant to Section 2.3(e) and (ii) subsequent acceleration
by Seller pursuant to Section 2.3(f).
"Exchange Rate" has the meaning specified in Section 2.1(c).
"Firm Purchase Price" has the meaning specified in Section 2.2(a).
"Firm Securities" has the meaning specified in the recitals to this
Agreement.
"Firm Stock Base Amount" means shares of Class A Common Stock.
"Firm Stock" has the meaning specified in Section 2.1(a).
"First Time of Delivery" means the First Time of Delivery specified
pursuant to section 2 of the Underwriting Agreement.
"Initial Price" has the meaning specified in Section 2.1(c).
"Liens" means any lien, mortgage, security interest, pledge, charge,
encumbrance or adverse claim of any kind.
"Marketable Securities" means any common equity securities listed on a
U.S. national or regional securities exchange or reported by the
NASDAQ National Market.
"Merger Consideration" has the meaning specified in Section 6.2(a).
"NYSE" means the New York Stock Exchange, Inc.
"Optional Securities" has the meaning specified in the recitals to
this Agreement.
"Permitted Dividend" means any quarterly cash dividend in respect of
the Class A Common Stock, except to the extent that the per share
amount of such dividend results in an annualized dividend yield on the
Class A Common Stock in excess of 12.5%.
"Pricing Date" has the meaning specified in the definition of "Average
Market Price".
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"Purchaser" has the meaning specified in the preamble to this
Agreement.
"Reorganization Event" has the meaning specified in Section 6.2.
"Rollover Offering" means a reoffering or refinancing of Securities
effected not earlier than [CLOSING DATE], 2000 by means of a completed
public offering or offerings, or another similar offering (which may
include one or more exchange offers), by or on behalf of Seller.
"Second Time of Delivery" means the Second Time of Delivery specified
pursuant to Section 2 of the Underwriting Agreement.
"Securities" has the meaning specified in the recitals to this
Agreement.
"Seller" has the meaning specified in the preamble to this Agreement.
"Spin-Off Distribution" means a distribution by the Company to holders
of Class A Common Stock of Marketable Securities issued by an issuer
other than the Company.
"Then-Current Market Price" of the Class A Common Stock means the
average Closing Price per share of Class A Common Stock for the
Calculation Period consisting of five Trading Days immediately prior
to the time such adjustment is effected (or, in the case of an
adjustment effected at the opening of business on the Business Day
next following a record date as described in Section 6.1(f)(i),
immediately prior to the earlier of the time such adjustment is
effected and the related ex-date); provided that if no Closing Price
for the Class A Common Stock is determined for one or more (but not
all) of such Trading Days, such Trading Days shall be disregarded in
the calculation of the Then-Current Market Price (but no additional
Trading Days shall be added to the Calculation Period). If no Closing
Price for the Class A Common Stock may be determined for any of such
Trading Days, the Then-Current Market Price shall be the Closing Price
for the Class A Common Stock for the most recent Trading Day prior to
such five Trading Days for which a Closing Price for the Class A
Common Stock may be determined pursuant to the definition of "Closing
Price". The "ex-date" with respect to any dividend, distribution or
issuance shall mean the first date on which the Class A Common Stock
trade regular way on their principal market without the right to
receive such dividend, distribution or issuance.
"Trading Day" in respect of any common equity security means a day on
which such common equity security (A) is not suspended from trading on
any United States national or regional securities exchange or
association or over-the-counter market at the close of business and
(B) has traded at
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least once on the United States national or regional securities
exchange or association or over-the-counter market that is the primary
market for the trading of such security.
"Transaction Value" means, with respect to any Reorganization Event,
the sum of: (x) for any cash received in such Reorganization Event,
the amount of such cash received per share of Class A Common Stock;
(y) for any property other than cash or Marketable Securities received
in such Reorganization Event, an amount equal to the market value on
the date such Reorganization Event is consummated of such property
received per share of Class A Common Stock (as determined by a
nationally recognized independent investment banking firm retained for
this purpose by the Administrator, whose determination shall be
final); and (z) for any Marketable Securities received in such
Reorganization Event, an amount equal to the average Closing Price per
share of such Marketable Securities for the Calculation Period
consisting of 20 Trading Days immediately prior to the Exchange Date
(or, in the case of a Cash Merger, for the Calculation Period
consisting of the 20 Trading Days immediately prior to the date the
Reorganization Event is consummated), multiplied by the number of such
Marketable Securities received for each share of Class A Common Stock;
provided that if no Closing Price for such Marketable Securities may
be 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
may be determined for any of such Trading Days, the calculation in the
preceding clause (z) shall be based on the Closing Price for the
Marketable Securities for the most recent Trading Day prior to such 20
Trading Days for which a Closing Price for the Marketable Securities
may be determined pursuant to the definition of "Closing Price".
"Transfer Restrictions" has the meaning provided in the Collateral
Agreement.
"Transferred Securities" has the meaning specified in Section 2.3(g).
"Trust Agreement" means the Amended and Restated Trust Agreement,
dated as of [Date], constituting Ameritrade Automatic Common Exchange
Security Trust.
"Underwriters" has the meaning specified in the recitals to this
Agreement.
"Underwriting Agreement" has the meaning specified in the recitals to
this Agreement. [REVISE AS NECESSARY]
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"U.S. Government Securities" means direct obligations of the United
States of America.
"Value" means (i) in respect of cash, the amount of such cash; (ii) in
respect of any property other than cash or Marketable Securities, an
amount equal to the market value on the date the relevant
Reorganization Event is consummated (as determined by a nationally
recognized independent investment banking firm retained for this
purpose by the Administrator, whose determination shall be final); and
(iii) in respect of any share of Marketable Securities, an amount
equal to the average Closing Price per share of such Marketable
Securities for the Calculation Period consisting of the 20 Trading
Days immediately prior to the date the relevant Reorganization Event
is consummated; provided that if no Closing Price for such Marketable
Securities may be 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 may be determined for any of such
Trading Days, the calculation in the preceding clause (iii) shall be
based on the Closing Price for the Marketable Securities for which a
Closing Price for the Marketable Securities may be determined pursuant
to the definition of "Closing Price".
Section 1.2. Interpretation.
(a) When a reference is made in this Agreement to Articles, Sections,
Exhibits or Schedules, such reference is to Articles or Sections of, or Exhibits
or Schedules to, this Agreement unless otherwise indicated.
(b) The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement, and shall not be
deemed to limit or otherwise affect any of the provisions of this Agreement.
(c) Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".
(d) Any reference to any statute, regulation or agreement is a
reference to such statute, regulation or agreement as supplemented or amended
from time to time.
ARTICLE II
SALE AND PURCHASE
Section 2.1. Sale and Purchase.
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(a) Firm Stock. Upon the terms and subject to the conditions of this
Agreement, Seller agrees to sell to Purchaser on the Exchange Date, and
Purchaser agrees to purchase from Seller on the Exchange Date, the number of
shares of Class A Common Stock (the "Firm Stock") equal to the product of the
Firm Share Base Amount and the Exchange Rate.
(b) Additional Stock. Upon the terms and subject to the conditions of
this Agreement, if the Underwriters exercise the option to purchase Optional
Securities pursuant to the Underwriting Agreement, Seller agrees to sell to
Purchaser on the Exchange Date, and Purchaser agrees to purchase from Seller on
the Exchange Date, the number of additional shares of Class A Common Stock (the
"Additional Stock") equal to the product of the Additional Share Base Amount and
the Exchange Rate. If the Underwriters exercise their option to purchase
Optional Securities pursuant to the Underwriting Agreement, Purchaser shall
notify Seller in writing that Purchaser will purchase the Additional Stock on
the Exchange Date, which notice shall specify the Additional Share Base Amount
and the Second Time of Delivery. The Firm Stock and the Additional Stock (if
any) are collectively referred to in this Agreement as the "Contract Stock".
(c) Exchange Rate. The "Exchange Rate" shall be the rate determined in
accordance with the following formula, subject to adjustment as provided in
Article VI:
(i) if the Average Market Price is less than $ (the "Appreciation
Threshold Price") but equal to or greater than $ (the "Initial
Price"), a fraction (rounded upward or downward to the nearest
1/10,000th or, if there is not a nearest 1/10,000th, to the next lower
1/10,000th) equal to the Initial Price divided by the Average Market
Price;
(ii) if the Average Market Price is equal to or greater than the
Appreciation Threshold Price, ; and
(iii) if the Average Market Price is less than the Initial Price, 1.
Section 2.2. Purchase Price.
(a) Firm Purchase Price. The purchase price for the Firm Stock (the
"Firm Purchase Price") shall be $ in cash.
(b) Additional Purchase Price. The purchase price for the Additional
Stock (the "Additional Purchase Price") shall be an amount equal to the
difference between (i) the aggregate proceeds to Purchaser from the sale of the
Optional Securities and (ii) the aggregate cost to Purchaser, as notified by
Purchaser to Seller at the Second Time of Delivery, of the Additional Treasury
Securities.
Section 2.3. Payment for and Delivery of Contract Stock.
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(a) First Time of Delivery. Upon the terms and subject to the
conditions of this Agreement, Purchaser shall deliver to Seller the Firm
Purchase Price at the First Time of Delivery, at the offices of Mayer, Brown &
Platt, 190 South LaSalle Street, Chicago, Illinois , or at such other
place as shall be agreed upon by Purchaser and Seller, paid by wire transfer to
an account designated by Seller, in Federal (immediately available) funds.
(b) Second Time of Delivery. Upon the terms and subject to the
conditions of this Agreement, Purchaser shall deliver to Seller the Additional
Purchase Price at the Second Time of Delivery at the offices of Mayer, Brown &
Platt, 190 South LaSalle Street, Chicago, Illinois , or at such other
place as shall be agreed upon by Purchaser and Seller, paid by wire transfer to
an account designated by Seller, in Federal (immediately available) funds.
(c) Sale and Delivery of Contract Stock. Seller agrees to sell and
deliver the Contract Stock to Purchaser on the Exchange Date. Unless Seller
elects the Cash Settlement Alternative as provided in Section 2.3(d), sale and
delivery shall be effected by delivery by the Collateral Agent to the Custodian,
for the account of Purchaser, of Class A Common Stock then held by the
Collateral Agent as collateral under the Collateral Agreement, in an amount
equal to the number of shares of Contract Stock, rounded down to the nearest
whole number. Seller agrees to make a cash payment in respect of any fractional
shares included in the Contract Stock at the Exchange Date, in an amount equal
to the value of such fractional shares at the Average Market Price. In addition,
if the difference between (A) the aggregate proceeds of any sale (net of any
brokerage or related expenses) of any Class A Common Stock or Marketable
Securities sold by Purchaser pursuant to Section 2.4(g)(ii) of the Trust
Agreement and (B) the product of the number of shares of Class A Common Stock or
Marketable Securities so sold and the Average Market Price, is negative, Seller
shall pay such difference to Purchaser; if such difference is positive,
Purchaser shall pay the difference to Seller. Notwithstanding the foregoing, if
a Reorganization Event shall have occurred prior to the Exchange Date then, in
lieu of the foregoing, delivery shall be effected as follows: (i) in the case of
any cash required to be delivered on the Exchange Date as provided in Section
6.2, by wire transfer to an account designated by Purchaser, in Federal
(immediately available) funds; (ii) in the case of any Marketable Securities to
be delivered in lieu of cash as provided in Section 6.2, by delivery by the
Collateral Agent to the Custodian, for the account of Purchaser, of the
applicable number of Marketable Securities then held as collateral under the
Collateral Agreement, as provided in Section 5.7 of the Collateral Agreement;
and (iii) in the case of any cash included in the Accelerated Portion as
provided in Section 6.2(b), by wire transfer as provided in clause (i) above or
in the case of any non-cash assets included in such Accelerated Portion, by
delivery of such assets to the Custodian, for the account of Purchaser.
(d) Cash Settlement Alternative. At its option, Seller may deliver to
Purchaser on the Exchange Date (whether or not extended pursuant to Section
2.3(e) or accelerated pursuant to Section 2.3(f)), in lieu of the Contract
Stock, an amount in cash equal to the Average Market Price of the Contract Stock
on the Exchange Date (the "Cash
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<PAGE> 14
Settlement Alternative"), paid by wire transfer to an account designated by
Purchaser, in Federal (immediately available) funds; provided that if Seller
elects the Cash Settlement Alternative in connection with a Rollover Offering,
as provided below, and such Rollover Offering has been consummated on or before
the Exchange Date, such cash payment shall be made not later than the fifth
Trading Day after the Exchange Date. Seller may elect the Cash Settlement
Alternative in respect of all, but not less than all, Contract Stock and may do
so by notice to Purchaser, the Collateral Agent and the Custodian not less than
35 days prior to the Exchange Date as then in effect (specifying whether such
cash settlement is being made in connection with a Rollover Offering). If Seller
elects the Cash Settlement Alternative, Purchaser shall provide notice of such
election (specifying whether such cash settlement is being made in connection
with a Rollover Offering) to the holders of the Securities, not less than 30 nor
more than 90 days prior to the Exchange Date as then in effect.
(e) Extension of Exchange Date at Election of Purchaser. Seller may,
at its option, by notice to Purchaser not earlier than May , 2002, and not
later than June o, 2002, elect to extend the Exchange Date to October , 2002,
and the number of shares of Contract Stock and amount of cash to be delivered
pursuant to Section 2.3(c) shall be calculated as of such extended Exchange
Date; provided that such extension shall be effective only if, on or before the
date of such notice, Seller shall have:
(i) delivered to the Custodian, for the account of and subject to
the exclusive control of Purchaser, free and clear of any Liens and
Transfer Restrictions, U.S. Government Securities that, through the
scheduled payment of principal and interest in accordance with their
terms, will provide, not later than one Business Day before October ,
2002, cash in an amount equal to not less than the product of (1) $
and (2) the sum of the Firm Share Base Amount and the Additional Share
Base Amount; and
(ii) delivered to Purchaser (1) a certificate of Seller
substantially in the form of Exhibit A and dated the date of such
delivery (A) identifying the U.S. Government Securities being
transferred, (B) certifying that with respect to such U.S. Government
Securities the representations and warranties contained in Exhibit A
are true and correct on and as of the date of such transfer, and (C)
certifying that such U.S. Government Securities satisfy the conditions
set forth in Section 2.3(e)(i); and (2) an opinion, dated the date of
such delivery, of counsel addressed to Purchaser confirming the
representations contained in the second sentence of paragraph 2(c) of
Exhibit A.
In addition, Seller hereby covenants and agrees to take all other actions
necessary to cause Purchaser to be a protected purchaser of such U.S. Government
Securities, within the meaning of Article 8 of the New York Uniform Commercial
Code.
If Seller elects to extend the Exchange Date, Purchaser shall provide
notice of such election to the holders of the Securities not later than June ,
2002.
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(f) Acceleration of Exchange Date at Election of Purchaser. At any
time after the Exchange Date has been extended pursuant to Section 2.3(e),
Seller may, at its option in connection with the consummation of a Rollover
Offering, accelerate the Exchange Date to any date on or after July , 2002, by
notice to Purchaser not later than 10:00 a.m. on the date to which the Exchange
Date is accelerated, and the number of shares of Contract Stock and amount of
cash to be delivered pursuant to Section 2.3(c) shall be calculated as of such
accelerated Exchange Date; provided that such acceleration shall be effective
only if, at or prior to 10:00 a.m. on such accelerated Exchange Date, Seller
shall have paid to Purchaser, by wire transfer to an account designated by the
Custodian, in Federal (immediately available) funds, an amount equal to the
product of (i) the aggregate accrued and unpaid quarterly distributions on each
Security (computed on the basis of a quarterly distribution of $ and a 360-day
year comprised of twelve 30-day months) and (ii) the sum of the Firm Share Base
Amount and the Additional Share Base Amount. Upon receipt of such amount in
Federal (immediately available) funds, Purchaser shall promptly deliver to
Seller, free and clear of any Liens and Transfer Restrictions, the U.S.
Government Securities previously delivered by Seller to Purchaser pursuant to
Section 2.3(e)(i) (together with any payments received by Purchaser before the
date of such transfer in respect of such U.S. Government Securities).
If Seller elects to accelerate the Exchange Date, Purchaser shall
provide notice of such election to the holders of the Securities not later than
the accelerated Exchange Date.
(g) Satisfaction of Obligations. Notwithstanding any other provision
of this Agreement, if on or prior to the Exchange Date as then in effect, Seller
transfers Securities to Purchaser, free and clear of any Liens and Transfer
Restrictions, for cancellation (any Securities so transferred being referred to
in this Agreement as the "Transferred Securities") then the number of shares of
Contract Stock deliverable by Seller pursuant to this Agreement shall be reduced
by a number equal to the product of (i) the number of shares of Contract Stock
before giving effect to any such transfers and (ii) a fraction, the numerator of
which is the number of Transferred Securities and the denominator of which is
the sum of the Firm Stock Base Amount and the Additional Stock Base Amount
(rounded down to the nearest whole share).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of Seller. Seller
represents and warrants to Purchaser that each representation and warranty made
by Seller pursuant to section 1(b) of the Underwriting Agreement [REVISE AS
NECESSARY] is true and correct on the date of this Agreement.
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Section 3.2. Representations and Warranties of Purchaser. Purchaser
represents and warrants to Seller that each representation and warranty made by
Purchaser pursuant to section 1(a) of the Underwriting Agreement [REVISE AS
NECESSARY] is true and correct on the date of this Agreement.
ARTICLE IV
CONDITIONS TO PURCHASER'S OBLIGATIONS
Section 4.1. Condition to Delivery of Firm Purchase Price. The
obligation of Purchaser to deliver the Firm Purchase Price at the First Time of
Delivery is subject to the condition that the purchase by the Underwriters of
the Firm Securities pursuant to the Underwriting Agreement shall have been
consummated as contemplated under the Underwriting Agreement.
Section 4.2. Condition to Delivery of Additional Purchase Price. The
obligation of Purchaser to deliver the Additional Purchase Price at the Second
Time of Delivery is subject to the condition that the purchase by the
Underwriters of the Optional Securities shall have been consummated as
contemplated under the Underwriting Agreement.
ARTICLE V
COVENANTS
Section 5.1. Covenants of Seller.
(a) Taxes. Seller shall pay any and all documentary, stamp, transfer
or similar taxes and charges that may be payable in respect of the execution of
this Agreement and the transfer and delivery of the Contract Stock (or any cash
or Marketable Securities in lieu of the Contract Stock) pursuant to this
Agreement.
(b) Forward Contract. Seller hereby agrees that: (i) it will not treat
this Agreement, any portion of this Agreement, or any obligation under this
Agreement as giving rise to any interest income or other inclusions of ordinary
income; (ii) it will not treat the delivery of any portion of the Contract
Stock, cash, Marketable Securities or other property to be delivered pursuant to
this Agreement as the payment of interest or ordinary income; (iii) it will
treat this Agreement in its entirety as a forward contract for the delivery of
such Contract Stock, cash, Marketable Securities or other property; and (iv) it
will not take any action (including filing any tax return or form or taking any
position in any tax proceeding) that is inconsistent with the obligations
contained in clauses (i) through (iii) of this Section 5.1(b). Notwithstanding
the preceding sentence, Seller may take any action or position required by law,
provided that Seller delivers to Purchaser an unqualified opinion of counsel,
nationally recognized as expert in Federal tax matters, to
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the effect that such action or position is required by a statutory change,
Treasury regulation, or applicable court decision published after the date of
this Agreement.
(c) Limitations on Trading During Certain Days. Seller hereby agrees
that it will not buy Class A Common Stock for its own account during the 60 days
prior to the Exchange Date.
(d) Notices. Seller will cause to be delivered to Purchaser:
(i) Immediately upon the occurrence of any Event of Default, or
upon Seller's obtaining knowledge that any of the conditions or events
described in Section 7.1(a) or (b) shall have occurred with respect to
the Company, notice of such occurrence; and
(ii) If at any time prior to the Exchange Date Seller receives
notice, or otherwise obtains knowledge, that any event requiring an
adjustment to be effected pursuant to Article VI shall have occurred
or be pending, then Seller shall promptly cause to be delivered to
Purchaser a notice identifying such event and stating, if known to
Seller, the date on which such event occurred or is to occur and, if
applicable, the record date relating to such event. Seller shall cause
further notices to be delivered to Purchaser if Seller shall
subsequently receive notice, or otherwise obtain knowledge, of any
further or revised information regarding the terms or timing of such
event or any record date relating to such event.
Section 5.2. Further Assurances. From time to time on and after the
date of this Agreement through the Exchange Date, each of the parties to this
Agreement shall use its reasonable best efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things reasonably necessary,
proper or advisable to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement in accordance with the terms and
conditions of this Agreement, including (i) using reasonable best efforts to
remove any legal impediment to the consummation of such transactions and (ii)
the execution and delivery of all such deeds, agreements, assignments and
further instruments of transfer and conveyance necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement in
accordance with the terms and conditions of this Agreement.
ARTICLE VI
ADJUSTMENTS TO EXCHANGE RATE, APPRECIATION THRESHOLD PRICE,
INITIAL PRICE AND CLOSING PRICE; REORGANIZATION EVENTS
Section 6.1. Dilution Adjustments. The Exchange Rate, Appreciation
Threshold Price and Initial Price shall be subject to adjustment from time to
time as follows:
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(a) Stock Dividends, Splits, Reclassifications, Etc. If the Company
shall, after the date of this Agreement,
(i) pay a stock dividend or make a distribution with respect to
the Class A Common Stock in the form of Class A Common Stock;
(ii) subdivide or split the outstanding Class A Common Stock into
a greater number of shares of Class A Common Stock;
(iii) combine the outstanding Class A Common Stock into a smaller
number of shares of Class A Common Stock; or
(iv) issue by reclassification of Class A Common Stock any other
shares of Class A Common Stock of the Company;
then, in each such case, the Exchange Rate shall be multiplied by a Dilution
Adjustment equal to the number of shares of Class A Common Stock (or in the case
of a reclassification referred to in clause (iv) above, the number of other
shares of stock of the Company issued pursuant to such reclassification), or the
fraction of such shares, that a shareholder who held one Share of Class A Common
Stock immediately prior to such event would be entitled solely by reason of such
event to hold immediately after such event. The Appreciation Threshold Price and
Initial Price shall also be adjusted in the manner described in Section 6.1(e).
(b) Right or Warrant Issuances. If the Company shall, after the date
of this Agreement, issue, or declare a record date in respect of an issuance of,
rights or warrants to all holders of Class A Common Stock entitling them to
subscribe for or purchase Class A Common Stock at a price per share less than
the Then-Current Market Price of the Class A Common Stock (other than rights to
purchase Class A Common Stock pursuant to a plan for the reinvestment of
dividends or interest), then, in each such case, the Exchange Rate shall be
multiplied by a Dilution Adjustment equal to a fraction, (i) the numerator of
which shall be the number of shares of Class A Common Stock outstanding
immediately prior to the time the adjustment resulting from the issuance of such
rights or warrants is effected, plus the number of additional shares of Class A
Common Stock offered for subscription or purchase pursuant to such rights or
warrants, and (ii) the denominator of which shall be the number of shares of
Class A Common Stock outstanding immediately prior to the time such adjustment
is effected plus the number of additional shares of Class A Common Stock that
the aggregate offering price of the total number of shares of Class A Common
Stock so offered for subscription or purchase pursuant to such rights or
warrants would purchase at the Then-Current Market Price of the Class A Common
Stock, which shall be determined by multiplying the total number of stock so
offered for subscription or purchase by the exercise price of such rights or
warrants and dividing the product so obtained by such Then-Current Market Price.
To the extent that, after the expiration of such rights or warrants, any of the
Class A Common Stock offered thereby shall not have been delivered, the Exchange
Rate shall be further adjusted to equal the Exchange Rate
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which would have been in effect had such adjustment for the issuance of such
rights or warrants been made upon the basis of delivery of only the number of
shares of Class A Common Stock actually delivered. The Appreciation Threshold
Price and Initial Price shall also be adjusted in the manner described in
Section 6.1(e).
(c) Distributions of Other Assets. If the Company shall, after the
date of this Agreement, declare or pay a dividend or make a distribution to all
holders of Class A Common Stock, in either case, of evidences of its
indebtedness or other non-cash assets (excluding (A) any dividends or
distributions referred to in Section 6.1(a) and (B) any Spin-Off Distributions)
or shall issue to all holders of Class A Common Stock rights or warrants to
subscribe for or purchase any of its securities (other than rights or warrants
referred to in Section 6.1(b)), then, in each such case, the Exchange Rate shall
be multiplied by a Dilution Adjustment equal to a fraction, the numerator of
which shall be the Then-Current Market Price per Share of Class A Common Stock,
and the denominator of which shall be such Then-Current Market Price per share
less the fair market value (as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Administrator, whose
determination shall be final) as of the time the adjustment is effected of the
portion of the evidences of indebtedness or assets so distributed or of such
subscription rights or warrants so issued applicable to one Share of Class A
Common Stock. The Appreciation Threshold Price and Initial Price shall also be
adjusted in the manner described in Section 6.1(e).
(d) Cash Dividends; Excess Purchase Payments. If the Company shall,
after the date of this Agreement, declare a record date in respect of a
distribution of cash (other than any Permitted Dividend, any cash distributed in
consideration of fractional Class A Common Stock and any cash distributed in a
Reorganization Event), by dividend or otherwise, to all holders of Class A
Common Stock, or make an Excess Purchase Payment, then the Exchange Rate will be
multiplied by a Dilution Adjustment equal to a fraction, the numerator of which
shall be the Then-Current Market Price of the Class A Common Stock on such
record date, and the denominator of which shall be such Then- Current Market
Price less the amount of such distribution applicable to one Share of Class A
Common Stock which would not be a Permitted Dividend or, in the case of an
Excess Purchase Payment, less the aggregate amount of such Excess Purchase
Payment for which adjustment is being made at such time divided by the number of
shares of Class A Common Stock outstanding on such record date. The Appreciation
Threshold Price and Initial Price shall also be adjusted in the manner described
in Section 6.1(e).
(e) Corresponding Adjustments to Initial Price, Appreciation Threshold
Price and Closing Price.
(i) If any adjustment is made to the Exchange Rate pursuant to
Section 6.1(a), (b), (c) or (d), the Appreciation Threshold Price and
the Initial Price shall also be adjusted by dividing each of the
Appreciation Threshold Price and the Initial Price by the applicable
Dilution Adjustment.
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<PAGE> 20
(ii) If, during any Calculation Period used in calculating the
Average Market Price, the Then-Current Market Price or the Transaction
Value, there shall occur any event requiring an adjustment to be
effected pursuant to this Section 6.1, then the Closing Price for each
Trading Day in the Calculation Period occurring prior to the day on
which such adjustment is effected shall be adjusted by being divided
by the relevant Dilution Adjustment.
(f) Timing of Dilution Adjustments. Each Dilution Adjustment shall be
effected:
(i) in the case of any dividend, distribution or issuance, as of
the opening of business on the Business Day next following the record
date for determination of holders of Class A 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
is announced by the Company;
(ii) in the case of any subdivision, split, combination or
reclassification, 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 per share for shares
proposed 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 the repurchased shares become entitled to
payment of such Excess Purchase Payment.
(g) General; Failure of Dilution Event to Occur. All Dilution
Adjustments shall be rounded upward or downward to the nearest 1/10,000th or, if
there is not a nearest 1/10,000th, to the next lower 1/10,000th. No adjustment
in the Exchange Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent in the Exchange Rate; provided,
however, that any adjustments that by reason of this sentence are not required
to be made shall be carried forward and taken into account in any subsequent
adjustment. If any announcement or declaration of a record date in respect of a
dividend, distribution, issuance or repurchase requiring an adjustment pursuant
to this Section 6.1 shall subsequently be canceled by the Company or shall fail
to occur for any other reason, then, upon such cancellation or failure to occur,
the Exchange Rate shall be further adjusted to the Exchange Rate that would then
have been in effect had adjustment for such event not been made. If, after an
announcement of a share repurchase requiring an adjustment pursuant to this
Section 6.1, the Company reduces the repurchase price or repurchases fewer
shares than announced, then upon completion of such share repurchase the
Exchange Rate shall be further adjusted to equal the Exchange Rate that would
have been in effect had the adjustment for such repurchase been based on the
actual price and amount repurchased. If a Reorganization Event shall occur after
the occurrence of one or more
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<PAGE> 21
events requiring an adjustment pursuant to this Section 6.1, the Dilution
Adjustments previously applied to the Exchange Rate in respect of such events
shall not be rescinded but shall be applied to the new Exchange Rate provided
for under Section 6.2.
Section 6.2. Adjustment for Consolidation, Merger or Other
Reorganization Event.
(a) In the event of (i) any consolidation, amalgamation 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
consolidation, amalgamation or merger in which the Company is the continuing
corporation and in which the Class A Common Stock outstanding immediately prior
to the consolidation, amalgamation or merger are not exchanged for cash,
securities or other property of the Company or another corporation), (ii) 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, (iii)(x) any statutory exchange of securities of the Company or any
Company Successor with another corporation or (y) any sale of all or
substantially all of the outstanding equity securities of the Company or any
Successor Company, including pursuant to any plan of arrangement or similar
scheme with the Company's shareholders under any applicable law, rule or
regulation or order of any court or governmental authority (in the case of each
of the preceding clauses (x) and (y), other than in connection with a
consolidation, amalgamation or merger referred to in clause (i) immediately
above), or (iv) any liquidation, dissolution or winding up of the Company or any
Company Successor (any such event described in clause (i), (ii), (iii) or (iv),
a "Reorganization Event"), Seller shall deliver on the Exchange Date, in lieu of
the Contract Stock, cash in an amount (the "Basic Reorganization Event Amount")
equal to the Dilution Adjustment (or successive Dilution Adjustments), if any,
that have been applied to the Exchange Rate pursuant to Section 6.1 at or prior
to the time of such Reorganization Event, multiplied by the product of (x) the
Firm Share Base Amount plus the Additional Share Base Amount and (y)(i) if the
Transaction Value 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 equal to or greater than the Appreciation Threshold Price, multiplied by
the Transaction Value, and (iii) if the Transaction Value is less than the
Initial Price, the Transaction Value. Notwithstanding the foregoing, if the
consideration received by the holders of the Class A Common Stock in the
Reorganization Event (the "Merger Consideration") includes any Marketable
Securities, Seller may, at its option, in lieu of delivering cash as described
above, deliver an equivalent amount (based on the value determined in accordance
with clause (z) of the definition of Transaction Value) of such Marketable
Securities, but not exceeding, as a percentage of the total consideration
required to be delivered, the percentage of the total Transaction Value
attributable to such Marketable Securities.
(b) Notwithstanding Section 6.2(a), if at least 30% of the Merger
Consideration in any Reorganization Event consists of cash or cash equivalents
(a "Cash Merger"), then Seller shall be required (i) within five Business Days
after Seller receives the Merger
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<PAGE> 22
Consideration, to deliver the Accelerated Portion to Purchaser, provided that to
the extent the Accelerated Portion consists of property other than cash or cash
equivalents, Seller may, at its option, deliver, in lieu of such other property,
cash in an amount equal to the Value of such other property; and (ii) on the
Exchange Date, to deliver to Purchaser the number of Marketable Securities equal
to the product of (x) the sum of the Firm Share Base Amount and the Additional
Share Base Amount and (y) the Exchange Rate, adjusted as described in the next
sentence, and the provisions of Section 2.3(c) shall apply mutatis mutandis to
such Marketable Securities, provided that Seller may exercise the Cash
Settlement Alternative in respect of such Marketable Securities, in which case
Section 2.3(d) shall apply mutatis mutandis to such Marketable Securities. For
purposes of calculating such Exchange Rate, (A) the Initial Price and
Appreciation Threshold Price shall each be adjusted by multiplying the Initial
Price or Appreciation Threshold Price, as applicable, as then in effect, by a
fraction, the numerator of which is the Value of a share of the Marketable
Securities included in the Merger Consideration on the date the Cash Merger is
closed, and the denominator of which shall be the Transaction Value; and (B) the
Exchange Rate shall be adjusted by multiplying the Exchange Rate (computed on
the basis of the adjusted Initial Price and Appreciation Threshold Price and the
Average Market Price of the Marketable Securities) by a fraction, the numerator
of which is the aggregate Value of the Marketable Securities included in the
Merger Consideration received in exchange for a single share of Class A Common
Stock, and the denominator of which is the Value of a share of the Marketable
Securities included in the Merger Consideration on the date the Cash Merger is
closed.
Section 6.3. Spin-Off Distributions. If the Company shall, after the
date of this Agreement, effect a Spin-Off Distribution, then for all purposes of
this Agreement, from and after the record date in respect of such Spin-Off
Distribution, (i) the Contract Stock shall be deemed to include both (A) that
number of shares of Class A Common Stock equal to the product of (x) the sum of
the Firm Stock Base Amount and the Additional Stock Base Amount and (y) the
Exchange Rate, and (B) that number of Marketable Securities of the class
distributed in respect of the Contract Stock in such Spin-Off Distribution equal
to the product of (x) the sum of the Firm Stock Base Amount and the Additional
Stock Base Amount, (y) the Exchange Rate, and (z) the number of shares of such
Marketable Securities distributed per share of Class A Common Stock in the Spin-
Off Distribution; (ii) Seller's obligations under Section 2.3 shall include
delivery of such Marketable Securities together with the Class A Common Stock
comprising the Contract Stock and the provisions of Section 2.3(c) shall apply
mutatis mutandis to such Marketable Securities; and (iii) the "Closing Price" of
the Class A Common Stock shall thereafter be deemed to be equal to the sum of
(A) the Closing Price per Share of Class A Common Stock and (B) the product of
(x) the Closing Price per share of the spun-off Marketable Securities and (y)
the number of shares of such Marketable Securities distributed per Share of
Class A Common Stock in the Spin-Off Distribution.
Section 6.4. Adjustments with Respect to Marketable Securities. The
number of shares of any Marketable Securities included in any calculation
pursuant to this Agreement shall be subject to adjustment if any event that
would, had it occurred with
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<PAGE> 23
respect to the Class A Common Stock or the Company, have required an adjustment
pursuant to Section 6.1 or Section 6.2, shall occur with respect to such
Marketable Securities or the issuer of such Marketable Securities between the
time of the Spin-Off Distribution or Reorganization Event (or, in the case of
any adjustment occurring during a Calculation Period, the first day of such
Calculation Period) and the Exchange Date. Adjustment for such subsequent events
shall be as nearly equivalent as practicable to the adjustments provided for in
Section 6.1 or Section 6.2.
ARTICLE VII
ACCELERATION UPON AN EVENT OF DEFAULT
Section 7.1. Events of Default. If one or more of the following events
(each an "Event of Default") shall occur:
(a) Seller shall commence a voluntary case or other proceeding
seeking a liquidation, reorganization or other relief with respect to
Seller or Seller's debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of
Seller or any substantial part of Seller's property, or shall consent
to any such relief or to the appointment of or taking possession by
any such official in an involuntary case or other proceeding commenced
against Seller, or shall make a general assignment for the benefit of
creditors, or shall take any action to authorize any of the foregoing;
or
(b) an involuntary case or other proceeding shall be commenced
against Seller seeking liquidation, reorganization or other relief
with respect to Seller or Seller's debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of Seller or any substantial part of Seller's
property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against Seller under the federal bankruptcy
laws as now or hereafter in effect; or
(c) a Collateral Event of Default within the meaning of the
Collateral Agreement shall occur;
then, upon the occurrence of any such event, Seller shall become obligated to
deliver the Contract Stock (or the Marketable Securities or cash or combination
of Marketable Securities and cash deliverable in respect of such Contract
Stock), or any U.S. Government Securities then pledged under the Collateral
Agreement in respect of such Contract Stock. Purchaser and Seller agree that
such amount is a reasonable preestimate of loss and not a penalty. Such amount
is payable for the loss of bargain and
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<PAGE> 24
Purchaser will not be entitled to recover additional damages as a consequence of
any loss resulting from an Event of Default.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Adjustments of Exchange Rate; Selection of Independent
Investment Banking Firm. Purchaser shall be responsible for the effectuation and
calculation of any adjustment pursuant to Article VI and shall furnish Seller
notice of any such adjustment and shall provide Seller reasonable opportunity to
review the calculations pertaining to any such adjustment. If, pursuant to the
terms and conditions of this Agreement, the Administrator shall be required to
retain a nationally recognized independent investment banking firm for any
purpose provided in this Agreement, such nationally recognized independent
investment banking firm shall be selected and retained by the Administrator only
after consultation with Seller.
Section 8.2. No Assumption of Liability. By executing this Agreement,
none of the Trustees assumes any personal liability under this Agreement.
Section 8.3. Notices.
(a) All notices and other communications provided for in this
Agreement, unless otherwise specified, shall be in writing and shall be given at
the addresses set forth in the following sentence or at such other addresses as
may be designated by notice duly given in accordance with this Section 8.3 to
each other party to this Agreement. Until such notice is given, (i) notices to
Purchaser shall be directed to it in care of the Administrator, The Chase
Manhattan Bank, 450 West 33rd Street, New York, New York 10001, Telecopier No.
(212) 946-3638, Attention: Pledge Asset Control Services; and (ii) notices to
Seller [REVISE AS NECESSARY] shall be directed to it at , Telecopier
No. .
(b) Each notice given pursuant to Section 8.3(a) shall be effective
(i) if sent by certified mail (return receipt requested), 72 hours after being
deposited in the United States mail, postage prepaid or five days after being
deposited in the mail of another country, postage prepaid; (ii) if given by
telex or telecopier, when such telex or telecopied notice is transmitted (with
electronic confirmation of transmission or verbal confirmation of receipt); or
(iii) if given by any other means, when delivered at the address specified in
this Section 8.3.
Section 8.4. Governing Law; Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
To the extent permitted by law, the unenforceability or invalidity of any
provision or provisions of this Agreement shall not render any other provision
or provisions contained in this Agreement unenforceable or invalid.
-21-
<PAGE> 25
Section 8.5. Entire Agreement. Except as expressly set forth in this
Agreement, this Agreement constitutes the entire agreement among the parties
with respect to the subject matter of this Agreement and supersedes all prior
agreements, understandings and negotiations, both written and oral, among the
parties with respect to the subject matter of this Agreement.
Section 8.6. Amendments; Waivers. Any provision of this Agreement may
be amended or waived (either generally or in a particular instance and either
retrospectively or prospectively) if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by Purchaser and Seller or,
in the case of a waiver, by the party against whom the waiver is to be
effective. Purchaser agrees that it will not, without Seller's written consent,
agree to amend or waive any provision of the Trust Agreement in any manner that
materially and adversely affects the rights or obligations of Seller hereunder.
No failure or delay by either party in exercising any right, power or privilege
under this Agreement shall operate as a waiver of such right, power or privilege
nor shall any single or partial exercise of any such right, power or privilege
preclude any other or further exercise of such right, power or privilege or the
exercise of any other right, power or privilege. The rights and remedies
provided in this Agreement shall be cumulative and not exclusive of any rights
or remedies provided by law.
Section 8.7. Non-Assignability. This Agreement and the rights and
obligations of the parties under this Agreement may not be assigned or delegated
by either party without the prior written consent of the other party, and any
purported assignment without such consent shall be void.
Section 8.8. No Third Party Rights; Successors and Assigns. This
Agreement is not intended and shall not be construed to create any rights in any
person other than Seller and Purchaser and their respective successors and
assigns and no person shall assert any rights as third party beneficiary under
this Agreement. Whenever any of the parties to this Agreement is referred to,
such reference shall be deemed to include the successors and assigns of such
party. All the covenants and agreements contained in this Agreement by or on
behalf of Seller and Purchaser shall bind and be enforceable by, and inure to
the benefit of, their respective successors and assigns whether so expressed or
not, and shall be enforceable by and inure to the benefit of Purchaser and its
successors and assigns.
Section 8.9. Counterparts. This Agreement may be executed,
acknowledged and delivered in any number of counterparts, each of which shall be
an original, but all of which shall constitute a single agreement, with the same
effect as if the signatures on each such counterpart were upon the same
instrument.
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<PAGE> 26
IN WITNESS WHEREOF, the parties have caused this Purchase Agreement to
be duly executed and delivered as of the first date set forth above.
SELLER:
By:
---------------------------------------
Name:
Title:
PURCHASER:
AMERITRADE AUTOMATIC COMMON
EXCHANGE SECURITY TRUST
By:
---------------------------------------
[Name],
as Trustee
By:
---------------------------------------
[Name],
as Trustee
By:
---------------------------------------
[Name],
as Trustee
<PAGE> 27
Exhibit A
to
Purchase Agreement
CERTIFICATE FOR EXTENSION OF EXCHANGE DATE
The undersigned, ("Seller"), hereby certifies, pursuant to Section
2.3(e) of the Purchase Agreement, dated as of , 1999 (the "Contract"),
between Seller and Ameritrade Automatic Common Exchange Security Trust, that:
1. Seller is transferring the following U.S. Government Securities to
Purchaser:
[INSERT LIST OF TRANSFERRED U.S. GOVERNMENT SECURITIES]
2. Seller hereby represents and warrants to Purchaser that:
(a) Consents to Transfer. No Transfer Restrictions exist with respect
to or otherwise apply to the transfer by Seller of such U.S. Government
Securities to Purchaser.
(b) Delivery. Seller has delivered to the Custodian, for the account
of and subject to the exclusive control of Purchaser, free and clear of any
Liens and Transfer Restrictions, U.S. Government Securities that, through the
scheduled payment of principal and interest in accordance with their terms, will
provide, not later than one Business Day before October , 2002, cash in an
amount equal to not less than the product of (1) and (2) the sum of the Firm
Share Base Amount and the Additional Share Base Amount.
(c) Title. Seller has good and marketable title to such U.S.
Government Securities, free and clear of all Liens and Transfer Restrictions.
Upon delivery of such U.S. Government Securities to Purchaser, Purchaser will
obtain good and marketable title to such U.S. Government Securities free and
clear of all Liens and Transfer Restrictions.
3. Such U.S. Government Securities satisfy the conditions set forth in
Section 2.3(e)(i) of the Contract.
Capitalized terms defined in the Contract are used in this Certificate
as defined in the Contract.
IN WITNESS WHEREOF, the undersigned has executed this certificate this
____ day of ____________, _____.
By:
---------------------------------
Name:
Title:
A-1
<PAGE> 1
EXHIBIT 2.k.(iv)
- --------------------------------------------------------------------------------
COLLATERAL AGREEMENT
Among
- [SELLER[S]],
As Pledgor,
THE CHASE MANHATTAN BANK,
As Collateral Agent
and
AMERITRADE AUTOMATIC COMMON EXCHANGE SECURITY TRUST
------------------------------------
Dated as of , 1999
------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1. Defined Terms.....................................................1
Section 1.2. Interpretation....................................................6
ARTICLE II
THE SECURITY INTERESTS
Section 2.1. Grant of Security Interests.......................................7
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of Pledgor.........................8
Section 3.2. Representations and Warranties of the Collateral Agent............8
ARTICLE IV
CERTAIN COVENANTS OF PLEDGOR
Section 4.1. Certain Covenants of Pledgor......................................9
ARTICLE V
ADMINISTRATION OF THE COLLATERAL AND
VALUATION OF THE SECURITIES
Section 5.1. Valuation of Collateral..........................................10
Section 5.2. Substitution of Collateral.......................................11
Section 5.3. Additional Collateral............................................11
Section 5.4. Delivery of Collateral...........................................12
Section 5.5. Insufficiency Determination......................................13
Section 5.6. Release of Excess Collateral.....................................14
Section 5.7. Delivery of Contract[S] Consideration............................14
Section 5.8. Investment of Cash Collateral....................................15
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<PAGE> 3
ARTICLE VI
INCOME AND VOTING RIGHTS ON COLLATERAL
Section 6.1. Income on Collateral.............................................15
Section 6.2. Voting of Collateral.............................................15
ARTICLE VII
REMEDIES UPON EVENTS OF DEFAULT
Section 7.1. Rights of Secured Party..........................................16
Section 7.2. Power of Attorney................................................17
Section 7.3. Application of Collateral and Proceeds...........................17
ARTICLE VIII
THE COLLATERAL AGENT
Section 8.1. Conditions to Duties of the Collateral Agent.....................18
Section 8.2. Merger...........................................................20
Section 8.3. Resignation......................................................20
Section 8.4. Removal..........................................................20
Section 8.5. Effectiveness of Resignation or Removal..........................21
Section 8.6. Appointment of Successor.........................................21
Section 8.7. Acceptance by Successor..........................................21
Section 8.7. Compensation.....................................................21
ARTICLE IX
MISCELLANEOUS
Section 9.1. Termination......................................................22
Section 9.2. No Assumption of Liability.......................................22
Section 9.3. Notices..........................................................22
Section 9.4. Governing Law; Severability......................................22
Section 9.5. Entire Agreement.................................................23
Section 9.6. Amendments; Waivers..............................................23
Section 9.7. Non-Assignability................................................23
Section 9.8. No Third Party Rights; Successors and Assigns....................23
Section 9.9. Counterparts.....................................................23
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<PAGE> 4
Exhibits
Exhibit A - Notice of Pledge Value
Exhibit B - Certificate for Substituted Collateral
Exhibit C - Certificate for Additional Collateral
-iii-
<PAGE> 5
COLLATERAL AGREEMENT
COLLATERAL AGREEMENT, dated as of , 1999, among o [REVISE AS
NECESSARY] [SELLER[S]] ("Pledgor"), The Chase Manhattan Bank, a New York banking
corporation, as collateral agent hereunder for the benefit of Ameritrade
Automatic Common Exchange Security Trust, a trust organized under the laws of
the State of New York under and by virtue of an Amended and Restated Trust
Agreement, dated as of , 1999 (such trust and the trustees thereof acting in
their capacity as such being referred to in this Agreement as "Purchaser"), and
Purchaser.
WITNESSETH:
WHEREAS, pursuant to the Purchase Agreement, dated as of , 1999 (the
"Contract[S]"), [REVISE AS NECESSARY] between Pledgor and Purchaser, Pledgor has
agreed to sell and Purchaser has agreed to purchase Class A Common Stock, par
value $0.01 per share (the "Class A Common Stock"), of Ameritrade Holding
Corporation, a Delaware corporation (the "Company"), subject to the terms and
conditions of the Contract;
NOW, THEREFORE, to secure the performance by Pledgor of its obligations
under the Contract[S] and to secure the observance and performance of the
covenants and agreements contained in this Agreement and in the Contract[S], the
parties, intending to be bound, agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1. Defined Terms. As used in this Agreement, the following
terms have the following meanings:
"Accelerated Portion" has the meaning specified in the
Contract[S].
"Additional Purchase Price" has the meaning specified in the
Contract[S].
"Additional Stock Base Amount" has the meaning specified in
the Contract[S].
"Agreement" means this Collateral Agreement.
"Authorized Representative" of Pledgor means any trustee or
other representative as to whom Pledgor shall have delivered notice to
the Collateral Agent that such trustee or other representative is
authorized to act hereunder on behalf of Pledgor.
<PAGE> 6
"Cash Delivery Obligations" means, at any time (A) if no
Reorganization Event shall have occurred prior to such time, zero, and
(B) from and after any Reorganization Event, the Dilution Adjustment
(or successive Dilution Adjustments) that shall have been applied to
the Exchange Rate pursuant to Section 6.1 of the Contract[S] at or
prior to the Reorganization Event, times the product of: (i) the Firm
Stock Base Amount plus the Additional Stock Base Amount (if any) and
(ii) the Transaction Value (as defined in the Contract[S]) of any
Merger Consideration other than Marketable Securities delivered in the
related Reorganization Event, provided that if the Reorganization Event
is a Cash Merger, the Cash Delivery Obligations shall again be zero
after Pledgor has delivered the Accelerated Portion to the Purchaser as
required under the Purchase Agreement.
"Cash Merger" has the meaning specified in the Contract[S].
"Class A Common Stock" has the meaning specified in the
recitals to this Agreement.
"Closing Price" has the meaning specified in the Contract[S].
"Collateral" has the meaning specified in Section 2.1(a).
"Collateral Agent" means The Chase Manhattan Bank, in its
capacity as collateral agent under this Agreement, or its successor in
such capacity appointed in accordance with Section 8.5.
"Collateral Event of Default" means, at any time, the
occurrence of any of the following: (A) if no U.S. Government
Securities shall be pledged as substitute Collateral at such time,
failure of the aggregate Market Value of the Collateral to equal or
exceed the Pledge Value Requirement; (B) if any U.S. Government
Securities shall be pledged as substitute Collateral at such time,
failure of the Market Value of any U.S. Government Securities pledged
at such time (not including any U.S. Government Securities pledged in
respect of Cash Delivery Obligations at such time) to have an aggregate
Market Value of at least 105% of the Market Value of a number of shares
of Class A Common Stock and, from and after any Spin-Off Distribution,
of the Marketable Securities distributed in such Spin-Off Distribution
(or, from and after any Reorganization Event, the Marketable Securities
distributed in such Reorganization Event in lieu of such Class A Common
Stock or shares of Marketable Securities) equal in each case to (x) the
Maximum Deliverable Number of such securities minus (y) the number of
such securities pledged as Collateral hereunder at such time; or (C)
from and after any Reorganization Event in which consideration other
than Marketable Securities shall have been delivered, failure of the
U.S. Government Securities pledged in respect of Cash Delivery
Obligations to have an aggregate Market Value at least equal to 105% of
the Cash Delivery Obligations at such time, if, in the case of a
failure described in this clause (C), such failure shall continue to be
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<PAGE> 7
in effect at 4:00 p.m., New York City time, on the next Business Day
following the day on which telephonic notice in respect of such failure
shall have been given pursuant to Section 5.5(a).
"Collateral Requirement" means, as of any date and with
respect to: (i) any Class A Common Stock, 100%; (ii) any Marketable
Securities, 100%; (iii) any U.S. Government Securities pledged in
respect of Cash Delivery Obligations, 105%; and (iv) any other U.S.
Government Securities, 150%, provided that upon and after any failure
to cure an Insufficiency Determination by 4:00 p.m. New York City time
on the next Business Day following telephonic notice of such
Insufficiency Determination as described in Section 5.5(b), which
insufficiency shall be continuing on such next business day, the
Collateral Requirement relating to any U.S. Government Securities shall
be 200%. The portion of any pledged U.S. Government Securities that
shall be deemed to be pledged in respect of Cash Delivery Obligations
at any time shall be a portion having a Market Value equal to 105% of
the Cash Delivery Obligations at such time or, if less, the aggregate
Market Value of all U.S. Government Securities pledged at such time.
"Company" has the meaning specified in the recitals to this
Agreement.
"Contract[S]" has the meaning specified in the recitals to
this Agreement.
"Delivery Date" has the meaning specified in Section 7.1.
"Dilution Adjustment" has the meaning specified in the
Contract[S].
"Distribution Date" has the meaning specified in the Trust
Agreement.
"Eligible Collateral" means (i) unless and until a
Reorganization Event shall occur, Class A Common Stock and, if a
Spin-Off Distribution occurs, the Marketable Securities distributed in
such Spin-Off Distribution; (ii) U.S. Government Securities, and (iii)
from and after any Reorganization Event, the Marketable Securities
distributed in such Reorganization Event; provided, in each case, that
Pledgor has good and marketable title to such securities, free of all
Liens (other than the Liens created by this Agreement) and Transfer
Restrictions and that the Collateral Agent has a valid, first priority
perfected security interest therein and first lien thereon; and
provided further that to the extent the number of shares of Class A
Common Stock or shares of Marketable Securities pledged hereunder
exceeds at any time the Maximum Deliverable Number of such securities,
such excess shares shall not be Eligible Collateral.
"Event of Default" means the occurrence of: (i) an event
described in Section 7.1(a) or (b) of the Contract[S], (ii) a
Collateral Event of Default, (iii) a failure by Pledgor to have caused
the Collateral to meet the requirements described in Section 4.1(d) on
the Exchange Date, or (iv) if a Reorganization
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Event shall have occurred prior to the Exchange Date, failure by
Pledgor to cause to be delivered to Purchaser on the Exchange Date the
consideration then required to be delivered pursuant to Section 6.2 of
the Contract[S].
"Exchange Date" has the meaning specified in the Contract[S].
"Exchange Rate" has the meaning specified in the Contract[S].
"Firm Purchase Price" has the meaning specified in the
Contract[S].
"Firm Stock Base Amount" has the meaning specified in the
Contract[S].
"First Time of Delivery" has the meaning specified in the
Contract[S].
"Insufficiency Determination" has the meaning specified in
Section 5.5(a).
"Lien" means any lien, mortgage, security interest, pledge,
charge, encumbrance or adverse claim of any kind.
"Marketable Securities" has the meaning specified in the
Contract[S].
"Market Value" means, as of any date: (a) with respect to any
Class A Common Stock (except as otherwise provided in Section 5.5(b)),
the Closing Price of the Class A Common Stock on such date multiplied
by the number of shares of such Class A Common Stock; (b) with respect
to any U.S. Government Security, the product of (x)(i) the average unit
bid price for such security as published on the Trading Day prior to
such date in the New York edition of The Wall Street Journal or The New
York Times or the average unit bid price set forth on the applicable
page of the Bloomberg system, or, if not so published, (ii) the lower
bid price quoted (which quotation shall be evidenced in writing) on the
Trading Day prior to such date by either of two nationally recognized
dealers making a market in such security which are members of the
National Association of Securities Dealers, Inc. and (y) the number of
such units of such security; and (c) with respect to any shares of
Marketable Securities, the Closing Price of such Marketable Securities
on the Trading Day prior to such date multiplied by the number of such
Stock; provided that the "Market Value" of any Collateral that does not
constitute Eligible Collateral shall be zero.
"Maximum Deliverable Number" means, on any date, (i) with
respect to the Class A Common Stock, the product of the Firm Stock Base
Amount plus the Additional Stock Base Amount (if any), multiplied
successively by each Dilution Adjustment by which the Exchange Rate
shall have been multiplied on or prior to such date pursuant to the
Dilution Adjustments provided for under Section 6.1 of the Contract[S];
and (ii) with respect to the Marketable Securities of any class or
series, the product of (A) the Firm Stock Base Amount plus the
Additional Stock Base Amount (if any) multiplied by (B) the number of
Marketable Securities
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included in the Merger Consideration in the applicable Reorganization
Event or distributed in the applicable Spin-Off Distribution for each
share of Class A Common Stock, multiplied successively by (x) each
Dilution Adjustment by which the Exchange Rate with respect to the
Class A Common Stock shall have been multiplied on or prior to the date
of such Reorganization Event or Spin-Off Distribution pursuant to the
adjustments provided for under Article VI of the Contract[S], and (y)
each Dilution Adjustment by which the Exchange Rate with respect to
such Marketable Securities shall have been multiplied on or prior to
such date and after the date of such Reorganization Event or Spin-Off
Distribution pursuant to the adjustments provided for under Article VI
of the Contract[S].
"Person" means an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any other
entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.
"Pledge Value" means, as of any date, an amount equal to the
sum of the aggregate Market Values of each particular type of
Collateral, as of such date, in each case divided by the Collateral
Requirement for such type of Collateral.
"Pledge Value Requirement" means, as of any date, (a) the
aggregate Market Value on such date of the Maximum Deliverable Number
of shares of Class A Common Stock on such date or, from and after a
Reorganization Event, the Maximum Deliverable Number of the Marketable
Securities included in the Merger Consideration in such Reorganization
Event, plus (b) from and after a Reorganization Event, the Cash
Delivery Obligations, plus (c) from and after a Spin-Off Distribution,
the Market Value on such date of the Maximum Deliverable Number of the
Marketable Securities distributed in such Spin-Off Distribution.
"Pledged Items" means, as of any date, any and all securities,
instruments, cash and other property delivered by Pledgor to be held by
the Collateral Agent under this Agreement as Collateral, whether or not
constituting Eligible Collateral and whether or not then required to be
held by the Collateral Agent hereunder.
"Pledgor" has the meaning specified in the preamble to this
Agreement.
"Prior Collateral" has the meaning specified in Section
5.2(a).
"Purchaser" has the meaning specified in the preamble to this
Agreement.
"Reorganization Event" has the meaning specified in the
Contract[S].
"Responsible Officer" means, when used with respect to the
Collateral Agent, any vice president, assistant vice president,
assistant treasurer or
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assistant secretary located in the division or department of the
Collateral Agent responsible for performing the obligations of the
Collateral Agent under this Agreement. "Second Time of Delivery" has
the meaning specified in the Contract[S].
"Spin-off Distribution" has the meaning specified in the
Contract[S].
"Trading Day" has the meaning specified in the Contract[S].
"Transfer Restriction" means, with respect to any item, any
condition to or restriction on the ability of the holder of such item
to sell, assign or otherwise transfer such item of Collateral or to
enforce the provisions thereof or of any document related thereto
whether set forth in such item of Collateral itself or in any document
related thereto, including (i) any requirement that any sale,
assignment or other transfer or enforcement of such item of Collateral
be consented to or approved by any Person, including the issuer thereof
or any other obligor thereon, (ii) any limitations on the type or
status, financial or otherwise, of any purchaser, pledgee, assignee or
transferee of such item of Collateral, (iii) any requirement to deliver
any certificate, consent, agreement, opinion of counsel, notice or any
other document of any Person to the issuer of, any other obligor on or
any registrar or transfer agent for, such item of Collateral, prior to
the sale, pledge, assignment or other transfer or enforcement of such
item of Collateral, and (iv) any registration or qualification
requirement for such item of Collateral pursuant to any federal or
state securities law that has not been satisfied; provided, however,
that the required delivery of any assignment from the seller, pledgor,
assignor or transferor of such item of Collateral, together with any
evidence of the corporate or other authority of such Person, shall not
constitute a "Transfer Restriction".
"Trustee" or "Trustees" means any trustee or trustees of
Purchaser named in the Trust Agreement, or any successor as such
trustee or trustees.
"UCC" means the Uniform Commercial Code as in effect in the
State of New York.
"U.S. Government Securities" means direct obligations of the
United States of America that mature on a date that is one year or less
from the date such obligations are pledged hereunder, but in any event
prior to the Exchange Date then in effect.
Section 1.2. Interpretation.
(a) When a reference is made in this Agreement to Articles, Sections,
Exhibits or Schedules, such reference is to Articles or Sections of, or Exhibits
or Schedules to, this Agreement unless otherwise indicated.
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(b) The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement, and shall not be
deemed to limit or otherwise affect any of the provisions of this Agreement.
(c) Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(d) Any reference to any statute, regulation or agreement is a
reference to such statute, regulation or agreement as supplemented or amended
from time to time.
ARTICLE II
THE SECURITY INTERESTS
Section 2.1. Grant of Security Interests. In order to secure the
performance by Pledgor of its obligations under the Contract[S] and to secure
the observance and performance of the covenants and agreements contained in this
Agreement and in the Contract[S]:
(a) Security Interests. Pledgor hereby grants, sells, conveys,
assigns, transfers and pledges to the Collateral Agent, as agent of and
for the benefit of Purchaser, a security interest in and to, and a lien
upon and right of set-off against, all of its right, title and interest
in, to and under (i) the Pledged Items described in paragraphs (b) and
(c); (ii) all additions to and substitutions for such Pledged Items;
(iii) all income, products and proceeds and collections received or to
be received, or derived or to be derived, now or any time hereafter
from or in connection with the Pledged Items; and (iv) all powers and
rights now owned or hereafter acquired under or with respect to the
Pledged Items (such Pledged Items, additions, substitutions, income,
products and proceeds, collections, powers and rights being
collectively called the "Collateral"). The Collateral Agent shall have
all of the rights, remedies and recourses with respect to the
Collateral afforded a secured party by the UCC, in addition to, and not
in limitation of, the other rights, remedies and recourses afforded to
the Collateral Agent by this Agreement.
(b) First Time of Delivery. Effective upon and subject to
receipt by Pledgor of the Firm Purchase Price, at the First Time of
Delivery, Pledgor shall either (1) deliver to the Collateral Agent in
pledge hereunder one or more certifi cates representing in the
aggregate at least o shares of Class A Common Stock, registered in the
name of the Collateral Agent or its nominee or duly endorsed in blank
or accompanied by undated stock powers duly endorsed in blank, or (2)
if such Class A Common Stock are not held in certificated form but are
held in book-entry form by The Depository Trust Company or any other
comparable depositary, transfer such Class A Common Stock to an account
of the Collateral Agent or to an account (other than an account of
Pledgor) designated by the
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Collateral Agent with The Depository Trust Company or such other
depositary, as applicable.
(c) Second Time of Delivery. Effective upon and subject to the
receipt by Pledgor of the Additional Purchase Price, at the Second Time
of Delivery, Pledgor shall either (1) deliver to the Collateral Agent
in pledge hereunder one or more certificates representing in the
aggregate at least the Additional Stock Base Amount of Class A Common
Stock, registered in the name of the Collateral Agent or its nominee or
duly endorsed in blank or accompanied by undated stock powers duly
endorsed in blank, or (2) if such Class A Common Stock is not held in
certificated form but is held in book-entry form by The Depository
Trust Company or any other comparable depositary, transfer such Class A
Common Stock to an account of the Collateral Agent or to an account
(other than an account of Pledgor) designated by the Collateral Agent
with The Depository Trust Company or such other depositary, as
applicable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of Pledgor. Pledgor hereby
represents and warrants to the Collateral Agent and Purchaser that:
(a) No Transfer Restrictions. No Transfer Restrictions exist
with respect to or otherwise apply to the pledge or assignment of, or
transfer by Pledgor of, any items of Collateral to the Collateral Agent
hereunder, or the subsequent sale or transfer of such items of
Collateral by the Collateral Agent pursuant to the terms of this
Agreement.
(b) Title to Collateral; Perfected Security Interest. Pledgor
has good and marketable title to the Collateral, free of all Liens
(other than the Lien created by this Agreement) and Transfer
Restrictions and has good, right and lawful authority to assign,
transfer and pledge such Collateral and all additions to such
Collateral and substitutions for such Collateral under this Agreement.
Upon delivery of any Collateral to the Collateral Agent hereunder, the
Collateral Agent will obtain a valid, first priority perfected security
interest in, and a first lien upon, such Collateral subject to no other
Lien. None of the Collateral is or shall be pledged by Pledgor as
collateral for any other purpose.
Section 3.2. Representations and Warranties of the Collateral Agent.
The Collateral Agent represents and warrants to Pledgor and Purchaser that:
(a) Corporate Existence and Power. The Collateral Agent is a
banking corporation, duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and
has all corporate powers and all
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governmental licenses, authorizations, consents and approvals required
to enter into, and perform its obligations under, this Agreement.
(b) Authorization and Non-Contravention. The execution,
delivery and performance by the Collateral Agent of this Collateral
Agreement have been duly authorized by all necessary corporate action
on the part of the Collateral Agent (no action by the shareholders of
the Collateral Agent being required) and do not and will not violate,
contravene or constitute a default under any provision of applicable
law or regulation or of the charter or by-laws of the Collateral Agent
or of any material agreement, judgment, injunction, order, decree or
other instrument binding upon the Collateral Agent.
(c) Binding Effect. This Agreement constitutes a valid and
binding agreement of the Collateral Agent enforceable against the
Collateral Agent in accordance with its terms.
ARTICLE IV
CERTAIN COVENANTS OF PLEDGOR
Section 4.1. Certain Covenants of Pledgor. Pledgor agrees that, so long
as any of its obligations under the Contract[S] remain outstanding:
(a) Title to Collateral. Pledgor shall at all times hereafter
have and maintain good and marketable title to the Collateral pledged
by it, free of all Liens (other than the Lien created by this
Agreement) and Transfer Restrictions, and, subject to the terms of this
Agreement, will at all times hereafter have and maintain good, right
and lawful authority to assign, transfer and pledge such Collateral and
all such additions to such Collateral and substitutions for such
Collateral under this Agreement.
(b) Pledge Value Requirement. Pledgor shall cause the
aggregate Pledge Value of the Collateral to be equal to or greater than
the Pledge Value Requirement at all times, and shall pledge additional
Collateral in the manner described in Section 5.4 as necessary to cause
such requirement to be met.
(c) Pledge Upon Reorganization Event. Upon the occurrence of a
Reorganization Event, Pledgor shall immediately cause to be delivered
to the Collateral Agent, in the manner provided in Section 5.4: (i)
cash in an amount equal to 100% of Pledgor's Cash Delivery Obligations
(or U.S. Government Securities having an aggregate Market Value when
pledged and at
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daily mark-to-market valuations thereafter at least equal to 105% of
the Cash Delivery Obligations); and (ii) Marketable Securities in an
amount at least equal to the Maximum Deliverable Number of such
securities, or, at Pledgor's election, U.S. Government Securities
having an aggregate Market Value when pledged and at daily
mark-to-market valuations thereafter at least equal to 150% of such
Maximum Deliverable Number of Marketable Securities, in each case to be
held as substitute Collateral hereunder.
(d) Pledge Upon Spin-Off Distribution. Upon the occurrence of
a Spin-Off Distribution, Pledgor shall immediately cause to be
delivered to the Collateral Agent, in the manner provided in Section
5.4, Marketable Securities in an amount at least equal to the Maximum
Deliverable Number of such securities, or, at Pledgor's election, U.S.
Government Securities having an aggregate Market Value at least equal
to 150% of such Maximum Deliverable Number of Marketable Securities, in
each case to be held as additional Collateral hereunder.
(e) Pledge of Contract[S] Consideration. Notwithstanding
Pledgor's right to substitute Collateral pursuant to Section 5.2,
Pledgor shall cause the Collateral to include, on the Exchange Date,
(i) unless a Reorganization Event shall have occurred, a number of
shares of Class A Common Stock at least equal to the number of shares
of Class A Common Stock (and, if a Spin-Off Distribution has occurred,
the number of shares of Marketable Securities distributed in such
Spin-Off Distribution) required to be delivered under the Contract[S]
on the Exchange Date, and (ii) if a Reorganization Event has occurred,
any Marketable Securities or other property required to be delivered
under the Contract[S] on the Exchange Date.
(f) Further Assurances. Pledgor shall, at its expense and in
such manner and form as Purchaser or the Collateral Agent may
reasonably require, give, execute, deliver, file and record any
financing statement, notice, instrument, document, agreement or other
papers that may be necessary or desirable in order to create, preserve,
perfect, substantiate or validate any security interest granted
pursuant to this Agreement or to enable the Collateral Agent to
exercise and enforce its rights and the rights of Purchaser hereunder
with respect to such security interest. To the extent permitted by
applicable law, Pledgor hereby authorizes the Collateral Agent to
execute and file, in the name of Pledgor or otherwise, UCC financing or
continuation statements (which may be carbon, photographic, photostatic
or other reproductions of this Agreement or of a financing statement
relating to this Agreement) which the Collateral Agent may reasonably
deem necessary or appropriate to further perfect, or maintain the
perfection of, the security interests granted hereby.
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ARTICLE V
ADMINISTRATION OF THE COLLATERAL AND
VALUATION OF THE SECURITIES
Section 5.1. Valuation of Collateral. The Collateral Agent shall
determine as of 4:00 p.m., New York City time, on each Business Day whether the
Pledge Value is at least equal to the Pledge Value Requirement and whether an
Insufficiency Determination or Collateral Event of Default shall have occurred
and, from and after any Reorganization Event, Spin-Off Distribution or
substitution of U.S. Government Securities for pledged Class A Common Stock or
shares of Marketable Securities pursuant to Section 5.2, shall determine the
Pledge Value and the Pledge Value Requirement on each Business Day and shall
provide written notice of the Pledge Value and the Pledge Value Requirement, in
the form of Exhibit A, to Pledgor.
Section 5.2. Substitution of Collateral. Pledgor may substitute
Collateral in accordance with the following provisions:
(a) Unless an Event of Default or a failure by Pledgor to meet
any of its obligations under Article IV or V has occurred and is
continuing, Pledgor shall have the right at any time and from time to
time to deposit Eligible Collateral with the Collateral Agent in
substitution for Pledged Items previously deposited hereunder ("Prior
Collateral") and to obtain the release of such Prior Collateral from
the Lien created by this Agreement.
(b) If Pledgor wishes to deposit Eligible Collateral with the
Collateral Agent in substitution for Prior Collateral, it shall (i)
give written notice from an Authorized Representative to the Collateral
Agent identifying the Prior Collateral to be released from the Lien
created by this Agreement, (ii) deliver to the Collateral Agent
concurrently with such Eligible Collateral a certificate of Pledgor
substantially in the form of Exhibit B and dated the date of such
delivery, (A) identifying the items of Eligible Collateral being
substituted for the Prior Collateral and the Prior Collateral that is
to be transferred to Pledgor and (B) certifying that the
representations and warranties contained in Exhibit B are true and
correct on and as of the date of such certificate, and (iii) deliver to
the Collateral Agent concurrently with such Eligible Collateral an
opinion, dated the date of such delivery, of counsel addressed to the
Collateral Agent confirming the representations contained in the second
sentence of paragraph 3(b) of Exhibit B. Pledgor hereby covenants and
agrees to take all actions required under Section 5.4 and any other
actions necessary to create for the benefit of the Collateral Agent a
valid, first priority perfected security interest in, and a first lien
upon, such Eligible Collateral deposited with the Collateral Agent in
substitution for Prior Collateral.
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(c) No such substitution shall be made unless and until the
Collateral Agent shall have determined that the aggregate Pledge Value
of all of the Collateral at the time of such proposed substitution,
after giving effect to the proposed substitution, shall at least equal
the Pledge Value Requirement.
Section 5.3. Additional Collateral. Pledgor may pledge additional
Collateral hereunder at any time and shall pledge additional collateral when
required under this Agreement. Concurrently with the delivery of any additional
Eligible Collateral, Pledgor shall deliver (i) a certificate of Pledgor
substantially in the form of Exhibit C, signed by an Authorized Representative,
and dated the date of such delivery, (A) identifying the items of additional
Eligible Collateral being pledged and (B) certifying that the representations
and warranties contained in Exhibit C are true and correct on and as of the date
of such certificate, and (ii) an opinion, dated the date of such delivery, of
counsel addressed to the Collateral Agent confirming the representations
contained in the second sentence of paragraph 2(b) of Exhibit C. Pledgor hereby
covenants and agrees to take all actions required under Section 5.4 and any
other actions necessary to create for the benefit of the Collateral Agent a
valid, first priority perfected security interest in, and a first lien upon,
such additional Eligible Collateral.
Section 5.4. Delivery of Collateral. Pledgor shall deliver the
Collateral to the Collateral Agent in accordance with the following provisions:
(a) Pledged Class A Common Stock. In the case of Collateral
consisting of Class A Common Stock, by either (1) delivery to the
Collateral Agent of one or more certificates representing such Class A
Common Stock, registered in the name of the Collateral Agent or its
nominee or duly endorsed in blank or accompanied by undated stock
powers duly endorsed in blank, or (2) if such Class A Common Stock is
not held in certificated form but is held in book-entry form by The
Depository Trust Company or any other comparable depositary, transfer
of such Class A Common Stock to an account of the Collateral Agent or
to an account (other than an account of Pledgor) designated by the
Collateral Agent with The Depository Trust Company or such other
depositary, as applicable;
(b) Pledged U.S. Government Securities. In the case of
Collateral consisting of U.S. Government Securities, by transfer of
such U.S. Government Securities through the Book Entry System of the
Federal Reserve System to the account of the Collateral Agent or to an
account (other than an account of Pledgor) designated by the Collateral
Agent; and
(c) Pledged Marketable Securities. In the case of Collateral
consisting of Marketable Securities, by either (1) delivery of
certificates evidencing such Marketable Securities, registered in the
name of the Collateral Agent or its nominee or duly endorsed in blank
or accompanied by stock powers duly executed in blank, or (2) if such
Marketable Securities are not held in certificated form but are held in
book-entry form by The Depository Trust Company or any
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other comparable depositary, by transfer to an account of the
Collateral Agent or to an account (other than an account of Pledgor)
designated by the Collateral Agent or to an account (other than an
account of Pledgor) designated by the Collateral Agent with The
Depository Trust Company or such other depositary, as applicable. Each
such delivery of Marketable Securities shall be accompanied by an
opinion of counsel satisfactory to the Collateral Agent that the
Collateral Agent has obtained a valid, first priority perfected
security interest in, and a first lien upon, such Marketable
Securities.
Upon delivery of any Pledged Item under this Agreement, the Collateral Agent
shall examine such Pledged Item and any opinions and certificates delivered
pursuant to Sections 5.2 or 5.3, this Section 5.4 or otherwise pursuant to the
terms of this Agreement in connection therewith to determine that they comply as
to form with the requirements for Eligible Collateral. Pledgor hereby designates
the Collateral Agent as the person in whose name any Collateral held in book
entry form in the Federal Reserve System shall be registered.
Section 5.5. Insufficiency Determination.
(a) If as of 4:00 p.m., New York City time, on any Business Day the
Collateral Agent determines that the aggregate Pledge Value of the Collateral is
less than the Pledge Value Requirement (any such determination, an
"Insufficiency Determination"), the Collateral Agent shall promptly notify
Pledgor of such determination by telephone call to an Authorized Representative
of Pledgor followed by a written confirmation of such call.
(b) If, by 4:00 p.m., New York City time on the next Business Day
following the day on which telephonic notice shall have been given pursuant to
the preceding paragraph 5.5(a), Pledgor shall have failed to deliver, in the
manner set forth in Sections 5.3 and 5.4, sufficient additional Eligible
Collateral so that, after giving effect to such delivery, the aggregate Pledge
Value of the Collateral, as of such next business day, is at least equal to the
Pledge Value Requirement, then (x) the Collateral Requirement with respect to
any U.S. Government Securities pledged hereunder (other than in respect of Cash
Delivery Obligations) shall be increased from 150% to 200% until the termination
of this Agreement, and (y) unless a Collateral Event of Default shall have
occurred and be continuing, the Collateral Agent shall:
(i) commence sales, in the manner described in Section 5.5(c),
of such portion of the Collateral consisting of U.S. Government
Securities as may be required to be sold in order to generate proceeds
sufficient to purchase Class A Common Stock or, after a Reorganization
Event or Spin-Off Distribution, Marketable Securities of the applicable
type as described in the following clause (ii); and
(ii) commence purchases, in the manner described in Section
5.5(c), of Class A Common Stock or, after a Reorganization Event or
Spin-Off Distribution,
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Marketable Securities of the applicable type, in an amount sufficient
to cause the aggregate Pledge Value of the Collateral to be at least
equal to the Pledge Value Requirement.
Notwithstanding the foregoing, the Collateral Agent shall discontinue sales and
purchases pursuant to the preceding clauses (i) and (ii), respectively, if at
any time a Collateral Event of Default shall have occurred and be continuing.
The Collateral Agent shall determine the Market Value and the Pledge Value of
the Collateral after each purchase of Class A Common Stock or shares of
Marketable Securities pursuant to the preceding clause (ii) in order to
determine whether the Pledge Value Requirement is met and whether a Collateral
Event of Default has occurred. Solely for purposes of such calculation, the
Market Value of the Class A Common Stock or shares of Marketable Securities
shall be: (A) the most recent sales price as reported in the composite
transactions for the principal securities exchange on which the Class A Common
Stock or shares of Marketable Securities, as the case may be, are then listed
or, if such securities are not so listed, the last quoted ask price for such
securities in the over-the-counter market as reported by the NASDAQ National
Market or, if not so reported, by the National Quotation Bureau or a similar
organization; or (B) if higher, in the case of Class A Common Stock, the most
recent available Closing Price.
(c) Collateral sold and Class A Common Stock or shares of Marketable
Securities purchased by the Collateral Agent pursuant to the preceding Sections
5.5(a) and (b) may be sold and purchased on any securities exchange or in any
over-the-counter market or in any private purchase transaction, and at such
price or prices, in each case as the Collateral Agent may deem satisfactory.
Pledgor covenants and agrees that it will execute and deliver such documents and
take such other action as the Collateral Agent deems necessary or advisable in
order that any such sales and purchases may be made in compliance with law.
Section 5.6. Release of Excess Collateral. If on any Business Day the
Collateral Agent determines that the aggregate Pledge Value of Pledgor's
Eligible Collateral exceeds the Pledge Value Requirement and no Event of Default
or failure by Pledgor to meet any of its obligations under Articles IV or V has
occurred and is continuing, Pledgor may obtain the release from the Lien created
by this Agreement of any Collateral having an aggregate Pledge Value on such
Business Day less than or equal to such excess, upon delivery to the Collateral
Agent of a written notice from an Authorized Representative of Pledgor
indicating the items of Collateral to be released. Such Collateral shall be
released only after the Collateral Agent shall have determined that the
aggregate Pledge Value of all of the Collateral remaining after such release as
determined on such Business Day is at least equal to the Pledge Value
Requirement.
Section 5.7. Delivery of Contract[S] Consideration. On the Exchange
Date, unless (i) a Reorganization Event shall have occurred prior to the
Exchange Date or (ii) if permitted under the Contract[S], Seller[S] shall have
elected the Cash Settlement Alternative pursuant to Section 2.3(d) of the
Contract[S] and made the cash payment required by that Section, the Collateral
Agent shall deliver to Purchaser from the Class A
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Common Stock and, if a Spin-Off Distribution has occurred, Marketable Securities
then held by it hereunder the number of shares of Class A Common Stock and
shares of Marketable Securities that were distributed in such Spin-Off
Distribution then required to be delivered by Pledgor under the Contract[S]. If
a Reorganization Event shall have occurred prior to the Exchange Date, then, (A)
if so instructed by Pledgor by the close of business on the Business Day
preceding the Exchange Date, the Collateral Agent shall deliver to Purchaser, to
the extent Marketable Securities are to be delivered on such date under Section
6.2 of the Contract[S], the Marketable Securities then held by the Collateral
Agent hereunder; and (B) if such Reorganization Event is a Cash Merger, the
Collateral Agent shall deliver to Purchaser all cash or other assets then held
by the Collateral Agent and required to be delivered under the Contract[S] at
the time when such delivery is required to be made under the Contract[S]. Upon
such delivery, Purchaser shall hold such Class A Common Stock, shares of
Marketable Securities, cash or other property, as the case may be, absolutely
and free from any claim or right whatsoever.
Section 5.8. Investment of Cash Collateral. The Collateral Agent shall
invest any cash received by it pursuant to Section 6.2 of the Contract[S] in
U.S. Government Securities.
ARTICLE VI
INCOME AND VOTING RIGHTS ON COLLATERAL
Section 6.1. Income on Collateral. Unless an Event of Default or
failure by Pledgor to meet any of its obligations under Article IV or V has
occurred and is continuing, Pledgor shall be entitled to receive for its own
account all dividends, interest and, if any, principal and premium relating to
all of the Collateral, unless the payment of such amounts to Pledgor would
reduce the aggregate Pledge Value of the Collateral below the Pledge Value
Requirement. The Collateral Agent agrees to remit to Pledgor on the Business Day
received or the first Business Day thereafter all such payments received by it.
If an Event of Default or failure by Pledgor to meet any of its obligations
under Article IV or V has occurred and is continuing, all such payments made or
accrued after and during the continuance of such default or failure shall be
retained by the Collateral Agent, and any such payments which are received by
Pledgor shall be received in trust for the benefit of Purchaser, shall be
segregated from other funds of Pledgor and shall forthwith be paid over to the
Collateral Agent. Any such payments so retained by, or paid over to, the
Collateral Agent shall be held by the Collateral Agent as Collateral hereunder.
Section 6.2. Voting of Collateral. Unless an Event of Default has
occurred and is continuing, Pledgor shall have the right, from time to time, to
vote and to give consents, ratifications and waivers with respect to the
Collateral, and the Collateral Agent shall, upon receiving a written request
from Pledgor, deliver to Pledgor or as specified in such request such proxies,
powers of attorney, consents, ratifications and waivers in respect
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<PAGE> 20
of any of the Collateral which is registered in the name of the Collateral Agent
or its nominee as shall be specified in such request and be in form and
substance satisfactory to the Collateral Agent.
If an Event of Default shall have occurred and be continuing, the
Collateral Agent shall have the right to the extent permitted by law, and
Pledgor shall take all such action as may be necessary or appropriate to give
effect to such right, to vote and to give consents, ratifications and waivers,
and take any other action with respect to any or all of the Collateral with the
same force and effect as if the Collateral Agent were the absolute and sole
owner of the Collateral.
ARTICLE VII
REMEDIES UPON EVENTS OF DEFAULT
Section 7.1. Rights of Secured Party. If any Event of Default shall
have occurred and be continuing, the Collateral Agent may exercise on behalf of
Purchaser all the rights of a secured party under the UCC (whether or not in
effect in the jurisdiction where such rights are exercised) and, in addition,
without being required to give any notice, except as provided in this Agreement
or as may be required by mandatory provisions of law, shall: (i) deliver all
Collateral consisting of Class A Common Stock or shares of Marketable Securities
(but not, in either case, in excess of the number of shares of such securities
deliverable under the Contract[S] at such time) to Purchaser on the date of such
Event of Default (in either case, the "Delivery Date"), whereupon Purchaser
shall hold such Class A Common Stock or shares of Marketable Securities
absolutely free from any claim or right of whatsoever kind, including any equity
or right of redemption of Pledgor which may be waived, and Pledgor, to the
extent permitted by law, hereby specifically waives all rights of redemption,
stay or appraisal which it has or may have under any law now existing or
hereafter adopted; and (ii) if such delivery shall be insufficient to satisfy in
full all of the obligations of Pledgor under the Contract[S], sell all of the
remaining Collateral, or such lesser portion of the remaining Collateral as may
be necessary to generate proceeds sufficient to satisfy in full all of the
obligations of Pledgor under the Contract[S], at public or private sale or at
any broker's board or on any securities exchange, for cash, upon credit or for
future delivery, and at such price or prices as the Collateral Agent may deem
satisfactory. Pledgor covenants and agrees that it will execute and deliver such
documents and take such other action as the Collateral Agent deems necessary or
advisable in order that any such sales may be made in compliance with law. Upon
any such sale the Collateral Agent shall have the right to deliver, assign and
transfer the Collateral so sold to the purchaser of such Collateral. Each
purchaser at any such sale shall hold the Collateral so sold absolutely and free
from any claim or right of whatsoever kind, including any equity or right of
redemption of Pledgor which may be waived, and Pledgor, to the extent permitted
by law, hereby specifically waives all rights of redemption, stay or appraisal
which it has or may have under any law now existing or hereafter adopted. The
notice (if any) of such sale required by Article 9 of the UCC shall (1) in case
of a public sale, state the time and
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<PAGE> 21
place fixed for such sale, (2) in case of sale at a broker's board or on a
securities exchange, state the board or exchange at which such sale is to be
made and the day on which the Collateral, or the portion of such Collateral so
being sold, will first be offered for sale at such board or exchange, and (3) in
the case of a private sale, state the day after which such sale may be
consummated. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral Agent may
fix in the notice of such sale. At any such sale the Collateral may be sold in
one lot as an entirety or in separate parcels, as the Collateral Agent may
determine. The Collateral Agent shall not be obligated to make any such sale
pursuant to any such notice. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be so
adjourned. In case of any sale of all or any part of the Collateral on credit or
for future delivery, the Collateral so sold may be retained by the Collateral
Agent until the selling price is paid by the purchaser of such Collateral, but
the Collateral Agent shall not incur any liability in case of the failure of
such purchaser to take up and pay for the Collateral so sold and, in case of any
such failure, such Collateral may again be sold upon like notice. The Collateral
Agent, instead of exercising the power of sale conferred upon it in this
Agreement, may proceed by a suit or suits at law or in equity to foreclose the
security interests and sell the Collateral, or any portion of such Collateral,
under a judgment or decree of a court or courts of competent jurisdiction.
Section 7.2. Power of Attorney. Upon any delivery or sale of all or any
part of any Collateral made either under the power of delivery or sale given
hereunder or under judgment or decree in any judicial proceedings for
foreclosure or otherwise for the enforcement of this Agreement, the Collateral
Agent is hereby irrevocably appointed the true and lawful attorney of Pledgor,
in the name and stead of Pledgor, to make all necessary deeds, bills of sale and
instruments of assignment, transfer or conveyance of the property thus delivered
or sold. For that purpose the Collateral Agent may execute all such documents
and instruments. This power of attorney shall be deemed coupled with an
interest, and Pledgor hereby ratifies and confirms all that its attorneys acting
under such power, or such attorneys' successors or agents, shall lawfully do by
virtue of this Agreement. If so requested by the Collateral Agent, by the
Trustees or by any purchaser of the Collateral or a portion of the Collateral,
Pledgor shall further ratify and confirm any such delivery or sale by executing
and delivering to the Collateral Agent, to the Trustees or to such purchaser or
purchasers at the expense of Pledgor all proper deeds, bills of sale,
instruments of assignment, conveyance of transfer and releases as may be
designated in any such request.
Section 7.3. Application of Collateral and Proceeds. In the case of an
Event of Default, the Collateral Agent may proceed to realize upon the security
interest in the Collateral against any one or more of the types of Collateral,
at any one time, as the Collateral Agent shall determine in its sole discretion
subject to the foregoing provisions of this Article VII. The proceeds of any
sale of, or other realization upon, or other receipt
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<PAGE> 22
from, any such Collateral shall be applied by the Collateral Agent in the
following order of priorities:
first, to the payment to Purchaser of an amount equal to: (A)
the aggregate Market Value of a number of shares of Class A Common
Stock and, if a Spin-Off Distribution has occurred, Marketable
Securities distributed in such Spin-Off Distribution equal to (1) the
number of shares of Class A Common Stock or shares of Marketable
Securities, as the case may be, required to be delivered under the
Contract[S] on the Delivery Date minus (2) the number of shares of
Class A Common Stock or shares of Marketable Securities, as the case
may be, delivered by the Collateral Agent to Purchaser on the Delivery
Date as described above; or (B) from and after a Reorganization Event,
the sum of (1) the Cash Delivery Obligations on the Delivery Date and
(2) the aggregate Market Value on the Delivery Date of a number of
Marketable Securities distributed in such Reorganization Event equal to
(x) the number of such Marketable Securities permitted to be delivered
on the Delivery Date under Section 6.2 of the Contract[S] minus (y) the
number of such Marketable Securities delivered by the Collateral Agent
to Purchaser on the Delivery Date as described above; together with, in
either of cases (A) and (B), any amounts due to Purchaser from Pledgor
pursuant to Section 2.4(k)(ii) of the Trust Agreement;
second, to the payment to the Collateral Agent of the expenses
of such sale or other realization, including reasonable compensation to
the Collateral Agent and its agents and counsel, and all expenses,
liabilities and advances incurred or made by the Collateral Agent in
connection therewith, including brokerage fees in connection with the
sale by the Collateral Agent of any Pledged Item; and
finally, if all of the obligations of Pledgor hereunder and
under the Contract[S] have been fully discharged or sufficient funds
have been set aside by the Collateral Agent at the request of Pledgor
for the discharge of such obligations, any remaining proceeds shall be
released to Pledgor.
ARTICLE VIII
THE COLLATERAL AGENT
Section 8.1. Conditions to Duties of the Collateral Agent. The
Collateral Agent accepts its duties and responsibilities hereunder as agent for
Purchaser, on and subject to the following terms and conditions:
(a) Performance of Duties. The Collateral Agent undertakes to
perform such duties and only such duties as are expressly set forth in
this Agreement and, beyond the exercise of reasonable care in the
performance of such duties, no implied covenants or obligations shall
be read into this Agreement against the
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<PAGE> 23
Collateral Agent. No provision of this Agreement shall be construed to
relieve the Collateral Agent from liability for its own grossly
negligent action, grossly negligent failure to act, bad faith, wilful
misconduct or reckless disregard of its duties. In performing its
duties, the following shall apply:
(i) The Collateral Agent may consult with counsel,
and the advice or opinion of such counsel shall be full and
complete authorization and protection in respect of an action
taken or suffered hereunder in good faith and in accordance
with such advice or opinion of counsel.
(ii) The Collateral Agent shall not be liable with
respect to any action taken, suffered or omitted by it in good
faith (i) reasonably believed by it to be authorized or within
the discretion or rights or powers conferred on it by this
Agreement or (ii) in accordance with any direction or request
of the Trustees.
(iii) The Collateral Agent shall not be liable for
any error of judgment made in good faith by any of its
officers, unless the Collateral Agent was grossly negligent in
ascertaining the pertinent facts.
(iv) In the absence of bad faith on its part, the
Collateral Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon any note, notice, resolution, consent,
certificate, affidavit, letter, telegram, teletype message,
statement, order or other document believed by it to be
genuine and correct and to have been signed or sent by the
proper Person or Persons.
(v) No provision of this Agreement shall require
the Collateral Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to
it.
(vi) The Collateral Agent may perform any duties
hereunder either directly or by or through agents or
attorneys, and the Collateral Agent shall not be responsible
for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder. In
furtherance of the preceding sentence, any subsidiary owned or
controlled by the Collateral Agent, or its successors, as
agent for the Collateral Agent, may perform any or all of the
duties of the Collateral Agent relating to the valuation of
securities and other instruments constituting Collateral
hereunder.
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<PAGE> 24
(vii) In no event shall the Collateral Agent be
personally liable for any taxes or other governmental charges
imposed upon or in respect of (i) the Collateral or (ii) the
income or other distributions thereon.
(viii) Unless and until the Collateral Agent shall
have received notice from Pledgor, Purchaser or any other
Person, or unless and until a Responsible Officer of the
Collateral Agent shall have actual knowledge to the contrary,
the Collateral Agent shall be entitled to deem and treat all
Collateral delivered to it hereunder as Eligible Collateral
hereunder, provided that the Collateral Agent has carried out
the duties specified in Article V with respect to such
Collateral at the time of delivery of such Collateral.
The Collateral Agent shall not be responsible for the correctness of
the recitals and statements in this Agreement that are made by Pledgor
or for any statement or certificate delivered by Pledgor pursuant to
this Agreement, provided that the Collateral Agent has carried out the
duties specified in Article V with respect to such Collateral at the
time of delivery of such Collateral. Except as specifically provided in
this Agreement, the Collateral Agent shall not be responsible for the
validity, sufficiency, collectibility or marketability of any
Collateral given to or held by it hereunder or for the validity or
sufficiency of the Contract[S] or the Lien on the Collateral purported
to be created hereby.
(b) Knowledge. The Collateral Agent shall not be deemed to
have knowledge of any Event of Default (except a Collateral Event of
Default), unless and until a Responsible Officer of the Collateral
Agent shall have actual knowledge of such Event of Default or the
Collateral Agent shall have received written notice, delivered in
accordance with Section 9.3, of such Event of Default.
Section 8.2. Merger. Any corporation or association into which the
Collateral Agent may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its agency business and assets
as a whole or substantially as a whole, or any corporation or association
resulting from any such conversion, sale, merger, consolidation or transfer to
which it is a party, shall be and become the successor Collateral Agent
hereunder and vested with all of the title to the Collateral and all of the
powers, discretions, immunities, privileges and other matters as was its
predecessor without, except as provided above, the execution or filing of any
instrument or any further act, deed or conveyance on the part of any of the
parties to this Agreement, anything in this Agreement to the contrary
notwithstanding.
Section 8.3. Resignation. Subject to Section 8.5, the Collateral Agent
and any successor Collateral Agent may at any time resign by giving 30 days'
written notice by registered or certified mail to Pledgor and notice to
Purchaser in accordance with the provisions of Section 9.3.
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<PAGE> 25
Section 8.4. Removal.
(a) Subject to Section 8.5, the Collateral Agent may be removed at any
time by an instrument or concurrent instruments in writing delivered to the
Collateral Agent and to Pledgor and signed by Purchaser.
(b) Subject to Section 8.5, the Collateral Agent shall be removed
immediately upon (i) termination of the Trust Agreement, (ii) termination of the
Administration Agreement (as defined in the Trust Agreement), (iii) termination
of the Paying Agent Agreement (as defined in the Trust Agreement), (iv)
termination of the Custodian Agreement (as defined in the Trust Agreement), or
(v) the resignation or removal of the Administrator, the Paying Agent or the
Custodian (in each case as defined in the Trust Agreement).
Section 8.5. Effectiveness of Resignation or Removal. No resignation or
removal of the Collateral Agent shall be effective until a successor Collateral
Agent shall have been appointed and shall have accepted the duties of the
Collateral Agent. If, within 30 days after notice by the Collateral Agent to the
Trust or by the Trust to the Collateral Agent of any such resignation or
removal, no successor Collateral Agent shall have been selected and accepted the
duties of the Collateral Agent, the Collateral Agent may apply to a court of
competent jurisdiction for the appointment of a successor Collateral Agent.
Section 8.6. Appointment of Successor.
(a) If the Collateral Agent hereunder shall resign or be removed, or be
dissolved or shall be in the course of dissolution or liquidation or otherwise
become incapable of action hereunder, or if it shall be taken under the control
of any public officer or officers or of a receiver appointed by a court, a
successor may be appointed by Purchaser by an instrument or concurrent
instruments in writing signed by Purchaser or by its attorneys in fact duly
authorized. A copy of such instrument or concurrent instruments shall be sent by
registered mail to Pledgor.
(b) Every such successor Collateral Agent appointed pursuant to the
provisions of this Agreement shall be a trust company or bank in good standing,
having a reported capital, surplus and retained earnings of not less than
$100,000,000 and capable of holding the Collateral in the State of New York, if
there be such an institution willing, qualified and able to accept the duties of
the Collateral Agent hereunder upon customary terms.
Section 8.7. Acceptance by Successor. Every temporary or permanent
successor Collateral Agent appointed hereunder shall execute, acknowledge and
deliver to its predecessor and also to Pledgor and Purchaser an instrument in
writing accepting such appointment hereunder, whereupon such successor, without
any further act, deed or conveyance, shall become fully vested with all the
estates, properties, rights, powers, duties and obligations of its predecessors.
Such predecessor shall, nevertheless, on the
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<PAGE> 26
written request of its successor or Pledgor, execute and deliver an instrument
transferring to such successor all the estates, properties, rights and powers of
such predecessor hereunder. Every predecessor Collateral Agent shall deliver all
Collateral held by it as the Collateral Agent hereunder to its successor. Should
any instrument in writing from Pledgor be required by a successor Collateral
Agent for more fully and certainly vesting in such successor the estates,
properties, rights, powers, duties and obligations hereby vested or intended to
be vested in the predecessor, any and all such instruments in writing shall, at
the request of the temporary or permanent successor Collateral Agent, be
forthwith executed, acknowledged and delivered by Pledgor.
Section 8.7. Compensation. For services to be rendered by the
Collateral Agent pursuant to this Agreement, the Administrator shall receive
only such fees and expenses as shall be paid to it pursuant to the terms of the
Indemnity Agreement and shall have no recourse to the assets of Purchaser for
the payment of any such amounts.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Termination. This Agreement and the rights hereby granted
by Pledgor in the Collateral shall cease, terminate and be void upon fulfillment
of all of the obligations of Pledgor under the Contract[S], and Pledgor shall
have no further liability hereunder upon such termination. Any Collateral
remaining at the time of such termination (including any Class A Common Stock
held following Seller's election of the Cash Settlement Alternative and payment
in respect of the Cash Settlement Alternative pursuant to the Contract[S], if
permitted thereunder) shall be fully released and discharged from the Lien
created by this Agreement and delivered to Pledgor by the Collateral Agent, all
at the expense of Pledgor.
Section 9.2. No Assumption of Liability. By executing this Agreement,
none of the Trustees assumes any personal liability under this Agreement.
Section 9.3. Notices.
(a) All notices and other communications provided for in this
Agreement, unless otherwise specified, shall be in writing and shall be given at
the addresses set forth in the following sentence or at such other addresses as
may be designated by notice duly given in accordance with this Section 9.3 to
each other party to this Agreement. Until such notice is given, (i) notices to
Pledgor shall be directed to it at , Telecopier No. [REVISE AS
NECESSARY]; (ii) notices to the Collateral Agent shall be directed to it at The
Chase Manhattan Bank, 450 West 33rd Street, New York, New York 10001, Telecopier
No. (212) 946-3638, Attention: Pledged Asset Control Services; and (iii) notices
to Purchaser shall be directed to it in care of the Administrator for Purchaser,
The Chase Manhattan Bank, 450 West 33rd Street, New York, New York 10001,
Telecopier No. (212) 946-3638, Attention: Collateral Management Services.
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<PAGE> 27
(b) Each notice given pursuant to Section 9.3(a) shall be effective (i)
if sent by certified mail (return receipt requested), 72 hours after being
deposited in the United States mail, postage prepaid or five days after being
deposited in the mail of another country, postage prepaid; (ii) if given by
telex or telecopier, when such telex or telecopied notice is transmitted (with
electronic confirmation of transmission or verbal confirmation of receipt); or
(iii) if given by any other means, when delivered at the address specified in
this Section 9.3.
Section 9.4. Governing Law; Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York;
provided that as to Collateral located in any jurisdiction other than the State
of New York, the Collateral Agent on behalf of Purchaser shall have all of the
rights to which a secured party is entitled under the laws of such other
jurisdiction.
To the extent permitted by law, the unenforceability or invalidity of
any provision or provisions of this Agreement shall not render any other
provision or provisions contained in this Agreement unenforceable or invalid.
Section 9.5. Entire Agreement. Except as expressly set forth in this
Agreement, this Agreement constitutes the entire agreement among the parties
with respect to the subject matter of this Agreement and supersedes all prior
agreements, understandings and negotiations, both written and oral, among the
parties with respect to the subject matter of this Agreement.
Section 9.6. Amendments; Waivers. Any provision of this Agreement may
be amended or waived (either generally or in a particular instance and either
retrospectively or prospectively) if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by Pledgor, the Collateral
Agent and Purchaser or, in the case of a waiver, by the party against whom the
waiver is to be effective. No failure or delay by either party in exercising any
right, power or privilege under this Agreement shall operate as a waiver of such
right, power or privilege nor shall any single or partial exercise of any such
right, power or privilege preclude any other or further exercise of such right,
power or privilege or the exercise of any other right, power or privilege. The
rights and remedies provided in this Agreement shall be cumulative and not
exclusive of any rights or remedies provided by law.
Section 9.7. Non-Assignability. This Agreement and the rights and
obligations of the parties under this Agreement may not be assigned or delegated
by either party without the prior written consent of the other party, and any
purported assignment without such consent shall be void.
Section 9.8. No Third Party Rights; Successors and Assigns. This
Agreement is not intended and shall not be construed to create any rights in any
person other than Pledgor, the Collateral Agent and Purchaser and their
respective successors and assigns and no person shall assert any rights as third
party beneficiary under this Agreement. Whenever any of the parties to this
Agreement is referred to, such
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<PAGE> 28
reference shall be deemed to include the successors and assigns of such party.
All the covenants and agreements in this Agreement contained by or on behalf of
Pledgor, the Collateral Agent and Purchaser shall bind, and inure to the benefit
of, their respective successors and assigns whether so expressed or not, and
shall be enforceable by and inure to the benefit of Purchaser and its successors
and assigns.
Section 9.9. Counterparts. This Agreement may be executed, acknowledged
and delivered in any number of counterparts, each of which shall be an original,
but all of which shall constitute a single agreement, with the same effect as if
the signatures on each such counterpart were upon the same instrument.
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<PAGE> 29
IN WITNESS WHEREOF, the parties have caused this Collateral Agreement
to be duly executed and delivered as of the first date set forth above.
PLEDGOR:
By:
-----------------------------------------------
Name:
Title:
THE COLLATERAL AGENT:
THE CHASE MANHATTAN BANK,
as Collateral Agent
By:
-----------------------------------------------
Name:
Title:
PURCHASER:
AMERITRADE AUTOMATIC COMMON
EXCHANGE SECURITY TRUST
By:
-----------------------------------------------
[Donald J. Puglisi,]
as Trustee
By:
-----------------------------------------------
[William R. Latham III,]
as Trustee
By:
-----------------------------------------------
[James B. O'Neill,]
as Trustee
<PAGE> 30
Exhibit A
to
Collateral Agreement
NOTICE OF PLEDGE VALUE
To: - [SELLER[S] / PLEDGOR]
Telecopier No. -
THE CHASE MANHATTAN BANK, as Collateral Agent (the "Collateral Agent")
under the Collateral Agreement, dated as of , 1999 (the "Collateral
Agreement"), among you, as Pledgor, the Collateral Agent and Ameritrade
Automatic Common Exchange Security Trust, hereby notifies you, pursuant to
Section 5.1 of the Collateral Agreement, that as of 4:00 p.m. New York City time
on _________ __, ____:
1. The Pledge Value was $ ; and
----------
2. The Pledge Value Requirement was $ .
----------
Capitalized terms not otherwise defined in this Notice have the
respective meanings specified in the Collateral Agreement.
THE CHASE MANHATTAN BANK,
as Collateral Agent
By:
-----------------------------------------------
Name:
Title:
<PAGE> 31
Exhibit B
to
Collateral Agreement
CERTIFICATE FOR SUBSTITUTED COLLATERAL
The undersigned, - (the "Pledgor"), hereby certifies, pursuant to
Section 5.2(b) of the Collateral Agreement, dated as of -, 1999 (the "Collateral
Agreement"), among Pledgor, The Chase Manhattan Bank, as Collateral Agent, and
Ameritrade Automatic Common Exchange Security Trust, that:
1. Pledgor is delivering the following securities to the Collateral
Agent to be held by the Collateral Agent as substituted Collateral (the
"Substituted Collateral"):
[INSERT DESCRIPTION OF SUBSTITUTE COLLATERAL]
2. Pledgor requests that the Collateral Agent transfer to Pledgor the
following Prior Collateral, pursuant to Section 5.2 of the Collateral Agreement:
[INSERT DESCRIPTION OF PRIOR COLLATERAL]
3. Pledgor hereby represents and warrants to the Collateral Agent and
Purchaser that:
(a) Consents to Transfer. No Transfer Restrictions exist with
respect to or otherwise apply to the pledge or assignment of, or
transfer by Pledgor of, any items of Substituted Collateral to the
Collateral Agent under the Collateral Agreement, or the subsequent sale
or transfer of such items of Substituted Collateral by the Collateral
Agent pursuant to the terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security Interest. Pledgor
has good and marketable title to the Substituted Collateral, free of
all Liens (other than the Lien created by the Collateral Agreement) and
Transfer Restrictions and has good, right and lawful authority to
assign, transfer and pledge such Substitute Collateral under the
Collateral Agreement. Upon delivery of the Substituted Collateral to
the Collateral Agent under the Collateral Agent, the Collateral Agent
will obtain a valid, first priority perfected security interest in, and
a first lien upon, such Substituted Collateral subject to no other
Lien. None of such Substituted Collateral is or shall be pledged by
Pledgor as collateral for any other purpose.
This Certificate may be relied upon by Purchaser as fully and to the
same extent as if this Certificate had been specifically addressed to Purchaser.
Capitalized terms not otherwise defined Certificate have the respective
meanings specified in the Collateral Agreement.
<PAGE> 32
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of ____________, ____.
- [PLEDGOR / SELLER[S]]
By:
-----------------------------------------------
Name:
Title:
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<PAGE> 33
Exhibit C
to
Collateral Agreement
CERTIFICATE FOR ADDITIONAL COLLATERAL
The undersigned, - (the "Pledgor"), hereby certifies, pursuant to
Section 5.3 of the Collateral Agreement, dated as of -, 1999 (the "Collateral
Agreement"), among Pledgor, The Chase Manhattan Bank, as Collateral Agent and
Ameritrade Automatic Common Exchange Security Trust, that:
1. Pledgor is delivering the following securities to the Collateral
Agent to be held by the Collateral Agent as additional Collateral (the
"Additional Collateral"):
[INSERT DESCRIPTION OF ADDITIONAL COLLATERAL]
2. Pledgor hereby represents and warrants to the Collateral Agent and
Purchaser that:
(a) Consents to Transfer. No Transfer Restrictions exist with
respect to or otherwise apply to the pledge or assignment of, or
transfer by Pledgor of, any items of Additional Collateral to the
Collateral Agent under the Collateral Agreement, or the subsequent sale
or transfer of such items of Additional Collateral by the Collateral
Agent pursuant to the terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security Interest. Pledgor
has good and marketable title to the Additional Collateral, free of all
Liens (other than the Lien created by the Collateral Agreement) and
Transfer Restrictions and has good, right and lawful authority to
assign, transfer and pledge such Additional Collateral under the
Collateral Agreement. Upon delivery of the Additional Collateral to the
Collateral Agent, the Collateral Agent will obtain a valid, first
priority perfected security interest in, and a first lien upon, such
Additional Collateral subject to no other Lien. None of such Additional
Collateral is or shall be pledged by Pledgor as collateral for any
other purpose.
This Certificate may be relied upon by Purchaser as fully and to the
same extent as if this Certificate had been specifically addressed to Purchaser.
Capitalized terms not otherwise defined Certificate have the respective
meanings specified in the Collateral Agreement.
<PAGE> 34
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of ____________, ____.
[PLEDGOR / SELLER[S]]
By:
-----------------------------------------------
Name:
Title:
-2-
<PAGE> 1
EXHIBIT 2.k.(v)
- --------------------------------------------------------------------------------
FUND EXPENSE AGREEMENT
Among
[SELLER[S]]
THE CHASE MANHATTAN BANK,
for Itself and Its Affiliate
and
AMERITRADE AUTOMATIC COMMON EXCHANGE SECURITY TRUST
------------------------------------
Dated as of , 1999
------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1. Defined Terms...............................................................................1
Section 1.2. Interpretation..............................................................................2
ARTICLE II
PAYMENTS BY [SELLER[S]]
Section 2.1. Agreement to Pay Up-Front Fees and Expenses.................................................3
Section 2.2. Agreement to Pay Additional Expenses........................................................3
ARTICLE III
CERTAIN AGREEMENTS OF THE SERVICE PROVIDER
Section 3.1. Statements and Reports......................................................................4
Section 3.2. Trust Termination; Refund of Unused Expense Funds...........................................4
Section 3.3. Termination of Administration Agreement.....................................................4
Section 3.4. Amendments to Other Agreements..............................................................5
Section 3.5. Payment to ChaseMellon Shareholder Services, L.L.C..........................................5
ARTICLE IV
MISCELLANEOUS
Section 4.1. Term of Agreement...........................................................................5
Section 4.2. No Assumption of Liability..................................................................5
Section 4.3. Notices.....................................................................................5
Section 4.4. Governing Law; Severability.................................................................6
Section 4.5. Entire Agreement............................................................................6
Section 4.6. Amendments; Waivers.........................................................................6
Section 4.7. Non-Assignability...........................................................................6
Section 4.8. No Third Party Rights; Successors and Assigns...............................................6
Section 4.9. Counterparts................................................................................6
</TABLE>
-i-
<PAGE> 3
FUND EXPENSE AGREEMENT
FUND EXPENSE AGREEMENT, dated as of , 1999, among
("[Seller[s]]") [revise as necessary], The Chase Manhattan Bank (the "Service
Provider"), for itself in its capacities as Administrator, Custodian and
Collateral Agent and for its affiliate, ChaseMellon Shareholder Services, L.LC.,
in its capacity as Paying Agent for Ameritrade Automatic Common Exchange
Security Trust, a trust organized under the laws of the State of New York under
and by virtue of an Amended and Restated Trust Agreement, dated as of
, 1999 (such trust and the trustees thereof acting in their
capacity as such being referred to in this Agreement as the "Trust"), and the
Trust.
WITNESSETH:
WHEREAS, the Trust is a trust organized under the laws of the State of
New York under and by virtue of the Amended and Restated Trust Agreement, dated
as of , 1999 (the "Trust Agreement"); and
WHEREAS, [Seller[s]] desires to make provision for the payment of
certain initial and on-going expenses of the Trust;
NOW, THEREFORE, the parties to this Agreement, intending to be bound,
agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1. Defined Terms.
(a) Capitalized terms used and not otherwise defined in this Agreement
have the respective meanings specified in the Trust Agreement.
(b) As used in this Agreement, the following terms have the following
meanings:
"Additional Expense" means the Ordinary Expense the incurrence
of which will require the Service Provider to provide the Additional
Expense Notice pursuant to Section 2.2(a) and any Ordinary Expense
incurred thereafter.
"Additional Expense Notice" has the meaning specified in
Section 2.2(a).
"Agreement" means this Fund Expense and Indemnity Agreement.
"Ordinary Expense" of the Trust means any expense of the Trust
other than any expense of the Trust arising under Section 3.4 of the
Administration Agreement, Section 3.5 or 3.6 of the Custodian
Agreement, Section 5.6 of the Paying Agent Agreement or Section 7.6 of
the Trust Agreement.
<PAGE> 4
Agreement,Section 3.5 or 3.6 of the Custodian Agreement, Section 5.6 of
the Paying Agent Agreement or Section 7.6 of the Trust Agreement.
"[Seller[s]]" has the meaning specified in the preamble to this
Agreement.
"Service Provider" has the meaning specified in the preamble
to this Agreement.
"Trust" has the meaning specified in the preamble to this
Agreement.
"Trust Agreement" has the meaning specified in the recitals to
this Agreement.
"Up-Front Fee Amount" means the amount set forth as such on
Schedule I hereto payable as a one-time payment to the Service Provider
in respect of its services, as Administrator, Custodian and Collateral
Agent, and those of ChaseMellon Shareholder Services, L.L.C., as Paying
Agent, for the entire term of the Trust.
"Up-Front Expense Amount" means the amount set forth as such
on Schedule I hereto payable as a one-time payment to the Service
Provider in respect of Ordinary Expenses anticipated to be incurred by
the Administrator on behalf of the Trust, pursuant to the
Administration Agreement, during the term of the Trust.
Section 1.2. Interpretation.
(a) When a reference is made in this Agreement to Articles, Sections,
Exhibits or Schedules, such reference is to Articles or Sections of, or Exhibits
or Schedules to, this Agreement unless otherwise indicated.
(b) The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement, and shall not be
deemed to limit or otherwise affect any of the provisions of this Agreement.
(c) Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(d) Any reference to any statute, regulation or agreement is a
reference to such statute, regulation or agreement as supplemented or amended
from time to time.
-2-
<PAGE> 5
ARTICLE II
PAYMENTS BY [SELLER[S]]
Section 2.1. Agreement to Pay Up-Front Fees and Expenses. [Seller[s]]
agree[s] to pay or cause to be paid to the Service Provider in Federal
(immediately available) funds at the First Time of Delivery the Up-Front Fee
Amount and the Up-Front Expense Amount.
Section 2.2. Agreement to Pay Additional Expenses.
(a) Before incurring on behalf of the Trust any Ordinary Expense that,
together with all prior Ordinary Expenses incurred by the Administrator on
behalf of the Trust, would cause the aggregate amount of Ordinary Expenses of
the Trust to exceed the Up- Front Expense Amount, the Administrator shall
provide to [Seller[s]] (i) prompt written notice (the "Additional Expense
Notice") to the effect that the aggregate amount of Ordinary Expenses of the
Trust will exceed the Up-Front Expense Amount, and (ii) an accounting, in such
detail as shall be reasonably acceptable to [Seller[s]], of all Ordinary
Expenses incurred on behalf of the Trust through the date of the Additional
Expense Notice.
(b) From and after the date of the Additional Expense Notice, the
Service Provider agrees that it will not, without the prior written consent of
[Seller[s]], incur on behalf of the Trust (i) any single expense in excess of
$1,000 or (ii) in any calendar period, expenses aggregating in excess of $3,000.
Subject to the foregoing, the Service Provider shall give notice to [Seller[s]]
in writing promptly after incurring any Additional Expense. Such notice shall be
accompanied by any demand, bill, invoice or other similar document in respect of
such Additional Expense.
(c) Subject to the first sentence of Section 2.2(b), [Seller[s]]
agree[s] to pay to the Service Provider from time to time the amount of any
Additional Expense. [Seller[s]] shall pay any such Additional Expense in Federal
(immediately available) funds by the later of (i) five Business Days after the
receipt by [Seller[s]] from the Service Provider of notice of the incurrence of
such Additional Expense, or (ii) the due date for the payment of such Additional
Expense.
(d) [Seller[s]] may contest in good faith the reasonableness of any
Additional Expense and the parties shall attempt in good faith to resolve
amicably the disagreement; provided that if the parties cannot resolve the
dispute by the due date specified in Section 2.2(c) with respect to such
Additional Expense, then subject to the first sentence of Section 2.2(b),
[Seller[s]] shall pay the amount of such Additional Expense as provided in
Section 2.2(c) subject to later adjustment and credit if such dispute is
resolved in favor of [Seller[s]].
-3-
<PAGE> 6
ARTICLE III
CERTAIN AGREEMENTS OF THE SERVICE PROVIDER
Section 3.1. Statements and Reports.
(a) The Service Provider shall
(i) collect and safekeep all demands, bills, invoices or other
written communications received from third parties in connection with
any Ordinary Expenses and Additional Expenses; and
(ii) prepare and maintain adequate books and records showing
all receipts and disbursements of funds in connection therewith.
(b) [Seller[s]] shall have the right to inspect and to copy, at its
expense, all such documents, books and records at all reasonable times and from
time to time during the term of this Agreement.
Section 3.2. Trust Termination; Refund of Unused Expense Funds. In
consideration of the agreements of [Seller[s]] in this Agreement:
(a) if, at the termination of the Trust in accordance with
Section 8.3 of the Trust Agreement, the aggregate amount of Ordinary
Expenses incurred by the Service Provider on behalf of the Trust
through the date of termination shall be less than the Up-Front Expense
Amount, the Service Provider shall, promptly following the date of such
termination, pay to [Seller[s]] in Federal (immediately available)
funds the amount of such excess; and
(b) the Trust shall reimburse [Seller[s]] for any payments
made by [Seller[s]] under this Agreement by paying over to [Seller[s]],
prior to the termination of the Trust, any funds held by the Trust
after satisfaction in full of the obligation of the Trust to pay
distributions in respect of the Securities, the obligation of the Trust
to distribute cash, Stock, Marketable Securities and other property to
the holders of the Securities, and satisfaction of or provision for all
other obligations and liabilities of the Trust, whether present or
future, contingent or otherwise, as principal or surety or otherwise.
Section 3.3. Termination of Administration Agreement. If the Service
Provider shall resign or be removed as Administrator pursuant to the
Administration Agreement, the Service Provider shall promptly repay to
[Seller[s]] a ratable portion of the Up-Front Fee Amount for the period from the
date of such resignation or removal to the Exchange Date, together with any
unexpended portion of the Up-Front Expense Amount.
Section 3.4. Amendments to Other Agreements. The Service Provider
agrees that it will not consent to any amendment of the Administration
Agreement, the
-4-
<PAGE> 7
Custodian Agreement or the Collateral Agreement without the prior
written consent of [Seller[s]].
Section 3.5. Payment to ChaseMellon Shareholder Services, L.L.C. The
Service Provider agrees that it shall pay over to ChaseMellon Shareholder
Services, L.L.C. that portion of the payments made to the Service Provider under
this Agreement that is due and payable to ChaseMellon Shareholder Services,
L.L.C. in connection with its role as Paying Agent for the Trust.
ARTICLE IV
MISCELLANEOUS
Section 4.1. Term of Contract. This Agreement shall continue in effect
until the completion of the liquidation of the Trust in accordance with Section
8.3(c) of the Trust Agreement.
Section 4.2. No Assumption of Liability. By executing this Agreement,
none of the Trustees assumes any personal liability under this Agreement.
Section 4.3. Notices.
(a) All notices and other communications provided for in this
Agreement, unless otherwise specified, shall be in writing and shall be given at
the addresses set forth in the following sentence or at such other addresses as
may be designated by notice duly given in accordance with this Section 4.3 to
each other party to this Agreement. Until such notice is given, (i) notices to
[Seller[s]] shall be directed to [it] [them] at [Seller[s]'[s] address]; (ii)
notices to the Service Provider (for itself or for the Paying Agent) shall be
directed to it at The Chase Manhattan Bank, 450 West 33rd Street, New York, New
York 10001, Telecopier No. (212) 946-3638, Attention: Pledged Asset Control
Services; and (iii) notices to the Trust or the Trustees shall be directed to
the Trustees at [850 Library Avenue, Suite 204, Newark, Delaware 19715,
Telecopier No. (302) 738-7210, Attention: Donald J. Puglisi or the applicable
Trustee].
(b) Each notice given pursuant to Section 4.3(a) shall be effective (i)
if sent by certified mail (return receipt requested), 72 hours after being
deposited in the United States mail, postage prepaid; (ii) if given by telex or
telecopier, when such telex or telecopied notice is transmitted (with electronic
confirmation of transmission or verbal confirmation of receipt); or (iii) if
given by any other means, when delivered at the address specified in this
Section 4.3.
Section 4.4. Governing Law; Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
To the extent permitted by law, the unenforceability or invalidity of any
provision or provisions of this
-5-
<PAGE> 8
Agreement shall not render any other provision or provisions contained in this
Agreement unenforceable or invalid.
Section 4.5. Entire Agreement. Except as expressly set forth in this
Agreement, this Agreement constitutes the entire agreement among the parties
with respect to the subject matter of this Agreement and supersedes all prior
agreements, understandings and negotiations, both written and oral, among the
parties with respect to the subject matter of this Agreement.
Section 4.6. Amendments; Waivers. Any provision of this Agreement may
be amended or waived (either generally or in a particular instance and either
retrospectively or prospectively) if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by [Seller[s]], the Service
Provider and the Trust or, in the case of a waiver, by the party against whom
the waiver is to be effective. No failure or delay by either party in exercising
any right, power or privilege under this Agreement shall operate as a waiver of
such right, power or privilege nor shall any single or partial exercise of any
such right, power or privilege preclude any other or further exercise of
such right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies in this Agreement provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
Section 4.7. Non-Assignability. This Agreement and the rights and
obligations of the parties under this Agreement may not be assigned or delegated
by either party without the prior written consent of the other party, and any
purported assignment without such consent shall be void.
Section 4.8. No Third Party Rights; Successors and Assigns. This
Agreement is not intended and shall not be construed to create any rights in any
person other than [Seller[s]], the Service Provider, the Trust and their
respective successors and assigns and no person shall assert any rights as third
party beneficiary under this Agreement. Whenever any of the parties to this
Agreement is referred to, such reference shall be deemed to include the
successors and assigns of such party. All the covenants and agreements in this
Agreement contained by or on behalf of [Seller[s]], the Service Provider, the
Trust shall bind, and inure to the benefit of, their respective successors and
assigns whether so expressed or not, and shall be enforceable by and inure to
the benefit of the Service Provider and its successors and assigns.
Section 4.9. Counterparts. This Agreement may be executed, acknowledged
and delivered in any number of counterparts, each of which shall be an original,
but all of which shall constitute a single agreement, with the same effect as if
the signatures on each such counterpart were upon the same instrument.
-6-
<PAGE> 9
IN WITNESS WHEREOF, the parties have caused this Fund Expense Agreement
to be duly executed and delivered as of the first date set forth above.
[SELLER[S]]
By:
---------------------------------
([Seller[s]])
THE SERVICE PROVIDER:
THE CHASE MANHATTAN BANK,
as Service Provider
By:
---------------------------------
Name:
Title:
THE TRUST:
AMERITRADE AUTOMATIC COMMON
EXCHANGE SECURITY TRUST
By:
---------------------------------
[Name],
as Trustee
By:
---------------------------------
[Name],
as Trustee
By:
---------------------------------
[Name],
as Trustee
-7-
<PAGE> 10
SCHEDULE I
Expenses of Organization of the Trust and the
Public Offering of the Securities [REVISE AS NECESSARY]
<TABLE>
<S> <C>
Up-Front Fee Amount: $230,000
Up-Front Expense Amount:
Trustees Fees 36,000
Wall Street Concepts Fees 3,000
Accounting Fees 96,500
Fidelity Bond 1,500
Other $ 15,000
--------
Total Up-Front Expense Amount $152,000
========
</TABLE>
-8-
<PAGE> 1
EXHIBIT 2.k.(vi)
- --------------------------------------------------------------------------------
FUND INDEMNITY AGREEMENT
Among
- [SELLER[S]],
THE CHASE MANHATTAN BANK,
for Itself and Its Affiliate
and
AMERITRADE AUTOMATIC COMMON EXCHANGE SECURITY TRUST
------------------------------------
Dated as of , 1999
------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1. Defined Terms.....................................................1
Section 1.2. Interpretation....................................................2
ARTICLE II
PAYMENTS BY SELLER
Section 2.1. Agreement to Pay Indemnification Expenses.........................2
Section 2.2. Condition to Payments.............................................3
ARTICLE III
CERTAIN AGREEMENTS OF THE SERVICE PROVIDER
Section 3.1. Statements and Reports............................................3
Section 3.2. Amendments to Other Agreements....................................3
Section 3.3. Payment to ChaseMellon Shareholder Services, L.L.C................4
ARTICLE IV
MISCELLANEOUS
Section 4.1. Term of Agreement.................................................4
Section 4.2. No Assumption of Liability........................................4
Section 4.3. Notices...........................................................4
Section 4.4. Governing Law; Severability.......................................4
Section 4.5. Entire Agreement..................................................5
Section 4.6. Amendments; Waivers...............................................5
Section 4.7. Non-Assignability.................................................5
Section 4.8. No Third Party Rights; Successors and Assigns.....................5
Section 4.9. Counterparts......................................................5
<PAGE> 3
FUND INDEMNITY AGREEMENT
FUND INDEMNITY AGREEMENT, dated as of , 1999, among
("Seller[S]") [REVISE AS NECESSARY], The Chase Manhattan Bank (the
"Service Provider"), for itself in its capacities as Administrator, Custodian
and Collateral Agent and for its affiliate, ChaseMellon Shareholder Services,
L.L.C., in its capacity as Paying Agent for Ameritrade Automatic Common Exchange
Security Trust, a trust organized under the laws of the State of New York under
and by virtue of an Amended and Restated Trust Agreement, dated as of ,
1999 (such trust and the trustees thereof acting in their capacity as such being
referred to in this Agreement as the "Trust"), and the Trust.
WITNESSETH:
WHEREAS, the Trust is a trust organized under the laws of the State of
New York under and by virtue of the Amended and Restated Trust Agreement, dated
as of , 1999 (the "Trust Agreement"); and
WHEREAS, Seller[S] desire[s] to make provision for the payment of
certain indemnification expenses of the Trust;
NOW, THEREFORE, the parties to this Agreement, intending to be bound,
agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.1. Defined Terms.
(a) Capitalized terms used and not otherwise defined in this Agreement
have the respective meanings specified in the Trust Agreement.
(b) As used in this Agreement, the following terms have the following
meanings:
"Agreement" means this Fund Indemnity Agreement.
"Claimant" has the meaning specified in Section 2.1(b).
"Indemnification Expenses" has the meaning specified in
Section 2.1(a).
"Seller[S]" has the meaning specified in the preamble to this
Agreement. [REVISE AS NECESSARY]
"Service Provider" has the meaning specified in the preamble
to this Agreement.
<PAGE> 4
"Trust" has the meaning specified in the preamble to this
Agreement.
"Trust Agreement" has the meaning specified in the recitals to
this Agreement.
Section 1.2. Interpretation.
(a) When a reference is made in this Agreement to Articles, Sections,
Exhibits or Schedules, such reference is to Articles or Sections of, or Exhibits
or Schedules to, this Agreement unless otherwise indicated.
(b) The table of contents and headings contained in this Agreement are
for reference purposes only and are not part of this Agreement, and shall not be
deemed to limit or otherwise affect any of the provisions of this Agreement.
(c) Whenever the words "include", "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation".
(d) Any reference to any statute, regulation or agreement is a
reference to such statute, regulation or agreement as supplemented or amended
from time to time.
ARTICLE II
PAYMENTS BY SELLER
Section 2.1. Agreement to Pay Indemnification Expenses.
(a) Seller[S] agree[s] to pay to and indemnify the Trust, and hold the
Trust harmless from, any expenses of the Trust arising under Section 2.2(g) or
3.4 of the Administration Agreement, Section 8.1(a)(v) of the Collateral
Agreement, Section 3.5 or 3.6 of the Custodian Agreement, Section 5.6 of the
Paying Agent Agreement and the last sentence of Section 7.6 of the Trust
Agreement (collectively, "Indemnification Expenses"). Subject to Section 2.1(b),
Seller[S] shall pay any Indemnification Expense in Federal (immediately
available) funds no later than five Business Days after the receipt by
Seller[S], pursuant to Section 2.1(b), of written notice of any claim for
Indemnification Expenses.
(b) The Trustees shall give notice to, or cause notice to be given to,
Seller[S] in writing of any claim for Indemnification Expenses or any threatened
claim for Indemnification Expenses immediately upon their acquiring knowledge of
such claim. Such written notice shall be accompanied by any demand, bill,
invoice or other communication received from any third party claimant (a
"Claimant") in respect of such Indemnification Expense.
-2-
<PAGE> 5
(c) The Trust agrees that Seller[S] may, and Seller[S] [is] [are]
authorized on behalf of the Trust to, contest in good faith with any Claimant
any amount contained in any claim for Indemnification Expense, provided that if,
within such time period as the Trust shall determine to be reasonable, Seller[S]
and such Claimant are unable to resolve amicably any disagreement regarding such
claim for Indemnification Expense, Seller[S] shall retain counsel reasonably
satisfactory to the Trust to represent the Trust in any resulting proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
It is understood that Seller[S] shall not, in respect of the legal expenses of
any indemnified party in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel). Seller[S] shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the Claimant,
Seller[S] agree[s] to indemnify the Trustees and the Trust from and against any
loss or liability by reason of such settlement or judgment.
Section 2.2. Condition to Payments. Seller[S]'[s] obligations under
Section 2.1 shall be subject to the condition that the Securities that are
deliverable under the Underwriting Agreement at the First Time of Delivery shall
have been issued and paid for at the First Time of Delivery.
ARTICLE III
CERTAIN AGREEMENTS OF THE SERVICE PROVIDER
Section 3.1. Statements and Reports.
(a) The Service Provider shall
(i) collect and safekeep all demands, bills, invoices or other
written communications received from third parties in connection with
any claim for Indemnification Expenses; and
(ii) prepare and maintain adequate books and records showing
all receipts and disbursements of funds in connection therewith.
(b) Seller[S] shall have the right to inspect and to copy, at its
expense, all such documents, books and records at all reasonable times and from
time to time during the term of this Agreement.
Section 3.2. Amendments to Other Agreements. The Service Provider
agrees that it will not consent to any amendment of the Administration
Agreement, the Custodian Agreement or the Collateral Agreement without the prior
written consent of Seller[S].
-3-
<PAGE> 6
Section 3.3. Payment to ChaseMellon Shareholder Services, L.L.C. The
Service Provider agrees that it shall pay over to ChaseMellon Shareholder
Services, L.L.C. that portion of the payments made to the Service Provider under
this Agreement that is due and payable to ChaseMellon Shareholder Services,
L.L.C. in connection with its role as Paying Agent for the Trust.
ARTICLE IV
MISCELLANEOUS
Section 4.1. Term of Agreement. This Agreement shall continue in effect
until the completion of the liquidation of the Trust in accordance with Section
8.3(c) of the Trust Agreement.
Section 4.2. No Assumption of Liability. By executing this Agreement,
none of the Trustees assumes any personal liability under this Agreement.
Section 4.3. Notices.
(a) All notices and other communications provided for in this
Agreement, unless otherwise specified, shall be in writing and shall be given at
the addresses set forth in the following sentence or at such other addresses as
may be designated by notice duly given in accordance with this Section 4.3 to
each other party to this Agreement. Until such notice is given, (i) notices to
Seller[S] shall be directed to [it] [them] at [REVISE AS NECESSARY] ,
Telecopier No. ; (ii) notices to the Service Provider (for itself or for the
Paying Agent) shall be directed to it at The Chase Manhattan Bank, 450 West
33rd Street, New York, New York 10001, Telecopier No. (212) 946-3638, Attention:
Pledged Asset Control Services; and (iii) notices to the Trust or the Trustees
shall be directed to the Trustees at [850 Library Avenue, Suite 204, Newark,
Delaware 19715, Telecopier No. (302) 738-6680, Attention: Donald J. Puglisi or
the applicable Trustee].
(b) Each notice given pursuant to Section 4.3(a) shall be effective (i)
if sent by certified mail (return receipt requested), 72 hours after being
deposited in the United States mail, postage prepaid or five days after being
deposited in the mail of another country, postage prepaid; (ii) if given by
telex or telecopier, when such telex or telecopied notice is transmitted (with
electronic confirmation of transmission or verbal confirmation of receipt); or
(iii) if given by any other means, when delivered at the address specified in
this Section 4.3.
Section 4.4. Governing Law; Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
To the extent permitted by law, the unenforceability or invalidity of any
provision or provisions of this Agreement shall not render any other provision
or provisions contained in this Agreement unenforceable or invalid.
-4-
<PAGE> 7
Section 4.5. Entire Agreement. Except as expressly set forth in this
Agreement, this Agreement constitutes the entire agreement among the parties
with respect to the subject matter of this Agreement and supersedes all prior
agreements, understandings and negotiations, both written and oral, among the
parties with respect to the subject matter of this Agreement.
Section 4.6. Amendments; Waivers. Any provision of this Agreement may
be amended or waived (either generally or in a particular instance and either
retrospectively or prospectively) if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by Goldman Sachs, Seller[S],
the Service Provider and the Trust or, in the case of a waiver, by the party
against whom the waiver is to be effective. No failure or delay by either party
in exercising any right, power or privilege under this Agreement shall operate
as a waiver of such right, power or privilege nor shall any single or partial
exercise of any such right, power or privilege preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege. The rights and remedies in this Agreement provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
Section 4.7. Non-Assignability. This Agreement and the rights and
obligations of the parties under this Agreement may not be assigned or delegated
by either party without the prior written consent of the other party, and any
purported assignment without such consent shall be void.
Section 4.8. No Third Party Rights; Successors and Assigns. This
Agreement is not intended and shall not be construed to create any rights in any
person other than Goldman Sachs, Seller[S], the Service Provider, the Trust and
their respective successors and assigns and no person shall assert any rights as
third party beneficiary under this Agreement. Whenever any of the parties to
this Agreement is referred to, such reference shall be deemed to include the
successors and assigns of such party. All the covenants and agreements in this
Agreement contained by or on behalf of Goldman Sachs, Seller[S], the Service
Provider, the Trust shall bind, and inure to the benefit of, their respective
successors and assigns whether so expressed or not, and shall be enforceable by
and inure to the benefit of the Service Provider and its successors and assigns.
Section 4.9. Counterparts. This Agreement may be executed, acknowledged
and delivered in any number of counterparts, each of which shall be an original,
but all of which shall constitute a single agreement, with the same effect as if
the signatures on each such counterpart were upon the same instrument.
-5-
<PAGE> 8
IN WITNESS WHEREOF, the parties have caused this Fund Indemnity
Agreement to be duly executed and delivered as of the first date set forth
above.
AMERITRADE INTERNATIONAL LIMITED
By:
-----------------------------------------------
Name:
Title:
THE SERVICE PROVIDER:
THE CHASE MANHATTAN BANK,
as Service Provider
By:
-----------------------------------------------
Name:
Title:
THE TRUST:
AMERITRADE AUTOMATIC COMMON
EXCHANGE SECURITY TRUST
By:
-----------------------------------------------
[Name],
as Trustee
By:
-----------------------------------------------
[Name],
as Trustee
By:
-----------------------------------------------
[Name],
as Trustee
-6-
<PAGE> 1
EXHIBIT 2.n.(ii)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form N-2
(Securities Act File No. 333-77547 and Investment Company Act File No.
811-9319) of our report dated July 9, 1999, on our audit of the statement of
assets and liabilities of Ameritrade Automatic Common Exchange Security Trust.
We also consent to the reference to our firm under the caption "Experts".
/s/ PRICEWATERHOUSECOOPERS LLP
New York, New York
July 9, 1999
<PAGE> 1
EXHIBIT 2.n.(iii)
CONSENT TO BEING NAMED AS TRUSTEE
The undersigned hereby consents to being named in the Registration
Statement on Form N-2 of Ameritrade Automatic Common Exchange Security Trust
(formerly, the Ninth Automatic Common Exchange Security Trust)(the "Trust") and
any amendments thereto, as a person about to become a trustee of the Trust.
Dated: July 12, 1999
/s/ DONALD J. PUGLISI
-----------------------------------
Donald J. Puglisi
<PAGE> 2
CONSENT TO BEING NAMED AS TRUSTEE
The undersigned hereby consents to being named in the Registration
Statement on Form N-2 of Ameritrade Automatic Common Exchange Security Trust
(formerly, the Ninth Automatic Common Exchange Security Trust) (the "Trust") and
any amendments thereto, as a person about to become a trustee of the Trust.
Dated: July 12, 1999
/s/ WILLIAM R. LATHAM III
-----------------------------------
William R. Latham III
<PAGE> 3
CONSENT TO BEING NAMED AS TRUSTEE
The undersigned hereby consents to being named in the Registration
Statement on Form N-2 of Ameritrade Automatic Common Exchange Security
Trust (formerly, the Ninth Automatic Common Exchange Security Trust) (the
"Trust") and any amendments thereto, as a person about to become a trustee of
the Trust.
Dated: July 12, 1999
/s/ JAMES B. O'NEILL
-----------------------------------
James B. O'Neill
