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EXHIBIT 2.k(iii)(A)
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PURCHASE AGREEMENT
Between
[NAME OF SELLER],
As Seller
and
AMERITRADE AUTOMATIC COMMON EXCHANGE SECURITY TRUST,
As Purchaser
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Dated as of July __, 1999
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Table of Contents
Page
ARTICLE I ------
DEFINITIONS; INTERPRETATION
Section 1.1. Defined Terms...............................................................................2
Section 1.2. Interpretation..............................................................................7
ARTICLE II
SALE AND PURCHASE
Section 2.1. Sale and Purchase...........................................................................7
Section 2.2. Purchase Price..............................................................................8
Section 2.3. Payment for and Delivery of Firm Stock......................................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1. Representations and Warranties of Seller....................................................9
Section 3.2. Representations and Warranties of Purchaser.................................................9
ARTICLE IV
CONDITIONS TO PURCHASER'S OBLIGATIONS
Section 4.1. Condition to Delivery of Firm Purchase Price................................................9
ARTICLE V
COVENANTS
Section 5.1. Covenants of Seller.........................................................................9
Section 5.2. Further Assurances.........................................................................10
ARTICLE VI
ADJUSTMENTS TO EXCHANGE RATE, APPRECIATION THRESHOLD PRICE,
INITIAL PRICE AND CLOSING PRICE; REORGANIZATION EVENTS
Section 6.1. Dilution Adjustments.......................................................................11
Section 6.2. Adjustment for Consolidation, Merger or Other Reorganization Event.........................14
Section 6.3. Spin-Off Distributions.....................................................................15
Section 6.4. Adjustments with Respect to Marketable Securities..........................................15
ARTICLE VII
ACCELERATION UPON AN EVENT OF DEFAULT
Section 7.1. Events of Default..........................................................................16
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Adjustments of Exchange Rate; Selection of Independent Investment
Banking Firm...........................................................................17
Section 8.2. No Assumption of Liability.................................................................17
Section 8.3. Notices....................................................................................17
Section 8.4. Governing Law; Severability................................................................17
Section 8.5. Entire Agreement...........................................................................17
Section 8.6. Amendments; Waivers........................................................................18
Section 8.7. Non-Assignability..........................................................................18
Section 8.8. No Third Party Rights; Successors and Assigns..............................................18
Section 8.9. Counterparts...............................................................................18
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PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of July __, 1999, between [NAME OF
SELLER], a trust organized under the laws of [ ] ("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 July __, 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 4,000,000 $o 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 Class A Common Stock) on the Exchange Date
referred to below; and
WHEREAS, Seller has agreed, pursuant to the Collateral Agreement, dated
as of July __, 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 July __, 1999 (the "Underwriting Agreement"), among Purchaser, Seller, J.
▇▇▇ ▇▇▇▇▇▇▇▇, the Company, and ▇▇▇▇▇▇▇ Sachs & Co., as representatives of the
several underwriters named in such agreement (the "Underwriters"), to issue and
sell to the Underwriters an aggregate of 4,000,000 Securities (the "Firm
Securities") and, at the Underwriters' option, up to 600,000 additional
Securities (such additional Securities as the Underwriters shall actually
purchase pursuant to the Underwriting Agreement, the "Optional Securities") to
cover overallotments;
NOW, THEREFORE, the parties to this Agreement, intending to be bound,
agree as follows:
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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.
"Administrator" means The Chase Manhattan Bank, administrator
for Purchaser under the Administration Agreement, dated as of July __,
1999, 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(b).
"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 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".
"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.
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"Cash Merger" has the meaning specified in Section 6.2(b).
"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 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 shares 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.
"Custodian" means The Chase Manhattan Bank, as custodian for
Purchaser under the Custodian Agreement, dated as of July __, 1999,
between the Custodian and Purchaser, or its successor in such capacity,
or any other Custodian appointed pursuant to the Trust Agreement.
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"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 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 July __, 2002.
"Exchange Rate" has the meaning specified in Section 2.1(b).
"Firm Purchase Price" has the meaning specified in Section
2.2.
"Firm Stock" has the meaning specified in Section 2.1(a).
"Firm Stock Base Amount" has the meaning specified in Section
2.1(a).
"Initial Price" has the meaning specified in Section 2.1(b).
"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".
"Purchaser" has the meaning specified in the preamble to this
Agreement.
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"Reorganization Event" has the meaning specified in Section
6.2.
"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.
"Time of Delivery" has the meaning specified in Section
2.3(a).
"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 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
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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 Security" has the meaning specified in Section
2.3(c).
"Trust Agreement" means the Amended and Restated Trust
Agreement, dated as of July __, 1999, 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.
"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".
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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.
(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 [O]
(the "Firm Stock Base Amount") and the Exchange Rate.
(b) 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 $o (the
"Appreciation Threshold Price") but equal to or greater than $o (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, o; and
(iii) if the Average Market Price is less than the Initial
Price, 1.
Section 2.2. Purchase Price.
Firm Purchase Price. The purchase price for the Firm Stock (the "Firm
Purchase Price") shall be $-- in cash.
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Section 2.3. Payment for and Delivery of Firm Stock.
(a) Time of Delivery. Upon the terms and subject to the conditions of
this Agreement, Purchaser shall deliver to Seller the Firm Purchase Price on
July , 1999 (the "Time of Delivery") at the offices of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, 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) Sale and Delivery of Firm Stock. Seller agrees to sell and deliver
the Firm Stock to Purchaser on the Exchange Date. 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 Firm Stock, rounded down to the nearest whole number. Seller agrees to
make a cash payment in respect of any fractional shares included in the Firm
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(f)(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; or (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.
(c) 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
Firm 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 Firm 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 Firm
Stock Base Amount (rounded down to the nearest whole share).
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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 is true and
correct on the date of this Agreement.
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(c) of the Underwriting Agreement 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 Time of
Delivery is subject to the condition that the purchase by the Underwriters of
the Firm 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 Firm Stock (or any cash or
Marketable Securities in lieu of the Firm 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 Firm 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
Firm 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 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.
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(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 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:
(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;
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(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 capital shares 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
capital shares 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 shares 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 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
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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.
(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
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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 stock 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 stock 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 stock 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 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
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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 stockholders 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 Firm Stock, cash in an amount (the "Basic Reorganization Event Amount")
equal to the result of applying the Dilution Adjustment (or successive Dilution
Adjustments), if any, 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 Stock 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, o 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 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
Firm Stock Base Amount and (y) the Exchange Rate, adjusted as described in the
next sentence, and the provisions of Section 2.3(b) 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.
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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 Firm Stock shall be deemed to include both (A) that number
of shares of Class A Common Stock equal to the product of (x) the Firm Stock
Base Amount and (y) the Exchange Rate, and (B) that number of Marketable
Securities of the class distributed in respect of the Firm Stock in such
Spin-Off Distribution equal to the product of (x) the Firm 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 Firm Stock and the provisions of Section 2.3(b) 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 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
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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 Firm Stock (or the Marketable Securities or cash or combination of
Marketable Securities and cash deliverable in respect of such Firm Stock), or
any U.S. Government Securities then pledged under the Collateral Agreement in
respect of such Firm Stock. Purchaser and Seller agree that such amount is a
reasonable pre-estimate of loss and not a penalty. Such amount is payable for
the loss of bargain and 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, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Telecopier No.
(▇▇▇) ▇▇▇-▇▇▇▇, Attention: Pledge Asset Control Services; and (ii) notices to
Seller [REVISE AS NECESSARY] shall be directed to it at -, Telecopier No. --.
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(b) Each notice given pursuant to Section 8.3(a) shall be effective (i)
if sent by certified mail (return receipt requested), three Business Days 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 from the
addressee 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.
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.
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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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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:
[NAME OF SELLER]
By:
---------------------------------------
Name:
Title:
PURCHASER:
AMERITRADE AUTOMATIC COMMON
EXCHANGE SECURITY TRUST
By:
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
as Trustee
By:
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III,
as Trustee
By:
---------------------------------------
▇▇▇▇▇ ▇. ▇'▇▇▇▇▇,
as Trustee