AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 9, 1996
REGISTRATION NO. 333-00155*
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
AMENDMENT NO. 1
TO
FORM S-6
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
----------------------------
A. EXACT NAME OF TRUST:
Qualified Unit Investment Liquid Trust Series ("QUILTS"), Equity
Strategic Ten, Series 1 and Equity Strategic Five, Series 1
B. NAME OF DEPOSITOR:
OCC Distributors
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
OCC Distributors
Two World Financial Center
225 Liberty Street
New York, New York 10080-6116
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY OF COMMENTS TO:
SUSAN A. MURPHY MICHAEL R. ROSELLA, Esq.
Senior Vice President Battle Fowler LLP
Quest Cash Management Services Park Avenue Tower
Oppenheimer Capital 75 East 55th Street
Two World Financial Center New York, New York 10022
225 Liberty Street (212) 856-6858
New York, New York 10080-6116
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Qualified Unit Investment Liquid Trust
Series ("QUILTS"), Equity Strategic Ten, Series 1 and Equity Strategic
Five, Series 1 is being registered under the Securities Act of 1933
pursuant to Section 24(f) of the Investment Company Act of 1940, as
amended, and Rule 24f-2 thereunder.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
$500** (as required by Rule 24f-2)
H. APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the Registration
Statement.
_____ Check if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.
* The Prospectus included in this Registration Statement constitutes a
Combined Prospectus as permitted by the provisions of Rule 429 of The
General Rules and Regulations under the Securities Act of 1933 (the
"Act"). Said Prospectus covers units of undivided interest in QUILTS,
Equity Strategic Five, Series 1 and QUILTS, Equity Strategic Ten, Series
1 heretofore filed as part of separate registration statements on Form
S-6 (Registration Nos. 333-00155 and 33-65075, respectively) under the
Act.
** Previously paid.
336964.1
<PAGE>
Qualified Unit Investment Liquid Trust Series ("QUILTS")
Equity Strategic Ten, Series 1
Equity Strategic Five, Series 1
CROSS-REFERENCE SHEET
Pursuant to Rule 404 of Regulation C
Under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction as
to the Prospectus in Form S-6)
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C>
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust............................... Front cover of Prospectus
(b) Title of securities issued.................. Front cover of Prospectus
2. Name and address of each depositor............... The Sponsor
3. Name and address of trustee...................... The Trustee
4. Name and address of principal underwriters....... Distribution of Units
5. State of organization of trust................... Organization
6. Execution and termination of trust agreement..... Trust Agreement, Amendment and
Termination
7. Changes of name.................................. Not Applicable
8. Fiscal year...................................... Not Applicable
9. Litigation....................................... None
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer securities............. Book Entry Units
(b) Cumulative or distributive securities....... Interest and Principal Distributions
(c) Redemption.................................. Trustee Redemption
(d) Conversion, transfer, etc................... Book Entry Units, Sponsor Repurchase,
Trustee Redemption
(e) Periodic payment plan....................... Not Applicable
(f) Voting rights............................... Trust Agreement, Amendment and
Termination
(g) Notice to certificateholders................ Records, Portfolio, Substitution of Securities,
Trust Agreement, Amendment and
Termination, The Sponsor, the Trustee
(h) Consents required........................... Trust Agreement, Amendment and Termination
(i) Other provisions............................ Tax Status
11. Type of securities comprising units.............. Objectives, Portfolio, Portfolio Summary
12. Certain information regarding periodic payment
certificates..................................... Not Applicable
</TABLE>
i
336964.1
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C>
13. (a) Load, fees, expenses, etc................... Summary of Essential Information, Public
Offering Price, Market for Units, Volume and
Other Discounts, Sponsor's Profits, Trust
Expenses and Charges
(b) Certain information regarding periodic
payment certificates........................ Not Applicable
(c) Certain percentages......................... Summary of Essential Information, Public
Offering Price, Market for Units, Volume
and Other Discounts
(d) Price differences........................... Volume and Other Discounts, Distribution of
Units
(e) Other loads, fees, expenses................. Book Entry Units
(f) Certain profits receivable by depositors,
principal underwriters, trustee or
affiliated persons.......................... Sponsor's Profits, Portfolio Summary
(g) Ratio of annual charges to income........... Not Applicable
14. Issuance of trust's securities................... Organization, Certificates
15. Receipt and handling of payments from purchasers. Organization
16. Acquisition and disposition of underlying
securities....................................... Organization, Objectives, Portfolio, Portfolio
Supervision
17. Withdrawal or redemption......................... Comparison of Public Offering Price,
Sponsor's Repurchase Price and Redemption
Price, Sponsor Repurchase, Trustee
Redemption
18. (a) Receipt, custody and disposition of income.. Monthly Distributions, Interest and Principal
Distributions, Portfolio Supervision
(b) Reinvestment of distributions............... Not Applicable
(c) Reserves or special funds................... Interest and Principal Distributions
(d) Schedule of distributions................... Not Applicable
19. Records, accounts and reports.................... Records
20. Certain miscellaneous provisions of trust
agreement
(a) Amendment................................... Trust Agreement, Amendment and Termination
(b) Termination................................. Trust Agreement, Amendment and Termination
(c) and (d) Trustee, removal and successor....... The Trustee
(e) and (f) Depositor, removal and successor..... The Sponsor
21. Loans to security holders........................ Not Applicable
22. Limitations on liability......................... The Sponsor, The Trustee, The Evaluator
23. Bonding arrangements............................. Part II - Item A
24. Other material provisions of trust agreement..... Not Applicable
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of depositor........................ The Sponsor
26. Fees received by depositor....................... Not Applicable
</TABLE>
ii
336964.1
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C>
27. Business of depositor............................ The Sponsor
28. Certain information as to officials and affiliated
persons of depositor............................. Not Applicable
29. Voting securities of depositor................... Not Applicable
30. Persons controlling depositor.................... Not Applicable
31. Payments by depositor for certain services
rendered to trust................................ Not Applicable
32. Payments by depositor for certain other services
rendered to trust................................ Not Applicable
33. Remuneration of employees of depositor for
certain services rendered to trust............... Not Applicable
34. Remuneration of other person for certain services
rendered to trust................................ Not Applicable
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities by states..... Distribution of Units
36. Suspension of sales of trust's securities........ Not Applicable
37. Revocation of authority to distribute............ None
38. (a) Method of distribution...................... Distribution of Units
(b) Underwriting agreements..................... Distribution of Units
(c) Selling agreements.......................... Distribution of Units
39. (a) Organization of principal underwriters...... The Sponsor
(b) N.A.S.D. membership of principal
underwriters................................ The Sponsor
40. Certain fees received by principal underwriters.. The Sponsor
41. (a) Business of principal underwriters.......... The Sponsor
(b) Branch offices of principal underwriters.... The Sponsor
(c) Salesmen of principal underwriters.......... The Sponsor
42. Ownership of trust's securities by certain persons Not Applicable
43. Certain brokerage commissions received by
principal underwriters........................... Not Applicable
44. (a) Method of valuation......................... Summary of Essential Information, Market for
Units, Offering Price, Accrued Interest,
Volume and Other Discounts, Distribution of
Units, Comparison of Public Offering Price,
Sponsor's Repurchase Price and Redemption
Price, Sponsor Repurchase, Trustee
Redemption
(b) Schedule as to offering price............... Summary of Essential Information
(c) Variation in offering price to certain
persons..................................... Distribution of Units, Volume and Other
Discounts
45. Suspension of redemption rights.................. Not Applicable
</TABLE>
iii
336964.1
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C>
46. (a) Redemption valuation........................ Comparison of Public Offering Price,
Sponsor's Repurchase Price and Redemption
Price, and Redemption Price, and Trustee
Redemption
(b) Schedule as to redemption price............. Summary of Essential Information
47. Maintenance of position in underlying securities. Comparison of Public Offering Price,
Sponsor's Repurchase Price and Redemption
Price, Sponsor Repurchase, Trustee
Redemption
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of trustee........... The Trustee
49. Fees and expenses of trustee..................... Trust Expenses and Charges
50. Trustee's lien................................... Trust Expenses and Charges
VI. Policy of Registrant
51. (a) Provisions of trust agreement with respect
to selection or elimination of underlying
securities.................................. Objectives, Portfolio, Portfolio Supervision,
Substitution of Securities
(b) Transactions involving elimination of
underlying securities....................... Not Applicable
(c) Policy regarding substitution or elimination
of underlying securities.................... Substitution of Securities
(d) Fundamental policy not otherwise covered.... Not Applicable
52. Tax status of trust.............................. Tax Status
VII. FINANCIAL AND STATISTICAL INFORMATION
53. Trust's securities during last ten years......... Not Applicable
54. Hypothetical account for issuers of periodic
payment plans.................................... Not Applicable
55. Certain information regarding periodic payment
certificates..................................... Not Applicable
56. Certain information regarding periodic payment
plans..............................Not Applicable
57. Certain other information regarding periodic
payment plans.................................... Not Applicable
58. Financial statements (Instruction 1(c) to Form
S-6) ............................................ Statement of Financial Condition
</TABLE>
iv
336964.1
<PAGE>
("QUILTS")
QUALIFIED UNIT INVESTMENT LIQUID TRUST SERIES
A Unit Investment Trust
Equity Strategic Ten, Series 1
Equity Strategic Five, Series 1
QUILTS consists of two separate unit investment trusts designated
QUILTS Equity Strategic Ten, Series 1 (the "Strategic Ten Trust") and QUILTS
Equity Strategic Five, Series 1 (the "Strategic Five Trust") (collectively,
the "Trusts"). The Sponsor of the Trusts is OCC Distributors (the "Sponsor").
The objective of each Trust is to maximize total return through a combination
of capital appreciation and current dividend income. The Strategic Ten Trust
seeks to outperform the Dow Jones Industrial Average ("DJIA") by investing for
a period of approximately twelve (12) months in its ten highest dividend
yielding common stocks ("DJIA Strategic Ten") determined the day prior to the
initial Date of Deposit. The Strategic Five Trust seeks to outperform the DJIA
by investing for a period of approximately twelve (12) months in the five
lowest price stocks of the DJIA's ten highest dividend yielding common stocks
("DJIA Strategic Five") determined the day prior to the initial Date of
Deposit. The name "Dow Jones Industrial Average" is the property of Dow Jones
& Company, Inc., which is not affiliated with the Sponsor, has not
participated in any way in the creation of the Trusts or in the selection of
the stocks included in each Trust and has not reviewed or approved any
information included in this Prospectus. Dow Jones & Company, Inc. has not
granted to the Trusts or the Sponsor a license to use the Dow Jones Industrial
Average. The value of the Units of the Trusts will fluctuate with fluctuations
in the value of the underlying Securities in the portfolio of each Trust.
Therefore, Unit Holders who sell their Units prior to termination of the
Trusts may receive more or less than their original purchase price upon sale.
No assurance can be given that dividends will be paid or that the Units will
appreciate in value. Units of the Trusts may be suited for purchase by IRAs,
self-employed retirement plans (formerly Keogh Plans), pension, profit-sharing
and other qualified retirement plans. Investors considering participation in
any such plan should review specific tax laws and pending legislation related
thereto and should consult their attorneys or tax advisers with respect to the
establishment and maintenance of any such plan. (See "Retirement Plans" and
"Tax Status" in Part B of this Prospectus.)
This Prospectus consists of two parts. Part A contains a Summary of
Essential Information for each Trust including descriptive material relating
to each Trust, the Statement of Condition of the Trusts and the Portfolio of
each Trust. Part B contains general information about Trusts. Part A may not
be distributed unless accompanied by Part B.
QUILTS are not a deposit or other obligation of, or guaranteed by, a
depository institution. QUILTS are not insured by the FDIC and are subject to
investment risks, including possible loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE COMMISSION OR ANY STATE SECURITIES CORPORATION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS PART A DATED FEBRUARY 9,
1996 Please read and retain both parts of this
Prospectus for future reference.
331449.2
<PAGE>
QUILTS
Equity Strategic Ten, Series 1
SUMMARY OF ESSENTIAL INFORMATION AS OF FEBRUARY 8, 1996 (The initial
Date of Deposit. The initial Date of Deposit is the date on which the
Trust Agreement was signed and the deposit of Securities with the
Trustee was made.)
<TABLE>
<S> <C>
CUSIP#: 74834 K300 Evaluation Time: 4:00 P.M. New York time.
Sponsor: OCC Distributors Minimum Purchase: 1,000 Units
Date of Deposit: February 8, 1996 Minimum Principal Distribution: $1.00 per 1,000 Units.
Aggregate Value Liquidation Period: From February 20, 1997 to the Mandatory
of Securities:....................................$145,197 Termination Date.
Number of Units: (The number of Units will be Minimum Value of Trust: The Trust may be terminated if the
increased as the Sponsor deposits additional value of the Trust is less than 40% of the aggregate of the
Securities into the Trust.)........................149,534 Securities at the completion of the Deposit period.
Fractional Undivided Interest in Trust Mandatory Termination Date: The earlier of March 20, 1997 or
per 1,000 Units:.................................1/149,534 the disposition of the last Security in the Trust.
Public Offering Price: Trustee: The Chase Manhattan Bank (National Association).
Aggregate Value of Securities Trustee's Annual Fee and Estimated Expenses: $1.02 per
in Trust.......................................$145,197 1,000 Units outstanding.
Divided By 149,534 Units multiplied Annual Supervisory Fee (Payable to an affiliate of the
by 1,000........................................$971.00 Sponsor): Maximum of $.25 per 1,000 Units outstanding
Plus Sales Charge of 2.90% of Public Offering (see "Trust Expenses and Charges" in Part B).
Price............................................$29.00 Estimated Organizational Expenses:(3)(4) $1.67 per 1,000 Units.
Public Offering Price per 1,000 Units(1).........$1,000.00 Record Date: June 14, 1996 and December 13, 1996.
Redemption Price per 1,000 Units.......................$971.00 Dividend Payment Date: June 28, 1996 and December 31,
Sponsor's Repurchase Price and Redemption 1996.
Price per 1,000 Units:(2).......................$971.00 Rollover Notification Date(5): February 19, 1997 or another date
Excess of Public Offering Price Over as determined by the Sponsor.
Redemption Price per 1,000 Units: ..................$29.00
Excess of Sponsor's Initial Repurchase Price
Over Redemption Price per 1,000 Units:..............$29.00
</TABLE>
(1) On the Initial Date of Deposit there will be no cash in the Income or
Principal Accounts. Anyone purchasing Units after such date will have
included in the Public Offering Price a pro rata share of any cash in such
Accounts.
(2) Any redemptions of over 25,000 Units may, upon request of redeeming Unit
Holders to the Trustee, be made in kind. The Trustee will forward the
distributed securities to the Unit Holder's bank or broker-dealer account
at the Depository Trust Company in book-entry form. See "Liquidity -
Trustee Redemption" in Part B.
(3) Although historically the sponsors of unit investment trusts ("UITs") have
paid all the costs of establishing UIT, this Trust (and therefore the Unit
Holders) will bear all or a portion of its organizational costs. Such
organizational costs include: the cost of preparing and printing the
registration statement, the trust indenture and other closing documents;
and the initial audit of the Trust. Total organizational expenses will be
amortized over the life of the Trust. See "Trust Expenses and Changes" in
Part B.
(4) Assumes the Trust will reach a size of 15,000,000 Units as estimated by
the Sponsor; organizational expenses per 1,000 Units will vary with the
actual size of the Trust. If the Trust does not reach this Unit level, the
Estimated Organizational Expenses will be adversely affected.
(5) If a Unit Holder ("Rollover Unit Holder") so specifies prior to the
Rollover Notification Date, the Rollover Unit Holder's Units will be
redeemed in kind and the underlying distributed Securities will be sold by
the Sponsor, on behalf of the Trustee, during the Liquidation Period. The
proceeds will be reinvested as received in an available series of the
QUILTS Equity Strategic Ten, if offered (see "Trust Administration Trust
Termination").
A-2
331449.2
<PAGE>
QUILTS
Equity Strategic Five, Series 1
SUMMARY OF ESSENTIAL INFORMATION AS OF FEBRUARY 8, 1996 (The initial Date
of Deposit. The initial Date of Deposit is the date on which the Trust
Agreement was signed and the deposit of Securities with the Trustee was
made.)
<TABLE>
<S> <C>
CUSIP#: 74834 K292 Evaluation Time: 4:00 P.M. New York time.
Sponsor: OCC Distributors Minimum Purchase: 1,000 Units
Date of Deposit: February 8, 1996 Minimum Principal Distribution: $1.00 per 1,000 Units.
Aggregate Value Liquidation Period: From February 20, 1997 to the Mandatory
of Securities:.................................$145,641 Termination Date.
Number of Units: (The number of Units will be Minimum Value of Trust: The Trust may be terminated if the
increased as the Sponsor deposits additional value of the Trust is less than 40% of the aggregate of the
Securities into the Trust.).....................149,758 Securities at the completion of the Deposit period.
Fractional Undivided Interest in Trust Mandatory Termination Date: The earlier of March 20, 1997 or
per 1,000 Units:..............................1/149,758 the disposition of the last Security in the Trust.
Public Offering Price: Trustee: The Chase Manhattan Bank (National Association).
Aggregate Value of Securities Trustee's Annual Fee and Estimated Expenses: $1.02 per
in Trust....................................$145,641 1,000 Units outstanding.
Divided By 149,758 Units multiplied Annual Supervisory Fee (Payable to an affiliate of the
by 1,000.....................................$972.50 Sponsor): Maximum of $.25 per 1,000 Units outstanding
Plus Sales Charge of 2.75% of Public Offering (see "Trust Expenses and Charges" in Part B).
Price.........................................$27.50 Estimated Organizational Expenses:(3)(4) $1.67 per 1,000 Units.
Public Offering Price per 1,000 Units(1)......$1,000.00 Record Date: June 14, 1996 and December 13, 1996.
Redemption Price per 1,000 Units....................$972.50 Dividend Payment Date: June 28, 1996 and December 31,
Sponsor's Repurchase Price and Redemption 1996.
Price per 1,000 Units:(2)....................$972.50 Rollover Notification Date(5): February 19, 1997 or another date
Excess of Public Offering Price Over as determined by the Sponsor.
Redemption Price per 1,000 Units: ...............$27.50
Excess of Sponsor's Initial Repurchase Price
Over Redemption Price per 1,000 Units:...........$27.50
</TABLE>
(1) On the Initial Date of Deposit there will be no cash in the Income or
Principal Accounts. Anyone purchasing Units after such date will have
included in the Public Offering Price a pro rata share of any cash in such
Accounts.
(2) Any redemptions of over 25,000 Units may, upon request of redeeming Unit
Holders to the Trustee, be made in kind. The Trustee will forward the
distributed securities to the Unit Holder's bank or broker-dealer account
at the Depository Trust Company in book-entry form. See "Liquidity -
Trustee Redemption" in Part B.
(3) Although historically the sponsors of unit investment trusts ("UITs") have
paid all the costs of establishing UIT, this Trust (and therefore the Unit
Holders) will bear all or a portion of its organizational costs. Such
organizational costs include: the cost of preparing and printing the
registration statement, the trust indenture and other closing documents;
and the initial audit of the Trust. Total organizational expenses will be
amortized over the life of the Trust. See "Trust Expenses and Changes" in
Part B.
(4) Assumes the Trust will reach a size of 15,000,000 Units as estimated by
the Sponsor; organizational expenses per 1,000 Units will vary with the
actual size of the Trust. If the Trust does not reach this Unit level, the
Estimated Organizational Expenses will be adversely affected.
(5) If a Unit Holder ("Rollover Unit Holder") so specifies prior to the
Rollover Notification Date, the Rollover Unit Holder's Units will be
redeemed in kind and the underlying distributed Securities will be sold by
the Sponsor, on behalf of the Trustee, during the Liquidation Period. The
proceeds will be reinvested as received in an available series of the
QUILTS Equity Strategic Five, if offered (see "Trust Administration -
Trust Termination").
A-3
331449.2
<PAGE>
QUALIFIED
UNIT INVESTMENT LIQUID TRUST SERIES
("QUILTS")
THE TRUSTS
The Trust consists of two separate unit investment trusts
designated QUILTS, Equity Strategic Ten, Series 1 ("Strategic Ten Trust") and
Equity Strategic Five, Series 1 ("Strategic Five Trust") (collectively, the
"Trusts"). The Trusts were created under the laws of the State of New York by
a Trust Indenture and Agreement (the "Trust Agreement"), dated the initial
Date of Deposit, between OCC Distributors, as sponsor (the "Sponsor") and The
Chase Manhattan Bank (National Association), as trustee (the "Trustee"). On
the initial Date of Deposit, the Sponsor deposited with the Trustee the
underlying Securities including delivery statements relating to contracts for
the purchase of certain such Securities (the "Securities") in the aggregate
amount set forth in the "Summary of Essential Information" for each Trust and
cash or an irrevocable letter of credit issued by a major commercial bank in
the amount required for such purchases. Thereafter, the Trustee, in exchange
for the Securities so deposited, delivered to the Sponsor a certificate
evidencing the ownership of all of the Units of the Trusts, which Units are
being offered by this Prospectus. (See "The Trust Organization" in Part B.)
Each Trust will terminate approximately one year after the initial Date of
Deposit.
Objectives. The objective of each Trust is to maximize total
return through capital appreciation and current dividend income. The Strategic
Ten Trust will invest for twelve (12) months in approximately equal values of
the ten (10) common stocks in the Dow Jones Industrial Average ("DJIA") having
the highest dividend yield on the business day prior to the initial Date of
Deposit (the "DJIA Strategic Ten"). The Strategic Five Trust will invest for
twelve (12) months in approximately equal values of the five (5) common stocks
in the DJIA having the lowest per share stock price of the ten companies in
the DJIA having the highest dividend yield on the business day prior to the
initial Date of Deposit (the "DJIA Strategic Five"). As used herein, the term
"highest dividend yield" means the yield for each Security calculated by
annualizing the last quarterly or semi-annual ordinary dividend distributed on
that Security and dividing the result by the market value of that Security on
the business day prior to the initial Date of Deposit. This rate is
historical, and there is no assurance that any dividends will be declared or
paid in the future on the Securities in the Trusts. As used herein, the term
"Securities" means the common stocks initially deposited in each Trust and
described under Portfolio and any additional common stocks acquired and held
by the Trust pursuant to the provisions of the Indenture (see "The
Trusts--Organization" and "Risk Factors--Additional Securities" in Part B of
this Prospectus). Further, the Securities may appreciate or depreciate in
value, dependent upon the full range of economic and market influences
affecting corporate profitability, the financial condition of issuers and the
prices of equity securities in general and the Securities in particular.
Therefore, there is no guarantee that the objective of the Trusts will be
achieved.
Portfolio Summary. General. The Trusts are comprised of
those Securities listed in each "Portfolio" in this Part A. The Strategic Ten
Trust contains an underlying portfolio of ten (10) common stocks issued by
companies engaged primarily in the following industries: Auto Manufacturing, 1
(10%); Chemical Products, 1 (10%); Electronics, 1 (10%); Financial
Services/Banking, 1 (10%); Forest Products and Paper, 1 (10%);
Machinery-Construction and Mining, 1 (10%); Oil/Gas-International, 3 (30%);
and Tobacco/Food Processing, 1 (10%). The Strategic Ten Trust is deemed to be
concentrated
A-4
331449.2
<PAGE>
in the Oil/Gas-International category.* See "Risk Factors--Petroleum Refining
Companies" in Part B of this Prospectus. The Strategic Five Trust contains an
underlying portfolio of five (5) common stocks issued by companies engaged
primarily in the following industries: Auto Manufacturing, 1 (20%);
Electronics, 1 (20%); Forest Products and Paper, 1 (20%); Machinery -
Construction and Mining, 1 (20%); and Oil/Gas-International, 1 (20%). Although
there are certain risks of price volatility associated with investment in
common stocks (particularly with an investment in one or two common stocks),
the risk to investors is reduced because the Trusts' capital is divided among
ten stocks from eight different industry groups in the case of the Strategic
Ten Trust or among five stocks from five different industry groups in the case
of the Strategic Five Trust.
With the deposit of the Securities in the Trusts on the
initial Date of Deposit, the Sponsor established a proportionate relationship
among the aggregate value of the specified Securities in the portfolio of each
of the Trusts. During the 90 days subsequent to the initial Date of Deposit,
the Sponsor may, but is not obligated to, deposit from time to time additional
Securities in the Trusts ("Additional Securities"), contracts to purchase
Additional Securities or cash (or a bank letter of credit in lieu of cash)
with instructions to purchase Additional Securities, maintaining to the extent
practicable the original proportionate relationship of the number of shares of
each Security in the portfolio of each of the Trusts immediately prior to such
deposit, thereby creating additional Units which will be offered to the public
by means of this Prospectus. These additional Units will each represent, to
the extent practicable, an undivided interest in the same number and type of
securities of identical issuers as are represented by Units issued on the
initial Date of Deposit. It may not be possible to maintain the exact original
proportionate relationship among the number of shares of Securities in the
portfolio of each of the Trusts on the initial Date of Deposit with the
deposit of Additional Securities because of, among other reasons, purchase
requirements, changes in prices, or the unavailability of Securities. Deposits
of Additional Securities in the Trusts subsequent to the 90-day period
following the initial Date of Deposit must replicate exactly the proportionate
relationship among the shares of each Security in the portfolio of each of the
Trusts at the end of the initial 90-day period. The number and identity of
Securities in the Trusts will be adjusted to reflect the disposition of
Securities and/or the receipt of a stock dividend, a stock split or other
distribution with respect to such Securities. The portfolio of each of the
Trusts may change slightly based on such disposition. Securities received in
exchange for shares will be similarly treated. As additional Units are issued
by each Trust as a result of the deposit of Additional Securities, the
aggregate value of the Securities in the Trusts will be increased and the
fractional undivided interest in the Trusts represented by each Unit will be
decreased. As of the Date of Deposit, Units in each of the Trusts represent an
undivided interest in the principal and net income of the Trusts in the ratio
of one thousand Units for the indicated initial aggregate value of Securities
in each of the Trusts on the initial Date of Deposit as is set forth in the
Summary of Essential Information (see "The Trusts--Organization" in Part B)
(For the specific number of Units in each of the Trusts as of the initial Date
of Deposit, see "Summary of Essential Information" for each Trust in this Part
A).
The DJIA Strategic Ten. The yield for each security was
calculated by annualizing the last quarterly or semi-annual ordinary dividend
distributed and dividing the result by the market value of the Security one
business day prior to the initial Date of Deposit. This formula (an objective
determination) served as the basis for the Sponsor's selection of the DJIA
Strategic Ten. The companies represented in the Strategic Ten Trust are some
of the most well-known and highly capitalized companies in America. The
Securities were selected irrespective of any research recommendation by the
Sponsor. Investing in the stocks of the DJIA may be effective as well as
- --------
* A Trust is considered to be "concentrated" in a particular category
or issuer when the Securities in that category or of that issuer
constitute 25% or more of the aggregate face amount of the portfolio.
A-5
331449.2
<PAGE>
conservative because regular dividends are common for established companies
and dividends have accounted for a substantial portion of the total return on
stocks of the DJIA as a group.
Although Equity Strategic Ten Portfolios were not available
until this year, during the last 20 years, the strategy of investing in
approximately equal values of the ten highest yielding stocks each year
generally would have yielded a higher total return than an investment in all
30 stocks which make up the DJIA. The following table shows the hypothetical
performance of investing approximately equal amounts in each of the DJIA
Strategic Ten (but not any QUILTS Equity Strategic Ten Series) at the
beginning of each year and rolling over the proceeds. They do not reflect
sales charges, commissions or taxes. These results represent past performance
of the DJIA Strategic Ten, and should not be considered indicative of future
results of the Trust. The DJIA Strategic Ten underperformed the DJIA in
certain years. Also, investors in the Trust may not realize as high a total
return as on a direct investment in the Strategic Ten since the Trust has
sales charges and expenses and may not be fully invested at all times. Unit
prices fluctuate with the value of the underlying stocks, and there is no
assurance that dividends on these stocks will be paid or that the Units will
appreciate in value.
The following table compares the actual performance of the
DJIA and approximately equal values of the DJIA Strategic Ten in each of the
past 20 years, as of December 31 in each of these years:
A-6
331449.2
<PAGE>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
<TABLE>
<CAPTION>
DJIA Strategic Ten(1) Dow Jones Industrial Average (DJIA)
Year Appreciation(2) Actual Dividend Yield (3) Total Return(4) Appreciation(2) Actual Dividend Yield (3) Total Return(4)
<S> <C> <C> <C> <C> <C> <C>
1976 27.80% 7.10% 34.90% 17.86% 4.86% 22.72%
1977 -7.58 5.82 1.76 -17.27 4.56 -12.71
1978 -6.95 7.04 0.09 -3.15 5.84 2.69
1979 4.58 8.39 12.97 4.19 6.33 10.52
1980 18.69 8.53 27.22 14.93 6.48 21.41
1981 -0.88 8.37 7.49 -9.23 5.83 -3.40
1982 17.81 8.23 26.04 19.60 6.19 25.79
1983 30.52 8.38 38.90 20.30 5.38 25.68
1984 -8.19 13.99 5.80 -3.76 4.82 1.06
1985 22.19 7.23 29.42 27.66 5.12 32.78
1986 23.97 10.82 34.79 22.58 4.33 26.91
1987 0.94 5.13 6.07 2.26 3.76 6.02
1988 15.92 8.72 24.64 11.85 4.10 15.95
1989 18.65 6.60 25.25 26.96 4.75 31.71
1990 -12.61 5.04 -7.57 -4.34 3.77 -0.57
1991 28.11 6.97 35.08 20.32 3.61 23.93
1992 -5.12 12.96 7.84 4.17 3.18 7.35
1993 16.81 10.11 26.92 13.72 3.02 16.74
1994 0.06 4.09 4.15 2.14 2.81 4.95
1995 24.18 12.43 36.61 33.45 3.04 36.49
</TABLE>
(1) The ten highest-yielding DJIA stocks. The DJIA Strategic Ten any given
year were selected by ranking the dividend yields for each of the stocks
in the DJIA as of the beginning of that year, based upon an annualization
of the last quarterly or semi-annual regular dividend distribution (which
would have been declared in the preceding year) divided by that stock's
market value on the first trading day on the New York Stock Exchange in
that year.
(2) Appreciation for the DJIA Strategic Ten is calculated by subtracting the
market value of these stocks as of the first trading day on the New York
Stock Exchange in a given year from the market value of those stocks as
the last trading day in that year, and dividing the result by the market
value of the stocks as of the first trading day in that year. Appreciation
for the DJIA is calculated by subtracting the opening value of the DJIA as
of the first trading dy in each year from the closing value of the DJIA as
of the last trading day in that year, and dividing the result by the
opening value of the DJIA as of the first trading day in that year.
(3) Actual Dividend Yield for the DJIA Strategic Ten is calculated by adding
the total dividends received on the stocks in the year and dividing the
result by the market value of the stocks as of the first trading day in
that year. Actual Dividend Yield for the DJIA is calculated by taking the
total dividends credited to the DJIA and dividing the result by the
opening value of the DJIA as of the first trading day in that year.
(4) Total Return represents the sum of Appreciation and Actual Dividend Yield.
Total Return does not take into consideration any reinvestment of dividend
income.
A-7
331449.2
<PAGE>
The DJIA Strategic Five. The yield for each security was
calculated by annualizing the last quarterly or semi-annual ordinary dividend
distributed and dividing the result by the market value of the Security one
business day prior to the initial Date of Deposit. This formula (an objective
determination) served as the basis for the Sponsor's selection of the DJIA
Strategic Five. The companies represented in the Trust are some of the most
well-known and highly capitalized companies in America. The Securities were
selected irrespective of any research recommendation by the Sponsor. Investing
in the stocks of the DJIA may be effective as well as conservative because
regular dividends are common for established companies and dividends have
accounted for a substantial portion of the total return on stocks of the DJIA
as a group.
Although Equity Strategic Five Portfolios were not available
until this year, during the last 20 years, the strategy of investing in
approximately equal values of the five lowest priced of the ten highest
yielding stocks each year generally would have yielded a higher total return
than an investment in all 30 stocks which make up the DJIA. The following
table shows the hypothetical performance of investing approximately equal
amounts in each of the DJIA Strategic Five (but not any QUILTS Equity
Strategic Five Series) at the beginning of each year and rolling over the
proceeds. They do not reflect sales charges, commissions or taxes. These
results represent past performance of the DJIA Strategic Five, and should not
be considered indicative of future results of the Trust. The DJIA Strategic
Five underperformed the DJIA in certain years. Also, investors in the Trust
may not realize as high a total return as on a direct investment in the DJIA
Strategic Five since the Trust has sales charges and expenses and may not be
fully invested at all times. Unit prices fluctuate with the value of the
underlying stocks, and there is no assurance that dividends on these stocks
will be paid or that the Units will appreciate in value.
The following table compares the actual performance of the
DJIA and approximately equal values of the DJIA Strategic Five in each of the
past 20 years, as of December 31 in each of these years:
A-8
331449.2
<PAGE>
COMPARISON OF DIVIDENDS, APPRECIATION AND TOTAL RETURN
<TABLE>
<CAPTION>
DJIA Strategic Five(1) Dow Jones Industrial Average (DJIA)
Year Appreciation(2) Actual Dividend Yield (3) Total Return(4) Appreciation(2) Actual Dividend Yield (3) Total Return(4)
<S> <C> <C> <C> <C> <C> <C>
1976 33.35% 7.41% 40.76% 17.86% 4.86% 22.72%
1977 -0.39 6.04 5.65 -17.27 4.56 -12.71
1978 -5.39 7.16 1.23 -3.15 5.84 2.69
1979 1.80 8.10 9.90 4.19 6.33 10.52
1980 31.87 8.65 40.52 14.93 6.48 21.41
1981 -4.39 8.02 3.63 -9.23 5.83 -3.40
1982 34.58 7.30 41.88 19.60 6.19 25.79
1983 27.33 8.78 36.11 20.30 5.38 25.68
1984 3.77 7.11 10.88 -3.76 4.82 1.06
1985 30.24 7.60 37.84 27.66 5.12 32.78
1986 24.13 6.18 30.31 22.58 4.33 26.91
1987 6.23 4.83 11.06 2.26 3.76 6.02
1988 10.30 11.54 21.84 11.85 4.10 15.95
1989 13.49 4.35 17.84 26.96 4.75 31.71
1990 -20.60 5.33 -15.27 -4.34 3.77 -0.57
1991 56.41 5.38 61.79 20.32 3.61 23.93
1992 1.91 21.08 22.99 4.17 3.18 7.35
1993 18.02 15.83 33.85 13.72 3.02 16.74
1994 5.04 3.56 8.60 2.14 2.81 4.95
1995 10.70 19.72 30.42 33.45 3.04 36.49
</TABLE>
(1) The five lowest priced stocks of the ten highest-yielding DJIA stocks. The
DJIA Strategic Five for any given year were selected by ranking the
dividend yields for each of the stocks in the DJIA as of the beginning of
that year, based upon an annualization of the last quarterly or
semi-annual regular dividend distribution (which would have been declared
in the preceding year) divided by that stock's market value on the first
trading day on the New York Stock Exchange in that year.
(2) Appreciation for the DJIA Strategic Five is calculated by subtracting the
market value of these stocks as of the first trading day on the New York
Stock Exchange in a given year from the market value of those stocks as
the last trading day in that year, and dividing the result by the market
value of the stocks as of the first trading day in that year. Appreciation
for the DJIA is calculated by subtracting the opening value of the DJIA as
of the first trading dy in each year from the closing value of the DJIA as
of the last trading day in that year, and dividing the result by the
opening value of the DJIA as of the first trading day in that year.
(3) Actual Dividend Yield for the DJIA Strategic Five is calculated by adding
the total dividends received on the stocks in the year and dividing the
result by the market value of the stocks as of the first trading day in
that year. Actual Dividend Yield for the DJIA is calculated by taking the
total dividends credited to the DJIA and dividing the result by the
opening value of the DJIA as of the first trading day in that year.
(4) Total Return represents the sum of Appreciation and Actual Dividend Yield.
Total Return does not take into consideration any reinvestment of dividend
income.
A-9
331449.2
<PAGE>
RISK FACTORS
An investment in Units of the Trusts should be made with an
understanding of the risks inherent in any investment in the Securities
including, for common stocks, the risk that the financial condition of the
issuers of the Securities may become impaired or that the general condition of
the stock market may worsen (both of which may contribute directly to a
decrease in the value of the Securities and thus in the value of the Units).
An investment in the Strategic Five Trust may subject a Unit Holder to greater
market risk due to the relative lack of diversity in its portfolio, which
contains five stocks, than the Strategic Ten Trust, which contains ten stocks
in its portfolio. The portfolios of the Trusts are fixed and not "managed" by
the Sponsor. All the Securities in the Trust are liquidated during a 30
business day period at the termination of the one-year life of each of the
Trusts. Since the Trusts will not sell Securities in response to ordinary
market fluctuation, but only at the Trusts' termination or to meet
redemptions, the amount realized upon the sale of the Securities may not be
the highest price attained by an individual Security during the life of the
Trusts. In addition, the Strategic Ten Trust is considered to be
"concentrated" in stocks of companies deriving a substantial portion of their
income from the petroleum refining industry. Investment in this industry may
pose additional risks including the volatility of oil prices, the impact of
oil cartels, political uncertainty in the Middle East and increasing costs
associated with environmental damage caused by oil companies and compliance
with environmental regulations and legislation.
In connection with the deposit of Additional Securities subsequent to
the initial Date of Deposit, if cash (or a letter of credit in lieu of cash)
is deposited with instructions to purchase Securities, to the extent the price
of a Security increases or decreases between the deposit and the time the
Security is purchased, Units may represent less or more of that Security and
more or less of the other Securities in such Trust. In addition, brokerage
fees incurred in purchasing Securities with cash deposited with instructions
to purchase the Securities will be an expense of the Trusts. Price
fluctuations during the period from the time of deposit to the time the
Securities are purchased, and payment of brokerage fees, will affect the value
of every Unit Holder's Units and the income per Unit received by a Trust.
The Sponsor cannot give any assurance that the business and
investment objectives of the issuers of the Securities will correspond with or
in any way meet the limited term objective of the Trusts. (See "Risk Factors"
in Part B of this Prospectus).
PUBLIC OFFERING PRICE
The Public Offering Price of each Unit of the Trusts is equal to the
aggregate offering price of the Securities in each Trust divided by the number
of Units of each Trust outstanding, plus a sales charge of (a) 2.90% of the
Public Offering Price or 2.987% of the net amount invested in Securities per
1,000 Units of the Strategic Ten Trust and (b) 2.75% of the Public Offering
Price or 2.828% of the net amount invested in Securities per 1,000 Units of
the Strategic Five Trust (see "Summary of Essential Information"). Any cash
held by the Trusts will be added to the Public Offering Price. For additional
information regarding the Public Offering Price, the description of dividend
and principal distributions, repurchase and redemption of Units and other
essential information regarding the Trusts, see the "Summary of Essential
Information" for each Trust in this Part A. During the initial offering period
orders involving at least 50,000 Units or $50,000 will be entitled to a volume
discount from the Public Offering Price. The Public Offering Price per Unit
may vary on a daily basis in accordance with fluctuations in the aggregate
value of the underlying Securities. (See "Public Offering" in Part B.) The
price of a single Unit, or any multiple thereof, is calculated by dividing the
Public Offering Price per 1,000 Units by 1,000 and multiplying by the number
of Units. If the Units of each of the Trusts had been available for sale on
February 8, 1996, the Public Offering Price per 1,000 Units would have been
$1,000.00.
A-10
331449.2
<PAGE>
DISTRIBUTIONS
Distributions of dividends received, less expenses, will be made by
each of the Trusts on the Distribution Dates to all Unit Holders of record on
the corresponding Record Date. (See "Rights of Unit Holders -- Distributions"
in Part B. For the specific dates representing the Distribution Dates and the
Record Dates, see "Summary of Essential Information" for each Trust in Part
A.) The final distribution will be made within a reasonable time after the
termination of the Trust. Unit Holders may elect to automatically reinvest
distributions (other than the final distribution in connection with the
termination of the Trusts) into additional Units of a Trust, which will not be
subject to a sales charge. See "Rights of Unit Holders - Reinvestment" in Part
B.
MARKET FOR UNITS
The Sponsor, although not obligated to do so, intends to maintain a
secondary market for the Units of the Trusts after the initial public offering
has been completed. The secondary market repurchase price will be based on the
market value of the Securities in the portfolio of each of the Trusts. (See
"Liquidity -- Sponsor Repurchase" for a description on how the secondary
market repurchase price will be determined.) If a market is not maintained a
Unit Holder will be able to redeem his or her Units with the Trustee (See
Liquidity -- Trustee Redemption" in Part B). As a result, the existence of a
liquid trading market for these Securities may depend on whether dealers will
make a market in these Securities. There can be no assurance of the making or
the maintenance of a market for any of the Securities contained in the
portfolio of each of the Trusts or of the liquidity of the Securities in any
markets made. In addition, the Trusts may be restricted under the Investment
Company Act of 1940 from selling Securities to the Sponsor. The price at which
the Securities may be sold to meet redemptions and the value of the Units will
be adversely affected if trading markets for the Securities are limited or
absent.
TERMINATION
During the 30 day period prior to the Mandatory Termination Date (the
"Liquidation Period"), Securities will begin to be sold in connection with the
termination of the Trusts and all Securities will be sold or distributed by
the Mandatory Termination Date. The Trustee may utilize the services of the
Sponsor for the sale of all or a portion of the Securities in the Trust. The
Sponsor will receive brokerage commissions from the Trusts in connection with
such sales in accordance with applicable law. The Sponsor will determine the
manner, timing and execution of the sales of the underlying Securities. Unit
Holders may elect one of the three options in receiving their terminating
distributions. Unit Holders may elect: (1) to receive their pro rata share of
the underlying Securities in kind, if they own at least 25,000 Units, (2) to
receive cash upon the liquidation of their pro rata share of the underlying
Securities, or (3) to invest the amount of cash they would have received upon
the liquidation of their pro rata share of the underlying Securities in units
of a future series of each of the Trusts (if one is offered) at a reduced
sales charge. See "Trust Administration--Trust Termination" in Part B for a
description of how to select a termination distribution option.
The Sponsor will attempt to sell the Securities as quickly as it can
during the Liquidation Period without, in its judgment, materially adversely
affecting the market price of the Securities, but all of the Securities will
in any event be disposed of by the end of the Liquidation Period. The Sponsor
does not anticipate that the period will be longer than 30 days, and it could
be as short as one day, depending on the liquidity of the Securities being
sold. The liquidity of any Security depends on the daily trading volume of the
Security and the amount that the Sponsor has available for sale on any
particular day.
It is expected (but not required) that the Sponsor will generally
follow the following guidelines in selling the Securities: for highly liquid
Securities, the Sponsor will generally sell Securities on the first
A-11
331449.2
<PAGE>
day of the Liquidation Period; for less liquid Securities, on each of the
first two days of the Liquidation Period, the Sponsor will generally sell any
amount of any underlying Securities at a price no less than 1/2 of one point
under the last closing sale price of those Securities. On each of the
following two days, the price limit will increase to one point under the last
closing sale price. After four days, the Sponsor intends to sell at least a
fraction of the remaining underlying Securities, the numerator of which is one
and the denominator of which is the total number of days remaining (including
that day) in the Liquidation Period, without any price restrictions.
During the Liquidation Period, Unit Holders who have not chosen to
receive distributions-in-kind will be at risk to the extent that Securities
are not sold; for this reason the Sponsor will be inclined to sell the
Securities in as short a period as they can without materially adversely
affecting the price of the Securities. Unit Holders should consult their own
tax advisers in this regard.
A-12
331449.2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Sponsor, Trustee, and Unit Holders of
Qualified Unit Investment Liquid Trust Series ("QUILTS")
Equity Strategic Ten, Series 1 and
Equity Strategic Five, Series 1
We have audited the accompanying Statements of Condition and
Portfolios of Qualified Unit Investment Liquid Trust Series ("QUILTS"), Equity
Strategic Ten, Series 1 and Equity Strategic Five, Series 1 as of February 8,
1996. These statements are the responsibility of the Sponsor. Our
responsibility is to express an opinion on the Statements of Condition and
Portfolios based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the Statements of Condition and
Portfolios are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
Statements of Condition and Portfolios. An audit also includes assessing the
accounting principles used and significant estimates made by the Sponsor, as
well as evaluating the overall financial statement presentation. We believe
that our audit provides a reasonable basis for our opinion. The irrevocable
letters of credit deposited in connection with the securities owned as of
February 8, 1996, pursuant to contracts to purchase, as shown in the
Statements of Condition and Portfolios, was confirmed to us by The Chase
Manhattan Bank (National Association), the Trustee.
In our opinion, the accompanying Statements of Condition and
Portfolios present fairly, in all material respects, the financial position of
Equity Strategic Ten, Series 1 and Equity Strategic Five, Series 1 as of
February 8, 1996 in conformity with generally accepted accounting principles.
BDO SEIDMAN, LLP
New York, New York
February 8, 1996
A-13
331449.2
<PAGE>
QUILTS
STATEMENTS OF CONDITION
AS OF DATE OF DEPOSIT, FEBRUARY 8, 1996
TRUST PROPERTY
<TABLE>
<CAPTION>
EQUITY EQUITY
STRATEGIC STRATEGIC
TEN, FIVE,
SERIES 1 SERIES 1
--------- --------
<S> <C> <C>
Investment in Securities--Sponsor's Contracts to Purchase
Underlying Securities Backed by Letter of Credit (1)................ $ 145,197 $ 145,641
Organizational Costs(2)................................................. 25,000 25,000
--------------- ----------------
Total................................................................... $ 170,197 $ 170,641
=============== ================
INTEREST OF UNIT HOLDERS
Liabilities:
Accrued Liability(2).................................................... $ 25,000 $ 25,000
Interest of Unit Holders-- Units of Fractional
Undivided Interest Outstanding
Cost to Unit Holders(3)............................................. $ 149,534 $ 149,759
Less-Gross Underwriting Commissions(4).............................. 4,337 4,118
--------------- ----------------
Net Amount Applicable to Unit Holders............................... 145,197 145,641
--------------- ----------------
Total............................................................... $ 170,197 $ 170,641
=============== ================
</TABLE>
(1) Aggregate cost to the Trust of the Securities listed in the Portfolio
is determined by the Trustee on the basis set forth under "Public
Offering--Offering Price" as of 4:00 p.m. on February 8, 1996.
Irrevocable letters of credit issued by Credit Lyonnais in an amount
in excess of $290,838 have been deposited with the Trustee to cover
the purchase of the Securities pursuant to contracts to purchase such
Securities.
(2) Organizational costs incurred by the Trust have been deferred and will
be amortized over the life of the Trust. The Trust will reimburse the
Sponsor for actual organizational costs incurred.
(3) Aggregate public offering price computed on 149,534 Units of Equity
Strategic Ten, Series 1 and on 149,758 Units of Equity Strategic Five,
Series 1 on the basis set forth under "Public Offering--Offering
Price" in Part B.
(4) Sales charge of 2.90% computed on 149,534 Units of Equity Strategic
Ten, Series 1 and 2.75% computed on 149,758 Units of Equity Strategic
Five, Series 1 on the basis set forth under "Public Offering Price" in
Part B.
A-14
331449.2
<PAGE>
QUILTS
Equity Strategic Ten, Series 1
PORTFOLIO
AS OF FEBRUARY 8, 1996
<TABLE>
<CAPTION>
Cost of
Portfo- Percentage Market Securities
lio Number of Name of Issuer of Value to Trust
No. Shares and Ticker Symbol (2) Fund (1) Per Share (3)
----- -------- --------------------- ---------- --------- ---
<S> <C> <C> <C> <C> <C>
1 272 Chevron Corporation - 10.00% $53.375 $14,518
CHV
2 183 E.I. du Pont De 9.97 79.125 14,480
Nemours & Company - DD
3 175 Exxon Corporation - 9.97 82.750 14,481
XON
4 183 General Electric 10.02 79.500 14,549
Company - GE
5 283 General Motors 10.02 51.375 14,539
Corporation - GM
6 358 International Paper 10.02 40.625 14,544
Company - IP
7 178 J.P. Morgan & 10.02 81.750 14,552
Company, Inc. - JPM
8 213 Minnesota Mining and 10.02 68.250 14,537
Manufacturing
Company -MMM
9 151 Philip Morris 9.96 95.875 14,476
Companies, Inc. - MO
10 179 Texaco, Inc. - TX 10.00 81.125 14,521
Total 100.00% $145,197
============== ==========
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Based on the cost of the Securities to the Strategic Ten Trust.
(2) Forward contracts to purchase the Securities were entered into on
February 8, 1996. All such contracts are expected to be settled on or
about the First Settlement Date of the Trust which is expected to be
February 14, 1996.
(3) Evaluation of Securities by the Trustee was made on the basis of closing
sales prices at the Evaluation Time on the Initial Date of Deposit.
Additional information regarding the Strategic Ten Trust is as follows:
Sponsor's Profit/Loss
Sponsor's (Initial Date
Purchase Price of Deposit)
$145,197 $--
A-15
331449.2
<PAGE>
QUILTS
Equity Strategic Five, Series 1
PORTFOLIO
AS OF FEBRUARY 8, 1996
<TABLE>
<CAPTION>
Percentage Market Cost of
Portfolio Number of Name of Issuer (2) of Value Securities
No. Shares and Ticker Symbol Fund (1) Per Share to Trust (3)
--- -------- ----------------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
1 546 Chevron Corporation - CHV 20.01% $53.375 $ 29,143
2 366 General Electric Company - 19.98 79.500 29,097
GE
3 567 General Motors Corporation 20.00 51.375 29,130
- GM
4 717 International Paper 20.00 40.625 29,128
Company - IP
5 427 Minnesota Mining & 20.01 68.250 29,143
Manufacturing Company -
MMM
Total 100.0% $145,641
=============== ==============
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Based on the cost of the Securities to the Strategic Five Trust.
(2) Forward contracts to purchase the Securities were entered into on
February 8, 1996. All such contracts are expected to be settled on or
about the First Settlement Date of the Trust which is expected to be
February 14, 1996.
(3) Evaluation of Securities by the Trustee was made on the basis of closing
sales prices at the Evaluation Time on the Initial Date of Deposit.
Addiional information regarding the Strategic Five Trust is as follows:
Sponsor's Profit/Loss
Sponsor's (Initial Date
Purchase Price of Deposit)
$145,641 $--
UNDERWRITING SYNDICATES
OCC Distributors, World Financial Center, 200 Liberty
Street, New York, NY 10281 will act as Underwriter for all of the Units of the
Trusts. The Underwriter will distribute the Units through various
broker-dealers, banks and/or other eligible participants (see "Public Offering
- - Distribution of Units" in Part B).
A-16
331449.2
<PAGE>
[GRAPHIC OMITTED]
Strategic 10 Trust
- ------------------
An opportunity for Above-Average Total return through Capital Appreciation and
Dividend Income.
Equities: The Place to Be
History has demonstrated that over time owning common stocks is an effective way
of building wealth.
During the period from 1926 through 1994 stocks provided an average total return
of 10.2% versus 4.8% for long term government bonds and 3.7% for U.S. Treasury
bills.*
Investors should bear in mind that Treasuries and U.S. Government bonds are
fixed income obligations, having the highest credit characteristics, while
equity securities involve greater risk. But for those investors with the
appropriate risk tolerance and investment time horizon, stocks would have
provided investors with a substantial increase in real wealth.
Choosing the Right Stocks
The most common and popular indicator of the U.S. stock market is the Dow Jones
Industrial Average (DJIA)**. The DJIA comprises 30 common stocks chosen by the
editors of The Wall Street Journal as representative of the overall market and
of American industry. These companies are major factors in our economy and their
stocks are widely held by individuals and institutional investors. The companies
represented in the DJIA are some of the most well-known and highly capitalized
companies in America.
Investing in the stocks of the DJIA
may be an effective as well as a conservative investment strategy.
*Ibbotson Associates - All results assume reinvestment of dividends on stocks or
coupons on bonds and no taxes. Transaction costs are not included.
**Dow Jones Industrial Average is the property of Dow Jones and Company Inc.,
which is unaffiliated with the Sponsor and has not participated in any way in
the creation of the Trust or in the selection of its stocks, or has approved any
information contained in this brochure or in the Trust's prospectus.
<PAGE>
The QUILTS Equity
Strategic 10 Trust
The QUILTS Equity Strategic 10 Trust utilizes a simple time tested strategy.
The Trust provides investors with the opportunity to invest in stocks of The Dow
Jones Industrial Average while offering an attractive level of diversification.
The Trust seeks to provide above
average total return through capital appreciation and dividend income.
The Strategy
The Strategic 10 Strategy entails calculating and ranking the dividend yields of
each of the 30 companies that comprise the DJIA. The ten stocks with the highest
dividend yield are identified, and held for approximately one year. At maturity
the trust is liquidated. Investors may choose to reinvest the proceeds into the
next available QUILTS Equity Strategic series at a reduced sales charge, or
receive all proceeds in cash.
Investing in DJIA stocks with high dividend yields relative to their price is
designed to increase the potential for higher returns, because we believe their
prices are undervalued. This may be effective in achieving the Trust's
investment objectives. Since the Trust consists of common stocks, an investment
should be made with an understanding of the risks inherent in any investment in
common stock.
Advantages
Diversification - Purchasing a portfolio of these stocks as opposed to just one
or two can achieve greater diversification.
Cost- Effective - An investment in the Trust avoids the costs associated with
buying small quantities of securities directly. Minimum purchase is
approximately $1,000.
<PAGE>
Historically (as the chart shows) this strategy has effectively achieved higher
returns than investing in the entire DJIA.
A Comparison of Total Return
An Investment of $10,000
1/1/76 thru 12/31/95***
[GRAPHIC OMITTED]
Term - The same stocks are held in the Trust for approximately one year, at
which time the Trust will liquidate and proceeds will be distributed to
unitholders.
Rollover Option - At maturity unitholders have the option of rolling into the
next available QUILTS Equity Series at a reduced sales charge.
Liquidity - All or a portion of your units may be sold at any time. You will
receive the current market value for your units, which may be more or less than
the original purchase price. There is no charge to liquidate.
Dividends - Dividends are paid on a semi-annual basis, either in cash or
reinvested into the Trust at no additional charge.
***The graph above represents past performance of the DJIA and the ten highest
yielding stocks of the DJIA (but not the Trust). It is important to note that
past performance is no guarantee of future results. Further, results are
hypothetical. The graph assumes that all dividends and capital gains during a
year are reinvested at the end of that year and does not reflect commissions or
taxes. In addition, the Trust's performance will vary from that of investing in
the ten highest yielding stocks of the DJIA because the Trust has a sales charge
and expenses, may not invest equally in these stocks and may not be fully
invested at all times. There can be no assurance that the Trust will outperform
the DJIA over its one-year life or over consecutive rollover periods, if
available.
<PAGE>
[GRAPHIC OMITTED]
Strategic 5 Trust
- -----------------
An opportunity for Above-Average Total return through Capital Appreciation and
Dividend Income.
Equities: The Place to Be
History has demonstrated that over time owning common stocks is an effective way
of building wealth.
During the period from 1926 through 1994 stocks provided an average total return
of 10.2% versus 4.8% for long term government bonds and 3.7% for U.S. Treasury
bills.*
Investors should bear in mind that Treasuries and U.S. Government bonds are
fixed income obligations, having the highest credit characteristics, while
equity securities involve greater risk. But for those investors with the
appropriate risk tolerance and investment time horizon, stocks would have
provided investors with a substantial increase in real wealth.
Choosing the Right Stocks
The most common and popular indicator of the U.S. stock market is the Dow Jones
Industrial Average (DJIA)**. The DJIA comprises 30 common stocks chosen by the
editors of The Wall Street Journal as representative of the overall market and
of American industry. These companies are major factors in our economy and their
stocks are widely held by individuals and institutional investors.
Investing in the stocks of the DJIA
may be an effective as well as a conservative investment strategy.
*Ibbotson Associates - All results assume reinvestment of dividends on stocks or
coupons on bonds and no taxes. Transaction costs are not included.
**Dow Jones Industrial Average is the property of Dow Jones and Company Inc.,
which is unaffiliated with the Sponsor and has not participated in any way in
the creation of the Trust or in the selection of its stocks, or has approved any
information contained in this brochure or in the Trust's prospectus.
<PAGE>
The QUILTS Equity
Strategic 5 Trust
The QUILTS Equity Strategic 5 Trust utilizes a simple time tested strategy. The
Trust provides investors with the opportunity to invest in stocks of DJIA which
are some of the most well-known and highly capitalized companies in America.
The Trust seeks to provide above
average total return through capital appreciation and dividend income.
The Strategy
The Strategic 5 Strategy entails calculating and ranking the dividend yields of
each of the 30 companies that comprise the DJIA.. The ten stocks with the
highest dividend yields are identified, and equal amounts of the five stocks
with the lowest price per share are purchased. These stocks are held for about
one year, and at maturity the trust is liquidated. Investors may choose to
reinvest the proceeds into the next available QUILTS Equity Strategic series at
a reduced sales charge, or receive all proceeds in cash.
Investing in DJIA stocks with high dividend yields relative to their price is
designed to increase the potential for higher returns, because we believe their
prices are undervalued. This may be effective in achieving the Trust's
investment objectives. Since the Trust consists of common stocks, an investment
should be made with an understanding of the risks inherent in any investment in
common stock.
Advantages
Diversification - Purchasing a portfolio of these stocks as opposed to just one
or two can achieve greater diversification.
Cost- Effective - An investment in the Trust avoids the costs associated with
buying small quantities of securities directly. Minimum purchase is
approximately $1,000.
<PAGE>
Historically (as the chart shows) this strategy has effectively achieved higher
returns than investing in the entire DJIA.
A Comparison of Total Return
An Investment of $10,000
1/1/76 thru 12/31/95***
[GRAPHIC OMITTED]
Term - The same stocks are held in the Trust for approximately one year, at
which time the Trust will liquidate and proceeds will be distributed to
unitholders.
Rollover Option - At maturity unitholders have the option of rolling into the
next available QUILTS Equity Series at a reduced sales charge.
Liquidity - All or a portion of your units may be sold at any time. You will
receive the current market value for your units, which may be more or less than
the original purchase price. There is no charge to liquidate.
Dividends - Dividends are paid on a semi-annual basis, either in cash or
reinvested into the Trust at no additional charge.
***The graph above represents past performance of the DJIA and the five lowest
priced highest yielding stocks of the DJIA (but not the Trust). It is important
to note that past performance is no guarantee of future results. Further,
results are hypothetical. The graph assumes that all dividends and capital gains
during a year are reinvested at the end of that year and does not reflect
commissions or taxes. In addition, the Trust's performance will vary from that
of investing in the five lowest priced highest yielding stocks of the DJIA,
because the Trust has a sales charge and expenses, may not invest equally in
these stocks and may not be fully invested at all times. There can be no
assurance that the Trust will outperform the DJIA over its one-year life or over
consecutive rollover periods, if available.
<PAGE>
PROSPECTUS PART B
Part B of this Prospectus may not be Distributed unless Accompanied by Part A
QUALIFIED UNIT INVESTMENT LIQUID TRUST SERIES ("QUILTS")
EQUITY STRATEGIC TEN, SERIES 1
EQUITY STRATEGIC FIVE, SERIES 1
THE TRUST
Organization. "QUILTS" is comprised of two separate "unit
investment trusts" designated as set forth above in Part A. The Trusts were
created under the laws of the State of New York pursuant to a Trust Indenture
and Agreement (the "Trust Agreement") dated the Date of Deposit between OCC
Distributors, as Sponsor, and The Chase Manhattan Bank (National Association),
as Trustee.
The Portfolio of the Strategic Ten Trust contains the ten
(10) common stocks in the Dow Jones Industrial Average ("DJIA") (which is not
affiliated with the Sponsor) having the highest dividend yield on the business
day prior to the initial Date of Deposit (the "DJIA Strategic Ten"). The
Portfolio of the Strategic Five Trust contains the five (5) common stocks in
the DJIA having the lowest per share stock price of the ten companies in the
DJIA having the highest dividend yield on the business day prior to the
initial Date of Deposit (the "DJIA Strategic Five"). As used herein, the term
"highest dividend yield" means the yield for each Security calculated by
annualizing the last quarterly or semi-annual ordinary dividend distributed on
that Security and dividing the result by the market value of that Security on
the business day prior to the initial Date of Deposit. This rate is
historical, and there is no assurance that any dividends will be declared or
paid in the future on the Securities in the Trusts. As used herein, the term
"Securities" means the common stocks initially deposited in each of the Trusts
and described under the Portfolios and any additional common stocks acquired
and held by the Trust pursuant to the provisions of the Indenture.
On the initial Date of Deposit, the Sponsor deposited with
the Trustee the Securities with an aggregate value as set forth in Part A and
cash or an irrevocable letter of credit issued by a major commercial bank in
the amount required for such purchases. Thereafter the Trustee, in exchange
for the Securities so deposited, delivered to the Sponsor the Certificates
evidencing the ownership of all Units of the Trusts. The Sponsor may also, in
certain circumstances, direct the Trustee to dispose of certain Securities if
the Sponsor believes that, because of market or credit conditions, or for
certain other reasons, retention of the Security would be detrimental to Unit
Holders. (See "Trust Administration--Portfolio Supervision.")
As of the day prior to the initial Date of Deposit, a "Unit"
represents an undivided interest or pro rata share in the Securities of the
Trust in the ratio of one thousand Units for the indicated amount of the
aggregate market value of the Securities initially deposited in the Trusts as
is set forth in the "Summary of Essential Information" for each Trust. To the
extent that any Units are redeemed by the Trustee, the fractional undivided
interest or pro rata share in such Trust represented by each unredeemed Unit
will increase, although the actual interest in such Trust represented by such
fraction will remain unchanged. Units will remain outstanding until redeemed
upon tender to the Trustee by Unit Holders, which may include the Sponsor or
the Underwriters, or until the termination of the Trust Agreement.
With the deposit of the Securities in the Trusts on the
initial Date of Deposit, the Sponsor established a proportionate relationship
among the initial aggregate value of specified Securities
331449.2
<PAGE>
in each of the Trusts. During the 90 days subsequent to the initial Date of
Deposit, the Sponsor may deposit additional Securities in the Trust that are
substantially similar to the Securities already deposited in the Trust
("Additional Securities"), contracts to purchase Additional Securities or cash
(or a bank letter of credit in lieu of cash) with instructions to purchase
Additional Securities, in order to create additional Units, maintaining to the
extent practicable the original proportionate relationship of the number of
shares of each Security in the portfolio of each of the Trusts on the initial
Date of Deposit. These additional Units will each represent, to the extent
practicable, an undivided interest in the same number and type of securities
of identical issuers as are represented by Units issued on the initial Date of
Deposit. It may not be possible to maintain the exact original proportionate
relationship among the Securities deposited on the initial Date of Deposit
because of, among other reasons, purchase requirements, changes in prices, or
unavailability of Securities. The number and identity of Securities in the
Trusts will be adjusted to reflect the disposition of Securities and/or the
receipt of a stock dividend, a stock split or other distribution with respect
to shares. Securities received in exchange for shares will be similarly
treated. The portfolio of each of the Trusts may change slightly based on such
transaction. Substitute Securities may be acquired under specified conditions
when Securities originally deposited in the Trusts are unavailable (see "The
Trust--Substitution of Securities" below). Units may be continuously offered
to the public by means of this Prospectus (see "Public Offering--Distribution
of Units") resulting in a potential increase in the number of Units
outstanding. As additional Units are issued by the Trusts as a result of the
deposit of Additional Securities, the aggregate value of the Securities in
each of the Trusts will be increased and the fractional undivided interest in
each of the Trusts represented by each Unit will be decreased.
Objectives. The objective of the Trusts is to maximize total
return through capital appreciation and current dividend income. The Strategic
Ten Trust will invest for one year in approximately equal values of the ten
(10) common stocks in the DJIA having the highest dividend yield one business
day prior to the initial Date of Deposit. The Strategic Five Trust will invest
for one year in approximately equal values of the five (5) common stocks in
the DJIA having the lowest per share stock price of the ten companies in the
DJIA having the highest dividend yield one business day prior to the initial
Date of Deposit. Investing in DJIA stocks with the highest dividend yields may
be effective in achieving the Trusts' investment objectives because regular
dividends are common for established companies and dividends have accounted
for a substantial portion of the total return on DJIA stocks as a group.
Further, the Securities may appreciate or depreciate in value, dependent upon
the full range of economic and market influences affecting corporate
profitability, the financial condition of issuers and the prices of equity
securities in general and the Securities in particular. Investors should note
that each Trust's selection criteria were applied to the Securities one
business day prior to the initial Date of Deposit. Since the Sponsors may
deposit additional Securities in connection with the sale of additional Units,
the yields on these Securities may change subsequent to the initial Date of
Deposit. Therefore, there is no guarantee that the objective of the Trusts
will be achieved.
The DJIA Strategic Ten. The Strategic Ten Trust is a fixed
diversified portfolio of the ten common stocks in the Dow Jones Industrial
Average having the highest dividend yield one business day prior to the
initial Date of Deposit. The Strategic Ten Trust seeks a higher total return
than the DJIA by acquiring these ten established, widely held stocks one
business day before the Strategic Ten Trust is created, and holding them for
about one year. There can be no assurance that the dividend rates will be
maintained. Reduction or elimination of a dividend could adversely affect the
stock price as well. Purchasing a portfolio of these stocks as opposed to one
or two can achieve a more diversified holding. There is only one investment
decision instead of ten, two dividends instead of 40. An investment in the
Strategic Ten Trust can be cost-efficient, avoiding the odd-lot costs of
buying small quantities of securities directly. Investment in a number of
companies with high dividends relative to their stock prices (usually because
their stock prices are depressed) is designed to increase the Strategic Ten
Trust's potential for higher returns. The Strategic Ten Trust's return will
consist of a combination of capital appreciation and current dividend income.
The Strategic Ten Trust will terminate in about
B-2
331449.2
<PAGE>
one year, when investors may choose to either receive the distribution in kind
(if they own at least 25,000 Units) in cash or reinvest in the next QUILTS
Equity Strategic Ten Series (if available) at a reduced sales charge.
The DJIA Strategic Five. The Strategic Five Trust is a fixed
diversified portfolio of the five common stocks in the Dow Jones Industrial
Average having the lowest per share stock price of the ten companies in the
DJIA having the highest dividend yield one business day prior to the initial
Date of Deposit. The Strategic Five Trust seeks a higher total return than the
DJIA by acquiring these five established, widely held stocks one business day
before the Strategic Five Trust is created, and holding them for about one
year. There can be no assurance that the dividend rates will be maintained.
Reduction or elimination of a dividend could adversely affect the stock price
as well. Purchasing a portfolio of these stocks as opposed to one or two can
achieve a more diversified holding. There is only one investment decision
instead of five, two dividends instead of 20. An investment in the Strategic
Five Trust can be cost-efficient, avoiding the odd-lot costs of buying small
quantities of securities directly. Investment in a number of companies with
high dividends relative to their stock prices (usually because their stock
prices are depressed) is designed to increase the Strategic Five Trust's
potential for higher returns. The Strategic Five Trust's return will consist
of a combination of capital appreciation and current dividend income. The
Strategic Five Trust will terminate in about one year, when investors may
choose to either receive the distribution in kind (if they own at least 25,000
Units) in cash or reinvest in the next QUILTS Equity Strategic Five Series (if
available) at a reduced sales charge.
The Dow Jones Industrial Average. Each of the Securities has
been taken from the DJIA. The DJIA comprises 30 common stocks chosen by the
editors of The Wall Street Journal as representative of the broad market and
of American industry. The companies are major factors in their industries and
their stocks are widely held by individuals and institutional investors.
Changes in the components of the DJIA are made entirely by the editors of The
Wall Street Journal without consultation with the companies, the stock
exchange or any official agency. For the sake of continuity, changes are made
rarely. Most substitutions have been the result of mergers, but from time to
time, changes may be made to achieve a better representation. The components
of the DJIA may be changed at any time for any reason. Any changes in the
components of the DJIA after the date of this Prospectus will not cause a
change in the identity of the common stocks included in the Trust Portfolio,
inducing any additional Securities deposited in the Trust.
The first DJIA, consisting of 12 stocks, was published in
The Wall Street Journal in 1896. The list grew to 20 stocks in 1916 and to 30
stocks on October 1, 1928. Taking into account a number of name changes, 9 of
the original companies are still in the DJIA today. For two periods of 17
consecutive years each, there were no changes to the list: March 14, 1939 -
July 1956 and June 1, 1959 - August 6, 1976.
List as of October 1, 1928 Current List
- -------------------------- ------------
Allied Chemical AT&T Corporation
American Can Allied Signal
American Smelting Aluminum Company of America
American Sugar American Express Company
American Tobacco Bethlehem Steel Corporation
Atlantic Refining Boeing Company
Bethlehem Steel Corporation Caterpillar Inc.
Chrysler Corporation Chevron Corporation
General Electric Company Coca-Cola Company
General Motors Corporation Walt Disney Company
General Railway Signal E.I. du Pont de Nemours & Company
B-3
331449.2
<PAGE>
<TABLE>
<S> <C>
Goodrich Eastman Kodak Company
International Harvester Exxon Corporation
International Nickel General Electric Company
Mack Trucks General Motors Corporation
Nash Motors Goodyear Tire & Rubber Company
North American International Business Machines Corporation
Paramount Publix International Paper Company
Postum, Inc. McDonald's Corporation
Radio Corporation of America (RCA) Merck & Company, Inc.
Sears, Roebuck & Company Minnesota Mining & Manufacturing Company
Standard Oil of New Jersey J.P. Morgan & Company, Inc.
Texas Corporation Phillip Morris Companies, Inc.
Texas Gulf Sulphur Proctor & Gamble Company
Union Carbide Corporation Sears, Roebuck & Company
United States Steel Company Texaco, Inc.
Victor Talking Machine Union Carbide Corporation
Westinghouse Electric Corporation United Technologies Corporation
Woolworth Corporation Westinghouse Electric Corporation
Wright Aeronautical Woolworth Corporation
</TABLE>
Portfolio. The Trusts consist of those Securities listed in
the "Portfolio" for each Trust in Part A (or contracts to purchase such
Securities together with an irrevocable letter or letters of credit for the
purchase of such contracts) and Additional Securities deposited upon the
creation of additional Units as set forth above and Substitute Securities
acquired by a Trust as long as such Securities may continue to be held from
time to time in the Trust together with uninvested cash realized from the
disposition of Securities. Because certain of the Securities from time to time
may be sold under certain circumstances, as described (see "Trust
Administration"), no assurance can be given that the Trusts will retain for
any length of time their present size and composition. The Trustee has not
participated and will not participate in the selection of Securities for the
Trusts, and neither the Sponsor nor the Trustee will be liable in any way for
any default, failure or defect in any Securities.
All of the Securities are publicly traded on the New York
Stock Exchange. The contracts to purchase Securities deposited initially in
the Trusts are expected to settle in three business days, in the ordinary
manner for such Securities. Settlement of the contracts for Securities is thus
expected to take place prior to the settlement of purchase of Units on the
initial Date of Deposit.
RISK FACTORS
Fixed Portfolio. The value of the Units will fluctuate
depending on all the factors that have an impact on the economy and the equity
markets. These factors similarly impact on the value of a Portfolio Security's
issuer and the ability of such an issuer to distribute dividends. The Trusts
are not a "managed registered investment company" and Securities will not be
sold by the Trustee as a result of ordinary market fluctuations. Unlike a
managed investment company in which there may be frequent changes in the
portfolio of securities based upon economic, financial and market analyses,
securities of a unit investment trust, such as the Trusts, are not subject to
such frequent changes based upon continuous analysis. However, the Sponsor may
direct the disposition by the Trustee of Securities upon the occurrence of
certain events. Some of the Securities in the Trusts may also be owned by
other clients of the Sponsor and its affiliates. However, because these
clients may have differing investment objectives, the Sponsor may sell certain
Securities from those accounts in instances where a sale by the Trusts would
be impermissible, such as to maximize return by taking advantage of market
fluctuations. (See "Trust Administration--Portfolio Supervision" below.)
Potential
B-4
331449.2
<PAGE>
investors also should be aware that the Sponsor may change its views as to the
investment merits of any of the Securities during the life of the Trusts and
therefore should consult their own financial advisers with regard to a
purchase of Units. In addition, investors should be aware that the Sponsor,
and its affiliates, currently act and will continue to act as investment
adviser for managed investment companies and managed private accounts that may
have similar or different investment objectives from the Trusts. Some of the
Securities in the Trusts may also be owned by these other clients of the
Sponsor and its affiliates. However, because these clients have "managed"
portfolios and may have differing investment objectives, the Sponsor may sell
certain Securities from those accounts in instances where a sale by the Trust
would be impermissible, such as to maximize return by taking advantage of
market fluctuation. Investors should consult with their own financial advisers
prior to investing in either of the Trusts to determine its suitability. (See
"Trust Administration--Portfolio Supervision.") All the Securities in each of
the Trusts are liquidated or distributed during a 30-day period at the
termination of the approximately one-year life of the Trusts. Since the Trusts
will not sell Securities in response to ordinary market fluctuation, but only
at the termination of the Trusts or upon the occurrence of certain events, the
amount realized upon the sale of the Securities may not be the highest price
attained by an individual Security during the life of the Trusts.
Additional Securities. Investors should be aware that in
connection with the creation of additional Units subsequent to the initial
Date of Deposit, the Sponsor may deposit Additional Securities, contracts to
purchase Additional Securities or cash (or letter of credit in lieu of cash)
with instructions to purchase Additional Securities, in each instance
maintaining the original proportionate relationship, subject to adjustment
under certain circumstances, of the numbers of shares of each Security in each
of the Trusts. To the extent the price of a Security increases or decreases
between the time cash is deposited with instructions to purchase the Security
at the time the cash is used to purchase the Security, Units may represent
less or more of that Security and more or less of the other Securities in the
Trusts. In addition, brokerage fees (if any) incurred in purchasing Securities
with cash deposited with instructions to purchase the Securities will be an
expense of the Trusts. Price fluctuations between the time of deposit and the
time the Securities are purchased, and payment of brokerage fees, will affect
the value of every Unit Holder's Units and the Income per Unit received by the
Trusts. In particular, Unit Holders who purchase Units during the initial
offering period would experience a dilution of their investment as a result of
any brokerage fees paid by the Trusts during subsequent deposits of Additional
Securities purchased with cash deposited. In order to minimize these effects,
the Trusts will try to purchase Securities as near as possible to the
Evaluation Time or at prices as close as possible to the prices used to
evaluate Trust Units at the Evaluation Time.
Common Stock. Since the Trusts contain common stocks of
domestic issuers, an investment in Units of either of the Trusts should be
made with an understanding of the risks inherent in any investment in common
stocks including the risk that the financial condition of the issuers of the
Securities may become impaired or that the general condition of the stock
market may worsen (both of which may contribute directly to a decrease in the
value of the Securities and thus in the value of the Units). Additional risks
include risks associated with the right to receive payments from the issuer
which is generally inferior to the rights of creditors of, or holders of debt
obligations or preferred stock issued by, the issuer. Holders of common stocks
have a right to receive dividends only when, if, and in the amounts declared
by the issuer's board of directors and to participate in amounts available for
distribution by the issuer only after all other claims on the issuer have been
paid or provided for. By contrast, holders of preferred stocks usually have
the right to receive dividends at a fixed rate when and as declared by the
issuer's board of directors, normally on a cumulative basis. Dividends on
cumulative preferred stock must be paid before any dividends are paid on
common stock and any cumulative preferred stock dividend which has been
omitted is added to future dividends payable to the holders of such cumulative
preferred stock. Preferred stocks are also usually entitled to rights on
liquidation which are senior to those of common stocks. For these reasons,
preferred stocks generally entail less risk than common stocks.
B-5
331449.2
<PAGE>
Moreover, common stocks do not represent an obligation of
the issuer and therefore do not offer any assurance of income or provide the
degree of protection of debt securities. The issuance of debt securities or
even preferred stock by an issuer will create prior claims for payment of
principal, interest and dividends which could adversely affect the ability and
inclination of the issuer to declare or pay dividends on its common stock or
the economic interest of holders of common stock with respect to assets of the
issuer upon liquidation or bankruptcy. Further, unlike debt securities which
typically have a stated principal amount payable at maturity (which value will
be subject to market fluctuations prior thereto), common stocks have neither
fixed principal amount nor a maturity and have values which are subject to
market fluctuations for as long as the common stocks remain outstanding.
Common stocks are especially susceptible to general stock market movements and
to volatile increases and decreases in value as market confidence in and
perceptions of the issuers change. These perceptions are based on
unpredictable factors including expectations regarding government, economic,
monetary and fiscal policies, inflation and interest rates, economic expansion
or contraction, and global or regional political, economic or banking crises.
The value of the common stocks in the Trusts thus may be expected to fluctuate
over the life of the Trusts to values higher or lower than those prevailing on
the initial Date of Deposit.
Petroleum Refining Companies. The Portfolio of the Strategic
Ten Trust may be considered to be concentrated in common stocks of companies
engaged in refining and marketing oil and related products. According to the
U.S. Department of Commerce, the factors which will most likely shape the
industry to 1996 and beyond include the price and availability of oil from the
Middle East, changes in United States environmental policies and the continued
decline in U.S. production of crude oil. Possible effects of these factors may
be increased U.S. and world dependence on oil from the Organization of
Petroleum Exporting Countries ("OPEC") and highly uncertain and potentially
more volatile oil prices and a higher rate of growth for natural gas
production than for other fuels. Factors which the Sponsor believes may
increase the profitability of oil and petroleum operations include increasing
demand for oil and petroleum products as a result of the continued increases
in annual miles driven and the improvement in refinery operating margins
caused by increases in average domestic refinery utilization rates. The
existence of surplus crude oil production capacity and the willingness to
adjust production levels are the two principal requirements for stable crude
oil markets. Without excess capacity, supply disruptions in some countries
cannot be compensated for by others. Surplus capacity in Saudi Arabia and a
few other countries and the utilization of that capacity during the Persian
Gulf crisis prevented severe market disruption. Although unused capacity can
contribute to market stability, it ordinarily creates pressure to overproduce
and contributes to market uncertainty. The likely restoration of a large
portion of Kuwait and Iraq's production and export capacity over the next few
years could lead to such a development in the absence of substantial growth in
world oil demand. Formerly, OPEC members attempted to exercise control over
production levels in each country through a system of mandatory production
quotas. As a result of the crisis in the Middle East, the mandatory system has
since been replaced with a voluntary system. Production under the new system
has had to be curtailed on at least one occasions as a result of weak prices,
even in the absence of supplies from Iraq. The pressure to deviate from
mandatory quotas, if they are reimposed, is likely to be substantial and could
lead to a weakening of prices. In the longer term, additional capacity and
production will be required to accommodate the expected increases in world oil
demand and to compensate for expected sharp drops in U.S. crude oil production
and exports from the former Soviet Union. Only a few OPEC countries,
particularly Saudi Arabia, have the petroleum reserves that will allow the
required increase in production capacity to be attained. Given the large-scale
financing that is required, the prospect that such expansion will occur soon
enough to meet the increased demand is uncertain.
Declining U.S. crude oil production will likely lead to
increased dependence on OPEC oil, putting refiners at risk of continued and
unpredictable supply disruptions. Increasing sensitivity to environmental
concerns will also pose serious challenges to the industry over the coming
decade.
B-6
331449.2
<PAGE>
Refiners are likely to be required to make heavy capital investments and make
major production adjustments in order to comply with increasingly stringent
environmental legislation, such as the 1990 amendments to the Clean Air Act.
If the cost of these changes is substantial enough to cut deeply into profit,
smaller refiners may be forced out of the industry entirely. Moreover, lower
consumer demand due to increases in energy efficiency and conservation, due to
gasoline reformulations that call for less crude oil, due to warmer winters or
due to a general slowdown in economic growth in this country and abroad, could
negatively affect the price of oil and the profitability of oil companies.
Cheaper oil could also decrease demand for natural gas. However, no assurance
can be given that the demand for or the price of oil will increase or that if
either anticipated increase does take place, it will not be marked by great
volatility.
In addition, any future scientific advances concerning new
sources of energy and fuels or legislative changes relating to the energy
industry or the environment could have a negative impact on the petroleum
product or natural gas industry. While legislation has been enacted to
deregulate certain aspects of the oil industry, no assurances can be given
that new or additional regulations will not be adopted. Each of the problems
referred to could adversely affect the financial stability of the issuers of
any petroleum industry stocks in the Trusts.
Legislation. From time to time Congress considers proposals
to reduce the rate of the dividends-received deductions. Enactment into law of
a proposal to reduce the rate would adversely affect the after-tax return to
investors who can take advantage of the deduction. Unit Holders are urged to
consult their own tax advisers. Further, at any time after the Initial Date of
Deposit, legislation may be enacted, with respect to the Securities in the
Trusts or the issuers of the Securities. Changing approaches to regulation,
particularly with respect to the environment or with respect to the petroleum
industry, may have a negative impact on certain companies represented in the
Trusts. There can be no assurance that future legislation, regulation or
deregulation will not have a material adverse effect on the Trusts or will not
impair the ability of the issuers of the Securities to achieve their business
goals.
PUBLIC OFFERING
Offering Price. The Public Offering Price per 1,000 Units of
each of the Trusts is equal to the aggregate value of the underlying
Securities (the price at which they could be directly purchased by the public
assuming they were available) in each Trust divided by the number of Units
outstanding for that Trust times 1,000 plus a sales charge of (a) 2.90% of the
Public Offering Price or 2.987% of the net amount invested in Securities per
1,000 Units of the Strategic Ten Trust and (b) 2.75% of the Public Offering
Price or 2.828% of the net amount invested in Securities per 1,000 Units of
the Strategic Five Trust. In addition, the net amount invested in Securities
will involve a proportionate share of amounts in the Income Account and
Principal Account, if any. The Public Offering Price can vary on a daily basis
from the amount stated in this Prospectus in accordance with fluctuations in
the market value of the Securities and the price to be paid by each investor
will be computed as of the date the Units are purchased.
The aggregate value of the Securities is determined in good
faith by the Trustee on each "Business Day" as defined in the Indenture in the
following manner: because the Securities are listed on a national securities
exchange, this evaluation is based on the closing sale prices on that exchange
as of the Evaluation Time (unless the Trustee deems these prices inappropriate
as a basis for valuation). If the Trustee deems these prices inappropriate as
a basis for evaluation, then the Trustee may utilize, at the Trusts' expense,
an independent evaluation service or services to ascertain the values of the
Securities. The independent evaluation service shall use any of the following
methods, or a combination thereof, which it deems appropriate: (a) on the
basis of current bid prices for comparable securities, (b) by appraising the
value of the Securities on the bid side of the market or by such other
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appraisal deemed appropriate by the Trustee, or (c) by any combination of the
above, each as of the Evaluation Time.
Volume and Other Discounts. Units of the Trusts are
available to Unit Holders at a volume discount ("Volume Discount") from the
Public Offering Price during the initial public offering. Volume Discount will
result in a reduction of the sales charge applicable to such purchases.
Furthermore, Volume Discount applies to the cumulative Units purchased by a
Unit Holder during a period of 60 days from the initial date of sale of the
Units to such Unit Holder. Units purchased by the same purchasers in separate
transactions during the 60-day period will be aggregated for purposes of
determining if such purchaser is entitled to a Volume Discount provided that
such purchaser must own at least the lesser of either (i) the required number
of Units, or (ii) the required dollar amount at the Public Offering Price, at
the time such determination is made. Units held in the name of the spouse of
the purchaser or in the name of a child of the purchaser under 21 years of age
are deemed for the purposes hereof to be registered in the name of the
purchaser. Volume Discount is also applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary account.
As a result of such discounts, units are sold to dealers/agents at prices
which represent a concession as reflected below. The Sponsor reserves the
right to change these discounts from time to time. The amount of Volume
Discount, the approximate sales charge and the dealer concession applicable to
such purchases are as follows:
<TABLE>
<CAPTION>
Volume Discount
from Public Approximate Approximate
Number of Units Sales Offering per Reduced Dealer/Agent
or Dollar Amounts Charge Unit Sales Charge Concession
<S> <C> <C> <C> <C>
Strategic Ten Trust
Less than 25,000 2.90% 0% 2.90% 2.00%
25,000 but less than 50,000 2.90% .05% 2.85% 2.00%
50,000 but less than 100,000 2.90% .30% 2.60% 1.75%
100,000 but less than 250,000 2.90% .65% 2.25% 1.45%
250,000 and above* 2.90% .90% 2.00% 1.25%
Strategic Five Trust
Less than 25,000 2.75% 0% 2.75% 1.80%
25,000 but less than 50,000 2.75% .05% 2.70% 1.80%
50,000 but less than 100,000 2.75% .25% 2.50% 1.65%
100,000 but less than 250,000 2.75% .60% 2.15% 1.35%
250,000 and above* 2.75% .80% 1.95% 1.15%
</TABLE>
Net Asset Value Purchases. No sales charge will be applied
to the following transactions: purchases by persons who for at least 90 days
have been directors, trustees, officers or full-time employees of any of (i)
the funds distributed by OCC Distributors, (ii) Op Cap Advisors and (iii) OCC
Distributors, or their affiliates, their immediate relatives or any trust,
pension, profit sharing or other benefit plan for any of them; purchases by
any account advised by Oppenheimer Capital, the parent of Op Cap Advisors; and
purchases by an employee of a broker-dealer having a dealer or servicing
agreement with OCC Distributors and/or a participating member of the
Oppenheimer Capital brokered CD selling group or of a bank or financial
intermediary currently offering QUILTS to its customers.
Distribution of Units. During the initial offering period
(i) Units issued on the initial Date of Deposit and (ii) Additional Units
issued after such date in respect of additional deposits of Securities,
- --------
* For any transactions of 250,000 Units or more or over $250,000, the
Sponsor intends to negotiate the applicable sales charge and such charge
will be disclosed to any such purchaser.
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will be distributed by the Sponsor and dealers at the Public Offering Price.
The initial offering period in each case is thirty days unless extended by the
Sponsor for Units specified in (i) and (ii) in the preceding sentence. In
addition, Units may be distributed through dealers who are members of the
National Association of Securities Dealers, Inc. or other financial
intermediaries as permitted by law. Certain banks and thrifts will make Units
of the Trusts available to their customers on an agency basis. A portion of
the sale charge paid by their customers is retained by or remitted to the
banks. Under the Glass-Steagall Act, banks are prohibited from underwriting
Units; however, the Glass-Steagall Act does permit certain agency transactions
and the banking regulators have indicated that these particular agency
transactions are permitted under such Act. In addition, state securities laws
on this issue may differ from the interpretations of federal law expressed
herein and banks and financial institutions may be required to register as
dealers pursuant to state law.
The Sponsor intends to qualify the Units of the Trusts for
sale in Arkansas, Connecticut, Florida, Georgia, Illinois, Indiana, Iowa,
Maryland, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South
Carolina, Tennessee, Texas, Virginia, Washington, West Virginia and the
District of Columbia. Additional states may be added from time to time.
The Sponsor may provide additional concessions to its
affiliates in connection with the distribution of the Units. The Sponsor
reserves the right to change the dealers concession at any time. Such Units
may then be distributed to the public by the dealers at the Public Offering
Price then in effect. The Sponsor reserves the right to reject, in whole or in
part, any order for the purchase of Units. Also, the Sponsor in its discretion
may from time to time pursuant to objective criteria established by the
Sponsor pay fees to qualifying Underwriters, brokers, dealers, banks and/or
others for certain services or activities which are primarily intended to
result in sales of Units of the Trusts. Such payments are made by the Sponsor
out of its own assets and out of the assets of the Trusts. These programs will
not change the price Unit Holders pay for their Units or the amount that the
Trusts will receive from the Units sold.
Sponsor's Profits. The Sponsor will receive a gross
underwriting commission (although the net commission retained will be lower
because of the concession paid to dealers) equal to 2.90% of the Public
Offering Price (2.987% of the net amount invested in the Securities) for the
Strategic Ten Trust and 2.75% of the Public Offering Price per Unit
(equivalent to 2.828% of the net amount invested in the Securities) for the
Strategic Five Trust. Additionally, the Sponsor may realize a profit on the
deposit of the Securities in the Trusts representing the difference between
the cost of the Securities to the Sponsor and the cost of the Securities to
the Trusts (see "Portfolio" in Part A). The Sponsor may realize profits or
sustain losses with respect to Securities deposited in the Trusts which were
acquired from underwriting syndicates of which it was a member.
The Sponsor may have participated as a sole underwriter or
manager, co-manager or member of underwriting syndicates from which some of
the aggregate principal amount of the Securities were acquired for the Trusts
in the amounts set forth in Part A.
During the initial offering period and thereafter to the
extent Additional Units continue to be issued and offered for sale to the
public the Sponsor may also realize profits or sustain losses as a result of
fluctuations after the initial Date of Deposit in the offering prices of the
Securities and hence in the Public Offering Price received by the Sponsor for
the Units. Cash, if any, made available to the Sponsor prior to settlement
date for the purchase of Units may be used in the Sponsor's business subject
to the limitations of 17 CFR 240.15c3-3 under the Securities Exchange Act of
1934, and may be of benefit to the Sponsor.
Both upon acquisition of Securities and termination of the
Trusts, the Trustee may utilize the services of the Sponsor for the purchase
or sale of all or a portion of the Securities in the Trusts.
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The Sponsor will receive brokerage commissions from the Trusts in connection
with such purchases and sales in accordance with applicable law.
In maintaining a market for the Units (see
"Liquidity--Sponsor Repurchase") the Sponsor will realize profits or sustain
losses in the amount of any difference between the price at which they buy
Units and the price at which they resell such Units.
Comparison of Public Offering Price, Sponsor's Repurchase
Price and Redemption Price. Although the Public Offering Price of Units of the
Trusts will be determined on the basis of the current offering prices of the
Securities in the Trusts, the value at which Units may be redeemed or sold in
the secondary market will be determined on the basis of the current bid prices
of such Securities. On the initial Date of Deposit, the Public Offering Price
and the Sponsor's Initial Repurchase Price per Unit of each of the Trusts
(based on the offering side evaluation of the Securities in the Trusts) each
exceeded the Redemption Price and the Sponsor's secondary market Repurchase
Price per Unit (based upon the current bid side evaluation of the Securities
in the Trusts) by the amounts shown under "Summary of Essential Information"
for each Trust in Part A of this Prospectus. On the initial Date of Deposit,
the bid side evaluation for each Trust was lower than the offering side
evaluation for such Trust by the amount set forth in Part A. For this reason,
among others (including fluctuations in the market prices of such Securities
and the fact that the Public Offering Price includes the applicable sales
charge), the amount realized by a Unit Holder upon any redemption or Sponsor
repurchase of Units may be less than the price paid for such Units. See
"Liquidity--Sponsor Repurchase."
RIGHTS OF UNIT HOLDERS
Book-Entry Units. Ownership of Units of the Trusts will not
be evidenced by certificates. All evidence of ownership of the Units will be
recorded in book-entry form either at Depository Trust Company ("DTC") through
an investor's broker's account or through registration of the Units on the
books of the Trustee. Units held through DTC will be deposited by the Sponsor
with DTC in the Sponsor's DTC account and registered in the nominee name CEDE
& CO. Individual purchases of beneficial ownership interest in the Trusts will
be made in book-entry form through DTC or the Trustee. Ownership and transfer
of Units will be evidenced and accomplished directly and indirectly by
book-entries made by DTC and its participants if the Units are evidenced at
DTC, or otherwise will be evidenced and accomplished by book-entries made by
the Trustee. DTC will record ownership and transfer of the Units among DTC
participants and forward all notices and credit all payments received in
respect of the Units held by the DTC participants. Beneficial owners of Units
will receive written confirmation of their purchase and sale from the
broker-dealer or bank from whom their purchase was made. Units are
transferable by making a written request properly accompanied by a written
instrument or instruments of transfer which should be sent registered or
certified mail for the protection of the Unit Holder. Unit Holders must sign
such written request exactly as their names appear on the record of the
Trusts. Such signatures must be guaranteed by a commercial bank or trust
company, savings and loan association or by a member firm of a national
securities exchange.
Distributions. Dividends received by a Trust are credited by
the Trustee to an Income Account for that Trust. Other receipts, including the
proceeds of Securities disposed of, are credited to a Principal Account for
the Trust.
Distributions to each Unit Holder from the Income Account
are computed as of the close of business on each Record Date for the following
Distribution Date. Distributions from the Principal Account of the Trusts
(other than amounts representing failed contracts, as previously discussed)
will be computed as of each Record Date, and will be made to the Unit Holders
of the Trusts on or shortly after the Distribution Date. Proceeds representing
principal received from the disposition of any of the Securities between a
Record Date and a Distribution Date which are not used for redemptions of
Units
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<PAGE>
will be held in the Principal Account and not distributed until the next
Distribution Date. Persons who purchase Units between a Record Date and a
Distribution Date will receive their first distribution on the Distribution
Date following the first Record Date on which they are a Unit Holder of
record.
As of each month the Trustee will deduct from the Income
Account of the Trusts, and, to the event funds are not sufficient therein,
from the Principal Account of the Trusts, amounts necessary to pay the
expenses of the Trusts (as determined on the basis set forth under "Trust
Expenses and Charges"). The Trustee also may withdraw from said accounts such
amounts, if any, as it deems necessary to establish a reserve for any
applicable taxes or other governmental charges that may be payable out of the
Trusts. Amounts so withdrawn shall not be considered a part of such Trust's
assets until such time as the Trustee shall return all or any part of such
amounts to the appropriate accounts. In addition, the Trustee may withdraw
from the Income and Principal Accounts such amounts as may be necessary to
cover redemptions of Units by the Trustee.
The dividend distribution per 1,000 Units cannot be
estimated and will change and may be reduced as Securities are redeemed,
exchanged or sold, or as expenses of the Trusts fluctuate. No distribution
need be made from the Principal Account until the balance therein is an amount
sufficient to distribute $1.00 per 1,000 Units.
Reinvestment. Income and principal distributions on Units
(other than the final distribution in connection with the termination of the
Trusts) may be reinvested by participating in a Trust's reinvestment plan.
Under the plan, the Units acquired for participants will be either Units
already held in inventory by the Sponsor or new Units created by the Sponsor's
deposit of Additional Securities as described in "The Trust-Organization" in
this Part B. Units acquired by reinvestment will not be subject to a sales
charge. The Sponsor reserves the right to demand, modify or terminate the
reinvestment plan at any time without prior notice. The reinvestment plan for
the Trusts may not be available in all states. In order to enable a Unit
Holder to participate in the reinvestment plan with respect to a particular
distribution on their Units, written notification must be received by the
Trustee within 10 days prior to the Record Date for such distribution. Each
subsequent distribution of income or principal on the participant's Units will
be automatically applied by the Trustee to purchase additional Units of a
Trust.
Records. The Trustee shall furnish Unit Holders in
connection with each distribution a statement of the amount of dividends and
interest, if any, and the amount of other receipts, if any, which are being
distributed, expressed in each case as a dollar amount per 1,000 Units. Within
a reasonable time after the end of each calendar year the Trustee will furnish
to each person who at any time during the calendar year was a Unit Holder of
record, a statement showing (a) as to the Income Account: dividends, interest
and other cash amounts received, amounts paid for purchases of Substitute
Securities and redemptions of Units, if any, deductions for applicable taxes
and fees and expenses of the Trusts, and the balance remaining after such
distributions and deductions, expressed both as a total dollar amount and as a
dollar amount representing the pro rata share of each 1,000 Units outstanding
on the last business day of such calendar year; (b) as to the Principal
Account: the dates of disposition of any Securities and the net proceeds
received therefrom, deductions for payments of applicable taxes and fees and
expenses of the Trusts, amounts paid for purchases of Substitute Securities
and redemptions of Units, if any, and the balance remaining after such
distributions and deductions, expressed both as a total dollar amount and as a
dollar amount representing the pro rata share of each 1,000 Units outstanding
on the last business day of such calendar year; (c) a list of the Securities
held, a list of Securities purchased, sold or otherwise disposed of during the
calendar year and the number of Units outstanding on the last business day of
such calendar year; (d) the Redemption Price per 1,000 Units based upon the
last computation thereof made during such calendar year; and (e) amounts
actually distributed to Unit Holders during such calendar year from the Income
and Principal Accounts, separately stated, of the Trusts, expressed both as
total dollar amounts and as dollar
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<PAGE>
amounts representing the pro rata share of each 1,000 Units outstanding on the
last business day of such calendar year.
The Trustee shall keep available for inspection by Unit
Holders at all reasonable times during usual business hours, books of record
and account of its transactions as Trustee, including records of the names and
addresses of Unit Holders, Certificates issued or held, a current list of
Securities in the portfolio and a copy of the Trust Agreement.
Expenses and Charges.
Initial Expenses
All or a portion of the expenses incurred in creating and
establishing the Trusts, including the cost of the initial preparation and
execution of the Trust Agreement, the initial fees and expenses of the
Trustee, legal expenses and other actual out-of-pocket expenses, will be paid
by the Trusts and amortized over the life of the Trusts. All advertising and
selling expenses, as well as any organizational expenses not paid by the
Trusts, will be borne by the Sponsor at no cost to the Trusts.
Fees
The Sponsor will not charge the Trusts a fee for their
services as such. (See "Sponsor's Profits.")
The Sponsor will receive for portfolio supervisory services
to the Trusts an Annual Fee in the amount set forth under "Summary of
Essential Information" in Part A. The Sponsor's fee may exceed the actual cost
of providing portfolio supervisory services for the Trusts, but at no time
will the total amount received for portfolio supervisory services rendered to
all series in any calendar year exceed the aggregate cost to the Sponsor of
supplying such services in such year. (See "Portfolio Supervision.")
The Trustee will receive, for its ordinary recurring
services to the Trusts, an annual fee in the amount set forth under "Summary
of Essential Information" in Part A. For a discussion of the services
performed by the Trustee pursuant to its obligations under the Trust
Agreement, see "Trust Administration" and "Rights of Unit Holders".
The Trustee's fees applicable to the Trusts are payable from
the Income Account of the Trusts to the extent funds are available and then
from the Principal Account. Both fees may be increased without approval of the
Unit Holders by amounts not exceeding proportionate increases in consumer
prices for services as measured by the United States Department of Labor's
Consumer Price Index entitled "All Services Less Rent."
Other Charges
The following additional charges are or may be incurred by
the Trusts: all expenses (including audit and counsel fees) of the Trustee
incurred and advances made in connection with its activities under the Trust
Agreement, including annual audit expenses of independent public accountants
selected by the Sponsor (so long as the Sponsor maintains a secondary market,
the Sponsor will bear any audit expense which exceeds 50 cents per 1,000
Units), the expenses and costs of any action undertaken by the Trustee to
protect the Trusts and the rights and interests of the Unit Holders; fees of
the Trustee for any extraordinary services performed under the Trust
Agreement; indemnification of the Trustee for any loss or liability accruing
to it without gross negligence, bad faith or willful misconduct on its part,
arising out of or in connection with its acceptance or administration
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of the Trusts; indemnification of the Sponsor for any losses, liabilities and
expenses incurred in acting as sponsor of the Trusts without gross negligence,
bad faith or willful misconduct on its part; and all taxes and other
governmental charges imposed upon the Securities or any part of the Trusts (no
such taxes or charges are being levied, made or, to the knowledge of the
Sponsor, contemplated). The above expenses, including the Trustee's fees, when
paid by or owing to the Trustee are secured by a first lien on the Trust to
which such expenses are charged. In addition, the Trustee is empowered to sell
the Securities in order to make funds available to pay all expenses.
TAX STATUS
The following is a general discussion of certain of the
Federal income tax consequences of the purchase, ownership and disposition of
the Units. The summary is limited to investors who hold the Units as "capital
assets" (generally, property held for investment) within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code").
Unit Holders should consult their tax advisers in determining the Federal,
state, local and any other tax consequences of the purchase, ownership and
disposition of Units.
In rendering the opinion set forth below, Battle Fowler LLP
has examined the Agreement, the final form of Prospectus dated the date hereof
(the "Prospectus") and the documents referred to therein, among others, and
has relied on the validity of said documents and the accuracy and completeness
of the facts set forth therein.
In the opinion of Battle Fowler LLP, special counsel for the
Sponsor, under existing law:
1. Each Trust will be classified as a grantor trust
for Federal income tax purposes and not as a partnership or
association taxable as a corporation. Classification of a Trust as a
grantor trust will cause the Trust not to be subject to Federal
income tax, and will cause the Unit Holders of the Trust to be
treated for Federal income tax purposes as the owners of a pro rata
portion of the assets of the Trust. All income received by a Trust
will be treated as income of the Unit Holders in the manner set forth
below.
2. Each Trust is not subject to the New York State
Franchise Tax on Business Corporations or the New York City General
Corporation Tax. For a Unit Holder who is a New York resident,
however, a pro rata portion of all or part of the income of the Trust
will be treated as the income of the Unit Holder under the income tax
laws of the State and City of New York. Similar treatment may apply
in other states.
3. During the 90-day period subsequent to the
initial issuance date, the Sponsor reserves the right to deposit
additional Securities that are substantially similar to those
establishing the Trusts. This retained right falls within the
guidelines promulgated by the Internal Revenue Service ("IRS") and
should not affect the taxable status of the Trusts.
A taxable event will generally occur with respect to each
Unit Holder when the Trusts dispose of a Security (whether by sale, exchange
or redemption) or upon the sale, exchange or redemption of Units by such Unit
Holder. The price a Unit Holder pays for his Units, including sales charges,
is allocated among his pro rata portion of each Security held by the Trusts
(in proportion to the fair market values thereof on the date the Unit Holder
purchases his Units) in order to determine his initial cost for his pro rata
portion of each Security held by the Trusts.
For Federal income tax purposes, a Unit Holder's pro rata
portion of dividends paid with respect to a Security held by a Trust are
taxable as ordinary income to the extent of such corporation's current and
accumulated "earnings and profits" as defined by Section 316 of the Code. A
Unit Holder's
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pro rata portion of dividends paid on such Security that exceed such current
and accumulated earnings and profits will first reduce a Unit Holder's tax
basis in such Security, and to the extent that such dividends exceed a Unit
Holder's tax basis in such Security will generally be treated as capital gain.
A distribution of Securities by the Trustee to a Unit Holder
(or to his agent, including the Sponsor) upon redemption of Units (or an
exchange of Units for Securities by the Unit Holder with the Sponsor) will not
be a taxable event to the Unit Holder or to other Unit Holders. The redeeming
or exchanging Unit Holder's basis for such Securities will be equal to his
basis for the same Securities (previously represented by his Units) prior to
such redemption or exchange, and his holding period for such Securities will
include the period during which he held his Units. A Unit Holder will have a
taxable gain or loss, which will be a capital gain or loss except in the case
of a dealer or a financial institution, when the Unit Holder (or his agent,
including the Sponsor) sells the Securities so received in redemption for
cash, when a redeeming or exchanging Unit Holder receives cash in lieu of
fractional shares, when the Unit Holder sells his Units for cash or when the
Trustee sells the Securities from the Trusts. However, to the extent a
Rollover Unit Holder invests his redemption proceeds in units of an available
series of the QUILTS Equity Strategic Ten or Equity Strategic Five (a
"Rollover QUILTS"), such Unit Holder generally will not be entitled to a
deduction for any losses recognized upon the disposition of any Securities to
the extent that such Unit Holder is considered the owner of substantially
identical securities under the grantor trust rules described above as applied
to such Unit Holder's ownership of Units in a Rollover QUILTS, if such
substantially identical securities were acquired within a period ending 30
days after such disposition. If a loss is incurred on the disposition of a
Security and, during the period beginning 30 days before the disposition of
such Security and ending 30 days after such date, the taxpayer acquires,
enters into a contract to acquire, or acquires an option to acquire,
substantially identical Securities, a tax loss is generally not available.
A Unit Holder's portion of gain, if any, upon the sale,
exchange or redemption of Units or the disposition of Securities held by the
Trusts will generally be considered a capital gain and will be long-term if
the Unit Holder has held his Units for more than one year. Investors who
acquire Units after the date on which Units are initially sold will not
qualify for long-term capital gain treatment even though they hold Units until
the Trust terminates if Securities are sold on or before one year from the
date on which they acquired Units. Individuals who realize long-term capital
gains may be subject to a reduced tax rate on such gains. Such lower rate will
be unavailable to those non-corporate Unit Holders who, as of the Mandatory
Termination Date (or earlier termination of a Trust, have held their units for
less than a year and a day. Similarly, with respect to non-corporate Rollover
Unit Holders, this lower rate will be unavailable if, as of the beginning of
the Liquidation Period, such Rollover Unit Holders have held their shares for
less than a year and a day. The deduction of capital losses is subject to
limitations. Tax rates may increase prior to the time when Unit Holders may
realize gains from the sale, exchange or redemption of Units or Securities.
A Unit Holder's portion of loss, if any, upon the sale or
redemption of Units or the disposition of Securities held by a Trust will
generally be considered a capital loss and will be long-term if the Unit
Holder has held his Units for more than one year. Capital losses are
deductible to the extent of capital gains; in addition, up to $3,000 of
capital losses of non-corporate Unit Holders may be deducted against ordinary
income.
Under Section 67 of the Code and the accompanying
Regulations, a Unit Holder who itemizes his deductions may also deduct his pro
rata share of the fees and expenses of the Trusts, but only to the extent that
such amounts, together with the Unit Holder's other miscellaneous deductions,
exceed 2% of his adjusted gross income. The deduction of fees and expenses may
also be limited by Section 68 of the Code, which reduces the amount of
itemized deductions that are allowed for individuals with incomes in excess of
certain thresholds.
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After the end of each calendar year, the Trustee will
furnish to each Unit Holder an annual statement containing information
relating to the dividends received by the Trust on the Securities, the gross
proceeds received by the Trust from the disposition of any Security, and the
fees and expenses paid by the Trust. The Trustee will also furnish annual
information returns to each Unit Holder and to the Internal Revenue Service.
A corporation that owns Units will generally be entitled to
a 70% dividends received deduction with respect to such Unit Holder's pro rata
portion of dividends received by the Trust from a domestic corporation under
Section 243 of the Code or from a qualifying foreign corporation under Section
245 of the Code (to the extent the dividends are taxable as ordinary income,
as discussed above) in the same manner as if such corporation directly owned
the Securities paying such dividends. However, a corporation owning Units
should be aware that Sections 246 and 246A of the Code impose additional
limitations on the eligibility of dividends for the 70% dividends received
deduction. These limitations include a requirement that stock (and therefore
Units) must generally be held at least 46 days (as determined under Section
246(c) of the Code). Moreover, the allowable percentage of the deduction will
be reduced from 70% if a corporate Unit Holder owns certain stock (or Units)
the financing of which is directly attributable to indebtedness incurred by
such corporation. Accordingly, Unit Holders should consult their tax adviser
in this regard. Recent legislative proposals, if enacted, would reduce the
rate of the dividends received deduction.
As discussed in the section "Termination", each Unit Holder
may have three options in receiving their termination distributions, which are
(i) to receive their pro rata share of the underlying Securities in kind, (ii)
to receive cash upon liquidation of their pro rata share of the underlying
Securities, or (iii) to invest the amount of cash they would receive upon the
liquidation of their pro rata share of the underlying Securities in units of a
future series of the Trusts (if one is offered).
Entities that generally qualify for an exemption from
Federal income tax, such as many pension trusts, are nevertheless taxed under
Section 511 of the Code on "unrelated business taxable income." Unrelated
business taxable income is income from a trade or business regularly carried
on by the tax-exempt entity that is unrelated to the entity's exempt purpose.
Unrelated business taxable income generally does not include dividend or
interest income or gain from the sale of investment property, unless such
income is derived from property that is debt-financed or is dealer property. A
tax-exempt entity's dividend income from a Trust and gain from the sale of
Units in a Trust or the Trust's sale of Securities is not expected to
constitute unrelated business taxable income to such tax-exempt entity unless
the acquisition of the Unit itself is debt-financed or constitutes dealer
property in the hands of the tax-exempt entity.
Before investing in a Trust, the trustee or investment
manager of an employee benefit plan (e.g., a pension or profit sharing
retirement plan) should consider among other things (a) whether the investment
is prudent under the Employee Retirement Income Security Act of 1974
("ERISA"), taking into account the needs of the plan and all of the facts and
circumstances of the investment in the Trust; (b) whether the investment
satisfies the diversification requirement of Section 404(a)(1)(C) of ERISA;
and (c) whether the assets of the Trust are deemed "plan assets" under ERISA
and the Department of Labor regulations regarding the definition of "plan
assets."
Prospective tax-exempt investors are urged to consult their
own tax advisers prior to investing in either of the Trusts.
Retirement Plans
These Trusts may be well suited for purchase by Individual
Retirement Accounts ("IRAs"), Keogh plans, pension funds and other qualified
retirement plans, certain of which are briefly
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described below. Generally, capital gains and income received in each of the
foregoing plans are exempt from Federal taxation. All distributions from such
plans are generally treated as ordinary income but may, in some cases, be
eligible for special 5 or 10 year averaging or tax-deferred rollover
treatment. Unit Holders in IRAs, Keogh plans and other tax-deferred retirement
plans should consult their plan custodian as to the appropriate disposition of
distributions. Investors considering participation in any of these plans
should review specific tax laws related thereto and should consult their
attorneys or tax advisers with respect to the establishment and maintenance of
any of these plans. These plans are offered by brokerage firms, including the
Sponsor of the Trusts, and other financial institutions. Fees and charges with
respect to such plans may vary.
Retirement Plans for the Self-Employed--Keogh Plans. Units
of the Trusts may be purchased by retirement plans established for
self-employed individuals, partnerships or unincorporated companies ("Keogh
plans"). Qualified individuals may generally make annual tax-deductible
contributions up to the lesser of 25% of annual compensation or $30,000 to
Keogh plans. The assets of the plan must be held in a qualified trust or other
arrangement which meets the requirements of the Code. Generally, there are
penalties for premature distributions from a plan before attainment of age
591/2, except in the case of a participant's death or disability and certain
other circumstances. Keogh plan participants may also establish separate IRAs
(see below) to which they may contribute up to an additional $2,000 per year
($2,250 in a spousal account).
Individual Retirement Account--IRA. Any individual
(including one covered by an employer retirement plan) can establish an IRA or
make use of a qualified IRA arrangement set up by an employer or union for the
purchase of Units of the Trust. Any individual can make a contribution in an
IRA equal to the lesser of $2,000 ($2,250 in a spousal account) or 100% of
earned income; such investment must be made in cash. However, the deductible
amount an individual may contribute will be reduced if the individual or the
individual's spouse (in the case of a married individual) participates in a
qualified retirement plan and the individual's adjusted gross income exceeds
$25,000 (in the case of a single individual or a married individual filing a
separate return not residing with such person's spouse) or $40,000 (in the
case of married individuals filing a joint return). Special rules apply in the
case of married individuals living together who file separate returns.
Generally, there are penalties for premature distributions from an IRA before
the attainment of age 59 1/2, except in the case of the participant's death or
disability and certain other circumstances.
Corporate Pension and Profit-Sharing Plans. A pension or
profit-sharing plan for employees of a corporation may purchase Units of the
Trusts.
LIQUIDITY
Sponsor Repurchase. The Sponsor, although not obligated to
do so, currently intends to maintain a secondary market for the Units and
continuously to offer to repurchase the Units. The Sponsor's secondary market
repurchase price after the initial public offering is completed, will be based
on the aggregate value of the Securities in the portfolio of each of the
Trusts and will be the same as the redemption price. The aggregate value will
be determined by the Trustee on a daily basis after the initial public
offering is completed and computed on the basis set forth under
"Liquidity--Trustee Redemption." During the initial offering period, the
Sponsor's repurchase price will be based on the aggregate offering price of
the Securities in the Trusts. Unit Holders who wish to dispose of their Units
should inquire of the Sponsor as to current market prices prior to making a
tender for redemption. The Sponsor may discontinue repurchase of Units if the
supply of Units exceeds demand, or for other business reasons. The date of
repurchase is deemed to be the date on which Units are received in proper form
by OCC Distributors, Two World Financial Center, 225 Liberty Street, New York,
NY 10080-6116. Units received after 4 P.M., New York Time, will be deemed to
have been repurchased
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on the next business day. In the event a market is not maintained for the
Units, a Unit Holder may be able to dispose of Units only by tendering them to
the Trustee for redemption.
Units purchased by the Sponsor in the secondary market may
be reoffered for sale by the Sponsor at a price based on the aggregate
offering price of the Securities in each of the Trusts plus (a) a 2.90% sales
charge (2.987% of the net amount invested) for the Strategic Ten Trust and (b)
a 2.75% sales charge (2.828% of the net amount invested) for the Strategic
Five Trust, plus a pro rata portion of amounts, if any, in the Income Account.
Any Units that are purchased by the Sponsor in the secondary market also may
be redeemed by the Sponsor if it determines such redemption to be in its best
interest.
The Sponsor may, under certain circumstances, as a service
to Unit Holders, elect to purchase any Units tendered to the Trustee for
redemption (see "Liquidity--Trustee Redemption" in this Part B). Factors which
the Sponsor will consider in making a determination will include the number of
Units of the Trust which it has in inventory, its estimate of the salability
and the time required to sell such Units and general market conditions. For
example, if in order to meet redemptions of Units the Trustee must dispose of
Securities, and if such disposition cannot be made by the redemption date
(seven calendar days after tender), the Sponsor may elect to purchase such
Units. Such purchase shall be made by payment to the Unit Holder not later
than the close of business on the redemption date of an amount equal to the
Redemption Price on the date of tender.
Trustee Redemption. Units may also be tendered to the
Trustee for redemption at its corporate trust office at 770 Broadway, New
York, New York 10003, upon proper delivery of such Units and payment of any
relevant tax. At the present time there are no specific taxes related to the
redemption of Units. No redemption fee will be charged by the Sponsor or the
Trustee. Units redeemed by the Trustee will be cancelled.
Within three business days following a tender for
redemption, the Unit Holder will be entitled to receive in cash an amount for
each Unit tendered equal to the Redemption Price per Unit computed as of the
Evaluation Time set forth under "Summary of Essential Information" for each
Trust in Part A on the date of tender. The "date of tender" is deemed to be
the date on which Units are received by the Trustee, except that with respect
to Units received after the close of trading on the New York Stock Exchange,
the date of tender is the next day on which such Exchange is open for trading,
and such Units will be deemed to have been tendered to the Trustee on such day
for redemption at the Redemption Price computed on that day.
A Unit Holder will receive his redemption proceeds in cash
and amounts paid on redemption shall be withdrawn from the Income Account, or,
if the balance therein is insufficient, from the Principal Account. All other
amounts paid on redemption shall be withdrawn from the Principal Account. The
Trustee is empowered to sell Securities in order to make funds available for
redemptions. Such sales, if required, could result in a sale of Securities by
the Trustee at a loss. To the extent Securities are sold, the size and
diversity of such Trust will be reduced. The Securities to be sold will be
selected by the Trustee in order to maintain, to the extent practicable, the
proportionate relationship among the number of shares of each of the
Securities in the Portfolio. Provision is made in the Indenture under which
the Sponsor may, but need not, specify minimum amounts in which blocks of
Securities are to be sold in order to obtain the best price for the Trust.
While these minimum amounts may vary from time to time in accordance with
market conditions, the Sponsor believes that the minimum amounts which would
be specified would be approximately 1,000 shares for readily marketable
Securities.
The Redemption Price per Unit is the pro rata share of the
Unit in each Trust determined by the Trustee on the basis of (i) the cash on
hand in the Trust or moneys in the process of being
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collected, (ii) the value of the Securities in the Trust as determined by the
Trustee, less (a) amounts representing taxes or other governmental charges
payable out of the Trust, (b) the accrued expenses of the Trust and (c) cash
allocated for the distribution to Unit Holders of record as of the business
day prior to the evaluation being made. The Trustee may determine the value of
the Securities in each Trust in the following manner: if the Securities are
listed on a national securities exchange or the NASDAQ national market system,
this evaluation is generally based on the closing sale prices on that exchange
or that system (unless the Trustee deems these prices inappropriate as a basis
for valuation). If the Securities are not so listed or, if so listed and the
principal market therefor is other than on the exchange, the evaluation shall
generally be based on the closing purchase price in the over-the-counter
market (unless the Trustee deems these prices inappropriate as a basis for
evaluation) or if there is no such closing purchase price, then the Trustee
may utilize, at the Trust's expense, an independent evaluation service or
services to ascertain the values of the Securities. The independent evaluation
service shall use any of the following methods, or a combination thereof,
which it deems appropriate: (a) on the basis of current bid prices for
comparable securities, (b) by appraising the value of the Securities on the
bid side of the market or (c) by any combination of the above.
Any Unit Holder tendering 25,000 Units or more of a Trust
for redemption may request by written notice submitted at the time of tender
from the Trustee in lieu of a cash redemption a distribution of shares of
Securities and cash in an amount and value equal to the Redemption Price Per
Unit as determined as of the evaluation next following tender. To the extent
possible, in kind distributions ("In Kind Distributions") shall be made by the
Trustee through the distribution of each of the Securities in book-entry form
to the account of the Unit Holder's bank or broker-dealer at The Depository
Trust Company. An In Kind Distribution will be reduced by customary transfer
and registration charges. The tendering Unit Holders will receive his pro rata
number of whole shares of each of the Securities comprising the portfolio and
cash from the Principal Accounts equal to the balance of the Redemption Price
to which the tendering Unit Holder is entitled. If funds in the Principal
Account are insufficient to cover the required cash distribution to the
tendering Unit Holder, the Trustee may sell Securities in the manner described
above.
The Trustee is irrevocably authorized in its discretion, if
the Sponsor does not elect to purchase a Unit tendered for redemption or if
the Sponsor tenders a Unit or Units for redemption, in lieu of redeeming such
Unit, to sell such Unit in the over-the-counter market for the account of the
tendering Unit Holder at prices which will return to the Unit Holder an amount
in cash, net after deducting brokerage commissions, transfer taxes and other
charges, equal to or in excess of the Redemption Price for such Unit. The
Trustee will pay the net proceeds of any such sale to the Unit Holder on the
day he would otherwise be entitled to receive payment of the Redemption Price.
The Trustee reserves the right to suspend the right of
redemption and to postpone the date of payment of the Redemption Price per
Unit for any period during which the New York Stock Exchange is closed, other
than customary weekend and holiday closings, or trading on that Exchange is
restricted or during which (as determined by the Securities and Exchange
Commission) an emergency exists as a result of which disposal or evaluation of
the Securities is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit. The Trustee and the
Sponsor are not liable to any person or in any way for any loss or damage
which may result from any such suspension or postponement.
A Unit Holder who wishes to dispose of his Units should
inquire of his bank or broker in order to determine if there is a current
secondary market price in excess of the Redemption Price.
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TRUST ADMINISTRATION
Portfolio Supervision. Each Trust is a unit investment trust
and is not a managed fund. Traditional methods of investment management for a
managed fund typically involve frequent changes in a portfolio of securities
on the basis of economic, financial and market analyses. The Portfolios of
each of the Trusts, however, will not be managed and therefore the adverse
financial condition of an issuer will not necessarily require the sale of its
Securities from the Portfolio. Although the portfolios of the Trusts are
regularly reviewed, because of the formula employed in selecting the DJIA
Strategic Ten and DJIA Strategic Five, it is unlikely that the Trusts will
sell any of the Securities other than to satisfy redemptions of Units, or to
cease buying Additional Securities in connection with the issuance of
additional Units. Although the Sponsor may direct the disposition of
Securities upon the occurrence of the following events, it is unlikely that
they will cause the Trust to dispose of a Security or cease buying it:
1. default in payment of amounts due on any of the
Securities;
2. institution of certain legal proceedings;
3. default under certain documents materially and
adversely affecting future declaration or payment
of amounts due or expected; or
4. determination of the Sponsor that the tax treatment
of the Trust as a grantor trust would otherwise be
jeopardized; or
5. decline in price as a direct result of serious
adverse credit factors affecting the issuer of a
Security which, in the opinion of the Sponsor,
would make the retention of the Security
detrimental to the Trust or the Unit Holders.
Furthermore, the Trusts will likely continue to hold a Security and purchase
additional shares notwithstanding its ceasing to be included among the DJIA
Strategic Ten or the DJIA Strategic Five, or even its deletion from the DJIA.
If a default in the payment of amounts due on any Security
occurs and if the Sponsor fails to give immediate instructions to sell or hold
that Security, the Trust Agreement provides that the Trustee, within 30 days
of that failure by the Sponsor, may sell the Security.
The Trust Agreement provides that it is the responsibility
of the Sponsor to instruct the Trustee to reject any offer made by an issuer
of any of the Securities to issue new securities in exchange and substitution
for any Security pursuant to a recapitalization or reorganization, if any
exchange or substitution is effected notwithstanding such rejection, any
securities or other property received shall be promptly sold unless the
Depositor directs that it be retained.
Any property received by the Trustee after the initial Date
of Deposit as a distribution on any of the Securities in a form other than
cash or additional shares of the Securities received in a non-taxable stock
dividend or stock split, which shall be retained, shall be retained or
disposed by the Trustee as provided in the Trust Agreement. The proceeds of
any disposition shall be credited to the Income or Principal Account of the
Trusts.
The Trust Agreement also authorizes the Sponsor to increase
the size and number of Units of the Trusts by the deposit of Additional
Securities, contracts to purchase Additional Securities or cash or a letter of
credit with instructions to purchase Additional Securities in exchange for the
corresponding number of additional Units within 90 days subsequent to the
initial Date of Deposit,
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<PAGE>
provided that the original proportionate relationship among the number of
shares of each Security established on the initial Date of Deposit is
maintained to the extent practicable. Deposits of Additional Securities in a
Trust subsequent to the 90-day period following the initial Date of Deposit
must replicate exactly the proportionate relationship among the shares of each
Security in that Trust portfolio at the end of the initial 90-day period.
With respect to deposits of Additional Securities (or cash
or a letter of credit with instructions to purchase Additional Securities), in
connection with creating additional Units of the Trusts, the Sponsor may
specify the minimum numbers in which Additional Securities will be deposited
or purchased. If a deposit is not sufficient to acquire minimum amounts of
each Security, Additional Securities may be acquired in the order of the
Security most under-represented immediately before the deposit when compared
to the original proportionate relationship. If Securities of an issue
originally deposited are unavailable at the time of the subsequent deposit,
the Sponsor may (1) deposit cash or a letter of credit with instructions to
purchase the Security when it becomes available, or (2) deposit (or instruct
the Trustee to purchase) either Securities of one or more other issues
originally deposited or a Substitute Security.
Trust Agreement and Amendment. The Trust Agreement may be
amended by the Trustee and the Sponsor without the consent of any of the Unit
Holders: (1) to cure any ambiguity or to correct or supplement any provision
which may be defective or inconsistent; (2) to change any provision thereof as
may be required by the Securities and Exchange Commission or any successor
governmental agency; or (3) to make such other provisions in regard to matters
arising thereunder as shall not adversely affect the interests of the Unit
Holders.
The Trust Agreement may also be amended in any respect, or
performance of any of the provisions thereof may be waived, with the consent
of the holders of Certificates evidencing 662/3% of the Units then outstanding
for the purpose of modifying the rights of Unit Holders; provided that no such
amendment or waiver shall reduce any Unit Holder's interest in the Trust
without his consent or reduce the percentage of Units required to consent to
any such amendment or waiver without the consent of the holders of all
Certificates. The Trust Agreement may not be amended, without the consent of
the holders of all Units in a Trust then outstanding, to increase the number
of Units issuable or to permit the acquisition of any Securities in addition
to or in substitution for those initially deposited in such Trust, except in
accordance with the provisions of the Trust Agreement. The Trustee shall
promptly notify Unit Holders, in writing, of the substance of any such
amendment.
Trust Termination. The Trust Agreement provides that the
Trusts shall terminate upon the maturity, redemption or other disposition, as
the case may be, of the last of the Securities held in such Trust but in no
event is it to continue beyond February 19, 1997. If the value of a Trust
shall be less than the minimum amount set forth under "Summary of Essential
Information" for that Trust in Part A, the Trustee may, in its discretion, and
shall, when so directed by the Sponsor, terminate the Trust. The Trusts may
also be terminated at any time with the consent of the holders of 100% of the
Units then outstanding. The Trustee may utilize the services of the Sponsor
for the sale of all or a portion of the Securities in the Trust. The Sponsor
will receive brokerage commissions from the Trusts in connection with such
sales in accordance with applicable law. In the event of termination, written
notice thereof will be sent by the Trustee to all Unit Holders. Such notice
will provide Unit Holders with three options by which to receive their pro
rata share of the net asset value of the Trust.
1. A Unit Holder who owns at least 25,000 Units and
whose interest in a Trust would entitle him to receive at least one
share of each Security, and who so elects by notifying the Trustee
prior to the commencement of the Liquidation Period by returning a
properly completed election request (to be supplied to Unit Holders
at least 20 days prior to such date) (see Part A - "Summary of
Essential Information" for the date of the commencement
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<PAGE>
of the Liquidation Period), and whose interest in the Trust entitles
him to receive at least one share of each underlying Security, will
have his Units redeemed on commencement of the Liquidation Period by
distribution of the Unit Holder's pro rata share of the net asset
value of the Trust on such date distributed in kind to the extent
represented by whole shares of underlying Securities and the balance
in cash within three business days next following the commencement of
the Liquidation Period. Unit Holders subsequently selling such
distributed Securities will incur brokerage costs when disposing of
such Securities. Unit Holders should consult their own tax adviser in
this regard.
A Unit Holder may also elect prior to the
commencement of the Liquidation Period by so specifying in a properly
completed election request, the following two options with regard to
the termination distribution of such Unit Holder's interest in the
Trust as set forth below.
2. to receive in cash such Unit Holder's pro rata
share of the net asset value of the Trust derived from the sale by
the Sponsor as the agent of the Trustee of the underlying Securities
over a period not to exceed 30 days immediately following the
commencement of the Liquidation Period. The Unit Holder's Redemption
Price per Unit on the settlement date of the last trade of a Security
in the Trust will be distributed to such Unit Holder within three
business days of the settlement of the trade of the last Security to
be sold; and/or
3. to invest such Unit Holder's pro rata share of
the net asset value of a Trust derived from the sale by the Sponsor
as agent of the Trustee of the underlying Securities over a period
not to exceed 30 days immediately following the commencement of the
Liquidation Period, in units of an available series of QUILTS Equity
Strategic Ten or Equity Strategic Five, as the case may be ("Rollover
QUILTS"), provided one is offered. It is expected that a special
redemption and liquidation will be made of all Units of this Trust
held by Unit Holder (a "Rollover Unit Holder") who affirmatively
notifies the Trustee in writing by the Rollover Notification Date set
forth in the "Summary of Essential Information" for each Trust in
Part A. The availability of this option does not constitute a
solicitation of an offer to purchase Units of a Rollover QUILTS or
any other security. A Unit Holder's election to participate in this
option will be treated as an indication of interest only. A Rollover
Unit Holder's Units will be redeemed in kind and the Securities
disposed of over the Liquidation Period. As long as the Unit Holder
confirms his interest in purchasing units of the Rollover QUILTS and
units are available, the proceeds of the sales (net of brokerage
commissions, governmental charges and any other selling expenses)
will be reinvested in units of the Rollover QUILTS at their net asset
value plus the applicable sales charge. Such purchaser may be
entitled to a reduced sales load of approximately 1.95% of the Public
Offering Price upon the purchase of units of the Rollover QUILTS. It
is expected that the terms of the Rollover QUILTS will be
substantially the same as the terms of the Trusts described in this
Prospectus, and that a similar procedure for redemption, liquidation
and investment in a subsequent QUILTS Equity Strategic Ten or Equity
Strategic Five series will be available for each new Trust
approximately one year after the creation of that Trust. At any time
prior to the purchase by the Unit Holder of units of a Rollover
QUILTS such Unit Holder may change his investment strategy and
receive, in cash, the proceeds of the sale of the Securities. An
election of this option will not prevent the Unit Holder from
recognizing taxable capital gain or loss (except in the case of a
loss, if the Rollover QUILTS is treated as substantially identical to
the Trust) as a result of the liquidation, even though no cash will
be distributed to pay taxes. Unit Holders should consult their own
tax advisers in this regard. (See "Tax Status".)
The Sponsor has agreed to effect the sales of underlying
securities for the Trustee in the case of the second and third options over a
period not to exceed 30 days immediately following
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<PAGE>
the commencement of the Liquidation Period. The Sponsor, on behalf of the
Trustee, will sell the distributed Securities as quickly as practicable,
unless prevented by unusual and unforeseen circumstances, such as, among other
reasons, a suspension in trading of a Security, the close of a stock exchange,
outbreak of hostilities and collapse of the economy. The Redemption Price Per
Unit upon the settlement of the last sale of Securities during the Liquidation
Period will be distributed to Unit Holders in redemption of such Unit Holders'
interest in the Trust.
Depending on the amount of proceeds to be invested in Units
of Rollover QUILTS and the amount of other orders for Units in Rollover
QUILTS, the Sponsor may purchase a large amount of securities for Rollover
QUILTS in a short period of time. The Sponsor's buying of securities may tend
to raise the market prices of these securities. The actual market impact of
the Sponsor's purchases, however, is currently unpredictable because the
actual amount of securities to be purchased and the supply and price of those
securities is unknown. A similar problem may occur in connection with the sale
of Securities during the Liquidation Period; depending on the number of sales
required, the prices of and demand for Securities, such sales may tend to
depress the market prices and thus reduce the proceeds of such sales. The
Sponsor believes that the sale of underlying Securities over a 30-day period
as described above is in the best interest of a Unit Holder and may mitigate
the negative market price consequences stemming from the trading of large
amounts of Securities. The Securities may be sold in fewer than 30 days if, in
the Sponsor's judgment, such sales are in the best interest of Unit Holders.
The Sponsor, in implementing such sales of securities on behalf of the
Trustee, will seek to maximize the sales proceeds and will act in the best
interests of the Unit Holders. There can be no assurance, however, that any
adverse price consequences of heavy trading will be mitigated.
Unit Holders who do not make any election will be deemed to
have elected to receive the Redemption Price per Unit in cash (option number
2).
The Sponsor may for any reason, in its sole discretion,
decide not to sponsor any subsequent series of the Trusts, without penalty or
incurring liability to any Unit Holder. If the Sponsor so decides, the Sponsor
will notify the Trustee of that decision, and the Trustee will notify the Unit
Holders prior to the commencement of the Liquidation Period. All Unit Holders
will then elect either option 1, if eligible, or option 2.
The Sponsor reserves the right to modify, suspend or
terminate the reinvestment privilege at any time.
Investors should be aware that the staff of the Division of
Investment Management of the Securities and Exchange Commission ("SEC") is of
the view that the rollover described in option 3 above would constitute an
"exchange offer" for the purposes of Section 11(c) of the Investment Company
Act of 1940, and would therefore be prohibited absent an exemptive order. The
Sponsor has received an exemptive order under Section 11(c) which it believes
permits it to offer the rollover option, but no assurance can be given that
the SEC will concur with the Sponsor's position and additional regulatory
approvals may be required.
The Sponsor. Effective as of November 28, 1995 the Sponsor,
Quest for Value Distributors, changed its name to OCC Distributors. The
Sponsor is a majority-owned subsidiary of Oppenheimer Capital. Since 1969,
Oppenheimer Capital has managed assets for many of the nation's largest
pension plan clients. Today, the firm has over $37 billion under management
from separate accounts and money market funds. The Quest for Value
organization was created in 1988 to introduce mutual funds designed to help
individual investors achieve their financial goals. OCC Distributors is
committed to retirement planning and services geared to the long term
investment goals of the individual investor. The Sponsor, a Delaware general
partnership, is engaged in the mutual fund distribution business. It is a
member of the National Association of Securities Dealers, Inc.
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The information included herein is only for the purpose of
informing investors as to the financial responsibility of the Sponsor and its
ability to carry out its contractual obligations.
The Sponsor is liable for the performance of its obligations
arising from its responsibilities under the Trust Agreement, but will be under
no liability to Unit Holders for taking any action, or refraining from taking
any action, in good faith pursuant to the Trust Agreement, or for errors in
judgment except in cases of its own willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
The Sponsor may resign at any time by delivering to the
Trustee an instrument of resignation executed by the Sponsor. If at any time
the Sponsor shall resign or fail to perform any of its duties under the Trust
Agreement or becomes incapable of acting or becomes bankrupt or its affairs
are taken over by public authorities, then the Trustee may either (a) appoint
a successor Sponsor; (b) terminate the Trust Agreement and liquidate the
Trusts; or (c) continue to act as Trustee without terminating the Trust
Agreement. Any successor sponsor appointed by the Trustee shall be
satisfactory to the Trustee and, at the time of appointment, shall have a net
worth of at least $1,000,000.
The Trustee. The Trustee is The Chase Manhattan Bank
(National Association), a national banking association with its principal
executive office located at 1 Chase Manhattan Plaza, New York, New York 10081
and its unit investment trust office at 770 Broadway, New York, New York 10003
(800) 428-8890. The Trustee is subject to the supervision by the Comptroller
of the Currency, the Federal Deposit Insurance Corporation and the Board of
Governors of the Federal Reserve System.
The Trustee shall not be liable or responsible in any way
for taking any action, or for refraining from taking any action, in good faith
pursuant to the Trust Agreement, or for errors in judgment; or for an
disposition of any moneys, Securities or Certificates in accordance with the
Trust Agreement, except in case of its own willful misfeasance, bad faith,
negligence or reckless disregard of its obligations and duties. In addition,
the Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or the Trusts which it may be
required to pay under current or future law of the United States or any other
taxing authority having jurisdiction. The Trustee shall not be liable for
depreciation or loss incurred by reason of the sale by the Trustee of any of
the Securities pursuant to the Trust Agreement.
For further information relating to the responsibilities of
the Trustee under the Trust Agreement, reference is made to the material set
forth under "Rights of Unit Holders."
The Trustee may resign by executing an instrument in writing
and filing the same with the Sponsor, and mailing a copy of a notice of
resignation to all Unit Holders. In such an event the Sponsor is obligated to
appoint a successor Trustee as soon as possible. In addition, if the Trustee
becomes incapable of acting or becomes bankrupt or its affairs are taken over
by public authorities, the Sponsor may remove the Trustee and appoint a
successor as provided in the Trust Agreement. Notice of such removal and
appointment shall be mailed to each Unit Holder by the Sponsor. If upon
resignation of the Trustee no successor has been appointed and has accepted
the appointment within thirty days after notification, the retiring Trustee
may apply to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of the Trustee becomes effective only
when the successor Trustee accepts its appointment as such or when a court of
competent jurisdiction appoints a successor Trustee. Upon execution of a
written acceptance of such appointment by such successor Trustee, all the
rights, powers, duties and obligations of the original Trustee shall vest in
the successor.
Any corporation into which the Trustee may be merged or with
which it may be consolidated, or an corporation resulting from any merger or
consolidation to which the Trustee shall
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be a party, shall be the successor Trustee. The Trustee must always be a
banking corporation organized under the laws of the United States or any State
and have at all times an aggregate capital, surplus and undivided profits of
not less than $2,500,000.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby and
certain matters relating to federal tax law have been passed upon by Battle
Fowler LLP, 75 East 55th Street, New York, New York 10022 as counsel for the
Sponsor. Messrs. Carter, Ledyard & Milburn, Two Wall Street, New York, New
York 10005 have acted as counsel for the Trustee.
Independent Auditors. The Statements of Condition and
Portfolios are included herein in reliance upon the report of BDO Seidman,
LLP, independent auditors, and upon the authority of said firm as experts in
accounting and auditing.
Performance Information. Total returns, average annualized
returns or cumulative returns for various periods of the DJIA Strategic Ten
and the DJIA Strategic Five, the related index and the current Strategic Ten
Trust or Strategic Five Trust may be included from time to time in
advertisements, sales literature and reports to current or prospective
investors. Total return shows changes in Unit price during the period plus
reinvestment of dividends and capital gains, divided by the maximum public
offering price. Average annualized returns show the average return for stated
periods of longer than a year. Sales material may also include an illustration
of the cumulative results of like annual investments in the DJIA Strategic Ten
and the DJIA Strategic Five during an accumulation period and like annual
withdrawals during a distribution period. Figures for actual portfolios will
reflect all applicable expenses and, unless otherwise stated, the maximum
sales charge. No provision is made for any income taxes payable. Similar
figures may be given for the Strategic Ten Trusts or the Strategic Five Trusts
applying the DJIA Strategic Ten and the DJIA Strategic Five to other indexes.
Returns may also be shown on a combined basis. Trust performance may be
compared to performance on a total return basis of the Dow Jones Industrial
Average, the S&P 500 Composite Price Stock Index, or performance data from
Lipper Analytical Services, Inc. and Morningstar Publications, Inc. or from
publications such as Money, The New York Times, U.S. News and World Report,
Business Week, Forbes or Fortune. As with other performance data, performance
comparisons should not be considered representative of a Trust's relative
performance for any future period.
B-24
331449.2
<PAGE>
Qualified Unit Investment Liquid Trust Series ("QUILTS")
(A Unit Investment Trust)
Equity Strategic Ten, Series 1
Equity Strategic Five, Series 1
Prospectus Dated: February 9, 1996
Sponsor: Trustee:
OCC Distributors The Chase Manhattan Bank
Two World Financial Center (National Association)
225 Liberty Street 770 Broadway
New York, New York 10080- 6116 New York, New York 10003
(800) 628-6664 (800) 428-8890
============================
Table of Contents
Title Page
PART A
Summary of Essential Information................................... A-2
Independent Auditors' Report...................................... A-13
Statement of Condition.............................................A-14
Portfolio and Cash Flow Information................................A-15
Underwriting Syndicates............................................A-16
PART B
The Trusts..........................................................B-1
Risk Factors........................................................B-4
Public Offering.....................................................B-7
Rights of Unit Holders ............................................B-10
Tax Status.........................................................B-13
Liquidity..........................................................B-16
Trust Administration...............................................B-19
Other Matters......................................................B-24
No person is authorized to give any information or to make any
representations not contained in Parts A and B of this Prospectus; and any
information or representation not contained herein must not be relied upon as
having been authorized by the Trust, the Trustee, the Evaluator, or the
Sponsor. The Trust is a registered as unit investment trust under the
Investment Company Act of 1940. Such registration does not imply that the
Trust or any of its Units have been guaranteed, sponsored, recommended or
approved by the United States or any state or any agency or officer thereof.
This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in any state to any person to whom
it is not lawful to make such offer in such state.
Parts A and B of this Prospectus do not contain all of the
information set forth in the registration statement and exhibits thereto,
filed with the Securities and Exchange Commission, Washington, D.C., under the
Securities Act of 1933, and the Investment Company Act of 1940, and to which
reference is made.
331449.2
<PAGE>
PART II--ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A--BONDING ARRANGEMENTS
The employees of Quest for Value Distributors are covered under Brokers'
Blanket Policy, Standard Form 14, in the amount of $1,000,000.
ITEM B--CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers
and documents: The facing sheet on Form S-6.
The Cross-Reference Sheet.
The Prospectus consisting of pages.
Undertakings.
Signatures.
Written consents of the following persons:
Battle Fowler LLP (included in Exhibit 3.1)
BDO Seidman, LLP
The Chase Manhattan Bank (National Association) (included in
Exhibit 5.1)
The following exhibits:
*99.1.1 -- Reference Trust Agreements including certain Amendments to
the Trust Indenture and Agreement referred to under Exhibit
1.1.1 below.
*99.1.1.1 -- Trust Indenture and Agreement.
99.1.3.4 -- Agreement of General Partnership of Quest for Value
Distributors dated July 9, 1987 (filed as Exhibit 1.3.4 to
Form S-6 Registration Statement No. 33-57284 of Quest for
Value's Unit Investment Laddered Treasury Securities
("QUILTS") on January 21, 1993 and incorporated herein by
reference).
99.1.4 -- Form of Master Agreement Among Underwriters (filed as Exhibit
1.4 to Amendment No. 2 to Form S-6 Registration Statement No.
33-57284 of Quest for Value's Unit Investment Laddered Trust
Series ("QUILTS"), QUILTS Monthly Income -- U.S. Treasury
Series 1; QUILTS Monthly Income -- U.S. Treasury Series 2 and
QUILTS Asset Builder -- U.S. Treasury Series 3 on March 19,
1993 and incorporated herein by reference).
*99.2.1 -- Form of Certificate.
*99.3.1 -- Opinion of Battle Fowler LLP as to the legality of the
securities being registered, including their consent to the
filing thereof and to the use of their name under the headings
"Tax Status" and "Legal Opinions" in the Prospectus, and to
the filing of their opinion regarding tax status of the Trust.
- --------
* Filed herewith.
II-i
336964.1
<PAGE>
*99.5.1 -- Consent of the Evaluator.
99.6.0 -- Powers of Attorney of Quest for Value Distributors, by the
majority of the Board of Directors and certain officers of
Oppenheimer Financial Corp., its Managing General Partner
(filed as Exhibit 6.0 to Amendment No. 2 to Form S-6
Registration Statement No. 33-57284 of Quest for Value's Unit
Investment Laddered Trust Series ("QUILTS"), QUILTS Monthly
Income -- U.S. Treasury Series 1; QUILTS Monthly Income --
U.S. Treasury Series 2 and QUILTS Asset Builder -- U.S.
Treasury Series 3 on March 19, 1993 and as Exhibit 6.0 to
Pre-Effective amendment No. 1 to Form S-6 Registration
Statement No. 33-57284 of Quest for Value's Investment Unit
Investment Laddered Trust Series ("QUILTS") on March 5, 1993
and incorporated herein by reference).
*27 -- Financial Data Schedule (for EDGAR filing only).
- --------
* Filed herewith.
II-ii
336964.1
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file
with the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Qualified Unit Investment Liquid Trust Series ("QUILTS"), Equity
Strategic Ten, Series 1 and Equity Strategic Five, Series 1 has duly caused
this Amendment to the Registration Statement to be signed on its behalf by the
undersigned, hereunto duly authorized, in the City of New York and State of
New York on the 9th day of February, 1996.
QUALIFIED UNIT INVESTMENT LIQUID TRUST SERIES
("QUILTS"), EQUITY STRATEGIC TEN, SERIES 1 AND
EQUITY STRATEGIC FIVE, SERIES 1
(Registrant)
OCC DISTRIBUTORS
(Depositor)
By: OPPENHEIMER FINANCIAL CORP.,
as Managing General Partner of the
Depositor
By: /s/ SUSAN A. MURPHY
(Susan A. Murphy, Attorney-in-Fact)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons, who constitute the principal officers and a majority of the directors
of Oppenheimer Financial Corp., the Managing General Partner of the Depositor,
in the capacities and on the date indicated.
NAME TITLE DATE
STEPHEN ROBERT* Chief Executive Officer and Director
Stephen Robert
NATHAN GANTCHER* Chief Operating Officer and Director
Nathan Gantcher
ROGER EINIGER* Chief Administrative Officer and Director
Roger Einiger
JOSEPH LAMOTTA* Director
Joseph LaMotta
ANTONIO FERNANDEZ* Chief Financial Officer and Treasurer
Antonio Fernandez
*By: /s/ SUSAN A. MURPHY February 9, 1996
(Susan A. Murphy, Attorney-in-Fact)
- --------
* Executed copy of Power of Attorney filed as Exhibit 6.0 to Amendment No. 2
to Registration Statement No. 33-57284 on March 19, 1993, and as Exhibit
6.0 to the Pre-Effective Amendment No. 1 to Registration Statement No.
33-57284 on March 5, 1993.
II-iii
336964.1
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Sponsor, Trustee, and Unit Holders of
QUILTS, Equity Strategic Five, Series 1
We have issued our report dated February 9, 1996 on the Statements of
Condition and Portfolios of Qualified Unit Investment Liquid Trust Series
("QUILTS"), Equity Strategic Ten, Series 1 and Equity Strategic Five, Series 1
as of February 9, 1996 contained in the Registration Statement on Form S-6 and
the Prospectus. We consent to the use of our report in the Registration
Statement and Prospectus and to the use of our name as it appears under the
caption "Independent Auditors."
BDO Seidman, LLP
New York, New York
February 9, 1996
II-iv
336964.1
<PAGE>
REGISTRATION NO. 333-00155
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
EXHIBITS
FILED WITH
AMENDMENT NO. 1
TO
FORM S-6
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
------------------------
QUALIFIED UNIT INVESTMENT LIQUID TRUST SERIES ("QUILTS"),
EQUITY STRATEGIC TEN, SERIES 1
EQUITY STRATEGIC FIVE, SERIES 1
336964.1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number DESCRIPTION PAGE
<S> <C> <C>
99.1.1 -- Reference Trust Agreements including certain Amendments to the
Trust Indenture and Agreement referred to under Exhibit 1.1.1
below
99.1.1.1 -- Trust Indenture and Agreement................................
99.1.3.4 -- Agreement of General Partnership of Quest for Value
Distributors dated July 9, 1987 (filed as Exhibit 1.3.4 to Form
S-6 Registration Statement No. 33-57284 of Quest for Value's Unit
Investment Laddered Treasury Securities ("QUILTS") on January 21,
1993 and incorporated herein by reference).
99.1.4 -- Form of Master Agreement Among Underwriters (filed as Exhibit 1.4 to
Amendment No. 2 to Form S-6 Registration Statement No. 33-57284 of
Quest for Value's Unit Investment Laddered Trust Series ("QUILTS"),
QUILTS Monthly Income -- U.S. Treasury Series 1; QUILTS Monthly
Income -- U.S. Treasury Series 2 and QUILTS Asset Builder -- U.S.
Treasury Series 3 on March 19, 1993 and incorporated herein by
reference).
99.2.1 -- Form of Certificate..........................................
99.3.1 -- Opinion of Battle Fowler LLP as to the legality of the securities being
registered, including their consent to the filing thereof and to the use of
their name under the headings "Tax Status" and "Legal Opinions" in the
Prospectus, and to the filing of their opinion regarding tax status of the
Trust........................................................
99.5.1 -- Consent of the Evaluator.....................................
99.6.0 -- Powers of Attorney of Quest for Value Distributors, by the majority of
the Board of Directors and certain officers of Oppenheimer Financial
Corp., its Managing General Partner (filed as Exhibit 6.0 to Amendment
No. 2 to Form S-6 Registration Statement No. 33-57284 of Quest for
Value's Unit Investment Laddered Trust Series ("QUILTS"), QUILTS
Monthly Income -- U.S. Treasury Series 1; QUILTS Monthly Income --
U.S. Treasury Series 2 and QUILTS Asset Builder -- U.S. Treasury
Series 3 on March 19, 1993 and as Exhibit 6.0 to Pre-Effective
amendment No. 1 to Form S-6 Registration Statement No. 33-57284 of
Quest for Value's Investment Unit Investment Laddered Trust Series
("QUILTS") on March 5, 1993 and incorporated herein by reference).
27 -- Financial Data Schedule (for EDGAR filing only).
</TABLE>
336964.1
QUALIFIED UNIT INVESTMENT
LIQUID TRUST SERIES ("QUILTS")
EQUITY STRATEGIC FIVE, SERIES 1
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement (the "Agreement") dated February 8,
1996 among OCC Distributors, as Depositor, and The Chase Manhattan Bank
(National Association), as Trustee, sets forth certain provisions in full and
incorporates other provisions by reference to the document entitled "Qualified
Unit Investment Liquid Trust Series ("QUILTS") And Subsequent Series And Any
Other Future Trusts For Which OCC Distributors Acts As Sponsor" dated February
8, 1996 (the "Indenture") (collectively, such documents hereinafter called the
"Indenture and Agreement"). This Agreement and the Indenture, as incorporated
by reference herein, will constitute a single instrument.
WITNESSETH THAT:
WHEREAS, this Agreement is a Reference Trust Agreement as defined in
Section 1.1 of the Indenture, and shall be amended and modified from time to
time by an Addendum as defined in Section 1.1 (1) of the Indenture, such
Addendum setting forth any Additional Securities as defined in Section 1.1 (2)
of the Indenture;
WHEREAS, the Depositor wishes to deposit Securities, and any
Additional Securities as listed on any Addendums hereto, into the Trust and
issue Units, and Additional Units as the case maybe, in respect thereof
pursuant to Sections 2.1 and 2.6 of the Indenture; and
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee and the Evaluator
agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Section 1. Subject to the provisions of Part II hereof, all the
provisions contained in the Indenture are herein incorporated by reference in
their entirety and shall be deemed to be a part of this instrument as fully
and to the same extent
338056.1
<PAGE>
as though said provisions had been set forth in full in this
instrument.
Section 2. This Reference Trust Agreement may be amended and modified
by Addendums, attached hereto, evidencing the purchase of Additional
Securities which have been deposited to effect an increase over the number of
Units initially specified in Part II of this Reference Trust Agreement
("Additional Closings"). The Depositor and Trustee hereby agree that their
respective representations, agreements and certifications contained in the
Closing Memorandum dated February 8, 1996, relating to the initial deposit of
Securities continue as if such representations, agreements and certifications
were made on the date of such Additional Closings and with respect to the
deposits made therewith, except as such representations, agreements and
certifications relate to their respective By-Laws and, as to the Trustee, its
charter and permit to exercise fiduciary powers and as to which they each
represent that their has been no amendment affecting their respective
abilities to perform their respective obligations under the Indenture.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
Section 1. The following special terms and conditions are hereby
agreed to:
(a) The Securities (including Contract Securities) listed in Schedule
A hereto have been deposited in the Trust under this Agreement.
(b) The number of Units delivered by the Trustee in exchange for the
Securities referred to in Section 2.3 is 149,758.
(c) For the purposes of the definition of Unit in item (19) of
Section 1.1, the fractional undivided interest in and ownership of the Trust
per 1,000 Units initially is 1/149758 as of the date hereof.
(d) The term Record Date shall mean the fifteenth day (or the last
business day prior thereto) of June and December, 1996.
(e) The term Payment Date shall mean the last day (or the last
business day prior thereto) of June and December, 1996.
(f) The First Settlement Date shall mean February 14, 1996.
-2-
338056.1
<PAGE>
(g) For purposes of Section 6.1(g), the liquidation amount is hereby
specified to be 40% of the aggregate value of the Securities as of the date of
the last deposit of Additional Securities.
(h) For purposes of Section 6.4, the Trustee shall be paid per annum
an amount computed according to the following Schedule, determined on the
basis of the number of Units outstanding as of the Record Date preceding the
Record Date on which the compensation is to be paid, provided, however, that
with respect to the period prior to the first Record Date, the Trustee's
compensation shall be computed at $.86 per 1000 Units:
rate per 1000 Units number of Units outstanding
$0.62 200,000,000 or more
$0.74 100,000,000 - 199,999,999
$0.80 50,000,000 - 99,999,999
$0.86 49,999,999 or less
(i) For purposes of Section 7.4, the Depositor's maximum supervisory
annual fee is hereby specified to be $.25 per 1,000 Units.
(j) The Termination Date shall mean February 19, 1997.
(k) Except for temporary certificates evidencing the Units described
in paragraph (b) above, ownership of Units of these Series of Qualified Unit
Investment Liquid Trust Series ("QUILTS"), shall not be evidenced by
certificates.
IN WITNESS WHEREOF, the parties hereto have caused this Reference
Trust Agreement to be duly executed on the date first above written.
[Signatures on separate pages]
-3-
338056.1
<PAGE>
OCC DISTRIBUTORS
as Depositor
By: OPPENHEIMER FINANCIAL CORP.
as Managing Partner of the
Depositor
By: /s/ Susan A. Murphy
Authorized Person
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
I, Carla Vogel, a Notary Public in and for the said County in the
State aforesaid, do hereby certify that Susan A. Murphy personally known to me
to be the same person whose name is subscribed to the foregoing instrument and
personally known to me to be an Authorized Person of Oppenheimer Financial
Corp., a Delaware corporation, appeared before me this day in person, and
acknowledged that he/she signed and delivered the said instrument as his/her
free and voluntary act as such Authorized Person and as the free and voluntary
act of said Oppenheimer Financial Corp., for the uses and purposes therein set
forth.
GIVEN under my hand and notarial seal this 8th day of February, 1996.
/s/Carla Vogel
Notary Public
(SEAL)
My Commission expires: November 1, 1997
338056.1
<PAGE>
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
as Trustee and Evaluator
By: /s/Thomas Porrazzo
(SEAL)
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I, Ada Iris Vegas, a Notary Public in and for the said County in the
State aforesaid, do hereby certify that Thomas Porrazzo personally known to me
to be the same person whose name is subscribed to the foregoing instrument and
personally known to me to be a Vice President of The Chase Manhattan Bank
(National Association), appeared before me this day in person, and
acknowledged that he/she sealed with the corporate seal of The Chase Manhattan
Bank (National Association) and signed and delivered the said instrument as
his/her free and voluntary act as such Vice President and as the free and
voluntary act of said The Chase Manhattan Bank (National Association), for the
uses and purposes therein set forth.
GIVEN under my hand and notarial seal this 6th day of February, 1996.
/s/Ada Iris Vegas
Notary Public
(SEAL)
My Commission expires: 6-30-96
338056.1
<PAGE>
SCHEDULE A
QUILTS
Equity Strategic Five, Series 1
PORTFOLIO
AS OF FEBRUARY 8, 1996
<TABLE>
<CAPTION>
Percentage Market Cost of
Portfolio Number of Name of Issuer (2) of Value Securities
No. Shares and Ticker Symbol Fund (1) Per Share to Trust (3)
--- -------- ----------------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
1 546 Chevron Corporation - CHV 20.01% $53.375 $ 29,143
2 366 General Electric Company - 19.98 79.500 29,097
GE
3 567 General Motors Corporation 20.00 51.375 29,130
- GM
4 717 International Paper 20.00 40.625 29,128
Company - IP
5 427 Minnesota Mining & 20.01 68.250 29,143
Manufacturing Company -
MMM
Total 100.0% $145,641
=============== ==============
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Based on the cost of the Securities to the Strategic Five Trust.
(2) Forward contracts to purchase the Securities were entered into on
February 8, 1996. All such contracts are expected to be settled on or
about the First Settlement Date of the Trust which is expected to be
February 14, 1996.
(3) Evaluation of Securities by the Trustee was made on the basis of closing
sales prices at the Evaluation Time on the Initial Date of Deposit.
Addiional information regarding the Strategic Five Trust is as follows:
Sponsor's Profit/Loss
Sponsor's (Initial Date
Purchase Price of Deposit)
$145,641 $--
<PAGE>
QUALIFIED UNIT INVESTMENT
LIQUID TRUST SERIES ("QUILTS")
EQUITY STRATEGIC TEN, SERIES 1
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement (the "Agreement") dated February 8,
1996 among OCC Distributors, as Depositor, and The Chase Manhattan Bank
(National Association), as Trustee, sets forth certain provisions in full and
incorporates other provisions by reference to the document entitled "Qualified
Unit Investment Liquid Trust Series ("QUILTS") And Subsequent Series And Any
Other Future Trusts For Which OCC Distributors Acts As Sponsor" dated February
8, 1996 (the "Indenture") (collectively, such documents hereinafter called the
"Indenture and Agreement"). This Agreement and the Indenture, as incorporated
by reference herein, will constitute a single instrument.
WITNESSETH THAT:
WHEREAS, this Agreement is a Reference Trust Agreement as defined in
Section 1.1 of the Indenture, and shall be amended and modified from time to
time by an Addendum as defined in Section 1.1 (1) of the Indenture, such
Addendum setting forth any Additional Securities as defined in Section 1.1 (2)
of the Indenture;
WHEREAS, the Depositor wishes to deposit Securities, and any
Additional Securities as listed on any Addendums hereto, into the Trust and
issue Units, and Additional Units as the case maybe, in respect thereof
pursuant to Sections 2.1 and 2.6 of the Indenture; and
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained, the Depositor, the Trustee and the Evaluator
agree as follows:
Part III
STANDARD TERMS AND CONDITIONS OF TRUST
Section 1. Subject to the provisions of Part II hereof, all the
provisions contained in the Indenture are herein incorporated by reference in
their entirety and shall be deemed to be a part of this instrument as fully
and to the same extent
338056.1
<PAGE>
as though said provisions had been set forth in full in this
instrument.
Section 2. This Reference Trust Agreement may be amended and modified
by Addendums, attached hereto, evidencing the purchase of Additional
Securities which have been deposited to effect an increase over the number of
Units initially specified in Part II of this Reference Trust Agreement
("Additional Closings"). The Depositor and Trustee hereby agree that their
respective representations, agreements and certifications contained in the
Closing Memorandum dated February 8, 1996, relating to the initial deposit of
Securities continue as if such representations, agreements and certifications
were made on the date of such Additional Closings and with respect to the
deposits made therewith, except as such representations, agreements and
certifications relate to their respective By-Laws and, as to the Trustee, its
charter and permit to exercise fiduciary powers and as to which they each
represent that their has been no amendment affecting their respective
abilities to perform their respective obligations under the Indenture.
Part IV
SPECIAL TERMS AND CONDITIONS OF TRUST
Section 1. The following special terms and conditions are hereby
agreed to:
(a) The Securities (including Contract Securities) listed in Schedule
A hereto have been deposited in the Trust under this Agreement.
(b) The number of Units delivered by the Trustee in exchange for the
Securities referred to in Section 2.3 is 149,534.
(c) For the purposes of the definition of Unit in item (19) of
Section 1.1, the fractional undivided interest in and ownership of the Trust
per 1,000 Units initially is 1/149534 as of the date hereof.
(d) The term Record Date shall mean the fifteenth day (or the last
business day prior thereto) of June and December, 1996.
(e) The term Payment Date shall mean the last day (or the last
business day prior thereto) of June and December, 1996.
(f) The First Settlement Date shall mean February 14, 1996.
338056.1
<PAGE>
(g) For purposes of Section 6.1(g), the liquidation amount is hereby
specified to be 40% of the aggregate value of the Securities as of the date of
the last deposit of Additional Securities.
(h) For purposes of Section 6.4, the Trustee shall be paid per annum
an amount computed according to the following Schedule, determined on the
basis of the number of Units outstanding as of the Record Date preceding the
Record Date on which the compensation is to be paid, provided, however, that
with respect to the period prior to the first Record Date, the Trustee's
compensation shall be computed at $.86 per 1000 Units:
rate per 1000 Units number of Units outstanding
$0.62 200,000,000 or more
$0.74 100,000,000 - 199,999,999
$0.80 50,000,000 - 99,999,999
$0.86 49,999,999 or less
(i) For purposes of Section 7.4, the Depositor's maximum supervisory
annual fee is hereby specified to be $.25 per 1,000 Units.
(j) The Termination Date shall mean February 19, 1997.
(k) Except for temporary certificates evidencing the Units described
in paragraph (b) above, ownership of Units of these Series of Qualified Unit
Investment Liquid Trust Series ("QUILTS"), shall not be evidenced by
certificates.
IN WITNESS WHEREOF, the parties hereto have caused this Reference
Trust Agreement to be duly executed on the date first above written.
[Signatures on separate pages]
338056.1
<PAGE>
OCC DISTRIBUTORS
as Depositor
By: OPPENHEIMER FINANCIAL CORP.
as Managing Partner of the
Depositor
By: /s/Susan A. Murphy
Authorized Person
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
I, Carla Vogel, a Notary Public in and for the said County in
the State aforesaid, do hereby certify that Susan A. Murphy personally known
to me to be the same person whose name is subscribed to the foregoing
instrument and personally known to me to be an Authorized Person of
Oppenheimer Financial Corp., a Delaware corporation, appeared before me this
day in person, and acknowledged that he/she signed and delivered the said
instrument as his/her free and voluntary act as such Authorized Person and as
the free and voluntary act of said Oppenheimer Financial Corp., for the uses
and purposes therein set forth.
GIVEN under my hand and notarial seal this 8th day of February,
1996.
/s/Carla Vogel
Notary Public
(SEAL)
My Commission expires: November 1, 1997
338056.1
<PAGE>
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
as Trustee and Evaluator
By: /s/Thomas Porrazo
(SEAL)
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I, Ada Iris Vegas, a Notary Public in and for the said County in the
State aforesaid, do hereby certify that Thomas Porrazzo personally known to me
to be the same person whose name is subscribed to the foregoing instrument and
personally known to me to be a Vice President of The Chase Manhattan Bank
(National Association), appeared before me this day in person, and
acknowledged that he/she sealed with the corporate seal of The Chase Manhattan
Bank (National Association) and signed and delivered the said instrument as
his/her free and voluntary act as such Vice President and as the free and
voluntary act of said The Chase Manhattan Bank (National Association), for the
uses and purposes therein set forth.
GIVEN under my hand and notarial seal this 6th day of February, 1996.
/s/Ada Iris Vegas
Notary Public
(SEAL)
My Commission expires: 6-30-96
338056.1
<PAGE>
SCHEDULE A
QUILTS
Equity Strategic Ten, Series 1
PORTFOLIO
AS OF FEBRUARY 8, 1996
<TABLE>
<CAPTION>
Cost of
Portfo- Percentage Market Securities
lio Number of Name of Issuer of Value to Trust
No. Shares and Ticker Symbol (2) Fund (1) Per Share (3)
----- -------- --------------------- ---------- --------- ---
<S> <C> <C> <C> <C> <C>
1 272 Chevron Corporation - 10.00% $53.375 $14,518
CHV
2 183 E.I. du Pont De 9.97 79.125 14,480
Nemours & Company - DD
3 175 Exxon Corporation - 9.97 82.750 14,481
XON
4 183 General Electric 10.02 79.500 14,549
Company - GE
5 283 General Motors 10.02 51.375 14,539
Corporation - GM
6 358 International Paper 10.02 40.625 14,544
Company - IP
7 178 J.P. Morgan & 10.02 81.750 14,552
Company, Inc. - JPM
8 213 Minnesota Mining and 10.02 68.250 14,537
Manufacturing
Company -MMM
9 151 Philip Morris 9.96 95.875 14,476
Companies, Inc. - MO
10 179 Texaco, Inc. - TX 10.00 81.125 14,521
Total 100.00% $145,197
============== ==========
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Based on the cost of the Securities to the Strategic Ten Trust.
(2) Forward contracts to purchase the Securities were entered into on
February 8, 1996. All such contracts are expected to be settled on or
about the First Settlement Date of the Trust which is expected to be
February 14, 1996.
(3) Evaluation of Securities by the Trustee was made on the basis of closing
sales prices at the Evaluation Time on the Initial Date of Deposit.
Additional information regarding the Strategic Ten Trust is as follows:
Sponsor's Profit/Loss
Sponsor's (Initial Date
Purchase Price of Deposit)
$145,197 $--
QUALIFIED UNIT INVESTMENT
LIQUID TRUST SERIES ("QUILTS")
AND
SUBSEQUENT SERIES AND ANY OTHER
FUTURE TRUSTS FOR WHICH OCC
DISTRIBUTORS ACTS AS SPONSOR
--------------------
TRUST INDENTURE AND AGREEMENT
Among
OCC DISTRIBUTORS
As Depositor
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
As Trustee
--------------------
Dated: February 8, 1996
337970.1
<PAGE>
TRUST INDENTURE AND AGREEMENT
QUALIFIED UNIT INVESTMENT
LIQUID TRUST SERIES ("QUILTS")
and Subsequent Series and any other future
trusts for which OCC Distributors
acts as sponsor
CONTENTS
Page
ARTICLE I DEFINITIONS; CERTIFICATES............................... 2
Section 1.1. Definitions............................................. 2
Section 1.2. Form of Certificate..................................... 4
ARTICLE II DEPOSIT OF SECURITIES; DECLARATION OF TRUST;
FORM AND ISSUANCE OF CERTIFICATES..................... 8
Section 2.1. Deposit of Securities................................... 8
Section 2.2. Declaration of Trust.................................... 8
Section 2.3. Issuance of Units....................................... 8
Section 2.4. Form of Certificates.................................... 9
Section 2.5. Certain Contracts Satisfactory.......................... 9
Section 2.6. Deposit of Additional Securities........................ 9
ARTICLE III ADMINISTRATION OF TRUST................................. 12
Section 3.1. Cost.................................................... 12
Section 3.2. Income Account.......................................... 12
Section 3.3. Principal Account....................................... 13
Section 3.4. Reserve Account......................................... 13
Section 3.5. Payments and Distributions.............................. 14
Section 3.6. Distribution Statements................................. 17
Section 3.7. Substitute Securities................................... 18
Section 3.8. Sale of Securities...................................... 19
Section 3.9. Counsel................................................. 20
Section 3.10. Notice and Sale by Trustee.............................. 20
Section 3.11. Reorganization and Similar Events....................... 20
Section 3.12. Notice of Actions....................................... 21
Section 3.13. Notice of Change in Principal Account: ................ 21
Section 3.14. Extraordinary Distributions............................. 21
ARTICLE IV EVALUATION OF SECURITIES; EVALUATOR..................... 22
Section 4.1. Evaluation of Securities................................ 22
Section 4.2. Tax Reports............................................. 22
Section 4.3. Liability of Trustee with Respect to
Evaluations........................................... 23
ARTICLE V TRUST EVALUATION; REDEMPTION OR PURCHASE OF
UNITS................................................. 23
Section 5.1. Trust Evaluation........................................ 23
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i
<PAGE>
Page
Section 5.2. Redemptions by Trustee; Purchases by Depositor.......... 24
Section 5.3. Transfer of Units; Issuance, Transfer and
Interchange of Certificates........................... 27
Section 5.4. Replacement of Certificates............................. 28
Section 5.5. Form of Certificate..................................... 29
ARTICLE VI TRUSTEE; REMOVAL OF DEPOSITOR........................... 29
Section 6.1. General Definition of Trustee's Liabilities,
Rights and Duties; Removal of Depositor............... 29
Section 6.2. Books, Records and Reports.............................. 33
Section 6.3. Indenture and List of Securities on File................ 34
Section 6.4. Compensation............................................ 34
Section 6.5. Removal and Resignation of the Trustee;
Successor............................................. 35
Section 6.6. Qualifications of Trustee............................... 37
ARTICLE VII DEPOSITOR............................................... 37
Section 7.1. Succession.............................................. 37
Section 7.2. Resignation of a Depositor.............................. 38
Section 7.3. Liability of Depositor and Indemnification.............. 38
Section 7.4. Compensation............................................ 39
ARTICLE VIII RIGHTS OF UNIT HOLDERS.................................. 40
Section 8.1. Beneficiaries of Trust.................................. 40
Section 8.2. Rights, Terms and Conditions............................ 40
ARTICLE IX ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS.......... 41
Section 9.1. Amendments.............................................. 41
Section 9.2. Termination............................................. 41
Section 9.3. Construction............................................ 44
Section 9.4. Registration of Units................................... 44
Section 9.5. Written Notice.......................................... 44
Section 9.6. Severability............................................ 45
Section 9.7. Dissolution of Depositor Not to Terminate............... 45
This Table of Contents does not constitute part of the Indenture.
337970.1
ii
<PAGE>
QUALIFIED UNIT INVESTMENT LIQUID
TRUST SERIES
("QUILTS")
(A UNIT INVESTMENT TRUST)
AND
SUBSEQUENT SERIES AND ANY OTHER FUTURE TRUSTS
FOR WHICH OCC DISTRIBUTORS ACTS
AS SPONSOR
TRUST INDENTURE AND AGREEMENT
DATED FEBRUARY 8, 1996
This Trust Indenture and Agreement ("Indenture") dated February 8,
1996, among OCC Distributors ("Distributors"), as Depositor, and The Chase
Manhattan Bank (National Association), as Trustee.
WITNESSETH THAT
In consideration of the premises and of the mutual agreements herein
contained, the Depositor and the Trustee agree as follows:
INTRODUCTION
The Depositor, concurrently with the execution and delivery hereof,
is establishing Qualified Unit Investment Liquid Trust Series ("QUILTS"),
wherein certain interest bearing and non-interest bearing obligations will be
deposited by the Depositor, to be held by the Trustee in trust for the use and
benefit of the registered holders of units of beneficial interest as recorded
in book-entry form. The parties hereto are entering into this Indenture for
the purpose of establishing certain of the terms, covenants and conditions of
Qualified Unit Investment Liquid Trust Series and of each additional series of
such Trust, and any other future trusts for which the Depositor acts as
sponsor, which may be established from time to time hereafter. For Qualified
Unit Investment Liquid Trust Series and each subsequent series, and any other
future trusts for which the Depositor acts as sponsor (as to which this
Indenture is to be applicable) the parties hereto shall execute a separate
Reference Trust Agreement incorporating by reference this Indenture and
effecting any amendment, supplement or variation from or to this Indenture
with respect to the related series and specifying for that series (i) the
Securities deposited in trust and the number of Units delivered by the Trustee
in exchange for the Securities pursuant to Section 2.3; (ii) the initial
fractional undivided
337970.1
<PAGE>
interest represented by each Unit; (iii) the first and subsequent Record
Dates; (iv) the first and subsequent Payment Dates; (v) the First Settlement
Date; (vi) the Termination Date; (vii) the liquidation amount for purposes of
Section 6.1(g); (viii) the Trustee's fee; (ix) the Depositor's fee; and (x)
any other change or addition contemplated or permitted by this Indenture.
ARTICLE I
DEFINITIONS; CERTIFICATES
Section 1.1. Definitions: Whenever used in this Indenture the
following words and phrases, unless the context clearly indicates otherwise,
shall have the following meanings:
(1) "Addendum to the Reference Trust Agreement" shall mean the
addendum which evidences the Additional Securities deposited into the
Trust and the number of Additional Units created.
(2) "Additional Securities" shall mean such Securities as are
listed in Supplementary Schedules to Addendums to the Reference Trust
Agreement and which have been deposited to effect an increase over the
number of Units initially specified in the Reference Trust Agreement.
(3) "Additional Units" shall mean such Units as are issued in
respect of Additional Securities.
(4) "Business Day" shall mean any day other than Saturday,
Sunday, or, in the City of New York, a legal holiday or a day on which
banking institutions or the New York Stock Exchange are authorized by
law to close.
(5) "Certificate" shall mean any certificate substantially in
the form hereinafter recited executed by the Trustee and the Depositor
evidencing ownership of an undivided fractional interest in each
Trust.
(6) "Contract Securities" shall mean Securities which are to be
acquired by the Trust pursuant to contracts, including (i) Securities
listed in Schedule A to the Reference Trust Agreement, contracts for
the purchase thereof which have been assigned to the Trustee and cash
or an irrevocable letter of credit issued by a commercial bank in the
amount required for such purchase which has been delivered to the
Trustee and (ii) Securities which the Depositor has contracted to
purchase for the Trust pursuant to Sections 2.6 and 3.7.
-2-
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<PAGE>
(7) "Depositor" shall mean OCC Distributors, its successors or
any successor Depositor appointed as herein provided.
(8) "DTC" shall mean Depository Trust Company, or its
successors.
(9) "Evaluator" shall mean The Chase Manhattan Bank (National
Association), or its successors or any successor evaluator appointed
as herein provided.
(10) "Failed Security" shall have the meaning assigned to it in
Section 3.7 hereof.
(11) "First Settlement Date" shall mean the date specified in
Part II of the Reference Trust Agreement.
(12) The words "herein", "hereby", "herewith", "hereof",
"hereinafter", "hereunder", "hereinabove", "hereafter", "heretofore"
and similar words or phrases of reference and association shall refer
to this Indenture in its entirety.
(13) "Indenture" shall mean this Trust Indenture and Agreement
as originally executed or, if amended as herein provided, as so
amended.
(14) "Original Issue" shall mean an issue of Securities
deposited pursuant to Section 2.1 or any Substitute Securities
purchased to replace any Original Issue which have become Failed
Securities.
(15) "Original Proportionate Relationship" shall mean the
proportionate relationship among the number of shares of each Security
established on the deposit made pursuant to Section 2.1. The Original
Proportionate Relationship shall be adjusted, if appropriate, to
reflect (1) the deposit of Substitute Securities and (2) the
occurrence of any stock dividend, stock splits, redemptions, or
similar events.
(16) "Payment Date" shall have the meaning assigned to it in
Part II of the Reference Trust Agreement.
(17) "Record Date" shall have the meaning assigned to it in
Part II of the Reference Trust Agreement.
(18) "Reference Trust Agreement" shall mean the indenture for
the particular series of Quest for Value Trust into which the terms of
this Indenture are incorporated.
-3-
337970.1
<PAGE>
(19) "Securities" shall mean the securities, including Contract
Securities, (i) which are listed in Schedule A and Supplemental
Schedules to Addendums to the Reference Trust Agreement or (ii) which
have been received by the Trust in exchange, substitution or
replacement pursuant to Section 3.7 hereof, as may from time to time
continue to be held as part of the Trust to which such Reference Trust
Agreement relates.
(20) "Substitute Security" shall mean a Security purchased by
the Trustee pursuant to Section 3.7 hereof.
(21) "Trust" shall mean the trust created by this Indenture,
which shall consist of the Securities held pursuant and subject to
this Indenture together with all dividends thereon, received but
undistributed, any undistributed cash realized from the sale,
redemption, liquidation, or maturity thereof, such amounts as may be
on deposit in the Reserve Accounts hereinafter established and all
other property and rights to which Unit Holders may be entitled under
the provisions of this Indenture.
(22) "Trustee" shall mean The Chase Manhattan Bank (National
Association), or its successors or any successor Trustee appointed as
herein provided.
(23) "Unit" shall mean the fractional undivided interest in and
ownership of the Trust initially specified in Part II of the Reference
Trust Agreement, the denominator of which shall be decreased by the
number of any such Units redeemed as provided in Section 5.2.
(24) "Unit Holder" shall mean the registered holder of units of
beneficial interest as recorded in book-entry form at DTC, his legal
representatives and heirs and the successors of any corporation,
partnership or legal entity which is a registered holder of any Unit,
and as such shall be deemed a beneficiary of the trust created by the
Indenture to the extent of his pro rata share thereof.
(25) Words importing singular number shall include the plural
number in each case and vice versa, and words importing person shall
include corporations and associations, as well as natural persons.
Section 1.2. Form of Certificate: If the Reference Trust
Agreement specifies that Units of a Trust shall be evidenced by Certificates,
the form of Certificate evidencing ownership of fractional undivided interests
in the Trust shall be substantially as follows:
-4-
337970.1
<PAGE>
No.
CERTIFICATE OF OWNERSHIP
--evidencing--
A Fractional Undivided Interest
--in--
QUALIFIED UNIT INVESTMENT
LIQUID TRUST SERIES
("QUILTS")
__________ SERIES _________
- --------------------
CUSIP
This is to certify that ______________________________ is the owner and
registered holder of this Certificate evidencing the ownership of _____
unit(s) of fractional undivided interest in the above named Trust created
under the laws of the State of New York pursuant to the Trust Indenture and
Agreement among OCC Distributors as Depositor and The Chase Manhattan Bank
(National Association) as Trustee (the "Indenture"), a copy of which is
available at the office of the Trustee. This Certificate is issued under and
is subject to the terms, provisions and conditions of the Indenture to which
the holder of this Certificate by virtue of the acceptance hereof asserts and
is bound, a summary of which Indenture is contained in the Prospectus relating
to the Trust. This Certificate is transferable and interchangeable by the
registered holder in person or by his duly authorized attorney at the
Trustee's office upon surrender of this Certificate properly endorsed or
accompanied by a written instrument of transfer or other documents that the
Trustee may require for transfer in form satisfactory to the Trustee and
payment of the fees and expenses as provided in the Indenture.
-5-
337970.1
<PAGE>
Witness the facsimile signature of a duly authorized officer of the
Depositor and the manual signature of an authorized signature of the Trustee.
Date: OCC DISTRIBUTORS,
Depositor
___________________________________
Authorized Signatory
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), Trustee
By: _______________________________
Authorized Officer
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT - _________________ Custodian __________________
____________
(Cust)
(Minor)
Under Uniform Gifts to Minors Act
_________________________________
(State)
Additional abbreviations may also be used though not in the above list.
-6-
337970.1
<PAGE>
(FORM OF ASSIGNMENT)
For Value Received, __________________________________________________________
hereby sell(s), assign(s) and transfer(s) ______________ Units represented
by this Certificate unto
SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE MUST BE PROVIDED
___________________________________________
and do(es) hereby irrevocably constitute and appoint _________________________
______________________________________________________, attorney, to transfer
said Units on the books of the Trustee, with full power of substitution in the
premises.
Dated:
_____________________________
SIGNATURE(S) GUARANTEED BY
__________________________________ _____________________________
Firm or Bank NOTICE: The signature(s) to
this assignment must
correspond with the name(s)
as written upon the face of
the Certificate in every
__________________________________ particular, without
alteration or enlargement or
Authorized Signature any change whatever.
Signature(s) must be guaranteed by a member or participant of the Securities
Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion Program
(SEMP) or New York Stock Exchange, Inc. Medallion Signature Program (MSP).
-7-
337970.1
<PAGE>
ARTICLE II
DEPOSIT OF SECURITIES; DECLARATION OF TRUST;
FORM AND ISSUANCE OF CERTIFICATES
Section 2.1. Deposit of Securities: The Depositor, concurrently with the
execution and delivery of the Reference Trust Agreement, has deposited with
the Trustee in trust the Securities listed in Schedule A to the Reference
Trust Agreement in bearer form or registered in the name of the Trustee, or
its nominee, or duly endorsed in blank or accompanied by all necessary
instruments of assignment and transfer in proper form to be held, managed and
applied by the Trustee as herein provided. In the event that the purchase of
Securities represented by "when-issued" and/or "regular way" contracts shall
not be consummated in accordance with said contracts, the Trustee shall credit
to the Principal Account pursuant to Section 3.3 hereof the cash or cash
equivalents (including such portion of any letter of credit applicable to such
contracts) deposited by the Depositor, for the purpose of such purchase. Such
monies, unless invested in substitute Securities in accordance with Section
3.7 hereof, shall be distributed to Unit Holders pursuant to Section 3.5
hereof on the Payment Date following the failure of consummation of such
purchase. The Depositor shall deliver the Securities listed on said Schedule
or Schedules to the Trustees which were not actually delivered concurrently
with the execution and delivery of the Reference Trust Agreement within 90
days after said execution and delivery or, if Section 3.7 applies, within such
shorter period as is specified in Section 3.7.
The Trustee is irrevocably authorized to effect registration of
transfer of the Securities in fully registered form in the name of the Trustee
or its nominee.
Section 2.2. Declaration of Trust: The Trustee declares that it holds
and will hold the Securities as Trustee in trust upon the trusts herein set
forth for the use and benefit of all present and future Unit Holders.
Section 2.3. Issuance of Units: (a) The Trustee hereby acknowledges
receipt of the deposit referred to in Section 2.1, and simultaneously with the
receipt of said deposit, has registered on the registration books of the Trust
the ownership by The Depository Trust Company of the number of Units specified
in Part II of the Reference Trust Agreement and will cause such Units to be
credited at The Depository Trust Company to the account of the Depositor or,
pursuant to the Depositor's direction and as hereafter provided, the account
of the issuer of the letter of credit referred to in Section 2.01. The
Depositor shall not sell, pledge, hypothecate or otherwise transfer such
Units, prior to the effectiveness of the registration statement covering the
Units filed with the Securities and Exchange
-8-
337970.1
<PAGE>
Commission under the Securities Act of 1933, except that the Depositor may
place the Units as security for any letter of credit provided in connection
with the deposit of contracts described in Section 2.1.
The number of Units may be increased through a split of the Units or
decreased through a reverse split thereof, as directed in writing by the
Depositor, on any day on which the Depositor is the only beneficial holder of
Units, which revised number of Units shall be recorded by the Trustee on its
books. The Trustee shall be entitled to rely on the Depositor's direction as
certification that no person other than the Depositor has a beneficial
interest in the Units and the Trustee shall have no liability to any person
for action taken pursuant to such direction.
(b) Unless the Reference Trust Agreement for the Trust provides that
Units may be represented by Certificates, ownership of Units shall be
evidenced solely by registration on the records of the Trustee. If the
Reference Trust Agreement permits the holding of Units in certificated form,
Unit Holders may elect to have their Units held in certificated form by making
a written request to the Trustee requesting such Certificates and paying the
applicable charge referred to in Section 5.3. Units and Certificates may be
transferred as provided in Article V.
Section 2.4. Form of Certificates: Each Certificate referred to in
Section 2.3 is, and each Certificate hereafter issued shall be, in
substantially the form hereinabove recited, numbered serially for
identification, in fully registered form, transferable only on the books of
the Trustee as herein provided, executed manually or in facsimile by an
authorized officer of the Trustee and in facsimile by an Authorized Signator
of the Depositor.
Section 2.5. Certain Contracts Satisfactory: The Depositor approves
as satisfactory in form and substance the contracts to be assumed by the
Trustee with regard to any Securities listed in Schedule A to the Reference
Trust Agreement and authorizes the Trustee on behalf of the Trust to assume
such contracts and otherwise to carry out the terms and provisions thereof or
to take other appropriate action in order to complete the deposit of the
Securities covered thereby into the Trust.
Section 2.6. Deposit of Additional Securities: (a) From time to time
and in the discretion of the Depositor, the Depositor may make deposits of (i)
Additional Securities duly endorsed in blank or accompanied by all necessary
instruments of assignment and transfer in proper form (or contracts to
purchase Additional Securities and cash or an irrevocable letter of credit in
an amount necessary to consummate the purchase of any Additional Securities
pursuant to such contracts ("Additional
-9-
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<PAGE>
Contract Securities")) or (ii) cash or a bank letter of credit in lieu of cash
(collectively, the "Purchase Monies") with instructions to purchase Additional
Securities, such Purchase Monies being in an amount equal to the value of the
Additional Securities to be purchased pursuant to such instructions as
determined by the last preceding evaluation made pursuant to Section 4.1 and
(iii) Cash (as defined below). Each deposit made during the 90 days following
the deposit made pursuant to Section 2.1 hereof shall replicate, to the extent
practicable, as specified in the following paragraph (b), the Original
Proportionate Relationship. Each deposit made after the 90 days following the
deposit made pursuant to Section 2.1 hereof (except for deposits made to
replace Failed Securities if such deposits occur within 20 days from the date
of a failure occurring within such initial 90 day period) shall maintain
exactly the proportionate relationship existing among the Securities as of the
expiration of such 90 day period. Each such deposit (whenever made) shall
exactly replicate Cash. For purposes of this paragraph, "Cash" means, as to
the Principal Account, cash or other property (other than Securities) on hand
in the Principal Account or receivable and to be credited to the Principal
Account as of the date of the supplemental deposit (other than amounts to be
distributed solely to persons other than persons receiving the distribution
from the Principal Account as holders of Additional Units created by the
deposit), and, as to the Income Account, cash or other property (other than
Securities) received by the Trust as of the date of the supplemental deposit
or receivable by the Trust in respect of dividends or other distributions
declared but not received as of the date of the supplemental deposit, reduced
by the amount of any cash or other property received or receivable on any
Security allocable (in accordance with the Trustee's calculation of the
monthly distribution from the Income Account pursuant to Section 3.5) to a
distribution made or to be made in respect of Record Date occurring prior to
the supplemental deposit. Each deposit of Additional Securities shall be
listed in a Supplementary Schedule to an Addendum to the Reference Trust
Agreement stating the date of such deposit and the number of Additional Units
being issued therefor. The Trustee shall acknowledge in such Addendum receipt
of the deposit, and simultaneously with the receipt of said deposit, reflect
the aggregate number of Additional Units specified in such Addendum by
recording such Units on its books. Such Additional Securities shall be held,
administered and applied by the Trustee in the same manner as herein provided
for the Securities. The execution by the Depositor in connection with the
deposit of Additional Securities of an Addendum to the Reference Trust
Agreement shall constitute the approval by the Depositor as satisfactory in
form and substance of the contracts to be entered into or assumed on such
Addendum and authorization to the Trustee on behalf of the Trust to enter into
or assume such contracts and otherwise to carry out the terms and provisions
thereof or to take other
-10-
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<PAGE>
appropriate action in order to complete the deposit of the Additional
Securities covered thereby into the Trust.
(b) Additional Securities deposited during the 90 days following the
deposit made pursuant to Section 2.1 hereof pursuant to this paragraph shall
maintain as closely as practicable the Original Proportionate Relationship,
except as provided in this Section. Additional Securities may be deposited or
purchased in round lots; if the amount of the deposit is insufficient to
acquire round lots of each Security to be acquired, the Additional Securities
shall be deposited or purchased in the order of the Security in the Trust most
under represented immediately before the deposit with respect to the Original
Proportionate Relationship. Instructions to purchase Additional Securities
under this Section, shall be in writing and shall direct the Trustee to
purchase, or enter into contracts to purchase, Additional Securities; such
instructions shall also specify the name, CUSIP number, if any, aggregate
amount of each such Additional Security, price or price range and date to be
purchased. When requested by the Trustee, the Depositor shall act as broker to
execute purchases in accordance with such instructions; the Depositor shall be
entitled to compensation therefor in accordance with applicable law and
regulations. The Trustee shall have no liability for any loss or depreciation
resulting from any purchase made pursuant to the Depositor's instructions or
made by the Depositor as broker. Cash deposited for the purchase of Additional
Securities to be acquired pursuant to instructions to purchase Additional
Securities shall be credited to the Principal Account. Cash deposited to
secure the purchase of Contract Securities shall be credited to the Principal
Account only at the times specified in Section 3.3. In connection with
valuations made pursuant to Sections 4.1 and 5.1, (i) there shall be
subtracted from the cash balance of the Principal Account the cost to the
Trust of contracts entered into by the Trustee pursuant to purchase
instructions, and (ii) Contract Securities and contracts entered into by the
Trustee pursuant to purchase instructions shall be valued as the Securities to
be acquired pursuant thereto. If, at the time of a subsequent deposit under
this Section, Securities of an Original Issue are unavailable, cannot be
purchased at reasonable prices or their purchase is prohibited or restricted
by applicable law, regulation or policies, in lieu of the portion of the
deposit that would otherwise be represented by those Securities, the Depositor
may (A) deposit (or instruct the Trustee to purchase) Securities of another
Original Issue or replacement securities, or (B) deposit cash or a letter of
credit with instructions to acquire the Securities of such original issue when
they become available.
The Trustee shall have no responsibility for the selection of
Securities deposited hereunder or for maintaining the composition of the Trust
portfolio.
-11-
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<PAGE>
ARTICLE III
ADMINISTRATION OF TRUST
Section 3.1. Cost: The cost of the initial preparation, printing and
execution of the Certificates and this Indenture, Registration Statement and
other documents relating to the Trust, Federal and State registration fees and
costs, the initial fees and expenses of the Trustee and Evaluator, legal and
auditing expenses and other out-of-pocket expenses (excluding expenses
incurred in the preparation and printing of preliminary prospectuses and
prospectuses, expenses incurred in the preparation and printing of brochures
and other advertising materials and any other selling expenses), to the extent
not borne by the Depositor, shall be paid by the Trust; provided, however, the
Trust shall not bear such expenses in excess of the amount shown in the
Statement of Condition included in the Prospectus, and any such excess shall
be borne by the Depositor. To the extent the funds in the Interest and
Principal Accounts of the Trust shall be insufficient to pay the expenses
borne by the Trust specified in this Section 3.1, the Trustee shall advance
out of its own funds and cause to be deposited and credited to the Interest
Account such amount as may be required to permit payment of such expenses. The
Trustee shall be reimbursed for such advance on each Record Date from funds on
hand in the Income Account, or to the extent funds are not available in such
Account, from the Principal Account, in the amount deemed to have accrued as
of such Record Date as provided in the following sentence (less prior payments
on account of such advances, if any), and the provisions of Section 6.4 with
respect to the reimbursement of disbursements for Trust expenses, including,
without limitation, the lien in favor of the Trustee therefor, shall apply to
the payment of expenses made pursuant to this Section. For purposes of the
provisions of the preceding sentence and the addition provided in clause
(a)(4) of Section 5.1, the expenses borne by the Trust pursuant to this
Section shall be deemed to accrue at a daily rate over the time period
specified for their amortization by the Depositor pursuant to Section 5.1;
provided, however, that nothing herein shall be deemed to prevent, and the
Trustee shall be entitled to, full reimbursement for any advances made
pursuant to this Section no later than the termination of the Trust. For
purposes of this Section 3.1, the Trustee shall rely on the written estimates
of such expenses provided by the Depositor pursuant to Section 5.1.
Section 3.2. Income Account: The Trustee shall collect the dividends
or other like cash distributions on the Securities in the Trust as such are
paid, and credit such amounts, as collected, to a separate account to be known
as the "Income Account."
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<PAGE>
Section 3.3. Principal Account: (a) The Securities and all cash,
other than amounts credited to the Income Account, received by the Trustee in
respect of the Securities shall be credited to a separate account to be known
as the "Principal Account."
(b) Moneys and/or irrevocable letters of credit required to purchase
Contract Securities or deposited to secure such purchases are hereby declared
to be held specially by the Trustee for such purchases and shall not be deemed
to be part of the Principal Account until (i) the Depositor fails to timely
purchase Contract Securities and has not given the Failed Contract Notice (as
defined in Section 3.7) at which time the moneys and/or letters of credit
attributable to the Contract Security not purchased by the Depositor shall be
credited to the Principal Account; or (ii) the Depositor has given the Trustee
the Failed Contract Notice at which time the moneys and/or letters of credit
attributable to failed contracts referred to in such Notice shall be credited
to the Principal Account; provided, however, that if the Depositor also
notifies the Trustee in the Failed Contract Notice that they have purchased or
entered into a contract to purchase Securities (as defined in Section 3.7),
the Trustee shall not credit such moneys and/or letters of credit to the
Principal Account unless the Substitute Securities shall also have failed or
is not delivered by the Depositor within two business days after the
settlement date of such Substitute Securities, in which event the Trustee
shall forthwith credit such moneys and/or letters of credit to the Principal
Account. To the extent of moneys, and/or moneys drawn under a letter of
credit, deposited by the Depositor and then held by the Trustee, the Trustee
shall credit to the Principal Account, and to the extent such moneys are
insufficient the Depositor shall deposit in the Principal Account the
difference, if any, between the purchase price of the failed Contract Security
and the purchase price of the Substitute Securities, together with any sales
charge and accrued interest applicable to such difference and distribute such
moneys to Unit Holders pursuant to Section 3.5.
Section 3.4. Reserve Account: From time to time the Trustee shall
withdraw from the cash on deposit in the Income Account or the Principal
Account such amounts as it, in its sole discretion, shall deem requisite to
establish a reserve for any applicable taxes or other governmental charges
that may be payable out of or by the Trust. Such amounts so withdrawn shall be
credited to a separate account which shall be known as the "Reserve Account".
The Trustee shall not be required to distribute to the Unit Holders any of the
amounts in the Reserve Account; provided, however, that if it shall, in its
sole discretion, determine that such amounts are no longer necessary for
payment of any applicable taxes or other governmental charges, then it shall
promptly deposit such amounts in the appropriate account from which withdrawn
or, if the Trust has
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been terminated or is in the process of termination, the Trustee shall
distribute to each Unit Holder such holder's interest in the Reserve Account
in accordance with Section 9.2.
Section 3.5. Payments and Distributions: Distributions to each Unit
Holder from the Income Account are computed as of the close of business on
each Record Date for the following Payment Date. Distributions from the
Principal Account of the Trust (other than amounts representing failed
contracts, as discussed in Section 3.3.(b) will be computed as of each Record
Date, and will be made to the Unit Holders of the Trust on or shortly after
the next Payment Date. Proceeds representing principal received from the
disposition of any of the Securities between a Record Date and a Payment Date
which are not used for redemptions of Units will be held in the Principal
Account and not distributed until the second succeeding Payment Date. Persons
who purchase Units between a Record Date and a Payment Date will receive their
first distribution on the second Payment Date after such purchase.
As of each Record Date, the Trustee shall:
(a) Deduct from the Income Account and, to the extent funds are
not sufficient therein, from the Principal Account of the Trust,
amounts necessary to pay any unpaid expenses of the Trust, including
registration charges, Blue Sky fees, printing costs, attorneys' fees,
auditing costs and other miscellaneous out-of-pocket expenses, as
certified by the Depositor, incurred in keeping the registration of
the Units and the Trust on a current basis pursuant to Section 9.4,
provided, however, that no portion of such amount shall be deducted
or paid unless the payment thereof from the Trust is at that time
lawful;
(b) deduct from the Income Account or, to the extent funds are
not available in such Account, from the Principal Account, and pay to
itself individually the amounts that it is at the time entitled to
receive on account of its fees, unpaid expenses and advances;
(c) deduct from the Income Account, or, to the extent funds are
not available in such Account, from the Principal Account, and pay an
amount equal to the unpaid fees and expenses, if any, of counsel
pursuant to Section 3.9 as certified to it by the Depositor; and
(d) deduct from the Income Account, or, to the extent funds are
not available in such Account, from the Principal Account the
estimated amount that the Depositor is then entitled to receive
pursuant to Section 7.4 and hold such amount without interest until
such time as it is payable to the Depositor as set forth below.
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On or before the first Payment Date after the conclusion of each
calendar year, the Trustee shall, upon certification in satisfactory form to
the Trustee, upon which the Trustee may rely, distribute to the Depositor from
the amount so held pursuant to the immediately preceding paragraph the amounts
that the Depositor is at the time entitled to receive pursuant to Section 7.4
on account of services theretofore performed and expenses theretofore
incurred.
The Trustee also may withdraw from said accounts such amounts, if
any, as it deems necessary to establish a reserve for any applicable taxes or
other governmental charges that may be payable out of the Trust. Amounts so
withdrawn shall not be considered a part of such Trust's assets until such
time as the Trustee shall return all or any part of such amounts to the
appropriate accounts. In addition, the Trustee may withdraw from the Income
and Principal Accounts such amounts as may be necessary to cover redemptions
of Units by the Trustee.
The Principal Account shall be reimbursed for any amount withdrawn
from the Principal Account under this Indenture in order to satisfy
obligations which, pursuant to the terms hereof, are first to be paid out of
the Income Account to the extent funds are available therein, when sufficient
funds are not available in the Income Account after giving effect to the
payment from the Income Account of all amounts otherwise required to be
deducted therefor at that time when sufficient funds are next available in the
Income Account after giving effect to the payment from the Income Account of
all amounts otherwise required to be deducted therefrom at that time.
On each Payment Date or within a reasonable period of time
thereafter, the Trustee shall distribute by mail to each Unit Holder of record
at the close of business on the preceding Record Date, at the post office
address appearing on the registration books of the Trustee, such holder's pro
rata share of the balance in the Income Account calculated as set forth in the
next paragraph, plus such holder's pro rata share of the distributable cash
balance of the Principal Account, as of the preceding Record Date; provided,
however, that funds credited to the Principal Account in the event of the
failure of consummation of a contract to purchase Securities pursuant to
Section 2.1 hereof, funds representing the proceeds of the sale of Securities
pursuant to Section 3.8 hereof, and funds representing the proceeds of the
sale of Securities under Section 5.2, 6.4 or this Section 3.5 in excess of the
aggregate of (i) the amounts needed for the purposes of said Sections and (ii)
such amount as the Depositor has informed the Trustee is to be used to
purchase securities pursuant to Section 3.7 hereof, shall not be distributed
until the following Payment Date or at such earlier date as shall be
determined by the Trustee. The Trustee shall not be required to make a
distribution from the Principal Account
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unless the cash balance on deposit therein available for distribution shall be
sufficient to distribute at least $1.00 per Unit in the case of Units
initially offered at approximately $1,000, or a proportionately lower amount
in the case of Units initially offered at less than $1,000 (e.g., .001 per
Unit in the case of Units initially offered at approximately $1.00).
The Trustee shall compute the amount of the Distribution from the
Income Account (i) by subtracting from the cash balance of the Income Account
computed as of the close of business on such Record Date (a) any unpaid fees
and expenses then deductible pursuant to the foregoing provisions of Section
3.5 and (b) the Trustee's estimate of other expenses chargeable to the Income
Account pursuant to the Indenture which have accrued as of such Record Date,
or are otherwise properly attributable to the period to which such Income
Distribution relates and (ii) by dividing the result of such calculation by
the number of Units outstanding on the applicable Record Date.
The amounts to be distributed to each Unit Holder of the Trust of
record as of each Record Date shall be that pro rata share of the cash balance
of the Income and Principal Accounts of the Trust, computed as set forth
above, as shall be represented by the Units registered in the name of such
Unit Holder on the registration or other record books of the Trustee.
In the computation of each such share, fractions of less than one
cent shall be omitted. After any such distribution provided for above, any
cash balance remaining in the Income Account or the Principal Account shall be
held in the same manner as other amounts subsequently deposited in each such
accounts, respectively.
For the purpose of distribution, as herein provided, the holders of
record on the registration books of the Trustee at the close of business on
each Record Date shall be conclusively entitled to such distribution, and no
liability shall attach to the Trustee by reason of payment to any such
registered Unit Holder of record. Nothing herein shall be construed to prevent
the payment of amounts from the Interest Account and the Principal Account to
individual Unit Holders by means of one check, draft or other proper
instrument, provided that the appropriate statement of such distribution shall
be furnished therewith as provided in Section 3.6 hereof.
The Trustee will, for any Unit Holder who provides the Trustee
written instruction, properly executed and in form satisfactory to the
Trustee, received by the Trustee no later than its close of business 10
business days prior to a Record Date (the "Reinvestment Notice Date"),
reinvest such Unit holder's distribution from the Income and Principal
Accounts in Units of the Trust, purchased from the Depositor, to the extent
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the Depositor shall make Units available for such purchase, at the Depositor's
offering price as of the third business day prior to the following
Distribution Date, and at such reduced sales charge, or with no sales charge
imposed, as may be described in the prospectus for the Trusts. If, for any
reason, the Depositor does not have Units of the Trust available for purchase,
the Trustee shall distribute such Unit Holder's distribution from the Income
and Principal Accounts in the manner provided in this Section 3.5. The Trustee
shall be entitled to rely on a written instruction received as of the
Reinvestment Notice Date and shall not be affected by any subsequent notice to
the contrary. The Trustee shall have no responsibility for any loss or
depreciation resulting from any reinvestment made in accordance with this
paragraph, or for any failure to make such reinvestment in the event the
Depositor does not make Units available for purchase.
Section 3.6. Distribution Statements: With each distribution from the
Income or Principal Accounts the Trustee shall set forth, either in the
instrument by means of which payment of such distribution is made or in an
accompanying statement the amount being distributed from each such account
expressed as a dollar amount per Unit.
Within a reasonable period of time after the last business day of
each calendar year, the Trustee shall furnish to each person who at any time
during such calendar year was a Unit Holder a statement setting forth, with
respect to such calendar year:
(A) as to the Income Account:
(1) the amount of dividends received on the Securities,
(2) the amounts paid from the Income Account for redemptions
of Units pursuant to Section 5.2,
(3) the deductions for applicable taxes and fees and expenses
of the Trustee, the Evaluator and counsel pursuant to Section 3.9, the
annual audit fees referred to in Section 6.2 and the annual fee of the
Depositor for portfolio supervisory services pursuant to Section 7.4,
(4) the amount distributed from the Income Account,
identifying separately amounts distributed as dividends and as other
income,
(5) any other amount credited to or deducted from the Income
Account, and
(6) the balance remaining after such distribu- tions and
deductions, expressed both as a total dollar
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amount and as a dollar amount per Unit outstanding on the last business
day of such calendar year;
(B) as to the Principal Account:
(1) The number of shares of each issue of Securities sold or
liquidated, and the aggregate net proceeds received with respect to each
issue, excluding any portion thereof credited to the Income Account,
(2) the amounts paid from the Principal Account for
redemptions of Units pursuant to Section 5.2,
(3) the deductions for payment of applicable taxes and fees
and expenses of the Trustee, the Evaluator and counsel pursuant to Section
3.9, the annual audit fees referred to in Section 6.2 and the annual fee
of the Depositor for portfolio supervisory services pursuant to Section
7.4, and
(4) the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a dollar amount
per Unit outstanding on the last business day of such calendar year; and
(C) the following information:
(1) a list of Securities held in the Trust as of the last
business day of such calendar year,
(2) the number of Units outstanding on the last business day
of such calendar year,
(3) the Net Asset Value per Unit based on the last Trust
Evaluation made during such calendar year, and
(4) the amounts actually distributed to Unit Holders during
such calendar year from the Income and Principal Accounts, separately
stated, expressed both as total dollar amounts and as dollar amounts per
Unit outstanding on the Record Dates for such distributions.
Section 3.7. Substitute Securities: In the event that any Contract
Security is not delivered due to any occurrence, act or event beyond the
control of the Depositor and of the Trustee (such a Contract Security being
herein called a "Failed Security"), the Depositor may instruct the Trustee to
purchase Substitute Securities which have been selected by the Depositor
having a cost not in excess of the cost of the Failed Securities. To be
eligible for inclusion in the Trust, the Substitute Securities which the
Depositor selects must: (A) be of the same type as that replaced (e.g., both
will be common stock or
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preferred stock); (B) in the Depositor's judgment, be substantially similar to
the Failed Security, as the case may be, as respects the investment
characteristics which led the Depositor to select the Failed Security for
inclusion in the Trust; and (C) be purchased prior to, simultaneously with, or
no more than twenty days after delivery of written notice to the Trustee of
the failed contract (the "Failed Contract Notice").
Any Substitute Securities received by the Trustee shall be deposited
hereunder and shall be subject to the terms and conditions of this Indenture
to the same extent as other Securities deposited hereunder. No such deposit of
Substitute Securities shall be made after the earlier of (i) 90 days after the
date of execution and delivery of the applicable Reference Trust Agreement or
(ii) the first Payment Date to occur after the date of execution and delivery
of the applicable Reference Trust Agreement.
Whenever a Substitute Security is acquired by the Depositor pursuant
to the provisions of this Section 3.7, the Trustee shall, within five days
thereafter, mail to all Certifi- cateholders notices of such acquisition,
including an identification of the Failed Security and the Substitute Security
acquired. The purchase price of a Substitute Security shall be paid out of the
funds in the principal account attributable to the Failed Security which it
replaces. The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any purchase made pursuant to any
such instructions from the Depositor and in the absence of such instructions
the Trustee shall have no duty to purchase any Substitute Securities under
this Indenture. The Depositor shall not be liable for any failure to instruct
the Trustee to purchase any Substitute Security or for errors of judgment in
selecting any Substitute Security.
Section 3.8. Sale of Securities: In order to maintain the sound
investment character of the Trust, the Depositor may direct the Trustee to
sell or liquidate Securities at such prices and times and in such manner as
shall be determined by the Depositor, provided that the Depositor has
determined that any one or more of the following conditions exist:
(i) default in the payment of amounts when due on any
of the Securities;
(ii) institution of certain legal proceedings;
(iii) default under certain documents materially and
adversely affecting future declarations or payments of
amounts due or expected;
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(iv) determination of the Depositor that the tax
treatment of the Trust as a "grantor trust" would otherwise
be jeopardized; or
(v) decline in price that is a direct result of serious
adverse credit factors affecting the issuer of a Security which, in
the opinion of the Depositor, would make the retention of the Security
detrimental to the Trust or the Unit Holders.
Upon receipt of such direction from the Depositor, upon which the
Trustee shall rely, the Trustee shall proceed to sell the specified Security
in accordance with such direction. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by reason of any sale
made pursuant to any such direction, or by reason of the failure of the
Depositor to give any such direction, and in the absence of such direction the
Trustee shall have no duty to sell any Securities under this Section 3.8.
Section 3.9. Counsel: The Depositor from time to time as it may deem
necessary employ a firm of attorneys for any legal services that may be
required in connection with the disposition of Securities pursuant to Section
3.8. The fees and expenses of such counsel shall be paid by the Trustee from
the Interest and Principal Accounts as provided for in Section 3.5(c) hereof.
Section 3.10. Notice and Sale by Trustee: If at any time there has
been a failure by the issuer to pay a declared dividend, the Trustee shall
notify the Depositor thereof. If within thirty days after such notification
the Trustee has not received any instructions from the Depositor to sell or to
hold or to take any other action in connection with such Securities, the
Trustee shall sell such Securities forthwith, and the Trustee shall not be
liable or responsible in any way for depreciation or loss incurred by reason
of such sale or by reason of any action or inaction in accordance with such
written instructions of the Depositor. The Trustee shall promptly notify the
Depositor of such action in writing and shall set forth therein the Securities
sold and the proceeds received therefrom.
Section 3.11. Reorganization and Similar Events: In the event that an
offer by the issuer of any of the Securities or any other party shall be made
to issue new Securities, the Trustee shall reject such offer. However, should
any exchange or substitution be effected notwithstanding such rejection or
without an initial offer, any Securities, cash and/or property received in
exchange shall be deposited hereunder and shall be promptly sold, if
securities or property, by the Trustee pursuant to the Depositor's direction,
unless the Depositor advises the Trustee to retain such securities or
property. The cash received in such exchange and cash proceeds of any such
sales shall be
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distributed to Certificateholders on the next Payment Date in the manner set
forth in Section 3.5 regarding distributions from the Principal Account. This
section shall apply, but its application shall not be limited, to public
tender offers, mergers, acquisitions, reorganizations and recapitalization.
Neither the Depositor nor the Trustee shall be liable to any person for action
or failure to take action pursuant to the terms of this Section 3.11.
Section 3.12. Notice of Actions: In the event that the Trustee shall
have been notified at any time of any action to be taken or proposed to be
taken by holders of any Securities held by the Trust (including, but not
limited to, the making of any demand, direction, request, giving of any
notice, consent or waiver or the voting with respect to election of directors
or any amendment or supplement to any corporate resolution, agreement or other
instrument under or pursuant to which such Securities have been issued) the
Trustee shall promptly notify the Depositor and shall thereupon take such
action or refrain from taking any action as the Depositor shall in writing
direct; provided, however, that if the Depositor shall not within five
business days of the giving of such notice to the Depositor direct the Trustee
to take or refrain from taking any action, the Trustee shall take such action
as it, in its sole discretion, shall deem advisable. Neither the Depositor nor
the Trustee shall be liable to any person for any action or failure to take
action with respect to this section.
Section 3.13. Notice of Change in Principal Account: The Trustee
shall give prompt written notice to the Depositor of all amounts credited to
or withdrawn from the Principal Account pursuant to any provisions of this
Article III, and the balance of such account after giving effect to such
credit of withdrawal.
Section 3.14. Extraordinary Distributions: Any property received by
the Trustee after the initial date of Deposit in a form other than cash or
additional shares of the Securities listed on Schedule A or of a Substitute
Security received in a non-taxable stock split or stock dividend, which shall
be retained by the Trust, shall be dealt with in the manner described in
Section 3.11 and shall be retained or disposed by the Trustee according to
those provisions, provided, however, that no property shall be retained which
the Trustee determines shall adversely affect its duties hereunder. The
proceeds of any disposition shall be credited to the Income or Principal
Account of the Trust, as the Depositor may direct.
The Trust is intended to be treated as a fixed investment (i.e.,
grantor) trust for income tax purposes, and its powers shall be limited in
accordance with the restrictions imposed on such trusts by Treas. Reg. Section
301.7701-4.
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ARTICLE IV
EVALUATION OF SECURITIES; EVALUATOR
Section 4.1. Evaluation of Securities: The Trustee shall determine
separately and promptly furnish to the Depositor upon request the value of
each issue of Securities (determined as set forth below) as of the Evaluation
Time on each of the days on which the Trustee shall make the Trust Evaluation
required by Section 5.1. The value of each issue of Securities shall be
determined in good faith by the Trustee in accordance with the following
procedures: If the Securities are listed on one or more national securities
exchanges, such valuation shall be based on the closing purchase price on such
exchange which is the principal market thereof, deemed to be the New York
Stock Exchange if the Securities are listed thereon (unless the Trustee deems
such price inappropriate as a basis for valuation). If the Securities are not
so listed or, if so listed and the principal market therefor is other than on
such exchange or there is no such closing purchase price on such exchange,
such valuation shall be based on the closing purchase price in the
over-the-counter market (unless the Trustee deems such price inappropriate as
a basis for valuation) or if there is no such closing purchase price, then the
Trustee may utilize, at the Trust's expense, an independent evaluation service
or services to ascertain the values of the Securities. The independent
evaluation service shall use any of the following methods, or a combination
thereof, which it deems appropriate: (A) on the basis of current bid prices of
such Securities as obtained from investment dealers or brokers (including the
Depositor) who customarily deal in securities comparable to those held by the
Trust, or (B) if bid prices are not available for any of such Securities, on
the basis of bid prices for comparable securities, or (C) by appraisal of the
value of the Securities on the bid side of the market or by such other
appraisal as is deemed appropriate, or (D) by any combination of the above.
The Trustee shall be permitted to rely on these evaluations when determining
the Unit Price. The Trustee shall have no responsibility or liability for the
valuations supplied to it by the independent evaluation service. The Trustee
shall also make an evaluation of the Securities deposited in the Trust as of
the time said Securities are deposited under this Indenture pursuant to
Section 2.1. Such evaluation shall be made on the same basis as set forth
above and shall be included in the Schedules attached to the Reference Trust
Agreement.
Section 4.2. Tax Reports: For the purpose of permitting Unit Holders
to satisfy any reporting requirements of applicable Federal or State tax law,
the Trustee shall transmit to any Unit Holder upon written request any
determinations made by the Trustee pursuant to Section 4.1.
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Section 4.3. Liability of Trustee with Respect to Evaluations: The
Depositor and the Unit Holders may rely on any evaluation furnished by the
Trustee and shall have no responsibility for the accuracy thereof. The
determinations made by the Trustee hereunder shall be made in good faith upon
the basis of the best information available to it. The Trustee shall be under
no liability to the Depositor or the Unit Holders for errors in judgment,
provided, however, that this provision shall not protect the Trustee against
any liability to which it would otherwise be subject by reason of willful
misfeasance, bad faith or negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties hereunder.
ARTICLE V
TRUST EVALUATION; REDEMPTION
OR PURCHASE OF UNITS
Section 5.1. Trust Evaluation: The Trustee shall make an evaluation
of the Trust (herein called a "Trust Evaluation") as of the close of trading
on the New York Stock Exchange (4:00 p.m. Eastern Time) (sometimes referred to
herein as the "Evaluation Time") (i) on the last Business Day of each of the
months of December and June, (ii) on the day on which any Unit is tendered for
redemption or to the Depositor for repurchase unless such tender shall occur
subsequent to the close of trading on the New York Stock Exchange, in which
event on the Business Day next following such day, and on each Business Day
after the initial public offering has been completed, and (iii) on any other
day desired by the Trustee or requested by the Depositor. Each Trust
Evaluation shall take into account and itemize separately (a)(1) the cash on
hand in the Trust (other than monies on deposit in the Reserve Account, funds
deposited on the date hereof by the Depositor for the purchase of Contract
Securities and not theretofore credited to the Principal Account pursuant to
Section 3.3 and funds in the Principal Account with respect to which contracts
for the purchase of the Substitute Securities have been entered into pursuant
to Section 3.7 hereof), including dividends receivable on stocks trading ex
dividend, (a)(2) the value of each issue of the Securities in the Trust as
determined by the Trustee pursuant to Section 4.1, (a)(3) amounts representing
organizational expenses paid less amounts representing accrued organizational
expenses of the Trust and (a)(4) all other assets of the Trust. For each such
evaluation there shall be deducted from the sum of the above (b)(1) amounts
representing any applicable taxes or other governmental charges payable out of
the Trust and for which no deductions shall have previously been made for the
purpose of addition to the Reserve Account, (b)(2) amounts representing
accrued fees of the Trustee and expenses of the Trust including but not
limited to unpaid fees of the Trustee and expenses of the
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Trust including but not limited to unpaid fees of the Trustee and expenses of
the Trust (including legal and auditing expenses), accrued fees and expenses
of the Depositor and its successor, if any, and (b)(3) cash held for
distribution to Unit Holders of record and redemption of Units tendered as of
a date on or prior to the evaluation then being made. The value of the pro
rata share of each unit of the Trust determined on the basis of any such
evaluation shall be referred to herein as the "Unit Value."
Until the Depositor has informed the Trustee that there will be no
further deposits of Additional Securities pursuant to Section 2.6, the
Depositor shall provide the Trustee with written estimates of (i) the total
organizational expenses to be borne by the Trust pursuant to Section 3.1, (ii)
the total number of Units to be issued in connection with the initial deposit
and all anticipated deposits of Additional Securities and (iii) the period or
periods over which such expenses are to be amortized, separately stated with
respect to each such amortization period. For purposes of calculating the
Trust Evaluation and Unit Value, the Trustee shall treat all such anticipated
expenses as having been paid and all liabilities therefor as having been
incurred, and all Units as having been issued, in each case on the date of the
Trust Agreement, and, in connection with each such calculation, shall take
into account a pro rata portion of such expense and liability based on the
actual number of Units issued as of the date of such calculation. In the event
the Trustee is informed by the Depositor of a revision in its estimate of
total expenses, total Units or period of amortization, and upon the conclusion
of the deposit of Additional Securities or initial offering period, the
Trustee shall base calculations made thereafter on such revised estimates or
actual expenses or period of amortization, respectively, but such adjustment
shall not affect calculations made prior thereto and no adjustment shall be
made in respect thereof.
The sum of (a)(1) and (a)(3) reduced by the sum of (b)(1) and (b)(2)
and (b)(3) shall be referred to herein as the "Unit Cash Value."
The Trustee shall promptly advise the Depositor of each determination
of Unit Value made by it as above provided, and, in addition, upon each
valuation by the Trustee under Section 4.1 other than those involved in such
calculations of Unit Value, the Trustee shall promptly furnish to Depositor,
for purposes of assisting it in maintaining a market in the Units, with such
information regarding the Principal, Income and Reserve Accounts as the
Depositor may reasonably request.
Section 5.2. Redemptions by Trustee; Purchases by Depositor: Any Unit
tendered for redemption by a Unit Holder or his duly authorized attorney to
the Trustee at its unit investment trust office shall be redeemed by the
Trustee on the
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third Business Day following the day on which tender for redemption is made
(the "Redemption Date"). Subject to payment by such Unit Holder of any tax or
other governmental charges which may be imposed thereon, such redemption is to
be made by payment on the Redemption Date of cash equivalent to the Net Asset
Value per Unit determined by the Trustee as of the closing of trading on the
New York Stock Exchange, on the date of tender, multiplied by the number of
Units being tendered for redemption (herein called the "Redemption Price").
Unit received for redemption by the Trustee on any day after the close of
trading on the New York Stock Exchange will be held by the Trustee until the
next day on which the New York Stock Exchange is open for trading and will be
deemed to have been tendered on such day for redemption at the Redemption
Price computed on that day.
The Trustee may in its discretion, and shall when so directed by the
Depositor in writing, suspend the right of redemption or postpone the date of
payment of the Redemption Price beyond the Third Business Day following the
day on which tender for redemption is made:
(1) for any period during which the New York Stock Exchange is
closed other than customary weekend and holiday closings or during
which trading on the New York Stock Exchange is suspended;
(2) for any period during which an emergency exists as a result
of which disposal by the Trust of the Securities is not reasonably
practicable or it is not reasonably practicable fairly to determine in
accordance herewith the value of the Securities; or
(3) for such other periods as the Securities and
Exchange Commission may by order permit,
and the Trustee shall not be liable to any person or in any way for any loss
or damage which may result from any such suspension or postponement.
Not later than the close of business on the day of tender of a Unit
for redemption by a Unit Holder other than the Depositor, the Trustee shall
notify the Depositor of such tender. The Depositor shall have the right to
purchase such Unit by notifying the Trustee of its election to make such
purchase as soon as practicable thereafter, but in no event subsequent to the
close of business on the second business day after the day on which such Unit
was tendered for redemption. Such purchase shall be made by payment for such
Unit by the Depositor to the Unit Holder not later than the close of business
on the Redemption Date of an amount equal to the Redemption Price which would
otherwise be payable by the Trustee to such Unit Holder.
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Any Unit so purchased by the Depositor may, at the option of the
Depositor, be tendered to the Trustee for redemption at the unit investment
trust office of the Trustee in the manner provided in the first paragraph of
this Section 5.2.
If the Depositor does not elect to purchase any Unit tendered to the
Trustee for redemption, or if a Unit is being tendered by the Depositor for
redemption, that portion of the Redemption Price which represents interest
shall be withdrawn from the Interest Account to the extent funds are
available. The balance paid on any redemption, including accrued interest, if
any, shall be withdrawn from the Principal Account to the extent that funds
are available for such purpose. If such available balance shall be
insufficient, the Trustee shall sell such Securities from among those
designated on the current list for such purpose as provided below and in the
manner, in its discretion, as it shall deem advisable or necessary in order to
fund the Principal Account for purposes of such redemption. Sales of
Securities by the Trustee shall be made in such manner as the Trustee shall
determine, subject to any minimum face amount limitations on sale which shall
have been specified by the Depositor and agreed to by the Trustee. In the
event that funds are withdrawn from the Principal Account or Securities are
sold for payment of any portion of the Redemption Price representing accrued
interest, the Principal Account shall be reimbursed when sufficient funds are
next available in the Interest Account for such funds so applied.
The Depositor shall maintain with the Trustee a current list of
Securities designated to be sold, and/or the proportionate amount of the
Securities designated to be sold, for the purpose of redemption of Units
tendered for redemption and not purchased by the Depositor, and for payment of
expenses hereunder, provided that if the Depositor shall for any reason fail
to maintain such a list, the Trustee, in its sole discretion, may designate a
current list of Securities for such purposes. The net proceeds of any sales of
Securities from such list representing principal shall be credited to the
Principal Account and the proceeds of such sales representing accrued interest
shall be credited to the Interest Account.
Neither the Trustee nor the Depositor shall be liable or responsible
in any way for depreciation or loss incurred by reason of any sale of
Securities made pursuant to this Section 5.2.
Units redeemed pursuant to this Section 5.2 shall be cancelled by the
Trustee and the Units shall be terminated by such redemptions.
If the related prospectus for the Trust so provides, a Unit Holder
who tenders for redemption Units in an aggregate
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amount of at least the amount specified in the prospectus may request, at the
time of tender, to receive an In Kind Distribution in lieu of cash. Such In
Kind Distribution shall consist of (i) such Unit Holder's pro rata portion of
each of the Securities, to the extent of whole shares, and (ii) cash equal to
such Unit Holder's pro rata portion of the Income and Principal Accounts
follows: (x) a pro rata portion of the net proceeds of sale of the Securities
representing any fractional shares included in such Unit Holder's pro rata
share of the Securities and (y) such other cash as may properly be included in
such Unit Holder's pro rata share of the sum of the cash balances of the
Income and Principal Accounts in an amount equal to the Redemption Price on
the date of tender less amounts specified in clauses (i) and (ii)(x) of this
sentence. The Trustee shall distribute the Unit Holder's Securities to the
account of the Unit Holder's bank or broker dealer at The Depository Trust
Company. An In Kind Distribution shall be reduced by customary transfer and
registration charges incurred by the Trustee.
Notwithstanding the foregoing provisions of this Section 5.2, the
Trustee is hereby irrevocably authorized in its discretion, in the event that
the Depositor does not elect to purchase any Unit tendered to the Trustee for
redemption (other than Units as to which a valid request for In Kind
Redemption has been made), or in the event that a Unit is being tendered by
the Depositor for redemption, in lieu of redeeming Units tendered for
redemption, to sell such Units in the over-the-counter market or by private
sale for the account of tendering Unit Holders at prices which will return to
the Unit Holders amounts in cash, net after deducting brokerage commissions,
transfer taxes and other charges, equal to or in excess of the Redemption
Prices which such Unit Holders would otherwise be entitled to receive on
redemption pursuant to this Section 5.2. The Trustee shall pay to the Unit
Holders the net proceeds of any such sale on the day they would otherwise be
entitled to receive payment of the Redemption Price hereunder.
Section 5.3. Transfer of Units; Issuance, Transfer and Interchange of
Certificates: Units may be transferred by the Unit Holder thereof by
presentation and surrender of transfer instructions or, in the case of
certificated Units, properly endorsed Certificates, at the Trustee's unit
investment trust office, accompanied by such documents executed by the Unit
Holder or his authorized attorney, as the Trustee deems necessary to evidence
the authority of the person making the transfer. Certificates issued pursuant
to this Indenture are interchangeable for one or more other Certificates in an
equal aggregate number of Units and all Certificates issued as may be
requested by the Unit Holder and deemed appropriate by the Trustee shall be
issued in denominations of one Unit or any multiple thereof. The Trustee may
deem and treat the person in whose name any Unit shall be registered upon the
books of the
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Trustee as the owner of such Unit for all purposes hereunder and the Trustee
shall not be affected by any notice to the contrary. The transfer books
maintained by the Trustee for the purposes of this Section 5.3 shall include
the name and address of the record owners of the Unit, shall include an
indication as to whether the Units are represented by Certificates or are in
uncertificated form, and shall be closed in connection with the termination of
the Trust pursuant to Article IX hereof.
A sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any such transfer shall be paid to the
Trustee by the Unit Holder. A Unit Holder may be required to pay a fee of $2
for each new Certificate to be issued (or such other amount as may be
specified by the Trustee and approved by the Depositor) pursuant to the
preceding paragraph.
Certificates will be issued to Unit Holders if so provided in the
Reference Trust Agreement for a Trust or if so directed by the Sponsors;
provided that subject to the terms of this Indenture, a holder of
uncertificated Units shall have the same rights, benefits and obligations as
though such holder were in possession of a Certificate. Unit Holders who have
elected to hold their Units in uncertificated form in any certificated Trust
may at any time request the Trustee to issue Certificates for such Units. The
Trustee shall, upon receipt of such request in form satisfactory to it, issue
such Certificates as may be requested by the Unit Holder and deemed
appropriate by the Trustee in denominations of one Unit or any multiple
thereof. Holders of Units evidenced by Certificates may at any time elect to
have their Units held in uncertificated form by surrendering their
Certificates to the Trustee for cancellation. At such time, an appropriate
notation will be made in the registration books of the Trustee to indicate
that the Units formerly evidenced by such cancelled Certificates are Units
held in uncertificated form.
All Certificates cancelled pursuant to this Indenture may be
destroyed or otherwise voided by the Trustee in accordance with the usual
practice of the Trustee.
The Trustee may adopt other reasonable rules and regulations for the
registration, transfer, tender and redemption of Units as it may, in its
discretion, deem necessary.
Section 5.4. Replacement of Certificates: In case any Certificate
shall become mutilated or be destroyed, stolen or lost, the Trustee shall
execute and deliver a new Certificate in exchange and substitution therefor
upon the Unit Holder's furnishing the Trustee with proper identification and
satisfactory indemnity, complying with such other reasonable regulations and
conditions as the Trustee may prescribe and
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paying such expenses and charges, including any bonding fee, as the Trustee
may incur or reasonably impose; provided that if the Trustee has terminated or
is in the process of termination the Trustee, in lieu of issuing such new
Certificate, may, upon the terms and conditions set forth herein, make the
distributions set forth in Section 9.2 hereof. Any mutilated Certificate shall
be duly surrendered and cancelled before any duplicate Certificate shall be
issued in exchange and substitution therefor. Upon issuance of any duplicate
Certificate pursuant to this Section 5.4, the original Certificate claimed to
have been lost, stolen or destroyed shall become null and void and of no
effect, and any bona fide purchaser thereof shall have only such rights as are
afforded under Article 8 of the Uniform Commercial Code to a holder presenting
a Certificate for transfer in the case of an overissue.
Section 5.5. Form of Certificate: Any Certificate permitted to be
issued pursuant to this Indenture shall be in fully registered form, shall be
numbered for identification, shall be executed in facsimile by the Depositor
and manually by an authorized signatory of the Trustee, shall be dated the
date of execution and delivery by the Trustee and shall represent a fractional
undivided interest in the Trust, the numerator of which fraction shall be the
number of Units set forth on the face of such Certificate and the denominator
of which shall be the total number of Units of fractional undivided interest
in the Trust outstanding at that time.
ARTICLE VI
TRUSTEE; REMOVAL OF DEPOSITOR
Section 6.1. General Definition of Trustee's Liabilities, Rights and
Duties; Removal of Depositor: In addition to and notwithstanding the other
duties, rights, privileges and liabilities of the Trustee otherwise set forth
herein, the liabilities of the Trustee are further defined as follows:
(a) all moneys deposited with or received by the Trustee
hereunder shall be held by the Trustee without interest in trust as
part of the Trust or the Reserve Account until required to be
disbursed in accordance with the provisions of this Indenture and
such moneys will be segregated by separate recordation on the trust
ledgers of the Trustee so long as such practice preserves a valid
preference under applicable law, or if such preference is not so
preserved the Trustee shall handle such moneys in such other manner
as shall constitute the segregation and holding thereof in trust
within the meaning of the Investment Company Act of 1940;
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(b) the Trustee shall be under no liability for any action
taken in good faith and with reasonable care on any appraisal, paper,
order, list, demand, request, consent, affidavit, notice, opinion,
direction, evaluation, endorsement, assignment, resolution, draft or
other document, whether or not of the same kind, prima facie properly
executed, or for the disposition of moneys, Securities or
Certificates pursuant to this Indenture, or in respect of any
evaluation which the Trustee is required to make or is required or
permitted to have made by others under this Indenture or otherwise
except by reason of its negligence, lack of good faith and reasonable
care or willful misconduct, provided that the Trustee shall not in
any event be liable or responsible for any evaluation made by any
independent evaluation service employed by it pursuant to Section
4.1. The Trust shall pay and hold the Trustee harmless from and
against any loss, liability or expense incurred in acting as Trustee
of the Trust other than by reason of willful misfeasance, bad faith
or negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties hereunder, including
the costs and expenses of the defense against any claim or liability
in the premises. The Trustee may construe any of the provisions of
this Indenture, insofar as the same may appear to be ambiguous or
inconsistent with any other provisions hereof, and any construction
of any such provisions hereof by the Trustee in good faith shall be
binding upon the parties hereto. The Trustee shall in no event be
deemed to have assumed or incurred any liability, duty or obligation
to any Unit Holder or the Depositor, other than as expressly provided
for herein;
(c) the Trustee in its role as Trustee shall not be
responsible for or in respect of the recitals herein, the validity or
sufficiency of this Indenture or for the due execution hereof by the
Depositor, or for the form, character, genuineness, sufficiency,
value or validity of any Securities (except that the Trustee shall be
responsible for the exercise of due care in determining the
genuineness and negotiability of Securities delivered to it pursuant
to contracts for the purchase of such Securities) or for or in
respect of the validity or sufficiency of the Certificates or of the
due execution thereof by the Depositor, and the Trustee shall in no
event assume or incur any liability, duty or obligation to any Unit
Holder or the Depositor other than as expressly provided for herein.
The Trustee shall not be responsible for or in respect of the
validity of any signature by or on behalf of the Depositor;
(d) the Trustee shall not be under any obligation to
appear in, prosecute or defend any action, which in its
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opinion may involve it in expense or liability, unless as often as
required, it shall be furnished with reasonable security and
indemnity against such expense or liability as it may require, and
any pecuniary cost of the Trustee from such actions shall be
deductible from and a charge against the Income and Principal
Accounts. The Trustee shall in its discretion undertake such action
as it may deem necessary at any and all times to protect the Trust
and the rights and interests of the Unit Holders pursuant to the
terms of this Indenture, provided, however, that the expenses and
costs of such actions, undertakings or proceedings shall be
reimbursable to the Trustee from the Income and Principal Accounts,
and the payment of such costs and expenses shall be secured by a lien
on the Trust prior to the interests of the Unit Holders;
(e) the Trustee may employ agents, attorneys, accountants and
auditors and shall not be answerable for the default or misconduct of
any such agents, attorneys, accountants or auditors if such agents,
attorneys, accountants or auditors shall have been selected or their
activities overseen with reasonable care; provided, however, that if
the Trustee chooses to employ the Depository Trust Company in
connection with the storage and handling of, and the furnishing of
administrative services in connection with the Securities, the
Trustee will be answerable for any default or misconduct of the
Depository Trust Company and its employees and agents as fully and to
the same extent as if such default or misconduct had been committed
or occasioned by the Trustee. The Trustee shall be fully protected in
respect of any action under this Indenture taken, or suffered, in
good faith by it in accordance with the opinion of counsel. The fees
and expenses charged by such agents, attorneys, accountants or
auditors shall constitute an expense of the Trustee reimbursable from
the Income and Principal Accounts as set forth in Section 3.5 hereof;
(f) other than as provided in Article VII hereunder, if at any
time the Depositor shall resign or fail to undertake or perform or
become incapable of undertaking or performing any of the duties which
by the terms of this Indenture are required by it to be undertaken or
performed and no express provision is made for action to be taken by
the Trustee in such event, or said Depositor shall be adjudged a
bankrupt or insolvent, or a receiver of such Depositor or of its
property shall be appointed, or any public officer shall take charge
or control of such Depositor or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then in any
such case, the Trustee may do any one or more of the following: (1)
appoint a successor Depositor who shall act
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hereunder in all respects in place of the Depositor, who shall be
compensated semi-annually, at rates deemed by the Trustee to be
reasonable under the circumstances, by deduction from the Income
Account or from the Principal Account, but no such deduction shall be
made exceeding such reasonable amount as the Securities and Exchange
Commission may prescribe in accordance with Section 26(a)(2)(C) of
the Investment Company Act of 1940; or (i) terminate this Indenture
and the Trust created hereby and liquidate the Trust, all in the
manner provided in Section 9.2 or (3) continue to act as Trustee
hereunder without terminating this Indenture, acting in its own
absolute discretion without appointing any successor Depositor and
assuming such of the duties and responsibilities of the Depositor
hereunder as the Trustee determines, in its absolute discretion, are
necessary or desirable for the administration and preservation of the
Trust and receiving additional compensation at rates determined as
provided in clause (1). If the Trustee continues so to act, it is
authorized to employ one or more agents to perform portfolio
supervisory services and such other of the services of the Depositor
hereunder as the Trustee determines, in its sole discretion, to be
necessary or desirable. The fees and expenses of such agent or agents
shall be charged to the Trust in accordance with Section 6.4. All
provisions of this Indenture relating to the liability and
indemnification of the Trustee, including, without limitation,
subparagraph (e) of this Section, shall apply to any responsibility
assumed or action taken by the Trustee pursuant to this subparagraph;
(g) if the value of the Trust as shown by any evaluation by
the Trustee pursuant to Section 5.1 hereof shall be less than the
liquidation amount specified in Part II of the Reference Trust
Agreement, the Trustee may in its discretion, and shall, when so
directed by the Depositor, terminate this Indenture and the Trust
created hereby and liquidate the Trust, all in the manner provided in
Section 9.2;
(h) in no event shall the Trustee be liable for any taxes or
other governmental charges imposed upon or in respect of the
Securities or upon the interest thereon or upon it as Trustee
hereunder or upon or in respect of the Trust which it may be required
to pay under any present or future law of the United States of
America or any other taxing authority having jurisdiction in the
premises. For all such taxes and charges and for any expenses,
including counsel fees, which the Trustee may sustain or incur with
respect to such taxes or charges, the Trustee shall be reimbursed and
indemnified out of the Income and Principal Accounts of the Trust,
and the payment of such amounts so
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paid by the Trustee shall be secured by a prior lien on the Trust
prior to the interests of the Unit Holders;
(i) the Trustee, except by reason of its negligence, lack of
good faith, reckless disregard of its obligations hereunder or
willful misconduct, shall not be liable for any action taken or
suffered to be taken by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred
upon it by this Indenture;
(j) notwithstanding anything in this Indenture to the
contrary, the Trustee is authorized and empowered to enter into any
safekeeping arrangement or arrangements it deems necessary or
appropriate for holding the Securities then owned by the Trust and
the Trustee is authorized and empowered in its sole right to amend,
supplement or terminate any safekeeping arrangement or arrangements
made under this provision. In addition, the Trustee is authorized and
empowered, at the request and discretion of the Depositor, to execute
and file on behalf of the Trust any and all documents, in connection
with consents to service of process, required to be filed under the
securities laws of the various States in order to permit the sale of
Units of the Trust in such States by the Depositor;
(k) the Trustee in its individual or any other capacity may
become owner or pledgee or, or be an underwriter or dealer in respect
of, stock, bonds or other obligations issued by the same issuer (or
an affiliate of such issuer) or any obligor of any Securities at any
time held as part of the Trust and may deal in any manner with the
same or with the issuer (or an affiliate of the issuer) with the same
rights and powers as if it were not the Trustee hereunder; and
(l) the Trust may include a letter or letters of credit for
the purchase of Contract Securities issued by the Trustee in its
individual capacity for the account of the Depositor, and the Trustee
may otherwise deal with the Depositor with the same rights and powers
as if it were not the Trustee hereunder.
Section 6.2. Books, Records and Reports: The Trustee shall keep
proper books of record and account of all the transactions under this
Indenture at its corporate trust office including a record of the name and
address of every Unit Holder, and such books and records shall be open to
inspection by any Unit Holder at all reasonable times during the usual
business hours, and such books and records shall be made available to the
Depositor upon the request of the Depositor including, but not limited to, a
record of the name and address of every Unit Holder.
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Unless the Depositor otherwise directs, the Trustee shall cause
audited statements as to the assets and income of the Trust to be prepared on
an annual basis by independent public accountants selected by the Depositor,
provided, however, that if the Depositor is then making a market for units of
the Trust, the Depositor shall bear the cost of such audit to the extent that
it exceeds $.50/unit of approximately $1,000 initial value (or such
proportionate amount in the case of units of greater or lesser initial value).
In the event that the Depositor is not making a market for the Units of a
Trust, then the Depositor may instruct the Trustee not to prepare such
statements. Such audited statement will be made available to Unit Holders upon
request.
To the extent permitted under the Investment Company Act of 1940 as
evidenced by an opinion of counsel to the Depositor, the Trustee shall pay, or
reimburse to the Depositor or others, the costs of the preparation of
documents and information with respect to each Trust required by law or
regulation in connection with the maintenance of a secondary market in units
of each Trust. Such costs may include but are not limited to accounting and
legal fees, blue sky registration and filing fees, printing expenses and other
reasonable expenses related to documents required under Federal and state
securities laws.
The Trustee shall make such annual or other reports as may from time
to time be required under any applicable state or federal statute or rule or
regulation thereunder.
Section 6.3. Indenture and List of Securities on File: The Trustee
shall keep a certified copy or duplicate original of this Indenture on file at
its investment unit trust office available for inspection at all reasonable
times during the usual business hours by any Unit Holder and the Trustee shall
keep and so make available for inspection a current list of the Securities.
Section 6.4. Compensation: For services performed under this
Indenture the Trustee shall be paid at the rate per annum set forth in Part II
of the Reference Trust Agreement which shall be computed on the basis of the
greatest number of Units in the Trust at any time during the period with
respect to which such compensation is being computed. The Trustee may from
time to time adjust its compensation as set forth above provided that the
total adjustment upward does not, at the time of such adjustment, exceed the
percentage of the total increase, after the date hereof, in consumer prices
for services as measured by the United States Department of Labor Consumer
Price Index entitled "All Services Less Rent," or, if such index shall cease
to be published, then as measured by the available index most nearly
comparable to such index. The consent or concurrence of any Unit Holder
hereunder shall not be required for any such
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adjustment or increase. Such compensation shall be charged by the Trustee
against the Income and Principal Accounts on or before the Payment Date on
which such period terminates; provided, however, that such compensation shall
be deemed to provide only for the usual normal and recurring functions
undertaken as Trustee pursuant to this Indenture.
The Trustee shall charge the Income and Principal Accounts at such
times as shall be convenient in its administration of the Trust for any and
all expenses, including the fees of counsel which may be retained by the
Trustee in connection with its activities hereunder, and disbursements
incurred hereunder and any extraordinary services performed by the Trustee
hereunder. The Trustee shall be indemnified and held harmless against any loss
or liability accruing to it without negligence, bad faith or willful
misconduct on its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses (including
counsel fees) of defending itself against any claim of liability in the
premises. If the cash balances in the Income and Principal Accounts shall be
insufficient to provide for amounts payable pursuant to this Section 6.4, the
Trustee shall have the power to sell (i) Securities from the current list of
Securities designated to be sold pursuant to Section 5.2 hereof, or (ii) if no
such Securities have been so designated, such Securities as the Trustee may
see fit to sell in its own discretion, and to apply the proceeds of any such
sale in payment of the amounts payable pursuant to this Section 6.4. The
Trustee shall not be liable or responsible in any way for depreciation or loss
incurred by reason of any sale of Securities made pursuant to this Section
6.4. Any moneys payable to the Trustee pursuant to this section shall be
secured by a prior lien on the Trust.
Section 6.5. Removal and Resignation of the Trustee; Successor: The
following provisions shall provide for the removal and resignation of the
Trustee and the appointment of any successor Trustee.
(a) Any resignation or removal of the Trustee and appointment
of a successor pursuant to this section shall not become effective
until acceptance of appointment by the successor Trustee as provided
in subsection (b) hereof.
(b) The Trustee or any trustee hereafter appointed may resign
and be discharged of the trust created by this Indenture by executing
an instrument in writing resigning as such Trustee, filing the same
with the Depositor and mailing a copy of a notice of resignation to
all Unit Holders then on record not less than sixty days before the
date specified in such instrument when, subject to Section 6.5(d),
such resignation is to take effect. Upon receiving such notice of
resignation, the Depositor shall use their best efforts
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to promptly appoint a successor Trustee as hereinafter provided, by
written instrument, in duplicate, one copy of which shall be
delivered to the resigning Trustee and one copy to the successor
Trustee. In case at any time the Trustee shall become incapable of
acting or shall be deemed incapable of acting by the written consent
of Unit Holders evidencing 66-2/3% of the outstanding Units of the
Trust, or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purposes of rehabilitation, conservation,
or liquidation, or the Depositor shall deem it to be in the best
interests of the Unit Holders, then in any such case the Depositor
may remove the Trustee and appoint a successor Trustee by written
instrument, in duplicate, one copy of which shall be delivered to the
Trustee so removed and one copy to the successor Trustee; provided
that notice of such removal and appointment of a successor shall be
mailed by the Depositor to each Unit Holder then of record.
(c) Any successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor and the retiring Trustee an
instrument accepting such appointment hereunder, and such successor
Trustee without any further act, deed or conveyance shall become
vested with all the rights, powers, duties and obligations of its
predecessor hereunder with like effect as if originally named Trustee
herein and shall be bound by all the terms and conditions of this
Indenture. Upon the request of such successor Trustee, the Depositor
and the retiring Trustee shall, upon payment of any amounts due the
retiring Trustee or provision therefor to the satisfaction of such
retiring Trustee, execute and deliver an instrument acknowledged by
it transferring to such successor Trustee all the rights and powers
of the retiring Trustee; and the retiring Trustee shall transfer,
deliver and pay over to the successor Trustee all bonds and moneys at
the time held by it hereunder, together with all necessary
instruments of transfer and assignment or other documents properly
executed necessary to effect such transfer and such of the records or
copies thereof maintained by the retiring Trustee in the
administration hereof as may be requested by the successor Trustee,
and shall thereupon be discharged from all duties and
responsibilities under this Indenture. A successor trustee shall not
be under any liability hereunder for occurrences or omissions prior
to the effectiveness of its appointment. The retiring Trustee shall,
nevertheless, retain a lien upon all Securities and moneys at the
time held by it hereunder to secure any amounts then due the retiring
Trustee hereunder.
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(d) In case at any time the Trustee shall resign and no
successor Trustee shall have been appointed and have accepted
appointment within thirty days after notice of resignation has been
received by the Depositor, the retiring Trustee may forthwith apply
to a court of competent jurisdiction for the appointment of a
successor Trustee. Such court may thereupon, after such notice, if
any, as it may deem proper and prescribe, appoint a successor
Trustee.
(e) Any corporation into which any Trustee hereunder may be
merged or with which it may consolidate, or any corporation resulting
from any merger or consolidation to which any Trustee hereunder shall
be a party, shall be the successor Trustee under this Indenture
without the execution or filing of any paper, instrument or further
act to be done on the part of the parties hereto, anything herein, or
in any agreement relating to such merger or consolidation, by which
any such Trustee may seek to retain certain powers, rights and
privileges theretofore obtaining for any period of time following
such merger or consolidation, to the contrary notwithstanding.
Section 6.6. Qualifications of Trustee: The Trustee, or any successor
thereof, shall be a corporation organized and doing business under the laws of
the United States or any state thereof, which is authorized under such laws to
exercise corporate trust powers and having at all times an aggregate capital,
surplus, and undivided profits of not less than $2,500,000.
ARTICLE VII
DEPOSITOR
Section 7.1. Succession: The covenants, provisions and agreements
herein contained shall in every case be binding upon any successor to the
business of the Depositor. In the event of the death, resignation or
withdrawal of any partner of either of the Depositor or of any successor
Depositor which may be a partnership, the deceased, resigning or withdrawing
partner shall be relieved of all further liability hereunder if at the time of
such death, resignation or withdrawal such Depositor maintains a net worth
(determined in accordance with generally accepted accounting principles) of at
least $1,000,000. In the event of an assignment by the Depositor to a
successor corporation or partnership as permitted by the next following
sentence, such Depositor and, if such Depositor is a partnership, its partners
shall be relieved of all further liability under this Indenture. The Depositor
may transfer all or substantially all of its assets to a corporation or
partnership which carries on the business of that Depositor, if at the time of
such
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transfer such successor duly assumes all the obligations of said Depositor
under this Indenture and if at such time such successor maintains a net worth
of at least $1,000,000 (determined in accordance with generally accepted
accounting principles).
Section 7.2. Resignation of a Depositor: If at any time, any
Depositor desires to resign its position as Depositor hereunder, it may resign
by delivering to the Trustee an instrument of resignation executed by such
Depositor. Such resignation shall become effective upon the expiration of
thirty days from the date on which such instrument is delivered to the
Trustee. Upon effective resignation hereunder, the resigning Depositor shall
be discharged and shall no longer be liable in any manner hereunder except as
to acts or omissions occurring prior to such resignation and any successor
Depositor appointed by the Trustee pursuant to Section 6.1(f) shall thereupon
perform all duties and be entitled to all rights under this Indenture. The
successor Depositor shall not be under any liability hereunder for occurrences
or omissions prior to the execution of such instrument.
Section 7.3. Liability of Depositor and Indemnification:
(a) No Depositor shall be under any liability to any other
Depositor, the Trust or the Unit Holders for any action or for
refraining from the taking of any action in good faith pursuant to
this Indenture, or for errors in judgment or for depreciation or loss
incurred by reason of the purchase or sale of any Securities,
provided, however, that this provision shall not protect the
Depositor against any liability to which they would otherwise be
subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of their
reckless disregard of their obligations and duties hereunder. The
Depositor may rely in good faith on any paper, order, notice, list,
affidavit, receipt, evaluation, opinion, endorsement, assignment,
draft or any other document of any kind prima facie properly executed
and submitted to them by the Trustee, the Trustee's counsel or any
other person for any matters arising hereunder. The Depositor shall
in no event be deemed to have assumed or incurred any liability,
duty, or obligation to any Unit Holder or the Trustee other than as
expressly provided for herein.
(b) The Trust shall pay and hold the Depositor harmless from
and against any loss, liability or expense incurred in acting as
Depositor of the Trust other than by reason of wilful misfeasance,
bad faith or gross negligence in the performance of their duties or
by reason of the reckless disregard of their obligations and duties
-38-
337970.1
<PAGE>
hereunder, including the costs and expenses of the defense against
any claim or liability in the premises. The Depositor shall not be
under any obligation to appear in, prosecute or defend any legal
action which in their opinion may involve them in any expense or
liability, provided, however, that the Depositor may, in their
discretion, undertake any such action which they may deem necessary
or desirable in respect of this Indenture and the rights and duties
of the parties hereto and the interests of the Unit Holders hereunder
and, in such event, the legal expenses and costs of any such action
and any liability resulting therefrom shall be expenses, costs and
liabilities of the Trust and shall be paid directly by the Trustee
out of the Income and Principal Accounts as provided by Section 3.5.
(c) None of the provisions of this Indenture shall be deemed
to protect or purport to protect the Depositor against any liability
to the Trust or to the Unit Holders to which the Depositor would
otherwise be subject by reason of willful misfeasance, bad faith or
negligence in the performance of their duties, or by reason of the
Depositor's reckless disregard of their obligations and duties under
this Indenture.
Section 7.4. Compensation: The Depositor or its affiliate shall
receive at the times set forth in Section 3.5 as compensation for performing
portfolio supervisory services, such amount and for such periods as specified
in Part II of the Reference Trust Agreement. Such compensation shall be
calculated on the basis of the largest number of Units outstanding at any time
during the period for which such compensation is being computed. At no time,
however, will the total amount received by the Depositor for services rendered
to all series of the Qualified Unit Investment Liquid Trust Series in any
calendar year exceed the aggregate cost to them of supplying such services in
such year. Such rate may be increased by the Trustee from time to time,
without the consent or approval of any Unit Holder or the Depositor, by
amounts not exceeding the proportionate increase during the period from the
date of such Reference Trust Agreement to the date of any such increase, in
consumer prices as published either under the classification "All Services
Less Rent" in the Consumer Price Index published by the United States
Department of Labor, or, if such Index is no longer published, a similar
index.
In the event that any amount of the compensation paid to the
Depositor pursuant to Section 3.5 is found to be an improper charge against
the Trust, the Depositor shall reimburse the Trust in such amount. An improper
charge shall be established if a final judgment or order for reimbursement of
the Trust shall be rendered against the Depositor and such judgment or order
shall not be effectively stayed or a final settlement is
-39-
337970.1
<PAGE>
established in which the Depositor agrees to reimburse the Trust for amounts
paid to the Depositor pursuant to this Section 7.4.
ARTICLE VIII
RIGHTS OF UNIT HOLDERS
Section 8.1. Beneficiaries of Trust: By the purchase and acceptance
or other lawful delivery and acceptance of any Unit the Unit Holder shall be
deemed to be a beneficiary of the trust created by this Indenture and vested
with all right, title and interest in the Trust to the extent of his or her
Unit or Units subject to the terms and conditions of this Indenture.
Section 8.2. Rights, Terms and Conditions: In addition to the other
rights and powers set forth in the other provisions and conditions of this
Indenture the Unit Holders shall have the following rights and powers and
shall be subject to the following terms and conditions:
(a) A Unit Holder may at any time prior to the termination of
the Trust tender his Unit or Units to the Trustee for redemption in
accordance with Section 5.2.
(b) The death or incapacity of any Unit Holder shall not
operate to terminate this Indenture or the Trust, nor entitle his
legal representatives or heirs to claim an accounting or to take any
action or proceeding in any court of competent jurisdiction for a
partition or winding up of the Trust, nor otherwise affect the
rights, obligations and liabilities of the parties hereto or any of
them. Each Unit Holder expressly waives any right he may have under
any rule of law, or the provisions of any statute, or otherwise, to
require the Trustee at any time to account, in any manner other than
as expressly provided in this Indenture, in respect of the Securities
or moneys from time to time received, held and applied by the Trustee
hereunder.
(c) No Unit Holder shall have any right to vote or in any
manner otherwise control the operation and management of the Trust,
or the obligations of the parties hereto, nor shall anything herein
set forth, be construed so as to constitute the Unit Holders from
time to time as partners; nor shall any Unit Holder ever be under any
liability to any third persons by reason of any action taken by the
parties to this Indenture for any other cause whatsoever.
-40-
337970.1
<PAGE>
ARTICLE IX
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
Section 9.1. Amendments: This Indenture may be amended from time to
time by the parties hereto or their respective successors, without the consent
of any of the Unit Holders (a) to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provision contained herein; (b) to change any
provision required by the Securities and Exchange Commission or any successor
governmental agency to be changed; or (c) to make such other provision in
regard to matters or questions arising hereunder as shall not adversely affect
the interests of the Unit Holders; provided, however, that the parties hereto
may not amend this Indenture so as to (1) increase the number of Units above
the number set forth in Part II of the Reference Trust Agreement or such
lesser amount as may be outstanding at any time during the term of this
Indenture, except as the result of the deposit of Additional Securities as
herein provided, or (2) except in the manner permitted by the Indenture as in
effect on the date of the first deposit of Securities under a particular
Indenture, permit the deposit or acquisition hereunder of securities either in
addition to or in replacement of any of the Securities.
This Indenture may also be amended from time to time by the Depositor
and the Trustee (or the performance of any of the provisions of this Agreement
may be waived) with the expressed written consent of Unit Holders representing
66-2/3% of the Units at the time outstanding under the Indenture for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the
rights of the Unit Holders; provided, however, that no such amendment or
waiver shall (i) reduce the interest in the Trust represented by such Units
without the consent of the Unit Holder, (ii) reduce the aforesaid percentage
of Units, the holders of which are required to consent to any such amendment,
without the consent of the holders of all Units then outstanding or (iii)
affect the duties, obligations and responsibilities of the Trustee without its
consent.
Promptly after the execution of any such amendment the Trustee shall
furnish written notification to all then outstanding Unit Holders of the
substance of such amendment.
Section 9.2. Termination: This Indenture and the Trust created hereby
shall terminate upon the earlier of (i) the Termination Date or (ii) the
maturity, redemption, sale or other disposition as the case may be of the last
Securities held hereunder, unless sooner terminated as hereinbefore specified
and may be terminated at any time by written consent of all Unit Holders;
provided that in no event shall the Trust continue
-41-
337970.1
<PAGE>
beyond the end of the calendar year preceding the fiftieth
anniversary of the execution of this Indenture.
Written notice of any termination, specifying the time or times at
which the Unit Holders may surrender their Units for cancellation shall be
given by the Trustee to each Unit Holder at his address appearing on the
registration books of the Trustee.
In the event of any termination of the Trust prior to the Termination
Date, the Trustee shall proceed to liquidate the Securities then held and make
the payments and distributions provided for hereinafter in this Section 9.2
except that in such event, the distribution to each Unit Holder shall be made
in cash and shall be such Unit Holder's pro rata interest in the balance of
the Principal and Income Account after the deductions herein provided.
In the event that the Trust terminates on the Termination Date, the
Trustee shall, not less than 20 days prior to the Termination Date, send a
written notice to each Unit Holder of record owning, as of such date, the
number of Units prerequisite to electing an in-kind distribution specified in
the prospectus for the Trust and whose interest in the Trust would entitle him
to receive at least one share of each Security. Such notice shall allow such
Unit Holder to elect to redeem his Units at the net asset value on the
Termination Date and to receive, in partial payment of the Redemption Price
per Unit, an in-kind distribution of such Unit Holder's pro rata share of the
Securities, to the extent of whole shares. The Trustee will honor duly
executed requests for such in-kind distribution received by the close of
business on the Termination Date. Unit Holders who do not effectively request
an in-kind distribution shall receive their distribution upon termination in
cash. Redemption of the Units of Unit Holders electing such in-kind
distribution shall be made within three business days following the
Termination Date and shall consist of (i) such Unit Holder's pro rata share of
Securities (valued as of the Termination Date) to the extent of whole shares
and (ii) cash equal to the balance of such Unit Holder's Redemption Price.
On the Termination Date, this Indenture and the Trust created hereby
shall terminate. In connection with such Termination, the Trustee shall
segregate such number of shares of Securities as shall be necessary to satisfy
in-kind distributions to Unit Holders electing such distribution.
The balance of the Securities shall be sold over a period immediately
following the Termination Date specified in the prospectus for the Trust. The
Depositor shall direct the Trustee to sell the Securities in such manner as
the Depositor determines will produce the best price for the Trust. Pursuant
-42-
337970.1
<PAGE>
to such direction, the Trustee may use the services of the
Depositor to effect such sales.
Within a reasonable period of time after such termination and
liquidation of Securities, the Trustee shall:
(a) deduct from the Income Account or, to the extent that
funds are not available in such account, from the Principal Account
and pay to itself individually an amount equal to the sum of
(1) its accrued compensation for its ordinary recurring
services,
(2) any compensation due it for its extraordinary
services, and
(3) any other costs, expenses, advances or indemnities
as provided herein;
(b) deduct from the Income Account or, to the extent that
funds are not available in such account, from the Principal Account
and pay accrued and unpaid fees of counsel pursuant to Section 3.9;
(c) deduct from the Income Account or the Principal Account
any amounts which may be required to be deposited in the Reserve
Account to provide for payment of any applicable taxes or other
governmental charges and any other amounts which may be required to
meet expenses incurred under this Indenture;
(d) make a final distribution from the Trust to each Unit
Holder, upon surrender for cancellation of his Unit or Units, such
holder's pro rata share of the cash balances of the Income and
Principal Interest Accounts and, on the conditions set forth in
Section 3.4 hereof, the balance of the Reserve Account, if any;
(e) together with such distribution to each Unit Holder as
provided for in (d), furnish to each such Unit Holder a final
distribution statement as of the date of the computation of the
amount distributable to Unit Holders, setting forth the data and
information in substantially the form and manner provided for in
Section 3.6 hereof; and
(f) distribute to each Unit Holder receiving the distribution
provided in paragraph (d) any dividends, which on the Termination
Date were declared, but not received, net of any and all expenses not
previously deducted, within a reasonable time of their receipt.
-43-
337970.1
<PAGE>
The amounts to be so distributed to each Unit Holder shall be that
pro rata share of the balance of the total Income and Principal Accounts as
shall be represented by the Units held of record by such Unit Holder.
The Trustee shall be under no liability with respect to moneys held
by it in the Income, Reserve and Principal Accounts upon termination except to
hold the same in trust without interest until disposed of in accordance with
the terms of this Indenture.
Upon the Depositor's request, the Trustee will include in the written
notice to be sent to Unit Holders referred to in the fourth paragraph of this
section a form of election whereby Unit Holders electing a cash distribution
may express interest in investing such cash distribution in units of another
series of the Qualified Unit Investment Liquid Trust Series (the "New
Series"). The Trustee will inform the Depositor of all Unit Holders who,
within the time period specified in such notice, express such interest. The
Depositor will provide to such Unit Holders any applicable sales material with
respect to the New Series and a form, acceptable to the Trustee, whereby a
Unit Holder may appoint the Trustee the Unit Holder's agent to apply the Unit
Holder's cash distribution for the purchase of a unit or units of the New
Series. Such form will specify, among other things, the time by which it must
be returned to the Trustee in order to be effective and the manner in which
such purchase shall be made. This paragraph shall not obligate the Depositor
to create any New Series or to provide any such investment election.
Section 9.3. Construction: This Indenture is executed and delivered
in the State of New York, and all local laws or rules of construction of such
State shall govern the rights of the parties hereto and the Unit Holders and
the interpretation of the provisions hereof.
Section 9.4. Registration of Units. The Depositor agrees and
undertakes to register the Units with the Securities and Exchange Commission
or other applicable governmental agency pursuant to applicable Federal or
State statutes, if such registration shall be required, and to do all things
that may be necessary or required to comply with this provision during the
term of the Trust created hereunder, and the Trustee shall incur no liability
or be under any obligation or expense in connection therewith.
Section 9.5. Written Notice: Any notice, demand, direction or
instruction to be given to the Depositor hereunder shall be in writing and
shall be duly given if mailed or delivered to: OCC Distributors, World
Financial Center, 200 Liberty Street New York, New York 10281 Attn: Susan
Murphy, and with a copy to OCC Distributors' Secretary, or at such other
-44-
337970.1
<PAGE>
address as shall be specified by the Depositor to the Trustee in writing. Any
notice, demand, direction or instruction to be given to the Trustee shall be
in writing and shall be duly given if mailed or delivered to the Trustee, 770
Broadway, New York, New York 10003. Any notice to be given to the Unit Holders
shall be duly given if mailed or delivered to each Unit Holder at the address
of such holder appearing on the registration books of the Trust.
Section 9.6. Severability: If any one or more of the covenants,
agreements, provisions or terms of this Indenture shall be held contrary to
any express provision of law or contrary to policy or express law, though not
expressly prohibited, or against public policy, or shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Indenture and shall in no way affect the validity
or enforceability of the other provisions of this Indenture or of the Units or
the rights of the Unit Holders.
Section 9.7. Dissolution of Depositor Not to Terminate: The
dissolution of the Depositor from or for any cause whatsoever shall not
operate to terminate this Indenture or the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first above written.
[Signatures and acknowledgments on separate pages.]
-45-
337970.1
<PAGE>
OCC DISTRIBUTORS
as Depositor
By: OPPENHEIMER FINANCIAL CORP.
as Managing Partner of the
Depositor
By: /s/ Susan A. Murphy
Authorized Person
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
I, Carla Vogel, a Notary Public in and for the said County in the
State aforesaid, do hereby certify that Susan A. Murphy personally known to me
to be the same person whose name is subscribed to the foregoing instrument and
personally known to me to be an Authorized Person of Oppenheimer Financial
Corp., a Delaware corporation, appeared before me this day in person, and
acknowledged that he/she signed and delivered the said instrument as his/her
free and voluntary act as such Authorized Person and as the free and voluntary
act of said Oppenheimer Financial Corp., for the uses and purposes therein set
forth.
GIVEN under my hand and notarial seal this 8th day of February, 1996.
/s/Carla Vogel
Notary Public
(SEAL)
My Commission expires: November 1, 1997
337970.1
THE CHASE MANHATTAN BANK
(NATIONAL ASSOCIATION)
as Trustee and Evaluator
By: /s/Thomas Porrazzo
(SEAL)
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I, Ada Iris Vegas, a Notary Public in and for the said County in the
State aforesaid, do hereby certify that Thomas Porrazzo personally known to me
to be the same person whose name is subscribed to the foregoing instrument and
personally known to me to be a Vice President of The Chase Manhattan Bank
(National Association), appeared before me this day in person, and
acknowledged that he/she sealed with the corporate seal of The Chase Manhattan
Bank (National Association) and signed and delivered the said instrument as
his/her free and voluntary act as such Vice President and as the free and
voluntary act of said The Chase Manhattan Bank (National Association), for the
uses and purposes therein set forth.
GIVEN under my hand and notarial seal this 6th day of February, 1996.
/s/Ada Iris Vegas
Notary Public
(SEAL)
My Commission expires: 6-30-96
337970.1
No.
CERTIFICATE OF OWNERSHIP
--evidencing--
A Fractional Undivided Interest
--in--
QUALIFIED UNIT INVESTMENT
LIQUID TRUST SERIES
("QUILTS")
EQUITY STRATEGIC _________, SERIES _________
- --------------------
CUSIP
This is to certify that ______________________________ is the owner and
registered holder of this Certificate evidencing the ownership of unit(s) of
fractional undivided interest in the above named Trust created under the laws
of the State of New York pursuant to the Trust Indenture and Agreement among
OCC Distributors as Depositor and The Chase Manhattan Bank (National
Association) as Trustee (the "Indenture"), a copy of which is available at the
office of the Trustee. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Indenture to which the holder of this
Certificate by virtue of the acceptance hereof asserts and is bound, a summary
of which Indenture is contained in the Prospectus relating to the Trust. This
Certificate is transferable and interchangeable by the registered holder in
person or by his duly authorized attorney at the Trustees' office upon
surrender of this Certificate properly endorsed or accompanied by a written
instrument of transfer or other documents that the Trustee may require for
transfer in form satisfactory to the Trustee and payment of the fees and
expenses as provided in the Indenture.
Witness the facsimile signature of a duly authorized officer of
the Depositor and the manual signature of an authorized signature of the
Trustee.
Date: OCC DISTRIBUTORS,
Depositor
338789.1
<PAGE>
Authorized Signatory
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), Trustee
By:
Authorized Officer
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in
full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT - _________________ Custodian
- --------
(Cust)
(Minor)
Under Uniform Gifts to Minors Act
---------------------------------
(State)
Additional abbreviations may also be used though not in the above list.
338789.1
<PAGE>
(FORM OF ASSIGNMENT)
For Value Received,
hereby sell, assign and transfer ______________ Units
represented by this
Certificate unto
SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE MUST BE PROVIDED
-------------------------------------------
and does hereby irrevocably constitute and appoint
______________________________________________________, attorney, to transfer
said Units on the books of the Trustee, with full power of substitution in the
premises.
Dated:
SIGNATURE(S) GUARANTEED BY
NOTICE: The signature(s)
to this
Firm or Bank assignment must correspond
with the name(s) as written
upon the face of the
Certificate in every
particular, without
alteration or
enlargement or any change
whatever.
- ---------------------------------------------------
Authorized Signature
Signature(s) must be guaranteed by a member or participant of the
Securities Transfer Agents Medallion Program (STAMP), Stock
Exchanges Medallion Program (SEMP) or New York Stock Exchange,
Inc. Medallion Signature Program (MSP).
338789.1
BATTLE FOWLER LLP
A LIMITED LIABILITY PARTNERSHIP
75 East 55th Street
New York, New York 10022
(212) 856-7000
February 8, 1996
OCC Distributors
Two World Financial Center
225 Liberty Street
New York, New York 10080-6116
Re: Qualified Unit Investment Liquid
Trust Series ("QUILTS")
Equity Strategic Ten, Series 1 and
Equity Strategic Five, Series 1
Dear Sirs:
We have acted as special counsel for OCC Distributors, as
Depositor, Sponsor and Principal Underwriter (the "Depositor") of Qualified
Unit Investment Liquid Trust Series ("QUILTS"): Equity Strategic Ten, Series 1
and Equity Strategic Five, Series 1 (collectively the "Trusts") in connection
with the issuance by the Trusts, respectively, of 149,534 and 149,758 units of
fractional undivided interest (the "Units") in the Trusts. Pursuant to the
Trust Agreements referred to below, the Depositor has transferred to the
Trusts certain securities and contracts to purchase certain securities
together with an irrevocable letter of credit to be held by the Trustee upon
the terms and conditions set forth in the Trust Agreements. (All securities to
be acquired by the Trusts are collectively referred to as the "Securities").
In connection with our representation, we have examined copies
of the following documents relating to the creation of the Trusts and the
issuance and sale of the Units: (a) the Trust Indenture and Agreement and
related Reference Trust Agreements, each of even date herewith, relating to
the Trusts (collectively the "Trust Agreements") among the Depositor and The
Chase Manhattan Bank (National Association), as Trustee; (b) the Notification
of Registration on Form N-8A, as amended, and the Registration Statement on
Form N-8B-2, as amended, relating to
338216.1
<PAGE>
OCC Distributors 2
February 8, 1996
the Trusts, as filed with the Securities and Exchange Commission (the
"Commission") pursuant to the Investment Company Act of 1940 (the "1940 Act");
(c) the Registration Statements on Form S-6 (Registration Nos. 33-65075 and
333-00155) filed with the Commission pursuant to the Securities Act of 1933
(the "1933 Act"), and all Amendments thereto (said Registration Statement, as
amended by said Amendment(s) being herein called the "Registration
Statement"); (d) the proposed form of final Prospectus (the "Prospectus")
relating to the Units, which is expected to be filed with the Commission on
February 9, 1996; (e) certified resolutions of the Board of Directors of
Oppenheimer Financial Corp., the Managing General Partner of the Depositor
(the "Managing General Partner"), authorizing the execution and delivery by
the Depositor of the Trust Agreements and the consummation of the transactions
contemplated thereby; (f) the Partnership Agreement of the Depositor; and (g)
a certificate of an authorized officer of the Managing General Partner with
respect to certain factual matters contained therein.
We have not reviewed the financial statements, compilation of
the Securities held by the Trusts, or other financial or statistical data
contained in the Registration Statement and the Prospectus, as to which you
have been furnished with the reports of the accountants appearing in the
Registration Statement and the Prospectus.
In addition, we have assumed the genuineness of all agreements,
instruments and documents submitted to us as originals and the conformity to
originals of all copies thereof submitted to us. We have also assumed the
genuineness of all signatures and the legal capacity of all persons executing
agreements, instruments and documents examined or relied upon by us.
Statements in this opinion as to the validity, binding effect
and enforceability of agreements, instruments and documents are subject: (i)
to limitations as to enforceability imposed by bankruptcy, reorganization,
moratorium, insolvency and other laws of general application relating to or
affecting the enforceability of creditors' rights, and (ii) to limitations
under equitable principles governing the availability of equitable remedies.
We are not admitted to the practice of law in any jurisdiction
but the State of New York and we do not hold ourselves out as experts in or
express any opinion as to the laws of other states or jurisdictions except as
to matters of Federal and Delaware corporate law.
338216.1
<PAGE>
OCC Distributors 3
February 8, 1996
Based exclusively on the foregoing, we are of the opinion that
under existing law:
(1) The Trust Agreements have been duly authorized and entered
into by an authorized officer of the Depositor and are valid and binding
obligations of the Depositor in accordance with their respective terms.
(2) The execution and delivery of each of the Certificates
evidencing the Units of each of the Trusts has been duly authorized by the
Depositor and each such Certificate, when executed by the Depositor and the
Trustee in accordance with the provisions of such Certificate and the
respective Trust Agreements and issued for the consideration contemplated
therein, will constitute fractional undivided interest in the respective
Trusts, will be entitled to the benefits of the respective Trust Agreements,
will conform in all material respects to the description thereof for the Units
as provided in the Trust Agreements and the Registration Statement, and the
Units will be fully paid and non-assessable by the Trusts.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name in the Registration
Statement and in the Prospectus under the headings "Tax Status" and "Legal
Opinions". We authorize you to deliver copies of this opinion to the Trustee
and the Trustee may rely on this opinion as fully and to the same extent as if
it had been addressed to it.
This opinion is intended solely for the benefit of the
addressees and the Trustee in connection with the issuance of the Units of the
Trusts and may not be relied upon in any other manner or by any other person
without our express written consent.
Very truly yours,
Battle Fowler LLP
338216.1
The Chase Manhattan Bank, N.A.
770 Broadway
New York, New York 10003-9598
February 9, 1996
OCC Distributors
Oppenheimer Capital
Two World Financial Center
225 Liberty Street
New York, NY 10080-6116
Re: QUILTS Equity Strategic Five, Series 1
Gentlemen:
We have examined Registration Statement File No. 333-00155 for the above
referenced trust. We hereby acknowledge that The Chase Manhattan Bank,
(National Association) is currently acting as the evaluator for the trust. We
hereby consent to the use in the Registration Statement of the reference to
the Chase Manhattan Bank (National Association) as evaluator.
You are hereby authorized to file a copy of this letter with Securities and
Exchange Commission.
Sincerely,
Miguel Cervoni
Second Vice President
339373.1
<PAGE>
The Chase Manhattan Bank, N.A.
770 Broadway
New York, New York 10003-9598
February 9, 1996
OCC Distributors
Oppenheimer Capital
Two World Financial Center
225 Liberty Street
New York, NY 10080-6116
Re: QUILTS Equity Strategic Ten, Series 1
Gentlemen:
We have examined Registration Statement File No. 33-65075 for the above
referenced trust. We hereby acknowledge that The Chase Manhattan Bank,
(National Association) is currently acting as the evaluator for the trust. We
hereby consent to the use in the Registration Statement of the reference to
the Chase Manhattan Bank (National Association) as evaluator.
You are hereby authorized to file a copy of this letter with Securities and
Exchange Commission.
Sincerely,
Miguel Cervoni
Second Vice President
339373.1
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The schedule contains summary financial information extracted from the
statement of condition as of date of deposit and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001004979
<NAME> STRATEGIC FIVE
<SERIES>
<NUMBER> 1
<NAME> QUILTS
<MULTIPLIER> 1
<S> <C>
<CURRENCY> US DOLLARS
<FISCAL-YEAR-END> FEB-20-1997
<PERIOD-START> FEB-09-1996
<PERIOD-END> FEB-09-1996
<PERIOD-TYPE> OTHER
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 145,641
<RECEIVABLES> 0
<ASSETS-OTHER> 25,000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 170,641
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 25,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 149,758
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 145,641
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<LEGEND> The schedule contains summary financial information extracted from
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<CIK> 0001004979
<NAME> STRATEGIC TEN
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