<PAGE>
As filed with the Securities and Exchange Commission June 3, 1996REGISTRATION
NO. 333-1252
================================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
T.A. OF DELAWARE, INC.
DELAWARE 22-2479691
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
_______________
ONE BEACON STREET
BOSTON, MASSACHUSETTS 02108
(617) 725-2478
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
_______________
MARK MENCHEL
ONE BEACON STREET
BOSTON, MASSACHUSETTS 02108
(617) 725-1767
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
_______________
COPIES TO:
ANN-ELLEN HORNIDGE, ESQ.
MINTZ, LEVIN, COHN, FERRIS,
GLOVSKY AND POPEO, P.C.
ONE FINANCIAL CENTER
BOSTON, MA 02111
(617) 542-6000
_______________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462 (b) under the Securities Act, check the following box and
list the Securities Act registration number of the earlier effective
registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [_]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=================================================================================================================================
TITLE OF EACH CLASS OF AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED OFFERING PRICE /(1)/ AGGREGATE OFFERINEG REGIISTRATION
PRICE /(1)/ FEE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Tax Exempt Securities Trust Certificates.. $70,000,000 100% $70,000,000 $24,138
=================================================================================================================================
</TABLE>
/(1)/ Estimated solely for the purpose of calculating the registration fee.
_______________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE>
Information contained herein is subject to completion and amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These Securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these Securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Subject to Completion, Dated June 3, 1996
PROSPECTUS
T.A. OF DELAWARE, INC.
TAX EXEMPT SECURITIES TRUST CERTIFICATES
ISSUABLE IN SERIES
This Prospectus relates to Tax Exempt Securities Trust Certificates
(the "Certificates") that may be offered and sold from time to time in
one or more Series (as defined) under this Prospectus and the related
prospectus supplement ("Prospectus Supplement"). The Certificates will
be sold from time to time under this Prospectus on terms determined for
each Series at the time of the sale and as described in the related
Prospectus Supplement. The Certificates are issuable from time to time
in separate series (each, a "Series") pursuant to one or more separate
Trust Agreements (as defined) between the Trustor (as defined) and a
Trustee (as defined). Each Series of Certificates will consist of one
or more classes (each, a "Class") of Certificates which will represent
in the aggregate the entire beneficial ownership interest in all of the
assets or in particular groups of assets deposited into a trust
("Trust") by T.A. of Delaware, Inc. (the "Company") as trustor (in such
capacity, the "Trustor") or otherwise purchased by a Trust established
by the Company, either directly or through a trust, corporation,
partnership or other entity controlled by the Company. The issuer with
respect to a Series of Certificates will be the Trust established in
respect of such Certificates.
Each Class of Certificates of any Series will represent the right,
which may be senior or subordinate to the rights of one or more other
Classes of such Series and, to the extent set forth in the related
Prospectus Supplement, to the rights of one or more Classes of other
Series, to receive a specified portion of the payments of principal of
and premium, if any, and interest made with respect to all of the Tax
Exempt Securities (as defined) deposited in the Trust for such Series or
with respect to the Tax Exempt Securities included in one or more groups
of assets (each, an "Asset Group") held by the Trust. Payments or
distributions of interest on each Class of Certificates will be made on
each Distribution Date (as defined) as specified in the related
Prospectus Supplement. The amount of principal and interest available
and payable on each Series of Certificates on each Distribution Date
will be applied to the Classes of such Series in the order and as
otherwise provided in the related Prospectus Supplement. Principal
payments to distributions on each Class of Certificates will be made on
either a pro rata or random lot basis among Certificates of such Class,
as specified in the related Prospectus Supplement. The rate of payment
of principal of each Class of Certificates entitled to principal
distributions will depend on the priority of payment of such Class and
the rate and timing of principal payments (including prepayments) on Tax
Exempt Securities. The rate of payment on the Tax Exempt Securities that
are subject to redemption as described herein and in the related
Prospectus Supplement may affect the yield on the Certificates of
varying Classes in the manner described in the Prospectus Supplement.
Certificates of a Series will be subject to redemption prior to maturity
to repurchase only under the circumstances and according to the
priorities described herein and the related Prospectus Supplement.
Proceeds of the assets of each Trust (the "Trust Property") are
the sole source of payments on the Certificates. The Trust Property will
consists primarily of all or a portion of one or more issues, series or
maturities of tax exempt bonds (the "Tax Exempt Securities"), the
interest on which is excludable from gross income of the holders thereof
for federal income tax purposes. Any Series of Certificates will be
treated as a grantor trust or partnership for federal income tax
purposes. Accordingly, distributions of interest received with respect
to the Tax Exempt Securities are expected to retain their tax exempt
character when distributed to Certificateholders with respect to
Certificates. See "Certain Federal Income Tax Consequences."
If so specified in the Prospectus Supplement, the Trust with
respect to any Series of Certificates may include credit enhancement in
the form of reserve funds, subordination of one or more Classes of
Certificates to one or more other Classes of Certificates, insurance
policies, letters of credit, or other types of credit support or any
combination of the foregoing.
Although the Certificates of a Series will be secured by the Tax
Exempt Securities consisting the Trust Property, the Certificates will
have payment characteristics different from the payment characteristics
of the Tax Exempt Securities. An investment in the Certificates should
not be viewed as a direct investment the underlying Tax Exempt
Securities.
____________________
See "Risk Factors" beginning on page 8 for a description of certain
factors that should be considered by prospective investors in evaluating
an investment in the Certificates.
____________________
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 COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
____________________
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of securities offered hereby unless accompanied
by a Prospectus Supplement.
TUCKER ANTHONY
--------------
INCORPORATED
The date of this Prospectus is __________ __, 1996.
<PAGE>
____________________
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act with respect to the
Certificates to be offered by this Prospectus and related Prospectus Supplement.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain portions
of which have been omitted pursuant to the rules and regulations of the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document are not necessarily complete. With respect
to each such contract, agreement or other document filed or incorporated by
reference as an exhibit to the Registration Statement, reference is made to such
exhibit for a more complex description of the matter involved, and each such
statement is qualified in its entirety by such reference.
The Registration Statement and the exhibits and schedules thereto may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and will also be available for inspection and copying at the regional
offices of the Commission located at 7 World Trade Center, New York, New York
10048 and at 500 West Madison Street (Suite 1400), Chicago, Illinois 60661.
Copies of such material may also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934 subsequent to the date of this
Prospectus and prior to the termination of the offering of the securities
offered hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part thereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of such person, a
copy of any and all of the documents incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are specifically
incorporated by reference in such documents. Requests for such copies should be
directed to Secretary, T.A. of Delaware, Inc., One Beacon Street, Boston,
Massachusetts 02108, (617) 725-2487.
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF PROSPECTUS
The following summary is qualified in its entirety by reference to the more
detailed information appearing elsewhere in this Prospectus and by reference
to the information with respect to each Series of Certificates contained in
the Prospectus Supplement to be prepared and delivered in connection with the
offering of such Series. Capitalized terms used in this summary that are not
otherwise defined have the meanings ascribed thereto in this Prospectus.
An Index of Major Defined Terms is set forth immediately preceding the back
cover page.
Company................ T.A. of Delaware, Inc. See "The Company."
Securities Offered..... Tax Exempt Securities Trust Certificates (the
"Certificates"). The Certificates are issuable
from time to time in separate series (each, a
"Series") pursuant to separate Trust Agreements
(as defined) between the Company and a Trustee (as
defined). Each Series of Certificates will consist
of one or more classes (each, a "Class") of
Certificates which will either (i) represent in
the aggregate the entire beneficial ownership
interest in the Trust Property (as defined) of a
separate Trust (as defined) established with
respect to the related Series created pursuant to
the Trust Agreement or (ii) represent in the
aggregate the right to receive a specified portion
of the payments of principal, premium, if any, and
interest made with respect to one or more groups
of assets (each, an "Asset Group") included in the
Trust Property of such a Trust. Unless otherwise
specified in the related Prospectus Supplement,
each Series of Certificates, or Class of
Certificates in the case of a Series consisting of
two or more Classes, may have a stated amount and
will be entitled to distributions of interest
based on a specified fixed interest rate or
percentage or a variable interest rate determined
by reference to a specified formula or any
combination thereof (each, an "Interest
Distribution Basis"). Each Series or Class of
Certificates may have a different Interest
Distribution Basis. The related Prospectus
Supplement will describe the Interest Distribution
Basis for each Series or Class of Certificates, or
the initial Interest Distribution Basis and the
method for determining subsequent changes to the
Interest Distribution Basis.
A Series may include one or more Classes of
Certificates ("Strip Certificates") entitled (i)
to principal distributions, with disproportionate,
nominal or no interest distributions or (ii) to
interest distributions with disproportionate,
nominal or no principal distributions. Classes of
Strip Certificates that are entitled to receive
distributions of interest only may have no stated
amount and may have one or more notional amounts
solely for the purpose of determining interest
payable to the holders of such Certificates. In
addition, a Series may include two or more Classes
of Certificates which differ as to timing,
priority of payment, interest distribution rate or
amount of distributions of principal or interest
or both, or as to which distributions of principal
or interest or both on any class may be made upon
the occurrence of specified events, in accordance
with a schedule or formula, or on the basis of
collections from designated portions of the Trust
Property.
A Series of Certificates may also include one or
more Classes of Certificates (collectively, the
"Senior Certificates") which are senior to one or
more Classes of Certificates (collectively, the
"Subordinate
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Certificates") of such Series and, to the extent
set forth in the related Prospectus Supplement, to
one or more Classes of Certificates of other
Series in respect of certain distributions on the
underlying Trust Property. In addition, certain
Classes of Senior (or Subordinate) Certificates
may be senior to other Classes of Senior (or
Subordinate) Certificates in respect of such
distributions or with respect to losses.
The Certificates will be issued in fully
registered form in the authorized minimum
denominations and multiples thereof specified in
the related Prospectus Supplement. If so specified
in the related Prospectus Supplement, a Series of
Certificates or certain Classes of such Series
offered thereby may be available in book-entry
only form. See "Description of the Certificates."
Upon any delivery of additional Tax Exempt
Securities to the Trustee for a Trust, a new
Series with a corresponding aggregate principal
amount of Certificates will be issued, in one or
more Classes, as set forth in the related
Prospectus Supplement, up to a total aggregate
principal amount authorized in the Trust
Agreement. No such new Series of Certificates will
be issued if the Rating Agency (as defined) will,
as a result of such issuance, downgrade the rating
on any outstanding Series of Certificates or any
class thereof. See "-- Trust Assets," "The Tax
Exempt Securities - Addition of Tax Exempt
Securities" and "Description of the Certificates -
General."
The Issuer............. The Issuer with respect to a Series of
Certificates will be a trust fund (each, a
"Trust") established by the Company, either
directly or through a trust, corporation,
partnership or other entity controlled by the
Company, for the purpose of issuing one or more
Series of Certificates. Each Trust will be created
by a separate agreement (each, a "Trust
Agreement") between the Company, acting as trustor
(in such capacity, the "Trustor"), and a bank or
trust company or other fiduciary, acting as
trustee (the "Trustee"). The Issuer will not have,
nor is it expected to have, any significant assets
available for distributions on a Series of
Certificates, other than the Trust Property.
Trust Assets........... The property of each Trust (the "Trust Property")
will consist primarily of all or a portion of one
or more issues, series or maturities of tax exempt
bonds (the "Tax Exempt Securities") included in
one or more Asset Groups held by the Trust. If so
specified in a related Prospectus Supplement, the
Trust Property of a Trust may have a concentration
level such that any particular Tax Exempt Security
or Obligor (as defined) with respect to any Tax
Exempt Security constitutes more than 10% of the
Trust Property. In the case of such asset
concentration, the related Prospectus Supplement
will include information, including audited
financial information, concerning the Obligor, the
Conduit Issuer (as defined), the Revenue Bond
Issuer (as defined), and the Governmental Issuer
(as defined), as applicable. See "Risk Factors"
and "The Tax Exempt Securities" herein and in the
related Prospectus Supplement. The Tax Exempt
Securities will be irrevocably transferred to the
Trustee and will be held in the name of the
Trustee or its nominee, in trust for the benefit
of the Certificateholders of the related Series of
Certificates as the beneficial owners of the
Tax
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Exempt Securities in accordance with the Trust
Agreement. Tax Exempt Securities may consist of:
(a) Tax exempt revenue bonds issued by a conduit
governmental issuer (the "Conduit Issuer"), the
proceeds of which are loaned to an eligible
obligor or obligors (the "Obligor) to finance or
refinance eligible projects. The Obligor is
generally a non-governmental, private entity. The
payment of principal, premium, if any, interest
and all other amounts owed with respect to Tax
Exempt Securities issued by Conduit Issuers are
payable by amounts owed by the Obligor under the
terms of its loan. The loan is payable out of
general cash flow of the Obligor or specific
project revenues or otherwise. The repayment
obligation may be secured by a mortgage on the
project and/or other assets of the Obligor and
other security interests. Tax Exempt Securities
issued by Conduit Issuers are non-recourse to the
Conduit Issuer.
(b) Tax exempt revenue bonds issued by a state or
local governmental entity, such as a public
authority or agency, without general taxing power
(the "Revenue Bond Issuer"). The bonds are issued
to finance or refinance the capital expenditure
and operating needs of the Revenue Bond Issuer and
are payable from the revenues of such Issuer,
often a dedicated and pledged revenue stream.
(c) Tax exempt bonds issued by a governmental
entity, such as a state or local government or
some other political subdivision, with general
taxing power (the "Governmental Issuer"). The
bonds are issued to finance or refinance the
capital expenditure and operating needs of the
Governmental Issuer and are payable from some or
all of the revenues of such Issuer. If all sources
of revenue of the Issuer, including tax receipts,
are available to make the payment, the bonds are
general obligation bonds secured by the full faith
and credit of the Issuer. Otherwise, they will be
limited obligations of the Issuer.
(d) Any combination of the foregoing.
Unless otherwise provided in the related
Prospectus Supplement, subject to the limitations
set forth in the Trust Agreement for a Series, the
Trustor may from time to time deliver to the
Trustee additional Tax Exempt Securities in
addition to the Tax Exempt Securities originally
pledged as security for a Series, or deposited in
the Trust for a Series, as the case may be. Upon
any such addition, subject to the limitations
described herein and in the related Prospectus
Supplement, a new Series with a corresponding
aggregate principal amount of Certificates will be
issued in one or more Classes, as set forth in the
related Prospectus Supplement, up to a total
aggregate principal amount of Certificates
outstanding not to exceed the amount authorized in
the Trust Agreement. See "The Certificates --
General." Unless otherwise specified in the
related Prospectus Supplement, (i) no addition
will be permitted which would delay the final
Distribution Date of any Class of Certificates of
a Series issued by such Trust and (ii) only like
kind Tax Exempt Securities may be added. No
addition may be made (i) if such addition would
result in the Trust becoming required to register
as an "Investment Company" for purposes of the
Investment Company Act of 1940 or (ii) if the
Rating Agency will, as a result of such
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
addition, downgrade the rating on any outstanding
Series of Certificates or any Class thereof.
For a further description of the Tax Exempt
Securities that will be deposited into each Trust,
see "The Tax Exempt Securities" herein and in the
related Prospectus Supplement.
Interest Distributions... Except as otherwise specified herein or in the
related Prospectus Supplement, interest on each
Class of Certificates of each Series, other than
Strip Certificates, will be made from amounts
available therefor at the applicable rate (the
"Interest Distribution Rate") determined by using
the designated Interest Distribution Basis (which
may be a fixed, variable or adjustable rate or any
combination thereof) on the outstanding principal
amount of such Class on the dates (each an
"Interest Distribution Date") provided in the
related Prospectus Supplement. Distributions, if
any, with respect to interest on Strip
Certificates will be made on each Interest
Distribution Date as described herein and in the
related Prospectus Supplement. See "Description of
the Certificates."
Principal Distributions.. Except as otherwise specified herein or in the
related Prospectus Supplement, distributions of
the principal (and any related premium) on the
Certificates of each Series will be made from
amounts available therefor on the dates provided
for the payment of principal (and any related
premium) in the related Prospectus Supplement
(each, a "Principal Distribution Date") on a pro
rata basis among all such Certificates or among
the Certificates of any class, in proportion to
their respective outstanding principal amounts, or
in the priority and manner otherwise specified in
the related Prospectus Supplement. Except as may
otherwise be provided in the related Prospectus
Supplement, Strip Certificates having no principal
balance will not receive distributions in respect
of principal. See "Description of the
Certificates."
Credit Enhancement....... The Trust with respect to any Series of
Certificates may include credit enhancement in the
form of reserve funds, subordination, insurance
policies, letters of credit, or other types of
credit support or any combination of the foregoing
to provide full or partial coverage for certain
defaults and losses relating to the Tax Exempt
Securities. The type, characteristics and amount
of credit enhancement will be determined based on
the characteristics of the Trust Property and
other factors and will be established on the basis
of requirements of each Rating Agency (as defined)
rating the Certificates of any Series. If so
provided in the related Prospectus Supplement, any
form of credit enhancement may have certain
limitations and exclusions from coverage
thereunder, which will be described in the related
Prospectus Supplement. To the extent not set forth
herein, the amount and types of coverage, the
identification of any entity providing the
coverage, the terms of any subordination and
related information will be set forth in the
Prospectus Supplement relating to a Series of
Certificates. See "Description of Credit
Enhancement" and "Risk Factors."
(1) Subordinate
Certificates........ A Series of Certificates may include one or more
Classes of Subordinate Certificates. The rights of
holders of such Subordinate
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Certificates to receive distributions on any
Distribution Date, as applicable, will be
subordinate in right and priority to the right of
holders of Senior Certificates of the Series, but
only to the extent described in the related
Prospectus Supplement. If so specified in the
related Prospectus Supplement, the rights of
holders of Subordinate Certificates of a Series
may be subordinate in right and priority to the
right of holders of Senior Certificates of one or
more other Series. If so specified in the related
Prospectus Supplement, subordination may apply
only in the event of certain types of losses not
covered by other credit enhancement. Unless
otherwise specified in the related Prospectus
Supplement, such subordination will be in lieu of
providing insurance policies or other credit
support with respect to losses arising from such
events. Unless otherwise specified in the related
Prospectus Supplement, in certain circumstances,
the related Series Supplement may require a
trustee that is not the Trustee to be appointed to
act on behalf of holders of Subordinate
Certificates.
The related Prospectus Supplement will set forth
information concerning the amount of subordination
of a Class or Classes of Subordinate Certificates
in a Series, the circumstances in which such
subordination will be applicable, the manner, if
any, in which the amount of subordination will
decrease over time, the manner of funding any
related Reserve Fund (as defined) and the
conditions under which amounts in any related
Reserve Fund will be used to make distributions to
holders of Senior Certificates and/or to holders
of Subordinate Certificates or be released from
the related Trust estate. See "Description of
Credit Enhancement--Subordinate Certificates."
(2) Letter of Credit..... If so specified in the related Prospectus
Supplement, credit support may be provided by one
or more letters of credit. A letter of credit may
provide limited protection against certain losses
in addition to or in lieu of other credit support.
The issuer of the letter of credit (the "LC Bank")
will be obligated to honor demands with respect to
such letter of credit, to the extent of the amount
available thereunder, to provide funds under the
circumstances and subject to such conditions as
are specified in the related Prospectus
Supplement. The liability of the LC Bank under its
letter of credit may be reduced by the amount of
unreimbursed payments thereunder.
The maximum liability of an LC Bank under its
letter of credit will be an amount equal to a
percentage specified in the related Prospectus
Supplement of the initial aggregate outstanding
principal balance of the Tax Exempt Securities in
the Trust or one or more Classes of Certificates
of the related Series and an amount of interest to
accrue thereon. The maximum amount available at
any time to be paid under a letter of credit will
be determined in the manner specified therein and
in the related Prospectus Supplement. See
"Description of Credit Enhancement--Letter of
Credit."
(3) Bond Insurance
Policy............. If so specified in the related Prospectus
Supplement, credit support for a Series may be
provided by an insurance policy (the "Bond
Insurance Policy") issued by one or more insurance
companies. Such Bond Insurance Policies may
guarantee timely distributions of interest and
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
full distributions of principal on the basis of a
schedule of principal distributions set forth in
or determined in the manner specified in the
related Prospectus Supplement. See "Description of
Credit Enhancement--Bond Insurance Policy."
(4) Reserve Funds........ For any Series of Certificates or with respect to
one or more Classes of Certificates within a
Series, one or more reserve funds (each, a
"Reserve Fund") may be established and funded in
the aggregate amount, if any, specified in the
related Prospectus Supplement. Any Reserve Fund
may also be funded over time through application
of a specified amount of cash flow to the extent
described in the related Prospectus Supplement.
Such a Reserve Fund may be established to increase
the likelihood of the timely distribution on the
Certificates of such Series or to reduce the
likelihood of a special redemption with respect to
any Series. Reserve Funds may be established to
provide protection against certain losses or
delinquencies in addition to or in lieu of other
credit support. Amounts on deposit in the Reserve
Fund for a Series, together with (unless otherwise
specified in the related Prospectus Supplement)
the reinvestment income thereon, if any, will be
applied for the purposes, in the manner and to the
extent provided by the related Prospectus
Supplement.
On each Distribution Date, as applicable, for a
Series, all amounts on deposit in any Reserve Fund
for the Series in excess of the amounts required
to be maintained therein by the related Trust
Agreement and specified in the related Prospectus
Supplement, may be released from the Reserve Fund
and will not be available for future payments or
distributions on the Certificates of such Series.
Additional information concerning any Reserve
Fund, including whether any such Reserve Fund is a
part of the Trust estate, the circumstances under
which moneys therein will be applied to make
distributions to Certificateholders, the balance
required to be maintained in such Reserve Fund,
the manner in which such required balance will
decrease over time and the manner of funding any
such Reserve Fund, will be set forth in the
related Prospectus Supplement. See "Description of
Credit Enhancement--Reserve Funds."
Certain Federal Income
Tax Consequences......... The federal income tax consequences of an
investment in the Certificates of any Series will
depend on the characterization of the Certificates
as an interest in a grantor trust ("Grantor Trust
Certificates") or an interest in a trust
characterized as a partnership for federal income
tax purposes ("Partnership Certificates"). In the
case of Partnership Certificates, the Trust will
be treated as a partnership for federal income tax
purposes, each Certificateholder will be treated
as a member of such partnership, and all amounts
allocated to Certificateholders that are
attributable to payments of interest on Tax Exempt
Securities and Additional Tax Exempt Securities
that are excludable from federal gross income will
be excludable from the federal gross income of
such Certificateholders. In the case of Grantor
Trust Certificates, a purchaser of Certificates
will be considered as
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
having purchased stripped bonds or stripped
coupons from the Tax Exempt Securities and will be
treated as the owner thereof for federal income
tax purposes. Discount accruing on Certificates at
a yield not exceeding the coupon rate of interest
on the Tax Exempt Securities (or, at the election
of the taxpayer, the original yield to maturity of
the Tax Exempt Securities) will be excludable from
gross income for federal income tax purposes. The
related Prospectus Supplement will specify whether
a Series constitutes Grantor Trust Certificates or
Partnership Certificates and will describe
additional consequences that relate to the
specific Certificates issued pursuant
thereto.
There are a number of material tax aspects of an
investment in the Certificates. Prospective
investors are urged to read "Certain Federal
Income Tax Consequences" and "Risk Factors" herein
and in the Prospectus Supplement.
Legal Investment........ Investors whose investment is subject to legal
restrictions should consult their own legal
advisors to determine whether and to what extent
the Certificates constitute legal investment for
them. See "Legal Investment."
Use of Proceeds......... The net proceeds from the sale of each Series will
be used to (i) purchase the Tax Exempt Securities
deposited into a Trust, (ii) to repay indebtedness
which has been incurred to acquire Tax Exempt
Securities, (iii) to establish any Reserve Funds
described in the related Prospectus Supplement,
(iv) to pay costs of structuring, guaranteeing,
credit enhancing and issuing such Certificates or
(v) for other purposes relating to one or more of
the foregoing, as set forth in the Prospectus
Supplement. If so specified in the related
Prospectus Supplement, the purchase of the Tax
Exempt Securities for a Series may be effected by
an exchange of Certificates with the seller of
such Tax Exempt Securities. See "Use of Proceeds."
Ratings................. It will be a condition to the issuance of any
Certificates offered by this Prospectus and the
related Prospectus Supplement that they be rated
in one of the four highest applicable rating
categories by at least one nationally rated
statistical rating organization ("Rating Agency").
The rating or ratings applicable to Certificates
of each Series will be as set forth in the related
Prospectus Supplement. Certificates not offered by
this Prospectus and a related Prospectus
Supplement may be non-rated or rated in other than
one of the four highest rating categories.
A security rating should be evaluated
independently of similar ratings of different
types of security. A security rating does not
address the effect of redemption or reinvestment
rates on investors' yields. A rating is not a
recommendation to buy, sell or hold Certificates
and may be subject to revision or withdrawal at
any time by the assigning rating organization.
Each rating should be evaluated independently of
any other rating. See "Risk Factors."
- --------------------------------------------------------------------------------
<PAGE>
RISK FACTORS
Investors should consider, among other things, the risk factors described
below in connection with the purchase of the Certificates. Additional risk
factors particular to a Series or Class of Certificates will be provided, if
applicable, in the related Prospectus Supplement.
ABSENCE OF PUBLIC MARKET; LIMITED LIQUIDITY
The Certificates will be new securities for which there currently is no
market. There can be no assurance as to the liquidity of any markets that may
develop for the Certificates, the ability of holders of Certificates to sell
their Certificates, or the price at which holders would be able to sell their
Certificates. Future trading prices of the Certificates will depend on many
factors, including, among other things, prevailing interest rates and other
economic factors, and the market for similar securities. The Prospectus
Supplement for any Series of Certificates may indicate that an underwriter
specified therein intends to make a market in the Certificates. However, no
underwriter will be obligated to do so and any market making activity may be
discontinued at any time without notice. Therefore, there can be no assurance
that any active market for the Certificates will develop. The Certificates will
not be listed on any securities exchange.
LIMITED OBLIGATIONS; SOURCE OF PAYMENT
The Certificates will not represent an interest in or obligation of the
Company, the Trustee or any of their affiliates. The only obligations of the
foregoing entities with respect to the Certificates or any Tax Exempt Securities
will be the obligations (if any) of the Company pursuant to certain limited
representations and warranties made under the related Trust Agreements. The
assets included in the related Trust for each Series of Certificates (including
the Tax Exempt Securities and any form of credit enhancement) will be the sole
source of payment on the Certificates, and there will be no recourse to the
Company or any other entity in the event that such proceeds are insufficient or
otherwise unavailable to make all payments provided for under the Certificates.
This Prospectus has not been, and no Prospectus Supplement will be, approved or
adopted by any Conduit Issuer, Revenue Bond Issuer, or Governmental Issuer
(where appropriate, collectively an "Issuer").
YIELD AND REPAYMENT CONSIDERATIONS
For Tax Exempt Securities subject to redemption prior to maturity, the
redemption rate on the Tax Exempt Securities will affect the weighted average
life of each Series or Class of Certificates. The related Prospectus Supplement
will set forth the final scheduled distribution date for each Series or Class of
Certificates offered thereby, which dates will be based on the stated maturities
and mandatory sinking fund redemption schedules of the Tax Exempt Securities in
the related Trust. However, the Tax Exempt Securities may also be subject to
redemption prior to their stated maturities (other than as a result of mandatory
sinking fund redemption) in accordance with the optional and special redemption
provisions of the Tax Exempt Securities. Each Tax Exempt Security will be
subject to restrictions on the respective Issuer thereof's ability to optionally
redeem the Tax Exempt Security as described under "Yield and Redemption
Considerations -Redemptions." See "The Tax Exempt Securities" herein. The
Prospectus Supplement will include a description of the redemption provisions
applicable to each Tax Exempt Security deposited into the Trust with respect to
the Certificates issued pursuant thereto, and will also include information
detailing the percentage of Tax Exempt Securities that are optionally redeemable
within different years. The yield of the Certificates of a given Series or Class
may be adversely affected by a higher or lower than anticipated rate of
redemption on the Tax Exempt Securities. In particular, the yield on Strip
Certificates will be extremely sensitive to the rate of redemptions of the
related Tax Exempt Securities. In addition, certain Classes of Certificates of a
Series may be more sensitive to the rate of redemptions of the Tax Exempt
Securities than other Classes of Certificates. The rate of redemptions of the
Tax Exempt Securities will be influenced by a number of factors, including
prevailing market interest rates, local and regional economic conditions, the
availability of refinancing, legal and other factors. See "Yield Considerations"
and "Maturity and Prepayment Considerations."
<PAGE>
RISK OF ADVERSE TAX CONSEQUENCES
An investment in the Certificates may be affected by one or more of the tax
consequences described below:
No Verification; Limited Information regarding Tax Exempt Status of
underlying Tax Exempt Securities. No effort has been or will be made to verify
or update the original opinion of bond counsel with respect to the exclusion
from gross income for federal income tax purposes of the interest on any Tax
Exempt Security or to determine if subsequent events have occurred that would
adversely affect the conclusions set forth therein. Investors should note that
current tax law protecting the confidentiality of taxpayer information prohibits
the Internal Revenue Service from giving notice to the municipal bond market of
audits of Issuers in circumstances where the audit might result in a loss of
tax-exempt status for their bonds until the audit concludes and official action
is taken. Accordingly, notwithstanding the absence of any public pronouncement
with respect to any Tax Exempt Security, such Tax Exempt Securities may be the
subject (or may become the subject in the future) of an Internal Revenue Service
examination of its tax-exempt status. As of the date of issuance of the
Certificates, neither the Company nor the Trustee will have actual knowledge of
any events that may adversely affect the exclusion from gross income for federal
income tax purposes of the interest on the Tax Exempt Securities, including any
notice that the Internal Revenue Service considers interest on any Tax Exempt
Security to be so includable. However, the tax exemption of interest on
municipal obligations such as the Tax Exempt Securities can be lost or adversely
affected by events which take place after, and even long after, the original
issuance of the Tax Exempt Security. Such an event with respect to the Tax
Exempt Security could take place after the date of the issuance and sale of the
Certificates. In such case, distributions by the Trust to holders of
Certificates made from amounts received with respect to Tax Exempt Securities
which have lost their tax exemption would not be treated as tax exempt interest,
which would have a materially adverse effect upon investors.
Loss of Tax Exemption on Underlying Tax Exempt Securities. The Internal
Revenue Code of 1986, as amended (the "Code"), imposes certain requirements on
Issuers of Tax Exempt Securities and, where applicable, Obligors who use the
proceeds of the Tax Exempt Securities, including requirements as to the
investment and use of such proceeds, which must be satisfied subsequent to
issuance of the Tax Exempt Securities. Failure to comply with certain of such
requirements could cause interest on the Tax Exempt Securities to be included in
the gross income of holders thereof retroactive to the date of issuance. In such
case, distributions by the Trust to holders of Certificates made from amounts
received with respect the non-complying Tax Exempt Securities would not be
treated as tax exempt interest, which would have a materially adverse effect
upon investors.
Prepayment Risk Upon Determination of Taxability With Respect to Underlying
Tax Exempt Securities. Tax Exempt Securities may be subject to redemption, in
accordance with the provisions of the governing documents with respect thereto,
upon determination (which may or may not be final judicial determination) that
the interest thereon is not exempt from gross income of the holders thereof for
purposes of federal income taxes. Any such prepayment with respect to a Tax
Exempt Security may have an impact on the yield to maturity of the Certificates
as discussed under "--Yield and Repayment Considerations." In addition, there
can be no assurance that any Issuer or Obligor would have sufficient funds to
pay the redemption price in the event of such redemption. As noted under "--
Limited Obligations; Source of Payment," payments by the Issuers or Obligors
with respect to the Tax Exempt Securities are the sole source of payment on the
Certificates, and there will be no recourse to the Company or any other entity
in the event that such payments are insufficient or otherwise unavailable to
make all payments provided for under the Certificates.
Liability for Tax Owed. In the event that interest on any Tax Exempt
Security were determined to be includible in the gross incomes of holders
thereof, the Internal Revenue Service could seek to assess taxes, interest and
penalties for periods prior to such determination in which holders did not
report such interest received in their gross incomes, subject to applicable
limitations periods for such assessments. The Internal Revenue Service generally
must assess income taxes for a taxable year within the three-year period
beginning on the due date for the return for such year (or, if later, beginning
on the date the return for the year is
<PAGE>
actually filed with the Internal Revenue Service). In certain circumstances,
such as fraud, failure to file a tax return, or filing a tax return as to which
there is a substantial omission of income, the limitations period described in
the preceding sentence may be extended.
Classification of Trusts for Federal Income Tax Purposes. Neither the
Company nor the Trustee with respect to any Trust will seek any rulings from the
Internal Revenue Service regarding the classification of any particular Trust as
a grantor trust or as a partnership for federal income tax purposes rather than
as an association taxable as a corporation. While the Company expects to receive
an opinion of counsel that a Trust will be classified as a grantor trust or as a
partnership, as applicable, an opinion of counsel is not a legal determination
and is not binding on the IRS. Moreover, an opinion of counsel is based on
existing judicial and administrative interpretations of applicable law and
regulations, all of which are subject to change. Therefore, there can be no
assurance that any particular Trust will be treated as a grantor trust or a
partnership, as applicable.
Failure to comply with the constituent documents of a Trust classified as a
partnership or a grantor trust, as applicable, may also result in such Trust
being classified, for federal income tax purposes, as an association taxable as
a corporation.
If a Trust were classified as an association taxable as a corporation,
among other things, the income, deductions and any credits of the Trust would
have to be reported on its own tax return and could not be passed through to the
holders of Certificates, the Trust would be subject to tax as a corporation and
distributions by the Trust would not be treated as tax exempt interest, but be
taxable as dividends in whole or in part.
There are a number of material tax aspects of an investment in the
Certificates. Prospective investors are urged to read "Certain Federal Income
Tax Consequences" herein and in the Prospectus Supplement.
ASSET CONCENTRATION AND CREDIT RISK
The Trust Property of any Trust may have a concentration level such that
any particular Tax Exempt Security or Obligor with respect to any Tax Exempt
Security would constitute more than 10% of the Trust Property. Certificates of a
Series which are secured by Trust Property with such a concentration level will
be subject to credit risk greater than that usually encountered in asset-backed
transactions or experienced by Certificates of a Series secured by Trust
Property which is not concentrated, because the diversification of credit risk
generally present in a non-concentrated asset pool will be diminished. The
related Prospectus Supplement will describe the concentration level of the Trust
Property with respect to any Certificates issued pursuant thereto. If any Tax
Exempt Security or Obligor with respect to any Tax Exempt Security will
constitute more than 10% of a Trust Property, the related Prospectus Supplement
will also provide or incorporate by reference financial information on the
Obligor with respect to such Tax Exempt Security.
Except in the case of asset concentration as described above or in any
related Prospectus Supplement, no investigation has been or will be made of the
business condition, financial or otherwise, of any Issuer or underlying Obligor
with respect to any Tax Exempt Security and no verification has been made or
will be made of reports or information, if any, filed or required to be filed by
any of the foregoing with the Commission or provided to the holders of Tax
Exempt Securities. Accordingly, investors may be given limited disclosure with
respect to the underlying credits.
LIMITATIONS OF CREDIT ENHANCEMENT
With respect to each Series of Certificates, credit enhancement may be
provided to the extent and for the purposes described in the related Prospectus
Supplement to cover losses on the underlying Tax Exempt Securities. Credit
enhancement may be provided in one or more of the forms referred to herein,
including, but not limited to: reserve funds, subordination of one or more
Classes of Certificates of the same Series, insurance policies, letters of
credit, or other types of credit support or any combination of the foregoing.
The Prospectus Supplement for a Series will describe any credit enhancement
relating to the Certificates of such Series. Use of such
<PAGE>
credit enhancement will be subject to the conditions and limitations described
herein and in the related Prospectus Supplement. Such credit enhancement may not
cover all potential losses or risks.
The amount, type and nature of credit enhancement, if any, required with
respect to a Series or with respect to one or more Classes of Certificates will
be determined on the basis of criteria established by each Rating Agency rating
such Series. Such criteria are sometimes based on an actuarial analysis of the
behavior of assets in a group that is larger than the pool of assets securing
the Series. Such analysis is often the basis on which each Rating Agency
determines the amount of credit enhancement required with respect to each Series
of Certificates. There can be no assurance that the historical data supporting
any such actuarial analysis will accurately reflect future experience nor any
assurance that the data derived from a large pool of assets accurately predicts
the delinquency or loss experience of any particular pool of assets. Except as
described herein and in any Prospectus Supplement, the rating of any Series of
Certificates by any applicable Rating Agency may be lowered following the
initial issuance thereof as a result of the downgrading of the obligations of
any applicable credit support provider.
If principal payments on Certificates of a Series are made in a specified
order of priority, any limits with respect to the aggregate amount of claims
under any related insurance policy, letters of credit or other credit
enhancement may be exhausted before the principal of the lower priority Classes
has been repaid. As a result, the impact of significant losses on the Tax Exempt
Securities may bear primarily on the Certificates of the later maturing or lower
priority Classes. Moreover, if a form of credit enhancement covers more than one
Series of Certificates (each, a "Covered Series"), holders of Certificates
issued by any of such Covered Series will be subject to the risk that such
credit support will be exhausted by the claims of other Covered Series prior to
such Covered Series receiving any coverage.
The obligations of the issuers of any credit support will not be guaranteed
or insured by the United States, or by any agency or instrumentality thereof.
See "Description of Credit Enhancement."
DEFICIENCY ON SALE OF TAX EXEMPT SECURITIES
If a Trust were to sell Tax Exempt Securities upon the conditions specified
in the Trust Agreement and described in the related Prospectus Supplement, there
could be no assurance that the proceeds of such sale would pay in full the
principal of and interest on the related Series of Certificates. The value of
the Tax Exempt Securities upon such a sale would depend on their credit quality,
prevailing interest rates and other factors.
CONTROL OF VOTING RIGHTS; CONFLICTING VOTING RIGHTS; CONSENTS
The voting and other rights, if any, of Certificateholders of any Series of
Certificates will be set forth in the related Trust Agreement and described in
the Prospectus Supplement. Holders of different Classes of Certificates may have
conflicting voting rights and interests. Potential investors in the Certificates
should consider the allocation of voting rights in light of this consideration.
If so provided in any Prospectus Supplement, the consent of the provider of
credit enhancement with respect to any Series or Class of Certificateholders may
be required in addition to or in lieu of the consent of the Certificateholders
of such Series or Class.
If so provided in the related Prospectus Supplement, the Trust Agreement
with respect to a Trust treated as a partnership for federal income tax purposes
may provide that a transferee of one or more Classes of Certificates will become
entitled to exercise voting rights as a Certificateholder only if it obtains the
consent of the Trustor at the time of transfer, which consent may be withheld by
the Trustor in its sole discretion.
Limited Management of Trust Property. Except as otherwise described herein
and in the related Prospectus Supplement, the Trust will not dispose of any Tax
Exempt Security, regardless of adverse events, financial or otherwise, which may
affect the value of the Tax Exempt Security or the issuer thereof. If there is a
payment default on any Tax Exempt Security or any other default which may result
in acceleration of the Tax Exempt Security, the Trust will dispose of or
otherwise manage the defaulted Tax Exempt Security in the manner provided in the
related Trust Agreement, as applicable. Such arrangements may not result in full
payment of principal or
<PAGE>
interest to holders of Certificates or to holders of each Class of Certificates,
and may affect the weighted average life of the Certificates. The Trust may add
Tax Exempt Securities or substitute Tax Exempt Securities to the extent provided
in the Trust Agreement and as described herein and in any Prospectus Supplement.
See "The Tax Exempt Securities - Substitution of Tax Exempt Securities;
Addition of Tax Exempt Securities."
RISK OF LOSS FOLLOWING DEFAULT
The market value of the Tax Exempt Securities securing a Series may
fluctuate as general interest rates fluctuate. Following an event of default
with respect to any Tax Exempt Security, there is no assurance that the market
value thereof will be equal to or greater than the unpaid principal and accrued
interest due on the Certificates of such Series, together with any other
expenses or liabilities payable thereon. If the Tax Exempt Securities securing a
Series are sold by the Trustee following an event of default, the proceeds of
such sale may be insufficient to pay in full the principal of and interest on
the related Series of Certificates.
In addition, upon any termination or event of default with respect to a
Trust, and a resulting sale of the Trust Property, unless otherwise specified in
the related Prospectus Supplement, the proceeds of such sale will be applied to
the payment of certain amounts due to the Trustee and certain other
administrative and other expenses prior to the payment of accrued interest on,
and the then principal balance of, the Certificates. Consequently, in the event
of any such event of default and sale of Trust Property, any Classes on which
principal payments have previously been made may have, in the aggregate, a
greater proportion of their principal repaid than will Classes on which
principal payments have not previously been made.
In the event the principal of the Certificates of a Series is declared due
and payable, the holders of any such Certificates issued at a discount from par
("original issue discount") may be entitled, under applicable provisions of the
Federal Bankruptcy Code, to receive no more than an amount equal to the unpaid
principal amount thereof less unamortized original issue discount ("accreted
value"). There is no assurance as to how such accreted value would be determined
if such event occurred.
LIMITED NATURE OF RATING
It will be a condition to the issuance of any Certificates offered by this
Prospectus and the related Prospectus Supplement that they be rated in one of
the four highest applicable rating categories by at least one nationally rated
statistical rating organization ("Rating Agency"). The rating or ratings
applicable to Certificates of each Series will be as set forth in the related
Prospectus Supplement. Certificates not offered by this Prospectus and a related
Prospectus Supplement may be non-rated or rated in other than one of the four
highest rating categories.
A security rating should be evaluated independently of similar ratings of
different types of securities. A security rating does not address the effect of
redemption or reinvestment rates on investors' yields. A rating is not a
recommendation to buy, sell or hold certificates and may be subject to revision
or withdrawal at any time by the assigning rating organization. Each rating
should be evaluated independently of any other rating. See "Ratings."
ERISA CONSIDERATIONS
Certificates should not be purchased by, or with the assets of, an employee
pension benefit plan or employee welfare benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended.
<PAGE>
THE TAX EXEMPT SECURITIES
Each Trust will consist primarily of one or more issues, series or
maturities of tax exempt bonds (the "Tax Exempt Securities"). Tax Exempt
Securities may consist of (a) tax exempt revenue bonds issued by a state agency
or other governmental authority or instrumentality (the "Conduit Issuer"), which
are non-recourse obligations of such Conduit Issuer, and the proceeds of which
are loaned to an eligible Obligor; (b) tax exempt revenue bonds issued by a
state or local governmental entity, such as a public authority or agency,
without general taxing power (the "Revenue Bond Issuer"); (c) tax exempt bonds
issued by a governmental entity, such as a state or local government or other
political subdivision, with general taxing power (the "Governmental Issuer"); or
(d) any combination of the foregoing. See "The Tax Exempt Securities" herein and
in the Prospectus Supplement.
Each Tax Exempt Security will be subject to restrictions on the respective
Issuer thereof's ability to optionally redeem the Tax Exempt Security as
described under "Yield and Redemption Considerations -Redemptions." Additional
information relating to the particular Tax Exempt Securities deposited in the
Trust for a Series of Certificates will be contained in the related Prospectus
Supplement, including whether the Trust Property of such Trust may have a
concentration level such that any particular Tax Exempt Security or Obligor
constitutes more than 10% of the Trust Property. In the case of such asset
concentration, the related Prospectus Supplement will include information,
including audited financial information, concerning the Obligor, the Conduit
Issuer, the Revenue Bond Issuer, and the Governmental Issuer, as
applicable.
GENERAL
Conduit Tax Exempt Securities. Tax Exempt Securities issued by Conduit
Issuers ("Conduit Tax Exempt Securities) are generally issued for the primary
purpose of providing the issuer thereof with funds to make a loan or loans (in
some instances, in the form of a lease or installment sale) to one or more
eligible borrower (each, an "Obligor") to finance or refinance one or more
eligible projects of such Obligor(s) (the eligibility of an Obligor and the
project are determined in accordance with state law and federal tax law). The
Obligors are generally non-governmental, private entities. Conduit Tax Exempt
Securities are issued pursuant to an indenture, resolution or other document
(each referred to herein as an "Indenture") which, among other things, governs
the terms and conditions of the securities issued thereunder. The proceeds of
the Tax Exempt Securities are loaned to the Obligor pursuant to a loan agreement
between the Conduit Issuer and the Obligor, and repayment of such proceeds may
be secured by a mortgage on the financed project or other assets of the Obligor
pursuant to a security agreement. The debt service on Conduit Tax Exempt
Securities is payable solely from loan repayments by the Obligor, and upon an
event of default, by a realization of the value of any pledged collateral.
Payment of debt service on Conduit Tax Exempt Securities is non-recourse to the
Conduit Issuer.
Revenue Tax Exempt Securities. Tax Exempt Securities issued by Revenue Bond
Issuers ("Revenue Tax Exempt Securities") are issued for the primary purpose of
providing the Revenue Bond Issuers with funds to finance or refinance its
statutory (pursuant to state law) purpose, such as to construct, operate and
maintain a water and sewer system or to construct, operate and maintain a toll
highway. Revenue Tax Exempt Securities are also issued pursuant to an Indenture.
The scheduled debt service on Revenue Tax Exempt Securities is structured so
that it is payable from all or some portion of the cash flow generated by the
Revenue Bond Issuer in connection with its operations (such as water and sewer
assessments or toll revenues). These revenues may be pledged, in whole or in
part, to the payment of the Revenue Tax Exempt Securities.
Governmental Tax Exempt Securities. Tax Exempt Securities issued by
Governmental Issuers ("Governmental Tax Exempt Securities") are issued to
provide the Governmental Issuer with funds necessary to finance or refinance its
capital expenditure and operating needs. Governmental Tax Exempt Securities are
payable from some or all of the revenues of such Issuer. If all sources of
revenue of the Issuer, including tax receipts, are available to make the
payment, the bonds are general obligation bonds secured by the full faith and
credit of the Issuer. Except in some limited circumstances Governmental Tax
Exempt Securities are not issued pursuant to an Indenture and no assets or
revenues of the Governmental Issuer are pledged.
<PAGE>
RESERVE FUNDS
Many Conduit and Revenue Tax Exempt Securities are also secured by one or
more reserve funds, the primary function of which is to provide funds if the
amounts otherwise available under the Indenture are insufficient to pay
scheduled debt service on such Tax Exempt Securities. The amount of the reserve
fund varies from one Tax Exempt Security to another, and may vary over time with
respect to an issue of Tax Exempt Securities. The amount required to be on
deposit in a reserve fund is generally a function of the amount of outstanding
Tax Exempt Securities issued, but generally does not exceed the maximum annual
debt service on the Tax Exempt Securities secured thereby, and is often much
less than such amount. A reserve fund may be valued at the market value of the
investments on deposit therein, or at the par value or cost of such investments,
as provided in the Indenture. Usually reserve funds are funded with the proceeds
of Tax Exempt Securities upon their issuance, although they may be funded over
time from revenues remaining after the payment of debt service on the Tax Exempt
Securities and other expenses. Deficiencies in reserve funds, resulting from the
application of the amounts on deposit therein to pay debt service on Tax Exempt
Securities or from changes in the valuation of the investments therein (if the
reserve fund is valued at the market value of the investments on deposit therein
and not at the par value or cost of such investments) are generally made up over
time with revenues remaining after the payment of debt service on the Tax Exempt
Securities and other expenses. Failure to make up such deficiency often results
in an event of default with respect to such Tax Exempt Security.
EVENTS OF DEFAULT AND REMEDIES
Events of Default. Indentures with respect to Conduit Tax Exempt Securities
and Revenue Tax Exempt Securities generally provide that any one of a number of
specified events will constitute an event of default with respect to the
securities issued thereunder. Such events of default typically include the
following or variations thereof: (1) failure by the Issuer to pay any
installment of interest or principal on the Tax Exempt Securities at the time
required or to redeem any of the Tax Exempt Securities at the time required; (2)
failure by the Issuer or the Obligor to observe or perform any covenant,
agreement or condition contained in the Securities, the Indenture or the loan or
security documents, which failure continues for a specified period after notice
thereof is given by the Indenture trustee or the holders of not less than a
specified percentage of the outstanding Tax Exempt Securities; and (3) the
voluntary or involuntary filing or entry of an order or decree with respect to
the Issuer or the Obligor for protection or relief under any law relating to
insolvency or bankruptcy or any similar law relating to creditors' rights.
Remedies. Indentures with respect to Conduit Tax Exempt Securities and
Revenue Tax Exempt Securities generally provide that upon the occurrence of an
event of default, the Indenture trustee may, and upon the written request of the
holders of not less than a specified percentage of the outstanding Tax Exempt
Securities must, proceed to protect and enforce the rights of the holders of the
Tax Exempt Securities by such suits, actions or other proceedings as it may deem
appropriate. Certain Indentures provide that the occurrence of an event of
default entitles the Indenture trustee and/or the holders of a specified
percentage of the outstanding Tax Exempt Securities to declare the principal and
accrued interest on the outstanding Tax Exempt Securities immediately due and
payable, subject to certain cure rights on the part of the Issuer and Obligor,
if applicable. Generally, Indentures also provide that the right of a holder of
the Tax Exempt Securities to institute any proceeding for any remedy under the
Indenture or applicable law is subject to one or more of the following
conditions: (i) the Indenture trustee shall have consented thereto; (ii) the
proceeding shall be brought for the ratable benefit of all Tax Exempt Securities
holders; and/or (iii) the Indenture trustee, after being requested to institute
a proceeding by the owners of at least a specified percentage of the outstanding
Tax Exempt Securities, shall have refused or neglected to comply with such
request within a reasonable time.
Unless otherwise specified in the Prospectus Supplement, it is anticipated
that the Trust will hold less than all of the Tax Exempt Securities of a
particular issue of Tax Exempt Securities. Accordingly, the Trust may not hold
the requisite percentage of Tax Exempt Securities outstanding under an Indenture
to effectively control the exercise of any voting rights granted to holders by
such Indenture, including those pertaining to the enforcement
<PAGE>
of remedies in the event of default, and as a result may be subject to the
decisions of the Indentures trustee or other holders.
REDEMPTION AND PAYMENT
There are three types of redemption provisions to which Tax Exempt
Securities are typically subject: mandatory sinking fund redemption, optional
redemption and special redemption.
Sinking Fund Redemption. Tax Exempt Securities which are "term bonds"
are subject to mandatory redemption prior to maturity from scheduled sinking
fund installments at a redemption price equal to the principal amount thereof
plus interest accrued to the redemption date. The particular Tax Exempt
Securities to be redeemed within a maturity are selected by lot or another
method prescribed by the applicable Indenture. Therefore, generally, the owner
of a particular Tax Exempt Security may not know on what exact date the Security
may be redeemed. In addition, Issuers generally have the right to purchase Tax
Exempt Securities subject to sinking fund redemption on the open market at a
price not greater than the redemption price. The amount of any Tax Exempt
Securities so purchased and any Tax Exempt Securities purchased or redeemed from
other than sinking fund installments is credited to reduce required future
sinking fund installments in the manner prescribed by the applicable Indenture,
which may be pro rata, chronological order, inverse chronological order,
pursuant to a cash flow test formula, or at the discretion of the Issuer or the
Obligor, as applicable.
Optional Redemption. Tax Exempt Securities are generally subject to
redemption, in whole or in part, at the option of the Issuer or the Obligor, as
applicable, from any available source (generally including the proceeds of
refunding bonds) on or after a certain specified date (generally ten years after
the date of issuance) at a price that generally is initially in excess of par
and declines incrementally to par, over a year or more, plus interest accrued to
the date of redemption.
Special Redemption. Tax Exempt Securities are generally subject to special
redemption on any date, in whole or in part, at the principal amount thereof
plus interest accrued to the redemption date (generally without a premium) from
or in an amount equal to certain sources of funds, which generally include (i)
unexpended proceeds of the issue (especially, amounts not used for construction)
and (ii) proceeds of condemnation, eminent domain, and casualty insurance
proceeds. Special redemption may be either optional or mandatory, according to
the terms of the applicable Indenture. Tax Exempt Securities may also be subject
to redemption upon determination, in accordance with the provisions of the
Indenture, that the interest thereon is not exempt from gross income of the
holders thereof for purposes of federal income taxes, at a redemption price
equal to the principal amount or the principal amount plus a redemption premium,
plus accrued interest to the redemption date.
In addition, certain issues of Tax Exempt Securities contain so-called
"mandatory tender" provisions that enable the Issuer to require the holder to
tender its Tax Exempt Securities to the Issuer for purchase at a price equal to
the principal amount thereof plus interest accrued to the special tender date in
order to permit the Issuer to remarket such Tax Exempt Securities and not to
redeem them. From the bondholder's perspective, a "mandatory tender" is
economically identical to a redemption at par plus accrued interest.
SUBSTITUTION OF TAX EXEMPT SECURITIES
Unless otherwise provided in the related Prospectus Supplement, subject to
the limitations set forth in the Trust Agreement for a Series, the Trustor may
deliver to the Trustee other Tax Exempt Securities in substitution for any Tax
Exempt Securities originally pledged as security for a Series, or deposited in
the Trust for a Series, as the case may be. Unless otherwise specified in the
related Prospectus Supplement, any such substitute Tax Exempt Securities will
have an outstanding principal balance or asset value (determined in a manner
consistent with the Tax Exempt Securities for which it is substituted) that is
greater than or equal to the outstanding principal balance or aggregate asset
value of the Tax Exempt Securities for which it is substituted and will
otherwise have such characteristics as shall be necessary to cause the Tax
Exempt Securities on such substitution, to conform more fully to the description
thereof set forth in the related Prospectus Supplement. Unless otherwise
specified in the
<PAGE>
related Prospectus Supplement, (i) no substitution will be permitted which would
delay the final Distribution Date of any Class of Certificates of the related
Series and (ii) only like kind Tax Exempt Securities may be substituted for Tax
Exempt Securities. No substitution may be made (i) if such substitution would
result in the Trust becoming required to register as an "Investment Company" for
purposes of the Investment Company Act of 1940 or (ii) if the Rating Agencies
will, as a result of such substitution, downgrade the rating on the related
Series of Certificates or any Class thereof.
ADDITION OF TAX EXEMPT SECURITIES
Unless otherwise provided in the related Prospectus Supplement, subject to
the limitations set forth in the Trust Agreement establishing a particular
Trust, the Trustor may from time to time deliver to the Trustee additional Tax
Exempt Securities in addition to the Tax Exempt Securities originally deposited
to such Trust. Upon any such addition, subject to the limitations described
herein and in the related Prospectus Supplement, a new Series with a
corresponding aggregate principal amount of Certificates will be issued by the
Trust. See "The Certificates --General." Unless otherwise specified in the
related Prospectus Supplement, (i) no addition will be permitted which would
delay the final Distribution Date of any Class of Certificates of a Series
issued by the Trust and (ii) only like kind Tax Exempt Securities may be added.
No addition may be made (i) if such addition would result in the Trust becoming
required to register as an "Investment Company" for purposes of the Investment
Company Act of 1940 or (ii) if the Rating Agencies will, as a result of such
addition, downgrade the rating on any outstanding Series of Certificates or any
Class thereof.
YIELD AND REDEMPTION CONSIDERATIONS
TIMING OF PAYMENT OR DISTRIBUTIONS OF INTEREST AND PRINCIPAL
Each payment or distribution of interest on Certificates bearing interest
(or addition to principal of a Class of Certificates) on a Payment Date or
Distribution Date will include all interest accrued during the Interest Accrual
Period specified in the related Prospectus Supplement preceding such Payment
Date or Distribution Date. If the Interest Accrual Period for a Series ends on a
date other than a Payment Date or Distribution Date for such Series, the yield
realized by the holders of such Securities may be lower than the yield that
would result if the Interest Accrual Period ended on such Payment Date or
Distribution Date. Additionally, if so specified in the related Prospectus
Supplement, interest accrued for an Interest Accrual Period for one or more
Classes may be calculated on the assumption that principal payments or
distributions (and additions to principal of the Certificates) and allocations
of losses on the Tax Exempt Securities are made on the first day of the
preceding Interest Accrual Period and not on the Payment Date or Distribution
Date with respect to such preceding Interest Accrual Period. Such method would
produce a lower effective yield than if interest were calculated on the basis of
the actual principal amount outstanding during such Interest Accrual Period.
REDEMPTIONS
The yield to maturity or final distribution on the Certificates will be
affected by the rate of redemptions of Tax Exempt Securities. The rate at which
redemptions occur on such Tax Exempt Securities will be affected by a variety of
factors, including, without limitation, the terms of the Tax Exempt Securities,
the level of prevailing interest rates, the availability of credit and economic,
tax, legal and other factors. The rate of principal payments or distributions on
the Certificates generally will correspond to the rate of principal payments,
including redemptions of the Tax Exempt Securities. Tax Exempt Securities
purchased in the primary market will not be redeemable at the option of the
Issuer thereof for a period of at least seven years from their date of issuance;
Tax Exempt Securities purchased in the secondary market will not be redeemable
at the option of the Issuer thereof for a period of at least seven years from
their date of issuance.
<PAGE>
If the purchaser of a Certificate offered at a discount calculates its
anticipated yield to maturity or final distribution based on an assumed rate of
distributions of principal that is faster than that actually experienced on the
Tax Exempt Securities, the actual yield to maturity or final distribution will
be lower than that so calculated. Conversely, if the purchaser of a Certificate
offered at a premium calculates its anticipated yield to maturity or final
distribution based on an assumed rate of distributions of principal that is
slower than that actually experienced on the Tax Exempt Securities, the actual
yield to maturity or final distribution will be lower than that so calculated.
Changes in the timing of redemptions of the Tax Exempt Securities may
significantly affect the actual yield to maturity of an investor in the
Certificates, even if the average rate of redemptions is consistent with the
investor's expectation. In general, the earlier a redemption payment is received
on the Tax Exempt Securities and paid on an investor's Certificates, the greater
the effect on such investor's yield to maturity or final distribution. The
effect on an investor's yield of principal payments or distributions occurring
at a rate higher (or lower) than the rate anticipated by the investor during a
given period may not be offset by a subsequent like decrease (or increase) in
the rate of principal payments or distribution.
To the extent permitted by the terms of the Trust Agreement and if
specified in any Prospectus Supplement, redemptions of Certificates by the Trust
or Trustor will affect the weighted average life of and the yield on the
Certificates. Such redemptions may occur in a declining interest rate
environment during which investors may be unable to invest proceeds received in
such a redemption at rates similar to those received on the Certificates.
INTEREST RATE RISK
Certain Certificates or Classes of Certificates may exhibit special
sensitivity to interest rate fluctuations. Fluctuations in interest rates will
have a significant affect on the yield to maturity of such Certificates and may,
under certain circumstances, result in a negative yield. Such reduced or
negative yields would adversely affect the yields to maturity of holders of
Certificates issued hereunder. The related Prospectus Supplement for such a
Series will specify the percentage of the pool of Tax Exempt Securities that are
expected to be especially sensitive to interest rate fluctuations.
REDEMPTIONS AND WEIGHTED AVERAGE LIFE
The stated maturity for any Class of Certificates is the date specified in
the related Prospectus Supplement, calculated on the basis of the assumptions
applicable to such Certificates set forth therein, no later than which the
entire aggregate outstanding principal thereof will be fully paid.
The rate of return on reinvestment of distributions of principal and
interest on the Tax Exempt Securities securing a Series and the rates at which
principal payments are received on such Tax Exempt Securities and the rate at
which payments are made from any Reserve Fund or other Credit Enhancement for
such Series may affect the ultimate maturity of each Class of such Series.
Redemptions of the Tax Exempt Securities will accelerate the rate at which
principal is paid or distributed on the Tax Exempt Securities. High reinvestment
rates tend to increase the amount of Excess Cash Flow which to the extent
applied to principal payments or distributions on the Certificates, will
accelerate principal payments or distributions on such Certificates.
Weighted average life refers to the average amount of time that will elapse
from the date of issue of a security until each dollar of principal of such
security will be repaid to the investor. The weighted average life of the
Certificates of a Series will be influenced by the rate at which principal on
the Tax Exempt Securities is paid.
In addition, the weighted average life of the Certificates may be affected
by the varying maturities of the Tax Exempt Securities.
OTHER FACTORS AFFECTING WEIGHTED AVERAGE LIFE
<PAGE>
Fixed or Adjustable Rate Obligations. The Tax Exempt Securities may consist
of fixed or adjustable rate obligations. The rate of redemptions with respect to
adjustable rate obligations has fluctuated in recent years. No assurance can be
given as to the rate of redemptions of the Tax Exempt Securities in stable or
changing interest rate environments.
Issuer Default. If an Issuer were to default on its obligations with
respect to a Tax Exempt Security, payments to holders of Certificates would be
impaired. If the default was never cured, it could effectively shorten the
weighted average life of the Certificates. If the default was cured, it could
lengthen the weighted average life depending on how much of the defaulted amount
was ultimately repaid. No assurance can be given that no Issuer will default. If
an Issuer does default, no assurance can be given as to when such default will
occur and how much of the default amount will ultimately be repaid.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued in Series. Each Series of Certificates will
be issued pursuant to a Trust Agreement, similar to one of the forms filed as an
exhibit to the Registration Statement of which this Prospectus is a part. Each
Trust Agreement will be filed with the Securities and Exchange Commission as an
exhibit to a Current Report on Form 8-K within 15 days following the issuance of
such Series of Certificates. The following summaries (together with additional
summaries under "The Trust Agreement" below) describe certain provisions
relating to the Certificates common to each Trust Agreement. Any differences
between the following summaries and the Trust Agreement for a particular Series
of Certificates will be described in the Prospectus Supplement for such Series
of Certificates.
Unless otherwise specified in the Prospectus Supplement with respect to a
Series, Certificates of each Series covered by a particular Trust Agreement will
evidence specified beneficial ownership interests in a separate Trust created
pursuant to such Trust Agreement. A Trust will consist of, to the extent
provided in the Trust Agreement: (i) the particular issue, series and maturity
of Tax Exempt Securities deposited into the Trust, exclusive of any interest
retained by the Company or any of its affiliates with respect to such Tax Exempt
Securities, if so specified in the related Prospectus Supplement; (ii) all
payments and collections in respect of the Tax Exempt Securities; (iii) assets
acquired by the Trustee as a result of actions taken to enforce the payment of
the Tax Exempt Securities upon the occurrence of a default with respect thereto;
and (iv) any combination, as and to the extent specified in the related
Prospectus Supplement, of a reserve fund, insurance policy, letter of credit,
surety bond or other type of credit enhancement as described under "Description
of Credit Enhancement."
Each Series of Certificates may consist of any one or a combination of the
following: (i) a single Class of Certificates; (ii) two or more Classes of
Certificates which differ as to the timing, sequential order, Interest
Distribution Basis or Rate or amount of distributions of principal or interest
or both; (iii) two or more Classes of Certificates, one or more Classes of which
will be Strip Certificates entitled to (a) principal distributions, with
disproportionate, nominal or no interest distributions or (b) interest
distributions, with disproportionate, nominal or no principal distributions;
(iv) two or more Classes of Certificates, one or more Classes of which will be
Senior Certificates, senior in right of payment to one or more Classes of
Subordinate Certificates of such Series and, to the extent set forth in the
related Prospectus Supplement, to the rights of one or more Classes of
Subordinate Certificates of other Series (any such series, a "Senior/Subordinate
Series"); or (v) other types of Classes of Certificates, as described in the
related Prospectus Supplement. If so provided in a Prospectus Supplement, credit
support for each series of Certificates will be provided by one of the forms of
credit enhancement that are described under "Description of Credit Enhancement,"
including the subordination of one or more Classes of Certificates, or by any
combination of the foregoing.
Unless otherwise specified in the Prospectus Supplement with respect to a
Series, and subject to the limitations set forth in the Trust Agreement
establishing a particular Trust, additional Tax Exempt Securities may
<PAGE>
be delivered from time to time by the Trustor to the Trustee to be held in one
or more separate Asset Groups included in the Trust Property, whereupon a new
Series with a corresponding aggregate principal amount of Certificates will be
issued, in one or more Classes, as set forth in the related Prospectus
Supplement, up to a total aggregate principal amount of Certificates outstanding
not to exceed the amount authorized in the Trust Agreement.
FORM OF CERTIFICATES
Unless otherwise specified in the related Prospectus Supplement, the
Certificates of each Series will be initially issued through the book-entry
facilities of The Depository Trust Company ("DTC"). As to any such Class of
Certificates ("DTC Registered Certificates"), the record holder of such
Certificates will be DTC's nominee. DTC is a limited-purpose trust company
organized under the laws of the State of New York, which holds securities for
this participating organizations ("Participants") and facilitates the clearance
and settlement of securities transactions among Participants through electronic
book-entry changes in the accounts of Participants. Participants include
securities brokers and dealers, banks, trust companies and clearing corporations
and may include certain other organizations. Other institutions that are not
Participants but clear through or maintain a custodial relationship with
Participants (such institutions, "Intermediaries") have indirect access to DTC's
clearance system.
Unless otherwise specified in the related Prospectus Supplement, no person
acquiring an interest in any DTC Registered Certificates (each such person, a
"Beneficial Owner") will be entitled to receive a Certificate representing such
interest in registered, certificated form, unless either (i) DTC ceases to act
as depository in respect thereof and a successor depository is not obtained, or
(ii) the Depositor elects in its sole discretion to discontinue the registration
of such Certificates through DTC. Prior to any such event, the Beneficial Owners
will not be recognized by the Trustee as holders of the related Certificates for
purposes of the Trust Agreement and Beneficial Owners will be able to exercise
their rights as owners of such Certificates only indirectly through DTC,
Participants and Intermediaries. Any Beneficial Owner that desires to purchase,
sell or otherwise transfer any interest in DTC Registered Certificates may do so
only through DTC, either directly if such Beneficial Owner is a Participant or
indirectly through Participant and, if applicable, Intermediaries. Pursuant to
the procedures of DTC, transfer of the beneficial ownership of any DTC
Registered Certificates will be required to be made in minimum denominations
specified in the related Prospectus Supplements. The ability of a Beneficial
Owner to pledge DTC Registered Certificates to persons or entities that are not
Participants in the DTC system, or to otherwise act with respect to such
certificates, may be limited because of the lack of physical certificates
evidencing such certificates and because DTC may act only on behalf of
Participants.
Distributions in respect of the DTC Registered Certificates will be
forwarded by the Trustees to DTC, and DTC will be responsible for forwarding
such payments to Participants, each of which will be responsible for disbursing
such payments to the Beneficial Owners it represents or, if applicable, to
Intermediaries. Accordingly, Beneficial Owners may experience delays in the
receipt of payments in respect of their Certificates. Under DTC's procedures,
DTC will take actions permitted to be taken by holders of any class of DTC
Registered Certificates under the Tryst Agreement only at the direction of one
or more Participants to whose account the DTC Registered Certificates are
credited and whose aggregate holdings represent no less than any minimum amount
of Percentage Interests or voting rights required therefor. DTC may take
conflicting actions with respect to any action of holders of Certificates of any
class to the extent that Participants authorize such actions. None of the
Company, the Trustee or any of their respective affiliates will have any
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the DTC registered certificates, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
References herein to a "holder" or "Certificateholder" are references to
the beneficial owner of a Certificate.
DELIVERY OF TAX EXEMPT SECURITIES
At the time of issuance of a Series of Certificates, the Company (or its
designee) will cause the Tax Exempt Securities being included in the related
Trust or Asset Group within the Trust to be delivered to the Trustee. The
<PAGE>
Trustee will, concurrently with such delivery, deliver a Series of Certificates
to the Company (or its designee) in exchange for the Tax Exempt Securities.
The Company will make certain limited representations and warranties with
respect to the Tax Exempt Securities as to (i) the price quotations it has
received with respect to the Tax Exempt Securities, (ii) the nature of the
transaction in which the Tax Exempt Securities were purchased, (iii) the
principal balance of the Tax Exempt Securities deposited into the Trust and the
percentage of the Trust as of the Closing Date represented by such principal
balance of the Tax Exempt Security, and (iv) the accuracy, to the best of its
knowledge, of certain identifying information furnished to the Trustee in
respect of each Tax Exempt Security.
The Trustee will make certain representations and warranties regarding its
authority to enter into, and its ability to perform its obligations under, the
Trust Agreement.
PRINCIPAL AND INTEREST ON THE CERTIFICATES
The method of determining, and the amount of distributions of principal and
interest (or, where applicable, of principal only or interest only) on a
particular Series of Certificates will be described in the related Prospectus
Supplement. Different Classes of Certificates may have different Interest
Distribution Rates, which may be fixed, variable or adjustable Interest
Distribution Rates, or any combination of two or more such Interest Distribution
Rates. The related Prospectus Supplement will specify the Interest Distribution
Rate or Rates for each Class, or the initial Interest Distribution Rate or Rates
and the method for determining the Interest Distribution Rate or Rates. Interest
on the Certificates will be calculated on the basis described in the Prospectus
Supplement.
In the case of a Series of Certificates which includes two or more Classes
of Certificates, the timing, sequential order, priority of payment or amount of
distributions in respect of principal, if any, and any schedule or formula or
other provisions applicable to the determination thereof (including
distributions among multiple Classes of Senior Certificates or Subordinate
Certificates) of each such Class shall be as set forth in the related Prospectus
Supplement. Unless otherwise provided in a Prospectus Supplement, distributions
in respect of principal of any Class of Certificates will be made on a pro rata
basis among all of the Certificates of such class.
DESCRIPTION OF CREDIT ENHANCEMENT
GENERAL
For any Series of Certificates, credit enhancement may be provided with
respect to one or more Classes thereof or the related Trust Property. Credit
enhancement may be in the form of a letter of credit, the subordination of one
or more Classes of Certificates of such Series, the establishment of one or more
Reserve Funds, guarantee insurance or another method of credit enhancement
described in the related Prospectus Summary, or any combination of the
foregoing. If so specified in the related Prospectus Supplement, any form of
credit enhancement (including but not limited to insurance, letters of credit or
guarantee insurance) may be structured so as to be drawn on by more than one
Series of Certificates to the extent described therein.
Unless otherwise specified in the related Prospectus Supplement for a
Series, the credit enhancement will not provide protection against all risks of
loss and will not guarantee repayment of the entire principal balance of the
Certificates and interest thereon. If losses occur which exceed the amount
covered by credit enhancement or which are not covered by the credit
enhancement, Certificateholders will bear their allocable share of deficiencies.
Moreover, if a form of credit enhancement covers more than one Series of
Certificates (each, a "Covered Series"), holders of Certificates issued by any
of such Covered Series will be subject to the risk that such credit enhancement
will be exhausted by the claims of other Covered Series prior to such Covered
Series receiving any of its intended share of such coverage.
<PAGE>
If credit enhancement is provided with respect to a Series, or the related
Trust Property, the related Prospectus Supplement will include a description of
(i) the amount payable under such credit enhancement, (ii) any conditions to
payment thereunder not otherwise described herein, (iii) the conditions (if any)
under which the amount payable under such credit enhancement may be reduced and
under which such credit enhancement may be terminated or replaced; and (iv) the
material provisions of any agreement related to such credit enhancement.
Additionally, the related Prospectus Supplement will set forth certain
information with respect to the issuer of any third-party credit enhancement,
including (i) a brief description of its principal business activities, (ii) its
principal place of business, place of incorporation and the jurisdiction under
which it is chartered or licensed to do business, (iii) if applicable, the
identity of regulatory agencies which exercise primary jurisdiction over the
conduct of its business, (iv) its total assets, and its stockholders or
policyholders surplus, if applicable, as of the date specified in the Prospectus
Supplement, (v) a statement to the effect that publicly available reports filed
by it will be delivered to Holders upon written request, or (vi) such other
financial information as may be provided by it specifically for the purpose of
inclusion in the related Prospectus Supplement.
SUBORDINATE CERTIFICATES
If so specified in the related Prospectus Supplement, one or more
Classes of Certificates of a Series may be Subordinate Certificates. If so
specified in the related Prospectus Supplement, the rights of the Holders of
Subordinate Certificates to receive distributions of principal and interest on
any Distribution Date will be subordinated to such rights of the Holders of
Senior Certificates of such Series and, to the extent specified in the related
Prospectus Supplement, to such rights of Holders of Senior Certificates of other
Series to the extent specified in the related Prospectus Supplement. Unless
otherwise provided in the Prospectus Supplement, the amount of subordination
will decrease whenever amounts otherwise payable to the Holder of Subordinate
Certificates are paid to the Holders of Senior Certificates (including amounts
withdrawn from any related Reserve Fund and paid to the Holders of Senior
Certificates), and will (unless otherwise specified in the related Prospectus
Supplement) increase whenever there is distributed to the Holders of Subordinate
Certificates amounts in respect of which subordinate payments have previously
been paid to the Holders of Senior Certificates. Unless otherwise specified in
the related Prospectus Supplement, in certain circumstances, the related Trust
Agreement may require a trustee that is not the Trustee to be appointed to act
on behalf of Holders of Subordinate Certificates.
A Series may include one or more Classes of Subordinate Certificates
entitled to receive cash flows remaining after distributions are made to all
other Classes designated as being senior thereto. Such right will effectively be
subordinate to the rights of other Holders of Senior Certificates, but will not
be limited to a specified dollar amount of subordination.
The related Prospectus Supplement will set forth information concerning the
amount of subordination of a Class or Classes of Subordinate Certificates of a
Series, the circumstances in which such subordination will be applicable, the
manner, if any, in which the amount of subordination will decrease over time,
the manner of funding any related Reserve Fund and the conditions under which
amounts in any related Reserve Fund will be used to make distributions to
Holders of Senior Certificates and/or to Holders of Subordinate Certificates or
be released from the related Trust.
LETTER OF CREDIT
The letter of credit, if any, with respect to a Series or Classes of
Certificates will be issued by the bank or financial institution specified in
the related Prospectus Supplement (the "LC Bank"). Under the letter of credit,
the LC Bank will be obligated to honor drawings thereunder in an aggregate fixed
dollars amount, net of unreimbursed payments thereunder, equal to the percentage
specified in the related Prospectus Supplement of the aggregate principal
balance of one or more Classes of Certificates (the "LC Percentage"). If so
specified in the related Prospectus Supplement, the letter of credit may permit
drawings in the event of losses not covered by insurance policies or other
credit support, such as losses arising from damage not covered by standard
hazard insurance policies. The amount available under the letter of credit will,
in all cases, be reduced to the extent of the unreimbursed payments thereunder.
The obligations of the LC Bank under the letter of credit for each Series or
<PAGE>
Class of Certificates will expire at the earlier of the date specified in the
related Prospectus Supplement or the termination of the Trust, as applicable. A
copy of the letter of credit for a Series, if any, will be filed with the
Commission as an exhibit to a Current Report on Form 8-K to be filed within 15
days of issuance of the Certificates of the related Series.
BOND INSURANCE POLICY
A Bond insurance policy, if any, with respect to a Series or Class of
Certificates will be provided by one or more insurance companies. Such bond
insurance policy will guarantee, with respect to one or more Classes of
Certificates of the related Series, timely distributions of interest and full
distributions of principal on the basis of a schedule of principal distributions
set forth or determined in the manner specified in the related Prospectus
Supplement. If so specified in the related Prospectus Supplement, the bond
insurance policy will also guarantee against any payment made to a
Certificateholders which is subsequently recovered as a "voidable preference"
payment under the Bankruptcy Code. A copy of the bond insurance policy for a
Series, if any, will be filed with the Commission as an exhibit to a Current
Report in Form 8K to be filed with the Commission within 15 days of issuance of
the Bonds of the related Series.
RESERVE FUNDS
One or more Reserve Funds may be established with respect to a Series or
one or more Classes of Certificates, in which cash, a letter of credit, eligible
investments, a demand note or a combination thereof, in the amounts, if any, so
specified in the related Prospectus Supplement will be deposited. The Reserve
Funds for a Series also may be funded over time by depositing therein a
specified amount of the distributions received on the related Trust Property as
specified in the related Prospectus Supplement.
Amounts on deposit in any Reserve Fund, together with the reinvestment
income thereon, if any, will be applied by the Trustee for the purposes in the
manner and to the extent specified in the related Prospectus Supplement. A
Reserve Fund may be provided to increase the likelihood of timely payments or
distributions of principal of and interest on the Certificates, if required as a
condition to the rating of such Series by each Rating Agency, or to reduce the
likelihood of special redemptions with respect to any Series. Following each
Distribution Date, amounts in such Reserve Fund in excess of any amount required
to be maintained therein may be released from the Reserve Fund under the
conditions, in the manner and to the extent specified in the related Prospectus
Supplement and will not be available for further application by the Trustee.
Moneys deposited in any Reserve Fund will be invested in certain eligible
investments, except as otherwise specified in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, any
reinvestment income or other gain from such investments will be credited to the
related Reserve Fund for such Series, and any loss resulting from such
investments will be charged to such Reserve Fund. The Reserve Fund, if any, for
a Series will not be a part of Trust or Trust Property, as applicable, unless
otherwise specified in the related Prospectus Supplement.
Additional information concerning any Reserve Fund will be set forth in the
related Prospectus Supplement, including the initial balance of such Reserve
Fund, the balance required to be maintained in the Reserve Fund, the manner in
which such required balance will decrease over time, the manner of funding such
Reserve Fund, the purposes for which funds in the Reserve Fund may be applied to
make payments or distributions to Certificateholders and use of investment
earning from the Reserve Fund, if any.
MAINTENANCE OF CREDIT ENHANCEMENT
If a letter of credit has been obtained for a Series of Certificates, the
Trustee will be obligated to exercise its best reasonable efforts to keep or
cause to be kept such letter of credit in full force and effect throughout the
term of the applicable Trust, unless coverage thereunder has been exhausted
through payment of claims or otherwise, or substitution therefor is made as
described below under "Reduction or Substitution of Credit Enhancement."
<PAGE>
Unless otherwise specified in the applicable Prospectus Supplement, if a letter
of credit obtained for a Series of Certificates is scheduled to expire prior to
the date the final distribution on such Certificates is made and coverage under
such letter of credit has not been exhausted and no substitution has occurred,
the Trustee will draw the amount available under the letter of credit and
maintain such amount in trust for such Certificateholders.
If a bond insurance policy or surety bond has been obtained for a Series of
Certificates, the Trustee will be obligated to exercise its best reasonable
efforts to keep each such bond insurance policy or surety bond in full force and
effect throughout the term of the applicable Trust Agreement, unless coverage
thereunder has been exhausted through payment of claims.
REDUCTION OR SUBSTITUTION OF CREDIT ENHANCEMENT
Unless otherwise provided in the Prospectus Supplement, the Company may, at
any time, replace the credit enhancement then in effect with successor credit
enhancement, provided that prior to the substitution of any credit enhancement,
the Company shall have delivered to the Trustee (i) written advice from any
Rating Agency that provides a rating for the affected Certificates that upon
such replacement the ratings on the Certificates will not be reduced, suspended,
or withdrawn as a result of such replacement, (ii) an opinion of independent
counsel as to the legality, validity and enforceability of the successor credit
enhancement, and (iii) an opinion of counsel acceptable to the Trustee that the
substitution or replacement of the successor letter of credit is authorized by
the Trust Agreement and will not cause interest on the Certificates to be
included in the gross income of the owners of such Certificates for purposes of
federal income taxation.
Each form of credit enhancement will provide that upon satisfaction of the
obligations covered with respect to such credit enhancement or upon the honoring
of a draw or claim under such credit enhancement the amount available thereunder
shall be reduced, subject, if so provided in the terms thereof and in the
Prospectus Supplement, to reinstatement in accordance with the terms thereof.
THE COMPANY
The Company is a wholly owned subsidiary of Tucker Anthony Holding
Corporation. Tucker Anthony Incorporated, which may act as underwriter in
offerings made hereby and by the related Prospectus Supplement, is also a wholly
owned subsidiary of Tucker Anthony Holding Corporation. The Company was
incorporated in the State of Delaware on September 28, 1983. The Company's sole
business will be to act as the depositor of Tax Exempt Securities into Trusts
formed to issue certificates such as the Certificates and otherwise to act as
the Trustor as described herein and in any Prospectus Supplement. Prior to the
filing of the Registration Statement of which this Prospectus is a part, the
Company had limited business activity, unrelated to its activities as described
in this Prospectus and any related Prospectus Supplement. The principal
executive office of the Company is located at One Beacon Street, Boston,
Massachusetts and its telephone number is (617) 725-2487.
THE TRUST AGREEMENT
As described above under "Description of the Certificates -- General," each
Series of Certificates will be issued pursuant to a Trust Agreement as described
in that section.
ESTABLISHMENT OF TRUST ACCOUNT; ASSIGNMENT OF TAX EXEMPT SECURITIES
The Trustee will establish a trust account (the "Trust Account") with
respect to each Series of Certificates, in which it shall hold the Tax Exempt
Securities delivered to it by the Trustor, together with all moneys received as
principal, premium, if any, or interest with respect to the Tax Exempt
Securities pending disbursement as provided in the Trust Agreement. The Trustee
is authorized to establish various subaccounts within the Trust Account
corresponding to the characterization of moneys to be deposited therein so that
the Trustee may at all times
<PAGE>
ascertain such characterization. Subject to the provisions of the Trust
Agreement described under "Duties and Liability of Trustee" below, the Trustee
shall assume full responsibility and risk for the Tax Exempt Securities on
deposit with it and all moneys received by it as principal of, premium, if any,
or interest on the Tax Exempt Securities, and shall bear all costs and expenses
incurred by it as trustee of such Tax Exempt Securities (subject to the terms
hereof and to such other payment or reimbursement of its expenses as may be set
forth in the Trust Agreement or one or more separate agreements). Moneys to the
credit of the Trust Account shall be held by the Trustee uninvested. Except as
set forth in the related Prospectus Supplement, the Tax Exempt Securities and
moneys received and held in the Trust Account will not be subject to any right,
charge, security interest, lien or claim of any kind in favor of the Trustee or
any person claiming through it. The Trustee shall not have the power or
authority to transfer, assign, hypothecate, pledge or otherwise dispose of any
of the assets of the Trust Account to any person, except as expressly permitted
by the provisions of the Trust Agreement.
The Tax Exempt Securities will be irrevocably transferred by the Trustor or
another entity acting on behalf of the Trustor to the Trustee and will be held
in the name of the Trustee or its nominee as specified in the Trust Agreement.
The Trustee is authorized and directed to deliver any instrument or document
necessary to obtain registration or registration of transfer of the Tax Exempt
Securities and to obtain payment of principal, premium, if any, and interest
thereon. The Trustee is further authorized to sign and file any declaration,
affidavit, certificate of ownership or other document required to service the
Trust Account and to present for payment all Tax Exempt Securities or coupons
thereon required to be presented as a condition to payment at the maturity or
upon call for redemption thereof.
OBLIGATIONS OF TRUSTEE AND TRUSTOR
The Trustee has no obligation with respect to the Tax Exempt Securities
except as otherwise provided in the Trust Agreement. The liabilities of the
Trustor with respect to the Tax Exempt Securities and the Certificates, if any,
will be specified in the Trust Agreement for any particular Series of
Certificates and described in the related Prospectus Supplement.
REPORTS TO CERTIFICATEHOLDERS
On each Distribution Date, or as soon thereafter as is practicable, the
Trustee shall forward by mail to each Holder a statement setting forth the
following information, on a Class by Class basis, as applicable:
(a) the amount of such distribution allocable to interest on the
Tax Exempt Securities;
(b) the amount of such distribution allocable to principal on the
Tax Exempt Securities;
(c) if the payments received by the Trustee with respect to the Tax
Exempt Securities are insufficient to make the required interest
distributions with respect to the Certificates, the aggregate amount of all
such interest shortfalls on such Distribution Date and the amount of such
interest shortfalls to be allocated to such Class of Certificates;
(d) if any loss is incurred with respect to the Tax Exempt
Securities, the aggregate amount of all such losses on such Distribution
Date and the amount of such losses to be allocated to such Class of
Certificates;
(e) the aggregate amount of interest remaining unpaid, if any, for
each Class of Certificates, after giving effect to the distribution made on
such Distribution Date;
(f) the aggregate Certificate Principal Balance (as defined in the
Trust Agreement) of each Class of Certificates after giving effect to the
distribution made on such Distribution Date and to losses allocated on such
Distribution Date;
<PAGE>
(g) in the case of any credit enhancement described in the related
Prospectus Supplement, the amount drawn on such credit enhancement and
included in amounts distributed to Certificateholders, and the remaining
balance or coverage of such credit support as of the close of business on
the applicable Distribution Date after giving effect to such withdrawal;
(h) in the case of any Series which includes Subordinate
Certificates, the subordinated amount, if any, determined as of the related
Distribution Date and if the distribution to the Holders of Senior
Certificates is less than their required distribution, the amount of any
shortfall; and
(i) in the case of a Trust treated as a partnership for federal
income tax purposes, to the extent additional Tax Exempt Securities are
deposited into the Trust and a corresponding aggregate principal amount of
Certificates are issued, information regarding such additional Tax Exempt
Securities and the Trust Property as included in the related Prospectus
Supplement and information regarding the aggregate principal amount of
Certificates so issued, on a Class by Class basis; and
(j) such other information as specified in the related Trust
Supplement.
In addition, upon the issuance of a new Series of Certificates, the Trustee
shall forward to each Holder of Certificates of such outstanding Series a copy
of the information concerning the Tax Exempt Securities relating to such new
Series of Certificates included in the related Prospectus Supplement.
TERMINATION EVENTS
Upon the occurrence of any of the following (herein called "Termination
Events"):
(a) the Trustee shall fail to distribute to any Certificateholder any
distribution required to be made under the terms of the Trust Agreement and
such failure shall continue unremedied for five days;
(b) the Company shall consent to the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceeding of or relating to the
Company or a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceeding, or for the winding up or
liquidation of its affairs, shall have been entered against the Company or
the Company shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment to the benefit of
its creditors or voluntarily suspend payment of its obligations;
(c) the Company shall cease to be a party to the Trust Agreement or a
failure of the Company to maintain the Company's Required Interest (as
defined in the Trust Agreement); or
(d) it becomes necessary to register the Trust as an "investment
company" under the Investment Company Act of 1940, as amended;
the Trustee shall notify each registered Certificateholder of the occurrence of
such Termination Event as soon as practicable after it obtains knowledge
thereof. The Certificateholders representing at least 66% of the voting rights
of Certificates affected by a Termination Event may waive such Termination
Event; provided, however, that a Termination Event under section (a) above may
only be waived by all of the Certificateholders. Upon any such waiver, such
Termination Event shall cease to exist and shall be deemed to have been remedied
for every purpose hereunder. No such waiver shall extend to any subsequent or
other Termination Event nor shall impair any right consequent thereon except to
the extent expressly waived. Unless a Termination Event is waived by the
requisite number of Certificateholders, as soon as is commercially practical,
after the giving of such notice, the Trustee shall
<PAGE>
sell the Tax Exempt Securities to the highest bidder in an auction, subject only
to the requirement that at least one bid is received from a person that is not
an affiliate of the Company. The proceeds of such a sale or, if no such bids are
received, the assets of the Trust shall be distributed on the next Distribution
Date to the Certificateholders pro rata based on the outstanding Certificate
Principal Balances of the Certificates they hold.
TERM OF EFFECTIVENESS
Except as provided below, the Trust Agreement is to remain in effect until
the date upon which all of the Tax Exempt Securities have been paid in full at
the maturity or early redemption thereof and the payments on such Tax Exempt
Securities has been distributed to Holders of Certificates in accordance with
the Trust Agreement. The discharge of any indenture or other document related to
any of the Tax Exempt Securities will not result in a termination of the Trust
Agreement. The Trust Agreement shall terminate with the consequences set forth
above under "--Termination Events" upon the occurrence of any Termination Event
unless such Termination Event shall have been waived as described above.
THE TRUSTEE
The identity of the commercial bank, trust company or other fiduciary named
as the Trustee for each Series of Certificates will be set forth in the related
Prospectus Supplement. The entity serving as Trustee may have normal banking
relationships with the Trustor. In addition, for the purpose of meeting the
legal requirements of certain local jurisdictions, the Trustee will have the
power to appoint co-trustees or separate trustees of all or any part of the
Trust relating to a Series of Certificates. In the event of such appointment,
all rights, powers, duties and obligations conferred or imposed upon the Trustee
by the Trust Agreement relating to such Series will be conferred or imposed upon
the Trustee and each co-trustee and separate trustee jointly, or in any
jurisdiction in which the Trustee shall be incompetent or unqualified to perform
certain acts, singly upon such separate trustee or co-trustee who shall exercise
and perform such rights, powers, duties and obligations solely at the direction
of the Trustee. The Trustee may also appoint agents to perform any of the
responsibilities of the Trustee, which agents shall have any or all of the
rights, powers, duties and obligations of the Trustee conferred on them by such
appointment; provided, that the Trustee shall continue to be responsible for its
duties and obligations under the Trust Agreement.
DUTIES AND LIABILITY OF THE TRUSTEE
The Trustee accepts and agrees to fulfill the obligations imposed upon it
by the Trust Agreement, but only upon the terms and conditions set forth therein
and subject to the provisions thereof. The Trustee shall incur no liability to
any Holder of any Certificate if, by reason of any provision of any present or
future law, or regulation thereunder, of any governmental authority, or by
reason of any natural disaster or war or other circumstance beyond its control,
the Trustee is prevented from doing or performing any act or thing which the
terms of the Trust Agreement provide should be done or performed. The Trustee
will assume no obligation and shall not be subject to any liability to Holders
of Certificates or the Trustor in the performance of its duties, other than by
reason of willful misconduct, bad faith or gross negligence or as may be
required by ERISA. The Trustee is not under any obligation to take any action
which may tend to involve it in any expense or liability, the recover or payment
of which within a reasonable time is not, in its reasonable opinion, assured to
it. The Trustee may own and deal in Tax Exempt Securities, in obligations of the
same issue and maturity as the Tax Exempt Securities and in the Certificates, as
though it were not the Trustee under this Agreement. The Trustee will be
required at all times to maintain a fidelity bond or other insurance (which may
be self-insurance) in reasonable form and amount to protect against loss due to
dishonest or fraudulent action by its employees in connection with its
obligations under the Trust Agreement.
<PAGE>
RESIGNATION AND REMOVAL OF TRUSTEE
The Trustee may at any time resign as Trustee by giving written notice of
its election to do so to the Trustor and such resignation shall take effect upon
the appointment of a successor Trustee by the Trustor, subject to and agreeing
to comply with the terms and conditions of the Trust Agreement. If at any time
the Trustee becomes incapable of acting or is adjudged a bankrupt or insolvent,
or a receiver of the Trustee or of its property is appointed, or any public
officer takes charge or control of the Trustee or of its property or affairs for
the purpose of rehabilitation, conservation or liquidation, then any Holder of a
Certificate may, on behalf of itself and all others similarly situated, petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
If at any time the Trustee notifies the Trustor that it elects to resign as
Trustee, the Trustor, or other entity specified in any Prospectus Supplement,
shall, within 45 days after the delivery of the notice of resignation or
removal, appoint a successor Trustee, which is to be a commercial bank or trust
company having its principal office in the United States of America and having
combined capital and surplus of at least $50,000,000. If no successor Trustee
has been so appointed within such 45-day period, the Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee. Any
corporation or association into or with which the Trustee may be merged,
consolidated or converted will be the successor of such Trustee without the
execution or filing of any document or any further act.
Notwithstanding the foregoing, no resignation or removal of the Trustee in
accordance with the provisions of the Trust Agreement will become effective
until its successor Trustee has accepted its appointment thereunder.
VOTING RIGHTS
The voting and other rights, if any, of Certificateholders of any Series of
Certificates will be set forth in the related Trust Agreement and described in
the Prospectus Supplement. If so provided in any Prospectus Supplement, the
consent of the provider of credit enhancement with respect to any Series or
Class of Certificateholders may be required in addition to or in lieu of the
consent of the Certificateholders of such Series or Class.
If so provided in the related Prospectus Supplement, the Trust Agreement
with respect to a Trust treated as a partnership for federal income tax purposes
may provide that a transferee of one or more Classes of Certificates will become
entitled to exercise voting rights as a Certificateholder only if it obtains the
consent of the Trustor at the time of transfer, which consent may be withheld by
the Trustor in its sole discretion.
AMENDMENTS OF TRUST AGREEMENT
The Trust Agreement may be amended at any time and from time to time by
agreement between the Trustor and the Trustee, with prior written notice to the
Rating Agencies, without the consent of any of the Certificateholders to cure
any ambiguity, to correct or supplement any provision of the Trust Agreement or
for the purpose of adding any provision or changing in any manner or eliminating
any of the provisions in the Trust Agreement or of modifying in any manner the
rights of the Certificateholders; provided, however, that such action shall not,
as evidenced by an opinion of counsel, adversely affect in any material respect
the interests of any Certificateholder.
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
OVERVIEW
The following is a general discussion of certain of the anticipated
material federal income tax consequences of the purchase, ownership, and
disposition of Certificates, which may consist of Grantor Trust Certificates (as
defined) and Partnership Certificates (as defined). Because the income tax
consequences of an investment in any Certificate will depend on the terms of the
Certificate, whether the issuer is treated as a grantor trust or partnership for
federal income tax purposes, and the tax attributes of the assets
collateralizing or otherwise supporting such Certificate, the discussion herein
is limited to a discussion of certain tax consequences common to several types
of transactions. The Prospectus Supplement for each Series of Certificates will
describe additional consequences that relate to the specific Certificates issued
pursuant thereto. ACCORDINGLY, THIS DISCUSSION SHOULD ONLY BE READ IN CONNECTION
WITH THE DISCUSSION UNDER "CERTAIN FEDERAL INCOME TAX CONSEQUENCES" IN THE
PROSPECTUS SUPPLEMENT TO WHICH INVESTORS ARE REFERRED.
The discussion below does not purport to address all federal income tax
consequences that may be applicable to particular categories of investors
subject to special rules, such as pension plans or other tax exempt investors,
banks, thrifts, insurance companies, real estate investment trusts, regulated
investment companies, foreign investors, dealers in securities or currencies and
persons so treated for federal income tax purposes, persons whose functional
currency is other than the U.S. dollar, and persons who hold securities as part
of a straddle, hedging or conversion transaction. The discussion is based on the
Internal Revenue Code of 1986 (the "Code"), legislative history, regulations,
cases, administrative rulings and other authorities that are currently in
effect, or in the case of certain regulations, proposed, all of which,
particularly proposed regulations, are subject to change or differing
interpretations. Any such change or differing interpretations may apply
retroactively. Furthermore, the discussion does not address any of the state,
local or foreign tax consequences of the purchase, ownership and disposition of
the Certificates. INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS IN DETERMINING
THE FEDERAL, STATE AND LOCAL INCOME AND OTHER TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP, AND DISPOSITION OF CERTIFICATES.
Trusts that will issue Strip Certificates will qualify as grantor trusts
under the Code and the consequences of owning Certificates issued by such a
trust are discussed under the caption "Grantor Trust Certificates" below. In the
case of other Trusts, the Certificates will be treated as partnership interests
for federal income tax purposes. The consequences of owning Certificates issued
by such a trust is discussed under the caption "Partnership Certificates" below.
Prospective investors should be aware that neither the Company nor the
Trustee will seek any rulings from the Internal Revenue Service regarding any of
the tax consequences discussed herein. Further, while the Company expects to
receive an opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., tax
counsel to the Company ("Tax Counsel"), with respect to the federal income tax
characterization of each Series of Certificates and all material federal income
tax consequences at the time of issuance of such Series, no such opinion is
binding on the Internal Revenue Service or the courts.
IN ADDITION TO THE FEDERAL INCOME TAX CONSEQUENCES DESCRIBED HEREIN,
POTENTIAL INVESTORS SHOULD CONSIDER THE STATE TAX CONSEQUENCES OF THE
ACQUISITION, OWNERSHIP, AND DISPOSITION OF THE CERTIFICATES. STATE TAX LAW MAY
DIFFER SUBSTANTIALLY FROM FEDERAL TAX LAW, AND THIS DISCUSSION DOES NOT PURPORT
TO DESCRIBE ANY ASPECT OF THE TAX LAWS OF ANY STATE. THEREFORE, POTENTIAL
INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE VARIOUS
STATE TAX CONSEQUENCES OF AN INVESTMENT IN THE CERTIFICATES.
On the respective date of initial issuance and delivery of each of the
underlying Tax Exempt Securities, the respective bond counsel rendered its
opinion to the effect that, under existing laws, interest on the Tax Exempt
Securities is [(i)] excludable from gross income for federal income tax purposes
[and (ii) exempt from State [and local] income taxes]. In rendering its
opinions, Tax Counsel has not independently verified the opinions of bond
counsel. Rather, Tax Counsel has assumed the continuing correctness of such
opinions, continuing compliance with the requirements of the Code that must be
met after the issuance of the Tax Exempt Securities in order that interest
<PAGE>
not be included in gross income for federal income tax purposes, and that no
circumstances have occurred that would adversely affect the exclusion from gross
income for federal income tax purposes of interest on the Tax Exempt Securities
as described in the opinions of bond counsel. Additionally, Tax Counsel has not
undertaken to determine or to inform Certificateholders whether such
circumstances have occurred or if they do occur in the future.
GRANTOR TRUST CERTIFICATES
Certificates representing interests in certain Series may be issued in the
form of trust certificates in a trust treated as a grantor trust for federal
income tax purposes ("Grantor Trust Certificates").
Upon the issuance of any Series of Grantor Trust Certificates, Tax Counsel
will deliver its opinion generally to the effect that under then current law and
assuming compliance with the constituent documents of the Trust (and certain
related agreements), the Trust will be classified, for federal income tax
purposes, as a grantor trust and not as an association taxable as a corporation,
and a purchaser of Certificates will have purchased stripped bonds or stripped
coupons from the Tax Exempt Securities and will be treated as the owner thereof
for federal income tax purposes. Discount accruing on Certificates at a yield
not exceeding the coupon rate of interest on the Tax Exempt Securities (or, at
the election of the taxpayer, the original yield to maturity of the Tax Exempt
Securities) will be excludable from gross income for federal income tax
purposes.
For a more detailed discussion, see "Certain Federal Income Tax
Consequences" in the related Prospectus Supplement.
PARTNERSHIP CERTIFICATES
Certificates representing interests in certain Series may be issued in the
form of trust certificates in a business trust treated as a partnership for
federal income tax purposes ("Partnership Certificates").
Upon the issuance of any Series of Partnership Certificates, Tax Counsel
will deliver its opinion generally to the effect that under then current law and
assuming compliance with the constituent documents of the Trust (and certain
related documents), the arrangement among the holders of the Partnership
Certificates evidenced by the Trust Agreement will be classified as a
partnership for federal income tax purposes. Consequently, each
Certificateholder will be treated as a member of such partnership, and all
amounts allocated to Certificateholders that are attributable to payments of
interest on the Tax Exempt Securities that are excludable from federal gross
income will be excludable from the federal gross income of the
Certificateholders. The foregoing opinions are based upon and subject to the
discussion set forth under "Overview" above and the discussion set forth in the
related Prospectus Supplement.
For a more detailed discussion, see "Certain Federal Income Tax
Consequences" in the related Prospectus Supplement.
ADDITIONAL TAX CONSIDERATIONS
Expenses. The Code disallows to individuals, estates and trusts any
deduction for expenses allocable to interest which is wholly tax-exempt and to a
regulated investment company which distributes exempt-interest dividends that
portion of its expenses determined by the ratio of its exempt income to its
total income (gross income plus exempt income), excluding capital gain net
income. To the extent not so disallowed, a Certificateholder will be entitled to
deduct its proportionate share of reasonable fees paid by the Trust, subject to
the following limitations. If the Certificateholder is an individual, estate or
trust, the deduction for such fees will be allowed only to the extent that such
holder's miscellaneous itemized deductions, including such fees, exceed two
percent of the holder's adjusted gross income. In the case of Certificateholders
who are individuals, certain otherwise allowable itemized deductions, including
such fees, will be reduced by an amount equal to three percent of such holder's
adjusted gross
<PAGE>
income in excess of a statutory threshold (in 1995 $114,700 for single and
joint-filing individuals, $57,350 for married taxpayers filing separately).
Conduit Treatment for Regulated Investment Companies. Tax Counsel will
opine that a regulated investment company (a "RIC") investing in Certificates
should be permitted to take into account its share of the assets of the Trust
for purposes of the asset qualification tests under Sections 851(b)(4) and
852(b)(5) of the Code. Treasury Regulation Section 1.856-3(g) provides for such
"conduit" treatment of partnership interests held by real estate investment
trusts (each, a "REIT") for purposes of the asset diversification tests
applicable to REITs. Although there is no similar regulation applicable to RICs,
the statutory taxation schemes applicable to REITs and RICs are similar and
authorities applicable to one type of entity are often applied to the other. The
IRS has adopted a similar approach in General Counsel's Memorandum 39207
(December 14, 1983) and in several private letter rulings. However, there can be
no assurance that the IRS will agree that such "conduit" treatment is
appropriate for interests in partnerships that differ substantially from
ownership of undivided interests in the underlying assets. In addition, if the
IRS were successfully to contend that a Class or Classes of Certificates
constitutes indebtedness rather than an equity ownership interest in the Trust,
the holders of the other Classes of Certificates likely would be treated as
owning all of the Tax Exempt Securities, subject to a borrowing from the holders
of the Classes treated as indebtedness, for purposes of the foregoing asset
qualification tests.
Original Issue Discount. The initial public offering price of certain of
the Tax Exempt Securities may have been less than the amount payable at maturity
(i.e., there may be original issue discount). Original issue discount is
excludable from gross income for federal income tax purposes to the same extent
as interest on tax-exempt obligations. The Code provides that original issue
discount accrues in accordance with a constant interest method based on the
compounding of interest and that a holder's adjusted basis for purposes of
determining a holder's gain or loss on disposition of such obligations will be
increased by such amount. Holders should consult their tax advisors concerning
the determination of the initial offering price to the public and the accrual of
original issue discount with respect to the Tax Exempt Securities.
Market Discount. If the Trust purchases any Tax Exempt Security at a
market discount, rather than an original issue discount, and such market
discount exceeds a statutorily specified de minimis amount, then gain upon
-- -------
the disposition of such security will be treated as ordinary income rather than
capital gain to the extent of the market discount accruing during the Trust's
holding period, and such income will be taken into account by holders of
Certificates.
Amortization of Bond Premium. If the Trust's cost for a Tax Exempt Security
exceeds the face amount of the Tax Exempt Security, the Trust will be considered
to have purchased the Tax Exempt Security at a premium. The Trust will be
required to amortize any premium relating to the Tax Exempt Security in
accordance with the rules of the Code. Generally, bond premium must be amortized
on a constant yield method. Amortization of premium will be allocated among
Certificateholders in accordance with the allocation provisions in the Trust
Agreement. Amortization of premium on the Tax Exempt Security will reduce the
Trust's tax basis for the Tax Exempt Securities and the basis of corresponding
Certificateholders in their Certificates, but will not result in any deduction
from the income of the Trust or of the Certificateholders.
Alternative Minimum Tax. The opinion of bond counsel (or other information
provided by bond counsel) with regard to the federal alternative minimum tax is
set forth in Appendix B. Holders are advised to consult their tax advisors as
----------
to the applicability of the alternative minimum tax.
Collateral Tax Considerations. The Code contains provisions that could
result in other tax consequences as a result of the ownership of the
Certificates or the receipt of interest that is excludable from gross income.
Thus, ownership of the Certificates may result in collateral federal income tax
consequences to certain taxpayers including, without limitation, financial
institutions, property and casualty insurance companies, certain foreign
corporations doing business in the United States, certain Subchapter S
corporations with excess passive income, individual recipients of Social
Security or Railroad Retirement benefits, individuals who may otherwise qualify
for the earned income credit, and taxpayers who may be deemed to have incurred
or continued indebtedness to purchase or carry
<PAGE>
tax-exempt obligations. The Code contains provisions which may limit or deny any
tax deduction or any adjustment to a holder's basis with respect to the payment
of any expenses associated with the purchase of the Certificates. Prospective
purchasers of the Certificates should consult their advisors as to the
applicability of any such collateral tax consequences.
Information Reporting. All taxpayers are required to report for
informational purposes on their federal income tax returns the amounts of tax-
exempt interest they receive, which would include their share of the interest
earned on the Tax Exempt Securities.
Future Legislation. Various proposals have been, or may be, introduced
before Congress from time to time to restrict or eliminate the federal income
tax exemption, to impose certain collateral tax consequences on the ownership of
municipal obligations (such as the Tax Exempt Securities), or to change the
rates of tax imposed by the Code in a manner which might affect the relative
value of the federal income tax exemption for the holders of such municipal
obligations. No prediction can be made regarding what additional legislation, if
any, may be proposed with respect to the tax-exempt status of interest on
municipal obligations, nor can any prediction be made whether any legislation,
if enacted, would apply to the Tax Exempt Securities, the Trust or the
Certificates. There can be no assurance that any such legislation, if enacted,
would not have an adverse impact on the price and marketability of the Tax
Exempt Securities, which in turn may have an adverse impact on the price and
marketability of the Certificates.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C., Boston, Massachusetts.
USE OF PROCEEDS
The net proceeds from the sale of each Series will be used to (i) purchase
the Tax Exempt Securities deposited into a Trust, (ii) to repay indebtedness
which has been incurred to acquire Tax Exempt Securities, (iii) to establish any
Reserve Funds described in the related Prospectus Supplement, (iv) to pay costs
of structuring, guaranteeing, credit enhancing and issuing such Certificates or
(v) for other purposes relating to one or more of the foregoing, as set forth in
the Prospectus Supplement. If so specified in the related Prospectus Supplement,
the purchase of the Tax Exempt Securities for a Series may be effected by an
exchange of Certificates with the seller of such Tax Exempt Securities.
METHODS OF DISTRIBUTION
The Certificates offered hereby and by the related Prospectus Supplements
will be offered in Series through one or more of the methods described below.
The Prospectus Supplement prepared for each Series will describe the method of
offering being utilized for that Series and will state the net proceeds to the
Company from such sale.
The Company intends that Certificates will be offered through the following
methods from time to time and that offerings may be made concurrently through
more than one of these methods or that an offering of a particular Series of
Certificates may be made through a combination of two or more of these methods.
Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and
public re-offering by underwriters;
2. By placements with institutional investors through dealers; and
<PAGE>
3. By direct placements with institutional investors.
In addition, if specified in the related Prospectus Supplement, a Series of
Certificates may be offered in whole or in part in exchange for the Tax Exempt
Securities (and other assets, if applicable) that would comprise the Trust in
respect of such Certificates.
If underwriters are used in a sale of any Certificates (other than in
connection with an underwriting on a best efforts basis), such Certificates will
be acquired by the underwriters for their own account and may be resold from
time to time on one or more transactions, including negotiated transactions, at
fixed public offering prices or at varying prices to be determined at the time
of sale or at the time of commitment therefor. Such underwriters may be broker-
dealers affiliated with the Company whose identities and relationships to the
Company will be as set forth in the related Prospectus Supplement. The managing
underwriter or underwriters with respect to the offer and sale of a particular
Series of Certificates will be set forth on the cover of the Prospectus
Supplement relating to such Series and the members of the underwriting
syndicate, if any, will be named in such Prospectus Supplement.
In connection with the sale of the Certificates, underwriters may receive
compensation from the Company or from purchasers of the Certificates in the form
of discounts, concessions or commissions. Underwriters and dealers participating
in the distribution of the Certificates may be deemed to be underwriters in
connection with such Certificates, and any discounts or commissions received by
them from the Company and any profit on the resale of Certificates by them may
be deemed to be underwriting discounts and commissions under the Securities Act
of 1933, as amended.
It is anticipated that the underwriting agreement pertaining to the sale of
any Series of Certificates will provide that the obligations of the underwriters
will be subject to certain conditions precedent, that the underwriters will be
obligated to purchase all such Certificates if any are purchased (other than in
connection with an underwriting on a best efforts basis) and that, in limited
circumstances, the Company will indemnify the several underwriters and the
underwriters will indemnify the Company against certain civil liabilities,
including liabilities under the Securities Act of 1933, as amended, or will
contribute to payments required to be made in respect thereof.
The Prospectus Supplement with respect to any Series offered by placements
through dealers will contain information regarding the nature of such offering
and any agreements to be entered into between the Company and purchasers of
Certificates of such Series.
Purchasers of Certificates, including dealers, may, depending on the facts
and circumstances of such purchases, be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended, in connection with reoffers
and sales by them of Certificates. Certificateholders should consult with their
legal advisors in this regard prior to any such reoffer or sale.
RATINGS
It will be a condition to the issuance of any Certificates offered by this
Prospectus and the related Prospectus Supplement that they be rated in one of
the four highest applicable rating categories by at least one nationally rated
statistical rating organization ("Rating Agency"). The rating or ratings
applicable to Certificates of each Series will be as set forth in the related
Prospectus Supplement. Certificates not offered by this Prospectus and a related
Prospectus Supplement may be non-rated or rated in other than one of the four
highest rating categories.
A security rating should be evaluated independently of similar ratings of
different types of security. A security rating does not address the effect of
redemption or reinvestment rates on investors' yields. A rating is not a
recommendation to buy, sell or hold Certificates and may be subject to revision
or withdrawal at any time by the assigning rating organization. Each rating
should be evaluated independently of any other rating. See "Risk Factors."
<PAGE>
INDEX OF MAJOR DEFINED TERMS
<TABLE>
<CAPTION>
<S> <C>
"Asset Group".................................................................................................2
"Beneficial Owner"...........................................................................................19
"Certificates".................................................................................Prospectus Cover
"Class"........................................................................................Prospectus Cover
"Conduit Tax Exempt Securities"..............................................................................13
"Conduit Issuer"..........................................................................................2, 13
"DTC"........................................................................................................18
"Governmental Issuer".....................................................................................3, 13
"Governmental Tax Exempt Securities".........................................................................13
"Interest Accrual Period"....................................................................................16
"Interest Distribution Basis"..........................................................................1, 4, 20
"Interest Distribution Date"..................................................................................4
"Interest Distribution Rate"..............................................................................4, 20
"Obligor".................................................................................................2, 13
"Participants"...............................................................................................18
"Partnership Certificates"................................................................................6, 29
"Physical Certificates"......................................................................................19
"Principal Distribution Date".................................................................................4
"Revenue Bond Issuer".....................................................................................3, 13
"Revenue Tax Exempt Securities"..............................................................................13
"Senior Certificates".....................................................................................1, 18
"Series".......................................................................................Prospectus Cover
"Strip Certificates"...............................................................................1, 4, 18, 28
"Subordinate Certificates"................................................................................1, 18
"Tax Exempt Securities".................................................................Prospectus Cover, 2, 12
</TABLE>
<PAGE>
<TABLE>
<S> <C>
"Termination Events"................................................................................25
"Trust"........................................................................Prospectus Cover, 2, 12
"Trust Account".....................................................................................23
"Trust Agreement"................................................................................2, 23
"Trust Property"...................................................................Prospectus Cover, 2
"Trustee"........................................................................................2, 26
"Trustor"..........................................................................Prospectus Cover, 2
</TABLE>
<PAGE>
Information contained herein is subject to completion and amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These Securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these Securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Version 1
Subject to Completion, Dated June 3, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus Dated ______, 1996)
$__________
T.A. OF DELAWARE, INC.
TAX EXEMPT SECURITIES TRUST CERTIFICATES
MULTI-CLASS SERIES [A][ ]
Tax Exempt Securities Trust Certificates, Multi-Class Series [A][ ] (the
"Certificates") evidence the right to receive payments with respect to a group
of assets (the "Series [A][ ] Asset Group) and certain payments with respect to
other assets comprising other Asset Groups held or to be held by the Tax Exempt
Securities Trust (the "Trust"), to be formed by T.A. of Delaware, Inc. (the
"Company"), a wholly owned special purpose subsidiary of Tucker Anthony
Incorporated pursuant to a Trust Agreement (the "Trust Agreement"), dated as of
______ __, 199_, between the Company and [ ] as trustee (the "Trustee").
The Certificates will consist of the following classes: the Class [A][ ]-1
Certificates (hereinafter also referred to as the "Senior Certificates"), Class
[A][ ]-2 Certificates (hereinafter also referred to as the "Mezzanine
Certificates"), and Class [A][ ]-3 Certificates (hereinafter also referred to as
the "Subordinate Certificates"). The Class [A][ ]-2 Certificates and Class [A][
]-3 Certificates will be placed with institutional or other investors, and are
not being offered for sale by this Prospectus Supplement. [The rights of the
Class [A][ ]-2 Certificateholders (as defined) to receive distributions with
respect to the Series [A][ ] Asset Group will be subordinated to the rights of
the Class [A][ ]-1 Certificateholders, and the rights of the Class [A][ ]-3
Certificateholders to receive such distributions will be
(cover page continued on next page)
____________________________
SEE "RISK FACTORS" BEGINNING ON PAGE S-8 FOR A DESCRIPTION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING AN
INVESTMENT IN THE CERTIFICATES.
____________________________
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 COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
____________________________
[Tucker Anthony (the "Underwriter")] [the Underwriters (as defined)]
intend[s] to make a secondary market in the Certificates, but [has] [have] no
obligation to do so. There can be no assurance that a secondary market for the
Certificates will develop or, if it does develop, that it will continue.
The Class [A][ ]-1 Certificates will be offered from time to time by the
Underwriter[s] in negotiated transactions or otherwise at varying prices to be
determined at the time of sale. The aggregate proceeds to the [Company] [Trust]
from any sale of the [A][ ]-1 Certificates will be equal to the purchase price
paid by the purchasers thereof, net of any expenses payable by the Company and
any compensation to the Underwriter[s].
The [A][ ]-1 Certificates are offered by the Underwriter[s] subject to
prior sale, to withdrawal, cancellation or modification of the offer without
notice, to delivery and acceptance by the Underwriter[s] and certain further
conditions. It is expected that delivery of the [A][ ]-1 Certificates will be
made in book-entry only form through the facilities of The Depository Trust
Company, on or about ____________, 199_.
TUCKER ANTHONY
--------------
INCORPORATED
The date of this Prospectus Supplement is __________ __, 199_.
<PAGE>
(cover page continued from previous page)
subordinated to the rights of the Class[A][ ]-2 Certificateholders to the extent
described herein.] [The rights of the Class [A]-2 and Class [A]-3
Certificateholders to receive distributions with respect to the Series [A] Asset
Group will also be subordinated to the rights of any Senior Certificates of
subsequent Series to be issued by the Trust from time to time and which will be
offered pursuant to related Prospectus Supplements to the extent described
herein.] [The rights of the Class [ ]-2 and Class [ ]-3 Certificateholders to
receive distributions with respect to the Series [ ] Asset Group will also be
subordinated to the rights of any Senior Certificates of a Series previously
issued by the Trust and of any Senior Certificates of subsequent Series to be
issued by the Trust from time to time and which will be offered pursuant to
related Prospectus Supplements to the extent described herein.]
It is a condition of issuance that the Class [A][ ]-1 Certificates be rated
___ [and ____] by _______ [and _______, respectively] based on the protection
afforded by the subordination of the Class [A][ ]-2 and Class [A][ ]-3
Certificates. The Class [A][ ]-2 and Class [A][ ]-3 Certificates will not be
rated.
Interest, to the extent of the Class [A][ ]-1 Pass-Through Rate of [ ]%
per annum, the Class [A][ ]-2 Pass-Through Rate of [ ]% per annum and the Class
[A][ ]-3 Pass-Through Rate of [ ]% per annum will be distributed to the Class
[A][ ]-1 Certificateholders, the Class [A][ ]-2 Certificateholders, and the
Class [A][ ]-3 Certificateholders, respectively, on each [ ] and [ ]
(or, if such day is not a Business Day, the next succeeding Business Day) (each,
a "Distribution Date") commencing [ ] in the manner set forth and as
described herein. Principal payments will be distributed to Certificateholders
on each Distribution Date in the manner set forth and as described herein.
The Series [A][ ] Asset Group will consist of the municipal securities
described herein and in Appendix A (the "Tax Exempt Securities"). Additional
----------
municipal securities, which will constitute one or more separate Asset Groups
within the Trust, may be deposited into the Trust from time to time as described
herein and subject to the limitations of the Trust Agreement. Upon any such
deposit a related, new Series of Certificates will be issued by the Trust. The
Tax Exempt Securities will be held by the Trustee in accordance with the Trust
Agreement. Although the Certificates are secured by the Series [A][ ] Asset
Group, the Certificates will have payment characteristics different from the
payment characteristics of the Tax Exempt Securities constituting such Asset
Group. An investment in the Class [A][ ]-1 Certificates should not be viewed as
a direct investment in the Tax Exempt Securities.
Payments on the Tax Exempt Securities are the sole source of payments on
the Certificates. Interest on the Tax Exempt Securities is excludable from
gross income of the holders thereof for federal income tax purposes. As is more
fully discussed under "Certain Federal Income Tax Consequences," because the
arrangement among the holders of the Certificates evidenced by the Trust
Agreement will be classified as a partnership for federal income tax purposes,
distributions of interest received with respect to the Tax Exempt Securities are
expected to retain their tax exempt character when distributed to
Certificateholders with respect to the Certificates.
The Certificates do not represent an interest in or an obligation of the
Company, the municipal issuer of the Tax Exempt Securities, the Trustee, or any
of their affiliates. Neither the Certificates nor the underlying Tax Exempt
Securities are insured or guaranteed by any governmental agency or
instrumentality or by the Company or any of its affiliates.
__________________
This Prospectus Supplement does not contain complete information about the
Class [A][ ]-1 Certificates offered hereby. Additional information is contained
in the Prospectus, and purchasers are urged to read both the Prospectus
Supplement and the Prospectus in full. Sales of the Class [A][ ]-1 Certificates
may not be consummated unless the purchaser has received both the Prospectus
Supplement and the Prospectus.
[IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE CLASS
<PAGE>
[A][ ]-1 CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN
THE OPEN MARKET. SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.]
Until 90 days after the date of this Prospectus Supplement, all dealers
effecting transactions in the Class [A][ ]-1 Certificates, whether or not
participating in this distribution, may be required to deliver a Prospectus
Supplement and Prospectus. This is in addition to the obligation of dealers to
deliver a Prospectus Supplement and Prospectus when acting as underwriter and
with respect to their unsold allotments or subscriptions.
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act with respect to the
Class [A][ ]-1 Certificates to be offered by this Prospectus and related
Prospectus Supplement. This Prospectus does not contain all of the information
set forth in the Registration Statement and the exhibits and schedules thereto,
certain portions of which have been omitted pursuant to the rules and
regulations of the Commission. Statements made in this Prospectus as to the
contents of any contract, agreement or other document are not necessarily
complete. With respect to each such contract, agreement or other document filed
or incorporated by reference as an exhibit to the Registration Statement,
reference is made to such exhibit for a more complex description of the matter
involved, and each such statement is qualified in its entirety by such
reference.
The Registration Statement and the exhibits and schedules thereto may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and will also be available for inspection and copying at the regional
offices of the Commission located at 7 World Trade Center, New York, New York
10048 and at 500 West Madison Street (Suite 1400), Chicago, Illinois 60661.
Copies of such material may also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates.
<PAGE>
- -----------------------------------------------------------------------------
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the more
detailed information appearing elsewhere herein and in the Prospectus.
Capitalized terms used in this summary that are not otherwise defined have the
meanings ascribed thereto in the Prospectus.
Title of Securities.. Tax Exempt Securities Trust, Multi-Class Series [A][ ]
(the "Certificates").
Company............. T.A. of Delaware, Inc. (the "Company"), a Delaware
Corporation. Neither the Company nor any of its
affiliates has guaranteed or insured the Certificates.
See "THE COMPANY" herein.
Trustee............. [ ] (the "Trustee").
Trust Assets........ The initial property of the Trust (the "Trust
Property") will be the group of assets (the "Series
[A][ ] Asset Group") consisting of the municipal
securities described herein and in Appendix A (the "Tax
Exempt Securities"). From time to time additional
municipal securities (the "Additional Tax Exempt
Securities"), which will constitute one or more
separate Asset Groups, may be deposited into the Trust
whereupon a related, new Series of Certificates will be
issued by the Trust. No such deposit of Additional Tax
Exempt Securities will be made (i) if such addition
would result in the Trust becoming required to register
as an "Investment Company" for purposes of the
Investment Company Act of 1940 (as amended) or (ii) if
the Rating Agencies will, as a result of such addition,
downgrade the rating on any outstanding Class of
Certificates. In connection with each new Asset Group,
the Trust will issue a related new Series of
Certificates. The Tax Exempt Securities will be
irrevocably transferred to the Trustee and will be held
in the name of the Trustee or its nominee, in trust for
the benefit of the Certificateholders as the beneficial
owners of the Tax Exempt Securities in accordance with
the Trust Agreement. The Tax Exempt Securities consist
of [tax exempt revenue bonds issued by a conduit
governmental issuer (the "Conduit Issuer"), the
proceeds of which are loaned to an eligible obligor or
obligors (the "Obligor) to finance or refinance
eligible projects. The Obligor is generally a non-
governmental, private entity. The payment of principal,
premium, if any, interest and all other amounts owed
with respect to Tax Exempt Securities issued by Conduit
Issuers are payable by amounts owed by the Obligor
under the terms of its loan. The loan is payable out of
general cash flow of the Obligor or specific project
revenues or otherwise. The repayment obligation may be
secured by a mortgage on the project and/or other
assets of the Obligor and other security interests. Tax
Exempt Securities issued by conduit Issuers are non-
recourse to the Conduit Issuer] [tax exempt revenue
bonds issued by a state or local governmental entity,
such as a public authority or agency, without general
taxing power (the "Revenue Bond Issuer"). The bonds are
issued to finance or refinance the capital expenditure
and operating needs of the Revenue Bond Issuer and are
payable from the revenues of such Issuer, often a
dedicated and pledged revenue stream] [tax exempt bonds
issued by a governmental entity, such as a state or
local government or some other political subdivision,
with general taxing power (the "Governmental Issuer").
The bonds are issued to finance
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
or refinance the capital expenditure and operating
needs of the Governmental Issuer and are payable from
some or all of the revenues of such Issuer. If all
sources of revenue of the Issuer, including tax
receipts, are available to make the payment, the bonds
are general obligation bonds secured by the full faith
and credit of the Issuer. Otherwise, they will be
limited obligations of the Issuer] [any combination of
the foregoing].
[Describe asset concentration level of Trust Property,
to the extent any Tax Exempt Security or Obligor with
respect to any Tax Exempt Security constitutes more
than 10% of the Trust Property, including cross-
reference to audited financial information and other
information with respect to the Obligor, Revenue Bond
Issuer, Governmental Issuer, as applicable.] [See "RISK
FACTORS" and "THE TAX EXEMPT SECURITIES" herein.]
Securities Offered... The Tax Exempt Securities Trust Certificates, Multi-
Class Series [A][ ] will consist of the following
classes of Certificates: the Class [A][ ]-1
Certificates, Class [A][ ]-2 Certificates, and Class
[A][ ]-3 Certificates. The Class [A][ ]-2 and Class
[A][ ]-3 Certificates will be placed with institutional
or other investors and are not being offered by this
Prospectus Supplement. Each Certificate evidences the
right to receive principal, premium, if any and
interest payments on the Tax Exempt Securities included
in the Series [A][ ] Asset Group and certain payments
with respect to Additional Tax Exempt Securities
constituting one or more separate Asset Groups held or
to be held by the Trust due after the Cut-Off Date (as
defined) all as more fully described herein. [The
rights of the Class [A][ ]-2 Certificateholders to
receive distributions with respect to the Series [A][ ]
Asset Group will be subordinated to the rights of the
Class [A][ ]-1 Certificateholders, and the rights of
the Class [A][ ]-3 Certificateholders to receive such
distributions will be subordinated to the rights of the
Class [A][ ]-1 and Class [A][ ]-2 Certificateholders to
the extent described herein.] [The rights of the Class
[A]-2 and Class [A]-3 Certificateholders to receive
distributions with respect to the Series [A] Asset
Group will also be subordinated to the rights of any
Senior Certificates of subsequent Series to be issued
by the Trust from time to time and which will be
offered pursuant to related Prospectus Supplements to
the extent described herein.] [The rights of the Class
[ ]-2 and Class [ ]-3 Certificateholders to receive
distributions with respect to the Series [ ] Asset
Group will also be subordinated to the rights of any
Senior Certificates of a Series previously issued by
the Trust and of any Senior Certificates of subsequent
Series to be issued by the Trust from time to time and
which will be offered pursuant to related Prospectus
Supplements to the extent described herein.] See
"DESCRIPTION OF THE CERTIFICATES -Subordination of the
Class [A][ ]-2 and Class [A][ ]-3 Certificates" herein.
Subsequent Series In connection with the deposit of Additional Tax Exempt
Securities to the Trust constituting one or more
separate Asset Groups therein, the Trust will issue one
or more related Series of Certificates, each with a
Senior, Mezzanine and Subordinate Class. The Senior
Class of any such Series will be offered by means of
the Prospectus and a separate related Prospectus
Supplement. None of the Certificates of any Class
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
of such Series is being offered by this Prospectus
Supplement. The total aggregate Certificate Principal
Balance (as defined) of all of the Certificates of all
Series issued or to be issued by the Trust will not
exceed $[ ]. The respective aggregate Certificate
Principal Balance of each Class within a Series that
will be so issued will be calculated so that (i) no
Rating Agency will, as a result of such issuance,
downgrade the rating on any outstanding Class of
Certificates of any Series and (ii) the ratio of Senior
Certificates to Subordinate Certificates will not be
less than [ ] to [ ].
Initial Certificate
Principal Balance... The Certificates will have an aggregate initial
Certificate Principal Balance of $[ ]. The Class [A]
[ ]-1 Certificates will have an initial Certificate
Principal Balance of $[ ], the Class [A][ ]-2
Certificates will have an initial Certificate Principal
Balance of $[ ] and the Class [A][ ]-3 Certificates
will have an initial Certificate Principal Balance of
$[ ]. The Certificate Principal Balance shall mean,
with respect to any Certificate, on any date of
determination, an amount equal to (a) the Initial
Amount (as defined) thereof minus (b) the sum of (i)
the aggregate of all amounts in respect of principal of
such Certificate (or any predecessor Certificate)
distributed to the Holder thereof prior to that date
and (ii) the aggregate of all losses allocated to such
Certificate (or any predecessor Certificate) as
described herein.
Pass-Through Rate... The Pass-Through Rate for the Class [A][ ]-1
Certificates is [ ]% and for the Class [A][ ]-2
Certificates is [ ]%. The Class [A][ ]-3 Certificates
will not have a Pass-Through Rate. Interest on such
Class will be payable based on a formula as described
herein. See "--Interest Distributions" and "DESCRIPTION
OF THE CERTIFICATES -Distributions on the
Certificates."
Form; Denomination.. The Certificates will be issued pursuant to the Trust
Agreement in denominations of $[5,000] and integral
multiples of $[5,000] in excess thereof (the "Initial
Amount") in the case of the Class [A][ ]-1 Certificates
and $[100,000] and integral multiples of $[1,000] in
excess thereof in the case of the Class [A][ ]-2 and
Class [A][ ]-3 Certificates; provided, however, that
one certificate of each Class may be issued in such
other amount as is necessary to include the remainder
of such Class. The Class [A][ ]-1 Certificates will be
initially represented by one or more Global
Certificates (as defined) registered in the name of
Cede & Co., as nominee of The Depository Trust Company,
New York, New York ("DTC"). The interests of beneficial
owners of the Class [A][ ]-1 Certificates will be
represented by book entries on the records of
participating members of DTC. Physical Certificates (as
defined) representing the Class [A][ ]-1 Certificates
will be available only under certain limited
circumstances. See "DESCRIPTION OF THE CERTIFICATES -
Book-Entry Registration".
Distribution Dates.. Distributions of principal and interest will be made on
each [ ] and [ ] (or, if such day is not a Business Day
(defined as any day on which banks in New York, New
York are open for commercial banking purposes and that
is not a day on which the New York Stock Exchange is
authorized or obligated by law or executive order to
close) the next
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
succeeding Business Day) (each, a "Distribution Date"),
commencing [ ].
Cut-Off Date........ ________ __, 1996 (the "Cut-Off Date").
Available Distribution
Amount.............. The "Available Distribution Amount" for any
Distribution Date is equal to the aggregate of (i) all
payments of principal, premium, if any, and interest
made with respect to the Tax Exempt Securities and (ii)
all payments of principal and premium, if any (but not
interest), made with respect to Additional Tax Exempt
Securities included in any other Asset Group held or to
be held by the Trust and received by the Trustee after
the preceding Determination Date (or, in the case of
the initial Distribution Date, the Cut-Off Date) on or
prior to the related Determination Date (whether due to
scheduled payments, scheduled or unscheduled
prepayments or otherwise) less any administrative
expenses incurred by the Trust since the preceding
Determination Date. With respect to any Distribution
Date, the "Determination Date" is the day that is _____
business days prior to such Distribution Date.
Interest
Distributions...... On each Distribution Date, the Trustee will distribute
to the registered holders of the Class [A][ ]-1
Certificates (the "Class [A][ ]-1 Certificateholders"),
of the Class [A][ ]-2 Certificates (the "Class [A][ ]-2
Certificateholders") and of the Class [A][ ]-3
Certificates (the "Class [A][ ]-3 Certificateholders"
and, together with the Class [A][ ]-1
Certificateholders and the Class [A][ ]-2
Certificateholders, the "Certificateholders" or
"Holders") as of the second Business Day next preceding
such Distribution Date (the "Record Date"), in the
manner and priority set forth herein, to the extent of
the Available Distribution Amount for such Distribution
Date, interest distributions in an amount equal to the
Accrued Certificate Interest (as defined) on such
Class.
With respect to any Distribution Date, for each Class
of Certificates, "Accrued Certificate Interest" will be
equal to interest accrued during the related Interest
Accrual Period (as defined) on the Certificate
Principal Balance of the Certificate of such Class at
the related Pass-Through Rate; provided however, that
in the case of the Class [A][ ]-3 Certificates, Accrued
Certificate Interest will be equal to the residual
portion of the Available Distribution Amount allocable
to interest on the Tax Exempt Securities after the
Accrued Certificate Interest with respect to all other
Classes of Certificates has been distributed. [The
"Interest Accrual Period" for any Distribution Date
will be the six-month period preceding such
Distribution Date.] See "DESCRIPTION OF THE
CERTIFICATES -- Interest Distributions" herein.
Principal
Distributions....... On each Distribution Date, the Trustee will distribute
to the Certificateholders in whose name the
Certificates are registered as of the applicable Record
Date, in the manner and priority set forth herein, to
the extent of the portion of the Available Distribution
Amount remaining after Accrued Certificate Interest has
been distributed to Certificateholders, a distribution
allocable to principal which will, as more fully
described herein, include the scheduled payments due on
the Tax Exempt Securities and Additional Tax Exempt
Securities and the
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
portion of any unscheduled collections, including
prepayment proceeds and premium, if any.
Subordination of the
Class [A][ ]-2 and
Class [A][ ]-3
Certificates........ [The rights of the Class [A] [ ]-2 Certificateholders
(as defined) to receive distributions to which they
would otherwise be entitled to with respect to the
Series [A] [ ] Asset Group will be subordinated to the
rights of the Class [A][ ]-1 Certificateholders. The
rights of the Class [A][ ]-3 Certificateholders to
receive distributions to which they would otherwise be
entitled to with respect to the Series [A] [ ] Asset
Group will be subordinated to the rights of the Class
[A][ ]-1 and Class [A][ ]-2 Certificateholders.] [The
rights of the Class [A]-2 and Class [A]-3
Certificateholders to receive distributions with
respect to the Series [A] Asset Group to which they
would otherwise be entitled to will also be
subordinated to the rights of any Senior Certificates
of subsequent Series to be issued by the Trust from
time to time and which will be offered pursuant to
related Prospectus Supplements to the extent described
herein.] [The rights of the Class [ ]-2 and Class [ ]-3
Certificateholders to receive distributions with
respect to the Series [ ] Asset Group to which they
would otherwise be entitled to will also be
subordinated to the rights of any Senior Certificates
of a Series previously issued by the Trust and of any
Senior Certificates of subsequent Series to be issued
by the Trust from time to time and which will be
offered pursuant to related Prospectus Supplements to
the extent described herein.] This subordination is
intended to enhance the likelihood of timely receipt by
Class [A][ ]-1 Certificateholders of the full amount of
interest and principal required to be paid to them, and
to afford such Class [A][ ]-1 Certificateholders
limited protection against losses in respect of the Tax
Exempt Securities. See "DESCRIPTION OF THE
CERTIFICATES - Subordination of the Class [A][ ]-2 and
Class [A][ ]-3 Certificates herein."
[Credit
Enhancement......... Description of third party credit enhancement, if any,
available for the Certificates, including information
with respect to the provider of such third party credit
enhancement as set forth in the Prospectus.]
Special Prepayment
Considerations....... The rate and timing of payments on the Certificates
will depend, among other things, on the rate and timing
of principal payments on the Tax Exempt Securities and
Additional Tax Exempt Securities. Such principal
payments may be as a result of scheduled or unscheduled
payments on the Tax Exempt Securities. Accordingly, the
Certificates are subject to cash flow uncertainties.
[Insert description of prepayment provisions of the Tax
Exempt Securities; Insert description of effect of
prepayment provisions on rate and timing of prepayments
of Certificates]
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
Special Yield
Considerations...... The yield to maturity on the Certificates will depend,
among other things, on the rate and timing of payments
on the Tax Exempt Securities and Additional Tax Exempt
Securities and the allocation thereof to reduce the
Certificate Principal Balance of each Class.
The yield to maturity on each class of the Certificates
will also depend on the Pass-Through Rate and the
purchase price for such Certificates. In general, if a
class of Certificates is purchased at a premium and
principal distributions thereon occur at a rate faster
than anticipated at the time of purchase, the
investor's actual yield to maturity will be lower than
that assumed at the time of purchase. Conversely, if a
class of Certificates is purchased at a discount and
principal distributions thereon occur at a rate slower
than that assumed at the time of purchase, the
investor's actual yield to maturity will be lower than
that assumed at the time of purchase. The degree of
yield volatility will depend upon the magnitude of the
premium or the discount, as the case may be.
Federal Income Tax
Considerations...... In the opinion of Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C., Tax Counsel to the [Company], (i) the
Trust will be treated as a partnership for federal
income tax purposes, (ii) each Certificateholder will
be treated as a member of such partnership and (iii)
all amounts allocated to such Certificateholders that
are attributable to payments of interest on Tax Exempt
Securities and Additional Tax Exempt Securities that
are excludable from federal gross income will be
excludable from the federal gross income of such
Certificateholders. As specified herein, interest on
the Tax Exempt Securities and Additional Tax Exempt
Securities may be subject to the federal alternative
minimum tax. A Certificateholder's share of any
allocable gain recognized on the sale, payment at
maturity, or other disposition of Tax Exempt Securities
and Additional Tax Exempt Securities will be includable
in its gross income for federal income tax purposes. As
a member of the partnership, each Certificateholder
will be required to report on its federal income tax
return its share of the income, expense, gain or loss
of the Trust.
There are a number of material tax aspects of an
investment in the Certificates. Prospective investors
are urged to read the discussion contained under
"Certain Federal Income Tax Consequences" herein and in
the Prospectus.
Legal Investment.... Investors whose investment is subject to legal
restrictions should consult their own legal advisors to
determine whether and to what extent the Certificates
constitute legal investment for them. See "LEGAL
INVESTMENT."
Use of Proceeds..... The net proceeds of the offering of the Certificates
will be used [to purchase the Tax Exempt Securities]
[to repay indebtedness which has been incurred to
acquire the Tax Exempt Securities] [to establish the
Reserve Fund] [to pay costs of structuring,
guaranteeing, credit enhancing and issuing the
Certificates] [Describe other purpose, if any,
- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
relating to one or more of the foregoing]. See "USE OF
PROCEEDS."
Ratings............. It is a condition to the issuance of the Certificates
that __________ [ and _________] ([each, a] [the]
"Rating Agency" assign the [respective] rating[s] of
____ [and _____] to the Class [A][ ]-1 Certificates.
The ratings on the Certificates do not address [list
any carve-outs].
A security rating should be evaluated independently of
similar ratings of different types of security. A
security rating does not address the effect of
redemption or reinvestment rates on investors' yields.
A rating is not a recommendation to buy, sell or hold
Certificates and may be subject to revision or
withdrawal at any time by the assigning rating
organization. Each rating should be evaluated
independently of any other rating. See "RISK FACTORS."
- -------------------------------------------------------------------------------
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus
Supplement and the Prospectus, investors should consider, among other things,
the risk factors described below in connection with the purchase of the Class
[A][ ]-1 Certificates offered hereby.
CLASSIFICATION OF TRUST FOR FEDERAL INCOME TAX PURPOSES. Neither the
Company nor the Trustee will seek any rulings from the Internal Revenue Service
regarding the classification of the Trust as a partnership for federal income
tax purposes rather than as an association taxable as a corporation. While the
Company expects to receive an opinion of counsel that the Trust will be
classified as a partnership, an opinion of counsel is not a legal determination
and is not binding on the IRS. Moreover, an opinion of counsel is based on
existing judicial and administrative interpretations of applicable law and
regulations, all of which are subject to change. Therefore, there can be no
assurance that the Trust will be treated as a partnership.
Failure to comply with the constituent documents of the Trust may also
result in the Trust being classified, for federal income tax purposes, as an
association taxable as a corporation.
If the Trust were classified as an association taxable as a corporation,
among other things, the income, deductions and any credits of the Trust would
have to be reported on its own tax return and could not be passed through to the
holders of Certificates, the Trust would be subject to tax as a corporation and
distributions by the Trust would not be treated as tax exempt interest, but be
taxable as dividends in whole or in part.
There are a number of material tax aspects of an investment in the
Certificates. Prospective investors are urged to read "Certain Federal Income
Tax Consequences" herein and in the Prospectus.
[ASSET CONCENTRATION. The Trust Property of the Trust has a concentration
level such that particular Tax Exempt Securities or Obligors with respect to any
Tax Exempt Security would constitute more than 10% of the Trust Property. As a
result, Certificates will be subject to credit risk greater than that usually
encountered in asset-backed transactions or experienced by Certificates of a
Series secured by Trust Property which is not concentrated, because the
diversification of credit risk generally present in a non-concentrated asset
pool will be diminished. The concentration level of the Trust Property is
described under "THE TAX EXEMPT SECURITIES" herein. This Prospectus Supplement
also provides or incorporates by reference financial information on the Obligor
with respect to such Tax Exempt Securities.]
[YIELD AND REDEMPTION CONSIDERATION. Describe any particular
characteristics of the Tax Exempt Securities that would shorten the average life
of the Certificates and could affect the yield of any Class of Certificates. See
"CERTAIN YIELD AND PREPAYMENT CONSIDERATIONS" and "THE TAX EXEMPT SECURITIES."
VOTING RIGHTS. Certificateholders have the right under the Trust Agreement
to vote on certain matters. See "The Trust Agreement - Voting Rights." Holders
of different Classes of Certificates may have conflicting voting interests.
Potential investors in the Certificates should consider the allocation of voting
rights herein in light of this consideration. Under the provisions of the Trust
Agreement, a transferee of the Class [A][ ]-1 Certificates will become entitled
to exercise voting rights as a Certificateholder only if it obtains the consent
of the Trustor at the time of transfer, which consent may be withheld by the
Trustor in its sole discretion.
FORM OF CERTIFICATES. The Class [A][ ]-1 Certificates will be represented
initially be a Global Certificate registered in the name of Cede & Co., as
nominee for DTC, and will not be registered in the name of beneficial owners or
their nominees. As a result, unless and until Physical Certificates are issued
in the limited circumstances
<PAGE>
described herein, beneficial owners will not be recognized by the Trustee as
"Certificateholders". Therefore, until such time, beneficial owners will be able
to exercise the rights of a registered Certificateholder only indirectly through
DTC participants and indirect participants (as defined). See "DESCRIPTION OF THE
CERTIFICATES - Book-Entry Certificates.
LIMITED NATURE OF RATINGS. It is a condition of issuance that the Class
[A][ ]-1 Certificates be rated ___ [and ____] by _______ [and _______,
respectively] based on the protection afforded by the subordination of the Class
[A][ ]-2 and Class [A][ ]-3 Certificates. A security rating is not a
recommendation to buy, sell or hold securities and may be subject to revision or
withdrawal at any time by the assigning Rating Agency. In addition, a security
rating does not address the frequency of principal payments on the Tax Exempt
Securities or the corresponding effect on yield to investors. See "RATINGS."
[Describe any particular risks or considerations concerning the Tax Exempt
Securities.]
<PAGE>
THE TAX EXEMPT SECURITIES
GENERAL
The Tax Exempt Securities consist of __ issues of tax exempt securities, in
the aggregate principal amounts, bearing interest at the rates, and maturing on
the dates set forth in the table below:
TAX AGGREGATE FINAL
EXEMPT PRINCIPAL INTEREST MATURITY
SECURITIES AMOUNT RATE DATE
------------ --------- -------- --------
Total amount
deposited under
Trust Agreement:
Appendix A to this Prospectus sets forth, in addition to the above
----------
information, the full names, the respective issuers and obligors (if
applicable), the trustee or paying agent, the dates of issuance, the interest
and principal payment dates, the redemption features, if any, and the CUSIP
numbers of each issue of tax exempt securities making up the Tax Exempt
Securities.]
The Company has received the following price quotations with respect to the
Tax Exempt Securities:
TAX
EXEMPT PRICE PER $1,000 OF
SECURITIES SUCH SECURITIES TIME OF QUOTATION SOURCE
- ---------- ------------------- ----------------- ------
Such quotations were obtained from ____________________, who is [not] affiliated
with the Company. The Company believes that there is [an] [no] active secondary
market in the Tax Exempt Securities [but the Company believes that the price
quotations listed above accurately reflect the market prices of such Tax Exempt
Securities].
[The Tax Exempt Securities were purchased in [an] arms-length
transaction[s] from persons unaffiliated with the Issuer of the Tax Exempt
Securities or its underwriters.] [The Tax Exempt Securities were purchased in
[an arms-length] transaction[s] from __________________, an affiliate of [the
underwriter] [the Company].] [The Tax Exempt Securities were purchased in [an]
arms-length transaction[s] from persons unaffiliated with the Issuer of the Tax
Exempt Securities or its underwriters in exchange for [all] [a portion] of the
[Certificates] [Class [A][ ]-1 Certificates]. [Describe pricing/calculation
utilized for such exchange.]]
The Tax Exempt Securities will be held by the Trustee for the
Certificateholders as [book-entry credits to an account of the Trustee at DTC]
[as ___________].
<PAGE>
Set forth in tabular form below with respect to each of the Tax Exempt
Securities is the title of the Tax Exempt Security, indicating the identity and
location of the Issuer; the date of the Tax Exempt Security; the rating assigned
to the Tax Exempt Security as of the date of this Prospectus Supplement; the
principal balance of the Tax Exempt Security expected to be deposited in the
Trust on the Closing Date; the percentage of the Trust as of the Closing Date
represented by such principal balance of the Tax Exempt Security; the stated
coupon rate of interest borne by the Tax Exempt Security; the maturity date of
the Tax Exempt Security; the first date on which the Tax Exempt Security may be
redeemed pursuant to the [sinking fund] redemption schedule applicable to the
Tax Exempt Security; [the first date after the Closing Date on which the Issuer
of the Tax Exempt Security may exercise its right of optional redemption with
respect to the Tax Exempt Security (the "First Optional Call Date") and the
redemption price for that date;] [the percentage of the Trust as of the Closing
Date represented by Tax Exempt Securities that are optionally redeemable within
[specified years]]; and [whether the interest payable on the Tax Exempt Security
is an item of tax preference for purposes of computing the federal alternative
minimum tax, according to the opinion rendered at the time of original issuance
of the Tax Exempt Security by bond counsel and/or special tax counsel to the
Issuer of the Tax Exempt Security].
<TABLE>
<CAPTION>
TAX
TITLE OF EXEMPT
TAX PERCENTAGES OF SECURITY SINKING FIRST OPTIONAL
EXEMPT DATED CURRENT PRINCIPAL INITIAL POOL INTEREST MATURITY FUND CALL DATE
SECURITY DATE RATING AMOUNT BALANCE RATE DATE REDEMPTION AND PRICE(2) AMT STATUS(3)
- ---------- ----- ------- --------- -------------- -------- -------- ---------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(1)
</TABLE>
_________________________
(1) Neither the Company nor the Underwriter[s] make[s] any representations as
to the meanings of such rating. Any explanation of the rating must be
obtained from the assigning rating organization upon written request to
such rating organization. A security rating is not a recommendation to buy,
hold or sell securities and may be subject to revision or withdrawal at any
time by the assigning rating organization. Each security rating should be
evaluated independently of any other security rating.
[(2) Each Tax Exempt Security continues to be redeemable at declining prices
thereafter, but not below par.]
[(3) Indicates whether interest payable on the Tax Exempt Security is required
to be treated as a tax preference item for both individuals and
corporations for purposes of computing the federal alternative minimum tax.
All interest on the Tax Exempt Securities will be included in the adjusted
current earnings of certain corporations for purposes of calculating the
alternative minimum tax imposed on such corporations.]
The following table sets forth, for the Tax Exempt Securities, the
outstanding par amount of the Tax Exempt Security that is to be deposited into
the Trust, the outstanding par amount of all Tax Exempt Securities issued as
part of the same bond issue and that have the same maturity and the outstanding
par amount of all Tax Exempt Securities issued as part of the same bond issue.
<TABLE>
<CAPTION>
OUTSTANDING PAR OUTSTANDING PAR
AMOUNT OF AMOUNT OF TOTAL OUTSTANDING PAR AMOUNT OF
TAX EXEMPT TAX EXEMPT TOTAL TAX EXEMPT
TITLE OF BOND SECURITY TO BE DEPOSITED SECURITY MATURITY SECURITY ISSUE
------------- ------------------------ ----------------- -------------------------
<S> <C> <C> <C>
</TABLE>
[Discussion of concentration level of Trust Property.]
<PAGE>
REDEMPTION OF TAX EXEMPT SECURITIES
[Specific redemption provisions to be set forth]
SECURITY FOR THE TAX EXEMPT SECURITIES
The Tax Exempt Securities are secured principally by the [insert
description of security].
[Name of Tax Exempt Securities]
The following discussion relates to the Security securing the [name of Tax
Exempt Securities].
[copy to follow]
[Name of Tax Exempt Securities]
[the discussion above will be repeated for each series of Tax Exempt
Securities]
OBLIGORS ON TAX EXEMPT SECURITIES
[The obligation of the Conduit Issuer[s] with respect to the Tax Exempt
Securities is non-recourse and is limited to amounts received in connection with
the repayment of the loan of proceeds of the Tax Exempt Securities from the
Conduit Issuer to the borrower or borrowers thereof (the "Obligor") [and, if
applicable, any refunding or cross-calling [to be described based on the
specific characteristics of the Tax Exempt Securities]] and will not be payable
from general funds or assets of the Conduit Issuer. Accordingly, financial
information concerning the Conduit Issuer[s] of the Tax Exempt Securities has
not been included in this Prospectus Supplement.] [Because no single underlying
Conduit Tax Exempt Security or Obligor with respect to any Tax Exempt Security
constitutes 10% or more of the Trust Property, no financial information
concerning the underlying Obligor[s] with respect to the Conduit Tax Exempt
Securities has been included in this Prospectus Supplement.] [Because one or
more underlying Conduit Tax Exempt Securities or Obligors with respect to any
Tax Exempt Security constitute 10% or more of the Trust Property, financial
information concerning the underlying Obligor[s] has been included in this
Prospectus Supplement.]
[Because no single underlying Revenue Tax Exempt Security or Governmental
Tax Exempt Security constitutes 10% or more of the Trust Property, no financial
information concerning the Revenue Bond Issuer or the Governmental Issuer,
respectively, has been included in this Prospectus Supplement.]
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Tax Exempt Securities Trust Certificates, Multi-Class Series [A][ ]
will consist of the following classes of Certificates: the Class [A][ ]-1
Certificates, Class [A][ ]-2 Certificates, and Class [A][ ]-3 Certificates. The
Class [A][ ]-2 and Class [A][ ]-3 Certificates will be placed with institutional
or other investors and are not being offered by this Prospectus Supplement. Each
Certificate evidences the right to receive principal, premium, if any, and
interest payments on the Tax Exempt Securities included in the Series [A][
]Asset Group and certain payments with respect to Additional Tax Exempt
Securities constituting one or more separate Asset Groups held or to be held by
the Trust due after the Cut-Off Date (as defined) all as more fully described
herein. [The rights of the Class [A][ ]-2 Certificateholders to receive
distributions with respect to the Series [A][ ] Asset Group will be subordinated
to the rights of the Class [A][ ]-1 Certificateholders, and the rights of the
Class [A][ ]-3 Certificateholders to receive such distributions will be
subordinated to the rights of the Class [A][ ]-1 and Class [A][ ]-2
Certificateholders to the extent described herein.] [The rights of the Class
[A]-2 and Class [A]-3 Certificateholders to receive distributions with respect
to the Series [A] Asset Group will also be subordinated to the rights of any
Senior Certificates of subsequent Series to be issued by the Trust from time to
time
<PAGE>
and which will be offered pursuant to related Prospectus Supplements to the
extent described herein.] [The rights of the Class [ ]-2 and Class [ ]-3
Certificateholders to receive distributions with respect to the Series [ ] Asset
Group will also be subordinated to the rights of any Senior Certificates of a
Series previously issued by the Trust and of any Senior Certificates of
subsequent Series to be issued by the Trust from time to time and which will be
offered pursuant to related Prospectus Supplements to the extent described
herein.]
In connection with the deposit of Additional Tax Exempt Securities to the
Trust constituting one or more separate Asset Groups therein, the Trust will
issue one or more related Series of Certificates, each with a Senior, Mezzanine
and Subordinate Class. The Senior Class of any such Series will be offered by
means of the Prospectus and a separate related Prospectus Supplement. None of
the Certificates of any Class of such Series is being offered by this Prospectus
Supplement. The total aggregate Certificate Principal Balance (as defined) of
all of the Certificates of all Series issued or to be issued by the Trust will
not exceed $[ ]. The respective aggregate Certificate Principal
Balance of each Class within a Series that will be so issued will be calculated
so that (i) no Rating Agency will, as a result of such issuance, downgrade the
rating on any outstanding Class of Certificates of any Series and (ii) the ratio
of Senior Certificates to Subordinate Certificates will not be less than [ ] to
[ ].
The Certificates will be issued pursuant to the Trust Agreement in
denominations of $[5,000] and integral multiples of $[5,000] in excess thereof
(the "Initial Amount") in the case of the Class [A][ ]-1 Certificates and
$[100,000] and integral multiples of $[1,000] in excess thereof in the case of
the Class [A][ ]-2 and Class [A][ ]-3 Certificates; provided, however, that one
certificate of each Class may be issued in such other amount as is necessary to
include the remainder of such Class. The Class [A][ ]-1 Certificates will be
initially represented by one or more Global Certificates (as defined) registered
in the name of Cede & Co., as nominee of The Depository Trust Company, New York,
New York ("DTC"). The interests of beneficial owners of the Class [A][ ]-1
Certificates will be represented by book entries on the records of participating
members of DTC. Physical Certificates (as defined) representing the Class [A][
]-1 Certificates will be available only under certain limited circumstances.
The Certificates will have an aggregate initial Certificate Principal
Balance of $[ ]. The Class [A][ ]-1 Certificates will have an initial
Certificate Principal Balance of $[ ], the Class [A][ ]-2 Certificates will have
an initial Certificate Principal Balance of $[ ] and the Class [A][ ]-3
Certificates will have an initial Certificate Principal Balance of $[ ]. The
Certificate Principal Balance shall mean, with respect to any Certificate, on
any date of determination, an amount equal to (a) the Initial Amount (as
defined) thereof minus (b) the sum of (i) the aggregate of all amounts in
respect of principal of such Certificate (or any predecessor Certificate)
distributed to the Holder thereof prior to that date and (ii) the aggregate of
all losses allocated to such Certificate (or any predecessor Certificate) as
described herein.
Payments of the principal of and premium, if any, and interest on the Tax
Exempt Securities and certain payments with respect to any Additional Tax Exempt
Securities will be the sole source of payments on the Certificates. Neither the
Trustee nor the Company (except as set forth herein) will be responsible for the
payments due on the Certificates, except that the Trustee will be required to
apply all payments received in respect of the Tax Exempt Securities to the
Certificates to which they relate without making any deduction, other than
administrative expenses and any applicable tax or other governmental charge.
BOOK-ENTRY REGISTRATION
The Class [A][ ]-1 Certificates will be issued in the form of one "Global
Certificate." The Global Certificate will be deposited on the date of the
closing of the sale of the Certificates offered hereby (the "Closing Date")
with, or on behalf of, DTC and registered in the name of a nominee of DTC.
The Global Certificates. Pursuant to procedures established by DTC (i) upon
deposit of the Global Certificate, DTC will credit the accounts of persons who
have accounts with DTC ("participants") or persons who hold interests through
participants designated by the Initial Purchaser with portions of the Global
Certificate which shall be comprised of the corresponding respective principal
amount of the Global Certificates and (ii) ownership of the Certificates will be
shown on, and the transfer of ownership thereof will be effected only through,
records maintained by DTC or its nominee
<PAGE>
(with respect to interests of participants) and the records of participants
(with respect to interests of persons other than participants).
Certificateholders may hold their interests in the Global Certificates directly
through DTC if they are participants in such system, or indirectly through
organizations which are participants in such system.
So long as DTC, or its nominee, is the registered owner or holder of the
Certificates, DTC or such nominee will be considered the sole owner or holder of
the Certificates represented by the Global Certificate for all purposes under
the Trust Agreement. No beneficial owner of an interest in the Global
Certificates will be able to transfer such interest except in accordance with
DTC's applicable procedures, in addition to those provided for under the Trust
Agreement with respect to the Certificates.
Payments of the principal of and interest on the Global Certificate will be
made to DTC or its nominee, as the case may be, as the registered owner thereof.
None of the Company, the Trustee nor the Underwriter[s] will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Certificate or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interest.
DTC or its nominee, upon receipt of any payment of the principal of and
interest on the Global Certificate, will credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Certificate as shown on the records of DTC
or its nominee. Payments by participants to owners of beneficial interests in
any such Global Certificates held through such participants will be governed by
standing instructions and customary practice, as is now the case with securities
held for the accounts of customers registered to the names of nominees for such
customers. Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in clearinghouse funds. If a
holder requires physical delivery of a Certificates ("Physical Certificates")
for any reason, including to sell Certificates to persons in states which
require physical delivery of such securities or to pledge such securities, such
holder must transfer its interest in the applicable Global Certificate in
accordance with the normal procedures of DTC and including, with respect to the
Certificates, with the procedures set forth in the Trust Agreement.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Certificates (including the presentation of Certificates
for exchange as described below) only at the direction of one or more
participants to whose account interests in the applicable Global Certificate is
credited and only in respect of such portion of the aggregate principal amount
of Global Certificates as to which such participant or participants has or have
given such direction.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "Clearing Agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934, as amended. DTC was created
to hold securities for its participants and facilitate the clearance and
settlement of securities transactions between participants through electronic
book-entry changes in accounts of its participants, thereby eliminating the need
for physical movement of certificates. Participants include securities brokers
and dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among participants of DTC, it
is under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
<PAGE>
Physical Certificates. If DTC is at any time unwilling or unable to
continue as a depositary for any Global Certificate and a successor depositary
is not appointed by the [Company] within 90 days, Physical Certificates will be
issued in exchange for the Global Certificates.
AVAILABLE DISTRIBUTION AMOUNT
The "Available Distribution Amount" for any Distribution Date is equal to
the aggregate of all (i) payments of principal, premium (if any) and interest
made with respect to the Tax Exempt Securities and (ii) all payments of
principal and premium, if any (but not interest), made with respect to
Additional Tax Exempt Securities included in any other Asset Group held or to be
held by the Trust and received by the Trustee after the preceding Determination
Date (or, in the case of the initial Distribution Date, the Cut-Off Date) on or
prior to the related Determination Date (whether due to scheduled payments,
scheduled or unscheduled redemptions or otherwise) less any administrative
expenses [describe particular administrative expenses, including surveillance
fee, if any] incurred by the Trust since the preceding Determination Date. With
respect to any Distribution Date, the "Determination Date" is the day that is __
business days prior to such Distribution Date.
DISTRIBUTIONS ON THE CERTIFICATES
Distributions of principal and interest on the Certificates will be made by
the Trustee (or its duly appointed paying agent, if any) directly to holders of
Certificates in accordance with the procedures set forth in the Trust Agreement
and summarized herein. Interest and principal payments will be made on each
Distribution Date. Such payments will be made to holders in whose names the
Certificates were registered at the close of business as of the second Business
Day next preceding the Distribution Date (the "Record Date"). Distributions
will be made by wire transfer in immediately available funds for the account of
each holder whose initial Certificate Principal Balance is not less than
$________ and who has provided appropriate wire instructions to the Trustee, and
to every other holder, by check mailed to the address of such holder as it
appears on the certificate register. The final payment on any Certificate
(whether a Physical Certificate or a Global Certificate) will be made only upon
presentation and surrender of such Certificate at the offices of the Trustee or
its agent or such office or agency as is specified in the notice of final
distribution to holders of Certificates being retired.
Interest
Holders of each Class of Certificates will be entitled to receive on each
Distribution Date, to the extent of the Available Distribution Amount for such
Distribution Date, interest distributions in an amount equal to the Accrued
Certificate Interest on such Class.
With respect to any Distribution Date, for each Class of Certificates,
"Accrued Certificate Interest" will be equal to interest accrued during the
related Interest Accrual Period on the Certificate Principal Balance of the
Certificate of such Class at the related Pass-Through Rate; provided however,
that in the case of the Class [A][ ]-3 Certificates, Accrued Certificate
Interest will be equal to the residual portion of the Available Distribution
Amount allocable to interest on the Tax Exempt Securities after the Accrued
Certificate Interest with respect to all other Classes of Certificates has been
distributed. The Certificate Principal Balance shall mean, with respect to any
Certificate, on any date of determination, an amount equal to (a) the Initial
Amount thereof minus (b) the sum of (i) the aggregate of all amounts in respect
of principal of such Certificate (or any predecessor Certificate) distributed to
the Holder thereof prior to that date and (ii) the aggregate of all losses
allocated to such Certificate (or any predecessor Certificate) as described
herein.
[The "Interest Accrual Period" for any Distribution Date will be the six-
month period preceding such Distribution Date.] The initial Interest Accrual
Period for the Certificates is the period from _________________ through
______________. Notwithstanding the foregoing, the distributions of interest on
any Distribution Date for all classes of Certificates will reflect interest
accrued, and receipt with respect thereto, on the Tax Exempt Securities for the
preceding accrual period thereon, as may be reduced by any shortfalls in the
collections of payments as described below.
<PAGE>
Principal
Holders of each Class of Certificates will be entitled to receive on each
Distribution Date, in the manner and priority set forth herein, to the extent of
the portion of the Available Distribution Amount remaining after Accrued
Certificate Interest has been distributed to Certificateholders, a distribution
allocable to principal which will, as more fully described herein, include the
scheduled payments due on the Tax Exempt Securities and any Additional Tax
Exempt Securities and the portion of any unscheduled collections, including
redemption proceeds and premium, if any.
SUBORDINATION OF THE CLASS [A][ ]-2 AND CLASS [A][ ]-3 CERTIFICATES
[The rights of the Class [A][ ]-2 Certificateholders to receive
distributions to which they would otherwise be entitled to with respect to the
Series [A] [ ] Asset Group will be subordinated to the rights of the Class [A] [
]-1 Certificateholders. The rights of the Class [A][ ]-3 Certificateholders to
receive distributions to which they would otherwise be entitled to with respect
to the Series [A] [ ] Asset Group will be subordinated to the rights of the
Class [A][ ]-1 and Class [A][ ]-2 Certificateholders.] [The rights of the Class
[A]-2 and Class [A]-3 Certificateholders to receive distributions with respect
to the Series [A] Asset Group to which they would otherwise be entitled to will
also be subordinated to the rights of any Senior Certificates of subsequent
Series to be issued by the Trust from time to time and which will be offered
pursuant to related Prospectus Supplements to the extent described herein.] [The
rights of the Class [ ]-2 and Class [ ]-3 Certificateholders to receive
distributions with respect to the Series [ ] Asset Group to which they would
otherwise be entitled to will also be subordinated to the rights of any Senior
Certificates of a Series previously issued by the Trust and of any Senior
Certificates of subsequent Series to be issued by the Trust from time to time
and which will be offered pursuant to related Prospectus Supplements to the
extent described herein.]
[CREDIT ENHANCEMENT
Description of third party credit enhancement, if any, available for the
Certificates, including information with respect to the provider of such third
party credit enhancement as set forth in the Prospectus.]
ALLOCATION OF LOSSES
Immediately after each payment date with respect to the Tax Exempt
Securities, the Trustee shall determine the total amount of losses, if any,
incurred with respect to the Tax Exempt Securities and any Additional Tax Exempt
Securities, and the portion of such losses attributable to principal of the Tax
Exempt Securities or the Additional Tax Exempt Securities and the portion
thereof attributable to interest on the Tax Exempt Securities.
Such losses shall be allocated first, to the Class [A][ ]-3 Certificates,
and within such Class, pro rata among Class [A][ ]-3 Certificateholders, on the
basis of their outstanding Class [A][ ]-3 Certificate Principal Balance, to
reduce their respective outstanding Certificate Principal Balances by the amount
so allocated in the case of an allocation of the principal portion of a loss or
based on the Accrued Certificate Interest thereon in the case of an allocation
of the interest portion of a loss; second, to the Class [A][ ]-2 Certificates,
and within such Class, pro rata among Class [A][ ]-2 Certificateholders, on the
basis of their outstanding Class [A][ ]-2 Certificate Principal Balance, to
reduce their respective outstanding Certificate Principal Balances by the amount
so allocated in the case of an allocation of the principal portion of a loss or
based on the Accrued Certificate Interest thereon in the case of an allocation
of the interest portion of a loss; and third, to the Class [A][ ]-1
Certificates, and within such Class, pro rata among Class [A][ ]-1
Certificateholders, on the basis of their outstanding Class [A][ ]-1 Certificate
Principal Balance, to reduce their respective outstanding Certificate Principal
Balances by the amount so allocated in the case of an allocation of the
principal portion of a loss or based on the Accrued Certificate Interest thereon
in the case of an allocation of the interest portion of a loss. Such losses will
be deemed to have been allocated on any Distribution Date prior to the
distribution of principal on such Distribution Date.
<PAGE>
YIELD AND REDEMPTION CONSIDERATIONS
GENERAL
The yield to maturity and the aggregate amount of distributions on the
Certificates will be affected by the rate and timing of principal payments on
and redemption of the Tax Exempt Securities included in the Series [A][ ] Asset
Group and of the Additional Tax Exempt Securities included in other Asset Groups
held by the Trust. The timing of changes in the rate of redemptions of such Tax
Exempt Securities and Additional Tax Exempt Securities may, and the timing of
losses will, significantly affect the yield to an investor, even if the average
rate of principal payments experienced over time is consistent with an
investor's expectation. Since the rate and timing of principal payments on the
Tax Exempt Securities and on the Additional Tax Exempt Securities will depend on
future events and on a variety of factors (as described more fully herein) no
assurance can be given as to such rate or the timing of principal payments of
the Certificates.
[Insert description of specific redemption and/or default provisions of Tax
Exempt Securities and potential effect on yield on and repayments of
Certificates].
[Because the Pass-Through Rates on the Certificates are fixed, such rates
will not change in response to changes in market interest rates.]
The yield to maturity of the Certificates will depend on the price paid by
the holders of the Certificates and the related Pass-Through Rate. The extent
to which the yield to maturity of a Certificate is sensitive to redemptions of
the Tax Exempt Securities and Additional Tax Exempt Securities will depend, in
part, upon the degree to which it is purchased at a discount or premium. In
general, if a class of Certificates is purchased at a premium and principal
distributions thereon occur at a rate faster than anticipated at the time of
purchase, the investor's actual yield to maturity will be lower than that
assumed at the time of purchase. Conversely, if a class of Certificates is
purchased at a discount and principal distributions thereon occur a rate slower
than that assumed at the time of purchase, the investor's actual yield to
maturity will be lower than that assumed at the time of purchase. The magnitude
of the change will depend upon the amount of premium or discount, as the case
may be, and the rate of prepayment.
WEIGHTED AVERAGE LIFE OF CERTIFICATES
Weighted average life refers to the average amount of time that will elapse
from the date of issuance of a security to the date of distribution to the
investor of each dollar distributed in reduction of principal of such security
(assuming no losses). The weighted average life of the Certificates will be
influenced by, among other things, the rate at which principal of the Tax Exempt
Securities and Additional Tax Exempt Securities is paid and the rate at which
the Tax Exempt Securities and Additional Tax Exempt Securities are redeemed.
The assumed final Distribution Date with respect to each class of the
Certificates is _______ __, ___, which is the Distribution Date immediately
following the latest scheduled maturity date of the Tax Exempt Securities and
any Additional Tax Exempt Securities. No event of default, change in the
priorities for distribution among the various classes or other provisions under
the Trust Agreement will arise or become applicable solely by reason of the
failure to retire the entire Certificate Principal Balance of any Class of
Certificates on or before its assumed final Distribution Date.
The weighted average life of the Class [A][ ]-1 Certificates is __________.
<PAGE>
THE COMPANY
The Company is a wholly owned subsidiary of Tucker Anthony Holding
Corporation. Tucker Anthony Incorporated, which may act as underwriter of this
offering, is also a wholly owned subsidiary of Tucker Anthony Holding
Corporation. The Company was incorporated in the State of Delaware on September
28, 1983. The Company's sole business will be to act as the depositor of Tax
Exempt Securities into Trusts formed to issue certificates such as the
Certificates and otherwise to act as Trustor as described herein. Prior to the
filing of the Registration Statement of which the Prospectus is a part, the
Company had limited business activity, unrelated to its activities as described
in the Prospectus and this Prospectus Supplement. The principal executive
office of the Company is located at One Beacon Street, Boston, Massachusetts
02108 and its telephone number is (617) 725-2487.
THE TRUST AGREEMENT
The discussion of the terms of the Trust Agreement contained herein is
limited in scope. Investors should review the discussion contained in the
Prospectus under the heading "THE TRUST AGREEMENT." In addition, a copy of the
Trust Agreement will be filed with the Securities and Exchange Commission by the
Company in a Form 8-K within fifteen days of the initial offering of the Class
[A][ ]-1 Certificates.
The Company will provide a prospective or actual Certificateholder without
charge, on written request, a copy of the Trust Agreement. Requests should be
addressed to Secretary, T.A. of Delaware, Inc., One Beacon Street, Boston,
Massachusetts 02108.
VOTING RIGHTS ON CERTIFICATES
Each Certificate will be allocated voting rights for purposes of certain
actions that may be taken pursuant to the Trust Agreement. ____% of all voting
rights will be allocated to the Class [A][ ]-1 Certificates in proportion to
their Percentage Interests. ____% of all voting rights will be allocated to the
Class [A][ ]-2 Certificates in proportion to their Percentage Interests. ____%
of all voting rights will be allocated to the Class [A][ ]-3 Certificates in
proportion to their Percentage Interests. Under the provisions of the Trust
Agreement, a transferee of the Class [A][ ]-1 Certificates will become entitled
to exercise voting rights as a Certificateholder only if it obtains the consent
of the Trustor at the time of transfer, which consent may be withheld by the
Trustor in its sole discretion. [Voting Rights of Third Party Credit Provider.]
VOTING ON TAX EXEMPT SECURITIES
Under the Trust Agreement, [the holders of the [Class [A][ ]-2] [Class [A]
[ ]-3] Certificates] [other designated Class of Certificateholders] [the Trustor
or different entity] will be entitled to take any action or exercise any remedy
with respect to the Tax Exempt Securities, subject to the limitations set forth
in the Trust Agreement.
The Trustee is not to take any action as the nominal holder or holder of
any of the Tax Exempt Securities, either alone or as a part of a group of
holders of such Tax Exempt Securities, except in accordance with the affirmative
direction of [the holders of the [Class [A][ ]-2] [Class [A][ ]-3] Certificates]
[other designated Class of Certificateholders] [the Trustor or different
entity].
DEFAULT ON TAX EXEMPT SECURITIES
The Trustee will use its best reasonable efforts to collect all payments
due with respect to the Tax Exempt Securities and, consistent therewith, will
follow such normal and customary procedures as it shall deem necessary or
desirable.
If the Issuer defaults on the payment of interest or principal and premium,
if any, on any Tax Exempt Security, the Trustee shall promptly give notice to
the registered holders of the applicable Certificates. Such notice shall set
forth
<PAGE>
(a) the identity of the issue of Tax Exempt Securities, (b) the date and nature
of such default, (c) the amount of the interest or principal in default, (d) the
identifying numbers of the Interest-Only Certificates or Certificates or any
combination, as the case may be, evidencing the interest or principal described
above in clause (c), and (e) any other information which the Trustee may deem
appropriate.
CERTAIN LIABILITIES
The Company will be liable without limitation for all debts and obligations
of, and claims against, the Trust; provided, however, that the Company shall not
be responsible for the payment to holders or beneficial owners of Certificates
of any amount which represents, directly or indirectly, principal, interest or
premium on the Tax Exempt Securities.
CERTAIN COVENANTS
The [Company] [other entity acting as managing certificateholder] now has
and shall continue to have during the term of the Trust Agreement the "Company's
Required Interest" which term shall mean that, so long as the aggregate
Certificate Principal Balance of the Certificates exceeds $____________, an
aggregate interest at all times in each material item of income, gain, loss,
deduction and credit derived from the arrangement evidenced by the Certificates
of not less than 1% multiplied by the result obtained by dividing $____________
by the aggregate Certificate Principal of the Certificates (but in no event less
than two-tenths of one percent) and if and so long as the aggregate Certificate
Principal Certificates equals or is less than $____________ of an aggregate
interest in each such material item of income, gain, loss, deduction and credit
of not less than 1%. As described in the Trust Agreement, the Certificates
representing the Company's Required Interest shall not be transferred by the
Company and shall bear a legend to that effect.
The holders and beneficial owners of Certificates acknowledge and agree,
pursuant to the Trust Agreement, that the Trust shall be deemed a partnership
for income tax purposes but the Trust does not constitute a partnership for any
other purpose.
THE TRUSTEE
The Trust Agreement provides that the Trustee will incur no liability to
any Certificateholder if, by reason of any provision of any present or future
law, or regulation thereunder, of any governmental authority, or by reason of
any natural disaster or war or other circumstance beyond its control, the
Trustee is prevented from doing or performing any act or thing which the terms
of the Trust Agreement provide should be done or performed.
The Trust Agreement provides that the Trustee will assume no obligation and
shall not be subject to any liability to holders of Certificates in the
performance of its duties, other than by reason of willful misconduct, bad faith
or gross negligence. The Trustee will not be under any obligation to take any
action which may tend to involve it in any expense or liability, the payment of
which within a reasonable time is not, in its reasonable opinion, assured to it.
The Trustee may own and deal in Tax Exempt Securities, in obligations of the
same issue and maturity as the Tax Exempt Securities and in the Certificates, as
though it were not the Trustee under the Trust Agreement.
The Trustee is required at all times to maintain a fidelity bond or other
insurance (which may be self-insurance) in reasonable form and amount to protect
against loss due to dishonest or fraudulent action by its employees in
connection with its obligations under the Trust Agreement.
The Trustee is allowed at any time to resign as Trustee by written notice
of its election to do so, and such resignation shall take effect upon the
appointment of a successor Trustee, subject to the terms and conditions of the
Trust Agreement. If at any time the Trustee becomes incapable of acting or is
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property is appointed, or any public officer takes charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then any holder of a Certificate may, on behalf of
itself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
<PAGE>
In any case at any time the Trustee notifies the Company that it elects to
resign as Trustee, the Company [other entity acting as managing
certificateholder] is required, within 45 days after the delivery of the notice
of resignation or removal, to appoint a successor Trustee, which is to be a
commercial bank or trust company having its principal office in the United
States of America and having a combined capital and surplus of at least
$50,000,000. If no successor Trustee has been appointed as successor Trustee
within 45 days after the Trustee has given written notice of its election to
resign, the Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
Any corporation or association into or with which the Trustee may be
merged, consolidated or converted will be the successor of such Trustee without
the execution or filing of any document or any further act.
TRUSTEE FEES
The Trustee is entitled to receive an annual fee (the "Trustee Fee") equal
to 0.___% per annum (the "Trustee Fee Rate") on the aggregate Certificate
Principal Balance of the Certificates then outstanding. The Trustee Fee is
designed to compensate the Trustee for the performance of all of its duties
under the Trust Agreement.
AMENDMENTS
The Trust Agreement may be amended at any time and from time to time by
agreement between the Company and the Trustee, for any purpose and in respect of
which they may deem necessary or desirable, without the consent of any of the
Certificateholders, if (i) the Trustee determines that such amendment will not
adversely affect the interests of any Certificateholders and (ii) the Trustee
has received an opinion of appropriate special tax and securities counsel to the
effect that such amendment would not result in the withdrawal of or modification
of the conclusions of, any opinion previously delivered by such counsel in
connection with the Certificates.
TERMINATION EVENTS
Upon the occurrence of any of the following (herein called "Termination
Events"):
(a) the Trustee shall fail to distribute to any Certificateholders
any distribution required to be made under the terms of the Trust Agreement
and such failure shall continue unremedied for five days;
(b) the Company shall consent to the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceeding of or relating to the
Company or a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceeding, or for the winding up or
liquidation of its affairs, shall have been entered against the Company or
the Company shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment to the benefit of
its creditors or voluntarily suspend payment of its obligations;
(c) the Company [other entity acting as managing certificateholder]
shall cease to be a party to the Trust Agreement or a failure of the
Company to maintain the Company's Required Interest; or
(d) it becomes necessary to register the Trust as an "investment
company" under the Investment Company Act of 1940, as amended;
the Trustee shall notify each registered Certificateholder of the occurrence of
such Termination Event as soon as practicable after it obtains knowledge
thereof. The Certificateholders representing at least 66% of the voting rights
of Certificates affected by a Termination Event may waive such Termination Event
or default; provided, however, that a Termination Event under section (a) above
may only be waived by all of the Certificateholders. Upon any such waiver, such
Termination Event or default shall cease to exist and shall be deemed to have
been remedied for every purpose hereunder. No such waiver shall extend to any
subsequent or other Termination Event or default not shall impair any right
consequent
<PAGE>
thereon except to the extent expressly waived. Unless a Termination Event is
waived by the requisite number of Certificateholders, as soon as is commercially
practical, after the giving of such notice, the Trustee shall sell the Tax
Exempt Securities to the highest bidder in an auction, subject only to the
requirement that at least one bid is received from a person that is not an
affiliate of the Company. The proceeds of such a sale or, if no such bids are
received, the assets of the Trust shall be distributed on the next Distribution
Date to the Certificateholders pro rata based on the outstanding Certificate
Principal Balances of the Certificates they hold.
TERM OF EFFECTIVENESS
Except as provided below, the Trust Agreement is to remain in effect until
the date upon which all of the Tax Exempt Securities have been paid in full at
the maturity or early redemption thereof or receipt of a final payment thereon,
and the payments on such Tax Exempt Securities has been distributed to holders
of Certificates in accordance with the Trust Agreement. The discharge of any
indenture or other document related to any of the Tax Exempt Securities will not
result in a termination of the Trust Agreement. The Trust Agreement shall
terminate with the consequences set forth above under "--Termination Events"
upon the occurrence of any Termination Event unless such Termination Event shall
have been waived as described above.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
Boston, Massachusetts, tax counsel to the Company ("Tax Counsel"), the
arrangement among the holders of the Certificates evidenced by the Trust
Agreement will be classified as a partnership for federal income tax purposes.
Consequently, each Certificateholder will be treated as a member of such
partnership, and all amounts allocated to Certificateholders that are
attributable to payments of interest on the Tax Exempt Securities and Additional
Tax Exempt Securities that are excludable from federal gross income will be
excludable from the federal gross income of the Certificateholders. The
foregoing opinions are based upon and subject to the discussion set forth below.
BASIS OF OPINION
The opinion of Tax Counsel and the tax consequences described herein are
based upon an analysis of existing laws, regulations, rulings and court
decisions, including the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), and cover certain matters not directly addressed by such
authorities. The Internal Revenue Service (the "IRS") has not yet issued any
regulations or rulings under certain of the provisions of the Code discussed
below and the opinion and tax consequences described herein are subject to and
may be modified by the eventual issuance of such regulations and rulings. No
rulings will be sought or obtained from the IRS regarding the classification of
the Trust as a partnership for federal income tax purposes or any other aspect
of the tax consequences described herein. In addition, there is no assurance
that any such rulings could be obtained or that the IRS will agree with the
conclusions expressed herein. The following discussion does not purport to
discuss all federal income tax consequences that may be applicable to particular
categories of investors, some of which may be subject to special rules.
Therefore, potential purchasers should consult their own tax advisors prior to
purchasing Certificates.
On the date of initial issuance and delivery of the underlying Tax Exempt
Securities, __________________ (respectively, "Bond Counsel"), rendered its
opinion to the effect that, under existing laws, interest on the Tax Exempt
Securities is [(i)] excludable from gross income for federal income tax purposes
[and (ii) exempt from ___________________ State [and local] income taxes]. See
["Tax Exemption"] in the Official Statements attached as Appendix B to this
----------
Prospectus Supplement. In rendering its opinions, Tax Counsel has not
independently verified the opinion of Bond Counsel. Rather, Tax Counsel has
assumed the continuing correctness of such opinion, continuing compliance with
the requirements of the Code that must be met after the issuance of the Tax
Exempt Securities in order that interest not be included in gross income for
federal income tax purposes, and that no circumstances have occurred that would
adversely affect the exclusion from gross income for federal income tax purposes
of interest on the Tax Exempt Securities as described in the opinions of Bond
Counsel. Additionally, Tax Counsel has not undertaken to determine or to inform
Certificateholders whether such circumstances have occurred or if they do occur
or intervene in the future.
<PAGE>
TAX STATUS OF THE TRUST ARRANGEMENT
The opinion of Tax Counsel as to classification of the Trust as a
partnership for federal income tax purposes is based principally on Section
301.7701-2 of the Treasury Regulations, which provides that an unincorporated
organization generally shall not be classified as an association taxable as a
corporation unless such association has more than two of the corporate
characteristics of continuity of life, centralization of management, limited
liability and free transferability of interests.
The Trust Agreement provides that the Tax Exempt Securities will be sold,
the proceeds will be distributed to Certificateholders and the Trust will
terminate if the Company [other entity acting as managing certificateholder]
ceases to hold its Minimum Required Interest (set forth in the Trust Agreement)
or an act of bankruptcy occurs with respect to the Company [other entity acting
as managing certificateholder]; accordingly, the Trust will lack the corporate
characteristic of continuity of life. The Trust Agreement provides that a
transferee of Certificates of certain classes will become entitled to exercise
voting rights as a Certificateholder only if it obtains the consent of the
Company [other entity acting as managing certificateholder] at the time of
transfer, which consent may be withheld by the Company [other entity acting as
managing certificateholder] in its sole discretion; accordingly, the Trust will
lack the corporate characteristic of free transferability of interests.
Furthermore, because more than 90% of the income of the Trust each year will
consist of interest, it will not be treated as a corporation under the publicly
traded partnership rules of Section 7704 of the Code. Because the Trust does not
possess at least two and may lack all four of the relevant corporate
characteristics, and because it will not be treated as a publicly traded
partnership, it will be classified as a partnership for federal income tax
purposes.
Taxable mortgage pool ("TMP") rules enacted as part of the Tax Reform Act
of 1986 treat certain arrangements that securitize real estate mortgages as
taxable corporations. An entity will be characterized as a TMP only if (i)
substantially all of its assets are debt obligations and more than 50% of such
debt obligations consist of real estate mortgages or interests therein, (ii) the
entity is the obligor under debt obligations with two or more maturities and
(iii) payments on the debt obligations referred to in (ii) bear a relationship
to payments on the debt obligations referred to in (i). Equity interests
corresponding to maturity classes of debt will be treated as debt for purposes
of these rules to the extent provided in Treasury regulations. Characterization
of the Trust as a TMP would prevent tax-exempt interest income from flowing
through to holders, because the Trust would be taxed as a corporation. Because
the Certificates do not represent interests in the Trust with two or more
maturities, Tax Counsel is of the opinion that the Trust will not be treated as
a TMP.
Treatment of distributions to holders of each class of Certificates as tax-
exempt interest requires that such holders be treated as members of the
partnership created by the Trust Agreement, and therefore requires that such
class constitute an equity interest in the Trust, rather than a debt obligation
of the Trust or of the holders of some other class or classes of Certificates,
for federal income tax purposes. If the IRS were successfully to assert that a
class of Certificates represents indebtedness of the Trust or of the holders of
some other class or classes of Certificates, distributions to the holders of the
class of Certificates treated as indebtedness would not constitute tax-exempt
interest and the holders of the class or classes of Certificates determined to
represent equity interests in the Trust Arrangement would be treated as owning
all of the Tax Exempt Securities, subject to a borrowing from the holders of the
classes of Certificates treated as indebtedness. Tax Counsel has advised that
if the IRS were to pursue this position in court, the IRS should not prevail.
In addition, there can be no absolute assurance that the IRS will agree
with the other opinions of Tax Counsel set forth above. If the IRS were
successfully to assert that the Trust constitutes an association taxable as a
corporation, distributions from the Trust to some or all holders would not be
treated as tax-exempt interest, which would have a materially adverse effect
upon investors. The remainder of this discussion assumes that the Trust
Arrangement will be taxable as a partnership and that all holders are members of
such partnership.
PARTNERSHIP TAXATION
As a partnership, the Trust will not be subject to federal income tax, but
each Certificateholder will be required to separately take into account such
holder's allocable share of income, gain, losses, deductions and credits of the
Trust. The Trust will report its operations on the accrual basis for federal
income tax purposes, using the calendar year as its
<PAGE>
taxable year. The Trust will file a partnership information return with the IRS
for each taxable year of the Trust and will report each Certificateholder's
allocable share of Trust income and expense to holders and the IRS on Schedule
K-1. Each Certificateholder must include on its federal income tax returns its
allocable share of Trust income and expense for any taxable year of the Trust
ending within or with the taxable year of the Certificateholder. The Company
[other entity acting as managing certificateholder] will be the tax matters
partner for the Trust and, in general, will have the authority to extend the
statute of limitations for the Certificateholders with respect to Trust items
and to enter into settlements (that may be binding on the Certificateholders)
with the IRS on behalf of the Certificateholders.
The Trust's income will consist primarily of interest earned on the Tax
Exempt Securities (including appropriate adjustments for original issue
discount, bond premium and market discount, if any) and any gain upon
disposition or redemption of Tax Exempt Securities and Additional Tax Exempt
Securities. The Trust's deductions will consist primarily of expenses of the
Trust and losses, if any, upon disposition of Tax Exempt Securities and
Additional Tax Exempt Securities.
The tax items of a partnership are allocable to the partners in accordance
with the Code, Treasury Regulations and the partnership agreement (here, the
Trust Agreement and related documents). The Trust Agreement will provide that
items of income and deduction are reflected as increases or decreases in the
capital accounts of the holders and distributions in liquidation will be made in
accordance with those accounts. The Trust Agreement should therefore have
substantial economic effect, and Tax Counsel is of the opinion that the
allocations in the Trust Agreement will be respected for federal income tax
purposes. However, because tax allocations and tax reporting will be done on a
uniform basis for all Certificateholders but Certificateholders may purchase
Certificates at different times and at different prices, the ultimate tax
consequences to a Certificateholder may differ from the amounts reported by the
Trust.
Distributions from the Trust will generally not be taxable to a
Certificateholder unless such distributions are in excess of the
Certificateholder's adjusted basis in the Certificates it owns. Cash
distributions to a Certificateholder in excess of adjusted basis generally will
be taxable to such Certificateholder as capital gain. A Certificateholder's
basis in its Certificate will generally be equal to the Certificateholder's
purchase price, increased by such Certificateholder's share of items of Trust
income and gain, and reduced, but not below zero, by such Certificateholder's
share of Trust expenses and losses (including amortizable bond premium) and
distributions by the Trust.
If a Certificate is transferred during a taxable year of the Trust,
allocations of tax items of the Trust between the transferor and the transferee
will be based upon the portions of such taxable year during which each owned the
Certificate.
Under Section 708 of the Code, the Trust will be deemed to terminate for
Federal income tax purposes if 50% or more of the capital and profits interests
in the Trust are sold or exchanged within a 12-month period. If such a
termination were to occur, the Trust's taxable year would end and the Trust
would be deemed to have distributed its assets to the Certificateholders, who
would then be treated as recontributing those assets to the Trust, as a new
partnership. Under these rules, Certificateholders would generally not
recognize any taxable gain or loss as a result of the deemed distribution of the
Trust's assets incident to the Trust's termination as a partnership for tax
purposes. However, termination could have the effect of modifying the Trust's
basis for its underlying Tax Exempt Securities, which in turn may affect items
of income, gain or loss reportable by a Certificateholder, or of shifting income
and expense items into different taxable years for Certificateholders who are
not calendar years reporters. The Company may not be able to determine whether
a constructive termination has occurred and the Trust may be unable to comply
with certain technical requirements that might apply should such a termination
occur.
Gain or Loss on Sale. In general, a holder's basis in a Certificate is
computed in the manner discussed above. Upon sale or exchange of a Certificate,
a Certificateholder generally will recognize gain or loss equal to the
difference between the amount realized on the disposition and the holder's tax
basis in the Certificate. Loss from the sale or exchange of a Certificate will
be recognized on a distribution of cash in liquidation of such Certificate if
the holder's basis in the Certificate exceeds the amount of money distributed.
Except in the case of Certificateholders who are certain financial institutions
or who would be treated as dealers in respect of the Tax Exempt Securities, such
gains or losses should be capital gains or losses.
<PAGE>
Identification of Interests. Holders that sell some but not all of their
interests in Certificates should be aware that they may not be permitted to
identify specific interests sold for tax purposes. In Revenue Ruling 84-53,
1984-1 C.B. 159, the IRS took the position that a partner acquiring an interest
in a partnership in separate transactions at different prices must maintain an
aggregate adjusted tax basis in a single partnership interest consisting of its
combined interests. Under this ruling, a Certificateholder who makes various
purchases of interests would not be allowed to maintain a separate tax basis in
each interest based upon its specific purchase price. It is not clear whether
this ruling will apply in the case of a partnership like the arrangement
evidenced by the Certificates, where it is anticipated that records will be kept
providing a verifiable means of identifying each separate interest and tracing
the purchase price of such interest.
No Section 754 Election. The Trust does not intend to elect under Section
754 of the Code to adjust the basis of its assets upon a sale of Certificates or
other events. Consequently, a subsequent purchaser of Certificates may have a
basis in its Certificate which differs from the Trust's basis in corresponding
Trust assets. Items of items of income and loss generated by the Trust will be
determined based on the Trust's basis for its assets rather than the
Certificateholder's basis for its Certificates.
ADDITIONAL TAX CONSIDERATIONS
Additional tax considerations relevant to an investment in the Certificates
of any Series are set forth under "Certain Federal Income Tax Consequences -
Additional Tax Considerations" in the Prospectus. Prospective investors should
read the discussion under such caption in the Prospectus and consult their own
tax advisors regarding the additional tax considerations relevant to an
investment in the Certificates.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C., Boston, Massachusetts. [Other counsel to
be identified.]
USE OF PROCEEDS
The net proceeds from the sale of the Certificates will be used to
[purchase the Tax Exempt Securities deposited into a Trust,] [to repay
indebtedness which has been incurred to acquire Tax Exempt Securities,] [to
establish any Reserve Funds described herein,] [to pay costs of structuring,
guaranteeing, credit enhancing and issuing the Certificates,] [Describe other
purposes, if any, relating to one or more of the foregoing.]. [The purchase of
the Tax Exempt Securities for a Series will be effected by an exchange of the
Certificates with the seller of such Tax Exempt Securities.]
PLAN OF DISTRIBUTION
The [Company] has entered into an Underwriting Agreement with [Tucker
Anthony Incorporated, as Underwriter] [the several underwriters (the
"Underwriters") listed below for whom [the Underwriter] is acting as
Representative]. Subject to the terms and conditions set forth in the
Underwriting Agreement, the [Company] has agreed to sell to [the Underwriter]
[each of the Underwriters named below], and [the Underwriter] [each of the
Underwriters] has [severally] agreed to purchase [the principal amount of Class
[A][ ]-1 Certificates set forth opposite its name].
Underwriters Class Principal Amount
------------ ----- ----------------
[A][ ]-1 $
----------
$__________
<PAGE>
[The Underwriters[s] propose[s] to offer [the Class [A][ ]-1 Certificates]
[part of the Class [A][ ]-1 Certificates] directly to the public at the public
offering price set forth on the cover page hereof and part to certain dealers at
such price less a concession not in excess of the amount set forth below for
such Class. The Underwriter[s] may allow and such dealers may reallow a selling
concession not in excess of the amount set forth below for such Class. After
the initial public offering, such public offering price and such selling
concession may be changed.
Selling
Concession Reallowances
(Percent of (Percent of
Principal Principal
Amount) Amount)
---------- -----------
Class [A][ ]-1 Certificates % %]
[The [Company] has been advised by the Underwriter that it proposes to
offer the Class [A][ ]-1 Certificates to the public from time to time in
negotiated transactions or otherwise at varying prices to be determined at the
time of sale. The Underwriter and any dealers that participate with the
Underwriter in the distribution of the Class [A][ ]-1 Certificates may be deemed
to be underwriters and any commissions received by them and any profit on the
resale of the Class [A][ ]-1 Certificates positioned by them may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933 as
amended.] [Description of underwriting fees.]
The Underwriting Agreement provides that the [Company] will indemnify the
Underwriter[s] against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriter[s]
may be required to make in respect thereof.
[The Tax Exempt Securities pledged as security for the Certificates will be
purchased from the Underwriter[s] simultaneously with the closing of the sale of
the Certificates.]
[Disclosure of the extent to which Certificates were purchased by the
Underwriter or an affiliate in the initial offering of such Certificates.]
[Disclosure in case the Company or any affiliate is retaining an interest
in one or more Classes.]
RATINGS
It is a condition to the issuance of the Class [A][ ]-1 Certificates that
__________ [ and _________] ([each, a] [the] "Rating Agency" assign the
[respective] rating[s] of ____ [and _____] to the Class [A][ ]-1 Certificates.
The ratings on the Certificates do not address [list any carve-outs].
A security rating should be evaluated independently of similar ratings of
different types of security. A security rating does not address the effect of
redemption or reinvestment rates on investors' yields. A rating is not a
recommendation to buy, sell or hold Certificates and may be subject to revision
or withdrawal at any time by the assigning rating organization. Each rating
should be evaluated independently of any other rating. See "RISK FACTORS."
<PAGE>
APPENDIX A
DESCRIPTION OF TAX EXEMPT SECURITIES
Municipal Issuer:
Tax Exempt Securities:
Dated:
Original Principal
Maturity Date:
Original Par Value
Amount Issued:
CUSIP Number:
Stated Interest Rate:
Interest and Principal Payment Dates:
Terms of Redemption:
Security for Bonds
Trustee for Tax Exempt Securities:
Mode of Payment
of Tax Exempt Securities:
Par Value Amount of
Tax Exempt Securities Deposited Under
Trust Agreement: $ _______
The Tax Exempt Securities will be held by the Trustee for the holders of
Certificates as book-entry credits to an account of the Trustee at the
Depository Trust Company of New York.
<PAGE>
Information contained herein is subject to completion and amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These Securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these Securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Version 2
Subject to Completion, Dated JUNE 3, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus Dated ______, 1996)
$__________
T.A. OF DELAWARE, INC.
TAX EXEMPT SECURITIES TRUST CERTIFICATES
MULTI-CLASS SERIES [A][ ]
$_________ ___% Principal Strip Certificates due ________ __, _____
$ 0 (1) Coupon Strip Certificates due _________ __, ____
_____________________
(1) The Coupon Strip Certificates will accrue interest at ___% per annum on a
notional amount equal to the outstanding principal balance of the Principal
Strip Certificates as described herein.
Tax Exempt Securities Trust Certificates, Multi-Class Series [A][ ] (the
"Certificates") evidence ownership of the principal and interest payments due on
the assets held by the Tax Exempt Securities Trust (the "Trust"), to be formed
by [T.A. of Delaware, Inc.] (the "Company"), a wholly owned special purpose
(cover page continued on next page)
___________________________
SEE "RISK FACTORS" BEGINNING ON PAGE S-6 FOR A DESCRIPTION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS IN EVALUATING AN
INVESTMENT IN THE CERTIFICATES.
___________________________
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 COMMISSION
PASSED ON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
___________________________
[Tucker Anthony (the "Underwriter")] [the Underwriters (as defined)]
intend[s] to make a secondary market in the Certificates, but [has] [have] no
obligation to do so. There can be no assurance that a secondary market for the
Certificates will develop or, if it does develop, that it will continue.
The Certificates will be offered from time to time by the Underwriter[s] in
negotiated transactions or otherwise at varying prices to be determined at the
time of sale. The aggregate proceeds to the [Company] [Trust] from any sale of
the Certificates will be equal to the purchase price paid by the purchasers
thereof, net of any expenses payable by the Company and any compensation to the
Underwriter[s].
The Certificates are offered by the Underwriter[s] subject to prior sale,
to withdrawal, cancellation or modification of the offer without notice, to
delivery and acceptance by the Underwriter[s] and certain further conditions. It
is expected that delivery of the Certificates will be made in book-entry only
form through the facilities of The Depository Trust Company, on or about
____________, 199_.
TUCKER ANTHONY
--------------
INCORPORATED
The date of this Prospectus Supplement is __________ __, 199_.
<PAGE>
(cover page continued from previous page)
subsidiary of Tucker Anthony Incorporated pursuant to a Trust Agreement (the
"Trust Agreement"), dated as of ______ __, 199_, between the Company and [ ] as
trustee (the "Trustee"). The Certificates will consist of the following classes:
the Principal Strip Certificates and the Coupon Strip Certificates. It is a
condition of issuance that the Certificates be rated ___ [and ____] by _______
[and _______, respectively].
The Trust assets will consist of the municipal securities described herein
and in Appendix A (the "Tax Exempt Securities"). The Tax Exempt Securities will
----------
be held by the Trustee in accordance with the Trust Agreement. Although the
Certificates are secured by the Tax Exempt Securities, the Certificates will
have payment characteristics different from the payment characteristics of the
Tax Exempt Securities. An investment in the Certificates should not be viewed as
a direct investment in the Tax Exempt Securities.
The yield to maturity on the Principal Strip Certificates will be sensitive
and on the Coupon Strip Certificates will be extremely sensitive to the rate and
timing of principal payments on the Tax Exempt Securities (including as a result
of redemptions and defaults). A rapid rate of redemption of the Tax Exempt
Securities could result in the failure of investors in the Coupon Strip
Certificates to recover their initial investment. See "Risk Factors" and
"Certain Yield and Prepayment Considerations" herein and "Risk Factors" and
"Yield Considerations" in the Prospectus.
Payments on the Tax Exempt Securities are the sole source of payments on
the Certificates. Interest on the Tax Exempt Securities is excludable from gross
income of the holders thereof for federal income tax purposes. As is more fully
discussed under "Certain Federal Income Tax Consequences," because the Trust
will be classified as a grantor trust for federal income tax purposes,
distributions of interest received with respect to the Tax Exempt Securities are
expected to retain their tax exempt character when distributed to
Certificateholders with respect to the Certificates.
The Certificates do not represent an interest in or an obligation of the
Company, the municipal issuer of the Tax Exempt Securities, the Trustee, or any
of their affiliates. Neither the Certificates nor the underlying Tax Exempt
Securities are insured or guaranteed by any governmental agency or
instrumentality or by the Company or any of its affiliates.
__________________
This Prospectus Supplement does not contain complete information about the
Certificates offered hereby. Additional information is contained in the
Prospectus, and purchasers are urged to read both the Prospectus Supplement and
the Prospectus in full. Sales of the Certificates may not be consummated unless
the purchaser has received both the Prospectus Supplement and the Prospectus.
[IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE
CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZATION, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.]
Until 90 days after the date of this Prospectus Supplement, all dealers
effecting transactions in the Certificates, whether or not participating in this
distribution, may be required to deliver a Prospectus Supplement and Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus
Supplement and Prospectus when acting as underwriter and with respect to their
unsold allotments or subscriptions.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-3 (the "Registration Statement") under the Securities Act with respect to the
Certificates to be offered by the Prospectus and this Prospectus Supplement.
This Prospectus Supplement does not contain all of the information set forth in
the Registration Statement and the exhibits and schedules thereto, certain
portions of which have been omitted pursuant to the rules and regulations of the
Commission. Statements made in this Prospectus Supplement as to the contents of
any contract, agreement or other document are not necessarily complete. With
respect to each such contract, agreement or other document filed or incorporated
by reference as an exhibit to the Registration Statement, reference is made to
such exhibit for a more complex description of the matter involved, and each
such statement is qualified in its entirety by such reference.
The Registration Statement and the exhibits and schedules thereto may be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549 and will also be available for inspection and copying at the regional
offices of the Commission located at 7 World Trade Center, New York, New York
10048 and at 500 West Madison Street (Suite 1400), Chicago, Illinois 60661.
Copies of such material may also be obtained from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates.
<PAGE>
- --------------------------------------------------------------------------------
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the more
detailed information appearing elsewhere herein and in the Prospectus.
Capitalized terms used in this summary that are not otherwise defined have the
meanings ascribed thereto in the Prospectus.
Title of Securities......... The securities offered hereby are the Tax Exempt
Securities Trust, Multi-Class Series [A][ ] (the
"Certificates").
Company..................... T.A. of Delaware, Inc. (the "Company"), a Delaware
corporation. Neither the Company nor any of its
affiliates has guaranteed or insured the
Certificates. See "THE COMPANY" herein.
Trustee..................... [ ] (the "Trustee").
Trust Assets................ The property of the Trust (the "Trust Property")
will consist of the Tax Exempt Securities
described herein [and in Appendix A]. The Tax
Exempt Securities will be irrevocably transferred
to the Trustee and will be held in the name of the
Trustee or its nominee, in trust for the benefit
of the Certificateholders as the beneficial owners
of the Tax Exempt Securities in accordance with
the Trust Agreement. The Tax Exempt Securities
consist of [tax exempt revenue bonds issued by a
conduit governmental issuer (the "Conduit
Issuer"), the proceeds of which are loaned to an
eligible obligor or obligors (the "Obligor) to
finance or refinance eligible projects. The
Obligor is generally a non-governmental, private
entity. The payment of principal, premium, if any,
interest and all other amounts owed with respect
to Tax Exempt Securities issued by Conduit Issuers
are payable by amounts owed by the Obligor under
the terms of its loan. The loan is payable out of
general cash flow of the Obligor or specific
project revenues or otherwise. The repayment
obligation may be secured by a mortgage on the
project and/or other assets of the Obligor and
other security interests. Tax Exempt Securities
issued by Conduit Issuers are non-recourse to the
Conduit Issuer] [tax exempt revenue bonds issued
by a state or local governmental entity, such as a
public authority or agency, without general taxing
power (the "Revenue Bond Issuer"). The bonds are
issued to finance or refinance the capital
expenditure and operating needs of the Revenue
Bond Issuer and are payable from the revenues of
such Issuer, often a dedicated and pledged revenue
stream] [tax exempt bonds issued by a governmental
entity, such as a state or local government or
some other political subdivision, with general
taxing power (the "Governmental Issuer"). The
bonds are issued to finance or refinance the
capital expenditure and operating needs of the
Governmental Issuer and are payable from some or
all of the revenues of such Issuer. If all sources
of revenue of the Issuer, including tax receipts,
are available to make the payment, the bonds are
general obligation bonds secured by the full faith
and credit of the Issuer. Otherwise, they will be
limited obligations of the Issuer] [any
combination of the foregoing].
[Describe asset concentration level of Trust
Property, to the extent any Tax Exempt Security or
Obligor with respect to any Tax Exempt Security
constitutes more than 10% of the Trust Property
including cross-reference to audited financial
information and other
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
information with respect to the Obligor, Revenue
Bond Issuer, or Governmental Isuer, as
applicable.] [See "RISK FACTORS" and "THE TAX
EXEMPT SECURITIES" herein.]
Securities Offered.......... The Tax Exempt Securities Trust Certificates,
Multi-Class Series [A][ ] will consist of two
classes of Certificates: the Principal Strip
Certificates and the Coupon Strip Certificates.
Each Certificate evidences the ownership of, and
the right to receive certain principal, premium,
if any, and interest on the Tax Exempt Securities
held by the Trust due after the Cut-Off Date (as
Defined) all as more fully described herein.
Principal Strip Rate and
Coupon Strip Rate.......... The rates on all Classes of Certificates are set
forth on the cover hereof.
Initial Certificate
Principal Balance.......... The Certificates will have an aggregate initial
Certificate Principal Balance (as defined) of
$[ ]. The Principal Strip Certificates will
have an initial Certificate Principal Balance of
$[ ]. The Coupon Strip Certificates will have
a notional balance equal to the Certificate
Principal Balance of the Principal Strip
Certificates. Certificate Principal Balance shall
mean, with respect to any Certificate, on any date
of determination, an amount equal to (a) the
initial Certificate Principal Balance (as defined)
thereof minus (b) the sum of (i) the aggregate of
all amounts in respect of principal of such
Certificate (or any predecessor Certificate)
distributed to the Holder thereof prior to that
date and (ii) the aggregate of all losses
allocated to such Certificate (or any predecessor
Certificate) as described herein.
Form; Denomination.......... The Certificates will be issued pursuant to the
Trust Agreement in denominations of [describe
denominations for each class] provided, however,
that one certificate of each Class may be issued
in such other amount as is necessary to include
the remainder of such Class. The Certificates will
be initially represented by one or more Global
Certificates (as defined) registered in the name
of Cede & Co., as nominee of The Depository Trust
Company, New York, New York ("DTC"). The interests
of beneficial owners of the Certificates will be
represented by book entries on the records of
participating members of DTC. Physical
Certificates (as defined) representing the
Certificates will be available only under certain
limited circumstances. See "DESCRIPTION OF THE
CERTIFICATES - Book-Entry Registration".
Distribution Dates.......... Distributions of principal and interest will be
made on each [ ] and [ ] (or, if such day is
not a Business Day (defined as any day on which
banks in New York, New York are open for
commercial banking purposes and that is not a day
on which the New York Stock Exchange is authorized
or obligated by law or executive order to close)
the next succeeding Business Day) (each, a
"Distribution Date"), commencing [ ].
Cut-Off Date................ ________ __, 1996 (the "Cut-Off Date").
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Available Distribution
Amount...................... The "Available Distribution Amount" for any
Distribution Date is equal to the aggregate of all
payments of principal and interest made with
respect to the Tax Exempt Securities and received
by the Trustee after the preceding Determination
Date (or, in the case of the initial Distribution
Date, the Cut-Off Date) on or prior to the related
Determination Date (whether due to scheduled
payments, scheduled or unscheduled prepayments or
otherwise) less any administrative expenses
incurred by the Trust since the preceding
Determination Date. With respect to any
Distribution Date, the "Determination Date" is the
day that is _____ business days prior to such
Distribution Date.
Interest Distributions...... On each Distribution Date, the Trustee will
distribute to the registered holders of the
Principal Strip Certificates (the "Principal Strip
Certificateholders") and of the Coupon Strip
Certificates (the "Coupon Strip
Certificateholders" and, together with the
Principal Strip Certificateholders, the
"Certificateholders" or "Holders") as of the
second Business Day next preceding such
Distribution Date (the "Record Date"), in the
manner and priority set forth herein, to the
extent of the Available Distribution Amount for
such Distribution Date, interest distributions in
an amount equal to the Accrued Certificate
Interest (as defined) on such Class.
With respect to any Distribution Date, "Accrued
Certificate Interest" will be equal to (i) in the
case of Principal Strip Certificates, interest
accrued during the related Interest Accrual Period
(as defined) on the Certificate Principal Balance
of the Certificates of such class at the related
Principal Strip Rate and (ii) in the case of the
Coupon Strip Certificates, interest accrued during
the related Interest Accrual Period on a notional
balance equal to the Certificate Principal Balance
of the Principal Strip Certificates (the "Coupon
Strip Notional Amount") immediately prior to such
Distribution Date at the Coupon Strip Rate. See
"Description of the Certificates - Interest
Distributions" herein.. [The "Interest Accrual
Period" for any Distribution Date will be the
six-month period preceding such Distribution
Date.] See "DESCRIPTION OF THE CERTIFICATES --
Interest Distributions" herein.
Principal Distributions..... On each Distribution Date, the Trustee will
distribute to the Principal Strip
Certificateholders in whose name the Certificates
are registered as of the applicable Record Date,
in the manner set forth herein, to the extent of
the portion of the Available Distribution Amount
remaining after Accrued Certificate Interest has
been distributed to Certificateholders, a
distribution allocable to principal which will, as
more fully described herein, include the scheduled
payments due on the Tax Exempt Securities and the
portion of any unscheduled collections, including
prepayment proceeds and premium, if any. The
Coupon Strip Certificates have no Certificate
Principal Balance and, accordingly, will not be
entitled to any principal distribution. See
"Description of the Certificates - Principal
Distributions" herein.
Allocation of Losses........ Any losses on the Tax Exempt Securities will be
allocated to the Principal Strip Certificates by
reducing the aggregate Certificate Principal
Balance thereof in an amount equal to such loss.
Within the
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Principal Strip Certificates, losses will be
allocated pro rata based on the Certificate
Principal Balances of all of the Certificates of
such Class. Any reduction in the Certificate
Principal Balance of the Principal Strip
Certificates will result in a corresponding
decrease in the Coupon Strip Notional Amount.
[Credit Enhancement......... [Description of third-party credit enhancement, if
any, available for the Certificates, including
information with respect to the provider of such
third party credit enhancement, as set forth in
the Prospectus.]
Special Prepayment
Considerations.............. The rate and timing of payments on the
Certificates will depend, among other things, on
the rate and timing of principal payments on the
Tax Exempt Securities. Such principal payments may
be as a result of scheduled or unscheduled
payments on the Tax Exempt Securities.
Accordingly, the Certificates are subject to cash
flow uncertainties.
[Insert description of prepayment provisions of
the Tax Exempt Securities; Insert description of
effect of prepayment provisions on rate and timing
of prepayments of Certificates]
Special Yield
Considerations............. The yield to maturity on the Certificates will
depend, among other things, on the rate and timing
of payments on the Tax Exempt Securities and the
allocation thereof to reduce the Certificate
Principal Balance of the Principal Strip
Certificates or, in the case of the Coupon Strip
Certificates, the related Coupon Strip Notional
Amount.
The yield to maturity on each class of the
Certificates will also depend on the Principal
Strip Rate or the Coupon Strip Rate, as
applicable, and the purchase price for such
Certificates. In general, if a class of
Certificates is purchased at a premium and
principal distributions thereon occur at a rate
faster than anticipated at the time of purchase,
the investor's actual yield to maturity will be
lower than that assumed at the time of purchase.
Conversely, if a class of Certificates is
purchased at a discount and principal
distributions thereon occur at a rate slower than
that assumed at the time of purchase, the
investor's actual yield to maturity will be lower
than that assumed at the time of purchase. The
degree of yield volatility will depend upon the
magnitude of the premium or the discount, as the
case may be.
The yield to investors on the Coupon Strip
Certificates will be extremely sensitive to the
rate and timing of principal payments on the Tax
Exempt Securities, which rate may fluctuate
significantly over time. A rapid rate of principal
payments on the Tax Exempt Securities could result
in the failure of investors in the Coupon Strip
Certificates to recover their initial investment.
Federal Income Tax
Considerations.............. In the opinion of Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C., Boston, Massachusetts,
tax counsel to the Company ("Tax Counsel"), a
purchaser of Certificates will have purchased
stripped bonds or stripped coupons from the Tax
Exempt Securities and will be
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
treated as the owner thereof (the "Owner") for
federal income tax purposes. Discount accruing on
Certificates at a yield not exceeding the coupon
rate of interest on the Tax Exempt Securities (or,
at the election of the taxpayer, the original
yield to maturity of the Tax Exempt Securities)
will be excludable from gross income for federal
income tax purposes.
There are a number of material tax aspects of an
investment in the Certificates. Prospective
investors are urged to read the discussion
contained under "Certain Federal Income Tax
Consequences" herein and in the Prospectus.
Legal Investment............ Investors whose investment is subject to legal
restrictions should consult their own legal
advisors to determine whether and to what extent
the Certificates constitute legal investment for
them. See "LEGAL INVESTMENT."
Use of Proceeds............. The net proceeds of the offering of the
Certificates will be used [to purchase the Tax
Exempt Securities] [to repay indebtedness which
has been incurred to acquire the Tax Exempt
Securities] [to establish the Reserve Fund] [to
pay costs of structuring, guaranteeing, credit
enhancing and issuing the Certificates] [Describe
other purpose, if any, relating to one or more of
the foregoing.] See "USE OF PROCEEDS."
Ratings..................... It is a condition to the issuance of the
Certificates that __________ [ and _________]
([each, a] [the] "Rating Agency" assign the
[respective] rating[s] of ____ [and _____] to the
Certificates. The ratings on the Certificates do
not address [list any carve-outs].
A security rating should be evaluated
independently of similar ratings of different
types of security. A security rating does not
address the effect of redemption or reinvestment
rates on investors' yields. A rating is not a
recommendation to buy, sell or hold Certificates
and may be subject to revision or withdrawal at
any time by the assigning rating organization.
Each rating should be evaluated independently of
any other rating. See "RISK FACTORS."
- --------------------------------------------------------------------------------
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus
Supplement and the Prospectus, investors should consider, among other things,
the risk factors described below in connection with the purchase of the
Certificates offered hereby.
CLASSIFICATION OF TRUST FOR FEDERAL INCOME TAX PURPOSES. Neither the
Company nor the Trustee will seek any rulings from the Internal Revenue Service
regarding the classification of the Trust as a grantor trust for federal income
tax purposes rather than as an association taxable as a corporation. While the
Company expects to receive an opinion of counsel that the Trust will be
classified as a grantor trust, an opinion of counsel is not a legal
determination and is not binding on the IRS. Moreover, an opinion of counsel is
based on existing judicial and administrative interpretations of applicable law
and regulations, all of which are subject to change. Therefore, there can be no
assurance that the Trust will be treated as a grantor trust.
Failure to comply with the constituent documents of the Trust may also
result in the Trust being classified, for federal income tax purposes, as an
association taxable as a corporation.
If the Trust were classified as an association taxable as a corporation,
among other things, the income, deductions and any credits of the Trust would
have to be reported on its own tax return and could not be passed through to the
Holders of Certificates, the Trust would be subject to tax as a corporation and
distributions by the Trust would not be treated as tax exempt interest, but be
taxable as dividends in whole or in part.
There are a number of material tax aspects of an investment in the
Certificates. Prospective investors are urged to read "Certain Federal Income
Tax Consequences" herein and in the Prospectus.
[ASSET CONCENTRATION. The Trust Property of the Trust has a concentration
level such that particular Tax Exempt Securities or Obligor with respect to any
Tax Exempt Security would constitute more than 10% of the Trust Property. As a
result, the Certificates will be subject to credit risk greater than that
usually encountered in asset-backed transactions or experienced by Certificates
of a Series secured by Trust Property which is not concentrated, because the
diversification of credit risk generally present in a non-concentrated asset
pool will be diminished. The concentration level of the Trust Property is
described under "THE TAX EXEMPT SECURITIES" herein. This Prospectus Supplement
also provides or includes by reference financial information on the Obligor(s)
with respect to such Tax Exempt Securities.]
[YIELD AND REDEMPTION CONSIDERATIONS. Describe any particular
characteristics of the Tax Exempt Securities that would shorten the average life
of the Certificates and could affect the yield of any Class of Certificates. See
"Certain Yield and Prepayment Considerations" and "The Tax Exempt Securities."]
VOTING RIGHTS; CONSENTS. Certificateholders have the right under the Trust
Agreement to vote on certain matters. See "The Trust Agreement - Voting Rights.
Holders of different Classes of Certificates may have conflicting voting
interests. Potential investors in the Certificates should consider the
allocation of voting rights herein in light of this consideration.
FORM OF CERTIFICATES. The Certificates will be represented initially be a
Global Certificate registered in the name of Cede & Co., as nominee for DTC, and
will not be registered in the name of beneficial owners or their nominees. As a
result, unless and until Physical Certificates are issued in the limited
circumstances described herein, beneficial owners will not be recognized by the
Trustee as "Certificateholders". Therefore, until such time, beneficial owners
will be able to exercise the rights of a registered Certificateholder only
indirectly through DTC
<PAGE>
participants and indirect participants (as defined). See "DESCRIPTION OF THE
CERTIFICATES - Book-Entry Certificates.
LIMITED NATURE OF RATINGS. It is a condition of issuance that the
Certificates be rated ___ [and ____] by _______ [and _______, respectively]. A
security rating is not a recommendation to buy, sell or hold securities and may
be subject to revision or withdrawal at any time by the assigning Rating Agency.
In addition, a security rating does not address the frequency of principal
payments on the Tax Exempt Securities or the corresponding effect on yield to
investors. See "RATINGS."
[Describe any particular risks or considerations concerning the Tax Exempt
Securities.]
<PAGE>
THE TAX EXEMPT SECURITIES
GENERAL
The Tax Exempt Securities consist of __ issues of tax exempt securities, in
the aggregate principal amounts, bearing interest at the rates, and maturing on
the dates set forth in the table below:
TAX AGGREGATE FINAL
EXEMPT PRINCIPAL INTEREST MATURITY
SECURITIES AMOUNT RATE DATE
---------- --------- -------- --------
Total amount
deposited under
Trust Agreement:
Appendix A to this Prospectus sets forth, in addition to the above
----------
information, the full names, the respective issuers and obligors (if
applicable), the trustee or paying agent, the dates of issuance, the interest
and principal payment dates, the redemption features, if any, and the CUSIP
numbers of each issue of tax exempt securities making up the Tax Exempt
Securities.]
The Company has received the following price quotations with respect to the
Tax Exempt Securities:
TAX
EXEMPT PRICE PER $1,000 OF
SECURITIES SUCH SECURITIES TIME OF QUOTATION SOURCE
---------- --------------- ----------------- ------
Such quotations were obtained from ____________________, who is [not] affiliated
with the Company. The Company believes that there is [an] [no] active secondary
market in the Tax Exempt Securities [but the Company believes that the price
quotations listed above accurately reflect the market prices of such Tax Exempt
Securities].
[The Tax Exempt Securities were purchased in [an] arms-length
transaction[s] from persons unaffiliated with the Issuer of the Tax Exempt
Securities or its underwriters.] [The Tax Exempt Securities were purchased in
[an arms-length] transaction[s] from __________________, an affiliate of [the
underwriter] [the Company].] [The Tax Exempt Securities were purchased in [an]
arms-length transaction[s] from persons unaffiliated with the Issuer of the Tax
Exempt Securities or its underwriters in exchange for [all] [a portion] of the
[Certificates] [Class [A][ ]-1 Certificates]. [Describe pricing/calculation
utilized for such exchange.]]
The Tax Exempt Securities will be held by the Trustee for the
Certificateholders as [book-entry credits to an account of the Trustee at DTC]
[as ___________].
<PAGE>
Set forth in tabular form below with respect to each of the Tax Exempt
Securities is the title of the Tax Exempt Security, indicating the identity and
location of the Issuer; the date of the Tax Exempt Security; the rating assigned
to the Tax Exempt Security as of the date of this Prospectus Supplement; the
principal balance of the Tax Exempt Security expected to be deposited in the
Trust on the Closing Date; the percentage of the Trust as of the Closing Date
represented by such principal balance of the Tax Exempt Security; the stated
coupon rate of interest borne by the Tax Exempt Security; the maturity date of
the Tax Exempt Security; the first date on which the Tax Exempt Security may be
redeemed pursuant to the [sinking fund] redemption schedule applicable to the
Tax Exempt Security; [the first date after the Closing Date on which the Issuer
of the Tax Exempt Security may exercise its right of optional redemption with
respect to the Tax Exempt Security (the "First Optional Call Date") and the
redemption price for that date;] [the percentage of the Trust as of the Closing
Date represented by Tax Exempt Securities that are optionally redeemable within
[specified years]]; and [whether the interest payable on the Tax Exempt Security
is an item of tax preference for purposes of computing the federal alternative
minimum tax, according to the opinion rendered at the time of original issuance
of the Tax Exempt Security by bond counsel and/or special tax counsel to the
Issuer of the Tax Exempt Security].
<TABLE>
<CAPTION>
TAX
TITLE OF EXEMPT
TAX PERCENTAGES OF SECURITY SINKING FIRST OPTIONAL
EXEMPT DATED CURRENT PRINCIPAL INITIAL POOL INTEREST MATURITY FUND CALL DATE
SECURITIES DATE RATING AMOUNT BALANCE RATE DATE REDEMPTION AND PRICE(2) AMT STATUS(3)
- ---------- ----- ------- --------- -------------- -------- -------- ---------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
(1)
_________________________
(1) Neither the Company nor the Underwriter[s] make[s] any representations as
to the meanings of such rating. Any explanation of the rating must be
obtained from the assigning rating organization upon written request to
such rating organization. A security rating is not a recommendation to buy,
hold or sell securities and may be subject to revision or withdrawal at any
time by the assigning rating organization. Each security rating should be
evaluated independently of any other security rating.
[(2) Each Tax Exempt Security continues to be redeemable at declining prices
thereafter, but not below par.]
[(3) Indicates whether interest payable on the Tax Exempt Security is required
to be treated as a tax preference item for both individuals and
corporations for purposes of computing the federal alternative minimum tax.
All interest on the Tax Exempt Securities will be included in the adjusted
current earnings of certain corporations for purposes of calculating the
alternative minimum tax imposed on such corporations.]
The following table sets forth, for the Tax Exempt Securities, the
outstanding par amount of the Tax Exempt Security that is to be deposited into
the Trust, the outstanding par amount of all Tax Exempt Securities issued as
part of the same bond issue and that have the same maturity and the outstanding
par amount of all Tax Exempt Securities issued as part of the same bond issue.
<TABLE>
<CAPTION>
OUTSTANDING PAR OUTSTANDING PAR OUTSTANDING PAR
AMOUNT OF AMOUNT OF TOTAL AMOUNT OF TOTAL
TAX EXEMPT TAX EXEMPT TAX EXEMPT SECURITY
TITLE OF BOND SECURITY TO BE DEPOSITED SECURITY MATURITY ISSUE
------------- ------------------------ ----------------- -------------------
<S> <C> <C> <C>
</TABLE>
[Discussion of concentration level of Trust Property.]
<PAGE>
REDEMPTION OF TAX EXEMPT SECURITIES
[Specific redemption provisions to be set forth]
SECURITY FOR THE TAX EXEMPT SECURITIES
The Tax Exempt Securities are secured principally by the [insert
description of security].
[Name of Tax Exempt Securities]
The following discussion relates to the Security securing the [name of Tax
Exempt Securities].
[copy to follow]
[Name of Tax Exempt Securities]
[the discussion above will be repeated for each series of Tax Exempt
Securities]
OBLIGORS ON TAX EXEMPT SECURITIES
[The obligation of the Conduit Issuer[s] with respect to the Tax Exempt
Securities is non-recourse and is limited to amounts received in connection with
the repayment of the loan of proceeds of the Tax Exempt Securities from the
Conduit Issuer to the borrower or borrowers thereof (the "Obligor") [and, if
applicable, any refunding or cross-calling [to be described based on the
specific characteristics of the Tax Exempt Securities]] and will not be payable
from general funds or assets of the Conduit Issuer. Accordingly, financial
information concerning the Conduit Issuer[s] of the Tax Exempt Securities has
not been included in this Prospectus Supplement.] [Because no single underlying
Conduit Tax Exempt Security or Obligor with respect to any Tax Exempt Security
constitutes 10% or more of the Trust Property, no financial information
concerning the underlying Obligor[s] with respect to the Conduit Tax Exempt
Securities has been included in this Prospectus Supplement.] [Because one or
more underlying Conduit Tax Exempt Securities or Obligors with respect to any
Tax Exempt Security constitute 10% or more of the Trust Property, financial
information concerning the underlying Obligor[s] has been included in this
Prospectus Supplement.]
[Because no single underlying Revenue Tax Exempt Security or Governmental
Tax Exempt Security constitutes 10% or more of the Trust Property, no financial
information concerning the Revenue Bond Issuer or the Governmental Issuer,
respectively, has been included in this Prospectus Supplement.]
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Tax Exempt Securities Trust Certificates, Multi-Class Series [A][ ]
will consist of two classes of Certificates: the Principal Strip Certificates
and the Coupon Strip Certificates. Each Certificate evidences the ownership of,
and the right to receive certain principal, premium, if any, and interest on the
Tax Exempt Securities held by the Trust due after the Cut-Off Date, all as more
fully described herein.
The Certificates will be issued pursuant to the Trust Agreement in
denominations of [describe denominations for each Class] provided, however, that
one certificate of each Class may be issued in such other amount as is necessary
to include the remainder of such Class. The Certificates will be initially
represented by one or more Global Certificates (as defined) registered in the
name of Cede & Co., as nominee of The Depository Trust Company, New York, New
York ("DTC"). The interests of beneficial owners of the Certificates will be
represented by book entries on the records of
<PAGE>
participating members of DTC. Physical Certificates (as defined) representing
the Certificates will be available only under certain limited circumstances. See
"-- Book-Entry Registration."
The Certificates will have an aggregate initial Certificate Principal
Balance (as defined) of $[ ]. The Principal Strip Certificates will
have an initial Certificate Principal Balance of $[ ]. The Coupon Strip
Certificates will have a notional balance equal to the Certificate Principal
Balance of the Principal Strip Certificates. Certificate Principal Balance shall
mean, with respect to any Certificate, on any date of determination, an amount
equal to (a) the initial Certificate Principal Balance thereof minus (b) the sum
of (i) the aggregate of all amounts in respect of principal of such Certificate
(or any predecessor Certificate) distributed to the Holder thereof prior to that
date and (ii) the aggregate of all losses allocated to such Certificate (or any
predecessor Certificate) as described herein.
Payments of the principal of and premium, if any, and interest on the Tax
Exempt Securities will be the sole source of payments on the Certificates.
Neither the Trustee nor the Company will be responsible for the payments due on
the Certificates, except that the Trustee will be required to apply all payments
received in respect of the Tax Exempt Securities to the Certificates to which
they relate without making any deduction, other than administrative expenses and
any applicable tax or other governmental charge.
BOOK-ENTRY REGISTRATION
The Certificates will be issued in the form of one "Global Certificate."
The Global Certificate will be deposited on the date of the closing of the sale
of the Certificates offered hereby (the "Closing Date") with, or on behalf of,
DTC and registered in the name of a nominee of DTC.
The Global Certificates. Pursuant to procedures established by DTC (i)
upon deposit of the Global Certificate, DTC will credit the accounts of persons
who have accounts with DTC ("participants") or persons who hold interests
through participants designated by the Initial Purchaser with portions of the
Global Certificate which shall be comprised of the corresponding respective
principal amount of the Global Certificates and (ii) ownership of the
Certificates will be shown on, and the transfer of ownership thereof will be
effected only through, records maintained by DTC or its nominee (with respect to
interests of participants) and the records of participants (with respect to
interests of persons other than participants). Certificateholders may hold their
interests in the Global Certificates directly through DTC if they are
participants in such system, or indirectly through organizations which are
participants in such system.
So long as DTC, or its nominee, is the registered owner or Holder of the
Certificates, DTC or such nominee will be considered the sole owner or Holder of
the Certificates represented by the Global Certificate for all purposes under
the Trust Agreement. No beneficial owner of an interest in the Global
Certificates will be able to transfer such interest except in accordance with
DTC's applicable procedures, in addition to those provided for under the Trust
Agreement with respect to the Certificates.
Payments of the principal of and interest on the Global Certificate will be
made to DTC or its nominee, as the case may be, as the registered owner thereof.
None of the Company, the Trustee nor the Underwriter[s] will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Certificate or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interest.
DTC or its nominee, upon receipt of any payment of the principal of and
interest on the Global Certificate, will credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the principal amount of such Global Certificate as shown on the records of DTC
or its nominee. Payments by participants to owners of beneficial interests in
any such Global Certificates held through such participants will be governed by
standing instructions and customary practice, as is now the case with securities
held for the accounts of customers registered to the names of nominees for such
customers. Such payments will be the responsibility of such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in clearinghouse funds. If a
holder requires physical delivery of a Certificates ("Physical Certificates")
for
S-11
<PAGE>
any reason, including to sell Certificates to persons in states which require
physical delivery of such securities or to pledge such securities, such holder
must transfer its interest in the applicable Global Certificate in accordance
with the normal procedures of DTC and including, with respect to the
Certificates, with the procedures set forth in the Trust Agreement.
DTC has advised the Company that it will take any action permitted to be
taken by a Holder of Certificates (including the presentation of Certificates
for exchange as described below) only at the direction of one or more
participants to whose account interests in the applicable Global Certificate is
credited and only in respect of such portion of the aggregate principal amount
of Global Certificates as to which such participant or participants has or have
given such direction.
DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the New York Banking Law, a "banking organization"
within the meaning of the New York Banking Law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "Clearing Agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934, as amended. DTC was created
to hold securities for its participants and facilitate the clearance and
settlement of securities transactions between participants through electronic
book-entry changes in accounts of its participants, thereby eliminating the need
for physical movement of certificates. Participants include securities brokers
and dealers, banks, trust companies and clearing corporations and certain other
organizations. Indirect access to the DTC system is available to others such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly
("indirect participants").
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Certificates among participants of DTC, it
is under no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
Physical Certificates. If DTC is at any time unwilling or unable to
continue as a depositary for any Global Certificate and a successor depositary
is not appointed by the [Company] within 90 days, Physical Certificates will be
issued in exchange for the Global Certificates.
AVAILABLE DISTRIBUTION AMOUNT
The "Available Distribution Amount" for any Distribution Date is equal to
the aggregate of all payments of principal, premium (if any) and interest made
with respect to the Tax Exempt Securities and received by the Trustee after the
preceding Determination Date (or, in the case of the initial Distribution Date,
the Cut-Off Date) on or prior to the related Determination Date (whether due to
scheduled payments, scheduled or unscheduled redemptions or otherwise) less any
administrative expenses [describe particular administrative expenses, including
surveillance fee, if any] incurred by the Trust since the preceding
Determination Date. With respect to any Distribution Date, the Determination
Date" is the day that is __ business days prior to such Distribution Date.
DISTRIBUTIONS ON THE CERTIFICATES
Distributions of principal and interest on the Certificates will be made by
the Trustee (or its duly appointed paying agent, if any) directly to Holders of
Certificates in accordance with the procedures set forth in the Trust Agreement
and summarized herein. Interest and principal payments will be made on each
Distribution Date. Such payments will be made to holders in whose names the
Certificates were registered at the close of business as of the second Business
Day next preceding the Distribution Date (the "Record Date"). Distributions will
be made by wire transfer in immediately available funds for the account of each
Holder whose initial Certificate Principal Balance, or Coupon strip Notional
Amount, as applicable, is not less than $________ and who has provided
appropriate wire instructions to the Trustee, and to every other Holder, by
check mailed to the address of such Holder as it appears on the certificate
register. The final payment on any Certificate (whether a Physical Certificate
or a Global Certificate) will be made only upon presentation and surrender of
S-12
<PAGE>
such Certificate at the offices of the Trustee or its agent or such office or
agency as is specified in the notice of final distribution to Holders of
Certificates being retired.
Interest
On each Distribution Date, the Trustee will distribute to the Principal
Strip Certificateholders and the Coupon Strip Certificateholders in whose name
the Certificates are registered as of the applicable Record Date, in the manner
set forth herein, to the extent of the Available Distribution Amount for such
Distribution Date, interest distributions in an amount equal to the Accrued
Certificate Interest on such Class.
With respect to any Distribution Date, "Accrued Certificate Interest" will
be equal to (i) in the case of Principal Strip Certificates, interest accrued
during the related Interest Accrual Period (as defined) on the Certificate
Principal Balance of the Certificates of such class at the related Principal
Strip Rate and (ii) in the case of the Coupon Strip Certificates, interest
accrued during the related Interest Accrual Period on the Coupon Strip Notional
Amount immediately prior to such Distribution Date at the Coupon Strip Rate.
[The "Interest Accrual Period" for any Distribution Date will be the six-month
period preceding such Distribution Date.]
Principal
On each Distribution Date, the Trustee will distribute to the Principal
Strip Certificateholders in whose name the Certificates are registered as of the
applicable Record Date, in the manner set forth herein, to the extent of the
portion of the Available Distribution Amount remaining after Accrued Certificate
Interest has been distributed to Certificateholders, a distribution allocable to
principal which will, as more fully described herein, include the scheduled
payments due on the Tax Exempt Securities and the portion of any unscheduled
collections, including prepayment proceeds and premium, if any. The Coupon Strip
Certificates have no Certificate Principal Balance and, accordingly, will not be
entitled to any principal distribution.
[CREDIT ENHANCEMENT
Description of third party credit enhancement, if any available for the
Certificates, including information with respect to the provider of such credit
enhancement, as set forth in the Prospectus.]
ALLOCATION OF LOSSES
Any losses on the Tax Exempt Securities will be allocated to the Principal
Strip Certificates by reducing the aggregate Certificate Principal Balance
thereof in an amount equal to such loss. Within the Principal Strip
Certificates, losses will be allocated pro-rata based on the Certificate
Principal Balances of all of the Certificates of such Class. Any reduction in
the Certificate Principal Balance of the Principal Strip Certificates will
result in a corresponding decrease in the Coupon Strip Notional Amount. Such
losses will be deemed to have been allocated on any Distribution Date prior to
the distribution of principal on such Distribution Date.
YIELD AND REDEMPTION CONSIDERATIONS
GENERAL
The yield to maturity and the aggregate amount of distributions on the
Certificates will be affected by the rate and timing of principal payments on
and redemption of the Tax Exempt Securities. The timing of changes in the rate
of redemptions of the Tax Exempt Securities may, and the timing of losses will,
significantly affect the yield to an investor, even if the average rate of
principal payments experienced over time is consistent with an investor's
expectation. Since the rate and timing of principal payments on the Tax Exempt
Securities will depend on future events and on a variety of factors (as
described more fully herein) no assurance can be given as to such rate or the
timing of principal payments of the Certificates.
S-13
<PAGE>
[Insert description of specific redemption and/or default provisions of Tax
Exempt Securities and potential effect on yield on and repayments of
Certificates].
[Because the Pass-Through Rates on the Certificates are fixed, such rates
will not change in response to changes in market interest rates.]
The yield to maturity of the Certificates will depend on the price paid by
the Holders of the Certificates and the related interest rate. The extent to
which the yield to maturity of a Certificate is sensitive to redemptions of the
Tax Exempt Securities will depend, in part, upon the degree to which it is
purchased at a discount or premium. In general, if a class of Certificates is
purchased at a premium and principal distributions thereon occur at a rate
faster than anticipated at the time of purchase, the investor's actual yield to
maturity will be lower than that assumed at the time of purchase. Conversely, if
a class of Certificates is purchased at a discount and principal distributions
thereon occur a rate slower than that assumed at the time of purchase, the
investor's actual yield to maturity will be lower than that assumed at the time
of purchase. The magnitude of the change will depend upon the amount of premium
or discount, as the case may be, and the rate of prepayment.
WEIGHTED AVERAGE LIFE OF CERTIFICATES
Weighted average life refers to the average amount of time that will elapse
from the date of issuance of a security to the date of distribution to the
investor of each dollar distributed in reduction of principal of such security
(assuming no losses). The weighted average life of the Certificates will be
influenced by, among other things, the rate at which principal of the Tax Exempt
Securities is paid and the rate at which the Tax Exempt Securities are redeemed.
The assumed final Distribution Date with respect to each class of the
Certificates is _______ __, ___, which is the Distribution Date immediately
following the latest scheduled maturity date of the Tax Exempt Securities. No
event of default, change in the priorities for distribution among the various
classes or other provisions under the Trust Agreement will arise or become
applicable solely by reason of the failure to retire the entire Certificate
Principal Balance of any Class of Certificates on or before its assumed final
Distribution Date.
The weighted average life of the Principal Strip Certificates is _________.
COUPON STRIP CERTIFICATE YIELD CONSIDERATIONS
The yield to maturity on the Coupon Strip Certificates will be extremely
sensitive to both the timing of receipt of prepayments (which will result from
redemptions) and the overall rate of [prepayments/redemptions] and defaults, if
any, on the Tax Exempt Securities, which rate may fluctuate significantly over
time. A rapid rate of [prepayments/redemptions] of the Tax Exempt Securities may
result in a failure of investors in the Coupon Strip Certificates to fully
recover their initial investment.
The following table indicates the sensitivity of the yield to maturity on
the Coupon Strip Certificates to various rates of [prepayment/redemption] of the
Tax Exempt Securities by projecting the monthly aggregate payments of interest
on the Coupon Strip Certificates and computing the corresponding pre-tax yields
to maturity on a corporate bond equivalent basis. Any differences between such
assumptions and the actual characteristics and performance of the Tax Exempt
Securities may result in yields being different from those shown in the Coupon
Strip Yield Table. Discrepancies between assumed and actual characteristics and
performance underscore the hypothetical nature of the table, which is provided
only to give a general sense of the sensitivity of yields in varying prepayment
scenarios.
S-14
<PAGE>
PRE-TAX YIELDS TO MATURITY OF THE COUPON STRIP CERTIFICATES
ASSUMED
PURCHASE
PRICE
--------- ______________________ ______________________
% % % % % %
--- --- --- --- --- ---
The pre-tax yields to maturity set forth in the preceding table were
calculated by determining the monthly discount rate which, when applied to the
assumed stream of cash flows to be paid on the Coupon Strip Certificates, would
cause the discounted present value of such assumed streams of cash flows to
equal the assumed purchase price listed in the table. Accrued interest is
included in the purchase prices shown and is used in computing the corporate
bond equivalent yields shown. These yields do not take into account the
different interest rates at which investors may be able to reinvest funds
received by them as distributions on the Coupon Strip Certificates, and thus do
not reflect the return on any investment in the Coupon Strip Certificates when
any reinvestment rates other than the discount rates are considered.
Notwithstanding the assumed prepayment and redemption rates reflected in
the preceding table, it is highly unlikely that the Tax Exempt Securities will
be redeemed according to one particular pattern. For this reason, and because
the timing of cash flows is critical to determining yields, the pre-tax yields
to maturity on the Coupon Strip Certificates are likely to differ from those
shown in the table, even if all the Tax Exempt Securities are redeemed at the
indicated percentages over any given time period or over the entire life of the
Certificates.
There can be no assurance that the Tax Exempt Securities will be
[prepaid/redeemed] at any particular rate or that the yield on the Coupon Strip
Certificates will conform to the yields described herein. Moreover, the various
remaining terms to maturity of the Tax Exempt Securities could produce slower or
faster principal distributions than indicated in the preceding table at the
various constant percentages specified, even if the weighted average remaining
term to maturity of the Tax Exempt Securities is as assumed. Investors are urged
to make their investment decisions based on their determinations as to
anticipated rates of prepayment under a variety of scenarios. Investors in the
Coupon Strip Certificates should fully consider the risk that a rapid rate of
[prepayments/redemptions] on the Tax Exempt Securities could result in the
failure of such investors to fully recover their investments.
THE COMPANY
The Company is a wholly owned subsidiary of Tucker Anthony Holding
Corporation. Tucker Anthony Incorporated, which may act as underwriter of this
offering, is also a wholly owned subsidiary of Tucker Anthony Holding
Corporation. The Company was incorporated in the State of Delaware on September
28, 1983. The Company's sole business will be to act as the depositor of Tax
Exempt Securities into Trusts formed to issue certificates such as the
Certificates and otherwise to act as Trustor as described herein. Prior to the
filing of the Registration Statement of which the Prospectus is a part, the
Company had limited business activity, unrelated to its activities as described
in the Prospectus and this Prospectus Supplement. The principal executive office
of the Company is located at One Beacon Street, Boston, Massachusetts 02108 and
its telephone number is (617) 725-2487.
THE TRUST AGREEMENT
The discussion of the terms of the Trust Agreement contained herein is
limited in scope. Investors should review the discussion contained in the
Prospectus under the heading "THE TRUST AGREEMENT." In addition, a copy of the
Trust Agreement will be filed with the Securities and Exchange Commission by the
Company in a Form 8-K within fifteen days of the initial offering of the Class
A-1 Certificates.
S-15
<PAGE>
The Company will provide a prospective or actual Certificateholder without
charge, on written request, a copy of the Trust Agreement. Requests should be
addressed to Secretary, T.A. of Delaware, Inc., One Beacon Street, Boston,
Massachusetts 02108.
VOTING RIGHTS ON CERTIFICATES
Each Certificate will be allocated voting rights for purposes of certain
actions that may be taken pursuant to the Trust Agreement. ____% of all voting
rights will be allocated to the Class A-1 Certificates in proportion to their
Percentage Interests. ____% of all voting rights will be allocated to the Class
A-2 Certificates in proportion to their Percentage Interests. ____% of all
voting rights will be allocated to the Class A-3 Certificates in proportion to
their Percentage Interests. [Voting Rights of Third Party Credit Provider.]
VOTING ON TAX EXEMPT SECURITIES
In the event of any action or consent requiring the vote of the holders of
any Tax Exempt Securities, under the terms of the Trust Agreement the Trustee is
required to deliver to the Certificateholders its proxy for such vote,
returnable to the Trustee, who is to vote solely in accordance with such
proxies, weighted by the voting rights of the Certificates held by each
Certificateholder; provided that if the action or consent will result in a
decision to retain Tax Exempt Securities which otherwise would be redeemed or
tendered or a decision to accept or reject a tender for cash of the Tax Exempt
Securities no such proxies shall be delivered and the Trustee shall vote all Tax
Exempt Securities in favor of the tender for cash of Tax Exempt Securities. If
the holders of Tax Exempt Securities shall have the right to elect to retain Tax
Exempt Securities after a mandatory tender or to accept or reject a tender for
cash of the Tax Exempt Securities, such election shall not be referred to the
Certificateholders but the Trustee shall elect in every case on behalf of the
Certificateholders to accept the tender and to receive cash.
The Trustee is not to take any action as the nominal holder or holder of
any of the Tax Exempt Securities, either alone or as a part of a group of such
holders of such Tax Exempt Securities, except in accordance with the affirmative
direction of the Holders of the Certificates to which such Tax Exempt Securities
relate after notifying such Certificateholders of such action or proposed group.
The Trustee shall have no liability for any failure to act resulting from late
return of, or failure to return, any such proxy sent by the Trustee to Holders
of the Certificates.
DEFAULT ON TAX EXEMPT SECURITIES
The Trustee will use its best reasonable efforts to collect all payments
due with respect to the Tax Exempt Securities and, consistent therewith, will
follow such normal and customary procedures as it shall deem necessary or
desirable.
If the Issuer defaults on the payment of interest or principal and premium,
if any, on any Tax Exempt Security, the Trustee shall promptly give notice to
the registered Holders of the applicable Certificates. Such notice shall set
forth (a) the identity of the issue of Tax Exempt Securities, (b) the date and
nature of such default, (c) the amount of the interest or principal in default,
(d) the identifying numbers of the Coupon Strip Certificates or the Principal
Strip Certificates or any combination, as the case may be, evidencing the
interest or principal described above in clause (c), and (e) any other
information which the Trustee may deem appropriate.
THE TRUSTEE
The Trust Agreement provides that the Trustee will incur no liability to
any Certificateholder if, by reason of any provision of any present or future
law, or regulation thereunder, of any governmental authority, or by reason of
any natural disaster or war or other circumstance beyond its control, the
Trustee is prevented from doing or performing any act or thing which the terms
of the Trust Agreement provide should be done or performed.
The Trust Agreement provides that the Trustee will assume no obligation and
shall not be subject to any liability to Holders of Certificates in the
performance of its duties, other than by reason of willful misconduct, bad faith
or gross
S-16
<PAGE>
negligence. The Trustee will not be under any obligation to take any action
which may tend to involve it in any expense or liability, the payment of which
within a reasonable time is not, in its reasonable opinion, assured to it. The
Trustee may own and deal in Tax Exempt Securities, in obligations of the same
issue and maturity as the Tax Exempt Securities and in the Certificates, as
though it were not the Trustee under the Trust Agreement.
The Trustee is required at all times to maintain a fidelity bond or other
insurance (which may be self-insurance) in reasonable form and amount to protect
against loss due to dishonest or fraudulent action by its employees in
connection with its obligations under the Trust Agreement.
The Trustee is allowed at any time to resign as Trustee by written notice
of its election to do so, and such resignation shall take effect upon the
appointment of a successor Trustee, subject to the terms and conditions of the
Trust Agreement. If at any time the Trustee becomes incapable of acting or is
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property is appointed, or any public officer takes charge or control of the
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then any Holder of a Certificate may, on behalf of
itself and all others similarly situated, petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
In any case at any time the Trustee notifies the Company that it elects to
resign as Trustee, the Company is required, within 45 days after the delivery of
the notice of resignation or removal, to appoint a successor Trustee, which is
to be a commercial bank or trust company having its principal office in the
United States of America and having a combined capital and surplus of at least
$50,000,000. If no successor Trustee has been appointed as successor Trustee
within 45 days after the Trustee has given written notice of its election to
resign, the Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
Any corporation or association into or with which the Trustee may be
merged, consolidated or converted will be the successor of such Trustee without
the execution or filing of any document or any further act.
TRUSTEE FEES
The Trustee is entitled to receive an annual fee (the "Trustee Fee") equal
to 0.___% per annum (the "Trustee Fee Rate") on the aggregate Certificate
Principal Balance of the Certificates then outstanding. The Trustee Fee is
designed to compensate the Trustee for the performance of all of its duties
under the Trust Agreement.
AMENDMENTS
The Trust Agreement may be amended at any time and from time to time by
agreement between the Company and the Trustee, for any purpose and in respect of
which they may deem necessary or desirable, without the consent of any of the
Certificateholders, if (i) the Trustee determines that such amendment will not
adversely affect the interests of any Certificateholders and (ii) the Trustee
has received an opinion of appropriate special tax and securities counsel to the
effect that such amendment would not result in the withdrawal of or modification
of the conclusions of, any opinion previously delivered by such counsel in
connection with the Certificates. In addition, the Trust Agreement may be
amended at any time without the consent of any of the Holders of the
Certificates for purposes of obtaining or maintaining any rating on the
Certificates by a nationally recognized securities rating agency.
TERMINATION EVENTS
Upon the occurrence of any of the following (herein called "Termination
Events"):
(a) the Trustee shall fail to distribute to any Certificateholders
any distribution required to be made under the terms of the Trust Agreement
and such failure shall continue unremedied for five days;
(b) the Company shall consent to the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceeding of or relating to the
S-17
<PAGE>
Company or a decree or order of a court or agency or supervisory authority
having jurisdiction in the premises for the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceeding, or for the winding up or
liquidation of its affairs, shall have been entered against the Company or
the Company shall admit in writing its inability to pay its debts generally
as they become due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment to the benefit of
its creditors or voluntarily suspend payment of its obligations;
(c) the Company shall cease to be a party to the Trust Agreement; or
(d) it becomes necessary to register the Trust as an "investment
company" under the Investment Company Act of 1940, as amended;
the Trustee shall notify each registered Certificateholder of the occurrence of
such Termination Event as soon as practicable after it obtains knowledge
thereof. The Certificateholders representing at least 66% of the voting rights
of Certificates affected by a Termination Event may waive such Termination
Event; provided, however, that a Termination Event under section (a) above may
only be waived by all of the Certificateholders. Upon any such waiver, such
Termination Event shall cease to exist and shall be deemed to have been remedied
for every purpose hereunder. No such waiver shall extend to any subsequent or
other Termination Event not shall impair any right consequent thereon except to
the extent expressly waived. [Unless a Termination Event is waived by the
requisite number of Certificateholders, as soon as is commercially practical,
after the giving of notice to the Certificateholders, the Trustee shall sell the
Tax Exempt Securities to the highest bidder in an auction, subject only to the
requirement that at least one bid is received from a person that is not an
affiliate of the Company. The proceeds of such a sale or, if no such bids are
received, the assets of the Trust shall be distributed on the next Distribution
Date to the Certificateholders pro rata based on the outstanding Certificate
Principal Balances of the Certificates they hold.]
TERM OF EFFECTIVENESS
Except as provided below, the Trust Agreement is to remain in effect until
the date upon which all of the Tax Exempt Securities have been paid in full at
the maturity or early redemption thereof or receipt of a final payment thereon,
and the payments on such Tax Exempt Securities has been distributed to Holders
of Certificates in accordance with the Trust Agreement. The discharge of any
indenture or other document related to any of the Tax Exempt Securities will not
result in a termination of the Trust Agreement. The Trust Agreement shall
terminate with the consequences set forth above under "--Termination Events"
upon the occurrence of any Termination Event unless such Termination Event shall
have been waived as described above.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
In the opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
Boston, Massachusetts, tax counsel to the Company ("Tax Counsel"), the Trust
will be classified for federal income tax purposes as a grantor trust and not as
an association taxable as a corporation, and a purchaser of Certificates will
have purchased stripped bonds or stripped coupons from the Tax Exempt Securities
and will be treated as the owner thereof for federal income tax purposes. This
opinion is based upon and subject to the discussion set forth below. As
described below under "-- Original Issue Discount," discount accruing on
Certificates at a yield not exceeding the coupon rate of interest on the Tax
Exempt Securities (or, at the election of the taxpayer, the original yield to
maturity of the Tax Exempt Securities) will be excludable from gross income for
federal income tax purposes. In addition, each Certificateholder will be treated
as if it paid directly its share of expenses paid by the Trust. See "Additional
Tax Considerations" in the Prospectus.
BASIS OF OPINION
The opinion of Tax Counsel and the tax consequences described herein are
based upon an analysis of existing laws, regulations, rulings and court
decisions, including the provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), and cover certain matters not directly addressed by such
authorities. The Internal Revenue Service (the "IRS")
S-18
<PAGE>
has not yet issued any regulations or rulings under certain of the provisions of
the Code discussed below and the opinion and tax consequences described herein
are subject to and may be modified by the eventual issuance of such regulations
and rulings. No rulings will be sought or obtained from the IRS regarding the
classification of the Trust as a grantor trust for federal income tax purposes
or any other aspect of the tax consequences described herein. In addition, there
is no assurance that any such rulings could be obtained or that the IRS will
agree with the conclusions expressed herein. The following discussion does not
purport to discuss all federal income tax consequences that may be applicable to
particular categories of investors, some of which may be subject to special
rules. Therefore, potential purchasers should consult their own tax advisors
prior to purchasing Certificates.
On the date of initial issuance and delivery of the underlying Tax Exempt
Securities, __________________ (respectively, "Bond Counsel"), rendered its
opinion to the effect that, under existing laws, interest on the Tax Exempt
Securities is [(i)] excludable from gross income for federal income tax purposes
[and (ii) exempt from ___________________ State [and local] income taxes]. See
["Tax Exemption"] in the Official Statement attached as Appendix B to this
----------
Prospectus Supplement. In rendering its opinions, Tax Counsel has not
independently verified the opinion of Bond Counsel. Rather, Tax Counsel has
assumed the continuing correctness of such opinion, continuing compliance with
the requirements of the Code that must be met after the issuance of the Tax
Exempt Securities in order that interest not be included in gross income for
federal income tax purposes, and that no circumstances have occurred that would
adversely affect the exclusion from gross income for federal income tax purposes
of interest on the Tax Exempt Securities as described in the opinion of Bond
Counsel. Additionally, Tax Counsel has not undertaken to determine or to inform
Certificateholders whether such circumstances have occurred or if they do occur
in the future.
ORIGINAL ISSUE DISCOUNT
The Holder of a Certificate will be treated for federal income tax purposes
as acquiring stripped bonds or stripped interest payments at an original issue
discount equal to the difference between the aggregate amounts payable on the
Certificate (whether representing principal or interest on the Municipal
Securities), assuming that the Tax Exempt Securities remain outstanding to their
final maturity dates (or earlier applicable redemption date), and the purchase
price of the Certificate. The purchaser should accrue such original issue
discount using a constant yield to maturity (or applicable redemption date)
which discounts all principal, interest and redemption premium, if any, payable
on the Certificate to the purchase price thereof. All such accruals of original
issue discount will be treated as tax-exempt to the extent that the yield so
determined does not exceed the coupon rate on the underlying Tax Exempt
Securities (or, at the election of the taxpayer, original yield to maturity of
the Tax Exempt Securities). Any accruals in excess of such amount would result
in taxable income or gain.
The original issue discount is accrued over the term to maturity (or
applicable redemption date) of each Certificate on the basis of a constant yield
to maturity (or applicable redemption date) compounded at the end of each six-
month period (or shorter period from the date of purchase) ending on the dates
in each calendar year corresponding to payments with respect to the Tax Exempt
Securities. The adjusted basis of the Holder of a Certificate is increased by
the amount of tax-exempt original issue discount accrued in each period and
decreased by cash payments received by the holder in such period.
With respect to a Certificate which matures within one year or less of the
date of purchase by a purchaser thereof, the original issue discount shall be
treated as accruing on a straight-line basis over the number of days between the
date of purchase and the date of payment of the Certificate. The Holder of a
Certificate that matures within one year of purchase may wish to consult its tax
advisor with respect to the possibility of electing to treat the original issue
discount as accruing on the basis of the constant yield to maturity with
compounding on a daily basis.
The calculation of original issue discount may differ for subsequent
purchasers of a Certificate. Such subsequent purchasers should consult their tax
advisors as to the proper method of calculation.
S-19
<PAGE>
ADDITIONAL TAX CONSIDERATIONS
Additional tax considerations relevant to an investment in the Certificates
are set forth under "Certain Federal Income Tax Consequences - Additional Tax
Considerations" in the Prospectus. Prospective investors should read the
discussion under such caption in the Prospectus and consult their own tax
advisors regarding the additional tax considerations relevant to an investment
in the Certificates.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C., Boston, Massachusetts. [Other counsel to
be identified.]
USE OF PROCEEDS
The net proceeds from the sale of each Class will be used to [purchase the
Tax Exempt Securities] [to repay indebtedness which has been incurred to acquire
the Tax Exempt Securities] [to establish the Reserve Fund] [to pay costs of
structuring, guaranteeing, credit enhancing and issuing the Certificates]
[Describe other purpose, if any, relating to one or more of the foregoing.] See
"USE OF PROCEEDS."
PLAN OF DISTRIBUTION
The [Company] has entered into an Underwriting Agreement with [Tucker
Anthony Incorporated, as Underwriter] [the several underwriters (the
"Underwriters") listed below for whom [the Underwriter] is acting as
Representative]. Subject to the terms and conditions set forth in the
Underwriting Agreement, the [Company] has agreed to sell to [the Underwriter]
[each of the Underwriters named below], and [the Underwriter] [each of the
Underwriters] has [severally] agreed to purchase [the Certificates] [the
principal amount of each Class of Certificates set forth opposite its name].
<TABLE>
<CAPTION>
Underwriters Class Principal Amount
------------ ----- ----------------
<S> <C> <C>
$
________
$ ________
</TABLE>
[The Underwriters[s] propose[s] to offer [the Certificates] [part of each
Class of the Certificates] directly to the public at the public offering price
set forth on the cover page hereof and part to certain dealers at such price
less a
S-20
<PAGE>
concession not in excess of the amount set forth below for each such Class. The
Underwriter[s] may allow and such dealers may reallow a selling concession not
in excess of the amount set forth below for each such Class. After the initial
public offering, such public offering price and such selling concession may be
changed.
<TABLE>
<CAPTION>
Selling
Concession Reallowances
(Percent of (Percent of
Principal Principal
Amount) Amount)
----------- ----------
<S> <C> <C>
Principal Strip Certificates % %
Coupon Strip Certificates % %]
</TABLE>
[The [Company] has been advised by the Underwriter that it proposes to
offer the Certificates to the public from time to time in negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. The Underwriter and any dealers that participate with the Underwriter in
the distribution of the Certificates may be deemed to be underwriters and any
commissions received by them and any profit on the resale of the Certificates
positioned by them may be deemed to be underwriting discounts and commissions
under the Securities Act of 1933 as amended.] [Description of underwriting
fees.]
The Underwriting Agreement provides that the [Company] will indemnify the
Underwriter[s] against certain liabilities, including liabilities under the
Securities Act of 1933, as amended, or contribute to payments the Underwriter[s]
may be required to make in respect thereof.
[The Tax Exempt Securities pledged as security for the Certificates will be
purchased from the Underwriter[s] simultaneously with the closing of the sale of
the Certificates.]
[Disclosure of the extent to which Certificates were purchased by the
Underwriter or an affiliate in the initial offering of such Certificates.]
[Disclosure in case the Company or any affiliate is retaining an interest
in one or more Classes.]
RATINGS
It is a condition to the issuance of the Certificates that __________ [ and
_________] ([each, a] [the] "Rating Agency" assign the [respective] rating[s] of
____ [and _____] to the Certificates. The ratings on the Certificates do not
address [list any carve-outs].
A security rating should be evaluated independently of similar ratings of
different types of security. A security rating does not address the effect of
redemption or reinvestment rates on investors' yields. A rating is not a
recommendation to buy, sell or hold Certificates and may be subject to revision
or withdrawal at any time by the assigning rating organization. Each rating
should be evaluated independently of any other rating. See "RISK FACTORS."
S-21
<PAGE>
APPENDIX A
DESCRIPTION OF TAX EXEMPT SECURITIES
Municipal Issuer:
Tax Exempt Securities:
Dated:
Original Principal
Maturity Date:
Original Par Value
Amount Issued:
CUSIP Number:
Stated Interest Rate:
Interest Payment Dates:
Terms of Redemption:
Security for Bonds
Description of Mortgage Loans
Pool Performance Data
Default Rates
Foreclosure Costs and Rates
Use of liquidity reserves or credit enhancement
Trustee for Tax Exempt Securities:
Mode of Payment
of Tax Exempt Securities:
Par Value Amount of
Tax Exempt Securities Deposited Under
Trust Agreement: $ _______
The Tax Exempt Securities will be held by the Trustee for the Holders of
Certificates as book-entry credits to an account of the Trustee at the
Depository Trust Company of New York.
<PAGE>
VERSION 1
================================================================================
No dealer, salesperson or other person has been authorized to give any
information or make any representations not contained in this Prospectus
Supplement and the Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or by the Underwriter. This Prospectus Supplement and the Prospectus do not
constitute an offer to sell, or a solicitation of an offer to buy, the
securities offered hereby to anyone in any jurisdiction in which the person
making such offer or solicitation is not qualified to do so or to anyone to whom
it is unlawful to make any such offer or solicitation. Neither the delivery of
this Prospectus Supplement and the Prospectus nor any sale made hereunder shall,
under any circumstances, create an implication that information herein or
therein is correct as of any time since the date of this Prospectus Supplement.
______________
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY OF TERMS.......................................................... S-
RISK FACTORS.............................................................. S-
THE TAX EXEMPT SECURITIES................................................. S-
DESCRIPTION OF THE CERTIFICATES........................................... S-
YIELD AND REDEMPTION CONSIDERATIONS....................................... S-
THE COMPANY............................................................... S-
THE TRUST AGREEMENT....................................................... S-
CERTAIN FEDERAL INCOME TAX CONSEQUENCES................................... S-
LEGAL MATTERS............................................................. S-
USE OF PROCEEDS........................................................... S-
PLAN OF DISTRIBUTION...................................................... S-
RATINGS................................................................... S-
Prospectus
SUMMARY OF PROSPECTUS..................................................... 1
RISK FACTORS.............................................................. 8
THE TAX EXEMPT SECURITIES................................................. 12
YIELD AND REDEMPTION CONSIDERATIONS....................................... 16
DESCRIPTION OF THE CERTIFICATES........................................... 18
DESCRIPTION OF CREDIT ENHANCEMENT......................................... 20
THE COMPANY............................................................... 23
THE TRUST AGREEMENT....................................................... 23
CERTAIN FEDERAL INCOME TAX CONSEQUENCES................................... 28
LEGAL MATTERS............................................................. 31
USE OF PROCEEDS........................................................... 31
METHODS OF DISTRIBUTION................................................... 31
RATINGS................................................................... 32
INDEX OF MAJOR DEFINED TERMS.............................................. I-1
</TABLE>
Until 90 days after the date of each Prospectus Supplement, all dealers
effecting transactions in the related Certificates, whether or not participating
in the distribution thereof, may be required to deliver this Prospectus and the
related Prospectus Supplement. This delivery requirement is in addition to the
obligation of dealers to deliver a Prospectus Supplement and Prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions
$___________
T.A. OF DELAWARE, INC.
TAX EXEMPT SECURITIES TRUST
CERTIFICATES, MULTI-CLASS SERIES [A][ ]
__________________
PROSPECTUS SUPPLEMENT
__________________
TUCKER ANTHONY INCORPORATED
___________, 199_
================================================================================
<PAGE>
================================================================================
VERSION 2
No dealer, salesperson or other person has been authorized to give any
information or make any representations not contained in this Prospectus
Supplement and the Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or by the Underwriter. This Prospectus Supplement and the Prospectus do not
constitute an offer to sell, or a solicitation of an offer to buy, the
securities offered hereby to anyone in any jurisdiction in which the person
making such offer or solicitation is not qualified to do so or to anyone to whom
it is unlawful to make any such offer or solicitation. Neither the delivery of
this Prospectus Supplement and the Prospectus nor any sale made hereunder shall,
under any circumstances, create an implication that information herein or
therein is correct as of any time since the date of this Prospectus Supplement.
______________
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY OF TERMS........................................................... S-
RISK FACTORS............................................................... S-
THE TAX EXEMPT SECURITIES.................................................. S-
DESCRIPTION OF THE CERTIFICATES............................................ S-
YIELD AND REDEMPTION CONSIDERATIONS........................................ S-
THE COMPANY................................................................ S-
THE TRUST AGREEMENT........................................................ S-
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................... S-
LEGAL MATTERS.............................................................. S-
USE OF PROCEEDS............................................................ S-
PLAN OF DISTRIBUTION....................................................... S-
RATINGS.................................................................... S-
Prospectus
SUMMARY OF PROSPECTUS...................................................... 1
RISK FACTORS............................................................... 8
THE TAX EXEMPT SECURITIES.................................................. 12
YIELD AND REDEMPTION CONSIDERATIONS........................................ 16
DESCRIPTION OF THE CERTIFICATES............................................ 18
DESCRIPTION OF CREDIT ENHANCEMENT.......................................... 20
THE COMPANY................................................................ 23
THE TRUST AGREEMENT........................................................ 23
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................... 28
LEGAL MATTERS.............................................................. 31
USE OF PROCEEDS............................................................ 31
METHODS OF DISTRIBUTION.................................................... 31
RATINGS.................................................................... 32
INDEX OF MAJOR DEFINED TERMS............................................... I-1
</TABLE>
Until 90 days after the date of each Prospectus Supplement, all dealers
effecting transactions in the related Certificates, whether or not participating
in the distribution thereof, may be required to deliver this Prospectus and the
related Prospectus Supplement. This delivery requirement is in addition to the
obligation of dealers to deliver a Prospectus Supplement and Prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions
$___________
T.A. OF DELAWARE, INC.
TAX EXEMPT SECURITIES TRUST
CERTIFICATES, MULTI-CLASS SERIES [A][ ]
__________________
PROSPECTUS SUPPLEMENT
__________________
TUCKER ANTHONY INCORPORATED
___________, 199_
===============================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
-------------------------------------------
The expenses expected to be incurred in connection with the issuance and
distribution of the Certificates being registered, other than underwriting
compensation, are as set forth below. All such expenses, except for the SEC
registration and filing fees, are estimated:
<TABLE>
<S> <C>
SEC Registration Fee............................. $24,138.00
Legal Fees and Expenses.......................... $ *
Accounting Fees and Expenses..................... $ *
Trustee's Fees and Expenses
(including counsel Fees)........................ $ *
Blue Sky Qualification Fees
and expenses.................................... $ *
Printing and Engraving Fees...................... $ *
Rating Agency Fees............................... $ *
Miscellaneous.................................... $ *
---------
Total............................................ $ *
</TABLE>
________________________
* To be provided by amendment.
II-1
<PAGE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
-----------------------------------------
Section 145 of the General Corporation Law of Delaware empowers a
corporation to indemnify any person who was or is a party or witness or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he or she is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise.
Depending on the character of the proceeding, a corporation may indemnify
against expenses, costs and fees (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred in connection
with such action, suit or proceeding if the person indemnified acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. If the person indemnified is not wholly successful in such action,
suit or proceeding, but is successful, on the merits or otherwise, in one or
more but less than all claims, issues or matters in such proceeding, he or she
may be indemnified against expenses actually and reasonably incurred in
connection with each successfully resolved claim, issue or matter. In the case
of an action or suit by or in the right of the corporation, no indemnification
may be made in respect to any claim, issue or matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall determine that despite the adjudication of liability such person
is fairly and reasonably entitled to indemnity for such expenses which the court
shall deem proper. Section 145 provides that to the extent a director, officer,
employee or agent of a corporation has been successful in the defense of any
action, suit or proceeding referred to above or in the defense of any claim,
issue or manner therein, he or she shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him or her in
connection therewith.
The Certification of Incorporation of the Registrant provides that no
Director of the Registrant shall be personally liable to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a Director;
provided, however, that this limitation of liability of a Director shall not
apply with respect to (i) any breach of the Director's duty of loyalty to the
Registrant or its stockholder, (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) any
liability arising under Section 174 of the General Corporation Law of the State
of Delaware and (iv) for any transaction from which the Director derives an
improper personal benefit. The Bylaws of the Registrant are silent as to the
indemnification of officers and directors.
ITEM 16. EXHIBITS:
--------
1.1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of Company as currently in
effect
3.2 Bylaws of Company as currently in effect
4.1 Form of Trust Agreement (Partnership Classification)
4.2 Form of Trust Agreement (Grantor Trust Classification)
*5.1 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
as to legality including consent of such firm
*8.1 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
as to certain tax matters (including consent of such firm)
*24.1 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
(included as Exhibits 5.1 and 8.1)
_________________________
* To be provided by amendment.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS.
------------
A. Undertaking Pursuant to Rule 415.
--------------------------------
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement for the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed on the Registration
Statement or any material change of such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933 each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
B. Filing Incorporating Subsequent Exchange Act Documents By Reference:
-------------------------------------------------------------------
The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange
Act of 1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at the
time shall be deemed to be the initial bona fide offering thereof.
---------
C. Undertaking in respect of indemnification.
-----------------------------------------
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant, pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant, as the case may be, will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the act and will be governed by the
final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Boston, Massachusetts on March 29, 1996.
T.A. OF DELAWARE, INC.
By:/s/ John H. Goldsmith
-------------------------------------
John H. Goldsmith
Principal Executive Officer
By:/s/ Lawrence G. Kirshbaum
-------------------------------------
Lawrence G. Kirshbaum
Principal Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Wayne Workman his true and lawful attorney-in-
fact and agent, with full power of substitution and resubstitution for him in
his name, place and stead, and in any and all capacities, to sign any and all
amendments (including post-effective amendments to this Registration Statement,
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as full to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent or his
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ John H. Goldsmith Director, Principal
- ------------------------------
John H. Goldsmith Executive Officer March 29, 1996
/s/ Lawrence G. Kirshbaum Director, Principal
- ------------------------------
Lawrence G. Kirshbaum Financial Officer March 29, 1996
/s/ Wayne Workman
- ------------------------------
Wayne Workman Director, Vice President March 29, 1996
/s/ Kevin J. McKay
- ------------------------------
Kevin J. McKay Director, Clerk/Secretary March 29, 1996
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
EXHIBIT NO.
- -----------
1.1 - Form of Underwriting Agreement
3.1 - Certificate of Incorporation of Company as currently in
effect
3.2 - Bylaws of Company as currently in effect
4.1 - Form of Trust Agreement (Partnership Classification)
4.2 - Form of Trust Agreement (Grantor Trust Classification)
*5.1 - Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C.
as to legality (including consent of such firm)
*8.1 - Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
as to certain tax matters (including consent of such
firm)
*24.1 - Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
(included in Exhibits 5.1 and 8.1)
_____________
* To be provided by amendment
II-5
<PAGE>
T.A. OF DELAWARE, INC.
TAX EXEMPT SECURITIES TRUST
UNDERWRITING AGREEMENT
__________________
___________, 199_
_________________________
_________________________
_________________________
_________________________
_________________________
Ladies and Gentlemen:
From time to time T.A. of Delaware, Inc. (the "Company"), a Delaware
corporation, proposes to enter into one or more Pricing Agreements (each a
"Pricing Agreement") in the form of Annex I hereto, with such additions and
deletions as the parties thereto may determine. Subject to the terms and
conditions stated herein and therein, the Company proposes to cause the Trust
specified in the applicable Pricing Agreement to issue and sell to the firms
named in Schedule I to the applicable Pricing Agreement (such firms constituting
the "Underwriters" with respect to such Pricing Agreement and the securities
specified therein) certain of such Trust's Certificates (the "Certificates")
specified in Schedule II to such Pricing Agreement (with respect to such Pricing
Agreement, the "Designated Securities"), less the amount of Designated
Securities covered by Delayed Delivery Contracts, if any, as provided in Section
3 hereof and as may be specified in Schedule II to such Pricing Agreement (with
respect to such Pricing Agreement, any Designated Securities to be covered by
Delayed Delivery Contracts are herein sometimes referred to as "Contract
Securities" and the Designated Securities to be purchased by the Underwriters
(after giving effect to the deduction, if any, for Contract Securities) are
herein sometimes referred to as "Underwriters' Securities").
The Securities may be sold from time to time in one or more Series. Each
Series of Securities, which will include one or more classes of Certificates,
will be issued by a Trust to be formed with respect to one or more of such
Series (each, a "Trust"). Each Trust will be formed pursuant to a trust
agreement (a "Trust Agreement") to be entered into between the Company and the
Trustee specified in the related Pricing Agreement (the "Trustee"). The
Certificates of a Series will be issued pursuant to the related Trust Agreement
and any Trust Supplement. The property of each Trust will include the tax
exempt securities deposited therein ("Tax Exempt Securities").
The terms and conditions of any particular issuance of Designated
Securities shall be as specified in the Pricing Agreement relating thereto and
in or pursuant to the related Trust Agreement.
Capitalized terms used but not defined herein or in any Pricing Agreement
shall have the meanings ascribed thereto in the related Trust Agreement.
<PAGE>
1. Particular sales of Designated Securities may be made from time to
time to the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (The "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to an Underwriter or Underwriters who act without any firm
being designated as its or their representatives. This Underwriting Agreement
shall not be construed as an obligation of any of the Underwriters to purchase
the Securities. The obligation of the Company to cause a trust to issue and
sell any of the Securities and the obligation of any of the Underwriters to
purchase any of the Securities shall be evidenced by the Pricing Agreement with
respect to the Designated Securities specified therein. Each Pricing Agreement
shall specify the aggregate amount of such Designated Securities, the initial
public offering price of such Designated Securities, the purchase price to the
Underwriters of such Designated Securities, the names of the Underwriters of
such Designated Securities, the names of the Representatives of such
Underwriters and the amount of such Designated Securities to be purchased by
each Underwriter and whether any of such Designated Securities shall be covered
by Delayed Delivery Contracts (as defined in section 3 hereof) and shall set
forth the date, time and manner of delivery of such Designated Securities and
payment therefor. The Pricing Agreement shall also specify (to the extent not
set forth in the Trust Agreement and the registration statement and prospectus
with respect thereto) the terms of such Designated Securities. A Pricing
Agreement shall be in the form of an executed writing (which may be in
counterparts), and may be evidenced by an exchange of telegraphic communications
or any other rapid transmission device designed to produce a written record of
communications transmitted. The obligations of the Underwriters under this
agreement and each Pricing Agreement shall be several and not joint.
2. The Company represents and warrants to, and agrees with, each of the
Underwriters as follows:
(a) a registration statement on Form S-3 (File No. 333-1252),
including a form of prospectus, in respect of the Securities has been filed
with the Securities and Exchange Commission (the "Commission"); such
registration statement and any post-effective amendment thereto, each in
the form heretofore delivered or to be delivered to the Representatives
and, excluding exhibits to such registration statement, but including all
documents incorporated by reference in the prospectus contained therein, to
the Representatives for each of the other Underwriters, have been declared
effective by the Commission in such form; no other document with respect to
such registration statement or document incorporated by reference therein
has heretofore been filed or transmitted for filing with the Commission
(other than prospectuses filed pursuant to Rule 424(b) of the rules and
regulations of the Commission under the Securities Acct of 1933, as amended
(the "Act), each in the form heretofore delivered to the representatives);
and no stop order suspending the effectiveness of such registration
statement has been issued and no proceeding for that purpose has been
initiated or, to the best of the Company's knowledge, threatened by the
Commission (any preliminary prospectus included in such registration
statement or filed with the Commission pursuant to Rule 424(a) under the
act, is hereinafter called a "Preliminary Prospectus," the various parts of
such registration statement, including all exhibits thereto and the
documents incorporated by reference in the prospectus contained in the
registration statement at the time such part of the registration statement
became effective, each as amended at the time such part of the registration
statement became effective, are hereinafter collectively called the
"Registration Statement"; the prospectus relating to the Securities, in the
form in which it has most recently been filed or transmitted for filing,
with the Commission on or prior to the date of this Agreement, being
hereinafter called the "Prospectus"; any reference
-2-
<PAGE>
herein to any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include the documents incorporated by reference therein
pursuant to the applicable form under the act, as of the date of such
Preliminary Prospectus or Prospectus, as the case may be; any reference to
any amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed after the date
of such Preliminary Prospectus or Prospectus, as the case may be, under the
Securities Exchange act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or Prospectus, as
the case may be; any reference to any amendment to the Registration
Statement shall be deemed to refer to and include any annual report of the
Company filed pursuant to Sections 13(a) or 15(d) of the Exchange Act after
the effective date of the Registration Statement that is incorporated by
reference in the Registration Statement; and any reference to the
Prospectus as amended or supplemented shall be deemed to refer to the
Prospectus as amended or supplemented in relation to the applicable
Designated Securities in the form in which it is filed with the Commission
pursuant to Rule 424(b) under the Act in accordance with Section 5(a)
hereof, including any documents incorporated by reference therein as of the
date of such filing);
(b) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the Requirements of the Act and
the Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statement therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement thereto,
when such documents become effective or are filed with the Commission, as
the case may be, will conform in all material respects to the requirements
of the Act and the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter of Designated Securities through the Representatives expressly
for use in the Prospectus as amended or supplemented relating to such
Designated Securities;
(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and do
not and will not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statement
therein not misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the company
by an Underwriter of Designated Securities through the Representatives
expressly for use in the Prospectus as amended or supplemented relating to
such Designated Securities;
(d) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the state of Delaware,
with power and authority (corporate
-3-
<PAGE>
and other) to own its properties and conduct its business as described in
the Prospectus and to consummate the transactions contemplated therein and
herein;
(e) This Agreement has been, and each Pricing Agreement with respect
to the Designated Securities upon its execution and delivery by the Company
will have been, duly authorized, executed and delivered by the Company. The
Securities have been duly authorized, and, when Designated Securities are
issued and delivered pursuant to this Agreement and the Pricing Agreement
with respect to such Designated Securities and, in the case of any Contract
Securities, pursuant to Delayed Delivery Contracts with respect to such
Contract Securities, such Designated Securities and Contract securities
will have been duly executed, authenticated, issued and delivered. The
Trust Agreement has been duly authorized, and at the Time of Delivery (as
defined in Section 4 hereof) for the Designated Securities, the Trust
Agreement will constitute a valid and legally binding instrument,
enforceable in accordance with its terms, subject as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles. The Trust Agreement conforms, and the Designated
Securities will conform, to the descriptions thereof contained in the
Prospectus as amended or supplemented with respect to the Designated
Securities;
(f) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Trust Agreement,
each of the Delayed Delivery Contracts, this Agreement and any Pricing
Agreement, and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company is a party or by which the Company is bound
or to which any of the property or assets of the Company is subject, nor
will such action result in any violation of the provisions of the Company's
Certificate of Incorporation or By-laws, or any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over the company or any of its properties; and no consent,
approval, authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for the issue and
sale of the securities or the consummation by the company of the
transactions contemplated by this Agreement or any Pricing Agreement or any
Delayed Delivery Contract, except such as have been, or will have been
prior to the Time of Delivery, obtained under the act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Designation Securities by the
Underwriters;
(g) The statements set forth in the Prospectus under the captions
"Description of the Certificates" and set forth in the Prospectus
Supplement under the caption "Description of the Certificates" insofar as
they purport to constitute a summary of the terms of the certificates are
accurate, complete and fair;
(h) The Company is not in violation of its Certificate of
Incorporation or By-laws, nor is it in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which it is a party or by which it or
any of its properties may be bound;
-4-
<PAGE>
(i) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company is a party or of
which any property of the company is the subject which, if determined
adversely to the Company, would individually or in the aggregate have a
material adverse effect on the current or future consolidated financial
position, shareholders' equity or results of operations of the Company on
the consummation of the transactions contemplated hereby, and, to the best
of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(j) The Company is not and, after giving effect to the offering and
sale of the Securities, will not be an "investment company" or any entity
"controlled" by an "investment company", as such terms are defined in the
investment company act of 1940, as amended (the "Investment Company Act");
[(k) Neither the Company, Sallie Mae nor any of their affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida Statutes;]
(l) In the event any of the Securities are purchased pursuant to
Delayed Delivery Contracts, each of such Delayed Delivery Contracts has
been duly authorized by the Company and, when executed and delivered by the
Company and the purchaser named therein, will constitute a valid and
legally binding Agreement of the Company enforceable in accordance with its
terms, subject, as to enforcement, to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general equity principles; and any
Delayed Delivery Contracts conform to the description thereof in the
Prospectus.
3. Upon the execution of the Pricing Agreement applicable to any
Designated Securities and authorization by the Representatives of the release of
the Underwriters' Securities, the several Underwriters propose to offer such
Underwriters' Securities for sale upon the terms and conditions set forth in the
prospectus as amended or supplemented.
The Company may specify in Schedule II to the Pricing Agreement applicable
to any Designated Securities that the Underwriters are authorized to solicit
offers to purchase Designated Securities from the Company pursuant to delayed
delivery contracts (herein called "Delayed Delivery Contracts"), substantially
in the form of Annex III attached hereto but with such changes therein as the
Representatives and the Company may authorize or approve. If so specified, the
Underwriters will endeavor to make such arrangements, and as compensation
therefor the Company will pay to the Representatives, for the accounts of the
Underwriters, at the Time of Delivery, such commission, if any, as may be set
forth in such Pricing Agreement. Delayed Delivery Contracts, if any, are to be
with investors of the types described in the Prospectus and subject to other
conditions therein set forth. The Underwriters will not have any responsibility
with respect to the validity or performance of any Delayed Delivery Contracts.
The amount of Contract Securities to be deducted from the amount of
Designated Securities to be purchased by each Underwriter as set forth in
Schedule I to the Pricing Agreement applicable to such Designated Securities
shall be, in each case, the amount of Contract Securities which the Company has
been advised by the Representatives have been attributed to such Underwriter,
provided that, if the Company has not been so advised, the amount of Contract
Securities to be so deducted shall be, in each case, that proportion of Contract
Securities which the amount of Designated Securities to be purchased by such
Underwriter under such Pricing Agreement bears to the total amount of the
Designated Securities
-5-
<PAGE>
(rounded as the Representatives may determine). The total amount of
Underwriters' Securities to be purchased by all the Underwriters pursuant to
such Pricing Agreement shall be the total amount of Designated Securities set
forth in Schedule I to such Pricing Agreement less the amount of the Contract
Securities. The Company will deliver to the Representatives not later than 3:30
p.m., New York City time, on the third business day preceding the Time of
Delivery specified in the applicable Pricing Agreement (or such other time and
date as the Representatives and the Company may agree upon in writing), a
written notice setting forth the amount of Contract Securities.
4. Underwriters' Securities to be purchased by each Underwriter pursuant
to the Pricing Agreement relating thereto, in the form specified in such Pricing
Agreement, and in such authorized denominations and registered in such names as
the Representatives may request upon at least forty-eight hours' prior notice to
the Company, shall be delivered by or on behalf of the Company to the
Representatives for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by wire transfer or
by certified or official bank check or checks, payable to the order of the
Company in the funds specified in such Pricing Agreement, all in the manner and
at the place and time and date specified in such Pricing Agreement or at such
other place and time and date as the Representatives and the Company may agree
upon in writing, such time and date being herein called the "Time of Delivery"
for such Securities.
Concurrently with the delivery of and payment for the Underwriters'
Securities, the Company will deliver to the Representatives for the accounts of
the Underwriters a check payable to the order of the party designated in the
Pricing Agreement relating to such Underwriters' Securities in the amount of any
compensation payable by the Company to the Underwriters in respect of any
Delayed Delivery Contracts as provided in Section 3 hereof and the Pricing
Agreement relating to such Securities.
5. The Company agrees with each of the Underwriters of any Designated
Securities:
(a) To prepare the Prospectus as amended or supplemented in relation
to the applicable Designated Securities in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the act not later than the Commission's close of business on the second
business day following the execution and delivery of the Pricing Agreement
relating to the applicable Designated Securities or, if applicable, such
earlier time as may be required by Rule 424(b); to make no further
amendment or any supplement to the Registration Statement or Prospectus as
amended or supplemented after the date of the Pricing Agreement relating to
such Designated Securities and prior to the time of delivery for such
Designated Securities which shall be disapproved by the Representatives for
such Designated Securities promptly after reasonable notice thereof; to
advise the Representatives promptly of any such amendment or supplement
after such Time of Delivery and furnish the Representatives with copies
thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act for so long as the delivery of a prospectus is required in connection
with the offering or sale of such Designated Securities, and during such
same period to advise the Representatives, promptly after it receives
notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed with the Commission, of
the issuance by the commission of any stop order or of any order preventing
or suspending the use of any prospectus relating to the Designated
Securities, of the suspension of the qualification of such Designated
Securities for offering or sale in any jurisdiction, of the initiation or
threatening of
-6-
<PAGE>
any proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or
Prospectus or for additional information; and, in the event of the issuance
of any such stop order or of any such order preventing or suspending the
use of any prospectus relating to the Designated Securities or suspending
any such qualification, to promptly use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Designated Securities
for offering and sale under the securities laws of such jurisdictions as
the Representatives may request and to comply with such laws so as to
permit the continuance of sales and dealings therein in such jurisdictions
for as long as may be necessary to complete the distribution of such
Designated Securities, provided that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus as
amended or supplemented, in such quantities as the Representatives may from
time to time reasonably request, and, if the delivery of a Prospectus is
required at any time in connection with the offering or sale of the
Designated Securities and if at such time any event shall have occurred as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such Prospectus
is delivered, not misleading or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference in
the Prospectus in order to comply with the act or the exchange act, to
notify the Representatives and, upon their request, to file such document
and to prepare and furnish without charge to each Underwriter and to any
dealer in securities as many copies as the Representatives may from time to
time reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance;
(d) To cause the Trust to make generally available to holders of
Designated Securities, as soon as practicable, but in any event not later
than eighteen months after the effective date of the Registration Statement
(as defined in Rule 158(c) under the Act), an earnings statement of the
Trust (which need not be audited) complying with Section 11(a) of the Act
and the rules and regulations of the Commission thereunder (including, at
the option of the company, Rule 158); and
(e) To apply the net proceeds of the offering and sale of the
Designated Securities that it receives in the manner set forth in the
Prospectus.
6. The Company covenants and agrees with the several Underwriters that
the Company will pay or cause to be paid the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities under the act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, any Delayed Delivery
Contracts, any Blue Sky and Legal Investment Memoranda, closing documents
(including any compilations thereof) and any other documents in connection with
the offering, purchase, sale and delivery of the Designated Securities; (iii)
all expenses
-7-
<PAGE>
in connection with the qualification of the Designated Securities for offering
and sale under state securities laws as provided in Section 5(b) hereof,
including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky and Legal
Investment Surveys; (iv) any fees charged by securities rating services for
rating the Designated securities; (v) the cost of preparing the Designated
Securities; (vi) the fees and expenses of the Trustee in connection with the
Trust Agreement and the Designated Securities; and (vii) all other costs and
expenses incident to the performance of its obligations hereunder and under any
Delayed Delivery Contracts which are not otherwise specifically provided for in
this Section. It is understood, however, that, except as provided in this
Section, and Sections 8 and 11 hereof, the Underwriters will pay all of their
own costs and expenses, including the fees of their counsel, transfer taxes on
resale of any of the securities by them, and any advertising expenses connected
with any offers they may make.
7. The obligations of the Underwrites of any Designated Securities under
the Pricing Agreement relating to such designated securities shall be subject,
in the reasonable discretion of the Representatives, to the condition that all
representations and warranties and other statements of the company in or
incorporated by reference in the pricing agreement relating to such Designated
Securities are, at and as of the Time of Delivery for such Designated
Securities, true and correct, the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed, and the
following additional conditions:
(a) The Prospectus as amended or supplemented in relation to the
applicable Designated Securities shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the rules and regulations under the act and in accordance
with Section 5(a) hereof, no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission, and all requests for additional information on the part of the
Commission shall have been complied with.
(b) Counsel for the Underwriters shall have furnished to the
Representatives such opinion or opinions, substantially in the form
attached hereto as Annex II(a), dated the Time of Delivery for such
Designated Securities, with respect to the Designated Securities and such
other related matters as the Representatives may reasonably request, and
the Company shall have furnished or caused to be furnished to such counsel
such documents and information as they may reasonably request to pass upon
such matters.
(c) Special counsel for the Company shall have furnished to the
Representatives a written opinion or opinions, dated the Time of Delivery
for such Designated Securities, substantially in the form attached hereto
as Annex II(c) or as is otherwise satisfactory to the Representatives;
(d) Counsel for the Trustee shall have furnished to the
Representatives a written opinion or opinions, dated the Time of Delivery
for such Designated Securities, substantially in the form attached hereto
as Annex II(d) or as is otherwise satisfactory to the Representatives;
(e) On or after the date of the Pricing Agreement relating to the
Designated Securities (i) no downgrading shall have occurred in the rating
accorded any previously issued designated securities by any "nationally
recognized statistical rating organization" as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the act ("Rating Agency"),
and (ii) no
-8-
<PAGE>
such rating agency shall have publicly announced that it has under
surveillance or review, with possible negative implications, its rating of
any designated securities.
(f) On or after the date of the Pricing Agreement relating to the
Designated Securities there shall not have occurred any of the following:
(i) a suspension or material limitation in trading in securities generally
on the New York Stock Exchange or any setting of minimum prices for trading
on such exchange; (ii) a general moratorium on commercial banking
activities declared by either federal or New York State authorities; or
(iii) the outbreak or escalation of hostilities involving the United States
or the declaration by the United States of a national emergency or war, if
the affected of any such event specified in this clause (iii) in the
reasonable judgment of the Representatives makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Underwriters' Securities on the terms and in the manner contemplated in the
prospectus as theretofore amended or supplemented relating to the
Designated Securities.
(g) The Company shall have furnished or caused to be furnished to the
Representatives at the Time of Delivery for the Designated Securities a
certificate or certificates of officers of the Company satisfactory to the
Representatives as to the accuracy of the representations and warranties of
the Company herein at and as of such time of delivery, as to the
performance by the Company of all of its obligations hereunder to be
performed at or prior to such Time of Delivery, as to the matters set forth
in subsections (a), (h) and (i) of this Section and as to such other
matters as the Representatives may reasonably request;
(h) At the Time of delivery, the aggregate amount of the
Underwriters' Securities as specified in the related Pricing Agreement for
the Designated Securities shall have been sold by the Trust to the
Underwriters; and
(i) The Designated Securities shall be rated as set forth in the
related Prospectus by the Rating Agency (or Agencies) specified in such
Prospectus, and such Rating Agency or Agencies shall not have placed the
Designated Securities under surveillance or review with negative
implications.
8 (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented and any other prospectus
relating to the Designated Securities, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statement therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, any preliminary prospectus
supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the securities, or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter of Designated
-9-
<PAGE>
Securities through the Representatives expressly for use in the Prospectus as
amended or supplemented relating to such Securities.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which it may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented and any other prospectus
relating to the Securities, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Prospectus, any preliminary prospectus
supplement, the Registration Statement, the Prospectus as amended or
supplemented and any other prospectus relating to the Designated Securities or
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representatives expressly for use therein; and will reimburse the Company for
any legal or other expenses reasonably incurred by the Company in connection
with investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relive it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without
the written consent of the indemnified party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is an
actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the indemnified
party from all liability arising out of such action or claim and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company, on the one hand and the
- 10 -
<PAGE>
Underwriters of the Designated Securities on the other from the offering of the
Designated Securities to which such loss, claim, damage or liability (or action
in respect thereof) relates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company on the one
hand and the Underwriters of the Designated Securities on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations., The relative benefits received by the
Company, on the one hand, and such Underwriters on the other shall be deemed to
be in the same proportion as the total net proceeds from such offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by such Underwriters. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company, on the
one hand, or such Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the applicable Designated Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The obligations of the Underwriters of Designated
Securities in this subsection (d) to contribute are several in proportion to
their respective underwriting obligations with respect to such Securities and
not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company and to each
person, if any, who controls the Company within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Underwriters' Securities which it has agreed to purchase under the Pricing
Agreement relating to such Underwriters' Securities, the Representatives may in
their discretion arrange for themselves or another party or other parties to
purchase such Underwriters' Securities on the terms contained herein and
therein. If within thirty-six hours after such default by any Underwriter the
Representatives do not arrange for the purchase of such Underwriters'
Securities, then the Company shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to the
Representatives to purchase such
- 11 -
<PAGE>
Underwriters' Securities on such terms. In the event that, within the respective
prescribed period, the Representatives notify the Company that they have so
arranged for the purchase of such Underwriters' Securities, or the Company
notifies the Representatives that it has so arranged for the purchase of such
Underwriters' Securities, the Representatives or the Company shall have the
right to postpone the Time of Delivery for such Underwriters' Securities for a
period of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the Prospectus as
amended or supplemented, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments or supplements to the
Registration Statement or the Prospectus which in the opinion of the
Representatives may thereby be made necessary. The term "Underwriter" as used in
this Agreement shall include any person substituted under this Section with like
effect as if such person had originally been a party to the Pricing Agreement
with respect to such Designated Securities.
(b) If, after giving effect to any arrangements for the purchase of
the Underwriters' Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subjection (a) above, the
aggregate amount of such Underwriters' Securities which remains unpurchased does
not exceed one-eleventh of the aggregate amount of the Designated Securities,
then the Company shall have the right to require each non-defaulting Underwriter
to purchase the amount of Underwriters' Securities which such Underwriter agreed
to purchase under the Pricing Agreement relating to such Designated Securities
and, in addition, to require each non-defaulting Underwriter to purchase its pro
rata share (based on the amount of Designated Securities which such Underwriter
agreed to purchase under such Pricing Agreement) of the Underwriters' Securities
of such defaulting Underwriter or Underwriters for which such arrangements have
not been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Underwriters' Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate amount of Underwriters' Securities which remains unpurchased exceeds
one-eleventh of the aggregate amount of the Designated Securities, as referred
to in subsection (b) above, or if the Company shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Underwriters' Securities of a defaulting Underwriter or Underwriters,
then the Pricing Agreement relating to such designated Securities shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company, except for the expenses to be borne by the Company
and the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof, but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the Company
or any officer or director or controlling person of the Company and shall
survive delivery of and payment for the Securities.
11. If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, the Company shall not then be under any liability to any Underwriter
with respect to the Designated Securities covered by such Pricing Agreement
except as provided in section 6 and 8 hereof; but, if for any other reason
Underwriters' Securities are not delivered by or on behalf of the Company as
provided herein, except for any of the reasons specified in Section 7(i), the
Company will reimburse the Underwriters through
- 12 -
<PAGE>
the Representatives for all out-of-pocket expenses approved in writing by the
Representatives, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of such Designated Securities, but the Company shall then be under no
further liability to any Underwriter with respect to such Designated Securities
except as provided in Section 6 and 8 hereof.
12. In all dealings hereunder, the Representatives of the Underwriters of
Designated Securities shall act on behalf of each of such Underwriters, and the
parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement, and if to the Company shall be delivered or sent by mail,
telex or facsimile transmission to:
T.A. of Delaware, Inc.
One Beacon Street
Boston, Massachusetts 02108
Attention:
with copies to:
Christopher Conley
Senior Vice President
Tucker Anthony Incorporated
Four Landmark Square
Stamford, Connecticut 06901
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company by the Representatives upon request. Any such statements, requests,
notice or agreements shall take effect upon receipt thereof.
13. This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Company, and, to the
extent provided, in Sections 8 and 10 hereof, the officers and directors of the
Company and each person who controls the Company or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or virtue of this Agreement
or any such Pricing Agreement. No purchaser of any of the Securities from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of each Pricing Agreement. As used
herein, "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business and "New York Business Day" shall mean any
day when banking institutions are open for business in New York City, New York.
- 13 -
<PAGE>
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement and each Pricing Agreement may be executed by any one
or more of the parties hereto and thereto in any number of counterparts, each of
which shall be deemed to be an original, but all such respective counterparts
shall together constitute one and the same instrument.
IF THE FOREGOING IS IN ACCORDANCE WITH YOUR UNDERSTANDING, PLEASE SIGN AND
RETURN TO US ___ COUNTERPARTS HEREOF.
Very truly yours.
T.A. OF DELAWARE, INC.
By:_________________________________________
Name:
Title:
Accepted as of the date hereof:
By:_________________________________
Name:
Title:
- 14 -
<PAGE>
ANNEX I
PRICING AGREEMENT
-----------------
__________________________________
AS REPRESENTATIVES OF THE SEVERAL
UNDERWRITERS NAMED ON SCHEDULE I HERETO,
C/O_______________________________
__________________________________
__________________________________
, 199_
Ladies and Gentlemen:
T.A. of Delaware, Inc., a Delaware corporation (the "Company") proposes,
subject to the terms and conditions stated herein and in the Underwriting
Agreement, dated ____________, 199_ (the "Underwriting Agreement"), between the
Company on the one hand, and _______________ and ______________, on the other
hand, that the Company will cause the trust (the "Trust") formed pursuant to the
Trust Agreement dated ____________, 199_ between the Company and
___________________ as trustee (the "Trustee"), to issue and sell to the
Underwriters named in Schedule I hereto (the "Underwriters") the Certificates
(the "Certificates") specified in Schedule II hereto (the "Designated
Securities"). The Certificates will be issued pursuant to the Trust Agreement.
Each of the provisions of the Underwriting Agreement is incorporated herein
by reference in its entirety, and shall be deemed to be a part of this Agreement
to the same extent as if such provisions had been set forth in full herein; and
each of the representations and warranties set forth therein shall be deemed to
have been made at and as of the date of this Pricing Agreement, except that each
representation and warranty which refers to the Prospectus in Section 2 of the
Underwriting Agreement shall be deemed to be a representation or warranty as of
the date of the Underwriting Agreement in relation to the Prospectus (as therein
defined), and also a representation and warranty as of the date of this Pricing
Agreement in relation to the Prospectus as amended or supplemented relating to
the Designated Securities which are the subject of this Pricing Agreement. Each
reference to the Representatives herein and in the provisions of the
Underwriting Agreement so incorporated by reference shall be deemed to refer to
you. Unless otherwise defined herein, terms defined in the Underwriting
Agreement are used herein as therein defined.
The Representatives designated to act on behalf of the Representatives and
on behalf of each of the Underwriters of the Designated Securities pursuant to
Section 12 of the Underwriting Agreement and the address of the Representatives
referred to in such Section 12 are set forth at the end of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
cause the Trust to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Trust,
<PAGE>
at the time and place and at the purchase price to the Underwriters set forth in
Schedule II hereto, the amount of Designated Securities set forth opposite the
name of such Underwriter in Schedule I hereto, less the amount of Designated
Securities covered by Delayed Delivery Contracts, if any, as may be specified in
Schedule II.
During the period beginning from the date of this Pricing Agreement for the
Designated Securities and continuing to and including the later of (i)
[_________ days after] the termination of trading restrictions for such
Designated Securities, as notified to the Company by the Representatives and
(ii) [_____ days after] the Time of Delivery for such Designated Securities, the
Company agrees not to, and not to permit any affiliated entity to, offer, sell,
contract to sell or otherwise dispose of, any securities (other than the
Designated Securities) evidencing an ownership in, or any securities
collateralized by, Bonds, without the prior written consent of the
Representatives.
If the foregoing is in accordance with your understanding, please sign and
return to us _________ counterparts hereof, and upon acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the Underwriters
and the Company. It is understood that your acceptance of this letter on behalf
of each of the Underwriters is or will be pursuant to the authority set forth in
a form of Agreement among Underwriters, the form of which shall be submitted to
the Company for examination upon request, but without warranty on the part of
the Representatives as to the authority of the signers thereof.
Very truly yours.
T.A. OF DELAWARE, INC.
By:_________________________________________
Name:
Title:
Accepted as of the date hereof:
By:________________________________
Name:
Title:
- 16 -
<PAGE>
SCHEDULE I
AMOUNT OF DESIGNATED SECURITIES TO BE
PURCHASED
UNDERWRITER CLASS__ CLASS__ CLASS__
- 17 -
<PAGE>
SCHEDULE II
Title of each Class of Designated Securities:
Aggregate amount of each Class:
Price to Public of each Class:
Purchase Price by Underwriters of each Class:
Specified funds for payment of purchase price:
Indenture:
Maturity:
Return Rate:
Form of Designated Securities:
Time of Delivery:
Closing location for delivery of Designated Securities:
Names and addresses of Representatives:
Designated Representatives:
Address for Notices, etc.
- 18 -
<PAGE>
ANNEX II(A)
UNDERWRITER: COUNSEL OPINION
----------------------------
- 19 -
<PAGE>
ANNEX II(C)
THE COMPANY:
------------
OUTSIDE COUNSEL OPINION
-----------------------
- 20 -
<PAGE>
ANNEX II(D)
TRUSTEE:
--------
COUNSEL OPINIONS
----------------
- 21 -
<PAGE>
ANNEX III
DELAYED DELIVERY CONTRACT
-------------------------
T.A. OF DELAWARE, INC.
C/O____________________________________
_______________________________________
_______________________________________
Attention:______________________ ____________, 19__
Ladies and Gentlemen:
The undersigned hereby agrees to purchase from [Trust] (hereinafter called
the "Trust"), and the Company agrees to cause the Trust to sell to the
undersigned,
$__________
principal amount of Certificates ________ (hereinafter called the "Designated
Securities"), offered by the Company's Prospectus, dated _________, 19__, as
amended or supplemented, receipt of a copy of which is hereby acknowledged, at a
purchase price of ___% of the amount thereof, plus accrued interest from the
date from which interest accrues as set forth below, and on the further terms
and conditions set forth below.
The undersigned will purchase the Designated Securities from the Trust on
____, 19__ (the "Delivery Date") and interest on the Designated Securities so
purchased will accrue from _______, 19__.
[The undersigned will purchase the Designated Securities from the Trust on
the delivery date or dates and in the amount or amounts set forth below:
<TABLE>
<CAPTION>
DATE FROM WHICH
DELIVERY DATE AMOUNT INTEREST ACCRUES
------------- ------ ----------------
<S> <C> <C>
_______, 19__ $_____ _______, 19__
_______, 19__ $_____ _______, 19__
</TABLE>
EACH SUCH DATE ON WHICH DESIGNATED SECURITIES ARE TO BE PURCHASED HEREUNDER IS
HEREINAFTER REFERRED TO AS A "DELIVERY DATE."]
Payment for the Designated Securities which the undersigned has agreed to
purchase on [THE] [EACH] Delivery Date shall be made to the Company or its order
by certified or official bank check in _______ Clearing House funds at the
office of _______, ________, _________, or by wire transfer to a bank account
specified by the Company, on [THE] [SUCH] Delivery Date upon delivery to the
undersigned of the Designated Securities then to be purchased by the undersigned
in definitive fully registered form and in such denominations and registered in
such names as the undersigned may designate by written telex or facsimile
communication addressed to the Company not less than five full business days
prior to [THE] [SUCH] Delivery Date.
The obligation of the undersigned to take delivery of and make payment for
Designated Securities on [THE] [EACH] Delivery Date shall be subject to the
condition that the purchase of Designated Securities to be made by the
undersigned shall not on [THE] [SUCH] Delivery Date be prohibited under the laws
of the jurisdiction to which the undersigned is subject. The obligation of the
undersigned to take delivery of and make payment for Designated Securities shall
not be affected by the failure of any purchaser to
<PAGE>
take delivery of and make payment for Designated Securities pursuant to other
contracts similar to this contract.
[THE UNDERSIGNED UNDERSTANDS THAT UNDERWRITERS (THE "UNDERWRITERS") ARE
ALSO PURCHASING DESIGNATED SECURITIES FROM THE COMPANY, BUT THAT THE OBLIGATIONS
OF THE UNDERSIGNED HEREUNDER ARE NOT CONTINGENT ON SUCH PURCHASES]. Promptly
after completion of the sale to the Underwriters the Company will mail or
deliver to the undersigned at its address set forth below notice to such effect,
accompanies by a copy of the Opinion of Counsel for the Company delivered to the
Underwriters in connection therewith.
The undersigned represents and warrants that, as of the date of this
contract, the undersigned is not prohibited from purchasing the Designated
Securities hereby agreed to be purchased by it under the laws of the
jurisdiction to which the undersigned is subject.
This contract will inure to the benefit of and be binding upon the parties
hereto and their respective successors, but will not be assignable by either
party hereto without the written consent of the other.
This contract may be executed by either of the parties hereto in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
It is understood that the acceptance by the Company of any Delayed Delivery
Contract (including this contract) is in the Company's sole discretion and that,
without limiting the foregoing, acceptances of such contracts need not be on a
first-come, first-served basis. If this contract is acceptable to the Company,
it is requested that the Company sign the form of acceptance below and mail or
deliver one of the counterparts hereof to the undersigned at its address set
forth below. This will become a binding contract between the Company and the
undersigned when such counterpart is so mailed or delivered by the Company.
Yours very truly,
______________________________________
By:___________________________________
(Authorized Signature)
Name:
Title:
______________________________________
(Address)
Accepted _____________________, 19__
T.A. of Delaware, Inc.
By: _____________________________
Name:
Title:
<PAGE>
CERTIFICATE OF INCORPORATION
OF
T.A. OF DELAWARE, INC.
FIRST: The name of the corporation is T.A. OF DELAWARE, INC. (the
"Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is No. 100 West Tenth Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
The purpose specified in the foregoing paragraph shall in nowise be limited
or restricted by reference to, or inference from, the terms of any provision in
this certificate of incorporation.
The corporation shall possess and may exercise all powers and privileges
necessary or convenient to effect the foregoing purpose, including the general
powers now or hereafter conferred by the laws of the State of Delaware upon
corporations formed under the General Corporation Law of the State of Delaware.
FOURTH: The total number and the designation of the shares of capital
stock which the Corporation shall have authority to issue is one thousand
(1,000) shares of common stock, par value $1.00 per share.
FIFTH: The name and mailing address of the sole incorporator is as
follows:
Name Mailing Address
---- ---------------
Kim Sainten 53 Wall Street
New York, New York 10005
SIXTH: The names and mailing addresses of the persons who are to serve as
directors until the first annual meeting of stockholders, or until their
successors are elected and qualify, are as follows:
<PAGE>
Name Mailing Address
---- ---------------
W. Ward Carey Tucker, Anthony & R.L. Day, Inc.
120 Broadway, New York, NY 10271
Patrick E. Scorese Tucker, Anthony & R.L. Day, Inc.
120 Broadway, New York, NY 10271
SEVENTH: The corporation is to have perpetual existence.
EIGHTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of its directors and
stockholders:
(1) The number of directors of the corporation shall be such as from time
to time shall be fixed by, or in the manner provided in, the by-laws of the
Corporation. Election of directors need not be by written ballot unless the by-
laws of the Corporation so provide.
(2) The Board of Directors shall have power without the assent or vote of
the stockholders:
(a) To make, alter, amend, change, add to or repeal the by-laws of
the Corporation; to determine the use and disposition of any surplus or net
profits; and to fix the times for the declaration and payment of dividends;
and
(b) To determine from time to time whether, and to what extent, and
at what times and places, and under what conditions and regulations, the
accounts and books of the Corporation (other than the stock ledger), or any
of them, shall be open to the inspection of the stockholders.
(3) In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the Corporation; subject, nevertheless, to the provisions of the statutes of
Delaware, of this certificate of incorporation, and to any by-law from time to
time made by the stockholders; provided, however, that no by-law so made shall
invalidate any prior act of the directors which would have been valid if such
by-law had not been made.
NINTH: The Corporation may, to the full extent permitted by Section 145 of
the General Corporation Law of the State of Delaware, as amended from time to
time, indemnify all persons whom it may indemnify pursuant thereto.
- 2 -
<PAGE>
TENTH: Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the Corporation under the
provisions of Section 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for the
Corporation under the provisions of Section 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Corporation. as the case may be, to
be summoned in such manner as the said court directs. If a majority in number
representing three-fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
the Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of the Corporation, as the case may be, and also on the
Corporation.
ELEVENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders, directors, and officers herein are granted subject to this
reservation.
THE UNDERSIGNED, being the sole incorporator hereinbefore named, for the
purpose of forming a Corporation pursuant to the General Corporation Law of the
State of Delaware, does make this certificate of incorporation, hereby declaring
and certifying that this is her act and deed and the facts herein stated are
true, and accordingly has hereunto set her hand this 27th day of September,
1983.
_________________________________
Kim Sainten
- 3 -
<PAGE>
BY-LAWS
OF
T.A. OF DELAWARE, INC.
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation
-----------------
shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 2. Other Offices. The corporation may also have offices at such
-------------
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or as the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of the stockholders shall be
-----------------
held at such place either within or without the State of Delaware as shall be
designated from time to time by the Board of Directors in the case of annual
meetings or as may be fixed by the person or persons calling the meeting in the
case of special meetings.
Section 2. Annual Meetings. The annual meetings of stockholders for the
---------------
election of directors and the transaction of such other business as may properly
be brought before the meeting
<PAGE>
shall be held at such date and time as shall be designated from time to time by
the Board of Directors.
Section 3. Special Meetings. Except as otherwise provided by law, a
----------------
special meeting of the stockholders may be called at any time by the President,
the Board of Directors, or by the holders of a majority of the shares of stock
issued, outstanding and entitled to vote.
Section 4. Notice of Meetings. Except as otherwise provided by law,
------------------
written notice of each meeting of stockholders, whether annual or special,
stating the place, date and hour of the meeting and, in the case of a special
meeting, the purpose or purposes for which the meeting is held, shall be given
to each stockholder entitled to vote at such meeting not less than ten nor more
than sixty days before the date of such meeting. If mailed, the notice shall be
addressed to each stockholder in a postage-prepaid envelope at its address as it
appears on the records of the corporation unless, prior to the time of mailing,
the Secretary shall have received from any such stockholder a written request
that notices intended for it be mailed to some other address, in which case
notices intended for such stockholder shall be mailed to the address designated
in such request.
Section 5. Quorum and Adjournment. Except as otherwise provided by law,
----------------------
at all meetings of the stockholders, the holders of a majority of the shares of
stock issued and outstanding and entitled to vote thereat, present in person or
represented by
- 2 -
<PAGE>
proxy, shall constitute a quorum for the transaction of business. If, however, a
quorum shall not be present or represented at any meeting of the stockholders,
the stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting.
Section 6. Voting. When a quorum is present or represented at any
------
meeting, the vote of the holders of a majority of the shares constituting such
quorum shall decide any question brought before such meeting, unless the
question is one upon which a vote of a different percent of shares is required
by statute, the certificate of incorporation or these by-laws, in which case the
vote of the holders of such different percent of shares shall be required. Each
stockholder of record on the applicable record date that is entitled to vote
shall be entitled at every meeting of the stockholders to one vote in person or
by proxy for each share of capital stock held by such stockholder.
- 3 -
<PAGE>
Section 7. Proxies. Each stockholder entitled to vote at a meeting of
-------
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. Every proxy must be in writing and signed by the stockholder or his
attorney-in-fact. No proxy shall be voted or acted upon after three years from
its date, unless the proxy provides for a longer period.
Section 8. Consent of stockholders in Lieu of Meeting. Any action
------------------------------------------
required or permitted to be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice and without a
vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing. Such written consent shall be filed with the records of
the corporation.
ARTICLE III
DIRECTORS
Section 1. Number and Term of Office. The number of directors may be
-------------------------
fixed from time to time by resolution of the Board of Directors, or by action of
the stockholders, subject,
- 4 -
<PAGE>
nevertheless, to the provisions of the statutes of the State of Delaware. The
number of directors shall initially be two. Until the first annual meeting of
stockholders or until their successors are duly elected and qualified, the Board
of Directors shall consist of the persons named as such in the certificate of
incorporation. Directors shall be elected at each annual meeting of
stockholders, except as provided in Section 2 of this Article, and each director
shall hold office until the next annual meeting of stockholders and until his
successor shall have been elected and qualified or until his death, resignation,
disqualification or removal from office. Directors need not be stockholders of
the corporation.
Section 2. Filling of Vacancies. Vacancies newly created directorships
---------------------
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the director so chosen shall hold office until
the next annual election and until their respective successors are duly elected
and shall qualify, unless sooner displaced. If there are no directors in office,
then an election of directors may be held in the manner provided by statute. If,
at the time of filling any vacancy or any newly created directorship, the
directors then in office shall constitute less than a majority of the whole
board (as constituted immediately prior to any such increase), the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten percent of the
- 5 -
<PAGE>
total number of the shares at the time outstanding having the right to vote for
such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. Power of Board of Directors. The business and affairs of the
---------------------------
corporation shall be managed by or under the direction of its Board of
Directors, which may exercise all such powers of the corporation and do all such
lawful acts and things as are not be statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
Section 4. Place of Meetings. The Board of Directors of the corporation
-----------------
may hold meetings, both regular and special, either within or without the State
of Delaware.
Section 5. Annual Meeting. The first meeting of each newly elected Board
--------------
of Directors shall be held as soon as practicable after the annual election of
directors for the purpose of organization, the designation of the Chairman of
the Board of Directors, the election of officers and the transaction of other
business. Such annual meeting of the Board of Directors may be held without
notice if it shall be held on the day fixed for the annual meeting of
stockholders and as soon as practicable after the time fixed for such
stockholders' meeting, provided a quorum is present. If such annual meeting
shall not be held on such date, it shall be held at such time and place as shall
be
- 6 -
<PAGE>
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors, or as shall be specified in a consent or written waiver
signed by all of the directors.
Section 6. Regular Meetings. Regular meetings of the Board of Directors
----------------
may be held without notice at such time and at such place as shall from time to
time be determined by the Board of Directors.
Section 7. Special Meetings. Special meetings of the Board of Directors
----------------
may be called by the President or any Vice-President on two days' notice to each
director, either personally or by mail or by telegram; special meetings shall be
called by the President or Secretary in like manner and on like notice on the
written request of two directors unless the Board of Directors consists of only
one director, in which case special meetings shall be called by the President or
Secretary in like manner and on like notice on the written request of the sole
director.
Section 8. Quorum and Manner of Acting. At all meetings of the Board
---------------------------
of Directors the presence of a majority of directors shall constitute a quorum
for the transaction of business. If a quorum shall not be present at any meeting
of the Board of Directors, the directors present may adjourn the meeting from
time to time, without notice other than announcement at the meeting, until a
quorum shall be present. Except as otherwise required by statute or by the
certificate of incorporation or by these by-laws, at any meeting at which a
quorum is present, the
- 7 -
<PAGE>
act of a majority of directors present shall be the act of the Board of
Directors.
Section 9. Consent of Directors in Lieu of Meeting. Any action required
---------------------------------------
or permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all members of the Board of Directors consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the Board of Directors.
Section 10. Presence at Meetings. Members of the Board of Directors of
--------------------
the corporation may participate in a meeting of the Board of Directors by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and participation
in a meeting pursuant hereto shall constitute presence in person at such
meeting.
Section 11. Compensation of Directors. The Board of Directors shall have
-------------------------
the authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the Board of Directors
and may be paid a fixed sum for attendance at each meeting of the Board of
Directors or a stated salary as directors. No such payment shall preclude any
director from serving the corporation in any other capacity and receiving
compensation therefor.
Section 12. Removal of Directors. Any director may be removed, with or
--------------------
without cause, at any time, by the affirmative vote of the holders of a majority
of the outstanding shares of
- 8 -
<PAGE>
stock issued, outstanding and entitled to vote at an election of directors, at a
meeting of the stockholders called for such purpose.
Section 13. Resignation of Directors. Any director may resign, at any
------------------------
time, from the Board of Directors upon written notice to the corporation.
ARTICLE IV
NOTICES
Section 1. Method of Giving Notice. Whenever, under the provisions of the
-----------------------
statutes or of the certificate of incorporation or of these by-laws, notice is
required to be given to any director or stockholder, it shall not be construed
to require personal notice, but such notice may be given in writing, by mail,
addressed to such director or stockholder, at his address as it appears on the
records of the corporation, with postage thereon prepaid, and such notice shall
be deemed to have been duly given when deposited in the United States mail,
postage prepaid, directed to the person at his address as it appears on the
records of the corporation, or upon the delivery or telex thereof to such
person.
Section 2. Waiver of Notice. Whenever any notice is required to be given
----------------
under the provisions of the General Corporation Law of the State of Delaware, of
the certificate of incorporation or of these by-laws, a written waiver thereof,
signed by the person or persons entitled to said notice, whether
- 9 -
<PAGE>
before or after the time stated therein, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of such
meeting except when such person attends a meeting for the express purpose of
objection, at the beginning of the meeting, that such meeting is not lawfully
called or convened.
ARTICLE V
OFFICERS
Section 1. Officers. The officers of the corporation shall be a
--------
President, a Secretary and such other officers, including one or more Vice
Presidents, as, from time to time, may be deemed by the Board of Directors to be
necessary or advisable in the conduct of the affairs of the corporation. The
officers shall be elected or appointed by the Board of Directors.
Section 2. Compensation. The salaries of all officers of the corporation
------------
shall be fixed by or under the direction of the Board of Directors.
Section 3. Term of Office; Removal and Vacancies. So far as practicable,
-------------------------------------
all officers shall be elected at the first meeting of the Board of Directors
following the annual meeting of stockholders in each year. Each officer of the
corporation shall hold office until his successor is elected and qualified or
until his earlier resignation or removal. Any officer elected or appointed by
the Board of Directors may be removed at any time by the affirmative vote of a
majority of the Board of Directors.
- 10 -
<PAGE>
Any vacancy occurring in any office of the corporation shall be filled by the
Board of Directors.
Section 4. The President. The President shall be the chief executive
-------------
officer of the corporation and shall preside at each meeting of the
stockholders. He shall have general and active supervision and control of all of
the business and affairs of the corporation and shall see that all orders and
resolutions of the Board of Directors are carried into effect. He shall have
general authority, in the name and on behalf of the corporation, to execute
bonds, deeds, agreements, instruments and contracts in connection with the
business of the corporation, to affix the corporate seal and to sign stock
certificates; to cause the employment or appointment of such employees and
agents of the corporation as the proper conduct of operations may require and to
fix their compensation, subject to the provisions of these by-laws; to remove or
suspend any employee or agent who shall have been employed or appointed under
his authority or under authority of an officer subordinate to him; to suspend
for cause, pending final action by the authority which shall have elected or
appointed him, any officer of the corporation and, in general, to exercise all
the powers usually appertaining to the office of president of a corporation,
except as otherwise provided in these by-laws.
Section 5. Vice Presidents. The Vice Presidents respectively shall have
---------------
such powers and perform such duties as the Board of Directors or the President
may from time to time
- 11 -
<PAGE>
prescribe. In the absence of, or in the event of the inability of, the President
to act, the Vice President or Vice Presidents, if any, in the order determined
by the Board of Directors, shall have the authority to exercise the powers and
perform the duties of the President.
Section 6. The Secretary. The Secretary shall give, or cause to be given,
-------------
notice of all meetings of stockholders and of the Board of Directors, shall
attend all such meetings and shall keep and attest true records of all
proceedings thereat. He shall have custody of the corporate seal and shall have
authority to affix the same and to attest any and all instruments or writings to
which the same may be affixed. He shall keep and account for all books,
documents, papers and records of the corporation, except those for which some
other officer or agent is properly accountable. He shall have authority to sign
stock certificates and shall generally perform all of the duties usually
appertaining to the office of secretary of a corporation. In the absence of the
Secretary, his duties shall be performed by an Assistant Secretary designated by
the President, or by a Secretary pro tempore so designated.
-----------
Section 7. The Treasurer. Under the general direction of the President,
-------------
the Treasurer shall have the care and custody of all moneys, funds and
securities of the corporation; shall deposit or cause to be deposited all such
funds in and with such depositories as the Board of Directors shall from time to
time direct; shall advise upon all terms of credit granted by the
- 12 -
<PAGE>
corporation and its subsidiary corporations, respectively; shall be responsible
for the collection of all their accounts, and shall cause to be recorded, daily,
a statement of all receipts and disbursements of the corporation, in order that
proper entries may be made in the books of account. He shall have power to sign
stock certificates; to endorse for deposit or collection, or otherwise, all
checks, drafts, notes, bills of exchange or other commercial paper payable to
the corporation, and to give proper receipts of discharges for all payments to
the corporation. In the absence of the Treasurer, his duties shall be performed
by an Assistant Treasurer designated by the President, or by some other officer
so designated.
Section 8. Additional Powers and Duties. In addition to the foregoing
----------------------------
especially enumerated duties and powers, the several officers of the corporation
shall perform such other duties and exercise such further powers as may be
provided in these by-laws or as the Board of Directors may, from time to time,
determine, or as may be assigned to them by any competent superior officer.
ARTICLE VI
STOCK CERTIFICATES
Section 1. Stock Certificates. Every holder of stock in the corporation
------------------
shall be entitled to have a certificate, signed by, or in the name of the
corporation by, the President and the Treasurer, or an Assistant Treasurer, or
the Secretary or an
- 13 -
<PAGE>
Assistant Secretary of the corporation, certifying the number of shares owned by
him in the corporation.
Section 2. Lost Certificates. The Board of Directors may direct a new
-----------------
certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to give the corporation a bond in
such sum as it may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged to have been
lost, stolen or destroyed.
Section 3. Transfers of Stock. Upon surrender to the corporation of a
------------------
certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, to cancel
the old certificate and to record the transaction upon its books.
Section 4. Record Date. In order that the corporation may determine the
-----------
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or to express consent to corporate action in writing
without a meeting,
- 14 -
<PAGE>
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any lawful action,
the Board of Directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such meeting, nor more
than sixty days prior to any other action. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjournment meeting.
ARTICLE VII
FISCAL YEAR
The fiscal year of the corporation shall be determined by the Board of
Directors.
ARTICLE VIII
INDEMNIFICATION
The corporation shall indemnify its officers, directors, employees and
agents to the extent permitted by the General Corporation Law of the State of
Delaware.
- 15 -
<PAGE>
ARTICLE IX
AMENDMENTS
These by-laws may be altered or repealed at any regular or special meeting
of the stockholders or of the Board of Directors. Notice of any such proposed
alteration or repeal shall be contained in the notice of any such special
meeting.
- 16 -
<PAGE>
[Form of Master Trust Agreement
For Tax Partnership Classification]
TRUST AGREEMENT
between
T.A. of DELAWARE, INC.
as Trustor
and
[BANK],
not in its individual capacity but solely
as Trustee
Dated as of ________, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
Definitions and Usage
---------------------
SECTION 1.01. Definitions and Usage............................... - 1 -
---------------------
<S> <C> <C>
ARTICLE II
Organization
------------
SECTION 2.01. Creation of Trust; Name............................. - 1 -
-----------------------
SECTION 2.02. Appointment of Trustee.............................. - 1 -
----------------------
SECTION 2.03. Initial Capital Contribution of Trust Estate........ - 1 -
--------------------------------------------
SECTION 2.04. Declaration of Trust................................ - 1 -
--------------------
SECTION 2.05. Establishment of Trust Account and Ownership........ - 2 -
--------------------------------------------
SECTION 2.06. Transfer of Bonds to Trust Account.................. - 2 -
----------------------------------
SECTION 2.07. Representations and Warranties of the Trustor....... - 2 -
---------------------------------------------
SECTION 2.08. Additional Covenants................................ - 3 -
--------------------
SECTION 2.09. Obligations of Trustee and Trustor.................. - 4 -
----------------------------------
ARTICLE III
Certificates and Transfer of Interests
--------------------------------------
SECTION 3.01. Initial Beneficial Ownership........................ - 4 -
----------------------------
SECTION 3.02. Certificates Issuable in Series and Classes......... - 4 -
-------------------------------------------
SECTION 3.03. Execution of Certificates........................... - 4 -
-------------------------
SECTION 3.04. Form and Numbering of Certificates.................. - 4 -
----------------------------------
SECTION 3.05. Registration of Transfer and Exchange of
----------------------------------------
Certificates........................................ - 5 -
------------
SECTION 3.05A. Special Transfer Provisions......................... - 5 -
---------------------------
SECTION 3.06. Mutilated, Destroyed, Lost or Stolen Certificates... - 7 -
-------------------------------------------------
SECTION 3.07. Delivery of Certificates............................ - 7 -
------------------------
SECTION 3.08. Persons Deemed Owners............................... - 8 -
---------------------
SECTION 3.09. Access to List of Certificateholders' Names and
-----------------------------------------------
Addresses........................................... - 8 -
---------
SECTION 3.10. Maintenance of Office or Agency..................... - 9 -
-------------------------------
SECTION 3.11. Book-Entry Only System for Certificates............. - 9 -
---------------------------------------
SECTION 3.12. No Listing on Securities Market.................... - 10 -
-------------------------------
SECTION 4.01. Prior Notice to Certificateholders with Respect to
--------------------------------------------------
Certain Matters.................................... - 10 -
---------------
SECTION 4.02. Action by Certificateholders with Respect to
--------------------------------------------
Bankruptcy......................................... - 11 -
----------
SECTION 4.03. Restrictions on Certificateholders' Power.......... - 11 -
-----------------------------------------
SECTION 4.04. Voting Rights; Majority Control.................... - 11 -
-------------------------------
</TABLE>
<PAGE>
<TABLE>
ARTICLE V
Application of Trust Funds; Certain Duties
------------------------------------------
<S> <C> <C>
SECTION 5.01. Application of Trust Funds......................... - 11 -
--------------------------
SECTION 5.02. Priority of Distribution........................... - 12 -
------------------------
SECTION 5.03. Allocation of Losses............................... - 13 -
--------------------
SECTION 5.04. Method of Payment.................................. - 13 -
-----------------
SECTION 5.05. Segregation of Moneys: No Interest................. - 14 -
----------------------------------
SECTION 5.06. Accounting and Reports to Certificateholders, the
-------------------------------------------------
Internal Revenue Service and Others................ - 14 -
-----------------------------------
SECTION 5.07. Reports to Certificateholders...................... - 14 -
-----------------------------
SECTION 5.08. Signature on Returns; Tax Matters Partner.......... - 15 -
-----------------------------------------
SECTION 5.09. Capital Accounts................................... - 15 -
----------------
ARTICLE VI
Authority and Duties of Trustee
-------------------------------
SECTION 6.01. General Authority.................................. - 16 -
-----------------
SECTION 6.02. General Duties..................................... - 16 -
--------------
SECTION 6.03. Action upon Instruction............................ - 16 -
-----------------------
SECTION 6.04. No Duties Except as Specified in this Agreement or
--------------------------------------------------
in Instructions.................................... - 17 -
---------------
SECTION 6.05. No Action Except Under Specified Documents or
---------------------------------------------
Instructions....................................... - 17 -
------------
SECTION 6.06. Restrictions....................................... - 17 -
------------
ARTICLE VII
The Trustee
-----------
SECTION 7.01. Acceptance of Duties............................... - 17 -
--------------------
SECTION 7.02. Limited Liability.................................. - 18 -
-----------------
SECTION 7.03. Fidelity Bond...................................... - 18 -
-------------
SECTION 7.04. Indemnification of Trustee......................... - 18 -
--------------------------
SECTION 7.05. Resignation and Removal............................ - 19 -
-----------------------
SECTION 7.06. Default on Bonds................................... - 19 -
----------------
SECTION 7.07. Notice of Certain Defaults......................... - 19 -
--------------------------
SECTION 7.08. Credit Ratings..................................... - 20 -
--------------
SECTION 7.09. Payment of Trustee Fee............................. - 20 -
----------------------
</TABLE>
<PAGE>
<TABLE>
ARTICLE VIII
Termination of Trust Agreement
------------------------------
<S> <C> <C>
SECTION 8.01. Termination Events and Sale of Bonds............... - 20 -
------------------------------------
SECTION 8.02. Notice to Holders.................................. - 21 -
-----------------
SECTION 8.03. Waiver of Termination Events....................... - 21 -
----------------------------
ARTICLE IX
Miscellaneous
-------------
SECTION 9.01. Supplements and Amendments......................... - 21 -
--------------------------
SECTION 9.02. Limitations on Rights of Others.................... - 22 -
-------------------------------
SECTION 9.03. Notices............................................ - 22 -
-------
SECTION 9.04. Severability....................................... - 22 -
------------
SECTION 9.05. Separate Counterparts.............................. - 22 -
---------------------
SECTION 9.06. Successors and Assigns............................. - 22 -
----------------------
SECTION 9.07. No Petition........................................ - 23 -
-----------
SECTION 9.08. No Recourse........................................ - 23 -
-----------
SECTION 9.09. Headings........................................... - 23 -
--------
SECTION 9.10. Governing Law...................................... - 23 -
-------------
SECTION 9.11. Creation of Trust and Delivery of Trust Agreement.. - 23 -
-------------------------------------------------
</TABLE>
<PAGE>
TRUST AGREEMENT dated as of __________, 1996, between T.A. of
Delaware, Inc., a Delaware corporation, as Trustor (the "Trustor"), and [Bank],
a _______________________________, not in its individual capacity but solely as
Trustee (the "Trustee").
The Trustor and the Trustee hereby agree as follows:
ARTICLE I
Definitions and Usage
---------------------
SECTION 1.01. Definitions and Usage. Unless the context shall clearly
---------------------
indicate some other meaning or may otherwise require, capitalized terms used but
not defined herein are defined in Exhibit A hereto, which also contains rules as
to construction and usage that are applicable herein.
ARTICLE II
Organization
------------
SECTION 2.01. Creation of Trust; Name. There is hereby created a Trust
-----------------------
for the benefit of the Holders of certificates to be issued by the Trust, which
shall be known as Tax Exempt Securities Trust. The sole assets of such Trust
shall be the Bonds transferred from time to time by the Trustor to the Trustee
and any other property specified in Schedule I hereto (as updated by any Trust
----------
Supplement). The Certificates shall evidence undivided interests in the Trust.
The income received by and the assets of such Trust shall be distributed solely
in accordance with this Agreement.
SECTION 2.02. Appointment of Trustee. The Trustor hereby (i) appoints the
----------------------
Trustee as trustee of the Trust effective as of the date hereof to have all the
rights, powers and duties set forth herein and (ii) ratifies all actions of the
Trustee taken on behalf of the Trust prior to the execution hereof.
SECTION 2.03. Initial Capital Contribution of Trust Estate. The Trustor
--------------------------------------------
hereby sells, assigns, transfers, conveys and sets over to the Trustee, as of
the date hereof, the sum of $1.00. The Trustee hereby acknowledges receipt in
trust from the Trustor of the foregoing contribution, which shall constitute the
initial Trust Estate. The Trustor shall pay or cause to be paid the
organizational expenses of the Trust as they may arise or shall, upon the
request of the Trustee, promptly reimburse the Trustee for any such expenses,
including reasonable fees and expenses of counsel, paid by the Trustee.
SECTION 2.04. Declaration of Trust. The Trustee hereby declares that it
--------------------
will hold the Trust Estate in trust upon and subject to the conditions set forth
herein for the use and benefit of the Certificateholders, subject to the
obligations of the Trust under this Agreement. It is the intention of the
parties hereto that the Trust constitute a trust and that this Agreement
constitute the governing instrument of such trust. It is the intention of the
parties hereto that, solely for federal income tax purposes, the Trust shall be
treated as a partnership, with the assets of the partnership being the Bonds and
other assets held by the Trust and, the partners of the partnership being the
Certificateholders (including the Trustor in its capacity as Certificateholder
and as recipient of distributions from the Trust). The parties agree that,
unless otherwise required by appropriate federal tax authorities, they shall
treat the Trust as a partnership for federal tax purposes, and the Trust will
file or cause to be filed annual or other necessary returns, reports and other
forms consistent with the characterization of the Trust as a partnership for
Federal tax purposes.
<PAGE>
Effective as of the date hereof, the Trustee shall have all rights, powers and
duties set forth herein with respect to accomplishing the purposes of the Trust.
SECTION 2.05. Establishment of Trust Account and Ownership.
--------------------------------------------
(a) The Trustee shall establish the Trust Account, in which it shall hold
the Bonds delivered to it by the Trustor or otherwise purchased by the Trust on
or after the date hereof, together with all moneys received as principal,
premium, if any, or interest with respect to the Bonds pending disbursement as
hereinafter provided. The Trustee is authorized to establish various
subaccounts within the Trust Account corresponding to the characterization of
moneys to be deposited therein so that the Trustee may at all times ascertain
such characterization.
(b) The Trustee shall hold and retain the Bonds in trust for the benefit
and account of the Holders of Certificates as the beneficial owners of the
Bonds. Subject to Section 7.02, the Trustee shall assume full responsibility
and risk for the Bonds on deposit with it and all moneys received by it as
principal, premium, if any, or interest on the Bonds, and shall bear all costs
and expenses incurred by it as trustee of such Bonds (subject to the terms
hereof and to such other reimbursement by the Trustor as may be agreed upon by
the Trustee and the Trustor in one or more separate agreements).
(c) The Bonds, and all moneys received as principal, premium, if any, and
interest on the Bonds, shall remain in the custody of the Trustee and shall be
kept in the Trust Account, which shall be a segregated account created by
separate recordation within the trust department of the Trustee. Moneys to the
credit of the Trust Account shall be held by the Trustee uninvested. The Bonds
and moneys received and held in the Trust Account will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of the
Trustee or any person claiming through it. The Trustee shall not have the power
or authority to transfer, assign, hypothecate, pledge or otherwise dispose of
any of the assets of the Trust Account to any person, except as expressly
permitted by the provision of this Agreement.
SECTION 2.06. Transfer of Bonds to Trust Account.
----------------------------------
(a) The Bonds will be irrevocably transferred by the Trustor or another
entity acting on behalf of the Trustor to the Trustee and will be held in the
name of the Trustee or its nominee in book-entry form with the Securities
Depository as evidenced by Book-Entry Credits or in the name of the Trustee or
its nominee as definitive Bonds. The Trustor represents and warrants to the
Trustee that the Bonds are genuine and that, immediately prior to the delivery
thereof to the Securities Depository, the Trustor shall own the Bonds free and
clear of any lien, pledge, encumbrance or any other security interest.
(b) The Trustee is authorized and directed to deliver any instrument or
document necessary to obtain registration or registration of transfer of the
Bonds and to obtain payment of principal, premium, if any, and interest thereon.
The Trustee is further authorized to sign and file any declaration, affidavit,
certificate of ownership or other document required to service the Trust Account
and to present for payment all Bonds or coupons thereon required to be presented
as a condition to payment at the maturity or upon call for redemption thereof.
(c) Notwithstanding the foregoing, the Trustee may hold Bonds in its
account within DTC or other Securities Depository registered under Section 17(a)
of the Securities Exchange Act.
SECTION 2.07. Representations and Warranties of the Trustor. The Trustor
---------------------------------------------
hereby represents and warrants to the Trustee that:
<PAGE>
(a) The Trustor is duly organized, validly existing and in good standing
under the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted.
(b) The Trustor has the power and authority to execute and deliver this
Agreement and to carry out its terms; [the Trustor has full power and authority
to sell and assign the property to be sold and assigned to and deposited with
the Trust (or with the Trustee on behalf of the Trust) and the Trustor has duly
authorized such sale and assignment and deposit to the Trust (or to the Trustee
on behalf of the Trust) by all necessary action;] and the execution, delivery
and performance of this Agreement have been duly authorized by the Trustor by
all necessary action.
(c) This Agreement constitutes a legal, valid and binding obligation of
the Trustor enforceable in accordance with its terms, subject to the effect of
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws relating to or affecting creditors' rights generally
and court decisions with respect thereto and subject to the application of
equitable principles in any proceeding, whether at law or in equity.
(d) The consummation of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof do not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under, the charter documents of the
Trustor or any material [indenture], agreement or other material instrument to
which the Trustor is a party or by which it is bound; nor result in the creation
or imposition of any lien upon any of its properties pursuant to the terms of
any such [indenture], agreement or other instrument; nor violate any law or, to
the Trustor's knowledge, any order, rule or regulation applicable to the Trustor
of any court or of any federal or state regulatory body, administrative agency
or other governmental instrumentality having jurisdiction over the Trustor or
its properties.
(e) No consent of any Federal or state governmental or administrative
authority is required to be obtained by the Trustor prior to its entering into
this Agreement or in connection with its consummation of the transactions
contemplated herein.
SECTION 2.08. Additional Covenants.
--------------------
(a) The Trustor now has and shall continue to have during the term of this
Agreement the "Trustor's Required Interest" which term shall mean that, so long
as the Certificate Principal Balance of Outstanding Certificates exceeds
$____________, an aggregate interest at all times in each material item of
income, gain, loss, deduction and credit derived from the arrangement evidenced
by the Certificates of not less than 1% multiplied by the result obtained by
dividing $____________ by the Certificate Principal Balance of then Outstanding
Certificates (but in no event less than two-tenths of one percent) and if and so
long as the stated amount of Outstanding Certificates equals or is less than
$____________ of an aggregate interest in each such material item of income,
gain, loss, deduction and credit of not less than 1%. The Certificates
representing the Trustor's Required Interest shall not be transferred by the
Trustor and shall bear a legend to that effect.
(b) The Trustor has not made and will not make any representations to
Holders concerning the exercise of its discretion to approve the exercise of
"Voting Rights" by a transferee of Certificates beyond the provisions made in
this Trust Agreement.
<PAGE>
SECTION 2.09. Obligations of Trustee and Trustor.
----------------------------------
(a) The Trustee has no obligation with respect to the Bonds except as
otherwise provided in this Agreement.
(b) The Trustor will be liable without limitation for all debts and
obligations of, and claims against, the Trust; provided, however, that the
Trustor shall not be responsible for the payments to Holders or Beneficial
Owners of Certificates of any amount that represents, directly or indirectly,
principal, interest or premium on the Bonds.
ARTICLE III
Certificates and Transfer of Interests
--------------------------------------
SECTION 3.01. Initial Beneficial Ownership. Upon the formation of the
----------------------------
Trust by the contribution by the Trustor pursuant to Section 2.05 and until the
issuance of Certificates, the Trustor shall be the sole beneficial owner of the
Trust.
SECTION 3.02. Certificates Issuable in Series and Classes. Upon the
-------------------------------------------
initial deposit of Bonds to the Trust, and from time to time upon any subsequent
deposit of Bonds to the Trust, Certificates may be issued in separate Series,
each of which Series may consist of one or more Classes, in an aggregate
principal amount and with such terms and designations as shall be provided in a
related Trust Supplement. The Trust Supplement for a Series will set forth the
designation of a Series, or Class within a Series, as Senior or Subordinate
Certificates, the Interest Distribution Dates, the Principal Distribution Dates,
the Interest Distribution Rate and Interest Distribution Basis, for such Series.
SECTION 3.03. Execution of Certificates. After their authorization by a
-------------------------
Trust Supplement, the Certificates shall be executed with the manual signature
of an Authorized Trustee Officer. Only such Certificates as shall have been
duly executed by an Authorized Trustee Officer shall be entitled to any benefit
or security under this Agreement. No Certificate shall be valid or become
obligatory for any purpose unless and until such Certificate shall have been
duly executed by an Authorized Trustee Officer, and such signature of an
Authorized Trustee Officer upon any such Certificate shall be conclusive
evidence that such Certificate has been duly executed and delivered under this
Agreement.
In case any Authorized Trustee Officer whose signature shall appear on any
Certificates shall cease to be such officer before the delivery of such
Certificates, such signature shall nevertheless be valid and sufficient for all
purposes the same as if such person had remained in officer until such delivery.
SECTION 3.04. Form and Numbering of Certificates. The definitive
----------------------------------
Certificates are issuable in fully registered form in Initial Amounts. Each
Certificate shall be substantially in the form set forth in Exhibit B hereto,
---------
with such appropriate variations, omissions and insertions as may be necessary
or appropriate to conform to the provisions of this Agreement. All Certificates
may have endorsed thereon such letters, numbers or other marks of identification
and such legends or text as may be necessary or appropriate to conform to any
applicable rules and regulations of any governmental authority or of any
securities exchange on which the certificates may be listed or any usage or
requirement of law with respect thereto.
<PAGE>
Certificates offered and sold in reliance on Rule 144A shall be issued
initially in the form of one or more permanent global certificates in registered
form, substantially in the form set forth in Exhibit B ("Global Certificates"),
------- -
deposited with the Trustee, as custodian for the Securities Depository, and
shall bear the legend set forth on Exhibit B-1 hereto. The aggregate principal
-----------
amount of any Global Certificate may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for the
Securities Depository, as hereinafter provided. Certificates offered and sold
in reliance on any other exemption from registration under the Securities Act
other than as described in the preceding sentences shall be issued, and
Certificates offered and sold in reliance on Rule 144A may be issued, in the
form of certificated Certificates in registered form in substantially the form
set forth in Exhibit B (the "Physical Certificates").
---------
SECTION 3.05. Registration of Transfer and Exchange of Certificates. The
-----------------------------------------------------
Trustee shall establish and maintain the Certificate Register for the
registration and registration of transfer of Certificates as provided in this
Agreement. Said Certificate Register shall be available at all reasonable times
for inspection by the Trustor and its agents and representatives, and the
Trustee shall provide to the Trustor, upon its written request, an accurate copy
of the names and addresses of the Holders set forth in the Certificate Register.
Subject to the provisions of Section 3.05A, the transfer of any Certificate
may be registered only upon the Certificate Register upon surrender thereof to
the Trustee together with an assignment duly executed by the registered owner or
such owner's attorney or legal representative in such form as shall be
satisfactory to the Trustee. Upon any such registration of transfer, the
Trustee shall execute and deliver in exchange for such Certificate a new
registered Certificate or Certificates, registered in the name of the
transferee, of any denomination or Percentage Interest, as applicable,
authorized by this Agreement in the aggregate stated amount equal to the stated
amount, or in the aggregate Percentage Interest equal to the Percentage
Interest, of such Certificate surrendered or exchanged, of the same Class and
terms, and entitling the Holder thereof to receive interest payments in the same
manner and in the same form as the Certificates so surrendered.
In all cases in which Certificates shall be exchanged or the transfer of
Certificates shall be registered hereunder, the Trustee shall execute and
deliver at the earliest practicable time Certificates in accordance with the
provisions of this Agreement. All Certificates surrendered in any such exchange
or registration of transfer shall be canceled by the Trustee. No service charge
shall be made for any registration, transfer, or exchange of Certificates, but
the Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
SECTION 3.05A. Special Transfer Provisions.
---------------------------
(a) The following provisions shall apply with respect to the registration
of any proposed transfer of a Certificate constituting a Restricted Security to
any Institutional Accredited Investor which is not a QIB:
(i) the Trustee shall register the transfer of any Certificate
constituting a Restricted Security, whether or not such Certificate bears
the Private Placement Legend, if (x) the requested transfer is after [three
years from the Date of Original Issue] or (y) in the case of a transfer to
an Institutional Accredited Investor which is not a QIB, the proposed
transferee has delivered to the Trustee a certificate substantially in the
form of Exhibit B-2 hereto; and
-----------
<PAGE>
in a Global Certificate, upon receipt by the Trustee of (x) the certificate, if
any, required by paragraph (i) above and (y) instructions given in accordance
with the Securities Depository's and the Trustee's procedures, whereupon (a) the
Trustee shall reflect on its books and records the date and (if the transfer
does not involve a transfer of outstanding Physical Certificates) a decrease in
the principal amount of a Global Certificate in an amount equal to the principal
amount of the beneficial interest in a Global Certificate to be transferred, and
(b) the Trustee shall authenticate and deliver one or more Physical Certificates
of like tenor and amount.
(b) The following provisions shall apply with respect to the registration
of any proposed transfer of a Certificate constituting a Restricted Security to
a QIB:
(i) the Trustee shall register the transfer if such transfer is
being made by a proposed transferor who has checked the box provided for on
the form of Certificate stating, or has otherwise advised the Trustee in
writing, that the sale has been made in compliance with the provisions of
Rule 144A to a transferee who has signed the certification provided for on
the form of Certificate stating, or has otherwise advised the Trustee in
writing, that it is purchasing the Cert ificate for its own account or an
account with respect to which it exercises sole investment discretion and
that it and any such account is a QIB within the meaning of Rule 144A, and
is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information as it has requested
pursuant to Rule 144A or has determined not to request such information and
that it is aware that the transferor is relying upon its foregoing
representations in order to claim the exemption from registration provided
by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the
Certificates to be transferred consist of Physical Certificates which after
transfer are to be evidenced by an interest in the Global Certificate, upon
receipt by the Trustee of instructions given in accordance with the
Securities Depository's and the Trustee's procedures, the Trustee shall
reflect on its books and records the date and an increase in the principal
amount of the Global Certificate in an amount equal to the principal amount
of the Physical Certificates to be transferred, and the Trustee shall
cancel the Physical Certificates so transferred.
(c) Upon the transfer, exchange or replacement of Certificates not bearing
the Private Placement Legend, the Trustee shall deliver Certificates that do not
bear the Private Placement Legend. Upon the transfer, exchange or replacement
of Certificates bearing the Private Placement Legend, the Trustee shall deliver
only Certificates that bear the Private Placement Legend unless (i) the
circumstances contemplated by paragraph (a)(i)(x) of this Section 3.05A exist,
(ii) there is delivered to the Trustee an Opinion of Counsel reasonably
satisfactory to the Trustee to the effect that neither such legend nor the
related restrictions on transfer are required in order to maintain compliance
with the provisions of the Securities Act or (iii) such Certificate has been
sold pursuant to an effective registration statement under the Securities Act.
(d) By its acceptance of any Certificate bearing the Private Placement
Legend, each Holder of such a Certificate acknowledges the restrictions on
transfer of such Certificate set forth in this Agreement and in the Private
Placement Legend and agrees that it will transfer such Certificate only as
provided in this Agreement.
<PAGE>
The Trustee shall retain copies of all letters, notices and other written
communications received pursuant to Section 3.05A. The Trustor shall have the
right to inspect and make copies of all such letters, notices or other written
communications at any reasonable time upon the giving of reasonable written
notice to the Trustee.
SECTION 3.06. Mutilated, Destroyed, Lost or Stolen Certificates. In case
-------------------------------------------------
any Certificate shall become mutilated or be destroyed or lost, the Trustee
shall execute and deliver a new Certificate of like date, Class, terms and tenor
in exchange and substitution for an upon the cancellation of such mutilated
Certificate or in lieu of an in substitution for such Certificate destroyed or
lost, and the Holder shall pay the reasonable expenses and charges of the
Trustee in connection therewith and, in case of a Certificate destroyed or lost,
the Holder shall file with the Trustee evidence satisfactory to it that such
Certificate was destroyed or lost, and of such Holder's ownership thereof, and
shall furnish the Trustor and the Trustee with such indemnity as shall be
satisfactory to them.
Any replacement Certificate issued pursuant to this Section shall
constitute complete and indefensible evidence of ownership in the Bonds, as if
originally issued, whether or not the destroyed, lost or stolen Certificate
shall be found at any time.
SECTION 3.07. Delivery of Certificates. Upon execution and delivery of
------------------------
the related Trust Supplement, the Trustee shall execute the Certificates and
deliver the Certificates to or for the account of the Trustor upon receipt by
the Trustee of the following:
(a) issuing instructions authorizing the execution and delivery of such
Certificates and specifying the Series, the Classes within such Series, the
Maturity Date of each Class, the principal amount, the Interest Distribution
Rate and Interest Distribution Basis of each Class of such Certificates to be
executed and delivered;
(b) in case the Certificates to be executed and delivered are of any
Series not theretofore created, an appropriate Trust Supplement, designating the
new Series to be created and prescribing, consistent with the applicable
provisions of this Agreement, the terms and provisions relating to the
Certificates of such Series;
(c) Opinions of Counsel addressed to the Trustee to the effect that:
(i) all instruments furnished to the Trustee in connection with
such Certificates conform to the requirements of this Agreement and
constitute all the documents required to be delivered hereunder for the
Agreement Trustee to authenticate and deliver the Certificates then applied
for;
(ii) all conditions precedent provided for in this Agreement
relating to the execution and delivery of the Certificates applied for have
been complied with;
(iii) assuming due execution and delivery thereof by the
Agreement Trustee, this Agreement and the related Trust Supplement, as
executed and delivered by the Trustor, are the valid, legal and binding
obligations of the Trustor, enforceable in accordance with their terms,
subject to the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws relating to or
affecting creditors' rights generally and court decisions with respect
thereto, and such counsel need express no opinion with respect to the
availability of equitable remedies, and the execution of such Trust
Supplement is authorized or permitted by Section 8.01 of this Agreement;
<PAGE>
(iv) the Certificates then applied for, when issued, delivered,
and paid for, will be valid, legal and binding obligations entitled to the
benefits of this Agreement and the related Trust Supplement, equally and
ratably with all other Certificates of such Series, if any, theretofore
issued, authenticated, delivered and paid for and then Outstanding
hereunder, and enforceable in accordance with their terms, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto, and such counsel
need express no opinion with respect to the availability of equitable
remedies;
(d) an Officer's Certificate of the Trustor stating that:
(i) the Trustor is not in default under this Agreement and the
issuance of the Certificates will not result in any breach of any of the
terms, conditions or provisions of, or constitute a default under, the
Trust Agreement, any [indenture], mortgage, deed of trust or other
agreement or instrument to which the Issuer is a party or by which it is
bound, or any order of any court or administrative agency entered in any
proceeding to which the Issuer is a party or by which it may be bound or to
which it may be subject, and that all conditions precedent provided in this
Agreement relating to the authentication and delivery of the Certificates
applied for have been complied with;
(ii) attached thereto are true and correct copies of letters
signed by each Rating Agency confirming that the Certificates of such new
Series have been rated in the [ ] rating categories by such Rating
Agency.
(e) Unless any of the requirements set forth herein shall be deleted by
the related Trust Supplement, an Officer's Certificate of the Trustor stating
that all of the Bonds and any other assets securing such Series and all
previously issued and Outstanding Series:
(i) satisfy each of the requirements established for such Bonds
in the related Trust Supplement; and
[(ii) have been endorsed as provided in the Sales Agreement;]
(f) Cash in the amount, if any, required by the terms of the related Trust
Supplement to be deposited in the applicable Account and held by the Trustee and
applied in accordance with the terms hereof or as otherwise provided in the
related Trust Supplement;
(g) Such other documents, certificates, instruments or opinions as may be
required by the terms of the Trust Supplement creating such Series of
Certificates.
SECTION 3.08. Persons Deemed Owners. Prior to due presentation of a
---------------------
Certificate for registration of transfer, the Trustee, the Certificate Registrar
and any agent may treat the Person in whose name any Certificate shall be
registered in the Certificate Register as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 5.01 and for all other
purposes whatsoever, and neither the Trustee, the Certificate Registrar nor any
agent of any thereof shall be bound by any notice to the contrary.
SECTION 3.09. Access to List of Certificateholders' Names and Addresses.
---------------------------------------------------------
The Trustee shall furnish or cause to be furnished to the Trustor within fifteen
(15) days after receipt by the Trustee of a request therefor from the Trustor in
writing, a list, in such form as the Trustor may reasonably require, of
<PAGE>
the names and addresses of the Certificateholders as of the most recent Record
Date. If three or more Certificateholders or one or more Certificateholders
evidencing not less than twenty-five percent (25%) of the Certificate Principal
Balance apply in writing to the Trustee, and such application states that the
applicants desire to communicate with other Certificateholders with respect to
their rights under this Agreement or under the Certificates and such application
is accompanied by a copy of the communication that such applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such applicants access during normal business hours to
the current list of Certificateholders. Upon receipt of any such application,
the Trustee will promptly notify the Trustor by providing a copy of such
application and a copy of the list of Certificateholders produced in response
thereto. Each Certificateholder, by receiving and holding a Certificate, shall
be deemed to have agreed not to hold any of the Trustor, the Certificate
Registrar or the Trustee accountable by reason of the disclosure of its name and
address, regardless of the source from which such information was derived.
SECTION 3.10. Maintenance of Office or Agency. The Trustee shall maintain
-------------------------------
an office or offices or agency or agencies where Certificates may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Trustee in respect of the Certificates may be served. The Trustee
initially designates _____________________________________ as such office. The
Trustee shall give prompt written notice to the Trustor and to the
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
SECTION 3.11. Book-Entry Only System for Certificates.
---------------------------------------
(a) Except as otherwise provided herein, one fully registered Certificate
for the entire amount of each respective Class shall be registered in the name
of the Securities Depository or its nominee, and ownership thereof shall be
maintained in book-entry form by the Securities Depository for the account of
the Agent Members thereof (each, a "Global Certificate" and collectively, the
"Global Certificates"). Initially, the Global Certificates shall be registered
in the name of Cede & Co., as the nominee of DTC. Transfers of beneficial
ownership interests in the Global Certificates which are registered in the name
of Cede & Co. will be accomplished by book entries made by the Securities
Depository and in turn by the Agent Members who act on behalf of the Beneficial
Owners of Certificates.
Neither the Trustee, the Trustor nor any or their respective affiliates
shall have any responsibility or obligation with respect to:
(i) the accuracy of the records of the Securities Depository or
any Agent Member with respect to any beneficial ownership interest in the
Certificates;
(ii) the delivery to any Agent Member, any beneficial owner of
the Certificates or any other person, other than the Securities Depository,
of any notice with respect to the Certificates;
(iii) the payment to any Agent Member, any beneficial owner of
the Certificates or any other person, other than the Securities Depository,
of any amount distributable with respect to the Certificates; or
(iv) the failure of the Securities Depository to effect any
transfer.
(b) So long as the Certificates are registered in the name of a Securities
Depository or its nominee, the Trustee may treat the Securities Depository as,
and deem the Securities Depository to be, the absolute owner of the Certificates
for all purposes whatsoever, including without limitation:
<PAGE>
(i) the payment of distributions to Holders of the Certificates;
(ii) giving notices of redemption and other matters with respect
to the Certificates:
(iii) registering transfers with respect to the Certificates;
and
(iv) the selection of Certificates for redemption.
(c) Interests of beneficial owners in the Global Certificates may be
transferred or exchanged for Physical Certificates in accordance with the rules
and procedures of the Securities Depository and the provisions of Section 3.05A.
In addition, if at any time the Securities Depository notifies the Trustee that
it is unwilling or unable to continue as Securities Depository with respect to
the Certificates, or if at any time the Securities Depository shall no longer be
registered or in good standing under the Securities Exchange Act or other
applicable statute or regulation and a successor Securities Depository is not
appointed by the Trustee within 90 days after it receives notice or becomes
aware of such condition, as the case may be, then the Trustee shall execute and
deliver Physical Certificates representing the Certificates as provided below.
Physical Certificates issued in exchange for a Global Certificate pursuant to
this paragraph shall be registered in such names and be in such denominations as
the Securities Depository, pursuant to instructions from the Agent Members or
otherwise, shall instruct the Trustee. The Trustee shall deliver such Physical
Certificates representing the Certificates to the persons in whose names such
Physical Certificates are so registered. Any Physical Certificate constituting
a Restricted Security delivered in exchange for an interest in a Global
Certificate shall, except as otherwise provided by paragraphs (a)(i)(x) and (c)
of Section 3.05A, bear the Private Placement Legend.
SECTION 3.12. No Listing on Securities Market. Certificates shall not be
-------------------------------
listed on any established securities market. For this purpose, an established
securities market includes any national securities exchange registered under the
Securities Exchange Act or exempted from registration because of the limited
volume of transactions, any local exchange, and any over the counter market
characterized by an interdealer quotation system which regularly disseminates
quotations of obligations by identified brokers or dealer, by electronic means
or otherwise.
ARTICLE IV
Actions by Trustee
------------------
SECTION 4.01. Prior Notice to Certificateholders with Respect to Certain
----------------------------------------------------------
Matters. With respect to the following matters, the Trustee shall not take
- -------
action unless at least thirty days before the taking of such action the Trustee
shall have notified the Certificateholders in writing of the proposed action and
the Certificateholders shall not have notified the Trustee in writing prior to
the thirtieth day after such notice is given that such Certificateholders have
withheld consent:
(a) the transfer, sale, or other disposition of any Bonds, or the
exercise, as a nominal holder or holder of Bonds, of any remedy with respect to
any defaulting Bonds; or
(b) the initiation of any material claim or lawsuit by the Trust (other
than claims or lawsuits brought in connection with the collection of the Bonds)
and the compromise of any material action, claim or lawsuit brought by or
against the Trust (other than with respect to the aforementioned claims or
lawsuits for collection of Bonds).
<PAGE>
SECTION 4.02. Action by Certificateholders with Respect to Bankruptcy.
-------------------------------------------------------
The Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the unanimous prior approval of all
Certificateholders (other than the Trustor) and the delivery to the Trustee by
each such Certificateholder of a certificate certifying that such
Certificateholder believes that the Trust is insolvent.
SECTION 4.03. Restrictions on Certificateholders' Power. The
-----------------------------------------
Certificateholders shall not direct the Trustee to take or refrain from taking
any action if such action or inaction would be contrary to any obligation of the
Trust or the Trustee under this Agreement nor shall the Trustee be permitted to
follow any such direction, if given.
SECTION 4.04. Voting Rights; Majority Control.
-------------------------------
(a) Notwithstanding the provisions of Sections 3.05 and 3.05A, following
the initial issuance of any Series of Certificates, a subsequent transferee of
any Certificate of a Class designated by the related Trust Supplement as a
"Mezzanine Class," will become entitled to exercise voting rights as a
Certificateholder only if it obtains the consent of the Trustor at the time of
transfer, which consent may be withheld by the Trustor in its sole discretion.
(b) Except as expressly provided herein, any action that may be taken by
the Certificateholders under this Agreement may be taken by the Holders of
Certificates of a Senior Class or a Mezzanine Class evidencing more than half of
the Certificate Principal Balance. Except as expressly provided herein, any
written notice of the Certificateholders delivered pursuant to this Agreement
shall be effective if signed by the Holders of Certificates of a Senior Class or
Mezzanine Class evidencing more than half of the Certificate Principal Balance
at the time of the delivery of such notice.
(c) Holders of Certificates of a Subordinate Class will not have any
voting rights with respect to actions to be taken by the Trustee as the nominal
holder or holder of Bonds.
ARTICLE V
Application of Trust Funds; Certain Duties
------------------------------------------
SECTION 5.01. Application of Trust Funds.
--------------------------
(a) There is hereby established a Fund, to be held by the Trustee on
behalf of the Certificateholders and designated the "Tax Exempt Securities Trust
Distribution Fund" (referred to hereafter as the "Distribution Fund"). Moneys on
deposit in the Trust Account shall be transferred by the Trustee to the
Distribution Fund. The Distribution Fund shall be used only for the payment of
Certificateholders' Distribution Amounts. The Distribution Fund shall consist of
two Accounts, which are hereby established, to be held by the Trustee on behalf
of the Certificateholders and designated the "Interest Account" and the
"Principal Account." To the extent a particular Series or Class of Certificates
has been identified to a particular Bond or Bonds held by the Trustee pursuant
to the provisions of the related Trust Supplement, the Trustee shall maintain
separate subaccounts within the Interest Account and the Principal Account for
each such Series or Class and, after the creation of any such subaccounts,
references in this Trust Agreement to the Interest Account or the Principal
Account shall be deemed to refer to the applicable subaccount.
<PAGE>
Moneys received by the Trustee which are allocable to interest on Bonds
shall be deposited in the Interest Account. Moneys shall also be deposited in
the Interest Account from the Principal Account as provided below. Moneys on
deposit in the Interest Account shall be applied by the Trustee to the payment
of interest distributions to Certificateholders when due (whether on a
Distribution Date or upon the prepayment or payment of the Certificates in
accordance with the terms of this Trust Agreement) without further authorization
or direction.
Moneys received by the Trustee which are allocable to principal of, or
premium, if any, on the Bonds shall be deposited in the Principal Account.
Moneys on deposit in the Principal Account shall be applied by the Trustee to
the payment of principal distributions to Certificateholders when due (whether
on a Certificate Distribution Date or upon the prepayment or payment of the
Certificates in accordance with the terms of this Trust Agreement) without
further authorization or direction. Prior to application thereof in accordance
with the preceding sentence, moneys on deposit in the Principal Account shall be
transferred by the Trustee and used to make up any deficiency in the Interest
Account.
No later than the close of business on each Distribution Date, the Trustee
will distribute such amounts to Certificateholders in the order of priority set
forth below; provided, however, that if the Trustee receives funds for
distribution to Certificateholders after 11:00 am. on any day it shall use all
reasonable efforts to distribute such funds to Certificateholder on such day but
shall not be liable for any damages if such funds are distributed on the
following Business Day.
(b) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificateholder, such tax shall reduce
the amount otherwise distributable to the Certificateholder in accordance with
this Section. The Trustee is hereby authorized to retain from amounts otherwise
distributable to the Certificateholders sufficient funds for the payment of any
tax that is legally owed by the Trust (but such authorization shall not prevent
the Trustee from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the outcome of
such proceedings). The amount of any withholding tax imposed with respect to a
Certificateholder shall be treated as cash distributed to such Certificateholder
at the time it is withheld by the Trust to be remitted to the appropriate taxing
authority. If there is a possibility that withholding tax is payable with
respect to a distribution (such as a distribution to a non-U.S.
Certificateholder), the Trustee in its sole discretion may (but unless otherwise
required by law shall not be obligated to) withhold such amounts in accordance
with this paragraph (b). In the event that a Certificateholder wishes to apply
for a refund of any such withholding tax, the Trustee shall reasonably cooperate
with such Certificateholder in making such claim so long as such
Certificateholder agrees to reimburse the Trustee and the Administrator for any
out-of-pocket expenses incurred.
SECTION 5.02. Priority of Distribution. The related Trust Supplement for
------------------------
a Series of Certificates will designate such Series as Senior, Mezzanine or
Subordinate, and will further determine the order of priority of the Classes
within such Series. To the extent of available funds in the Interest Account
and Principal Account of the Distribution Fund (and any subaccounts, as
applicable), on each Distribution Date the Trustee shall make the following
distributions or payments:
(a) to the payment of amounts due as Administrative Expenses; and
(b) to the Holders of all Classes of Certificates of a Series which are
designated [A-1], in respect of interest, Accrued Certificate Interest for such
Distribution Date; and
<PAGE>
(c) to the Holders of all Classes of Certificates which are designated [A-
1], in respect of principal, an amount equal to the respective Class [A-1]
Percentage of all amounts of principal received with respect to the Bonds on or
prior to the related Distribution Date; and
(d) to the Holders of all Classes of Certificates of a Series which are
designated [A-2], in respect of interest, Accrued Certificate Interest for such
Distribution Date; and
(e) to the Holders of all Classes of Certificates which are designated [A-
2], in respect of principal, an amount equal to the respective Class [A-2]
Percentage of all amounts of principal received with respect to the Bonds on or
prior to the related Distribution Date; and
(f) to the Holders of all Classes of Certificates of a Series which are
designated [A-3], in respect of interest, Accrued Certificate Interest for such
Distribution Date; and
(g) to the Holders of all Classes of Certificates which are designated [A-
3], in respect of principal, an amount equal to the respective Class [A-3]
Percentage of all amounts of principal received with respect to the Bonds on or
prior to the related Distribution Date.
SECTION 5.03. Allocation of Losses. Immediately after each payment date
--------------------
with respect to the Bonds, the Trustee shall determine the total amount of
losses, if any, incurred with respect to the Bonds, the portion of such losses
attributable to principal of the Bonds, and the portion thereof attributable to
interest on the Bonds. Such losses shall be allocated:
(a) first, to all Classes of Certificates which are designated [A-3], and
within such Classes, pro rata among Class [A-3] Certificateholders of a Series,
on the basis of their outstanding Class [A-3] Certificate Principal Balance, to
reduce their respective outstanding Certificate Principal Balances by the amount
so allocated in the case of an allocation of the principal portion of a loss or
based on the Accrued Certificate Interest thereon in the case of an allocation
of the interest portion of a loss;
(b) second, to all Classes of Certificates which are designated [A-2], and
within such Classes, pro rata among Class [A-2] Certificateholders of a Series,
on the basis of their outstanding Class [A-2] Certificate Principal Balance, to
reduce their respective outstanding Certificate Principal Balances by the amount
so allocated in the case of an allocation of the principal portion of a loss or
based on the Accrued Certificate Interest thereon in the case of an allocation
of the interest portion of a loss; and
(c) third, to all Classes of Certificates which are designated [A-1]
Certificates, and within such Classes, pro rata among Class [A-1]
Certificateholders of a Series, on the basis of their outstanding Class [A-1]
Certificate Principal Balance, to reduce their respective outstanding
Certificate Principal Balances by the amount so allocated in the case of an
allocation of the principal portion of a loss or based on the Accrued
Certificate Interest thereon in the case of an allocation of the interest
portion of a loss.
Such losses will be deemed to have been allocated on any Distribution Date
prior to the distribution of principal on such Distribution Date.
SECTION 5.04. Method of Payment. Subject to Section 5.01, distributions
-----------------
required to be made to Certificateholders on any Distribution Date shall be made
to each Certificateholder of record on the applicable Record Date either by wire
transfer, in immediately available funds, to the account of such
Certificateholder at a bank or other entity having appropriate facilities
therefore, if such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions (which may be standing instructions)
at least five Business Days prior to such Distribution Date and such
Certificateholder's
<PAGE>
Certificates in the aggregate evidence a denomination of not less than
[$50,000], or, if not, by check mailed to such Certificateholder at the address
of such Certificateholder appearing in the Certificate Register; provided,
however, that, unless Definitive Certificates have been issued pursuant to
Section 3.11, with respect to Certificates registered on the Record Date in the
name of the nominee of the Securities Depository (initially, such nominee to be
Cede & Co.), distributions will be made by wire transfer in immediately
available funds to the account designated by such nominee. Notwithstanding the
foregoing, the final distribution in respect of any Certificate (whether on the
Final Maturity Date or otherwise) will be payable only upon presentation and
surrender of such Certificate at the Corporate Trust Office of the Trustee
maintained pursuant to Section 3.05 hereof or such other location specified in
writing to the Certificateholder thereof.
SECTION 5.05. Segregation of Moneys: No Interest. Subject to Section
----------------------------------
5.01, moneys received by the Trustee hereunder shall be deposited in the
Distribution Fund and invested in Investment Securities in accordance with
instructions received from the Administrator. The Trustee shall not be liable
for any interest thereon.
SECTION 5.06. Accounting and Reports to Certificateholders, the Internal
----------------------------------------------------------
Revenue Service and Others. The Trustee shall (a) maintain (or cause to be
- --------------------------
maintained) the books of the Trust on a calendar year basis on the accrual
method of accounting, (b) deliver (or cause to be delivered) to each
Certificateholder (and to each Person who was a Certificateholder at any time
during the applicable calendar year), as may be required by the Code and
applicable Treasury Regulations, such information as may be required (including
Schedule K-1) to enable each such Certificateholder to prepare its federal and
state income tax returns, (c) file (or cause to be filed) such tax returns
relating to the Trust (including a partnership information return, Internal
Revenue Service Form 1065), and make such elections as may from time to time be
required or appropriate under any applicable state or federal statute or rule or
regulation thereunder so as to maintain the Trust's characterization as a
partnership for federal income tax purposes, (d) cause such tax returns to be
signed in the manner required by law and (e) collect (or cause to be collected)
any withholding tax as described in and in accordance with Section 5.01(b) with
respect to income or distributions to Certificateholders. [The Trustee shall
elect under Section 1278 of the Code to include in income currently any market
discount that accrues with respect to the Bonds.] The Trustee shall not make
the election provided under Section 754 of the Code. The Trustee shall be
entitled to hire an independent accounting firm to perform the functions
described in this Section 5.06.
SECTION 5.07. Reports to Certificateholders. On each Distribution Date,
-----------------------------
or as soon thereafter as is practicable, the Trustee shall forward by mail to
each Holder a statement setting forth the following information, on a Class by
Class basis, as applicable:
(a) the amount of such distribution allocable to interest on the Bonds;
(b) the amount of such distribution allocable to principal on the Bonds;
(c) if the payments received by the Trustee with respect to the Bonds are
insufficient to make the required interest distributions with respect to the
Certificates, the aggregate amount of all such interest shortfalls on such
Distribution Date and the amount of such interest shortfalls to be allocated to
such Class of Certificates;
(d) if any loss is incurred with respect to the Bonds, the aggregate
amount of all such losses on such Distribution Date and the amount of such
losses to be allocated to such Class of Certificates;
<PAGE>
(e) the aggregate amount of interest remaining unpaid, if any, for each
Class of Certificates, after giving effect to the distribution made on such
Distribution Date;
(f) the aggregate Certificate Principal Balance of each Class of
Certificates after giving effect to the distribution made on such Distribution
Date and to losses allocated on such Distribution Date;
(g) in the case of any credit enhancement, the amount drawn on such credit
enhancement and included in amounts distributed to Certificateholders, and the
remaining balance or coverage of such credit support as of the close of business
on the applicable Distribution Date after giving effect to such withdrawal;
(h) in the case of any Series which includes Subordinate Certificates, the
subordinated amount, if any, determined as of the related Distribution Date and
if the distribution to the Holders of Senior Certificates is less than their
required distribution, the amount of any shortfall; and
(i) to the extent additional Bonds are deposited into the Trust and a
corresponding aggregate principal amount of Certificates are issued, information
regarding such additional Bonds and the Trust Estate as included in the related
Trust Supplement and information regarding the aggregate principal amount of
Certificates so issued, on a Class by Class basis; and
(j) such other information as specified in the related Trust Supplement.
In addition, upon the issuance of a new Series of Certificates, the Trustee
shall forward to each Holder of Certificates of any outstanding Series a copy of
the information concerning the Bonds relating to such new Series of Certificates
included in the related Trust Supplement.
SECTION 5.08. Signature on Returns; Tax Matters Partner.
-----------------------------------------
(a) The Trustee shall sign on behalf of the Trust the tax returns of the
Trust unless otherwise required by applicable law.
(b) The Trustor shall be designated the "tax matters partner" of the Trust
pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations.
SECTION 5.09. Capital Accounts. The Trust shall maintain accounts
----------------
("Capital Accounts") with respect to each Certificateholder (including the
Trustor) in accordance with the following provisions:
(a) Each Certificateholder's Capital Account shall be increased by the
Capital Contributions (as defined below) of such Certificateholder, such
Certificateholder's distributive share of gain (and any liquidated gain) and any
items in the nature of income or gain which are specially allocated to such
Certificateholder pursuant to Section 5.03 of this Agreement.
(b) Each Certificateholder's Capital Account shall be reduced by any
amount distributed to such Certificateholder and such Certificateholder's
distributive share of losses and deductions (and any liquidating loss),
including any special allocation pursuant to Section 5.03.
(c) In the event all or a portion of a Certificate is transferred in
accordance with the terms of this Agreement, the transferee shall succeed to the
Capital Account of the transferor to the extent it related to such Certificate
or a portion thereof.
<PAGE>
"Capital Contribution" means the amount of any cash and the fair market
value of any property contributed to the Trust by a Certificateholder (including
any amounts deemed to be contributed in connection with the original issuance of
the Certificates), including, in the case of the Trustor, the fair market value
of any Bonds deemed to be contributed by the Trustor to the Trust, taking into
account the provisions of Section 707(a)(2)(B) of the Code and the Regulations
thereunder. The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Section 1.704-1(b) of the Treasury Regulations and shall be interpreted in
a manner consistent therewith.
ARTICLE VI
Authority and Duties of Trustee
-------------------------------
SECTION 6.01. General Authority. The Trustee is authorized and directed
-----------------
on behalf of the Trust to acquire and hold legal title to the Bonds from the
Trustor or upon the direction of the Trustor.
SECTION 6.02. General Duties. It shall be the duty of the Trustee to
--------------
discharge (or cause to be discharged) all its responsibilities pursuant to the
terms of this Agreement and each Trust Supplement and to administer the Trust in
the best interests of the Certificateholders, subject to and in accordance with
the provisions of this Agreement. Without limiting the foregoing, the Trustee
shall on behalf of the Trust file and prove any claim or claims that may exist
on behalf of the Trust against the Trustor in connection with any claims paying
procedure as part of an insolvency or receivership proceeding involving the
Trustor. Except as expressly provided in this Agreement, the Trustee shall have
no obligation to administer, service or collect the Bonds or to maintain,
monitor or otherwise supervise the administration, servicing or collection of
the Bonds.
SECTION 6.03. Action upon Instruction.
-----------------------
(a) Subject to Article IV and Section 7.01, the Certificateholders may by
written instruction direct the Trustee in the management of the Trust. Such
direction may be exercised at any time by written instruction of the
Certificateholders pursuant to Article IV.
(b) The Trustee shall not be required to take any action hereunder if the
Trustee shall have reasonably determined, or shall have been advised by counsel,
that such action is likely to result in liability on the part of the Trustee or
is contrary to the terms hereof or is otherwise contrary to law.
(c) Whenever the Trustee is unable to determine the appropriate course of
action between alternative courses of action permitted or required by the terms
of this Agreement, the Trustee shall promptly give notice (in such form as shall
be appropriate under the circumstances) to the Certificateholders requesting
instruction as to the course of action to be adopted, and to the extent the
Trustee acts in good faith in accordance with any written instruction received
from the Certificateholders of Certificates evidencing more than half of the
Certificate Principal Balance at the time of delivery of such instructions, the
Trustee shall not be liable on account of such action to any Person. If the
Trustee shall not have received appropriate instruction within [30] days of such
notice (or within such shorter period of time as reasonably may be specified in
such notice or may be necessary under the circumstances) the Trustee may, but
shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement, as it shall deem to be in the best interests
of the Certificateholders, and shall have no liability to any Person for such
action or inaction.
<PAGE>
(d) If the Trustee is unsure as to the application of any provision of
this Agreement or any other agreement entered into by the Trustee on behalf of
the Trust or any such provision is ambiguous as to its application, or is, or
appears to be, in conflict with any other applicable provision, or if this
Agreement permits any determination by the Trustee or is silent or is incomplete
as to the course of action that the Trustee is required to take with respect to
a particular set of facts, the Trustee may give notice (in such form as shall be
appropriate under the circumstances) to the Certificateholders requesting
instruction and, to the extent that the Trustee acts or refrains from acting in
good faith in accordance with any such instruction received from
Certificateholders of Certificates evidencing more than half of the Certificate
Principal Balance at the time of delivery of such instructions, the Trustee
shall not be liable, on account of such action or inaction, to any Person. If
the Trustee shall not have received appropriate instruction within [30] days of
such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) the
Trustee may, but shall be under no duty to, take or refrain from taking such
action, not inconsistent with this Agreement or such other agreements, as it
shall deem to be in the best interests of the Certificateholders, and shall have
no liability to any Person for such action or inaction.
SECTION 6.04. No Duties Except as Specified in this Agreement or in
-----------------------------------------------------
Instructions. The Trustee shall not have any duty or obligation to manage, make
- ------------
any payment with respect to, register, record, sell, service, dispose of or
otherwise deal with the Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Trustee is a party, except as expressly provided by the terms of
this Agreement or in any document or written instruction received by the Trustee
pursuant to Section 6.03 hereof. No implied duties or obligations shall be read
into this Agreement against the Trustee. The Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to prepare or file any
Commission filing for the Trust or to record this Agreement. The Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens on any part of the Trust
Estate that result from actions by, or claims against, [NAME OF Trustee] in its
individual capacity or as the Trustee that are not related to the ownership or
the administration of the Trust Estate.
SECTION 6.05. No Action Except Under Specified Documents or Instructions.
----------------------------------------------------------
The Trustee shall not manage, control, use, sell, service, dispose of or
otherwise deal with any part of the Trust Estate except (i) in accordance with
the powers granted to and the authority conferred upon the Trustee pursuant to
this Agreement and (ii) in accordance with any document or instruction delivered
to the Trustee pursuant to Section 6.03 hereof.
SECTION 6.06. Restrictions. The Trustee shall not take any action (i)
------------
that is inconsistent with the purposes of the Trust set forth in Section 2.04 or
(ii) that, to the actual knowledge of the Trustee, would result in the Trust's
becoming taxable as a corporation for Federal income tax purposes. The
Certificateholders shall not direct the Trustee to take any action that would
violate the provisions of this Section.
ARTICLE VII
The Trustee
-----------
SECTION 7.01. Acceptance of Duties. The Trustee hereby accepts and agrees
--------------------
to fulfill the obligations imposed upon it by this Agreement, but only upon the
terms and conditions set forth in this Article and subject to the provisions of
this Agreement, to all of which the Trustor and the Holders agree.
<PAGE>
SECTION 7.02. Limited Liability.
-----------------
(a) The Trustee shall incur no liability to any Holder of any Certificate
if, by reason of any provision of any present or future law, or regulation
thereunder, of any governmental authority, or by reason of any natural disaster
or war or other circumstance beyond its control, the Trustee is prevented from
doing or performing any act or thing which the terms of this Agreement provide
should be done or performed.
(b) The Trustee shall assume no obligation and shall not be subject to any
liability to Holders of Certificates or the Trustor in the performance of its
duties, other than by reason of willful misconduct, bad faith or gross
negligence or as may be required by ERISA. The Trustee is not under any
obligation to take any action which may tend to involve it in any expense or
liability, the recover or payment of which within a reasonable time is not, in
its reasonable opinion, assured to it. The Trustee may own and deal in Bonds,
in obligations of the same issue and maturity as the Bonds and in the
Certificates, as though it were not the Trustee under this Agreement.
SECTION 7.03. Fidelity Bond. The Trustee is required at all times to
-------------
maintain a fidelity bond or other insurance (which may be self-insurance) in
reasonable form and amount to protect against loss due to dishonest or
fraudulent action by its employees in connection with its obligations under this
Agreement.
SECTION 7.04. Indemnification of Trustee. The Trustor agrees to indemnify
--------------------------
the Trustee against and hold it harmless from, any liability relating to, or in
any way connected with, or arising thereunder caused solely by the failure of
Trustor to perform its obligations hereunder. Without limiting the generality
of the foregoing, the Trustee shall have no duty or responsibility for and shall
not be deemed to have been negligent with respect to, and the Trustor shall
indemnify and hold harmless the Trustee against, any liability arising out of
any claim (i) that the Bonds are not genuine, (ii) that any disclosure with
respect to the Bonds or the Certificates required by applicable federal and
state laws was not made or (iii) that registration of the Certificates or any
investment company relating to the Certificates and this Trust Agreement is
required by applicable federal or state securities laws and Trustor failed to
effect such registration.
If the indemnification provided for in the preceding paragraph is invalid
or unenforceable in accordance with its terms, then the Trustor shall contribute
to the amount paid or payable by the Trustee as a result of such liability in
such proportion as is appropriate to reflect the relative benefits received by
the Trustor, on one hand, and the Trustee, on the other, from the issuance and
sale of such Certificates. For this purpose the benefits received by the
Trustor shall be the aggregate amount received by the Trustor upon the sale of
such Certificates, less the costs and expenses of such sale, including the cost
of acquisition of the Bonds or parts thereof evidenced thereby, and the benefits
received by the Trustee shall be the aggregate amount of fees received by the
Trustee, less costs and expenses incurred in relation to such Certificates. If,
however, the allocation provided by the immediately preceding two sentences is
not permitted by applicable law, then the Trustor shall contribute to such
amount paid or payable by the Trustee, in such proportion as is appropriate to
reflect no only such relative benefits but also the relative fault of the
Trustor, on the one hand, and the Trustee, on the other, in connection with the
actions or omissions which resulted in such liability, as well as any other
relevant equitable considerations.
In case any claim shall be made or action brought against the Trustee for
any reason for which indemnity may be sought against the Trustor as provided
above, the Trustee may promptly notify the Trustor in writing setting forth the
particulars of such claim or action and the Trustor may assume the defense
thereof. In the event that the Trustor assumes the defense, the Trustee shall
have the right to retain separate counsel in any such action but shall bear the
fees and expenses of such counsel unless (i) the Trustor shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include the Trustee and the Trustor, and the Trustee has been advised in writing
by such counsel that one or more legal defenses
<PAGE>
may be available to it which may not be available to the Trustor, in which case
the Trustor shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the reasonable fees and expenses of such
counsel.
The term "liability", as used in this Section 7.04, shall include any
losses, claims, damages, expenses (including without limitation the Trustee's
reasonable costs and expenses in defending itself against any losses, claims or
investigations of any nature whatsoever) or other liabilities, joint or several,
arising for any reason under this Agreement (including without limitation
violation of applicable laws or trademarks or service marks).
The obligations of the Trustor under this Section 7.04 shall be in addition
to any liability which the Trustor may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Trustee and to
each person, if any, who controls the Trustee within the meaning of the
Securities Exchange Act.
Upon any removal or resignation of the Trustee, the Trustee's right to
indemnification and the Trustor's obligations to indemnify the Trustee hereunder
shall survive such removal or resignation.
SECTION 7.05. Resignation and Removal.
-----------------------
(a) The Trustee may at any time resign as Trustee by giving written notice
of its election to do so to the Trustor and such resignation shall take effect
upon the appointment of a successor Trustee by the Trustor, subject to and
agreeing to comply with the terms and conditions of this Agreement. If at any
time the Trustee becomes incapable of acting or is adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property is appointed, or any
public officer takes charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then any
Holder of a Certificate may, on behalf of itself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
(b) If at any time the Trustee notifies the Trustor that it elects to
resign as Trustee, the Trustor shall, within 45 days after the delivery of the
notice of resignation or removal, appoint a successor Trustee, which is to be a
commercial bank or trust company having its principal office in the United
States of America and having combined capital and surplus of at least
$50,000,000. If no successor Trustee has been so appointed within such 45-day
period, the Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee. Any corporation or association into or with
which the Trustee may be merged, consolidated or converted will be the successor
of such Trustee without the execution or filing of any document or any further
act.
(c) Notwithstanding the foregoing, no resignation or removal of the
Trustee in accordance with the provisions hereof shall become effective until
its successor Trustee has accepted its appointment hereunder.
SECTION 7.06. Default on Bonds. The Trustee shall use its best reasonable
----------------
efforts to collect all payments due with respect to the Bonds in accordance with
such normal and customary practices it shall deem necessary or advisable, and
shall have the power and authority, acting alone, to do any and all things in
connection therewith and the administration of the Trust as it may deem
necessary or advisable.
SECTION 7.07. Notice of Certain Defaults. Upon receipt of notice of any
--------------------------
default on the Bonds from Issuer's trustee or other applicable fiduciary or upon
actual knowledge thereof by an officer of the Trustee assigned to its corporate
trust office, the Trustee shall promptly give notice of such default to the
<PAGE>
Holders of the Certificates. Such notice shall set forth (a) the identity of the
issue of Bonds, (b) the date and nature of such default, (c) the amount of
principal and the amount of interest to which such default relates and (d) any
other information which the Trustee deems appropriate.
SECTION 7.08. Credit Ratings. The Trustor shall at its expense take all
--------------
reasonable action necessary to enable at least one nationally recognized
statistical rating organization (as that term is used in the rules and
regulations of the Commission under the Securities Exchange Act) to provide
credit ratings for the Certificates.
SECTION 7.09. Payment of Trustee Fee. On each Distribution Date, prior to
----------------------
distributions to Holders of Certificates, the Trustee shall withdraw its Trustee
Fee from the Trust Account. The amount of the Trustee Fee shall not be
available for distributions to Holders in respect of their Certificates.
ARTICLE VIII
Termination of Trust Agreement
------------------------------
SECTION 8.01. Termination Events and Sale of Bonds. Upon the occurrence
------------------------------------
of any of the following (herein called "Termination Events"):
(a) the Trustee shall fail to distribute to the Holders of any
Certificates any distribution required to be made under the terms of this
Agreement and such failure shall continue unremedied for five days;
(b) the Trustor shall consent to the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities or similar proceeding of or relating to the Trustor or a
decree or order of a court of agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceeding, or for the winding up or liquidation of its
affairs, shall have been entered against the Trustor or the Trustor shall admit
in writing its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or reorganization
statue, make an assignment to the benefit of its creditors or voluntarily
suspend payment of its obligations;
(c) the Trustor shall cease to be a party to this Agreement or a failure
of the Trustor to maintain the Trustor's Required Interest; or
(d) it becomes necessary to register the Trust as an "investment company"
under the Investment Company Act;
the Trustee shall notify each registered owner of the Certificates of the
occurrence of such Termination Event as soon as practicable after it obtains
knowledge thereof. Unless a Termination Event is waived by the requisite number
of Certificateholders, as soon as is commercially practical, after the giving of
such notice, the Trustee shall sell the Bonds to the highest bidder in an
auction in which at least one bid is received from a Person that is not an
affiliate of the Trustor. The proceeds of such a sale or, if no bids are
received, the assets of the Trust shall be distributed on the next Distribution
Date to the Holders of the Certificates pro rata based on the outstanding
Certificate Principal Balances of the Certificates they hold.
<PAGE>
SECTION 8.02. Notice to Holders. Upon any termination of the Trust or any
-----------------
sale of defaulted Bonds pursuant to Section 5.01, the Trustee shall give prompt
written notice thereof to the Holders at their respective addresses appearing in
the Certificate Register.
SECTION 8.03. Waiver of Termination Events. The Holders representing at
----------------------------
least 66% of the Voting Rights of Certificates affected by a Termination Event
may waive such Termination Event or default; provided, however, that a
Termination Event under Section 8.01(a) may only be waived by the Holders of all
the Certificates. Upon any such waiver, such Termination Event or default shall
cease to exist and shall be deemed to have been remedied for every purpose
hereunder. No such waiver shall extend to any subsequent or other Termination
Event or default nor shall impair any right consequent thereon except to the
extent expressly waived.
ARTICLE IX
Miscellaneous
-------------
SECTION 9.01. Supplements and Amendments.
--------------------------
(a) This Agreement, including the Exhibits, Attachments and Annexes
hereto, may be amended by the Trustor and the Trustee, with prior written notice
to the Rating Agencies, without the consent of any Certificateholders, to cure
any ambiguity, to correct or supplement any provisions in this Agreement or for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions in this Agreement or of modifying in any manner the rights
of the Certificateholders; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect the
interests of any Certificateholder.
(b) This Agreement may also be amended from time to time by the Trustor
and the Trustee, with prior written notice to the Rating Agencies, with the
consent of the Certificateholders of Certificates evidencing more than half of
the Certificate Principal Balance for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Certificateholders; provided,
--------
however, that no such amendment shall (a) increase or reduce in any manner the
- -------
amount of, or accelerate or delay the timing of, collections of payments on
Bonds or distributions that shall be required to be made for the benefit of the
Certificateholders, (b) reduce the aforesaid percentage of the Outstanding
Amount of the Certificate Principal Balance required to consent to any such
amendment, without the consent of all the outstanding Certificateholders or (c)
modify Section 2.08, or any other Sections without an Opinion of Counsel that
such amendment will not cause the Trust to be taxed as a corporation.
Promptly after the execution of any such amendment or consent, the Trustee
shall furnish written notification of the substance of such amendment or consent
to each Certificateholder and each of the Rating Agencies.
It shall not be necessary for the consent of the Certificateholders
pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents (and any other
consents of Certificateholders provided for in this Agreement) and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
<PAGE>
(c) Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement.
The Trustee may, but shall not be obligated, to enter into any such amendment
which affects the Trustee's own rights, duties or immunities under this
Agreement or otherwise.
(d) Notwithstanding anything to the contrary contained in this Section
9.01, or elsewhere in this Agreement, without the consent of any
Certificateholders but with prior notice to the Rating Agencies, the Trustor and
the Trustee (upon written direction from the Trustor), at any time and from time
to time, may enter into one or more Trust Supplements to set forth the terms of
any Class of Certificates that have not theretofore been authorized by a Trust
Supplement.
SECTION 9.02. Limitations on Rights of Others. Except for Section 2.7,
-------------------------------
the provisions of this Agreement are solely for the benefit of the Trustee, the
Trustor, the Certificateholders, the Administrator and, to the extent expressly
provided herein, the Agreement Trustee and the [Noteholders], and nothing in
this Agreement (other than Section 2.7), whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 9.03. Notices.
-------
(a) Unless otherwise expressly specified or permitted by the terms hereof,
all notices shall be in writing and shall be deemed given upon receipt by the
intended recipient or three Business Days after mailing if mailed by certified
mail, postage prepaid (except that notice to the Trustee shall be deemed given
only upon actual receipt by the Trustee), if to the Trustee, addressed to its
Corporate Trust Office at [Trustees Address & Fax]; if to the Trustor, addressed
to [Trustors Address & Fax]; or, as to each party, at such other address or
facsimile number as shall be designated by such party in a written notice to
each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given (i) by first-class mail, postage prepaid, at the address of such
Certificateholder as shown in the Certificate Register, or (ii) by facsimile if
the Certificate Register contains a facsimile number for such Certificateholder.
Any notice so mailed or sent by facsimile within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Certificateholder receives such notice.
SECTION 9.04. Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 9.05. Separate Counterparts. This Agreement may be executed by
---------------------
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 9.06. Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon, and inure to the benefit of, the Trustor
and its successors, the Trustee and its successors, each Certificateholder and
its successors and permitted assigns, all as herein provided. Any request,
notice, direction, consent, waiver or other instrument or action by a
Certificateholder shall bind the successors and assigns of such
Certificateholder.
<PAGE>
SECTION 9.07. No Petition.
-----------
(a) The Trustor will not at any time institute against the Trust any
bankruptcy proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Certificates or
this Agreement.
(b) The Trustee (not in its individual capacity but solely as Trustee), by
entering into this Agreement, and each Certificateholder, by accepting a
Certificate, hereby covenant and agree that they will not at any time institute
against the Trustor or the Trust, or join in any institution against the Trustor
or the Trust of, any bankruptcy, reorganization, arrangement, insolvency,
receivership or liquidation proceedings, or other proceedings under any United
States Federal or state bankruptcy or similar law in connection with any
obligations relating to the Certificates or this Agreement.
SECTION 9.08. No Recourse. Each Certificateholder by accepting a
-----------
Certificate acknowledges that such Certificateholder's Certificates represent
beneficial interests in the Trust only and do not represent interests in or
obligations of the Trustor, and Trustee or any affiliate thereof or any officer,
director or employee of any thereof and no recourse may be had against such
parties or their assets, except as may be expressly set forth in this Agreement,
the Certificates.
SECTION 9.09. Headings. The headings of the various Articles and Sections
--------
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 9.10. Governing Law. This Agreement shall be construed in
-------------
accordance with the laws of The State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 9.11. Creation of Trust and Delivery of Trust Agreement. This
-------------------------------------------------
Trust Agreement shall be deemed for all purposes executed and delivered at the
Trustee's corporate trust office in [Town, County, State of Trustee] and the
Trust shall be created and effective upon delivery of this Trust Agreement
executed by the Trustor to such office and acceptance thereof by the Trustee at
such office, which acceptance shall be evidenced conclusively by the Trustee's
execution hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above written.
[Trustee]
T.A. OF DELAWARE, INC.
as Trustor
By:_________________________________
Name:
Title:
ATTEST:
__________________________________
Name:
Title:
<PAGE>
EXHIBIT A
DEFINITIONS AND USAGE
---------------------
Definitions
-----------
"Accrued Certificate Interest" means, with respect to each Distribution
----------------------------
Date, with respect to each Class of Certificates, six month's interest at the
related Pass-Through Rate on the Certificate Principal Balance thereof
immediately prior to such Distribution Date. Accrued Certificate Interest will
be calculated on the basis of a 360-day year consisting of twelve 30-day months.
"Administrative Expenses" means an amount equal to $_________, payable by
-----------------------
the Trustee pursuant to an agreement with a third party in connection with
surveillance or similar services provided by such party to the Trust.
"Agent Member" means a member of, or participant in, the Securities
------------
Depository and shall include a "DTC Participant" as such term is used in the DTC
Letter at any time when DTC is the Securities Depository.
"Agreement" means this Trust Agreement as amended under the terms hereof.
---------
"Authorized Trustee Officer," means the Chairman of the Board, each
--------------------------
Executive Officer, President, Senior Vice President, Executive Vice President,
Vice President, Assistant Vice President, Secretary, Assistant Secretary,
Treasurer, Assistant Treasurer and Trust Officer of the Trustee and every other
officer or employee of the Trustee designated as such by any of the foregoing
for purposes hereof in a communication to the other parties hereto.
"Beneficial Owner" means any Person owning Certificates through an Agent
----------------
Member directly or through an "Indirect DTC Participant" as such term is used in
the rules and regulations of DTC.
"Benefit Plan" means any (i) employee benefit plan (as defined in Section
------------
3(3) of ERISA) which is subject to the provisions of Title I of ERISA, (ii)
plans described in Section 4975 (e)(1) of the Code, including individual
retirement accounts described in Section 408(a) of the Code or Keogh plans or
(iii) or any entity (including an insurance company general account) whose
underlying assets include plan assets by reason of a plan's investment in such
entity.
"Book-Entry Credit" means the evidence of the deposit by the Trustee of one
-----------------
or more Bonds in a separate account of the Trustee, as Trustee under this
Agreement, with DTC or any successors or assigns of DTC.
"Bonds" means the obligations listed in Schedule I.
----- ----------
"Business Day" means any day on which banks in New York, New York are open
------------
for commercial banking purposes and that is not a day on which the New York
Stock Exchange is authorized or obligated by law or executive order to close.
"Certificate Distribution Date" means for each Class of Certificates, the
-----------------------------
first Business Day following the expiration of each Interest Period for such
Class of Certificates.
<PAGE>
"Certificate Owner" means, with respect to a Book-Entry Certificate, the
-----------------
person who is the beneficial owner of such Book-Entry Certificate, as reflected
on the books of the Securities Depository, or on the books of a person
maintaining an account with such Securities Depository (directly as a Securities
Depository Participant or as an indirect participant, in each case in accordance
with the rules of such Securities Depository).
"Certificate Paying Agent" means any paying agent or co-paying agent
------------------------
appointed pursuant to Section 4.01 of the Trust Agreement, which shall initially
be the [Owner Trustee].
"Certificate Principal Balance" means, with respect to each Certificate, on
-----------------------------
any date of determination, an amount equal to (a) the Initial Amount thereof
minus (b) the sum of (i) the aggregate of all amounts in respect of principal of
such Certificate (or any predecessor Certificate) distributed to the Holder
thereof in accordance with the terms of this Agreement and (ii) the aggregate of
all losses allocated to such Certificate (or any predecessor Certificate)
pursuant to Section ____.
"Certificate Register" means the register established and maintained by the
--------------------
Trustee pursuant to Section 3.05 in which the registration and transfer of the
Certificates is recorded.
"Certificates" means certificates issued pursuant to the terms of this
------------
Agreement and designated in Section ____.
"Class" means each of the ____ Classes of Certificates issued pursuant to
-----
this Agreement and designated in Section _____.
"Code" means the Internal Revenue Code of 1986. Each reference to a
----
section of the Code herein shall be deemed to include the United States Treasury
Regulations proposed or in effect thereunder and applicable to the Bonds or the
Certificates or the use of proceeds thereof, and also includes all applicable
amendments and successor provisions unless the context clearly requires
otherwise.
"Commission" means the Securities and Exchange Commission.
----------
"Certificateholder" means a person in whose name a Certificate is
-----------------
registered in the Certificate Register.
"Code" means the Internal Revenue Code of 1986, as amended from time to
----
time, and Treasury Regulations promulgated thereunder.
"Date of Original Issue" means the first date on which the Trustee issues
----------------------
all or any portion of the Certificates.
"Definitive Certificates" shall have the meaning specified in Section 3.04
-----------------------
of the Trust Agreement.
"Distribution Date" means the first business day of each [ ] and [ ],
-----------------
commencing [ ], 199__.
"DTC" means The Depository Trust Corporation, a clearing agency registered
---
with the Commission, its successor or successors, and its nominee or nominees.
"Distribution Fund" means the Fund so designated and established by Section
-----------------
5.1 of the Trust Agreement.
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended.
"Final Maturity Date" means, with respect to any Note or Certificate, the
-------------------
date on which the entire unpaid principal amount of such Note or Certificate
becomes due and payable as provided in the related Terms Supplement.
"Global Certificate" has the meaning set forth in Section _____.
------------------
"Holder" means a person in whose name a Certificate is registered in the
------
Certificate Register.
"Initial Amount" means, with respect to each Class of Certificates, the
--------------
denomination of the Certificates of such Class upon original issuance thereof,
which shall be $[100,000] and any integral multiple of $[1,000] in excess
thereof; provided, however, that one Certificate of each Class may be issued in
such other denomination as is necessary to include the remainder of such Class.
"Initial Trust Estate" means the Trust Estate as of the Closing Date
--------------------
"Institutional Accredited Investors" means an institution that is an
----------------------------------
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3), or
(7) under the Securities Act.
"Investment Securities" means any of the following:
---------------------
(a) direct obligations of, or obligations on which the timely payment
of the principal of and interest on which are unconditionally and fully
guaranteed by, the United States of America;
(b) interest-bearing time or demand deposits, certificates of deposit
or other similar banking arrangements with any bank, trust company,
national banking association or other depository institution (including the
Trustee or any of its affiliates), provided that, at the time of deposit or
purchase, (i) if such deposit, certificate or other arrangement shall be
payable in more than one year, the depository institution shall have senior
long-term debt rated by each Rating Agency in its highest rating category
and (ii) if such deposit, certificate or other arrangement shall be payable
in one year or less, the depository institution shall have short-term debt
which is rated P1 by Moody's (if Moody's is rating such short-term debt)
and F-1+ by Fitch (if Fitch is rating such short-term debt);
(c) bonds, debentures, notes or other evidences of indebtedness
issued or guaranteed by any of the following agencies: Federal Farm Credit
Banks; Federal Home Loan Mortgage Corporation; the Export-Import Bank of
the United States; the Federal National Mortgage Association; the Tennessee
Valley Authority; the Government National Mortgage Association; the Federal
Financing Bank; the Farmers Home Administration;
(d) repurchase agreements and reverse repurchase agreements with
banks (which may include the [Indenture] Trustee or any of its affiliates)
which are members of the Federal Deposit Insurance Corporation, the
outstanding, unsecured long-term debt securities of which are rated Aaa by
Moody's and AAA by Fitch (if Fitch is rating such securities);
(e) overnight repurchase agreements and reverse repurchase agreements
(i) with counterparties the outstanding, unsecured debt securities of which
are rated P1 by Moody's and (ii) which are at least 102% collateralized by
securities described in subparagraph (a) of this definition which are held
by a third-party collateral agent in a segregated trust account;
<PAGE>
(f) investment agreements or guaranteed investment contracts, secured
by collateral securities or unsecured as the Trustee may determine, which
may be entered into by and among the Issuer, the Trustee and any bank, bank
holding company, corporation or any other financial institution whose
outstanding, unsecured long term debt securities are rated AAA by Fitch (if
Fitch is rating such securities) and Aaa by Moody's, or by an insurance
company whose claims-paying ability is so rated, provided further that any
such agreement must:
(i) clearly state the exact entity guarantor, the value of
invested funds guaranteed, the rate of guaranteed interest, and the
termination date;
(ii) contain an unconditional, irrevocable pledge by the
guarantor and be written in favor of the Trustee;
(iii) not be cancelable for failure to pay any fees or
premiums and its enforceability must be warranted;
(iv) provide that demands for funds be honored on terms and
conditions determined by the Issuer and the issuer of such agreement
and be credited to the Trustee in immediately available funds;
(v) clearly establish the basis for compounding or
computation of interest, and provide that all guaranteed interest
accrue to the payment date;
(vi) provide that failure to meet collateral or other
provisions shall result in acceleration of the agreement at the option
of the Trustee and provide that merger or acquisition of the issuer of
the agreement, or assumption of the obligations of the agreement, with
or by another entity if combined with a credit or claims paying
ability rating downgrade below the standards set forth in this
subsection (f) shall result in acceleration of the agreement at the
option of the Trustee acting on behalf of the Issuer (after
confirmation by Moody's and Fitch that such acceleration will not
affect the ratings assigned to the Notes); and may provide that other
designated events relating to the issuer of the agreement or its
parent or any related entity, if combined with a credit or claims
paying ability rating downgrade below the standards set forth in this
subsection (f) shall result in acceleration of the agreement at the
option of the Trustee acting on behalf of the Issuer); and
(vii) be accompanied by an Opinion of Counsel, on which the
Trustee may conclusively rely, stating that such agreement satisfies
the requirements of clauses (i) through (vi) above;
(g) any debt instrument rated Aaa by Moody's and AAA by Fitch (if
Fitch is rating such debt instrument);
(h) commercial paper rated P1 by Moody's and F1+ by Fitch (if Fitch
is rating such commercial paper); and
(i) any other investment agreement or guaranteed investment contract
approved in writing by each Rating Agency.
Notwithstanding the foregoing, investments described in subparagraphs (g)
and (h) shall not include any "margin security" as such term is defined in
Regulation T of the Board of Governors of the Federal
<PAGE>
Reserve System or any "margin stock" as such term is defined in Regulation G, U
or X of the Board of Governors of the Federal Reserve System.
"Issuer" means each issuer of Bonds as set forth in Schedule I.
------ ----------
"Maturity Date" means, as to each Series and Class of Certificates, the
-------------
stated maturity date identified as such in the related Trust Supplement.
"Officer's Certificate" means a document signed by an Authorized Officer of
---------------------
the Issuer either attesting to or acknowledging the circumstances,
representations or other matters therein stated or set forth or directing that
an action be taken by the person to whom such document is addressed.
"Opinion of Counsel" means an opinion in writing signed by Mintz, Levin,
------------------
Cohn, Ferris, Glovsky and Popeo, P.C. or any other attorney or firm of attorneys
acceptable to the Trustee who may but need not be counsel for the Trustee or the
Trustor.
"Outstanding," means, when used with reference to any Certificates, as of a
-----------
particular date, all such Certificates previously issued and delivered under
this Agreement, except:
(a) any such Certificate previously canceled by the Trustee or
delivered to the Trustee for cancellation;
(b) any such Certificate or portion thereof for whose payment at the
maturity thereof money in the necessary amount has been paid to the Trustee
by the Issuer of the Bonds underlying such Certificate and is held by the
Trustee in trust for or was paid by the Trustee to the Holder of such
Certificate pursuant to this Agreement; or
(c) any such Certificate in exchange for or in lieu of which other
Certificates have been issued and delivered pursuant to this Agreement.
"Outstanding Amount" means the aggregate principal amount of all Notes, or
------------------
Series or Class of Notes, or all Certificates, or Class of Certificates, as
applicable, Outstanding as of the date of determination.
"Percentage Interest" means the percentage interest evidenced by any
-------------------
Certificate that is equal to a fraction the numerator of which is the initial
Certificate Principal Balance thereof and the denominator of which is the
aggregate initial Certificate Principal Balance of such Class of Certificates.
"Physical Certificates" has the meaning set forth in Section ____.
---------------------
"Private Placement Legend" means the legend initially set forth on the
------------------------
Certificates in the form set forth on Exhibit A
------- -
"Qualified Institutional Buyer" or "QIB" shall have the meaning specified
-----------------------------
in Rule 144A under the Securities Act.
"Rating Agency" means the nationally recognized statistical rating agency
-------------
or agencies that rate the Certificates at the time of their issuance at the
request of the Trustor.
"Record Date" means, with respect to any Distribution Date, the second
-----------
Business Day next preceding such Distribution Date.
<PAGE>
"Restricted Security" has the meaning set forth in Rule 144(a)(3) under the
-------------------
Securities Act; provided that the Trustee shall be entitled to request and
--------
conclusively rely upon an Opinion of Counsel with respect to whether any
Certificate is a Restricted Security.
"Rule 144A" means Rule 144A under the Securities Act.
---------
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Securities Depository" means DTC or another recognized securities
---------------------
depository selected by the Trustee, which maintains a book-entry system in
respect of the Certificates.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
-----------------------
amended.
"Tax Matters Partner" shall have such meaning as is set forth in Section
-------------------
6231(a)(7) of the Code and used in Subtitle F, Chapter 63C of the Code.
"Termination Events" shall have the meaning set forth in Section ____.
------------------
"Treasury Regulations" means regulations, including proposed or temporary
--------------------
regulations, promulgated under the Code. References in any document or
instrument to specific provisions of proposed or temporary regulations shall
include analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Trust" means the trust created by this Agreement pursuant to Section ____
-----
and maintained by the Trustee for the benefit of the Holders.
"Trust Account" means a separate account established and maintained by the
-------------
Trustee for the exclusive benefit of the Holders of Certificates.
"Trust Agreement" means the Trust Agreement dated as of _______________,
---------------
1996 between the Depositor and the Owner Trustee, as amended and supplemented
from time to time.
"Trust Estate" means all property of the Trust from time to time, including
------------
all funds held by the Trustee under the Trust Agreement.
"Trust Supplement" means each supplement to the Trust Agreement that
----------------
authorizes an issuance of a Class of Certificates.
"Trustee" means [ ], a banking corporation organized
-------
and existing under the laws of [ ], in its capacity as trustee under
this Agreement, or any successor in such capacity.
"Trustee Fee" means, for each Distribution Date, one-half of the Trustee
-----------
Fee Rate multiplied by the aggregate Certificate Principal Balance of the
Certificates immediately preceding such Distribution Date.
"Trustor" means [ ], a [ ].
-------
"Trustor's Required Interest" shall have the meaning set forth in Section
---------------------------
2.08.
"Voting Rights" means the portion of all voting rights of the Certificates
-------------
that is allocated to any Certificate.
<PAGE>
EXHIBIT B
[FORM OF CERTIFICATE]
[FOR CERTIFICATES THAT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT] [THIS
CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1993, AS
AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS
EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS
THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501 (A) (1), (2), (3) OR (7) UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS
CERTIFICATE IN AN OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN THREE
YEARS AFTER THE ORIGINAL ISSUANCE OF THIS CERTIFICATE RESELL OR OTHERWISE
TRANSFER THIS CERTIFICATE EXCEPT (A) TO [TAX EXEMPT SECURITIES TRUST] [TRUSTEE],
(B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR
HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A SIGNED
LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN BE
OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) PURSUANT
TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
IN CONNECTION WITH ANY TRANSFER OF THIS CERTIFICATE WITHIN THREE YEARS AFTER THE
ORIGINAL ISSUANCE OF THIS CERTIFICATE, IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION
AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT.]
[FOR CERTIFICATE REPRESENTING TRUSTOR'S INTEREST] [THIS CERTIFICATE MAY NOT BE
TRANSFERRED]
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF [ ]
OR THE TRUSTEE REFERRED TO BELOW, OR OF ANY OF THEIR AFFILIATES. THIS
CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENT AGENCY OR
INSTRUMENTALITY.
<PAGE>
TAX-EXEMPT SECURITIES TRUST CERTIFICATE,
SERIES ______, CLASS [A- ]
____% RATE
Evidencing an undivided interest in a Trust whose assets consist of certain
[ ] bonds and certain other property held in trust transferred by
[ ]
CUSIP ___________ [$___________] [INITIAL CLASS [A- ] CERTIFICATE
PRINCIPAL BALANCE]
Certificate No. _____ [$___________] [INITIAL CERTIFICATE PRINCIPAL
BALANCE OF THIS CERTIFICATE]
First Distribution Final Scheduled
Date:_____________, ____ Distribution Date:_____________, ____
THIS CERTIFIES THAT ______________________ is the registered owner of a
beneficial interest in the Trust referred to below consisting of a pool of
[ ] bonds (the "Bonds") and certain other property held in trust
transferred to the Trust by [ ] (the "Trustor"). The Trust
was created pursuant to the Trust Agreement, dated as of ____________ __, 199_
(the "Agreement"), between the Trustor and _________________________________, as
trustee (the "Trustee", which term includes any successor entity under the
Agreement), a summary of certain of the pertinent provisions of which is set
forth herein. THE TERMS AND CONDITIONS OF THE AGREEMENT ARE HEREBY INCORPORATED
IN THIS CERTIFICATE AS IF FULLY SET FORTH AND, EXCEPT AS OTHERWISE DEFINED
HEREIN, ALL TERMS USED HEREIN SHALL HAVE THE MEANING ASCRIBED THERETO IN THE
AGREEMENT UNLESS THE CONTEXT HEREOF DICTATES OTHERWISE. THE HOLDER HEREOF HEREBY
ASSENTS TO ALL OF THE TERMS AND PROVISIONS OF THE AGREEMENT, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE. The Bonds
to which this Certificate and other Certificates are related, and interest,
premium, if any, and principal payments on the Bonds received by the Trustee
pending their disbursement to Holders of Certificates will be held by the
Trustee in a trust account for the benefit of Holders of Certificates at
_____________________, New York, New York _____.
This Certificate is one of a duly authorized issue of certificates of
[ ] designated as its Tax-Exempt Securities Trust Certificates, Multi-Class
Series ____, which is comprised of [ ] Classes; the [ ] and
[ ] Certificates (collectively, the "Certificates"). Reference is
hereby made to the Agreement for a statement of the respective rights thereunder
of the Trustor and the Trustee and the Holders of the Certificates and the terms
upon which the Certificates are authenticated and delivered.
This Class [A- ] Certificate represents a Percentage Interest [equal to the
initial Certificate Principal Balance of this Certificate divided by the initial
Class [A- ] Certificate Principal Balance, both as set forth above] [set forth
on the face hereof].
The Trustee shall distribute from the Trust Account, to the extent of
available funds on the ______ day of each calendar month, or, if such ____ day
is not a Business Day, the Business Day immediately
<PAGE>
following such ____ day (the "Distribution Date"), commencing _____________, to
the Person in whose name this Certificate is registered at the close of business
on the last Business Cay next preceding such Distribution Date (each a "Record
Date"), [a principal amount equal to the product of the Percentage Interest
evidenced by this Certificate and that portion of the Funds on deposit in the
Trust Account that is allocated to principal on such Class of Certificates on
such Distribution Date.]
Distributions of interest will be made on each Distribution Date, to the
extent of available funds, in an amount equal to thirty days' interest accrued
at a rate per annum equal to the applicable Pass-Through Rate on the outstanding
Certificate Principal of this Certificate as of the day immediately prior to the
related Distribution Date reduced by its pro rata portion of the aggregate
shortfalls of interest allocated to such Class of Certificates.
Not later than each Distribution Date, the Trustee will send to each
Certificateholder a statement containing information relating to the Bonds and
payments made to Certificateholders.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Holder hereof entitled thereto at the address
appearing in the Certificate Registerer or, if such Holder holds Class [A- ]
Certificates with an aggregate initial Certificate Principal Balance of at least
$1,000,000 by wire transfer in immediately available funds to the account of
such Certificateholder designated in writing to the Trustee at least five
Business Days prior to the applicable Record Date. Notwithstanding the above,
the final distribution on this Certificate will be made after due notice of the
pendency of such final distribution and only upon presentation and surrender of
this Certificate at the office or agency designated in such notice.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable on the Certificate
Register upon surrender of this Certificate for registration of transfer at the
office or agency of the Trustee designated therefor, duly endorsed by, or
accompanied by a written instrument of transfer in a form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class and of authorized denominations, and for the same aggregate interest in
the Trust will be issued to the designated transferee or transferees.
The Class [A- ] Certificates will be issued in fully registered form in
minimum denominations of $[100,000] Certificate Principal Balance and in
integral multiples of $1,000 in excess of such amount; provided, however, that
one Certificate of each Class may be issued in such other amount as is required
so that the aggregate of each Class of Certificates equals its respective
aggregate Certificate Principal Balance. As provided in the Agreement and
subject to certain limitations therein set forth, this Certificate is
exchangeable for one or more new Certificates of the same Class and of
authorized denominations evidencing a like aggregate Certificate Principal
Balance, as requested by the Holder surrendering the same.
No service charge will be made for such registrations of transfers or
exchanges, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. The Trustee
and any agent of the Trustee may treat the person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Trustee nor
any such agent thereof shall be affected by notice to the contrary.
The Trustor will elect under Section 761(a) of the Internal Revenue Code of
1986, as amended (the "Code"), for the Agreement and the partnership represented
by the Certificates to be excluded from the application of Subchapter K of the
Code and the Holder of this Certificate (by purchase and holding this
Certificate) shall be deemed to have concurred in such election.
<PAGE>
The Trustee assumes no obligation nor shall it be subject to any liability
to the Holder of this Certificate other than it agrees to use its best judgment
and good faith in the performance of the duties specifically set forth herein
and in the Agreement.
The Trustee shall at all times be a commercial bank or trust company
organized and doing business under the laws of the United States of America or
the State of New York, authorized to act as Trustee, having a combined capital
and surplus of at least $50,000,000, subject to examination by federal or New
York authority. It shall at all times have an office or an agent for acceptance
and delivery of Bonds and Certificates in the Borough of Manhattan, City and
State of New York.
The Trustee may resign any time and shall resign if it shall cease to met
the requirements of the preceding paragraph and the Trustor shall thereupon
appoint a successor Trustee. Notice of any such resignation and the appointment
of a successor Trustee shall be mailed to the address of the Holder of this
Certificate set forth on the books of the Trustee.
The obligations and responsibilities of the Trustor and the Trustee created
by the Agreement will terminate upon the maturity or other liquidation of the
last Bond remaining in the Trust.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid or obligatory for any
purpose.
THE TERMS AND PROVISIONS OF THIS CERTIFICATE ARE GOVERNED BY THE LAWS
OF NEW YORK.
IN WITNESS WHEREOF, the trustee has caused this Certificate to be duly
executed under its corporate seal.
__________________________, as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class [A- ] Certificates referred to in the within-mentioned
Agreement.
Date:
______________________________________________
as Trustee
By: _________________________________________
Authorized Officer
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto ____________________________________________________________
(Please print or typewrite name and address, including postal zip code, or
assignee) the undivided interest in the Trust evidenced by the within
Certificate and hereby authorize(s) the transfer of registration of such
interest to the assignee on the Certificate Register.
I (we) further direct the Trustee to issue a new Certificate of the same
Class and of a like initial Certificate Principal Balance and undivided interest
in the Trust to the above-named assignee and to deliver such Certificate to the
following address_____________________________________________________________.
Dated:_________________, ____
Social Security or other _____________________________________
Tax Identification No. Signature by or on behalf of
of Assignee: assignor (signature must be signed as
registered)
_________________________ _____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the Master
Servicer:
Distribution shall be made by check mailed to______________________________
____________________________, or if the aggregate initial Certificate Principal
Balance of Certificates of this Class held by the Holder is at least $1,000,000
and the Trustee shall have received appropriate wiring instructions in
accordance with the Agreement, by wire transfer in immediately available funds
to ________________________________ the account of ____________________________,
account number _______________. This information is provided by the assignee
named above or its agent.
<PAGE>
EXHIBIT B-1
FORM OF LEGEND FOR BOOK-ENTRY CERTIFICATES
Any Global Certificate authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
AGREEMENT AND IS REGISTERED IN THE NAME OF A SECURITIES DEPOSITORY OR A
NOMINEE OF A SECURITIES DEPOSITORY OR A SUCCESSOR SECURITIES DEPOSITORY.
THIS CERTIFICATE IS NOT EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE SECURITIES DEPOSITORY OR ITS NOMINEE EXCEPT
IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE AGREEMENT, AND NO TRANSFER OF
THIS CERTIFICATE (OTHER THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY
THE SECURITIES DEPOSITORY TO A NOMINEE OF THE SECURITIES DEPOSITORY OR BY A
NOMINEE OF THE SECURITIES DEPOSITORY TO THE SECURITIES DEPOSITORY OR
ANOTHER NOMINEE OF THE SECURITIES DEPOSITORY) MAY BE REGISTERED EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
<PAGE>
EXHIBIT B-2
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------------------------------------
____________, ____
[ ]
Attention: Corporate Trust Department
Re: Tax Exempt Securities Trust Certificates, Multi-Class Series A, Class
A-[ ] due _______ __, ______ (the "Certificates")
Ladies and Gentlemen:
In connection with our proposed purchase of the Certificates we confirm
that:
1. We have received a copy of the Offering Memorandum (the "Offering
Memorandum"), dated ________ __, 1995, relating to the Certificates and such
other information as we deem necessary in order to make our investment decision.
We acknowledge that we have read and agreed to the matters stated on pages [ ]
and [ ] and under the captions "Transfer Restrictions" and "Book-Entry;
Delivery and Form" of such Offering Memorandum, including the restrictions on
duplication and circulation of such Offering Memorandum.
2. We understand that any subsequent transfer of the Certificates is
subject to certain restrictions and conditions set forth in the Offering
Memorandum and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Certificates except in compliance with, such
restrictions and conditions and the Securities Act of 1933, as amended (the
"Securities Act").
3. We understand that the offer and sale of the Certificates have not
been registered under the Securities Act, and that the Certificates may not be
offered or sold within the United States or to, or for the account or benefit
of, U.S. persons except as permitted in the following sentence. We agree, on
our own behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Certificates, we will do so only
(A) to the [Trust] [Trustee], (B) inside the United States in accordance with
Rule 144A under the Securities Act to a "qualified institutional buyer" (as
defined therein), (C) inside the United States to an institutional "accredited
investor" (as defined below) that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to the Trustee (as defined in
the Agreement relating to the Certificates), a signed letter containing certain
representations and agreements relating to the restrictions on transfer of the
Certificates (the form of which letter can be obtained from the Trustee), (D)
outside the United States in accordance with Rule 904 of Regulation S under the
Securities Act, (E) pursuant to the exemption from registration provided by Rule
144 under the Securities Act (if available), or (F) pursuant to an effective
registration statement under the Securities Act, and we further agree to provide
to any person purchasing Certificates from us a notice advising such purchaser
that resales of the Certificates are restricted as stated
<PAGE>
4. We understand that, on any proposed resale of Certificates, we will be
required to furnish to the Trustee such certification, legal opinions and other
information as the Trustee may reasonably require to confirm that the proposed
sale complies with the foregoing restrictions. We further understand that the
Certificates purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of our investment in the Certificates, and we
and any accounts for which we are acting are each able to bear the economic risk
of our or their investment, as the case may be.
6. We are acquiring the Certificates purchased by us for our account or
for one or more accounts (each of which is an institutional "accredited
investor") as to each of which we exercise sole investment discretion.
You, the Trustor and the Initial Purchasers are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceeding or official
inquiry with respect to the matters covered hereby.
Very truly yours,
By:__________________________________
Name:
Title:
<PAGE>
[Form of Trust Agreement for
Grantor Trust Classification]
________________________________________________________________________________
TRUST AGREEMENT
between
T.A. OF DELAWARE, INC.,
as Trustor
and
___________________,
as Trustee
relating to
Tax Exempt Securities Trust Certificates, Multi-Class Series __
$__________ Coupon Strip Certificates
$__________ Principal Strip Certificates
Dated as of ____________________, 19__
Relating to
$__________
[Name of Bonds, Series, Due Date]
________________________________________________________________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I DEFINITIONS AND CONSTRUCTION................................................... 1
SECTION 1.01. Certain Definitions.................................................... 1
SECTION 1.02. Rules of Construction.................................................. 5
ARTICLE II ESTABLISHMENT OF TRUST......................................................... 6
SECTION 2.01 Creation of Trust...................................................... 6
SECTION 2.02 Establishment of Trust Accounts and Ownership.......................... 6
SECTION 2.03. Transfer of Bonds to Trust Account..................................... 7
SECTION 2.04. Limited Obligations.................................................... 7
ARTICLE III THE CERTIFICATES............................................................... 7
SECTION 3.01. Classes of Certificates................................................ 7
SECTION 3.02. Ownership of Underlying Bonds; Voting.................................. 7
SECTION 3.03. Limitation on Issuance of Certificates................................. 8
SECTION 3.04. Form and Numbering of Certificates..................................... 8
SECTION 3.05. Details of Certificates................................................ 8
SECTION 3.06. Validity of Certificates............................................... 9
SECTION 3.07. Exchange of Certificates............................................... 9
SECTION 3.08. Registration and Transfer of Certificates.............................. 9
SECTION 3.09. Ownership of Certificates.............................................. 10
SECTION 3.10. Authorization of Certificates; Prior Accrued Bond
Interest............................................................... 10
SECTION 3.11 Temporary Certificates................................................. 11
SECTION 3.12 Mutilated, Destroyed or Lost Certificates.............................. 11
SECTION 3.13. Book-Entry Only System for Principal Strip Certificates................ 12
SECTION 3.14. No Listing on Securities Market........................................ 13
ARTICLE IV DISTRIBUTIONS IN RESPECT OF THE CERTIFICATES................................... 13
SECTION 4.01. Distributions.......................................................... 13
SECTION 4.02. Segregation of Moneys Received from Issuers in Respect of
Bonds.................................................................. 14
SECTION 4.03. Allocation of Losses and Interest Shortfalls on Bonds.................. 14
SECTION 4.04 Statements to Holders.................................................. 15
ARTICLE V TERMINATION EVENTS AND PURCHASE OF CERTIFICATES
UPON TRUSTOR'S TENDER DEMAND................................................... 15
SECTION 5.01 Termination Events and Sale of Bonds................................... 15
SECTION 5.02. Notice to Holders...................................................... 16
SECTION 5.03. Waiver of Termination Events........................................... 16
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE VI REDEMPTION OF PRINCIPAL STRIP CERTIFICATES....................................... 16
SECTION 6.01. Redemption................................................................ 16
SECTION 6.02. Selection by Trustee of Principal Strip Certificates...................... 17
SECTION 6.03. Notice of Redemption...................................................... 17
ARTICLE VII CERTAIN COVENANTS................................................................ 17
SECTION 7.01. Method of Payment of Principal Strip Certificates......................... 17
SECTION 7.02. Covenant to Perform and Authority of the Trustor.......................... 17
ARTICLE VIII THE TRUSTEE...................................................................... 17
SECTION 8.01. Acceptance of Duties...................................................... 18
SECTION 8.02. Limited Liability......................................................... 18
SECTION 8.03. Fidelity Bond............................................................. 18
SECTION 8.04. Indemnification of Trustee................................................ 18
SECTION 8.05 Monthly Statements from Trustee........................................... 19
SECTION 8.06 Resignation and Removal................................................... 20
SECTION 8.07. Default on Bonds.......................................................... 20
SECTION 8.08. Notice of Certain Defaults................................................ 20
SECTION 8.09. Credit Ratings............................................................ 21
SECTION 8.10. Payment of Trustee Fee.................................................... 21
ARTICLE IX MISCELLANEOUS.................................................................... 21
SECTION 9.01. Governing Law............................................................. 21
SECTION 9.02. Notices................................................................... 21
SECTION 9.03. Binding Agreement......................................................... 22
SECTION 9.04. Amendments................................................................ 22
SECTION 9.05. Termination and Severability.............................................. 22
SECTION 9.06. Counterparts.............................................................. 23
</TABLE>
<PAGE>
TRUST AGREEMENT
THIS TRUST AGREEMENT, dated as of ____________________________, 199__, is
hereby executed by and between T.A. of Delaware, Inc., a Delaware corporation,
as trustor (together with its successors and assigns as such the "Trustor"), and
____________________________, a banking corporation organized and existing under
the laws of ____________________________, as trustee (together with any
successor as such the "Trustee").
WHEREAS, the Trustor desires to deposit the obligations listed in
Schedule I, (the "Bonds") with the Trustee, and to provide for the creation,
- ----------
execution and delivery of Tax Exempt Securities Trust Certificates, Multi-Class
Series ____ (the "Certificates") evidencing undivided interests in such Bonds,
including future principal of, premium, if any, and interest payments on such
Bonds; and
WHEREAS, the Certificates are to be substantially in the forms set forth as
Exhibit A hereto with appropriate insertions, modifications and omissions, as
- ---------
provided in this Agreement; and
WHEREAS, the Trustor wishes the Trustee to act as the trustee of the Bonds
on behalf of the Holders of the Certificates and to carry out the duties set
forth in this Agreement pertaining to the Certificates, and the Trustee has
agreed so to act;
NOW, THEREFORE, in consideration of the premises and of the mutual promises
contained in this document, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND CONSTRUCTION
SECTION 1.01. Certain Definitions. The following terms shall have the
-------------------
following meanings unless the context otherwise requires.
"ACCRUED CERTIFICATE INTEREST" shall mean, with respect to each
Distribution Date, (a) with respect to the Coupon Strip Certificates, six
month's accrued interest at the Coupon Strip Rate on the Coupon Strip Notional
Balance immediately prior to such Distribution Date or (b) with respect to the
Principal Strip Certificates, six month's accrued interest at the Principal
Strip Rate on the Certificate Principal Balance of the Outstanding Principal
Strip Certificates immediately prior to such Distribution Date. Accrued
Certificate Interest will be calculated on the basis of a 360-day year
consisting of twelve 30-day months.
"AGENT MEMBER" shall mean a member of or participant in, the Securities
Depository and shall include a "DTC Participant" as such term is used in the DTC
Letter at any time when DTC is the Securities Depository.
<PAGE>
"AGREEMENT" shall mean this Trust Agreement as amended under the terms
hereof.
"AUTHORIZED TRUSTEE OFFICER" shall mean the Chairman of the Board, each
Executive Officer, President, Senior Vice President, Executive Vice President,
Vice President, Assistant Vice President, Secretary, Assistant Secretary,
Treasurer, Assistant Treasurer and Trust Officer of the Trustee and every other
officer or employee of the Trustee designated as such by any of the foregoing
for purposes hereof in a communication to the other parties hereto.
"AUTHORIZED DENOMINATIONS" for the Coupon Strip Certificates shall be the
Percentage Interest and multiples thereof, set forth in Schedule II and for the
-----------
Principal Strip Certificates shall be the dollar amount, and multiples thereof,
set forth in Schedule II.
-----------
"BENEFICIAL OWNER" shall mean any Person owning Certificates through an
Agent Member directly or through an "Indirect DTC Participant" as such term is
used in the rules and regulations of DTC.
"BOOK-ENTRY CREDIT" shall mean the evidence of the deposit by the Trustee
of one or more Bonds in a separate account of the Trustee, as Trustee under this
Agreement, with DTC or any successors or assigns of DTC.
"BONDS" shall mean the obligations listed in Schedule I.
----------
"BONDS PAYMENT DATE" shall mean each of the payment dates for the Bonds as
set forth in Schedule I.
----------
"BONDS RATE" shall mean each of the per annum rates of interest on the
Bonds set forth in Schedule I.
----------
"BUSINESS DAY" shall mean any day on which banks in New York, New York are
open for commercial banking purposes and that is not a day on which the New York
Stock Exchange is authorized or obligated by law or executive order to close.
"CERTIFICATES" shall mean Tax Exempt Securities Trust Certificates, Multi-
Class Series __, which consist of Coupon Strip Certificates and Principal Strip
Certificates issued hereunder.
"CERTIFICATE PRINCIPAL BALANCE" shall mean, with respect to each
Certificate, on any date of determination, an amount equal to (a) the initial
Certificate Principal Balance thereof minus (b) the sum of (i) the aggregate of
all amounts in respect of principal of such Certificate (or any predecessor
Certificate) distributed to the Holder thereof in accordance with the terms of
this Agreement and (ii) the aggregate of all losses allocated to such
Certificate (or any predecessor Certificate) pursuant to Section 4.03.
"CERTIFICATE REGISTER" shall mean the register established and maintained
by the Trustee pursuant to Section 3.08 in which the registration and transfer
of the Certificates is recorded.
<PAGE>
"CLASS" shall mean each of the classes of Certificates issued pursuant to
this Agreement and designated in Section 3.01.
"CODE" shall mean the Internal Revenue Code of 1986, as amended. Each
reference to a section of the Code herein shall be deemed to include the United
States Treasury Regulations proposed or in effect thereunder and applicable to
the Bonds or the Certificates or the use of proceeds thereof, and also includes
all applicable amendments and successor provisions unless the context clearly
requires otherwise.
"COMMISSION" shall mean the Securities and Exchange Commission.
"COUPON STRIP NOTIONAL BALANCE" shall mean the aggregate Certificate
Principal Balance of the Principal Strip Certificates at the time of such
determination.
"COUPON STRIP RATE" shall mean the rate set forth and designated as such in
Schedule II.
- -----------
"COUPON STRIP CERTIFICATE" shall mean each Certificate representing the
right to receive the specified portion of the interest payments on the Bonds
which Certificate is substantially in the form set forth as Exhibit A hereto and
---------
has been designated as such and authenticated by the Trustee.
"DATE OF ORIGINAL ISSUE" shall mean the first date on which the Trustee
issues all or any portion of the Certificates.
"DISTRIBUTION DATES" shall mean the ______ business day of each _________
and ___________, commencing _____________, 199_.
"DTC" shall mean The Depository Trust Company, a clearing agency registered
with the Commission, its successor or successors, and its nominee or nominees.
"DTC LETTER" shall mean the letter of representations from the Trustor and
the Trustee to DTC of even date herewith relating to the Certificates and any
amendment or replacement thereof.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"HOLDER" shall mean a person in whose name a Certificate is registered in
the Certificate Register.
"ISSUER" shall mean each issuer of Bonds set forth in Schedule I.
----------
<PAGE>
"OPINION OF COUNSEL" means an opinion in writing signed by Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C. or any other attorney or firm of attorneys
acceptable to the Trustee who may but need not be counsel for the Trustee or the
Trustor.
"OUTSTANDING" shall mean, when used with reference to any Certificates, as
of a particular date, all such Certificates previously issued and delivered
under this Agreement, except:
(a) any such Certificate previously cancelled by the Trustee or delivered
to the Trustee for cancellation;
(b) any such Certificate or portion thereof for whose payment at the
maturity thereof money in the necessary amount has been paid to the Trustee by
the Issuer of the Bonds underlying such Certificate and is held by the Trustee
in trust for or was paid by the Trustee to the Holder of such Certificate
pursuant to this Agreement; or
(c) any such Certificate in exchange for or in lieu of which other
Certificates have been issued and delivered pursuant to this Agreement.
"PERCENTAGE INTEREST" shall mean the percentage interest evidenced by any
Coupon Strip Certificate that is set forth on the face thereof.
"PERSON" includes an individual, association, unincorporated organization,
corporation, partnership, joint venture, business trust or a government or an
agency or a political subdivision thereof, or any other entity.
"PRINCIPAL" shall mean the principal, including any redemption premium, of
the Bonds that has been received by the Trustee.
"PRINCIPAL CREDIT SOURCE" shall mean the entity, if any, identified as such
in Schedule I.
----------
"PRINCIPAL STRIP RATE" shall mean the rate set forth and designated as
such in Schedule II.
-----------
"PRINCIPAL STRIP CERTIFICATE" shall mean each Certificate representing the
right to receive all of the principal payments and a specified portion of the
interest payments on the Bonds which Certificate is substantially in the form
set forth as Exhibit A hereto and has been designated as such and authenticated
---------
by the Trustee.
"RATING AGENCY" shall mean, the nationally recognized statistical rating
agency or agencies that rate the Certificates at the time of their issuance at
the request of the Trustor.
"RECORD DATE" shall mean, with respect to any Distribution Date, the second
Business Day next preceding such Distribution Date.
<PAGE>
"REDEMPTION DATE" shall mean, with respect to any Bond to be redeemed, the
date fixed by the Issuer thereof for such redemption.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SECURITIES DEPOSITORY" shall mean DTC or another recognized securities
depository selected by the Trustee which maintains a book-entry system in
respect of the Certificates.
"SECURITIES EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
"TERMINATION EVENTS" shall have the meaning set forth in Section 5.01.
"TRUST" shall mean the trust created by this Agreement pursuant to Section
2.01 and maintained by the Trustee for the benefit of the Holders.
"TRUST ACCOUNT" shall mean a separate account established and maintained by
the Trustee for the exclusive benefit of the Holders of Certificates.
"TRUSTEE" shall mean _______________________, a banking corporation
organized and existing under the laws of ______________, in its capacity as
trustee under this Agreement, or any successor in such capacity.
"TRUSTEE FEE" shall mean, for each Distribution Date, one-half of the
Trustee Fee Rate multiplied by the outstanding principal balance of the Bonds
immediately preceding the most recent Bonds Payment Date.
"TRUSTEE FEE RATE" shall mean 0.___% per annum.
"TRUSTOR" shall mean T.A. of Delaware, Inc., a corporation organized and
existing under the laws of the State of Delaware.
"VOTING RIGHTS" shall mean the portion of all voting rights of the
Certificates that is allocated to any Certificate. The Voting Rights under this
Agreement will be allocated __% to the Coupon Strip Certificates and __% to the
Principal Strip Certificates. Within the Coupon Strip Certificates, the Voting
Rights shall be allocated in proportion to the Percentage Interest represented
by each Certificate. Within the Principal Strip Certificates, the Voting Rights
shall be allocated in proportion to the Certificate Principal Balances of each
Certificate.
SECTION 1.02. Rules of Construction. Unless the context or use
---------------------
indicates another or different meaning or intent, the following rules shall
apply to the construction of this Agreement.
(a) Words importing the singular number shall include the plural number
and vice versa.
<PAGE>
(b) The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.
(c) The words "hereof", "herein," "hereto," and other words of similar
import refer to this Agreement as a whole.
(d) All references herein to a particular time of day shall be to New York
City time.
(e) Reference to Sections and Articles shall be to Sections and Articles
hereof unless a different document is specified.
ARTICLE II
ESTABLISHMENT OF TRUST
SECTION 2.01 Creation of Trust. There is hereby created a Trust for
-----------------
the benefit of the Holders of the Certificates. The sole asset of such Trust
shall be the Bonds transferred by the Trustor to the Trustee and any other
property specified in Schedule I hereto. The Certificates shall evidence
----------
undivided interests in the Trust. The income received by and the assets of such
Trust shall be distributed solely in accordance with this Agreement.
SECTION 2.02 Establishment of Trust Accounts and Ownership.
---------------------------------------------
(a) The Trustee shall establish the Trust Account, in which it shall hold
the Bonds delivered to it by the Trustor on or after the date hereof, together
with all moneys received as principal, premium, if any, or interest with respect
to the Bonds pending disbursement as hereinafter provided. The Trustee is
authorized to establish various subaccounts within the Trust Account
corresponding to the characterization of moneys to be deposited therein so that
the Trustee may at all times ascertain such characterization.
(b) The Trustee shall hold and retain the Bonds in trust for the benefit
and account of the Holders of Certificates as the beneficial owners of the
Bonds. Subject to Section 8.02, the Trustee shall assume full responsibility and
risk for the Bonds on deposit with it and all moneys received by it as principal
of, premium, if any, or interest on the Bonds, and shall bear all costs and
expenses incurred by it as Trustee of such Bonds (subject to the terms hereof
and to such other reimbursement by the Trustor as may be agreed upon by the
Trustee and the Trustor in one or more separate agreements).
(c) The Bonds, and all moneys received as principal, premium, if any, and
interest on the Bonds, shall remain in the custody of the Trustee and shall be
kept in the Trust Account, which shall be a segregated account created by
separate recordation within the trust department of the Trustee. Moneys to the
credit of the Trust Account shall be held by the Trustee uninvested. The Bonds
and moneys received and held in the Trust Account will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of the
Trustee or any
<PAGE>
person claiming through it. The Trustee shall not have the power or authority to
transfer, assign, hypothecate, pledge or otherwise dispose of any of the assets
of the Trust Account to any person, except as expressly permitted by the
provisions of this Agreement.
SECTION 2.03. Transfer of Bonds to Trust Account.
----------------------------------
(a) The Bonds will be irrevocably transferred by the Trustor or another
entity acting on behalf of the Trustor to the Trustee and will be held in the
name of the Trustee or its nominee in book-entry form with the Securities
Depository as evidenced by Book-Entry Credits. The Trustor represents and
warrants to the Trustee that the Bonds are genuine and that, immediately prior
to the delivery thereof to the Securities Depository, the Trustor shall own the
Bonds free and clear of any lien, pledge, encumbrance or any other security
interest.
(b) The Trustee is authorized and directed to deliver any instrument or
document necessary to obtain registration or registration of transfer of the
Bonds and to obtain payment of principal, premium, if any, and interest thereon.
The Trustee is further authorized to sign and file any declaration, affidavit,
certificate of ownership or other document required to service the Trust Account
and to present for payment all Bonds or coupons thereon required to be presented
as a condition to payment at the maturity or upon call for redemption thereof.
(c) Notwithstanding the foregoing, the Trustee may hold Bonds in its
account within DTC or other Securities Depository registered under Section 17(a)
of the Securities Exchange Act.
SECTION 2.04. Limited Obligations. Neither the Trustee nor the Trustor
-------------------
has any obligation with respect to the Bonds, except as otherwise provided in
this Agreement.
ARTICLE III
THE CERTIFICATES
SECTION 3.01. Classes of Certificates. The Certificates shall be
-----------------------
issued in two Classes: (a) Coupon Strip Certificates and (b) Principal Strip
Certificates. The Certificates shall have the respective Coupon Strip Rate or
Principal Strip Rate, the maturity dates and the respective Coupon Strip
Notional Amount or Certificate Principal Balance set forth in Schedule II.
-----------
SECTION 3.02. Ownership of Underlying Bonds; Voting. Each Certificate
-------------------------------------
evidences an undivided ownership interest in the Bonds, including an interest in
the principal of and premium, if any, and interest on such Bonds in accordance
with the provisions thereof and hereof.
In the event of any action or consent requiring the vote of the owners of
any Bonds, the Trustee shall, within three Business Days of being informed of
any such action or consent,
<PAGE>
deliver to the Holders of the Certificates proxies for such vote, returnable to
the Trustee. The Trustee shall vote solely in accordance with such proxies,
weighted by the Voting Rights of the Certificates held by each Holder; provided,
however, that, if the action or consent will result in a decision to retain
Bonds which otherwise would be redeemed or tendered or a decision to accept or
reject a tender for cash of the Bonds, no such proxies shall be solicited and
the Trustee shall vote in favor of the tender for cash of Bonds.
Other than with respect to such a redemption or tender for cash, the
Trustee shall not take any action as the nominal holder or owner of any of the
Bonds, either alone or as part of a group of such holders or owners of such
Bonds, except in accordance with the affirmative direction of the Holders of the
Certificates after notifying such Holders of such action. The Trustee shall have
no liability for any failure to act resulting from the later return of, or
failure to return, any such proxy sent by the Trustee to the Holders of the
Certificates.
If the owners of Bonds shall have the right to elect to retain Bonds after
a mandatory tender or to accept or reject a tender for cash of the Bonds, such
election shall not be referred to the Holder of Certificates but the Trustee
shall elect in every case on behalf of the Holders to accept the tender and to
receive cash.
SECTION 3.03. Limitation on Issuance of Certificates. No Certificates
--------------------------------------
may be issued under the provisions of this Agreement except in accordance with
the provisions of this Article III.
SECTION 3.04. Form and Numbering of Certificates. The definitive
----------------------------------
Certificates are issuable in fully registered form in Authorized Denominations.
Each Certificate shall be substantially in the form set forth in Exhibit A
---------
hereto, with such appropriate variations, omissions and insertions as may be
necessary or appropriate to conform to the provisions of this Agreement. All
Certificates may have endorsed thereon such letters, numbers or other marks of
identification and such legends or text as may be necessary or appropriate to
conform to any applicable rules and regulations of any governmental authority or
of any securities exchange on which the Certificates may be listed or any usage
or requirement of law with respect thereto.
SECTION 3.05. Details of Certificates. The Certificates shall be dated
-----------------------
the Date of Original Issue and shall entitle their Holders to payments of
interest, principal and, under certain circumstances, premium on the Bonds, all
as hereinafter provided.
The Certificates shall be executed with the manual signature of an
Authorized Trustee Officer. In case any Authorized Trustee Officer whose
signature shall appear on any Certificates shall cease to be such officer before
the delivery of such Certificates, such signature shall nevertheless be valid
and sufficient for all purposes the same as if such person had remained in
office until such delivery.
Both the principal of and the premium, if any, and the interest to which
the Holders of the Certificates are entitled shall be payable in any coin or
currency of the United States of America that is legal tender for the payment of
public and private debts on the respective dates
<PAGE>
of payment thereof. The final distribution with respect to all Certificates
shall be payable at the principal corporate trust office of the Trustee upon the
presentation and surrender of such Certificates as the same shall become due and
payable.
Payments on the Bonds to which the Holders of any Certificate are entitled
which is payable, and is punctually paid or duly provided for to the Trustee, on
any Distribution Date shall then be paid by the Trustee by check to the person
in whose name such Certificate is registered in the Certificate Register at the
close of business on the relevant Record Date. Payments shall be made by wire
transfer of immediately available funds to any Holder whose initial Certificate
Principal Balance, or Coupon Strip Notional Amount, as applicable, is not less
than $____________, at the option of such Holder, according to wire instructions
given to the Trustee in writing for such purpose.
Subject to the foregoing provisions of this Section, each Certificate
delivered under this Agreement upon registration of transfer of or in exchange
for or in lieu of any other Certificate shall carry all the rights to interest
accrued and unpaid, and to accrue, on the Bonds which were carried by such other
Certificate and each such Certificate shall entitle the Holder thereof to
receive interest payments from such date, so that neither gain nor loss in
interest shall result from such transfer, exchange or substitution.
SECTION 3.06. Validity of Certificates. Only such Certificates as
------------------------
shall have been duly executed by an Authorized Trustee Officer shall be entitled
to any benefit or security under this Agreement. No Certificate shall be valid
or become obligatory for any purpose unless and until such signature shall have
been duly executed by an Authorized Trustee Officer, and such signature of an
Authorized Trustee Officer upon any such Certificate shall be conclusive
evidence that the Certificate has been duly executed and delivered under this
Agreement.
SECTION 3.07. Exchange of Certificates. Subject to Sections 3.08 and
------------------------
3.11, Certificates, upon surrender thereof at the corporate trust office of the
Trustee, together with an assignment duly executed by the registered owner or
his attorney or legal representative in such form as shall be satisfactory to
the Trustee, may, at the option of the registered owner thereof, be exchanged
for an equal aggregate stated amount of Certificates, or in the aggregate
Percentage Interest of such Certificates, as applicable, of the same Class and
terms, of any Authorized Denominations, entitling the Holder thereof to receive
interest payments in the same manner, and in the same form as the Certificates
surrendered for exchange.
SECTION 3.08. Registration and Transfer of Certificates. The Trustee
-----------------------------------------
shall establish and maintain the Certificate Register for the registration and
registration of transfer of Certificates as provided in this Agreement. Said
Certificate Register shall be available at all reasonable times for inspection
by the Trustor and its agents and representatives, and the Trustee shall provide
to the Trustor, upon its written request, an accurate copy of the names and
addresses of the Holders set forth in the Certificate Register.
The transfer of any Certificate may be registered only upon the Certificate
Register upon surrender thereof to the Trustee together with an assignment duly
executed by the registered
<PAGE>
owner or such owner's attorney or legal representative in such form as shall be
satisfactory to the Trustee. Upon any such registration of transfer, the Trustee
shall execute and deliver in exchange for such Certificate a new registered
Certificate or Certificates, registered in the name of the transferee of any
denomination or Percentage Interest as applicable, authorized by this Agreement
in the aggregate denomination equal to the denomination, or in the aggregate
Percentage Interest equal to the Percentage Interest of such Certificate
surrendered or exchanged, of the same Class and terms, and entitling the Holder
thereof to receive interest payments in the same manner and in the same form as
the Certificates so surrendered.
In all cases in which Certificates shall be exchanged or the transfer of
Certificates shall be registered hereunder, the Trustee shall execute and
deliver at the earliest practicable time Certificates in accordance with the
provisions of this Agreement. All Certificates surrendered in any such exchange
or registration of transfer shall be canceled by the Trustee. No service charge
shall be made for any registration, transfer or exchange of Certificates, but
the Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any transfer or
exchange of Certificates.
SECTION 3.09. Ownership of Certificates. The Trustor, the Trustee and
-------------------------
any agent of the Trustor or the Trustee may treat the person in whose name any
Certificate is registered, including, without limitation, any Securities
Depository or its nominee, as the owner of such Certificate for the purpose of
receiving distributions of principal of and redemption premium, if any, and
interest on, such Certificate, and for all other purposes whatsoever, whether or
not such Certificate be overdue, and to the extent permitted by law, neither the
Trustee nor the Trustor or any such agent shall be affected by notice to the
contrary.
SECTION 3.10. Authorization of Certificates; Prior Accrued Bond
-------------------------------------------------
Interest.
- --------
(a) There shall be issued under this Agreement the Principal Strip
Certificates in the aggregate initial Certificate Principal Balance set forth in
Schedule II and the Coupon Strip Certificates with an aggregate initial Coupon
- -----------
Strip Notional Amount set forth in Schedule II. Each Certificate shall be dated
-----------
the Date of Original Issue.
The Certificates shall be executed substantially in the respective forms
and in the manner set forth herein, but before the Certificates shall be
delivered by the Trustee, there shall be filed or deposited with the Trustee the
following:
(i) a fully executed counterpart of this Agreement;
(ii) opinions of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo,
P.C., special counsel to the Trustor, as to the due authorization,
execution and delivery of and the validity of and enforceability against
the Trustor of this Agreement and the DTC Letter, certain securities laws
matters and certain tax matters, in form and substance satisfactory to the
Trustor and the Trustee;
(iii) a fully executed counterpart of the DTC letter; and
<PAGE>
(iv) such other documents, certificates and opinions as the Trustee
may require.
When such documents shall have been filed with the Trustee and when the
Certificates shall have been executed as required by this Agreement, the Trustee
shall deliver the Certificates at one or more times to or upon the order of the
Trustor, but only upon deposit of the Bonds, or any portion thereof, with the
Trustee.
(b) On the first Distribution Date, the Trustee shall transfer to the
Trustor: (i) the amount set forth in Schedule I as accrued interest on Bonds
----------
representing the portion of the interest received by the Trustee which accrued
prior to the Date of Original Issue on the portion of the Bonds deposited with
the Trustee on the Date of Original Issue plus (ii) with respect to each portion
of the Bonds, if any, deposited with the Trustee subsequent to the Date of
Original Issue the portion of interest received by the Trustee on such portion
of the Bonds which accrued prior to the Date of Original Issue.
SECTION 3.11 Temporary Certificates. Until definitive Certificates of
----------------------
any Class are ready for delivery, upon request of the Trustor, who shall supply
the Trustee with the number of Certificates required, the Trustee shall execute
and deliver, in lieu of definitive Certificates of such Class and subject to the
same limitations and conditions, typewritten, printed, engraved or lithographed
temporary Certificates of such Class, in the form of fully registered
Certificates in Authorized Denominations, substantially of the tenor of the
Certificates of such Class set forth in this Agreement and with such appropriate
omissions, insertions and variations as may be required.
Until definitive Certificates are ready for delivery, any temporary
Certificate may be exchanged at the principal corporate trust office of the
Trustee, without charge to the Holder thereof, for an equal aggregate stated
amount or, in an equal Percentage Interest of such Certificates, as applicable,
of temporary fully registered Certificates of Authorized Denominations, of like
tenor, of the same Class and terms, and entitling the Holder thereof to receive
interest payments on the Bonds in the same manner as the Certificates so
exchanged.
If temporary Certificates of any Class shall be issued, the Trustee shall
prepare the definitive Certificates of such Class and execute the same, and the
Trustee, upon presentation to it at its principal office of any temporary
Certificate, shall cancel the same and deliver in exchange therefor at the place
designated by the Holder, without charge to the Holder thereof, a definitive
Certificate or Certificates of an equal aggregate stated amount or, in an equal
Percentage Interest of such Certificates, as applicable, of the same Class and
terms, and entitling the Holder thereof to receive interest payments in the same
manner as the temporary Certificate so surrendered. Until so exchanged, the
temporary Certificates of any Class shall be in all respects be entitled to the
same benefit of this Agreement as the definitive Certificates of such Class to
be issued and authenticated hereunder.
SECTION 3.12 Mutilated, Destroyed or Lost Certificates. In case any
-----------------------------------------
Certificate shall become mutilated or be destroyed or lost, the Trustee shall
execute and deliver a new Certificate of like date, Class, terms and tenor in
exchange and substitution for and upon the
<PAGE>
cancellation of such mutilated Certificate or in lieu of and in substitution for
such Certificate destroyed or lost, and the Holder shall pay the reasonable
expenses and charges of the Trustee in connection therewith and, in case of a
Certificate destroyed or lost, the Holder shall file with the Trustee evidence
satisfactory to it that such Certificate was destroyed or lost, and of such
Holder's ownership thereof, and shall furnish the Trustor and the Trustee with
such indemnity as shall be satisfactory to them.
Any replacement Certificate issued pursuant to this Section shall
constitute complete and indefensible evidence of ownership of the Bonds, as if
originally issued, whether or not the destroyed, lost or stolen Certificate
shall be found at any time.
SECTION 3.13. Book-Entry Only System for Principal Strip Certificates.
-------------------------------------------------------
(a) Except as otherwise provided herein, one fully registered Principal
Strip Certificate for the entire amount of such Class shall be registered in the
name of the Securities Depository or its nominee, and ownership thereof shall be
maintained in book-entry form by the Securities Depository for the account of
the Agent Members thereof. Initially, the Principal Strip Certificates shall be
registered in the name of Cede & Co., as the nominee of DTC. Transfers of
beneficial ownership interests in the Principal Strip Certificates which are
registered in the name of Cede & Co. will be accomplished by book entries made
by the Securities Depository and in turn by the Agent Members who act on behalf
of the Beneficial Owners of Principal Strip Certificates.
Neither the Trustee, the Trustor nor any of their respective affiliates
shall have any responsibility or obligation with respect to:
(i) the accuracy of the records of the Securities Depository or any
Agent Member with respect to any beneficial ownership interest in the
Principal Strip Certificates;
(ii) the delivery to any Agent Member, any beneficial owner of the
Certificates or any other person, other than the Securities Depository, of
any notice with respect to the Principal Strip Certificates;
(iii) the payment to any Agent Member, any beneficial owner of the
Principal Strip Certificates or any other person, other than the Securities
Depository, of any amount distributable with respect to the Principal Strip
Certificates; or
(iv) the failure of the Securities Depository to effect any
transfer.
(b) So long as the Principal Strip Certificates are registered in the name
of a Securities Depository or its nominee, the Trustee may treat the Securities
Depository as, and deem the Securities Depository to be, the absolute owner of
the Principal Strip Certificates for all purposes whatsoever, including without
limitation:
<PAGE>
(i) the payment of distributions to Holders of the Principal Strip
Certificates;
(ii) giving notices of redemption and other matters with respect to
the Principal Strip Certificates;
(iii) registering transfers with respect to the Principal Strip
Certificates; and
(iv) the selection of Principal Strip Certificates for redemption.
(c) If at any time the Securities Depository notifies the Trustee that it
is unwilling or unable to continue as Securities Depository with respect to the
Principal Strip Certificates, or if at any time the Securities Depository shall
no longer be registered or in good standing under the Securities Exchange Act or
other applicable statute or regulation and a successor Securities Depository is
not appointed by the Trustee within 90 days after it receives notice or becomes
aware of such conditions, as the case may be then the Trustee shall execute and
deliver certificates representing the Principal Strip Certificates as provided
below. Certificates for the Principal Strip Certificates issued in exchange for
a global certificate pursuant to this paragraph shall be registered in such
names and be in such Authorized Denominations as the Securities Depository,
pursuant to instructions from the Agent Members or otherwise, shall instruct the
Trustee. The Trustee shall deliver such certificates representing the Principal
Strip Certificates to the persons in whose names such Principal Strip
Certificates are so registered.
SECTION 3.14. No Listing on Securities Market. Certificates shall not be
-------------------------------
listed on any established securities market. For this purpose, an established
securities market includes any national securities exchange registered under the
Securities Exchange Act of 1934 or exempted form registration because of the
limited volume of transactions, any local exchange, and any over the counter
market characterized by an interdealer quotation system which regularly
disseminates quotations of obligations by identified brokers or dealers, by
electronic means or otherwise.
ARTICLE IV
DISTRIBUTIONS IN RESPECT OF THE CERTIFICATES
SECTION 4.01. Distributions.
-------------
(a) On each Distribution Date, the Trustee shall make distributions to
each Holder of record as of the applicable Record Date (other than as provided
in Section 3.05 with respect to the final distribution) either in immediately
available funds by wire transfer (if such Holder is eligible to receive wire
transfers and has made a request therefor) or by check mailed to such Holder at
the address appearing in the Certificate Register. The Trustee shall pay to each
Holder of a Certificate in respect of interest, the Accrued Certificate Interest
on such Certificate for such Distribution Date. If payments received by the
Trustee with respect to the Bonds after deduction of the applicable Trustee Fee
are insufficient to pay all Accrued Certificate Interest
<PAGE>
on the Certificates on such Distribution Date, then such remaining funds will be
distributed as interest to the Holders of the Certificates pro rata based on
their Accrued Certificate Interest.
(b) With respect to any Principal Strip Certificate, if the applicable
Issuer shall have paid and the Trustee shall have received all or any part of
the Principal due upon maturity or earlier redemption of the underlying Bonds,
the Trustee shall pay to each Holder of record of Principal Strip Certificates
as of the applicable Record Date either in immediately available funds by wire
transfer (if such Holder is eligible to receive a wire transfers and has made a
request therefor) or by check mailed to such Holder at the address appearing in
the Certificate Register, the entire amount of such Principal. If payments
received by the Trustee with respect to the Bonds after deduction of the
applicable Trustee Fee and the payment of all Accrued Certificate Interest on
the Certificate Interest on the Certificates on such Distribution Date are
insufficient to pay the aggregate Certificate Principal Balance of the Principal
Strip Certificates, then such remaining funds will be distributed as principal
to the Holders of the Principal Strip Certificates pro rata based on their
Certificate Principal Balance.
(c) When making any payment to a Holder of a Certificate under this
Agreement, the Trustee shall round down such payment to the nearest whole cent.
SECTION 4.02. Segregation of Moneys Received from Issuers in Respect of
---------------------------------------------------------
Bonds. All moneys received from the Issuers of Bonds or otherwise by the Trustee
- -----
in respect of Bonds evidenced by Certificates issued hereunder shall be held by
it without interest in the Trust Account until required to be disbursed in
accordance with the provisions of this Agreement or as otherwise required by law
and such moneys will be segregated by separate recordation on the books and
records of the Trustee.
SECTION 4.03. Allocation of Losses and Interest Shortfalls on Bonds.
-----------------------------------------------------
(a) Immediately after each Bonds Payment Date, the Trustee shall determine
the total amount of losses, if any, incurred with respect to the Bonds. Such
losses shall be allocated to the Principal Strip Certificates, pro rata, on the
basis of their outstanding Certificate Principal Balances, to reduce their
respective outstanding Certificate Principal Balances by the amount so
allocated. Any reduction in the Certificate Principal Balance of th Principal
Strip Certificates will result in a corresponding decrease in the Coupon Strip
Notional Amount. Such losses will be deemed to have been allocated on any
Distribution Date prior to the distribution of principal on such Distribution
Date.
(b) Immediately after each Bonds Payment Date, the Trustee shall determine
the total amount of interest shortfalls, if any, incurred with respect to the
Bonds. Such interest shortfalls shall be allocated to all Classes of
Certificates, pro rata, based on the Accrued Certificate Interest on each Class,
to reduce the Accrued Certificate Interest payable to each Class on the next
Distribution Date.
<PAGE>
SECTION 4.04 Statements to Holders. On each Distribution Date, the
---------------------
Trustor shall forward to the Trustee and the Trustee shall forward by mail to
each Holder a statement setting forth the following information, on a Class by
Class basis, as applicable:
(a) the amount of interest distributed to Holders of such Class of
Certificates;
(b) the amount of principal distributed to Holders of such Class of
Certificates;
(c) if the interest payments received by the Trustee with respect to the
Bonds are insufficient to make the required interest distributions with respect
to the Certificates, the aggregate amount of all such interest shortfalls on
such Distribution Date and the amount of such interest shortfalls to be
allocated to such Class of Certificates;
(d) if any loss is incurred with respect to the Bonds, the aggregate
amount of all such losses on such Distribution Date and the amount of such
losses to be allocated to such Class of Certificates;
(e) the aggregate Accrued Certificate Interest remaining unpaid, if any,
for each Class of Certificates, after giving effect to the distribution made on
such Distribution Date; and
(f) the aggregate Certificate Principal Balance of each Class of
Certificates after giving effect to the distribution made on such Distribution
Date and to losses allocated on such Distribution Date.
ARTICLE V
TERMINATION EVENTS
AND PURCHASE OF CERTIFICATES UPON TRUSTOR'S TENDER DEMAND
SECTION 5.01 Termination Events and Sale of Bonds. Upon the occurrence
------------------------------------
of any of the following (herein called "Termination Events"):
(a) the Trustee shall fail to distribute to the Holders of any
Certificates any distribution required to be made under the terms of this
Agreement and such failure shall continue unremedied for five days;
(b) the Trustor shall consent to the appointment of a conservator,
receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceeding of or relating to the Trustor or a
decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator, receiver or
liquidator in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceeding, or for the winding up or liquidation of its
affairs, shall have been entered against the Trustor or the Trustor shall admit
in writing its inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency or reorganization
<PAGE>
statute, make an assignment to the benefit of its creditors or voluntarily
suspend payment of its obligations;
(c) the Trustor shall cease to be a party to this Agreement; or
(d) it becomes necessary to register the Trust as an "investment company"
under the Investment Company Act;
The Trustee shall notify each registered owner of the Certificates of the
occurrence of such Termination Event as soon as practicable after it obtains
knowledge thereof. Unless a Termination Event is waived by the requisite number
of Certificateholders, as soon as is commercially practical after the giving of
such notice, the Trustee shall sell the Bonds to the highest bidder in an
auction in which at least one bid is received from a Person that is not an
affiliate of the Trustor. The proceeds of such a sale shall be distributed on
the next Distribution Date first to the Holders of all Certificates in respect
of Accrued Certificate Interest thereon (pro rata based on the amounts of
Accrued Certificate Interest) and then to the Holders of the Principal Strip
Certificates in respect of principal thereof (pro rata based on Certificate
Principal Balance).
SECTION 5.02. Notice to Holders. Upon any termination of the Trust or any
-----------------
sale of defaulted Bonds pursuant to Section 5.01, the Trustee shall give prompt
written notice thereof to the Holders at their respective addresses appearing in
the Certificate Register.
SECTION 5.03. Waiver of Termination Events. The Holders representing at
----------------------------
least 66% of the Voting Rights of Certificates affected by a Termination Event
may waive such Termination Event; provided, however, that a Termination Event
under section 5.01(a) may only be waived by the Holders of all the Certificates.
Upon any such waiver, such Termination Event shall cease to exist and shall be
deemed to have been remedied for every purpose hereunder. No such waiver shall
extend to any subsequent or other Termination Event nor shall impair any right
consequent thereon except to the extent expressly waived.
ARTICLE VI
REDEMPTION OF PRINCIPAL STRIP CERTIFICATES
SECTION 6.01. Redemption. If the Bonds of any issue underlying Principal
----------
Strip Certificates are redeemed in whole or in part, and upon actual receipt by
the Trustee of notice of such redemption or upon publication to that effect in
The Bond Buyer, The Wall Street Journal or The New York Times, each of which the
- -------------- ----------------------- ------------------
Trustee shall review on a regular basis, the Trustee shall, in accordance with
the provisions of this Article VI, redeem a principal amount of Principal Strip
Certificates equal to the principal amount of the Bonds so redeemed. In the
absence of the actual notice or publication described in this Section 6.01, the
Trustee shall be under no obligation to effect the redemption required by this
Section 6.01.
<PAGE>
SECTION 6.02. Selection by Trustee of Principal Strip Certificates. In
----------------------------------------------------
the event of a partial redemption of the Bonds underlying any Principal Strip
Certificates, the particular Principal Strip Certificates to be redeemed shall
be selected by the Trustee from the outstanding Principal Strip Certificates by
lot or by such method as the Trustee shall deem fair and appropriate. To the
extent practical the Trustee shall, in the case of partial redemption, redeem
Principal Strip Certificates so that not more than one such Certificate remains
outstanding in other than an Authorized Denomination.
SECTION 6.03. Notice of Redemption. Notice of redemption shall be given
--------------------
by the Trustee to each Holder of any Principal Strip Certificate to be redeemed
as provided in Section 7.02 hereof within thirty (30) days after notice of
redemption of the underlying Bonds has been given by the Issuer, trustee or
paying agent of or for the Bonds, as the case may be (but not less than fifteen
days prior to the redemption date), provided, however, that the Trustee shall
not be required to give any notice of redemption less than three (3) business
days after the date it receives notice of such redemption. Notice of the
redemption of the Bonds shall be given by the Trustee to each Holder of a Coupon
Strip Certificate at the same time and in the same manner as the redemption
notice given to Holders of affected Principal Strip Certificates. All notices
shall be mailed to each Holder at such Holder's last address on the Certificate
Register.
ARTICLE VII
CERTAIN COVENANTS
SECTION 7.01. Method of Payment of Principal Strip Certificates. So long
-------------------------------------------------
as the Principal Strip Certificates are registered in the name of the Securities
Depository or a nominee thereof, distributions of principal and interest (other
than at maturity) with respect to the Principal Strip Certificates shall be made
to the Securities Depository by wire transfer provided proper wire instructions
are received by the Trustee prior to the applicable Record Date therefor.
SECTION 7.02. Covenant to Perform and Authority of the Trustor. The
------------------------------------------------
Trustor shall faithfully perform at all times all of its covenants, undertakings
and agreements contained in this Agreement and in any Certificate executed and
delivered hereunder. The Trustor represents that it is duly authorized to
execute this Agreement and to deposit the Bonds with the Trustee pursuant
hereto; that all action on its part for the issuance of the Certificates and the
adoption of this Agreement has been duly and effectively taken; and that such
Certificates in the hands of the Holders thereof will be valid rights to receive
payments in respect of the Bonds in the manner herein and in the Certificates
specified, enforceable according to their terms, notwithstanding the bankruptcy,
insolvency or liquidation of the Trustor.
ARTICLE VIII
THE TRUSTEE
<PAGE>
SECTION 8.01. Acceptance of Duties. The Trustee hereby accepts and agrees
--------------------
to fulfill the obligations imposed upon it by this Agreement, but only upon the
terms and conditions set forth in this Article and subject to the provisions of
this Agreement, to all of which the Trustor and the Holders, by the acceptance
of their Certificates, agree.
SECTION 8.02. Limited Liability.
-----------------
(a) The Trustee shall incur no liability to any Holder of any Certificate
if, by reason of any provision of any present or future law, or regulation
thereunder, of any governmental authority, or by reason of any natural disaster
or war or other circumstance beyond its control, the Trustee is prevented from
doing or performing any act or thing which the terms of this Agreement provide
should be done or performed.
(b) The Trustee shall assume no obligation and shall not be subject to any
liability to Holders of Certificates or the Trustor in the performance of its
duties, other than by reason of willful misconduct, bad faith or gross
negligence or as may be required by ERISA. The Trustee is not under any
obligation to take any action which may tend to involve it in any expense or
liability, the recovery or payment of which within a reasonable time is not, in
its reasonable opinion, assured to it. The Trustee may own and deal in Bonds,
in obligations of the same issue and maturity as the Bonds and in the
Certificates, as though it were not the Trustee under this Agreement.
SECTION 8.03. Fidelity Bond. The Trustee is required at all times to
-------------
maintain a fidelity bond or other insurance (which may be self-insurance) in
reasonable form and amount to protect against loss due to dishonest or
fraudulent action by its employees in connection with its obligations under this
Agreement.
SECTION 8.04. Indemnification of Trustee. The Trustor agrees to indemnify
--------------------------
the Trustee against, and hold it harmless from, any liability relating to, or in
any way connected with, or arising hereunder caused solely by the failure of
Trustor to perform its obligations hereunder. Without limiting the generality of
the foregoing, the Trustee shall have no duty or responsibility for and shall
not be deemed to have been negligent with respect to, and the Trustor shall
indemnify and hold harmless the Trustee against, any liability arising out of
any claim (i) that the Bonds are not genuine, (ii) that any disclosure with
respect to the Bonds or the Certificates required by applicable federal and
state laws was not made or (iii) that registration of the Certificates or any
investment company relating to the Certificates and this Trust Agreement is
required by applicable federal or state securities laws and Trustor failed to
effect such registration.
If the indemnification provided for in the preceding paragraph is invalid
or unenforceable in accordance with its terms, then the Trustor shall contribute
to the amount paid or payable by the Trustee as a result of such liability in
such proportions as is appropriate to reflect the relative benefits received by
the Trustor, on one hand, and the Trustee, on the other, from the issuance and
sale of such Certificates. For this purpose the benefits received by the
Trustor shall be the aggregate amount received by the Trustor upon the sale of
such Certificates, less the costs and
<PAGE>
expenses of such sale, including the cost of acquisition of the Bonds or parts
thereof evidenced thereby, and the benefits received by the Trustee shall be the
aggregate amount of fees received by the Trustee, less costs and expenses
incurred in relation to such Certificates. If, however, the allocation provided
by the immediately preceding two sentences is not permitted by applicable law,
then the Trustor shall contribute to such amount paid or payable by the Trustee,
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Trustor, on the one hand, and the Trustee, on
the other, in connection with the actions or omissions which resulted in such
liability, as well as any other relevant equitable considerations.
In case any claim shall be made or action brought against the Trustee for
any reason for which indemnity may be sought against the Trustor as provided
above, the Trustee may promptly notify the Trustor in writing setting forth the
particulars of such claim or action and the Trustor may assume the defense
thereof. In the event that the Trustor assumes the defense, the Trustee shall
have the right to retain separate counsel in any such action but shall bear the
fees and expenses of such counsel unless (i) the Trustor shall have specifically
authorized the retaining of such counsel or (ii) the parties to such suit
include the Trustee and the Trustor, and the Trustee has been advised in writing
by such counsel that one or more legal defenses may be available to it which may
not be available to the Trustor, in which case the Trustor shall not be entitled
to assume the defense of such suit notwithstanding its obligation to bear the
reasonable fees and expenses of such counsel.
The term "liability", as used in this Section 8.04, shall include any
losses, claims, damages, expenses (including without limitation the Trustee's
reasonable costs and expenses in defending itself against any losses, claims or
investigations of any nature whatsoever) or other liabilities, joint or several,
arising for any reason under this Agreement (including without limitation
violation of applicable laws or trademarks or servicemarks).
The obligations of the Trustor under this Section 8.04 shall be in addition
to any liability which the Trustor may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Trustee and to
each person, if any, who controls the Trustee within the meaning of the
Securities Exchange Act.
Upon any removal or resignation of the Trustee, the Trustee's right to
indemnification and the Trustor's obligations to indemnify the Trustee hereunder
shall survive such removal or resignation.
SECTION 8.05 Monthly Statements from Trustee. It shall be the duty of
-------------------------------
the Trustee, on or before the fifteenth day of each month, to file with the
Trustor a statement setting forth in respect of the preceding calendar month:
(a) ____________________________________; and
(b) any other information that the Trustor may reasonably request.
<PAGE>
All records and files pertaining to Certificates or the Trustor in the
custody of the Trustee shall be open at all reasonable times to the inspection
of the Trustor and its agents and representatives.
SECTION 8.06 Resignation and Removal.
-----------------------
(a) The Trustee may at any time resign as Trustee by giving written notice
of its election to do so to the Trustor and such resignation shall take effect
upon the appointment of a successor Trustee by the Trustor, subject to and
agreeing to comply with the terms and conditions of this Agreement. If at any
time the Trustee becomes incapable of acting or is adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property is appointed, or any
public officer takes charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then any
Holder of a Certificate may, on behalf of itself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Trustee and the appointment of a successor Trustee.
(b) If at any time the Trustee notifies the Trustor that it elects to
resign as Trustee, the Trustor shall, within 45 days after the delivery of the
notice of resignation or removal, appoint a successor Trustee, which is to be a
commercial bank or trust company having its principal office in the United
States of America and having a combined capital and surplus of at least
$50,000,000. If no successor Trustee has been so appointed within such 45-day
period, the Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee. Any corporation or association into or with
which the Trustee may be merged, consolidated or converted will be the successor
of such Trustee without the execution or filing of any document or any further
act.
(c) Notwithstanding the foregoing, no resignation or removal of the
Trustee in accordance with the provisions hereof shall become effective until
its successor Trustee has accepted its appointment hereunder.
SECTION 8.07. Default on Bonds. The Trustee shall use its best reasonable
----------------
efforts to collect all payments due with respect to the Tax Exempt Securities in
accordance with such normal and customary practices it shall deem necessary or
advisable, and shall have the power and authority, acting alone, to do any and
all things in connection therewith and the administration of the Trust as it may
deem necessary or advisable.
SECTION 8.08. Notice of Certain Defaults. Upon receipt of notice of any
--------------------------
default on the Bonds from the Issuer's trustee or other applicable fiduciary or
upon actual knowledge thereof by an officer of the Trustee assigned to its
corporate trust office, the Trustee shall promptly give notice of such default
to the Holders of the Certificates. Such notice shall set forth (a) the
identity of the issue of Bonds, (b) the date and nature of such default, (c) the
amount of principal and the amount of interest to which such default relates,
(d) the identifying numbers of the Coupon Strip Certificates or the Principal
Strip Certificates or any combination, as the case may be, evidencing the
interest or principal described in clause (c), and (e) any other information
which the Trustee deems appropriate.
<PAGE>
SECTION 8.09. Credit Ratings. The Trustor shall at its expense take all
--------------
reasonable action necessary to enable at least one nationally recognized
statistical rating organization (as that term is used in the rules and
regulations of the Commission under the Securities Exchange Act) to provide
credit ratings for the Certificates.
SECTION 8.10. Payment of Trustee Fee. On each Distribution Date, prior to
----------------------
distributions to Holders of Certificates, the Trustee shall withdraw its Trustee
Fee from the Trust Account. The amount of the Trustee Fee shall not be
available for distributions to Holders in respect of their Certificates.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Governing Law. This agreement will be governed by and
-------------
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in the State of New York.
SECTION 9.02. Notices.
-------
(a) Any notice or other instrument in writing which is authorized or
required by this Agreement to be given shall be sufficiently given if addressed
to and received by the addressee at its office specified below, or at such other
place as the addressee may from time to time designate to the parties hereto in
writing:
(i) If to the Trustor, addressed:
T.A. of Delaware, Inc.
One Beacon Street
Boston, MA 02108
Attention:
Telephone No.: (617)
Facsimile No.: (617)
Attention:
Telephone No.: (617)
Facsimile No.: (617)
(ii) If to the Trustee, addressed:
____________________________
____________________________
____________________________
____________________________
___________________
<PAGE>
Attention:__________________
Telephone No.:______________
Facsimile No.:______________
(b) The Trustee is hereby authorized and directed to give notice by first
class mail, postage prepaid, to each of the Rating Agencies [INSERT SPECIFIC
INFORMATION] or their respective successors of the occurrence of any of the
following: (i) any amendment of or supplement to this Agreement, pursuant to
Section 9.04, (ii) any resignation and removal of the Trustee and the
appointment of a successor Trustee, pursuant to Section 8.06, or (iii) the
Certificates no longer being registered solely in the name of the Securities
Depository or its nominee. Notwithstanding the foregoing provisions of this
Section, it is expressly understood and agreed that the Trustee is agreeing to
give such notices as a matter of courtesy and accommodation and will endeavor to
provide them, but shall not incur any liability or obligation, of any kind with
respect to any such notices delivered to the Rating Agencies or by reason of any
failure to deliver any such notice.
SECTION 9.03. Binding Agreement. This Agreement shall extend to and
-----------------
shall be binding upon the parties hereto and their respective successors and
assigns.
SECTION 9.04. Amendments.
----------
(a) This Agreement may be amended at any time without the consent of any
of the Holders of the Certificates for purposes of obtaining or maintaining any
rating on the Certificates by a nationally recognized securities rating agency.
(b) In addition, this Agreement may be amended at any time and from time
to time by agreement between the Trustor and the Trustee for any other purpose
and in any other respect which they may deem necessary or desirable, without the
consent of any of the Holders of Certificates, if (i) the Trustee determines
that such amendment will not adversely affect the interests of any Holders of
Certificates and (ii) the Trustee has received an Opinion of Counsel of
appropriate special tax and securities counsel to the effect that such amendment
will not result in the withdrawal of, or modification of the conclusions of, any
opinion previously delivered by such counsel in connection with the
Certificates.
SECTION 9.05. Termination and Severability.
----------------------------
(a) This Agreement is to remain in effect until the date upon which all of
the Bonds have been paid in full at the maturity or early redemption thereof and
the payment on such Bonds has been distributed to Holders of Certificates in
accordance with this Agreement. The discharge of any indenture or other
document related to any of the Bonds will not result in a termination of this
Agreement.
(b) If at any time it shall be determined that the Trustee shall be
prevented or forbidden from acting or performing any of its duties under the
terms of this Agreement by reason of any present or future law or regulation of
the United States of America or any other
<PAGE>
governmental agency or authority, then this Agreement shall be amended to delete
herefrom those duties that the Trustee is so prevented or forbidden from
performing, and if the Trustee is so prevented from performing all or
substantially all of its duties hereunder, then this Agreement may be terminated
by either of the parties hereto upon 90 days written notice.
SECTION 9.06. Counterparts. This Agreement may be executed in any
------------
number of counterparts, each of which, when executed and delivered, shall be
deemed an original, but all of which together constitute one and the same
agreement.
IN WITNESS WHEREOF, T.A. OF DELAWARE, INC. and
_____________________________ have caused this Trust Agreement to be executed by
their duly authorized officers and their respective seals to be affixed hereto,
all as of the ____ day of ____________, 199_.
T.A. OF DELAWARE, INC., as Trustor
By: ______________________________
Its: _____________________________
[SEAL]
_________________________________,
as Trustee
By:_______________________________
Its:______________________________
[SEAL]
<PAGE>
STATE OF )
: ss.
COUNTY OF )
On this ____ day of ________________, 199_, before me personally appeared
________________________ known to me to be ___________________________ of T.A.
of Delaware, Inc., one of the corporations that executed the within agreement,
and known to me to be the person that executed said agreement on behalf of such
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand on the day and year set
forth above.
______________________________
Notary Public
STATE OF )
: ss.
COUNTY OF )
On this ____ day of ________________, 199_, before me personally appeared
________________________ known to me to be ___________________________ of
________________________, one of the corporations that executed the within
agreement, and known to me to be the person that executed said agreement on
behalf of such corporation.
IN WITNESS WHEREOF, I have hereunto set my hand on the day and year set
forth above.
_______________________________
Notary Public
<PAGE>
SCHEDULE I
TO TRUST AGREEMENT
DESCRIPTION OF THE BONDS
Issuer:
Bonds:
Dated:
Original Principal Maturity Date:
Original Par Value Amount Issued:
CUSIP Number:
Stated Interest Rate:
Interest Payment Dates:
Redemption Date:
Redemption Price:
Year Redemption Price Year Redemption Price
---- ---------------- ---- ----------------
Trustee:
Mode of Payment Of Bonds: By credit to the Account of the Holder
at _________________________________.
Principal Amount of
Bonds Deposit Under Agreement: $________________
The Bonds will be held by the Trustee for the Holders of Certificates as book-
entry credits to an account of the Trustee at The Depository Trust Company of
New York.
<PAGE>
SCHEDULE II
TO TRUST AGREEMENT
CERTIFICATES
Initial Certificate Principal Balance of
Principal Strip Certificates: $___________
Initial Coupon Strip Notional Amount: $___________
Coupon Strip Rate: _____%
Principal Strip Rate: _____%
Authorized Denominations
Coupon Strip Certificates: _____%
Principal Strip Certificates $___________
<PAGE>
EXHIBIT A
[FOR Coupon Strip Certificates] [THE YIELD ON THIS CERTIFICATE WILL BE EXTREMELY
SENSITIVE TO PREPAYMENTS OF THE TAX EXEMPT SECURITIES. THIS CERTIFICATE IS NOT
ENTITLED TO ANY DISTRIBUTIONS IN RESPECT OF PRINCIPAL.
THIS CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF T.A. OF
DELAWARE, INC. OR THE TRUSTEE REFERRED TO BELOW, OR OF ANY OF THEIR AFFILIATES.
THIS CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENT AGENCY OR
INSTRUMENTALITY.
TAX EXEMPT SECURITIES TRUST CERTIFICATE,
MULTI-CLASS SERIES ____, [COUPON] [PRINCIPAL] STRIP CERTIFICATE
____% RATE
Evidencing an undivided interest in a Trust whose assets consist of certain
[municipal housing] bonds and certain other property held in trust transferred
by
T.A. OF DELAWARE, INC.
CUSIP _________ [$ ] [INITIAL [COUPON] [PRINCIPAL]
STRIP CERTIFICATE BALANCE]
Certificate No. [$ ] [INITIAL [COUPON] [PRINCIPAL]
STRIP CERTIFICATE BALANCE
OF THIS CERTIFICATE]
First Distribution Final Scheduled
Date:_______________ Distribution Date:___________,___
THIS CERTIFIES THAT _______________________ is the registered owner of a
beneficial interest in the Trust referred to below consisting of a pool of tax
exempt bonds (the "Bonds") and certain other property held in trust transferred
to the Trust by T.A. of Delaware, Inc. (the "Trustor"). The Trust was created
pursuant to the Trust Agreement, dated as of _______________ __, 199__ (the
"Agreement"), between the Trustor ___________________________ and
___________________________, as trustee (the "Trustee", which term includes any
successor entity under the Agreement), a summary of certain of the pertinent
provisions of which is set forth herein. THE TERMS AND CONDITIONS OF THE
AGREEMENT ARE HEREBY INCORPORATED IN THIS CERTIFICATE AS IF FULLY SET FORTH AND,
EXCEPT AS OTHERWISE DEFINED HEREIN, ALL TERMS USED HEREIN SHALL HAVE THE MEANING
ASCRIBED THERETO IN THE AGREEMENT UNLESS THE CONTEXT HEREOF DICTATES OTHERWISE.
THE HOLDER HEREOF
<PAGE>
ASSENTS TO ALL OF THE TERMS AND PROVISIONS OF THE AGREEMENT, A COPY OF WHICH IS
AVAILABLE FOR INSPECTION AT THE CORPORATE TRUST OFFICE OF THE TRUSTEE. The Bonds
to which this Certificate and other Certificates relate, and interest, premium,
if any, and principal payments on the Bonds received by the trustee pending
their disbursement to holders of Certificates will be held by the Trustee in a
trust account for the benefit of Holders of Certificates at
______________________________, _________________ ____.
This Certificate is one of a duly authorized issue of certificates of T.A.
of Delaware, Inc. designated as its Tax Exempt Securities Trust Certificates,
Multi-Class Series ____, which is comprised of two Classes: the Coupon Strip
Certificates and the Principal Strip Certificates (collectively, the
"Certificates"). Reference is hereby made to the Agreement for a statement of
the respective rights thereunder of the Trustor and the Trustee and the Holders
of the Certificates and the terms upon which the Certificates are authenticated
and delivered.
This [Coupon] [Principal] Strip Certificate represents a percentage
interest (the "Percentage Interest") [equal to the initial [Coupon] [Principal]
Strip Certificate Balance of this Certificate divided by the initial [Coupon]
[Principal] Strip Certificate Balance, both as set forth] [set forth on the face
hereof].
The Trustee shall distribute from the Trust Account, to the extent of
available funds on the _____ day of each calendar month, or, if such _____ day
is not a Business Day, the Business Day immediately following such ____ day
(the "Distribution Date"), commencing __________, to the Person in whose name
this Certificate is registered at the close of business on the last Business
Day next preceding such Distribution Date (each a "Record Date"), [a principal
amount equal to the product of the Percentage Interest evidenced by this
Certificate and that portion of the funds on deposit in the Trust Account that
is allocated to principal on such Class of Certificates on such Distribution
Date.]
Distributions of interest will be made on each Distribution Date, to the
extent of available funds, in an amount equal to thirty days' interest accrued
at a rate per annum equal to the applicable [Principal] [Coupon] Strip Rate on
[the Outstanding balance of Principal Strip Certificate] [Coupon Strip Notional
Amount] of this Certificate as of the day immediately prior to the related
Distribution Date.
Not later than each Distribution Date, the Trustee will send to each
Certificateholder a statement containing information relating to the Bonds and
payments made to Certificateholders.
Distributions on this Certificate will be made by the Trustee by check
mailed to the address of the Holder hereof entitled thereto at the address
appearing in the Certificate Register or, if such Holder holds Certificates with
an [aggregate initial Certificate Principal Balance of at least
__________________] by wire transfer in immediately available funds to the
account of such Certificateholder designated in writing to the Trustee at least
five Business Days prior to the applicable Record Date. Notwithstanding the
above, the final distribution on this Certificate will be made after due notice
of the pendency of such final distribution and only upon presentation and
surrender of this Certificate at the office or agency designated in such notice.
<PAGE>
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable on the Certificate
Register upon surrender of this Certificate for registration of transfer at the
office or agency of the Trustee designated therefor, duly endorsed by, or
accompanied by a written instrument of transfer in a form satisfactory to the
Trustee duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of the same
Class and of authorized denominations, and for the same aggregate interest in
the Trust will be issued to the designated transferee or transferees.
The Principal Strip Certificates will be issued in fully registered form in
minimum [denominations of $_______ and in integral multiples of $1,000 in excess
of such amount]. As provided in the Agreement and subject to certain
limitations therein set forth, this Certificate is exchangeable for one or more
new Certificates of the same Class and of authorized denominations evidencing a
like aggregate [stated amount] [Percentage Interest], as requested by the Holder
surrendering the same.
No service charge will be made for such registrations of transfer or
exchanges, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. The Trustee
and any agent of the Trustee may treat the person in whose name this Certificate
is registered as the owner hereof for all purposes, and neither the Trustee nor
any such agent thereof shall be affected by notice to the contrary.
The Trustee assumes no obligation nor shall it be subject to any liability
to the Holder of this Certificate other than it agrees to use its best judgment
and good faith in the performance of the duties specifically set forth herein
and in the Agreement.
[The Trustee shall at all times be a commercial bank or trust company
organized and doing business under the laws of the United States of America
authorized to act as Trustee, having a combined capital and surplus of at least
$50,000,000, subject to examination by federal [or New York] authority. [It
shall at all times have an office or an agent for acceptance and delivery of
Bonds and Certificates in the Borough of Manhattan, City and State of New York.]
The Trustee may resign any time and shall resign if it shall cease to meet
the requirements of the preceding paragraph and the Trustor shall thereupon
appoint a successor Trustee. Notice of any such resignation and the appointment
of a successor Trustee shall be mailed to the address of the Holder of this
Certificate set forth on the books of the Trustee.
The obligations and responsibilities of the Trustor and the Trustee created
by the Agreement will terminate upon the maturity or other liquidation of the
last Bond remaining in the Trust and the payment on the Bonds has been
distributed to Holders of Certificates in accordance with the Trust Agreement.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid or obligatory for any
purpose.
<PAGE>
The terms and provisions of this Certificate are governed by the laws of
New York.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed under its corporate seal.
_____________________________, as Trustee
By:_____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the [Principal] [Coupon] Strip Certificates referred to in the
within-mentioned Agreement.
Date:
________________________
as Trustee
By:_____________________
Authorized Officer
<PAGE>
ASSIGNMENT
----------
FOR VALUE RECEIVED the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
________________________________________________________________________________
__________ (Please print or typewrite name and address, including postal zip
code, or assignee) the undivided interest in the Trust evidenced by the within
Certificate and hereby authorize(s) the transfer of registration of such
interest to the assignee on the Certificate Register.
I (we) further direct the Trustee to issue a new Certificate of the same
class and of a like initial [Principal] [Coupon] Strip Certificate Balance and
undivided interest in the Trust to the above-named assignee and to deliver such
Certificate to the following address
________________________________________________________________________________
________________________________.
Dated: ____________________________
Social Security or ______________________________________
other Tax Identification Signature by or on behalf of
No. of Assignee: assignor (signature must be signed as
registered)
___________________________________ _____________________________________
Signature Guaranteed
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for the information of the
Trustee:
Distribution shall be made by check mailed to _________________________
_________________________________________________________________________, or if
the aggregate initial [Principal] [Coupon] Strip Certificate balance of this
Class held by the Holder [is not less than $_________] and the Trustee shall
have received appropriate wiring instructions in accordance with the Agreement,
by wire transfer in immediately available funds to
____________________________________________________, the account of
_________________________________________________, account number
______________________. This information is provided by the assignee named
above, or its agent.
