AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 29, 1996
REGISTRATION NO. 333-01867
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
Amendment No. 2
to
FORM S-6
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
----------------------------
A. EXACT NAME OF TRUST:
Qualified Unit Investment Liquid Trust Series ("QUILTS") Opportunity
Trust 2002
B. NAME OF DEPOSITOR:
OCC Distributors
C. COMPLETE ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES:
OCC Distributors
Two World Financial Center
225 Liberty Street
New York, New York 10281
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY OF COMMENTS TO:
SUSAN A. MURPHY MICHAEL R. ROSELLA, Esq.
President Battle Fowler LLP
OCC Cash Management Services 75 East 55th Street
Two World Financial Center New York, New York 10022
225 Liberty Street (212) 856-6858
New York, New York 10281
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of Qualified Unit Investment Liquid Trust
Series ("QUILTS") Opportunity Trust 2002 is being registered under the
Securities Act of 1933 pursuant to Section 24(f) of the Investment
Company Act of 1940, as amended, and Rule 24f-2 thereunder.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
$500 (as required by Rule 24f-2)*
H. APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the Registration
Statement.
_____ Check if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.
- --------
* Previously paid.
C/M: 11205.0015 397550.1
<PAGE>
Qualified Unit Investment Liquid Trust Series ("QUILTS")
Opportunity Trust 2002
CROSS-REFERENCE SHEET
Pursuant to Rule 404 of Regulation C
Under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction as
to the Prospectus in Form S-6)
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C>
I. ORGANIZATION AND GENERAL INFORMATION
1. (a) Name of trust.......................................... Front cover of Prospectus
(b) Title of securities issued............................. Front cover of Prospectus
2. Name and address of each depositor.......................... The Sponsor
3. Name and address of trustee................................. The Trustee
4. Name and address of principal underwriters.................. Distribution of Units
5. State of organization of trust.............................. Organization
6. Execution and termination of trust agreement................ Trust Agreement, Amendment and
Termination
7. Changes of name............................................. Not Applicable
8. Fiscal year................................................. Not Applicable
9. Litigation.................................................. None
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer securities........................ Book Entry Units
(b) Cumulative or distributive securities.................. Interest and Principal Distributions
(c) Redemption............................................. Trustee Redemption
(d) Conversion, transfer, etc.............................. Book Entry Units, Sponsor Repurchase,
Trustee Redemption
(e) Periodic payment plan.................................. Not Applicable
(f) Voting rights.......................................... Trust Agreement, Amendment and
Termination
(g) Notice to certificateholders........................... Records, Portfolio, Substitution of Securities,
Trust Agreement, Amendment and
Termination, The Sponsor, the Trustee
(h) Consents required...................................... Trust Agreement, Amendment and Termination
(i) Other provisions....................................... Tax Status
11. Type of securities comprising units......................... Objectives, Portfolio, Portfolio Summary
12. Certain information regarding periodic payment
certificates................................................ Not Applicable
i
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<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
13. (a) Load, fees, expenses, etc.............................. Summary of Essential Information, Public
Offering Price, Market for Units, Volume and
Other Discounts, Sponsor's Profits, Trust
Expenses and Charges
(b) Certain information regarding periodic
payment certificates................................... Not Applicable
(c) Certain percentages.................................... Summary of Essential Information, Public
Offering Price, Market for Units, Volume
and Other Discounts
(d) Price differences...................................... Volume and Other Discounts, Distribution of
Units
(e) Other loads, fees, expenses............................ Book Entry Units
(f) Certain profits receivable by depositors,
principal underwriters, trustee or
affiliated persons..................................... Sponsor's Profits, Portfolio Summary
(g) Ratio of annual charges to income...................... Not Applicable
14. Issuance of trust's securities.............................. Organization, Certificates
15. Receipt and handling of payments from purchasers............ Organization
16. Acquisition and disposition of underlying
securities.................................................. Organization, Objectives, Portfolio, Portfolio
Supervision
17. Withdrawal or redemption.................................... Comparison of Public Offering Price,
Sponsor's Repurchase Price and Redemption
Price, Sponsor Repurchase, Trustee
Redemption
18. (a) Receipt, custody and disposition of income............. Monthly Distributions, Interest and Principal
Distributions, Portfolio Supervision
(b) Reinvestment of distributions.......................... Not Applicable
(c) Reserves or special funds.............................. Interest and Principal Distributions
(d) Schedule of distributions.............................. Not Applicable
19. Records, accounts and reports............................... Records
20. Certain miscellaneous provisions of trust
agreement
(a) Amendment.............................................. Trust Agreement, Amendment and Termination
(b) Termination............................................ Trust Agreement, Amendment and Termination
(c) and (d) Trustee, removal and successor.................. The Trustee
(e) and (f) Depositor, removal and successor................ The Sponsor
21. Loans to security holders................................... Not Applicable
22. Limitations on liability.................................... The Sponsor, The Trustee, The Evaluator
23. Bonding arrangements........................................ Part II - Item A
24. Other material provisions of trust agreement................ Not Applicable
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of depositor................................... The Sponsor
26. Fees received by depositor.................................. Not Applicable
ii
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<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
27. Business of depositor....................................... The Sponsor
28. Certain information as to officials and affiliated
persons of depositor........................................ Not Applicable
29. Voting securities of depositor.............................. Not Applicable
30. Persons controlling depositor............................... Not Applicable
31. Payments by depositor for certain services
rendered to trust........................................... Not Applicable
32. Payments by depositor for certain other services
rendered to trust........................................... Not Applicable
33. Remuneration of employees of depositor for
certain services rendered to trust.......................... Not Applicable
34. Remuneration of other person for certain services
rendered to trust........................................... Not Applicable
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities by states................ Distribution of Units
36. Suspension of sales of trust's securities................... Not Applicable
37. Revocation of authority to distribute....................... None
38. (a) Method of distribution................................. Distribution of Units
(b) Underwriting agreements................................ Distribution of Units
(c) Selling agreements..................................... Distribution of Units
39. (a) Organization of principal underwriters................. The Sponsor
(b) N.A.S.D. membership of principal
underwriters........................................... The Sponsor
40. Certain fees received by principal underwriters............. The Sponsor
41. (a) Business of principal underwriters..................... The Sponsor
(b) Branch offices of principal underwriters............... The Sponsor
(c) Salesmen of principal underwriters..................... The Sponsor
42. Ownership of trust's securities by certain persons.......... Not Applicable
43. Certain brokerage commissions received by
principal underwriters...................................... Not Applicable
44. (a) Method of valuation.................................... Summary of Essential Information, Market for
Units, Offering Price, Accrued Interest,
Volume and Other Discounts, Distribution of
Units, Comparison of Public Offering Price,
Sponsor's Repurchase Price and Redemption
Price, Sponsor Repurchase, Trustee
Redemption
(b) Schedule as to offering price.......................... Summary of Essential Information
(c) Variation in offering price to certain
persons................................................ Distribution of Units, Volume and Other
Discounts
45. Suspension of redemption rights............................. Not Applicable
iii
C/M: 11205.0015 397550.1
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
46. (a) Redemption valuation................................... Comparison of Public Offering Price,
Sponsor's Repurchase Price and Redemption
Price, and Redemption Price, and Trustee
Redemption
(b) Schedule as to redemption price........................ Summary of Essential Information
47. Maintenance of position in underlying securities............ Comparison of Public Offering Price,
Sponsor's Repurchase Price and Redemption
Price, Sponsor Repurchase, Trustee
Redemption
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of trustee...................... The Trustee
49. Fees and expenses of trustee................................ Trust Expenses and Charges
50. Trustee's lien.............................................. Trust Expenses and Charges
VI. Policy of Registrant
51. (a) Provisions of trust agreement with respect
to selection or elimination of underlying
securities............................................. Objectives, Portfolio, Portfolio Supervision,
Substitution of Securities
(b) Transactions involving elimination of
underlying securities.................................. Not Applicable
(c) Policy regarding substitution or elimination
of underlying securities............................... Substitution of Securities
(d) Fundamental policy not otherwise covered............... Not Applicable
52. Tax status of trust......................................... Tax Status
VII. FINANCIAL AND STATISTICAL INFORMATION
53. Trust's securities during last ten years.................... Not Applicable
54. Hypothetical account for issuers of periodic
payment plans............................................... Not Applicable
55. Certain information regarding periodic payment
certificates................................................ Not Applicable
56. Certain information regarding periodic payment
plans....................................................... Not Applicable
57. Certain other information regarding periodic
payment plans............................................... Not Applicable
58. Financial statements (Instruction 1(c) to Form
S-6) ....................................................... Statement of Financial Condition
</TABLE>
iv
C/M: 11205.0015 397550.1
<PAGE>
("QUILTS")
QUALIFIED UNIT INVESTMENT LIQUID TRUST SERIES
A Unit Investment Trust
Opportunity Trust 2002
This Trust consists of a unit investment trust designated QUILTS
Opportunity Trust 2002 (the "Trust"). The Sponsor of the Trust is OCC
Distributors (the "Sponsor"). The objectives of the Trust are to seek to
achieve safety of capital through investment in stripped United States Treasury
issued notes or bonds paying no current interest ("Treasury Obligations") and
to attempt to provide for capital appreciation through investment in Class A
shares ("Fund Shares") of the Oppenheimer Quest Opportunity Value Fund (the
"Fund"), a diversified, open-end management investment company (the Treasury
Obligations and Fund Shares collectively, the "Securities"). The Fund's
subadvisor is OpCap Advisors, an affiliate of the Sponsor. The Fund seeks
growth of capital over time through investments in a diversified portfolio of
common stocks, bonds and cash equivalents, the proportions of which will vary
based upon Fund management's assessment of the relative values of each
investment under prevailing market conditions. The value of the Units of the
Trust will fluctuate with fluctuations in the value of the underlying
Securities in the portfolio of the Trust. Therefore, Unit Holders who sell
their Units prior to termination of the Trust may receive more or less than
their original purchase price upon sale. The allocation between the Treasury
Obligations and the Fund Shares would seek to assure that an investor
purchasing Units in the Trust at inception would at least receive back the
original unit purchase price at the termination of the Trust from the maturity
value of the Treasury Obligations. The Sponsor cannot give assurance that the
Trust's objectives can be achieved. There are certain risks inherent in an
investment in the Fund Shares and Treasury Obligations. See "Risk Factors" in
Parts A and B of this Prospectus. Units of the Trust may be suited for purchase
by IRAs, self-employed retirement plans (formerly Keogh Plans), pension,
profit-sharing and other qualified retirement plans. Investors considering
participation in any such plan should review specific tax laws and pending
legislation related thereto and should consult their attorneys or tax advisers
with respect to the establishment and maintenance of any such plan. (See
"Retirement Plans" and "Tax Status" in Part B of this Prospectus.) The minimum
purchase is 1,000 Units for individual purchases and 250 Units for purchases by
Individual Retirement Accounts, self-employed retirement plans (formerly Keogh
Plans), pension funds and other tax-deferred retirement plans.
This Prospectus consists of two parts. Part A contains a Summary of
Essential Information for the Trust including descriptive material relating to
the Trust, the Statement of Condition of the Trust and the Portfolio of the
Trust. Part B contains general information about the Trust. Part A may not be
distributed unless accompanied by Part B.
QUILTS is not a deposit or other obligation of, or guaranteed by, a
depository institution. QUILTS is not insured by the FDIC and is subject to
investment risks, including possible loss of the principal amount invested.
===============================================================================
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE COMMISSION OR ANY STATE SECURITIES CORPORATION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS PART A DATED AUGUST 29,
1996 Please read and retain both parts of this Prospectus for future reference.
330608.4
<PAGE>
QUILTS
Opportunity Trust 2002
SUMMARY OF ESSENTIAL INFORMATION AS OF AUGUST 28, 1996 (The Initial
Date of Deposit. The Initial Date of Deposit is the date on which the
Trust Agreement was signed and the deposit of Securities with the
Trustee was made.)
<TABLE>
<S> <C>
CUSIP#: 747938165 Evaluation Time: 4:00 P.M. New York Time.
Sponsor: OCC Distributors Minimum Purchase: 1,000 Units
Date of Deposit: August 28, 1996 Minimum Principal Distribution: $1.00 per 1,000 Units.
Aggregate Value Liquidation Period: Beginning 30 days prior to the
of Securities:.......................................$191,811.04 Mandatory Termination Date.
Number of Units: (The number of Units will be Minimum Value of Trust: The Trust may be terminated if
increased as the Sponsor deposits additional the value of the Trust is less than 40% of the aggregate
Securities into the Trust.)..............................200,000 of the Securities at the completion of the Deposit period.
Fractional Undivided Interest in Trust Mandatory Termination Date: The earlier of
per 1,000 Units:......................................... 1/200 December 15, 2002 or the disposition of the last
Public Offering Price: Security in the Trust.
Aggregate Value of Securities Trustee: The Chase Manhattan Bank.
in Trust..........................................$191,811.04 Trustee's Annual Fee(3) and Estimated Expenses: $1.12
Divided By 200,000 Units multiplied per 1,000 Units outstanding.
by 1,000..............................................$959.06 Evaluator: Muller Data Corporation.
Plus Sales Charge of 4.0% of Public Offering Evaluator's Fee For Each Evaluation of Treasury
Price..................................................$39.96 Obligations: $8.00 per evaluation.
Public Offering Price per 1,000 Units(1).................$999.02 Estimated Annual Organizational Expenses:(4)(5) $ 1.20
Redemption Price per 1,000 Units.............................$957.82 per 1,000 Units.
Sponsor's Repurchase Price per 1,000 Units:(2)...............$959.06 Record Date: Two business days after the Fund's ex-
Excess of Public Offering Price Over dividend date.
Redemption Price per 1,000 Units: ........................$41.20 Payment Date: Such day determined by the Trustee
Excess of Sponsor's Initial Repurchase Price which shall be as promptly as practicable after the
Over Redemption Price per 1,000 Units:.....................$1.24 related Record Date.
</TABLE>
(1) On the Initial Date of Deposit there will be no cash in the Income or
Capital Accounts. Anyone purchasing Units after such date will have
included in the Public Offering Price a pro rata share of any cash in such
Accounts.
(2) Any redemptions of over 25,000 Units may, upon request of redeeming Unit
Holders to the Trustee, be made in kind. The Trustee will forward the
distributed Fund Shares to the Unit Holder's bank or broker-dealer account
at the Depository Trust Company in book-entry form. See "Liquidity -
Trustee Redemption" in Part B.
(3) Any Rule 12b-1 fees paid by the Fund's distributor to the Trustee for
performing servicing functions with respect to the Fund Shares will be used
to reduce directly the expenses and fees otherwise payable by the Trust to
the Trustee.
(4) Although historically the sponsors of unit investment trusts ("UITs") have
paid all the costs of establishing UITs, this Trust (and therefore the Unit
Holders) will bear all or a portion of its organizational costs. Such
organizational costs include: the cost of preparing and printing the
registration statement, the trust indenture and other closing documents;
and the initial audit of the Trust. Total organizational expenses will be
amortized over a five year period. See "Trust Expenses and Changes" in Part
B.
(5) Assumes the Trust will reach a size of 10,000,000 Units as estimated by the
Sponsor; organizational expenses per 1,000 Units will vary with the actual
size of the Trust. If the Trust does not reach this Unit level, the
Estimated Annual Organizational Expenses will be adversely affected.
A-2
330608.4
<PAGE>
QUALIFIED
UNIT INVESTMENT LIQUID TRUST SERIES
("QUILTS")
THE TRUST
This trust consists of a unit investment trust designated
QUILTS Opportunity Trust 2002 (the "Trust"). The Trust was created under the
laws of the State of New York by a Trust Indenture and Agreement (the "Trust
Agreement"), dated the Initial Date of Deposit, between OCC Distributors, as
sponsor (the "Sponsor"), The Chase Manhattan Bank, as trustee (the "Trustee")
and Muller Data Corporation, as Evaluator. The Trust consists of stripped
United States Treasury issued notes or bonds bearing no current interest (the
"Treasury Obligations") and Class A shares (the "Fund Shares") of the
Oppenheimer Quest Opportunity Value Fund (the "Fund"), a diversified, open-end
management investment company, or contracts and funds for the purchase thereof
(the Treasury Obligations and Fund Shares, collectively, the "Securities"). The
Trust contains Treasury Obligations maturing approximately six years from the
Date of Deposit.
Objectives. The objectives of the Trust are to attempt to
obtain safety of capital through investment in Treasury Obligations and to
attempt to provide for capital appreciation through investment in shares of the
Fund. The Fund seeks growth of capital over time through investments in a
diversified portfolio of common stocks, bonds and cash equivalents, the
proportions of which will vary based upon Fund management's assessment of the
relative values of each investment under prevailing market conditions. While
the Fund may offer its shareholders an ability to reinvest distributions that
are payable to such shareholders, the Trust will elect to receive all
distributions declared by the Fund in cash. There is, of course, no assurance
that the Trust's objectives will be achieved.
The Trust is structured to contain a sufficient amount of
Treasury Obligations to insure that an initial investor will receive, at the
maturity of the Trust, $1,000 per 1,000 Units. On the Initial Date of Deposit,
the Public Offering Price, including the sales charge, was $999.02 per 1,000
Units. However, an investor holding his Units to the Trust maturity may suffer
a loss to the extent the investor's purchase cost per 1,000 Units exceeds
$1,000 since the capital protection is limited to the aggregate maturity value
per Unit of Treasury Obligations. An investor who sells his Units prior to the
Trust maturity, or all investors if the Trust is terminated before the Treasury
Obligations mature, may suffer a loss to the extent that the price he receives
upon the sale or redemption of his Units is less than the purchase price of his
Units. The price paid for a Unit may differ from that set forth herein due to
changes in the value of the Securities in the portfolio subsequent to the Date
of Deposit. There is no assurance that a purchaser of Units on the date of the
Prospectus or subsequent to such date will receive, upon termination, his
purchase price per Unit. The Fund has not been structured to generate dividends
and therefore dividend distributions by the Trust are likely to be
insignificant. The maximization of dividend income is not an objective of the
Trust. The Trust is "concentrated" in Fund Shares, so investors should be aware
that the potential for capital appreciation is directly related to the
investment performance of the Fund itself. There are certain risks inherent in
an investment in a portfolio of Fund Shares and Treasury Obligations. See "Risk
Factors" in this Part A and "Risk Factors" in Part B. The Trust will terminate
approximately six years after the Initial Date of Deposit. All of the
Securities are represented by the Sponsor's contracts to purchase such
Securities, which are expected to settle on or about September 4, 1996.
Portfolio Summary. $200,000 face amount of Treasury
Securities maturing on November 15, 2002 and 2,088 Fund Shares were held in the
Trust on the Initial Date of Deposit. The Treasury Obligations and the Fund
Shares represent 69.43% and 30.57%, respectively, of the total of
A-3
330608.4
<PAGE>
the aggregate offering side evaluation of Treasury Obligations and the
aggregate value of Fund Shares in the Trust on the Initial Date of Deposit.
With the deposit of the Securities in the Trust on the
Initial Date of Deposit, the Sponsor established a proportionate relationship
between the maturity amounts of Treasury Obligations and the number of Fund
Shares in the Trust. During the 90 days subsequent to the Initial Date of
Deposit, the Sponsor may, but is not obligated to, deposit from time to time
additional Securities in the Trust ("Additional Securities"), contracts to
purchase Additional Securities or cash (or a bank letter of credit in lieu of
cash) with instructions to purchase Additional Securities, maintaining to the
extent practicable the original proportionate relationship on the Initial Date
of Deposit between the maturity amount of Treasury Obligations and the number
of Fund Shares in the portfolio of the Trust, thereby creating additional Units
which will be offered to the public by means of this Prospectus. These
additional Units will each represent, to the extent practicable, an undivided
interest in the same number and type of securities of identical issuers as are
represented by Units issued on the Initial Date of Deposit. It may not be
possible to maintain the exact original proportionate relationship between the
Fund Shares and Treasury Obligations in the portfolio of the Trust on the
Initial Date of Deposit with the deposit of Additional Securities, because of,
among other reasons, purchase requirements, changes in prices, or the
unavailability of Securities. Deposits of Additional Securities in the Trust
subsequent to the 90-day period following the Initial Date of Deposit must
replicate exactly the proportionate relationship between the Fund Shares and
Treasury Obligations in the Trust Portfolio on the Initial Date of Deposit.
Within a period ending on the earlier of 90 days subsequent to the Date of
Deposit or the first Payment Date, substitute Treasury Obligations may be
acquired under specified conditions when Treasury Obligations originally
deposited in the Trust are unavailable. Any additional Treasury Obligations
added to the Trust will be substantially identical to those then held in the
Trust. (See "The Trust--Substitution of Securities" in Part B.) As additional
Units are issued by the Trust as a result of the deposit of Additional
Securities by the Sponsor, the aggregate value of the Securities in the Trust
will be increased and the fractional undivided interest in the Trust
represented by each unit will be decreased. As of the Date of Deposit, Units in
the Trust represent an undivided interest in the principal and net income of
the Trust in the ratio of one hundred Units for the indicated initial aggregate
value of Securities in Trust on
the Initial Date of Deposit as is set forth in the Summary of Essential
Information. (See "The Trust--Organization" in Part B.) (For the specific
number of Units in the Trust as of the Initial Date of Deposit, see "Summary of
Essential Information" in this Part A.)
The Sponsor does not act as an underwriter, manager or
co-manager of a public offering of the securities of any issuer in the
portfolio of the Trust.
THE FUND
The Fund's portfolio will normally be invested primarily in
common stocks and securities convertible into common stock. During periods when
common stocks appear to be overvalued and when value differentials are such
that fixed-income obligations appear to present meaningful capital growth
opportunities relative to common stocks or pending investment in securities
with capital growth opportunities, up to 50% or more of the Fund's assets may
be invested in bonds and other fixed-income obligations. This may include cash
equivalents which do not generate capital appreciation. The bonds in which the
Fund invests will be limited to U.S. government obligations, mortgage-backed
securities, investment-grade corporate debt obligations and unrated
obligations, including those of foreign issuers, which Fund management believes
to be of comparable quality. The Fund's subadvisor is OpCap Advisors, an
affiliate of the Sponsor. (See "The Trust--Oppenheimer Quest Opportunity Value
Fund" in Part B of this Prospectus.)
A-4
330608.4
<PAGE>
RISK FACTORS
Investors should be aware of the risks which an investment in
Units of the Trust may entail. During the life of the Trust, the value of the
portfolio Securities and hence the Units may fluctuate and therefore the Public
Offering Price and Redemption Price per Unit may be more or less than the price
paid by the investor. The Trust is "concentrated" in Fund Shares and investors
should be aware that the potential for capital appreciation is directly related
to the investment performance of the Fund itself. In addition, the value of the
Treasury Obligations will fluctuate inversely with changes in interest rates
and the value of Fund Shares will vary as the value of the underlying portfolio
securities of the Fund increases or decreases. The Treasury Obligations are
subject to substantially greater price fluctuations during periods of changing
interest rates than securities of comparable quality which make periodic
interest payments. (See "The Trust--Stripped U.S. Treasury Obligations.")
Although the Trust is structured to return to an initial Unit Holder his or her
purchase cost of a Unit through the distribution of the Treasury Obligations
maturity value on the mandatory termination date of the Trust, an investor will
have included the accrual of original issue discount on such Treasury
Obligations in income for Federal income tax purposes and will have paid
Federal income tax on such accrual. An investor holding his or her Units to the
Trust maturity may suffer a loss to the extent the investor's purchase cost of
per 1,000 Units exceeds $1,000 since the capital protection is limited to the
aggregate maturity value per 1,000 Units of Treasury Obligations. Similarly, an
investor who sells his or her Units prior to the Trust maturity, or all
investors if the Trust is terminated before the Treasury Obligations mature,
may suffer a loss to the extent that the price he or she receives upon the sale
or redemption of his or her Units is less than the purchase price of his or her
Units.
In connection with the deposit of Additional Securities
subsequent to the Initial Date of Deposit, if cash (or a letter of credit in
lieu of cash) is deposited with instructions to purchase Securities, to the
extent the price of a Security increases or decreases between the deposit and
the time the Security is purchased, Units may represent less or more of that
Security and more or less of the other Securities in the Trusts.
The Sponsor cannot give any assurance that the business and
investment objectives of the issuers of the Securities will correspond with or
in any way meet the limited term objectives of the Trust. (See "Risk Factors"
in Part B of this Prospectus.)
PUBLIC OFFERING PRICE
The Public Offering Price of each Unit of the Trust is equal
to the aggregate offering side evaluation during the initial offering period,
and the aggregate bid side evaluation thereafter, of the underlying Treasury
Obligations, and the net asset value of the Fund Shares (excluding any sales
charge) divided by the number of Units outstanding plus a sales charge of 4.0%
of the Public Offering Price or 4.167% of the net amount invested in Securities
per 1,000 Units of the Trust. (See "Summary of Essential Information.") Any
cash held by the Trust will be added to the Public Offering Price. For
additional information regarding the Public Offering Price, the description of
dividend and principal distributions, repurchase and redemption of Units and
other essential information regarding the Trust, see the "Summary of Essential
Information" for the Trust herein. During the initial offering period orders
involving at least 25,000 Units or $25,000 will be entitled to a volume
discount from the Public Offering Price. The Public Offering Price per Unit may
vary on a daily basis in accordance with fluctuations in the aggregate value of
the underlying Securities. (See "Public Offering" in Part B.) The price of a
single Unit, or any multiple thereof, is calculated by dividing the Public
Offering Price per 1,000 Units by 1,000 and multiplying by the number of Units.
A-5
330608.4
<PAGE>
DISTRIBUTIONS
Distributions of net income (other than amortized discount)
and long-term capital gains distributions received in respect to any of the
Securities by the Trust will be made by the Trust annually on or about the
Distribution Date to Unit Holders of record on the preceding Record Date, see
"Summary of Essential Information". The Record Dates and Distribution Dates
were established so as to occur shortly after the record dates and payment
dates of the Fund. The Fund declares and pays dividends from net investment
income and net long-term capital gains, if any, on an annual basis following
the end of its fiscal year (October 31), usually in December of each year. (See
"Rights of Unit Holders--Distributions" in Part B. Unit Holders may elect to
automatically reinvest distributions (other than the final distribution in
connection with the termination of the Trust), into additional Units of the
Trust, which will not be subject to a sales charge. (See "Rights of Unit
Holders - Reinvestment" in Part B.) Although Unit Holders will be required to
include in income amounts of original issue discount that have accrued during
the taxable year on the Treasury Obligations, no income will be currently
distributed to the Unit Holders. (See "Tax Status" in Part B.)
MARKET FOR UNITS
The Sponsor, although not obligated to do so, intends to
maintain a secondary market for the Units of the Trust after the initial public
offering has been completed. The secondary market repurchase price will be
based on the market value of the Securities in the portfolio of the Trust. (See
"Liquidity--Sponsor Repurchase" for a description on how the secondary market
repurchase price will be determined.) If a market is not maintained a Unit
Holder will be able to redeem his or her Units with the Trustee (See
Liquidity--Trustee Redemption" in Part B). The principal trading market for
certain other Securities may be in the over-the-counter market. As a result,
the existence of a liquid trading market for these Securities may depend on
whether dealers will make a market in these Securities. There can be no
assurance of the making or the maintenance of a market for any of the
Securities contained in the portfolio of the Trust or of the liquidity of the
Securities in any markets made. In addition, the Trust may be restricted under
the Investment Company Act of 1940 from selling Securities to the Sponsor. The
price at which the Securities may be sold to meet redemptions and the value of
the Units will be adversely affected if trading markets for the Securities are
limited or absent.
TERMINATION
During the 30-day period prior to the Mandatory Termination
Date (approximately six years after the Initial Date of Deposit for the Trust)
(the "Liquidation Period"), Securities will begin to be sold in connection with
the termination of the Trust and all Securities will be sold or distributed by
the Mandatory Termination Date. The Trustee may utilize the services of the
Sponsor for the sale of all or a portion of the Securities in the Trust. The
Sponsor may receive brokerage commissions from the Trust in connection with
such sales in accordance with applicable law. The Sponsor will determine the
manner, timing and execution of the sales of the underlying Securities. Unit
Holders may elect one of the three options in receiving their terminating
distributions. Unit Holders may elect: (1) to receive their pro rata share of
the underlying Securities in kind, if they own at least 25,000 Units, (2) to
receive cash upon the liquidation of their pro rata share of the underlying
Securities, or (3) to invest the amount of cash they would have received upon
the liquidation of their pro rata share of the underlying Securities in units
of a future series of the Trust (if one is offered) at a reduced sales charge.
See "Trust Administration--Trust Termination" in Part B for a description of
how to select a termination distribution option and "Tax Status--Disposition of
Units or Securities" in Part B for a description of the tax consequences of the
termination distribution options.
The Sponsor will attempt to sell the Securities as quickly as
it can during the Liquidation Period without, in its judgment, materially
adversely affecting the market price of the Securities, but
A-6
330608.4
<PAGE>
all of the Securities will in any event be disposed of by the end of the
Liquidation Period. The Sponsor does not anticipate that the period will be
longer than 30 days, and it could be as short as one day, depending on the
liquidity of the Securities being sold. The liquidity of any Security depends
on the daily trading volume of the Security and the amount that the Sponsor has
available for sale on any particular day.
During the Liquidation Period, Unit Holders who have not
chosen to receive distributions- in-kind will be at risk to the extent that
Fund Shares are not sold; for this reason the Sponsor will be inclined to sell
the Securities in as short a period as they can without materially adversely
affecting the price of the Securities. Fund Shares, as more fully described in
the prospectus for the Fund, will be redeemed through certain broker-dealers
and the Fund's transfer agent at the net asset value next computed after the
redemption request is received. Unit Holders should consult their own tax
advisers in this regard.
A-7
330608.4
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Sponsor, Trustee, and Unit Holders of
Qualified Unit Investment Liquid Trust Series
Opportunity Trust 2002
We have audited the accompanying Statement of Condition and
Portfolio of Qualified Unit Investment Liquid Trust Series ("QUILTS")
Opportunity Trust 2002 as of August 28, 1996. The statement is the
responsibility of the Sponsor. Our responsibility is to express an opinion on
the Statement of Condition and Portfolio based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the Statement of Condition and
Portfolio are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the Statement of
Condition and Portfolio. An audit also includes assessing the accounting
principles used and significant estimates made by the Sponsor, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion. The irrevocable letter of
credit deposited in connection with the securities owned as of August 28, 1996,
pursuant to contracts to purchase, as shown in the Statement of Condition and
Portfolio, was confirmed to us by The Chase Manhattan Bank, the Trustee.
In our opinion, the accompanying Statement of Condition and
Portfolio present fairly, in all material respects, the financial position of
QUILTS Opportunity Trust 2002 as of August 28, 1996 in conformity with
generally accepted accounting principles.
BDO SEIDMAN, LLP
New York, New York
August 28, 1996
A-8
330608.4
<PAGE>
QUILTS
OPPORTUNITY TRUST 2002
STATEMENT OF CONDITION
AS OF DATE OF DEPOSIT, AUGUST 28, 1996
TRUST PROPERTY
Investment in Securities--Sponsor's Contracts to Purchase
Underlying Securities Backed by Letter of Credit (1)...... $ 191,811.04
Organizational Costs(2)....................................... 60,000.00
-----------
Total......................................................... $ 251,811.04
==========
INTEREST OF UNIT HOLDERS
Liabilities: Accrued Liability(2)............................ $ 60,000.00
-----------
Interest of Unit Holders-- Units of Fractional
Undivided Interest Outstanding
Cost to Unit Holders(3)................................... $ 199,803.04
Less-Gross Underwriting Commissions(4).................... 7,992.00
-----------
Net Amount Applicable to Unit Holders..................... 191,811.04
----------
Total..................................................... $ 251,811.04
==========
(1) Aggregate cost to the Trust of the Securities listed in the Portfolio
is determined by the Evaluator on the basis set forth under "Public
Offering--Offering Price" as of 4:00 p.m. on August 28, 1996. An
irrevocable letter of credit issued by Credit Lyonnais in an aggregate
amount of $2,000,000 has been deposited with the Trustee to cover the
purchase of $191,811.04 of Securities pursuant to contracts to purchase
such Securities.
(2) Organizational costs incurred by the Trust have been capitalized and
will be amortized over a five year period. The Trust will reimburse the
Sponsor for actual organizational costs incurred.
(3) Aggregate public offering price computed on Units of QUILTS Opportunity
Trust 2002 on the basis set forth under "Public Offering--Offering
Price" in Part B.
(4) Sales charge of 4.0% computed on Units of QUILTS Opportunity Trust 2002
on the basis set forth under "Public Offering Price" in Part B.
A-9
330608.4
<PAGE>
QUILTS
Opportunity Trust 2002
PORTFOLIO
AS OF AUGUST 28, 1996
<TABLE>
<CAPTION>
Percentage Cost of
Portfolio Name of Issuer and Title of Securities of Securities
No. Represented by Contracts to Purchase(1) Fund (2) to Trust (3)
- -------------- ------------------------------------------------------- ---------------- ----------------
<S> <C> <C> <C>
1 $200,000 Zero Coupon U.S. Treasury Bonds
Maturing November 15, 2002 69.43% $133,180.00
2 2,088 Class A Shares of Oppenheimer Quest
Opportunity Value Fund ($28.08 per Fund
Share) 30.57 58,631.04
-------- -------------
100.00% $191,811.04
======= ===========
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) The Treasury Obligations have been purchased at a discount from the
maturity value because there is no stated interest income thereon (such
securities are often referred to as zero coupon securities). Over the life
of the Treasury Obligations such discount accrues and upon maturity thereof
the holder receives 100% of the Treasury Obligation maturity amount. The
Fund Shares have been valued at their net asset value as of the Evaluation
Time on the Initial Date of Deposit. The Fund's subadviser is OpCap
Advisors. All Securities are represented by contracts to purchase such
Securities. Forward contracts to purchase the Securities were entered into
on August 28, 1996. All such contracts are expected to be settled on or
about the First Settlement Date of the Trust which is expected to be
September 4, 1996.
(2) Offering prices of Treasury Obligations are determined by the Evaluator on
the basis stated under "Public Offering Price" herein. The offering side
evaluation is greater than the current bid side evaluation of the Treasury
Obligations, which is the basis on which Redemption Price per Unit is
determined (see "Liquidity--Trustee Redemption" in Part B of this
Prospectus). The aggregate value of the Treasury Obligations based on the
bid side evaluation of the Treasury Obligations on the day prior to the
Date of Deposit was $132,932 (which is $248 lower than the aggregate cost
of the Treasury Obligations to the Trust based on the offering side
evaluation). The loss to Sponsor on deposit totals $150.
UNDERWRITING
OCC Distributors, Two World Financial Center, 225 Liberty Street, New York,
New York 10281 will act as Underwriter for all of the Units of the Trust. The
Underwriter will distribute Units through various broker-dealers, banks and/or
other eligible participants (see "Public Offering -- Distribution of Units" in
Part B.)
A-10
330608.4
<PAGE>
PROSPECTUS PART B
Part B of this Prospectus may not be Distributed unless Accompanied by Part A
QUALIFIED UNIT INVESTMENT LIQUID TRUST SERIES ("QUILTS")
OPPORTUNITY TRUST 2002
THE TRUST
Organization. This Trust consists of a unit investment trust
designated QUILTS Opportunity Trust 2002. The Trust was created under the laws
of the State of New York pursuant to a Trust Indenture and Agreement (the
"Trust Agreement") dated the Date of Deposit between OCC Distributors, as
Sponsor, and The Chase Manhattan Bank, as Trustee and Muller Data Corporation,
as Evaluator.
On the initial Date of Deposit, the Sponsor deposited with
the Trustee stripped United States Treasury issued notes or bonds paying no
current return (the "Treasury Obligations") and Class A shares of the
Oppenheimer Quest Opportunity Value Fund, a diversified, open-end Management
Investment Company (the "Fund Shares") including funds and delivery statements
relating to contracts for the purchase of certain such securities
(collectively, the "Securities") with an aggregate value as set forth in Part A
and cash or an irrevocable letter of credit issued by a major commercial bank
in the amount required for such purchases. Thereafter the Trustee, in exchange
for the Securities so deposited, delivered to the Sponsor certificates of
beneficial interest (the "Certificates") evidencing the ownership of all Units
of the Trust. Through this Prospectus, the Sponsor is offering the Units,
including Additional Units, as defined below, for sale to the public. The
Sponsor has a limited right to substitute other securities in the Trust
portfolio in the event of a failed contract ("Substitute Securities"). See "The
Trust--Substitution of Securities." The Sponsor may also, in certain
circumstances, direct the Trustee to dispose of certain Securities if the
Sponsor believes that, because of market or credit conditions, or for certain
other reasons, retention of the Security would be detrimental to Unit Holders.
(See "Trust Administration--Portfolio Supervision.")
As of the Initial Date of Deposit, a "Unit" represents an
undivided interest or pro rata share in the Securities of the Trust in the
ratio of one thousand Units for the indicated amount of the aggregate market
value of the Securities initially deposited in the Trust as is set forth in the
"Summary of Essential Information" for the Trust. To the extent that any Units
are redeemed by the Trustee, the fractional undivided interest or pro rata
share in the Trust represented by each unredeemed Unit will increase, although
the actual interest in the Trust represented by such fraction will remain
unchanged. Units will remain outstanding until redeemed upon tender to the
Trustee by Unit Holders, which may include the Sponsor or the Underwriters, or
until the termination of the Trust Agreement.
With the deposit of the Securities in the Trust on the
Initial Date of Deposit, the Sponsor established a proportionate relationship
between the maturity amounts of Treasury Obligations and the number of Fund
Shares in the portfolio. During the 90 days subsequent to the Initial Date of
Deposit, the Sponsor may deposit additional Securities in the Trusts that are
substantially similar to the Securities already deposited in the Trust
("Additional Securities"), contracts to purchase Additional Securities or cash
(or a bank letter of credit in lieu of cash) with instructions to purchase
Additional Securities, in order to create additional Units, maintaining to the
extent practicable the original proportionate relationship between the
Securities in the portfolio of the Trust on the Initial Date of Deposit. These
additional Units will each represent, to the extent practicable, an undivided
interest in the same number and type of securities of identical issuers as are
represented by Units issued on the
398974.1
<PAGE>
Initial Date of Deposit. It may not be possible to maintain the exact original
proportionate relationship between the Treasury Obligations and the Fund Shares
deposited on the Initial Date of Deposit because of, among other reasons,
purchase requirements, changes in prices, or unavailability of Securities.
Deposits of Additional Securities in the Trust subsequent to the 90-day period
following the Initial Date of Deposit must replicate exactly the proportionate
relationship between the Treasury Obligations and the Fund Shares in the
Portfolio of the Trust on the Initial Date of Deposit. Within a period ending
on the earlier of 90 days subsequent to the Initial Date of Deposit or the
first Payment Date, substitute Treasury Obligations may be acquired under
specified conditions when Treasury Obligations originally deposited in the
Trust are unavailable. Any additional Treasury Obligations added to the Trust
will be substantially identical to those then held in the Trust. (See "The
Trust--Substitution of Securities.")
Units may be continuously offered to the public by means of this Prospectus
(see "Public Offering--Distribution of Units") resulting in a potential
increase in the number of Units outstanding. As additional Units are issued by
the Trust as a result of the deposit of Additional Securities, the aggregate
value of the Securities in the Trust will be increased and the fractional
undivided interest in the Trust represented by each Unit will be decreased.
Objectives. The objectives of the Trust are to seek to
achieve safety of capital and to attempt to provide capital appreciation. The
Trust seeks to achieve these objectives by investing primarily in a portfolio
of stripped United States Treasury issued notes or bonds paying no current
interest and shares of the Oppenheimer Quest Opportunity Value Fund, a
diversified, open-end Management Investment Company. The Fund seeks growth of
capital over time through investments in a diversified portfolio of common
stocks, bonds and cash equivalents, the proportions of which will vary based
upon Fund management's assessment of the relative values of each investment
under prevailing market conditions. The allocation between the Treasury
Obligations and the Fund Shares would seek to assure that an investor
purchasing units in the Trust at inception would at least receive back the
original unit purchase price at the termination of the Trust from the maturity
value of the Treasury Obligations. There can be no assurance that the Trust's
investment objectives can be achieved.
Portfolio. The Trust consists of those Securities listed in
the "Portfolio" for the Trust in Part A (or contracts to purchase such
Securities together with an irrevocable letter or letters of credit for the
purchase of such contracts) and Additional Securities deposited upon the
creation of additional Units as set forth above and Substitute Securities
acquired by the Trust as long as such Securities may continue to be held from
time to time in the Trust together with uninvested cash realized from the
disposition of Securities. Because certain of the Securities from time to time
may be sold under certain circumstances, as described (see "Trust
Administration"), no assurance can be given that the Trust will retain for any
length of time its present size and composition. The Trustee has not
participated and will not participate in the selection of Securities for the
Trust, and neither the Sponsor nor the Trustee will be liable in any way for
any default, failure or defect in any Securities.
In selecting Treasury Obligations for the Trust, the Sponsor
normally will consider the following factors, among others: (i) the prices and
yields of such securities and (ii) the maturities of such securities. In
selecting the Fund Shares for deposit in the Trust, the following factors,
among others, were considered by the Sponsor: (i) the historical performance of
the Fund and (ii) the nature of the underlying Fund portfolio.
Stripped U.S. Treasury Obligations
The Treasury Obligations in the portfolio consist of United
States Treasury Obligations which have been stripped by the United States
Treasury of their unmatured interest coupons or such stripped coupons or
receipts or certificates evidencing such obligations or coupons. The obligor
with respect to the Treasury Obligations is the United States Government. Such
Treasury Obligations may
B-2
398974.1
<PAGE>
include certificates that represent rights to receive the payments that comprise
a U.S. Government bond.
Stripped U.S. Treasury bonds evidence the right to receive a
fixed payment at a future date from the U.S. Government, and are backed by the
full faith and credit of the U.S. Government. The Treasury Obligations can be
purchased at a deep discount because the buyer receives only the right to
receive one fixed payment at a specific date in the future and does not receive
any periodic interest payments. The effect of owning deep discount obligations
which do not make current interest payments is that a fixed yield is earned not
only on the original investment but also, in effect, on all discount earned
during the life of the discount obligations. This implicit reinvestment of
earnings at the same rate eliminates the risk of being unable to reinvest the
income on such obligations at a rate as high as the implicit yield on the
discount obligation, but at the same time eliminates the holder's ability to
reinvest at higher rates in the future. For this reason, the Treasury
Obligations are subject to substantially greater price fluctuations during
periods of changing market interest rates than are securities of comparable
quality which pay interest on a current basis. Investors should be aware that
income in respect of the accrual of original issue discount on the Treasury
Obligations, although not distributed on a current basis, will be includable by
a Unit Holder as income and will be subject to income tax on a current basis at
ordinary income tax rates (see "Tax Status").
Oppenheimer Quest Opportunity Value Fund
The following disclosure concerning the Fund and its
affiliates has been derived from the prospectus of the Oppenheimer Quest
Opportunity Value Fund. While the Sponsor has not independently verified its
information, it has no reason to believe that such information is not correct
in all material respects. No representation is made herein as to the accuracy
or adequacy of such information.
The portfolio contains Class A shares of the Oppenheimer
Quest Opportunity Value Fund. On October 31, 1995, the net assets of the Fund
were $634,511,114. The average net assets for the year ended October 31, 1995
for Class A shares of the Fund were $251,625,672. The Fund has retained an
investment adviser, OpCap Advisors (herein referred to as the "Adviser").
Objective. The Fund seeks growth of capital over time through
investments in a diversified portfolio of common stocks, bonds and cash
equivalents, the proportions of which will vary based upon Fund management's
assessment of the relative values of each investment under prevailing market
conditions.
Portfolio. The Fund's portfolio will normally be invested
primarily in common stocks and securities convertible into common stock During
periods when common stocks appear to be overvalued and when value differentials
are such that fixed-income obligations appear to present meaningful capital
growth opportunities relative to common stocks or pending investments in
securities with capital growth opportunities, up to 50% or more of the Fund's
assets may be invested in bonds and other fixed-income obligations. This may
include cash equivalents which do not generate capital appreciation. The bonds
in which the Fund invests will be limited to U.S. government obligations,
mortgage-backed securities, investment-grade corporate debt obligations and
unrated obligations, including those of foreign issuers, which Fund management
believes to be of comparable quality. To provide liquidity for the purchase of
new instruments and to effect redemptions of shares, the Fund typically invests
a part of its assets in various types of U.S. government securities and high
quality, short-term debt securities with remaining maturities of one year or
less such as government obligations, certificates of deposit, bankers'
acceptances, commercial paper, short-term corporate securities and repurchase
agreements ("money market instruments"). For temporary defensive purposes, the
Fund may invest up to 100%
B-3
398974.1
<PAGE>
of its assets in such securities. At any time that the Fund for temporary
defensive purposes invests in such securities, to the extent of such
investments, it is not pursuing its investment objectives.
Except as indicated, the investment objectives and policies
described above are fundamental and may not be changed without a vote of the
shareholders.
General Information Regarding the Fund. Shown below for the
periods indicated are per share income and capital changes for a share of
capital stock outstanding ("per share information") of the Fund. The Trust will
pay its pro rata share of the Fund's total expenses.
<TABLE>
<CAPTION>
Year
Year Year Year Year Year Year ended
ended ended ended ended ended ended 1/1/89(5)-
10/31/95 10/31/94 10/31/93 10/31/92 10/31/91 10/31/90 10/31/89
<S> <C> <C> <C> <C> <C> <C> <C>
Per Share Operating Data:
Net asset value: Start of period.................. $19.69 $18.71 $16.73 $14.29 $9.74 $11.59 $10.00(2)
Income (loss) from investment operations:
Net Investment income.............................. .23 .18 .35 .09 .03 .25 .17
Net realized and unrealized gain (loss)
on investments.................................. 5.40 1.35 2.02 2.93 4.78 (1.64) 1.42
---- ---- ---- ---- ---- ------ ----
Total income (loss) from investment
operations...................................... 5.63 1.53 2.37 3.02 4.81 (1.39) 1.59
Dividends and distributions to shareholders:
Dividends from net investment income.............. (.12) (.33) (.07) (.03) (.23) (.22) --
Distribution from net realized gain on investments (.61) (.22) (.32) (.55) (.03) (.24) --
----- ----- ----- ----- ----- ----- ------
Total dividends and distributions to Shareholders. (.73) (.55) (.39) (.58) (.26) (.46) --
Net Asset Value: End of period.................... 24.59 19.69 18.71 16.73 14.29 9.74 11.59
Total Return, at Net Asset Value(1)............... 29.88% 8.41% 14.34% 21.93% 50.44% (12.62%) 15.90%
Ratios/Supplemental Data:
Net Assets, end of period (in millions)........... $367,240 $163,340 $127,225 $40,563 $8,446 $4,570 $3,868
Ratios to average net assets:
Net investment income (loss)...................... 1.02% .96% 2.69% .72% .30%(3) 2.30%(3) 3.75%(3)(4)
Expenses.......................................... 1.69%(6) 1.78% 1.83% 2.27% 2.35%(3) 2.00%(3) 1.84%(3)(4)
Portfolio turnover rate........................... 21% 42% 24% 32% 88% 206% 103%
</TABLE>
(1) Total return shown assumes reinvestment of all dividends and
distributions but does not reflect deductions for sales charges.
Aggregate (not annualized) total return is shown for any period shorter
than one year.
(2) Offering Price.
(3) During the periods noted the former advisor voluntarily waived all or a
portion of its fees and assumed some operating expenses of the Fund.
Without such waivers and assumptions, the ratios of net operating
expenses to average net assets and the ratios of net investment income to
average net assets would have been 3.33% and (.68%) for the year ended
10/31/91, 3.69% and .61% for the year ended 10/31/90, and 5.32% and .27%
(annualized) for the period 1/1/89 (commencement of operations) to
10/31/89.
(4) Annualized.
(5) Commencement of Operations.
(6) This amount consists of: management fees of 1.00%; 12b-1 fees of .50%;
and other operating expenses of .19%.
B-4
398974.1
<PAGE>
Risk Factors. The information provided below describes risks
associated with an investment in the Fund Shares:
Equity Securities There are two types of risk generally
associated with owning equity securities: market risk and financial risk.
Market risk is the risk associated with the movement of the stock market in
general. Financial risk is associated with the financial condition and
profitability of the underlying company. Smaller capitalization companies may
experience higher growth rates and higher failure rates than do larger
capitalization companies. The trading volume of securities of smaller
capitalization companies is normally less than that of larger capitalization
companies and, therefore, may disproportionately affect their market price,
tending to make them rise more in response to buying demand and fall more in
response to selling pressure than is the case with larger capitalization
companies.
Debt Securities There are two types of risk associated with
owning debt securities: interest rate risk and credit risk. Interest rate risk
relates to fluctuations in market value arising from changes in interest rates.
If interest rates rise, the value of debt securities will normally decline and
if interest rates fall, the value of debt securities will normally increase.
All debt securities, including U.S. government securities, which are generally
considered to be the most creditworthy of all debt obligations, are subject to
interest rate risk. Securities with longer maturities generally will have a
more pronounced reaction to interest rate changes than shorter term securities.
Credit risk relates to the ability of the issuer to make
periodic interest payments and ultimately repay principal at maturity. Bonds
rated Baa3 by Moody's Investors Service ("Moody's") or BBB-by Standard & Poor's
Corporation ("S&P"), which the Fund may acquire, are described by those rating
agencies as having speculative elements. If a debt security is rated below
investment grade by one rating agency and as investment grade by a different
rating agency, the Adviser will make a determination as to the debt security's
investment grade quality. For a general description of Moody's and S&P ratings
see "Description of Corporate Bond Ratings" herein. The ratings of Moody's and
S&P represent their opinions as to the quality of the obligations which they
undertake to rate. It should be emphasized, however, that ratings are relative
and subjective and although ratings may be useful in evaluating the safety of
interest and principal payments, they do not evaluate the market risk of these
securities. Therefore, although these ratings may be an initial criterion for
selection of such investments, the Adviser also will evaluate these securities
and the ability of the issuers of such securities to pay interest and
principal.
The nature and degree of market and financial risk affecting
an investment in the Fund will depend on the relative amounts of the Fund's
assets committed to equity, longer-term debt or money market securities at any
particular time.
Higher portfolio turnover can be expected to result in a
higher incidence of short-term capital gains upon which taxes will be payable
and will also result in correspondingly higher transaction costs.
Additional Risks of Foreign Securities The Fund may purchase
foreign securities that are listed on a domestic or foreign securities
exchange, traded in domestic or foreign over-the-counter markets or represented
by American Depository Receipts ("ADRs"). There is no limit to the amount of
such foreign securities the Fund may acquire. Certain factors and risks are
presented by investment in foreign securities which are in addition to the
usual risks inherent in domestic securities. Foreign companies are not
necessarily subject to uniform accounting, auditing and financial reporting
standards or other regulatory requirements comparable to those applicable to
U.S. companies. Thus, there may be less available information concerning
non-U.S. issuers of securities held by the Fund than is available
B-5
398974.1
<PAGE>
concerning U.S. companies. In addition, with respect to some foreign countries,
there is the possibility of nationalization, expropriation or confiscatory
taxation; income earned in the foreign nation being subject to taxation,
including withholding taxes on interest and dividends (see "Tax Status"), or
other taxes imposed with respect to investments in the foreign nation;
limitations on the removal of securities, property or other assets of the Fund;
difficulties in pursuing legal remedies and obtaining judgments in foreign
courts, or political or social instability or diplomatic developments which
could affect U.S. investments in those countries.
Securities of many non-U.S. companies may be less liquid and
their prices more volatile than securities of comparable U.S. companies.
Non-U.S. stock exchanges and brokers are generally subject to less governmental
supervision and regulation than in the U.S. and commissions on foreign stock
exchanges are generally higher than negotiated commissions on U.S.
transactions. In addition, there may in certain instances be delays in the
settlement of non-U.S. stock exchange transactions. Certain countries restrict
foreign investments in their securities markets. These restrictions may limit
or preclude investment in certain countries, industries or market sectors, or
may increase the cost of investing in securities of particular companies.
Purchasing the shares of investment companies which invest in securities of a
given country may be the only or the most efficient way to invest in that
country. This may require the payment of a premium above the net asset value of
such investment companies and the return will be reduced by the operating
expenses of those investment companies.
A decline in the value of the U.S. dollar against the value
of any particular currency will cause an increase in the U.S. dollar value of
the Fund's holdings denominated in such currency. Conversely, a decline in the
value of any particular currency against the U.S. dollar will cause a decline
in the U.S. dollar value of the Fund's holdings of securities denominated in
such currency. Some foreign currency values may be volatile and there is the
possibility of governmental controls on currency exchange or governmental
intervention in currency markets which could adversely affect the Fund. The
Fund does not intend to speculate in foreign currency in connection with the
purchase or sale of securities on a foreign securities exchange but may enter
into foreign currency contracts to hedge its foreign currency exposure. While
those transactions may minimize the impact of currency appreciation and
depreciation, the Fund will bear a cost for entering into the transaction and
such transactions do not protect against a decline in the security's value
relative to other securities denominated in that currency.
Repurchase Agreement The Fund may acquire securities subject
to repurchase agreements. Repurchase agreements involve certain risks. Under a
typical repurchase agreement, the Fund acquires a debt security for a
relatively short period (usually for one day and very seldom for more than one
week) subject to an obligation of the seller to repurchase (and the Fund's
obligation to resell) the security at an agreed-upon higher price, thereby
establishing a fixed investment return during the holding period. Pending such
repurchase, the seller of the instrument maintains securities as collateral
equal in market value to the repurchase price.
In the event a seller defaulted on its repurchase obligation,
the Fund might suffer a loss to the extent that the proceeds from the sale of
the collateral were less than the repurchase price. In the event of a seller's
bankruptcy, the Fund might be delayed in, or prevented from, selling the
collateral for the Fund's benefit. The Fund's Board of Directors has
established procedures, which are periodically reviewed by the Board, pursuant
to which the Adviser will monitor the creditworthiness of the dealers and banks
with which the Fund enters into repurchase agreement transactions.
Investment Restrictions And Techniques. The Fund is subject
to certain investment restrictions which are fundamental policies changeable
only by shareholder vote. The restrictions in (a), (b) and (c) below do not
apply to U.S. government securities. The Fund may not: (a) Purchase more than
10% of the voting securities of any one issuer; (b) Purchase more than 10% of
any class
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<PAGE>
of security of any issuer, with all outstanding debt securities and all
preferred stock of an issuer each being considered as one class; (c)
Concentrate its investments in any particular industry, but if deemed
appropriate for attaining its investment objective, the Fund may invest up to
25% of its total assets (valued at the time of investment) in any one industry
classification used by the Fund for investment purposes (for this purpose, a
foreign government is considered an industry). Concentration of investment in
securities of one issuer may tend to increase the Fund's financial risk; (d)
Borrow money in excess of 10% of the value of the Fund's total assets; the Fund
may borrow only from banks and only as a temporary measure for extraordinary or
emergency purposes and will make no additional investments while such
borrowings exceed 5% of the total assets; (e) Invest more than 10% of the
Fund's total assets in illiquid securities, including securities for which
there is no readily available market, repurchase agreements which have a
maturity of longer than seven days, securities subject to legal or contractual
restrictions and certain over-the-counter options; and (f) Invest more than 5%
of the Fund's total assets in securities of issuers having a record, together
with predecessors, of less than three years of continuous operation.
Notwithstanding investment restriction (e) above, the Fund may purchase
securities which are not registered under the Securities Act of 1933 ("1933
Act") but which can be sold to "qualified institutional buyers" in accordance
with Rule 144A under the 1933 Act. Any such security will not be considered
illiquid so long as it is determined by the Board of Directors or the Adviser,
acting under guidelines approved and monitored by the Board, which has the
ultimate responsibility for any determination regarding liquidity, that an
adequate trading market exists for that security. This investment practice
could have the effect of increasing the level of illiquidity in the Fund during
any period that qualified institutional buyers become uninterested in
purchasing these restricted securities. The ability to sell to qualified
institutional buyers under Rule 144A is a relatively recent development and it
is not possible to predict how this market will develop. The Board will
carefully monitor any investments by the Fund in these securities.
Loans of Portfolio Securities The Fund may lend portfolio
securities if collateral (cash, U.S. Government or agency obligations or
letters of credit) securing such loans is maintained daily in an amount at
least equal to the market value of the securities loaned and if the Fund does
not incur any fees (except transaction fees of the custodian bank) in
connection with such loans. The Fund may call the loan at any time on five
days' notice and reacquire the loaned securities. The Fund would receive the
cash equivalent of the interest or dividends paid by the issuer on the
securities loan and would have the right to receive the interest on investment
of the cash collateral in short-term debt instruments. A portion of either or
both kinds of such interest may be paid to the borrower of such securities. The
Fund would continue to retain any voting rights with respect to the securities.
The value of the securities loaned, if any, is not expected to exceed 10% of
the value of the total assets of the Fund. There is a risk that the borrower of
the securities may default and the Fund may have difficulty in reacquiring the
loaned securities.
When-Issued and Delayed Delivery Securities and Firm
Commitments The Fund may purchase securities on a "when-issued" or "delayed
delivery" basis or may either purchase or sell securities on a "firm commitment
basis", whereby the price is fixed at the time of commitment but delivery and
payment may be as much as a month or more later. The underlying securities are
subject to market fluctuations and no interest accrues prior to delivery of the
securities.
Dividends And Distributions. The Fund declares and pays
dividends from net investment income on an annual basis following the end of
its fiscal year (October 31). The Fund may at times make payments from sources
other than income or net capital gains. Payments from such sources would, in
effect, represent a return of each shareholder's investment. All or a portion
of such payments would not be taxable to shareholders.
Distributions from net long-term and short-term capital
gains, if any, for the Fund normally are declared and paid annually, subsequent
to the end of its fiscal year. Short-term capital
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<PAGE>
gains include the gains from the disposition of securities held less than one
year, a portion of the premiums from expired put and call options written by
the Fund and net gains from closing transactions with respect to such options.
If required by tax laws to avoid excise or other taxes, dividends and/or
capital gains distributions may be made more frequently.
Investment Management Agreement The Fund is managed by the
Manager, Oppenheimer Management Corporation, which supervises the Fund's
investment program and handles its day-to-day business. The Manager carries out
its duties, subject to the policies established by the Board of Trustees, under
an Investment Advisory Agreement with the Fund which states the Manager's
responsibilities. The agreement sets forth the fees paid by the Fund to the
Manager and describes the expenses that the Fund pays to conduct its business.
The Manager has operated as an investment adviser since 1959.
The Manager (including a subsidiary) currently manages investment companies,
including other Oppenheimer funds, with assets of more than $50 billion as of
June 30, 1996, and with more than 2.8 million shareholder accounts. The Manger
is owned by Oppenheimer Acquisition Corp., a holding company that is owned in
part by senior officers of the Manager and controlled by Massachusetts Mutual
Life Insurance Company.
For its services under the Investment Advisory Agreement, the
Fund pays the Manger an annual fee based on the Fund's daily net assets at the
rate of 1.00% of the first $400 million of net assets, .90% of the next $400
million of net assets and .85% of net assets over $800 million. The Fund also
reimburses the Manager for bookkeeping and accounting services performed on
behalf of the Fund.
The Manager has retained OpCap Advisors to provide day-to-day
portfolio management of the Fund. OpCap Advisors is a majority-owned subsidiary
of Oppenheimer Capital, a registered investment advisor, whose employees
perform all investment advisory services provided to the Fund by OpCap
Advisors. The Sponsor, which is also a majority-owned subsidiary of Oppenheimer
Capital, is an affiliate of OpCap Advisors. The Fund's portfolio manager is
employed by OpCap Advisors and is primarily responsible for the selection of
the Fund's securities. The Manager will pay OpCap Advisors monthly an annual
fee based on the average daily net assets of the Fund equal to 40% of the
advisory fee collected by the Manager based on the total net assets of the Fund
as of November 22, 1995 (the "Base Amount") plus 30% of the investment advisory
fee collected by the Manager based on the total net assets of the Fund that
exceed the base amount. Oppenheimer Financial Corp., a holding company, holds a
33% interest in Oppenheimer Capital, a registered investment advisor, and
Oppenheimer Capital, L.P., a Delaware limited partnership whose units are
traded on the New York Stock Exchange and of which Oppenheimer Financial Corp.
is the sole general partner, owns the remaining 67% interest. Oppenheimer
Capital has operated as an investment advisor since 1968.
Prior to November 24, 1995, OpCap Advisors was named Quest
for Value Advisors and was the investment adviser to the Fund. Effective
November 24, 1995, the Manager acquired the investment advisory and other
contracts and business relationships and certain assets and liabilities of
Quest for Value Advisors, Quest for Value Distributors and Oppenheimer Capital
relating to twelve Quest for Value mutual funds, including the Fund. Pursuant
to this acquisition and Fund shareholder approval received on November 3, 1995,
the Fund entered into the following agreements, effective the date of this
Prospectus: the Investment Advisory Agreement between the Fund and the Manager,
and the distribution and service plans and agreements between the Fund and the
Distributor. Further, the Manager entered into a subadvisory agreement with the
Sub-Adviser for the benefit of the Fund.
OpCap Advisors may select its affiliate Oppenheimer & Co.,
Inc. ("Opco"), a registered broker-dealer to execute transactions for the Fund,
provided that the commissions, fees or other
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remuneration received by Opco are reasonable and fair compared to those paid to
other brokers in connection with comparable transactions. When selecting
broker-dealers other than Opco, OpCap Advisors may consider their record of
sales of shares of the Fund.
The Fund is responsible for bearing certain expenses
attributable to the Fund but not to a particular class ("Fund Expenses"),
including deferred organization expenses; taxes; registration fees; typesetting
of prospectuses and financial reports required for distribution to
shareholders; brokerage commissions; fees and related expenses of trustees or
directors who are not interested persons; legal, accounting and audit expenses;
custodian fees; insurance premiums; and trade association dues. Fund Expenses
will be allocated based on the total net assets of each class.
Each class of shares of the Fund will also be responsible for
certain expenses attributable only to that class ("Class Expenses"). These
Class Expenses may include distribution and service fees, transfer and
shareholder servicing agent fees, professional fees, printing and postage
expenses for materials distributed to current shareholders, state registration
fees and shareholder meeting expenses. Such items are considered Class Expenses
provided such fees and expenses relate solely to such Class.
The Fund's Plan of Distribution The Fund has adopted a
Distribution and Service Plan (the "Plan") pursuant to Rule 12b-1 to reimburse
the Oppenheimer Funds Distributor, Inc. (the "Distributor") for a portion of
its costs incurred in connection with the personal service and maintenance of
shareholder accounts that hold Class A shares. Under the Plan, the Fund pays an
annual asset-based sales charge to the Distributor of 0.25% of the average
annual net assets of the class. The Fund also pays a service fee to the
Distributor of 0.25% of the average annual net assets of the class. The
Distributor uses all of the service fee and a portion of the asset-based sales
charge (equal to 0.15% annually for Class A shares purchased prior to September
1, 1993 and 0.10% annually for Class A shares purchased on or after September
1, 1993) to compensate dealers, brokers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of their
customers that hold Class A shares. The Distributor retains the balance of the
asset-based sales charge to reimburse itself for its other expenditures under
the Plan.
Services to be provided include, among others, answering
customer inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor. The
payments under the Plan increase the annual expenses of Class A shares.
The Sponsor will not receive any Rule 12b-1 fees from the
Fund. Any Rule 12b-1 fees paid by the Fund's Distributor to the Trustee for
performing servicing functions with respect to the Fund Shares will be used to
reduce directly the expenses and fees otherwise payable by the Trust to the
Trustee. There can be no assurance that the Trustee will receive any Rule 12b-1
fees in the future.
Substitution of Securities. Neither the Sponsor nor the
Trustee shall be liable in any way for any default, failure or defect in any of
the Securities. In the event of a notice that any Treasury Obligation will not
be delivered ("Failed Treasury Obligations"), the Sponsor is authorized under
the Indenture to direct the Trustee to acquire other Treasury Obligations
("Substitute Treasury Obligations") within a period ending on the earlier of
the first Payment Date or 90 days after the Initial Date of Deposit. The cost
of the Substitution Treasury Obligations may not exceed the cost of the
Treasury Obligations which they replace. Any Substitution Treasury Obligation
deposited in the Trust will be substantially identical to every Treasury
Obligation then in the Trust. Whenever a Substitute Treasury Obligation has
been acquired for the Trust, the Trustee shall, within five days thereafter,
notify Unit Holders of the acquisition of the Substitute Treasury Obligation
and the Trustee shall, on the next Payment Date which is more than 30 days
thereafter make a pro rata distribution of the amount, if any,
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by which the cost to the Trust of the Failed Treasury Obligations exceeded the
cost of Substitute Treasury Obligations plus accrued interest, if any.
The Substitute Treasury Obligations must be purchased within
20 days after the sale of the portfolio Security or delivery of the notice of
the failed contract. Where the Sponsor purchases Substitute Treasury
Obligations in order to replace Failed Treasury Obligations, (i) the purchase
price may not exceed the purchase price of the Failed Treasury Obligations and
(ii) the Substitute Treasury Obligations must be substantially similar in terms
of maturity date, interest rate, yield to maturity, rating and purchase price
to the Treasury Obligations originally contracted for and not delivered. Where
the Sponsor purchases Substitute Treasury Obligations in order to replace
Treasury Obligations they sold, the Sponsor will endeavor to select Treasury
Obligations which are securities that possess characteristics that are
consistent with the objectives of the Trust as set forth above. Such selection
may include or be limited to Treasury Obligations previously included in the
portfolio of the Trust.
In the event no reinvestment is made, the proceeds of the
sale of Treasury Obligations will be distributed to Unit Holders as set forth
under "Risk Factors-Fund Shares and Treasury Obligations" and "Rights of Unit
Holders--Distributions." In addition, if the right of substitution shall not be
utilized to acquire Substitute Treasury Obligations in the event of a failed
contract, the Sponsor will cause to be refunded the sales charge attributable
to such Failed Treasury Obligations to all Unit Holders of the Trust, and
distribute the principal and accrued interest attributable to such Failed
Treasury Obligations on the next Distribution Date.
Because certain of the Treasury Obligations from time to time
may be substituted (see "Trust Administration--Portfolio Supervision") or may
be sold under certain circumstances, no assurance can be given that the Trust
will retain its present size and composition for any length of time. The
proceeds from the sale of a Security or the exercise of any redemption or call
provision will be distributed to Unit Holders except to the extent such
proceeds are applied to meet redemptions of Units. (See "Liquidity--Trustee
Redemption.")
RISK FACTORS
Fixed Portfolio. The value of the Units will fluctuate
depending on all the factors that have an impact on the economy and the equity
markets. These factors similarly impact on the ability of an issuer to
distribute dividends. The Trust is not a "managed registered investment
company" and Securities will not be sold by the Trustee as a result of ordinary
market fluctuations. Additionally, the Trust will not elect to reinvest any
distributions they are entitled to as a result of its ownership of Fund Shares.
Unlike a managed investment company in which there may be frequent changes in
the portfolio of securities based upon economic, financial and market analyses,
securities of a unit investment trust, such as the Trust, are not subject to
such frequent changes based upon continuous analysis. However, the Sponsor may
direct the disposition by the Trustee of Securities upon the occurrence of
certain events. (See "Trust Administration--Portfolio Supervision.") Some of
the Securities in the Trust may also be owned by other clients of the Sponsor
and its affiliates. However, because these clients may have differing
investment objectives, the Sponsor may sell certain Securities from those
accounts in instances where a sale by the Trust would be impermissible, such as
to maximize return by taking advantage of market fluctuations. (See "Trust
Administration--Portfolio Supervision" below.) Potential investors also should
be aware that the Sponsor may change its views as to the investment merits of
any of the Securities during the life of the Trust and therefore should consult
their own financial advisers with regard to a purchase of Units. In addition,
investors should be aware that the Sponsor, and its affiliates, currently act
and will continue to act as investment adviser for managed investment companies
and managed private accounts that may have similar or different investment
objectives from the Trust. Some of the Securities in the Trust may also be
owned by these other clients of the Sponsor and its affiliates. However,
because these clients have "managed" portfolios and may have differing
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investment objectives, the Sponsor may sell certain Securities from those
accounts in instances where a sale by the Trust would be impermissible, such as
to maximize return by taking advantage of market fluctuation. Investors should
consult with their own financial advisers prior to investing in the Trust to
determine its suitability. (See "Trust Administration--Portfolio Supervision.")
All the Securities in the Trust are liquidated or distributed during a 30 day
period at the termination of the life of the Trust. Since the Trust will not
sell Securities in response to ordinary market fluctuation, but only at the
Trust's termination or upon the occurrence of certain events, the amount
realized upon the sale of the Securities may not be the highest price attained
by an individual Security during the life of the Trust.
Fund Shares and Treasury Obligations. The Sponsor has taken
steps to ensure that an investment in Fund Shares is equitable to all parties
and particularly that the interest of the Unit Holders is protected.
Accordingly, any sales charges which would otherwise be applicable will be
waived on Fund Shares sold to the Trust, since the Sponsor is receiving the
sales charge on all Units sold. In addition, the Trust Agreement requires the
Trustee to vote all Fund Shares held in the Trust in the same manner and ratio
on all proposals as the vote of owners of Fund Shares not held by the Trust.
The Fund Shares may appreciate or depreciate in value (or pay
dividends) depending on the full range or economic and market influences
affecting the securities in which the Fund is invested and the success of the
Fund's management in anticipating or taking advantage of such opportunities as
may occur. In addition, in the event of the inability of the Fund's Adviser to
act and/or claims or actions against the Fund by regulatory agencies or other
persons or entities, the value of the Fund Shares may decline thereby causing a
decline in the value of Units. Termination of the Fund prior to the Termination
Date of a Trust may result in the termination of the Trust sooner than
anticipated. Prior to a purchase of Units, investors should determine that the
aforementioned risks are consistent with their investment objectives.
The net asset value of the Fund Shares, like the value of the
Treasury Obligations, will fluctuate over the life of the Trust and may be more
or less than the price paid therefor by the Trust.
An investment in Units of the Trust should be made with an understanding of
the risks inherent in ownership of equity securities since the Portfolio of the
Fund is invested in equity securities which the Fund's Adviser believes may be
undervalued. However, the Sponsor believes that, upon termination of the Trust
on the mandatory termination date, even if the Fund Shares are worthless, the
Treasury Obligations will provide sufficient cash at maturity to equal $1,000
per 1,000 Units. Part of such cash will, however, represent an amount of
taxable original issue discount of the Treasury Obligations which was
previously accrued and included in the income of the Unit Holders.
A UNIT HOLDER PURCHASING A UNIT ON THE DATE OF THIS
PROSPECTUS OR THEREAFTER MAY RECEIVE TOTAL DISTRIBUTIONS, INCLUDING
DISTRIBUTIONS MADE UPON TERMINATION OF THE TRUST THAT ARE LESS THAN THE AMOUNT
PAID FOR SUCH UNIT.
Sales of Securities in the portfolio under certain permitted
circumstances may result in an accelerated termination of the Trust. It is also
possible that, in the absence of a secondary market for the Units or otherwise,
redemptions of Units may occur in sufficient numbers to reduce the portfolio to
a size resulting in such termination. In addition, the Trust may be terminated
if the net aggregate value of the Trust is less than 40% of the aggregate value
of the Securities calculated immediately after the most recent deposit of
Securities in the Trust. Early termination of the Trust may have important
consequences to the Unit Holder; e.g., to the extent that Units were purchased
with a view to an investment of longer duration, the overall investment program
of the investor may require readjustment; or the overall return on investment
may be less than anticipated, and may result in a loss to a Unit Holder.
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In the event of the early termination of the Trust, the
Trustee will cause the Fund Shares to be sold and the proceeds thereof
distributed to the Unit Holders in proportion to their respective interests
therein, unless a Unit Holder elects to receive Fund Shares "in kind." (See
"Trust Administration--Trust Termination.") Proceeds from the sale of the
Treasury Obligations will be paid in cash.
In the event a contract to purchase Securities fails and
Substitute Treasury Obligations are not acquired, the Trustee will distribute
to Unit Holders the funds attributable to the failed contract. Investors should
be aware that in such an unlikely event, the amount of capital protection
provided by the Treasury Obligations may no longer be sufficient to assure that
an initial investor would receive back their original purchase price per Unit
at the termination of the Trust. The Sponsor will, in such case, refund the
sales charge applicable to the failed contract. If less than all the funds
attributable to a failed contract are applied to purchase Substitute Treasury
Obligations, the remaining money will be distributed to Unit Holders.
The Trustee will have no power to vary the investments of the
Trust, i.e., the Trustee will have no managerial power to take advantage of
market variations to improve a Unit Holder's investment but may dispose of
Securities only under limited circumstances.
To the best of the Sponsor's knowledge there was no
litigation pending as of the Initial Date of Deposit in respect of any Security
which might reasonably be expected to have a material adverse effect on the
Trust. At any time after the Initial Date of Deposit, litigation may be
instituted on a variety of grounds with respect to the Securities. The Sponsor
is unable to predict whether any such litigation may be instituted, or if
instituted, whether such litigation might have a material adverse effect on the
Trust.
Investors should consult with their own financial advisers
prior to investing in the Trust to determine its suitability. (See "Trust
Administration--Portfolio Supervision.") All the Securities in the Trust are
liquidated during a 30 day period prior to the termination of the Trust. Since
the Trust will not sell Securities in response to ordinary market fluctuation,
but only at the Trust's termination, the amount realized upon the sale of the
Securities may not be the highest price attained by an individual Security
during the life of the Trust.
There is no assurance that any dividends will be declared or
paid in the future on the Fund Shares. Investors should be aware that there is
no assurance that the Trust's objectives will be achieved.
Additional Securities. Investors should be aware that in
connection with the creation of additional Units subsequent to the Initial Date
of Deposit, the Sponsor may deposit Additional Securities, contracts to
purchase Additional Securities or cash (or letter of credit in lieu of cash)
with instructions to purchase Additional Securities, in each instance
maintaining the original proportionate relationship, subject to adjustment
under certain circumstances, of the numbers of shares of each Security in the
Trust. If the price of a Security increases or decreases between the time cash
is deposited with instructions to purchase the Security and the time the cash
is used to purchase the Security, Units may represent less or more of that
Security and more or less of the other Securities in the Trust. In addition,
brokerage fees (if any) incurred in purchasing Securities with cash deposited
with instructions to purchase the Securities will be an expense of the Trust.
Price fluctuations between the time of deposit and the time the Securities are
purchased, and payment of brokerage fees, will affect the value of every Unit
Holder's Units and the Income per Unit received by the Trust. In particular,
Unit Holders who purchase Units during the initial offering period would
experience a dilution of their investment as a result of any brokerage fees
paid by the Trust during subsequent deposits of Additional Securities purchased
with cash deposited. In order to minimize these effects, the Trust will
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try to purchase Securities as near as possible to the Evaluation Time or at
prices as close as possible to the prices used to evaluate Trust Units at the
Evaluation Time.
Legislation. From time to time Congress considers proposals
to reduce the rate of the dividends-received deductions. Enactment into law of
a proposal to reduce the rate would adversely affect the after-tax return to
investors who can take advantage of the deduction. Unit Holders are urged to
consult their own tax advisers. Further, at any time after the Initial Date of
Deposit, legislation may be enacted, with respect to the Securities in the
Trust or the issuers of the Securities. Changing approaches to regulation,
particularly with respect to the environment or with respect to the petroleum
industry, may have a negative impact on certain companies represented in the
Trust. There can be no assurance that future legislation, regulation or
deregulation will not have a material adverse effect on the Trust or will not
impair the ability of the issuers of the Securities to achieve their business
goals.
PUBLIC OFFERING
Offering Price. The Public Offering Price per 1,000 Units of
the Trust is equal to the aggregate value of the underlying Securities (the
price at which they could be directly purchased by the public assuming they
were available) in the Trust divided by the number of Units outstanding plus a
sales charge of 4.0% of the Public Offering Price (excluding any transaction
fees) or 4.167% of the net amount invested in Securities per 1,000 Units of the
Trust. In addition, the net amount invested in Securities will involve a
proportionate share of amounts in the Income Account and Principal Account, if
any. The Public Offering Price can vary on a daily basis from the amount stated
on the cover of this Prospectus in accordance with fluctuations in the market
value of the Securities and the price to be paid by each investor will be
computed as of the date the Units are purchased.
The aggregate value of the Securities is determined in good
faith by the Evaluator on each "Business Day" as defined in the Trust Agreement
in the following manner: during the initial offering period on the basis of the
net asset value of the Fund Shares and the offering side evaluation of the
Treasury Obligations and following the initial offering period on the basis of
the net asset value of the Fund Shares and the bid side evaluation of the
Treasury Obligations. The evaluation generally shall be based on the closing
purchase price in the over-the-counter market (unless the Evaluator deems these
prices inappropriate as a basis for evaluation) or if there is no such closing
purchase price, then the Evaluator may ascertain the values of the Treasury
Obligations using any of the following methods, or a combination thereof, which
it deems appropriate: (a) on the basis of current offering prices for the
Treasury Obligations as obtained from investment dealers or brokers who
customarily deal in securities comparable to those held in the Trust, (b) if
offering prices are not available for the Treasury Obligations, on the basis of
current offering prices for comparable securities, (c) by appraising the value
of the Treasury Obligations on the offering side of the market or by such other
appraisal deemed appropriate by the Evaluator, or (d) by any combination of the
above, each as of the Evaluation Time.
Volume and Other Discounts. Units of the Trust are available
at a volume discount ("Volume Discount") from the Public Offering Price during
the initial public offering. Volume Discount will result in a reduction of the
sales charge applicable to such purchases. Furthermore, Volume Discount applies
to the cumulative Units purchased by a Unit Holder during a period of 60 days
from the initial date of sale of the Units to such Unit Holder. Units purchased
by the same purchasers in separate transactions during the 60-day period will
be aggregated for purposes of determining if such purchaser is entitled to a
Volume Discount provided that such purchaser must own at least the lesser of
either (i) the required number of Units, or (ii) the required dollar amount at
the Public Offering Price, at the time such determination is made. Units held
in the name of the spouse of the purchaser or in the name of a child of the
purchaser under 21 years of age are deemed for the purposes hereof to be
registered in the name of the purchaser. Volume Discount is also applicable to
a trustee or other fiduciary purchasing securities for a single trust estate or
single fiduciary account. As a result of such
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discounts, units are sold to dealers/agents at prices which represent a
concession as reflected below. The Sponsor reserves the right to change these
discounts from time to time. The amount of Volume Discount, the approximate
sales charge and the dealer concession applicable to such purchases are as
follows:
<TABLE>
<CAPTION>
Volume Discount
from Public Approximate Approximate
Number of Units Sales Offering per Reduced Dealer/Agent
or Dollar Amounts Charge Unit Sales Charge Concession
------------------- ------ ---------------- ------------ -------------
<S> <C> <C> <C> <C>
Less than $25,000 4.00% 0.00% 4.00% 3.00%
$25,000 but less than $50,000 4.00% 0.25% 3.75% 2.90%
$50,000 but less than $100,000 4.00% 0.50% 3.50% 2.75%
$100,000 and above* 4.00% 0.75% 3.25% 2.50%
</TABLE>
Net Asset Value Purchases. No sales charge will be applied to
the following transactions: purchases by persons who for at least 90 days have
been directors, trustees, officers or full-time employees of any of (i) the
funds distributed by OCC Distributors, (ii) OpCap Advisors and (iii) OCC
Distributors, or their affiliates, their immediate relatives or any trust,
pension, profit sharing or other benefit plan for any of them; purchases by any
account advised by Oppenheimer Capital, the parent of OpCap Advisors; and
purchases by an employee of a broker-dealer having a dealer or servicing
agreement with OCC Distributors and/or a participating member of the
Oppenheimer Capital brokered CD selling group or of a bank or financial
intermediary currently offering QUILTS to its customers.
Distribution of Units. During the initial offering period (i)
Units issued on the Initial Date of Deposit and (ii) Additional Units issued
after such date in respect of additional deposits of Securities, will be
distributed by the Sponsor and dealers at the Public Offering Price. The
initial offering period in each case is thirty days unless extended by the
Sponsor for Units specified in (i) and (ii) in the preceding sentence. In
addition, Units may be distributed through dealers who are members of the
National Association of Securities Dealers, Inc. or other financial
intermediaries as permitted by law. Certain banks and thrifts will make Units
of the Trust available to their customers on an agency basis. A portion of the
sale charge paid by their customers is retained by or remitted to the banks.
Under the Glass-Steagall Act, banks are prohibited from underwriting Units;
however, the Glass-Steagall Act does permit certain agency transactions and the
banking regulators have indicated that these particular agency transactions are
permitted under such Act. In addition, state securities laws on this issue may
differ from the interpretations of federal law expressed herein and banks and
financial institutions may be required to register as dealers pursuant to state
law.
The Sponsor intends to qualify the Units of the Trust for
sale in the following states: Arkansas, California, Connecticut, District of
Columbia, Florida, Georgia, Illinois, Maryland, Mississippi, Nevada, New
Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee,
Texas and Virginia. Additional states may be added from time to time.
From time to time the Sponsor may implement programs under
which dealers of the Trust may receive nominal awards from the Sponsor for each
of their registered representatives who have sold a minimum number of UIT Units
during a specified time period. In addition, at various times the Sponsor may
implement other programs under which the sales force of a dealer may be
eligible to win other nominal awards for certain sales efforts, or under which
the Sponsor will reallow to any such
- --------
* For any transactions of 250,000 Units or more or over $250,000, the
Sponsor intends to negotiate the applicable sales charge and such charge
will be disclosed to any such purchaser.
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dealer that sponsors sales contests or recognition programs conforming to
criteria established by the Sponsor, or participates in sales programs
sponsored by the Sponsor, an amount not exceeding the total applicable sales
charges on the sales generated by such person at the public offering price
during such programs. Also, the Sponsor, in its discretion, may from time to
time, pursuant to objective criteria established by the Sponsor, pay fees to
qualifying dealers for certain services or activities which are primarily
intended to result in sales of Units of the Trust. Such payments are made by
the Sponsor out of its own assets, and not out of the assets of the Trust.
These programs will not change the price Unit Holders pay for their Units or
the amount that the Trust will receive from the Units sold.
The Sponsor may provide additional concessions to its
affiliates in connection with the distribution of the Units. The Sponsor
reserves the right to change the dealers concession at any time. Such Units may
then be distributed to the public by the dealers at the Public Offering Price
then in effect. The Sponsor reserves the right to reject, in whole or in part,
any order for the purchase of Units. Also, the Sponsor in its discretion may
from time to time pursuant to objective criteria established by the Sponsor pay
fees to qualifying Underwriters, brokers, dealers, banks and/or others for
certain services or activities which are primarily intended to result in sales
of Units of the Trust. Such payments are made by the Sponsor out of its own
assets and out of the assets of the Trust. These programs will not change the
price Unit Holders pay for their Units or the amount that the Trust will
receive from the Units sold.
Sponsor's Profits. The Sponsor will receive a gross
underwriting commission (although the net commission retained will be lower
because of the concession paid to dealers) equal to 4.0% of the Public Offering
Price per 1,000 Units (equivalent to 4.167% of the net amount invested in the
Securities of the Trust). Additionally, the Sponsor may realize a profit on the
deposit of the Securities in the Trust representing the difference between the
cost of the Securities to the Sponsor and the cost of the Securities to the
Trust (see "Portfolio" in Part A). The Sponsor may realize profits or sustain
losses with respect to Securities deposited in the Trust which were acquired
from underwriting syndicates of which it was a member.
The Sponsor has participated as a sole underwriter or
manager, co-manager or member of underwriting syndicates from which some of the
aggregate principal amount of the Securities were acquired for the Trust in the
amounts set forth in Part A.
During the initial offering period and thereafter to the
extent Additional Units continue to be issued and offered for sale to the
public the Sponsor may also realize profits or sustain losses as a result of
fluctuations after the Initial Date of Deposit in the offering prices of the
Securities and hence in the Public Offering Price received by the Sponsor for
the Units. Cash, if any, made available to the Sponsor prior to settlement date
for the purchase of Units may be used in the Sponsor's business subject to the
limitations of 17 CFR 240.15c3-3 under the Securities Exchange Act of 1934, and
may be of benefit to the Sponsor.
In maintaining a market for the Units (see
"Liquidity--Sponsor Repurchase") the Sponsor will realize profits or sustain
losses in the amount of any difference between the price at which they buy
Units and the price at which they resell such Units.
Comparison of Public Offering Price, Sponsor's Repurchase
Price and Redemption Price. Although the Public Offering Price of Units of the
Trust will be determined on the basis of the current offering prices of the
Securities in the Trust, the value at which Units may be redeemed or sold in
the secondary market will be determined on the basis of the current bid prices
of such Securities. On the Initial Date of Deposit, the Public Offering Price
and the Sponsor's Initial Repurchase Price per Unit of the Trust (based on the
offering side evaluation of the Securities in the Trust) each exceeded the
Redemption Price and the Sponsor's secondary market Repurchase Price per Unit
(based upon the
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current bid side evaluation of the Securities in the Trust) by the amounts
shown under "Summary of Essential Information" for the Trust in Part A of this
Prospectus. On the Initial Date of Deposit, the bid side evaluation for the
Trust was lower than the offering side evaluation for the Trust by the amount
set forth in Part A. For this reason, among others (including fluctuations in
the market prices of such Securities and the fact that the Public Offering
Price includes the applicable sales charge), the amount realized by a Unit
Holder upon any redemption or Sponsor repurchase of Units may be less than the
price paid for such Units. See "Liquidity--Sponsor Repurchase."
RIGHTS OF UNIT HOLDERS
Book-Entry Units. Ownership of Units of the Trust will not be
evidenced by certificates. All evidence of ownership of the Units will be
recorded in book-entry form either at Depository Trust Company ("DTC") through
an investor's broker's account or through registration of the Units on the
books of the Trustee. Units held through DTC will be deposited by the Sponsor
with DTC in the Sponsor's DTC account and registered in the nominee name CEDE &
CO. Individual purchases of beneficial ownership interest in the Trust will be
made in book-entry form through DTC or the Trustee. Ownership and transfer of
Units will be evidenced and accomplished directly and indirectly by book-
entries made by DTC and its participants if the Units are evidenced at DTC, or
otherwise will be evidenced and accomplished by book-entries made by the
Trustee. DTC will record ownership and transfer of the Units among DTC
participants and forward all notices and credit all payments received in
respect of the Units held by the DTC participants. Beneficial owners of Units
will receive written confirmation of their purchase and sale from the
broker-dealer or bank from whom their purchase was made. Units are transferable
by making a written request properly accompanied by a written instrument or
instruments of transfer which should be sent registered or certified mail for
the protection of the Unit Holder. Unit Holders must sign such written request
exactly as their names appear on the record of the Trust. Such signatures must
be guaranteed by a commercial bank or trust company, savings and loan
association or by a member firm of a national securities exchange.
Distributions. Dividends and distributions received by a
Trust, and/or Rule 12b-1 fees paid to the Trustee by the Fund's distributor
which are not applied to reduce the Trustee's annual fee, are credited by the
Trustee to an Income Account for that Trust. Other receipts, including the
proceeds of Securities disposed of, are credited to a Principal Account for the
Trust.
Distributions to each Unit Holder from the Income Account are
computed as of the close of business on each Record Date for the following
Distribution Date. Distributions from the Principal Account of the Trust (other
than amounts representing failed contracts, as previously discussed) will be
computed as of each Record Date, and will be made to the Unit Holders of the
Trust on or shortly after the Distribution Date. Proceeds representing
principal received from the disposition of any of the Securities between a
Record Date and a Distribution Date which are not used for redemptions of Units
will be held in the Principal Account and not distributed until the next
Distribution Date. Persons who purchase Units between a Record Date and a
Distribution Date will receive their first distribution on the Distribution
Date following the first Record Date on which they are a Unit Holder of record.
As of each month the Trustee will deduct from the Income
Account of the Trust, and, to the event funds are not sufficient therein, from
the Principal Account of the Trust, amounts necessary to pay the expenses of
the Trust (as determined on the basis set forth under "Trust Expenses and
Charges"). The Trustee also may withdraw from said accounts such amounts, if
any, as it deems necessary to establish a reserve for any applicable taxes or
other governmental charges that may be payable out of the Trust. Amounts so
withdrawn shall not be considered a part of the Trust's assets until such time
as the Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Income and Principal
Accounts such amounts as may be necessary to cover redemptions of Units by the
Trustee.
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The dividend distribution per 1,000 Units cannot be estimated
and will change and may be reduced as Securities are redeemed, exchanged or
sold, or as expenses of the Trust fluctuate. No distribution need be made from
the Principal Account until the balance therein is an amount sufficient to
distribute $1.00 per 1,000 Units.
Reinvestment. Distributions of income, capital gains, if any,
or principal on Units (other than the final distribution in connection with the
termination of the Trust) may be reinvested by participating in a Trust's
reinvestment plan. Under the plan, the Units acquired will be Units already
held in inventory by the Sponsor. Units acquired by reinvestment will not be
subject to a sales charge. If, for any reason, the Sponsor does not have Units
of the Trust available for purchase, the Trustee shall make such Unit Holder's
distribution as described under "Distributions" above. The Sponsor reserves the
right to amend, modify or terminate the reinvestment plan at any time without
prior notice. The reinvestment plan for the Trust may not be available in all
states. In order to enable a Unit Holder to participate in the reinvestment
plan with respect to a particular distribution on their Units, written
notification must be received by the Trustee within 10 days prior to the Record
Date for such distribution. Each subsequent distribution of income or principal
on the participant's Units will be automatically applied by the Trustee to
purchase additional Units of a Trust.
Records. The Trustee shall furnish Unit Holders in connection
with each distribution a statement of the amount of dividends and interest, if
any, and the amount of other receipts, if any, which are being distributed,
expressed in each case as a dollar amount per 1,000 Units. Within a reasonable
time after the end of each calendar year the Trustee will furnish to each
person who at any time during the calendar year was a Unit Holder of record, a
statement showing (a) as to the Income Account: dividends, interest and other
cash amounts received, amounts paid for purchases of Substitute Securities and
redemptions of Units, if any, deductions for applicable taxes and fees and
expenses of the Trust, and the balance remaining after such distributions and
deductions, expressed both as a total dollar amount and as a dollar amount
representing the pro rata share of each 1,000 Units outstanding on the last
business day of such calendar year; (b) as to the Principal Account: the dates
of disposition of any Securities and the net proceeds received therefrom,
deductions for payments of applicable taxes and fees and expenses of the Trust,
amounts paid for purchases of Substitute Securities and redemptions of Units,
if any, and the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount representing the
pro rata share of each 1,000 Units outstanding on the last business day of such
calendar year; (c) a list of the Securities held, a list of Securities
purchased, sold or otherwise disposed of during the calendar year and the
number of Units outstanding on the last business day of such calendar year; (d)
the Redemption Price per 1,000 Units based upon the last computation thereof
made during such calendar year; and (e) amounts actually distributed to Unit
Holders during such calendar year from the Income and Principal Accounts,
separately stated, of the Trust, expressed both as total dollar amounts and as
dollar amounts representing the pro rata share of each 1,000 Units outstanding
on the last business day of such calendar year.
The Trustee shall keep available for inspection by Unit
Holders at all reasonable times during usual business hours, books of record
and account of its transactions as Trustee, including records of the names and
addresses of Unit Holders, certificates issued or held, a current list of
Securities in the portfolio and a copy of the Trust Agreement.
Expenses and Charges.
Initial Expenses
All or a portion of the expenses incurred in creating and
establishing the Trust, including the cost of the initial preparation and
execution of the Trust Agreement, the initial fees and expenses
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of the Trustee, legal expenses and other actual out-of-pocket expenses, will be
paid by the Trust and amortized over a five year period. All advertising and
selling expenses, as well as any organizational expenses not paid by the Trust,
will be borne by the Sponsor at no cost to the Trust.
Fees
The Sponsor will not charge the Trust a fee for its services
as such. (See "Sponsor's Profits.")
The Trustee will receive, for its ordinary recurring services
to the Trust, an annual fee in the amount set forth under "Summary of Essential
Information" in Part A. Such fee shall be reduced directly by any Rule 12b-1
fees paid by the Fund's distributor to the Trustee for performing servicing
functions with respect to the Fund Shares. There can be no assurance that the
Trustee will receive any Rule 12b-1 fees in the future. For a discussion of the
services performed by the Trustee pursuant to its obligations under the Trust
Agreement, see "Trust Administration" and "Rights of Unit Holders".
The Trustee's fees applicable to the Trust are payable from
the Income Account of the Trusts to the extent funds are available and then
from the Principal Account. Both fees may be increased without approval of the
Unit Holders by amounts not exceeding proportionate increases in consumer
prices for services as measured by the United States Department of Labor's
Consumer Price Index entitled "All Services Less Rent."
Other Charges
The following additional charges are or may be incurred by
the Trust: all expenses (including audit and counsel fees) of the Trustee
incurred and advances made in connection with its activities under the Trust
Agreement, including annual audit expenses of independent public accountants
selected by the Sponsor (so long as the Sponsor maintains a secondary market,
the Sponsor will bear any audit expense which exceeds 50 cents per 1,000
Units), the expenses and costs of any action undertaken by the Trustee to
protect the Trusts and the rights and interests of the Unit Holders; fees of
the Trustee for any extraordinary services performed under the Trust Agreement;
indemnification of the Trustee for any loss or liability accruing to it without
gross negligence, bad faith or willful misconduct on its part, arising out of
or in connection with its acceptance or administration of the Trust;
indemnification of the Sponsor for any losses, liabilities and expenses
incurred in acting as sponsors of the Trust without gross negligence, bad faith
or willful misconduct on its part; and all taxes and other governmental charges
imposed upon the Securities or any part of the Trust (no such taxes or charges
are being levied, made or, to the knowledge of the Sponsor, contemplated). The
above expenses, including the Trustee's fees, when paid by or owing to the
Trustee are secured by a first lien on the Trust to which such expenses are
charged. In addition, the Trustee is empowered to sell the Securities in order
to make funds available to pay all expenses.
The fees and expenses set forth herein are payable out of the
Trust and when paid by or owing to the Trustee are secured by a lien on the
Trust. If the cash dividend, capital gains distributions and Rule 12b-1 fees
paid to the Trustee by the Fund's distributor are insufficient to provide for
amounts payable by the Trust, the Trustee has the power to sell Fund Shares
(not Treasury Obligations) to pay such amounts. To the extent Fund Shares are
sold, the size of the Trust will be reduced and the proportions of the types of
Securities will change. Such sales might be required at a time when Fund Shares
would not otherwise be sold and might result in lower prices than might
otherwise be realized. Moreover, due to the minimum amount in which Fund Shares
may be required to be sold, the proceeds of such sales may exceed the amount
necessary for the payment of such fees and expenses. If the cash dividends,
capital gains distributions, Rule 12b-1 fees paid to the Trustee by the Fund's
distributor and proceeds of Fund Shares sold after deducting the ordinary
expenses are
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insufficient to pay the extraordinary expenses of the Trust, the Trustee has
the power to sell Treasury Obligations to pay such extraordinary expenses.
TAX STATUS
The following is a general discussion of certain of the
Federal income tax consequences of the purchase, ownership and disposition of
the Units. The summary is limited to investors who hold the Units as "capital
assets" (generally, property held for investment) within the meaning of Section
1221 of the Internal Revenue Code of 1986, as amended (the "Code"). Unit
Holders should consult their tax advisers in determining the Federal, state,
local and any other tax consequences of the purchase, ownership and disposition
of Units.
Status of the Trust. In rendering the opinion set forth
below, Battle Fowler LLP has examined the Agreement, the final form of
Prospectus dated the date hereof (the "Prospectus") and the documents referred
to therein, among others, has relied on the validity of said documents and the
accuracy and completeness of the facts set forth therein and has assumed that
the Trust will be operated in conformance with the Agreement and as described
in the Prospectus.
In the opinion of Battle Fowler LLP, special counsel for the
Sponsor, under existing law:
1. The Trust will be classified as a grantor trust
for Federal income tax purposes and not as a partnership or
association taxable as a corporation. Classification of the Trust as a
grantor trust will cause the Trust not to be subject to Federal income
tax, and will cause the Unit Holders of the Trust to be treated for
Federal income tax purposes as the owners of a pro rata portion of the
assets of the Trust. All income received by a Trust will be treated as
income of the Unit Holders in the manner set forth below.
2. The Trust is not subject to the New York State
Franchise Tax on Business Corporations or the New York City General
Corporation Tax. For a Unit Holder who is a New York resident,
however, a pro rata portion of all or part of the income of the Trust
will be treated as the income of the Unit Holder under the income tax
laws of the State and City of New York. Similar treatment may apply in
other states.
3. The Sponsor's right, during the 90-day period
subsequent to the Initial Date of Deposit, to deposit additional
Securities that are substantially similar to those deposited on the
Initial Date of Deposit satisfies the criteria set forth by the
Internal Revenue Service ("IRS") and should not affect the status of
the Trust.
Taxation of Treasury Obligations. The Trust will contain
Treasury Obligations originally issued at a discount ("original issue
discount"). In general, original issue discount can be defined as the
difference between the price at which a security was issued and its stated
redemption price at maturity. In the case of a Treasury Obligation issued after
July 2, 1982, original issue discount is deemed to accrue on a constant
interest method, which corresponds in general to the economic accrual of
interest (adjusted to eliminate proportionately on an elapsed-time basis any
excess of the amount paid for the Treasury Obligation over the sum of the issue
price and the accrued original issue discount on the acquisition date).
Each Unit Holder will be required to include original issue
discount with respect to his interest in a Treasury Obligation held by the
Trust at the same time and in the same manner as though the Unit Holder was the
direct holder of such interest. The tax basis of a Unit Holder with respect to
his interest in a Treasury Obligation will be increased by the amount of
original issue discount thereon so included in the Unit Holder's gross income.
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Taxation of Fund Shares. The Trust will also own shares in
the Fund, an entity that has elected and qualified for the special tax
treatment applicable to "regulated investment companies." If the Fund
distributes 90% or more of its investment company taxable income to its
shareholders, it will not be subject to Federal income tax on the amounts so
distributed. Moreover, if the Fund distributes at least 98% of its investment
company taxable income (including any net capital gain) it will not be subject
to the 4% excise tax on certain undistributed income of "regulated investment
companies." The Fund declares and pays dividends from net investment income on
an annual basis following the end of its fiscal year (October 31). The Fund
also normally declares and pays distributions from net long-term capital gains
annually, after the end of its fiscal year. Distributions by the Fund of its
taxable income and short-term capital gains to its shareholders will be taxable
as ordinary income to such shareholders. Distributions of the Fund's net
capital gain, which are designated as capital gain dividends by the Fund, will
be taxable to its shareholders as long-term capital gain, regardless of the
length of time the shareholders have held their investment in the Fund.
Dividends (but not capital gains) paid by the Fund, qualify for the 70%
dividends received deduction for corporations unless derived from interest
income or foreign source income. The allowable deduction percentage will be
reduced from 70% if a corporate Unit Holder owns Units the financing of which
is directly attributable to indebtedness incurred by such corporation. Unit
Holders should consult their tax adviser in this regard. Recent legislative
proposals, if enacted, would reduce the rate of the dividends received
deduction.
Dispositions of Units or Securities. A taxable event will
generally occur with respect to each Unit Holder when the Trust disposes of a
Security (whether by sale, exchange or redemption) or upon the sale, exchange
or redemption of Units by such Unit Holder. The price a Unit Holder pays for
his Units, including sales charges, is allocated among his pro rata portion of
each Security held by the Trust (in proportion to the fair market values
thereof on the date the Unit Holder purchases his Units) in order to determine
his initial cost for his pro rata portion of each Security held by the Trust.
The amount of gain recognized by a Unit Holder on a
disposition of a Treasury Obligation by the Trust will be equal to the excess,
if any, of such Unit Holder's pro rata portion of the gross proceeds realized
by the Trust on the disposition over the Unit Holder's tax basis, determined in
the manner set forth above, in his pro rata portion of the Treasury Obligation
disposed of. Any gain recognized on a sale or exchange of a Unit Holder's pro
rata interest in a Treasury Obligation that does not constitute realization of
accrued "market discount" in the case of a Treasury Obligation issued after
July 18, 1984, will be capital gain. Gain realized on the disposition of the
interest of a Unit Holder in a market discount Treasury Obligation is treated
as ordinary income to the extent the gain does not exceed the accrued market
discount. A Unit Holder has an interest in a market discount Treasury
Obligation when the Unit Holder's tax cost for his pro rata interest in the
Treasury Obligation is less than the stated redemption price thereof at
maturity (or the issue price plus original issue discount accrued up to the
acquisition date, in the case of an original issue discount Treasury
Obligation.) If a Unit Holder has an interest in a market discount Treasury
Obligation and has incurred debt to acquire Units, the deductibility of a
portion of the interest incurred on such debt may be deferred.
As discussed in the section "Termination", each Unit Holder
may have three options in receiving their termination distributions, which are
(i) to receive their pro rata share of some or all of the underlying Securities
in kind, (ii) to receive cash upon liquidation of their pro rata share of the
underlying Securities, or (iii) to invest the amount of cash they would receive
upon the liquidation of their pro rata share of the underlying Securities in
units of a future series of the Trust (if one is offered).
A distribution of a pro rata share of the Securities by the
Trustee to a Unit Holder (or to his agent, including the Sponsor) upon
redemption of Units will not be a taxable event to the Unit Holder or to other
Unit Holders. The redeeming or exchanging Unit Holder's basis for such
Securities will be equal to the portion of his basis for his Units attributable
to those Securities prior to such
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redemption or exchange, and his holding period for such Securities will include
the period during which he held his Units. A Unit Holder will have a taxable
gain or loss, which will be a capital gain or loss except in the case of a
dealer or a financial institution, when the Unit Holder (or his agent,
including the Sponsor) sells Securities that were distributed to him by the
Trust, when a redeeming Unit Holder receives cash in lieu of fractional shares,
or when the Trustee sells Securities that cannot be distributed in kind.
A Unit Holder who receives cash upon liquidation of their pro
rata share of the underlying Securities will recognize gain or loss in the
manner described above.
If a Rollover Unit Holder invests his redemption proceeds in
units of an available series of the QUILTS Opportunity Trust (a "Rollover
QUILTS") holding securities substantially identical to the Securities, such
Unit Holder may not be entitled to a deduction for any losses recognized upon
the disposition of Securities. This loss disallowance rule will apply to the
extent that such Unit Holder is considered under the grantor trust rules
described above to be the owner of substantially identical securities as a
result of such Unit Holder's ownership of Units in a Rollover QUILTS, if such
Rollover QUILTS and substantially identical securities were acquired within a
period ending 30 days after such disposition. In addition, no deduction is
available for a loss incurred on the disposition of a Security if, during the
period beginning 30 days before the disposition of such Security and ending 30
days after such date, the taxpayer acquires, enters into a contract to acquire,
or acquires an option to acquire, substantially identical Securities.
A Unit Holder's portion of gain, if any, upon the sale,
exchange or redemption of Units or the disposition of Securities held by the
Trust will generally be considered a capital gain and will be long-term if the
Unit Holder has held his Units for more than one year. Individuals who realize
long-term capital gains may be subject to a reduced tax rate on such gains.
Such lower rate will be unavailable to corporate Unit Holders, and to those
non-corporate Unit Holders who, as of the date of their sale or exchange of
their Units, the disposition of Securities by the Trust, or the redemption of
their Units for cash or their disposition of Securities received from the
Trust, have held their units for less than a year and a day. Tax rates may
increase prior to the time when Unit Holders may realize gains from the sale,
exchange or redemption of Units or Securities.
A Unit Holder's portion of loss, if any, upon the sale or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital loss and will be long-term if the Unit Holder
has held his Units for more than one year. Capital losses are deductible to the
extent of capital gains; in addition, up to $3,000 of capital losses of
non-corporate Unit Holders may be deducted against ordinary income.
Treatment of Expenses of Trust. Under Section 67 of the Code
and the accompanying Regulations, a Unit Holder who itemizes his deductions may
also deduct his pro rata share of the fees and expenses of the Trust, but only
to the extent that such amounts, together with the Unit Holder's other
miscellaneous deductions, exceed 2% of his adjusted gross income. The deduction
of fees and expenses may also be limited by Section 68 of the Code, which
reduces the amount of itemized deductions that are allowed for individuals with
incomes in excess of certain thresholds.
After the end of each calendar year, the Trustee will furnish
to each Unit Holder an annual statement containing information relating to the
dividends received by the Trust on the Securities, the gross proceeds received
by the Trust from the disposition of any Security, and the fees and expenses
paid by the Trust. The Trustee will also furnish annual information returns to
each Unit Holder and to the Internal Revenue Service.
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Entities that generally qualify for an exemption from Federal
income tax, such as many pension trusts, are nevertheless taxed under Section
511 of the Code on "unrelated business taxable income." Unrelated business
taxable income is income from a trade or business regularly carried on by the
tax-exempt entity that is unrelated to the entity's exempt purpose. Unrelated
business taxable income generally does not include dividend or interest income
or gain from the sale of investment property, unless such income is derived
from property that is debt-financed or is dealer property. A tax-exempt
entity's dividend income from the Trust and gain from the sale of Units in the
Trust or the Trust's sale of Securities are not expected to constitute
unrelated business taxable income to such tax-exempt entity unless the
acquisition of the Unit itself is debt-financed or constitutes dealer property
in the hands of the tax-exempt entity.
Tax-exempt prospective investors are urged to consult their
own tax advisers prior to investing in the Trust.
Retirement Plans
This Trust may be well suited for purchase by Individual
Retirement Accounts ("IRAs"), Keogh plans, pension funds and other qualified
retirement plans, certain of which are briefly described below. Generally,
capital gains and income received in each of the foregoing plans are exempt
from Federal taxation. All distributions from such plans are generally treated
as ordinary income but may, in some cases, be eligible for special 5 or 10 year
averaging or tax-deferred rollover treatment. Unit Holders in IRAs, Keogh plans
and other tax-deferred retirement plans should consult their plan custodian as
to the appropriate disposition of distributions. Investors considering
participation in any of these plans should review specific tax laws related
thereto and should consult their attorneys or tax advisers with respect to the
establishment and maintenance of any of these plans. These plans are offered by
brokerage firms, including the Sponsor of the Trust, and other financial
institutions. Fees and charges with respect to such plans may vary.
Before investing in the Trust, the trustee or investment
manager of an employee benefit plan (e.g., a pension or profit sharing
retirement plan) should consider among other things (a) whether the investment
is prudent under the Employee Retirement Income Security Act of 1974 ("ERISA"),
taking into account the needs of the plan and all of the facts and
circumstances of the investment in the Trust; (b) whether the investment
satisfies the diversification requirement of Section 404(a)(1)(C) of ERISA; and
(c) whether the assets of the Trust are deemed "plan assets" under ERISA and
the Department of Labor regulations regarding the definition of "plan assets."
Retirement Plans for the Self-Employed--Keogh Plans. Units of the
Trust may be purchased by retirement plans established for self-employed
individuals, partnerships or unincorporated companies ("Keogh plans").
Qualified individuals may generally make annual tax-deductible contributions up
to the lesser of 25% of annual compensation or $30,000 to Keogh plans. The
assets of the plan must be held in a qualified trust or other arrangement which
meets the requirements of the Code. Generally, there are penalties for
premature distributions from a plan before attainment of age 591/2, except in
the case of a participant's death or disability and certain other
circumstances. Keogh plan participants may also establish separate IRAs (see
below) to which they may contribute up to an additional $2,000 per year ($2,250
in a spousal account).
Individual Retirement Account--IRA. Any individual (including one
covered by an employer retirement plan) can establish an IRA or make use of a
qualified IRA arrangement set up by an employer or union for the purchase of
Units of the Trust. Any individual can make a contribution in an IRA equal to
the lesser of $2,000 ($2,250 in a spousal account) or 100% of earned income;
such investment must be made in cash. However, the deductible amount an
individual may contribute will be reduced if the individual or the individual's
spouse (in the case of a married individual) participates in a qualified
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retirement plan and the individual's adjusted gross income exceeds $25,000 (in
the case of a single individual or a married individual filing a separate
return not residing with such person's spouse) or $40,000 (in the case of
married individuals filing a joint return). Special rules apply in the case of
married individuals living together who file separate returns. Generally, there
are penalties for premature distributions from an IRA before the attainment of
age 591/2, except in the case of the participant's death or disability and
certain other circumstances.
Corporate Pension and Profit-Sharing Plans. A pension or
profit-sharing plan for employees of a corporation may purchase Units of the
Trust.
Recent Legislation. As a result of the enactment of the Small
Business, Health Insurance and Welfare Reform Acts of 1996 (the "'96 Act"),
certain of the foregoing provisions have been amended. Pertinent provisions of
the '96 Act are described below:
Generally. Five year averaging will not apply to
distributions after December 31, 1999. Ten year averaging has been preserved in
very limited circumstances.
IRAs. Beginning January 1, 1997, a non-working spouse may be
eligible to establish an IRA and contribute up to $2,000, provided the combined
income of both spouses is at least equal to the amount contributed by both
spouses to IRAs.
SIMPLE Plans. The '96 Act provides for a new type of
retirement plan, a savings incentive match plan for employees (a "SIMPLE
Plan"), which may be adopted by certain employers that employ no more than 100
employees. Participants in a SIMPLE Plan are permitted to contribute up to
$6,000 to the Plan on a pre-tax basis and the employer makes either matching
contributions not in excess of 3 percent of compensation or non-elective
contributions equal to 2 percent of compensation. SIMPLE Plans are subject to
distribution rules similar to IRAs, except there is a 25 percent early
withdrawal penalty for withdrawals made during the first 2 years of
participation. Units of the Trust may be purchased by SIMPLE Plans.
LIQUIDITY
Sponsor Repurchase. The Sponsor, although not obligated to do
so, currently intends to maintain a secondary market for the Units and
continuously to offer to repurchase the Units. The Sponsor's secondary market
repurchase price after the initial public offering is completed, will be based
on the aggregate value of the Securities in the portfolio of the Trust and will
be the same as the redemption price. The aggregate value will be determined by
the Evaluator on a daily basis after the initial public offering is completed
and computed on the basis set forth under "Liquidity--Trustee Redemption."
During the initial offering period, the Sponsor's repurchase price will be
based on the aggregate offering price of the Securities in the Trust. Unit
Holders who wish to dispose of their Units should inquire of the Sponsor as to
current market prices prior to making a tender for redemption. The Sponsor may
discontinue repurchase of Units if the supply of Units exceeds demand, or for
other business reasons. The date of repurchase is deemed to be the date on
which Units are received in proper form by OCC Distributors, Two World
Financial Center, 225 Liberty Street, New York, NY 10281. Units received after
4 P.M., New York Time, will be deemed to have been repurchased on the next
business day. In the event a market is not maintained for the Units, a Unit
Holder may be able to dispose of Units only by tendering them to the Trustee
for redemption.
Units purchased by the Sponsor in the secondary market may be
reoffered for sale by the Sponsor at a price based on the aggregate offering
price of the Securities in the Trust plus a 4.0% sales charge (4.167% of the
net amount invested), plus a pro rata portion of amounts, if any, in the
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Income Account. Any Units that are purchased by the Sponsor in the secondary
market also may be redeemed by the Sponsor if it determines such redemption to
be in its best interest.
The Sponsor may, under certain circumstances, as a service to
Unit Holders, elect to purchase any Units tendered to the Trustee for
redemption (see "Liquidity--Trustee Redemption" in this Part B). Factors which
the Sponsor will consider in making a determination will include the number of
Units of the Trust which it has in inventory, its estimate of the salability
and the time required to sell such Units and general market conditions. For
example, if in order to meet redemptions of Units the Trustee must dispose of
Securities, and if such disposition cannot be made by the redemption date
(three business days after tender), the Sponsor may elect to purchase such
Units. Such purchase shall be made by payment to the Unit Holder not later than
the close of business on the redemption date of an amount equal to the
Redemption Price on the date of tender.
Trustee Redemption. Units may also be tendered to the Trustee
for redemption at its corporate trust office at 770 Broadway, New York, New
York 10003, upon proper delivery of such Units and payment of any relevant tax.
At the present time there are no specific taxes related to the redemption of
Units. No redemption fee will be charged by the Sponsor or the Trustee. Units
redeemed by the Trustee will be cancelled.
Within three business days following a tender for redemption,
the Unit Holder will be entitled to receive in cash an amount for each Unit
tendered equal to the Redemption Price per Unit computed as of the Evaluation
Time set forth under "Summary of Essential Information" for each Trust in Part
A on the date of tender. The "date of tender" is deemed to be the date on which
Units are received by the Trustee, except that with respect to Units received
after the close of trading on the New York Stock Exchange, the date of tender
is the next day on which such Exchange is open for trading, and such Units will
be deemed to have been tendered to the Trustee on such day for redemption at
the Redemption Price computed on that day.
A Unit Holder will receive his redemption proceeds in cash
and amounts paid on redemption shall be withdrawn from the Income Account, or,
if the balance therein is insufficient, from the Principal Account. All other
amounts paid on redemption shall be withdrawn from the Principal Account. The
Trustee is empowered to sell Securities in order to make funds available for
redemptions. Such sales, if required, could result in a sale of Securities by
the Trustee at a loss. To the extent Securities are sold, the size and
diversity of the Trust will be reduced. The Securities to be sold will be
selected by the Trustee in order to maintain, to the extent possible the
proportionate ratio of remaining Fund Shares and Treasury Obligations as of the
Initial Date of Deposit, provided, however, that, except to the extent the
Trust then lacks other assets sufficient to provide for payment of the
redemption, Treasury Obligations shall not be sold to the extent that the
maturity value per Unit outstanding of the Treasury Obligations remaining after
such sale would be less than the maturity value per Unit of the Treasury
Obligations on the Initial Date of Deposit. Provision is made in the Indenture
under which the Sponsor may, but need not, specify minimum amounts in which
blocks of Securities are to be sold in order to obtain the best price for the
Trust. While these minimum amounts may vary from time to time in accordance
with market conditions, the Sponsor believes that the minimum amounts which
would be specified would be approximately 100 shares for readily marketable
Securities.
The Redemption Price per Unit is the pro rata share of the
Unit in the Trust determined by the Trustee on the basis of (i) the cash on
hand in the Trust or moneys in the process of being collected, (ii) the value
of the Securities in the Trust as determined by the Evaluator, less (a) amounts
representing taxes or other governmental charges payable out of the Trust, (b)
the accrued expenses of the Trust and (c) cash allocated for the distribution
to Unit Holders of record as of the business day prior to the evaluation being
made. The Evaluator may determine the value of the Securities in each
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Trust in the following manner: the net asset value of the Fund Shares and the
bid side evaluation of the Treasury Obligations. The evaluation shall generally
be based on the closing purchase price in the over-the-counter market (unless
the Evaluator deems these prices inappropriate as a basis for evaluation) or if
there is no such closing purchase price, then the Evaluator may ascertain the
values of the Treasury Obligations using any of the following methods, or a
combination thereof, which it deems appropriate: (a) on the basis of the
current bid prices for the Treasury obligations as obtained from investment
dealers or brokers who customarily deal in securities comparable to those held
in the Trust, (b) if bid prices are not available for the Treasury Obligations,
on the basis of current bid prices for comparable securities, (c) by appraising
the value of the Treasury Obligations on the bid side of the market or (d) by
any combination of the above.
Any Unit Holder tendering 25,000 Units or more of the Trust
for redemption may request by written notice submitted at the time of tender
from the Trustee in lieu of a cash redemption a distribution of shares of
Securities and cash in an amount and value equal to the Redemption Price Per
Unit as determined as of the evaluation next following tender. To the extent
possible, in kind distributions ("In Kind Distributions") shall be made by the
Trustee through the distribution of each of the Fund Shares in book-entry form
to the account of the Unit Holder's bank or broker-dealer at The Depository
Trust Company. An In Kind Distribution will be reduced by customary transfer
and registration charges. The tendering Unit Holders will receive his pro rata
number of whole Fund Shares and cash from the Principal Accounts equal to the
balance of the Redemption Price to which the tendering Unit Holder is entitled,
which will include the proceeds of the sale of the Treasury Obligations and
fractional Fund Shares. If funds in the Principal Account are insufficient to
cover the required cash distribution to the tendering Unit Holder, the Trustee
may sell Securities in the manner described above.
The Trustee is irrevocably authorized in its discretion, if
the Sponsor does not elect to purchase a Unit tendered for redemption or if the
Sponsor tenders a Unit or Units for redemption, in lieu of redeeming such Unit,
to sell such Unit in the over-the-counter market for the account of the
tendering Unit Holder at prices which will return to the Unit Holder an amount
in cash, net after deducting brokerage commissions, transfer taxes and other
charges, equal to or in excess of the Redemption Price for such Unit. The
Trustee will pay the net proceeds of any such sale to the Unit Holder on the
day he would otherwise be entitled to receive payment of the Redemption Price.
The Trustee reserves the right to suspend the right of
redemption and to postpone the date of payment of the Redemption Price per Unit
for any period during which the New York Stock Exchange is closed, other than
customary weekend and holiday closings, or trading on that Exchange is
restricted or during which (as determined by the Securities and Exchange
Commission) an emergency exists as a result of which disposal or evaluation of
the Securities is not reasonably practicable, or for such other periods as the
Securities and Exchange Commission may by order permit. The Trustee and the
Sponsor are not liable to any person or in any way for any loss or damage which
may result from any such suspension or postponement.
A Unit Holder who wishes to dispose of his Units should
inquire of his bank or broker in order to determine if there is a current
secondary market price in excess of the Redemption Price.
TRUST ADMINISTRATION
Portfolio Supervision. The Trust is a unit investment trust
and is not a managed fund. Traditional methods of investment management for a
managed fund typically involve frequent changes in a portfolio of securities on
the basis of economic, financial and market analyses. The portfolio of the
Trust, however, will not be managed and therefore the adverse financial
condition of an issuer will not
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necessarily require the sale of its Securities from the portfolio. However, the
Sponsor may direct the disposition of Securities upon the occurrence of certain
events including:
1. default in payment of amounts due on any of the
Securities;
2. institution of certain legal proceedings;
3. default under certain documents materially and adversely
affecting future declaration or payment of amounts due
or expected;
4. determination of the Sponsor that the tax treatment of
the Trust as a grantor trust would otherwise be
jeopardized; or
5. decline in price as a direct result of serious adverse
credit factors affecting the issuer of a Security which,
in the opinion of the Sponsor, would make the retention
of the Security detrimental to the Trust or the Unit
Holders.
If a default in the payment of amounts due on any Security
occurs and if the Sponsor fails to give immediate instructions to sell or hold
that Security, the Trust Agreement provides that the Trustee, within 30 days of
that failure by the Sponsor, may sell the Security.
The Trust Agreement provides that it is the responsibility of
the Sponsor to instruct the Trustee to reject any offer made by an issuer of
any of the Securities to issue new securities in exchange and substitution for
any Security pursuant to a recapitalization or reorganization, except that the
Sponsor may instruct the Trustee to accept such an offer or to take any other
action with respect thereto as the Sponsor may deem proper if the issuer failed
to declare or pay, amounts owed with respect thereto.
The Trust Agreement also authorizes the Sponsor to increase
the size and number of Units of the Trust by the deposit of Additional
Securities, contracts to purchase Additional Securities or cash or a letter of
credit with instructions to purchase Additional Securities in exchange for the
corresponding number of additional Units within 90 days subsequent to the
Initial Date of Deposit, provided that the original proportionate relationship
between the Fund Shares and the Treasury Obligations established on the Initial
Date of Deposit is maintained to the extent practicable. Deposits of Additional
Securities in the Trust subsequent to the 90-day period following the Initial
Date of Deposit must also replicate exactly the proportionate relationship in
the portfolio of the Trust at the initial Date of Deposit.
With respect to deposits of Additional Securities (or cash or
a letter of credit with instructions to purchase Additional Securities), in
connection with creating additional Units of the Trust, the Sponsor may specify
the minimum numbers in which Additional Securities will be deposited or
purchased. If a deposit is not sufficient to acquire minimum amounts of each
Security, Additional Securities may be acquired in the order of the Security
most under-represented immediately before the deposit when compared to the
original proportionate relationship. If Securities of an issue originally
deposited are unavailable at the time of the subsequent deposit, the Sponsor
may (1) deposit cash or a letter of credit with instructions to purchase the
Security when it becomes available, or (2) deposit (or instruct the Trustee to
purchase) either Securities of one or more other issues originally deposited or
a Substitute Security.
Trust Agreement and Amendment. The Trust Agreement may be
amended by the Trustee and the Sponsor without the consent of any of the Unit
Holders: (1) to cure any ambiguity or to correct or supplement any provision
which may be defective or inconsistent; (2) to change any
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provision thereof as may be required by the Securities and Exchange Commission
or any successor governmental agency; or (3) to make such other provisions in
regard to matters arising thereunder as shall not adversely affect the
interests of the Unit Holders.
The Trust Agreement may also be amended in any respect, or
performance of any of the provisions thereof may be waived, with the consent of
the Unit Holders owning 662/3% of the Units then outstanding for the purpose of
modifying the rights of Unit Holders; provided that no such amendment or waiver
shall reduce any Unit Holder's interest in the Trust without his consent or
reduce the percentage of Units required to consent to any such amendment or
waiver without the consent of the Unit Holders. The Trust Agreement may not be
amended, without the consent of all Unit Holders then outstanding, to increase
the number of Units issuable or to permit the acquisition of any Securities in
addition to or in substitution for those initially deposited in such Trust,
except in accordance with the provisions of the Trust Agreement. The Trustee
shall promptly notify Unit Holders, in writing, of the substance of any such
amendment.
Trust Termination. The Trust Agreement provides that the
Trust shall terminate upon the maturity, redemption or other disposition, as
the case may be, of the last of the Securities held in the Trust but in no
event is it to continue beyond the Mandatory Termination Date. If the value of
the Trust shall be less than the minimum amount set forth under "Summary of
Essential Information" in Part A, the Trustee may, in its discretion, and
shall, when so directed by the Sponsor, terminate the Trust. The Trust may also
be terminated at any time with the consent of the holders of 100% of the Units
then outstanding. The Trustee may utilize the services of the Sponsor for the
sale of all or a portion of the Securities in the Trust. In the event of
termination, written notice thereof will be sent by the Trustee to all Unit
Holders. Such notice will provide Unit Holders with three options by which to
receive their pro rata share of the net asset value of the Trust.
1. A Unit Holder who owns at least 25,000 Units, and
who so elects by notifying the Trustee prior to the commencement of
the Liquidation Period by returning a properly completed election
request (to be supplied to Unit Holders at least 20 days prior to such
date) (see Part A - "Summary of Essential Information" for the date of
the commencement of the Liquidation Period), will have his Units
redeemed on commencement of the Liquidation Period by distribution of
the Unit Holder's pro rata share of the net asset value of the Trust
on such date distributed in kind to the extent represented by whole
shares of underlying Fund Shares and the balance in cash within three
business days next following the commencement of the Liquidation
Period. Such Unit Holders may also elect to invest the proceeds of the
Treasury Obligations in Fund Shares at such shares' net asset value,
which shall be subject to Rule 12b-1 fees. Unit Holders subsequently
selling such distributed Securities will incur brokerage costs when
disposing of such Securities. Unit Holders should consult their own
tax adviser in this regard.
A Unit Holder may also elect prior to the
commencement of the Liquidation Period by so specifying in a properly
completed election request, the following two options with regard to
the termination distribution of such Unit Holder's interest in the
Trust as set forth below:
2. to receive in cash such Unit Holder's pro rata
share of the net asset value of the Trust derived from the sale by the
Sponsor as the agent of the Trustee of the underlying Securities over
a period not to exceed 30 days immediately following the commencement
of the Liquidation Period. The Unit Holder's Redemption Price per Unit
on the settlement date of the last trade of a Security in the Trust
will be distributed to such Unit Holder within three business days of
the settlement of the trade of the last Security to be sold; and/or
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3. to invest such Unit Holder's pro rata share of
the net asset value of the Trust derived from the sale by the Sponsor
as agent of the Trustee of the underlying Securities over a period not
to exceed 30 days immediately following the commencement of the
Liquidation Period, in units of an available series of QUILTS
Opportunity Trust ("Rollover QUILTS") provided one is offered. It is
expected that a special redemption and liquidation will be made of all
Units of these Trusts held by Unit Holder (a "Rollover Unit Holder")
who affirmatively notifies the Trustee in writing by the Rollover
Notification Date set forth in the "Summary of Essential Information"
in Part A. The availability of this option does not constitute a
solicitation of an offer to purchase Units of a Rollover QUILTS or any
other security. A Unit Holder's election to participate in this option
will be treated as an indication of interest only. A Rollover Unit
Holder's Units will be redeemed in kind and the Securities disposed of
over the Liquidation Period. As long as the Unit Holder confirms his
interest in purchasing units of the Rollover QUILTS and units are
available, the proceeds of the sales (net of brokerage commissions,
governmental charges and any other selling expenses) will be
reinvested in units of the Rollover QUILTS at their net asset value
plus the applicable sales charge. Such purchaser may be entitled to a
reduced sales load (as disclosed in the prospectus for the Rollover
QUILTS) upon the purchase of units of the Rollover QUILTS. It is
expected that the terms of the Rollover QUILTS will be substantially
the same as the terms of the Trust described in this Prospectus, and
that a similar procedure for redemption, liquidation and investment in
subsequent series of the QUILTS Opportunity Trust will be available
for each new Trust. At any time prior to the purchase by the Unit
Holder of units of a Rollover QUILTS such Unit Holder may change his
investment strategy and receive, in cash, the proceeds of the sale of
the Securities. An election of this option will not prevent the Unit
Holder from recognizing taxable capital gain or loss (except in the
case of a loss, if the Rollover QUILTS is treated as substantially
identical to the Trust) as a result of the liquidation, even though no
cash will be distributed to pay taxes. Unit Holders should consult
their own tax advisers in this regard.
(See "Tax Status".)
The Sponsor has agreed to effect the sales of underlying
securities for the Trustee in the case of the second and third options over a
period not to exceed 30 days immediately following the commencement of the
Liquidation Period. The Sponsor, on behalf of the Trustee, will sell the
distributed Securities as quickly as practicable, unless prevented by unusual
and unforeseen circumstances, such as, among other reasons, a suspension in
trading of a Security, the close of a stock exchange, outbreak of hostilities
and collapse of the economy. The Redemption Price Per Unit upon the settlement
of the last sale of Securities during the Liquidation Period will be
distributed to Unit Holders in redemption of such Unit Holders' interest in the
Trust.
Depending on the amount of proceeds to be invested in Units
of Rollover QUILTS and the amount of other orders for Units in Rollover QUILTS,
the Sponsor may purchase a large amount of securities for Rollover QUILTS in a
short period of time. The actual market impact of the Sponsor's purchases,
however, is currently unpredictable because the actual amount of securities to
be purchased and the supply and price of those securities is unknown. A similar
problem may occur in connection with the sale of Securities during the
Liquidation Period. The Sponsor believes that the sale of underlying Securities
over a 30 day period as described above is in the best interest of a Unit
Holder and may mitigate the negative market price consequences stemming from
the trading of large amounts of Securities. The Securities may be sold in fewer
than 30 days if, in the Sponsor's judgment, such sales are in the best interest
of Unit Holders. The Sponsor, in implementing such sales of securities on
behalf of the Trustee, will seek to maximize the sales proceeds and will act in
the best interests of the Unit Holders. There can be no assurance, however,
that any adverse price consequences of heavy trading will be mitigated.
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Unit Holders who do not make any election will be deemed to
have elected to receive the Redemption Price per Unit in cash (option number
2).
The Sponsor may for any reason, in its sole discretion,
decide not to sponsor any subsequent series of the Trust, without penalty or
incurring liability to any Unit Holder. If the Sponsor so decides, the Sponsor
will notify the Trustee of that decision, and the Trustee will notify the Unit
Holders prior to the commencement of the Liquidation Period. All Unit Holders
will then elect either option 1, if eligible, or option 2.
The Sponsor reserves the right to modify, suspend or
terminate the reinvestment privilege at any time.
Investors should be aware that the staff of the Division of
Investment Management of the Securities and Exchange Commission ("SEC") is of
the view that the rollover described in option 3 above would constitute an
"exchange offer" for the purposes of Section 11(c) of the Investment Company
Act of 1940, and would therefore be prohibited absent an exemptive order. The
Sponsor has received an exemptive order under Section 11(c) which it believes
permits it to offer the rollover option, but no assurance can be given that the
SEC will concur with the Sponsor's position and additional regulatory approvals
may be required.
The Sponsor. Effective as of November 28, 1995 the Sponsor,
Quest for Value Distributors, changed its name to OCC Distributors. The Sponsor
is a majority-owned subsidiary of Oppenheimer Capital. Since 1969, Oppenheimer
Capital has managed assets for many of the nation's largest pension plan
clients. Today, the firm has over $40 billion under management from separate
accounts and money market funds. The Quest for Value organization was created
in 1988 to introduce mutual funds designed to help individual investors achieve
their financial goals. OCC Distributors is committed to retirement planning and
services geared to the long term investment goals of the individual investor.
The Sponsor, a Delaware general partnership, is engaged in the mutual fund
distribution business. It is a member of the National Association of Securities
Dealers, Inc.
The information included herein is only for the purpose of
informing investors as to the financial responsibility of the Sponsor and its
ability to carry out its contractual obligations.
The Sponsor is liable for the performance of its obligations
arising from its responsibilities under the Trust Agreement, but will be under
no liability to Unit Holders for taking any action, or refraining from taking
any action, in good faith pursuant to the Trust Agreement, or for errors in
judgment except in cases of its own willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
The Sponsor may resign at any time by delivering to the
Trustee an instrument of resignation executed by the Sponsor. If at any time
the Sponsor shall resign or fail to perform any of its duties under the Trust
Agreement or becomes incapable of acting or becomes bankrupt or its affairs are
taken over by public authorities, then the Trustee may either (a) appoint a
successor Sponsor; (b) terminate the Trust Agreement and liquidate the Trusts;
or (c) continue to act as Trustee without terminating the Trust Agreement. Any
successor sponsor appointed by the Trustee shall be satisfactory to the Trustee
and, at the time of appointment, shall have a net worth of at least $1,000,000.
The Trustee. The Trustee is The Chase Manhattan Bank, with
its principal executive office located at 270 Park Avenue, New York, New York
10017 and its unit investment trust office at 770 Broadway, New York, New York
10003 (800) 428-8890. Effective on or shortly after October 28, 1996 the
address of the Trustee's unit investment trust office will be 4 New York Plaza,
New York, New York 10004. The customer service number will not change. The
Trustee is subject to the
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supervision by the Superintendent of Banks of the State of New York, the
Federal Deposit Insurance Corporation and the Board of Governors of the Federal
Reserve System.
The Trustee shall not be liable or responsible in any way for
taking any action, or for refraining from taking any action, in good faith
pursuant to the Trust Agreement, or for errors in judgment; or for an
disposition of any moneys, Securities or Certificates in accordance with the
Trust Agreement, except in case of its own willful misfeasance, bad faith,
negligence or reckless disregard of its obligations and duties. In addition,
the Trustee shall not be liable for any taxes or other governmental charges
imposed upon or in respect of the Securities or the Trust which it may be
required to pay under current or future law of the United States or any other
taxing authority having jurisdiction. The Trustee shall not be liable for
depreciation or loss incurred by reason of the sale by the Trustee of any of
the Securities pursuant to the Trust Agreement.
For further information relating to the responsibilities of
the Trustee under the Trust Agreement, reference is made to the material set
forth under "Rights of Unit Holders."
The Trustee may resign by executing an instrument in writing
and filing the same with the Sponsor, and mailing a copy of a notice of
resignation to all Unit Holders. In such an event the Sponsor is obligated to
appoint a successor Trustee as soon as possible. In addition, if the Trustee
becomes incapable of acting or becomes bankrupt or its affairs are taken over
by public authorities, the Sponsor may remove the Trustee and appoint a
successor as provided in the Trust Agreement. Notice of such removal and
appointment shall be mailed to each Unit Holder by the Sponsor. If upon
resignation of the Trustee no successor has been appointed and has accepted the
appointment within thirty days after notification, the retiring Trustee may
apply to a court of competent jurisdiction for the appointment of a successor.
The resignation or removal of the Trustee becomes effective only when the
successor Trustee accepts its appointment as such or when a court of competent
jurisdiction appoints a successor Trustee. Upon execution of a written
acceptance of such appointment by such successor Trustee, all the rights,
powers, duties and obligations of the original Trustee shall vest in the
successor.
Any corporation into which the Trustee may be merged or with
which it may be consolidated, or an corporation resulting from any merger or
consolidation to which the Trustee shall be a party, shall be the successor
Trustee. The Trustee must always be a banking corporation organized under the
laws of the United States or any State and have at all times an aggregate
capital, surplus and undivided profits of not less than $2,500,000.
The Evaluator. The Evaluator for the Trust is Muller Data
Corporation, a New York corporation, with main offices located at 395 Hudson
Street, New York, New York 10014. Muller Data Corporation is a wholly-owned
subsidiary of Thomson Publishing Corporation, a Delaware corporation.
The Trustee, the Sponsor and the Unit Holders may rely on any
evaluation furnished by the Evaluator and shall have no responsibility for the
accuracy thereof. Determinations by the Evaluator under the Trust Agreement
shall be made in good faith upon the basis of the best information available to
it, provided, however, that the Evaluator shall be under no liability to the
Sponsor or Unit Holders for errors in judgment, except in cases of its own
willful misfeasance, bad faith, negligence or reckless disregard of its
obligation and duties. The Evaluator shall not be liable or responsible for
depreciation or losses incurred by reason of the purchase, sale or retention of
any Securities.
The Evaluator may resign or may be removed by the Sponsor and
Trustee, and the Sponsor and the Trustee are to use their best efforts to
appoint a satisfactory successor. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor Evaluator. If
upon resignation of the Evaluator no successor has accepted appointment within
thirty
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days after notice of resignation, the Evaluator may apply to a court of
competent jurisdiction for the appointment of a successor.
OTHER MATTERS
Legal Opinions. The legality of the Units offered hereby and
certain matters relating to federal tax law have been passed upon by Battle
Fowler LLP, 75 East 55th Street, New York, New York 10022 as counsel for the
Sponsor. Messrs. Carter, Ledyard & Milburn, Two Wall Street, New York, New York
10005 have acted as counsel for the Trustee.
Independent Auditors. The Statement of Condition and
Portfolio are included herein in reliance upon the report of BDO Seidman, LLP,
independent auditors, and upon the authority of said firm as experts in
accounting and auditing.
Legal Matters. The Investment Company Act of 1940 (the "Act")
limits the amounts that registered investment companies (such as the Trust) can
own of other registered investment companies (such as the Fund). However,
Section 12(d)(1)(E) of the Act would exempt the Trust from these limitations if
the Fund is the only "investment security" held by the Trust. While the term
"investment security" is not defined in Section 12(d) of the Act, it is defined
in another section of the Act to exclude government securities (such as the
Treasury Obligations) from its scope. Therefore, since the Trust only owns
shares of the Fund and Treasury Obligations it complies with the exception of
Section 12(d)(1)(E). Further, the Office of Chief Counsel of the Division of
Investment Management of the Securities and Exchange Commission granted the
Sponsor "no action" assurance on this issue.
DESCRIPTION OF CORPORATE BONDS RATINGS
MOODY'S INVESTORS SERVICE, INC.
Aaa: Bonds which are rated Aaa are judged to be the best
quality. They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rate Aa are judged to be of high qualify
by all standards. Together with the Aaa group they comprise what are generally
known as high grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A: Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa: Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
B-31
398974.1
<PAGE>
Ba: Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often the
protection of interest and principal payments may be very moderate and thereby
not well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of
a desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa: Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of danger with
respect to principal or interest.
Ca: Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have other
market shortcomings.
C: Bonds which are rated C are the lowest rated class of
bonds, and issues so rated can be regarded as having extremely poor prospects
of ever attaining any real investment standing.
Unrated: Where no rating has been assigned or where a rating
has been suspended or withdrawn, it may be for reasons unrelated to the quality
of the issue.
Should no rating be assigned, the reason may be one of the
following:
1. An application for rating was not received or accepted.
2. The issue or issuer belongs to a group of securities that
are not rated as a matter of policy.
3. There is a lack of essential data pertaining to the issue
or issuer.
4. The issue was privately based, in which case the rating is
not published in Moody's Investors Service, Inc.'s publications.
Suspension or withdrawal may occur if new and material
circumstances arise, the effects of which preclude satisfactory analysis; if
there is no longer available reasonable up-to-date data to permit a judgment to
be formed; if a bond is called for redemption; or for other reasons.
Note: Those bonds in the Aa, A, Baa, Ba and B groups which
Moody's believe possess the strongest investment attributes are designated by
the symbols Aa-1, A-1, Baa-1, and B-1.
STANDARD & POOR'S CORPORATION
AAA: Bonds rated AAA have the highest rating assigned by
Standard & Poor's Corporation ("S&P"). Capacity to pay interest and repay
principal is extremely strong.
AA: Bonds rated AA have a very strong capacity to pay
interest and repay principal and differ from the higher rated issues only in
small degree.
A: Bonds rated A have a strong capacity to pay interest and
repay principal although they are somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than bonds in the
highest rated categories.
B-32
398974.1
<PAGE>
BBB: Bonds rated BBB are regarded as having an adequate
capacity to pay interest and repay principal. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay interest
and repay principal for bonds in this category then in higher rated categories.
BB, B, CCC, CC, C: Bonds rated BB, B, CCC, CC and C are
regarded, on balance, as predominantly speculative with respect to capacity to
pay interest and repay principal in accordance with the terms of this
obligation. BB indicates the lowest degree of speculation and C the highest
degree of speculation. While such bonds will likely have some quality and
protective characteristics, they are outweighed by large uncertainties of major
risk exposures to adverse conditions.
C1: The rating C1 is reserve for income bonds on which no
interest is being paid.
D: Bonds rated D are in default, and payment of interest
and/or repayment of principal is in arrears.
Plus (+) or minus (-): The ratings from "AA" to "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
NR: Indicates that no rating has been requested, that there
is insufficient information on which to base a rating, or that S&P does not
rate a particular type of obligation as a matter of policy.
B-33
398974.1
<PAGE>
Qualified Unit Investment Liquid Trust Series ("QUILTS")
(A Unit Investment Trust)
Opportunity Trust 2002
Prospectus Dated: August 29, 1996
Sponsor: Trustee: Evaluator:
OCC Distributors The Chase Manhattan Bank Muller Data Corporation
Two World Financial Center 770 Broadway 395 Hudson Street
225 Liberty Street New York, New York 10003 New York, New York 10014
New York, New York 10281 (800) 428-8890
(800) 628-6664
============================
Table of Contents
Title Page
- ----- ----
PART A
Summary of Essential Information....................A-2
The Trust...........................................A-3
Independent Auditors' Report........................A-8
Statement of Condition..............................A-9
Portfolio...........................................A-10
Underwriting........................................A-10
PART B
The Trust...........................................B-1
Risk Factors........................................B-10
Public Offering.....................................B-13
Rights of Unit Holders .............................B-16
Tax Status..........................................B-19
Liquidity...........................................B-23
Trust Administration................................B-25
Other Matters.......................................B-31
Description of Corporate Bond Ratings...............B-31
No person is authorized to give any information or to make any
representations not contained in Parts A and B of this Prospectus; and any
information or representation not contained herein must not be relied upon as
having been authorized by the Trust, the Trustee, the Evaluator, or the
Sponsor. The Trust is a registered as unit investment trust under the
Investment Company Act of 1940. Such registration does not imply that the Trust
or any of its Units have been guaranteed, sponsored, recommended or approved by
the United States or any state or any agency or officer thereof.
This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, securities in any state to any person to whom
it is not lawful to make such offer in such state.
Parts A and B of this Prospectus do not contain all of the information
set forth in the registration statement and exhibits thereto, filed with the
Securities and Exchange Commission, Washington, D.C., under the Securities Act
of 1933, and the Investment Company Act of 1940, and to which reference is
made.
398974.1
<PAGE>
PART II--ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A--BONDING ARRANGEMENTS
The employees of OCC Distributors are covered under Brokers' Blanket
Policy, Standard Form 14, in the amount of $1,000,000.
ITEM B--CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers
and documents: The facing sheet on Form S-6.
The Cross-Reference Sheet.
The Prospectus consisting of pages.
Undertakings.
Signatures.
Written consents of the following persons:
Battle Fowler LLP (included in Exhibit 3.1)
BDO Seidman, LLP
Muller Data Corporation (included in Exhibit 5.1)
The following exhibits:
*99.1.1 -- Reference Trust Agreement including certain
Amendments to the Trust Indenture and Agreement
referred to under Exhibit 1.1.1 below.
*99.1.1.1 -- Trust Indenture and Agreement.
99.1.3.4 -- Agreement of General Partnership of Quest for Value
Distributors dated July 9, 1987 (filed as Exhibit
1.3.4 to Form S-6 Registration Statement No. 33-57284
of Quest for Value's Unit Investment Laddered Treasury
Securities ("QUILTS") on January 21, 1993 and
incorporated herein by reference).
99.1.4 -- Form of Master Agreement Among Underwriters (filed as
Exhibit 1.4 to Amendment No. 2 to Form S-6
Registration Statement No. 33-57284 of Quest for
Value's Unit Investment Laddered Trust Series
("QUILTS"), QUILTS Monthly Income -- U.S. Treasury
Series 1; QUILTS Monthly Income -- U.S. Treasury
Series 2 and QUILTS Asset Builder -- U.S. Treasury
Series 3 on March 19, 1993 and incorporated herein by
reference).
*99.2.1 -- Form of Certificate.
*99.3.1 -- Opinion of Battle Fowler LLP as to the legality of
the securities being registered, including their
consent to the filing thereof and to the use of their
name under the headings "Tax Status" and "Legal
Opinions" in the Prospectus, and to the filing of
their opinion regarding tax status of the Trust.
- --------
* Filed herewith.
II-i
C/M: 11205.0015 397550.1
<PAGE>
*99.5.1 -- Consent of the Evaluator.
99.6.0 -- Powers of Attorney of Quest for Value Distributors,
by the majority of the Board of Directors and certain
officers of Oppenheimer Financial Corp., its Managing
General Partner (filed as Exhibit 6.0 to Amendment No.
2 to Form S-6 Registration Statement No. 33-57284 of
Quest for Value's Unit Investment Laddered Trust
Series ("QUILTS"), QUILTS Monthly Income -- U.S.
Treasury Series 1; QUILTS Monthly Income -- U.S.
Treasury Series 2 and QUILTS Asset Builder -- U.S.
Treasury Series 3 on March 19, 1993 and as Exhibit 6.0
to Pre-Effective amendment No. 1 to Form S-6
Registration Statement No. 33-57284 of Quest for
Value's Investment Unit Investment Laddered Trust
Series ("QUILTS") on March 5, 1993 and incorporated
herein by reference).
*99.27 -- Financial Data Schedules (for EDGAR filing only).
- --------
* Filed herewith.
II-ii
C/M: 11205.0015 397550.1
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Qualified Unit Investment Liquid Trust Series ("QUILTS")
Opportunity Trust 2002 has duly caused this Registration Statement to be signed
on its behalf by the undersigned, hereunto duly authorized, in the City of New
York and State of New York on the 29th day of August 1996.
QUALIFIED UNIT INVESTMENT LIQUID TRUST SERIES ("QUILTS")
OPPORTUNITY TRUST 2002
(Registrant)
OCC DISTRIBUTORS
(Depositor)
By: OPPENHEIMER FINANCIAL CORP.,
as Managing General Partner of the Depositor
By: /s/ SUSAN A. MURPHY
-------------------------------------------
(Susan A. Murphy, Attorney-in-Fact)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons, who
constitute the principal officers and a majority of the directors of
Oppenheimer Financial Corp., the Managing General Partner of the Depositor, in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
<S> <C> <C>
STEPHEN ROBERT* Chief Executive Officer and Director
- ------------------------------------
Stephen Robert
NATHAN GANTCHER* Chief Operating Officer and Director
- ------------------------------------
Nathan Gantcher
ROGER EINIGER* Chief Administrative Officer and Director
- ------------------------------------
Roger Einiger
JOSEPH LAMOTTA* Director
- ------------------------------------
Joseph LaMotta
ANTONIO FERNANDEZ* Chief Financial Officer and Treasurer
- ------------------------------------
Antonio Fernandez
*By: /s/ SUSAN A. MURPHY August 29, 1996
------------------------------------
(Susan A. Murphy, Attorney-in-Fact)
</TABLE>
- --------
* Executed copy of Power of Attorney filed as Exhibit 6.0 to Amendment No.
2 to Registration Statement No. 33-57284 on March 19, 1993, and as
Exhibit 6.0 to the Pre-Effective Amendment No. 1 to Registration
Statement No. 33-57284 on March 5, 1993.
II-iii
C/M: 11205.0015 397550.1
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
The Sponsor, Trustee, and Unit Holders of
QUILTS Opportunity Trust 2002
We have issued our report dated August 28, 1996 on the Statement of Condition
and Portfolio of Qualified Unit Investment Liquid Trust Series ("QUILTS")
Opportunity Trust 2002 as of August 28, 1996 contained in the Registration
Statement on Form S-6 and the Prospectus. We consent to the use of our report
in the Registration Statement and Prospectus and to the use of our name as it
appears under the caption "Independent Auditors."
BDO Seidman, LLP
New York, New York
August 28, 1996
II-iv
C/M: 11205.0015 397550.1
<PAGE>
REGISTRATION NO. 33-01867
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
EXHIBITS
FILED WITH
AMENDMENT NO. 2
TO
FORM S-6
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
------------------------
QUALIFIED UNIT INVESTMENT LIQUID TRUST SERIES ("QUILTS")
Opportunity Trust 2002
================================================================================
C/M: 11205.0015 397550.1
<PAGE>
EXHIBIT INDEX
Exhibit Number DESCRIPTION PAGE
*99.1.1 -- Reference Trust Agreement including certain
Amendments to the Trust Indenture and
Agreement referred to under Exhibit 1.1.1
below. _____
*99.1.1.1 -- Trust Indenture and Agreement. _____
99.1.3.4 -- Agreement of General Partnership of Quest for
Value Distributors dated July 9, 1987 (filed
as Exhibit 1.3.4 to Form S-6 Registration
Statement No. 33-57284 of Quest for Value's
Unit Investment Laddered Treasury Securities
("QUILTS") on January 21, 1993 and
incorporated herein by reference). _____
99.1.4 -- Form of Master Agreement Among Underwriters
(filed as Exhibit 1.4 to Amendment No. 2 to
Form S-6 Registration Statement No. 33-57284
of Quest for Value's Unit Investment Laddered
Trust Series ("QUILTS"), QUILTS Monthly Income
-- U.S. Treasury Series 1; QUILTS Monthly
Income -- U.S. Treasury Series 2 and QUILTS
Asset Builder -- U.S. Treasury Series 3 on
March 19, 1993 and incorporated herein by
reference). _____
*99.2.1 -- Form of Certificate. _____
*99.3.1 -- Opinion of Battle Fowler as to the legality of
the securities being registered, including
their consent to the filing thereof and to the
use of their name under the headings "Tax
Status" and "Legal Opinions" in the
Prospectus, and to the filing of their opinion
regarding tax status of the Trust. _____
*99.5.1 -- Consent of the Evaluator. _____
99.6.0 -- Powers of Attorney of OCC Distributors, by the
majority of the Board of Directors and certain
officers of Oppenheimer Financial Corp., its
Managing General Partner (filed as Exhibit 6.0
to Amendment No. 2 to Form S-6 Registration
Statement No. 33-57284 of Quest for Value's
Unit Investment Laddered Trust Series
("QUILTS"), QUILTS Monthly Income -- U.S.
Treasury Series 1; QUILTS Monthly Income --
U.S. Treasury Series 2 and QUILTS Asset
Builder -- U.S. Treasury Series 3 on March 19,
1993 and as Exhibit 6.0 to Pre-Effective
amendment No. 1 to Form S-6 Registration
Statement No. 33-57284 of Quest for Value's
Investment Unit Investment Laddered Trust
Series ("QUILTS") on March 5, 1993 and
incorporated herein by reference). _____
*99.27 -- Financial Data Schedule (for EDGAR filing
only). _____
- --------
* Filed herewith.
C/M: 11205.0015 397550.1
QUALIFIED UNIT INVESTMENT
LIQUID TRUST SERIES ("QUILTS")
OPPORTUNITY TRUST 2002
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement (the "Agreement") dated August
28, 1996 among OCC Distributors, as Depositor, The Chase Manhattan Bank, as
Trustee, and Muller Data Corporation, as Evaluator, sets forth certain
provisions in full and incorporates other provisions by reference to the
document entitled "Qualified Unit Investment Liquid Trust Series ("QUILTS")
Opportunity Trust 2002 and Subsequent Series" dated August 28, 1996 (the
"Indenture") as amended in part by this Agreement (collectively, such documents
hereinafter called the "Indenture and Agreement"). This Agreement and the
Indenture, as incorporated by reference herein, will constitute a single
instrument.
WITNESSETH THAT:
WHEREAS, this Agreement is a Reference Trust Agreement as
defined in Section 1.1 of the Indenture, and shall be amended and modified from
time to time by an Addendum as defined in Section 1.1 (1) of the Indenture,
such Addendum setting forth any Additional Securities as defined in Section 1.1
(2) of the Indenture;
WHEREAS, the Depositor wishes to deposit Securities, and any
Additional Securities as listed on any Addendums hereto, into the Trust and
issue Units, and Additional Units as the case maybe, in respect thereof
pursuant to Sections 2.1 and 2.6 of the Indenture; and
NOW THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the Depositor, the Trustee and the
Evaluator agree as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Section 1. Subject to the provisions of Part II hereof, all
the provisions contained in the Indenture are herein incorporated by reference
in their entirety and shall be deemed to be a part of this instrument as fully
and to the same extent
396193.1
<PAGE>
as though said provisions had been set forth in full in this
instrument.
Section 2. This Reference Trust Agreement may be amended and
modified by Addendums, attached hereto, evidencing the purchase of Additional
Securities which have been deposited to effect an increase over the number of
Units initially specified in Part II of this Reference Trust Agreement
("Additional Closings"). The Depositor, Trustee and Evaluator hereby agree that
their respective representations, agreements and certifications contained in
the Closing Memorandum dated August 28, 1996, relating to the initial deposit
of Securities continue as if such representations, agreements and
certifications were made on the date of such Additional Closings and with
respect to the deposits made therewith, except as such representations,
agreements and certifications relate to their respective By-Laws and, as to the
Trustee, its charter and permit to exercise fiduciary powers and as to which
they each represent that their has been no amendment affecting their respective
abilities to perform their respective obligations under the Indenture.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
Section 1. The following special terms and conditions are
hereby agreed to:
(a) The Securities (including Contract Securities) listed in
Schedule A hereto have been deposited in the Trust under this Agreement.
(b) The number of Units delivered by the Trustee in
exchange for the Securities referred to in Section 2.3 is
200,000.
(c) For the purposes of the definition of Unit in item (19)
of Section 1.1, the fractional undivided interest in and ownership of the Trust
per 1,000 Units initially is 1/200 as of the date hereof.
(d) For the purposes of item (12) of Section 1.1 the
definition of the Fund shall mean the Oppenheimer Quest Opportunity Value Fund.
(e) The term Record Date shall mean two business days after
the Fund's ex-dividend date or such other day as the Trustee shall determine.
-2-
396193.1
<PAGE>
(f) The term Payment Date shall mean such day determined by
the Trustee which shall be as promptly as practicable after the related Record
Date.
(g) The First Settlement Date shall mean September 4, 1996.
(h) For purposes of Section 4.4, the Evaluator shall receive
for each evaluation of the Treasury Obligations in the Trust $8.00 per
valuation.
(i) For purposes of Section 6.1(g), the liquidation amount is
hereby specified to be 40% of the aggregate value of the Securities as of the
date of the last deposit of Additional Securities.
(j) For purposes of Section 6.4, the Trustee shall be paid
per annum $.86 per 1,000 Units.
(k) The Termination Day shall be the earlier of December 15,
2002 or the disposition of the last security in the Trust.
(l) The fiscal year for the Trust shall end on July
31st of each year.
(m) Units of the Trust shall not be evidenced by
Certificates.
IN WITNESS WHEREOF, the parties hereto have caused this
Reference Trust Agreement to be duly executed on the date first above written.
[Signatures on separate pages]
-3-
396193.1
<PAGE>
OCC DISTRIBUTORS
as Depositor
By: OPPENHEIMER FINANCIAL CORP.
as Managing Partner of the
Depositor
By: /S/ SUSAN A. MURPHY
--------------------------
Authorized Person
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
I, Carla P.S. Vogel , a Notary Public in and for the said
County in the State aforesaid, do hereby certify that Susan A. Murphy
personally known to me to be the same person whose name is subscribed to the
foregoing instrument and personally known to me to be an Authorized Person of
Oppenheimer Financial Corp., a Delaware corporation, appeared before me this
day in person, and acknowledged that he/she signed and delivered the said
instrument as his/her free and voluntary act as such Authorized Person and as
the free and voluntary act of said Oppenheimer Financial Corp., for the uses
and purposes therein set forth.
GIVEN under my hand and notarial seal this 27th day of
August, 1996.
/S/ CARLA P. S. VOGEL
------------------------
Notary Public
(SEAL)
My Commission expires:
396193.1
<PAGE>
THE CHASE MANHATTAN BANK
as Trustee
By: /S/ THOMAS PORRAZZO
------------------------
(SEAL)
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I, ADA IRIS VEGA , a Notary Public in and for the said County
in the State aforesaid, do hereby certify that Thomas Porrazzo personally known
to me to be the same person whose name is subscribed to the foregoing
instrument and personally known to me to be a Vice President of The Chase
Manhattan Bank, appeared before me this day in person, and acknowledged that
he sealed with the corporate seal of The Chase Manhattan Bank and signed
and delivered the said instrument as his free and voluntary act as such Vice
President and as the free and voluntary act of said The Chase Manhattan Bank,
for the uses and purposes therein set forth.
GIVEN under my hand and notarial seal this 26th day of
August, 1996.
/S/ ADA IRIS VEGA
---------------------------
Notary Public
(SEAL)
My Commission expires:
396193.1
<PAGE>
MULLER DATA CORPORATION, Evaluator
By:/S/ MARIO S. BUSCEMI
-------------------------------
Mario S. Buscemi
Chief Operating Officer
[SEAL]
Attest:
By:/S/ RICHARD BIRNBAUM
---------------------
Richard Birnbaum
Vice President
396193.1
<PAGE>
Schedule A
----------
QUILTS
Opportunity Trust 2002
PORTFOLIO
AS OF AUGUST 28, 1996
<TABLE>
<CAPTION>
Percentage Cost of
Portfolio Name of Issuer and Title of Securities of Securities
No. Represented by Contracts to Purchase(1) Fund (2) to Trust (3)
- -------------- ------------------------------------------------------- ---------------- ----------------
<S> <C> <C> <C>
1 $200,000 Zero Coupon U.S. Treasury Bonds
Maturing November 15, 2002 69.43% $133,180.00
2 2,088 Class A Shares of Oppenheimer Quest
Opportunity Value Fund ($28.08 per Fund
Share) 30.57 58,631.04
-------- -----------
100.00% $191,811.04
======= ===========
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) The Treasury Obligations have been purchased at a discount from the
maturity value because there is no stated interest income thereon (such
securities are often referred to as zero coupon securities). Over the life
of the Treasury Obligations such discount accrues and upon maturity thereof
the holder receives 100% of the Treasury Obligation maturity amount. The
Fund Shares have been valued at their net asset value as of the Evaluation
Time on the Initial Date of Deposit. The Fund's subadviser is OpCap
Advisors. All Securities are represented by contracts to purchase such
Securities. Forward contracts to purchase the Securities were entered into
on August 28, 1996. All such contracts are expected to be settled on or
about the First Settlement Date of the Trust which is expected to be
September 4, 1996.
(2) Offering prices of Treasury Obligations are determined by the Evaluator on
the basis stated under "Public Offering Price" herein. The offering side
evaluation is greater than the current bid side evaluation of the Treasury
Obligations, which is the basis on which Redemption Price per Unit is
determined (see "Liquidity--Trustee Redemption" in Part B of this
Prospectus). The aggregate value of the Treasury Obligations based on the
bid side evaluation of the Treasury Obligations on the day prior to the
Date of Deposit was $132,932 (which is $248 lower than the aggregate cost
of the Treasury Obligations to the Trust based on the offering side
evaluation). The loss to Sponsor on deposit totals $150.
UNDERWRITING
OCC Distributors, Two World Financial Center, 225 Liberty Street, New York,
New York 10281 will act as Underwriter for all of the Units of the Trust. The
Underwriter will distribute Units through various broker-dealers, banks and/or
other eligible participants (see "Public Offering -- Distribution of Units" in
Part B.)
A-10
330608.4
QUALIFIED UNIT INVESTMENT LIQUID
TRUST SERIES
("QUILTS")
OPPORTUNITY TRUST 2002
for all series formed on or subsequent to the effective
date specified below
----------
TRUST INDENTURE AND AGREEMENT
Between
OCC DISTRIBUTORS
As Depositor,
THE CHASE MANHATTAN BANK
As Trustee
and
MULLER DATA CORPORATION
As Evaluator
----------
Dated: August 28, 1996
397452.2
<PAGE>
QUALIFIED UNIT INVESTMENT LIQUID
TRUST SERIES
("QUILTS")
OPPORTUNITY TRUST 2002
and Subsequent Series and any future trusts for which OCC
Distributors acts as sponsor
CONTENTS
Article and Section Page
INTRODUCTION....................................................... 1
ARTICLE 1 DEFINITIONS; CERTIFICATES.......................... 2
Section 1.1. Definitions........................................ 2
Section 1.2. Form of Certificate................................ 6
ARTICLE 2 DEPOSIT OF SECURITIES; DECLARATION OF TRUST;
FORM AND ISSUANCE OF CERTIFICATES...... 9
Section 2.1. Deposit of Securities.............................. 9
Section 2.2. Declaration of Trust............................... 9
Section 2.3. Issuance of Units.................................. 9
Section 2.4. Form of Certificates............................... 10
Section 2.5. Certain Contracts Satisfactory..................... 10
Section 2.6. Deposit of Additional Securities................... 10
ARTICLE 3 ADMINISTRATION OF TRUST............................ 13
Section 3.1. Cost............................................... 13
Section 3.2. Income Account..................................... 13
Section 3.3. Principal Account.................................. 14
Section 3.4. Reserve Account.................................... 14
Section 3.5. Payments and Distributions......................... 15
Section 3.6. Distribution Statements............................ 18
Section 3.7. Substitute Securities.............................. 20
Section 3.8. Sale of Securities................................. 21
Section 3.9. Counsel............................................ 22
Section 3.10. Notice and Sale by Trustee......................... 22
Section 3.11. Reorganization and Similar Events.................. 22
Section 3.12. Notice of Actions.................................. 22
Section 3.13. Notice of Change in Principal Account.............. 23
Section 3.14. Extraordinary Distributions........................ 23
ARTICLE 4 EVALUATION OF SECURITIES; EVALUATOR................ 23
Section 4.1. Evaluation by Evaluator............................ 23
Section 4.2. Tax Reports........................................ 24
Section 4.3. Liability of Evaluator with respect to
Evaluations........................................ 24
Section 4.4. Evaluator's Compensation........................... 25
Section 4.5. Successor Evaluator................................ 25
397452.2
<PAGE>
Article and Section Page
ARTICLE 5 TRUST EVALUATION, REDEMPTION, PURCHASE, TRANSFER,
INTERCHANGE OR REPLACEMENT OF CERTIFICATES......... 26
Section 5.1. Trust Evaluation................................... 26
Section 5.2. Redemptions by Trustee; Purchases by Depositor..... 28
Section 5.3. Transfer of Units; Issuance, Transfer and
Interchange of Certificates........................ 31
Section 5.4. Replacement of Certificates........................ 32
Section 5.5. Form of Certificate................................ 32
ARTICLE 6 TRUSTEE; REMOVAL OF DEPOSITOR...................... 33
Section 6.1. General Definition of Trustee's Liabilities,
Rights and Duties; Removal of Depositor............ 33
Section 6.2. Books, Records and Reports......................... 37
Section 6.3. Indenture and List of Securities on File........... 37
Section 6.4. Compensation....................................... 37
Section 6.5. Removal and Resignation of the Trustee;
Successor.......................................... 39
Section 6.6. Qualifications of Trustee.......................... 40
ARTICLE 7 DEPOSITOR.......................................... 41
Section 7.1. Succession......................................... 41
Section 7.2. Resignation of Depositor........................... 41
Section 7.3. Liability of Depositor and Indemnification......... 41
Section 7.4. Compensation....................................... 42
ARTICLE 8 RIGHTS OF UNIT HOLDERS............................. 43
Section 8.1. Beneficiaries of Trust............................. 43
Section 8.2. Rights, Terms and Conditions....................... 43
ARTICLE 9 ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS..... 44
Section 9.1. Amendments......................................... 44
Section 9.2. Termination........................................ 45
Section 9.3. Construction....................................... 47
Section 9.4. Registration of Units.............................. 47
Section 9.5. Written Notice..................................... 48
Section 9.6. Severability....................................... 48
Section 9.7. Dissolution of Depositor Not to Terminate.......... 48
This Table of Contents does not constitute part of the Indenture.
397452.2
<PAGE>
QUALIFIED UNIT INVESTMENT LIQUID
TRUST SERIES
("QUILTS")
OPPORTUNITY TRUST 2002
(A UNIT INVESTMENT TRUST)
AND
SUBSEQUENT SERIES
AND ANY OTHER FUTURE TRUSTS
FOR WHICH OCC DISTRIBUTORS
ACTS AS SPONSOR
TRUST INDENTURE AND AGREEMENT
DATED AUGUST 28, 1996
This Trust Indenture and Agreement ("Indenture") dated August
28, 1996, among OCC Distributors, as Depositor, The Chase Manhattan Bank, as
Trustee, and Muller Data Corporation, as Evaluator.
WITNESSETH THAT
In consideration of the premises and of the mutual agreements
herein contained, the Depositor, the Trustee and the Evaluator agree as
follows:
INTRODUCTION
The Depositor concurrently with the execution and delivery
hereof is establishing Qualified Unit Investment Laddered Trust Series
("QUILTS") Opportunity Trust 2002 (and subsequent Series), wherein certain
securities consisting of Fund Shares and Treasury Obligations, and contracts
and funds for the purchase of such securities (collectively, the "Securities")
will be deposited by the Depositor, to be held by the Trustee in trust for the
use and benefit of the registered holders of units of beneficial ownership (the
"Units") as recorded in book-entry form. The parties hereto are entering into
this Indenture for the purpose of establishing certain of the terms, covenants
and conditions of QUILTS Opportunity Trust 2002 and of each additional series
of such Trusts, and any other future trusts for which the Depositor acts as
sponsor, which may be established from time to time hereafter. For QUILTS
Opportunity Trust 2002, and each subsequent series for which the Depositor acts
as sponsor (sometimes referred to herein as the "Trust") (as to which this
Indenture is to be applicable) the parties hereto shall execute a separate
Reference Trust Agreement incorporating by reference this Indenture and
effecting any amendment, supplement or variation from or to this Indenture with
respect to the related series and specifying for that series (i) the Securities
deposited in trust and the number of Units delivered by the Trustee in exchange
for the Securities pursuant to
397452.2
<PAGE>
Section 2.3; (ii) the initial fractional undivided interest represented by each
Unit; (iii) the first and subsequent Record Dates; (iv) the first and
subsequent Payment Dates; (v) the First Settlement Date; (vi) the liquidation
amount for purposes of Section 6.1(g); (vii) the Trustee's fee; (viii) the
Depositor's fee; (ix) the Evaluator's fee; (x) the Termination Date; and (xi)
any other change or addition contemplated or permitted by this Indenture.
ARTICLE 1
DEFINITIONS; CERTIFICATES
Section 1.1. Definitions: Whenever used in this
Indenture the following words and phrases, unless the context
clearly indicates otherwise, shall have the following meanings:
(1) "Addendum to the Reference Trust Agreement" shall mean
the addendum which evidences the Additional Securities deposited into the Trust
and the number of Additional Units created.
(2) "Additional Securities" shall mean such Securities as are
listed in Supplementary Schedules to Addendums to the Reference Trust Agreement
and which have been deposited to effect an increase over the number of Units
initially specified in the Reference Trust Agreement.
(3) "Additional Units" shall mean such Units as are issued in
respect of Additional Securities.
(4) "Business Day" shall mean any day other than a Saturday,
Sunday, or other day on which the New York Stock Exchange is closed for
trading, a legal holiday in the City of New York, or a day on which banking
institutions are authorized by law to close.
(5) "Certificate" shall mean any certificate substantially in
the form hereinafter recited executed by the Trustee and the Depositor
evidencing ownership of an undivided fractional interest in the Trust.
(6) "Contract Securities" shall mean Securities which are to
be acquired by the Trust pursuant to contracts, including (i) Securities listed
in Schedule A to the Reference Trust Agreement, contracts for the purchase
thereof which have been assigned to the Trustee and cash or an irrevocable
letter of credit issued by a commercial bank in the amount required for such
purchase which has been delivered to the Trustee and (ii) Securities which the
Depositor has contracted to purchase for the Trust pursuant to Sections 2.6 and
3.7.
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<PAGE>
(7) "Depositor" shall mean OCC Distributors or its successor
or any successor Depositor appointed as herein provided.
(8) "DTC" shall mean Depository Trust Company, or its
successors.
(9) "Evaluator" shall mean Muller Data Corporation or any
corporation into which such firm may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which such firm shall be a party, or any firm succeeding to all or
substantially all of the business of such firm; or any successor evaluator as
hereinafter provided for.
(10) "Failed Security" shall have the meaning assigned
to it in Section 3.7 hereof.
(11) "First Settlement Date" shall mean the date specified in
Part II of the Reference Trust Agreement.
(12) "Fund" shall mean the mutual fund set forth in Part II
of the Reference Trust Agreement.
(13) "Fund Shares" shall mean shares of the mutual fund set
forth in Part II of the Reference Trust Agreement relating to such Trust or
contracts and funds for the purchase thereof.
(14) "Indenture" shall mean this Trust Indenture and
Agreement as originally executed or, if amended as herein provided, as so
amended.
(15) "Payment Date" shall have the meaning assigned to it in
Part II of the Reference Trust Agreement.
(16) "Record Date" shall have the meaning assigned to it in
Part II of the Reference Trust Agreement.
(17) "Reference Trust Agreement" shall mean the indenture for
the particular series of QUILTS into which the terms of this Indenture are
incorporated.
(18) "Securities" shall mean the Fund Shares and Treasury
Obligations, including contracts and funds for the purchase of such securities
as are (i) deposited in irrevocable trust and listed in the Schedule to the
Reference Trust Agreement and on any supplemental schedule thereto, and (ii)
received in exchange or substitution for any Securities pursuant to Section 3.7
hereof, as may from time to time be acquired and continue to be held as a part
of the Trust to which such Reference Trust Agreement relates.
-3-
397452.2
<PAGE>
(19) "Substitute Security" shall mean a Security purchased by
the Trustee pursuant to Section 3.7 hereof.
(20) "Termination Date" shall have the meaning assigned to it
in Part II of the Reference Trust Agreement.
(21) "Trust" shall mean the Trust created by this Indenture,
which shall consist of the Securities held pursuant and subject to this
Indenture together with all dividends thereon, received but undistributed, any
undistributed cash realized from the sale, redemption, liquidation or maturity
thereof, such amounts as may be on deposit in the Reserve Accounts hereinafter
established and all other property and rights to which Unit Holders may be
entitled under the provisions of this Indenture.
(22) "Treasury Obligations" shall mean the debt obligations
of the government of the United States or agencies thereof or obligations of an
entity the payment of which is guaranteed by the full faith and credit of the
United States which have been stripped of their unmatured interest coupons or
such coupons or receipts or certificates evidencing such obligations or coupons
or contracts and funds for the purchase thereof. The obligor or guarantor of
each obligation is the United States government. Such obligations may include
certificates that represent ownership of the payments that comprise a United
States government bond.
(23) "Trustee" shall mean The Chase Manhattan Bank, or its
successors or any successor Trustee appointed as herein provided.
(24) "12b-1 Fee Rebate Amounts" shall mean, where applicable,
an amount of Rule 12b-1 fees received by the Trustee with respect to Fund
Shares held by the Trust in excess of the Trustee Fee Reduction (as defined in
Section 6.4 herein) if any.
(25) "Unit" shall mean the fractional undivided interest in
and ownership of the Trust initially specified in Part II of the Reference
Trust Agreement, the denominator of which shall be decreased by the number of
any such Units redeemed as provided in Section 5.2.
(26) "Unit Holder" shall mean the registered holder of units
of beneficial interest, his legal representatives and heirs and the successors
of any corporation, partnership or legal entity which is a registered holder of
any Unit, and as such shall be deemed a beneficiary of the trust created by the
Indenture to the extent of his pro rata share thereof.
(27) The words "herein," "hereby," "herewith,"
"hereof," "hereinafter," "hereunder," "hereinabove," "hereafter,"
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397452.2
<PAGE>
"heretofore" and similar words or phrases of reference and association shall
refer to this Indenture in its entirety.
(28) Words importing singular number shall include the plural
number in each case and vice versa, and words importing person shall include
corporations and associations, as well as natural persons.
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<PAGE>
Section 1.2. Form of Certificate: If the Reference Trust
Agreement specifies that Units of a Trust shall be evidenced by Certificates,
the form of Certificate evidencing ownership or fractional undivided interests
in the Trust shall be substantially as follows:
No.
CERTIFICATE OF OWNERSHIP
--evidencing--
A Fractional Undivided Interest
--in--
QUALIFIED UNIT INVESTMENT
LIQUID TRUST SERIES
("QUILTS")
_____ SERIES _____
- ---------------------
CUSIP
This is to certify that ______________________________ is the owner and
registered holder of this Certificate evidencing the ownership of _______
unit(s) of fractional undivided interest in the above named Trust created under
the laws of the State of New York pursuant to the Trust Indenture and Agreement
among OCC Distributors as Depositor, The Chase Manhattan Bank as Trustee and
Muller Data Corporation as Evaluator (the "Indenture"), a copy of which is
available at the office of the Trustee. This Certificate is issued under and is
subject to the terms, provisions and conditions of the Indenture to which the
holder of this Certificate by virtue of the acceptance hereof assents and is
bound, a summary of which Indenture is contained in the Prospectus relating to
the Trust. This Certificate is transferable and interchangeable by the
registered holder in person or by his duly authorized attorney at the Trustee's
office upon surrender of this Certificate properly endorsed or accompanied by a
written instrument of transfer or such documents that the Trustee may require
for transfer in form satisfactory to the Trustee and payment of the fees and
expenses as provided in the Indenture.
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<PAGE>
Witness the facsimile signature of a duly authorized officer
of the Depositor and the manual signature of an authorized signature of the
Trustee.
Date: OCC DISTRIBUTORS, Depositor
_____________________________________
THE CHASE MANHATTAN BANK, Trustee
By:__________________________________
Authorized Officer
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT - _________________ Custodian ______________________
- --------
(Cust)
(Minor)
Under Uniform Gifts to Minors Act
---------------------------------
(State)
Additional abbreviations may also be used though not in the above list.
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397452.2
<PAGE>
(FORM OF ASSIGNMENT)
For Value Received,
hereby sell(s), assign(s) and transfer(s) ______________ Units
represented by this
Certificate unto ______________________________________________________________
- -------------------------------------------------------------------------------
SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE MUST BE PROVIDED
-------------------------------------------
and do(es) hereby irrevocably constitute and appoint___________________________
______________________________________________________, attorney, to transfer
said Units on the books of the Trustee, with full power of substitution in the
premises.
Dated:
_________________________
SIGNATURE(S) GUARANTEED BY
- ---------------------------------------------
Firm or Bank NOTICE: The signature(s)
to this assignment must
correspond with the
name(s) as written upon
the face of the
Certificate in every
particular, without
alteration or
- ---------------------------------------------- enlargement or any change
whatever.
Authorized Signature
Signature(s) must be guaranteed by a member or participant of the
Securities Transfer Agents Medallion Program (STAMP), Stock
Exchanges Medallion Program (SEMP) or New York Stock Exchange,
Inc. Medallion Signature Program (MSP).
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<PAGE>
ARTICLE 2
DEPOSIT OF SECURITIES; DECLARATION OF TRUST;
FORM AND ISSUANCE OF CERTIFICATES
Section 2.1. Deposit of Securities: The Depositor,
concurrently with the execution and delivery of the Reference Trust Agreement
(the "initial Date of Deposit"), has deposited with the Trustee in trust the
Securities listed in Schedule A to the Reference Trust Agreement in bearer form
or registered in the name of the Trustee, or its nominee, or duly endorsed in
blank or accompanied by all necessary instruments of assignment and transfer in
proper form to be held, managed and applied by the Trustee as herein provided.
In the event that the purchase of Securities represented by "when-issued"
and/or "regular way" contracts shall not be consummated in accordance with said
contracts, the Trustee shall credit to the Principal Account pursuant to
Section 3.3 hereof the cash or cash equivalents (including such portion of any
letter of credit applicable to such contracts) deposited by the Depositor, for
the purpose of such purchase. Such monies, unless invested in substitute
Securities in accordance with Section 3.7 hereof, shall be distributed to Unit
Holders pursuant to Section 3.5 hereof on the Payment Date following the
failure of consummation of such purchase or such earlier date as the Trustee
shall determine. The Depositor shall deliver the Securities listed on said
Schedule or Schedules to the Trustee which were not actually delivered
concurrently with the execution and delivery of the Reference Trust Agreement
within 90 days after said execution and delivery or, if Section 3.7 applies,
within such shorter period as is specified in Section 3.7.
The Trustee is irrevocably authorized hereto to effect
registration of transfer of the Securities in fully registered form in the name
of the Trustee or its nominee.
Section 2.2. Declaration of Trust: The Trustee declares that
it holds and will hold the Securities as Trustee in trust upon the terms herein
set forth for the use and benefit of all present and future Unit Holders.
Section 2.3. Issuance of Units: (a) The Trustee hereby
acknowledges receipt of the deposit referred to in Section 2.1, and
simultaneously with the receipt of said deposit, has registered on the
registration books of the Trust the ownership by DTC of the number of Units
specified in Part II of the Reference Trust Agreement (and, if so requested by
the Depositor, will deliver a temporary Certificate evidencing such Units
pending such registration, which temporary Certificate will be canceled and be
of no further effect upon such registration) and will cause such Units to be
credited at DTC to the account of the Depositor or, pursuant to the Depositor's
direction and as
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<PAGE>
hereafter provided, the account of the issuer of the letter of credit referred
to in Section 2.1. The Depositor shall not sell, pledge, hypothecate or
otherwise transfer such Units, prior to the effectiveness of the registration
statement covering the Units filed with the Securities and Exchange Commission
under the Securities Act of 1933, except that the Depositor may place the Units
as security for any letter of credit provided in connection with the deposit of
contracts described in Section 2.1.
The number of Units may be increased through a split of the Units or
decreased through a reverse split thereof, as directed in writing by the
Depositor, on any day on which the Depositor is the only beneficial holder of
Units, which revised number of Units shall be recorded by the Trustee on its
books. The Trustee shall be entitled to rely on the Depositor's direction as
certification that no person other than the Depositor has a beneficial interest
in the Units and the Trustee shall have no liability to any person for action
taken pursuant to such direction.
(b) Unless the Reference Trust Agreement for the Trust
provides that Units may be represented by Certificates, ownership of Units
shall be evidenced solely by registration on the records of the Trustee. If the
Reference Trust Agreement permits the holding of Units in certificated form,
Unit Holders may elect to have their Units held in certificated form by making
a written request to the Trustee requesting such Certificates and paying the
applicable charge referred to in Section 5.3. Units and Certificates may be
transferred as provided in Article V.
Section 2.4. Form of Certificates: Each Certificate referred
to in Section 2.3 is, and each Certificate hereafter issued shall be, in
substantially the form hereinabove recited, numbered serially for
identification, in fully registered form, transferable only on the books of the
Trustee as herein provided, executed manually or in facsimile by an authorized
officer of the Trustee and in facsimile by an Authorized Signatory of the
Depositor.
Section 2.5. Certain Contracts Satisfactory: The Depositor
approves as satisfactory in form and substance the contracts to be assumed by
the Trustee with regard to any Securities listed in Schedule A to the Reference
Trust Agreement and authorizes the Trustee on behalf of the Trust to assume
such contracts and otherwise to carry out the terms and provisions thereof or
to take other appropriate action in order to complete the deposit of the
Securities covered thereby into the Trust.
Section 2.6. Deposit of Additional Securities. (a) From time
to time and in the discretion of the Depositor, the Depositor may make deposits
of (i) Additional Securities duly endorsed in blank or accompanied by all
necessary instruments of
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<PAGE>
assignment and transfer in proper form (or contracts to purchase Additional
Securities and cash or an irrevocable letter of credit in an amount necessary
to consummate the purchase of any Additional Securities pursuant to such
contracts ("Additional Contract Securities")) or (ii) cash or a bank letter of
credit in lieu of cash (collectively, the "Purchase Monies") with instructions
to purchase Additional Securities, such Purchase Monies being in an amount
equal to the value of the Additional Securities to be purchased pursuant to
such instructions as determined by the last preceding evaluation made pursuant
to Section 4.1 and (iii) Cash (as defined below). Each deposit made during the
90 days following the deposit made pursuant to Section 2.1 hereof shall
replicate, to the extent practicable, the proportional relationship between the
maturity amount of the Treasury Obligations and the number of Fund Shares
represented by each Unit of the Trust on the initial Date of Deposit; provided
that any additional Treasury Obligations shall be substantially identical to
those then held in the Trust. Each deposit made after the 90 days following the
deposit made pursuant to Section 2.1 hereof (except for deposits made to
replace Failed Securities if such deposits occur within 20 days from the date
of a failure occurring within such initial 90 day period) shall maintain
exactly the proportional relationship between the maturity amount of the
Treasury Obligations and the number of Fund Shares represented by each Unit of
the Trust as of the initial Date of Deposit. Each such deposit (whenever made)
shall also exactly replicate Cash. For purposes of this paragraph, "Cash"
means, as to the Principal Account, cash or other property (other than
Securities) on hand in the Principal Account or receivable and to be credited
to the Principal Account as of the date of the supplemental deposit (other than
amounts to be distributed solely to persons other than persons receiving the
distribution from the Principal Account as holders of Additional Units created
by the deposit), and, as to the Income Account, cash or other property (other
than Securities) received by the Trust as of the date of the supplemental
deposit or receivable by the Trust in respect of dividends or other
distributions declared but not received as of the date of the supplemental
deposit, reduced by the amount of any cash or other property received or
receivable on any Security allocable (in accordance with the Trustee's
calculation of the monthly distribution from the Income Account pursuant to
Section 3.5) to a distribution made or to be made in respect of Record Date
occurring prior to the supplemental deposit. Each deposit of Additional
Securities shall be listed in a Supplementary Schedule to an Addendum to the
Reference Trust Agreement stating the date of such deposit and the number of
Additional Units being issued therefor. The Trustee shall acknowledge in such
Addendum receipt of the deposit, and simultaneously with the receipt of said
deposit, reflect the aggregate number of Additional Units specified in such
Addendum by recording such Units on its books. Such Additional Securities shall
be held, administered and applied by the Trustee in the
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<PAGE>
same manner as herein provided for the Securities. The execution by the
Depositor in connection with the deposit of Additional Securities of an
Addendum to the Reference Trust Agreement shall constitute the approval by the
Depositor as satisfactory in form and substance of the contracts to be entered
into or assumed on such Addendum and authorization to the Trustee on behalf of
the Trust to enter into or assume such contracts and otherwise to carry out the
terms and provisions thereof or to take other appropriate action in order to
complete the deposit of the Additional Securities covered thereby into the
Trust.
(b) Instructions to purchase Additional Securities under this
Section, shall be in writing and shall direct the Trustee to purchase, or enter
into contracts to purchase, Additional Securities; such instructions shall also
specify the name, CUSIP number, if any, aggregate amount of each such
Additional Security, price or price range and date to be purchased. When
requested by the Trustee, the Depositor shall act as broker to execute
purchases in accordance with such instructions; the Depositor shall be entitled
to compensation therefor in accordance with applicable law and regulations. The
Trustee shall have no liability for any loss or depreciation resulting from any
purchase made pursuant to the Depositor's instructions or made by the Depositor
as broker. Cash deposited for the purchase of Additional Securities to be
acquired pursuant to instructions to purchase Additional Securities shall be
credited to the Principal Account. Cash deposited to secure the purchase of
Contract Securities shall be credited to the Principal Account only at the
times specified in Section 3.3. In connection with valuations made pursuant to
Sections 4.1 and 5.1, (i) there shall be subtracted from the cash balance of
the Principal Account the cost to the Trust of contracts entered into by the
Trustee pursuant to purchase instructions, and (ii) Contract Securities and
contracts entered into by the Trustee pursuant to purchase instructions shall
be valued as the Securities to be acquired pursuant thereto. If, at the time of
a subsequent deposit under this Section, either the Fund Shares or the Treasury
Obligations are unavailable, cannot be purchased at reasonable prices or their
purchase is prohibited or restricted by applicable law, regulation or policies,
in lieu of the portion of the deposit that would otherwise be represented by
those Securities, the Depositor may deposit cash or a letter of credit with
instructions to acquire the Securities of such original issue when they become
available.
The Trustee shall have no responsibility for the selection of
Securities deposited hereunder or for maintaining the composition of the Trust
portfolio.
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<PAGE>
ARTICLE 3
ADMINISTRATION OF TRUST
Section 3.1. Cost: The cost of the initial preparation,
printing and execution of the Certificates and this Indenture, Registration
Statement and other documents relating to the Trust, Federal and State
registration fees and costs, the initial fees and expenses of the Trustee and
Evaluator, legal and auditing expenses and other out-of-pocket expenses
(excluding expenses incurred in the preparation and printing of preliminary
prospectuses and prospectuses, expenses incurred in the preparation and
printing of brochures and other advertising materials and any other selling
expenses), to the extent not borne by the Depositor, shall be paid by the
Trust; provided, however, the Trust shall not bear such expenses in excess of
the amount shown in the Statement of Condition included in the Prospectus, and
any such excess shall be borne by the Depositor. To the extent the funds in the
Interest and Principal Accounts of the Trust shall be insufficient to pay the
expenses borne by the Trust specified in this Section 3.1, the Trustee shall
advance out of its own funds and cause to be deposited and credited to the
Interest Account such amount as may be required to permit payment of such
expenses. The Trustee shall be reimbursed for such advance on each Record Date
from funds on hand in the Income Account, or to the extent funds are not
available in such Account, from the Principal Account, in the amount deemed to
have accrued as of such Record Date as provided in the following sentence (less
prior payments on account of such advances, if any), and the provisions of
Section 6.4 with respect to the reimbursement of disbursements for Trust
expenses, including, without limitation, the lien in favor of the Trustee
therefor, shall apply to the payment of expenses made pursuant to this Section.
For purposes of the provisions of the preceding sentence and the addition
provided in clause (a)(4) of Section 5.1, the expenses borne by the Trust
pursuant to this Section shall be deemed to accrue at a daily rate over the
time period specified for their amortization by the Depositor pursuant to
Section 5.1; provided, however, that nothing herein shall be deemed to prevent,
and the Trustee shall be entitled to, full reimbursement for any advances made
pursuant to this Section no later than the termination of the Trust. For
purposes of this Section 3.1, the Trustee shall rely on the written estimates
of such expenses provided by the Depositor pursuant to Section 5.1.
Section 3.2. Income Account: The Trustee shall collect the
dividends or other like cash distributions on the Securities in the Trust as
such are paid, and any 12b-1 Fee Rebate Amounts, and credit such amounts, as
collected, to a separate account to be known as the "Income Account."
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<PAGE>
Section 3.3. Principal Account: (a) The Securities and all
cash, including capital gains distribution paid on the Fund Shares, other than
amounts credited to the Income Account, received by the Trustee in respect of
the Securities shall be credited to a separate account to be known as the
"Principal Account".
(b) Moneys and/or irrevocable letters of credit required to
purchase Contract Securities or deposited to secure such purchases are hereby
declared to be held specially by the Trustee for such purchases and shall not
be deemed to be part of the Principal Account until (i) the Depositor fails to
timely purchase Contract Securities and has not given the Failed Contract
Notice (as defined in Section 3.7) at which time the moneys and/or letters of
credit attributable to the Contract Securities not purchased by the Depositor
shall be credited to the Principal Account; or (ii) the Depositor has given the
Trustee the Failed Contract Notice at which time the moneys and/or letters of
credit attributable to failed contracts referred to in such Notice shall be
credited to the Principal Account; provided, however, that if the Depositor
also notifies the Trustee in the Failed Contract Notice that it has purchased
or entered into a contract to purchase Substitute Securities (as defined in
Section 3.7), the Trustee shall not credit such moneys and/or letters of credit
to the Principal Account unless the Securities shall also have failed or are
not delivered by the Depositor within two business days after the settlement
date of such Securities, in which event the Trustee shall forthwith credit such
moneys and/or letters of credit to the Principal Account. To the extent of
moneys, and/or moneys drawn under a letter of credit, deposited by the
Depositor and then held by the Trustee, the Trustee shall credit to the
Principal Account, and to the extent such moneys are insufficient the Depositor
shall deposit in the Principal Account, the difference, if any, between the
purchase price of the failed Contract Securities and the purchase price of the
Substitute Securities, together with any sales charge and accrued dividends
applicable to such difference and distribute such moneys to Unit Holders
pursuant to Section 3.5.
Section 3.4. Reserve Account: From time to time the Trustee
shall withdraw from the cash on deposit in the Income Account or the Principal
Account such amounts as it, in its sole discretion, shall deem requisite to
establish a reserve for any applicable taxes or other governmental charges that
may be payable out of or by the Trust. Such amounts so withdrawn shall be
credited to a separate account which shall be known as the "Reserve Account".
The Trustee shall not be required to distribute to the Unit Holders any of the
amounts in the Reserve Account; provided, however, that if it shall, in its
sole discretion, determine that such amounts are no longer necessary for
payment of any applicable taxes or other governmental
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<PAGE>
charges, then it shall promptly deposit such amounts in the appropriate account
from which withdrawn or, if the Trust has been terminated or is in the process
of termination, the Trustee shall distribute to each Unit Holder such holder's
interest in the Reserve Account in accordance with Section 9.2.
Section 3.5. Payments and Distributions: Distributions to
each Unit Holder from the Income Account are computed as of the close of
business on each Record Date for the following Payment Date. Distributions from
the Principal Account of the Trust (other than amounts representing failed
contracts, as discussed in Section 3.3.(b)) will be computed as of each Record
Date, and will be made to the Unit Holders of the Trust on or shortly after the
next Payment Date. Proceeds representing principal received from the
disposition of any of the Securities between a Record Date and a Payment Date
which are not used for redemptions of Units will be held in the Principal
Account and not distributed until the second succeeding Payment Date. Persons
who purchase Units between a Record Date and a Payment Date will receive their
first distribution on the second Payment Date after such purchase.
As of each Record Date the Trustee shall:
(a) deduct from the Income Account of the Trust, and, to the
extent funds are not sufficient therein, from the Principal Account of the
Trust, amounts necessary to pay any unpaid expenses of the Trust, including
registration charges, Blue Sky fees, printing costs, attorneys' fees, auditing
costs and other miscellaneous out-of-pocket expenses, as certified by the
Depositor, incurred in keeping the registration of the Units and the Trust on a
current basis pursuant to Section 9.4, provided, however, that no portion of
such amount shall be deducted or paid unless the payment thereof from the Trust
is at that time lawful;
(b) deduct from the Income Account or, to the extent funds
are not available in such Account, from the Principal Account, and pay to
itself individually the amounts that it is at the time entitled to receive on
account of its fees, unpaid expenses and advances;
(c) deduct from the Income Account, or, to the extent funds
are not available in such Account, from the Principal Account, and pay to the
Evaluator the amount that it is at the time entitled to receive pursuant to
Section 4.4;
(d) deduct from the Income Account, or, to the extent funds
are not available in such Account, from the Principal Account, and pay an
amount equal to the unpaid fees and expenses, if any, of counsel pursuant to
Section 3.9 as certified to it by the Depositor; and
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(e) deduct from the Income Account, or, to the extent funds
are not available in such Account, from the Principal Account the estimated
amount that the Depositor is then entitled to receive pursuant to Section 7.4
and hold such amount without interest until such time as it is payable to the
Depositor as set forth below.
On or before the next following Payment Date, the Trustee
shall, upon certification in satisfactory form to the Trustee, upon which the
Trustee may rely, distribute to the Depositor from the amount so held pursuant
to the immediately preceding paragraph the amounts that the Depositor is at the
time entitled to receive pursuant to Section 7.4 on account of services
theretofore performed and expenses theretofore incurred.
The Trustee also may withdraw from said accounts such
amounts, if any, as it deems necessary to establish a reserve for any
applicable taxes or other governmental charges that may be payable out of the
Trust. Amounts so withdrawn shall not be considered a part of such Trust's
assets until such time as the Trustee shall return all or any part of such
amounts to the appropriate accounts. In addition, the Trustee may withdraw from
the Income and Principal Accounts such amounts as may be necessary to cover
redemptions of Units by the Trustee.
The Principal Account shall be reimbursed for any amount
withdrawn from the Principal Account under this Indenture in order to satisfy
obligations which, pursuant to the terms hereof, are first to be paid out of
the Income Account to the extent funds are available therein when sufficient
funds are next available in the Income Account after giving effect to the
payment from the Income Account of all amounts otherwise required to be
deducted therefrom at that time. In the event the balance available in the
Income and Principal Accounts shall be insufficient for payment of the expenses
and fees payable on any Record Date, the Trustee shall have the power to sell
Securities in the manner provided in Section 6.4 to fund such shortfall.
On each Payment Date or within a reasonable period of time
thereafter, the Trustee shall distribute by mail to each Unit Holder of record
at the close of business on the preceding Record Date, at the post office
address appearing on the registration books of the Trustee, such holder's pro
rata share of the balance in the Income Account calculated as set forth in the
next paragraph, plus such holder's pro rata share of the distributable cash
balance of the Principal Account, as of the preceding Record Date; provided,
however, that funds credited to the Principal Account in the event of the
failure of consummation of a contract to purchase Securities pursuant to
Section 2.1 hereof, funds representing the proceeds of the sale of Securities
pursuant to Section 3.8 hereof, and funds representing the proceeds of the sale
of Securities under Section 5.2, 6.4 or this
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Section 3.5 in excess of the aggregate of (i) the amounts needed for the
purposes of said Sections and (ii) such amount as the Depositor have informed
the Trustee is to be used to purchase securities pursuant to Section 3.7
hereof, shall not be distributed until the following Payment Date or at such
earlier date as shall be determined by the Trustee. The Trustee shall include
in the cash balance of the Income and Principal Accounts the amount of any
dividends declared and receivable as of the Record Date provided that the same
are actually received on or before the related Distribution Date. The Trustee
shall not be required to make a distribution from the Principal Account unless
the cash balance on deposit therein available for distribution shall be
sufficient to distribute at least $1.00 per Unit in the case of Units initially
offered at approximately $1,000, or a proportionately lower amount in the case
of Units initially offered at less than $1,000 (e.g., .001 per Unit in the case
of Units initially offered at approximately $1.00).
The Trustee shall compute the amount of the Distribution from
the Income Account (i) by subtracting from the cash balance of the Income
Account computed as of the close of business on such Record Date (a) any unpaid
fees and expenses then deductible pursuant to the foregoing provisions of
Section 3.5 and (b) the Trustee's estimate of other expenses chargeable to the
Income Account pursuant to the Indenture which have accrued as of such Record
Date, or are otherwise properly attributable to the period to which such Income
Distribution relates and (ii) by dividing the result of such calculation by the
number of Units outstanding on the applicable Record Date.
The amounts to be so distributed to each Unit Holder of the
Trust of record as of each Record Date shall be that pro rata share of the cash
balance as of such Record Date of the Income and Principal Accounts of the
Trust, computed as set forth above, as shall be represented by the Units
registered in the name of such Unit Holder on the registration or other record
books of the Trustee.
In the computation of each such share, fractions of less than
one cent shall be omitted. After any such distribution provided for above, any
cash balance remaining in the Income Account or the Principal Account shall be
held in the same manner as other amounts subsequently deposited in each of such
Accounts, respectively.
For the purpose of distribution, as herein provided, the
holders of record on the registration books of the Trustee at the close of
business on each Record Date shall be conclusively entitled to such
distribution, and no liability shall attach to the Trustee by reason of payment
to any such registered Unit Holder of record. Nothing herein shall be construed
to prevent the payment of amounts from the Income Account and the Principal
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Account to individual Unit Holders by means of one check, draft or other proper
instrument, provided that the appropriate statement of such distribution shall
be furnished therein as provided in Section 3.6 hereof.
The Trustee will, for any Unit Holder who provides the
Trustee written instruction, properly executed and in form satisfactory to the
Trustee, received by the Trustee no later than its close of business 10
business days prior to a Record Date (the "Reinvestment Notice Date"), reinvest
such Unit holder's distribution from the Income and Principal Accounts in Units
of the Trust, purchased from the Depositor, to the extent the Depositor shall
make Units available for such purchase, at the Depositor's offering price as of
the third business day prior to the following Distribution Date, and at such
reduced sales charge, or with no sales charge imposed, as may be described in
the prospectus for the Trusts. If, for any reason, the Depositor does not have
Units of the Trust available for purchase, the Trustee shall distribute such
Unit Holder's distribution from the Income and Principal Accounts in the manner
provided in this Section 3.5. The Trustee shall be entitled to rely on a
written instruction received as of the Reinvestment Notice Date and shall not
be affected by any subsequent notice to the contrary. The Trustee shall have no
responsibility for any loss or depreciation resulting from any reinvestment
made in accordance with this paragraph, or for any failure to make such
reinvestment in the event the Depositor does not make Units available for
purchase.
Section 3.6. Distribution Statements: With each distribution
from the Income or Principal Accounts the Trustee shall set forth, either in
the instrument by means of which payment of such distribution is made or in an
accompanying statement the amount being distributed from each such account
expressed as a dollar amount per Unit.
Within a reasonable period of time after the last business
day of each calendar year, the Trustee shall furnish to each person who at any
time during such calendar year was a Unit Holder a statement setting forth,
with respect to such calendar year:
(A) as to the Income Account:
(1) the amount of dividends received on the
Securities,
(2) the amounts paid from the Income Account for
redemptions of Units pursuant to Section 5.2,
(3) the deductions for applicable taxes and fees and
expenses of the Trustee, the Evaluator and counsel pursuant to Section
3.9, the annual audit fees referred to
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in Section 6.2, and the annual fees of the Depositor for
portfolio supervisory services pursuant to Section 7.4,
(4) the amount distributed from the Income Account,
identifying separately amounts distributed as dividends and as other
income, in each case after deduction of the amounts of expenses and
fees chargeable to the Accounts on such Record Date,
(5) the amounts paid from the Principal Account
for redemption pursuant to Section 5.2,
(6) the amounts distributed from the Principal
Account, and
(7) all 12b-1 fee rebate amounts,
(8) any other amount credited to or deducted from
the Income Account, and
(9) the balance remaining after such distributions
and deductions, expressed both as a total dollar amount and as a
dollar amount per Unit outstanding on the last business day of such
calendar year;
(B) as to the Principal Account:
(1) The number of shares of each issue of Securities
sold or liquidated, and the aggregate net proceeds received with
respect to each issue, excluding any portion thereof credited to the
Income Account,
(2) the amounts paid for the purchase of Substitute
Securities pursuant to Section 3.7, and from the Principal Account for
redemption pursuant to Section 5.2,
(3) the amounts credited to or deducted from the
Principal Account on account of distributions of capital gains, if
any, on Fund Shares,
(4) the deductions for payment of applicable taxes
and fees and expenses of the Trustee, the Evaluator and counsel
pursuant to Section 3.9, the annual audit fees referred to in Section
6.2, and the annual fee of the Depositor for portfolio supervisory
services pursuant to Section 7.4, and
(5) the balance remaining after such distributions
and deductions, expressed both as a total dollar amount and as a
dollar amount per Unit outstanding on the last business day of such
calendar year; and
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(C) the following information:
(1) a list of Securities held in the Trust as of
the last business day of such calendar year,
(2) the number of Units outstanding on the last
business day of such calendar year,
(3) the Net Asset Value per Unit based on the last
Trust Evaluation made during such calendar year, and
(4) the amounts actually distributed to Unit Holders
during such calendar year from the Interest and Principal Accounts,
separately stated, expressed both as total dollar amounts and as
dollar amounts per Unit outstanding on the Record Dates for such
distributions and the status of such distributions for Federal income
tax purposes.
Section 3.7. Substitute Securities: In the event that any
Contract Security is not delivered due to any occurrence, act or event beyond
the control of the Depositor and of the Trustee (such a Contract Security being
herein called a "Failed Security"), the Depositor may instruct the Trustee to
purchase Substitute Securities which have been selected by the Depositor having
a cost not in excess of the cost of the Failed Securities. To be eligible for
inclusion in the Trust, the Contract Security must be a Treasury Obligation and
the Substitute Securities which the Depositor selects must: (a) be of the same
type as that replaced (e.g., Treasury Obligations will be substantially
identical to every Treasury Obligation then held in the Trust); (b) in the
Depositor's judgment, be substantially similar to the Failed Security, as the
case may be, as respects the investment characteristics which led the Depositor
to select the Failed Security for inclusion in the Trust (i.e., in terms of
maturity date, interest rate, yield to maturity, rating and purchase price);
and (c) be purchased prior to, simultaneously with, or no more than twenty days
after delivery of written notice to the Trustee of the failed contract (the
"Failed Contract Notice").
Any Substitute Securities received by the Trustee shall be
deposited hereunder and shall be subject to the terms and conditions of this
Indenture to the same extent as other Securities deposited hereunder. No such
deposit of Substitute Securities shall be made after the earlier of (i) 90 days
after the date of execution and delivery of the applicable Reference Trust
Agreement or (ii) the first Payment Date to occur after the date of execution
and delivery of the applicable Reference Trust Agreement.
Whenever a Substitute Security is acquired by the Depositor
pursuant to the provisions of this Section 3.7, the
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Trustee shall, within five days thereafter, mail to all Unit Holders notices of
such acquisition, including an identification of the Failed Security or the
Section 3.8 Security, as the case may be, and the Substitute Security acquired.
The purchase price of a Substitute Security shall be paid out of the funds in
the principal account attributable to the Failed Security which it replaces.
The Trustee shall not be liable or responsible in any way for depreciation or
loss incurred by reason of any purchase made pursuant to any such instructions
from the Depositor and in the absence of such instructions the Trustee shall
have no duty to purchase any Substitute Securities under this Indenture. The
Depositor shall not be liable for any failure to instruct the Trustee to
purchase any Substitute Security or for errors of judgment in selecting any
Substitute Security.
Section 3.8. Sale of Securities In order to maintain the
sound investment character of the Trust, the Depositor may direct the Trustee
to sell or liquidate Securities at such prices and times and in such manner as
shall be determined by the Depositor, provided that the Depositor has
determined that any one or more of the following conditions exist:
(i) default in the payment of amounts when due on
any of the Securities, including, but not limited to,
declared dividends or redemptions of Fund Shares;
(ii) institution of certain legal proceedings;
(iii) default under certain documents materially
and adversely affecting future declaration or payment of
amounts due or expected;
(iv) if the disposition of these Securities is necessary
in order to enable the Trust to make distributions of the Trust's
capital gain net income;
(v) determination of the Depositor that the tax
treatment of the Trust as a "grantor trust" would otherwise
be jeopardized; or
(vi) decline in price that is a direct result of serious
adverse credit factors affecting the issuer of a Security which, in
the opinion of the Depositor, would make the retention of the Security
detrimental to the Trust or the Unit Holders.
Upon receipt of such direction from the Depositor, upon which
the Trustee shall rely, the Trustee shall proceed to sell the specified
Security in accordance with such direction. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by reason of any sale
made pursuant to any such direction, or by reason of the failure of the
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Depositor to give any such direction, and in the absence of such direction the
Trustee shall have no duty to sell any Securities under this Section 3.8.
Section 3.9. Counsel: The Depositor may employ from time to
time as it may deem necessary a firm of attorneys for any legal services that
may be required in connection with the disposition of Securities pursuant to
Section 3.8. The fees and expenses of such counsel shall be paid by the Trustee
from the Interest and Principal Accounts as provided for in Section 3.5(d)
hereof.
Section 3.10. Notice and Sale by Trustee: If at any time
there has been a failure by the issuer to pay a dividend that is declared and
payable on the Fund Shares, the Trustee shall notify the Depositor thereof. If
within thirty days after such notification the Trustee has not received any
instruction from the Depositor to sell or to hold or to take any other action
in connection with such Fund Shares, the Trustee shall sell such Fund Shares
forthwith, and the Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of such sale or by reason of any action
or inaction in accordance with such written instructions of the Depositor. The
Trustee shall promptly notify the Depositor of such action in writing and shall
set forth therein the Securities sold and the proceeds received therefrom.
Section 3.11. Reorganization and Similar Events: In the event
that an offer by the issuer of any of the Securities or any other party shall
be made to issue new Securities, the Trustee shall reject such offer. However,
should any exchange or substitution be effected notwithstanding such rejection
or without an initial offer, any Securities, cash and/or property received in
exchange shall be deposited hereunder and shall be promptly sold, if securities
or property, by the Trustee pursuant to the Depositor's direction, unless the
Depositor advises the Trustee to retain such securities or property. The cash
received in such exchange and cash proceeds of any such sale shall be
distributed to Unit Holders on the next Payment Date in the manner set forth in
Section 3.5 regarding distributions from the Principal Account. This section
shall apply, but its application shall not be limited, to public tender offers,
mergers, acquisitions, reorganizations and recapitalization. Neither the
Depositor nor the Trustee shall be liable to any person for action or failure
to take action pursuant to the terms of this Section 3.11.
Section 3.12. Notice of Actions: In the event that the
Trustee shall have been notified at any time of any action to be taken or
proposed to be taken by holders of any Securities held by the Trust (including,
but not limited to, the making of any demand, direction, request, giving of any
notice, consent or
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waiver or the voting with respect to election of directors or any amendment or
supplement to any corporate resolution, agreement or other instrument under or
pursuant to which such Securities have been issued) the Trustee shall promptly
notify the Depositor and shall thereupon take such action or refrain from
taking any action as the Depositor shall in writing direct; provided, however,
that the Trustee shall vote the Fund Shares as closely as possible, in the same
manner and the same general proportion, as the shares of such Fund held by
owners other than the Trust are voted; and provided, further however, that if
the Depositor shall not within five business days of the giving of such notice
to the Depositor direct the Trustee to take or refrain from taking any action,
the Trustee shall take such action as it, in its sole discretion, shall deem
advisable. Neither the Depositor nor the Trustee shall be liable to any person
for any action or failure to take action with respect to this section.
Section 3.13. Notice of Change in Principal Account: The
Trustee shall give prompt written notice to the Depositor of all amounts
credited to or withdrawn from the Principal Account pursuant to any provisions
of this Article III, and the balance of such account after giving effect to
such credit or withdrawal.
Section 3.14. Extraordinary Distributions: Any property
received by the Trustee after the initial date of Deposit in a form other than
cash or additional shares of the Securities listed on Schedule A or of a
Substitute Security received in a non-taxable stock split or stock dividend,
which shall be retained by the Trust, shall be dealt with in the manner
described in Section 3.11 and shall be retained or disposed by the Trustee
according to those provisions, provided, however, that no property shall be
retained which the Trustee determines shall adversely affect its duties
hereunder. The proceeds of any disposition shall be credited to the Income or
Principal Account of the Trust, as the Depositor may direct.
The Trust is intended to be treated as a fixed investment
(i.e., grantor) trust for income tax purposes, and its powers shall be limited
in accordance with the restrictions imposed on such trusts by Treas. Reg.
Section 301.7701-4.
ARTICLE 4
EVALUATION OF SECURITIES; EVALUATOR
Section 4.1. Evaluation by Evaluator. (a) The Evaluator shall
determine separately, and shall promptly furnish to the Trustee and the
Depositor upon request, the value of each issue of Securities (including
Contract Securities ("Evaluation") as of the Evaluation Time (as defined in
Section 5.1) (i) on each Business Day during the period which the Units are
being offered
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for sale to the public and (ii) on any other day on which a Trust Evaluation is
to be made pursuant to Section 5.1 or which is requested by the Depositor or
the Trustee. As part of the Trust Evaluation, the Evaluator shall determine
separately and promptly furnish to the Trustee and the Depositor upon request
the Evaluation of each issue of Securities initially deposited in the Trust on
the initial date of deposit. The deposit shall be included in the Schedules
attached to the Reference Trust Agreement.
(b) During the initial offering period namely, from the date
of effectiveness of the Registration Statement under the Securities Act of 1933
relating to the Units, to and including the day which is designated in writing
by the Depositor to the Trustee and Evaluator as the conclusion of such period,
such Evaluation shall be made in the following manner: if the Securities are
listed on a national securities exchange, such Evaluation shall generally be
based on the closing sale price on such exchange unless the Evaluator deems
such price inappropriate as a basis for Evaluation). If the Securities are not
so listed or, if so listed, the principal market therefor is other than on such
exchange or there is no closing sale price on such exchange, such Evaluation
shall generally be based on the following methods or any combination thereof
whichever the Evaluator deems appropriate: (a) on the basis of current offering
prices for the Treasury Obligations as obtained from investment dealers or
brokers who customarily deal in securities comparable to those held by the
Trust and, with respect to any Fund shares deposited in a Trust, the net asset
value of such shares, (b) if offering prices are not available for the Treasury
Obligations, on the basis of offering price for comparable securities, (c) by
determining the valuation of the Treasury Obligations on the offering side of
the market by appraisal, or (d) by any combination of the above.
(c) After the initial offering period and both during and
after the initial offering periods for purposes of the Trust Evaluations
required by Section 5.1 Evaluation of the Securities shall be made in the
manner described in 4.1(b), on the basis of current bid prices for the Treasury
Obligations and the net asset value of the Fund Shares.
Section 4.2. Tax Reports: For the purpose of permitting Unit
Holders to satisfy any reporting requirements of applicable Federal or State
tax law, the Evaluator shall make available to the Trustee and the Trustee
shall transmit to any Unit Holder upon written request any determinations made
by the Evaluator pursuant to Section 4.1.
Section 4.3. Liability of Evaluator with respect to
Evaluations: The Trustee, the Depositor and the Unit Holders may
rely on any evaluation furnished by the Evaluator and shall have
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no responsibility for the accuracy thereof. The determinations made by the
Evaluator hereunder shall be made in good faith upon the basis of, and shall
have no liability for errors in, the information reasonably available to it.
The Evaluator shall be under no liability to the Trustee, the Depositor or the
Unit Holders for errors in judgment or any action taken in good faith,
provided, however, that this provision shall not protect the Evaluator against
any liability to which it would otherwise be subject by reason of willful
misfeasance, bad faith or negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties hereunder.
Section 4.4. Evaluator's Compensation: As compensation for
its services hereunder, the Evaluator, with respect to each series of the
Trust, shall receive against a statement therefor submitted to the Trustee
annually on or before each Distribution Date from the Income Account to the
extent funds are available and thereafter from the Principal Account the
amounts set forth in part II of the Reference Trust Agreement for such series,
provided, however, that if at any time the fee of the Trustee shall have been
increased pursuant to Section 6.4, the compensation of the Evaluator hereunder
shall at the same time be ratably increased.
Section 4.5. Successor Evaluator: (a) The Evaluator may
resign and be discharged hereunder, by executing an instrument in writing
resigning as Evaluator and filing the same with the Depositor and the Trustee,
not less than 60 days before the date specified in such instrument when,
subject to Section 4.5(e), such resignation is to take effect. Upon receiving
such notice of resignation, the Depositor and the Trustee shall use their best
efforts to appoint a successor evaluator having qualifications and at a rate of
compensation satisfactory to the Depositor and the Trustee. Such appointment
shall be made by written instrument executed by the Depositor and the Trustee,
in duplicate, one copy of which shall be delivered to the resigning Evaluator
and one copy to the successor evaluator. The Depositor may remove the Evaluator
at any time upon 30 days' written notice and appoint a successor evaluator
having qualifications and at a rate of compensation satisfactory to the
Depositor and the Trustee. Such appointment shall be made by written instrument
executed by the Depositor, in duplicate, one copy of which shall be delivered
by the Evaluator so removed and one copy to the successor evaluator. Notice of
such resignation or removal and appointment of a successor evaluator shall be
mailed by the Trustee to each Unit Holder.
(b) Any successor evaluator appointed hereunder shall
execute, acknowledge and deliver to the Depositor and the Trustee an instrument
accepting such appointment hereunder, and such successor evaluator without any
further act, deed or conveyance shall become vested with all the rights,
powers, duties and
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obligations of its predecessor hereunder with like effect as if originally
named Evaluator herein and shall be bound by all the terms and conditions of
this Indenture.
(c) In case at any time the Evaluator shall resign and no
successor evaluator shall have been appointed and have accepted appointment
within 30 days after notice of resignation has been received by the Depositor
and the Trustee, the Evaluator may forthwith apply to a court of competent
jurisdiction for the appointment of a successor evaluator. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor evaluator.
(d) Any corporation into which the Evaluator hereunder may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which the Evaluator hereunder shall be a party,
or any corporation succeeding to all or substantially all of the business of
the Evaluator hereunder, shall be the successor evaluator under this Indenture
without the execution or filing of any paper, instrument or further act to be
done on the part of the parties hereto, anything herein, or in any agreement
relating to such merger or consolidation, by which the Evaluator may seek to
retain certain powers, rights and privileges theretofore obtaining for any
period of time following such merger or consolidation, to the contrary
notwithstanding.
(e) Any resignation or removal of the Evaluator and
appointment of a successor evaluator pursuant to this Section shall become
effective upon acceptance of appointment by the successor evaluator as provided
in subsection (b) hereof.
ARTICLE 5
TRUST EVALUATION, REDEMPTION, PURCHASE, TRANSFER,
INTERCHANGE OR REPLACEMENT OF CERTIFICATES
Section 5.1. Trust Evaluation: The Trustee shall make an
evaluation of the Trust as of the close of trading on the New York Stock
Exchange (4:00 p.m. Eastern Time) (sometimes referred to herein as the
"Evaluation Time") (i) on the last Business Day of each of the months of June
and December, (ii) on the day on which any Unit of the Trust is tendered for
redemption or to the Depositor for repurchase (unless tender is made after the
Evaluation Time on such day, in which case Tender shall be deemed to have been
made on the next day subsequent thereto on which the New York Stock Exchange is
open for trading), and (iii) on any other day desired by the Trustee or
requested by the Depositor. Such evaluations shall take into account and
itemize separately (a)(1) the cash on hand in the Trust (other than monies on
deposit in the Reserve Account, funds deposited on the date
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hereof by the Depositor for the purchase of Securities and not theretofore
credited to the Principal Account pursuant to Section 3.3 and funds in the
Principal Account with respect to which contracts for the purchase of the
Substitute Securities have been entered into pursuant to Section 3.7 hereof),
including dividends receivable on stocks trading ex dividend, (a)(2) the value
of each issue of the Securities in the Trust as determined by the Trustee
pursuant to Section 4.1, (a)(3) amounts representing organizational expenses
paid less amounts representing accrued organizational expenses of the Trust and
(a)(4) all other assets of the Trust. For purposes of such calculation, 12b-1
Fee Rebate Amounts shall be deemed to accrue at a daily rate estimated by the
Trustee who is authorized to rely conclusively upon an estimate of the amount
thereof provided by the Fund. For each such evaluation there shall be deducted
from the sum of the above (b)(1) amounts representing any applicable taxes or
other governmental charges payable out of the Trust and for which no deductions
shall have previously been made for the purpose of addition to the Reserve
Account, (b)(2) amounts representing accrued fees of the Trustee and expenses
of the Trust including but not limited to unpaid fees of the Trustee and
expenses of the Trust including but not limited to unpaid fees of the Trustee
and expenses of the Trust (including legal and auditing expenses), accrued fees
and expenses of the Evaluator and the Depositor and their respective successor,
if any, and (b)(3) cash held for distribution to Unit Holders of record and
redemption of Units tendered as of a date on or prior to the evaluation then
being made. The value of the pro rata share of each unit of the Trust
determined on the basis of any such evaluation shall be referred to herein as
the "Unit Value."
Until the Depositor has informed the Trustee that there will
be no further deposits of Additional Securities pursuant to Section 2.6, the
Depositor shall provide the Trustee with written estimates of (i) the total
organizational expenses to be borne by the Trust pursuant to Section 3.1, (ii)
the total number of Units to be issued in connection with the initial deposit
and all anticipated deposits of Additional Securities and (iii) the period or
periods over which such expenses are to be amortized, separately stated with
respect to each such amortization period. For purposes of calculating the Trust
Evaluation and Unit Value, the Trustee shall treat all such anticipated
expenses as having been paid and all liabilities therefor as having been
incurred, and all Units as having been issued, in each case on the date of the
Trust Agreement, and, in connection with each such calculation, shall take into
account a pro rata portion of such expense and liability based on the actual
number of Units issued as of the date of such calculation. In the event the
Trustee is informed by the Depositor of a revision in its estimate of total
expenses, total Units or period of amortization, and upon the conclusion of the
deposit of Additional Securities or initial
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offering period, the Trustee shall base calculations made thereafter on such
revised estimates or actual expenses or period of amortization, respectively,
but such adjustment shall not affect calculations made prior thereto and no
adjustment shall be made in respect thereof.
The sum of (a)(1) and (a)(3) reduced by the sum of (b)(1) and
(b)(2) and (b)(3) shall be referred to herein as the "Unit Cash Value".
The Trustee shall promptly advise the Depositor of each
determination of Unit value made by it as above provided, and, in addition,
upon each valuation by the Evaluator under Section 4.1 other than those
involved in such calculations of Unit Value, the Trustee shall promptly furnish
to Depositor, for purposes of assisting it in maintaining a market in the
Units, with such information regarding the Principal, Income and Reserve
Accounts as the Depositor may reasonably request.
Section 5.2. Redemptions by Trustee; Purchases by Depositor:
Any Unit tendered for redemption by a Unit Holder or his duly authorized
attorney to the Trustee at its unit investment trust office shall be redeemed
by the Trustee on the third Business Day following the day on which tender for
redemption is made (the "Redemption Date"). Subject to payment by such Unit
Holder of any tax or other governmental charges which may be imposed thereon,
such redemption is to be made by payment on the Redemption Date of cash
equivalent to the Net Asset Value per Unit determined by the Trustee as of the
Evaluation Time on the date of tender, multiplied by the number of Units being
tendered for redemption (herein called the "Redemption Price"). Units received
for redemption by the Trustee on any day after the Evaluation Time will be held
by the Trustee until the next day on which the New York Stock Exchange is open
for trading and will be deemed to have been tendered on such day for redemption
at the Redemption Price computed on that day.
The Trustee may in its discretion, and shall when so directed
by the Depositor in writing, suspend the right of redemption or postpone the
date of payment of the Redemption Price beyond the third Business Day following
the day on which tender for redemption is made:
(1) for any period during which the New York Stock Exchange
is closed other than customary weekend and holiday closings or during
which trading on the New York Stock Exchange is restricted;
(2) for any period during which an emergency exists as a
result of which disposal by the Trust of the Securities is not
reasonably practicable or it is not reasonably
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practicable fairly to determine in accordance herewith the
value of the Securities; or
(3) for such other periods as the Securities and
Exchange Commission may by order permit,
and the Trustee shall not be liable to any person or in any way for any loss or
damage which may result from any such suspension or postponement.
Not later than the close of business on the day of tender of
a Unit for redemption by a Unit Holder other than the Depositor, the Trustee
shall notify the Depositor of such tender. The Depositor shall have the right
to purchase such Unit by notifying the Trustee of its election to make such
purchase as soon as practicable thereafter, but in no event subsequent to the
close of business on the second business day after the day on which such Unit
was tendered for redemption. Such purchase shall be made by payment for such
Unit by the Depositor to the Unit Holder not later than the close of business
on the Redemption Date of an amount equal to the Redemption Price which would
otherwise be payable by the Trustee to such Unit Holder.
Any Unit so purchased by the Depositor may, at the option of
the Depositor, be tendered to the Trustee for redemption at the unit investment
trust office of the Trustee in the manner provided in the first paragraph of
this Section 5.2.
If the Depositor does not elect to purchase any Unit tendered
to the Trustee for redemption, or if a Unit is being tendered by the Depositor
for redemption, that portion of the Redemption Price which represents dividends
shall be withdrawn from the Income Account to the extent funds are available.
The balance paid on any redemption, including accrued dividends, if any, shall
be withdrawn from the Principal Account to the extent that funds are available
for such purpose. If such available balance shall be insufficient, the Trustee
shall sell Securities in the manner provided below. In the event that funds are
withdrawn from the Principal Account or Securities are sold for payment of any
portion of the Redemption Price representing accrued dividends, the Principal
Account shall be reimbursed when sufficient funds are next available in the
Income Account for such funds so applied.
The Depositor shall designate Securities to be sold for the
purpose of redemption of Units tendered for redemption and not purchased for
the Depositor, and for payment of expenses hereunder, provided that if the
Depositor shall fail so to designate, the Trustee shall sell Fund Shares and
Treasury Obligations in such amounts as will result in the remaining Fund
Shares and Treasury Obligations held in the Trust approximating, as closely as
possible, the proportionate ratio of such Shares
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and Obligations on the initial Date of Deposit referred to in Section 2.1,
provided, however, that, except to the extent the Trust then lacks other assets
sufficient to provide for payment of the redemption, Treasury Obligations shall
not be sold to the extent that the maturity value, per Unit outstanding, of the
Treasury Obligations remaining after such sale would be less than the maturity
value, per Unit, of the Treasury Obligations on the initial Date of Deposit.
The net proceeds of any sales of Securities from such list representing
principal shall be credited to the Principal Account and the proceeds of such
sales representing accrued interest shall be credited to the Income Account.
Neither the Trustee nor the Depositor shall be liable or
responsible in any way for depreciation or loss incurred by reason of any sale
of Securities made pursuant to this Section 5.2.
Units redeemed pursuant to this Section 5.2 shall be canceled
by the Trustee and the Units shall be terminated by such redemptions.
If the related prospectus for the Trust so provides, a Unit
Holder who tenders for redemption Units in an aggregate amount of at least the
amount specified in the prospectus may request, at the time of tender, to
receive an In Kind Distribution in lieu of cash. Such In Kind Distribution
shall consist of (i) such Unit Holder's pro rata portion of Fund Shares, to the
extent of whole shares, and (ii) cash equal to such Unit Holder's pro rata
portion of the Income and Principal Accounts as follows: (x) a pro rata portion
of the net proceeds of sale of the Treasury Obligations and of the Fund Shares
representing any fractional shares included in such Unit Holder's pro rata
share of the Securities and (y) such other cash as may properly be included in
such Unit Holder's pro rata share of the sum of the cash balances of the Income
and Principal Accounts in an amount equal to the Redemption Price on the date
of tender less amounts specified in clauses (i) and (ii)(x) of this sentence.
The Trustee shall distribute the Unit Holder's Securities to the account of the
Unit Holder's bank or broker dealer at The Depository Trust Company. An In Kind
Distribution shall be reduced by customary transfer and registration charges
incurred by the Trustee.
Notwithstanding the foregoing provisions of this Section 5.2,
the Trustee is hereby irrevocably authorized in its discretion, in the event
that the Depositor do not elect to purchase any Unit tendered to the Trustee
for redemption (other than Units as to which a valid request for In Kind
Redemption has been made), or in the event that a Unit is being tendered by the
Depositor for redemption, in lieu of redeeming Units tendered for redemption,
to sell such Units in the over-the-counter market or
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by private sale for the account of tendering Unit Holders at prices which will
return to the Unit Holders amounts in cash, net after deducting brokerage
commissions, transfer taxes and other charges, equal to or in excess of the
Redemption Prices which such Unit Holders would otherwise be entitled to
receive on redemption pursuant to this Section 5.2. The Trustee shall pay to
the Unit Holders the net proceeds of any such sale on the day they would
otherwise be entitled to receive payment of the Redemption Price hereunder.
Section 5.3. Transfer of Units; Issuance, Transfer and
Interchange of Certificates: Units may be transferred by the Unit Holder
thereof by presentation and surrender of transfer instructions or, in the case
of certificated Units, properly endorsed Certificates, at the Trustee's unit
investment trust office, accompanied by such documents executed by the Unit
Holder or his authorized attorney, as the Trustee deems necessary to evidence
the authority of the person making the transfer. Certificates issued pursuant
to this Indenture are interchangeable for one or more other Certificates in an
equal aggregate number of Units and all Certificates issued as may be requested
by the Unit Holder and deemed appropriate by the Trustee shall be issued in
denominations of one Unit or any multiple thereof. The Trustee may deem and
treat the person in whose name any Unit shall be registered upon the books of
the Trustee as the owner of such Unit for all purposes hereunder and the
Trustee shall not be affected by any notice to the contrary. The transfer books
maintained by the Trustee for the purposes of this Section 5.3 shall include
the name and address of the record owners of the Unit, shall include an
indication as to whether the Units are represented by Certificates or are in
uncertificated form, and shall be closed in connection with the termination of
the Trust pursuant to Article IX hereof.
A sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any such transfer shall be paid
to the Trustee by the Unit Holder. A Unit Holder may be required to pay a fee
of $2 for each new Certificate to be issued (or such other amount as may be
specified by the Trustee and approved by the Depositor) pursuant to the
preceding paragraph.
Certificates will be issued to Unit Holders if so provided in
the Reference Trust Agreement for a Trust or if so directed by the Sponsors;
provided that subject to the terms of this Indenture, a holder of
uncertificated Units shall have the same rights, benefits and obligations as
though such holder were in possession of a Certificate. Unit Holders who have
elected to hold their Units in uncertificated form in any certificated Trust
may at any time request the Trustee to issue Certificates for such Units. The
Trustee shall, upon receipt of such request in form satisfactory to it, issue
such Certificates as may be
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requested by the Unit Holder and deemed appropriate by the Trustee in
denominations of one Unit or any multiple thereof. Holders of Units evidenced
by Certificates may at any time elect to have their Units held in
uncertificated form by surrendering their Certificates to the Trustee for
cancellation. At such time, an appropriate notation will be made in the
registration books of the Trustee to indicate that the Units formerly evidenced
by such cancelled Certificates are Units held in uncertificated form.
All Certificates cancelled pursuant to this Indenture may be
destroyed or otherwise voided by the Trustee in accordance with the usual
practice of the Trustee.
The Trustee may adopt other reasonable rules and regulations
for the registration, transfer, tender and redemption of Units as it may, in
its discretion, deem necessary.
Section 5.4. Replacement of Certificates: In case any
Certificate shall become mutilated or be destroyed, stolen or lost, the Trustee
shall execute and deliver a new Certificate in exchange and substitution
therefor upon the Unit Holder's furnishing the Trustee with proper
identification and satisfactory indemnity, complying with such other reasonable
regulations and conditions as the Trustee may prescribe and paying such
expenses and charges, including any bonding fee, as the Trustee may incur or
reasonably impose; provided that if the Trustee has terminated or is in the
process of termination the Trustee, in lieu of issuing such new Certificate,
may, upon the terms and conditions set forth herein, make the distributions set
forth in Section 9.2 hereof. Any mutilated Certificate shall be duly
surrendered and cancelled before any duplicate Certificate shall be issued in
exchange and substitution therefor. Upon issuance of any duplicate Certificate
pursuant to this Section 5.4, the original Certificate claimed to have been
lost, stolen or destroyed shall become null and void and of no effect, and any
bona fide purchaser thereof shall have only such rights as are afforded under
Article 8 of the Uniform Commercial Code to a holder presenting a Certificate
for transfer in the case of an overissue.
Section 5.5. Form of Certificate: Any Certificate permitted
to be issued pursuant to this Indenture shall be in fully registered form,
shall be numbered for identification, shall be executed in facsimile by the
Depositor and manually by an authorized signatory of the Trustee, shall be
dated the date of execution and delivery by the Trustee and shall represent a
fractional undivided interest in the Trust, the numerator of which fraction
shall be the number of Units set forth on the face of such Certificate and the
denominator of which shall be the total number of Units of fractional undivided
interest in the Trust outstanding at that time.
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ARTICLE 6
TRUSTEE; REMOVAL OF DEPOSITOR
Section 6.1. General Definition of Trustee's Liabilities,
Rights and Duties; Removal of Depositor: In addition to and notwithstanding the
other duties, rights, privileges and liabilities of the Trustee otherwise set
forth herein, the liabilities of the Trustee are further defined as follows:
(a) All moneys deposited with or received by the Trustee
hereunder shall be held by the Trustee without interest in trust as part of the
Trust or the Reserve Account until required to be disbursed in accordance with
the provisions of this Indenture and such moneys will be segregated by separate
recordation on the trust ledgers of the Trustee so long as such practice
preserves a valid preference under applicable law, or if such preference is not
so preserved the Trustee shall handle such moneys in such other manner as shall
constitute the segregation and holding thereof in trust within the meaning of
the Investment Company Act of 1940.
(b) The Trustee shall be under no liability for any action
taken in good faith and with reasonable care on any appraisal, paper, order,
list, demand, request, consent, affidavit, notice, opinion, direction,
evaluation, endorsement, assignment, resolution, draft or other document,
whether or not of the same kind, prima facie properly executed, or for the
disposition of moneys, Securities or Certificates pursuant to this Indenture,
or in respect of any evaluation which the Trustee is required to make or is
required or permitted to have made by others under this Indenture or otherwise
except by reason of its negligence, lack of good faith and reasonable care, or
willful misconduct, provided that the Trustee shall not in any event be liable
or responsible for any evaluation made by any independent evaluation service
employed by it pursuant to Section 4.1. The Trust shall pay and hold the
Trustee harmless from and against any loss, liability or expense incurred in
acting as Trustee of the Trust other than by reason of willful misfeasance, bad
faith or negligence in the performance of its duties or by reason of its
reckless disregard of its obligations and duties hereunder, including the costs
and expenses of the defense against any claim or liability in the premises;
provided, however, that the Trustee shall not in any event be liable or
responsible for any evaluation made by the Evaluator. The Trustee may construe
any of the provisions of this Indenture, insofar as the same may appear to be
ambiguous or inconsistent with any other provisions hereof, and any
construction of any such provisions hereof by the Trustee in good faith shall
be binding upon the parties hereto. The Trustee shall in no event be deemed to
have assumed or
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incurred any liability, duty or obligation to any Unit Holder or the Depositor,
other than as expressly provided for herein.
(c) The Trustee shall not be responsible for or in respect of
the recitals herein, the validity or sufficiency of this Indenture or for the
due execution hereof by the Depositor, or for the form, character, genuineness,
sufficiency, value or validity of any Securities (except that the Trustee shall
be responsible for the exercise of due care in determining the genuineness and
negotiability of Securities delivered to it pursuant to contracts for the
purchase of such Securities) or for or in respect of the validity or
sufficiency of the Certificates or of the due execution thereof by the
Depositor, and the Trustee shall in no event assume or incur any liability,
duty or obligation to any Unit Holder or the Depositor other than as expressly
provided for herein. The Trustee shall not be responsible for or in respect of
the validity of any signature by or on behalf of the Depositor.
(d) The Trustee shall not be under any obligation to appear
in, prosecute or defend any action, which in its opinion may involve it in
expense or liability, unless as often as required, it shall be furnished with
reasonable security and indemnity against such expense or liability as it may
require, and any pecuniary cost of the Trustee from such actions shall be
deductible from and a charge against the Income and Principal Accounts. The
Trustee shall in its discretion undertake such action as it may deem necessary
at any and all times to protect the Trust and the rights and interests of the
Unit Holders pursuant to the terms of this Indenture, provided, however, that
the expenses and costs of such actions, undertakings or proceedings shall be
reimbursable to the Trustee from the Income and Principal Accounts, and the
payment of such costs and expenses shall be secured by a lien on the Trust
prior to the interests of the Unit Holders.
(e) The Trustee may employ agents, attorneys, accountants and
auditors and shall not be answerable for the default or misconduct of any such
agents, attorneys, accountants or auditors if such agents, attorneys,
accountants or auditors shall have been selected or their activities overseen
with reasonable care; provided, however, that if the Trustee chooses to employ
DTC in connection with the storage and handling of, and the furnishing of
administrative services in connection with the Securities, the Trustee will be
answerable for any default or misconduct of DTC and its employees and agents as
fully and to the same extent as if such default or misconduct had been
committed or occasioned by the Trustee. The Trustee shall be fully protected in
respect of any action under this Indenture taken, or suffered, in good faith by
the Trustee, in accordance with the opinion of its counsel. The fees and
expenses charged by such agents, attorneys, accountants or auditors shall
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constitute an expense of the Trustee reimbursable from the Income and Principal
Accounts as set forth in Sections 3.5 and 6.4 hereof.
(f) Other than as provided in Article 7 hereunder, if at any
time the Depositor shall resign or fail to undertake or perform or become
incapable of undertaking or performing any of the duties which by the terms of
this Indenture are required by it to be undertaken or performed and no express
provision is made for action to be taken by the Trustee in such event, or the
Depositor shall be adjudged bankrupt or insolvent, or a receiver of such
Depositor or of its property shall be appointed, or any public officer shall
take charge or control of such Depositor or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then in any such case,
the Trustee may do any one or more of the following: (1) appoint a successor
Depositor who shall act hereunder in all respects in place of the Depositor,
who shall be compensated pursuant to Section 3.5, at rates deemed by the
Trustee to be reasonable under the circumstances, by deduction from the Income
Account or from the Principal Account, but no such deduction shall be made
exceeding such reasonable amount as the Securities and Exchange Commission may
prescribe in accordance with Section 26(a)(2)(C) of the Investment Company Act
of 1940; or (2) terminate this Indenture and the Trust created hereby and
liquidate the Trust, all in the manner provided in Section 9.2. or (3) continue
to act as Trustee hereunder without terminating this Indenture, acting in its
own absolute discretion without appointing any successor Depositor and assuming
such of the duties and responsibilities of the Depositor hereunder as the
Trustee determines, in its absolute discretion, are necessary or desirable for
the administration and preservation of the Trust and receiving additional
compensation at rates determined as provided in clause (1). If the Trustee
continues so to act, it is authorized to employ one or more agents to perform
portfolio supervisory services and such other of the services of the Depositor
hereunder as the Trustee determines, in its sole discretion, to be necessary or
desirable. The fees and expenses of such agent or agents shall be charged to
the Trust in accordance with Section 6.4. All provisions of this Indenture
relating to the liability and indemnification of the Trustee, including,
without limitation, subparagraph (e) of this Section, shall apply to any
responsibility assumed or action taken by the Trustee pursuant to this
subparagraph.
(g) If the value of the Trust as shown by any evaluation by
the Trustee pursuant to Section 5.1 hereof shall be less than the liquidation
amount specified in Part II of the Reference Trust Agreement, the Trustee may
in its discretion, and shall, when so directed by the Depositor, terminate this
Indenture and the Trust created hereby and liquidate the Trust, all in the
manner provided in Section 9.2.
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(h) In no event shall the Trustee be liable for any taxes or
other governmental charges imposed upon or in respect of the Securities or upon
the dividends thereon or upon it as Trustee hereunder or upon or in respect of
the Trust which it may be required to pay under any present or future law of
the United States of America or any other taxing authority having jurisdiction
in the premises. For all such taxes and charges and for any expenses, including
counsel fees, which the Trustee may sustain or incur with respect to such taxes
or charges, the Trustee shall be reimbursed and indemnified out of the Income
and Principal Accounts of the Trust, and the payment of such amounts so paid by
the Trustee shall be secured by a lien on the Trust prior to the interests of
the Unit Holders.
(i) The Trustee, except by reason of its negligence, lack of
good faith, reckless disregard of its obligations hereunder or willful
misconduct, shall not be liable for any action taken or suffered to be taken by
it in good faith and believed by it to be authorized or within the discretion
or rights or powers conferred upon it by this Indenture.
(j) Notwithstanding anything in this Indenture to the
contrary, the Trustee is authorized and empowered to enter into any safekeeping
arrangement or arrangements it deems necessary or appropriate for holding the
Securities then owned by the Trust and the Trustee is authorized and empowered
in its sole right to amend, supplement or terminate any safekeeping arrangement
or arrangements made under this provision. In addition, the Trustee is
authorized and empowered, at the request and discretion of the Depositor, to
execute and file on behalf of the Trust any and all documents, in connection
with consents to service of process, required to be filed under the securities
laws of the various States in order to permit the sale of Units of the Trust in
such States by the Depositor.
(k) The Trustee in its individual or any other capacity may
become owner or pledgee or, or be an underwriter or dealer in respect of,
stock, bonds or other obligations issued by the same issuer (or an affiliate of
such issuer) or any obligor of any Securities at any time held as part of the
Trust and may deal in any manner with the same or with the issuer (or an
affiliate of the issuer) with the same rights and powers as if it were not the
Trustee hereunder.
(l) The Trust may include a letter or letters of credit for
the purchase of Contract Securities issued by the Trustee in its individual
capacity for the account of the Depositor, and the Trustee may otherwise deal
with the Depositor with the same rights and powers as if it were not the
Trustee hereunder.
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Section 6.2. Books, Records and Reports: The Trustee shall
keep proper books of record and account of all the transactions under this
Indenture at its unit investment trust office including a record of the name
and address of every Unit Holder, and such books and records shall be open to
inspection by any Unit Holder at all reasonable times during the usual business
hours, and such books and records shall be made available to the Depositor upon
the request of the Depositor including, but not limited to, a record of the
name and address of every Unit Holder.
Unless the Depositor otherwise directs, the Trustee shall
cause audited statements as to the assets and income of the Trust to be
prepared on an annual basis by independent public accountants selected by the
Depositor, provided, however, that if the Depositor is then making a market for
units of the Trust, the Depositor shall bear the cost of such audit to the
extent that it exceeds $.50/unit of approximately $1000 initial value (or such
proportionate amount in the case of units of greater or lesser initial value).
In the event that the Depositor is not making a market for the Units of a
Trust, then the Depositor may instruct the Trustee not to prepare such
statements. Such audited statement will be made available to Unit Holders upon
request.
To the extent permitted under the Investment Company Act of
1940 as evidenced by an opinion of counsel to the Depositor, the Trustee shall
pay, or reimburse to the Depositor or others, the costs of the preparation of
documents and information with respect to the Trust required by law or
regulation in connection with the maintenance of a secondary market in units of
the Trust. Such costs may include but are not limited to accounting and legal
fees, blue sky registration and filing fees, printing expenses and other
reasonable expenses related to documents required under Federal and state
securities laws.
The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or federal statute or
rule or regulation thereunder.
Section 6.3. Indenture and List of Securities on File: The
Trustee shall keep a certified copy or duplicate original of this Indenture on
file at its unit investment trust office available for inspection at all
reasonable times during the usual business hours by any Unit Holder and the
Trustee shall keep and so make available for inspection a current list of the
Securities.
Section 6.4. Compensation: For services performed under this
Indenture the Trustee shall be paid at the rate per annum set forth in Part II
of the Reference Trust Agreement which shall be computed on the basis of the
greatest number of Units in
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the Trust outstanding at any time during the period with respect to which such
compensation is being computed. The Trustee may from time to time adjust its
compensation as set forth above provided that the total adjustment upward does
not, at the time of such adjustment, exceed the percentage of the total
increase, after the date hereof, in consumer prices for services as measured by
the United States Department of Labor Consumer Price Index entitled "All
Services Less Rent," or, if such index shall cease to be published, then as
measured by the available index most nearly comparable to such index. The
consent or concurrence of any Unit Holder hereunder shall not be required for
any such adjustment or increase. Such compensation shall be charged by the
Trustee against the Income and Principal Accounts on or before the Payment Date
on which such period terminates; provided, however, that such compensation
shall be deemed to provide only for the usual normal and recurring functions
undertaken as Trustee pursuant to this Indenture. The Trustee agrees to reduce
its compensation under this Indenture by any Rule 12b-1 fee amounts it receives
for performing servicing functions with respect to the Fund Shares ("Trustee
Fee Reduction").
The Trustee shall charge the Income and Principal Accounts at
such times as shall be convenient in its administration of the Trust for any
and all expenses, including the fees of counsel which may be retained by the
Trustee in connection with its activities hereunder, and advances made and
disbursements incurred hereunder and any extraordinary services performed by
the Trustee hereunder. The Trustee shall be indemnified and held harmless
against any loss or liability accruing to it without negligence, bad faith or
willful misconduct on its part, arising out of or in connection with the
acceptance or administration of this trust, including the costs and expenses
(including counsel fees) of defending itself against any claim of liability in
the premises. If the cash balances in the Income and Principal Accounts shall
be insufficient to provide for amounts payable pursuant to this Section 6.4,
the Trustee shall have the power to sell Securities. The Depositor shall, upon
request by the Trustee, provide the Trustee with a current list of Securities
designated to be sold for the purpose of payment of expenses hereunder,
provided that if the Depositor shall for any reason fail to provide such a
list, the Trustee, in its sole discretion, may designate a current list of
Securities for such purposes, provided, however, that, except to the extent the
Trust then lacks other assets, Treasury Obligations shall not be sold to the
extent that the maturity value, per Unit outstanding of the Treasury
Obligations remaining after such sale would be less than the maturity value,
per Unit, of the Treasury Obligations on the initial Date of Deposit. The net
proceeds of any such sales of Securities from such list representing principal
shall be credited to the Principal Account. The Trustee shall not be liable or
responsible in any way for depreciation or
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loss incurred by reason of any sale of Securities made pursuant to this Section
6.4. Any moneys payable to the Trustee pursuant to this section shall be
secured by a prior lien on the Trust.
Section 6.5. Removal and Resignation of the Trustee;
Successor: The following provisions shall provide for the removal and
resignation of the Trustee and the appointment of any successor Trustee:
(a) any resignation or removal of the Trustee and appointment
of a successor pursuant to this section shall not become effective until
acceptance of appointment by the successor Trustee as provided in subsection
(b) hereof;
(b) the Trustee or any trustee hereafter appointed may resign
and be discharged of the trust created by this Indenture by executing an
instrument in writing resigning as such Trustee, filing the same with the
Depositor and mailing a copy of a notice of resignation to all Unit Holders
then on record not less than sixty days before the date specified in such
instrument when, subject to Section 6.5(d), such resignation is to take effect.
Upon receiving such notice of resignation, the Depositor shall use its best
efforts to promptly appoint a successor Trustee as hereinafter provided, by
written instrument, in duplicate, one copy of which shall be delivered to the
resigning Trustee and one copy to the successor Trustee. In case at any time
the Trustee shall become incapable of acting or shall be deemed incapable of
acting by the written consent of Unit Holders evidencing beneficial ownership
of 66-2/3% of the outstanding Units of the Trust, or shall be adjudged a
bankrupt or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purposes of rehabilitation, conservation, or
liquidation, or the Depositor shall deem it to be in the best interests of the
Unit Holders, then in any such case the Depositor may remove the Trustee and
appoint a successor Trustee by written instrument, in duplicate, one copy of
which shall be delivered to the Trustee so removed and one copy to the
successor Trustee; provided that notice of such removal and appointment of a
successor shall be given to each Unit Holder then of record;
(c) any successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor and the retiring Trustee an instrument
accepting such appointment hereunder, and such successor Trustee without any
further act, deed or conveyance shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder with like effect as
if originally named Trustee herein and shall be bound by all the terms and
conditions of this Indenture. Upon the request of such successor Trustee, the
Depositor and the retiring Trustee shall, upon payment of any amounts due the
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retiring Trustee or provision therefor to the satisfaction of such retiring
Trustee, execute and deliver an instrument acknowledged by it transferring to
such successor Trustee all the rights and powers of the retiring Trustee; and
the retiring Trustee shall transfer, deliver and pay over to the successor
Trustee all Securities and moneys at the time held by it hereunder, together
with all necessary instruments of transfer and assignment or other documents
properly executed necessary to effect such transfer and such of the records or
copies thereof maintained by the retiring Trustee in the administration hereof
as may be requested by the successor Trustee, and shall thereupon be discharged
from all duties and responsibilities under this Indenture. A successor Trustee
shall not be under any liability hereunder for occurrences or omissions prior
to the effectiveness of its appointment. The retiring Trustee shall,
nevertheless, retain a lien upon all Securities and moneys at the time held by
it hereunder to secure any amounts then due the retiring Trustee hereunder;
(d) in case at any time the Trustee shall resign and no
successor Trustee shall have been appointed and have accepted appointment
within thirty days after notice of resignation has been received by the
Depositor, the retiring Trustee may forthwith apply to a court of competent
jurisdiction for the appointment of a successor Trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor Trustee; and
(e) any corporation into which any Trustee hereunder may be
merged or with which it may consolidate, or any corporation resulting from any
merger or consolidation to which any Trustee hereunder shall be a party, shall
be the successor Trustee under this Indenture without the execution or filing
of any paper, instrument or further act to be done on the part of the parties
hereto, anything herein, or in any agreement relating to such merger or
consolidation, by which any such Trustee may seek to retain certain powers,
rights and privileges theretofore obtaining for any period of time following
such merger or consolidation, to the contrary notwithstanding.
Section 6.6. Qualifications of Trustee: The Trustee, or any
successor thereof, shall be a corporation organized and doing business under
the laws of the United States or any state thereof, which is authorized under
such laws to exercise corporate trust powers and having at all times an
aggregate capital, surplus, and undivided profits of not less than $2,500,000.
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<PAGE>
ARTICLE 7
DEPOSITOR
Section 7.1. Succession: The covenants, provisions and
agreements herein contained shall in every case be binding upon any successor
to the business of the Depositor. In the event of the death, resignation or
withdrawal of any partner of a Depositor or of any successor Depositor which
may be a partnership, the deceased, resigning or withdrawing partner shall be
relieved of all further liability hereunder if at the time of such death,
resignation or withdrawal such Depositor maintains a net worth (determined in
accordance with generally accepted accounting principles) of at least
$1,000,000. In the event of an assignment by the Depositor to a successor
corporation or partnership as permitted by the next following sentence, such
Depositor and, if such Depositor is a partnership, its partners, shall be
relieved of all further liability under this Indenture. The Depositor may
transfer all or substantially all of its assets to a corporation or partnership
which carries on the business of that Depositor, if at the time of such
transfer such successor duly assumes all the obligations of said Depositor
under this Indenture and if at such time such successor maintains a net worth
of at least $1,000,000 (determined in accordance with generally accepted
accounting principles).
Section 7.2. Resignation of Depositor: If at any time any
Depositor desires to resign its position as Depositor hereunder, it may resign
by delivering to the Trustee an instrument of resignation executed by such
Depositor. Such resignation shall become effective upon the expiration of
thirty days from the date on which such instrument is delivered to the Trustee.
Upon effective resignation hereunder, the resigning Depositor shall be
discharged and shall no longer be liable in any manner hereunder except as to
acts or omissions occurring prior to such resignation, and any successor
Depositor appointed by the Trustee pursuant to Section 6.1(f) shall thereupon
perform all duties and be entitled to all rights under this Indenture. The
successor Depositor shall not be under any liability hereunder for occurrences
or omissions prior to the execution of such instrument.
Section 7.3. Liability of Depositor and Indemnification: (a)
The Depositor shall be under no liability to the Trust or the Unit Holders for
any action or for refraining from the taking of any action in good faith
pursuant to this Indenture, or for errors in judgment or for depreciation or
loss incurred by reason of the purchase or sale of any Securities, provided,
however, that this provision shall not protect the Depositor against any
liability to which it would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its duties or
by reason of its
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397452.2
<PAGE>
reckless disregard of its obligations and duties hereunder. The Depositor may
rely in good faith on any paper, order, notice, list, affidavit, receipt,
evaluation, opinion, endorsement, assignment, draft or any other document of
any kind prima facie properly executed and submitted to it by the Trustee, the
Trustee's counsel or any other person for any matters arising hereunder. The
Depositor shall in no event be deemed to have assumed or incurred any
liability, duty, or obligation to any Unit Holder or the Trustee other than as
expressly provided for herein.
(b) The Trust shall pay and hold the Depositor harmless from
and against any loss, liability or expense incurred in acting as Depositor of
the Trust other than by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties hereunder, including the costs and
expenses of the defense against any claim or liability in the premises. The
Depositor shall not be under any obligation to appear in, prosecute or defend
any legal action which in its opinion may involve it in any expense or
liability, provided, however, that the Depositor may, in its discretion,
undertake any such action which it may deem necessary or desirable in respect
of this Indenture and the rights and duties of the parties hereto and the
interests of the Unit Holders hereunder and, in such event, the legal expenses
and costs of any such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust and shall be paid directly by the
Trustee out of the Income and Principal Accounts as provided by Section 3.5.
(c) None of the provisions of this Indenture shall be deemed
to protect or purport to protect the Depositor against any liability to the
Trust or to the Unit Holders to which the Depositor would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of the Depositor's reckless disregard
of their obligations and duties under this Indenture.
Section 7.4. Compensation: The Depositor or its affiliate
shall receive at the times set forth in Section 3.5 as compensation for
performing portfolio supervisory services, such amount and for such periods as
specified in Part II of the Reference Trust Agreement. The computation of such
compensation shall be made on the basis of the largest number of Units
outstanding at any time during the period for which such compensation is being
computed. At no time, however, will the total amount received by the Depositor
for services rendered to all series of QUILTS in any calendar year exceed the
aggregate cost to it of supplying such services in such year. Such rate may be
increased by the Trustee from time to time, without the consent or approval of
any Unit Holder or the Depositor, by
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<PAGE>
amounts not exceeding the proportionate increase during the period from the
date of such Reference Trust Agreement to the date of any such increase, in
consumer prices as published either under the classification "All Services Less
Rent" in the Consumer Price Index published by the United States Department of
Labor or, if such Index is no longer published, a similar index.
In the event that any amount of the compensation paid to any
Depositor pursuant to Section 3.5 is found to be an improper charge against the
Trust, the Depositor shall reimburse the Trust in such amount. An improper
charge shall be established if a final judgment or order for reimbursement of
the Trust shall be rendered against the Depositor and such judgment or order
shall not be effectively stayed or a final settlement is established in which
the Depositor agrees to reimburse the Trust for amounts paid to the Depositor
pursuant to this Section 7.4.
ARTICLE 8
RIGHTS OF UNIT HOLDERS
Section 8.1. Beneficiaries of Trust: By the purchase and
acceptance or other lawful delivery and acceptance of any Unit the Unit Holder
shall be deemed to be a beneficiary of the Trust created by this Indenture and
vested with all right, title and interest in the Trust to the extent of his or
her Unit or Units subject to the terms and conditions of this Indenture.
Section 8.2. Rights, Terms and Conditions: In addition to the
other rights and powers set forth in the other provisions and conditions of
this Indenture the Unit Holders shall have the following rights and powers and
shall be subject to the following terms and conditions:
(a) A Unit Holder may at any time prior to the termination of
the Trust tender his Unit or Units to the Trustee for redemption in accordance
with Section 5.2.
(b) The death or incapacity of any Unit Holder shall not
operate to terminate this Indenture or the Trust, nor entitle his legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court of competent jurisdiction for a partition or winding up
of the Trust, nor otherwise affect the rights, obligations and liabilities of
the parties hereto or any of them. Each Unit Holder expressly waives any right
he may have under any rule of law, or the provisions of any statute, or
otherwise, to require the Trustee at any time to account, in any manner other
than as expressly provided in this Indenture, in respect of the Securities or
moneys from time to time received, held and applied by the Trustee hereunder.
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<PAGE>
(c) No Unit Holder shall have any right to vote or in any
manner otherwise control the operation and management of the Trust, or the
obligations of the parties hereto, nor shall anything herein set forth, be
construed so as to constitute the Unit Holders from time to time as partners;
nor shall any Unit Holder ever be under any liability to any third persons by
reason of any action taken by the parties to this Indenture for any other cause
whatsoever.
ARTICLE 9
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
Section 9.1. Amendments: This Indenture may be amended from
time to time by the parties hereto or their respective successors, without the
consent of any of the Unit Holders (a) to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or
inconsistent with any other provision contained herein; (b) to change any
provision required by Securities and Exchange Commission or any successor
governmental agency to be changed; or (c) to make such other provision in
regard to matters or questions arising hereunder as shall not adversely affect
the interests of the Unit Holders; provided, however, that the parties hereto
may not amend this Indenture so as to (1) increase the number of Units above
the number set forth in Part II of the Reference Trust Agreement or such lesser
amount as may be outstanding at any time during the term of this Indenture,
except as the result of the deposit of Additional Securities as herein
provided, or (2) except in the manner permitted by the Indenture as in effect
on the date of the first deposit of Securities under a particular Indenture,
permit the deposit or acquisition hereunder of securities either in addition to
or in replacement of any of the Securities.
This Indenture may also be amended from time to time by the
Depositor and the Trustee (or the performance of any of the provisions or this
Agreement may be waived) with the expressed written consent of Unit Holders
evidencing 66-2/3% of the Units at the time outstanding under the Indenture for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Indenture or of modifying in any
manner the rights of the Unit Holders; provided, however, that no such
amendment or waiver shall (i) reduce the interest in the Trust represented by
such Units without the consent of the Unit Holder, (ii) reduce the aforesaid
percentage of Units, the holders of which are required to consent to any such
amendment, without the consent of the holders of all Units then outstanding or
(iii) affect the duties, obligations and responsibilities of the Trustee
without its consent.
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397452.2
<PAGE>
Promptly after the execution of any such amendment the
Trustee shall furnish written notification to all then outstanding Unit Holders
of the substance of such amendment.
Section 9.2. Termination: This Indenture and the Trust
created hereby shall terminate upon the earlier of (i) the Termination Date or
(ii) the maturity, redemption, sale or other disposition as the case may be of
the last Security held hereunder, unless sooner terminated as hereinbefore
specified and may be terminated at any time by written consent of all Unit
Holders; provided that in no event shall the Trust continue beyond the end of
the calendar year preceding the fiftieth anniversary of the execution of this
Indenture.
Written notice of any termination, specifying the time or
times at which the Unit Holders may surrender their Units for cancellation
shall be given by the Trustee to each Unit Holder at his address appearing on
the registration books of the Trustee.
In the event of any termination of the Trust prior to the
Termination Date, the Trustee shall proceed to liquidate the Securities then
held and make the payments and distributions provided for hereinafter in this
Section 9.2 except that in such event, the distribution to each Unit Holder
shall be made in cash and shall be such Unit Holder's pro rata interest in the
balance of the Principal and Income Account after the deductions herein
provided.
In the event that the Trust terminates on the Termination
Date, the Trustee shall, not less than 20 days prior to the Termination Date,
send a written notice to each Unit Holder of record owning, as of such date,
the number of Units prerequisite to electing an in-kind distribution specified
in the prospectus for the Trust. Such notice shall allow such Unit Holders to
elect to redeem his Units at the net asset value on the Termination Date and to
receive, in partial payment of the Redemption Price per Unit, an in-kind
distribution of such Unit Holder's pro rata share of the Fund Shares, to the
extent of whole shares. The Trustee shall liquidate all Fund Shares not
distributed in kind. The Trustee will honor duly executed requests for such
in-kind distribution received by the close of business on the Termination Date.
Unit Holders who do not effectively request an in-kind distribution shall
receive their distribution upon termination in cash. Redemption of the Units of
Unit Holders electing such in-kind distribution shall be made within three
Business Days following the Termination Date and shall consist of (i) such Unit
Holders's pro rata share of Fund Shares (valued as of the Termination Date) to
the extent of whole shares and (ii) cash equal to the balance of such Unit
Holder's Redemption Price. In any case, Unit Holders will receive their pro
rata share of the Treasury Obligations and any other assets
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<PAGE>
of the Trust, including fractional share entitlements of Fund
Shares, in cash.
On the Termination Date, this Indenture and the Trust created
hereby shall terminate. In connection with such Termination, the Trustee shall
segregate such number of shares of Securities as shall be necessary to satisfy
in-kind distributions to Unit Holders electing such distribution.
The balance of the Securities shall be sold over a period
immediately following the Termination Date specified in the prospectus for the
Trust. The Depositor shall direct the Trustee to sell the Securities in such
manner as the Depositor determine will produce the best price for the Trust.
Pursuant to such direction, the Trustee may use the services of the Depositor
to effect such sales.
Within a reasonable period of time after such termination and
liquidation of Securities, the Trustee shall:
(a) deduct from the Income Account or, to the extent that
funds are not available in such account, from the Principal Account and pay to
itself individually an amount equal to the sum of
(1) its accrued compensation for its ordinary
recurring services,
(2) any compensation due it for its extraordinary
services, and
(3) any other costs, expenses, advances or indemnities
as provided herein;
(b) deduct from the Income Account or, to the extent that
funds are not available in such account, from the Principal Account and pay
accrued and unpaid fees of counsel pursuant to Section 3.9;
(c) deduct from the Income Account or the Principal Account
any amounts which may be required to be deposited in the Reserve Account to
provide for payment of any applicable taxes or other governmental charges and
any other amounts which may be required to meet expenses incurred under this
Indenture;
(d) make a final distribution from the Trust to each Unit
Holder, against surrender for cancellation of his Unit or Units, such Unit
Holder's pro rata share of the cash balances of the Income and Principal
Accounts and, on the conditions set forth in Section 3.04 hereof, the balance
of the Reserve Account, if any;
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<PAGE>
(e) together with such distribution to each Unit Holder as
provided for in (d), furnish to each such Unit Holder a final distribution
statement as of the date of the computation of the amount distributable to Unit
Holders, setting forth the data and information in substantially the form and
manner provided for in Section 3.6 hereof; and
(f) distribute to each Unit Holder receiving the distribution
provided in paragraph (d) any dividends, which on the Termination Date were
declared, but not received, net of any and all expenses not previously
deducted, within a reasonable time of their receipt.
The amounts to be so distributed to each Unit Holder shall be
that pro rata share of the balance of the total Income and Principal Accounts
as shall be represented by the Units held of record by such Unit Holder.
The Trustee shall be under no liability with respect to
moneys held by it in the Income, Reserve and Principal Accounts upon
termination except to hold the same in trust without interest until disposed of
in accordance with the terms of this Indenture.
Upon the Depositor's request, the Trustee will include in the
written notice to be sent to Unit Holders referred to in the fourth paragraph
of this section a form of election whereby Unit Holders electing a cash
distribution may express interest in investing such cash distribution in units
of another series of the Qualified Unit Investment Liquid Trust Series (the
"New Series"). The Trustee will inform the Depositor of all Unit Holders who,
within the time period specified in such notice, express such interest. The
Depositor will provide to such Unit Holders any applicable sales material with
respect to the New Series and a form, acceptable to the Trustee, whereby a Unit
Holder may appoint the Trustee the Unit Holder's agent to apply the Unit
Holder's cash distribution for the purchase of a unit or units of the New
Series. Such form will specify, among other things, the time by which it must
be returned to the Trustee in order to be effective and the manner in which
such purchase shall be made. This paragraph shall not obligate the Depositor to
create any New Series or to provide any such investment election.
Section 9.3. Construction: This Indenture is executed and
delivered in the State of New York, and all local laws or rules of construction
of such State shall govern the rights of the parties hereto and the Unit
Holders and the interpretation of the provisions hereof.
Section 9.4. Registration of Units: The Depositor
agrees and undertakes to register the Units with the Securities
and Exchange Commission or other applicable governmental agency
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<PAGE>
pursuant to applicable Federal or State statutes, if such registration shall be
required, and to do all things that may be necessary or required to comply with
this provision during the term of the Trust created hereunder, and the Trustee
shall incur no liability or be under any obligation or expense in connection
therewith.
Section 9.5. Written Notice: Any notice, demand, direction or
instruction to be given to the Depositor hereunder shall be in writing and
shall be duly given if mailed or delivered to the Depositor as follows: OCC
Distributors, Two World Financial Center, 225 Liberty Street, New York, New
York 10080, Attn: Susan Murphy, and with a copy to OCC Distributors' Secretary,
or at such other address as shall be specified by the Depositor to the Trustee
in writing. Any notice, demand, direction or instruction to be given to the
Trustee shall be in writing and shall be duly given if mailed or delivered to
the Trustee at 770 Broadway, New York, New York 10003 Attention: Unit
Investment Trust Division, or such other address as shall be specified to the
Depositor by the Trustee in writing. Any notice, demand, direction or
instruction to be given to the Evaluator shall be in writing and shall be duly
given if mailed or delivered to the Evaluator, Attention: 395 Hudson Street,
New York, New York 10014 or such other address as shall be specified to the
other parties hereto by the Evaluator in writing. Any notice to be given to the
Unit Holders shall be duly given if mailed or delivered to each Unit Holder at
the address of such holder appearing on the registration books of the Trustee.
Section 9.6. Severability: If any one or more of the
covenants, agreements, provisions or terms of this Indenture shall be held
contrary to any express provision of law or contrary to policy or express law,
though not expressly prohibited, or against public policy, or shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Indenture and shall in no way affect the validity
or enforceability of the other provisions of this Indenture or of the Units or
the rights of the Unit Holders.
Section 9.7. Dissolution of Depositor Not to Terminate: The
dissolution of the Depositor from or for any cause whatsoever shall not operate
to terminate this Indenture or the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first above written.
[Signatures and acknowledgements on separate pages.]
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<PAGE>
OCC DISTRIBUTORS,
as Depositor
By: OPPENHEIMER FINANCIAL CORP.
as Managing Partner of the
Depositor
By:/S/ SUSAN A. MURPHY
------------------------
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I, Carla P.S. Vogel , a Notary Public in and for the said
County in the State aforesaid, do hereby certify that Susan A. Murphy
personally known to me to be the same person whose name is subscribed to the
foregoing instrument and personally known to me to be an Authorized Person of
Oppenheimer Financial Corp., a Delaware corporation, appeared before me this
day in person, and acknowledged that he/she signed and delivered the said
instrument as his/her free and voluntary act as such Authorized Person and as
the free and voluntary act of said Oppenheimer Financial Corp., for the uses
and purposes therein set forth.
GIVEN under my hand and notarial seal this 27th day of
August, 1996.
/S/ CARLA P.S. VOGEL
---------------------
Notary Public
(SEAL)
My Commission expires:
397452.2
<PAGE>
THE CHASE MANHATTAN BANK
as Trustee
By: /S/ THOMAS PORRAZZO
---------------------------
(SEAL)
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
I, ADA IRIS VEGA , a Notary Public in and for the said County
in the State aforesaid, do hereby certify that Thomas Porrazzo personally known
to me to be the same person whose name is subscribed to the foregoing
instrument and personally known to me to be a Vice President of The Chase
Manhattan Bank, appeared before me this day in person, and acknowledged that
he/she sealed with the corporate seal of The Chase Manhattan Bank and signed
and delivered the said instrument as his/her free and voluntary act as such
Vice President and as the free and voluntary act of said The Chase Manhattan
Bank, for the uses and purposes therein set forth.
/S/ ADA IRIS VEGA
-----------------
Notary Public
(SEAL)
My Commission expires:
397452.2
<PAGE>
MULLER DATA CORPORATION,
Evaluator
By:/S/ MARIO S. BUSCEMI
-----------------------
Mario S. Buscemi
Chief Operating Officer
SEAL
ATTEST:
/S/ RICHARD S.BIRNBAUM
- ----------------------
Richard S. Birnbaum
Vice President
- ---------------------
397452.2
No.
CERTIFICATE OF OWNERSHIP
--evidencing--
A Fractional Undivided Interest
--in--
QUALIFIED UNIT INVESTMENT
LIQUID TRUST SERIES
("QUILTS")
OPPORTUNITY TRUST 2002
747938165
CUSIP
This is to certify that OCC DISTRIBUTORS is the owner and registered holder of
this Certificate evidencing the ownership of 200,000 unit(s) of fractional
undivided interest in the above named Trust created under the laws of the State
of New York pursuant to the Trust Indenture and Agreement among OCC
Distributors as Depositor, The Chase Manhattan Bank as Trustee, and Muller Data
Corporation as Evaluator (the "Indenture"), a copy of which is available at the
office of the Trustee. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Indenture to which the holder of this
Certificate by virtue of the acceptance hereof asserts and is bound, a summary
of which Indenture is contained in the Prospectus relating to the Trust. This
Certificate is transferable and interchangeable by the registered holder in
person or by his duly authorized attorney at the Trustees' office upon
surrender of this Certificate properly endorsed or accompanied by a written
instrument of transfer or other documents that the Trustee may require for
transfer in form satisfactory to the Trustee and payment of the fees and
expenses as provided in the Indenture.
C/M: 11205.0015 396760.1
<PAGE>
Witness the facsimile signature of a duly authorized officer
of the Depositor and the manual signature of an authorized signature of the
Trustee.
Date: August 28, 1996 OCC DISTRIBUTORS,
Depositor
/s/ ERNEST DILORENZO
---------------------------------
Authorized Signatory
THE CHASE MANHATTAN BANK, Trustee
By: /s/ ROBERT S. IONESCU
------------------------------
Authorized Officer
C/M: 11205.0015 396760.1
<PAGE>
ASSIGNMENT
For Value Received,____________________________________________________________
hereby sell, assign and transfer ______________ Units
represented by this
Certificate unto ______________________________________________________________
_______________________________________________________________________________
SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE MUST BE PROVIDED
-------------------------------------------
and does hereby irrevocably constitute and appoint_____________________________
______________________________________________________, attorney, to transfer
said Units on the books of the Trustee, with full power of substitution in the
premises.
Dated:
---------------------------
SIGNATURE(S) GUARANTEED BY
__________________________________________________ NOTICE: The signature(s)
to this assignment must correspond
Firm or Bank with the name(s) as written
upon the face of the
Certificate in every
particular, without
alteration or
enlargement or any change
whatever.
- --------------------------------------------------
Authorized Signature
Signature(s) must be guaranteed by a member or participant of the Securities
Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion Program
(SEMP) or New York Stock Exchange, Inc. Medallion Signature Program (MSP).1
C/M: 11205.0015 396760.1
BATTLE FOWLER LLP
A LIMITED LIABILITY PARTNERSHIP
75 East 55th Street
New York, New York 10022
(212) 856-7000
August 28, 1996
OCC Distributors
Two World Financial Center
225 Liberty Street
New York, New York 10281
Re: Qualified Unit Investment Liquid
Trust Series ("QUILTS")
Opportunity Trust 2002
---------------------------------
Dear Sirs:
We have acted as special counsel for OCC Distributors, as
Depositor, Sponsor and Principal Underwriter (the "Depositor") of Qualified
Unit Investment Liquid Trust Series ("QUILTS") Opportunity Trust 2002, (the
"Trust") in connection with the issuance by the Trust, of units of fractional
undivided interest (the "Units") in the Trust. Pursuant to the Trust Agreements
referred to below, the Depositor has transferred to the Trust certain
securities and contracts to purchase certain securities together with an
irrevocable letter of credit to be held by the Trustee upon the terms and
conditions set forth in the Trust Agreement. (All securities to be acquired by
the Trust are collectively referred to as the "Securities").
In connection with our representation, we have examined
copies of the following documents relating to the creation of the Trust and the
issuance and sale of the Units: (a) the Trust Indenture and Agreement dated
August 28, 1996 and related Reference Trust Agreement of even date herewith,
relating to the Trust (collectively the "Trust Agreements") among the
Depositor, The Chase Manhattan Bank, as Trustee, and Muller Data Corporation,
as Evaluator; (b) the Notification of Registration on Form N-8A, as amended,
and the Registration Statement on Form N-8B-2, as amended, relating to the
Trust, as filed with the Securities and Exchange Commission (the "Commission")
pursuant to the Investment Company Act of 1940 (the "1940 Act"); (c) the
C/M: 11205.0015 396200.1
<PAGE>
OCC Distributors 2
Registration Statement on Form S-6 (Registration No. 333-01867) filed with the
Commission pursuant to the Securities Act of 1933 (the "1933 Act"), and all
Amendments thereto (said Registration Statement, as amended by said
Amendment(s) being herein called the "Registration Statement"); (d) the
proposed form of final Prospectus (the "Prospectus") relating to the Units,
which is expected to be filed with the Commission on August 29, 1996; (e)
certified resolutions of the Board of Directors of Oppenheimer Financial Corp.,
the Managing General Partner of the Depositor (the "Managing General Partner"),
authorizing the execution and delivery by the Depositor of the Trust Agreements
and the consummation of the transactions contemplated thereby; (f) the
Partnership Agreement of the Depositor; and (g) a certificate of an authorized
officer of the Managing General Partner with respect to certain factual matters
contained therein.
We have not reviewed the financial statements, compilation of
the Securities held by the Trust, or other financial or statistical data
contained in the Registration Statement and the Prospectus, as to which you
have been furnished with the reports of the accountants appearing in the
Registration Statement and the Prospectus.
In addition, we have assumed the genuineness of all
agreements, instruments and documents submitted to us as originals and the
conformity to originals of all copies thereof submitted to us. We have also
assumed the genuineness of all signatures and the legal capacity of all persons
executing agreements, instruments and documents examined or relied upon by us.
Statements in this opinion as to the validity, binding effect
and enforceability of agreements, instruments and documents are subject: (i) to
limitations as to enforceability imposed by bankruptcy, reorganization,
moratorium, insolvency and other laws of general application relating to or
affecting the enforceability of creditors' rights, and (ii) to limitations
under equitable principles governing the availability of equitable remedies.
We are not admitted to the practice of law in any
jurisdiction but the State of New York and we do not hold ourselves out as
experts in or express any opinion as to the laws of other states or
jurisdictions except as to matters of Federal and Delaware corporate law.
Based exclusively on the foregoing, we are of the opinion
that under existing law:
C/M: 11205.0015 396200.1
<PAGE>
OCC Distributors 3
(1) The Trust Agreements have been duly authorized and
entered into by an authorized officer of the Depositor and are valid and
binding obligations of the Depositor in accordance with their respective terms.
(2) The execution and delivery of each of the Certificates
evidencing the Units of the Trust has been duly authorized by the Depositor and
each such Certificate, when executed by the Depositor and the Trustee in
accordance with the provisions of such Certificate and the respective Trust
Agreements and issued for the consideration contemplated therein, will
constitute fractional undivided interest in the Trust, will be entitled to the
benefits of the respective Trust Agreements, will conform in all material
respects to the description thereof for the Units as provided in the Trust
Agreements and the Registration Statement, and the Units will be fully paid and
non-assessable by the Trust.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name in the Registration
Statement and in the Prospectus under the headings "Tax Status" and "Legal
Opinions". We authorize you to deliver copies of this opinion to the Trustee
and the Trustee may rely on this opinion as fully and to the same extent as if
it had been addressed to it.
This opinion is intended solely for the benefit of the
addressees and the Trustee in connection with the issuance of the Units of the
Trust and may not be relied upon in any other manner or by any other person
without our express written consent.
Very truly yours,
Battle Fowler LLP
C/M: 11205.0015 396200.1
Muller Data Corporation
- ---------------------------------------------------------------- TSIS ---------
Thomson Securities Information Services
OCC Distributors
2 World Financial Center
225 Liberty Street
New York, New York 10080-6116
Qualified Unit Investment Liquid Trust Series ("QUILTS")
RE: QUILTS - Opportunity Trust 2002
--------------------------------------------------------
Gentlemen:
We have examined the Amendment to the Registration Statement File No. 333-01867
for the above captioned trust(s) . We hereby acknowledge that Muller Data
Corporation is currently acting as the evaluator for the trust(s). We hereby
consent to the use in the Amendment of the reference to Muller Data Corporation
as evaluator.
In addition , we hereby confirm that the ratings indicated in the above
referenced Amendment to the Registration Statement for the respective bonds
comprising the trust(s) portfolios are the ratings currently indicated in our
Muniview data base as of the date of the Evaluation Report(s).
You are hereby authorized to file a copy of this letter with the Securities and
Exchange Commission.
Sincerely,
/s/ MARIO S. BUSCEMI
- ----------------------
Mario S. Buscemi
Chief Operating Officer
MSB:tg
395 Hudson Street o New York, NY 10014-3622 o 212-807-3800
399346.1
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