<PAGE>
As filed with the Securities and Exchange Commission on October 1, 1996
Registration No. 333-09883
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
SOUTHPOINT STRUCTURED ASSETS, INC.
(Exact name of registrant as specified in its charter)
Delaware 51-6503749
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
50 North Front Street
Memphis, Tennessee 38103
(901) 524-4100
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
C. DAVID RAMSEY
SOUTHPOINT STRUCTURED ASSETS, INC.
50 North Front Street
Memphis, Tennessee 38103
(901) 524-4100
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
--------------------------
Copies to:
M. John Trofa, Esq.
Basil V. Godellas, Esq.
Chapman and Cutler
111 West Monroe
Chicago, Illinois 60603
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
If the only Securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [X]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED(1) REGISTERED PER UNIT PRICE(2) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Trust Certificates $10,000,000 100% $10,000,000 $3,449
- --------------------------------------------------------------------------------------------------------
</TABLE>
- ---------------------
(1) This Registration Statement and the registration fee pertain to the initial
offering of the Trust Certificates registered hereunder by the Registrant
and to offers and sales relating to market-making transactions by Morgan
Keegan & Company, Inc., an affiliate of the Registrant. The amount of the
Trust Certificates that may be initially offered hereunder and the
registration fee shall not be affected by any offers and sales relating to
any such market-making transactions.
(2) Estimated solely for purposes of calculating the registration fee.
------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE>
EXPLANATORY NOTE
This Registration Statement includes two different basic prospectuses with
corresponding forms of prospectus supplement for offering Series of Certificates
representing the entire beneficial ownership interest in various trusts to be
created from time to time, the assets of which will consist primarily of a
publicly issued, fixed income debt security or pool of such debt securities
together with certain other assets as described herein deposited in trust by
Southpoint Structured Assets, Inc. Following this Explanatory Note in sequential
order are the basic prospectus and form of prospectus supplement for trusts
consisting of (i) obligations of U.S. corporations, banking organizations and
insurance companies subject to the informational requirements of the Securities
Exchange Act of 1934 and (ii) obligations of the United States of America and
U.S. government sponsored entities.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Subject to Completion Dated ____, 1996
Prospectus Supplement
(To Prospectus Dated ____, 1996)
Trust Certificates, Series 1996 -- [ ]
$ [Notional Amount] [(Approximate)], Class Certificates,
[______%] [Variable] Pass Through Rate
$ [Notional Amount] [(Approximate)], Class Certificates,
[______%] [Variable] Pass Through Rate
Southpoint Structured Assets, Inc.
Depositor
Each Trust Certificate Series 1996 -- [__________] offered hereby will
consist of classes of Certificates, designated as Class Certificates[,] [and]
Class Certificates [and list others], [all] of which [only the Class
Certificates[,] [and] Class Certificates [and list others]] (collectively, the
"Certificates") and will represent a fractional undivided beneficial interest in
the Series 1996 -- [_________] Trust (the "Trust") to be formed pursuant to the
Trust Agreement dated as of [ ], between Southpoint Structured Assets, Inc. (the
"Depositor") and [_________], as trustee (the "Trustee"), as supplemented by the
Series 1996 -- [________] Supplement dated as of [_______], (collectively, the
"Trust Agreement"). The property of the Trust will consist in part of
[$][_______] aggregate principal amount of [a (______%) [floating rate] [specify
publicly issued debt security] due of [specify issuer]] [a pool of [________%]
[floating rate] publicly issued debt securities having a term of [not less than
years and not more than years] issued by one or more corporations, banking
organizations, or insurance companies organized under the laws of the United
States or any State [(other than the Retained Interest referred to herein)]
(collectively, the "Underlying Securities"), and having the characteristics
described herein under "Description of the Deposited Assets." Terms used but not
otherwise defined herein are defined in the Prospectus attached hereto (the
"Prospectus").
The Underlying Securities will be acquired by the Depositor and, pursuant
to the Trust Agreement, deposited into the Trust for the benefit of
Certificateholders. [The Underlying Securities were issued and sold as part of
an underwritten public offering in [________].] The Underlying Securities are
obligations of the Underlying Securities Issuer and [explain whether senior or
subordinate, whether secured or unsecured and whether subject to any redemption
or put rights]. [Describe any required principal payments of Underlying
Securities.]
Distributions on the Certificates will be made [monthly] [quarterly]
[semi-annually] on [[______] of each year] [to be conformed to interest payment
dates for Underlying Securities], or, if any such date is not a business day,
then on the immediately following business day (each, a "Distribution Date")
commencing [_______]. The last day on which distributions are scheduled to be
made on the Certificates is [________] (the "Final Distribution Date"), by which
date the holders of the Certificates will receive a distribution of all amounts
allocable to principal on such Certificates or, to the extent specified herein,
a pro rata share of any remaining Underlying Securities.
[The Certificates are redeemable in whole on any Distribution Date on or
after the _________, 19__ Distribution Date at a price equal to par (the
"Redemption Price") plus accrued and unpaid interest, upon exercise of the
optional redemption right by the holder of the Call Warrant. See
"RISK FACTORS--MATURITY AND YIELD CONSIDERATIONS" and "DESCRIPTION OF THE
CERTIFICATES--OPTIONAL REDEMPTION" herein.]
[The Certificates have been authorized for listing, upon official notice of
issuance, with the [name of exchange].]
SEE "RISK FACTORS" HEREIN ON PAGES [_] TO [_] AND IN THE PROSPECTUS ON
PAGES [*] TO [*].
______________________________________________
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT REPRESENT
AN OBLIGATION OF OR INTEREST IN THE DEPOSITOR OR ANY OF ITS RESPECTIVE
AFFILIATES. THE CERTIFICATES DO NOT REPRESENT A DIRECT OBLIGATION OF THE
UNDERLYING SECURITIES ISSUER OR ANY OF ITS AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
_____________________________________________
The Underwriter has agreed to purchase the Certificates from the Depositor
at [______]% of the Certificate Principal Balance thereof ($[__________]
aggregate proceeds to the Depositor, before deducting expenses estimated at
$[__________]) plus accrued interest, if any, at the Pass-Through Rate
calculated from [__________], 1996 (the "Expected Settlement Date"), subject to
the terms and conditions set forth in the Underwriting Agreement referred to
herein under "PLAN OF DISTRIBUTION."
The Underwriter proposes to offer the Certificates from time to time for
sale in negotiated transactions or otherwise, at prices determined at the time
of sale. For further information with respect to the plan of distribution and
any discounts, commissions or profits that may be deemed underwriting discounts
or commissions, see "PLAN OF DISTRIBUTION."
The Certificates are offered subject to receipt and acceptance by the
Underwriter, to prior sale and to the Underwriter's right to reject any order in
whole or in part and to withdraw, cancel or modify the offer without notice. It
is expected that delivery of the [specify applicable classes] Certificates will
be made in book-entry form through the facilities of The Depository Trust
Company on or about the Expected Settlement Date.
[NAME OF UNDERWRITER]
__________, 1996
<PAGE>
As and to the extent described herein, collections received by the Trustee
with respect to the Deposited Assets will be distributed to Certificateholders
[of each class] in the manner and priority described herein. [The rights of the
holders of the Class Certificates [and specify other classes] to receive
distributions of such collections are subordinated to the rights of the holders
of the Class Certificates [and specify other classes].] As and to the extent
described herein, losses realized on the Deposited Assets will be borne by the
holders of the Class Certificates [and specify other classes] before such losses
will be borne by the holders of the other classes of Offered Certificates [and
the Class Certificates [and specify other classes]]. To the extent described
herein, the relative priorities of each class of Certificates with respect to
collections from and losses on the Deposited Assets may each change over time,
either permanently or temporarily, upon the occurrence of certain circumstances
specified herein. See "Description of the Certificates--Subordination."
The Underlying Securities Issuer is not participating in, and will not
receive any proceeds in connection with, this offering.
There is currently no secondary market for the Certificates, and there can
be no assurance that a secondary market for the Certificates will develop or, if
it does develop, that it will continue. See "Risk Factors" in the Prospectus.
[If and to the extent required by applicable law or regulation, this
Prospectus Supplement and the Prospectus will also be used by the Underwriter
after the completion of the offering in connection with offers and sales related
to market-making transactions in the Offered Certificates in which the
Underwriter acts as principal. The Underwriter may also act as agent in such
transactions. Sales will be made at negotiated prices determined at the time of
sale.]
The [specify applicable classes] Certificates initially will be represented
by certificates registered in the name of CEDE & Co., as nominee of The
Depository Trust Company ("DTC"). The interests of beneficial owners of such
Certificates will be represented by book entries on the records of participating
members of DTC. Definitive certificates will be available for such Certificates
only under the limited circumstances described herein. See "Description of the
Certificates--Definitive Certificates."
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
THE CERTIFICATES OFFERED BY THIS PROSPECTUS SUPPLEMENT WILL CONSTITUTE A
SEPARATE SERIES OF CERTIFICATES BEING OFFERED BY THE DEPOSITOR PURSUANT TO ITS
PROSPECTUS DATED _______________, 1996, OF WHICH THIS PROSPECTUS SUPPLEMENT IS A
PART AND WHICH ACCOMPANIES THIS PROSPECTUS SUPPLEMENT. THE PROSPECTUS CONTAINS
IMPORTANT INFORMATION REGARDING THIS OFFERING WHICH IS NOT CONTAINED HEREIN, AND
PROSPECTIVE INVESTORS ARE URGED TO READ THE PROSPECTUS
S-2
<PAGE>
AND THIS PROSPECTUS SUPPLEMENT IN FULL. IN PARTICULAR, INVESTORS SHOULD CONSIDER
CAREFULLY THE FACTORS SET FORTH UNDER "RISK FACTORS" IN THE PROSPECTUS AND IN
THIS PROSPECTUS SUPPLEMENT.
UNTIL ________, 1996, ALL DEALERS EFFECTING TRANSACTIONS IN THE OFFERED
CERTIFICATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS SUPPLEMENT AND THE PROSPECTUS TO WHICH IT RELATES. THIS
DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
S-3
<PAGE>
TABLE OF CONTENTS
HEADING PAGE
SUMMARY OF PRINCIPAL ECONOMIC TERMS............................ S-6
The Certificates............................................ S-6
The Underlying Securities................................... S-8
SUMMARY OF PROSPECTUS SUPPLEMENT............................... S-9
FORMATION OF THE TRUST......................................... S-13
RISK FACTORS................................................... S-14
DESCRIPTION OF THE DEPOSITED ASSETS............................ S-14
General..................................................... S-14
Underlying Securities Indenture............................. S-17
[DESCRIPTION OF CREDIT SUPPORT]................................ S-19
[The Letter of Credit....................................... S-19
[The Surety Bond............................................ S-20
[Reserve Account............................................ S-20
YIELD ON THE CERTIFICATES...................................... S-21
DESCRIPTION OF THE CERTIFICATES................................ S-21
General..................................................... S-21
Definitive Certificates..................................... S-22
Distributions............................................... S-22
[Optional Redemption........................................ S-25
[Advances................................................... S-25
Allocation of Losses........................................ S-25
[Restrictions on Transfer of the Class [ ] Certificates..... S-26
DESCRIPTION OF THE TRUST AGREEMENT............................. S-26
General..................................................... S-26
The Trustee................................................. S-27
Events of Default........................................... S-27
Voting Rights............................................... S-28
Voting of Underlying Securities, Modification of Indenture.. S-28
Termination................................................. S-29
S-4
<PAGE>
CERTAIN LEGAL ASPECTS OF THE DEPOSITED ASSETS.................. S-30
FEDERAL INCOME TAX CONSEQUENCES................................ S-30
Grantor Trust Certificates.................................. S-31
Income of Certificate Owners................................ S-31
Bond Premium................................................ S-35
Election to Treat All Interest as Original Issue Discount... S-35
Modification or Exchange of Underlying Securities........... S-35
Deductibility of Trust's Fees and Expenses.................. S-35
Purchase and Sale of a Certificate.......................... S-36
Backup Withholding.......................................... S-37
Foreign Certificate Owners.................................. S-37
Partnership Certificates.................................... S-37
Partnership Taxation........................................ S-38
Discount and Premium........................................ S-39
Modification or Exchange of Underlying Securities........... S-39
Tax Consequences of Other Assets Held by Trust.............. S-39
Section 708 Termination..................................... S-39
Disposition of Certificates................................. S-40
Allocations Between Transferors and Transferees............. S-41
Section 754 Election........................................ S-41
Administrative Matters...................................... S-41
Tax Consequences to Foreign Certificate Owners.............. S-42
[STATE TAX CONSEQUENCES........................................ S-43
ERISA CONSIDERATIONS........................................... S-43
PLAN OF DISTRIBUTION........................................... S-45
RATINGS........................................................ S-46
LEGAL OPINIONS................................................. S-47
INDEX OF TERMS................................................. S-48
S-5
<PAGE>
SUMMARY OF PRINCIPAL ECONOMIC TERMS
The following summary of principal economic terms does not purport to be
complete and is qualified in its entirety by reference to the detailed
information appearing elsewhere herein and in the Prospectus, including under
the headings "Description of the Certificates," "Description of the Underlying
Securities" and "Description of Credit Support." Certain capitalized terms used
herein are defined elsewhere in this Prospectus Supplement on the pages
indicated in the "Index of Terms" or, to the extent not defined herein, have the
meanings assigned to such terms in the Prospectus.
The Certificates
The Trust.................... Series 1996-[_]Trust. The Trust will be formed
pursuant to the Trust Agreement dated as of
[__________] (the "Base Trust Agreement"),
between the Depositor and the Trustee, as
supplemented by the Series 1996-[ ] Supplement
dated as of the Expected Settlement Date (the
"Series Supplement" and, together with the Base
Trust Agreement, the "Trust Agreement").
Certificates Offered.......... Trust Certificates, Series 1996-[ ], consisting
of Class [ ] Certificates [,] [and] Class [ ]
Certificates [and specify others] (collectively,
the "Certificates").
[Initial Certificate Principal
Balance] [Notional Amount].... Class [ ]: [$][ ]. Class [ ]: [$][ ].
Final Distribution Date....... Class [ ]. Class [ ]. [The actual maturity of
each Class may be longer or shorter than the
Final Distribution Date.]
Pass-Through Rates............ [The Variable Pass-Through Rates applicable to
the calculation of the interest distributable on
any Distribution Date on the Certificates [(other
than the Class [ ] Certificates)] are equal
to [describe method for determining
variable rates]. The initial Variable Pass-
Through Rates for the Class [ ] Certificates [,]
and [and] the Class [ ] Certificates [and
specify others] are approximately % [,] [and]
% [and %] per annum, respectively.] [The
Pass-Through Rate applicable to the calculation
of the interest distributable on any Distribution
Date on the
S-6
<PAGE>
[specify classes] Certificates is fixed
at ___% [and ___%, respectively,] per
annum.]
Deposited Assets...................... The Deposited Assets shall consist of the
Underlying Securities [and describe any
assets which are ancillary or incidental
to the Underlying Securities]. See
"--THE UNDERLYING SECURITIES" [, "--OTHER
DEPOSITED ASSETS"] and "DESCRIPTION OF
THE DEPOSITED ASSETS" below.
Original Issue Date................... [ ].
Cut-off Date.......................... [ ].
Distribution Date..................... [ ], commencing [ ].
Record Date........................... The [ ] day immediately preceding each
Distribution Date.
Denominations......................... The Class [ ] Certificates [,] [and]
Class [ ] Certificates [and specify
others] will be available for purchase in
minimum denominations of [$][ ] and
[integral multiples thereof] [multiples
of [$][ ] in excess thereof].
Interest Accrual Periods.............. [Monthly] [Quarterly] [Semi-annually]
(or, in the case of the first Interest
Accrual Period, from and including the
Original Issue Date to but excluding the
first Distribution Date).
[Optional Redemption.................. On any Distribution Date occurring on or
after Distribution Date occurring in
____________, 19__, the Certificates may
be redeemed by the Depositor, in whole
only, at a price equal to the Redemption
Price.]
[Redemption Price..................... _____________________.]
Form of Security...................... Book-entry Certificates with The
Depository Trust Company ("DTC"), except
in certain limited circumstances. See
"DESCRIPTION OF THE CERTIFICATES--
DEFINITIVE CERTIFICATES." Distributions
thereon will be settled in [immediately
available (same-day)] [clearinghouse
(next-day)] funds.
S-7
<PAGE>
Trustee......................... [ ], as trustee.
Trustee Fee..................... [$] payable by the Depositor on the Original
Issue Date.
Administrative Agent............ [ ], as Administrative Agent.
Administrative Agent Fee........ [$], payable by the Depositor on the Original
Issue Date.
Ratings......................... [ ] by [ ][and [ ] by [ ]]. [Specify specific
ratings requirements for particular classes,
including the extent to which the issuance of
the Certificates of a given class is
conditioned upon satisfaction of the ratings
of each other class of Certificates.] See
"RATINGS."
THE UNDERLYING SECURITIES
Underlying Securities........... [A [ ]%] [floating rate] [publicly issued debt
security due [ ] [A pool of publicly issued
debt securities of various issuers, exclusive
of the Retained Interest] [in/having] an
aggregate principal amount of [$][ ].
Underlying Securities Issuer.... [Specify issuer] [Pool of various domestic
corporations, banking organizations and
insurance companies.]
Underlying Securities
Original Issue Date............. [ ].
Underlying Securities
Final Payment Date.............. [ ].
Amortization.................... [Describe amortization schedule, if any].
Denominations................... The Underlying Securities are available in
minimum denominations of [$][ ] and [integral
multiples thereof] [multiples of [$][ ] in
excess thereof].
Underlying Securities
Payment Dates................... [ ], commencing [ ].
Underlying Securities Rate...... [ % per annum.] [A [Weighted Average] rate per
annum equal to [specify interest rate formula
for debt security].]
S-8
<PAGE>
Underlying Securities
Interest Accrual Periods.............[Monthly] [Quarterly] [Semi-annually].
Priority.............................[Describe senior or subordinated status of
Underlying Securities].
Security.............................[Describe existence of any security for
obligations or state that Underlying
Securities are unsecured].
Redemption/Put/Other Features........[Describe existence of any redemption, put
or other material features applicable to
the Underlying Securities].
Form of Underlying Securities........Book-entry debt securities with DTC [listed
on the [New York] [American] Stock Exchange
[specify other listing]].
Underlying Securities Trustee
[Fiscal and Paying Agent]............[ ]. The Underlying Securities have been
issued pursuant to [an indenture dated as
of [ ], 19[ ] (the "Indenture"), between
the Underlying Securities Trustee and the
Underlying Securities Issuer].
Ratings of the Underlying
Securities...........................[ ] by [ ] [and [ ] by [ ]]. See
"DESCRIPTION OF THE UNDERLYING SECURITIES--
RATINGS OF UNDERLYING SECURITIES."
Other Deposited Assets
[Provide similar tabular summary description of the principal economic
terms of any credit support or other ancillary or incidental asset]
SUMMARY OF PROSPECTUS SUPPLEMENT
The following summary does not purport to be complete and is qualified in
its entirety by reference to the detailed information appearing elsewhere herein
and in the Prospectus.
Depositor............................Southport Structured Assets, Inc. (the
"Depositor"), an indirect wholly-owned
subsidiary of Morgan Keegan, Inc. See "THE
DEPOSITOR" in the Prospectus.
Certificates.........................The Certificates, each of which represents
a fractional undivided beneficial interest
in the Trust, will be issued pursuant to
the Trust Agreement. The Certificates will
consist of [ ] classes, designated as
S-9
<PAGE>
Class [ ] Certificates [and][,] Class [ ]
Certificates [and [specify other classes]], [all] of
which [all but the Class [ ] Certificates] are being
offered hereby (collectively, the "Certificates").
The Certificate Principal Balance of a Certificate
outstanding at any time represents the maximum
amount that the holder thereof is entitled to
receive as distributions allocable to principal. The
Certificate Principal Balance of a Certificate will
decline to the extent distributions allocable to
principal are made to such holder. [The Notional
Amount of the Class [ ] Certificates as of any date
of determination is equal to [specify]. Reference to
the Notional Amount of the Class [ ] Certificates is
solely for convenience in determining the basis on
which distributions on the Class [ ] Certificates
are calculated [and determining the relative voting
rights of Certificateholders of Class [ ]
Certificates for purposes of voting on a class-by-
class basis or otherwise]. The Notional Amount does
not represent the right to receive any distributions
allocable to principal.]
[The Class [ ] Certificates, which are not being
offered hereby, have in the aggregate an initial
Certificate Principal Balance of [$] [ ]
(approximate) and a [Variable] Pass-Through Rate
[of __%]. The Class [ ] Certificates represent the
right to receive distributions in respect of their
Certificate Principal Balance and interest thereon
at their applicable Pass-Through Rate.] Shortfalls
in collections with respect to the Deposited Assets
will be allocated solely to the Class [ ]
Certificates to the extent provided herein and,
thereafter, will be allocated among the Certificates
and the Class [ ] Certificates, as provided herein.
[The Class [ ] Certificates will be transferred by
the Depositor to an affiliate on or about
____________, 1996 (the "Closing Date"), and may be
sold at any time in accordance with any restrictions
in the Trust Agreement.]]
The Underlying Securities...Interest on the Underlying Securities accrues at the
Underlying Securities Rate for each Underlying
Securities Accrual Period and is payable on each
Underlying Securities Payment Date. The entire
principal amount of the Underlying Securities will
be
S-10
<PAGE>
payable on the Underlying Securities Final
Payment Date. [The Underlying Securities have
a remaining term to maturity of approximately
years.] [As of the Cut-off Date, the pool of
Underlying Securities has a weighted average
interest rate of [%] and a weighted average
remaining term to maturity of approximately
___ years. Approximately [%] [specify if
greater than 10%] of such Underlying
Securities consist of debt securities of
[U.S. corporate issuers].]
[Name such obligor] is a U.S. corporation
whose principal executive offices are located
at [specify address]. The obligor is subject
to the informational requirements of the
Exchange Act and in accordance therewith
files reports and other information (including
financial information) with the Commission.
See "DESCRIPTION OF THE DEPOSITED ASSETS."
[Other Deposited Assets and
Credit Support....................The Deposited Assets will also include [direct
obligations of the United States] [describe
any assets which are ancillary or incidental
to the Underlying Securities, including
hedging contracts such as puts, calls,
interest rate swaps, currency swaps, floors,
caps and collars] (such assets, together with
the Underlying Securities, the "Deposited
Assets"). See "DESCRIPTION OF THE DEPOSITED
ASSETS."
The Certificateholders of the [specify
particular classes] Certificates will have
the benefit of [describe credit support] to
support or ensure the [servicing and] [timely]
[ultimate] distribution of amounts due with
respect to the Deposited Assets, including
providing certain coverage with respect to
losses thereon.]
Distributions.....................Holders of the Certificates will be entitled
to receive on each Distribution Date, to the
extent of available funds on such Distribution
Date, after payment of the expenses of the
Trustee and its respective agents up to the
Allowable Expense Amount, (i) [in the case of
each class of Certificates other than the
Class [ ] Certificates,] distributions
allocable to interest at the applicable Pass-
Through Rate on the applicable Certificate
Principal Balance, (ii) [in the case of each
class of Certificates other than the Class
[ ]
S-11
<PAGE>
Certificates,] distributions allocable to
principal and (iii) [in the case of each class of
Certificates other than the Class [_]
Certificates,] distributions allocable to premium
(if any) in an amount equal to all payments of
premium (if any) received on the Underlying
Securities for the applicable Collection Period.
Distributions will be made to Certificateholders
only if, and to the extent that, payments are made
with respect to the Deposited Assets or are
otherwise covered by any Credit Support. [The
holders of the Class [_] Certificates will be
entitled to receive on each Distribution Date
distributions allocable to interest in an amount
equal to [describe Stripped Interest].] [The
holders of the Class [_] Certificates will not be
entitled to receive any distributions allocable to
principal or premium (if any).] See "DESCRIPTION
OF THE CERTIFICATES--DISTRIBUTIONS."
Special Distribution Dates....If a payment with respect to the Underlying
Securities is made to the Trustee after the
Underlying Securities Payment Date on which such
payment was due, then the Trustee shall distribute
any such amount received on the next occurring
Business Day (a "Special Distribution Date") as if
such funds had constituted Available Funds on the
Distribution Date immediately preceding such
Special Distribution Date; provided, however, that
the Record Date for such Special Distribution Date
shall be [five Business Days (as such term is
defined in the Prospectus, "Business Day") prior
to the day on] which the related payment was
received from the Underlying Securities Trustee.
[Subordination................As and to the extent described herein, the rights
of the holders of the Class [_] Certificates [and
specify other classes] to receive distributions of
principal, premium (if any), and interest with
respect to the Deposited Assets will be
subordinated to the rights of the holders of the
other classes of Certificates with respect to
losses attributable to principal, premium (if any)
and interest realized on a Deposited Asset (such
losses, "Realized Losses"). See "DESCRIPTION OF
THE CERTIFICATES--ALLOCATION OF LOSSES;
SUBORDINATION."]
[Optional Termination.........At its option, the [Depositor] may purchase all
the Deposited Assets in the Trust, and thereby
cause the
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<PAGE>
termination of the Trust and early retirement of
the Certificates, on any Distribution Date on
which the aggregate principal amount of the
Deposited Assets remaining in the Trust is less
than [10%] of the aggregate principal amount of
the Deposited Assets as of the Cut-off Date.
[Specify any other purchase or repurchase option
of the Depositor.] See "DESCRIPTION OF THE TRUST
AGREEMENT--TERMINATION" herein and in the
Prospectus.]
Federal Income
Tax Consequences..............In the opinion of tax counsel to the Trust, the
Trust will be classified for Federal income tax
purposes [as a grantor trust] [as a partnership]
and not as an association taxable as a
corporation. See "FEDERAL INCOME TAX
CONSEQUENCES."
Ratings.......................It is a condition to the issuance of the
Certificates that the Certificates have the
ratings specified above under "SUMMARY OF
PRINCIPAL ECONOMIC TERMS--THE CERTIFICATES--
RATINGS." A security rating is not a
recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any
time by the assigning rating agency. A security
rating does not address the occurrence or
frequency of redemptions or prepayments on, or
extensions of the maturity of, the Deposited
Assets, the corresponding effect on yield to
investors [or whether investors in the Class [ ]
Certificates may fail to recover fully their
initial investment]. See "RATINGS."
ERISA Considerations..........An employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), and an individual retirement account
(each, a "Plan") may purchase Certificates of any
class if either (i) the Depositor is able to
confirm the existence of at least 100 independent
purchasers of such class or (ii) the Plan can
represent that its purchase of the Certificates
would not be prohibited under ERISA or the Code.
See "ERISA CONSIDERATIONS."
FORMATION OF THE TRUST
The Trust will be formed pursuant to the Trust Agreement (including the
Series [ ] Supplement) between the Depositor and the Trustee. Concurrently with
the execution and
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<PAGE>
delivery of the Series [ ] Supplement, the Depositor will deposit the Underlying
Securities in the Trust. The Trustee, on behalf of the Trust, will accept such
Underlying Securities and will deliver the Certificates to or upon the order of
the Depositor.
The Underlying Securities will be purchased by the Depositor in the
secondary market (either directly or through an affiliate of the Depositor). The
Underlying Securities will not be acquired from the Underlying Securities Issuer
as part of any distribution by or pursuant to any agreement with the Underlying
Securities Issuer. The Underlying Securities Issuer is not participating in this
offering and will not receive any of the proceeds of the sale of the Underlying
Securities to the Depositor or the issuance of the Certificates. [Neither the
Depositor nor any of its affiliates participated in the initial public offering
of the Underlying Securities] [Morgan Keegan & Company, Inc., an affiliate of
the Depositor, participated in the initial public offering of the Underlying
Securities as a [co-underwriter] [underwriter]].
RISK FACTORS
[Describe risk factors applicable to the specific Underlying Securities,
other Deposited Assets and the particular structure of the Certificates being
offered, including factors relating to the yield on the Certificates, risks
associated with any concentration of credit, and risks associated with the
Deposited Assets and the terms thereof, as described elsewhere herein.] See
"RISK FACTORS" and "MATURITY AND YIELD CONSIDERATIONS" in the Prospectus.
DESCRIPTION OF THE DEPOSITED ASSETS
GENERAL
This Prospectus Supplement sets forth certain relevant terms with respect
to the Underlying Securities, but does not provide detailed information with
respect to the Underlying Securities or the Underlying Securities Issuer. This
Prospectus Supplement relates only to the Certificates offered hereby and does
not relate to the Deposited Assets. All disclosure contained herein with respect
to the Underlying Securities and the Underlying Securities Issuer is derived
from publicly available documents. [Describe publicly available documents.]
[The] [Each] Underlying Securities Issuer is subject to the information
reporting requirements of the Exchange Act.
Although the Depositor has no reason to believe the information concerning
the Underlying Securities, [the] [each] Underlying Securities Issuer or each
Underlying Securities Prospectus related to the Underlying Securities is not
reliable, neither the Depositor nor any of the Underwriters has participated in
the preparation of such documents, or made any due diligence inquiry with
respect to the information provided therein. There can be no assurance that
events affecting the Underlying Securities or the Underlying Securities Issuer
have not occurred, which have not yet been publicly disclosed, which would
affect the accuracy or completeness of the publicly available documents
described above.
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<PAGE>
[The Underlying Securities will be deposited into the Trust subject to the
right of the holder of the Retained Interest to receive on each Distribution
Date from payments received on the Underlying Securities, a distribution equal
to [%] per annum multiplied by the principal amount of the Underlying Securities
(the "Interest Strip"). The right of the holder of the Retained Interest to
receive the Interest Strip is of equal priority with the rights of the
Certificateholders to receive distributions of interest on the Certificates.]
[Use the following where the Underlying Securities consist of a pool of
obligations of multiple obligors.]
[The Deposited Assets will consist primarily of the Underlying Securities,
which are a pool of publicly issued debt securities of [domestic corporations,
banking organizations and insurance companies]. The Underlying Securities will
be purchased by the Depositor in the secondary market (either directly or
through an affiliate of the Depositor) and will be deposited into the Trust. The
Underlying Securities will not be acquired either from the respective obligors
on the Underlying Securities or pursuant to any distribution by or agreement
with such obligors.
The composition of the Underlying Securities pool and the distribution by
ratings, remaining term to maturity and interest rate of the Underlying
Securities as of the Cut-off Date are as set forth below:
COMPOSITION OF THE UNDERLYING SECURITIES POOL
AS OF THE CUT-OFF DATE
<TABLE>
<S> <C> <C>
Number of Underlying Securities:
Aggregate Principal Balance: [$]
Average Principal Balance: [$]
Largest Balance: [$]
Weighted Average Interest Rate: %
Weighted Average Original Term to years
Maturity:
Weighted Average Remaining Term to years
Maturity:
Longest Remaining Term to Maturity: years
</TABLE>
DISTRIBUTION BY INDUSTRY CLASSIFICATION
OF THE UNDERLYING SECURITIES POOL AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
AGGREGATE PERCENT OF
INDUSTRY PRINCIPAL AGGREGATE
CLASSIFICATION NUMBER BALANCE PRINCIPAL BALANCE
_____________ _____________ _____________
<S> <C> <C> <C>
Total ============= ============= =============
</TABLE>
S-15
<PAGE>
DISTRIBUTION BY RATINGS OF THE
UNDERLYING SECURITIES POOL AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
AGGREGATE PERCENT OF
PRINCIPAL AGGREGATE
RATING NUMBER BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
Total _____________ ______________ _____________
Total
============= ============== =============
</TABLE>
DISTRIBUTION BY REMAINING TERM TO MATURITY OF THE
UNDERLYING SECURITIES POOL AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
AGGREGATE PERCENT OF
REMAINING TERM PRINCIPAL AGGREGATE
TO MATURITY NUMBER BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
_____________ ______________ _____________
Total
============= ============== =============
</TABLE>
DISTRIBUTION BY INTEREST RATE OF THE
UNDERLYING SECURITIES POOL AS OF THE CUT-OFF DATE
<TABLE>
<CAPTION>
AGGREGATE PERCENT OF
INTEREST PRINCIPAL AGGREGATE
RATE RANGE NUMBER BALANCE PRINCIPAL BALANCE
<S> <C> <C> <C>
% to % [$] %
Greater than % ____________ ____________ ____________
Total [$] 100%
============ ============ ============
</TABLE>
The Underlying Securities consist of debt securities of [domestic corporate
issuers [specify other]]. As of the Cut-off Date, [all of] [approximately % of]
such Underlying Securities were rated [investment grade] [specify particular
rating] by at least one nationally recognized rating agency, and no obligor on
any Underlying Security was in default in the payment of any installments of
principal, interest or premium (if any) with respect thereto. Any such rating of
any of the Underlying Securities is not a recommendation to purchase, hold or
sell such Underlying Security or the Certificates, and there can be no assurance
that a rating will remain for any given period of time or that a rating will not
be lowered or withdrawn entirely by a rating agency if in its judgment
circumstances in the future so warrant. See "RATINGS" herein and "RISK FACTORS--
RATINGS OF THE CERTIFICATES" in the accompanying Prospectus regarding certain
considerations applicable to the ratings of the Certificates.
S-16
<PAGE>
UNDERLYING SECURITIES INDENTURE
The Underlying Securities have been issued pursuant to [an] agreement[s]
([each,] an "Indenture") between the [various] Underlying Securities Issuer[s]
and Underlying Securities Trustee[s]. The following summary describes certain
general terms of such Indenture[s], but investors should refer to the
Indenture[s] [itself] [themselves] for all terms governing the Underlying
Securities.
Each of the Indenture[s] limits the [respective] Underlying Securities
Issuer's ability to engage in certain activities and transactions and requires
that the Underlying Securities Issuer perform certain obligations with respect
to the Underlying Securities. [Describe common restrictive, financial and other
covenants on the Underlying Securities Issuer contained in the Indentures.]
[The following is a summary of the typical Underlying Security Events of
Default for each series of Outstanding Debt Securities. [Any additional
Underlying Security Events of Default unique to a Concentrated Underlying
Security have been described following the summary]:
(a) failure to make payments of principal (and premium, if any) and
interest to holders of the Outstanding Debt Securities in the time periods
given in the Indentures;
(b) material breaches of certain representations, warranties or
covenants or failure to observe or perform in any material respect any
covenant or agreement under an Indenture continuing for a specified period
of time after notice thereof is given to the Underlying Securities Issuer
by the Underlying Securities Trustee or the holders of not less than a
specified percentage of the Outstanding Debt Securities;
(c) failure by the Underlying Securities Issuer to make any
required payment of principal (and premium, if any) or interest with
respect to certain of the other outstanding debt obligations of the
Underlying Securities Issuer or the acceleration by or on behalf of the
holders thereof of such securities; [and]
(d) certain events of bankruptcy or insolvency relating to the
Underlying Securities [Issuer]; and
[(e) describe any additional common events of default with respect
to the pool of Underlying Securities].]
As of the Cut-off Date, [all of] [approximately __% of] the Underlying
Securities were [subject to [describe any put, call or other conversion or
redemption options applicable to the Underlying Securities as well as the nature
of the obligation represented by such Underlying Securities (i.e., senior,
subordinate, secured) and describe commonalities with respect to any
subordination or security provisions or collateral].]
S-17
<PAGE>
The [pool of] Underlying Securities, together with any other assets
described below and any Credit Support described under "Description of Credit
Support," represent the sole assets of the Trust that are available to make
distributions in respect of the Certificates.]
[Use the following with respect to each obligor the Underlying Securities
of which represent more than 10% of the total Underlying Securities available to
make distributions in respect of the Certificates--only a single obligor is
referred to for purposes of this section of the form of Prospectus Supplement.]
[A significant portion of] [Virtually all of] [All of] the Deposited Assets
of the Trust will consist of the [___%] [floating rate] [specify publicly issued
debt security] due of [specify issuer] [, exclusive of the interest therein
retained by [the Depositor] as described below (the "Retained Interest")],
having an aggregate principal amount outstanding as of the Cut-off Date of
approximately [$] (the "Underlying Securities"). The Underlying Securities will
be purchased by the Depositor in the secondary market (either directly or
through an affiliate of the Depositor) and will be deposited into the Trust.
The Underlying Securities will not be acquired either from [name such obligor]
or pursuant to any distribution by or agreement with [name such obligor].
[Describe any put, call or other conversion or redemption options applicable to
the Underlying Securities, as well as the nature of the obligation represented
by such Underlying Securities (i.e., senior, subordinate, secured)]. As of the
Cut-off Date, the foregoing debt security comprising [ %] of the Underlying
Securities was rated [specify investment grade rating] [investment grade] by
[specify nationally recognized rating agency or agencies], and the obligor
thereon was not in default in the payment of any installments of principal,
interest or premium (if any) with respect thereto. Any such rating of such
Underlying Securities is not a recommendation to purchase, hold or sell such
Underlying Securities or the Certificates, and there can be no assurance that a
rating will remain for any given period of time or that a rating will not be
lowered or withdrawn entirely by a rating agency if in its judgment
circumstances in the future so warrant. See "RATINGS" herein and "RISK FACTORS
- --Ratings of the Certificates" in the accompanying Prospectus regarding certain
considerations applicable to the ratings of the Certificates.
According to [name such obligor]'s publicly available documents, [name such
obligor] is a [identify form of domestic corporation, banking organization or
insurance company] whose principal executive offices are located at [specify
address]. The Depositor is not an affiliate of [name such obligor]. [Name such
obligor] is subject to the informational requirements of the Exchange Act and in
accordance therewith files reports and other information (including financial
information) with the Commission [and makes available to the public upon request
certain annual reports containing financial and other information]. Copies of
such reports and other information [may be inspected and copied at the
Commission locations listed under "AVAILABLE INFORMATION" in the accompanying
Prospectus and may be obtained from the Public Reference Section of the
Commission at Washington, D.C. 20549, at prescribed rates. In addition, such
reports and other information [can be inspected at the offices of the [New York
Stock Exchange at 20 Broad Street, New York, New York 10005] [American Stock
Exchange, 86 Trinity Place, New
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<PAGE>
York, New York 10013]] [may be obtained from [name such obligor], according to
its most recent annual report, upon written or oral request to [name such
obligor]].
The Trust will have no other significant assets [other than any Credit
Support or those assets referred to below] from which to make distributions of
amounts due in respect of the Certificates. Consequently, the ability of
Certificateholders to receive distributions in respect of the Certificates will
depend [almost] entirely on the Trust's receipt of payments on the foregoing
Underlying Securities from [name such obligor]. Prospective purchasers of the
Certificates should consider carefully [name such obligor]'s financial condition
and its ability to make payments in respect of such Underlying Securities. This
Prospectus Supplement relates only to the Certificates being offered hereby and
does not relate to the Underlying Securities of [name such obligor]. All
information contained in this Prospectus Supplement regarding [name such
obligor] is derived from the publicly available documents described in the
preceding paragraph.
The Deposited Assets will also include [direct obligations of the United
States of America][describe any assets which are ancillary or incidental to the
Underlying Securities, including hedging contracts such as puts, calls, interest
rate swaps, currency swaps, floors, caps and collars, and any cash or other
security pledged to support the Underlying Securities; include the financial
information of any counterparty to such agreements; and, describe any risk
associated therewith] (such assets, together with the Underlying Securities, the
"Deposited Assets").
[DESCRIPTION OF CREDIT SUPPORT]
For the benefit [solely] of the [Offered] [Class [ ] Certificates [and the
Class [ ] Certificates]], Credit Support will be obtained [and will constitute
part of the Trust to the extent provided below] to support or ensure the
[servicing and] [timely] [ultimate] distribution of amounts due with respect to
the Deposited Assets, in the form and amount described below.
[THE LETTER OF CREDIT
Simultaneously with the Depositor's assignment of the Deposited Assets to
the Trust, the Depositor will obtain the Letter of Credit from [ ] (the "Letter
of Credit Bank") in favor of the Trustee on behalf of the Certificateholders.
The Letter of Credit will be irrevocable and will [support the [timely]
[ultimate] remittance of amounts due with respect to the Deposited Assets]. The
maximum amount that the Trustee may draw under the Letter of Credit will
initially be equal to [$]. The initial amount of the Letter of Credit will be
[$]. Thereafter, the amount of the Letter of Credit with respect to any
Distribution Date will equal [the lesser of (i) [%] of the aggregate Certificate
Principal Balance outstanding on the preceding Distribution Date (after giving
effect to any payment of principal made on the preceding Distribution Date) but
in any event not less than [$], and (ii)] the amount of the
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<PAGE>
Letter of Credit on the preceding Distribution Date, plus [(a) reimbursement of
certain advances under the Letter of Credit and (b) recoveries on defaulted
Deposit Assets] [describe other methods]. The Letter of Credit expires on
_______, 19__. The Trustee will be obligated, in the event of a drawing on the
Letter of Credit, to pursue appropriate remedies against the Deposited Assets
and other collateral, and any realization thereon shall be paid to the Letter of
Credit Bank to the extent of any amounts owing, in the manner and priority
specified herein.]
[Add language regarding the Letter of Credit Bank with respect to its debt
ratings, activities it engages in, regulatory authorities having jurisdiction
over it and the nature of such regulation, a narrative description of its
assets, liabilities (including deposits) and equity, and include an address for
further information concerning the Letter of Credit Bank. In addition, to the
extent that the Letter of Credit will cover payment of 10% or more of the
aggregate principal amount of the Certificates covered thereby, provided
information of financial and other matters with respect to the Letter of Credit
Bank and audited financial statements to the extent that it covers over 20%]].
[THE SURETY BOND
Simultaneously with the Depositor's assignment of the Deposited Assets to
the Trust, the Depositor will obtain the Surety Bond from [ ] (the "Surety")
in favor of the Trustee on behalf of the Certificateholders. The Surety Bond
will guaranty [timely] [ultimate] distributions of the principal of and premium
(if any) and interest with respect to the [Offered] [Class[ ]] Certificates.
The Surety Bond expires on ________, 19__. The Trustee will be obligated, in
the event of a drawing on the Surety Bond, to pursue appropriate remedies
against the Deposited Assets and other collateral, and any realization thereon
shall be paid to the Surety to the extent of any amounts owing, in the manner
and priority specified herein.
[Add language regarding the issuer of the Surety Bond with respect to its
debt ratings, activities it engages in, regulatory authorities having
jurisdiction over it and the nature of such regulation, a narrative description
of its assets, liabilities (including deposits) and equity, and include an
address for further information concerning the Surety. In addition, to the
extent that the Surety Bond will cover payment of 10% or more of the aggregate
principal amount of the Certificates covered thereby, provide information of
financial and other matters with respect to the issuer of the Surety Bond and
audited financial statements to the extent that it covers over 20%.]]
[RESERVE ACCOUNT
The Depositor will deposit with the Trustee on the Closing Date cash,
letters of credit and short-term investments acceptable to the Rating Agency
initially rating the Certificates in the amount of [$]. [Collections with
respect to the Deposited Assets not distributed with respect to the Certificates
shall be deposited in the Reserve Account.] Amounts so deposited in such
Reserve Account will be used by the Trustee to make payments of principal of and
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<PAGE>
premium (if any) and interest on the Certificates to the extent that funds are
not otherwise available. Immediately after any Distribution Date, amounts in
the Reserve Account in excess of [indicate formula] [may be paid to the
Depositor].]
YIELD ON THE CERTIFICATES
[Describe factors relating to the Deposited Assets, the terms thereof and
the manner and priority in which collections thereon are allocated to the
Certificateholders of each class of the Certificates, as described elsewhere
herein.] See "Yield Considerations" and "Maturity and Prepayment
Considerations" in the Prospectus.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will consist of [ ] classes of Certificates, designated as
Class [ ][ ,] [and] Class [ ] [and Class [ ]] Certificates. The Certificates
represent in the aggregate the entire beneficial ownership interest in the
related Trust. The Class [ ] Certificates have in the aggregate an initial
[Certificate Principal Balance] [Notional Amount] of [$] (approximate) and a [%]
[Variable] Pass-Through Rate. The Class [ ] Certificates have in the aggregate
an initial [Certificate Principal Balance] [Notional Amount] of [$]
(approximate) and a [%] [Variable] Pass-Through Rate. [The Class [ ]
Certificates have in the aggregate an initial [Certificate Principal Balance]
[Notional Amount] of [$] (approximate) and a [%] [Variable] Pass-Through Rate.]
[The Class [ ] Certificates, which are not being offered hereby, will be
transferred by the Depositor to an affiliate on the Closing Date, and may be
sold at any time by the Depositor in accordance with the terms of the Trust
Agreement.]
The Certificates [(other than the Class [ ] Certificates [and specify
others] (the "Definitive Classes"))] will be issued, maintained and transferred
on the book-entry records of DTC and its Participants in minimum denominations
of [$ ] and [integral multiples thereof] [multiples of [$ ] in excess thereof].
[The Class [ ] Certificates [and specify any others] will be offered in
registered, certificated form, in minimum percentage interests corresponding to
the initial Notional Amounts or Certificate Principal Balances, as applicable,
of [$ ] and integral multiples thereof, except that one Certificate of each such
class may be issued with an initial Notional Amount or Certificate Principal
Balance, as applicable, equal to an integral multiple of [$ ] plus the excess of
the initial aggregate Notional Amount or Certificate Principal Balance, as
applicable, of such class over the greatest integral multiple of [$ ] that is
not more than such initial aggregate Notional Amount or Certificate Principal
Balance, as applicable.]
The Certificates [(other than the Definitive Classes of Certificates)] will
each initially be represented by one or more global certificates registered in
the name of the nominee of DTC (together with any successor clearing agency
selected by the Depositor, the "Clearing Agency"), except as provided below.
The Depositor has been informed by DTC that DTC's
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<PAGE>
nominee will be CEDE & Co. ("CEDE"). No holder of any such Certificate will be
entitled to receive a certificate representing such person's interest, except as
set forth below under "--DEFINITIVE CERTIFICATES." Unless and until Definitive
Certificates are issued under the limited circumstances described herein, all
references to actions by Certificateholders with respect to any such
Certificates shall refer to actions taken by DTC upon instructions from its
Participants. See "--DEFINITIVE CERTIFICATES" below and "DESCRIPTION OF
CERTIFICATES--GLOBAL SECURITIES" in the Prospectus.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC will take action permitted to be taken by a
Certificateholder under the Trust Agreement only at the direction of one or more
Participants to whose DTC account such Certificates are credited. Additionally,
DTC will take such actions with respect to specified Voting Rights only at the
direction and on behalf of Participants whose holdings of such Certificates
evidence such specified Voting Rights. DTC may take conflicting actions with
respect to Voting Rights, to the extent that Participants whose holdings of
Certificates evidence such Voting Rights, authorize divergent action.
DEFINITIVE CERTIFICATES
Definitive Certificates will be issued to Certificate Owners or their
nominees, respectively, rather than to DTC or its nominee, only if (i) the
Depositor advises the Trustee in writing that DTC is no longer willing or able
to discharge properly its responsibilities as Clearing Agency with respect to
each class of Certificates [(other than the Definitive Classes)] and the
Depositor is unable to locate a qualified successor or (ii) the Depositor, at
its option, elects to terminate the book-entry system through DTC.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee is required to notify all Participants of the
availability through DTC of Definitive Certificates. Upon surrender by DTC of
the definitive certificates representing the Certificates [(other than the
Definitive Classes of Certificates)] and receipt of instructions for re-
registration, the Trustee will reissue such Certificates as Definitive
Certificates issued in the respective principal amounts owned by the individual
owners of such Certificates, and thereafter the Trustee will recognize the
holders of such Definitive Certificates as Certificateholders under the Trust
Agreement.
DISTRIBUTIONS
Collections on the Deposited Assets that are received by the Trustee for a
given Collection Period pursuant to the collection procedures described herein
and in the Prospectus and deposited from time to time into the Certificate
Account will be applied by the Trustee on each applicable Distribution Date to
the following distributions in the following order of priority, solely to the
extent of Available Funds (as defined below) on such Distribution Date:
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(i) to the Trustee, all unpaid fees and expenses of the Trustee
and its respective agents, up to the Allowable Expense Amount (as defined
below) for the related Collection Period;
(ii) [to the providers of Credit Support ("Credit Support
Providers"), any amounts required to be paid or reimbursed to, or deposited
with, any such person (collectively, "Credit Support Payments");
(iii) ] to the Certificateholders of each Class of such Series,
first, to the payment of Required Interest [and on a pro rata basis to the
Credit Support Providers for the payment of any Credit Support Payments],
second, to the payment to Required Principal and third, to the payment of
Required Premium, in each case applicable to such Class, commencing with
the most highly ranked Class and, to the extent Available Funds remain
available, to each other class in accordance with the ranking specified
herein under "--ALLOCATION OF LOSSES; SUBORDINATION";
[(iii)] to the Trustee, all its remaining unpaid fees and expenses
and those of its respective agents not otherwise paid pursuant to clause
(i) above;
(iv) all remaining amounts, if any, to the Depositor].
There can be no assurance that collections received from the Deposited
Assets and any applicable Credit Support relating to the Certificates over a
specified period will be sufficient, after payment of all Allowable Expense
Amounts [and payment of all amounts required to be paid to the Credit Support
Providers] for such period, to make all required distributions to the
Certificateholders of the Certificates. To the extent Available Funds are
insufficient to make any such distributions due to any such Series or Class,
any shortfall will be carried over and will be distributable on the next
Distribution Date on which sufficient funds exist to pay such shortfalls.
For purposes hereof, the following terms have the following meanings:
"Allowable Expense Amount" means, for any given Collection Period, the sum
of (x) [$] and (y) amounts in respect of the Allowable Expense Amount from the
preceding Collection Period that have not been applied on the Distribution Date
for such preceding Collection Period.
"Available Funds" for any Distribution Date means the sum of (a) all
amounts received on or with respect to the Deposited Assets (including
investment income on Eligible Investments) received during the preceding
Collection Period [,] [and] (b) amounts available as of such Distribution Date
pursuant to the Credit Support described herein [and (c) any additional amount
that the [Depositor] may remit to the Trustee from time to time according to the
terms of the Trust Agreement for application as Available Funds.
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<PAGE>
"Call Premium Percentage" for any given Distribution Date means [a fixed
percentage] [a percentage that varies depending on [describe basis for variable
formula, such as the applicable date or other factors or indices]].
"Eligible Investments" means, with respect to the Certificates, those
investments acceptable to the Rating Agency as being consistent with the rating
of such Certificates, as specified in the Trust Agreement. Generally, Eligible
Investments must be limited to obligations or securities that mature not later
than the business day prior to the next succeeding Distribution Date.
["Interest Strip" allocable to the Retained Interest for any Distribution
Date means accrued and unpaid interest on the outstanding principal balance of
the Certificates, computed at an annual rate of [%].]
"Required Interest" for the Certificates or any Class thereof on any given
Distribution Date means the accrued and unpaid interest on the outstanding
Certificate Principal Balance [or Notional Amount] of such Certificates,
computed at the applicable Pass-Through Rate.
"Required Premium" for the Certificates or any Class thereof for any
Distribution Date means an amount equal to the product of (a) the Required
Principal for such Certificates on such Distribution Date and (b) the Call
Premium Percentage for such Distribution Date.
"Required Principal" for the Certificates or any Class thereof for any
Distribution Date means the amount received on the Deposited Assets attributable
to principal payments thereon during the related Collection Period, to the
extent allocable to such Certificates. The Certificate Principal Balance of a
Certificate outstanding at any time represents the maximum amount that the
holder thereof is entitled to receive as distributions allocable to principal
from the cash flow on the Underlying Securities, the other assets in the Trust
and any Credit Support obtained for the benefit of such holder. The Certificate
Principal Balance of any class of Certificates [(other than the Class [ ]
Certificates)] as of any date of determination is equal to the initial
Certificate Principal Balance thereof, reduced by the aggregate of (a) all
amounts allocable to principal previously distributed with respect to such
Certificate and (b) any reductions in the Certificate Principal Balance deemed
to have occurred in connection with allocations of (i) Realized Losses allocable
to principal on the Deposited Assets and (ii) Extraordinary Trust Expenses, as
described herein. [The Notional amount of the Class [ ] Certificates as of any
date of determination is equal to [specify amount].] [Holders of the Class [ ]
Certificates are not entitled to receive any distributions allocable to
principal.]
[Notwithstanding the priorities described above, holders of the Class [ ]
Certificates and the Class [ ] Certificates will be entitled to receive on any
Distribution Date 100% of all principal collections received in the related
Collection Period with respect to the Deposited Assets, to be distributed [on a
pro rata basis] in reduction of the Certificate Principal Balance of the Class
[ ] Certificates and the Class [ ] Certificates, if any of the following
conditions shall be satisfied: [describe conditions, if any, by which a certain
class is given 100% of the
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principal cash flow other than pursuant to subordination that is in effect from
the Closing Date].]
[OPTIONAL REDEMPTION
On each Distribution Date, or the next succeeding Business Day if such
Distribution Date is not a Business Day, on or after the Distribution Date in
[___________, 199_], the Certificates may be redeemed by the Trust at the
request of the Depositor at a price of [%] (the "Redemption Price"). In
addition, the Certificateholders shall be entitled to receive interest up to,
but not including, the Redemption Date.]
[ADVANCES
Subject to the following limitations, the Trustee will be obligated to
advance or cause to be advanced on or before each Distribution Date its own
funds, or funds in the Certificate Account that are not included in the
Available Funds for such Distribution Date, in an amount equal to the aggregate
of payments of principal, premium (if any) and interest, net of that portion of
the Administrative Fee (as defined herein) attributable to fees and expenses of
the Trustee, that were due during the related Collection Period and that were
delinquent on the related Determination Date (any such advance, an "Advance").
Advances are required to be made only to the extent they are deemed by the
Trustee to be recoverable from related late collections, insurance proceeds, if
any, or Liquidation Proceeds. The purpose of making such Advances is to
maintain a regular cash flow to the Certificateholders, rather than to guarantee
or insure against losses. The Trustee will not be required to make any Advances
with respect to reductions in the amount of the payments on the Deposited Assets
due to bankruptcy proceedings with respect to the Deposited Assets.
All Advances will be reimbursable to the Trustee from late collections,
insurance proceeds, if any, and any proceeds from the liquidation of the
Deposited Asset ("Liquidation Proceeds") as to which such unreimbursed Advance
was made. In addition, any Advances previously made in respect of any Deposited
Asset that are deemed by the Trustee to be nonrecoverable from related late
collections, insurance proceeds, if any, or Liquidation Proceeds may be
reimbursed to the Trustee out of any funds in the Certificate Account allocable
to any of the Deposited Assets prior to the distributions on the Certificates.
In the event that the Trustee fails in its obligation to make any such Advance,
the Trustee may be obligated to make any such Advance, to the extent provided in
the Trust Agreement.]
ALLOCATION OF LOSSES; SUBORDINATION
The subordination described herein provided by the Class [ ] Certificates
[and the Class [ ] Certificates] is designed to protect holders of the remaining
classes of Certificates from certain losses and other shortfalls with respect to
the Deposited Assets. As a result, losses and other shortfalls with respect to
the Deposited Assets will be borne by the
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remaining classes of Certificates, to the extent described below, only if such
losses and other shortfalls are not so covered, or the coverage in respect
thereof has been exhausted.
[Realized Losses and Extraordinary Trust Expenses will be allocated on any
Distribution Date as follows: [describe allocation among the various classes].]
[An "Extraordinary Trust Expense" is an expense of a given Trust in excess
of the Allowable Expense Amount, including certain reimbursements to the
Depositor described in the Prospectus under "Description of Certificates--
Certain Matters Regarding the Depositor" and certain reimbursements to the
Trustee described under "Description of the Trust Agreement--The Trustee"
herein.]
[RESTRICTIONS ON TRANSFER OF THE CLASS [ ] CERTIFICATES
Because the Class [ ] Certificates are subordinate to the Class [ ]
Certificates and the Class [ ] Certificates to the extent set forth herein, the
Class [ ] Certificates may not be purchased by or transferred to a Plan except
upon the delivery of an opinion of counsel as described herein. See "ERISA
Considerations."]
DESCRIPTION OF THE TRUST AGREEMENT
GENERAL
The Certificates will be issued pursuant to the Trust Agreement, a form of
which is filed as an exhibit to the Registration Statement. A Current Report on
Form 8-K relating to the Certificates containing a copy of the Trust Agreement
as executed will be filed by the Depositor with the Commission following the
issuance and sale of the Certificates. The Trust created under the Trust
Agreement (including the Series 1996-[ ] Supplement) will consist of (i) the
Deposited Assets (exclusive of any Retained Interest, which is not part of the
Trust), (ii) all payments on or collections in respect of the Deposited Assets
due after the Cut-off Date, together with any proceeds thereof[,] [and]
[(iii) any Credit Support in respect of any class or classes of Certificates]
[and (iv) the rights of the Depositor under the Purchase Agreement between the
Depositor and the Seller]. [In addition, the Certificateholders of the
Certificates may also have the benefit of certain Credit Support discussed
above. See "Description of Credit Support."] Reference is made to the
Prospectus for important information in addition to that set forth herein
regarding the Trust, the terms and conditions of the Trust Agreement and the
Certificates. The following summaries of certain provisions of the Trust
Agreement do not purport to be complete and are subject to the detailed
provisions contained in the form of Trust Agreement, to which reference is
hereby made for a full description of such provisions, including the definition
of certain terms used herein.
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THE TRUSTEE
[ ], a [ ] corporation, will act as trustee for the Certificates and the
Trust pursuant to the Trust Agreement. The Trustee's offices are located at [ ]
and its telephone number is [ ].
The Trust Agreement will provide that the Trustee and any director,
officer, employee or agent of the Trustee will be indemnified by the Trust and
will be held harmless against any loss, liability or expense incurred in
connection with any legal action relating to the Trust Agreement or the
Certificates or the performance of the Trustee's duties under the Trust
Agreement, other than any loss, liability or expense (i) that constitutes a
specific liability of the Trustee under the Trust Agreement or (ii) incurred by
reason of willful misfeasance, bad faith or negligence in the performance of the
Trustee's duties under the Trust Agreement or as a result of a breach, or by
reason of reckless disregard, of the Trustee's obligations and duties under the
Trust Agreement.
EVENTS OF DEFAULT
An event of default with respect to any class of Certificates under the
Trust Agreement (an "Event of Default") will consist of [(i) a default in the
payment of any interest on any Underlying Security after the same becomes due
and payable (subject to any applicable grace period); (ii) a default in the
payment of the principal of or any installment of principal of any Underlying
Security when the same becomes due and payable; and (iii) the occurrence and
continuance of such other events specified in the applicable Series Supplement.]
[Describe remedies available to Certificateholders upon the occurrence and
continuance of an Event of Default, including, as applicable, directing the
Trustee to vote the Underlying Securities in favor of declaring the principal
balance of and any accrued interest on the Outstanding Debt Securities to be
immediately due and payable].
The Trust Agreement will provide that, within 30 days after the occurrence
of an Event of Default in respect of the Certificate of any class, the Trustee
will give notice to the holders of such Certificates [and the holder of the
Retained Interest], transmitted by mail, of all such uncured or unwaived Events
of Default known to it. However, except in the case of an Event of Default
relating to the payment of principal of or premium, if any, or interest on any
of the Underlying Securities, the Trustee will be protected in withholding such
notice if in good faith it determines that the withholding of such notice is in
the interest of the holders of the Certificates of such class [and the holder of
the Retained Interest].
No holder of any Certificate will have the right to institute any
proceeding with respect to the Trust Agreement, unless, (i) such holder
previously has given to the Trustee written notice of a continuing breach, (ii)
the holders of Certificates of such Series evidencing not less than the
"Required Percentage--Remedies" specified in the applicable series supplement of
the aggregate Voting Rights of such Series have requested in writing that the
Trustee institute such proceeding in its own name as Trustee, (ii) such holder
or holders have offered the trustee reasonable indemnity, (iv) the trustee has
for 15 days failed to institute such proceeding and (v) no direction
inconsistent with such written
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request has been given to the Trustee during such 15-day period by the holders
of Cetificates of such Series evidencing not less than the Required Percentage--
Remedies of the aggregate Voting Rights of such Series.
VOTING RIGHTS
[At all times,] [Subject to the succeeding paragraph,] [ ]% of all Voting
Rights will be allocated among all holders of the Class [ ] Certificates[,]
[and] the Class [ ] Certificates [and specify other classes] in proportion to
the then outstanding Certificate Principal Balances [or Notional Amounts] of
their respective Certificates and [ ]% of all Voting Rights will be allocated
among all holders of the Class [ ] Certificates in proportion to the then
outstanding [Certificate Principal Balances] [Notional Amounts] of their
respective Certificates. [Specify whether and under what circumstances voting
will be class-by-class.]
[Specify conditions, if any, under which allocation of Voting Rights might
change from the foregoing percentages.]
[Specify the rights, if any, of the holder of the Retained Interest to
consent to certain actions.]
VOTING OF UNDERLYING SECURITIES, MODIFICATION OF INDENTURE
The Trustee, as holder of the Underlying Securities, has the right to vote
and give consents and waivers in respect of such Underlying Securities as
permitted by DTC and except as otherwise limited by the Trust Agreement. In the
event that the Trustee receives a request from DTC, the Underlying Securities
Trustee or the Underlying Securities Issuer for its consent to any amendment,
modification or waiver of the Underlying Securities, the Indenture or any other
document thereunder or relating thereto, or receives any other solicitation for
any action with respect to the Underlying Securities, the Trustee shall mail a
notice of such proposed amendment, modification, waiver or solicitation to each
Certificateholder of record as of such date. The Trustee shall request
instructions from the Certificateholders as to whether or not to consent to or
vote to accept such amendment, modification, waiver or solicitation. The
Trustee shall consent or vote, or refrain from consenting or voting, in the same
proportion (based on the relative Certificate Principal Balances and Notional
Amounts of the Certificates, as applicable) as the Certificates of the Trust
were actually voted or not voted by the Certificateholders thereof as of a date
determined by the Trustee prior to the date on which such consent or vote is
required; provided, however, that, notwithstanding anything to the contrary, the
Trustee shall at no time vote or consent to any matter (i) unless such vote or
consent would not (based on an opinion of counsel) alter the status of the Trust
as a grantor trust for Federal income tax purposes, (ii) which would alter the
timing or amount of any payment on the Underlying Securities, including, without
limitation, any demand to accelerate the Underlying Securities, except in the
event of a Underlying Security Event of Default or an event which with the
passage of time would become a Underlying Security Event of Default and with the
unanimous consent of all holders of Outstanding Certificates or (iii) which
would result in
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the exchange or substitution of any of the outstanding Underlying Securities
pursuant to a plan for the refunding or refinancing of such Underlying
Securities except in the event of a default under the Indenture and only with
the consent of Certificateholders representing 100% of the aggregate voting
rights of each outstanding Class of the Certificates and the holder of the
Retained Interest]. The Trustee shall have no liability for any failure to act
resulting from Certificateholders' late return of, or failure to return,
directions requested by the Trustee from the Certificateholders.
In the event that an offer is made by the Underlying Securities Issuer to
issue new obligations in exchange and substitution for any of the Underlying
Securities, pursuant to a plan for the refunding or refinancing of the
Outstanding Debt Securities or any other offer is made for the Underlying
Securities, the Trustee shall notify the Certificateholders and the holder of
the Retained Interest] of such offer as promptly as practicable. The Trustee
must reject any such offer unless an event of default under the Indenture has
occurred, the Trustee is directed by the affirmative vote of all of the
Certificateholders [and the holder of the Retained Interest] to accept such
offer and the Trustee has received the tax opinion described above.
If an event of default under the Indenture occurs and is continuing and if
directed by all the holders of outstanding Class [ ] Certificates and, unless
the Class [ ] Certificates are no longer outstanding, by all the holders of
outstanding Class [ ] Certificates, [and the holder of the Retained Interest,]
the Trustee shall vote the Underlying Securities in favor of directing, or take
such other action as may be appropriate to direct, the Underlying Securities
Trustee to declare the unpaid principal amount of the Underlying Securities and
any accrued and unpaid interest thereon to be due and payable. In connection
with a vote concerning whether to declare the acceleration of the Underlying
Securities, the Certificateholders' interests of each Class may differ and the
interests of either Class may differ from holders of other Outstanding Debt
Securities.
TERMINATION
The circumstances under which the obligations created by the Trust
Agreement will terminate in respect of the Certificates are described in
"Description of Certificates--Termination" in the Prospectus. The Depositor will
have the right to purchase all remaining Deposited Assets in the Trust and
thereby effect early retirement of the Certificates on any Distribution Date,
[(a)] once the aggregate principal amount of the Deposited Assets at the time of
any such purchase is less than [10%] of the aggregate principal amount of the
Deposited Assets as of the Cut-off Date [and (b) at the option of the Depositor
at [specify when and on what terms any such option may be exercised]]; provided,
however, that the right to exercise any such option is contingent on such
exercise being consistent with the Depositor's continued satisfaction of the
applicable requirements for exemption under Rule 3a-7 under the Investment
Company Act of 1940 and all applicable rules, regulations and interpretations
thereunder. In the event the Depositor exercises any such option, the portion of
the purchase price allocable to the Certificates of each class will be, to the
extent of available funds, [100% of their then aggregate outstanding Certificate
Principal Balance or Notional Amount, as applicable, plus with respect to the
Certificates
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[one month's] [three month's] [specify other period] interest thereon at the
Fixed Pass-Through Rate or the then applicable Variable Pass-Through Rate, as
the case may be, plus, with respect to each class of Certificates, any
previously accrued but unpaid interest thereon.] [Specify alternative allocation
method if different from above.] In no event will the Trust created by the Trust
Agreement for the Certificates continue beyond the expiration of 21 years from
the death of the survivor of the person or persons named in the Trust Agreement.
See "Description of Certificates--Termination in the Prospectus.
CERTAIN LEGAL ASPECTS OF THE DEPOSITED ASSETS
[Describe any applicable legal aspects of the Deposited Assets or relating
to the enforceability by the Certificateholders of the security interest, if
any, securing such Deposited Assets.]
FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of material Federal income tax
consequences of the purchase, ownership and disposition of the Certificates by
an initial holder of Certificates. Such consequences will depend on the terms of
the Certificate, whether the Trust is treated as a grantor trust or as a
partnership for Federal income tax purposes, and the assets collateralizing or
otherwise supporting such Certificate. The consequences of owning Certificates
which are deemed for Federal income tax purposes to be interests in a grantor
trust or in a partnership are discussed separately below under the captions
"Grantor Trust Certificates" and "Partnership Certificates," respectively. The
applicable Trust Agreement would include provisions appropriate to the
particulars of the transaction and to the relevant Federal income tax status of
the Trust and related Certificates.
This summary is based upon laws, regulations, rulings and decisions
currently in effect, all of which are subject to change, possibly on a
retroactive basis. The discussion does not deal with all Federal tax
consequences applicable to all categories of investors, some of which may be
subject to special rules. In addition, this summary is generally limited to
investors who will hold the Certificates 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"), and who do not hold their
Certificates as part of a "straddle," a "hedge" or a "conversion transaction"
Investors should consult their own tax advisors to determine the Federal, state,
local and other tax consequences of the purchase, ownership and disposition of
the Certificates. The Prospectus Supplement for each series of Certificates will
tailor the description of the Federal income tax consequences to the specific
Certificates issued pursuant thereto, as therein limited.
The Trust will be provided with an opinion of Chapman and Cutler, Chicago,
Illinois, special Federal tax counsel to the Depositor ("Federal Tax Counsel")
regarding certain Federal income tax matters discussed below. An opinion of
Federal Tax Counsel, however, is not binding on the Internal Revenue Service
(the "Service") or the courts. Prospective
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investors should note that no rulings have been or will be sought from the
Service with respect to any of the Federal income tax consequences discussed
below, and no assurance can be given that the Service will not take contrary
positions.
GRANTOR TRUST CERTIFICATES
If the Trust is intended to be classified as a grantor trust and not as an
association taxable as a corporation for Federal income tax purposes, Federal
Tax Counsel will so opine. The remainder of this discussion prior to
"PARTNERSHIP CERTIFICATES" assumes that the Trust is a grantor trust and not an
association taxable as a corporation for Federal income tax purposes.
Accordingly, each owner of a Certificate (a "Certificate Owner) will be subject
to Federal income taxation as if it owned directly the portion of the Deposited
Assets allocable to such Certificates, and as if it paid directly its share of
reasonable expenses paid by the Trust. The following discussion assumes that the
Underlying Securities were not issued with original issue discount ("OID") and,
accordingly, the Certificate owners will not realize OID except with respect to
a "stripped interest" (as defined below).
INCOME OF CERTIFICATE OWNERS
In General. A Certificate Owner will allocate the amount it pays for its
Certificate among each Underlying Security and each of the Deposited Assets in
the Trust in proportion to their relative fair market values on the date of
purchase of the Certificate in order to determine its initial tax basis for the
pro rata portion of each Underlying Security and Deposited Asset held by the
Trust. A Certificate Owner would calculate separately its income, gain, loss or
deduction realized with respect to each such asset.
The Federal income tax treatment of a holder of Certificates will depend
upon whether the interest in the Underlying Securities represented by a
Certificate will be considered to be a "stripped bond" or "stripped coupon"
(together a "stripped interest") within the meaning of Section 1286 of the Code.
A Certificate will not be considered to represent a stripped interest in the
Underlying Securities to the extent the Certificate is entitled to receive a
proportionate amount of all principal of a particular maturity represented by
the Underlying Securities and all interest relating thereto. A Certificate will
be considered to represent a stripped interest in the Underlying Securities if
the Certificate is entitled to receive less than all of the interest on a
particular maturity represented by the Underlying Securities or if the
Certificate is entitled to receive all or parts of the interest on a particular
maturity represented by the Underlying Securities but no principal on the
Underlying Securities. In addition, if a Certificate is entitled to receive
interest and principal on a particular maturity represented by the Underlying
Securities, but the interest it is entitled to receive on a particular maturity
represented by the Underlying Securities is disproportionately more than the
principal it is entitled to receive on a particular maturity represented by the
Underlying Securities, it could be argued (based on the preamble to Treas. Reg.
Section 1.1286-1 discussed below under "Tax Treatment of Certificates to the
Extent They are Stripped Interests") that the Certificates represents (a) an
interest in a particular maturity represented by the Underlying Securities that
is not a stripped interest to
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the extent it represents a proportional amount of all the principal and interest
on a particular maturity represented by the Underlying Securities and (b) a
stripped interest in a particular maturity represented by the Underlying
Securities to the extent of any additional interest to which it is entitled on a
particular maturity represented by the Underlying Securities. If a Certificate
represents in part a stripped interest and in part not a stripped interest, such
interests will be treated as two separate items for tax purposes and a purchaser
of Certificates will be required to allocate its purchase price among the two
items (as well as any other Deposited Assets) in proportion to their relative
fair market values on the date of purchase.
Tax Treatment of Certificates to the Extent They Are Not Stripped
Interests. To the extent a Certificate does not represent a stripped interest in
a particular maturity represented by the Underlying Securities, each
Certificate Owner will be required to report on its Federal income tax return,
in a manner consistent with its method of accounting, its proportional share of
the gross income of the Trust, including interest on and other amounts with
respect to the corresponding Underlying Security, income derived from the other
Deposited Assets held by the Trust, any gain or loss upon collection or
disposition of the corresponding Underlying Security, other Deposited Assets, or
as further described below under "Purchase and Sale of a Certificate" the sale
or other disposition of a Certificate. The portion of each monthly payment to a
Certificate Owner that is allocable to principal on the corresponding Underlying
Security (other than amounts representing market discount, as described below)
will represent a recovery of capital, which will reduce the tax basis of such
Certificate Owner's undivided interest in the Underlying Securities.
To the extent that the portion of the purchase price of a Certificate
allocated to a Certificate Owner's undivided interest in an Underlying Security,
based on the relative fair market value of each Underlying Security in which an
interest is acquired as well as other Deposited Assets in which an interest is
acquired, is greater than or less than the portion of the principal balance of
the Underlying Security allocable to the Certificate, such interest in the
Underlying Security will have been acquired at a premium or discount, as the
case may be (the "allocated Purchase Price"). This allocation is required to be
calculated separately for each Underlying Security represented by a Certificate.
To the extent that the allocated Purchase Price is less than the principal
balance of an Underlying Security, the Certificate Owner's interest in such
Underlying Security will be treated as purchased at a "market discount." The
market discount on a Underlying Security will, however, be considered to be zero
if it is less than a statutorily defined de minimis amount. Conversely, to the
extent that the allocated Purchase Price exceeds the principal balance of an
Underlying Security, the Certificate Owner's interest therein will be treated as
purchased with "bond premium." See the discussion below under "Bond Premium."
For example, if the allocated Purchase Price paid by a Certificate Owner
with respect to an Underlying Security is equal or almost equal to the portion
of the principal balance of the Underlying Security that is allocable to the
Certificate, there would be no significant amount of discount or premium with
respect to its interest in such Underlying Security. Moreover, if the total
purchase price of a Certificate is equal to the principal amount of the
Underlying Securities allocable to the Certificate, one or more Underlying
Securities will
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have been purchased at a discount because a portion of such purchase price will
be allocated to the other Deposited Assets of the Trust.
In general, under the market discount provisions of the Code, all or a
portion of the principal payments received by the Trust and the gain recognized
upon a sale, maturity or disposition of an Underlying Security or upon the sale
or other disposition of a Certificate (as further described below under
"PURCHASE AND SALE OF A CERTIFICATE") will be taxable as ordinary income to the
extent of accrued market discount. In general, the accrued market discount on
each Underlying Security will equal an amount that bears the same ratio to the
market discount on the Underlying Security as the number of days that the Trust
held the Underlying Security (or a Certificate Owner held a Certificate related
thereto), bears to the number of days after the Trust acquired the Underlying
Certificate (or a Certificate Owner acquired a Certificate related thereto) and
up and to the date of the maturity of the Underlying Security. At the election
of a Certificate Owner, market discount can be accrued under a constant yield
method as further described on the Code. The ordinary income treatment on
dispositions described above will not apply if a Certificate Owner elects (or
has previously elected) to include market discount in income currently as it
accrues for each taxable year during which it holds the Certificate. Such
election, if made, will also apply to all debt instruments acquired directly or
indirectly, by the Certificate Owner during the year in which the election is
made and all debt instruments acquired thereafter and is irrevocable without the
consent of the Service. If a Certificate Owner does not elect to annually
include accrued market discount in taxable income as it accrues, deductions for
any interest expense incurred by a Certificate Owner that is incurred to
purchase or carry a Certificate will be reduced by such accrued market discount.
In general, the portion of any interest expense that was not currently
deductible would ultimately be deductible when the accrued market discount is
included in income. Certificate Owners should consult their tax advisors
regarding whether an election should be made to include market discount in
income as it accrues and the method of accrual and as to the amount of interest
expense that may not be currently deductible.
Tax Treatment of Certificates to the Extent They Are Stripped Interests. To
the extent a Certificate represents a stripped interest in a particular maturity
represented by the Underlying Securities, each such Certificate will be subject
to the OID rules. The amount of OID on a stripped interest is equal to the
excess of the stated redemption price at maturity (or the amount payable on the
coupon) over the portion of the purchase price for the Certificate allocable to
the stripped interest, based on the relative fair market value of all assets
acquired.
The tax treatment of a Certificate Owner will depend upon whether the
amount of OID on the stripped interest represented by the Certificate is less
than a statutorily defined de minimis amount. In general, under Treas. Reg.
Section 1.1286-1 (the "De Minimis Regulation"), the amount of OID with respect
to the stripped interest will be de minimis if it is less than 1/4 of the one
percent multiplied by the product of the "stated redemption price at maturity"
(or in the case of a stripped coupon, the amount payable on the due date of such
coupon) and the number of full years remaining after the purchase date of either
the Underlying Security by the Trust or a Certificate by a Certificate Owner, as
appropriate
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until the maturity of such stripped interest. However, if the stripped interest
provides for amortization of principal, the amount of OID will be de minimis if
it is less than 1/4 of one percent multiplied by the product of the stated
redemption price at maturity (or in the case of a stripped coupon, the amount
payable on the due date of such coupon) and the weighted average maturity. This
calculation of de minimis OID is to be performed separately for each new
purchaser of a Certificate of the stripped interest from the date of purchase of
the Underlying Security by the Trust or a Certificate by a Certificate Owner, as
appropriate.
In the preamble to the De Minimis Regulation, the Service stated that the
final regulations are premised on the assumption that stripped coupons may be
treated as qualified stated interest with respect to the bonds from which they
are stripped and, therefore, may be excluded from stated redemption price at
maturity in appropriate circumstances. According to the Service, without these
assumptions, each stripped bond and stripped coupon would be treated as
a separate (zero coupon) bond, and the OID with respect to each such separate
bond or coupon virtually never would be de minimis. Finally, the Service
indicated that future regulations under section 1286 will provide specific
guidance relating to these assumptions. Certificate Owners are advised to
consult their tax advisers with respect to the use of this assumption in
determining the federal income tax consequences associated with the acquisition,
ownership and disposition of a Certificate, including the determination of
whether (i) OID is de minimis, (ii) a Certificate is subject to the market
discount rules discussed above under "Tax Treatment of Certificates to the
Extent They Are Not Stripped Interest," and (iii) whether a Certificate
represents an interest in an Underlying Security purchased at a premium and is
subject to the discussion below under "Bond Premium."
To the extent the amount of OID on the stripped interest represented by the
Certificate is de minimis under the rules discussed above, such OID will be
treated as zero. As a result, as described above under "Tax Treatment of
Certificates to the Extent They Are Not Stripped Interests," a Certificate Owner
would report its share of the income of the Trust under its usual method of
accounting.
If the OID with respect to the stripped interest in a particular maturity
represented by the Underlying Securities represented by a Certificate is not
treated as being de minimis, a Certificate Owner will be required to include in
income any OID on the stripped interest. Whether the Certificate Owner uses the
cash or the accrual method of tax accounting, OID must be included in income as
it accrues on a daily basis, regardless of when cash payments are received,
using a method reflecting a constant yield as described below. Such treatment
could result in the accrual of income by such Certificate Owner prior to the
receipt of cash by such Certificate Owner. The accrual of OID depends upon
whether the Underlying Security with respect to which OID exists matures within
one year of the date purchased. In the case of a Certificate that matures within
one year, OID accrues daily on a ratable basis unless the holder elects to
accrue such discount under a constant yield method, compounded daily. In the
case of a Certificate that does not mature within one year of the date
purchased, OID generally accrues daily, computed under a constant yield method,
compounded at least annually (with straight line interpolation between
compounding dates). Prospective purchasers should consult their tax advisors as
to the computation of the accrual
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of OID, including the impact of the discussion set forth above in the preamble
to the De Minimis Regulation.
BOND PREMIUM
In the event that a Certificate represents an interest in an Underlying
Security purchased (either initially upon the formation of the Trust or upon the
purchase of a Certificate) at a premium, such premium will be amortizable by the
Certificate Owner as an offset to interest income (with a corresponding
reduction in the Certificate Owner's basis) under a constant yield method over
the term of the Underlying Security if an election under Section 171 of the Code
is made or was previously in effect. Any such election will also apply to all
debt instruments held by the Certificate Owner during the year in which the
election is made and all debt instruments acquired thereafter and the election
is irrevocable without the consent of the Service.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT
Under Treas. Reg. Section 1.1272-3 and with the limits set forth therein,
any Certificate Owner may elect to include in gross income all interest
(including stated interest, OID, de minimis OID, market discount and de minimis
market discount, as adjusted by any bond premium or acquisition premium) that
accrues on an unstripped or stripped interest using the constant yield method
described above. Such an election with respect to an unstripped or stripped
interest having amortizable bond premium or market discount, to the extent
permitted, would constitute, respectively, an election to apply the market
discount rules or bond premium rules with respect to all other debt instruments
with market discount or amortizable bond premium, as the case may be, of such
Certificate Owner. A Certificate Owner should consult its tax adviser as to
whether to make such an election.
MODIFICATION OR EXCHANGE OF UNDERLYING SECURITIES
Depending upon the circumstances, it is possible that a modification of the
terms of one or more of the Underlying Securities, or a substitution of other
assets for the Underlying Securities, would be a taxable event to Certificate
Owners on which they would recognize gain or loss.
DEDUCTIBILITY OF TRUST'S FEES AND EXPENSES
In computing its Federal income tax liability, a Certificate Owner will be
entitled to deduct, consistent with its method of accounting, its share of
reasonable administrative fees, trustee fees and other fees paid or incurred by
the Trust and any allowable amortization deductions with respect to certain
other assets of the Trust, but not amortizable bond premium. If a Certificate
Owner is an individual, estate or trust, the deduction for his share of fees
will be a miscellaneous itemized deduction and will only be allowable to the
extent that they exceed 2% of the Certificate Owner's adjusted gross income.
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Purchase and Sale of a Certificate
A Certificate Owner's tax basis in a Certificate generally will equal the
cost of such Certificate increased by any amounts of undistributed taxable
income (e.g., OID or market discount) and reduced by any amortized premium (each
as described above) and any payments other than payments of qualified stated
interest, if any (subject to the application of the discussion set forth above
in the preamble to the De Minimis Regulation), on an Underlying Security
represented by the Certificate.
If a Certificate Owner sells its Certificate, gain, if any, will constitute
ordinary income to the extent of the aggregate of the accrued market discount
(which has not previously been included in such Certificate Owner's taxable
income) with respect to the Certificate Owner's pro rata portion of each
Underlying Security held by the Trust. Any other gains (or losses) will be
capital gains (or losses) except in the case of a dealer or a financial
institution, and will be long-term if the Certificate Owner has held its
Certificates for more than one year. A Certificate Owner will recognize taxable
gains (or losses) (a) upon redemption or sale of its Certificate, (b) if the
Trustee disposes of an asset or (c) upon receipt by the Trustee of payments of
principal on the Underlying Securities. The amount of any such gain (or loss)
is measured by comparing the Certificate Owner's pro rata share of the total
proceeds from the transaction with its adjusted tax basis in its certificate or
its pro rata interest in the asset as the case may be, and then reducing such
gain, if any, to the extent characterized as ordinary income resulting from
accrued market discount as discussed above. A Certificate Owner's tax basis in
its Certificate and its pro rata portion of each of the Underlying Securities of
the Trust may be adjusted to reflect the accrual of market discount (if the
Certificate Owner has elected to include such discount in income as it accrues),
original issue discount and amortized bond premium, if any. The tax cost
reduction requirements of said Code relating to amortization of bond premium
may, under some circumstances, result in the Certificate Owner realizing a
taxable gain when its Certificates are sold or redeemed for an amount equal to
its original cost. In addition, Certificate Owners must reduce the tax basis of
its Certificates and their pro rata portion of the Underlying Securities of the
Trust for their share of accrued interest received by the Trust, if any, on
Underlying Securities delivered after the Certificate Owner pays for its
certificates to the extent that such interest accrued on such Underlying
Securities during the period from the Certificate Owner's settlement date to the
date such Underlying Securities are delivered to the Trust and, consequently,
such Certificate Owner may have an increase in taxable gain or reduction in
capital loss upon the disposition of its Certificates or such Underlying
Securities.
For taxable years beginning after December 31, 1986 and before January 1,
1996, certain corporations may be subject to the environmental tax (the
"Superfund Tax") imposed by Section 59A of the Code. Interest received from,
and gains recognized from the disposition of, an Underlying Security by the
Trust or the sale of Certificates by a Certificate Owner will be included by
such corporations in the computation of the Superfund Tax. Under current Code
provisions, the Superfund Tax does not apply to tax years beginning on or after
January 1, 1996. However, the Superfund Tax could be extended retroactively.
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The Revenue Reconciliation Act of 1993 (the "Act") raised tax rates on
ordinary income while capital gains remain subject to a 28% maximum stated rate
for taxpayers other than corporations. Because some or all capital gains are
taxed at a comparatively lower rate under the Act, the Act includes a provision
that recharacterizes capital gains as ordinary income in the case of certain
financial transactions that are "conversion transactions" effective for
transactions entered into after April 30, 1993. Certificate Owners and
prospective investors should consult with their tax advisors regarding the
potential effect of this provision on their investment in the Certificates.
BACKUP WITHHOLDING
Payments made on the Certificates and proceeds from the sale of the
Certificates will not be subject to a "backup" withholding tax of 31% unless, in
general, the Certificate Owner fails to comply with certain reporting procedures
and is not an exempt recipient under applicable provisions of the Code.
FOREIGN CERTIFICATE OWNERS
To the extent that amounts paid to Certificate Owners that are not United
States persons ("Foreign Certificate Owners") are treated as interest with
respect to Underlying Securities issued after July 18, 1984, such amounts
generally will not be subject to the annual 30% withholding tax, provided that
such Foreign Certificate Owner fulfills certain certification requirements.
Under such requirements, the holder must certify, under penalties of perjury,
that it is not a "United States person" and provide its name and address.
A "United States person" means a citizen or resident of the U.S., a
corporation, partnership or other entity created or organized in or under the
laws of the U.S. or any political subdivision thereof, or an estate or trust the
income of which is includible in gross income for U.S. Federal income tax
purposes, regardless of its source.
PARTNERSHIP CERTIFICATES
If the Trust is intended to be treated as a partnership for purposes of
Federal income taxation, Federal Tax Counsel will so opine. The availability of
any tax benefits of investing in Certificates depends upon the classification of
the Trust as a partnership, rather than as an association taxable as a
corporation, for federal income tax purposes. Federal Tax Counsel's opinion
regarding the status of the Trust as a partnership for federal income tax
purposes is based on provisions of the Trust Agreement which (1) provide that
the Trust will terminate upon the occurrence of certain events such as the
insolvency or bankruptcy of the Depositor, (2) restrict the transferability of
the Certificates, (3) impose personal liability on the Depositor for expenses
and other liabilities of the Trust, (4) require that the Depositor will have a
net worth sufficient to meet the net worth requirements set by the Service for
the issuance of an advance ruling that an organization lacks the corporate
characteristic of limited liability for federal income tax purposes, (5)
restrict the number of Certificate
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Owners and (6) restrict the transfer of Certificates on an "established
securities market" as defined in Section 7704 of the Code.
If the Trust were taxable as a corporation, it would be subject to federal
income tax on any taxable income at regular corporate tax rates. Classification
of the Trust as a corporation would result in a substantial reduction in (or
elimination of) after-tax yield and cash flow to an Owner of a Certificate with
respect to its Certificate.
Final regulations have been issued that provide an anti-abuse rule under
Subchapter K of Chapter 1 of the Code. These regulations authorize the Service,
based upon all of the facts and circumstances, to recast a transaction involving
a partnership as appropriate to reflect the underlying economic arrangement or
to prevent the circumvention of other provisions of the Code. This authority to
recast a transaction includes, but is not limited to, disregarding and
reallocating allocations of the partnership's items of income, gain, loss,
deductions, or credits. It cannot be predicted whether the Service will assert
that such a rule would apply to recast the Federal income tax treatment of
either the Trust or the Certificates. Holders should consult their own tax
advisers in this regard.
The Service has recently issued proposed Treasury Regulations Section
1.7701-1 through 1.7701-3 which simplifies the regulations relating to the
classification of unincorporated business organizations, including entities such
as the Trust, as partnerships and corporations for federal income tax purposes
and is seeking public comments on the proposed regulations. At this time, the
Service has not yet finalized the proposed regulations and it is unclear when
they will be finalized and the form such final regulations may take.
Accordingly, although the ultimate effect of such regulations cannot be
predicted, it is not believed that any such simplifying regulations should
adversely affect the classification of the Trust as a partnership. Investors
should consult their own tax advisors in this regard.
Partnership Taxation
PARTNERSHIP TAXATION
As a partnership, the Trust will not be subject to Federal income tax, but
each Certificate Owner will be required to separately take into account such
holder's allocable share of income, gains, losses, deductions and credits of the
Trust. Each Certificate Owner will be required to take into account in computing
such Certificate Owner's federal income tax liability its share of items of
Trust income, gains, losses, deductions and credits for the tax year of the
Trust ending within or with the tax year of such Certificate Owner, without
regard to whether there are distributions from the Trust. A Certificate Owner's
distributive share of Trust income, expense, gain, loss or credit will be
determined in accordance with the Trust Agreement. All or a portion of any
allocated expenses (to the extent not otherwise disallowed under the Code) may
be treated as investment expenses subject to limitations on deductibility of
miscellaneous itemized deductions that do not exceed two percent of their
adjusted gross income in the case of Certificate Owners who are individuals,
estates or trusts.
A Certificate Owner's ability to recognize its distributive share of
expenses or losses, if any, may be subject to limitation under the Code (for
example, a Certificate Owner's
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distributive share of Trust loss, including capital loss, may be allowed only to
the extent of such Certificate Owner's adjusted basis in its Certificate). A
Certificate Owner should consult its tax advisors in this regard.
Any cash distributions by the Trust to a Certificate Owner will constitute
(i) first, a return of capital to the extent of such Certificate Owner's tax
basis in the Certificate (with a corresponding dollar-for-dollar reduction in
such tax basis), and (ii) thereafter, to the extent in excess thereof, gain on
the sale or exchange of such Certificate Owner's Certificate. See "Disposition
of Certificates" below.
DISCOUNT AND PREMIUM
It is believed that the Underlying Securities were not issued with OID and,
therefore, the Trust should not have OID income. However, the purchase price
paid by the Trust for the Underlying Securities may be greater or less than the
remaining principal balance of the Underlying Securities at the time of
purchase. If so, the Underlying Securities will have been acquired at a premium
or discount, as the case may be. Moreover, to the extent a deemed termination
of the Trust occurs as discussed below, it is possible that discount or premium
will be created, depending on the value of the Underlying Securities at such
time.
The amortization of bond premium and accrual of market discount are
discussed above under "Bond Premium" and "Tax Treatment of Certificates to the
Extent They Are Not Stripped Interests." For purposes of this discussion, the
Partnership will be considered the Certificate Owner.
MODIFICATION OR EXCHANGE OF UNDERLYING SECURITIES
Depending upon the circumstances, it is possible that a modification of the
terms of the Underlying Securities, or a substitution of other assets for the
Underlying Securities would be a taxable event to the Trust, which may result in
Federal income tax consequences to Certificate Owners.
TAX CONSEQUENCES OF OTHER ASSETS HELD BY TRUST
The manner in which income with respect to the other assets of the Trust
should be accrued will depend on the nature of those assets.
[Discuss specific tax consequences of other assets.]
SECTION 708 TERMINATION
Under Section 708 of the Code, the Trust will be deemed to terminate for
Federal income tax purposes if 50% or more of the capital and profits interests
in the Trust are sold or exchanged within a twelve-month period. Were such a
termination to occur, the Trust would be considered to have distributed its
assets to the partners, the Certificate Owners,
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who would then be treated as having recontributed those assets to the Trust, as
a new partnership.
DISPOSITION OF CERTIFICATES
Generally, capital gain or loss will be recognized on a sale or other
disposition of Certificates in an amount equal to the difference between the
amount realized and the seller's tax basis in the Certificates sold. A
Certificate Owner's tax basis in a Certificate will generally equal its cost
increased by his share of Trust income includible in his income (including for
the taxable year of sale) and decreased by any distributions received with
respect to such Certificate. In addition, both his tax basis in, and the amount
realized on a sale of, a Certificate would include the holder's share of
liabilities of the Trust. A holder acquiring Certificates at different prices
may be required to maintain a single aggregate adjusted tax basis in such
Certificate and, upon sale or other disposition of some of the Certificates,
allocate a pro rata portion of such aggregate tax basis to the Certificates sold
(rather than maintaining a separate tax basis in each Certificate for purposes
of computing gain or loss on a sale of that Certificate).
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax rates
on ordinary income while capital gains remain subject to a 28 percent maximum
stated rate. Because some or all capital gains are taxed at a comparatively
lower rate under the Tax Act, the Tax Act includes a provision that
recharacterizes capital gains as ordinary income in the case of certain
financial transactions that are "conversion transactions" effective for
transactions entered into after April 30, 1993. Prospective Certificate Owners
should consult with their tax advisors regarding the potential effect of this
provision with respect to any gains recognized on their investment in
Certificates.
In general, the transfer of interests in the Trust should not affect
Certificate Owners other than those disposing of or acquiring a Certificate.
However, under the partnership rules, as described above, a transfer during a
twelve-month period of 50% or more of the total interests in the partnership
capital and profits will result for Federal income tax purposes in a
termination and reconstitution of the Trust, with the result that the Trust's
basis in the Underlying Securities and Deposited Assets will equal the aggregate
of the Certificate Owner's basis in their Certificates. Upon the subsequent
receipt of principal payments on the Underlying Securities or the sale or
redemption of the Underlying Securities, this rule may result in the recognition
of gain or loss by a Certificate Owner in advance of the sale or redemption of
its Certificate.
On the sale of a Certificate, any gain attributable to the holder's share
of any accrued market discount on the Underlying Securities that has not
otherwise been included in the holder's income would generally be treated as
ordinary income to the holder and would give rise to special tax reporting
requirements.
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ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES
In general, the Trust's taxable income and losses will be determined
monthly and the tax items for a particular calendar month allocable to a
particular class of Certificates will be apportioned among holders of such
Certificates in proportion to the principal amount of such Certificates owned by
them as of the first business day following the end of such month. As a result,
a holder purchasing Certificates may be allocated tax items (which will affect
its tax liability and tax basis) attributable to periods before the actual
transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If such a convention is not allowed (or only applies to transfers
of less than all of a Certificate Owner's interest), taxable income or losses of
the Trust might be reallocated among the Certificate Owners. The Trustee is
authorized to revise the Trust's method of allocation between transferors and
transferees to conform to a method permitted by future regulations.
SECTION 754 ELECTION
In the event that a Certificate Owner sells its Certificates at a profit
(loss), the purchasing Certificate Owner will have a higher (lower) basis in the
Certificates than the selling Certificate Owner had. The tax basis of the
Trust's assets will not be adjusted to reflect that higher (or lower) basis
unless the Trust were to file an election under Section 754 of the Code. In
order to avoid the administrative complexities that would be involved in keeping
accurate accounting records, as well as potentially onerous information
reporting requirements, the Trust will not make such election. As a result
Certificate Owners might be allocated a greater or lesser amount of Trust income
than would be appropriate based on their own purchase price for Certificates.
ADMINISTRATIVE MATTERS
The Trustee is required to keep complete and accurate books of the Trust.
Such books will be maintained for financial reporting and tax purposes on an
accrual basis. The Trustee will file a partnership information return (Service
Form 1065) with the Service for each taxable year of the Trust and will report
each Certificate Owner's allocable share of items of Trust income and expense to
holders and the Service on Schedule K-1. The Trust will provide the Schedule K-1
information to nominees that fail to provide the Trust with the information
statement described below and such nominees will be required to forward such
information to the beneficial owners of the Certificates. Generally, holders
must file tax returns that are consistent with the information return filed by
the Trust or be subject to penalties, unless the holder notifies the Service of
all such inconsistencies.
Under Code Section 6031, any person that holds Certificates as a nominee at
any time during a calendar year is required to furnish the Trust with a
statement containing certain information on the nominee, the beneficial owners
and the Certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the
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nominee and (ii) as to each beneficial owner (x) the name, address and taxpayer
identification number of such person, (y) whether such person is not a United
States person, a tax-exempt entity, or a foreign government, an international
organization, or any wholly-owned agency or instrumentality of either of the
foregoing, and (z) certain information on Certificates that were held, bought or
sold on behalf of such person throughout the year. In addition, brokers and
financial institutions that hold Certificates through a nominee are required to
furnish directly to the Trust information as to themselves and their ownership
of Certificates. A clearing agency registered under Section 17A of the Exchange
Act is not required to furnish any such information statement to the Trust. The
information referred to above for any calendar year must be furnished to the
Trust on or before the following January 31. Nominees, brokers and financial
institutions that fail to provide the Trust with the information described above
may be subject to penalties.
The Depositor, as the tax matters partner, will be responsible for
representing the Certificate Owners in any dispute with the Service. The Code
provides for administrative examination of a partnership as if the partnership
were a separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the Trust by the appropriate taxing authorities could
result in an adjustment of the returns of the Certificate Owners and, under
certain circumstances, a Certificate Owner may be precluded from separately
litigating a proposed adjustment to the items of the Trust. An adjustment could
also result in an audit of a Certificate Owner's returns and adjustments of
items not related to the income (or loss) of the Trust.
TAX CONSEQUENCES TO FOREIGN CERTIFICATE OWNERS
It is not clear whether the Trust would be considered to be engaged in a
trade or business in the United States for purposes of Federal withholding taxes
with respect to non-U.S. persons because there is no clear authority dealing
with that issue under facts substantially similar to those described herein.
[Although it is not expected that the Trust would be engaged in a trade or
business in the United States for such purposes, the Trust expects to withhold
as if it were so engaged in order to protect the Trust from possible adverse
consequences of a failure to withhold. The Trust expects to withhold on the
portion of its taxable income that is allocable to foreign Certificate Owners
pursuant to Code Section 1446, as if such income were effectively connected to
U.S. trade or business, at a rate of 35% for foreign holders that are taxable as
corporations and 39.6% for all other foreign holders. Subsequent adoption of
Treasury regulations or the issuance of other administrative pronouncements may
require the Trust to change its withholding procedures. In determining a
holder's nonforeign status, the Trust may rely on Form W-8, Form W-9 or the
holder's certification of nonforeign status signed under penalties of perjury.]
[Each foreign holder might be required to file a U.S. individual or
corporate income tax return (including, in the case of a corporation, the branch
profits tax) on its share of the Trust's income. Each foreign holder must obtain
a taxpayer identification number from the Service and submit that number to the
Trust on Form W-8 in order to assure appropriate
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crediting of the taxes withheld. A foreign holder generally would be entitled to
file with the Service a claim for refund with respect to taxes withheld by the
Trust, taking the position that no taxes were due because the Trust was not
engaged in a U.S. trade or business. The Trust will cooperate in any such refund
claim if it can do so without incurring any out-of-pocket cost. No assurance can
be given as to whether any such refund claim would be granted.]
[The foregoing summary will be modified, as necessary, to reflect
differences caused by the precise nature of the Deposited Assets relating to a
given Series of Certificates.]
[STATE TAX CONSEQUENCES
[Describe any applicable state tax consequences that may arise, including
as a result of the specific nature of the Deposited Assets relating to a given
Series of Certificates or the degree of servicing required with respect to such
Deposited Assets.]]
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Code impose certain requirements on (a) an employee benefit
plan (as defined in Section 3(3) of ERISA), (b) a plan described in Section
4975(e)(i) of the Code or (c) any entity whose underlying assets include plan
assets by reason of a plan's investment in the entity (each, a "Plan").
Moreover, based on the reasoning of the United States Supreme Court's decision
in John Hancock Life Ins. Co. v. Harris Trust and Sav. Bank, 114 S.Ct. 517
(1993), an insurance company investing assets in its general account might be
treated as a Plan on the grounds that such an investor may be investing assets
of an employee benefit plan subject to ERISA.
In accordance with ERISA's general fiduciary standards, before investing in
a Certificate, a Plan fiduciary should determine whether such an investment is
permitted under the governing Plan instruments and its appropriate for the Plan
in view of its overall investment policy and the composition and diversification
of its portfolio. Other provisions of ERISA and the Code prohibit certain
transactions involving the assets of a Plan and persons who have certain
specified relationships to the Plan ("parties in interest" within the meaning of
ERISA or "disqualified persons" within the meaning of the Code). Thus, a Plan
fiduciary considering an investment in Certificates should also consider whether
such an investment might constitute or give rise to a prohibited transaction
under ERISA or the Code.
An investment in Certificates by a Plan might result in the assets of the
Trust being deemed to constitute Plan assets, which in turn might mean that
certain aspects of such investment, including the operation of the Trust, might
be prohibited transactions under ERISA and the Code. Neither ERISA nor the Code
defines the term "plan assets." Under Section 2510.3-101 of the United States
Department of Labor ("DOL") regulations (the
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"Regulation"), a Plan's assets may include an interest in the underlying assets
of an entity (such as a trust) for certain purposes, including the prohibited
transaction provisions of ERISA and the Code, if the Plan acquires an "equity
interest" in such entity. Thus, if a Plan acquired a Certificate of a particular
class, for certain purposes (including the prohibited transactions provisions)
the Plan would be considered to own its share of the underlying assets of the
Trust unless (1) such Certificate is a "publicly-offered security" or (2) equity
participation in such class by benefit plan investors is not "significant."
A publicly-offered security is a security that is (1) freely transferable,
(2) part of a class of securities that is owned by 100 or more investors
independent of the issuer and of one another at the conclusion of the initial
offering and (3) either is (A) part of a class of securities registered under
Section 12(b) or 12(g) of the Exchange Act, or (B) sold to the Plan as a part of
an offering of securities to the public pursuant to an effective registration
statement under the Securities Act and the class of securities of which such
security is a part is registered under the Exchange Act within 120 days (or such
later time as may be allowed by the Commission) after the end of the fiscal year
of the issuer during which the offering of such securities to the public
occurred. The Depositor does not anticipate that the Certificates of any class
will be considered publicly-offered securities within the meaning of the
Regulation.
Participation by benefit plan investors in any class of Certificates would
not be significant if immediately after the most recent acquisition of
Certificates of such class, whether or not from the Depositor or an Agent or
Underwriter, less than 25 percent of the value of such class were held by
benefit plan investors, which are defined as Plans and employee benefit plans
not subject to ERISA (for example, governmental plans). There can be no
assurance that less than 25 percent of the value of any given class of
Certificates will be held by benefit plan investors.
If assets of the Trust were deemed to be Plan assets, certain transactions
involving the Trust, including the acquisition of the Certificates themselves by
a Plan, could be prohibited transactions. If, for example, an obligor with
respect to any of the Deposited Assets, or any of such obligor's affiliates,
were a party in interest or disqualified person with respect to an acquiring
Plan, the acquisition of the Certificate could be construed as a prohibited
indirect loan from the Plan to the obligor. Any such prohibited transaction
could be treated as exempt under ERISA and the Code if the Certificates were
acquired pursuant to and in accordance with one or more "class exemptions"
issued by the DOL, such as Prohibited Transaction Class Exemptions ("PTCE")
84-14 (an exemption for certain transactions determined by an independent
qualified professional asset manager), PTCE 91-38 (an exemption for certain
transactions involving bank collective investment funds), PTCE 90-1 (an
exemption for certain transactions involving insurance company pooled separate
accounts) or PTCE 95-60 (an exemption for certain transactions involving
insurance company general accounts).
Certificates will not be sold to any Plan unless such Plan represents that
the acquisition of a Certificate would not be prohibited under ERISA and the
Code because an exemption is applicable to the acquisition and holding of the
Certificates and the activities of the Trust.
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To the extent an insurance company invests assets treated as assets of a Plan,
it will be required to make the foregoing representation as a condition to the
acquisition of a Certificate. Alternatively, if the Depositor is able to confirm
the existence of at least 100 independent purchasers of a class, the foregoing
representation will not be a condition to acquisition of Certificates of such
class.
Any Plan or insurance company investing assets of its general account
proposing to acquire Certificates should consult with its counsel.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting
Agreement, dated as of [ ], 199[ ] (the "Underwriting Agreement"), the
Depositor has agreed to sell and [Morgan Keegan & Company, Inc. (an affiliate of
the Depositor)] each of the Underwriters named below, including Morgan Keegan &
Company, Inc. (an affiliate of the Depositor)] (the "Underwriter[s]")[,] has
[severally] agreed to purchase, the [Certificates] [the principal amount of each
class of Certificates set forth below opposite its name].
<TABLE>
<CAPTION>
Class [ ] Class [ ] Class [ ]
<S> <C> <C> <C>
Morgan Keegan & Company, Inc. .. $ $ $
------------ ------------ ------------
Total...................... $ $ $
============ ============ ============
</TABLE>
[Morgan Keegan & Company, Inc. has] [The several Underwriters have] agreed,
subject to the terms and conditions set forth in the Underwriting Agreement, to
purchase all Certificates offered hereby if any of such Certificates are
purchased. [In the event of default by any Underwriter, the Underwriting
Agreement provides that, in certain circumstances, the purchase commitments of
non-defaulting Underwriters may be increased or the Underwriting Agreement may
be terminated.]
The Depositor has been advised by the Underwriter[s] that [it][they]
propose[s] to offer the Certificates from time to time in negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. The Underwriter[s] may effect such transactions by selling Certificates to
or through dealers and such dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Underwriter[s] and
any purchasers of Certificates for whom they may act as agents. The
Underwriter[s] and any dealers that participate with the Underwriter[s] in the
distribution of Certificates may be deemed to be underwriters, and any profit on
the resale of Certificates by them may be deemed to be underwriting discounts,
or commissions under the Securities Act.
[If and to the extent required by applicable law or regulation, this
Prospectus Supplement and the Prospectus will also be used by the Underwriter
after the completion of
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the offering in connection with offers and sales related to market-making
transactions in the Offered Certificates in which the Underwriter acts as
principal. The Underwriter may also act as agent in such transactions. Sales
will be made at negotiated prices determined at the time of sale.]
The Underwriting Agreement provides that the Depositor will indemnify the
Underwriter[s] against certain civil liabilities, including liabilities under
the Securities Act, or will contribute to payments the Underwriter[s] may be
required to make in respect thereof.
Morgan Keegan & Company, Inc. is an affiliate of the Depositor, and the
participation by Morgan Keegan & Company, Inc. in the offering of the
Certificates complies with Schedule E of the By-Laws of the National Association
of Securities Dealers, Inc. regarding underwriting securities of an affiliate.
RATINGS
It is a condition to the issuance of the Certificates that the Certificates
be rated not lower than [specify ratings applicable to each class] by [Standard
& Poor's Corporation ("Standard & Poor's")][Moody's Investors Service, Inc.
("Moody's")][Fitch Investors Service, L.P. ("Fitch")] [and] [Duff & Phelps
Credit Rating Company ("Duff & Phelps")](the "Rating [Agency][Agencies]"). The
ratings address the likelihood of the receipt by Certificateholders of payments
required under the Trust Agreement, and are based primarily on the credit
quality of the Deposited Assets and any providers of Credit Support, as well as
on the relative priorities of the Certificateholders of each class of the
Certificates with respect to collections and losses with respect to the
Deposited Assets. The rating on the Certificates does not, however, constitute a
statement regarding the occurrence or frequency of redemptions or prepayments
on, or extensions of the maturity of, the Deposited Assets, the corresponding
effect on yield to investors, or whether investors in the Class [ ] Certificates
[specify class with Notional Amount] may fail to recover fully their initial
investment.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning Rating
Agency. Each security rating should be evaluated independently of any other
security rating.
The Depositor has not requested a rating on the Certificates by any rating
agency other than the Rating [Agency] [Agencies]. However, there can be no
assurance as to whether any other rating agency will rate the Certificates, or,
if it does, what rating would be assigned by any such other rating agency. A
rating on the Certificates by another rating agency, if assigned at all, may be
lower than the ratings assigned to the Certificates by the Rating [Agency]
[Agencies].
S-46
<PAGE>
LEGAL OPINIONS
Certain legal matters relating to the Certificates will be passed upon for
the Depositor and the Underwriter[s] by Chapman and Cutler, Chicago, Illinois.
S-47
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
Term Page
<S> <C>
Act.............................................................. 37
Advance.......................................................... 25
allocated Purchase Price......................................... 32
Allowable Expense Amount......................................... 23
Available Funds.................................................. 23
Base Trust Agreement............................................. 6
Business Day..................................................... 12
Call Premium Percentage.......................................... 24
CEDE............................................................. 22
Certificate Owner................................................ 31
Certificates.....................................................1, 6, 10
Clearing Agency.................................................. 21
Closing Date..................................................... 10
Code............................................................. 30
Credit Support Payments.......................................... 23
Credit Support Providers......................................... 23
De Minimis Regulation............................................ 33
Definitive Classes............................................... 21
Deposited Assets................................................. 11
Depositor........................................................ 1, 9
Distribution Date................................................ 1
DOL.............................................................. 43
DTC.............................................................. 2, 7
Duff & Phelps.................................................... 46
Eligible Investments............................................. 24
ERISA............................................................ 13, 43
Event of Default................................................. 27
Expected Settlement Date......................................... 1
Federal Tax Counsel.............................................. 30
Final Distribution Date.......................................... 1
Fitch............................................................ 46
Foreign Certificate Owners....................................... 37
Indenture........................................................ 9, 17
Interest Strip................................................... 15, 24
Letter of Credit Bank............................................ 19
Liquidation Proceeds............................................. 25
Moody's.......................................................... 46
OID.............................................................. 31
Plan............................................................. 13, 43
Prospectus....................................................... 1
</TABLE>
S-48
<PAGE>
<TABLE>
<S> <C>
PTCE................................................................ 44
Rating [Agency][Agencies]........................................... 46
Realized Losses..................................................... 12
Redemption Price....................................................1, 25
Regulation.......................................................... 44
Required Interest................................................... 24
Required Premium.................................................... 24
Required Principal.................................................. 24
Retained Interest................................................... 18
Series Supplement................................................... 6
Service............................................................. 30
Special Distribution Date........................................... 12
Standard & Poor's................................................... 46
stripped interest................................................... 31
Superfund Tax....................................................... 36
Surety.............................................................. 20
Tax Act............................................................. 40
Trust............................................................... 1
Trust Agreement..................................................... 1, 6
Trustee............................................................. 1
Underlying Securities...............................................1, 18
Underwriter[s]...................................................... 45
Underwriting Agreement.............................................. 45
</TABLE>
S-49
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Subject to Completion Dated __________, 1996
PROSPECTUS
TRUST CERTIFICATES
(ISSUABLE IN SERIES)
SOUTHPOINT STRUCTURED ASSETS, INC.
DEPOSITOR
The Trust Certificates (the "Certificates") offered hereby and by
supplements (each a "Prospectus Supplement") to this Prospectus will be offered
from time to time in one or more series (each a "Series") and in one or more
classes within each such Series (each a "Class"). Certificates of each
respective Series and Class will be offered on terms to be determined at the
time of sale as described in the related Prospectus Supplement accompanying the
delivery of this Prospectus. Each Series and Class of Certificates will be
issuable as individual securities in registered form without coupons
("Registered Certificates") or as one or more global securities in registered
form (each a "Global Security").
Each Series of Certificates will represent in the aggregate the entire
beneficial ownership interest in a trust (the "Trust"), the assets of which will
consist primarily of a publicly issued, fixed income debt security or a pool of
such debt securities (the "Underlying Securities"), together with certain assets
described herein and in the related Prospectus Supplement (such assets, together
with the Underlying Securities, the "Deposited Assets"), to be deposited in
trust for the benefit of holders of Certificates of such Series
("Certificateholders") by Southpoint Structured Assets, Inc. (the "Depositor")
pursuant to a Trust Agreement and a series supplement thereto with respect to
any given Series (collectively, the "Trust Agreement") among the Depositor, the
administrative agent, if any (the "Administrative Agent") and the trustee (the
"Trustee") named in the related Prospectus Supplement. The Underlying Securities
will be purchased by the Depositor in the secondary market (either directly or
through an affiliate of the Depositor), and will not be acquired from the issuer
thereof as part of any distribution by or agreement with such issuer. The
Underlying Securities discussed herein and in the related Prospectus Supplement
represent the obligation of one or more corporations, banking organizations or
insurance companies organized under the laws of the United States or any State,
which are subject to the information requirements of the Securities Exchange Act
of 1934, as amended, and which, in accordance therewith, file reports and other
information with the Securities Exchange Commission. If so specified in the
related Prospectus Supplement, the Trust for a Series of Certificates may also
include, or the Certificateholders of such Certificates may have the benefit of,
any combination of insurance policies, letter of credit, reserve accounts and
other types of rights or assets designed to support or ensure the servicing nd
distribution of amounts due in respect of the Deposited Assets (collectively,
"Credit Support"). See "DESCRIPTION OF CERTIFICATES" and "DESCRIPTION OF
DEPOSITED ASSETS AND CREDIT SUPPORT."
Each Class of Certificates of any Series will represent the right, which
may be senior to those of one or more of the other Classes of such Series, to
receive specified portions of payments of principal, interest and certain other
amounts on the Deposited Assets in the manner described herein and in the
related Prospectus Supplement. A Series may include two or more Classes
differing as to the timing, sequential order or amount of distributions of
principal, interest or premium and one or more Classes within such Series may be
subordinated in certain respects to other Classes of such Series.
Except as otherwise provided herein and in the applicable Prospectus
Supplement, the Depositor's only obligations with respect to each Series of
Certificates will be, pursuant to certain representations and warranties
concerning the Deposited Assets, to assign and deliver the Deposited Assets and
certain related documents to the applicable Trustee and, in certain cases, to
provide for the Credit Support, if any. The principal obligations of an
Administrative Agent, if any is named in the applicable Prospectus Supplement,
with respect to a Series of Certificates will be pursuant to its contractual
administrative obligations and, only as and to the extent provided in the
related Prospectus Supplement, its obligation to make certain cash advances in
the event of payment delinquencies on the Deposited Assets. See "DESCRIPTION OF
THE CERTIFICATES--ADVANCES IN RESPECT OF DELINQUENCIES."
The Certificates of each Series will not represent an obligation of or
interest in the Depositor, any Administrative Agent or any of their respective
affiliates, except to the limited extent described herein and in the related
Prospectus Supplement. Neither the Certificates nor the Deposited Assets (unless
otherwise specified in such Prospectus Supplement) will be guaranteed or insured
by any governmental agency or instrumentality, or by the Depositor, any
Administrative Agent or their respective affiliates.
Prospective investors should consider the factors set forth herein under
"RISK FACTORS," beginning on page 1.
__________________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
__________________________________________
The Certificates may be offered and sold to or through underwriters,
through dealers or agents or directly to purchasers, as more fully described
under "Plan of Distribution" and in the related Prospectus Supplement. This
Prospectus may not be used to consummate sales of Certificates offered hereby
unless accompanied by a Prospectus Supplement.
THE DATE OF THIS PROSPECTUS IS __________, 1996
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a Series of Certificates to be
offered thereby and hereby will set forth, among other things, the following
with respect to such Series: (a) the specific designation and aggregate
principal amount, (b) the number of Classes of such Series and, with respect to
each Class of such Series, its designation, aggregate principal amount or, if
applicable, notional amount and authorized denominations, (c) certain
information concerning the type, characteristics and specifications of the
Deposited Assets and any Credit Support for such Series or Class, (d) the
relative rights and priorities of each such Class (including the method for
allocating collections from the Deposited Assets to the Certificateholders of
each Class and the relative ranking of the claims of the Certificateholders of
each Class to such Deposited Assets), (e) the name of the Trustee and the
Administrative Agent, if any, for such Series, (f) the Pass Through Rate (as
defined below) or the terms relating to the applicable method of calculation
thereof, (g) the time and place of distribution (each such date, a "Distribution
Date") of any interest, premium (if any) and/or principal, (h) the date of
issue, (i) the scheduled final Distribution Date, if applicable, (j) the
offering price, (k) any mandatory or optional redemption terms and any other
specific terms of Certificates of each such Series or Classes. See "DESCRIPTION
OF CERTIFICATES--GENERAL" for a listing of other items that may be specified in
the applicable Prospectus Supplement.
AVAILABLE INFORMATION
The Depositor is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports and other information concerning
the Depositor can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: New York
Regional Office, Seven World Trade Center, New York, New York 10048, and Chicago
Regional Office, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained upon written request addressed to the
Commission, Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Such material can also be accessed electronically by
means of the Commission home page on the Internet at http://www.sec.gov. The
Depositor does not intend to send any financial reports to Certificateholders.
The Depositor has filed with the Commission a registration statement on
Form S-3 (together with all amendments and exhibits, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the Certificates. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration Statement.
-2-
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
All documents filed by the Depositor pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Certificates shall be deemed to be
incorporated by reference in this Prospectus. Any statement contained herein or
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Depositor will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of any such person,
a copy of any or all of the documents incorporated herein by reference, except
the exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Written requests for such copies
should be directed to the President of Southpoint Structured Assets, Inc., at
its principal executive office located at 50 North Front Street, Memphis,
Tennessee 38103. Telephone requests for such copies should be directed to the
President of Southpoint Structured Assets, Inc. at (901) 524-4100.
REPORTS TO CERTIFICATEHOLDERS
Except as otherwise specified in the applicable Prospectus Supplement,
unless and until Definitive Certificates are issued, on each Distribution Date
unaudited reports containing information concerning the related Trust will be
prepared by the related Trustee and sent on behalf of each Trust only to Cede &
Co. ("Cede"), as nominee of DTC and registered holder of the Certificates. See
"DESCRIPTION OF CERTIFICATES--GLOBAL SECURITIES" and "DESCRIPTION OF THE TRUST
AGREEMENT--REPORTS TO CERTIFICATEHOLDERS; NOTICES." Such reports will not
constitute financial statements prepared in accordance with generally accepted
accounting principles.
-3-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Heading Page
<S> <C>
Prospectus Supplement......................................................... 2
Available Information......................................................... 2
Incorporation of Certain Information by Reference..............................3
Reports to Certificateholders..................................................3
Risk Factors...................................................................6
The Depositor..................................................................8
Use of Proceeds................................................................9
Formation of the Trust.........................................................9
Maturity and Yield Considerations.............................................10
Description of Certificates...................................................11
General....................................................................12
Distributions..............................................................14
Interest on the Certificates...............................................15
Principal of the Certificates..............................................23
Optional Redemption of Certificates........................................23
Global Securities..........................................................23
Description of Deposited Assets and Credit Support............................26
General....................................................................26
Underlying Securities Indenture............................................26
Principal Economic Terms of Underlying Securities..........................29
Publicly Available Information.............................................30
Other Deposited Assets.....................................................30
Credit Support.............................................................31
Collections................................................................33
</TABLE>
-4-
<PAGE>
Description of the Trust Agreement............................................34
General....................................................................34
Assignment of Deposited Assets.............................................34
Collection and Other Administrative Procedures.............................36
Retained Interest; Administrative Agent Compensation and Payment of
Expenses................................................................37
Advances in Respect of Delinquencies.......................................38
Certain Matters Regarding the Administrative Agent and the Depositor.......39
Administrative Agent Termination Events; Rights Upon Administrative
Agent Termination Event.................................................40
Modification and Waiver....................................................42
Reports to Certificateholders; Notices.....................................43
Evidence as to Compliance..................................................44
Replacement Certificates...................................................45
Termination................................................................45
Duties of the Trustee......................................................46
The Trustee................................................................46
Plan of Distribution..........................................................46
Legal Opinions................................................................48
-5-
<PAGE>
RISK FACTORS
Investors should consider, among other things, the following factors in
connection with the purchase of the Certificates:
Limited Liquidity. There will be no market for any Series (or Class within
such Series) of Certificates prior to the issuance thereof, and there can be no
assurance that a secondary market will develop or, if it does develop, that it
will provide Certificateholders with liquidity of investment or will continue
for the life of such Certificates.
Certain Legal Aspects. The applicable Prospectus Supplement may set forth
certain legal considerations that are applicable to a specific Series (or Class
or Classes within such Series) of Certificates being offered in connection with
that Prospectus Supplement or the assets deposited in or assigned to the related
Trust.
Limited Obligations and Interests of the Depositor or any of its
Affiliates. The Certificates will not represent a recourse obligation of or
interest in the Depositor or any of its affiliates. The Certificates of each
Series will not be insured or guaranteed by any government agency or
instrumentality, the Depositor, any Person affiliated with the Depositor or the
Issuer, or any other Person. The obligations, if any, of the Depositor with
respect to the Certificates of any Series will only be pursuant to certain
limited representations and warranties. The Depositor does not have, and is not
expected in the future to have, any significant assets with which to satisfy any
claims arising from a breach of any representation or warranty. If, for example,
the Depositor were required to repurchase a Underlying Security with respect to
which the Depositor has breached a representation or warranty, its only sources
of funds to make such repurchase would be from funds obtained from the
enforcement of a corresponding obligation, if any, on the part of the seller of
such Underlying Security to the Depositor, or from a reserve fund established to
provide funds for such repurchases. The Depositor has no obligation to establish
or maintain any such reserve fund.
Limited Assets. Although the Trust for any Series (or Class of such
Series) of Certificates may include, or the Certificateholders of such
Certificates may have the benefit of, certain assets which are designed to
support the payment upon, or otherwise ensure the servicing or distribution with
respect to, the Deposited Assets related to such Series or Class as described in
the related Prospectus Supplement, the Certificates do not represent obligations
of the Depositor, any Administrative Agent or any of their affiliates and,
unless otherwise specified in the applicable Prospectus Supplement, are not
insured or guaranteed by the Depositor, any Administrative Agent, any of their
affiliates or any other person or entity. Accordingly, Certificateholders'
receipt of distributions in respect of the Certificates will depend entirely on
the performance of and the Trust's receipt of payments with respect to the
Deposited Assets and any Credit Support identified in the related Prospectus
Supplement. See "Description of Deposited Assets and Credit Support."
-6-
<PAGE>
Credit Support Limitations. The Prospectus Supplement for a series of
Certificates will describe any Credit Support provided with respect thereto. Use
of Credit Support will be subject to the conditions and limitations described
herein and in the related Prospectus Supplement. Moreover, such Credit Support
may not cover all potential losses or risks.
The amount of any applicable Credit Support supporting one or more classes
of Offered Certificates, including the subordination of one or more classes of
Certificates, will be determined on the basis of criteria established by each
Rating Agency rating such classes of Certificates based on an assumed level of
defaults, delinquencies and losses on the Underlying Securities and certain
other factors. There can, however, be no assurance that the loss experience on
the related Underlying Securities will not exceed such assumed levels. See
"--Limited Nature of the Ratings of the Certificates", "Description of Deposited
Assets and Credit Support".
Maturity and Redemption Considerations. The timing of distributions of
interest, premium (if any) and principal of any Series (or of any Class within
such Series) of Certificates is affected by a number of factors, including the
performance of the related Deposited Assets, the extent of any early redemption,
repayment or extension of maturity with respect to the related Underlying
Securities (including acceleration resulting from any default or rescheduling
resulting from the bankruptcy or similar proceeding with respect to a Underlying
Securities Issuer) and the manner and priority in which collections from such
Underlying Securities and any other Deposited Assets are allocated to each Class
of such Series. Certain of these factors may be influenced by a variety of
accounting, tax, economic, social and other factors. The related Prospectus
Supplement will discuss any calls, puts or other redemption options, any
extension of maturity provisions and certain other terms applicable to such
Underlying Securities and any other Deposited Assets. See "Maturity and Yield
Considerations."
Tax Considerations. The Federal income tax consequences of the purchase,
ownership and disposition of the Certificates and the tax treatment of the Trust
will depend on the specific terms of the Certificates, the Trust, any Credit
Support and the Deposited Assets. See the description under "Federal Income Tax
Considerations" in the related Prospectus Supplement.
Limited Nature of the Ratings of the Certificates. At the time of issue,
the Certificates of any given Series (or each Class of such Series that is
offered hereby) will be rated in one of the investment grade categories
recognized by one or more nationally recognized rating agencies (a "Rating
Agency"). Unless otherwise specified in the applicable Prospectus Supplement,
the rating of any Series or Class of Certificates is based primarily on the
related Deposited Assets and any Credit Support and the relative priorities of
the Certificateholders of such Series or Class to receive collections from, and
to assert claims against, the Trust with respect to such Deposited Assets and
any Credit Support. The rating is not a recommendation to purchase, hold or sell
Certificates, inasmuch as such rating does not comment as to market price or
suitability for a particular investor. There can be no assurance that the rating
will remain for any given period of time or that the rating will not be lowered
or withdrawn entirely by the Rating Agency if in its judgment circumstances in
-7-
<PAGE>
the future so warrant. Any Class or Classes of a given Series of Certificates
may not be offered pursuant to this Prospectus, in which case such Class or
Classes may or may not be rated in an investment grade catergory by a Rating
Agency.
Global Securities. Unless otherwise specified in the related Prospectus
Supplement, the Certificates of each Series (or, if more than one Class exists,
each Class of such Series) will initially be represented by one or more Global
Securities deposited with, or on behalf of, a Depository (as defined below) and
will not be issued as individual definitive Certificates to the purchasers of
such Certificates. Consequently, unless and until such individual definitive
Certificates of a particular Series or Class are issued, such purchasers will
not be recognized as Certificateholders under the Trust Agreement. Hence, until
such time, such purchasers will only be able to exercise the rights of
Certificateholders indirectly through the Depository and its respective
participating organizations and, as a result, the ability of any such purchaser
to pledge that Certificate to persons or entities that do not participate in the
Depository's system, or to otherwise act with respect to such Certificate, may
be limited. See "DESCRIPTION OF CERTIFICATES--GLOBAL SECURITIES" and any further
description contained in the related Prospectus Supplement.
Passive Nature of the Trust. The Trustee with respect to any Series of
Certificates will hold the Deposited Assets for the benefit of the
Certificateholders. Each Trust will generally hold the related Deposited Assets
to maturity and not dispose of them, regardless of adverse events, financial or
otherwise, which may affect any Underlying Securities Issuer or the value of the
Deposited Assets. Under certain circumstances the holdeers of the Certificates
may direct the Trustee to dispose of the Underlying Securities or take certain
other actions in respect of the Deposited Assets.
The Prospectus Supplement for each Series of Certificates will set forth
information regarding additional risk factors, if any, applicable to such Series
(and each Class within such Series), including any risk factors applicable to
the specific Underlying Securities, other Deposited Assets, and where a
concentration of credit risk exists, the Underlying Securities Issuer.
THE DEPOSITOR
The Depositor is an indirect wholly-owned subsidiary of Morgan Keegan, Inc.
The Depositor was incorporated in the State of Delaware on July 30, 1996. The
Depositor was organized for the purpose of acquiring Underlying Securities and
issuing securities backed by such Underlying Securities. The Depositor
anticipates that it will in many cases have acquired Underlying Securities
indirectly through Morgan Keegan & Company, Inc., which is also an indirect
wholly-owned subsidiary of Morgan Keegan, Inc. The Depositor does not have, nor
is it expected in the future to have, any significant assets. The Certificates
do not represent an interest in or an obligation of the Depositor.
The Depositor maintains its principal office at 50 North Front Street,
Memphis, Tennessee 38103. Its telephone number is (901) 524-4100.
-8-
<PAGE>
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the net
proceeds to be received from the sale of each Series or Class of Certificates
(whether or not offered hereby) will be used by the Depositor to purchase the
related Deposited Assets and arrange certain Credit Support including, if
specified in the related Prospectus Supplement, making required deposits into
any reserve account or the applicable Certificate Account (as defined below) for
the benefit of the Certificateholders of such Series or Class. Any remaining net
proceeds, if any, will be used by the Depositor for general corporate purposes.
FORMATION OF THE TRUST
The Depositor will assign the Deposited Assets for each Series of
Certificates to the Trustee named in the applicable Prospectus Supplement, in
its capacity as Trustee, for the benefit of the Certificateholders of such
Series. See "DESCRIPTION OF THE TRUST AGREEMENT-ASSIGNMENT OF DEPOSITED ASSETS."
The Trustee named in the applicable Prospectus Supplement will administer the
Deposited Assets pursuant to the Trust Agreement and will receive a fee for such
services (the "Trustee's Fee"). Any Administrative Agent named in the applicable
Prospectus Supplement will perform such tasks as are specified therein and in
the Trust Agreement and will receive a fee for such services (the
"Administration Fee") as specified in the Prospectus Supplement. See
"DESCRIPTION OF THE TRUST AGREEMENT--COLLECTION AND OTHER ADMINISTRATIVE
PROCEDURES" and "--RETAINED INTEREST; ADMINISTRATIVE AGENT COMPENSATION AND
PAYMENT OF EXPENSES." The Trustee or an Administrative Agent, if applicable,
will either cause the assignment of the Deposited Assets to be recorded or will
obtain an opinion of counsel that no recordation is required to obtain a first
priority perfected security interest in such Deposited Assets.
Unless otherwise stated in the Prospectus Supplement, the Depositor's
assignment of the Deposited Assets to the Trustee will be without recourse. To
the extent provided in the applicable Prospectus Supplement, the obligations of
an Administrative Agent so named therein with respect to the Deposited Assets
will consist primarily of its contractual administrative obligations, if any,
under the Trust Agreement, its obligation, if any, to make certain cash advances
in the event of delinquencies in payments on or with respect to any Deposited
Assets in amounts described under "DESCRIPTION OF THE TRUST AGREEMENT--ADVANCES
IN RESPECT OF DELINQUENCIES," and its obligations, if any, to purchase Deposited
Assets as to which there has been a breach of certain representations and
warranties or as to which the documentation is materially defective. The
obligations of an Administrative Agent, if any, named in the applicable
Prospectus Supplement to make advances will be limited to amounts which any such
Administrative Agent believes ultimately would be recoverable under any Credit
Support, insurance coverage, the proceeds of liquidation of the Deposited Assets
or from other sources available for such purposes. See "DESCRIPTION OF THE TRUST
AGREEMENT--ADVANCES IN RESPECT OF DELINQUENCIES."
Unless otherwise provided in the related Prospectus Supplement, each Trust
will consist of (i) such Deposited Assets, or interests therein, exclusive of
any interest in such
-9-
<PAGE>
assets (the "Retained Interest") retained by the Depositor or any previous owner
thereof, as from time to time are specified in the Trust Agreement; (ii) such
assets as from time to time are identified as deposited in the related
Certificate Account; (iii) property, if any, acquired on behalf of
Certificateholders by foreclosure or repossession and any revenues received
thereon; (iv) those elements of Credit Support, if any, provided with respect to
any Class within such Series that are specified as being part of the related
Trust in the applicable Prospectus Supplement, as described therein and under
"DESCRIPTION OF DEPOSITED ASSETS AND CREDIT SUPPORT--CREDIT SUPPORT"; (v) the
rights of the Depositor under the agreement or agreements entered into by the
Trustee on behalf of the Certificateholders which constitute, or pursuant to
which the Trustee has acquired, such Deposited Assets; and (vi) the rights of
the Trustee in any cash advances, reserve fund or surety bond, if any, as
described under "DESCRIPTION OF THE TRUST AGREEMENT--ADVANCES IN RESPECT OF
DELINQUENCIES."
In addition, to the extent provided in the applicable Prospectus
Supplement, the Depositor will obtain Credit Support for the benefit of the
Certificateholders of any related Series (or Class within such Series) of
Certificates.
MATURITY AND YIELD CONSIDERATIONS
Each Prospectus Supplement will, to the extent applicable, contain
information with respect to the type and maturities of the related Underlying
Securities and the terms, if any, upon which such Underlying Securities may be
subject to early redemption (either by the applicable obligor or pursuant to a
third-party call option), repayment (at the option of the holders thereof) or
extension of maturity. The provisions of the Underlying Securities with respect
to the foregoing will, unless otherwise specified in the applicable Prospectus
Supplement, affect the weighted average life of the related Series of
Certificates.
The effective yield to holders of the Certificates of any Series (and Class
within such Series) may be affected by certain aspects of the Deposited Assets
or any Credit Support or the manner and priorities of allocations of collections
with respect to such Deposited Assets between the Classes of a given Series.
With respect to any Series of Certificates the Underlying Securities of which
consist of one or more redeemable securities, extendable securities or
securities subject to a third-party call option, the yield to maturity of such
Series (or Class within such Series) may be affected by any optional or
mandatory redemption or repayment or extension of the related Underlying
Securities prior to the stated maturity thereof. A variety of tax, accounting,
economic, and other factors will influence whether a corporate issuer exercises
any right of redemption in respect of its securities. All else remaining equal,
if prevailing interest rates fall significantly below the interest rates on the
related Underlying Securities, the likelihood of redemption would be expected to
increase. There can be no certainty as to whether any Underlying Security
redeemable at the option of the Underlying Security Issuer will be repaid prior
to its stated maturity.
Unless otherwise specified in the related Prospectus Supplement, each of
the Underlying Securities will be subject to acceleration upon the occurrence of
certain
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Underlying Security Events of Default (as defined below). The maturity
and yield on the Certificates will be affected by any early repayment of the
Underlying Securities as a result of the acceleration of the Outstanding Debt
Securities by the holders thereof. See "DESCRIPTION OF THE DEPOSITED
ASSETS-UNDERLYING SECURITIES INDENTURE." If a Underlying Securities Issuer
becomes subject to a bankruptcy proceeding, the timing and amount of payments
with respect to both interest and principal may be materially and adversely
affected. A variety of factors influence the performance of private debt
issuers and correspondingly may affect a Underlying Securities Issuer's ability
to satisfy its obligations under the Underlying Securities, including the
company's operating and financial condition, leverage, and social, geographic,
legal and economic factors.
The extent to which the yield to maturity of such Certificates may vary
from the anticipated yield due to the rate and timing of payments on the
Deposited Assets will depend upon the degree to which they are purchased at a
discount or premium and the degree to which the timing of payments thereon is
sensitive to the rate and timing of payments on the Deposited Assets.
The yield to maturity of any Series (or Class) of Certificates will also be
affected by variations in the interest rates applicable to, and the
corresponding payments in respect of, such Certificates, to the extent that the
Pass-Through Rate for such Series (or Class) is based on variable or adjustable
interest rates. With respect to any Series of Certificates representing an
interest in a pool of corporate debt securities, disproportionate principal
payments (whether resulting from differences in amortization schedules, payments
due on scheduled maturity or upon early redemption) on the related Underlying
Securities having interest rates higher or lower than the then applicable Pass-
Through Rates applicable to such Certificates may affect the yield thereon.
Additionally, if the Certificates are subject to optional redemption, and
such right to cause an optional redemption of the Certificates is exercised, the
Certificates will have a shorter maturity than if such right were not exercised.
Furthermore, such right is likely to be exercised, if at all, at a time when the
market value of the Underlying Securities has increased due to a declining
interest rate environment. In such an environment, the interest rates available
on potential reinvestment can be expected to be lower than the return that would
have been earned over the remaining life of the Certificates if they had not
been called.
The Prospectus Supplement for each Series of Certificates will set forth
additional information regarding yield and maturity considerations applicable to
such Series (and each Class within such Series) and the related Deposited
Assets, including the applicable Underlying Securities.
DESCRIPTION OF CERTIFICATES
Each Series (or, if more than one Class exists, the Classes within such
Series) of Certificates will be issued pursuant to a Trust Agreement and a
separate series supplement thereto among the Depositor, the Administrative
Agent, if any, and the Trustee named in the
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related Prospectus Supplement, a form of which Trust Agreement is attached as an
exhibit to the Registration Statement. The provisions of the Trust Agreement (as
so supplemented) may vary depending upon the nature of the Certificates to be
issued thereunder and the nature of the Deposited Assets, Credit Support and
related Trust. The following summaries describe certain provisions of the Trust
Agreement which may be applicable to each Series of Certificates. The applicable
Prospectus Supplement for a Series of Certificates will describe any provision
of the Trust Agreement that materially differs from the description thereof
contained in this Prospectus. The following summaries do not purport to be
complete and are subject to the detailed provisions of the form of Trust
Agreement to which reference is hereby made for a full description of such
provisions, including the definition of certain terms used, and for other
information regarding the Certificates. Wherever particular sections or defined
terms of the Trust Agreement are referred to, such sections or defined terms are
incorporated herein by reference as part of the statement made, and the
statement is qualified in its entirety by such reference. As used herein with
respect to any Series, the term "Certificate" refers to all the Certificates of
that Series, whether or not offered hereby and by the related Prospectus
Supplement, unless the context otherwise requires.
A copy of the applicable series supplement to the Trust Agreement relating
to each Series of Certificates issued from time to time will be filed by the
Depositor as an exhibit to a Current Report on Form 8K to be filed with the
Commission following the issuance of such Series.
GENERAL
There is no limit on the amount of Certificates that may be issued under
the Trust Agreement, and the Trust Agreement will provide that Certificates of
the applicable Series may be issued in multiple Classes. The Series (or Classes
within such Series) of Certificates to be issued under the Trust Agreement will
represent the entire beneficial ownership interest in the Trust for such Series
created pursuant to the Trust Agreement and each such Class will be allocated
certain relative priorities to receive specified collections from, and a certain
percentage ownership interest of the assets deposited in, such Trust, all as
identified and described in the applicable Prospectus Supplement. See
"DESCRIPTION OF DEPOSITED ASSETS AND CREDIT SUPPORT - COLLECTIONS."
Reference is made to the related Prospectus Supplement for a description of
the following terms of the Series (and, if applicable, Classes within such
Series) of Certificates in respect of which this Prospectus and such Prospectus
Supplement are being delivered: (i) the title of such Certificates; (ii) the
Series of such Certificates and, if applicable, the number and designation of
Classes of such Series; (iii) certain information concerning the type,
characteristics and specifications of the Deposited Assets being deposited into
the related Trust by the Depositor (and, with respect to any Underlying Security
which at the time of such deposit represents a significant portion of all such
Deposited Assets and any related Credit Support, certain information concerning
the terms of each such Underlying Security, the identity of the issuer thereof
and where publicly available information regarding such issuer may be obtained);
(iv) the limit, if any, upon the aggregate principal
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amount or notional amount, as applicable, of each Class thereof; (v) the dates
on which or periods during which such Series or Classes within such Series may
be issued (each, an "Original Issue Date"), the offering price thereof and the
applicable Distribution Dates on which the principal, if any, of (and premium,
if any, on) such Series or Classes within such Series will be distributable;
(vi) if applicable, the relative rights and priorities of each such Class
(including the method for allocating collections from and defaults or losses on
the Deposited Assets to the Certificateholders of each such Class); (vii)
whether the Certificates of such Series or each Class within such Series are
Fixed Rate Certificates or Floating Rate Certificates (each as defined below)
and the applicable interest rate (the "Pass-Through Rate") for each such Class
including the applicable rate, if fixed (a "Fixed Pass-Through Rate"), or the
terms relating to the particular method of calculation thereof applicable to
such Series or each Class within such Series, if variable (a "Variable
Pass-Through Rate"); the date or dates from which such interest will accrue; the
applicable Distribution Dates on which interest, principal and premium, in each
case as applicable, on such Series or Class will be distributable and the
related Record Dates, if any; (viii) the option, if any, of the Depositor or
Administrative Agent, if any, or another third party to purchase or repurchase
any Deposited Assets (in each case to the extent not inconsistent with the
Depositor's continued satisfaction of the applicable requirements for exemption
under Rule 3a-7 under the Investment Company Act of 1940 and all applicable
rules, regulations and interpretations thereunder) and the periods within which
or the dates on which, and the terms and conditions upon which any such option
may be exercised, in whole or in part; (ix) the rating of each Series or each
Class within such Series offered hereby (provided, however, that one or more
Classes within such Series not offered hereunder may be unrated or may be rated
below investment grade); (x) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which such Series or Class
within such Series will be issuable; (xi) whether the Certificates of any Class
within a given Series are to be entitled to (1) principal distributions, with
disproportionate, nominal or no interest distributions, or (2) interest
distributions, with disproportionate, nominal or no principal distributions
("Strip Certificates"), and the applicable terms thereof; (xii) whether the
Certificates of such Series or any Class within such series are to be issued in
the form of one or more Global Securities and, if so, the identity of the
Depository (as defined below), if other than The Depository Trust Company, for
such Global Security or Securities; (xiii) if a temporary Certificate is to be
issued with respect to such Series or any Class within such Series, whether any
interest thereon distributable on a Distribution Date prior to the issuance of a
definitive Certificate of such Series or Class will be credited to the account
of the Persons entitled thereto on such Distribution Date; (xiv) if a temporary
Global Security is to be issued with respect to such Series or Class, the terms
upon which beneficial interests in such temporary Global Security may be
exchanged in whole or in part for beneficial interests in a definitive Global
Security or for individual Definitive Certificates (as defined below) of such
Series or Class and the terms upon which beneficial interests in a definitive
Global Security, if any, may be exchanged for individual Definitive Certificates
of such Series or Class; (xv) if any additional Administrative Agent Termination
Events (as defined below), if applicable, provided for with respect to such
Class; (xvi) all applicable Required Percentages and Voting Rights (each as
defined below) relating to the manner and percentage of votes of
Certificateholders of such Series and each Class within such Series required
with respect to certain actions by the Depositor or the applicable
Administrative
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Agent, if any, or Trustee under the Trust Agreement or with respect to the
applicable Trust; and (xvii) any other terms of such Series or Class within such
Series of Certificates not inconsistent with the provisions of the Trust
Agreement relating to such Series.
Unless otherwise indicated in the applicable Prospectus Supplement,
Certificates of each Series (including any Class of Certificates not offered
hereby) will be issued only as Registered Certificates in denominations of
$1,000 and any integral multiple thereof and will be payable only in U.S.
dollars.
The United States Federal income tax consequences and ERISA consequences
relating to any Series or any Class within such Series of Certificates will be
described in the applicable Prospectus Supplement.
Unless otherwise provided in the applicable Prospectus Supplement,
Registered Certificates may be transferred or exchanged for like Certificates of
the same Series and Class at the corporate trust office or agency of the
applicable Trustee, subject to the limitations provided in the Trust Agreement,
without the payment of any service charge, other than any tax or governmental
charge payable in connection therewith. The Depositor may at any time purchase
Certificates at any price in the open market or otherwise. Certificates so
purchased by the Depositor may, at the discretion of the Depositor, be held or
resold or surrendered to the Trustee for cancellation of such Certificates.
DISTRIBUTIONS
Distributions allocable to principal, premium (if any) and interest on the
Certificates of each Series (and Class within such Series) will be made for such
Certificates by or on behalf of the Trustee on each Distribution Date as
specified in the related Prospectus Supplement and the amount of each
distribution will be determined as of the close of business on the date
specified in the related Prospectus Supplement (the "Determination Date").
Unless otherwise provided in the applicable Prospectus Supplement and
except as provided in the succeeding paragraph, distributions with respect to
Certificates will be made at the corporate trust office or agency of the Trustee
specified in the applicable Prospectus Supplement; provided, however, that any
such amounts distributable on the final Distribution Date of a Certificate will
be distributed only upon surrender of such Certificate at the applicable
location set forth above.
Unless otherwise specified in the applicable Prospectus Supplement,
distributions on Registered Certificates in U.S. dollars will be made, except as
provided below, by check mailed to the Registered Certificateholders of such
Certificates (which, in the case of Global Securities, will be a nominee of the
Depository); provided, however, that, in the case of a Series or Class of
Registered Certificates issued between a Record Date (as defined below) and the
related Distribution Dates, interest for the period beginning on the issue date
for such Series or Class and ending on the last day of the interest accrual
period ending immediately prior to or coincident with such Distribution Date
will, unless otherwise
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specified in the applicable Prospectus Supplement, be distributed on the next
succeeding Distribution Date to the Registered Certificateholders of the
Registered Certificates of such Series or Class on the related Record Date. A
Certificateholder of $10,000,000 or more in aggregate principal amount of
Registered Certificates of a given Series shall be entitled to receive such U.S.
dollar distributions by wire transfer of immediately available funds, but only
if appropriate wire transfer instructions have been received in writing by the
Trustee for such Series not later than fifteen calendar days prior to the
applicable Distribution Date. A Certificateholder shall provide appropriate
wire transfer instructions to the Trustee for such Series, and all such payments
will be made by wire transfer of immediately available funds to an account
maintained by the payee with a bank located outside the United States.
Except as otherwise specified in the applicable Prospectus Supplement,
"Business Day" with respect to any Certificate means any day, other than a
Saturday or Sunday, that is (i) not a day on which banking institutions are
authorized or required by law or regulation to be closed in The City of New York
and (ii) if the Pass-Through Rate for such Certificate is based on LIBOR, a
London Banking Day. "London Banking Day" with respect to any Certificate means
any day on which dealings in U.S. dollars are transacted in the London interbank
market. The Record Date with respect to any Distribution Date for a Series or
Class of Registered Certificates shall be specified as such in the applicable
Prospectus Supplement.
Interest on the Certificates
General. Each Class of Certificates (other than certain Classes of Strip
Certificates) of a given Series may have a different Pass-Through Rate, which
may be a fixed or variable Pass-Through Rate, as described below. In the case of
Strip Certificates with no or, in certain cases, a nominal Certificate Principal
Balance, such distributions of interest will be in an amount (as to any
Distribution Date, "Stripped Interest") described in the related Prospectus
Supplement. For purposes hereof, "Notional Amount" means the notional principal
amount specified in the applicable Prospectus Supplement on which interest on
Strip Certificates with no or, in certain cases, a nominal Certificate
Principal Balance will be made on each Distribution Date. Reference to the
Notional Amount of a Class of Strip Certificates herein or in a Prospectus
Supplement does not indicate that such Certificates represent the right to
receive any distribution in respect of principal in such amount, but rather the
term "Notional Amount" is used solely as a basis for calculating the amount of
required distributions and determining certain relative voting rights, all as
specified in the related Prospectus Supplement.
Fixed Rate Certificates. Each Series (or, if more than one Class exists,
each Class within such Series) of Certificates with a fixed Pass-Through Rate
("Fixed Rate Certificates") will bear interest, on the outstanding Certificate
Principal Balance (or Notional Amount, if applicable), from its Original Issue
Date, or from the last date to which interest has been paid, at the fixed Pass-
Through Rate stated on the face thereof and in the applicable Prospectus
Supplement until the principal amount thereof is distributed or made available
for repayment (or in the case of Fixed Rate Certificates with no or a nominal
principal amount, until the Notional Amount thereof is reduced to zero), except
that, if so
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<PAGE>
specified in the applicable Prospectus Supplement, the Pass-Through Rate for
such Series or any such Class or Classes may be subject to adjustment from time
to time in response to designated changes in the rating assigned to such
Certificates by one or more rating agencies, in accordance with a schedule or
otherwise, all as described in such Prospectus Supplement. Unless otherwise set
forth in the applicable Prospectus Supplement, interest on each Series or Class
of Fixed Rate Certificates will be distributable in arrears on each Distribution
Date specified in such Prospectus Supplement. Each such distribution of interest
shall include interest accrued through the day specified in the applicable
Prospectus Supplement. Unless otherwise specified in the applicable Prospectus
Supplement, interest on Fixed Rate Certificates will be computed on the basis
of a 360-day year of twelve 30-day months.
Floating Rate Certificates. Each Series (or, if more than one Class exists,
each Class within such Series) of Certificates with a variable Pass-Through Rate
("Floating Rate Certificates") will bear interest, on the outstanding
Certificate Principal Balance (or Notional Amount, if applicable), from its
Original Issue Date to the first Interest Reset Date (as defined below) for such
Series or Class at the Initial Pass-Through Rate set forth on the face thereof
and in the applicable Prospectus Supplement. Thereafter, the Pass-Through Rate
on such Series or Class for each Interest Reset Period (as defined below) will
be determined by reference to an interest rate basis (the "Base Rate"), plus or
minus the Spread, if any, or multiplied by the Spread Multiplier, if any. The
"Spread" is the number of basis points (one basis point equals one one-hundreth
of a percentage point) that may be specified in the applicable Prospectus
Supplement as being applicable to such Series or Class, and the "Spread
Multiplier" is the percentage that may be specified in the applicable Prospectus
Supplement as being applicable to such Series or Class, except that if so
specified in the applicable Prospectus Supplement, the Spread or Spread
Multiplier on such Series or any such Class or Classes of Floating Rate
Certificates may be subject to adjustment from time to time in response to
designated changes in the rating assigned to such Certificates by one or more
rating agencies, in accordance with a schedule or otherwise, all as described in
such Prospectus Supplement. The applicable Prospectus Supplement, unless
otherwise specified therein, will designate one of the following Base Rates as
applicable to a Floating Rate Certificate: (i) LIBOR (a "LIBOR Certificate"),
(ii) the Commercial Paper Rate (a "Commercial Paper Rate Certificate"), (iii)
the Treasury Rate (a "Treasury Rate Certificate"), (iv) the Federal Funds Rate
(a "Federal Funds Rate Certificate"), (v) the CD Rate (a "CD Rate Certificate")
or (vi) such other Base Rate (which may be based on, among other things, one or
more market indices or the interest and/or other payments (whether scheduled or
otherwise) paid, accrued or available with respect to a designated asset, pool
of assets or type of asset) as is set forth in such Prospectus Supplement and in
such Certificate. The "Index Maturity" for any Series or Class of Floating Rate
Certificates is the period of maturity of the instrument or obligation from
which the Base Rate is calculated. "H.15(519)" means the publication entitled
"Statistical Release H.15(519), Selected Interest Rates," or any successor
publication, published by the Board of Governors of the Federal Reserve System.
"Composite Quotations" means the daily statistical release entitled "Composite
3:30 p.m. Quotations for U.S Government Securities" published by the Federal
Reserve Bank of New York.
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<PAGE>
As specified in the applicable Prospectus Supplement, Floating Rate
Certificates of a given Series or Class may also have either or both of the
following (in each case expressed as a rate per annum on a simple interest
basis): (i) a maximum limitation, or ceiling, on the rate at which interest may
accrue during any interest accrual period specified in the applicable Prospectus
Supplement ("Maximum Pass-Through Rate") and (ii) a minimum limitation, or
floor, on the rate at which interest may accrue during any such interest accrual
period ("Minimum Pass-Through Rate"). In addition to any Maximum Pass-Through
Rate that may be applicable to any Series or Class of Floating Rate
Certificates, the Pass-Through Rate applicable to any Series or Class of
Floating Rate Certificates will in no event be higher than the maximum rate
permitted by applicable law, as the same may be modified by United States law of
general application.
The Depositor will appoint, and enter into agreements with, agents (each a
"Calculation Agent") to calculate Pass-Through Rates on each Series or Class of
Floating Rate Certificates. The applicable Prospectus Supplement will set forth
the identity of the Calculation Agent for each Series or Class of Floating Rate
Certificates. All determinations of interest by the Calculation Agent shall, in
the absence of manifest error, be conclusive for all purposes and binding on the
holders of Floating Rate Certificates of a given Series or Class.
The Pass-Through Rate on each Class of Floating Rate Certificates will be
reset daily, weekly, monthly, quarterly, semiannually or annually (such period
being the "Interest Reset Period" for such Class, and the first day of each
Interest Reset Period being an "Interest Reset Date"), as specified in the
applicable Prospectus Supplement. Interest Reset Dates with respect to each
Series, and any Class within such Series of Floating Rate Certificates, will be
specified in the applicable Prospectus Supplement; provided, however, that
unless otherwise specified in such Prospectus Supplement, the Pass-Through Rate
in effect for the ten days immediately prior to the Scheduled Final Distribution
Date will be that in effect on the tenth day preceding such Scheduled Final
Distribution Date. If an Interest Reset Date for any Class of Floating Rate
Certificates would otherwise be a day that is not a Business Day, such Interest
Reset Date will occur on a prior or succeeding Business Day, specified in the
applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement,
interest payable in respect of Floating Rate Certificates shall be the accrued
interest from and including the Original Issue Date of such Series or Class or
the last Interest Reset Date to which interest has accrued and been distributed,
as the case may be, to but excluding the immediately following Distribution
Date.
With respect to a Floating Rate Certificate, accrued interest shall be
calculated by multiplying the Certificate Principal Balance of such Certificate
(or, in the case of a Strip Certificate with no or a nominal Certificate
Principal Balance, the Notional Amount specified in the applicable Prospectus
Supplement) by an accrued interest factor. Such accrued interest factor will be
computed by adding the interest factors calculated for each day in the period
for which accrued interest is being calculated. Unless otherwise specified in
the applicable Prospectus Supplement, the interest factor (expressed as a
decimal
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calculated to seven decimal places without rounding) for each such day is
computed by dividing the Pass-Through Rate in effect on such day by 360, in the
case of LIBOR Certificates, Commercial Paper Rate Certificates, Federal Funds
Rate Certificates and CD Rate Certificates or by the actual number of days in
the year, in the case of Treasury Rate Certificates. For purposes of making the
foregoing calculation, the variable Pass-Through Rate in effect on any Interest
Reset Date will be the applicable rate as reset on such date.
Unless otherwise specified in the applicable Prospectus Supplement, all
percentages resulting from any calculation of the Pass-Through Rate on a
Floating Rate Certificate will be rounded, if necessary, to the nearest
1/100,000 of 1% (.0000001), with five one-millionths of a percentage point
rounded upward, and all currency amounts used in or resulting from such
calculation on Floating Rate Certificates will be rounded to the nearest
one-hundreth of a unit (with .005 of a unit being rounded upward).
Interest on any Series (or Class within such Series) of Floating Rate
Certificates will be distributable on the Distribution Dates and for the
interest accrual periods as and to the extent set forth in the applicable
Prospectus Supplement.
Upon the request of the holder of any Floating Rate Certificate of a given
Series or Class, the Calculation Agent for such Series or Class will provide the
Pass-Through Rate then in effect and, if determined, the Pass-Through Rate
that will become effective on the next Interest Reset Date with respect to such
Floating Rate Certificate.
(1) CD Rate Certificates. Each CD Rate Certificate will bear interest for
each Interest Reset Period at the Pass-Through Rate calculated with reference to
the CD Rate and the Spread or Spread Multiplier, if any, specified in such
Certificate and in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the "CD
Rate" for each Interest Reset Rate Period shall be the rate as of the second
Business Day prior to the Interest Reset Date for such Interest Reset Period (a
"CD Rate Determination Date") for negotiable certificates of deposit having the
Index Maturity designated in the applicable Prospectus Supplement as published
in H.15(519) under the heading "CDs (Secondary Market)." In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined below) pertaining to such CD Rate Determination Date, then the
"CD Rate" for such Interest Reset Period will be the rate on such CD Rate
Determination Date for negotiable certificates of deposit of the Index Maturity
designated in the applicable Prospectus Supplement as published in Composite
Quotations under the heading "Certificates of Deposit." If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the "CD Rate" for such Interest
Reset Period will be calculated by the Calculation Agent for such CD Rate
Certificate and will be the arithmetic mean of the secondary market offered
rates as of 10:00 a.m., New York City time, on such CD Rate Determination Date,
of three leading nonbank dealers in negotiable U.S. dollar certificates of
deposit in The City of New York selected by the Calculation Agent for such CD
Rate Certificate for negotiable certificates of deposit of major United States
money center banks of the highest credit
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standing (in the market for negotiable certificates of deposit) with a remaining
maturity closest to the Index Maturity designated in the related Prospectus
Supplement in a denomination of $5,000,000; provided, however, that if the
dealers selected as aforesaid by such Calculation Agent are not quoting offered
rates as mentioned in this sentence, the "CD Rate" for such Interest Reset
Period will be the same as the CD Rate for the immediately preceding Interest
Reset Period (or, if there was no such Interest Reset Period, the Initial Pass-
Through Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date shall
be the first to occur of (a) the tenth calendar day after such CD Rate
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day or (b) the second Business Day preceding the date any distribution
of interest is required to be made following the applicable Interest Reset Date.
(2) Commercial Paper Rate Certificates. Each Commercial Paper Rate
Certificate will bear interest for each Interest Reset Period at the Pass-
Through Rate calculated with reference to the Commercial Paper Rate and the
Spread or Spread Multiplier, if any, specified in such Certificate and in the
applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent for such Commercial Paper Rate Certificate as of the second
Business Day prior to the Interest Reset Date for such Interest Reset Period (a
"Commercial Paper Rate Determination Date") and shall be the Money Market Yield
(as defined below) on such Commercial Paper Rate Determination Date of the rate
for commercial paper having the Index Maturity specified in the applicable
Prospectus Supplement, as such rate shall be published in H.15d(519) under the
heading "Commercial Paper." In the event that such rate is not published prior
to 3:00 p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money Market
Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotation under the heading "Commercial Paper." If by 3:00 p.m., New York City
time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotation, then the "Commercial Paper Rate" for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent for such Commercial Paper
Rate Certificate for commercial paper of the specified Index Maturity placed for
an industrial issuer whose bonds are rated "AA" or the equivalent by a
nationally recognized rating agency; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting offered rates
as mentioned in this sentence, the "Commercial Paper Rate" for such Interest
Reset Period will be the same as the Commercial Paper Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Pass-Through Rate).
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"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
Money Market Yield = D X 360 X 100
-------------
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the first to occur of (a) the tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
Business Day, the next succeeding Business Day or (b) the second Business Day
preceding the date any distribution of interest is required to be made following
the applicable Interest Reset Date.
(3) Federal Funds Rate Certificates. Each Federal Funds Rate Certificate
will bear interest for each Interest Reset Period at the Pass-Through Rate
calculated with reference to the Federal Funds Rate and the Spread or Spread
Multiplier, if any, specified in such Certificate and in the applicable
Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Federal Funds Rate" for each Interest Reset Period shall be the effective rate
on the Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate
Determination Date") for Federal Funds as published in H.15(519) under the
heading "Federal Funds (Effective)." In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Federal Funds Rate Determination Date, the
"Federal Funds Rate" for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date as published in Composite quotations under
the heading "Federal Funds/Effective Rate." If by 3:00 p.m., New York City time,
on such Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the "Federal Funds Rate" for such Interest Reset
Period shall be the rate on such Federal Funds Rate Determination Date made
publicly available by the Federal Reserve Bank of New York which is equivalent
to the rate which appears in H.15 (519) under the heading "Federal Funds
(Effective)"; provided, however, that if such rate is not made publicly
available by the Federal Reserve Bank of New York by 3:00 p.m., New York City
time, on such Calculation Date, the "Federal Funds Rate" for such Interest Reset
Period will be the same as the Federal Funds Rate in effect for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Pass-Through Rate). Unless otherwise specified in the applicable
Prospectus Supplement, in the case of a Federal Funds Rate Certificate that
resets daily, the Pass-Through Rate on such Certificate for the period from and
including a Monday to but excluding the succeeding Monday will be reset by the
Calculation Agent for such Certificate on such second Monday (or, if not a
Business Day, on the next succeeding Business Day) to a rate equal to the
average of the Federal Funds Rates in effect with respect to each such day in
such week.
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The "Calculation Date" pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding Business Day.
(4) LIBOR Certificates. Each LIBOR Certificate will bear interest for each
Interest Reset Period at the Pass-Through Rate calculated with reference to
LIBOR and the Spread or Spread Multiplier, if any, specified in such Certificate
and in the applicable Prospectus Supplement.
With respect to LIBOR indexed to the offered rates for U.S. dollar
deposits, unless otherwise specified in the applicable Prospectus Supplement,
"LIBOR" for each Interest Reset Period will be determined by the Calculation
Agent for any LIBOR Certificate as follows:
(i) On the second London Banking Day prior to the Interest Reset Date
for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Certificate will determine the arithmetic
mean of the offered rates for deposits in U.S. dollars for the period of
the Index Maturity specified in the applicable Prospectus Supplement,
commencing on such Interest Reset Date, which appear on the Reuters Screen
LIBO Page at approximately 11:00 a.m., London time, on such LIBOR
Determination Date. "Reuters Screen LIBO Page" means the display
designated as page "LIBOR" on the Reuters Monitor Money Rates Service (or
such other page may replace the LIBO page on that service for the purpose
of displaying London interbank offered rates of major banks). If at least
two such offered rates appear on the Reuters Screen LIBO Page, "LIBOR" for
such Interest Reset Period will be the arithmetic mean of such offered
rates as determined by the Calculation Agent for such LIBOR Certificate.
(ii) If fewer than two offered rates appear on the Reuters Screen
LIBO Page on such LIBOR Determination Date, the Calculation Agent for such
LIBOR Certificate will request the principal London offices of each of four
major banks in the London interbank market selected by such Calculation
Agent to provide such Calculation Agent with its offered quotations for
deposits in U.S. dollars for the period of the specified Index Maturity,
commencing on such Interest Reset Date, to prime banks in the London
interbank market at approximately 11:00 a.m., London time, on such LIBOR
Determination Date and in a principal amount equal to an amount of not less
than $1,000,000 that is representative of a single transaction in such
market at such time. If at least two such quotations are provided, "LIBOR"
for such Interest Reset Period will be the arithmetic mean of such
quotations. If fewer than two such quotations are provided, "LIBOR" for
such Interest Reset Period will be the arithmetic mean of rates quoted by
three major banks in The City of New York selected by the Calculation Agent
for such LIBOR Certificate at approximately 11:00 a.m., New York City time,
on such LIBOR Determination Date for loans in U.S. dollars to leading
European banks, for the period of the specified Index Maturity, commencing
on such Interest Reset Date, and in a principal amount equal to an amount
of not less than $1,000,000 that is representative of a single transaction
in such market at such time; provided, however, that if fewer than three
banks selected as
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aforesaid by such Calculation Agent are quoting rates as mentioned in this
sentence, "LIBOR" for such Interest Reset Period will be the same as LIBOR
for the immediately preceding Interest Reset Period (or, if there was no
such Interest Reset Period, the Initial Pass-Through Rate).
(5) Treasury Rate Certificates. Each Treasury Rate Certificate will bear
interest for each Interest Reset Period at the Pass-Through Rate calculated with
reference to the Treasury Rate and the Spread or Spread Multiplier, if any,
specified in such Certificate and in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Treasury Rate" for each Interest Reset Period will be the rate for the auction
held on the Treasury Rate Determination Date (as defined below) for such
Interest Reset Period of direct obligations of the United States ("Treasury
bills") having the Index Maturity specified in the applicable Prospectus
Supplement, as such rate shall be published in H.15(519) under the heading "U.S.
Government Certificates--Treasury bills--auction average (investment)" or, in
the event that such rate is not published prior to 3:00 p.m., New York City
time, on the Calculation Date (as defined below) pertaining to such Treasury
Rate Determination Date, the auction average rate (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) on such Treasury Rate Determination Date as otherwise
announced by the United States Department of the Treasury. In the event that the
results of the auction of Treasury bills having the specified Index Maturity are
not published or reported as provided above by 3:00 p.m., New York City time, on
such Calculation Date, or if no such auction is held on such Treasury Rate
Determination Date, then the "Treasury Rate" for such Interest Reset Period
shall be calculated by the Calculation Agent for such Treasury Rate Certificate
and shall be a yield to maturity (expressed as a bond equivalent on the basis of
a year of 365 or 366 days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on such Treasury Rate Determination Date, of three
leading primary United States government securities dealers selected by such
Calculation Agent for the issue of Treasury bills with a remaining maturity
closest to the specified Index Maturity; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting bid rates as
mentioned in this sentence, then the "Treasury Rate" for such Interest Reset
Period will be the same as the Treasury Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Pass-Through Rate.)
The "Treasury Rate Determination Date" for such Interest Reset Period will
be the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury bills would normally be auctioned. Treasury bills
are normally sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is normally held on the following Tuesday,
except that such auction may be held on the preceding Friday. If, as the result
of a legal holiday, an auction is so held on the preceding Friday, such Friday
will be the Treasury Rate Determination Date pertaining to the Interest REset
Period commencing in the next succeeding week. Unless otherwise specified in the
applicable Prospectus Supplement, if an auction date shall fall on any day that
would
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otherwise be an Interest Reset Date for a Treasury Rate Certificate, then such
Interest Reset Date shall instead be the Business Day immediately following
such auction date.
The "Calculation Date" pertaining to any Treasury Rate Determination Date
shall be the first to occur of (a) the tenth calendar day after such Treasury
Rate Determination Date or, if such a day is not a Business Day, the next
succeeding Business Day or (b) the second Business Day preceding the date any
distribution of interest is required to be made following the applicable
Interest Reset Date.
Principal of the Certificates
Unless the related Prospectus Supplement provides otherwise, each
Certificate (other than certain Classes of Strip Certificates) will have a
"Certificate Principal Balance" which, at any time, will equal the maximum
amount that the holder thereof will be entitled to receive in respect of
principal out of the future cash flow on the Deposited Assets and other assets
included in the related Trust. Unless otherwise specified in the related
Prospectus Supplement, distributions generally will be applied to undistributed
accrued interest on, then to principal of, and then to premium (if any) on, each
such Certificate of the Class or Classes entitled thereto (in the manner and
priority specified in such Prospectus Supplement) until the aggregate
Certificate Principal Balance of such Class or Classes has been reduced to zero.
The outstanding Certificate Principal Balance of a Certificate will be reduced
to the extent of distributions of principal thereon, and, if applicable pursuant
to the terms of the related Series, by the amount of any net losses realized on
any Deposited Asset ("Realized Losses") allocated thereto. Unless the related
Prospectus Supplement provides otherwise, the initial aggregate Certificate
Principal Balance of all Classes of Certificates of a Series will equal the
outstanding aggregate principal balance of the related Deposited Assets as of
the applicable Cut-off Date. The initial aggregate Certificate Principal Balance
of a Series and each Class thereof will be specified in the related Prospectus
Supplement. Unless the Prospectus Supplement provides otherwise, distributions
of principal of any Class of Certificates will be made on a pro rata basis among
all the Certificates of such Class. Strip Certificates with no Certificate
Principal Balance will not receive distributions of principal.
Optional Redemption of Certificates
If so specified in the Prospectus Supplement relating to a Series, one or
more Classes of Certificates of any Series may be redeemed in whole at such time
and under the circumstances and at the redemption prices set forth in such
Prospectus Supplement. See also "DESCRIPTION OF THE TRUST AGREEMENT--
TERMINATION."
Global Securities
Unless otherwise specified in the applicable Prospectus Supplement, all
Certificates of a given Series (or, if more than one Class exists, any given
Class within that Series) will, upon issuance, be represented by one or more
Global Securities that will be deposited with, or on behalf of, The Depository
Trust Company, New York, New York (for Registered
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Certificates denominated and payable in U.S. dollars), or such other depository
identified in the related Prospectus Supplement (the "Depository"), and
registered in the name of a nominee of the Depository. Global Securities may be
issued in registered form and in either temporary or definitive form. Unless and
until it is exchanged in whole or in part for the individual Certificates
represented thereby (each a "Definitive Certificate"), a Global Security may not
be transferred except as a whole by the Depository for such Global Security to a
nominee of such Depository or by a nominee of such Depository to such Depository
or another nominee of such Depository or by such Depository or any such nominee
to a successor of such Depository or a nominee of such successor.
The Depository Trust Company has advised the Depositor as follows: The
Depository Trust Company is a limited-purpose trust company organized under the
laws of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. The Depository Trust Company was created to hold
securities of its participants and to facilitate the clearance and settlement of
securities transactions among the institutions that have accounts with such
Depository ("participants") in such securities through electronic book-entry
changes in accounts of the participants, thereby eliminating the need for
physical movement of securities certificates. Such Depository's participants
include securities brokers and dealers (including the Offering Agent), banks,
trust companies, clearing corporations, and certain other organizations, some of
whom (and/or their representatives) own such Depository. Access to such
Depository's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. The Depository
Trust Company has confirmed to the Depositor that it intends to follow such
procedures.
Upon the issuance of a Global Security, the Depository for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Certificates represented by such
Global Security to the accounts of its participants. The accounts to be
accredited shall be designated by the underwriters of such Certificates, or, if
such Certificates are offered and sold directly through one or more agents, by
the Depositor or such agent or agents. Ownership of beneficial interests in a
Global Security will be limited to participants or Persons that may hold
beneficial interests through participants. Ownership of beneficial interests in
a Global Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the Depository for such Global
Security or by participants or Persons that hold through participants. The laws
of some states require that certain purchasers of securities take physical
delivery of such securities. Such limits and such laws may limit the market for
beneficial interests in a Global Security.
So long as the Depository for a Global Security, or its nominee, is the
owner of such Global Security, such Depository or such nominee, as the case may
be, will be considered the sole Certificateholder of the individual Certificates
represented by such Global Security for all purposes under the Trust Agreement
governing such Certificates. Except as set forth below, owners of beneficial
interests in a Global Security will not be entitled to have any of
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the individual Certificates represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of any
such Certificates and will not be considered the Certificateholder thereof under
the Trust Agreement governing such Certificates. Because the Depository can
only act on behalf of its participants, the ability of a holder of any
Certificate to pledge that Certificate to persons or entities that do not
participate in the Depository's system, or to otherwise act with respect to such
Certificate, may be limited due to the lack of a physical certificate for such
Certificate.
Distributions of principal of (and premium, if any) and any interest on
individual Certificates represented by a Global Security will be made to the
Depository or its nominee, as the case may be, as the Certificateholder of such
Global Security. None of the Depositor, the Administrative Agent, if any, the
Trustee for such Certificates, any Paying Agent or the Certificate Registrar for
such Certificates will have responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial interests in such
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
The Depositor expects that the Depository for Certificates of a given Class
and Series, upon receipt of any distribution of principal, premium or interest
in respect of a definitive Global Security representing any of such
Certificates, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of such Depository. The
Depositor also expects that payments by participants to owners of beneficial
interests in such Global Security held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participants.
If the Depository for Certificates of a given Class of any Series is at any
time unwilling or unable to continue as depository and a successor depository is
not appointed by the Depositor within ninety days, the Depositor will issue
individual Definitive Certificates in exchange for the Global Security or
Securities representing such Certificates. In addition, the Depositor may at any
time and in its sole discretion determine not to have any Certificates of a
given Class represented by one or more Global Securities and, in such event,
will issue individual Definitive Certificates of such Class in exchange for the
Global Security or Securities representing such Certificates. Further, if the
Depositor so specifies with respect to the Certificates of a given Class, an
owner of a beneficial interest in a Global Security representing Certificates of
such Class may, on terms acceptable to the Depositor and the Depository for such
Global Security, receive individual Definitive Certificates in exchange for such
beneficial interest. In any such instance, an owner of a beneficial interest in
a Global Security will be entitled to physical delivery of individual Definitive
Certificates of the Class represented by such Global Security equal in principal
amount to such beneficial interest and to have such Definitive Certificates
registered in its name (if the Certificates of such Class are issuable as
Registered Certificates). Individual Definitive Certificates of such Class so
issued will be issued as Registered Certificates in denominations, unless
otherwise specified by the Depositor, of $1,000 and integral multiples thereof.
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The applicable Prospectus Supplement will set forth any specific terms of
the depository arrangement with respect to any Class or Series of Certificates
being offered thereby to the extent not set forth or different from the
description set forth above.
DESCRIPTION OF DEPOSITED ASSETS AND CREDIT SUPPORT
GENERAL
Each Certificate of each Series (or if more than one Class exists, each
Class (whether or not each such Class is offered hereby) within such Series)
will represent an ownership interest specified for such Series (or Class) of
Certificates in a designated, publicly issued, fixed income debt security or a
pool of such debt securities (the "Underlying Securities"), purchased by the
Depositor (or an affiliate thereof) in the secondary market, and will not be
acquired from the issuer thereof as part of any distribution by or agreement
with such issuer, and assigned to a Trust as described in the applicable
Prospectus Supplement. The Underlying Securities either will have been (a)
previously registered under the Securities Act or (b) are eligible for sale
under Rule 144(k). The Underlying Securities will represent direct obligations
of one or more corporations, banking organizations or insurance companies
organized under the laws of the United States or any state, which are subject to
the informational requirements of the Exchange Act and which, in accordance
therewith, file reports and other information with the Commission (with respect
to each Underlying Security, a "Underlying Securities Issuer").
This Prospectus relates only to the Certificates offered hereby and does
not relate to the Underlying Securities. The following description of the
Underlying Securities is intended only to summarize certain characteristics of
the Underlying Securities the Depositor is permitted to deposit in a Trust and
does not purport to be a complete description of any Underlying Security
Prospectus and Underlying Security Indenture (as defined below). The Prospectus
Supplement used to offer any Series of Certificates will contain a brief
discussion of the business activities of each Underlying Securities Issuer and
information concerning the market prices of the Underlying Securities.
UNDERLYING SECURITIES INDENTURE
General. Unless otherwise specified in the related Prospectus Supplement
each Underlying Security will have been issued pursuant to an agreement (each, a
"Underlying Securities Indenture") between the Underlying Securities Issuer and
a trustee (the "Underlying Securities Trustee"). Unless otherwise specified, the
Underlying Securities Indenture and the Underlying Securities Trustee will be
qualified under the Trust Indenture Act of 1939 (the "Trust Indenture Act") and
the Underlying Securities Indenture will contain certain provisions required by
the Trust Indenture Act.
Certain Covenants. Indentures generally contain covenants intended to
protect security holders against the occurrence or effects of certain specified
events, including restrictions limiting the issuer's, and in some cases any
subsidiary's, ability to:
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(i) consolidate, merge, or transfer or lease assets; (ii) incur or suffer to
exist any lien, charge, or encumbrance upon any of its property or assets, or to
incur, assume, guarantee or suffer to exist any indebtedness for borrowed money
if the payment of such indebtedness is secured by the grant of such a lien;
(iii) declare or pay any cash dividends, or make any distributions on or in
respect of, or purchase, redeem, exchange or otherwise acquire or retire for
value any capital stock or subordinated indebtedness of the issuer or its
subsidiaries, if any. An indenture may also contain financial covenants which,
among other things, require the maintenance of certain financial ratios or the
creation or maintenance of reserves. Subject to certain exceptions, indentures
typically may be amended or supplemented and past defaults may be waived with
the consent of the indenture trustee, the consent of the holders of not less
than a specified percentage of the outstanding securities, or both.
The Underlying Securities Indenture related to one or more Underlying
Securities included in a Trust may include some, all or none of the foregoing
provisions or variations thereof or additional covenants not discussed herein.
To the extent that the Underlying Securities are investment grade debt they are
unlikely to contain significant restrictive covenants although certain
non-investment grade debt may not be subject to restrictive covenants either.
There can be no assurance that any such provision will protect the Trust as a
holder of the Underlying Securities against losses. The Prospectus Supplement
used to offer any Series of Certificates will describe material covenants in
relation to any Underlying Security which represents more than 10% of the total
Underlying Securities (a "Concentrated Underlying Security") and, as applicable,
will describe material covenants which are common to any pool of Underlying
Securities.
Events of Default. Indentures generally provide that any one of a number of
specified events will constitute an event of default with respect to the
securities issued thereunder. Such events of default typically include the
following or variations thereof: (i) failure by the issuer to pay an installment
of interest or principal on the securities at the time required (subject to any
specified grace period) or to redeem any of the securities when required
(subject to any specified grace period); (ii) failure by the issuer to observe
or perform any covenant, agreement or condition contained in the securities or
the indenture which failure is materially adverse to security holders and
continues for a specified period after notice thereof is given to the issuer by
the Indenture trustee or the holders of not less than a specified percentage of
the outstanding securities; (iii) failure by the issuer to make any required
payment of principal (and premium, if any) or interest with respect to certain
of the other outstanding debt obligations of the issuer or the acceleration by
or on behalf of the holders thereof of such securities; and (iv) certain events
of insolvency or bankruptcy with respect to the Underlying Securities Issuer.
Remedies. Indentures generally provide that upon the occurrence of an event
of default, the indenture trustee may, and upon the written request of the
holders of not less than a specified percentage of the outstanding securities
must, take such action as it may deem appropriate to protect and enforce the
rights of the security holders. Certain indentures provide that the indenture
trustee or a specified percentage of the holders of the outstanding securities
have the right to declare all or a portion of the principal and accrued
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interest on the outstanding securities immediately due and payable upon the
occurrence of certain events of default, subject to the issuer's right to cure,
if applicable. Generally, an indenture will contain a provision entitling the
trustee thereunder to be indemnified by the security holders prior to proceeding
to exercise any right or power under such indenture with respect to such
securities at the request of such security holders. An indenture is also likely
to limit a security holder's right to institute certain actions or proceedings
to pursue any remedy under the indenture unless certain conditions are
satisfied, including consent of the indenture trustee, that the proceeding be
brought for the ratable benefit of all holders of the security, and/or the
indenture trustee, after being requested to institute a proceeding by the owners
of at least a specified minimum percentage of the securities, shall have refused
or neglected to comply with such request within a reasonable time.
Each Underlying Securities Indenture may include some, all or none of the
foregoing provisions or variations thereof or additional events of default not
discussed herein. The Prospectus Supplement with respect to any Series of
Certificates will describe the events of default under the Underlying Securities
Indenture with respect to any Concentrated Underlying Security ("Underlying
Security Events of Default") and applicable remedies with respect thereto. With
respect to any Trust comprised of a pool of securities, the applicable
Prospectus Supplement will describe certain common Underlying Security Events of
Default with respect to such pool. There can be no assurance that any such
provision will protect the Trust, as a holder of the Underlying Securities,
against losses. If a Underlying Security Event of Default occurs and the Trustee
as a holder of the Underlying Securities is entitled to vote or take such other
action to declare the principal amount of a Underlying Security and any accrued
and unpaid interest thereon to be due and payable, the Certificateholders'
objectives may differ from those of holders of other securities of the same
series and class as any Underlying Security ("Outstanding Debt Securities") in
determining whether to declare the acceleration of the Underlying Securities.
Subordination. As set forth in the applicable Prospectus Supplement,
certain of the Underlying Securities with respect to any Trust may be either
senior ("Senior Underlying Securities") or subordinated ("Subordinated
Underlying Securities") in right to payment to other existing or future
indebtedness of the Underlying Securities Issuer. With respect to Subordinated
Underlying Securities, to the extent of the subordination provisions of such
securities, and after the occurrence of certain events, security holders and
direct creditors whose claims are senior to Subordinated Underlying Securities,
if any, may be entitled to receive payment of the full amount due thereon before
the holders of any subordinated debt securities are entitled to receive payment
on account of the principal (and premium, if any) or any interest on such
securities. Consequently, the Trust as a holder of subordinated debt may suffer
a greater loss than if it held unsubordinated debt of the Underlying Securities
Issuer. There can be no assurance, however, that in the event of a bankruptcy or
similar proceeding the Trust as a holder of Senior Underlying Securities would
receive all payments in respect of such securities even if holders of
subordinated securities receive amounts in respect of such securities. Reference
is made to the Prospectus Supplement used to offer any Series of Certificates
for a description of any subordination provisions with respect to any
Concentrated Underlying Securities, and the percentage of Senior Underlying
Securities and Subordinated Underlying Securities, if any, in a Trust comprised
of a pool of securities.
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Secured Obligations. Certain of the Underlying Securities with respect to
any Trust may represent secured obligations of the Underlying Securities Issuer
("Secured Underlying Securities"). Generally, unless an event of default shall
have occurred, or with respect to certain collateral or as otherwise set forth
in the indenture pursuant to which such securities were offered and sold, an
issuer of secured obligations generally has the right to remain in possession
and retain exclusive control of the collateral securing a security and to
collect, invest and dispose of any income related to the collateral. The
indenture pursuant to which any secured indebtedness is issued may also contain
certain provisions for release, substitution or disposition of collateral under
certain circumstances with or without the consent of the indenture trustee or
upon the direction of not less than a specified percentage of the security
holders. The indenture pursuant to which any secured indebtedness is issued will
also provide for the disposition of the collateral upon the occurrence of
certain events of default with respect thereto. In the event of a default in
respect of any secured obligation, security holders may experience a delay in
payments on account of principal (and premium, if any) or any interest on such
securities pending the sale of any collateral and prior to or during such period
the related collateral may decline in value. If proceeds of the sale of
collateral following an indenture event of default are insufficient to repay all
amounts due in respect of any secured obligations, the holders of such
securities (to the extent not repaid from the proceeds of the sale of the
collateral) would have only an unsecured claim ranking pari passu with the
claims of all other general unsecured creditors.
The Underlying Securities Indenture with respect to any Secured Underlying
Security may include, some, all or none of the foregoing provisions or
variations thereof. The Prospectus Supplement used to offer any Series of
Certificates which includes Concentrated Underlying Securities which are Secured
Underlying Securities, will describe the security provisions of such Underlying
Securities and the related collateral. With respect to any Trust comprised of a
pool of securities, a substantial portion of which are Secured Underlying
Securities, the applicable Prospectus Supplement will disclose certain general
information with respect to such security provisions and the collateral.
PRINCIPAL ECONOMIC TERMS OF UNDERLYING SECURITIES
Reference is made to the applicable Prospectus Supplement with respect to
each Series of Certificates for a description of the following terms, as
applicable, of any Concentrated Underlying Securities: (i) the title and series
of such Underlying Securities, the aggregate principal amount, denomination and
form thereof; (ii) whether such securities are senior or subordinated to any
other obligations of the Underlying Securities Issuer; (iii) whether any of the
obligations are secured or unsecured and the nature of any collateral; (iv) the
limit, if any, upon the aggregate principal amount of such debt securities; (v)
the dates on which, or the range of dates within which, the principal of (and
premium, if any, on) such debt securities will be payable; (vi) the rate or
rates or the method of determination thereof, at which such Underlying
Securities will bear interest, if any ("Underlying Securities Rate"); the date
or dates from which such interest will accrue ("Underlying Securities Interest
Accrual Periods"); and the dates on which such interest will be payable
("Underlying Securities Payment Dates"); (vii) the obligation, if any, of the
Underlying Securities Issuer to redeem the Outstanding Debt Securities pursuant
to any sinking fund or analogous
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provisions, and the periods within which or the dates on which, the prices at
which and the terms and conditions upon which such debt securities may be
redeemed or repurchased, in whole or in part, pursuant to such obligation;
(viii) the periods within which or the dates on which, the prices at which and
the terms and conditions upon which such debt securities may be redeemed, if
any, in whole or in part, at the option of the Underlying Securities Issuer;
(ix) whether the Underlying Securities were issued at a price lower than the
principal amount thereof; (x) material events of default or restrictive
covenants provided for with respect to such Underlying Securities; (xi) the
rating thereof, if any; and (xii) any other material terms of such Underlying
Securities.
With respect to a Trust comprised of a pool of Underlying Securities, the
related Prospectus Supplement will describe the composition of the Underlying
Securities pool as of the Cut-off Date, certain material events of default or
restrictive covenants common to the Underlying Securities, and, on an aggregate,
percentage or weighted average basis, as applicable, the characteristics of the
pool with respect to the terms set forth in (ii), (iii), (v), (vi), (vii),
(viii) and (ix) of the preceding paragraph and any other material terms
regarding such pool of securities.
PUBLICLY AVAILABLE INFORMATION
In addition to the foregoing, with respect to each Underlying Security the
applicable Prospectus Supplement will disclose the identity of the applicable
obligor and will describe the existence and type of certain information that is
made publicly available by each obligor regarding such Underlying Security or
Underlying Securities and will disclose where and how prospective purchasers of
the Certificates may obtain such publicly available information with respect to
each such obligor. Such publicly available information will typically consist of
the quarterly and annual reports filed under the Exchange Act by such issuer
with, and which are available from, the Commission. Copies of such reports may
be inspected and copied at the Commission locations listed under "AVAILABLE
INFORMATION" in this Prospectus.
If the Underlying Securities Issuer ceases to file periodic reports under
the Exchange Act, the Depositor, on behalf of the Trust, will continue to be
subject to the reporting requirements of the Exchange Act and will provide
financial and other information relating to such issuer directly in its reports
to the Commission.
OTHER DEPOSITED ASSETS
In addition to the Underlying Securities, the Depositor may also deposit
into a given Trust, or the Trustee on behalf of the Certificateholders of a
Trust may enter into an agreement constituting or providing for the purchase of,
to the extent described in the related Prospectus Supplement, certain assets
related or incidental to one or more of such Underlying Securities or to some
other asset deposited in the Trust, including hedging contracts and other
similar arrangements (such as puts, calls, interest rate swaps, currency swaps,
floors, caps and collars, cash and assets ancillary or incidental to the
foregoing or to
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the Underlying Securities (including assets obtained through foreclosure or in
settlement of claims with respect thereto) and direct obligations of the United
States (all such assets for any given Series, together with the related
Underlying Securities, the "Deposited Assets"). The applicable Prospectus
Supplement will, to the extent appropriate, contain analogous disclosure with
respect to the foregoing assets as referred to above with respect to the
Underlying Securities.
Unless otherwise specified in the related Prospectus Supplement, the
Deposited Assets for a given Series of Certificates and the related Trust will
not constitute Deposited Assets for any other Series of Certificates and the
related Trust and Certificates of each Class of a given Series possess an equal
and ratable undivided ownership interest in such Deposited Assets. The
applicable Prospectus Supplement may, however, specify that certain assets
constituting a part of the Deposited Assets relating to any given Series may be
beneficially owned solely by or deposited solely for the benefit of one Class or
a group of Classes within such Series. In such event, the other Classes of such
Series will not possess any beneficial ownership interest in those specified
assets constituting a part of the Deposited Assets.
CREDIT SUPPORT
As specified in the applicable Prospectus Supplement for a given Series of
Certificates, the Trust for any Series of Certificates may include, or the
Certificateholders of such Series (or any Class or group or Classes within such
Series) may have the benefit of, Credit Support for any Class or group of
Classes within such Series. Such Credit Support may be provided by any
combination of the following means described below or any other means described
in the applicable Prospectus Supplement. The applicable Prospectus Supplement
will set forth whether the Trust for any Class or group of Classes of
Certificates contains, or the Certificateholders of such Certificates have the
benefit of, Credit Support and, if so, the amount, type and other relevant terms
of each element of Credit Support with respect to any such Class or Classes and
certain information with respect to the obligors of each such element, including
(i) a brief description of its principal business activities, (ii) its principal
place of business, place of incorporation and the jurisdiction under which it is
chartered or licensed to do business, (iii) if applicable, the identity of
regulatory agencies that exercise primary jurisdiction over the conduct of its
business and (iv) its total assets, and its stockholders' equity or
policyholders' surplus, if applicable, as of a date that will be specified in
the Prospectus Supplement. Additionally, with respect to any obligor, or group
of affiliated obligors, providing Credit Support for 10% or more of the
aggregate principal amount of such Class or Classes, the Prospectus Supplement
will include summarized financial statements of such entity and, with respect to
any obligor, or group of affiliated obligors, providing Credit Support for 20%
or more of the aggregate principal amount of such Class or Classes, the
Prospectus Supplement will include audited financial statements of such entity.
Subordination. As discussed below under "--COLLECTIONS," the rights of the
Certificateholders of any given Class within a Series of Certificates to receive
collections from the Trust for such Series and any Credit Support obtained for
the benefit of the Certificateholders of such Series (or Classes within such
Series) may be subordinated to the
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rights of the Certificateholders of one or more other Classes of such Series to
the extent described in the related Prospectus Supplement. Such subordination
accordingly provides some additional credit support to those Certificateholders
of those other Classes. For example, if losses are realized during a given
period on the Deposited Assets relating to a Series of Certificates such that
the collections received thereon are insufficient to make all distributions on
the Certificates of such Series, those realized losses would be allocated to the
Certificateholders of any Class of any such Series that is subordinated to
another Class, to the extent and in the manner provided in the related
Prospectus Supplement. In addition, if so provided in the applicable Prospectus
Supplement, certain amounts otherwise payable to Certificateholders of any Class
that is subordinated to another Class may be required to be deposited into a
reserve account. Amounts held in any reserve account may be applied as described
below under "--RESERVE ACCOUNTS" and in the related Prospectus Supplement.
If so provided in the related Prospectus Supplement, the Credit Support for
any Series or Class of Certificates may include, in addition to the
subordination of certain Classes of such Series and the establishment of a
reserve account, any of the other forms of Credit Support described below. Any
such other forms of Credit Support that are solely for the benefit of a given
Class will be limited to the extent necessary to make required distributions to
the Certificateholders of such Class or as otherwise specified in the related
Prospectus Supplement. In addition, if so provided in the applicable Prospectus
Supplement, the obligor of any other forms of Credit Support may be reimbursed
for amounts paid pursuant to such Credit Support out of amounts otherwise
payable to one or more of the Classes of the Certificates of such Series.
Letter of Credit; Surety Bond. The Certificateholders of any Series (or
Class or group of Classes of Certificates within such Series) may, if specified
in the applicable Prospectus Supplement, have the benefit of a letter or letters
of credit (a "Letter of Credit") issued by a bank (a "Letter of Credit Bank") or
a surety bond or bonds (a "Surety Bond") issued by a surety company (a
"Surety"). In either case, the Trustee or such other person specified in the
applicable Prospectus Supplement will use its reasonable efforts to cause the
Letter of Credit or the Surety Bond, as the case may be, to be obtained, to be
kept in full force and effect (unless coverage thereunder has been exhausted
through payment of claims) and to pay timely the fees or premiums therefor
unless, as described in the related Prospectus Supplement, the payment of such
fees or premiums is otherwise provided for. The Trustee or such other person
specified in the applicable Prospectus Supplement will make or cause to be made
draws under the Letter of Credit or the Surety Bond, as the case may be, under
the circumstances and to cover the amounts specified in the applicable
Prospectus Supplement. Any amounts otherwise available under the Letter of
Credit or the Surety Bond will be reduced to the extent of any prior
unreimbursed draws thereunder. The applicable Prospectus Supplement will
provide the manner, priority and source of funds by which any such draws are to
be repaid.
Unless otherwise specified in the applicable Prospectus Supplement, in the
event that the Letter of Credit Bank or the Surety, as applicable, ceases to
satisfy any credit rating or other applicable requirements specified in the
related Prospectus Supplement, the Trustee or such other person specified in the
applicable Prospectus Supplement will use its reasonable
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efforts to obtain or cause to be obtained a substitute Letter of Credit or
Surety Bond, as applicable, or other form of credit enhancement providing
similar protection, that meets such requirements and provides the same coverage
to the extent available for the same cost. There can be no assurance that any
Letter of Credit Bank or any Surety, as applicable, will continue to satisfy
such requirements or that any such substitute Letter of Credit, Surety Bond or
similar credit enhancement will be available providing equivalent coverage for
the same cost. To the extent not so available, the credit support otherwise
provided by the Letter of Credit or the Surety Bond (or similar credit
enhancement) may be reduced to the level otherwise available for the same cost
as the original Letter of Credit or Surety Bond. A copy of any such Letter of
Credit or Surety Bond will accompany the Current Report on Form 8-K to be filed
with the Commission within 15 days of the issuance of the Certificates of the
related Series.
Reserve Accounts. If so provided in the related Prospectus Supplement, the
Trustee or such other person specified in the Prospectus Supplement will
deposit or cause to be deposited into an account maintained with an eligible
institution (which may be the Trustee) (a "Reserve Account") any combination of
cash or permitted investments in specified amounts, which will be applied and
maintained in the manner and under the conditions specified in such Prospectus
Supplement. In the alternative or in addition to such deposit, a Reserve
Account may be funded through application of a portion of collections received
on the Deposited Assets for a given Series of Certificates, in the manner and
priority specified in the applicable Prospectus Supplement. Amounts may be
distributed to Certificateholders of such Class or group of Classes within such
Series, or may be used for other purposes, in the manner and to the extent
provided in the related Prospectus Supplement. Unless otherwise specified in the
related Prospectus Supplement, any such Reserve Account will
not be deemed to be part of the related Trust Fund. A Reserve Account may
provide coverage to more than one series of Certificates, if set forth in the
related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee will have a perfected security interest for the benefit of the
Certificateholders in the assets in the Reserve Account. However, to the extent
that the Depositor, any affiliate thereof or any other entity has an interest
in any Reserve Account, in the event of the bankruptcy, receivership or
insolvency of such entity, there could be delays in withdrawals from the Reserve
Account and the corresponding payments to the Certificateholders. Such delays
could adversely affect the yield to investors on the related Certificates.
Amounts deposited in any Reserve Account will be invested in certain permitted
investments by, or at the direction of, the Trustee, the Depositor or such other
person named in the related Prospectus Supplement.
COLLECTIONS
The Trust Agreement will establish procedures by which the Trustee or such
other person specified in the Prospectus Supplement is obligated, for the
benefit of the Certificateholders of each Series of Certificates, to administer
the related Deposited Assets, including making collections of all payments made
thereon, depositing from time to time prior to any applicable Distribution Date
such collections into a segregated account
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maintained or controlled by the applicable Trustee for the benefit of such
Series (each a "Certificate Account"). An Administrative Agent, if any is
appointed pursuant to the applicable Prospectus Supplement, will direct the
Trustee, and otherwise the Trustee will make all determinations, as to the
appropriate application of such collections and other amounts available for
distribution to the payment of any administrative or collection expenses (such
as the administrative fee) and certain Credit Support-related ongoing fees (such
as insurance premiums, letter of credit fees or any required account deposits)
and to the payment of amounts then due and owing on the Certificates of such
Series (and Classes within such Series), all in the manner and priorities
described in the related Prospectus Supplement. The applicable Prospectus
Supplement will specify the collection periods, if applicable, and Distribution
Dates for a given Series of Certificates and the particular requirements
relating to the segregation and investment of collections received on the
Deposited Assets during a given collection period or on or by certain specified
dates. There can be no assurance that amounts received from the Deposited
Assets and any Credit Support obtained for the benefit of Certificateholders for
a particular Series or Class of Certificates over a specified period will be
sufficient, after payment of all prior expenses and fees for such period, to pay
amounts then due and owing to holders of such Certificates. The applicable
Prospectus Supplement will also set forth the manner and priority by which any
Realized Loss will be allocated among the Classes of any Series of Certificates,
if applicable.
The relative priorities of distributions with respect to collections from
the assets of the Trust assigned to Classes of a given Series of Certificates
may permanently or temporarily change over time upon the occurrence of certain
circumstances specified in the applicable Prospectus Supplement. Moreover, the
applicable Prospectus Supplement may specify that the relative distribution
priority assigned to each Class of a given Series for purposes of payments of
certain amounts, such as principal, may be different from the relative
distribution priority assigned to each such Class for payments of other amounts,
such as interest or premium.
DESCRIPTION OF THE TRUST AGREEMENT
GENERAL
The following summary of certain provisions of the Trust Agreement and the
Certificates do not purport to be complete and such summary is qualified in its
entirety by reference to the detailed provisions of the form of Trust Agreement
filed as an exhibit to the Registration Statement. Wherever particular
sections or defined terms of the Trust Agreement are referred to, such sections
or defined terms are incorporated herein by reference as part of the statement
made, and the statement is qualified in its entirety by such reference.
ASSIGNMENT OF DEPOSITED ASSETS
At the time of issuance of any Series of Certificates, the Depositor will
cause the Underlying Securities to be included in the related Trust, and any
other Deposited Asset
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specified in the Prospectus Supplement, to be assigned to the related Trustee,
together with all principal, premium (if any) and interest received by or on
behalf of the Depositor on or with respect to such Deposited Assets after the
cut-off date specified in the Prospectus Supplement (the "Cut-off Date"), other
than principal, premium (if any) and interest due on or before the Cut-off Date
and other than any Retained Interest. The Trustee will, concurrently with such
assignment, deliver the Certificates to the Depositor in exchange for certain
assets to be deposited in the Trust. Each Deposited Asset will be identified in
a schedule appearing as an exhibit to the Trust Agreement. Such schedule will
include certain statistical information with respect to each Underlying Security
and each other Deposited Asset as of the Cut-off Date, and with respect to each
Concentrated Underlying Security, such schedule will include, to the extent
applicable, information regarding the payment terms thereof, the Retained
Interest, if any, with respect thereto, the maturity or terms thereof, the
rating, if any, thereof and certain other information with respect thereto.
In addition, the Depositor will, with respect to each Deposited Asset,
deliver or cause to be delivered to the Trustee (or to the custodian hereinafter
referred to) all documents necessary to transfer ownership of such Deposited
Asset to the Trustee. The Trustee (or such custodian) will review such
documents upon receipt thereof or within such period as is permitted in the
Prospectus Supplement, and the Trustee (or such custodian) will hold such
documents in trust for the benefit of the Certificateholders.
With respect to certain types of Deposited Assets specified in the
applicable Prospectus Supplement if and to the extent provided therein, if any
such document is found to be missing or defective in any material respect, the
Trustee (or such custodian) shall immediately notify the Administrative Agent,
if any, and the Depositor, and the Administrative Agent, if any, and otherwise
the Trustee shall immediately notify the relevant person who sold the applicable
Deposited Asset to the Depositor (a "Deposited Asset Provider"). If and to the
extent specified in the applicable Prospectus Supplement, if the Deposited Asset
Provider cannot cure such omission or defect within 60 days after receipt of
such notice, the Deposited Asset Provider will be obligated, within 90 days of
receipt of such notice, to repurchase the related Deposited Asset from the
Trustee at the Purchase Price (as defined below) or provide a substitute for
such Deposited Asset. There can be no assurance that a Deposited Asset Provider
will fulfill this repurchase or substitution obligation. Although the
Administrative Agent, if any, or otherwise the Trustee is obligated to use its
best efforts to enforce such obligation, neither such Administrative Agent nor
the Deposited Asset Provider defaults on its obligation. Unless otherwise
specified in the related Prospectus Supplement, when applicable, this repurchase
or substitution obligation constitutes the sole remedy available to the
Certificateholders or the Trustee for omission of, or a material defect in, or
failure to provide, a constituent document.
Each of the Depositor and the Administrative Agent, if any, will make
certain representations and warranties regarding its authority to enter into,
and its ability to perform its obligations under, the Trust Agreement. Upon a
breach of any such representation of the Depositor or any such Administrative
Agent, as the case may be, which materially and adversely affects the interests
of the Certificateholders, the Depositor
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or any such Administrative Agent, respectively, will be obligated to cure the
breach in all material respects.
COLLECTION AND OTHER ADMINISTRATIVE PROCEDURES
General. With respect to any Series of Certificates the Trustee or such
other person specified in the Prospectus Supplement directly or through
sub-administrative agents, will make reasonable efforts to collect all scheduled
payments under the Deposited Assets and will follow or cause to be followed such
collection procedures, if any, as it would follow with respect to comparable
financial assets that it held for its own account, provided that such procedures
are consistent with the Trust Agreement and any related instrument governing any
Credit Support (collectively, the "Credit Support Instruments") and provided
that, except as otherwise expressly set forth in the applicable Prospectus
Supplement, it shall not be required to expend or risk its own funds or
otherwise incur personal financial liability.
Sub-Administration. Any Trustee or Administrative Agent may delegate its
obligations in respect of the Deposited Assets to third parties they deem
qualified to perform such obligations (each, a "Sub-Administrative Agent"), but
the Trustee or Administrative Agent will remain obligated with respect to such
obligations under the Trust Agreement. Each Sub-Administrative Agent will be
required to perform the customary functions of an administrator of comparable
financial assets, including, if applicable, collecting payments from obligors
and remitting such collections to the Trustee; maintaining accounting records
relating to the Deposited Assets, attempting to cure defaults and delinquencies;
and enforcing any other remedies with respect thereto all as and to the extent
provided in the applicable Sub-Administration Agreement (as defined below).
The agreement between any Administrative Agent or Trustee and a Sub-
Administrative Agent (a "Sub-Administration Agreement") will be consistent with
the terms of the Trust Agreement and such assignment to the Sub-Administrator by
itself will not result in a withdrawal or downgrading of the rating of any Class
of Certificates issued pursuant to the Trust Agreement. With respect to any Sub-
Administrative Agreement between an Administrative Agent and a Sub-
Administrative Agent, although each such Sub-Administration Agreement will be a
contract solely between such Administrative Agent and the Sub-Administrative
Agent, the Trust Agreement pursuant to which a Series of Certificates is issued
will provide that, if for any reason such Administrative Agent for such Series
of Certificates is no longer acting in such capacity, the Trustee or any
successor Administrative Agent must recognize the Sub-Administrative Agent's
rights and obligations under such Sub-Administration Agreement.
The Administrative Agent or Trustee, as applicable, will be solely liable
for all fees owed by it to any Sub-Administrative Agent, irrespective of whether
the compensation of the Administrative Agent or Trustee, as applicable, pursuant
to the Trust Agreement with respect to the particular Series of Certificates is
sufficient to pay such fees. However, a Sub-Administrative Agent may be
entitled to a Retained Interest in certain Deposited Assets to the extent
provided in the related Prospectus Supplement. Each Sub-Administrative Agent
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will be reimbursed by the Administrative Agent, if any, or otherwise the Trustee
for certain expenditures which it makes, generally to the same extent the
Administrative Agent or Trustee, as applicable, would be reimbursed under the
terms of the Trust Agreement relating to such Series. SEE "--RETAINED INTEREST;
ADMINISTRATIVE AGENT COMPENSATION AND PAYMENT OF EXPENSES."
The Administrative Agent or Trustee, as applicable, may require any
Sub-Administrative Agent to agree to indemnify the Administrative Agent or
Trustee, as applicable, for any liability or obligation sustained by the
Administrative Agent or Trustee, as applicable, in connection with any act or
failure to act by the Sub-Administrative Agent.
Realization upon Defaulted Deposited Assets. Unless otherwise specified in
the applicable Prospectus Supplement, as administrator with respect to the
Deposited Assets, the Trustee, on behalf of the Certificateholders of a given
Series (or any Class or Classes within such Series), will present claims under
each applicable Credit Support Instrument, and will take such reasonable steps
as are necessary to receive payment or to permit recovery thereunder with
respect to defaulted Deposited Assets. As set forth above, all collections by
or on behalf of the Trustee or Administrative Agent under any Credit Support
Instrument are to be deposited in the Certificate Account for the related Trust,
subject to withdrawal as described above.
Unless otherwise provided in the applicable Prospectus Supplement, if
recovery on a defaulted Deposited Asset under any related Credit Support
Instrument is not available, the Trustee will be obligated to follow or cause to
be followed such normal practices and procedures as it deems necessary or
advisable to realize upon the defaulted Deposited Asset, provided that, except
as otherwise expressly provided in the applicable Prospectus Supplement, it
shall not be required to expend or risk its own funds or otherwise incur
personal financial liability. If the proceeds of any liquidation of the
defaulted Deposited Asset are less than the sum of (i) the outstanding principal
balance of the defaulted Deposited Asset, (ii) interest accrued thereon at the
applicable interest rate and (iii) the aggregate amount of expenses incurred by
the Administrative Agent and the Trustee, as applicable, in connection with such
proceedings to the extent reimbursable from the assets of the Trust under the
Trust Agreement, the Trust will realize a loss in the amount of such difference.
Only if and to the extent provided in the applicable Prospectus Supplement, the
Administrative Agent or Trustee, as so provided, will be entitled to withdraw or
cause to be withdrawn from the related Certificate Account out of the net
proceeds recovered on any defaulted Deposited Asset, prior to the distribution
of such proceeds to Certificateholders, amounts representing its normal
administrative compensation on the Deposited Asset, unreimbursed administrative
expenses incurred with respect to the Deposited Asset and any unreimbursed
advances of delinquent payments made with respect to the Deposited Asset.
RETAINED INTEREST; ADMINISTRATIVE AGENT COMPENSATION AND PAYMENT OF
EXPENSES
The Prospectus Supplement for a Series of Certificates will specify whether
there will be any Retained Interest in the Deposited Assets, and, if so, the
owner thereof. If so
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provided, the Retained Interest will be established on an asset-by-asset basis
and will be specified in an exhibit to the applicable series supplement to the
Trust Agreement. A Retained Interest in a Deposited Asset represents a specified
interest therein. Payments in respect of the Retained Interest will be deducted
from payments on the Deposited Assets as received and, in general, will not be
deposited in the applicable Certificate Account or become a part of the related
Trust. Unless otherwise provided in the applicable Prospectus Supplement, any
partial recovery of interest on a Deposited Asset, after deduction of all
applicable administration fees, will be allocated between the Retained Interest
(if any) and interest distributions to Certificateholders on a pari passu basis.
The applicable Prospectus Supplement will specify the Administrative
Agent's, if any, and the Trustee's compensation, and the source, manner and
priority of payment thereof, with respect to a given Series of Certificates.
If and to the extent specified in the applicable Prospectus Supplement, in
addition to amounts payable to any Sub-Administrative Agent, the Administrative
Agent, if any; and otherwise the Trustee will pay from its compensation certain
expenses incurred in connection with its administration of the Deposited Assets,
including, without limitation, payment of the fees and disbursements of the
Trustee, if applicable, and independent accountants, payment of expenses
incurred in connection with distributions and reports to Certificateholders, and
payment of any other expenses described in the related Prospectus Supplement.
ADVANCES IN RESPECT OF DELINQUENCIES
Unless otherwise specified in the applicable Prospectus Supplement, the
Administrative Agent, if any, specified therein will have no obligation to make
any advances with respect to collections on the Deposited Assets or in favor of
the Certificateholders of the related Series of Certificates. However, to the
extent provided in the applicable Prospectus Supplement, any such Administrative
Agent will advance on or before each Distribution Date its own funds or funds
held in the Certificate Account for such Series that are not part of the funds
available for distribution for such Distribution Date, in an amount equal to the
aggregate of payments of principal, premium (if any) and interest (net of
related administration fees and any Retained Interest) with respect to the
Deposited Assets that were due during the related Collection Period and were
delinquent on the related Determination Date, subject to (i) any such
Administrative Agent's good faith determination that such advances will be
reimbursable from Related Proceeds (as defined below) and (ii) such other
conditions as may be specified in the Prospectus Supplement.
Advances are intended to maintain a regular flow of scheduled interest,
premium (if any) and principal payments to holders of the Class or Classes of
Certificates entitled thereto, rather than to guarantee or insure against
losses. Unless otherwise provided in the related Prospectus Supplement, advances
of an Administrative Agent's funds, if any, will be reimbursable only out of
related recoveries on the Deposited Assets (and amounts received under any form
of Credit Support) for such Series with respect to which such advances were made
(as to any Deposited Assets, "Related Proceeds"); provided, however, that any
such
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advance will be reimbursable from any amounts in the Certificate Account for
such Series to the extent that such Administrative Agent shall determine, in its
sole judgment, that such advance (a "Nonrecoverable Advance") is not ultimately
recoverable from Related Proceeds. If advances have been made by such
Administrative Agent from excess funds in the Certificate Account for any
Series, such Administrative Agent will replace such funds in such Certificate
Account on any future Distribution Date to the extent that funds in such
Certificate Account on such Distribution Date are less than payments required to
be made to Certificateholders on such date. If so specified in the related
Prospectus Supplement, the obligations, if any, of an Administrative Agent to
make advances may be secured by a cash advance reserve fund or a surety bond. If
applicable, information regarding the characteristics of, and the identity of
any obligor on, any such surety bond, will be set forth in the related
Prospectus Supplement.
CERTAIN MATTERS REGARDING THE ADMINISTRATIVE AGENT AND THE DEPOSITOR
An Administrative Agent, if any, for each Series of Certificates under the
Trust Agreement will be named in the related Prospectus Supplement. The entity
serving as Administrative Agent for any such Series may be the Trustee, the
Depositor, an affiliate of either thereof, are any third party and may have
other normal business relationships with the Trustee, the Depositor or their
affiliates.
The Trust Agreement will provide that an Administrative Agent may resign
from its obligations and duties under the Trust Agreement with respect to any
Series of Certificates only if such resignation, and the appointment of a
successor, will not result in a withdrawal or downgrading of the rating of any
Class of Certificates of such Series or upon a determination that its duties
under the Trust Agreement with respect to such Series are no longer permissible
under applicable law. No such resignation will become effective until the
Trustee or a successor has assumed the Administrative Agent's obligations and
duties under the Trust Agreement with respect to such Series.
The Trust Agreement will further provide that neither such an
Administrative Agent, the Depositor nor any director, officer, employee, or
agent or the Administrative Agent or the Depositor will incur any liability to
the related Trust or Certificateholders for any action taken, or for refraining
from taking any action, in good faith pursuant to the Trust Agreement or for
errors in judgment; provided, however, that none of the Administrative Agent,
the Depositor nor any such person will be protected against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties thereunder or by reason of reckless
disregard of obligations and duties thereunder. The Trust Agreement will further
provide that, unless otherwise provided in the applicable series supplement
thereto, such an Administrative Agent, the Depositor and any director, officer,
employee or agent of the Administrative Agent or the Depositor will be entitled
to indemnification by the related Trust and will be held harmless against any
loss, liability or expense incurred in connection with any legal action relating
to the Trust Agreement or the Certificates, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
in the performance of duties thereunder or by reason of reckless disregard of
obligations and duties thereunder. Nothing
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contained in the Trust Agreement is in any way intended to be construed as a
waiver, release, or alteration of a Certificateholder's rights against any
person under the federal securities law. In addition, the Trust Agreement will
provide that neither such an Administrative Agent nor the Depositor will be
under any obligation to appear in, prosecute or defend any legal action which is
not incidental to their respective responsibilities under the Trust Agreement or
which in its opinion may involve it in any expense or liability. Each of such
Administrative Agent or the Depositor may, however, in its discretion undertake
any such action which it may deem necessary or desirable with respect to the
Trust Agreement and the rights and duties of the parties thereto and the
interests of the Certificateholders thereunder. The applicable Prospectus
Supplement will describe how such legal expenses and costs of such action and
any liability resulting therefrom will be allocated.
Any person into which an Administrative Agent may be merged or
consolidated, or any person resulting from any merger or consolidation to which
an Administrative Agent is a part, or any person succeeding to the business of
an Administrative Agent, will be the successor of the Administrative Agent under
the Trust Agreement with respect to the Certificates of any given Series.
ADMINISTRATIVE AGENT TERMINATION EVENTS; RIGHTS UPON ADMINISTRATIVE AGENT
TERMINATION EVENT
Unless otherwise provided in the related Prospectus Supplement,
"Administrative Agent Termination Events" under the Trust Agreement with respect
to any given Series of Certificates will consist of the following: (i) any
failure by an Administrative Agent to remit to the Trustee any funds in respect
of collections on the Deposited Assets and Credit Support, if any, as required
under the Trust Agreement, that continues unremedied for five days after the
giving of written notice of such failure to the Administrative Agent by the
Trustee or the Depositor, or to the Administrative Agent, the Depositor and the
Trustee by the holders of such Certificates evidencing not less than 25% of the
Voting Rights (as defined below); (ii) any failure by an Administrative Agent
duly to observe or perform in any material respect any of its other covenants or
obligations under the Trust Agreement with respect to such Series which
continues unremedied for thirty days after the giving of written notice of such
failure to the Administrative Agent by the Trustee or the Depositor, or to the
Administrative Agent, the Depositor and the Trustee by the holders of such
Certificates evidencing not less than 25% of the Voting Rights; and (iii)
certain events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings and certain actions by or on behalf of an
Administrative Agent indicating its insolvency or inability to pay its
obligations. Any additional Administrative Agent Termination Events with
respect to any given Series of Certificates will be set forth in the applicable
Prospectus Supplement. In addition, the applicable Prospectus Supplement and
the related series supplement to the Trust Agreement will specify as to each
matter requiring the vote of holders of Certificates of a Class or group of
Classes within a given Series, the circumstances and manner in which the
Required Percentage (as defined below) applicable to each such matter is
calculated. "Required Percentage" means, with respect to any matter requiring a
vote of holders of Certificates of a given Series, the specified percentage
(computed on the basis of outstanding Certificate Principal Balance or Notional
Amount, as
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applicable) of Certificates of a designated Class or group of Classes within
such Series (either voting as separate classes or as a single class) applicable
to such matter, all as specified in the applicable Prospectus Supplement and the
related series supplement to the Trust Agreement. "Voting Rights" evidenced by
any Certificate will be the portion of the voting rights of all the Certificates
in the related Series allocated in the manner described in the related
Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, so long
as an Administrative Agent Termination Event under the Trust Agreement with
respect to a given Series of Certificates remains unremedied, the Depositor or
the Trustee may, and at the direction of holders of such Certificates evidencing
not less than the "Required Percentage-- Administrative Agent Termination" of
the Voting Rights, the Trustee will, terminate all the rights and obligations of
such Administrative Agent under the Trust Agreement relating to the applicable
Trust and in and to the related Deposited Assets (other than any Retained
Interest of such Administrative Agent), whereupon the Trustee will succeed to
all the responsibilities, duties and liabilities of such Administrative Agent
under the Trust Agreement with respect to such Series (except that if the
Trustee is prohibited by law from obligating itself to make advances regarding
delinquent Deposited Assets, then the Trustee will not be so obligated) and will
be entitled to similar compensation arrangements. In the event that the Trustee
is unwilling or unable to act, it may or, at the written request of the holders
of such Certificates evidencing not less than the "Required Percentage--
Administrative Agent Termination" of the Voting Rights, it will appoint, or
petition a court of competent jurisdiction for the appointment of, an
administration agent acceptable to the Rating Agency with a net worth at the
time of such appointment of at least $15,000,000 to act as successor to such
Administrative Agent under the Trust Agreement with respect to such Series.
Pending such appointment, the Trustee is obligated to act in such capacity
(except that if the Trustee is prohibited by law from obligating itself to make
advances regarding delinquent Deposited Assets, then the Trustee will not be so
obligated). The Trustee and any such successor may agree upon the compensation
be paid to such successor, which in no event may be greater than the
compensation payable to such Administrative Agent under the Trust Agreement with
respect to such Series.
No Certificateholder will have the right under the Trust Agreement to
institute any proceeding with respect thereto unless such holder previously has
given to the Trustee written notice of breach and unless the holders of
Certificates evidencing not less than the "Required Percentage-- Remedies" of
the Voting Rights have made written request upon the Trustee to institute such
proceeding in its own name as Trustee thereunder and have offered to the Trustee
reasonable indemnity, and the Trustee for fifteen days has neglected or refused
to institute any such proceeding. The Trustee, however, is under no obligation
to exercise any of the trusts or powers vested in it by the Trust Agreement or
to make any investigation of matters arising thereunder or to institute, conduct
or defend any litigation thereunder or in relation thereto at the request, order
or direction of any of the holders of Certificates covered by the Trust
Agreement, unless such Certificateholders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby.
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<PAGE>
MODIFICATION AND WAIVER
Unless otherwise specified in the applicable Prospectus Supplement, the
Trust Agreement for each Series of Certificates may be amended by the Depositor
and the Trustee with respect to such Series, without notice to or consent of the
Certificateholders, for certain purposes including (i) to cure any ambiguity,
(ii) to correct or supplement any provision therein which may be inconsistent
with any other provision therein or in the Prospectus Supplement, (iii) to add
or supplement any Credit Support for the benefit of any Certificateholders
(provided that if any such addition affects any series or class of
Certificateholders differently than any other series or class of
Certificateholders, then such addition will not, as evidenced by an opinion of
counsel, have a material adverse effect on the interests of any affected series
or class of Certificateholders), (iv) to add to the covenants, restrictions or
obligations of the Depositor, the Administrative Agent, if any, or the Trustee
for the benefit of the Certificateholders, (v) to add, change or eliminate any
other provisions with respect to matters or questions arising under such Trust
Agreement so long as (x) any such addition, change or elimination will not, as
evidenced by an opinion of counsel, affect the tax status of the Trust or result
in a sale or exchange of any Certificate for tax purposes and (y) the Trustee
has received written confirmation from each Rating Agency rating such
Certificates that such amendment will not cause such Rating Agency to reduce or
withdraw the then current rating thereof, or (vi) to comply with any
requirements imposed by the Code. Without limiting the generality of the
foregoing, unless otherwise specified in the applicable Prospectus Supplement,
the Trust Agreement may also be modified or amended from time to time by the
Depositor, and the Trustee, with the consent of the holders of Certificates
evidencing not less than the "Required Percentage--Amendment" of the Voting
Rights of those Certificates that are materially adversely affected by such
modification or amendment for the purpose of adding any provision to or changing
in any manner or eliminating any provision of the Trust Agreement or of
modifying in any manner the rights of such Certificateholders; provided,
however, that in the event such modification or amendment would materially
adversely affect the rating of any Series or Class by each Rating Agency, the
"Required Percentage--Amendment" specified in the related series supplement to
the Trust Agreement shall include an additional specified percentage of the
Certificates of such Series or Class.
Except as otherwise set forth in the applicable Prospectus Supplement, no
such modification or amendment may, however, (i) reduce in any manner the amount
of or alter the timing of, distributions or payments which are required to be
made on any Certificate without the consent of the holder of such Certificate or
(ii) reduce the aforesaid Required Percentage of Voting Rights required for the
consent to any such amendment without the consent of the holders of all
Certificates covered by the Trust Agreement then outstanding.
Unless otherwise specified in the applicable Prospectus Supplement, holders
of Certificates evidencing not less than the "Required Percentage--Waiver" of
the Voting Rights of a given Series may, on behalf of all Certificateholders of
that Series, (i) waive, insofar as that Series is concerned, compliance by the
Depositor, the Trustee or the Administrative Agent, if any, with certain
restrictive provisions, if any, of the Trust Agreement before the time for such
compliance and (ii) waive any past default under the
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<PAGE>
Trust Agreement with respect to Certificates of that Series, except a default in
the failure to distribute amounts received as principal of (and premium, if any)
or any interest on any such Certificate and except a default in respect of a
covenant or provision the modification or amendment of which would require the
consent of the holder of each outstanding Certificate affected thereby.
REPORTS TO CERTIFICATEHOLDERS; NOTICES
Reports to Certificateholders. Unless otherwise provided in the applicable
Prospectus Supplement, with each distribution to Certificateholders of any Class
of Certificates of a given Series, the Administrative Agent or the Trustee, as
provided in the related Prospectus Supplement, will forward or cause to be
forwarded to each such Certificateholder, to the Depositor and to such other
parties as may be specified in the Trust Agreement, a statement setting forth:
(i) the amount of such distribution to Certificateholders of such
Class allocable to principal of or interest or premium, if any, on the
Certificates of such Class; and the amount of aggregate unpaid interest as
of such Distribution Date;
(ii) in the case of Certificates with a variable Pass-Through Rate, the
Pass-Through Rate applicable to such Distribution Date, as calculated in
accordance with the method specified herein and in the related Prospectus
Supplement;
(iii) the amount of compensation received by the Administrative Agent,
if any, and the Trustee for the period relating to such Distribution Date,
and such other customary information as the Administrative Agent, if any,
or otherwise the Trustee deems necessary or desirable to enable
Certificateholders to prepare their tax returns;
(iv) if the Prospectus Supplement provides for advances, the aggregate
amount of advances included in such distribution, and the aggregate amount
of unreimbursed advances at the close of business on such Distribution
Date;
(v) the aggregate stated principal amount or, if applicable, notional
principal amount of the Deposited Assets and the current interest rate
thereon at the close of business on such Distribution Date;
(vi) the aggregate Certificate Principal Balance or aggregate Notional
Amount, if applicable, of each Class of Certificates (including any Class
of Certificates not offered hereby) at the close of business on such
Distribution Date, separately identifying any reduction in such aggregate
Certificate Principal Balance or aggregate Notional Amount due to the
allocation of any Realized Losses or otherwise; and
(vii) as to any Series (or Class within such Series) for which Credit
Support has been obtained, the amount of coverage of each element of Credit
Support included therein as of the close of business on such Distribution
Date.
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<PAGE>
In the case of information furnished pursuant to subclauses (i) and (iii)
above, the amounts shall be expressed as a U.S. dollar amount per minimum
denomination of Certificates or for such other specified portion thereof. Within
a reasonable period of time after the end of each calendar year, the
Administrative Agent or the Trustee, as provided in the related Prospectus
Supplement, shall furnish to each person who at any time during the calendar
year was a Certificateholder a statement containing the information set forth in
subclauses (i) and (iii) above, aggregated for such calendar year or the
applicable portion thereof during which such person was a Certificateholder.
Such obligation of the Administrative Agent or the Trustee, as applicable, shall
be deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Administrative Agent or the Trustee, as
applicable, pursuant to any requirements of the Code as are from time to time in
effect.
Notices. Unless otherwise provided in the applicable Prospectus Supplement,
any notice required to be given to a holder of a Registered Certificate will be
mailed to the last address of such holder set forth in the applicable
Certificate Register.
EVIDENCE AS TO COMPLIANCE
Unless otherwise specified in the applicable Prospectus Supplement, the
Trust Agreement will provide that commencing on a certain date and on or before
a specified date in each year thereafter, a firm of independent public
accountants will furnish a statement to the Trustee to the effect that such firm
has examined certain documents and records relating to the administration of the
Deposited Assets during the related 12-month period (or, in the case of the
first such report, the period ending on or before the date specified in the
Prospectus Supplement, which date shall not be more than one year after the
related Original Issue Date) and that, on the basis of certain agreed upon
procedures considered appropriate under the circumstances, such firm is of the
opinion that such administration was conducted in compliance with the terms of
the Trust Agreement, except for such exceptions as such firm shall believe to be
immaterial and such other exceptions and qualifications as shall be set forth in
such report.
The Trust Agreement will also provide for delivery to the Depositor, the
Administrative Agent, if any, and the Trustee on behalf of the
Certificateholders, on or before a specified date in each year, of an annual
statement signed by two officers of the Trustee to the effect that the Trustee
has fulfilled its obligations under the Trust Agreement throughout the preceding
year with respect to any Series of Certificates.
Copies of the annual accountants' statement, if any, and the statement of
officers of the Trustee may be obtained by Certificateholders without charge
upon written request to either the Administrative Agent or the Trustee, as
applicable, at the address set forth in the related Prospectus Supplement.
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REPLACEMENT CERTIFICATES
Unless otherwise provided in the applicable Prospectus Supplement, if a
Certificate is mutilated, destroyed, lost or stolen, it may be replaced at the
corporate trust office or agency of the applicable Trustee at the location
specified in the applicable Prospectus Supplement, upon payment by the holder of
such expenses as may be incurred by the applicable Trustee in connection
therewith and the furnishing of such evidence and indemnity as such Trustee may
require. Mutilated Certificates must be surrendered before new Certificates will
be issued.
TERMINATION
The obligations created by the Trust Agreement for each Series of
Certificates will terminate upon the payment to Certificateholders of that
Series of all amounts held in the related Certificate Account or by an
Administrative Agent, if any, and required to be paid to them pursuant to the
Trust Agreement following the earlier of (i) the final payment or other
liquidation of the last Deposited Asset subject thereto or the disposition of
all property acquired upon foreclosure or liquidation of any such Deposited
Asset and (ii) the purchase of all the assets of the Trust by the party entitled
to effect such termination, under the circumstances and in the manner set forth
in the related Prospectus Supplement. In no event, however, will any trust
created by the Trust Agreement continue beyond the respective date specified in
the related Prospectus Supplement. Written notice of termination of the
obligations with respect to the related Series of Certificates under the Trust
Agreement will be provided as set forth above under "--Reports to
Certificateholders; Notices--Notices," and the final distribution will be made
only upon surrender and cancellation of the Certificates at an office or agency
appointed by the Trustee which will be specified in the notice of termination.
Any such purchase of Deposited Assets and property acquired in respect of
Deposited Assets evidenced by a Series of Certificates shall be made at a price
approximately equal to the aggregate fair market value of all the assets in the
Trust (as determined by the Trustee, the Administrative Agent, if any, and, if
different than both such persons, the person entitled to effect such
termination), in each case taking into account accrued interest at the
applicable interest rate to the first day of the month following such purchase
or, to the extent specified in the applicable Prospectus Supplement, a specified
price as determined therein (such price, a "Purchase Price"). The exercise of
such right will effect early retirement of the Certificates of that Series, but
the right of the person entitled to effect such termination is subject to the
aggregate principal balance of the outstanding Deposited Assets for such Series
at the time of purchase being less than the percentage of the aggregate
principal balance of the Deposited Assets at the Cut-off Date for that Series
specified in the related Prospectus Supplement.
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<PAGE>
DUTIES OF THE TRUSTEE
The Trustee makes no representations as to the validity or sufficiency of
the Trust Agreement, the Certificates of any Series or any Deposited Asset or
related document and is not accountable for the use or application by or on
behalf of any Administrative Agent of any funds paid to such Administrative
Agent or its designee in respect of such Certificates or the Deposited Assets,
or deposited into or withdrawn from the related Certificate Account or any other
account by or on behalf of such Administrative Agent. If no Administrative Agent
Termination Event has occurred and is continuing with respect to any given
Series, the Trustee is required to perform only those duties specifically
required under the Trust Agreement with respect to such Series. However, upon
receipt of the various certificates, reports or other instruments required to be
furnished to it, the Trustee is required to examine such documents and to
determine whether they conform to the applicable requirements of the Trust
Agreement.
THE TRUSTEE
The Trustee for any given Series of Certificates under the Trust Agreement
will be named in the related Prospectus Supplement. The commercial bank,
national banking association or trust company serving as Trustee will be
unaffiliated with, but may have normal banking relationships with, the
Depositor, any Administrative Agent and their respective affiliates.
PLAN OF DISTRIBUTION
Certificates may be offered in any of three ways: (i) through underwriters
or dealers; (ii) directly to one or more purchasers; or (iii) through agents.
The applicable Prospectus Supplement will set forth the terms of the offering of
any Series of Certificates, which may include the names of any underwriters, or
initial purchasers, the purchase price of such Certificates and the proceeds to
the Depositor from such sale, any underwriting discounts and other items
constituting underwriters' compensation, any initial public offering price, any
discounts or concessions allowed or reallowed or paid to dealers, any securities
exchanges on which such Certificates may be listed, and the place and time of
delivery of the Certificates to be offered thereby.
If underwriters are used in the sale, Certificates will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. Such Certificates may
be offered to the public either through underwriting syndicates represented by
managing underwriters or by underwriters without a syndicate. Such managing
underwriters or underwriters in the United States may include Morgan Keegan &
Company, Inc., an affiliate of the Depositor. Unless otherwise set forth in the
applicable Prospectus Supplement, the obligations of the underwriters to
purchase such Certificates will be subject to certain conditions precedent, and
the underwriters will be obligated to purchase all such Certificates if any of
such Certificates are purchased. Any
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<PAGE>
initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Certificates may also be sold through agents designated by the Depositor
from time to time. Any agent involved in the offer or sale of Certificates will
be named, and any commissions payable by the Depositor to such agent will be set
forth, in the applicable Prospectus Supplement. Unless otherwise indicated in
the applicable Prospectus Supplement, any such agent will act on a best efforts
basis for the period of its appointment.
If so indicated in the applicable Prospectus Supplement, the Depositor will
authorize agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Certificates at the public offering price described in
such Prospectus Supplement pursuant to delayed delivery contracts providing for
payment and delivery on a future date specified in such Prospectus Supplement.
Such contracts will be subject only to those conditions set forth in the
applicable Prospectus Supplement and such Prospectus Supplement will set forth
the commissions payable for solicitation of such contracts.
Any underwriters, dealers or agents participating in the distribution of
Certificates may be deemed to be underwriters and any discounts or commissions
received by them on the sale or resale of Certificates may be deemed to be
underwriting discounts and commissions under the Securities Act. Agents and
underwriters may be entitled under agreements entered into with the Depositor to
indemnification by the Depositor against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments that the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be customers of, engage in transactions
with, or perform services for, the Depositor or its affiliates in the ordinary
course of business.
Morgan Keegan & Company, Inc. is an affiliate of the Depositor. Morgan
Keegan & Company, Inc.'s participation, if any, in the offer and sale of
Certificates complies with the requirements of Schedule E of the By-Laws of the
National Association of Securities Dealers, Inc. regarding underwriting
securities of an affiliate.
If and to the extent required by applicable law or regulation, this
Prospectus will be used by Morgan Keegan & Company, Inc., an affiliate of the
Depositor, in connection with offers and sales related to market-making
transactions in the Offered Certificates previously offered hereunder in
transactions in which Morgan Keegan & Company, Inc. acts as principal. Morgan
Keegan & Company, Inc. may also act as agent in such transactions. Sales may be
made at negotiated prices determined at the time of sale.
As to each Series of Certificates, only those Classes rated in one of the
investment grade rating categories by a Rating Agency will be offered hereby.
Any unrated Classes or Classes rated below investment grade may be retained by
the Depositor or sold at any time to one or more purchasers.
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<PAGE>
LEGAL OPINIONS
Certain legal matters with respect to the Certificates, including federal
income tax consequences, will be passed upon for the Depositor and the
underwriters by Chapman and Cutler, Chicago, Illinois or other counsel
identified in the applicable Prospectus Supplement.
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<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
Term Page
<S> <C>
Administration Fee............................................................ 9
Administrative Agent.......................................................... 1
Base Rate.................................................................... 16
Calculation Agent............................................................ 17
CD Rate Certificate.......................................................... 16
CD Rate Determination Date................................................... 18
Cede.......................................................................... 3
Certificate Account.......................................................... 34
Certificateholders............................................................ 1
Certificates.................................................................. 1
Class......................................................................... 1
Commercial Paper Rate Certificate............................................ 16
Commercial Paper Rate Determination Date..................................... 19
Commission.................................................................... 2
Concentrated Underlying Security............................................. 27
Credit Support................................................................ 1
Credit Support Instruments................................................... 36
Cut-off Date................................................................. 35
Definitive Certificate....................................................... 24
Deposited Asset Provider..................................................... 35
Deposited Assets.......................................................... 1, 31
Depositor..................................................................... 1
Depository................................................................... 24
Determination Date........................................................... 14
Distribution Date............................................................. 2
Exchange Act.................................................................. 2
Federal Funds Rate Certificate............................................... 16
Federal Funds Rate Determination Date........................................ 20
Fixed Pass-Through Rate...................................................... 13
Fixed Rate Certificates...................................................... 15
Floating Rate Certificates................................................... 16
Global Security............................................................... 1
Interest Reset Date.......................................................... 17
Interest Reset Period........................................................ 17
Letter of Credit............................................................. 32
Letter of Credit Bank........................................................ 32
LIBOR Certificate............................................................ 16
LIBOR Determination Date..................................................... 21
Maximum Pass-Through Rate.................................................... 17
Minimum Pass-Through Rate.................................................... 17
Nonrecoverable Advance....................................................... 39
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
Original Issue Date.......................................................... 13
Outstanding Debt Securities.................................................. 28
participants................................................................. 24
Pass-Through Rate............................................................ 13
Prospectus Supplement......................................................... 1
Purchase Price............................................................... 45
Rating Agency................................................................. 7
Realized Losses.............................................................. 23
Registered Certificates....................................................... 1
Registration Statement........................................................ 2
Related Proceeds............................................................. 38
Reserve Account.............................................................. 33
Retained Interest............................................................ 10
Secured Underlying Securities................................................ 29
Securities Act................................................................ 2
Senior Underlying Securities................................................. 28
Series........................................................................ 1
Strip Certificates........................................................... 13
Stripped Interest............................................................ 15
Sub-Administration Agreement................................................. 36
Sub-Administrative Agent..................................................... 36
Subordinated Underlying Securities........................................... 28
Surety....................................................................... 32
Surety Bond.................................................................. 32
Treasury bills............................................................... 22
Treasury Rate Certificate.................................................... 16
Trust......................................................................... 1
Trust Agreement............................................................... 1
Trust Indenture Act.......................................................... 26
Trustee....................................................................... 1
Trustee's Fee................................................................. 9
Underlying Securities..................................................... 1, 26
Underlying Securities Indenture.............................................. 26
Underlying Securities Interest Accrual Periods............................... 29
Underlying Securities Issuer................................................. 26
Underlying Securities Payment Dates.......................................... 29
Underlying Securities Rate................................................... 29
Underlying Securities Trustee................................................ 26
Underlying Security Events of Default........................................ 28
Variable Pass-Through Rate................................................... 13
</TABLE>
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<PAGE>
================================================================================
No dealer, salesperson or other person has been authorized to give any
information or make any representations not contained in this Prospectus
Supplement and the Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Depositor or by the Underwriter. This Prospectus Supplement and the Prospectus
do not constitute an offer to sell, or a solicitation of an offer to buy, the
securities offered hereby to anyone in any jurisdiction in which the person
making such offer or solicitation is not qualified to do so or to anyone to whom
it is unlawful to make any such offer or solicitation. Neither the delivery of
this Prospectus Supplement and the Prospectus nor any sale made hereunder shall,
under any circumstances, create an implication that information herein or
therein is correct as of any time since the date of this Prospectus Supplement.
_________________
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Page
Summary of Principal Economic Terms.........................................
Summary of Prospectus Supplement............................................
Formation of the Trust......................................................
Risk Factors................................................................
Description of the Deposited Assets.........................................
[Description of Credit Support].............................................
Yield on the Certificates...................................................
Description of the Certificates.............................................
Description of the Trust Agreement..........................................
Certain Legal Aspects of the Deposited Assets...............................
Federal Income Tax Consequences.............................................
State Tax Consequences......................................................
ERISA Considerations........................................................
Plan of Distribution........................................................
Ratings.....................................................................
Legal Opinions..............................................................
Index of Terms..............................................................
PROSPECTUS
Prospectus Supplement.......................................................
Available Information.......................................................
Incorporation of Certain Information by Reference...........................
Reports to Certificateholders...............................................
Risk Factors................................................................
The Depositor...............................................................
Use of Proceeds.............................................................
Formation of the Trust......................................................
Maturity and Yield Considerations...........................................
Description of Certificates.................................................
Description of Deposited Assets and Credit Support..........................
Description of the Trust Agreement..........................................
Plan of Distribution........................................................
Legal Opinions..............................................................
Index of Terms..............................................................
_________________
Until 90 days after the date of each Prospectus Supplement, all dealers
effecting transactions in the related Certificates, whether or not participating
in the distribution thereof, may be required to deliver this Prospectus and the
related Prospectus Supplement. This delivery requirement is in addition to the
obligation of dealers to deliver a Prospectus Supplement and Prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
================================================================================
================================================================================
$______________________
SOUTHPOINT STRUCTURED
ASSETS, INC.
TRUST CERTIFICATES, SERIES ___
-------------------
PROSPECTUS SUPPLEMENT
-------------------
[UNDERWRITER]
_____________, 199__
================================================================================
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Subject to Completion Dated ____, 1996
Prospectus Supplement
(To Prospectus Dated __________, 1996)
Trust Certificates, Series 1996 - [ ]
$ [Notional Amount] [(Approximate)], Class Certificates,
[ %] [Variable] Pass Through Rate
$ [Notional Amount] [(Approximate)], Class Certificates,
[ %] [Variable] Pass Through Rate
Southpoint Structured Assets, Inc.
Depositor
Each Trust Certificate Series 1996--[ ] offered hereby will consist of
classes of Certificates, designated as Class Certificates[,] [and] Class
Certificates [and list others], [all] of which [only the Class Certificates[,]
[and] Class Certificates [and list others]] (collectively, the "Certificates")
and will represent a fractional undivided beneficial interest in the Series
1996--[ ] Trust (the "Trust") to be formed pursuant to the Trust Agreement dated
as of [ ], between Southpoint Structured Assets, Inc. (the "Depositor") and [ ],
as trustee (the "Trustee"), as supplemented by the Series 1996--[ ] Supplement
dated as of [ ] (collectively, the "Trust Agreement"). The property of the Trust
will consist in part of [$][ ] aggregate principal amount of [a [%][floating
rate] [specify publicly issued debt security] due of [specify issuer]] [a pool
of [%] [floating rate] publicly issued debt securities having a term of [not
less than years and not more than years] issued by [the United States of
America] [U.S. Government sponsored entity issuers] [Government Trust
Certificates ("GTCs") [provided that such GTCs, together with any AID-Guaranteed
Underlying Securities (as defined below), shall not account for 20% or more of
the aggregate cash flows on the Underlying Securities securing any Series of
Certificates]] [obligations guaranteed by the United States Agency for
International Development ("AID--GUARANTEED UNDERLYING SECURITIES") [provided
that such AID-Guaranteed Underlying Securities, together with any GTCs, shall
not account for 20% or more of the aggregate cash flows on the Underlying
Securities securing any Series of Certificates]] [(other than the Retained
Interest referred to herein)] (collectively, the "Underlying Securities"), and
having the characteristics described herein under "DESCRIPTION OF THE DEPOSITED
ASSETS." Terms used but not otherwise defined herein are defined in the
Prospectus attached hereto (the "Prospectus").
The Underlying Securities will be acquired by the Depositor and, pursuant
to the Trust Agreement, deposited into the Trust for the benefit of
Certificateholders. [The Underlying Securities were issued and sold as part of
an underwritten public offering in [ ].] The Underlying Securities are
obligations of the Underlying Securities Issuer and [explain whether senior or
subordinate, whether secured or unsecured and whether subject to any redemption
or put rights]. [Describe any required principal payments of Underlying
Securities.]
Distributions on the Certificates will be made [monthly] [quarterly]
[semi-annually] on [[ ] of each year] [to be conformed to interest payment dates
for Underlying Securities], or, if any such date is not a business day, then on
the immediately following business day (each, a "Distribution Date") commencing
[ ]. The last day on which distributions are scheduled to be made on the
Certificates is [ ] (the "Final Distribution Date"), by which date the holders
of the Certificates will receive a distribution of all amounts allocable to
principal on such Certificates or, to the extent specified herein, a pro rata
share of any remaining Underlying Securities.
[The Certificates are redeemable in whole on any Distribution Date on or
after the _________________, 19__ Distribution Date at a price equal to par (the
"Redemption Price") plus accrued and unpaid interest, upon exercise of the
optional redemption right by the holder of the Call Warrant. See "RISK FACTORS--
MATURITY AND YIELD CONSIDERATIONS" and "DESCRIPTION OF THE CERTIFICATES--
OPTIONAL REDEMPTION" herein.]
[The Certificates have been authorized for listing, upon official notice
of issuance, with the [name of exchange].]
See "RISK FACTORS" herein on page [_] to [_] and in the Prospectus on pages
[*] to [*].
---------------------------
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT REPRESENT
AN OBLIGATION OF OR INTEREST IN THE DEPOSITOR OR ANY OF ITS RESPECTIVE
AFFILIATES. THE CERTIFICATES DO NOT REPRESENT A DIRECT OBLIGATION OF THE
UNDERLYING SECURITIES ISSUER OR ANY OF ITS AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------
The Underwriter has agreed to purchase the Certificates from the Depositor
at [ ]% of the Certificate Principal Balance thereof ($[ ] aggregate proceeds to
the Depositor, before deducting expenses estimated at $[ ]) plus accrued
interest, if any, at the Pass-Through Rate calculated form [ ], 1996 (the
"Expected Settlement Date"), subject to the terms and conditions set forth in
the Underwriting Agreement referred to herein under "PLAN OF DISTRIBUTION."
The Underwriter proposes to offer the Certificates from time to time for
sale in negotiated transactions or otherwise, at prices determined at the time
of sale. For further information with respect to the plan of distribution and
any discounts, commissions or profits that may be deemed underwriting discounts
or commissions, see "PLAN OF DISTRIBUTION."
The Certificates are offered subject to receipt and acceptance by the
Underwriter, to prior sale and to the Underwriter's right to reject any order
in whole or in part and to withdraw, cancel or modify the offer without notice.
It is expected that delivery of the [specify applicable classes] Certificates
will be made in book-entry form through the facilities of The Depository Trust
Company on or about the Expected Settlement Date.
[NAME OF UNDERWRITER]
__________, 1996
<PAGE>
As and to the extent described herein, collections received by the Trustee
with respect to the Deposited Assets will be distributed to Certificateholders
[of each class] in the manner and priority described herein. [The rights of the
holders of the Class Certificates [and specify other classes] to receive
distributions of such collections are subordinated to the rights of the holders
of the Class Certificates [and specify other classes].] As and to the extent
described herein, losses realized on the Deposited Assets will be borne by the
holders of the Class Certificates [and specify other classes] before such losses
will be borne by the holders of the other classes of Offered Certificates [and
the Class Certificates [and specify other classes]]. To the extent described
herein, the relative priorities of each class of Certificates with respect to
collections from and losses on the Deposited Assets may each change over time,
either permanently or temporarily, upon the occurrence of certain circumstances
specified herein. See "Description of the Certificates--Subordination."
The Underlying Securities Issuer is not participating in, and will not
receive any proceeds in connection with, this offering.
There is currently no secondary market for the Certificates, and there can
be no assurance that a secondary market for the Certificates will develop or, if
it does develop, that it will continue. See "Risk Factors" in the Prospectus.
[If and to the extent required by applicable law or regulation, this
Prospectus Supplement and the Prospectus will also be used by the Underwriter
after the completion of the offering in connection with offers and sales related
to market-making transactions in the Offered Certificates in which the
Underwriter acts as principal. The Underwriter may also act as agent in such
transactions. Sales will be made at negotiated prices determined at the time of
sale.]
The [specify applicable classes] Certificates initially will be represented
by certificates registered in the name of CEDE & Co., as nominee of The
Depository Trust Company ("DTC"). The interests of beneficial owners of such
Certificates will be represented by book entries on the records of participating
members of DTC. Definitive certificates will be available for such Certificates
only under the limited circumstances described herein. See "DESCRIPTION OF THE
CERTIFICATES--DEFINITIVE CERTIFICATES."
[IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVERALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.]
THE CERTIFICATES OFFERED BY THIS PROSPECTUS SUPPLEMENT WILL CONSTITUTE A
SEPARATE SERIES OF CERTIFICATES BEING OFFERED BY THE DEPOSITOR PURSUANT TO ITS
PROSPECTUS DATED __________, 1996, OF WHICH THIS PROSPECTUS SUPPLEMENT IS A PART
AND WHICH ACCOMPANIES THIS PROSPECTUS SUPPLEMENT. THE PROSPECTUS CONTAINS
IMPORTANT INFORMATION REGARDING THIS OFFERING WHICH IS NOT CONTAINED HEREIN, AND
PROSPECTIVE INVESTORS ARE URGED TO READ THE PROSPECTUS
S-2
<PAGE>
and this prospectus supplement in full. In particular, investors should consider
carefully the factors set forth under "Risk Factors" in the prospectus and in
this Prospectus Supplement.
Until ________, 1996, all Dealers effecting transactions in the offered
certificates, whether or not participating in this distribution, may be required
to deliver a Prospectus Supplement and the Prospectus to which it relates. This
delivery requirement is in addition to the obligation of dealers to deliver a
Prospectus Supplement and Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
S-3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
HEADING PAGE
<S> <C>
SUMMARY OF PRINCIPAL ECONOMIC TERMS............................ S-6
The Certificates............................................ S-6
The Underlying Securities................................... S-8
Other Deposited Assets...................................... S-9
SUMMARY OF PROSPECTUS SUPPLEMENT............................... S-10
FORMATION OF THE TRUST......................................... S-14
RISK FACTORS................................................... S-14
DESCRIPTION OF THE DEPOSITED ASSETS............................ S-15
General..................................................... S-15
The Federal National Mortgage Association................... S-19
The Federal Home Loan Mortgage Corporation.................. S-19
The Student Loan Marketing Association...................... S-20
The Resolution Funding Corporation.......................... S-20
The Federal Home Loan Banks................................. S-21
Tennessee Valley Authority.................................. S-22
Federal Farm Credit Banks................................... S-22
Government Trust Certificates............................... S-23
AID-Guaranteed Underlying Securities........................ S-24
[DESCRIPTION OF CREDIT SUPPORT]................................ S-27
The Letter of Credit........................................ S-27
The Surety Bond............................................. S-28
Reserve Account............................................. S-28
YIELD ON THE CERTIFICATES...................................... S-28
DESCRIPTION OF THE CERTIFICATES................................ S-29
General..................................................... S-29
Definitive Certificates..................................... S-30
Distributions............................................... S-30
Optional Redemption......................................... S-32
Advances.................................................... S-33
Restrictions on Transfer of the Class [E] Certificates...... S-33
</TABLE>
S-4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
DESCRIPTION OF THE TRUST AGREEMENT............................. S-33
General..................................................... S-33
The Trustee................................................. S-34
Events of Default........................................... S-34
Voting Rights............................................... S-35
Voting of Underlying Securities, Modification of Indenture.. S-35
Termination................................................. S-37
CERTAIN LEGAL ASPECTS OF THE DEPOSITED ASSETS.................. S-37
FEDERAL INCOME TAX CONSEQUENCES................................ S-37
Grantor Trust Certificates.................................. S-38
Income of Certificate Owners................................ S-38
Bond Premium................................................ S-42
Election to Treat All Interest as Original Issue Discount... S-42
Modification or Exchange of Underlying Securities........... S-43
Deductibility of Trust,s Fees and Expenses.................. S-43
Purchase and Sale of a Certificate.......................... S-43
Backup Withholding.......................................... S-44
Foreign Certificate Owners.................................. S-44
Partnership Certificates.................................... S-45
Partnership Taxation........................................ S-46
Discount and Premium........................................ S-46
Modification or Exchange of Underlying Securities........... S-47
Tax Consequences of Other Assets Held by Trust.............. S-47
Section 708 Termination..................................... S-47
Disposition of Certificates................................. S-47
Allocations Between Transferors and Transferees............. S-48
Section 754 Election........................................ S-48
Administrative Matters...................................... S-49
Tax Consequences to Foreign Certificate Owners.............. S-50
STATE TAX CONSEQUENCES......................................... S-50
ERISA CONSIDERATIONS........................................... S-50
PLAN OF DISTRIBUTION........................................... S-52
RATINGS........................................................ S-53
LEGAL OPINIONS................................................. S-54
INDEX OF TERMS................................................. S-55
</TABLE>
S-5
<PAGE>
SUMMARY OF PRINCIPAL ECONOMIC TERMS
The following summary of principal economic terms does not purport to be
complete and is qualified in its entirety by reference to the detailed
information appearing elsewhere herein and in the Prospectus, including under
the headings "Description of the Certificates," "Description of the Underlying
Securities" and "Description of Credit Support." Certain capitalized terms used
herein are defined elsewhere in this Prospectus Supplement on the pages
indicated in the "Index of Terms" or, to the extent not defined herein, have the
meanings assigned to such terms in the Prospectus.
THE CERTIFICATES
The Trust.....................Series 1996-[ ] Trust. The Trust will be formed
pursuant to the Trust Agreement dated as of [ ]
(the "Base Trust Agreement"), between the
Depositor and the Trustee, as supplemented by the
Series 1996-[] Supplement dated as of the Expected
Settlement Date (the "Series Supplement" and,
together with the Base Trust Agreement, the "Trust
Agreement").
Certificates Offered..........Trust Certificates, Series 1996-[], consisting of
Class [] Certificates[,] [and] Class []
Certificates [and specify others](collectively,
the "Certificates").
[Initial Certificate
Principal Balance]
[Notional Amount].............Class [ ]: [$] [ ]. Class [ ]: [$] [ ].
Final Distribution Date.......Class [ ]. Class [ ]. [The actual maturity of each
Class may be longer or shorter than the Final
Distribution Date.]
Pass-Through Rates............[The Variable Pass-Through Rates applicable to the
calculation of the interest distributable on any
Distribution Date on the Certificates [(other than
the Class [ ] Certificates)] are equal to
[describe method for determining variable rates].
The initial
Variable Pass-Through Rates for the Class [ ]
Certificates [,] [and] the Class [ ] Certificates
[and specify others] are approximately ___%[,]
[and] ___% [and ___%] per annum, respectively.]
[The Pass-Through Rate applicable to the
calculation of the interest distributable on any
Distribution Date on the
S-6
<PAGE>
[specify classes] Certificates is fixed at ___%
[and ___%, respectively,] per annum.]
Deposited Assets............The Deposited Assets shall consist of the Underlying
Securities [and describe any assets which are
ancillary or incidental to the Underlying
Securities]. See "--THE UNDERLYING SECURITIES" [,
"--OTHER DEPOSITED ASSETS"] and "DESCRIPTION OF THE
DEPOSITED ASSETS" below.
Original Issue Date.........[ ].
Cut-off Date................[ ].
Distribution Date...........[ ], commencing [ ].
Record Date.................The [ ] day immediately preceding each Distribution
Date.
Denominations...............The Class [ ] Certificates [,] [and] Class [ ]
Certificates [and specify others] will be available
for purchase in minimum denominations of [$] [ ]
and [integral multiples thereof] [multiples of [$]
[ ] in excess thereof].
Interest Accrual
Periods.....................[Monthly] [Quarterly] [Semi-annually] (or, in the
case of the first Interest Accrual Period, from and
including the Original Issue Date to but excluding
the first Distribution Date).
[Optional Redemption........On any Distribution Date occurring on or after the
Distribution Date occurring in ___________, 19__,
the Certificates may be redeemed by the Depositor,
in whole only, at a price equal to the Redemption
Price.]
[Redemption Price...........___________.]
Form of Security............Book-entry Certificates with The Depository Trust
Company ("DTC"), except in certain limited
circumstances. See "DESCRIPTION OF THE CERTIFICATES
--DEFINITIVE CERTIFICATES." Distributions thereon
will be settled in [immediately available (same-
day)][clearinghouse (next-day)] funds.
Trustee.....................[ ], as trustee.
S-7
<PAGE>
Trustee Fee.................[$] payable by the Depositor on the Original Issue
Date.
Administrative Agent........[ ], as Administrative Agent.
Administrative Agent Fee....[$], payable by the Depositor on the Original Issue
Date.
Ratings.....................[ ] by [ ][and[ ] by [ ]]. [Specify specific ratings
requirements for particular classes, including the
extent to which the issuance of the Certificates of
a given class is conditioned upon satisfaction of
the ratings of each other class of Certificates.]
See "RATINGS."
THE UNDERLYING SECURITIES
Underlying Securities.......[A [ ]%] [floating rate] [publicly issued [treasury]
[debt] security due [ ] [A pool of publicly issued
[treasury securities] [debt securities of various
United States government sponsored entities]
[Government Trust Certificates ("GTCs") [provided
that such GTCs, together with any AID-Guaranteed
Underlying Securities (as defined below), shall not
account for 20% or more of the aggregate cash flows
on the Underlying Securities securing any Series of
Certificates]] [obligations guaranteed by the United
States Agency for International Development ("AID-
GUARANTEED UNDERLYING SECURITIES") [provided that
such AID-Guaranteed Underlying Securities, together
with any GTCs, shall not account for 20% or more of
the aggregate cash flows on the Underlying
Securities securing any Series of Certificates]],
exclusive of the Retained Interest] [in/having] an
aggregate principal amount of [$][ ].
[GSE Issuer]................[Specify issuer] [Pool of various U.S. government
sponsored entity issuers].
Underlying Securities
Original Issue Date.........[ ].
Underlying Securities
Final Payment Date..........[ ].
Amortization................[Describe amortization schedule, if any].
S-8
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Denominations...................... The Underlying Securities are available in minimum
denominations of [$] [_] and [integral multiples
thereof] [multiples of [$][_] in excess thereof].
Underlying Securities
Payment Dates...................... [_], commencing [_].
Underlying Securities Rate......... [ % per annum.] [A [Weighted Average] rate per
annum equal to [specify interest rate formula for debt
security].]
Underlying Securities
Interest Accrual Periods........... [Monthly] [Quarterly] [Semi-annually].
Priority........................... [Describe senior or subordinated status of Underlying
Securities].
Security........................... [Describe existence of any security for obligations or
state that Underlying Securities are unsecured].
Redemption/Put/Other Features...... [Describe existence of any redemption, put or other
material features applicable to the Underlying
Securities].
Form of Underlying Securities...... Book-entry debt securities with [DTC] [Federal
Reserve Bank] [listed on the [New York] [American]
Stock Exchange [specify other listing]].
[Fiscal Agent]..................... [_]. [The Underlying Securities have not been issued
pursuant to [an indenture and no trustee is provided
for.] [_] acts as fiscal agent for the Outstanding Debt
Securities pursuant to an agreement dated as of [_],
19[_] (the "Fiscal Agency Agreement"), between the
Fiscal Agent and the GSE Issuer.
Ratings of the Underlying
Securities......................... [_] by [_] [and [_] by [_]]. See "DESCRIPTION OF THE
UNDERLYING SECURITIES--RATINGS OF UNDERLYING SECURITIES."
</TABLE>
OTHER DEPOSITED ASSETS
[Provide similar tabular summary description of the principal economic
terms of any credit support or other ancillary or incidental asset.]
S-9
<PAGE>
SUMMARY OF PROSPECTUS SUPPLEMENT
The following summary does not purport to be complete and is qualified in
its entirety by reference to the detailed information appearing elsewhere herein
and in the Prospectus.
Depositor.................... Southpoint Structured Assets, Inc. (the
"Depositor"), an indirect wholly-owned subsidiary
of Morgan Keegan, Inc. See "The Depositor" in the
Prospectus.
Certificates................. The Certificates, each of which represents a
fractional undivided beneficial interest in the
Trust, will be issued pursuant to the Trust
Agreement. The Certificates will consist of [ ]
classes, designated as Class [ ] Certificates
[and] [,] Class [ ] Certificates [and [specify
other classes]], [all] of which [all but the Class
[ ] Certificates] are being offered hereby
(collectively, the "Certificates").
The Certificate Principal Balance of a Certificate
outstanding at any time represents the maximum
amount that the holder thereof is entitled to
receive as distributions allocable to principal.
The Certificate Principal Balance of a Certificate
will decline to the extent distributions allocable
to principal are made to such holder. [The
Notional Amount of the Class [ ] Certificates as
of any date of determination is equal to
[specify].
Reference to the Notional Amount of the Class [ ]
Certificates is solely for convenience in
determining the basis on which distributions on
the Class [ ] Certificates are calculated [and
determining the relative voting rights of
Certificateholders of Class [ ] Certificates for
purposes of voting on a class-by-class basis or
otherwise]. The Notional Amount does not represent
the right to receive any distributions allocable
to principal.]
[The Class [ ] Certificates, which are not being
offered hereby, have in the aggregate an initial
Certificate Principal Balance of [$][ ]
(approximate) and a [Variable] Pass-Through Rate
[of ___%]. The Class [ ] Certificates represent
the right to receive distributions in respect of
their Certificate Principal Balance and interest
thereon at their applicable Pass-Through Rate.]
Shortfalls in collections with respect to
S-10
<PAGE>
the Deposited Assets will be allocated solely to
the Class [ ] Certificates to the extent provided
herein and, thereafter, will be allocated among
the Certificates and the Class [ ] Certificates,
as provided herein. [The Class [ ] Certificates
will be transferred by the Depositor to an
affiliate on or about ________, 1996 (the "Closing
Date"), and may be sold at any time in accordance
with any restrictions in the Trust Agreement.]]
The Underlying Securities... Interest on the Underlying Securities accrues at
the Underlying Securities Rate for each Underlying
Securities Accrual Period and is payable on each
Underlying Securities Payment Date. The entire
principal amount of the Underlying Securities will
be payable on the Underlying Securities Final
Payment Date. [The Underlying Securities have a
remaining term to maturity of approximately
years.] [As of the Cut-off Date, the pool of
Underlying Securities has a weighted average
interest rate of [%] and a weighted average
remaining term to maturity of approximately ___
years. Approximately [%] [specify if greater than
10%] of such Underlying Securities consist of debt
securities of [specify U.S. government sponsored
entity or agency].
[Name such obligor] is a [U.S. government-
sponsored entity][specify other] whose principal
executive offices are located at [specify
address]. The obligor [makes available to the
public upon request certain annual financial and
other information]. See "DESCRIPTION OF THE
DEPOSITED ASSETS."
[Other Deposited
Assets and Credit Support... The Deposited Assets will also include [describe
any assets which are ancillary or incidental to
the Underlying Securities, including hedging
contracts such as puts, calls, interest rate
swaps, currency swaps, floors, caps and collars]
(such assets, together with the Underlying
Securities, the "Deposited Assets"). See
"DESCRIPTION OF THE DEPOSITED ASSETS."
The Certificateholders of the [specify particular
classes] Certificates will have the benefit of
[describe credit support] to support or ensure the
[servicing and] [timely] [ultimate] distribution
of amounts due with
S-11
<PAGE>
respect to the Deposited Assets, including
providing certain coverage with respect to losses
thereon.]
Distributions............... Holders of the Certificates will be entitled to
receive on each Distribution Date, to the extent
of available funds on such Distribution Date,
after payment of the expenses of the Trustee and
its respective agents up to the Allowable Expense
Amount, (i) [in the case of each class of
Certificates other than the Class [ ]
Certificates,] distributions allocable to interest
at the applicable Pass-Through Rate on the
applicable Certificate Principal Balance, (ii) [in
the case of each class of Certificates other than
the Class [ ] Certificates,] distributions
allocable to principal and (iii) [in the case of
each class of Certificates other than the Class
[ ] Certificates,] distributions allocable to
premium (if any) in an amount equal to all
payments of premium (if any) received on the
Underlying Securities for the applicable
Collection Period. Distributions will be made to
Certificateholders only if, and to the extent
that, payments are made with respect to the
Deposited Assets or are otherwise covered by any
Credit Support. [The holders of the Class [ ]
Certificates will be entitled to receive on each
Distribution Date distributions allocable to
interest in an amount equal to [describe Stripped
Interest].] [The holders of the Class [ ]
Certificates will not be entitled to receive any
distributions allocable to principal or premium
(if any).] See "DESCRIPTION OF THE
CERTIFICATES--DISTRIBUTIONS."
Special Distribution Dates.. If a payment with respect to the Underlying
Securities is made to the Trustee after the
Underlying Securities Payment Date on which such
payment was due, then the Trustee shall distribute
any such amount received on the next occurring
Business Day (a "SPECIAL DISTRIBUTION DATE") as if
such funds had constituted Available Funds on the
Distribution Date immediately preceding such
Special Distribution Date; provided, however, that
the Record Date for such Special Distribution Date
shall be [five Business Days (as such term is
defined in the Prospectus, "BUSINESS DAY") prior
to the day on] which the related payment was
received from the Underlying Securities Trustee.
S-12
<PAGE>
[Subordination................As and to the extent described herein, the rights
of the holders of the Class [] Certificates [and
specify other classes] to receive distributions of
principal, premium (if any), and interest with
respect to the Deposited Assets will be
subordinated to the rights of the holders of the
other classes of Certificates with respect to
losses attributable to principal, premium (if any)
and interest realized on a Deposited Asset (such
losses, "Realized Losses"). See "DESCRIPTION OF
THE CERTIFICATES--ALLOCATION OF LOSSES;
SUBORDINATION."]
[Optional Termination.........At its option, the [Depositor] may purchase all
the Deposited Assets in the Trust, and thereby
cause the termination of the Trust and early
retirement of the Certificates, on any
Distribution Date on which the aggregate principal
amount of the Deposited Assets remaining in the
Trust is less than [10%] of the aggregate
principal amount of the Deposited Assets as of the
Cut-off Date. [Specify any other purchase or
repurchase option of the Depositor.]
See "DESCRIPTION OF THE TRUST AGREEMENT--
TERMINATION" herein and in the Prospectus.]
Federal Income
Tax Consequences..............In the opinion of tax counsel to the Trust, the
Trust will be classified for Federal income tax
purposes [as a grantor trust] [as a partnership]
and not as an association taxable as a
corporation. See "FEDERAL INCOME TAX
CONSEQUENCES."
Ratings.......................It is a condition to the issuance of the
Certificates that the Certificates have the
ratings specified above under "SUMMARY OF
PRINCIPAL ECONOMIC TERMS--THE CERTIFICATES--
RATINGS." A security rating is not a
recommendation to buy, sell or hold securities and
may be subject to revision or withdrawal at any
time by the assigning rating agency. A security
rating does not address the occurrence or
frequency of redemptions or prepayments on, or
extensions of the maturity of, the Deposited
Assets, the corresponding effect on yield to
investors [or whether investors in the Class [E]
Certificates may fail to recover fully their
initial investment]. See "RATINGS."
S-13
<PAGE>
ERISA Considerations..........An employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), and an individual retirement account
(each, a "Plan") may purchase Certificates of any
class if either (i) the Depositor is able to
confirm the existence of at least 100 independent
purchasers of such class or (ii) the Plan can
represent that its purchase of the Certificates
would not be prohibited under ERISA or the Code.
See "ERISA CONSIDERATIONS."
FORMATION OF THE TRUST
The Trust will be formed pursuant to the Trust Agreement (including the
Series [ ] Supplement) between the Depositor and the Trustee. Concurrently with
the execution and delivery of the Series [ ] Supplement, the Depositor will
deposit the Underlying Securities in the Trust. The Trustee, on behalf of the
Trust, will accept such Underlying Securities and will deliver the Certificates
to or upon the order of the Depositor.
The Underlying Securities will be purchased by the Depositor in the
secondary market (either directly or through an affiliate of the Depositor).
The Underlying Securities will not be acquired from any GSE Issuer as part of
any distribution by or pursuant to any agreement with such issuer. [No] [The]
GSE Issuer is [not] participating in this offering and [none] will [not] receive
any of the proceeds of the sale of the Underlying Securities to the Depositor or
the issuance of the Certificates. [Neither the Depositor nor any of its
affiliates participated in the initial public offering of the Underlying
Securities] [Morgan Keegan & Company, Inc., an affiliate of the Depositor,
participated in the initial public offering of the Underlying Securities as a
[co-underwriter] [underwriter]].
RISK FACTORS
[Describe risk factors applicable to the specific Underlying Securities,
other Deposited Assets and the particular structure of the Certificates being
offered, including factors relating to the yield on the Certificates, risks
associated with any concentration of credit, and risks associated with the
Deposited Assets (including any material risks as a result of the inclusion in
the Deposited Assets of GTCs or AID-Guaranteed Underlying Securities) and the
terms thereof, as described elsewhere herein.] See "Risk Factors" and "Maturity
and Yield Considerations" in the Prospectus.
[The Underlying Securities are not guaranteed by the federal government or
any agency or instrumentally thereof, other than the Underlying Securities
Issuer.]
S-14
<PAGE>
DESCRIPTION OF THE DEPOSITED ASSETS
GENERAL
This Prospectus Supplement sets forth certain relevant terms with respect
to the Underlying Securities, but does not provide detailed information with
respect to the Underlying Securities. This Prospectus Supplement relates only
to the Certificates offered hereby and does not relate to the Deposited Assets.
All disclosure contained herein with respect to the Underlying Securities is
derived from publicly available documents. [Identify publicly available
documents]. Although the Depositor has no reason to believe the information
concerning the Underlying Securities, or any GSE Issuer in the Underlying
Securities Prospectus[es] [and other publicly available information] is not
reliable, neither the Depositor nor any of the Underwriters has participated in
the preparation of such documents, or made any due diligence inquiry with
respect to the information provided therein. There can be no assurance that
events affecting the Underlying Securities or a GSE Issuer have not occurred,
which have not yet been publicly disclosed, which would affect the accuracy or
completeness of the publicly available documents described above.
[The Underlying Securities will be deposited into the Trust subject to the
right of the holder of the Retained Interest to receive on each Distribution
Date from payments received on the Underlying Securities, a distribution equal
to [%] per annum multiplied by the principal amount of the Underlying Securities
(the "Interest Strip"). The right of the holder of the Retained Interest to
receive the Interest Strip is of equal priority with the rights of the
Certificateholders to receive distributions of interest on the Certificates.]
[Use the following where the Underlying Securities consist of a pool of
obligations of multiple obligors.]
[The Deposited Assets will consist primarily of the Underlying Securities,
which are a pool of [treasury securities] [and] [publicly issued debt securities
of U.S. government-sponsored entities][Government Trust Certificates
("GTCs")[provided that such GTCs, together with any AID-Guaranteed Underlying
Securities (as defined below), shall not account for 20% or more of the
aggregate cash flows on the Underlying Securities securing any series of
Certificates]][obligations guaranteed by the United States Agency for
International Development ("AID-GUARANTEED UNDERLYING SECURITIES")[provided that
such AID-Guaranteed Underlying Securities, together with any GTCs, shall not
account for 20% or more of the aggregate cash flows on the Underlying Securities
securing any Series of Certificates]]. The Underlying Securities will be
purchased by the Depositor in the secondary market (either directly or through
an affiliate of the Depositor) and will be deposited into the Trust. The
Underlying Securities will not be acquired either from the respective obligors
on the Underlying Securities or pursuant to any distribution by or agreement
with such obligors.
The composition of the Underlying Securities pool and the distribution by
ratings, remaining term to maturity and interest rate of the Underlying
Securities as of the Cut-off Date are as set forth below:
S-15
<PAGE>
Composition of the Underlying Securities Pool
as of the Cut-Off Date
Number of Underlying Securities:
Aggregate Principal Balance: [$]
Average Principal Balance: [$]
Largest Balance: [$]
Weighted Average Interest Rate: %
Weighted Average Original Term to Maturity: years
Weighted Average Remaining Term to Maturity: years
Longest Remaining Term to Maturity: years
Distribution by Ratings of the
Underlying Securities Pool as of the Cut-Off Date
<TABLE>
<CAPTION>
Percent of
Aggregate Aggregate
Rating Number Principal Balance Principal Balance
<S> <C> <C> <C>
_____________ _____________ _____________
Total ============= ============= =============
</TABLE>
Distribution by Remaining Term to Maturity
of the Underlying Securities Pool as of the Cut-Off Date
<TABLE>
<CAPTION>
Percent of
Remaining Term to Aggregate Aggregate
Maturity Number Principal Balance Principal Balance
<S> <C> <C> <C>
_____________ ______________ _____________
Total ============= ============== =============
</TABLE>
S-16
<PAGE>
Distribution by Interest Rate of the
Underlying Securities Pool as of the Cut-off Date
<TABLE>
<CAPTION>
Percent of
Aggregate Aggregate
Rating Number Principal Balance Principal Balance
<S> <C> <C> <C>
% to % [$] %
Greater than % ____________ ________________ ______________
[$] 100%
Total =============== ============ ==============
</TABLE>
The Underlying Securities consist of [treasury securities] [debt securities
of U.S. government-sponsored entities] [GTCs [provided that such GTCs, together
with any AID-Guaranteed Underlying Securities, shall not account for 20% or more
of the aggregate cash flows on the Underlying Securities securing any Series of
Certificates]] [AID-Guaranteed Underlying Securities [provided that such AID-
Guaranteed Underlying Securities, together with any GTCs, shall not account for
20% or more of the aggregate cash flows on the Underlying Securities securing
any Series of Certificates]]. As of the Cut-off Date, [all of] [approximately
% of] such Underlying Securities were rated [investment grade] [specify
particular rating] by at least one nationally recognized rating agency, and,
based on publicly available information, no obligor on any Underlying Security
was in default in the payment of any installments of principal, interest or
premium (if any) with respect thereto. Any such rating of any of the Underlying
Securities is not a recommendation to purchase, hold or sell such Underlying
Security or the Certificates, and there can be no assurance that a rating will
remain for any given period of time or that a rating will not be lowered or
withdrawn entirely by a rating agency if in its judgment circumstances in the
future so warrant. See "Ratings" herein and "Risk Factors--Ratings of the
Certificates" in the accompanying Prospectus regarding certain considerations
applicable to the ratings of the Certificates.
[The following is a summary of the typical Underlying Security Events of
Default for each series of Outstanding Debt Securities. Any additional
Underlying Security Events of Default unique to a Concentrated Underlying
Security have been described following the summary:
(a) failure to make payments of principal (and premium, if any) and
interest to holders of the Outstanding Debt Securities when the same shall
be due;
(b) material breaches of certain representations, warranties or
covenants or failure to observe or perform in any material respect any
covenant or agreement continuing for a specified period of time after
notice thereof is given to the GSE
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Issuer by the holders of not less than a specified percentage of the
Outstanding Debt Securities;
(c) certain events of bankruptcy or insolvency relating to the GSE
Issuer[; and
(d) describe any additional common events of default with respect
to the pool of Underlying Securities].]
As of the Cut-off Date, [all of] [approximately ___% of] the Underlying
Securities were [subject to [describe any put, call or other conversion or
redemption options applicable to the Underlying Securities]] [and [all of]
[approximately % of] the Underlying Securities were [describe the nature of
the obligation represented by such Underlying Securities (i.e., senior,
subordinate, secured) and describe commonalities with respect to any
subordination or security provisions or collateral.]]
The pool of Underlying Securities, together with any other assets described
below and any Credit Support described under "Description of Credit Support,"
represent the sole assets of the Trust that are available to make distributions
in respect of the Certificates.]
[Use the following with respect to each obligor the Underlying Securities
of which represent more than 10% of the total Underlying Securities available to
make distributions in respect of the Certificates -- only a single obligor is
referred to for purposes of this section of the form of Prospectus Supplement.]
[A significant portion of] [Virtually all of] [All of] the Deposited Assets
of the Trust will consist of the [___%] [floating rate] [specify publicly issued
debt security] due of [specify issuer][, exclusive of the interest therein
retained by [the Depositor] as described below (the "Retained Interest")],
having an aggregate principal amount outstanding as of the Cut-off Date of
approximately [$] (the "Underlying Securities"). The Underlying Securities
(other than Underlying Securities which are issued by the United States of
America) will be purchased by the Depositor in the secondary market (either
directly or through an affiliate of the Depositor) and will be deposited into
the Trust. The Underlying Securities will not be acquired either from [name such
obligor] or pursuant to any distribution by or agreement with [name such
obligor]. [Describe any put, call or other conversion or redemption options
applicable to the Underlying Securities, as well as the nature of the obligation
represented by such Underlying Securities (i.e., senior, subordinate, secured)].
As of the Cut-off Date, the foregoing debt security comprising [ %] of the
Underlying Securities was rated [specify investment grade rating] [investment
grade] by [specify nationally recognized rating agency or agencies], and, based
on publicly available information, the obligor thereon was not in default in the
payment of any installments of principal, interest or premium (if any) with
respect thereto. Any such rating such Underlying Securities is not a
recommendation to purchase, hold or sell such Underlying Securities or the
Certificates, and there can be no assurance that a rating will remain for any
given period of time or that a rating will not be lowered or withdrawn entirely
by a rating agency if in its judgment circumstances in the future so warrant.
See "Ratings" herein and "Risk Factors -- Ratings of the
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Certificates" in the accompanying Prospectus regarding certain considerations
applicable to the ratings of the Certificates.
[THE FEDERAL NATIONAL MORTGAGE ASSOCIATION
The Federal National Mortgage Association ("Fannie Mae") is a federally
chartered and stockholder-owned corporation organized and existing under the
Federal National Mortgage Association Charter Act, 12 U.S.C. 1716 et seq. It is
the largest investor in home mortgage loans in the United States. Fannie Mae
originally was established in 1938, as a United States government agency to
provide supplemental liquidity to the mortgage market and was transformed into a
stockholder-owned and privately managed corporation by legislation enacted in
1968. Fannie Mae provides funds to the mortgage market by purchasing mortgage
loans from lenders, thereby replenishing their funds for additional lending.
Fannie Mae acquires funds to purchase loans from many capital market investors
that ordinarily may not invest in mortgage loans, thereby expanding the total
amount of funds available for housing. Operating nationwide, Fannie Mae helps to
redistribute mortgage funds from capital-surplus to capital-short areas. Fannie
Mae also issues mortgaged-backed securities ("MBS"). Fannie Mae receives
guaranty fees for its guaranty of timely payments of principal of and interest
on MBS. Fannie Mae issues MBS primarily in exchange for pools of mortgage loans
from lenders. The issuance of MBS enables Fannie Mae to further its statutory
purpose of increasing the liquidity of residential mortgage loans.
Fannie Mae prepares an Information Statement annually which describes
Fannie Mae, its business and operations and contains Fannie Mae's audited
financial statements. From time to time Fannie Mae prepares supplements to its
Information Statement which include certain unaudited financial data and other
information concerning the business and operations of Fannie Mae. These
documents can be obtained without charge from Paul Paquin, Senior Vice
President--Investor Relations, Fannie Mae, 3900 Wisconsin Avenue, N.W.,
Washington, D.C. 20016 (telephone: (202) 752-7115). Fannie Mae is not
subject to the periodic reporting requirements of the Securities Exchange Act
of 1934.]
[THE FEDERAL HOME LOAN MORTGAGE CORPORATION
The Federal Home Loan Mortgage Corporation ("Freddie Mac") is a publicly
held government-sponsored enterprise created July 24, 1970 pursuant to the
Federal Home Loan Mortgage Corporation Act, Title III of the Emergency Home
Finance Act of 1970, as amended (the "FHLMC Act"). Freddie Mac's statutory
mission is to provide stability in the secondary market for home mortgages, to
respond appropriately to the private capital market and to provide ongoing
assistance to the secondary market for home mortgages (including mortgages
secured by housing for low- and moderate-income families involving a reasonable
economic return to Freddie Mac) by increasing the liquidity of mortgage
investments and improving the distribution of investment capital available for
home mortgage financing. The principal activity of Freddie Mac consists of the
purchase of first lien, conventional, residential mortgages and participation
interests in such mortgages from mortgage lending institutions and the resale of
the mortgages so purchased in the form of
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guaranteed mortgage securities. Freddie Mac generally matches and finances its
purchases or mortgages with sales of guaranteed securities. Mortgages retained
by Freddie Mac are financed with short-and long-term debt, cash temporarily held
pending disbursement to security holders, and equity capital.
Freddie Mac prepares an Information Statement annually which describes
Freddie Mac, its business and operations and contains Freddie Mac's audited
financial statements. From time to time Freddie Mac prepares supplements to is
Information Statement which include certain unaudited financial date and other
information concerning the business and operations of Freddie Mac. These
documents can be obtained from Freddie Mac by writing or calling Freddie Mac's
Investor Inquiry Department at 8200 Jones Branch Drive, McLean, Virginia 22102
(outside Washington, D.C. metropolitan area, telephone (800) 333-3672; within
Washington, D.C. metropolitan area, telephone (703) 759-8160). Freddie Mac is
not subject to the periodic reporting requirements of the Securities Exchange
Act of 1934.]
[THE STUDENT LOAN MARKETING ASSOCIATION
The Student Loan Marketing Association ("Sallie Mae") is a
stockholder-owned corporation established by the 1972 amendments to the Higher
Education Act of 1965,as amended, to provide liquidity, primarily through
secondary market and warehousing activities, for lenders participating in the
Federal Family Education Loan ("FFEL") program and the Health Education
Assistance Loan Program. Under the Higher Education Act, Sallie Mae is
authorized to purchase, warehouse, sell and offer participations or pooled
interest in, or otherwise deal in, student loans, including, but not limited to,
loans insured under the FFEL program, and to make commitments for any of the
foregoing. Sallie Mae is also authorized to buy, sell, hold, underwrite and
otherwise deal in obligations of eligible lenders, if such obligations are
issued by such eligible lender for the purpose of making or purchasing federally
guaranteed student loans under the Higher Education Act. As a federally
chartered corporation, Sallie Mae's structure and operational authorities are
subject to revision by amendments to the Higher Education Act of other federal
enactments.
Sallie Mae prepares an Information Statement annually which describes
Sallie Mae, its business and operations and contains Sallie Mae's audited
financial statements. From time to time Sallie Mae prepares supplements to its
Information Statement which include certain unaudited financial date and other
information concerning the business and operations of Sallie Mae. These
documents can be obtained without charge upon written request to the Corporate
and Investor Relations Division of Sallie Mae at 1050 Thomas Jefferson Street,
N.W., Washington, D.C. 20007, telephone (202) 298-3010. Sallie Mae is not
subject to the periodic reporting requirements of the Securities Exchange Act of
1934.]
[THE RESOLUTION FUNDING CORPORATION
The Resolution Funding Corporation (REFCORP") is a mixed-ownership
government corporation established by Title V of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989 (the "FIRRE Act"). The sole
purpose of the
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REFCORP is to provide financing for the Resolution Trust Corporation (the
"RTC"). REFCORP is to be dissolved, as soon as practicable, after the maturity
and full payment of all obligations issued by it. REFCORP is subject to the
general oversight and direction of the Oversight Board, which is comprised of
the Secretary of the Treasury, the Chairman of the Federal Reserve Board of
Governors, the Secretary of Housing and Urban Development and two independent
members from different political parties to be appointed by the President with
the advice and consent of the Senate. The day-to-day operations of REFCORP are
under the management of a three-member Directorate comprised of the Director of
the Office of Finance of the FHLBs and two members selected by the Oversight
Board from among the presidents of twelve FHLBs.
The RTC was established by the FIRRE Act to manage and resolve cases
involving failed savings and loan institutions pursuant to policies established
by the Oversight Board. The RTC is to manage and resolve cases for which a
receiver or conservator was appointed between January 1, 1989 through August 9,
1992. The RTC is authorized to issue nonvoting capital certificates to REFCORP
in exchange for the funds transferred from REFCORP to the RTC. The RTC will
terminate on or before December 31, 1996. the FIRRE Act limits the aggregate
principal amount of interest bearing obligations which may be issued by REFCORP
to $30 billion, which amount of obligations was issued in 1989. Pursuant to the
FIRRE Act, the net proceeds of these obligations are used to purchase nonvoting
capital certificates issued by the RTC or to retire previously issued REFCORP
obligations.
Information concerning REFCORP may be obtained from the Resolution Funding
Corporation, Suite 850, 655 Fifteenth Street, N.W., Washington, D.C. 20005.
REFCORP is not subject to the periodic reporting requirements of the Securities
Exchange Act of 1934.]
[THE FEDERAL HOME LOAN BANKS
The Federal Home Loan Banks constitute a system of twelve federally
chartered corporations (collectively, the FHLBS). The mission of each FHLB is
to enhance the availability of residential mortgage credit by providing a
readily available, low-cost source of funds to its member institutions. A
primary source of funds for the FHLBs is the proceeds from the sale to the
public of debt instruments issued by the Federal Housing Finance Board, which
are the joint and several obligations of all of the FHLBs. The FHLBs are
supervised and regulated by the Federal Housing Finance Board, which is an
independent federal agency in the executive branch of the United States
government, but obligations of the FHLBs are not obligations of the United
States government.
The Federal Home Loan Bank System produces annual and quarterly financial
reports in connection with the original offering and issuance by the Federal
Housing Finance Board of consolidated bonds and consolidated notes of the FHLBs.
Questions regarding the Federal Home Loan Banks Combined Financial Statement
should be directed to the Deputy Director, Financial Reporting and Operations
Divisions, Federal Housing Finance Board, 1777 F Street, N.W., Washington, D.C.
20006, (202) 406-2901. Copies of the Financial Reports will be furnished upon
request to the Capital Markets Divisions, Office of Finance.]
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<PAGE>
[TENNESSEE VALLEY AUTHORITY
TVA is a wholly owned corporate agency and instrumentality of the United
States of America established pursuant to the Tennessee Valley Authority Act of
1933, as amended the ("TVA Act"). TVA's objective is to develop the resources
of the Tennessee Valley region in order to strengthen the regional and national
economy and the national defense. The programs of TVA consist of power and
nonpower programs. For the fiscal year ending September 30, 1994, TVA received
$140 million in congressional appropriations from the federal government for the
nonpower programs. The power program is required to be self-supporting from
revenues it produces. The TVA Act authorizes TVA to issue evidences of
indebtedness that may only be used to finance its power program.
TVA prepares an Information Statement annually which describes TVA, its
business and operations and contains TVA's audited financial statements. From
time to time TVA prepares supplements to its Information Statement which include
certain unaudited financial data and other information concerning the business
and operations of TVA. These documents can be obtained upon written request
directed to Tennessee Valley Authority, 400 West Summit Hill Drive, Knoxville,
Tennessee 37902, Attention: Vice President and Treasurer, or by calling (615)
632-3366.]
[FEDERAL FARM CREDIT BANKS
The Farm Credit System is a nationwide system of lending institutions and
affiliated service and other entities (the "System"). Through its Banks
("FCBs") and related associations, the System provides credit and related
services to farmers, ranchers, producers and harvesters of aquatic products,
rural homeowners, certain farm-related businesses, agricultural and aquatic
cooperatives and rural utilities. System institutions are federally chartered
under the Farm Credit Act of 1971, as amended (the "Farm Credit Act"), and are
subject to regulation by a Federal agency, the Farm Credit Administration (the
"FCA"). The FBCs and associations are not commonly owned or controlled. They
are cooperatively owned, directly or indirectly, by their respective borrowers.
Unlike commercial banks and other financial institutions that lead to the
agricultural sector in addition to other sectors of the economy, under the Farm
Credit Act the System institutions are restricted solely to making loans to
qualified borrowers in the agricultural sector and to certain related
businesses. Moreover, the System is required to make credit and other services
available in all areas of the nation. In order to fulfill its broad statutory
mandate, the System maintains lending units in all 50 states and the
Commonwealth of Puerto Rico.
The System obtains funds for its lending operations primarily from the sale
of debt securities issued under Section 4.2(d) of the Farm Credit Act
("Systemwide Debt Securities"). The FCBs are jointly and severally liable on
all Systemwide Debt Securities. Systemwide Debt Securities are issued by the
FCBs through the Federal Farm Credit Banks Funding Corporation, as agent for the
FCBs (the "Funding Corporation"). Each FCB determines its participation in each
issue of Systemwide Debt Securities based on its funding and operating
requirements, subject to the availability of eligible collateral, to
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determinations by the Funding Corporation as to conditions of participation and
terms of each issuance, and to FCA approval.
Important information regarding the FCB's and the Farm Credit System,
including combined financial information, is contained in disclosure information
made available by the Funding Corporation. This information consists of the most
recent Farm Credit System Annual Information Statement and any Quarterly
Information Statements issued subsequent thereto (collectively, "Information
Statements") and certain press releases issued from time to time by the Funding
Corporation. Such information and the Farm Credit System Annual Report to
Investors for the current and two preceding fiscal years are available for
inspection at the Federal Farm Credit Banks Funding Corporation, Investment
Banking Services Department, 10 Exchange Place, Suite 1401, Jersey City, New
Jersey 07302; Telephone: (201) 200-8000. Upon request, the Funding Corporation
will furnish, without charge, copies of the above information.]
[GOVERNMENT TRUST CERTIFICATES
Government Trust Certificates ("GTCs") consist of certificates evidencing
undivided fractional interests in a trust, the assets of which consist of
promissory notes (the "Notes"), payable in U.S. Dollars, of a certain foreign
government, backed by a full faith and credit guaranty issued by the United
States of America, acting through the Defense Security Assistance Agency of the
Department of Defense (the "DSAA"), of the due and punctual payment of 90% of
all payments of principal and interest due on the Notes and a security interest
in collateral, consisting of non-callable securities issued or guaranteed by the
United States government or agencies thereof, sufficient to pay the remaining
10% of all payments of principal and interest due on the Notes.
Many issuances of GTCs were undertaken pursuant to Title III of the Foreign
Operations, Export Financing and Related Programs Appropriations Acts (the
"Appropriations Acts"), which permit borrowers to prepay certain eligible
high-interest loans made by the Federal Financing Bank (the "FFB") under the
Foreign Military Sales ("FMS") Credit Program. The Appropriations Acts permit
prepayment of the FMS loans with the proceeds of new loans and authorize the
issuance of a United States government guaranty covering no more and no less
than ninety percent (90%) of the payments due on each such new loan, in
accordance with the requirements of the Arms Export Control Act, as amended (the
"AECA"). It is a condition to the issuance of Certificates under such program
that the DSAA approve the refinancing of any such FMS loan.
Although 90% of all payments of principal and interest on the Notes are
guaranteed by the United States government or agencies thereof, and 10% of such
payments are secured by securities of the United States government or agencies
thereof, the GTCs themselves are not so guaranteed. In the event of a default on
the Notes, the trustee of the Trust would be required by the operative documents
to make a claim against the United States government or an agency thereof or
would be required to liquidate the collateral securing the Notes.
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Payments Under the Guaranty. If the borrower under the Notes (the
"Borrower") fails to deposit with the related trustee (the "Trustee") all
amounts due on the Notes on any Notes payment date (each, a "Note Payment
Date"), the Trustee will first notify the Borrower and, one business day
thereafter, will send a notice to the Director of the DSAA and to the related
depositary (the "Depositary") setting forth the amounts due on the Notes on such
Note Payment Date and the amounts, if any, received from the Borrower. On the
[11th calendar day] following the Note Payment Date, if any amounts due on a
Note remain unpaid, the Trustee will demand payment from DSAA on the applicable
Guaranty in accordance with its terms. On the day the Trustee receives such
payment, it will instruct the Depositary immediately to deliver sufficient funds
to pay the amounts remaining unpaid on the Note.
On the occurrence of an Event of Default (as defined in the related Loan
Agreement), the Trustee in its discretion may proceed to protect and enforce the
rights of the GTC holders under the Declaration of Trust by a suit, action or
other proceeding. As provided in the Loan Agreement, the Guaranty and the
Depositary Agreement, the Trustee has the legal power to exercise all the
rights, powers and privileges of a holder of the Note.
The Trustee is required to take all necessary action, as permitted by the
Declaration of Trust and applicable law (i) to enforce payments due from DSAA
under the Guaranty and (ii) to take possession of collateral maturing or paying
interest on or prior to the Note payment date on which default occurred, and to
apply such funds in accordance with the Declaration of Trust for the benefit of
holders of GTCs. The Trustee is required to notify the Borrower upon taking the
foregoing actions. Neither the Trust holding a Note nor DSAA has the right to
accelerate payment of the Note, notwithstanding any failure of the Borrower to
make payment on the Note or other Event of Default with respect to the Note.
[The applicable Prospectus Supplement will specify, to the extent GTCs are
included as Underlying Securities, the waiting period that must elapse before
reimbursement for a default on the Notes, and the delay between payment on the
Notes and payment on the GTCs that is built into the GTCs to protect against a
delay in reimbursement.
In addition, the related Prospectus Supplement will specify, to the extent
applicable: (i) the aggregate principal amount of such GTCs; (ii) the coupon, if
any, borne by such GTCs; (iii) the stated maturity of each GTC; (iv) the
identity of each underlying obligor; and (v) the conditions under which, and the
terms on which, any underlying obligation may be prepaid or redeemed prior to
the stated maturity of the obligation.]]
[AID-GUARANTEED UNDERLYING SECURITIES
General. AID-Guaranteed Underlying Securities consist of notes, bonds,
credit facilities and other debt instruments which are issued or arranged by
intermediary financial institutions ("IFIs") and guaranteed in whole or in part
by AID. Most AID guarantees are established under the auspices of the Private
Sector Investment Program (the "Investment Program"), created in 1983 under
Section 108 of the Foreign Assistance Act of 1961 and administered by AID. The
Investment Program seeks to promote sustainable economic
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development by strengthening the private sector in developing countries,
primarily through the facilitation of small business financing needs. In 1988
Congress provided the Investment Program with loan guarantee authority, and
guarantees have become the Investment Program's principal financing instrument.
AID guarantees are backed by the full faith and credit of the United States
government.
AID Housing Guaranty Program. The Housing Guaranty Program (the "Housing
Program") is administered by the AID Office of Housing and Urban Programs. The
Housing Program facilitates collaboration between AID and host-country housing
institution borrowers in both the public and private sectors. Under the Housing
Program AID participates in the planning, structuring and execution of a housing
or shelter finance program. Through the conclusion of "implementation
Agreements" the Housing Program aids developing countries in securing favorable
terms in U.S. capital markets for a U.S. government-guaranteed loan.
Payments under the AID Guarantees. Pursuant to the Fiscal Agency Agreement,
if the Borrower does not deposit with the Fiscal Agent thereunder at or before
12 o'clock noon, New York City time, on any date on which a payment of
principal, interest or maturity amount on the guaranteed AID-Guaranteed
Underlying Securities is due (each, an "AID-Guaranteed Underlying Security
Payment Date"), immediately available funds in an amount sufficient to pay in
full any interest and principal, and any maturity amount, due on such AID-
Guaranteed Underlying Security Payment Date with respect to the guaranteed AID-
Guaranteed Underlying Securities, the Fiscal Agent, acting on behalf of the
holders of the guaranteed AID-Guaranteed Underlying Securities, is obligated to
make a demand upon AID, not late than 2 o'clock p.m., New York City time, on
such AID-Guaranteed Underlying Security Payment Date for payment pursuant to the
Guarantees.
Pursuant to the Guarantees, AID is required, not later than three (3)
Business Days following receipt of such demand, to pay to the demanding AID-
Gauranteed Underlying Securityholders the applicable Guaranteed Amount.
Upon receipt by the Fiscal Agent of payments from AID pursuant to the
Guarantees, the Fiscal Agent will be required, if such payments are received at
or prior to 12 o'clock noon, New York City time, on any Business Date, to remit
such payments to the registered holders of the guaranteed AID-Guaranteed
Underlying Securities entitled thereto on such Business Day and, if such
payments are received after such time, to remit such payments to such registered
holders on the next such Business Day.
Each AID-Guaranteed Underlying Securityholder is deemed by the acceptance
of a guaranteed AID-Guaranteed Underlying Security to have irrevocably appointed
the Fiscal Agent as its agent for the purpose of making a demand for payment
upon AID pursuant to the Guarantees and receiving any payments to an AID-
Guaranteed Underlying Securityholder by AID pursuant to the Guarantees. The
Regulations also provide that any AID-Guaranteed Underlying Securityholder may
make demand for payment on AID under a Guarantee on its own behalf immediately
upon the failure of the Borrower to make any payment when due under such AID-
Guaranteed Underlying Securityholder's guaranteed AID-Guaranteed
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Underlying Security. All payments made by AID to the Fiscal Agent pursuant to
the Guarantees will be held in trust by the Fiscal Agent solely for the benefit
of the registered holders of the guaranteed AID-Guaranteed Underlying Securities
until remitted to such holders. AID will be discharged from its obligations to
make a payment pursuant to the Guarantees upon the making of such payment to the
Fiscal Agent on behalf of the AID-Guaranteed Underlying Securityholders,
provided that such discharge will be effective only as to such payment and to
the extent of the amount of such payment.
Events of Default. As provided by the terms of each AID-Guaranteed
Underlying Security, an Event of Default will be deemed to have occurred if the
borrower fails to make any payment on such AID-Guaranteed Underlying Security on
the applicable Payment Date. On the occurrence of an Event of Default, the
trustee of such AID-Guaranteed Underlying Security (the "Underlying Trustee") or
the Trustee may make demand on AID under the Guarantees. However, none of the
Fiscal Agent, the Trustee or AID may accelerate payment of any AID-Guaranteed
Underlying Security, notwithstanding any failure of the borrower to make payment
on the AID-Guaranteed Underlying Securities.
[The related Prospectus Supplement will specify, to the extent applicable:
(i) the aggregate principal or notional principal amount of such AID-Guaranteed
Underlying Securities; (ii) the coupon, if any, borne by such AID-Guaranteed
Underlying Securities; (iii) the stated maturity of each underlying obligation;
(iv) the identity of each underlying obligor; (v) the credit characteristics of
such obligor; (vi) the rating, if any, assigned to each such obligor, whether an
actual or a shadow rating; (vii) the conditions under which, and the terms on
which, any underlying obligation may be prepaid or redeemed prior to the stated
maturity of the obligation; and (viii) the identity of the Fiscal Agent.]
The Federal Credit Reform Act of 1990, Pub. Law 101-508 (the "Credit Reform
Act"), provides that payments in respect of loan guarantee commitments made on
or after October 1, 1991, including the guarantee commitments made by AID under
the Guarantees, will be made by the U.S. Treasury from a "financing account"
established under Section 502(7) of the Credit Reform Act. Section 505(c) of the
Credit Reform Act authorizes the Secretary of the Treasury to lend or pay to the
financing account such amounts as may be necessary to make any payments required
to discharge loan guarantee obligations and commitments in the event funds in
the financing account are insufficient.]
The Trust will have no other significant assets [other than any Credit
Support or those assets referred to below] from which to make distributions of
amounts due in respect of the Certificates. Consequently, the ability of
Certificateholders to receive distributions in respect of the Certificates will
depend [almost] entirely on the Trust's receipt of payments on the foregoing
Underlying Securities from [name such obligor]. Prospective purchasers of the
Certificates should consider carefully [name such obligor]'s financial condition
and its ability to make payments in respect of such Underlying Securities. This
Prospectus Supplement relates only to the Certificates being offered hereby and
does not relate to the Underlying Securities of [name such obligor]. All
information contained in this Prospectus Supplement regarding [name such
obligor] is derived from the publicly available documents described in the
preceding paragraph.
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The Deposited Assets will also include [describe any assets which are
ancillary or incidental to the Underlying Securities, including hedging
contracts such as puts, calls, interest rate swaps, currency swaps, floors, caps
and collars, and any cash or other security pledged to support the Underlying
Securities; include the financial information of any counterparty to such
agreements; and, describe any risk associated therewith] (such assets, together
with the Underlying Securities, the "Deposited Assets").
[DESCRIPTION OF CREDIT SUPPORT]
For the benefit [solely] of the [Offered] [Class [ ] Certificates [and the
Class [ ] Certificates]], Credit Support will be obtained [and will constitute
part of the Trust to the extent provided below] to support or ensure the
[servicing and] [timely] [ultimate] distribution of amounts due with respect to
the Deposited Assets, in the form and amount described below.
[THE LETTER OF CREDIT
Simultaneously with the Depositor's assignment of the Deposited Assets to
the Trust, the Depositor will obtain the Letter of Credit from [ ] (the "Letter
of Credit Bank") in favor of the Trustee on behalf of the Certificateholders.
The Letter of Credit will be irrevocable and will [support the [timely]
[ultimate] remittance of amounts due with respect to the Deposited Assets]. The
maximum amount that the Trustee may draw under the Letter of Credit will
initially be equal to [$]. The initial amount of the Letter of Credit will be
[$]. Thereafter, the amount of the Letter of Credit with respect to any
Distribution Date will equal [the lesser of (i) % of the aggregate Certificate
Principal Balance outstanding on the preceding Distribution Date) but in any
event not less than [$], and (ii) the amount of the Letter of Credit on the
preceding Distribution Date, plus [(a) reimbursement of certain advances under
the Letter of Credit and (b) recoveries on defaulted Deposited Assets]
[describe other methods]. The Letter of Credit expires on _____________, 19__.
The Trustee will be obligated, in the event of a drawing on the Letter of
Credit, to pursue appropriate remedies against the Deposited Assets and other
collateral, and any realization thereon shall be paid to the Letter of Credit
Bank to the extent of any amounts owing, in the manner and priority specified
herein.]
[Add language regarding the Letter of Credit Bank with respect to its debt
ratings, activities it engages in, regulatory authorities having jurisdiction
over it and the nature of such regulation, a narrative description of its
assets, liabilities (including deposits) and equity, and include an address for
further information concerning the Letter of Credit Bank. In addition, to the
extent that the Letter of Credit will cover payment of 10% or more of the
aggregate principal amount of the Certificates covered thereby, provide
information of
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financial and other matters with respect to the Letter of Credit Bank and
audited financial statements to the extent that it covers over 20%.]]
[THE SURETY BOND
Simultaneously with the Depositor's assignment of the Deposited Assets to
the Trust, the Depositor will obtain the Surety Bond from [_] (the "Surety") in
favor of the Trustee on behalf of the Certificateholders. The Surety Bond will
guaranty [timely] [ultimate] distributions of the principal of and premium (if
any) and interest with respect to the [Offered] Class [_]] Certificates. The
Surety Bond expires on , 19__. The Trustee will be obligated, in the event of a
drawing on the Surety Bond, to pursue appropriate remedies against the Deposited
Assets and other collateral, and any realization thereon shall be paid to the
Surety to the extent of any amounts owing, in the manner and priority specified
herein.
[Add language regarding the issuer of the Surety Bond with respect to its
debt ratings, activities it engages in, regulatory authorities having
jurisdiction over it and the nature of such regulation, a narrative description
of its assets, liabilities (including deposits) and equity, and include an
address for further information concerning the Surety. In addition, to the
extent that the Surety Bond will cover payment of 10% or more of the aggregate
principal amount of the Certificates covered thereby, provide information of
financial and other matters with respect to the issuer of the Surety Bond and
audited financial statements to the extent that it covers over 20%.]]
[RESERVE ACCOUNT
The Depositor will deposit with the Trustee on the Closing Date cash,
letters of credit and short-term investments acceptable to the Rating Agency
initially rating the Certificates in the amount of [$]. [Collections with
respect to the Deposited Assets not distributed with respect to the Certificates
shall be deposited in the Reserve Account.] Amounts so deposited in such Reserve
Account will be used by the Trustee to make payments of principal of and
premium (if any) and interest on the Certificates to the extent that funds are
not otherwise available. Immediately after any Distribution Date, amounts in the
Reserve Account in excess of [indicate formula] [may be paid to the Depositor].]
YIELD ON THE CERTIFICATES
[Describe factors relating to the Deposited Assets, the terms thereof and
the manner and priority in which collections thereon are allocated to the
Certificateholders of each class of the Certificates, as described elsewhere
herein.] See "Yield Considerations" and "Maturity and Prepayment Considerations"
in the Prospectus.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will consist of [ ] classes of Certificates, designated as
Class [ ] [,] [and] Class [ ] [and Class [ ]] Certificates. The Certificates
represent in the aggregate the entire beneficial ownership interest in the
related Trust. The Class [ ] Certificates have in the aggregate an initial
[Certificate Principal Balance] [Notional Amount] of [$] (approximate) and a [%]
[Variable] Pass-Through Rate. The Class [ ] Certificates have in the aggregate
an initial [Certificate Principal Balance] [Notional Amount] of [$]
(approximate) and a [%] [Variable] Pass-Through Rate. [The Class [ ]
Certificates have in the aggregate an initial [Certificate Principal Balance]
[Notional Amount] of [$] (approximate) and a [ %] [Variable] Pass-Through Rate.
[The Class [ ] Certificates, which are not being offered hereby, will be
transferred by the Depositor to an affiliate on the Closing Date, and may be
sold at any time by the Depositor in accordance with the terms of the Trust
Agreement.]
The Certificates [(other than the Class [ ] Certificates [and specify
others] (the "Definitive Classes"))] will be issued, maintained and transferred
on the book-entry records of DTC and its Participants in minimum denominations
of [$ ] and [integral multiples thereof] multiples of [$ ] in excess thereof].
[The Class [ ] Certificates [and specify any others] will be offered in
registered, certificated form, in minimum percentage interests corresponding to
the initial Notional Amounts or Certificate Principal Balances, as applicable,
of [$ ] and integral multiples thereof, except that one Certificate of each such
class may be issued with an initial Notional Amount or Certificate Principal
Balance, as applicable, equal to an integral multiple of [$ ] plus the excess of
the initial aggregate Notional Amount or Certificate Principal Balance, as
applicable, of such class over the greatest integral multiple of [$ ] that is
not more than such initial aggregate Notional Amount or Certificate Principal
Balance, as applicable.]
The Certificates [(other than the Definitive Classes of Certificates)] will
each initially be represented by one or more global certificates registered in
the name of the nominee of DTC (together with any successor clearing agency
selected by the Depositor, the "Clearing Agency"), except as provided below. The
Depositor has been informed by DTC that DTC's nominee will be CEDE & Co.
("CEDE"). No holder of any such Certificate will be entitled to receive a
certificate representing such person's interest, except as set forth below under
"--Definitive Certificates." Unless and until Definitive Certificates are issued
under the limited circumstances described herein, all references to actions by
Certificateholders with respect to any such Certificates shall refer to actions
taken by DTC upon instructions from its Participants. See "--Definitive
Certificates" below and "Description of Certificates--Global Securities" in the
Prospectus.
Under the rules, regulations and procedures creating and effecting DTC and
its operations, DTC will take action permitted to be taken by a
Certificateholder under the Trust Agreement only at the direction of one or more
Participants to whose DTC account such Certificates are credited. Additionally,
DTC will take such actions with respect to
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specified Voting Rights only at the direction and on behalf of Participants
whose holdings of such Certificates evidence such specified Voting Rights. DTC
may take conflicting actions with respect to Voting Rights, to the extent that
Participants whose holdings of Certificates evidence such Voting Rights,
authorize divergent action.
DEFINITIVE CERTIFICATES
Definitive Certificates will be issued to Certificate Owners or their
nominees, respectively, rather than to DTC or its nominee, only if (i) the
Depositor advises the Trustee in writing that DTC is no longer willing or able
to discharge properly its responsibilities as Clearing Agency with respect to
each class of Certificates [(other than the Definitive Classes)] and the
Depositor is unable to locate a qualified successor or (ii) the Depositor, at
its option, elects to terminate the book-entry system through DTC.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee is required to notify all Participants of the
availability through DTC of Definitive Certificates. Upon surrender by DTC of
the definitive certificates representing the Certificates [(other than the
Definitive Classes of Certificates)] and receipt of instructions for re-
registration, the Trustee will reissue such Certificates as Definitive
Certificates issued in the respective principal amounts owned by the individual
owners of such Certificates, and thereafter the Trustee will recognize the
holders of such Definitive Certificates as Certificateholders under the Trust
Agreement.
DISTRIBUTIONS
Collections on the Deposited Assets that are received by the Trustee for a
given Collection Period pursuant to the collection procedures described herein
and in the Prospectus and deposited from time to time into the Certificate
Account will be applied by the Trustee on each applicable Distribution Date to
the following distributions in the following order of priority, solely to the
extent of Available Funds (as defined below) on such Distribution Date:
(i) to the Trustee, all unpaid fees and expenses of the Trustee
and its respective agents, up to the Allowable Expense Amount (as defined
below) for the related Collection Period;
(ii) [to the providers of Credit Support ("Credit Support
Providers"), any amounts required to be paid or reimbursed to, or deposited
with, any such person (collectively, "Credit Support Payments");
(iii) to the Certificateholders of each Class of such Series, first,
to the payment of Required Interest [and on a pro rata basis to the Credit
Support Providers for the payment of any Credit Support Payments], second,
to the payment of Required Principal and third, to the payment of Required
Premium, in each case applicable to such Class, commencing with the most
highly ranked Class and, to the extent Available
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Funds remain available, to each other Class in accordance with the ranking
specified herein under "--ALLOCATION OF LOSSES; SUBORDINATION";
[(iii)] to the Trustee, all its remaining unpaid fees and expenses
and those of its respective agents not otherwise paid pursuant to clause
(i) above;
[(iv)] all remaining amounts, if any, to the Depositor].
There can be no assurance that collections received from the Deposited
Assets and any applicable Credit Support relating to the Certificates over a
specified period will be sufficient, after payment of all Allowable Expense
Amounts [and payment of all amounts required to be paid to the Credit Support
Providers] for such period, to make all required distributions to the
Certificateholders of the Certificates. To the extent Available Funds are
insufficient to make any such distributions due to any such Series or Class, any
shortfall will be carried over and will be distributable on the next
Distribution Date on which sufficient funds exist to pay such shortfalls.
For purposes hereof, the following terms have the following meanings:
"Allowable Expense Amount" means, for any given Collection Period, the sum
of (X) [$] and (y) amounts in respect of the Allowable Expense Amount from the
preceding Collection Period that have not been applied on the Distribution Date
for such preceding Collection Period.
"Available Funds" for any Distribution Date means the sum of (a) all
amounts received on or with respect to the Deposited Assets (including
investment income on Eligible Investments) received during the preceding
Collection Period [,] [and] (b) amounts available as of such Distribution Date
pursuant to the Credit Support described herein [and (c) any additional amount
that the [Depositor] may remit to the Trustee from time to time according to the
terms of the Trust Agreement for application as Available Funds].
"Call Premium Percentage" for any given Distribution Date means [a fixed
percentage] [a percentage that varies depending on [describe basis for variable
formula, such as the applicable date or other factors or indices]].
"Eligible Investments" means, with respect to the Certificates, those
investments acceptable to the Rating Agency as being consistent with the rating
of such Certificates, as specified in the Trust Agreement. Generally, Eligible
Investments must be limited to obligations or securities that mature not later
than the business day prior to the next succeeding Distribution Date.
["Interest Strip" allocable to the Retained Interest for any Distribution
Date means accrued and unpaid interest on the outstanding principal balance of
the Certificates, computed at an annual rate of [%].]
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"Required Interest" for the Certificates or any Class thereof on any given
Distribution Date means the accrued and unpaid interest on the outstanding
Certificate Principal Balance [or Notional Amount] of such Certificates,
computed at the applicable Pass-Through Rate.
"Required Premium" for the Certificates or any Class thereof for any
Distribution Date means an amount equal to the product of (a) the required
Principal for such Certificates on such Distribution Date and (b) the Call
Premium Percentage for such Distribution Date.
"Required Principal" for the Certificates or any Class thereof for any
Distribution Date means the amount received on the Deposited Assets attributable
to principal payments thereon during the related Collection Period, to the
extent allocable to such Certificates. The Certificate Principal Balance of a
Certificate outstanding at any time represents the maximum amount that the
holder thereof is entitled to receive as distributions allocable to principal
from the cash flow on the Underlying Securities, the other assets in the Trust
and any Credit Support obtained for the benefit of such holder. The Certificate
Principal Balance of any class of Certificates [(other than the Class [ ]
Certificates)] as of any date of determination is equal to the initial
Certificate Principal Balance thereof, reduced by the aggregate of (a) all
amounts allocable to principal previously distributed with respect to such
Certificate and (b) any reductions in the Certificate Principal Balance deemed
to have occurred in connection with allocations of (i) Realized Losses allocable
to principal on the Deposited Assets and (ii) Extraordinary Trust Expenses, as
described herein. [The Notional Amount of the Class [ ] Certificates as of any
date of determination is equal to [specify amount].] [Holders of the Class [ ]
Certificates are not entitled to receive any distributions allocable to
principal.]
[Notwithstanding the priorities described above, holders of the Class [ ]
Certificates and the Class [ ] Certificates will be entitled to receive on any
Distribution Date 100% of all principal collections received in the related
Collection Period with respect to the Deposited Assets, to be distributed [on a
pro rata basis] in reduction of the Certificate Principal Balance of the Class
[ ] Certificates and the Class [ ] Certificates, if any of the following
conditions shall be satisfied: [describe conditions, if any, by which a certain
class is given 100% of the principal cash flow other than pursuant to
subordination that is in effect from the Closing Date].]
[OPTIONAL REDEMPTION
On each Distribution Date, or the next succeeding Business Day if such
Distribution Date is not a Business Day, on or after the Distribution Date in
[__, 199_], the Certificates may be redeemed by the Trust at the request of the
Depositor at a price of [%] (the "Redemption Price"). In addition, the
Certificateholders shall be entitled to receive interest up to, but not
including, the Redemption Date.]
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[ADVANCES
Subject to the following limitations, the Trustee will be obligated to
advance or cause to be advanced on or before each Distribution Date its own
funds, or funds in the Certificate Account that are not included in the
Available Funds for such Distribution Date, in an amount equal to the aggregate
of payments of principal, premium (if any) and interest, net of that portion of
the Administrative Fee (as defined herein) attributable to fees and expenses of
the Trustee, that were due during the related Collection Period and that were
delinquent on the related Determination Date (any such advance, an "Advance").
Advances are required to be made only to the extent they are deemed by the
Trustee to be recoverable from related late collections, insurance proceeds, if
any, or Liquidation Proceeds. The purpose of making such Advances is to
maintain a regular cash flow to the Certificateholders, rather than to guarantee
or insure against losses. The Trustee will not be required to make any Advances
with respect to reductions in the amount of the payments on the Deposited Assets
due to bankruptcy proceedings with respect to the Deposited Assets.
All Advances will be reimbursable to the Trustee from late collections,
insurance proceeds, if any, and any proceeds from the liquidation of the
Deposited Asset ("Liquidation Proceeds") as to which such unreimbursed Advance
was made. In addition, any Advances previously made in respect of any Deposited
Asset that are deemed by the Trustee to be nonrecoverable from related late
collections, insurance proceeds, if any, or Liquidation Proceeds may be
reimbursed to the
Trustee out of any funds in the Certificate Account allocable to any of the
Deposited Assets prior to the distributions on the Certificates. In the event
that the Trustee fails in its obligation to make any such Advance, the Trustee
may be obligated to make any such Advance, to the extent provided in the Trust
Agreement.]
[RESTRICTIONS ON TRANSFER OF THE CLASS [ ] CERTIFICATES
Because the Class [ ] Certificates are subordinate to the Class [ ]
Certificates and the Class [ ] Certificates to the extent set forth herein, the
Class [ ] Certificates may not be purchased by or transferred to a Plan except
upon the delivery of an opinion of counsel as described herein. See "ERISA
CONSIDERATIONS."]
DESCRIPTION OF THE TRUST AGREEMENT
GENERAL
The Certificates will be issued pursuant to the Trust Agreement, a form of
which is filed as an exhibit to the Registration Statement. A Current Report on
Form 8-K relating to the Certificates containing a copy of the Trust Agreement
as executed will be filed by the Depositor with the Commission following the
issuance and sale of the Certificates. The Trust created under the Trust
Agreement (including the Series 1996-[ ] Supplement) will
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consist of (i) the Deposited Assets (exclusive of any Retained Interest, which
is not part of the Trust), (ii) all payments on or collections in respect of the
Deposited Assets due after the Cut-off Date, together with any proceeds
thereof[,] [and] [(iii) any Credit Support in respect of any class or classes of
Certificates] [and (iv) the rights of the Depositor under the Purchase Agreement
between the Depositor and the Seller]. [In addition, the Certificateholders of
the Certificates may also have the benefit of certain Credit Support discussed
above. See "Description of Credit Support."] Reference is made to the Prospectus
for important information in addition to that set forth herein regarding the
Trust, the terms and conditions of the Trust Agreement and the Certificates. The
following summaries of certain provisions of the Trust Agreement do not purport
to be complete and are subject to the detailed provisions contained in the form
of Trust Agreement, to which reference is hereby made for a full description of
such provisions, including the definition of certain terms used herein.
THE TRUSTEE
[ ], a [ ] corporation, will act as trustee for the Certificates and the
Trust pursuant to the Trust Agreement. The Trustee's offices are located at [ ]
and its telephone number is [ ].
The Trust Agreement will provide that the Trustee and any director,
officer, employee or agent of the Trustee will be indemnified by the Trust and
will be held harmless against any loss, liability or expense incurred in
connection with any legal action relating to the Trust Agreement or the
Certificates or the performance of the Trustee's duties under the Trust
Agreement, other than any loss, liability or expense (i) that constitutes a
specific liability of the Trustee under the Trust Agreement or (ii) incurred by
reason of willful misfeasance, bad faith or negligence in the performance of the
Trustee's duties under the Trust Agreement or as a result of a breach, or by
reason of reckless disregard, of the Trustee's obligations and duties under the
Trust Agreement.
EVENTS OF DEFAULT
An event of default with respect to any class of Certificates under the
Trust Agreement (an "Event of Default") will consist of [(i) a default in the
payment of any interest on any Underlying Security after the same becomes due
and payable (subject to any applicable grace period); (ii) a default in the
payment of the principal of or any installment of principal of any Underlying
Security when the same becomes due and payable; and (iii) the occurrence and
continuance of such other events specified in the applicable series supplement.]
[Describe remedies available to Certificateholders upon the occurrence and
continuance of all Event of Default, including, as applicable, directing the
Trustee to vote the Underlying Securities in favor of declaring the principal
balance of and any accrued interest on the Outstanding Debt Securities to be
immediately due and payable].
The Trust Agreement will provide that, within 30 days after the occurrence
of an Event of Default in respect of the Certificates of any class, the Trustee
will give notice to the
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holders of such Certificates [and the holder of the Retained Interest],
transmitted by mail, of all such uncured or unwaived Events of Default known
to it. However, except in the case of an Event of Default relating to the
payment of principal of or premium, if any, or interest on any of the Underlying
Securities, the Trustee will be protected in withholding such notice if in good
faith it determines that the withholding of such notice is in the interest of
the holders of the Certificates of such class [and the holder of the Retained
Interest].
No holder of any Certificate will have the right to institute any
proceeding with respect to the Trust Agreement, unless (i) such holder
previously has given to the Trustee written notice of a continuing breach, (ii)
the holders of Certificates of such Series evidencing not less than the
"Required Percentage--Remedies" specified in the applicable series supplement of
the aggregate Voting Rights of such Series have requested in writing that the
Trustee institute such proceeding in its own name as Trustee, (iii) such holder
or holders have offered the Trustee reasonable indemnity, (iv) the Trustee has
for 15 days failed to institute such proceeding and (v) no direction
inconsistent with such written request has been given to the Trustee during such
15-day period by the holders of Certificates of such Series evidencing not less
than the Required Percentage--Remedies of the aggregate Voting Rights of such
Series.
VOTING RIGHTS
[At all times,] [Subject to the succeeding paragraph,] [ ]% of all Voting
Rights will be allocated among all holders of the Class [ ] Certificates[,]
[and] the Class [ ] Certificates [and specify other classes] in proportion to
the then outstanding Certificate Principal Balances [or Notional Amounts] of
their respective Certificates and [ ]% of all Voting Rights will be allocated
among all holders of the Class [ ] Certificates in proportion to the then
outstanding [Certificate Principal Balances] [Notional Amounts] of their
respective Certificates. [Specify whether and under what circumstances voting
will be class-by-class.]
[Specify conditions, if any, under which allocation of Voting Rights might
change from the foregoing percentages.]
[Specify the rights, if any, of the holder of the Retained Interest to
consent to certain actions.]
VOTING OF UNDERLYING SECURITIES, MODIFICATION OF INDENTURE
The Trustee, as holder of the Underlying Securities, has the right to vote
and give consents and waivers in respect of such Underlying Securities as
permitted by [DTC] [Federal Reserve Bank] and except as otherwise limited by the
Trust Agreement. In the event that the Trustee receives a request from [DTC]
[Federal Reserve Bank], the [Fiscal Agent] or the GSE Issuer for its consent to
any amendment, modification or waiver of the Underlying Securities or any other
document thereunder or relating thereto, or receives any other solicitation for
any action with respect to the Underlying Securities, the Trustee shall mail a
notice of such proposed amendment, modification, waiver or solicitation to each
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Certificateholder of record as of such date. The Trustee shall request
instructions from the Certificateholders as to whether or not to consent to or
vote to accept such amendment, modification, waiver or solicitation. The Trustee
shall consent or vote, or refrain from consenting or voting, in the same
proportion (based on the relative Certificate Principal Balances and Notional
Amounts of the Certificates, as applicable) as the Certificates of the Trust
were actually voted or not voted by the Certificateholders thereof as of a date
determined by the Trustee prior to the date on which such consent or vote is
required; provided, however, that, notwithstanding anything to the contrary, the
Trustee shall at no time vote or consent to any matter (i) unless such vote or
consent would not (based on an opinion of counsel) alter the status of the Trust
as a grantor trust for Federal income tax purposes, (ii) which would alter the
timing or amount of any payment on the Underlying Securities, including, without
limitation, any demand to accelerate the Underlying Securities, except in the
event of an event of default with respect to the Underlying Securities or an
event which with the passage of time would become an event of default and with
the unanimous consent of all Outstanding Certificates and the holder of the
Retained Interest] or (iii) which would result in the exchange or substitution
of any of the outstanding Underlying Securities pursuant to a plan for the
refunding or refinancing of such Underlying Securities except in the event of a
default under the Underlying Securities and only with the consent of
Certificateholders representing 100% of the aggregate voting rights of each
outstanding Class of the Certificates [and the holder of the Retained Interest].
The Trustee shall have no liability for any failure to act resulting from
Certificateholders' late return of, or failure to return, directions requested
by the Trustee from the Certificateholders.
In the event that an offer is made by the GSE Issuer to issue new
obligations in exchange and substitution for any of the Underlying Securities,
pursuant to a plan for the refunding or refinancing of the Outstanding Debt
Securities or any other offer is made for the Underlying Securities, the Trustee
shall notify the Certificateholders [and the holder of the Retained Interest] of
such offer as promptly as practicable. The Trustee must reject any such offer
unless an event of default under the Underlying Securities has occurred, the
Trustee is directed by the affirmative vote of all of the Certificateholders
[and the holder of the Retained Interest] to accept such offer and the Trustee
has received the tax opinion described above.
If an event of default under the Underlying Securities occurs and is
continuing and if directed by all the holders of outstanding Class [ ]
Certificates [and Class [ ] Certificates,] [and the holder of the Retained
Interest,] the Trustee shall vote the Underlying Securities in favor of
directing, or take such other action as may be appropriate to declare the unpaid
principal amount of the Underlying Securities and any accrued and unpaid
interest thereon to be due and payable. In connection with a vote concerning
whether to declare the acceleration of the Underlying Securities, the
Certificateholders' interests of each Class may differ and the interests of
either Class may differ from holders of other Outstanding Debt Securities.
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TERMINATION
[The circumstances under which the obligations created by the Trust
Agreement will terminate in respect of the Certificates are described in
"Description of Certificates--Termination" in the Prospectus.] [Describe
additional termination provisions.] The Depositor will have the right to
purchase all remaining Deposited Assets in the Trust and thereby effect early
retirement of the Certificates on any Distribution Date, [(a)] once the
aggregate principal amount of the Deposited Assets at the time of any such
purchase is less than [10%] of the aggregate principal amount of the Deposited
Assets as of the Cut-off Date [and (b) at the option of the Depositor at
[specify when and on what terms any such option may be exercised]]; provided,
however, that the right to exercise any such option is contingent on such
exercise being consistent with the Depositor's continued satisfaction of the
applicable requirements for exemption under Rule 3a-7 under the Investment
Company Act of 1940 and all applicable rules, regulations and interpretations
thereunder. In the event the Depositor exercises any such option, the portion
of the purchase price allocable to the Certificates of each class will be, to
the extent of available funds, [100% of their then aggregate outstanding
Certificate Principal Balance or Notional Amount, as applicable, plus with
respect to the Certificates [one month's] [three month's] [specify other period]
interest thereon at the Fixed Pass-Through Rate or the then applicable Variable
Pass-Through Rate, as the case may be, plus, with respect to each class of
Certificates, any previously accrued but unpaid interest thereon.] [Specify
alternative allocation method if different from above.] In no event will the
Trust created by the Trust Agreement for the Certificates continue beyond the
expiration of 21 years from the death of the survivor of the person or persons
named in the Trust Agreement. See "Description of Certificates--Termination" in
the Prospectus.
CERTAIN LEGAL ASPECTS OF THE DEPOSITED ASSETS
[Describe any applicable legal aspects of the Deposited Assets or relating
to the enforceability by the Certificateholders of the security interest, if
any, securing such Deposited Assets.]
FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain material Federal income
tax consequences of the purchase, ownership and disposition of the Certificates
by an initial holder of Certificates. Such consequences will depend on the
terms of the Certificate, whether the Trust is treated as a grantor trust or as
a partnership for Federal income tax purposes, and the assets collateralizing or
otherwise supporting such Certificate. The consequences of owning Certificates
which are deemed for Federal income tax purposes to be interests in a grantor
trust or in a partnership are discussed separately below under the captions
"Grantor Trust Certificates" and "Partnership Certificates," respectively.
The applicable Trust Agreement would include provisions appropriate to the
particulars of the transaction and to the relevant Federal income tax status of
the Trust and related Certificates.
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This summary is based upon laws, regulations, rulings and decisions
currently in effect, all of which are subject to change, possibly on a
retroactive basis. The discussion does not deal with all Federal tax
consequences applicable to all categories of investors, some of which may be
subject to special rules. In addition, this summary is generally limited to
investors who will hold the Certificates 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"), and who do not hold their
Certificates as part of a "straddle," a "hedge" or a "conversion transaction."
Investors should consult their own tax advisors to determine the Federal, state,
local and other tax consequences of the purchase, ownership and disposition of
the Certificates. The Prospectus Supplement for each series of Certificates
will tailor the description of the Federal income tax consequences to the
specific Certificates issued pursuant thereto, as therein limited.
The Trust will be provided with an opinion of Chapman and Cutler, Chicago,
Illinois, special Federal tax counsel to the Depositor ("Federal Tax Counsel")
regarding certain Federal income tax matters discussed below. An opinion of
Federal Tax Counsel, however, is not binding on the Internal Revenue Service
(the "Service") or the courts. Prospective investors should note that no
rulings have been or will be sought from the Service with respect to any of the
Federal income tax consequences discussed below, and no assurance can be given
that the Service will not take contrary positions.
GRANTOR TRUST CERTIFICATES
If the Trust is intended to be classified as a grantor trust and not as an
association taxable as a corporation for Federal income tax purposes, Federal
Tax Counsel will so opine. The remainder of this discussion prior to
"Partnership Certificates" assumes that the Trust is a grantor trust and not an
association taxable as a corporation for Federal income tax purposes.
Accordingly, each owner of a Certificate (a "Certificate Owner") will be subject
to Federal income taxation as if it owned directly the portion of the Deposited
Assets allocable to such Certificates, and as if it paid directly its share of
reasonable expenses paid by the Trust. The following discussion assumes that
the Underlying Securities were not issued with original issue discount ("OID")
and, accordingly, the Certificate owners will not realize OID except with
respect to a "stripped interest" (as defined below).
INCOME OF CERTIFICATE OWNERS
In General. A Certificate Owner will allocate the amount it pays for its
Certificate among each Underlying Security and each of the Deposited Assets in
the Trust in proportion to their relative fair market values on the date of
purchase of the Certificate in order to determine its initial tax basis for the
pro rata portion of each Underlying Security and Deposited Asset held by the
Trust. A Certificate Owner would calculate separately its income, gain, loss or
deduction realized with respect to each such asset.
The Federal income tax treatment of a holder of Certificates will depend
upon whether the interest in the Underlying Securities represented by a
Certificate will be
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considered to be a "stripped bond" or "stripped coupon" (together a "stripped
interest") within the meaning of Section 1286 of the Code. A Certificate will
not be considered to represent a stripped interest in the Underlying Securities
to the extent the Certificate is entitled to receive a proportionate amount of
all principal of a particular maturity represented by the Underlying Securities
and all interest relating thereto. A Certificate will be considered to represent
a stripped interest in the Underlying Securities if the Certificate is entitled
to receive less than all of the interest on a particular maturity represented by
the Underlying Securities or if the Certificate is entitled to receive all or
part of the interest on a particular maturity represented by the Underlying
Securities but no principal on the Underlying Securities. In addition, if a
Certificate is entitled to receive interest and principal on a particular
maturity represented by the Underlying Securities, but the interest it is
entitled to receive on a particular maturity represented by the Underlying
Securities is disproportionately more than the principal it is entitled to
receive on a particular maturity represented by the Underlying Securities, it
could be argued (based on the preamble to Treas. Reg. Section 1.1286-1 discussed
below under "Tax Treatment of Certificates to the Extent They are Stripped
Interests") that the Certificates represents (a) an interest in a particular
maturity represented by the Underlying Securities that is not a stripped
interest to the extent it represents a proportional amount of all the principal
and interest on a particular maturity represented by the Underlying Securities
and (b) a stripped interest in a particular maturity represented by the
Underlying Securities to the extent of any additional interest to which it is
entitled on a particular maturity represented by the Underlying Securities. If a
Certificate represents in part a stripped interest and in part not a stripped
interest, such interests will be treated as two separate items for tax purposes
and a purchaser of Certificates will be required to allocate its purchase price
among the two items (as well as any other Deposited Assets) in proportion to
their relative fair market values on the date of purchase.
Tax Treatment of Certificates to the Extent They Are Not Stripped
Interests. To the extent a Certificate does not represent a stripped interest in
a particular maturity represented by the Underlying Securities, each Certificate
Owner will be required to report on its Federal income tax return, in a manner
consistent with its method of accounting, its proportional share of the gross
income of the Trust, including interest on and other amounts with respect to the
corresponding Underlying Security, income derived from the other Deposited
Assets held by the Trust, any gain or loss upon collection or disposition of the
corresponding Underlying Security, other Deposited Assets, or as further
described below under "PURCHASE AND SALE OF A CERTIFICATE" the sale or other
disposition of a Certificate. The portion of each monthly payment to a
Certificate Owner that is allocable to principal on the corresponding Underlying
Security (other than amounts representing market discount, as described below)
will represent a recovery of capital, which will reduce the tax basis of such
Certificate Owner's undivided interest in the Underlying Securities.
To the extent that the portion of the purchase price of a Certificate
allocated to a Certificate Owner's undivided interest in an Underlying Security,
based on the relative fair market value of each Underlying Security in which an
interest is acquired as well as other Deposited Assets in which an interest is
acquired, is greater than or less than the portion of the principal balance of
the Underlying Security allocable to the Certificate, such interest in
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the Underlying Security will have been acquired at a premium or discount, as the
case may be (the "allocated Purchase Price"). This allocation is required to be
calculated separately for each Underlying Security represented by a Certificate.
To the extent that the allocated Purchase Price is less than the principal
balance of an Underlying Security, the Certificate Owner's interest in such
Underlying Security will be treated as purchased at a "market discount." The
market discount on a Underlying Security will, however, be considered to be zero
if it is less than a statutorily defined de minimis amount. Conversely, to the
extent that the allocated Purchase Price exceeds the principal balance of an
Underlying Security, the Certificate Owner's interest therein will be treated as
purchased with "bond premium." See the discussion below under "Bond Premium."
For example, if the allocated Purchase Price paid by a Certificate Owner
with respect to an Underlying Security is equal or almost equal to the portion
of the principal balance of the Underlying Security that is allocable to the
Certificate, there would be no significant amount of discount or premium with
respect to its interest in such Underlying Security. Moreover, if the total
purchase price of a Certificate is equal to the principal amount of the
Underlying Securities allocable to the Certificate, one or more Underlying
Securities will have been purchased at a discount because a portion of such
purchase price will be allocated to the other Deposited Assets of the Trust.
In general, under the market discount provisions of the Code, all or a
portion of the principal payments received by the Trust and the gain recognized
upon a sale, maturity or disposition of an Underlying Security or upon the sale
or other disposition of a Certificate (as further described below under
"PURCHASE AND SALE OF A CERTIFICATE") will be taxable as ordinary income to the
extent of accrued market discount. In general, the accrued market discount on
each Underlying Security will equal an amount that bears the same ratio to the
market discount on the Underlying Security as the number of days that the Trust
held the Underlying Security (or a Certificate Owner held a Certificate related
thereto), bears to the number of days after the Trust acquired the Underlying
Certificate (or a Certificate Owner acquired a Certificate related thereto) and
up and to the date of the maturity of the Underlying Security. At the election
of a Certificate Owner, market discount can be accrued under a constant yield
method as further described on the Code. The ordinary income treatment on
dispositions described above will not apply if a Certificate Owner elects (or
has previously elected) to include market discount in income currently as it
accrues for each taxable year during which it holds the Certificate. Such
election, if made, will also apply to all debt instruments acquired directly or
indirectly, by the Certificate Owner during the year in which the election is
made and all debt instruments acquired thereafter and is irrevocable without the
consent of the Service. If a Certificate Owner does not elect to annually
include accrued market discount in taxable income as it accrues, deductions for
any interest expense incurred by a Certificate Owner that is incurred to
purchase or carry a Certificate will be reduced by such accrued market discount.
In general, the portion of any interest expense that was not currently
deductible would ultimately be deductible when the accrued market discount is
included in income. Certificate Owners should consult their tax advisors
regarding whether an election should be made to include market discount in
income as it accrues and the method of accrual and as the amount of interest
expense that may not be currently deductible.
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Tax Treatment of Certificates to the Extent They Are Stripped Interests. To
the extent a Certificate represents a stripped interest in a particular maturity
represented by the Underlying Securities, each such Certificate will be subject
to the OID rules. The amount of OID on a stripped interest is equal to the
excess of the stated redemption price at maturity (or the amount payable on the
coupon) over the portion of the purchase price for the Certificate allocable to
the stripped interest, based on the relative fair market value of all assets
required.
The tax treatment of a Certificate Owner will depend upon whether the
amount of OID on the stripped interest represented by the Certificate is less
than a statutorily defined de minimis amount. In general, under Treas. Reg.
Section 1.1286-1 (the "De Minimis Regulation"), the amount of OID with respect
to the stripped interest will be de minimis if it is less than 1/4 of one
percent multiplied by the product of the "stated redemption price at maturity"
(or in the case of a stripped coupon, the amount payable on the due date of such
coupon) and the number of full years remaining after the purchase date of either
the Underlying Security by the Trust or a Certificate by a Certificate Owner, as
appropriate until the maturity of such stripped interest. However, if the
stripped interest provides for amortization of principal, the amount of OID will
be de minimis if it is less than 1/4 of one percent multiplied by the product of
the stated redemption price at maturity (or in the case of a stripped coupon,
the amount payable on the due date of such coupon) and the weighted average
maturity. This calculation of de minimis OID is to be performed separately for
each new purchaser of a Certificate of the stripped interest from the date of
purchase of the Underlying Security by the Trust or a Certificate by a
Certificate Owner, as appropriate.
In the preamble to the De Minimis Regulation, the Service stated that the
final regulations are premised on the assumptions that stripped coupons may be
treated as qualified stated interest with respect to the bonds from which they
are stripped and, therefore, may be excluded from stated redemption price at
maturity in appropriate circumstances. According to the Service, without these
assumptions, each stripped bond and stripped coupon would be treated as a
separate (zero coupon) bond, and the OID with respect to each such separate bond
or coupon virtually never would be de minimis. Finally, the Service indicated
that future regulations under section 1286 will provide specific guidance
relating to these assumptions. Certificate Owners are advised to consult their
tax advisers with respect to the use of this assumption in determining the
federal income tax consequences associated with the acquisition, ownership and
disposition of a Certificate, including the determination of whether (i) OID is
de minimis, (ii) a Certificate is subject to the market discount rules discussed
above under "Tax Treatment of Certificates to the Extent They are Not Stripped
Interests," and (iii) whether a Certificate represents an interest in an
Underlying Security purchased at a premium and is subject to the discussion
below under "BOND PREMIUM."
To the extent the amount of OID on the stripped interest represented by the
Certificate is de minimis under the rules discussed above, such OID will be
treated as zero. As a result, as described above under "Tax Treatment of
Certificates to the Extent They Are Not Stripped Interests," a Certificate Owner
would report its share of the income of the Trust under its usual method of
accounting.
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If the OID with respect to the stripped interest in a particular maturity
represented by the Underlying Securities represented by a Certificate is not
treated as being de minimis, a Certificate Owner will be required to include in
income any OID on the stripped interest. Whether the Certificate Owner uses the
cash or the accrual method of tax accounting, OID must be included in income as
it accrues on a daily basis, regardless of when cash payments are received,
using a method reflecting a constant yield as described below. Such treatment
could result in the accrual of income by such Certificate Owner prior to the
receipt of cash by such Certificate Owner. The accrual of OID depends upon
whether the Underlying Security with respect to which OID exists matures within
one year of the date purchased. In the case of a Certificate that matures
within one year, OID accrues daily on a ratable basis unless the holder elects
to accrue such discount under a constant yield method, compounded daily. In the
case of a Certificate that does not mature within one year of the date
purchased, OID generally accrues daily, computed under a constant yield method,
compounded at least annual (with straight line interpolation between compounding
dates). Prospective purchasers should consult their tax advisors as to the
computation of the accrual of OID, including the impact of the discussion set
forth above in the preamble to the De Minimis Regulation.
BOND PREMIUM
In the event that a Certificate represents an interest in an Underlying
Security purchased (either initially upon the formation of the Trust or upon the
purchase of a Certificate) at a premium, such premium will be amortizable by the
Certificate Owner as an offset to interest income (with a corresponding
reduction in the Certificate Owner's basis) under a constant yield method over
the term of the Underlying Security if an election under Section 171 of the Code
is made or was previously in effect. Any such election will also apply to all
debt instruments held by the Certificate Owner during the year in which the
election is made and all debt instruments acquired thereafter and the election
is irrevocable without the consent of the Service.
ELECTION TO TREAT ALL INTEREST AS ORIGINAL ISSUE DISCOUNT
Under Treas. Reg. Section 1.1272-3 and with the limits set forth therein,
any Certificate Owner may elect to include in gross income all interest
(including stated interest, OID, de minimis OID, market discount and de minimis
market discount, as adjusted by any bond premium or acquisition premium) that
accrues on an unstripped or stripped interest using the constant yield method
described above. Such an election with respect to an unstripped or stripped
interest having amortizable bond premium or market discount, to the extent
permitted, would constitute, respectively, an election to apply the market
discount rules or bond premium rules with respect to all other debt instruments
with market discount or amortizable bond premium, as the case may be, of such
Certificate Owner. A Certificate Owner should consult its tax adviser as to
whether to make such an election.
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MODIFICATION OR EXCHANGE OF UNDERLYING SECURITIES
Depending upon the circumstances, it is possible that a modification of the
terms of one or more of the Underlying Securities, or a substitution of other
assets for the Underlying Securities, would be a taxable event to Certificate
Owners on which they would recognize gain or loss.
DEDUCTIBILITY OF TRUST'S FEES AND EXPENSES
In computing its Federal income tax liability, a Certificate Owner will be
entitled to deduct, consistent with its method of accounting, its share of
reasonable administrative fees, trustee fees and other fees paid or incurred by
the Trust and any allowable amortization deductions with respect to certain
other assets of the Trust, but not amortizable bond premium. If a Certificate
Owner is an individual, estate or trust, the deduction for his share of fees
will be a miscellaneous itemized deduction and will only be allowable to the
extent that they exceed 2% of the Certificate Owner's adjusted gross income.
PURCHASE AND SALE OF A CERTIFICATE
A Certificate Owner's tax basis in a Certificate generally will equal the
cost of such Certificate increased by any amounts of undistributed taxable
income (e.g., OID or market discount) and reduced by any amortized premium (each
as described above) and any payments other than payments of qualified stated
interest, if any (subject to the application of the discussion set forth above
in the preamble to the De Minimis Regulation), on an Underlying Security
represented by the Certificate.
If a Certificate Owner sells its Certificate, gain, if any, will constitute
ordinary income to the extent of the aggregate of the accrued market discount
(which has not previously been included in such Certificate Owner's taxable
income) with respect to the Certificate Owner's pro rata portion of each
Underlying Security held by the Trust. Any other gains (or losses) will be
capital gains (or losses) except in the case of a dealer or a financial
institution, and will be long-term if the Certificate Owner has held its
Certificates for more than one year. A Certificate Owner will recognize taxable
gains (or losses) (a) upon redemption or sale of its Certificate, (b) if the
Trustee disposes of an asset or (c) upon receipt by the Trustee of payments of
principal on the Underlying Securities. The amount of any such gain (or loss) is
measured by comparing the Certificate Owner's pro rata share of the total
proceeds from the transaction with its adjusted tax basis in its certificate or
its pro rata interest in the asset as the case may be, and then reducing such
gain, if any, to the extent characterized as ordinary income resulting from
accrued market discount as discussed above. A Certificate Owner's tax basis in
its Certificate and its pro rata portion of each of the Underlying Securities of
the Trust may be adjusted to reflect the accrual of market discount (if the
Certificate Owner has elected to include such discount in income as it accrues),
original issue discount and amortized bond premium, if any. The tax cost
reduction requirements of said Code relating to amortization of bond premium
may, under some circumstances, result in the Certificate Owner realizing a
taxable gain when its
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Certificates are sold or redeemed for an amount equal to its original cost. In
addition, Certificate Owners must reduce the tax basis of its Certificates and
their pro rata portion of the Underlying Securities of the Trust for their share
of accrued interest received by the Trust, if any, on Underlying Securities
delivered after the Certificate Owner pays for its certificates to the extent
that such interest accrued on such Underlying Securities during the period from
the Certificate Owner's settlement date to the date such Underlying Securities
are delivered to the Trust and, consequently, such Certificate Owner may have an
increase in taxable gain or reduction in capital loss upon the disposition of
its Certificates or such Underlying Securities.
For taxable years beginning after December 31, 1986 and before January 1,
1996, certain corporations may be subject to the environmental tax (the
"Superfund Tax") imposed by Section 59A of the Code. Interest received from, and
gains recognized from the disposition of, an Underlying Security by the Trust or
the sale of Certificates by a Certificate Owner will be included by such
corporations in the computation of the Superfund Tax. Under current Code
provisions, the Superfund Tax does not apply to tax years beginning on or after
January 1, 1996. However, the Superfund Tax could be extended retroactively.
The Revenue Reconciliation Act of 1993 (the "Act") raised tax rates on
ordinary income while capital gains remain subject to a 28% maximum stated rate
for taxpayers other than corporations. Because some or all capital gains are
taxed at a comparatively lower rate under the Act, the Act includes a provision
that recharacterizes capital gains as ordinary income in the case of certain
financial transactions that are "conversion transactions" effective for
transactions entered into after April 30, 1993. Certificate Owners are
prospective investors should consult with their tax advisors regarding the
potential effect of this provision on their investment in the Certificates.
BACKUP WITHHOLDING
Payments made on the Certificates and proceeds from the sale of the
Certificates will not be subject to a "backup" withholding tax of 31% unless, in
general, the Certificate Owner fails to comply with certain reporting procedures
and is not an exempt recipient under applicable provisions of the Code.
FOREIGN CERTIFICATE OWNERS
To the extent that amounts paid to Certificate Owners that are not United
States persons ("Foreign Certificate Owners") are treated as interest with
respect to Underlying Securities issued after July 8, 1984, such amounts
generally will not be subject to the annual 30% withholding tax, provided that
such Foreign Certificate Owner fulfills certain certification requirements.
Under such requirements, the holder must certify, under penalties of perjury,
that it is not a "United States person" and provide its name and address.
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A "United States person" means a citizen or resident of the U.S., a
corporation, partnership or other entity created or organized in or under the
laws of the U.S. or any political subdivision thereof, or an estate or trust the
income of which is includible in gross income for U.S. Federal income tax
purposes, regardless of its source.
PARTNERSHIP CERTIFICATES
If the Trust is intended to be treated as a partnership for purposes of
Federal income taxation, Federal Tax Counsel will so opine. The availability of
any tax benefits of investing in Certificates depends upon the classification of
the Trust as a partnership, rather than as an association taxable as a
corporation, for federal income tax purposes. Federal Tax Counsel's opinion
regarding the status of the Trust as a partnership for federal income tax
purposes is based on provisions of the Trust Agreement which (1) provide that
the Trust will terminate upon the occurrence of certain events such as the
insolvency or bankruptcy of the Depositor, (2) restrict the transferability of
the Certificates, (3) impose personal liability on the Depositor for expenses
and other liabilities of the Trust, (4) require that the Depositor will have a
net worth sufficient to meet the net worth requirements set by the Service for
the issuance of an advance ruling that an organization lacks the corporate
characteristic of limited liability for federal income tax purposes,
(5) restrict the number of Certificate Owners and (6) restrict the transfer of
Certificates on an "established securities market" as defined in Section 7704 of
the Code.
If the Trust were taxable as a corporation, it would be subject to federal
income tax on any taxable income at regular corporate tax rates. Classification
of the Trust as a corporation would result in a substantial reduction in (or
elimination of) after-tax yield and cash flow to an Owner of a Certificate with
respect to its Certificate.
Final regulations have been issued that provide an anti-abuse rule under
Subchapter K of Chapter 1 of the Code. These regulations authorize the Service,
based upon all of the facts and circumstances, to recast a transaction involving
a partnership as appropriate to reflect the underlying economic arrangement or
to prevent the circumvention of other provisions of the Code. This authority to
recast a transaction includes, but is not limited to, disregarding and
reallocating allocations of the partnership's items of income, gain, loss,
deductions, or credits. It cannot be predicted whether the Service will asset
that such a rule would apply to recast the Federal income tax treatment of
either the Trust of the Certificates. Holders should consult their own tax
advisers in this regard.
The Service has recently issued proposed Treasury Regulations
Section 1.7701-1 through 1.7701-3 which simplifies the regulations relating to
the classification of unincorporated business organizations, including entities
such as the Trust, as partnerships and corporations for federal income tax
purposes and is seeking public comments on the proposed regulations. At this
time, the Service has not yet finalized the proposed regulations and it is
unclear when they will be finalized and the form such final regulations may
take. Accordingly, although the ultimate effect of such regulations cannot be
predicted, it is not believed that any such simplifying regulations should
adversely affect the classification of the Trust as a partnership. Investors
should consult their own tax advisors in this regard.
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PARTNERSHIP TAXATION
As a partnership, the Trust will not be subject to Federal income tax, but
each Certificate Owner will be required to separately take into account such
holder's allocable share of income, gains, losses, deductions and credits of the
Trust. Each Certificate Owner will be required to take into account in computing
such Certificate Owner's federal income tax liability its share of items of
Trust income, gains, losses, deductions and credits for the tax year of the
Trust ending within or with the tax year of such Certificate Owner, without
regard to whether there are distributions from the Trust. A Certificate Owner's
distributive share of Trust income, expense, gain, loss or credit will be
determined in accordance with the Trust Agreement. All or a portion of any
allocated expenses (to the extent not otherwise disallowed under the Code) may
be treated as investment expenses subject to limitations on deductibility of
miscellaneous itemized deductions that do not exceed two percent of their
adjusted gross income in the case of Certificate Owners who are individuals,
estates or trusts.
A Certificate Owner's ability to recognize its distributive share of
expenses or losses, if any, may be subject to limitation under the Code (for
example, a Certificate Owner's distributive share of Trust loss, including
capital loss, may be allowed only to the extent of such Certificate Owner's
adjusted basis in its Certificate). A Certificate Owner should consult its tax
advisors in this regard.
Any cash distributions by the Trust to a Certificate Owner will constitute
(i) first, a return of capital to the extent of such Certificate Owner's tax
basis in the Certificate (with a corresponding dollar-for-dollar reduction in
such tax basis), and (ii) thereafter, to the extent in excess thereof, gain on
the sale or exchange of such Certificate Owner's Certificate. See "DISPOSITION
OF CERTIFICATES" below.
DISCOUNT AND PREMIUM
It is believed that the Underlying Securities were not issued with OID and,
therefore, the Trust should not have OID income. However, the purchase price
paid by the Trust for the Underlying Securities may be greater or less than the
remaining principal balance of the Underlying Securities at the time of
purchase. If so, the Underlying Securities will have been acquired at a premium
or discount, as the case may be. Moreover, to the extent a deemed termination of
the Trust occurs as discussed below, it is possible that discount or premium
will be created, depending on the value of the Underlying Securities at such
time.
The amortization of bond premium and accrual of market discount are
discussed above under "BOND PREMIUM" and "Tax Treatment of Certificates to the
Extent They Are Not Stripped Interests." For purposes of this discussion, the
Partnership will be considered the Certificate Owner.
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MODIFICATION OR EXCHANGE OF UNDERLYING SECURITIES
Depending upon the circumstances, it is possible that a modification of the
terms of the Underlying Securities, or a substitution of other assets for the
Underlying Securities would be a taxable event to the Trust, which may result in
Federal income tax consequences to Certificate Owners.
TAX CONSEQUENCES OF OTHER ASSETS HELD BY TRUST
The manner in which income with respect to the other assets of the Trust
should be accrued will depend on the nature of those assets.
[Discuss specific tax consequences of other assets.]
SECTION 708 TERMINATION
Under Section 708 of the Code, the Trust will be deemed to terminate for
Federal income tax purposes if 50% or more of the capital and profits interests
in the Trust are sold or exchanged within a twelve-month period. Were such a
termination to occur, the Trust would be considered to have distributed its
assets to the partners, the Certificate Owners, who would then be treated as
having recontributed those assets to the Trust, as a new partnership.
DISPOSITION OF CERTIFICATES
Generally, capital gain or loss will be recognized on a sale or other
disposition of Certificates in an amount equal to the difference between the
amount realized and the seller's tax basis in the Certificates sold. A
Certificate Owner's tax basis in a Certificate will generally equal its cost
increased by his share of Trust income includible in his income (including for
the taxable year of sale) and decreased by any distributions received with
respect to such Certificate. In addition, both his tax basis in, and the amount
realized on a sale of, a Certificate would include the holder's share of
liabilities of the Trust. A holder acquiring Certificates at different prices
may be required to maintain a single aggregate adjusted tax basis in such
Certificate and, upon sale or other disposition of some of the Certificates,
allocate a pro rata portion of such aggregate tax basis to the Certificates sold
(rather than maintaining a separate tax basis in each Certificate for purposes
of computing gain or loss on a sale of that Certificate).
"The Revenue Reconciliation Act of 1993" (the "Tax Act") raised tax rates
on ordinary income while capital gains remain subject to a 28 percent maximum
stated rate. Because some or all capital gains are taxed at a comparatively
lower rate under the Tax Act, the Tax Act includes a provision that
recharacterizes capital gains as ordinary income in the case of certain
financial transactions that are "conversion transactions" effective for
transactions entered into after April 30, 1993. Prospective Certificate Owners
should
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consult with their tax advisors regarding the potential effect of this
provision with respect to any gains recognized on their investment in
Certificates.
In general, the transfer of interests in the Trust should not affect
Certificate Owners other than those disposing of or acquiring a Certificate.
However, under the partnership rules, as described above, a transfer during a
twelve-month period of 50% or more of the total interests in the partnership
capital and profits will result for Federal income tax purposes in a termination
and reconstitution of the Trust, with the result that the Trust's basis in the
Underlying Securities and Deposited Assets will equal the aggregate of the
Certificate Owner's basis in their Certificates. Upon the subsequent receipt of
principal payments on the Underlying Securities or the sale or redemption of the
Underlying Securities, this rule may result in the recognition of gain or loss
by a Certificate Owner in advance of the sale or redemption of its Certificate.
On the sale of a Certificate, any gain attributable to the holder's share
of any accrued market discount on the Underlying Securities that has not
otherwise been included in the holder's income would generally be treated as
ordinary income to the holder and would give rise to special tax reporting
requirements.
ALLOCATIONS BETWEEN TRANSFERORS AND TRANSFEREES
In general, the Trust's taxable income and losses will be determined
monthly and the tax items for a particular calendar month allocable to a
particular class of Certificates will be apportioned among holders of such
Certificates in proportion to the principal amount of such Certificates owned by
them as of the first business day following the end of such month. As a result,
a holder purchasing Certificates may be allocated tax items (which will affect
its tax liability and tax basis) attributable to periods before the actual
transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If such a convention is not allowed (or only applies to transfers
of less than all of a Certificate Owner's interest), taxable income or losses of
the Trust might be reallocated among the Certificate Owners. The Trustee is
authorized to revise the Trust's method of allocation between transferors and
transferees to conform to a method permitted by future regulations.
SECTION 754 ELECTION
In the event that a Certificate Owner sells its Certificates at a profit
(loss), the purchasing Certificate Owner will have a higher (lower) basis in the
Certificates than the selling Certificate Owner had. The tax basis of the
Trust's assets will not be adjusted to reflect that higher (or lower) basis
unless the Trust were to file an election under Section 754 of the Code. In
order to avoid the administrative complexities that would be involved in keeping
accurate accounting records, as well as potentially onerous information
reporting requirements, the Trust will not make such election. As a result
Certificate
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Owners might be allocated a greater or lesser amount of Trust income than would
be appropriate based on their own purchase price for Certificates.
ADMINISTRATIVE MATTERS
The Trustee is required to keep complete and accurate books of the Trust.
Such books will be maintained for financial reporting and tax purposes on an
accrual basis. The Trustee will file a partnership information return (Service
Form 1065) with the Service for each taxable year of the Trust and will report
each Certificate Owner's allocable share of items of Trust income and expense to
holders and the Service on Schedule K-1. The Trust will provide the Schedule
K-1 information to nominees that fail to provide the Trust with the information
statement described below and such nominees will be required to forward such
information to the beneficial owners of the Certificates. Generally, holders
must file tax returns that are consistent with the information return filed by
the Trust or be subject to penalties, unless the holder notifies the Service of
all such inconsistencies.
Under Code Section 6031, any person that holds Certificates as a nominee at
any time during a calendar year is required to furnish the Trust with a
statement containing certain information on the nominee, the beneficial owners
and the Certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each beneficial
owner (x) the name, address and taxpayer identification number of such person,
(y) whether such person is not a United States person, a tax-exempt entity, or a
foreign government, an international organization, or any wholly-owned agency or
instrumentality of either of the foregoing, and (z) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust information as
to themselves and their ownership of Certificates. A clearing agency registered
under Section 17A of the Exchange Act is not required to furnish any such
information statement to the Trust. The information referred to above for any
calendar year must be furnished to the Trust on or before the following January
31. Nominees, brokers and financial institutions that fail to provide the Trust
with the information described above may be subject to penalties.
The Depositor, as the tax matters partner, will be responsible for
representing the Certificate Owners in any dispute with the Service. The Code
provides for administrative examination of a partnership as if the partnership
were a separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the Trust by the appropriate taxing authorities could
result in an adjustment of the returns of the Certificate Owners and, under
certain circumstances, a Certificate Owner may be precluded from separately
litigating a proposed adjustment to the items of the Trust. An adjustment could
also result in an audit of a Certificate Owner's returns and adjustments of
items not related to the income (or loss) of the Trust.
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TAX CONSEQUENCES TO FOREIGN CERTIFICATE OWNERS
It is not clear whether the Trust would be considered to be engaged in a
trade or business in the United States for purposes of Federal withholding taxes
with respect to non-U.S. persons because there is no clear authority dealing
with that issue under facts substantially similar to those described herein.
[Although it is not expected that the Trust would be engaged in a trade or
business in the United States for such purposes, the Trust expects to withhold
as if it were so engaged in order to protect the Trust from possible adverse
consequences of a failure to withhold. The Trust expects to withhold on the
portion of its taxable income that is allocable to foreign Certificate Owners
pursuant to Code Section 1446, as if such income were effectively connected to
U.S. trade or business, at a rate of 35% for foreign holders that are taxable as
corporations and 39.6% for all other foreign holders. Subsequent adoption of
Treasury regulations or the issuance of other administrative pronouncements may
require the Trust to change its withholding procedures. In determining a
holder's nonforeign status, the Trust may rely on Form W-8, Form W-9 or the
holder's certification of nonforeign status signed under penalties of perjury.]
[Each foreign holder might be required to file a U.S. individual or
corporate income tax return (including, in the case of a corporation, the branch
profits tax) on its share of the Trust's income. Each foreign holder must
obtain a taxpayer identification number from the Service and submit that number
to the Trust on Form W-8 in order to assure appropriate crediting of the taxes
withheld. A foreign holder generally would be entitled to file with the Service
a claim for refund with respect to taxes withheld by the Trust, taking the
position that no taxes were due because the Trust was not engaged in a U.S.
trade or business. The Trust will cooperate in any such refund claim if it can
do so without incurring any out-of-pocket cost. No assurance can be given as to
whether any such refund claim would be granted.]
[The foregoing summary will be modified, as necessary, to reflect
differences caused by the precise nature of the Deposited Assets relating to a
given Series of Certificates.]
[STATE TAX CONSEQUENCES]
[Describe any applicable state tax consequences that may arise, including
as a result of the specific nature of the Deposited Assets relating to a given
Series of Certificates or the degree of servicing required with respect to such
Deposited Assets.]]
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on (a) an employee benefit plan (as
defined in Section 3(3) of ERISA), (b) a plan described in Section 4975(e)(I) of
the Code or (c) any entity whose underlying assets include plan assets by reason
of a plan's investment in the entity (each, a "Plan"). Moreover, based on the
reasoning of the United States Supreme
S-50
<PAGE>
Court's decision in John Hancock Life Ins. Co. v. Harris Trust and Sav. Bank,
114 S.Ct. 517 (1993), an insurance company investing assets in its general
account might be treated as a Plan on the grounds that such an investor may be
investing assets of an employee benefit plan subject to ERISA.
In accordance with ERISA's general fiduciary standards, before investing in
a Certificate, a Plan fiduciary should determine whether such an investment is
permitted under the governing Plan instruments and is appropriate for the Plan
in view of its overall investment policy and the composition and diversification
of its portfolio. Other provisions of ERISA and the Code prohibit certain
transactions involving the assets of a Plan and persons who have certain
specified relationships to the Plan ("parties in interest" within the meaning of
ERISA or "disqualified persons" within the meaning of the Code). Thus, a Plan
fiduciary considering an investment in Certificates should also consider whether
such an investment might constitute or give rise to a prohibited transaction
under ERISA or the Code.
An investment in Certificates by a Plan might result in the assets of the
Trust being deemed to constitute Plan assets, which in turn might mean that
certain aspects of such investment, including the operation of the Trust, might
be prohibited transactions under ERISA and the Code. Neither ERISA nor the Code
defines the term "plan assets." Under Section 2510.3-101 of the United States
Department of Labor ("DOL") regulations (the "Regulation"), a Plan's assets may
include an interest in the underlying assets of an entity (such as a trust) for
certain purposes, including the prohibited transaction provisions of ERISA and
the Code, if the Plan acquires an "equity interest" in such entity. Thus, if a
Plan acquired a Certificate of a particular class, for certain purposes
(including the prohibited transaction provisions) the Plan would be considered
to own its share of the underlying assets of the Trust unless (1) such
Certificate is a "publicly-offered security" or (2) equity participation in such
class by benefit plan investors is not "significant."
A publicly-offered security is a security that is (1) freely transferable,
(2) part of a class of securities that is owned by 100 or more investors
independent of the issuer and of one another at the conclusion of the initial
offering and (3) either is (A) part of a class of securities registered under
Section 12(b) or 12(g) of the Exchange Act, or (B) sold to the Plan as a part of
an offering of securities to the public pursuant to an effective registration
statement under the Securities Act and the class of securities of which such
security is a part is registered under the Exchange Act within 120 days (or such
later time as may be allowed by the Commission) after the end of the fiscal year
of the issuer during which the offering of such securities to the public
occurred. The Depositor does not anticipate that the Certificates of any class
will be considered publicly-offered securities within the meaning of the
Regulation.
Participation by benefit plan investors in any class of Certificates would
not be significant if immediately after the most recent acquisition of
Certificates of such class, whether or not from the Depositor or an Agent or
Underwriter, less than 25 percent of the value of such class were held by
benefit plan investors, which are defined as Plans and employee benefit plans
not subject to ERISA (for example, governmental plans). There can
S-51
<PAGE>
be no assurance that less than 25 percent of the value of any given class of
Certificates will be held by benefit plan investors.
If assets of the Trust were deemed to be Plan assets, certain transactions
involving the Trust, including the acquisition of the Certificates themselves by
a Plan, could be prohibited transactions. If, for example, an obligor with
respect to any of the Deposited Assets, or any of such obligor's affiliates,
were a party in interest or disqualified person with respect to an acquiring
Plan, the acquisition of the Certificate could be construed as a prohibited
indirect loan from the Plan to the obligor. Any such prohibited transaction
could be treated as exempt under ERISA and the Code if the Certificates were
acquired pursuant to and in accordance with one or more "class exemptions"
issued by the DOL, such as Prohibited Transaction Class Exemption ("PTCE") 84-14
(an exemption for certain transactions determined by an independent qualified
professional asset manager), PTCE 91-38 (an exemption for certain transactions
involving bank collective investment funds), PTCE 90-1 (an exemption for certain
transactions involving insurance company pooled separate accounts) or PTCE 95-60
(an exemption for certain transactions involving insurance company general
accounts).
Certificates will not be sold to any Plan unless such Plan represents that
the acquisition of a Certificate would not be prohibited under ERISA and the
Code because an exemption is applicable to the acquisition and holding of the
Certificates and the activities of the Trust. To the extent an insurance company
invests assets treated as assets of a Plan, it will be required to make the
foregoing representation as a condition to the acquisition of a Certificate.
Alternatively, if the Depositor is able to confirm the existence of at least 100
independent purchasers of a class, the foregoing representation will not be a
condition to acquisition of Certificates of such class.
Any Plan or insurance company investing assets of its general account
proposing to acquire Certificates should consult with its counsel.
PLAN OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting
Agreement, dated as of [ ], 199[ ] (the "Underwriting Agreement"), the
Depositor as agreed to sell and [Morgan Keegan & Company, Inc. (an affiliate of
the Depositor)] [each of the Underwriters named below, including Morgan Keegan &
Company, Inc. (an affiliate of the Depositor)] (the "Underwriter[s]")[,] has
[severally] agreed to purchase, the [Certificates] [the principal amount of each
class of Certificates set forth below opposite its name].
<TABLE>
<CAPTION>
Class [ ] Class [ ] Class [ ]
<S> <C> <C> <C>
Morgan Keegan & Company, Inc... $ $ $
------------ ------------ ------------
Total..................... $ $ $
============ ============ ============
</TABLE>
S-52
<PAGE>
[Morgan Keegan & Company, Inc. has] [The several Underwriters have] agreed,
subject to the terms and conditions set forth in the Underwriting Agreement, to
purchase all Certificates offered hereby if any of such Certificates are
purchased. [In the event of default by any Underwriter, the Underwriting
Agreement provides that, in certain circumstances, the purchase commitments of
non-defaulting Underwriters may be increased or the Underwriting Agreement may
be terminated.]
The Depositor has been advised by the Underwriter[s] that [it] [they]
propose[s] to offer the Certificates from time to time in negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. The Underwriter[s] may effect such transactions by selling Certificates
to or through dealers and such dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Underwriter[s] and
any purchasers of Certificates for whom they may act as agents. The
Underwriter[s] and any dealers that participate with the Underwriter[s] in the
distribution of Certificates may be deemed to be underwriters, and any profit on
the resale of Certificates by them may be deemed to be underwriting discounts or
commissions under the Securities Act.
[If and to the extent required by applicable law or regulation, this
Prospectus Supplement and the Prospectus will also be used by the Underwriter
after the completion of the offering in connection with offers and sales related
to market-making transactions in the Offered Certificates in which the
Underwriter acts as principal. The Underwriter may also act as agent in such
transactions. Sales will be made at negotiated prices determined at the time of
sale.]
The Underwriting Agreement provides that the Depositor will indemnify the
Underwriter[s] against certain civil liabilities, including liabilities under
the Securities Act, or will contribute to payments the Underwriter[s] may be
required to make in respect thereof.
Morgan Keegan & Company, Inc. is an affiliate of the Depositor, and the
participation by Morgan Keegan & Company, Inc. in the offering of the
Certificates complies with Schedule E of the By-Laws of the National Association
of Securities Dealers, Inc. regarding underwriting securities of an affiliate.
RATINGS
It is a condition to the issuance of the Certificates that the Certificates
be rated not lower than [specify ratings applicable to each class] by [Standard
& Poor's Corporation ("Standard & Poor's")] [Moody's Investors Service, Inc.
("Moody's")] [Fitch Investors Service, L.P. ("Fitch")] [and] [Duff & Phelps
Credit Rating Company ("Duff and Phelps")] (the "Rating [Agency] [Agencies]").
The ratings address the likelihood of the receipt by the Certificateholders of
payments required under the Trust Agreement, and are based primarily on the
credit quality of the Deposited Assets and any providers of Credit Support, as
well as on the relative priorities of the Certificateholders of each class of
the Certificates with respect to collections and losses with respect to the
Deposited Assets. The rating on the Certificates does not, however, constitute a
statement regarding the occurrence or frequency
S-53
<PAGE>
of redemptions or prepayments on, or extensions of the maturity of, the
Deposited Assets, the corresponding effect on yield to investors, or whether
investors in the Class [ ] Certificates [specify class with Notional Amount] may
fail to recover fully their initial investment.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning Rating
Agency. Each security rating should be evaluated independently of any other
security rating.
The Depositor has not requested a rating on the Certificates by any rating
agency other than the Rating [Agency] [Agencies]. However, there can be no
assurance as to whether any other rating agency will rate the Certificates, or,
if it does, what rating would be assigned by any such other rating agency. A
rating on the Certificates by another rating agency, if assigned at all, may be
lower than the ratings assigned to the Certificates by the Rating [Agency]
[Agencies].
LEGAL OPINIONS
Certain legal matters relating to the Certificates will be passed upon for
the Depositor and the Underwriter[s] by Chapman and Cutler, Chicago, Illinois.
S-54
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
TERM PAGE
<S> <C>
Act...........................................................................44
Advance.......................................................................33
AECA..........................................................................23
AID--Guaranteed Underlying Securities......................................8, 15
AID--Guaranteed Underlying Security Payment Date..............................25
AID--Guaranteed Underlying Securities..........................................1
allocated Purchase Price......................................................40
Allowable Expense Amount......................................................31
Appropriations Acts...........................................................23
Available Funds...............................................................31
Base Trust Agreement...........................................................6
Borrower......................................................................24
Business Day..................................................................12
Call Premium Percentage.......................................................31
CEDE..........................................................................29
Certificate Owner.............................................................38
Certificates............................................................1, 6, 10
Clearing Agency...............................................................29
Closing Date..................................................................11
Code..........................................................................38
Credit Reform Act.............................................................26
Credit Support Payments.......................................................30
Credit Support Providers......................................................30
De Minimis Regulation.........................................................41
Definitive Classes............................................................29
Depositary....................................................................24
Deposited Assets..........................................................11, 27
Depositor..................................................................1, 10
Distribution Date..............................................................1
DOL...........................................................................51
DSAA..........................................................................23
DTC.........................................................................2, 7
Duff & Phelps.................................................................53
Eligible Investments..........................................................31
ERISA.....................................................................14, 50
Event of Default..............................................................34
Expected Settlement Date.......................................................1
Fannie Mae....................................................................19
Farm Credit Act...............................................................22
FCA...........................................................................22
FCBs..........................................................................22
Federal Tax Counsel...........................................................38
FFB...........................................................................23
</TABLE>
S-55
<PAGE>
<TABLE>
<S> <C>
FFEL.........................................................20
FHLMC Act....................................................19
Final Distribution Date.......................................1
FIRRE Act....................................................20
Fiscal Agency Agreement.......................................9
Fitch........................................................53
FMS..........................................................23
Foreign Certificate Owners...................................44
Freddie Mac..................................................19
Funding Corporation..........................................22
GTCs...............................................1, 8, 15, 23
Housing Program..............................................25
IFIs.........................................................24
Information Statements.......................................23
Interest Strip...........................................15, 31
Investment Program...........................................24
Letter of Credit Bank........................................27
Liquidation Proceeds.........................................33
MBS..........................................................19
Moody's......................................................53
Note Payment Date............................................24
Notes........................................................23
OID..........................................................38
Plan.....................................................14, 50
Prospectus....................................................1
PTCE.........................................................52
Rating [Agency] [Agencies]...................................53
Realized Losses..............................................13
Redemption Price..........................................1, 32
REFCORP......................................................20
Regulation...................................................51
Required Interest............................................32
Required Premium.............................................32
Required Principal...........................................32
Retained Interest............................................18
RTC..........................................................21
Sallie Mae...................................................20
Series Supplement.............................................6
Service......................................................38
Special Distribution Date....................................12
Standard & Poor's............................................53
stripped interest............................................39
Superfund Tax................................................44
Surety.......................................................28
System.......................................................22
Systemwide Debt Securities...................................22
</TABLE>
S-56
<PAGE>
<TABLE>
<S> <C>
Tax Act......................................................47
Trust.........................................................1
Trust Agreement...............................................1
Trustee...................................................1, 24
TVA Act......................................................22
Underlying Securities.....................................1, 18
Underlying Trustee...........................................26
Underwriter[s]...............................................52
Underwriting Agreement.......................................52
</TABLE>
S-57
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ Information contained herein is subject to completion or amendment. A +
+ registration statement relating to these securities has been filed with the +
+ Securities and Exchange Commission. These securities may not be sold nor may +
+ offers to buy be accepted prior to the time the registration statement +
+ becomes effective. This prospectus shall not constitute an offer to sell or +
+ the solicitation of an offer to buy nor shall there by any sale of these +
+ securities on any State in which such offer, solicitation or sale would be +
+ unlawful prior to registration or qualification under the securities laws +
+ of any such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion Dated __________, 1996
PROSPECTUS
TRUST CERTIFICATES
(ISSUABLE IN SERIES)
SOUTHPOINT STRUCTURED ASSETS, INC.
DEPOSITOR
The Trust Certificates (the "Certificates") offered hereby and by supplements
(each a "Prospectus Supplement") to this Prospectus will be offered from time
to time in one or more series (each a "Series") and in one or more classes
within each such Series (each a "Class"). Certificates of each respective Series
and Class will be offered on terms to be determined at the time of sale as
described in the related Prospectus Supplement accompanying the delivery of this
Prospectus. Each Series and Class of Certificates will be issuable as individual
securities in registered form without coupons ("Registered Certificates") or as
one or more global securities in registered form (each a "Global Security").
Each Series of Certificates will represent in the aggregate the entire
beneficial ownership interest in a trust (the "Trust"), the assets of which
will consist primarily of a publicly issued, fixed income debt security or a
pool of such debt securities (the "Underlying Securities"), together with
certain other assets described herein and in the related Prospectus Supplement
(such assets, together with the Underlying Securities, the "Deposited Assets"),
to be deposited in trust for the benefit of holders of Certificates of such
Series ("Certificateholders") by Southpoint Structured Assets, Inc. (the
"Depositor") pursuant to a Trust Agreement and a series supplement thereto with
respect to any given Series (collectively, the "Trust Agreement") among the
Depositor, the administrative agent, if any (the "Administrative Agent") and the
trustee (the "Trustee") named in the related Prospectus Supplement. The
Underlying Securities will be purchased by the Depositor in the secondary market
(either directly or through an affiliate of the Depositor), and will not be
acquired from the obligor with respect thereto or pursuant to any distribution
by or agreement with any such obligor. The Underlying Securities discussed
herein and in the related Prospectus Supplement represent (i) an obligation
issued or guaranteed by the United States of America or any agency thereof for
the payment of which the full faith and credit of the United States of America
is pledged, (ii) an obligation of one or more U.S. government sponsored
entities, (iii) Government Trust Certificates ("GTCs") (provided that such GTCs,
together with any AID-Guaranteed Underlying Securities (as defined below), shall
not account for 20% or more of the aggregate cash flows on the Underlying
Securities securing any Series of Certificates), or (iv) obligations guaranteed
by the United States Agency for International Development pursuant to the AID
Housing Guaranty Program ("AID-Guaranteed Underlying Securities")(provided that
such AID-Guaranteed Underlying Securities, together with any GTCs, shall not
account for 20% or more of the aggregate cash flows on the Underlying Securities
securing any Series of Certificates). If so specified in the related Prospectus
Supplement, the Trust for a Series of Certificates may also include, or the
Certificateholders of such Certificates may have the benefit of, any combination
of insurance policies, letter of credit, reserve accounts and other types of
rights or assets designed to support or ensure the servicing and distribution of
amounts due in respect of the Deposited Assets (collectively, "Credit Support").
See "DESCRIPTION OF CERTIFICATES" and "DESCRIPTION OF DEPOSITED ASSETS AND
CREDIT SUPPORT."
Each Class of Certificates of any Series will represent the right, which may
be senior to those of one or more of the other Classes of such Series, to
receive specified portions of payments of principal, interest and certain other
amounts on the Deposited Assets in the manner described herein and in the
related Prospectus Supplement. A Series may include two or more Classes
differing as to the timing, sequential order or amount of distributions of
principal, interest or premium and one or more Classes within such Series may be
subordinated in certain respects to other Classes of such Series.
Except as otherwise provided herein and in the applicable Prospectus
Supplement, the Depositor's only obligations with respect to each Series of
Certificates will be, pursuant to certain representations and warranties
concerning the Deposited Assets, to assign and deliver the Deposited Assets and
certain related documents to the applicable Trustee and, in certain cases, to
provide for the Credit Support, if any. The principal obligations of an
Administrative Agent, if any, is named in the applicable Prospectus Supplement,
with respect to a Series of Certificates will be pursuant to its contractual
administrative obligations and, only as and to the extent provided in the
related Prospectus Supplement, its obligations to make certain cash advances in
the event of payment delinquencies on the Deposited Assets. See "DESCRIPTION OF
THE CERTIFICATES--ADVANCES IN RESPECT OF DELINQUENCIES."
The Certificates of each Series will not represent an obligation of or
interest in the Depositor, any Administrative Agent or any of their respective
affiliates, except to the limited extent described herein and in the related
Prospectus Supplement. Neither the Certificates nor the Deposited Assets
(unless, and only as and to the extent otherwise specified in such Prospectus
Supplement) will be guaranteed or insured by any governmental agency or
instrumentality, or by the Depositor, any Administrative Agent or their
respective affiliates.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH HEREIN UNDER
"RISK FACTORS," BEGINNING ON PAGE 1.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________
The Certificates may be offered and sold to or through underwriters, through
dealers or agents or directly to purchasers, as more fully described under "Plan
of Distribution" and in the related Prospectus Supplement. This Prospectus may
not be used to consummate sales of Certificates offered hereby unless
accompanied by a Prospectus Supplement.
The date of this Prospectus is __________, 1996
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a Series of Certificates to be
offered thereby and hereby will set forth, among other things, the following
with respect to such Series: (a) the specific designation and aggregate
principal amount, (b) the number of Classes of such Series and, with respect to
each Class of such Series, its designation, aggregate principal amount or, if
applicable, notional amount and authorized denominations, (c) certain
information concerning the type, characteristics and specifications of the
Deposited Assets and any Credit Support for such Series or Class, (d) the
relative rights and priorities of each such Class (including the method for
allocating collections from the Deposited Assets to the Certificateholders of
each Class and the relative ranking of the claims of the Certificateholders of
each Class to such Deposited Assets), (e) the name of the Trustee and the
Administrative Agent, if any, for such Series, (f) the Pass Through Rate (as
defined below) or the terms relating to the applicable method of calculation
thereof, (g) the time and place of distribution (each such date, a "Distribution
Date") of any interest, premium (if any) and/or principal, (h) the date of
issue, (i) the scheduled final Distribution Date, if applicable, (j) the
offering price, (k) any mandatory or optional redemption terms and any other
specific terms of Certificates of each such Series or Class. See "DESCRIPTION
OF CERTIFICATES--GENERAL" for a listing of other items that may be specified in
the applicable Prospectus Supplement.
AVAILABLE INFORMATION
The Depositor is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). Reports and other information
concerning the Depositor can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the Commission:
New York Regional Office, Seven World Trade Center, New York, New York 10048,
and Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can be obtained upon written request
addressed to the Commission, Public Reference Section, 450 Fifth Street, N.W.,
Washington D.C. 20549, at prescribed rates. Such material can also be accessed
electronically by means of the Commission's home page on the Internet at
http://www.sec.gov. The Depositor does not intend to send any financial reports
to Certificateholders.
The Depositor has filed with the Commission a registration statement on
Form S-3 (together with all amendments and exhibits, the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
relating to the Certificates. This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration Statement.
-2-
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
All documents filed by the Depositor pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Certificates shall be deemed to be
incorporated by reference in this Prospectus. Any statement contained herein or
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Depositor will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of any such person,
a copy of any or all of the documents incorporated herein by reference, except
the exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Written requests for such copies
should be directed to the President of Southpoint Structured Assets, Inc., at
its principal executive office located at 50 North Front Street, Memphis,
Tennessee 38103. Telephone requests for such copies should be directed to the
President of Southpoint Structured Assets, Inc. at (901) 524-4100.
REPORTS TO CERTIFICATEHOLDERS
Except as otherwise specified in the applicable Prospectus Supplement,
unless and until Definitive Certificates are issued, on each Distribution Date
unaudited reports containing information concerning the related Trust will be
prepared by the related Trustee and sent on behalf of each Trust only to Cede &
Co. ("Cede"), as nominee of DTC and registered holder of the Certificates. See
"DESCRIPTION OF CERTIFICATES--GLOBAL SECURITIES" and "DESCRIPTION OF THE TRUST
AGREEMENT--REPORTS TO CERTIFICATEHOLDERS; NOTICES." Such reports will not
constitute financial statements prepared in accordance with generally accepted
accounting principles.
-3-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
HEADING PAGE
<S> <C>
PROSPECTUS SUPPLEMENT...................................................... 2
AVAILABLE INFORMATION...................................................... 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.......................... 3
REPORTS TO CERTIFICATEHOLDERS.............................................. 3
RISK FACTORS............................................................... 6
THE DEPOSITOR.............................................................. 8
USE OF PROCEEDS............................................................ 9
FORMATION OF THE TRUST..................................................... 9
MATURITY AND YIELD CONSIDERATIONS.......................................... 10
DESCRIPTION OF CERTIFICATES................................................ 11
General............................................................... 12
Distributions......................................................... 14
Interest on the Certificates.......................................... 15
Principal of the Certificates......................................... 23
Optional Redemption of Certificates................................... 23
Global Securities..................................................... 23
DESCRIPTION OF DEPOSITED ASSETS AND CREDIT SUPPORT......................... 26
General............................................................... 26
Underlying Securities................................................. 27
Principal Economic Terms of Underlying Securities..................... 28
Publicly Available Information........................................ 29
Other Deposited Assets................................................ 29
Credit Support........................................................ 30
Collections........................................................... 32
DESCRIPTION OF THE TRUST AGREEMENT......................................... 33
General............................................................... 33
Assignment of Deposited Assets........................................ 33
Collection and Other Administrative Procedures........................ 34
Retained Interest..................................................... 36
Advances in Respect of Delinquencies.................................. 37
</TABLE>
-4-
<PAGE>
Certain Matters Regarding the Administrative Agent and the Depositor... 37
Administrative Agent Termination Events; Rights Upon Administrative
Agent Termination Event........................................... 38
Modification and Waiver................................................ 40
Reports to Certificateholders.......................................... 41
Evidence as to Compliance.............................................. 42
Replacement Certificates............................................... 43
Termination............................................................ 43
Duties of the Trustee.................................................. 44
The Trustee............................................................ 44
PLAN OF DISTRIBUTION........................................................ 44
LEGAL OPINIONS.............................................................. 46
INDEX OF TERMS.............................................................. 47
-5-
<PAGE>
RISK FACTORS
Investors should consider, among other things, the following factors in
connection with the purchase of the Certificates:
Limited Liquidity. There will be no market for any Series (or Class within
such Series) of Certificates prior to the issuance thereof, and there can be no
assurance that a secondary market will develop or, if it does develop, that it
will provide Certificateholders with liquidity of investment or will continue
for the life of such Certificates.
Certain Legal Aspects. The applicable Prospectus Supplement may set forth
certain legal considerations that are applicable to a specific Series (or Class
or Classes within such Series) of Certificates being offered in connection with
that Prospectus Supplement or the assets deposited in or assigned to the related
Trust.
Limited Obligations and Interests of the Depositor or any of its
Affiliates. The Certificates will not represent a recourse obligation of or
interest in the Depositor or any of its affiliates. The Certificates of each
Series will not be insured or guaranteed by any government agency or
instrumentality, the Depositor, any Person affiliated with the Depositor or the
Issuer, or any other Person. The obligations, if any, of the Depositor with
respect to the Certificates of any Series will only be pursuant to certain
limited representations and warranties. The Depositor does not have, and is not
expected in the future to have, any significant assets with which to satisfy any
claims arising from a breach of any representation or warranty. If, for
example, the Depositor were required to repurchase an Underlying Security with
respect to which the Depositor has breached a representation or warranty, its
only sources of funds to make such repurchase would be from funds obtained from
the enforcement of a corresponding obligation, if any, on the part of the seller
of such Underlying Security to the Depositor, or from a reserve fund established
to provide funds for such repurchases. The Depositor has no obligation to
establish or maintain any such reserve fund.
Limited Assets. Although the Trust for any Series (or Class of such
Series) of Certificates may include, or the Certificateholders of such
Certificates may have the benefit of, certain assets which are designed to
support the payment upon, or otherwise ensure the servicing or distribution with
respect to, the Deposited Assets related to such Series or Class as described in
the related Prospectus Supplement, the Certificates do not represent obligations
of the Depositor, any Administrative Agent or any of their affiliates and,
unless otherwise specified in the applicable Prospectus Supplement, are not
insured or guaranteed by the Depositor, any Administrative Agent, any of their
affiliates or any other person or entity. Accordingly, Certificateholders'
receipt of distributions in respect of the Certificates will depend entirely on
the performance of and the Trust's receipt of payments with respect to the
Deposited Assets and any Credit Support identified in the related Prospectus
Supplement. See "Description of Deposited Assets and Credit Support."
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Credit Support Limitations. The Prospectus Supplement for a series of
Certificates will describe any Credit Support provided with respect thereto.
Use of Credit Support will be subject to the conditions and limitations
described herein and in the related Prospectus Supplement. Moreover, such
Credit Support may not cover all potential losses or risks.
The amount of any applicable Credit Support supporting one or more classes
of Certificates, including the subordination of one or more classes of
Certificates, will be determined on the basis of criteria established by each
Rating Agency rating such classes of Certificates based on an assumed level of
defaults, delinquencies and losses on the Underlying Securities and certain
other factors. There can, however, be no assurance that the loss experience on
the related Underlying Securities will not exceed such assumed levels. See
"Limited Nature of the Ratings of the Certificates", "Description of Deposited
Assets and Credit Support".
Maturity and Redemption Considerations. The timing of distributions of
interest, premium (if any) and principal of any Series (or of any Class within
such Series) of Certificates is affected by a number of factors, including the
performance of the related Deposited Assets, the extent of any early redemption,
repayment or extension of maturity with respect to the related Underlying
Securities and the manner and priority in which collections from such Underlying
Securities and any other Deposited Assets are allocated to each Class of such
Series. Certain of these factors may be influenced by a variety of accounting,
tax, economic, social and other factors. The related Prospectus Supplement will
discuss any calls, puts or other redemption options, any extension of maturity
provisions and certain other terms applicable to such Underlying Securities and
any other Deposited Assets. See "Maturity and Yield Considerations."
Tax Considerations. The Federal income tax consequences of the purchase,
ownership and disposition of the Certificates and the tax treatment of the Trust
will depend on the specific terms of the Certificates, the Trust, any Credit
Support and the Deposited Assets. See the description under "Federal Income Tax
Considerations" in the related Prospectus Supplement.
Limited Nature of the Ratings of the Certificates. At the time of issue,
the Certificates of any given Series (or each Class of such Series that is
offered hereby) will be rated in one of the investment grade categories
recognized by one or more nationally recognized rating agencies (a "Rating
Agency"). Unless otherwise specified in the applicable Prospectus Supplement,
the rating of any Series or Class of Certificates is based primarily on the
related Deposited Assets and any Credit Support and the relative priorities of
the Certificateholders of such Series or Class to receive collections from, and
to assert claims against, the Trust with respect to such Deposited Assets and
any Credit Support. The rating is not a recommendation to purchase, hold or sell
Certificates, inasmuch as such rating does not comment as to market price or
suitability for a particular investor. There can be no assurance that the rating
will remain for any given period of time or that the rating will not be lowered
or withdrawn entirely by the Rating Agency if in its judgment circumstances in
the future so warrant. Any Class or Classes of a given Series of Certificates
may not be
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offered pursuant to this Prospectus, in which case such Class or Classes may or
may not be rated in an investment grade category by a Rating Agency.
Global Securities. Unless otherwise specified in the related Prospectus
Supplement, the Certificates of each Series (or, if more than one Class exists,
each Class of such Series) will initially be represented by one or more Global
Securities deposited with, or on behalf of, a Depository (as defined below) and
will not be issued as individual definitive Certificates to the purchasers of
such Certificates. Consequently, unless and until such individual definitive
Certificates of a particular Series or Class are issued, such purchasers will
not be recognized as Certificateholders under the Trust Agreement. Hence, until
such time, such purchasers will only be able to exercise the rights of
Certificateholders indirectly through the Depository and its respective
participating organizations and, as a result, the ability of any such purchaser
to pledge that Certificate to persons or entities that do not participate in the
Depository's system, or to otherwise act with respect to such Certificate, may
be limited. See "DESCRIPTION OF CERTIFICATES--GLOBAL SECURITIES" and any further
description contained in the related Prospectus Supplement.
Passive Nature of the Trust. The Trustee with respect to any Series of
Certificates will hold the Deposited Assets for the benefit of the
Certificateholders. Each Trust will generally hold the related Deposited Assets
to maturity and not dispose of them, regardless of adverse events, financial or
otherwise, which may affect any GSE Issuer or the value of the Deposited Assets.
Under certain circumstances the holders of the Certificates may direct the
Trustee to dispose of the Underlying Securities or take certain other actions in
respect of the Deposited Assets.
The Prospectus Supplement for each Series of Certificates will set forth
information regarding additional risk factors, if any, applicable to such Series
(and each Class within such Series) including any risk factors applicable to the
specific Underlying Securities, other Deposited Assets, and where a
concentration of credit risk exists, the Underlying Securities Issuer.
THE DEPOSITOR
The Depositor is an indirect wholly-owned subsidiary of Morgan Keegan, Inc.
The Depositor was incorporated in the State of Delaware on July 30, 1996. The
Depositor was organized for the purpose of acquiring Underlying Securities and
issuing securities backed by such Underlying Securities. The Depositor
anticipates that it will in many cases have acquired Underlying Securities
indirectly through Morgan Keegan & Company, Inc., which is also an indirect
wholly-owned subsidiary of Morgan Keegan, Inc. The Depositor does not have, nor
is it expected in the future to have, any significant assets. The Certificates
do not represent an interest in or an obligation of the Depositor.
The Depositor maintains its principal office at 50 North Front Street,
Memphis, Tennessee 38103. Its telephone number is (901) 524-4100.
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USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the net
proceeds to be received from the sale of each Series or Class of Certificates
(whether or not offered hereby) will be used by the Depositor to purchase the
related Deposited Assets and arrange certain Credit Support including, if
specified in the related Prospectus Supplement, making required deposits into
any reserve account or the applicable Certificate Account (as defined below) for
the benefit of the Certificateholders of such Series or Class. Any remaining
net proceeds, if any, will be used by the Depositor for general corporate
purposes.
FORMATION OF THE TRUST
The Depositor will assign the Deposited Assets for each Series of
Certificates to the Trustee named in the applicable Prospectus Supplement, in
its capacity as Trustee, for the benefit of the Certificateholders of such
Series. See "DESCRIPTION OF THE TRUST AGREEMENT--ASSIGNMENT OF DEPOSITED
ASSETS." The Trustee named in the applicable Prospectus Supplement will
administer the Deposited Assets pursuant to the Trust Agreement and will receive
a fee for such services (the "Trustee's Fee"). Any Administrative Agent named in
the applicable Prospectus Supplement will perform such tasks as are specified
therein and in the Trust Agreement and will receive a fee for such services (the
"Administration Fee") as specified in the Prospectus Supplement. See
"DESCRIPTION OF THE TRUST AGREEMENT--COLLECTION AND OTHER ADMINISTRATIVE
PROCEDURES" and "--RETAINED INTEREST; ADMINISTRATIVE AGENT COMPENSATION AND
PAYMENT OF EXPENSES." The Trustee or an Administrative Agent, if applicable,
will either cause the assignment of the Deposited Assets to be recorded or will
obtain an opinion of counsel that no recordation is required to obtain a first
priority perfected security interest in such Deposited Assets.
Unless otherwise stated in the Prospectus Supplement, the Depositor's
assignment of the Deposited Assets to the Trustee will be without recourse. To
the extent provided in the applicable Prospectus Supplement, the obligations of
an Administrative Agent so named therein with respect to the Deposited Assets
will consist primarily of its contractual administrative obligations, if any,
under the Trust Agreement, its obligation, if any, to make certain cash advances
in the event of delinquencies in payments on or with respect to any Deposited
Assets in amounts described under "DESCRIPTION OF THE TRUST AGREEMENT--ADVANCES
IN RESPECT OF DELINQUENCIES," and its obligations, if any, to purchase Deposited
Assets as to which there has been a breach of certain representations and
warranties or as to which the documentation is materially defective. The
obligations of an Administrative Agent, if any, named in the applicable
Prospectus Supplement to make advances will be limited to amounts which any such
Administrative Agent believes ultimately would be recoverable under any Credit
Support, insurance coverage, the proceeds of liquidation of the Deposited
Assets or from other sources available for such purposes. See "DESCRIPTION OF
THE TRUST AGREEMENT--ADVANCES IN RESPECT OF DELINQUENCIES."
Unless otherwise provided in the related Prospectus Supplement, each Trust
will consist of (i) such Deposited Assets, or interests therein, exclusive of
any interest in such
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assets (the "Retained Interest") retained by the Depositor or any previous owner
thereof, as from time to time are specified in the Trust Agreement; (ii) such
assets as from time to time are identified as deposited in the related
Certificate Account; (iii) property, if any, acquired on behalf of
Certificateholders by foreclosure or repossession and any revenues received
thereon; (iv) those elements of Credit Support, if any, provided, with respect
to any Class within such Series that are specified as being part of the related
Trust in the applicable Prospectus Supplement, as described therein and under
"DESCRIPTION OF DEPOSITED ASSETS AND CREDIT SUPPORT--CREDIT SUPPORT"; (v) the
rights of the Depositor under the agreement or agreements entered into by the
Trustee on behalf of the Certificateholders which constitute, or pursuant to
which the Trustee has acquired, such Deposited Assets; and (vi) the rights of
the Trustee in any cash advances, reserve fund or surety bond, if any, as
described under "DESCRIPTION OF THE TRUST AGREEMENT--ADVANCES IN RESPECT OF
DELINQUENCIES."
In addition, to the extent provided in the applicable Prospectus
Supplement, the Depositor will obtain Credit Support for the benefit of the
Certificateholders of any related Series (or Class within such Series) of
Certificates.
MATURITY AND YIELD CONSIDERATIONS
Each Prospectus Supplement will, to the extent applicable, contain
information with respect to the type and maturities of the related Underlying
Securities and the terms, if any, upon which such Underlying Securities may be
subject to early redemption (either by the applicable obligor or pursuant to a
third-party call option), repayment (at the option of the holders thereof) or
extension of maturity. The provisions of the Underlying Securities with respect
to the foregoing will, unless otherwise specified in the applicable Prospectus
Supplement, affect the weighted average life of the related Series of
Certificates.
The effective yield to holders of the Certificates of any Series (and Class
within such Series) may be affected by certain aspects of the Deposited Assets
or any Credit Support or the manner and priorities of allocations of collections
with respect to such Deposited Assets between the Classes of a given Series.
With respect to any Series of Certificates the Underlying Securities of which
consist of one or more redeemable securities, extendable securities or
securities subject to a third-party call option, the yield to maturity of such
Series (or Class within such Series) may be affected by any optional or
mandatory redemption or repayment or extension of the related Underlying
Securities prior to the stated maturity thereof. A variety of tax, accounting,
economic, and other factors will influence whether an issuer exercises any right
of redemption in respect of its securities. The rate of redemption may also be
influenced by prepayments on the obligations a GSE Issuer holds for its own
account. All else remaining equal, if prevailing interest rates fall
significantly below the interest rates on the related Underlying Securities, the
likelihood of redemption would be expected to increase. There can be no
certainty as to whether any Underlying Security redeemable at the option of a
GSE Issuer will be repaid prior to its stated maturity.
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Unless otherwise specified in the related Prospectus Supplement, each of
the Underlying Securities will be subject to acceleration upon the occurrence of
certain Underlying Security Events of Default (as defined below). The maturity
and yield on the Certificates will be affected by any early repayment of the
Underlying Securities as a result of the acceleration of the Outstanding Debt
Securities by the holders thereof. See "DESCRIPTION OF THE DEPOSITED
ASSETS--UNDERLYING SECURITIES INDENTURE."
The extent to which the yield to maturity of such Certificates may vary
from the anticipated yield due to the rate and timing of payments on the
Deposited Assets will depend upon the degree to which they are purchased at a
discount or premium and the degree to which the timing of payments thereon is
sensitive to the rate and timing of payments on the Deposited Assets.
The yield to maturity of any Series (or Class) of Certificates will also be
affected by variations in the interest rates applicable to, and the
corresponding payments in respect of, such Certificates, to the extent that the
Pass-Through Rate for such Series (or Class) is based on variable or adjustable
interest rates. With respect to any Series of Certificates representing an
interest in a pool of corporate debt securities, disproportionate principal
payments (whether resulting from differences in amortization schedules, payments
due on scheduled maturity or upon early redemption) on the related Underlying
Securities having interest rates higher or lower than the then applicable Pass-
Through Rates applicable to such Certificates may affect the yield thereon.
Additionally, if the Certificates are subject to optional redemption, and
such right to cause an optional redemption of the Certificates is exercised, the
Certificates will have a shorter maturity than if such right were not exercised.
Furthermore, such right is likely to be exercised, if at all, at a time when the
market value of the Underlying Securities has increased due to a declining
interest rate environment. In such an environment, the interest rates available
on potential reinvestment can be expected to be lower than the return that would
have been earned over the remaining life of the Certificates if they had not
been called.
The Prospectus Supplement for each Series of Certificates will set forth
additional information regarding yield and maturity considerations applicable to
such Series (and each Class within such Series) and the related Deposited
Assets, including the applicable Underlying Securities.
DESCRIPTION OF CERTIFICATES
Each Series (or, if more than one Class exists, the Classes within such
Series) of Certificates will be issued pursuant to a Trust Agreement and a
separate series supplement thereto among the Depositor, the Administrative
Agent, if any, and the Trustee named in the related Prospectus Supplement, a
form of which Trust Agreement is attached as an exhibit to the Registration
Statement. The provisions of the Trust Agreement (as so supplemented) may vary
depending upon the nature of the Certificates to be issued thereunder and the
nature of the Deposited Assets, Credit Support and related Trust. The following
summaries
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describe certain provisions of the Trust Agreement which may be applicable to
each Series of Certificates. The applicable Prospectus Supplement for a Series
of Certificates will describe any provision of the Trust Agreement that
materially differs from the description thereof contained in this Prospectus.
The following summaries do not purport to be complete and are subject to the
detailed provisions of the form of Trust Agreement to which reference is hereby
made for a full description of such provisions, including the definition of
certain terms used, and for other information regarding the Certificates.
Wherever particular sections or defined terms of the Trust Agreement are
referred to, such sections or defined terms are incorporated herein by reference
as part of the statement made, and the statement is qualified in its entirety by
such reference. As used herein with respect to any Series, the term
"Certificate" refers to all the Certificates of that Series, whether or not
offered hereby and by the related Prospectus Supplement, unless the context
otherwise requires.
A copy of the applicable series supplement to the Trust Agreement relating
to each Series of Certificates issued from time to time will be filed by the
Depositor as an exhibit to a Current Report on Form 8-K to be filed with the
Commission following the issuance of such Series.
GENERAL
There is no limit on the amount of Certificates that may be issued under
the Trust Agreement, and the Trust Agreement will provide that Certificates of
the applicable Series may be issued in multiple Classes. The Series (or Classes
within such Series) of Certificates to be issued under the Trust Agreement will
represent the entire beneficial ownership interest in the Trust for such Series
created pursuant to the Trust Agreement and each such Class will be allocated
certain relative priorities to receive specified collections from, and a certain
percentage ownership interest of the assets deposited in, such Trust, all as
identified and described in the applicable Prospectus Supplement. See
"DESCRIPTION OF DEPOSITED ASSETS AND CREDIT SUPPORT--COLLECTIONS."
Reference is made to the related Prospectus Supplement for a description of
the following terms of the Series (and, if applicable, Classes within such
Series) of Certificates in respect of which this Prospectus and such Prospectus
Supplement are being delivered: (i) the title of such Certificates; (ii) the
Series of such Certificates and, if applicable, the number and designation of
Classes of such Series; (iii) certain information concerning the type,
characteristics and specifications of the Deposited Assets being deposited into
the related Trust by the Depositor (and, with respect to any Underlying Security
which at the time of such deposit represents a significant portion of all such
Deposited Assets and any related Credit Support, certain information concerning
the terms of each such Underlying Security, the identity of the issuer thereof
and where publicly available information regarding such issuer may be obtained);
(iv) the limit, if any, upon the aggregate principal amount or notional amount,
as applicable, of each Class thereof; (v) the dates on which or periods during
which such Series or Classes within such Series may be issued (each, an
"Original Issue Date"), the offering price thereof and the applicable
Distribution Dates on which the principal, if any, of (and premium, if any, on)
such Series or Classes within such Series will
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be distributable; (vi) if applicable, the relative rights and priorities of each
such Class (including the method for allocating collections from and defaults or
losses on the Deposited Assets to the Certificateholders of each such Class);
(vii) whether the Certificates of such Series or each Class within such Series
are Fixed Rate Certificates or Floating Rate Certificates (each as defined
below) and the applicable interest rate (the "Pass-Through Rate") for each such
Class including the applicable rate, if fixed (a "Fixed Pass-Through Rate"), or
the terms relating to the particular method of calculation thereof applicable to
such Series or each Class with such Series, if variable (a "Variable Pass-
Through Rate"); the date or dates from which such interest will accrue; the
applicable Distribution Dates on which interest, principal and premium, in each
case as applicable, on such Series or Class will be distributable and the
related Record Dates, if any; (viii) the option, if any, of the Depositor or
Administrative Agent, if any, or another third party to purchase or repurchase
any Deposited Assets (in each case to the extent not inconsistent with the
Depositor's continued satisfaction of the applicable requirements for exemption
under Rule 3a-7 under the Investment Company Act of 1940 and all applicable
rules, regulations and interpretations thereunder) and the periods within which
or the dates on which, and the terms and conditions upon which any such option
may be exercised, in whole or in part; (ix) the rating of each Series or each
Class within such Series offered hereby (provided, however, that one or more
Classes within such Series not offered hereunder may be unrated or may be rated
below investment grade); (x) if other than denominations of $1,000 and any
integral multiple thereof, the denominations in which such Series or Class
within such Series will be issuable; (xi) whether the Certificates of any Class
within a given Series are to be entitled to (1) principal distributions, with
disproportionate, nominal or no interest distributions, or (2) interest
distributions, with disproportionate, nominal or no principal distributions
("Strip Certificates"), and the applicable terms thereof; (xii) whether the
Certificates of such Series or of any Class within such series are to be issued
in the form of one or more Global Securities and, if so, the identity of the
Depository (as defined below), if other than The Depository Trust Company, for
such Global Security or Securities; (xiii) if a temporary Certificate is to be
issued with respect to such Series or any Class within such Series, whether any
interest thereon distributable on a Distribution Date prior to the issuance of a
definitive Certificate of such Series or Class will be credited to the account
of the Persons entitlted thereto on such Distribution Date; (xiv) if a temporary
Global Security is to be issued with respect to such Series or Class, the terms
upon which beneficial interests in such temporary Global Security may be
exchanged in whole or in part for beneficial interests in a definitive Global
Security or for individual Definitive Certificates (as defined below) of such
Series or Class and the terms upon which beneficial interests in a definitive
Global Security, if any, may be exchanged for individual Definitive Certificates
of such Series or Class; (xv) if any additional Administrative Agent Termination
Events (as defined below), if applicable, provided for with respect to such
Class; (xvi) all applicable Required Percentages and Voting Rights (each as
defined below) relating to the manner and percentage of votes of
Certificateholders of such Series and each Class within such Series required
with respect to certain actions by the Depositor or the applicable
Administrative Agent, if any, or Trustee under the Trust Agreement or with
respect to the applicable Trust; and (xvii) any other terms of such Series or
Class within such Series of Certificates not inconsistent with the provisions of
the Trust Agreement relating to such Series.
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Unless otherwise indicated in the applicable Prospectus Supplement,
Certificates of each Series (including any Class of Certificates not offered
hereby) will be issued only as Registered Certificates in denominations of
$1,000 and any integral multiple thereof and will be payable only in U.S.
dollars.
The United States Federal income tax consequences and ERISA consequences
relating to any Series or any Class within such Series of Certificates will be
described in the applicable Prospectus Supplement.
Unless otherwise provided in the applicable Prospectus Supplement,
Registered Certificates may be transferred or exchanged for like Certificates of
the same Series and Class at the corporate trust office or agency of the
applicable Trustee, subject to the limitations provided in the Trust Agreement,
without the payment of any service charge, other than any tax or governmental
charge payable in connection therewith. The Depositor may at any time purchase
Certificates at any price in the open market or otherwise. Certificates so
purchased by the Depositor may, at the discretion of the Depositor, be held or
resold or surrendered to the Trustee for cancellation of such Certificates.
DISTRIBUTIONS
Distributions allocable to principal, premium (if any) and interest on the
Certificates of each Series (and Class within such Series) will be made for such
Certificates by or on behalf of the Trustee on each Distribution Date as
specified in the related Prospectus Supplement and the amount of each
distribution will be determined as of the close of business on the date
specified in the related Prospectus Supplement (the "Determination Date").
Unless otherwise provided in the applicable Prospectus Supplement and
except as provided in the succeeding paragraph, distributions with respect to
Certificates will be made at the corporate trust office or agency of the Trustee
specified in the applicable Prospectus Supplement; provided, however, that any
such amounts distributable on the final Distribution Date of a Certificate will
be distributed only upon surrender of such Certificate at the applicable
location set forth above.
Unless otherwise specified in the applicable Prospectus Supplement,
distributions on Registered Certificates in U.S. dollars will be made, except as
provided below, by check mailed to the Registered Certificateholders of such
Certificates (which, in the case of Global Securities, will be a nominee of the
Depository); provided, however, that, in the case of a Series or Class of
Registered Certificates issued between a Record Date (as defined below) and the
related Distribution Dates, interest for the period beginning on the issue date
for such Series or Class and ending on the last day of the interest accrual
period ending immediately prior to or coincident with such Distribution Date
will, unless otherwise specified in the applicable Prospectus Supplement, be
distributed on the next succeeding Distribution Date to the Registered
Certificateholders of the Registered Certificates of such Series or Class on the
related Record Date. A Certificateholder of $10,000,000 or more in aggregate
principal amount of Registered Certificates of a given Series shall be entitled
to
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receive such U.S. dollar distributions by wire transfer of immediately available
funds, but only if appropriate wire transfer instructions have been received in
writing by the Trustee for such Series not later than fifteen calendar days
prior to the applicable Distribution Date. A Certificateholder shall provide
appropriate wire transfer instructions to the Trustee for such Series, and all
such payments will be made by wire transfer of immediately available funds to an
account maintained by the payee with a bank located outside the United States.
Except as otherwise specified in the applicable Prospectus Supplement,
"Business Day" with respect to any Certificate means any day, other than a
Saturday or Sunday, that is (i) not a day on which banking institutions are
authorized or required by law or regulation to be closed in The City of New York
and (ii) if the Pass-Through Rate for such Certificate is based on LIBOR, a
London Banking Day. "London Banking Day" with respect to any Certificate means
any day on which dealings in deposits in U.S. dollars are transacted in the
London interbank market. The Record Date with respect to any Distribution Date
for a Series or Class of Registered Certificates shall be specified as such in
the applicable Prospectus Supplement.
INTEREST ON THE CERTIFICATES
General. Each Class of Certificates (other than certain Classes of Strip
Certificates) of a given Series may have a different Pass-Through Rate, which
may be a fixed or variable Pass-Through Rate, as described below. In the case of
Strip Certificates with no or, in certain cases, a nominal Certificate Principal
Balance, such distributions of interest will be in an amount (as to any
Distribution Date, "Stripped Interest") described in the related Prospectus
Supplement. For purposes hereof, "Notional Amount" means the notional principal
amount specified in the applicable Prospectus Supplement on which interest on
Strip Certificates with no or, in certain cases, a nominal Certificate Principal
Balance will be made on each Distribution Date. Reference to the Notional Amount
of a Class of Strip Certificates herein or in a Prospectus Supplement does not
indicate that such Certificates represent the right to receive any distribution
in respect of principal in such amount, but rather the term "Notional Amount" is
used solely on a basis for calculating the amount of required distributions and
determining certain relative voting rights, all as specified in the related
Prospectus Supplement.
Fixed Rate Certificates. Each Series (or, if more than one Class exists,
each Class within such Series) of Certificates with a fixed Pass-Through Rate
("Fixed Rate Certificates") will bear interest, on the outstanding Certificate
Principal Balance (or Notional Amount, if applicable), from its Original Issue
Date, or from the last date to which interest has been paid, at the fixed
Pass-Through Rate stated on the face thereof and in the applicable Prospectus
Supplement until the principal amount thereof is distributed or made available
for repayment (or in the case of Fixed Rate Certificates with no or a nominal
principal amount, until the Notional Amount thereof is reduced to zero), except
that, if so specified in the applicable Prospectus Supplement, the Pass-Through
Rate for such Series or any such Class or Classes may be subject to adjustment
from time to time in response to designated changes in the rating assigned to
such Certificates by one or more rating agencies, in accordance with a schedule
or otherwise, all as described in such Prospectus Supplement.
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Unless otherwise set forth in the applicable Prospectus Supplement, interest on
each Series or Class of Fixed Rate Certificates will be distributable in arrears
on each Distribution Date specified in such Prospectus Supplement. Each such
distribution of interest shall include interest accrued through the day
specified in the applicable Prospectus Supplement. Unless otherwise specified in
the applicable Prospectus Supplement, interest on Fixed Rate Certificates will
be computed on the basis of a 360-day year of twelve 30-day months.
Floating Rate Certificates. Each Series (or, if more than one Class
exists, each Class within such Series) of Certificates with a variable Pass-
Through Rate ("Floating Rate Certificates") will bear interest, on the
outstanding Certificate Principal Balance (or Notional Amount, if applicable),
from its Original Issue Date to the first Interest Reset Date (as defined below)
for such Series or Class at the Initial Pass-Through Rate set forth on the face
thereof and in the applicable Prospectus Supplement. Thereafter, the Pass-
Through Rate on such Series or Class for each Interest Reset Period (as defined
below) will be determined by reference to an interest rate basis (the "Base
Rate"), plus or minus the Spread, if any, or multiplied by the Spread
Multiplier, if any. The "Spread" is the number of basis points (one basis point
equals one one-hundredth of a percentage point) that may be specified in the
applicable Prospectus Supplement as being applicable to such Series or Class,
and the "Spread Multiplier" is the percentage that may be specified in the
applicable Prospectus Supplement as being applicable to such Series or Class,
except that if so specified in the applicable Prospectus Supplement, the Spread
or Spread Multiplier on such Series or any such Class or Classes of Floating
Rate Certificates may be subject to adjustment from time to time in response to
designated changes in the rating assigned to such Certificates by one or more
rating agencies, in accordance with a schedule or otherwise, all as described in
such Prospectus Supplement. The applicable Prospectus Supplement, unless
otherwise specified therein, will designate one of the following Base Rats as
applicable to a Floating Rate Certificate: (i) LIBOR (a "LIBOR Certificate"),
(ii) the Commercial Paper Rate (a "Commercial Paper Rate Certificate"), (iii)
the Treasury Rate (a "Treasury Rate Certificate"), (iv) the Federal Funds Rate
(a "Federal Funds Rate Certificate"), (v) the CD Rate (a "CD Rate Certificate")
or (vi) such other Base Rate (which may be based on, among other things, one or
more market indices or the interest and/or other payments (whether scheduled or
otherwise) paid, accrued or available with respect to a designated asset, pool
of assets or type of asset) as is set forth in such Prospectus Supplement and in
such Certificate. The "Index Maturity" for any Series or Class of Floating Rate
Certificates is the period of maturity of the instrument or obligation from
which the Base Rate is calculated. "H.15(519)" means the publication entitled
"Statistical Release H.15(519), Selected Interest Rates," or any successor
publication, published by the Board of Governors of the Federal Reserve System.
"Composite Quotations" means the daily statistical release entitled "Composite
3:30 p.m. Quotations for U.S. Government Securities" published by the Federal
Reserve Bank of New York.
As specified in the applicable Prospectus Supplement, Floating Rate
Certificates of a given Series or Class may also have either or both of the
following (in each case expressed as a rate per annum on a simple interest
basis): (i) a maximum limitation, or ceiling, on the rate at which interest may
accrue during any interest accrual period specified in the applicable Prospectus
Supplement ("Maximum Pass-Through Rate"), and (ii) a minimum
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limitation, or floor, on the rate at which interest may accrue during any such
interest accrual period ("Minimum Pass-Through Rate"). In addition to any
Maximum Pass-Through Rate that may be applicable to any Series or Class of
Floating Rate Certificates, the Pass-Through Rate applicable to any Series or
Class of Floating Rate Certificates will in no event be higher than the maximum
rate permitted by applicable law, as the same may be modified by United States
law of general application.
The Depositor will appoint, and enter into agreements with, agents (each a
"Calculation Agent") to calculate Pass-Through Rates on each Series or Class of
Floating Rate Certificates. The applicable Prospectus Supplement will set forth
the identity of the Calculation Agent for each Series or Class of Floating Rate
Certificates. All determinations of interest by the Calculation Agent shall, in
the absence of manifest error, be conclusive for all purposes and binding on the
holders of Floating Rate Certificates of a given Series or Class.
The Pass-Through Rate on each Class of Floating Rate Certificates will be
reset daily, weekly, monthly, quarterly, semiannually or annually (such period
being the "Interest Reset Period" for such Class, and the first day of each
Interest Reset Period being an "Interest Reset Date"), as specified in the
applicable Prospectus Supplement. Interest Reset Dates with respect to each
Series, and any Class within such Series of Floating Rate Certificates, will be
specified in the applicable Prospectus Supplement; provided, however, that
unless otherwise specified in such Prospectus Supplement, the Pass-Through Rate
in effect for the ten days immediately prior to the Scheduled Final Distribution
Date will be that in effect on the tenth day preceding such Scheduled Final
Distribution Date. If an Interest Reset Date for any Class of Floating Rate
Certificates would otherwise be a day that is not a Business Day, such Interest
Reset Date will occur on a prior or succeeding Business Day, specified in the
applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement,
interest payable in respect of Floating Rate Certificates shall be the accrued
Interest from and including the Original Issue Date of such Series or Class or
the last Interest Reset Date to which interest has accrued and been distributed,
as the case may be, to but excluding the immediately following Distribution
Date.
With respect to a Floating Rate Certificate, accrued interest shall be
calculated by multiplying the Certificate Principal Balance of such Certificate
(or, in the case of a Strip Certificate with no or a nominal Certificate
Principal Balance, the Notional Amount specified in the applicable Prospectus
Supplement) by an accrued interest factor. Such accrued interest factor will be
computed by adding the interest factors calculated for each day in the period
for which accrued interest is being calculated. Unless otherwise specified in
the applicable Prospectus Supplement, the interest factor (expressed as a
decimal calculated to seven decimal places without rounding) for each such day
is computed by dividing the Pass-Through Rate in effect on such day by 360, in
the case of LIBOR Certificates, Commercial Paper Rate Certificates, Federal
Funds Rate Certificates and CD Rate Certificates or by the actual number of days
in the year, in the case of Treasury Rate
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Certificates. For purposes of making the foregoing calculation, the variable
Pass-Through Rate in effect on any Interest Reset Date will be the applicable
rate as reset on such date.
Unless otherwise specified in the applicable Prospectus Supplement, all
percentages resulting from any calculation of the Pass-Through Rate on a
Floating Rate Certificate will be rounded, if necessary, to the nearest
1/100,000 of 1% (.0000001), with five one-millionths of a percentage point
rounded upward, and all currency amounts used in or resulting from such
calculation on Floating Rate Certificates will be rounded to the nearest one-
hundredth of a unit (with .005 of a unit being rounded upward).
Interest on any Series (or Class within such Series) of Floating Rate
Certificates will be distributable on the Distribution Dates and for the
interest accrual periods as and to the extent set forth in the applicable
Prospectus Supplement.
Upon the request of the holder of any Floating Rate Certificate of a given
Series or Class, the Calculation Agent for such Series or Class will provide
the Pass-Through Rate then in effect and, if determined, the Pass-Through Rate
that will become effective on the next Interest Reset Date with respect to such
Floating Rate Certificate.
(1) CD Rate Certificates. Each CD Rate Certificate will bear interest
for each Interest Reset Period at the Pass-Through Rate calculated with
reference to the CD Rate and the Spread or Spread Multiplier, if any, specified
in such Certificate and in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the "CD
Rate" for each Interest Reset Period shall be the rate as of the second Business
Day prior to the Interest Reset Date for such Interest Reset Period (a "CD Rate
Determination Date") for negotiable certificates of deposit having the Index
Maturity designated in the applicable Prospectus Supplement as published in
H.15(519) under the heading "CDs (Secondary Market)." In the event that such
rate is not published prior to 3:00 p.m., New York City time, on the Calculation
Date (as defined below) pertaining to such CD Rate Determination Date, then the
"CD Rate" for such Interest Reset Period will be the rate on such CD Rate
Determination Date for negotiable certificates of deposit of the Index Maturity
designated in the applicable Prospectus Supplement as published in Composite
Quotations under the heading "Certificates of Deposit." If by 3:00 p.m., New
York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the "CD Rate" for such Interest
Reset Period will be calculated by the Calculation Agent for such CD Rate
Certificate and will be the arithmetic mean of the secondary market offered
rates as of 10:00 a.m., New York City time, on such CD Rate Determination Date,
of three leading nonbank dealers in negotiable U.S. dollar certificates of
deposit in The City of New York selected by the Calculation Agent for such CD
Rate Certificate for negotiable certificates of deposit of major United States
money center banks of the highest credit standing (in the market for negotiable
certificates of deposit) with a remaining maturity closest to the Index Maturity
designated in the related Prospectus Supplement in a denomination of $5,000,000;
provided, however, that if the dealers selected as aforesaid by such Calculation
Agent are not quoting offered rates as mentioned in this sentence, the "CD
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Rate" for such Interest Reset Period will be the same as the CD Rate for the
immediately preceding Interest Reset Period (or, if there was no such Interest
Reset Period, the Initial Pass-Through Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date shall
be the first to occur of (a) the tenth calendar day after such CD Rate
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day or (b) the second Business Day preceding the date any distribution
of interest is required to be made following the applicable Interest Reset Date.
(2) Commercial Paper Rate Certificates. Each Commercial Paper Rate
Certificate will bear interest for each Interest Reset Period at the Pass-
Through Rate calculated with reference to the Commercial Paper Rate and the
Spread or Spread Multiplier, if any, specified in such Certificate and in the
applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by the
Calculation Agent for such Commercial Paper Rate Certificate as of the second
Business Day prior to the Interest Reset Date for such Interest Reset Period (a
"Commercial Paper Rate Determination Date") and shall be the Money Market Yield
(as defined below) on such Commercial Paper Rate Determination Date of the rate
for commercial paper having the Index Maturity specified in the applicable
Prospectus Supplement, as such rate shall be published in H.15(519) under the
heading "Commercial Paper." In the event that such rate is not published prior
to 3:00 p.m. New York City time, on the Calculation Date (as defined below)
pertaining to such Commercial Paper Rate Determination Date, then the
"Commercial Paper Rate" for such Interest Reset Period shall be the Money Market
Yield on such Commercial Paper Rate Determination Date of the rate for
commercial paper of the specified Index Maturity as published in Composite
Quotations under the heading "Commercial Paper." If by 3:00 p.m., New York City
time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the "Commercial Paper Rate" for such
Interest Reset Period shall be the Money Market Yield of the arithmetic mean of
the offered rates, as of 11:00 a.m., New York City time, on such Commercial
Paper Rate Determination Date of three leading dealers of commercial paper in
The City of New York selected by the Calculation Agent for such Commercial Paper
Rate Certificate for commercial paper of the specified Index Maturity placed for
an industrial issuer whose bonds are rated "AA" or the equivalent by a
nationally recognized rating agency; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting offered rates as
mentioned in this sentence, the "Commercial Paper Rate" for such Interest Reset
Period will be the same as the Commercial Paper Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Pass-Through Rate).
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
Money Market Yield = D X 360 X 100
-------------
360 - (D X M)
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where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate
Determination Date shall be the first to occur of (a) the tenth calendar day
after such Commercial Paper Rate Determination Date or, if such day is not a
Business Day, the next succeeding Business Day or (b) the second Business Day
preceding the date any distribution of interest is required to be made following
the applicable Interest Reset Date.
(3) Federal Funds Rate Certificates. Each Federal Funds Rate Certificate
will bear interest for each Interest Reset Period at the Pass-Through Rate
calculated with reference to the Federal Funds Rate and the Spread or Spread
Multiplier, if any, specified in such Certificate and in the applicable
Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Federal Funds Rate" for each Interest Reset Period shall be the effective rate
on the Interest Reset Date for such Interest Reset Period (a "Federal Funds Rate
Determination Date") for Federal Funds a published in H.15(519) under the
heading "Federal Funds (Effective)." In the event that such rate is not
published prior to 3:00 p.m., New York City time, on the Calculation Date (as
defined below) pertaining to such Federal Funds Rate Determination Date, the
"Federal Funds Rate" for such Interest Reset Period shall be the rate on such
Federal Funds Rate Determination Date as published in Composite Quotations under
the heading "Federal Funds/Effective Rate." If by 3:00 p.m., New York City
time, on such Calculation Date such rate is not yet published in either
H.15(519) or Composite Quotations, then the "Federal Funds Rate" for such
Interest Reset Period shall be the rate on such Federal Funds Rate Determination
Date made publicly available by the Federal Reserve Bank of New York which is
equivalent to the rate which appears in H.15(519) under the heading "Federal
Funds (Effective)"; provided, however, that if such rate is not made publicly
available by the Federal Reserve Bank of New York by 3:00 p.m., New York City
time, on such Calculation Date, the "Federal Funds Rate" for such Interest Reset
Period will be the same as the Federal Funds Rate in effect for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset Period,
the Initial Pass-Through Rate). Unless otherwise specified in the applicable
Prospectus Supplement, in the case of a Federal Funds Rate Certificate that
resets daily, the Pass-Through Rate on such Certificate for the period from and
including a Monday to but excluding the succeeding Monday will be reset by the
Calculation Agent for such Certificate on such second Monday (or, if not a
Business Day, on the next succeeding Business Day) to a rate equal to the
average of the Federal Funds Rates in effect with respect to each such day in
such week.
The "Calculation Date" pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding Business Day.
(4) LIBOR Certificates. Each LIBOR Certificate will bear interest for
each Interest Reset Period at the Pass-Through Rate calculated with reference to
LIBOR and the
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Spread or Spread Multiplier, if any, specified in such Certificate and in the
applicable Prospectus Supplement.
With respect to LIBOR indexed to the offered rates for U.S. dollar
deposits, unless otherwise specified in the applicable Prospectus Supplement,
"LIBOR" for each Interest Reset Period will be determined by the Calculation
Agent for any LIBOR Certificate as follows:
(i) On the second London Banking Day prior to the Interest Reset Date
for such Interest Reset Period (a "LIBOR Determination Date"), the
Calculation Agent for such LIBOR Certificate will determine the arithmetic
mean of the offered rates for deposits in U.S. dollars for the period of
the Index Maturity specified in the applicable Prospectus Supplement,
commencing on such Interest Reset Date, which appear on the Reuters Screen
LIBO Page at approximately 11:00 a.m., London time, on such LIBOR
Determination Date. "Reuters Screen LIBO Page" means the display designated
as page "LIBOR" on the Reuters Monitor Money Rates Service (or such other
page may replace the LIBO page on that service for the purpose of
displaying London interbank offered rates of major banks). If at least two
such offered rates appear on the Reuters Screen LIBO Page, "LIBOR" for such
Interest Reset Period will be the arithmetic mean of such offered rates as
determined by the Calculation Agent for such LIBOR Certificate.
(ii) If fewer than two offered rates appear on the Reuters Screen
LIBO Page on such LIBOR Determination Date, the Calculation Agent for such
LIBOR Certificate will request the principal London offices of each of four
major banks in the London interbank market selected by such Calculation
Agent to provide such Calculation Agent with its offered quotations for
deposits in U.S. dollars for the period of the specified Index Maturity,
commencing on such Interest Reset Date, to prime banks in the London
interbank market at approximately 11:00 a.m., London time, on such LIBOR
Determination Date and in a principal amount equal to an amount of not less
than $1,000,000 that is representative of a single transaction in such
market at such time. If at least two such quotations are provided, "LIBOR"
for such Interest Reset Period will be the arithmetic mean of such
quotations. If fewer than two such quotations are provided, "LIBOR" for
such Interest Reset Period will be the arithmetic mean of rates quoted by
three major banks in The City of New York selected by the Calculation Agent
for such LIBOR Certificate at approximately 11:00 a.m., New York City time,
on such LIBOR Determination Date for loans in U.S. dollars to leading
European banks, for the period of the specified Index Maturity, commencing
on such Interest Reset Date, and in a principal amount equal to an amount
of not less than $1,000,000 that is representative of a single transaction
in such market at such time; provided, however, that if fewer than three
banks selected as aforesaid by such Calculation Agent are quoting rates as
mentioned in this sentence, "LIBOR" for such Interest Reset Period will be
the same as LIBOR for the immediately preceding Interest Reset Period (or,
if there was no such Interest Reset Period, the Initial Pass-Through Rate).
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(5) Treasury Rate Certificates. Each Treasury Rate Certificate will bear
interest for each Interest Reset Period at the Pass-Through Rate calculated with
reference to the Treasury Rate and the Spread or Spread Multiplier, if any,
specified in such Certificate and in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Treasury Rate" for each Interest Reset Period will be the rate for the auction
held on the Treasury Rate Determination Date (as defined below) for such
Interest Reset Period of direct obligations of the United States ("Treasury
bills") having the Index Maturity specified in the applicable Prospectus
Supplement, as such rate shall be published in H.15(519) under the heading "U.S.
Government Certificates--Treasury Bills-auction average (investment)" or, in
the event that such rate is not published prior to 3:00 p.m., New York City
time, on the Calculation Date (as defined below) pertaining to such Treasury
Rate Determination Date, the auction average rate (expressed as a bond
equivalent on the basis of a year of 365 or 366 days, as applicable, and applied
on a daily basis) on such Treasury Rate Determination Date as otherwise
announced by the United States Department of the Treasury. In the event that the
results of the auction of Treasury bills having the specified Index Maturity are
not published or reported as provided above by 3:00 p.m., New York City time, on
such Calculation Date, or if no such auction is held on such Treasury Rate
Determination Date, then the "Treasury Rate" for such Interest Reset Period
shall be calculated by the Calculation Agent for such Treasury Rate Certificate
and shall be a yield to maturity (expressed as a bond equivalent on the basis of
a year of 365 or 366 days, as applicable, and applied on a daily basis) of the
arithmetic mean of the secondary market bid rates, as of approximately 3:30
p.m., New York City time, on such Treasury Rate Determination Date, of three
leading primary United States government securities dealers selected by such
Calculation Agent for the issue of Treasury bills with a remaining maturity
closest to the specified Index Maturity; provided, however, that if the dealers
selected as aforesaid by such Calculation Agent are not quoting bid rates as
mentioned in this sentence, then the "Treasury Rate" for such Interest Reset
Period will be the same as the Treasury Rate for the immediately preceding
Interest Reset Period (or, if there was no such Interest Reset Period, the
Initial Pass-Through Rate.)
The "Treasury Rate Determination Date" for such Interest Reset Period will
be the day of the week in which the Interest Reset Date for such Interest Reset
Period falls on which Treasury bills would normally be auctioned. Treasury bills
are normally sold at auction on Monday of each week, unless that day is a legal
holiday, in which case the auction is normally held on the following Tuesday,
except that such auction may be held on the preceding Friday. If, as the result
of a legal holiday, an auction is so held on the preceding Friday, such Friday
will be the Treasury Rate Determination Date pertaining to the Interest Reset
Period commencing in the next succeeding week. Unless otherwise specified in the
applicable Prospectus Supplement, if an auction date shall fall on any day that
would otherwise be an Interest Reset Date for a Treasury Rate Certificate, then
such Interest Reset Date shall instead be the Business Day immediately following
such auction date.
The "Calculation Date" pertaining to any Treasury Rate Determination Date
shall be the first to occur of (a) the tenth calendar day after such Treasury
Rate Determination Date
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or, if such a day is not a Business Day, the next succeeding Business Day or (b)
the second Business Day preceding the date of any distribution of interest is
required to be made following the applicable Interest Reset Date.
PRINCIPAL OF THE CERTIFICATES
Unless the related Prospectus Supplement provides otherwise, each
Certificate (other than certain Classes of Strip Certificates) will have a
"Certificate Principal Balance" which, at any time, will equal the maximum
amount that the holder thereof will be entitled to receive in respect of
principal out of the future cash flow on the Deposited Assets and other assets
included in the related Trust. Unless otherwise specified in the related
Prospectus Supplement, distributions generally will be applied to undistributed
accrued interest on, then to principal of, and then to premium (if any) on, each
such Certificate of the Class or Classes entitled thereto (in the manner and
priority specified in such Prospectus Supplement) until the aggregate
Certificate Principal Balance of such Class or Classes has been reduced to zero.
The outstanding Certificate Principal Balance of a Certificate will be reduced
to the extent of distributions of principal thereon, and, if applicable pursuant
to the terms of the related Series, by the amount of any net losses realized on
any Deposited Asset ("Realized Losses") allocated thereto. Unless the related
Prospectus Supplement provides otherwise, the initial aggregate Certificate
Principal Balance of all Classes of Certificates of a Series will equal the
outstanding aggregate principal balance of the related Deposited Assets as of
the applicable Cut-off Date. The initial aggregate Certificate Principal Balance
of a Series and each Class thereof will be specified in the related Prospectus
Supplement. Unless the Prospectus Supplement provides otherwise, distributions
of principal of any Class of Certificates will be made on a pro rata basis among
all the Certificates of such Class. Strip Certificates with no Certificate
Principal Balance will not receive distributions of principal.
OPTIONAL REDEMPTION OF CERTIFICATES
If so specified in the Prospectus Supplement relating to a Series, one or
more Classes of Certificates of any Series may be redeemed in whole at such time
and under the circumstances and at the redemption prices set forth in such
Prospectus Supplement. See also "Description of the Trust Agreement--
Termination."
GLOBAL SECURITIES
Unless otherwise specified in the applicable Prospectus Supplement, all
Certificates of a given Series (or, if more than one Class exists, any given
Class within that Series) will, upon issuance, be represented by one or more
Global Securities that will be deposited with, or on behalf of, The Depository
Trust Company, New York, New York (for Registered Certificates denominated and
payable in U.S. dollars), or such other depository identified in the related
Prospectus Supplement (the "Depository"), and registered in the name of a
nominee of the Depository. Global Securities may be issued in either temporary
or definitive form. Unless and until it is exchanged in whole or in part for the
individual Certificates represented thereby (each a "Definitive Certificate"), a
Global Security may not
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be transferred except as a whole by the Depository of such Global Security to a
nominee of such Depository or by a nominee of such Depository to such Depository
or another nominee of such Depository or by such Depository or any such nominee
to a successor of such Depository or a nominee of such successor.
The Depository Trust Company has advised the Depositor as follows: The
Depository Trust Company is a limited-purpose trust company organized under the
laws of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. The Depository Trust Company was created to hold
securities of its participants and to facilitate the clearance and settlement of
securities transactions among the institutions that have accounts with such
Depository ("participants") in such securities through electronic book-entry
changes in accounts of the participants, thereby eliminating the need for
physical movement of securities certificates. Such Depository's participants
include securities brokers and dealers (including the Offering Agent), banks,
trust companies, clearing corporations, and certain other organizations, some of
whom (and/or their representatives) own such Depository. Access to such
Depository's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly. The Depository
Trust Company has confirmed to the Depositor that it intends to follow such
procedures.
Upon the issuance of a Global Security, the Depository for such Global
Security will credit, on its book-entry registraton and transfer system, the
respective principal amounts of the individual Certificates represented by such
Global Security to the accounts of its participants. The accounts to be
accredited shall be designated by the underwriters of such Certificates, or, if
such Certificates are offered and sold directly through one or more agents, by
the Depositor or such agent or agents. Ownership of beneficial interests in a
Global Security will be limited to participants or Persons that may hold
beneficial interests through participants. Ownership of beneficial interests in
a Global Security will be shown on, and the transfer of that ownership will be
effected only through, records maintained by the Depository for such Global
Security or by participants or Persons that hold through participants. The laws
of some states require that certain purchasers of securities take physical
delivery of such securities. Such limits and such laws may limit the market for
beneficial interests in a Global Security.
So long as the Depository for a Global Security, or its nominee, is the
owner of such Global Security, such Depository or such nominee, as the cause may
be, will be considered the sole Certificateholder of the individual Certificates
represented by such Global Security for all purposes under the Trust Agreement
governing such Certificates. Except as set forth below, owners of beneficial
interests in a Global Security will not be entitled to have any of the
individual Certificates represented by such Global Security registered in their
names, will not receive or be entitled to receive physical delivery of any such
Certificates and will not be considered the Certificateholder thereof under the
Trust Agreement governing such Certificates. Because the Depository can only act
on behalf of its participants, the ability of a holder of any Certificate to
pledge that Certificate to persons, or entities that do not
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participate in the Depository's system, or to otherwise act with respect to such
Certificate, may be limited due to the lack of a physical certificate for such
Certificate.
Distributions of principal of (and premium, if any) and any interest on
individual Certificates represented by a Global Security will be made to the
Depository or its nominee, as the case may be, as the Certificateholder of such
Global Security. None of the Depositor, the Administrative Agent, if any, the
Trustee for such Certificates, any Paying Agent or the Certificate Registrar for
such Certificates will have responsibility or liability for any aspect or the
records relating to or payments made on account of beneficial interests in such
Global Security or for maintaining, supervising or reviewing any records
relating to such beneficial interests.
The Depositor expects that the Depository for Certificates of a given Class
and Series, upon receipt of any distribution of principal, premium or interest
in respect of a definitive Global Security representing any of such
Certificates, will credit immediately participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security as shown on the records of such Depository. The
Depositor also expects that payments by participants to owners of beneficial
interests in such Global Security held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or registered
in "street name," and will be the responsibility of such participant.
If the Depository for Certificates of a given Class of any Series is at any
time unwilling or unable to continue as depository and a successor depository is
not appointed by the Depositor within ninety days, the Depositor will issue
individual Definitive Certificates in exchange for the Global Security or
Securities representing such Certificates. In addition, the Depositor may at any
time and in its sole discretion determine not to have any Certificates of a
given Class represented by one or more Global Securities and, in such event,
will issue individual Definitive Certificates of such Class in exchange for the
Global Security or Securities representing such Certificates. Further, if the
Depositor so specifies with respect to the Certificates of a given Class, an
owner of a beneficial interest in a Global Security representing Certificates of
such Class may, on terms acceptable to the Depositor and the Depository for such
Global Security, receive individual Definitive Certificates in exchange for such
beneficial interest. In any such instance, an owner of a beneficial interest in
a Global Security will be entitled to physical delivery of individual Definitive
Certificates of the Class represented by such Global Security equal in principal
amount to such beneficial interest and to have such Definitive Certificates
registered in its name (if the Certificates of such Class are issuable as
Registered Certificates). Individual Definitive Certificates of such Class so
issued will be issued as Registered Certificates in denominations, unless
otherwise specified by the Depositor, or $1,000 and integral multiples thereof.
The applicable Prospectus Supplement will set forth any specific terms of
the depository arrangement with respect to any Class or Series or Certificates
being offered thereby to the extent not set forth or different from the
description set forth above.
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DESCRIPTION OF DEPOSITED ASSETS AND CREDIT SUPPORT
General
Each Certificate of each Series (or if more than one Class exists, each
Class (whether or not each such Class is offered hereby) within such Series)
will represent an ownership interest specified for such Series (or Class) of
Certificates in a designated, publicly issued, fixed income debt security or a
pool of such debt securities (the "Underlying Securities"), purchased by the
Depositor (or an affiliate thereof) in the secondary market, and will not be
acquired from the issuer thereof as part of any distribution by or agreement
with such issuer, and assigned to a Trust as described in the applicable
Prospectus Supplement. Each Underlying Security will represent (i) an
obligation issued or guaranteed by the United States of America or any agency
thereof for the payment of which the full faith and credit of the United States
of America is pledged ("Treasury Securities"), (ii) an obligation of one or more
U.S. government sponsored entities created pursuant to federal statute ("a
GSE"), (iii) Government Trust Certificates ("GTCs") (provided that such GTCs,
together with any AID-Guaranteed Underlying Securities (as defined below), shall
not account for 20% or more of the aggregate cash flows on the Underlying
Securities securing any Series of Certificates), or (iv) obligations guaranteed
by the United States Agency for International Development pursuant to the AID
Housing Guaranty Program ("AID-Guaranteed Underlying Securities") (provided that
such AID-Guaranteed Underlying Securities, together with any GTCs, shall not
account for 20% or more of the aggregate cash flows on the Underlying Securities
securing any Series of Certificates). As specified in the applicable Prospectus
Supplement, the obligations of one or more of the following GSEs may be included
in a Trust: Federal National Mortgage Association ("Fannie Mae"), Federal Home
Loan Mortgage Association ("Freddie Mac"), Student Loan Marketing Association
("Sallie Mae"), Resolution Funding Corporation ("REFCORP"), Federal Home Loan
Banks ("FHLB") (to the extent such obligations represent the joint and several
obligations of the twelve Federal Home Loan Banks), Tennessee Valley Authority
("TVA") and Federal Farm Credit Banks ("FFCB"). GSE debt securities are exempt
from registration under the Securities Act pursuant to Section 3(a)(2) of the
Securities Act (or are deemed by statute to be so exempt) and are not required
to be registered under the Exchange Act. The securities of any GSE will be
included in a Trust only to the extent (A) its obligations are supported by the
full faith and credit of the U.S. government or (B) such organization makes
publicly available its annual report, which shall include financial statements
or similar financial information with respect to such organizations (a "GSE
Issuer"). GTCs and AID-Guaranteed Obligations will have been registered under
the Securities Act of 1933 (or will qualify for an exemption from registration)
and will have been acquired by the Depositor in purely secondary market
transactions. Based on information contained in the prospectus pursuant to
which any GSE Issuer's securities were originally offered (an "Underlying
Security Prospectus"), the applicable Prospectus Supplement will set forth
certain information with respect to the public availability of information with
respect to any GSE Issuer the debt securities of which constitute more than 10
percent of the Underlying Securities for any Series of Certificates as of the
date of such Prospectus Supplement (a "Concentrated Underlying Security"). The
specific terms and conditions of the Underlying Securities will be set forth in
the related Prospectus Supplement.
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This Prospectus relates only to the Certificates offered hereby and does
not relate to the Underlying Securities. The following description of the
Underlying Securities is intended only to summarize certain characteristics of
the Underlying Securities the Depositor is permitted to deposit in a Trust and
does not purport to be a complete description of any Underlying Security and is
qualified in its entirety by reference to the applicable Prospectus Supplement,
Underlying Security Prospectus, if any, and, to the extent applicable, the
statement of terms or similar document with respect to any Underlying Security.
The Prospectus Supplement used to offer any Series of Certificates will contain
a brief discussion of the business activities of each GSE Issuer and information
concerning the market prices of the Underlying Securities.
UNDERLYING SECURITIES
General. Unless otherwise specified in the related Prospectus Supplement,
none of the Underlying Securities will have been issued pursuant to an
indenture, and no trustee is provided for with respect to any Underlying
Security. There will generally be a fiscal agent ("Fiscal Agent") for a GSE
Issuer with respect to any related Underlying Security whose actions will be
governed by a fiscal agency agreement. A Fiscal Agent is not a trustee for the
holders of the Underlying Securities and does not have the same responsibilities
or duties to act for the holders of a GSE's securities as would a trustee.
Unless otherwise specified in the related Prospectus Supplement, the Underlying
Securities with respect to any GSE Issuer will not be guaranteed by the United
States and do not constitute a debt or obligation of the United States or of any
agency or instrumentality thereof other than the related GSE.
Contractual and Statutory Restrictions. A GSE Issuer and the related
Underlying Securities may be subject to certain contractual and statutory
restrictions which may provide some protection to securityholders against the
occurrence or effects of certain specified events. Unless otherwise specified
in the related Prospectus Supplement, each GSE is limited to such activities as
will promote its statutory purposes as set forth in the publicly available
information with respect to such issuer. See "DESCRIPTION OF THE DEPOSITED
ASSETS -- PUBLICLY AVAILABLE INFORMATION" in the related Prospectus Supplement.
A GSE's promotion of its statutory purposes, as well as its statutory,
structural and regulatory relationships with the federal government may cause or
require such GSE to conduct its business in a manner that differs from that an
enterprise which is not a GSE might employ.
Neither the United States nor any agency thereof is obligated to finance
any GSE Issuer's operations or to assist a GSE Issuer in any manner.
Prospective purchasers should consult the publicly available information with
respect to each GSE Issuer for a more detailed description of the regulatory and
statutory restrictions on the related GSE's activities.
Events of Default. Underlying Securities issued by a GSE Issuer may
provide that any one of a number of specified events will constitute an event of
default with respect thereto. Such events of default typically include the
following or variations thereof: (i) failure by the issuer to pay an installment
of interest or principal on the securities at the time required (subject to any
specified grace period) or to redeem any of the securities when required
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(subject to any specified grace period); (ii) failure by the issuer to observe
or preform any covenant, agreement or condition contained in the securities or
authorizing legislation or regulation, as the case may be, which failure is
materially adverse to securityholders and continues for a specified period after
notice thereof; and (iii) certain events of insolvency or bankruptcy with
respect to the GSE Issuer. The Underlying Securities will generally provide
that, upon the occurrence of an event of default, the holders of not less than a
specified percentage of the outstanding securities may declare all or a portion
of the principal and accrued interest on the outstanding securities immediately
due and payable, subject to the issuer's right to cure, if applicable.
Each Underlying Security may include some, all or none of the foregoing
provisions or variations thereof or additional events of default not discussed
herein. The Prospectus Supplement with respect to any Series of Certificates
will describe the events of default under the Underlying Securities with respect
to any Concentrated Underlying Security ("Underlying Security Events of
Default") and applicable remedies with respect thereto. With respect to any
Trust compromised of a pool of securities, the applicable Prospectus Supplement
will describe certain common Underlying Security Events of Default with respect
to such pool. There can be no assurance that any such provision will protect the
Trust, as a holder of the Underlying Securities, against losses. If an
Underlying Security Event of Default occurs and the Trustee as a holder of the
Underlying Securities is entitled to vote or take such other action to declare
the principal amount of an Underlying Security and any accrued and unpaid
interest thereon to be due and payable, the Certificateholders' objectives may
differ from those of holders of other securities of the same series and class as
any Underlying Security ("Outstanding Debt Securities") in determining whether
to declare the acceleration of the Underlying Securities.
PRINCIPAL ECONOMIC TERMS OF UNDERLYING SECURITIES
Reference is made to the applicable Prospectus Supplement with respect to
each Series of Certificates for a description of the following terms, as
applicable, of any Concentrated Underlying Security: (i) the title and series of
such Underlying Securities, the aggregate principal amount, denomination and
form thereof; (ii) whether such securities are senior or subordinated to any
other obligations of the Underlying Securities Issuer; (iii) whether any of the
obligations are secured or unsecured and the nature of any collateral; (iv) the
limit, if any, upon the aggregate principal amount of such debt securities; (v)
the dates on which, or the range of dates within which, the principal of (and
premium, if any, on) such debt securities will be payable; (vi) the rate or
rates or the method of determination thereof, at which such Underlying
Securities will bear interest, if any ("Underlying Securities Rate"); the date
or dates from which such interest will accrue ("Underlying Securities Interest
Accrual Periods"); and the dates on which such interest will be payable
("Underlying Securities Payment Dates"); (vii) the obligation, if any, of the
Underlying Securities Issuer to redeem the securities pursuant to any sinking
fund or analogous provisions, and the periods within which or the dates on
which, the prices at which and the terms and conditions upon which such debt
securities may be redeemed or repurchased, in whole or in part, pursuant to such
obligation; (viii) the periods within which or the dates on which, the prices at
which and the terms and conditions upon which such debt securities may be
redeemed, if
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any, in whole or in part, at the option of the Underlying Securities Issuer;
(ix) whether the Underlying Securities were issued at a price lower than the
principal amount thereof; (x) material events of default or restrictive
covenants provided for with respect to such Underlying Securities; (xi) the
rating thereof, if any; and (xii) any other material terms of such Underlying
Securities.
With respect to a Trust compromised of a pool of Underlying Securities, the
related Prospectus Supplement will describe the composition of the Underlying
Securities pool as of the Cut-off Date, certain material events of default or
restrictive covenants common to the Underlying Securities, and, on an aggregate,
percentage or weighted average basis, as applicable, the characteristics of the
pool with respect to the terms set forth in (ii), (iii), (v), (vi), (vii),
(viii) and (ix) of the preceding paragraph and any other material terms
regarding such pool of securities.
PUBLICLY AVAILABLE INFORMATION
In addition to the foregoing, with respect to each Concentrated Underlying
Security issued by a GSE Issuer the applicable Prospectus Supplement will
disclose the identity of the applicable obligor, and will describe the existence
and type of certain information that is made publicly available by each obligor
regarding such Underlying Security or Underlying Securities and will disclose
where and how prospective purchasers of the Certificates may obtain such
publicly available information with respect to each such obligor. Such
information will typically consist of such obligor's annual report, which
contains financial statements or similar financial information, and can be
obtained from the Commission, if so specified in the applicable Prospectus
Supplement, or from the office of such obligor identified in the related
Prospectus Supplement. However, the precise nature of such publicly available
information and where and how it may be obtained with respect to any given GSE
Issuer will vary, and, as described above, will be set forth in the applicable
Prospectus Supplement with respect to any such obligor.
OTHER DEPOSITED ASSETS
In addition to the Underlying Securities, the Depositor may also deposit
into a given Trust, or the Trustee on behalf of the Certificateholders of a
Trust may enter into an agreement constituting or providing for the purchase of,
to the extent described in the related Prospectus Supplement, certain assets
related or incidental to one or more of such Underlying Securities or to some
other asset deposited in the Trust, including hedging contracts and other
similar arrangements (such as puts, calls, interest rate swaps, currency swaps,
floors, caps and collars, cash and assets ancillary or incidental to the
foregoing or to the Underlying Securities (including assets obtained through
foreclosure or in settlement of claims with respect thereto) (all such assets
for any given Series, together with the related Underlying Securities, the
"Deposited Assets"). The applicable Prospectus Supplement will, to the extent
appropriate, contain analogous disclosure with respect to the foregoing assets
as referred to above with respect to the Underlying Securities.
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Unless otherwise specified in the related Prospectus Supplement, the
Deposited Assets for a given Series of Certificates and the related Trust will
not constitute Deposited Assets for any other Series of Certificates and the
related Trust and the Certificates of each Class of a given Series possess an
equal and ratable undivided ownership interest in such Deposited Assets. The
applicable Prospectus Supplement may, however, specify that certain assets
constituting a part of the Deposited Assets relating to any given Series may be
beneficially owned solely by or deposited solely for the benefit of one Class or
a group of Classes within such Series. In such event, the other Classes of such
Series will not possess any beneficial ownership interest in those specified
assets constituting a part of the Deposited Assets.
CREDIT SUPPORT
As specified in the applicable Prospectus Supplement for a given Series of
Certificates, the Trust for any Series of Certificates may include, or the
Certificateholders of such Series (or any Class or group of Classes within such
Series) may have the benefit of, Credit Support for any Class or group of
Classes within such Series. Such Credit Support may be provided by any
combination of the following means described below or any other means described
in the applicable Prospectus Supplement. The applicable Prospectus Supplement
will set forth whether the Trust for any Class or group of Classes of
Certificates contains, or the Certificateholders of such Certificates have the
benefit of, Credit Support and, if so, the amount, type and other relevant terms
of each element of Credit Support with respect to any such Class or Classes and
certain information with respect to the obligors of each such element, including
(i) a brief description of its principal business activities, (ii) its principal
place of business, place of incorporation and the jurisdiction under which it is
chartered or licensed to do business, (iii) if applicable, the identity of
regulatory agencies that exercise primary jurisdiction over the conduct of its
business and (iv) its total assets, and its stockholders' equity or
policyholders' surplus, if applicable, as of a date that will be specified in
the Prospectus Supplement. Additionally, with respect to any obligor, or group
of affiliated obligors, providing Credit Support for 10% or more of the
aggregate principal amount of such Class or Classes, the Prospectus Supplement
will include summarized financial statements of such entity and, with respect to
any obligor, or group of affiliated obligors, providing Credit Support for 20%
or more of the aggregate principal amount of such Class or Classes, the
Prospectus Supplement will include audited financial statements of such entity.
Subordination. As discussed below under "--Collections," the rights of the
Certificateholders of any given Class within a Series of Certificates to receive
collections from the Trust for such Series and any Credit Support obtained for
the benefit of the Certificateholders of such Series (or Classes within such
Series) may be subordinated to the rights of the Certificateholders of one or
more other Classes of such Series to the extent described in the related
Prospectus Supplement. Such subordination accordingly provides some additional
credit support to those Certificateholders of those other Classes. For example,
if losses are realized during a given period on the Deposited Assets relating to
a Series of Certificates such that the collections received thereon are
insufficient to make all distributions on the Certificates of such Series,
those realized losses would be allocated to the Certificateholders of any Class
of such Series that is subordinated to another Class, to the
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extent and in the manner provided in the related Prospectus Supplement. In
addition, if so provided in the applicable Prospectus Supplement, certain
amounts otherwise payable to Certificateholders of any Class that is
subordinated to another Class may be required to be deposited into a reserve
account. Amounts held in any reserve account may be applied as described below
under "--Reserve Accounts" and in the related Prospectus Supplement.
If so provided in the related Prospectus Supplement, the Credit Support for
any Series or Class of Certificates may include, in addition to the
subordination of certain Classes of such Series and the establishment of a
reserve account, any of the other forms of Credit Support described below. Any
such other forms of Credit Support that are solely for the benefit of a given
Class will be limited to the extent necessary to make required distributions to
the Certificateholders of such Class or as otherwise specified in the related
Prospectus Supplement. In addition, if so provided in the applicable Prospectus
Supplement, the obligor of any other forms of Credit Support may be reimbursed
for amounts paid pursuant to such Credit Support out of amounts otherwise
payable to one or more of the Classes of the Certificates of such Series.
Letter of Credit; Surety Bond. The Certificateholders of any Series (or
Class or group of Classes of Certificates within such Series) may, if specified
in the applicable Prospectus Supplement, have the benefit of a letter or letters
of credit (a "Letter of Credit") issued by a bank (a "Letter of Credit Bank") or
a surety bond or bonds (a "Surety Bond") issued by a surety company (a
"Surety"). In either case, the Trustee or such other person specified in the
applicable Prospectus Supplement will use its reasonable efforts to cause the
Letter of Credit or the Surety Bond, as the case may be, to be obtained, to be
kept in full force and effect (unless coverage thereunder has been exhausted
through payment of claims) and to pay timely the fees or premiums therefor
unless, as described in the related Prospectus Supplement, the payment of such
fees or premiums is otherwise provided for. The Trustee or such other person
specified in the applicable Prospectus Supplement will make or cause to be made
draws under the Letter of Credit or the Surety Bond, as the case may be, under
the circumstances and to cover the amounts specified in the applicable
Prospectus Supplement. Any amounts otherwise available under the Letter of
Credit or the Surety Bond will be reduced to the extent of any prior
unreimbursed draws thereunder. The applicable Prospectus Supplement will provide
the manner, priority and source of funds by which any such draws are to be
repaid.
Unless otherwise specified in the applicable Prospectus Supplement, in the
event that the Letter of Credit Bank or the Surety, as applicable, ceases to
satisfy any credit rating or other applicable requirements specified in the
related Prospectus Supplement, the Trustee or such other person specified in the
applicable Prospectus Supplement will use its reasonable efforts to obtain or
cause to be obtained a substitute Letter of Credit or Surety Bond, as
applicable, or other form of credit enhancement providing similar protection,
that meets such requirements and provides the same coverage to the extent
available for the same cost. There can be no assurance that any Letter of
Credit Bank or any Surety, as applicable, will continue to satisfy such
requirements or that any such substitute Letter of Credit, Surety Bond or
similar credit enhancement will be available providing equivalent coverage for
the same cost. To the extent not so available, the credit support otherwise
provided by the
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Letter of Credit or the Surety Bond (or similar credit enhancement) may be
reduced to the level otherwise available for the same cost as the original
Letter of Credit or Surety Bond. A copy of any such Letter of Credit or Surety
Bond will accompany the Current Report on Form 8-K to be filed with the
Commission within 15 days of the issuance of the Certificates of the related
Series.
Reserve Accounts. If so provided in the related Prospectus Supplement, the
Trustee or such other person specified in the Prospectus Supplement will deposit
or cause to be deposited into an account maintained with an eligible institution
(which may be the Trustee) (a "Reserve Account") any combination of cash or
permitted investments in specified amounts, which will be applied and maintained
in the manner and under the conditions specified in such Prospectus Supplement.
In the alternative or in addition to such deposit, a Reserve Account may be
funded through application of a portion of collections received on the Deposited
Assets for a given Series of Certificates, in the manner and priority specified
in the applicable Prospectus Supplement. Amounts may be distributed to
Certificateholders of such Class or group of Classes within such Series, or may
be used for other purposes, in the manner and to the extent provided in the
related Prospectus Supplement. Unless otherwise specified in the related
Prospectus Supplement, any such Reserve Account will not be deemed to be part of
the related Trust Fund. A Reserve Account may provide coverage to more than one
series of Certificates, if set forth in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, the
Trustee will have a perfected security interest for the benefit of the
Certificateholders in the assets in the Reserve Account. However, to the extent
that the Depositor, any affiliate thereof or any other entity has an interest in
any Reserve Account, in the event of the bankruptcy, receivership or insolvency
of such entity, there could be delays in withdrawls from the Reserve Account and
the corresponding payments to the Certificateholders. Such delays could
adversely affect the yield to investors on the related Certificates. Amounts
deposited in any Reserve Account will be invested in certain permitted
investments by, or at the direction of, the Trustee, the Depositor or such other
person named in the related Prospectus Supplement.
COLLECTIONS
The Trust Agreement will establish procedures by which the Trustee or such
other person specified in the Prospectus Supplement is obligated, for the
benefit of the Certificateholders of each Series of Certificates, to administer
the related Deposited Assets, including making collections of all payments made
thereon, depositing from time to time prior to any applicable Distribution Date
such collections into a segregated account maintained or controlled by the
applicable Trustee for the benefit of such Series (each a "Certificate
Account"). An Administrative Agent, if any is appointed pursuant to the
applicable Prospectus Supplement, will direct the Trustee, and otherwise the
Trustee will make all determinations, as to the appropriate application of such
collections and other amounts available for distribution to the payment of any
administrative or collection expenses (such as the administrative fee) and
certain Credit Support-related ongoing fees (such as insurance premiums, letter
of credit fees or any required account deposits) and to
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the payment of amounts then due and owing on the Certificates of such Series
(and Classes within such Series), all in the manner and priorities described in
the related Prospectus Supplement. The applicable Prospectus Supplement will
specify the collection periods, if applicable, and Distribution Dates for a
given Series of Certificates and the particular requirements relating to the
segregation and investment of collections received on the Deposited Assets
during a given collection period or on or by certain specified dates. There can
be no assurance that amounts received from the Deposited Assets and any Credit
Support obtained for the benefit of Certificateholders for a particular Series
or Class of Certificates over a specified period will be sufficient, after
payment of all prior expenses and fees for such period, to pay amounts then due
and owing to holders of such Certificates. The applicable Prospectus Supplement
will also set forth the manner and priority by which any Realized Loss will be
allocated among the Classes of any Series of Certificates, if applicable.
The relative priorities of distributions with respect to collections from
the assets of the Trust assigned to Classes of a given Series of Certificates
may permanently or temporarily change over time upon the occurrence of certain
circumstances specified in the applicable Prospectus Supplement. Moreover, the
applicable Prospectus Supplement may specify that the relative distribution
priority assigned to each Class of a given Series for purposes of payments of
certain amounts, such as principal, may be different from the relative
distribution priority assigned to each such Class for payments of other amounts,
such as interest or premium.
DESCRIPTION OF THE TRUST AGREEMENT
GENERAL
The following summary of certain provisions of the Trust Agreement and the
Certificates do not purport to be complete and such summary is qualified in its
entirety by reference to the detailed provisions of the form of Trust Agreement
filed as an exhibit to the Registration Statement. Wherever particular sections
or defined terms of the Trust Agreement are referred to, such sections or
defined terms are incorporated herein by reference as part of the statement
made, and the statement is qualified in its entirety by such reference.
ASSIGNMENT OF DEPOSITED ASSETS
At the time of issuance of any Series of Certificates, the Depositor will
cause the Underlying Securities to be included in the related Trust, and any
other Deposited Asset specified in the Prospectus Supplement, to be assigned to
the related Trustee, together with all principal, premium (if any) and interest
received by or on behalf of the Depositor on or with respect to such Deposited
Assets after the cut-off date specified in the Prospectus Supplement (the "Cut-
off Date"), other than principal, premium (if any) and interest due on or before
the Cut-off Date and other than any Retained Interest. The Trustee will,
concurrently with such assignment, deliver the Certificates to the Depositor in
exchange for
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certain assets to be deposited in the Trust. Each Deposited Asset will be
identified in a schedule appearing as an exhibit to the Trust Agreement. Such
schedule will include certain statistical information with respect to each
Underlying Security and each other Deposited Asset as of the Cut-off Date, and
with respect to each Concentrated Underlying Security, such schedule will
include, to the extent applicable, information regarding the payment terms
thereof, the Retained Interest, if any, with respect thereto, the maturity or
terms thereof, the rating, if any, thereof and certain other information with
respect thereto.
In addition, the Depositor will, with respect to each Deposited Asset,
deliver or cause to be delivered to the Trustee (or to the custodian hereinafter
referred to) all documents necessary to transfer ownership of such Deposited
Asset to the Trustee. The Trustee (or such custodian) will review such documents
upon receipt thereof or within such period as is permitted in the Prospectus
Supplement, and the Trustee (or such custodian) will hold such documents in
trust for the benefit of the Certificateholders.
Each of the Depositor and the Administrative Agent, if any, will make
certain representations and warranties regarding its authority to enter into,
and its ability to perform its obligations under, the Trust Agreement. Upon a
breach of any such representation of the Depositor or any such Administrative
Agent, as the case may be, which materially and adversely affects the interests
of the Certificateholders, the Depositor or any such Administrative Agent,
respectively, will be obligated to cure the breach in all material respects.
COLLECTION AND OTHER ADMINISTRATIVE PROCEDURES
General. With respect to any Series of Certificates the Trustee or such
other person specified in the Prospectus Supplement directly or through sub-
administrative agents, will make reasonable efforts to collect all scheduled
payments under the Deposited Assets and will follow or cause to be followed such
collection procedures, if any, as it would follow with respect to comparable
financial assets that it held for its own account, provided that such procedures
are consistent with the Trust Agreement and any related instrument governing any
Credit Support (collectively, the "Credit Support Instruments") and provided
that, except as otherwise expressly set forth in the applicable Prospectus
Supplement, it shall not be required to expend or risk its own funds or
otherwise incur personal financial liability.
Sub-Administration. Any Trustee or Administrative Agent may delegate its
obligations in respect of the Deposited Assets to third parties they deem
qualified to perform such obligations (each, a "Sub-Administrative Agent"), but
the Trustee or Administrative Agent will remain obligated with respect to such
obligations under the Trust Agreement. Each Sub-Administrative Agent will be
required to perform the customary functions of an administrator of comparable
financial assets, including, if applicable, collecting payments from obligors
and remitting such collections to the Trustee; maintaining accounting records
relating to the Deposited Assets, attempting to cure defaults and delinquencies;
and enforcing any other remedies with respect thereto all as and to the extent
provided in the applicable Sub-Administration Agreements (as defined below).
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The agreement between any Administrative Agent or Trustee and a Sub-
Administrative Agent (a "Sub-Administration Agreement") will be consistent with
the terms of the Trust Agreement and such assignment to the Sub-Administrator by
itself will not result in a withdrawal or downgrading of the rating of any Class
of Certificates issued pursuant to the Trust Agreement. With respect to any Sub-
Administrative Agreement between an Administrative Agent and a Sub-
Administrative Agent, although each such Sub-Administration Agreement will be a
contract solely between such Administrative Agent and the Sub-Administrative
Agent, the Trust Agreement pursuant to which a Series of Certificates is issued
will provide that, if for any reason such Administrative Agent for such Series
of Certificates is no longer acting in such capacity, the Trustee or any
successor Administrative Agent must recognize the Sub-Administrative Agent's
rights and obligations under such Sub-Administration Agreement.
The Administrative Agent or Trustee, as applicable, will be solely liable
for all fees owed by it to any Sub-Administrative Agent, irrespective of whether
the compensation of the Administrative Agent or Trustee, as applicable, pursuant
to the Trust Agreement with respect to the particular Series of Certificates is
sufficient to pay such fees. However, a Sub-Administrative Agent may be entitled
to a Retained Interest in certain Deposited Assets to the extent provided in the
related Prospectus Supplement. Each Sub-Administrative Agent will be reimbursed
by the Administrative Agent, if any, or otherwise the Trustee for certain
expenditures which it makes, generally to the same extent the Administrative
Agent or Trustee, as applicable, would be reimbursed under the terms of the
Trust Agreement relating to such Series. See "--RETAINED INTEREST;
ADMINISTRATIVE AGENT COMPENSATION AND PAYMENT OF EXPENSES."
The Administrative Agent or Trustee, as applicable, may require any Sub-
Administrative Agent to agree to indemnify the Administrative Agent or Trustee,
as applicable, for any liability or obligation sustained by the Administrative
Agent or Trustee, as applicable, in connection with any act or failure to act by
the Sub-Administrative Agent.
Realization upon Defaulted Deposited Assets. Unless otherwise specified in
the applicable Prospectus Supplement, as administrator with respect to the
Deposited Assets, the Trustee, on behalf of the Certificateholders of a given
Series (or and Class or Classes within such Series), will present claims under
each applicable Credit Support Instrument, and will take such reasonable steps
as are necessary to receive payment or to permit recovery thereunder with
respect to defaulted Deposited Assets. As set forth above, all collections by or
on behalf of the Trustee or Administrative Agent under any Credit Support
Instrument are to be deposited in the Certificate Account for the related Trust,
subject to withdrawal as described above.
Unless otherwise provided in the applicable Prospectus Supplement, if
recovery on a defaulted Deposited Asset under any related Credit Support
Instrument is not available, the Trustee will be obligated to follow or cause to
be followed such normal practices and procedures as it deems necessary or
advisable to realize upon the defaulted Deposited Asset, provided that, except
as otherwise expressly provided in the applicable Prospectus Supplement, it
shall not be required to expend or risk its own funds or otherwise incur
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personal financial liability. If the proceeds of any liquidation of the
defaulted Deposited Asset are less than the sum of (i) the outstanding principal
balance of the defaulted Deposited Asset, (ii) interest accrued thereon at the
applicable interest rate and (iii) the aggregate amount of expenses incurred by
the Administrative Agent and the Trustee, as applicable, in connection with such
proceedings to the extent reimbursable from the assets of the Trust under the
Trust Agreement, the Trust will realize a loss in the amount of such difference.
Only if and to the extent provided in the applicable Prospectus Supplement, the
Administrative Agent or Trustee, as so provided, will be entitled to withdraw or
cause to be withdrawn from the related Certificate Account out of the net
proceeds recovered on any defaulted Deposited Asset, prior to the distribution
of such proceeds to Certificateholders, amounts representing its normal
administrative compensation on the Deposited Asset, unreimbursed administrative
expenses incurred with respect to the Deposited Asset and any unreimbursed
advances of delinquent payments made with respect to the Deposited Asset.
RETAINED INTEREST; ADMINISTRATIVE AGENT COMPENSATION AND PAYMENT OF
EXPENSES
The Prospectus Supplement for a Series of Certificates will specify whether
there will be any Retained Interest in the Deposited Assets, and, if so, the
owner thereof. If so provided, the Retained Interest will be established on an
asset-by-asset basis and will be specified in an exhibit to the applicable
series supplement to the Trust Agreement. A Retained Interest in a Deposited
Asset represents a specified interest therein. Payments in respect of the
Retained Interest will be deducted from payments on the Deposited Assets as
received and, in general, will not be deposited in the applicable Certificate
Account or become a part of the related Trust. Unless otherwise provided in the
applicable Prospectus Supplement, any partial recovery of interest on a
Deposited Asset, after deduction of all applicable administration fees, will be
allocated between the Retained Interest (if any) and interest distributions to
Certificateholders on a pari passu basis.
The applicable Prospectus Supplement will specify the Administrative
Agent's, if any, and the Trustee's compensation, and the source, manner and
priority of payment thereof, with respect to a given Series of Certificates.
If and to the extent specified in the applicable Prospectus Supplement, in
addition to amounts payable to any Sub-Administrative Agent, the Administrative
Agent, if any, and otherwise the Trustee will pay from its compensation certain
expenses incurred in connection with its administration of the Deposited Assets,
including, without limitation, payment of the fees and disbursements of the
Trustee, if applicable, and independent accountants, payment of expenses
incurred in connection with distributions and reports to Certificateholders, and
payment of any other expenses described in the related Prospectus Supplement.
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ADVANCES IN RESPECT OF DELINQUENCIES
Unless otherwise specified in the applicable Prospectus Supplement, the
Administrative Agent, if any, specified therein will have no obligation to make
any advances with respect to collections on the Deposited Assets or in favor of
the Certificateholders of the related Series of Certificates. However, to the
extent provided in the applicable Prospectus Supplement, any such Administrative
Agent will advance on or before each Distribution Date its own funds or funds
held in the Certificate Account for such Series that are not part of the funds
available for distribution for such Distribution Date, in an amount equal to the
aggregate of payments of principal, premium (if any) and interest (net of
related administration fees and any Retained Interest) with respect to the
Deposited Assets that were due during the related Collection Period and were
delinquent on the related Determination Date, subject to (i) any such
Administrative Agent's good faith determination that such advances will be
reimbursable from Related Proceeds (as defined below) and (ii) such other
conditions as may be specified in the Prospectus Supplement.
Advances are intended to maintain a regular flow of scheduled interest,
premium (if any) and principal payments to holders of the Class or Classes of
Certificates entitled thereto, rather than to guarantee or insure against
losses. Unless otherwise provided in the related Prospectus Supplement, advances
of an Administrative Agent's funds, if any, will be reimbursable only out of
related recoveries on the Deposited Assets (and amounts received under any form
of Credit Support) for such Series with respect to which such advances were made
(as to any Deposited Assets, "Related Proceeds"); provided, however, that any
such advance will be reimbursable from any amounts in the Certificate Account
for such Series to the extent that such Administrative Agent shall determine, in
its sole judgment, that such advance (a "Nonrecoverable Advance") is not
ultimately recoverable from Related Proceeds. If advances have been made by such
Administrative Agent from excess funds in the Certificate Account for any
Series, such Administrative Agent will replace such funds in such Certificate
Account on any future Distribution Date to the extent that funds in such
Certificate Account on such Distribution Date are less than payments required to
be made to Certificateholders on such date. If so specified in the related
Prospectus Supplement, the obligations, if any, of an Administrative Agent to
make advances may be secured by a cash advance reserve fund or a surety bond. If
applicable, information regarding the characteristics of, and the identity of
any obligor on, any such surety bond, will be set forth in the related
Prospectus Supplement.
CERTAIN MATTERS REGARDING THE ADMINISTRATIVE AGENT AND THE DEPOSITOR
An Administrative Agent, if any, for each Series of Certificates under the
Trust Agreement will be named in the related Prospectus Supplement. The entity
serving as Administrative Agent for any such Series may be the Trustee, the
Depositor, an affiliate of either thereof, or any third party and may have other
normal business relationships with the Trustee, the Depositor or their
affiliates.
The Trust Agreement will provide that an Administrative Agent may resign
from its obligations and duties under the Trust Agreement with respect to any
Series of Certificates
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<PAGE>
only if such resignation, and the appointment of a successor, will not result in
a withdrawal or downgrading of the rating of any Class of Certificates of such
Series or upon a determination that its duties under the Trust Agreement with
respect to such Series are no longer permissible under applicable law. No such
resignation will become effective until the Trustee or a successor has assumed
the Administrative Agent's obligations and duties under the Trust Agreement with
respect to such Series.
The Trust Agreement will further provide that neither such an
Administrative Agent, the Depositor nor any director, officer, employee, or
agent or the Administrative Agent or the Depositor will incur any liability to
the related Trust or Certificateholders for any action taken, or for refraining
from taking any action, in good faith pursuant to the Trust Agreement or for
errors in judgment; provided, however, that none of the Administrative Agent,
the Depositor nor any such person will be protected against any liability that
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties thereunder or by reason of reckless
disregard of obligations and duties thereunder. The Trust Agreement will further
provide that, unless otherwise provided in the applicable series supplement
thereto, such an Administrative Agent, the Depositor and any director, officer,
employee or agent of the Administrative Agent or the Depositor will be entitled
to indemnification by the related Trust and will be held harmless against any
loss, liability or expense incurred in connection with any legal action relating
to the Trust Agreement or the Certificates, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
in the performance of duties thereunder or by reason of reckless disregard of
obligations and duties thereunder. Nothing contained in the Trust Agreement is
in any way intended to be construed as a waiver, release, or alteration of a
Certificateholder's rights against any person under the federal securities laws.
In addition, the Trust Agreement will provide that neither such an
Administrative Agent nor the Depositor will be under any obligation to appear
in, prosecute or defend any legal action which is not incidental to their
respective responsibilities under the Trust Agreement or which in its opinion
may involve it in any expense or liability. Each of such Administrative Agent or
the Depositor may, however, in its discretion undertake any such action which it
may deem necessary or desirable with respect to the Trust Agreement and the
rights and duties of the parties thereto and the interests of the
Certificateholders thereunder. The applicable Prospectus Supplement will
describe how such legal expenses and costs of such action and any liability
resulting therefrom will be allocated.
Any person into which an Administrative Agent may be merged or
consolidated, or any person resulting from any merger or consolidation to which
an Administrative Agent is a part, or any person succeeding to the business of
an Administrative Agent, will be the successor of the Administrative Agent under
the Trust Agreement with respect to the Certificates of any given Series.
ADMINISTRATIVE AGENT TERMINATION EVENTS; RIGHTS UPON ADMINISTRATIVE AGENT
TERMINATION EVENT
Unless otherwise provided in the related Prospectus Supplement,
"Administrative Agent Termination Events" under the Trust Agreement with respect
to any given Series of
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Certificates will consist of the following: (i) any failure by an Administrative
Agent to remit to the Trustee any funds in respect of collections on the
Deposited Assets and Credit Support, if any, as required under the Trust
Agreement, that continues unremedied for five days after the giving of written
notice of such failure to the Administrative Agent by the Trustee or the
Depositor, or to the Administrative Agent, the Depositor and the Trustee by the
holders of such Certificates evidencing not less than 25% of the Voting Rights
(as defined below); (ii) any failure by an Administrative Agent duly to observe
or perform in any material respect any of its other covenants or obligations
under the Trust Agreement with respect to such Series which continues unremedied
for thirty days after the giving of written notice of such failure to the
Administrative Agent by the Trustee or the Depositor, or to the Administrative
Agent, the Depositor and the Trustee by the holders of such Certificates
evidencing not less than 25% of the Voting Rights; and (iii) certain events of
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings and certain actions by or on behalf of an Administrative
Agent indicating its insolvency or inability to pay its obligations. Any
additional Administrative Agent Termination Events with respect to any given
Series of Certificates will be set forth in the applicable Prospectus
Supplement. In addition, the applicable Prospectus Supplement and the related
series supplement to the Trust Agreement will specify as to each matter
requiring the vote of holders of Certificates of a Class or group of Classes
within a given Series, the circumstances and manner in which the Required
Percentage (as defined below) applicable to each such matter is calculated.
"Required Percentage" means, with respect to any matter requiring a vote of
holders of Certificates of a given Series, the specified percentage (computed on
the basis of outstanding Certificate Principal Balance or Notional Amount, as
applicable) of Certificates of a designated Class or group of Classes within
such Series (either voting as separate classes or as a single class) applicable
to such matter, all as specified in the applicable Prospectus Supplement and the
related series supplement to the Trust Agreement. "Voting Rights" evidenced by
any Certificate will be the portion of the voting rights of all the Certificates
in the related Series allocated in the manner described in the related
Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, so long
as an Administrative Agent Termination Event under the Trust Agreement with
respect to a given Series of Certificates remains unremedied, the Depositor or
the Trustee may, and at the direction of holders of such Certificates evidencing
not less than the "Required Percentage--Administrative Agent Termination" of the
Voting Rights, the Trustee will, terminate all the rights and obligations of
such Administrative Agent under the Trust Agreement relating to the applicable
Trust and in and to the related Deposited Assets (other than any Retained
Interest of such Administrative Agent), whereupon the Trustee will succeed to
all the responsibilities, duties and liabilities of such Administrative Agent
under the Trust Agreement with respect to such Series (except that if the
Trustee is prohibited by law from obligating itself to make advances regarding
delinquent Deposited Assets, then the Trustee will not be so obligated) and will
be entitled to similar compensation arrangements. In the event that the Trustee
is unwilling or unable to act, it may or, at the written request of the holders
of such Certificates evidencing not less than the "Required Percentage--
Administrative Agent Termination" of the Voting Rights, it will appoint, or
petition a court of competent jurisdiction for the appointment of, an
administration agent acceptable to the
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<PAGE>
Rating Agency with a net worth at the time of such appointment of at least
$15,000,000 to act as successor to such Administrative Agent under the Trust
Agreement with respect to such Series. Pending such appointment, the Trustee is
obligated to act in such capacity (except that if the Trustee is prohibited by
law from obligating itself to make advances regarding delinquent Deposited
Assets, then the Trustee will not be so obligated). The Trustee and any such
successor may agree upon the compensation be paid to such successor, which in no
event may be greater than the compensation payable to such Administrative Agent
under the Trust Agreement with respect to such Series.
No Certificateholder will have the right under the Trust Agreement to
institute any proceeding with respect thereto unless such holder previously
has given to the Trustee written notice of breach and unless the holders of
Certificates evidencing not less than the "Required Percentage--Remedies" of
the Voting Rights have made written request upon the Trustee to institute such
proceeding in its own name as Trustee thereunder and have offered to the Trustee
reasonable indemnity, and the Trustee for fifteen days has neglected or refused
to institute any such proceeding. The Trustee, however, is under no obligation
to exercise any of the trusts or powers vested in it by the Trust Agreement or
to make any investigation of matters arising thereunder or to institute, conduct
or defend any litigation thereunder or in relation thereto at the request, order
or direction of any of the holders of Certificates covered by the Trust
Agreement, unless such Certificateholders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which may be
incurred therein or thereby.
MODIFICATION AND WAIVER
Unless otherwise specified in the applicable Prospectus Supplement, the
Trust Agreement for each Series of Certificates may be amended by the Depositor
and the Trustee with respect to such Series, without notice to or consent of the
Certificateholders, for certain purposes including (i) to cure any ambiguity,
(ii) to correct or supplement any provision therein which may be inconsistent
with any other provision therein or in the Prospectus Supplement, (iii) to add
or supplement any Credit Support for the benefit of any Certificateholders
(provided that if any such addition affects any series or class of
Certificateholders differently than any other series or class of
Certificateholders, then such addition will not, as evidenced by an opinion of
counsel, have a material adverse effect on the interests of any affected series
or class of Certificateholders), (iv) to add to the covenants, restrictions or
obligations of the Depositor, the Administrative Agent, if any, or the Trustee
for the benefit of the Certificateholders, (v) to add, change or eliminate any
other provisions with respect to matters or questions arising under such Trust
Agreement so long as (x) any such addition, change or elimination will not, as
evidenced by an opinion of counsel, affect the tax status of the Trust or result
in a sale or exchange of any Certificate for tax purposes and (y) the Trustee
has received written confirmation from each Rating Agency rating such
Certificates that such amendment will not cause such Rating Agency to reduce
or withdraw the then current rating thereof, or (vi) to comply with any
requirements imposed by the Code. Without limiting the generality of the
foregoing, unless otherwise specified in the applicable Prospectus Supplement,
the Trust Agreement may also be modified or amended from time to time by the
Depositor, and the Trustee, with the consent
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of the holders of Certificates evidencing not less than the "Required
Percentage--Amendment" of the Voting Rights of those Certificates that are
materially adversely affected by such modification or amendment for the purpose
of adding any provision to or changing in any manner or eliminating any
provision of the Trust Agreement or of modifying in any manner the rights of
such Certificateholders; provided, however, that in the event such modification
or amendment would materially adversely affect the rating of any Series or Class
by each Rating Agency, the "Required Percentage--Amendment" specified in the
related series supplement to the Trust Agreement shall include an additional
specified percentage of the Certificates of such Series or Class.
Except as otherwise set forth in the applicable Prospectus Supplement, no
such modification or amendment may, however, (i) reduce in any manner the amount
of or alter the timing of, distributions or payments which are required to be
made on any Certificate without the consent of the holder of such Certificate or
(ii) reduce the aforesaid Required Percentage of Voting Rights required for the
consent to any such amendment without the consent of the holders of all
Certificates covered by the Trust Agreement then outstanding.
Unless otherwise specified in the applicable Prospectus Supplement, holders
of Certificates evidencing not less than the "Required Percentage--Waiver" of
the Voting Rights of a given Series may, on behalf of all Certificateholders of
that Series, (i) waive, insofar as that Series is concerned, compliance by the
Depositor, the Trustee or the Administrative Agent, if any, with certain
restrictive provisions, if any, of the Trust Agreement before the time for such
compliance and (ii) waive any past default under the Trust Agreement with
respect to Certificates of that Series, except a default in the failure to
distribute amounts received as principal of (and premium, if any) or any
interest on any such Certificate and except a default in respect of a covenant
or provision the modification or amendment of which would require the consent of
the holder of each outstanding Certificate affected thereby.
REPORTS TO CERTIFICATEHOLDERS; NOTICES
Reports to Certificateholders. Unless otherwise provided in the applicable
Prospectus Supplement, with each distribution to Certificateholders of any Class
of Certificates of a given Series, the Administrative Agent or the Trustee, as
provided in the related Prospectus Supplement, will forward or cause to be
forwarded to each such Certificateholder, to the Depositor and to such other
parties as may be specified in the Trust Agreement, a statement setting forth:
(i) the amount of such distribution to Certificateholders of such
Class allocable to principal of or interest or premium, if any, on the
Certificates of such Class; and the amount of aggregate unpaid interest as
of such Distribution Date;
(ii) in the case of Certificates with a variable Pass-Through Rate,
the Pass-Through Rate applicable to such Distribution Date, as calculated
in accordance with the method specified herein and in the related
Prospectus Supplement;
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(iii) the amount of compensation received by the Administrative
Agent, if any, and the Trustee for the period relating to such Distribution
Date, and such other customary information as the Administrative Agent, if
any, or otherwise the Trustee deems necessary or desirable to enable
Certificateholders to prepare their tax returns;
(iv) if the Prospectus Supplement provides for advances, the
aggregate amount of advances included in such distribution, and the
aggregate amount of unreimbursed advances at the close of business on such
Distribution Date;
(v) the aggregate stated principal amount or, if applicable,
notional principal amount of the Deposited Assets and the current interest
rate thereon at the close of business on such Distribution Date;
(vi) the aggregate Certificate Principal Balance or aggregate
Notional Amount, if applicable, of each Class of Certificates (including
any Class of Certificates not offered hereby) at the close of business on
such Distribution Date, separately identifying any reduction in such
aggregate Certificate Principal Balance or aggregate Notional Amount due
to the allocation of any Realized Losses or otherwise; and
(vii) as to any Series (or Class within such Series) for which
Credit Support has been obtained, the amount of coverage of each element
of Credit Support included therein as of the close of business on such
Distribution Date.
In the case of information furnished pursuant to subclauses (i) and (iii)
above, the amounts shall be expressed as a U.S. dollar amount per minimum
denomination of Certificates or for such other specified portion thereof.
Within a reasonable period of time after the end of each calendar year, the
Administrative Agent or the Trustee, as provided in the related Prospectus
Supplement, shall furnish to each person who at any time during the calendar
year was a Certificateholder a statement containing the information set forth in
subclauses (i) and (iii) above, aggregated for such calendar year or the
applicable portion thereof during which such person was a Certificateholder.
Such obligation of the Administrative Agent or the Trustee, as applicable, shall
be deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Administrative Agent or the Trustee, as
applicable, pursuant to any requirements of the Code as are from time to time in
effect.
Notices. Unless otherwise provided in the applicable Prospectus
Supplement, any notice required to be given to a holder of a Registered
Certificate will be mailed to the last address of such holder set forth in the
applicable Certificate Register.
EVIDENCE AS TO COMPLIANCE
Unless otherwise specified in the applicable Prospectus Supplement, the
Trust Agreement will provide that commencing on a certain date and on or before
a specified date in each year thereafter, a firm of independent public
accountants will furnish a statement to the Trustee to the effect that such firm
has examined certain documents and records relating
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to the administration of the Deposited Assets during the related 12-month period
(or, in the case of the first such report, the period ending on or before the
date specified in the Prospectus Supplement, which date shall not be more than
one year after the related Original Issue Date) and that, on the basis of
certain agreed upon procedures considered appropriate under the circumstances,
such firm is of the opinion that such administration was conducted in compliance
with the terms of the Trust Agreement, except for such exceptions as such firm
shall believe to be immaterial and such other exceptions and qualifications as
shall be set forth in such report.
The Trust Agreement will also provide for delivery to the Depositor,
the Administrative Agent, if any, and the Trustee on behalf of the
Certificateholders, on or before a specified date in each year, of an annual
statement signed by two officers of the Trustee to the effect that the Trustee
has fulfilled its obligations under the Trust Agreement throughout the preceding
year with respect to any Series of Certificates.
Copies of the annual accountants' statement, if any, and the statement of
officers of the Trustee may be obtained by Certificateholders without charge
upon written request to either the Administrative Agent or the Trustee, as
applicable, at the address set forth in the related Prospectus Supplement.
REPLACEMENT CERTIFICATES
Unless otherwise provided in the applicable Prospectus Supplement, if a
Certificate is mutilated, destroyed, lost or stolen, it may be replaced at the
corporate trust office or agency of the applicable Trustee at the location
specified in the applicable Prospectus Supplement, upon payment by the holder of
such expenses as may be incurred by the applicable Trustee in connection
therewith and the furnishing of such evidence and indemnity as such Trustee may
require. Mutilated Certificates must be surrendered before new Certificates
will be issued.
TERMINATION
The obligations created by the Trust Agreement for each Series of
Certificates will terminate upon the payment to Certificateholders of that
Series of all amounts held in the related Certificate Account or by an
Administrative Agent, if any, and required to be paid to them pursuant to the
Trust Agreement following the earlier of (i) the final payment or other
liquidation of the last Deposited Asset subject thereto or the disposition of
all property acquired upon foreclosure or liquidation of any such Deposited
Asset and (ii) the purchase of all the assets of the Trust by the party entitled
to effect such termination, under the circumstances and in the manner set forth
in the related Prospectus Supplement. In no event, however, will any trust
created by the Trust Agreement continue beyond the respective date specified in
the related Prospectus Supplement. Written notice of termination of the
obligations with respect to the related Series of Certificates under the Trust
Agreement will be provided as set forth above under "--REPORTS TO
CERTIFICATEHOLDERS; NOTICES--NOTICES," and the final distribution will be made
only
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upon surrender and cancellation of the Certificates at an office or agency
appointed by the Trustee which will be specified in the notice of termination.
Any such purchase of Deposited Assets and property acquired in respect of
Deposited Assets evidenced by a Series of Certificates shall be made at a price
approximately equal to the aggregate fair market value of all the assets in the
Trust (as determined by the Trustee, the Administrative Agent, if any, and, if
different than both such persons, the person entitled to effect such
termination), in each case taking into account accrued interest at the
applicable interest rate to the first day of the month following such purchase
or, to the extent specified in the applicable Prospectus Supplement, a specified
price as determined therein (such price, a "Purchase Price"). The exercise of
such right will effect early retirement of the Certificates of that Series, but
the right of the person entitled to effect such termination is subject to the
aggregate principal balance of the outstanding Deposited Assets for such Series
at the time of purchase being less than the percentage of the aggregate
principal balance of the Deposited Assets at the Cut-off Date for that Series
specified in the related Prospectus Supplement.
DUTIES OF THE TRUSTEE
The Trustee makes no representations as to the validity or sufficiency of
the Trust Agreement, the Certificates of any Series or any Deposited Asset or
related document and is not accountable for the use or application by or on
behalf of any Administrative Agent of any funds paid to such Administrative
Agent or its designee in respect of such Certificates or the Deposited Assets,
or deposited into or withdrawn from the related Certificate Account or any other
account by or on behalf of such Administrative Agent. If no Administrative
Agent Termination Event has occurred and is continuing with respect to any given
Series, the Trustee is required to perform only those duties specifically
required under the Trust Agreement with respect to such Series. However, upon
receipt of the various certificates, reports or other instruments required to be
furnished to it, the Trustee is required to examine such documents and to
determine whether they conform to the applicable requirements of the Trust
Agreement.
THE TRUSTEE
The Trustee for any given Series of Certificates under the Trust Agreement
will be named in the related Prospectus Supplement. The commercial bank,
national banking association or trust company serving as Trustee will be
unaffiliated with, but may have normal banking relationships with, the
Depositor, any Administrative Agent and their respective affiliates.
PLAN OF DISTRIBUTION
Certificates may be offered in any of three ways: (i) through underwriters
or dealers; (ii) directly to one or more purchasers; or (iii) through agents.
The applicable Prospectus Supplement will set forth the terms of the offering of
any Series of Certificates, which may
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include the names of any underwriters, or initial purchasers, the purchase price
of such Certificates and the proceeds to the Depositor from such sale, any
underwriting discounts and other items constituting underwriters' compensation,
any initial public offering price, any discounts or concessions allowed or
reallowed or paid to dealers, any securities exchanges on which such
Certificates may be listed and the place and time of delivery of the
Certificates to be offered thereby.
If underwriters are used in the sale, Certificates will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at a fixed public offering
price or at varying prices determined at the time of sale. Such Certificates may
be offered to the public either through underwriting syndicates represented by
managing underwriters or by underwriters without a syndicate. Such managing
underwriters or underwriters in the United States may include Morgan Keegan &
Company, Inc., an affiliate of the Depositor. Unless otherwise set forth in the
applicable Prospectus Supplement, the obligations of the underwriters to
purchase such Certificates will be subject to certain conditions precedent, and
the underwriters will be obligated to purchase all such Certificates if any of
such Certificates are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
Certificates may also be sold through agents designated by the Depositor
from time to time. Any agent involved in the offer or sale of Certificates will
be named, and any commissions payable by the Depositor to such agent will be set
forth, in the applicable Prospectus Supplement. Unless otherwise indicated in
the applicable Prospectus Supplement, any such agent will act on a best efforts
basis for the period of its appointment.
If so indicated in the applicable Prospectus Supplement, the Depositor will
authorize agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase Certificates at the public offering price described in
such Prospectus Supplement pursuant to delayed delivery contracts providing for
payment and delivery on a future date specified in such Prospectus Supplement.
Such contracts will be subject only to those conditions set forth in the
applicable Prospectus Supplement and such Prospectus Supplement will set forth
the commissions payable for solicitation of such contracts.
Any underwriters, dealers or agents participating in the distribution of
Certificates may be deemed to be underwriters and any discounts or commissions
received by them on the sale or resale of Certificates may be deemed to be
underwriting discounts and commissions under the Securities Act. Agents and
underwriters may be entitled under agreements entered into with the Depositor to
indemnification by the Depositor against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments that the agents or underwriters may be required to make in respect
thereof. Agents and underwriters may be customers of, engage in transactions
with, or perform services for, the Depositor or its affiliates in the ordinary
course of business.
Morgan Keegan & Company, Inc. is an affiliate of the Depositor. Morgan
Keegan & Company, Inc.'s participation, if any, in the offer and sale of
Certificates complies with the
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requirements of Schedule E of the By-Laws of the National Association of
Securities Dealers, Inc. regarding underwriting securities of an affiliate.
If and to the extent required by applicable law or regulation, this
Prospectus will be used by Morgan Keegan & Company, Inc., an affiliate of the
Depositor, in connection with offers and sales related to market-making
transactions in the Offered Certificates previously offered hereunder in
transactions in which Morgan Keegan & Company, Inc. acts as principal. Morgan
Keegan & Company, Inc. may also act as agent in such transactions. Sales may be
made at negotiated prices determined at the time of sale.
As to each Series of Certificates, only those Classes rated in one of the
investment grade rating categories by a Rating Agency will be offered hereby.
Any unrated Classes or Classes rated below investment grade may be retained by
the Depositor or sold at any time to one or more purchasers.
LEGAL OPINIONS
Certain legal matters with respect to the Certificates, including federal
income tax matters, will be passed upon for the Depositor and the underwriters
by Chapman and Cutler, Chicago, Illinois or other counsel identified in the
applicable Prospectus Supplement.
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INDEX OF TERMS
<TABLE>
<CAPTION>
Term Page
<S> <C>
Administration Fee...................................................... 9
Administrative Agent.................................................... 1
AID-Guaranteed Underlying Securities.................................... 1, 26
Base Rate............................................................... 16
Calculation Agent....................................................... 17
CD Rate Certificate..................................................... 16
CD Rate Determination Date.............................................. 18
Cede.................................................................... 3
Certificate Account..................................................... 32
Certificateholders...................................................... 1
Certificates............................................................ 1
Class................................................................... 1
Commercial Paper Rate Certificate....................................... 16
Commercial Paper Rate Determination Date................................ 19
Commission.............................................................. 2
Concentrated Underlying Security........................................ 26
Credit Support.......................................................... 1
Credit Support Instruments.............................................. 34
Cut-off Date............................................................ 33
Definitive Certificate.................................................. 23
Deposited Assets........................................................ 1, 29
Depositor............................................................... 1
Depository.............................................................. 23
Determination Date...................................................... 14
Distribution Date....................................................... 2
Exchange Act............................................................ 2
Fannie Mae.............................................................. 26
Federal Funds Rate Certificate.......................................... 16
Federal Funds Rate Determination Date................................... 20
FFCB.................................................................... 26
FHLB.................................................................... 26
Fiscal Agent............................................................ 27
Fixed Pass-Through Rate................................................. 13
Fixed Rate Certificates................................................. 15
Floating Rate Certificates.............................................. 16
Freddie Mac............................................................. 26
Global Security......................................................... 1
GSE..................................................................... 26
GSE Issuer.............................................................. 26
GTCs.................................................................... 1
Interest Reset Date..................................................... 17
Interest Reset Period................................................... 17
</TABLE>
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No dealer, salesperson or other person has been authorized to give any
information or make any representations not contained in this Prospectus
Supplement and the Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Depositor or by the Underwriter. This Prospectus Supplement and the Prospectus
do not constitute an offer to sell, or a solicitation of an offer to buy, the
securities offered hereby to anyone in any jurisdiction in which the person
making such offer or solicitation is not qualified to do so or to anyone to whom
it is unlawful to make any such offer or solicitation. Neither the delivery of
this Prospectus Supplement and the Prospectus nor any sale made hereunder shall,
under any circumstances, create an implication that information herein or
therein is correct as of any time since the date of this Prospectus Supplement.
------------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
Page
<S> <C>
Summary of Principal Economic Terms.......................................
Summary of Prospectus Supplement..........................................
Formation of the Trust....................................................
Risk Factors..............................................................
Description of the Deposited Assets.......................................
[Description of Credit Support]...........................................
Yield on the Certificates.................................................
Description of the Certificates...........................................
Description of the Trust Agreement........................................
Certain Legal Aspects of the Deposited Assets.............................
Federal Income Tax Consequences...........................................
State Tax Consequences....................................................
ERISA Considerations......................................................
Plan of Distribution......................................................
Ratings...................................................................
Legal Opinions............................................................
Index of Terms............................................................
PROSPECTUS
Prospectus Supplement.....................................................
Available Information.....................................................
Incorporation of Certain Information by Reference.........................
Reports to Certificateholders.............................................
Risk Factors..............................................................
The Depositor.............................................................
Use of Proceeds...........................................................
Formation of the Trust....................................................
Maturity and Yield Considerations.........................................
Description of Certificates...............................................
Description of Deposited Assets and Credit Support........................
Description of the Trust Agreement........................................
Plan of Distribution......................................................
Legal Opinions............................................................
Index of Terms............................................................
</TABLE>
------------------
Until 90 days after the date of each Prospectus Supplement, all dealers
effecting transactions in the related Certificates, whether or not participating
in the distribution thereof, may be required to deliver this Prospectus and the
related Prospectus Supplement. This delivery requirement is in addition to the
obligation of dealers to deliver a Prospectus Supplement and Prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
================================================================================
================================================================================
$_____________________
SOUTHPOINT STRUCTURED
ASSETS, INC.
TRUST CERTIFICATES, SERIES ___
--------------------
PROSPECTUS SUPPLEMENT
--------------------
[UNDERWRITER]
_____________, 199_
================================================================================
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses expected to be incurred in connection with the issuance and
distribution of the securities being registered, other than underwriting
compensation, are as set forth below. All such expenses, except for the SEC
registration and filing fees, are estimated:
SEC Registration Fee ................................... $3,449.00
Legal Fees and Expenses ................................ $ *
Accounting Fees and Expenses ........................... $ *
Trustee's Fees and Expenses (including counsel Fees) ... $ *
Blue Sky Qualification Fees and expenses ............... $ *
Printing and Engraving Fees ............................ $ *
Rating Agency Fees ..................................... $ *
Miscellaneous .......................................... $ *
---------
Total ............................................. $ *
=========
---------------
* To be provided by amendment.
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of Delaware empowers a
corporation to indemnify any person who was or is a party or witness or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he or she is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise.
Depending on the character of the proceeding, a corporation may indemnify
against expenses, costs and fees (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred in connection
with such action suit or proceeding if the person indemnified acted in good
faith and in a manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his or her conduct was
unlawful. If the person indemnified is not wholly successful in such action,
suit or proceeding, but is successful, on the merits or otherwise, in one or
more but less than all claims, issues or matters in such proceeding, he or she
may be indemnified against expenses actually and reasonably incurred in
connection with each successfully resolved claim, issue or matter. In the case
of an action or suit by or
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in the right of the corporation, no indemnification may be made in respect to
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
that despite the adjudication of liability such person is fairly and reasonably
entitled to indemnity for such expenses which the court shall deem proper.
Section 145 provides that to the extent a director, officer, employee or agent
of a corporation has been successful in the defense of any action, suit or
proceeding referred to above or in the defense of any claim, issue or manner
therein, he or she shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him or her in connection therewith.
The Certification of Incorporation of the Registrant provides that no
Director of the Registrant shall be personally liable to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a Director;
provided, however, that this limitation of liability of a Director shall not
apply with respect to (i) any breach of the Director's duty of loyalty to the
Registrant or its stockholder, (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) any
liability arising under Section 174 of the General Corporation Law of the State
of Delaware and (iv) for any transaction from which the Director derives an
improper personal benefit. Section 7 of the By-Laws of the Registrant provides
for the indemnification of the Directors and Officers of the Registrant in
certain circumstances. Reference is made to Exhibit 3.2 to this Registration
Statement for the complete text of Section 7 of the By-Laws.
Reference is made to Section 9 of the form of Underwriting Agreement filed
as Exhibit 1.1 hereto for provisions relating to the indemnification of
directors, officers and controlling persons against certain liabilities
including liabilities under the Securities Act of 1933, as amended.
Item 16. Exhibits:
1.1 Form of Underwriting Agreement.
* 3.1 Certificate of Incorporation of Southpoint Structured Assets, Inc.
* 3.2 By-Laws of Southpoint Structured Assets, Inc.
4.1 Form of Trust Agreement.
5.1 Opinion of Chapman and Cutler as to legality (including consent of
such firm)
8.1 Opinion of Chapman and Cutler as to certain tax matters (including
consent of such firm)
23.1 Consent of Chapman and Cutler (included in Exhibits 5.1 and 8.1)
* 24.1 Power of Attorney
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25.1 Statement of eligibility of Trustee
- -----------------
* Previously filed.
Item 17. Undertakings.
A. Undertaking Pursuant to Rule 415.
The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change of such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933 each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. Undertaking in connection with incorporation by reference of certain
filings under the Securities Exchange Act of 1934.
The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement shall be
deemed to be a new Registration Statement relating to the securities
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offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Undertaking in respect of indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant, pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant, as the case may be, will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the act and will be governed by the
final adjudication of such issue.
D. Undertaking in respect of the eligibility of the Trustee
The Registrant hereby undertakes to file an application for the purpose of
determining the eligibility of the trustee to act under subsection (a) of
Section 310 of the Trust Indenture Act ("Act") in accordance with the rules and
regulations prescribed by the Commission under section 305(b)(2) of the Act.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the undersigned
hereby certifies on behalf of Southpoint Structured Assets, Inc. (the
"Depositor") that he has reasonable grounds to believe that the Depositor meets
all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to the Registration Statement dated as of October 1, 1996 to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Memphis, State of Tennessee, on the 1st day of October, 1996.
Southpoint Structured Assets, Inc.
By: /s/ C. David Ramsey
--------------------------------
C. David Ramsey, President
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to the Registration Statement has been signed by the following persons in
the capacities and on the dates indicated:
Signature Position Date
/s/ C. David Ramsey President (Principal October 1, 1996
- ------------------------- Executive Officer) and
C. David Ramsey Director
* Treasurer (Principal October 1, 1996
- ------------------------- Financial Officer and
Charles D. Maxwell Principal Accounting
Officer) and Director
* Secretary and Director October 1, 1996
- -------------------------
Barbara A. Steen
* C. David Ramsey, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above for whom he is attorney-in-fact
pursuant to a power of attorney duly executed by such persons and filed with the
Securities and Exchange Commission.
/s/ C. David Ramsey
-------------------------------
C. David Ramsey
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EXHIBIT 1.1
SOUTHPOINT STRUCTURED ASSETS, INC.
TRUST CERTIFICATES, SERIES 1996-[___]
FORM OF UNDERWRITING AGREEMENT
_________, 199__
To the Representatives named in Schedule I
hereto of the Underwriters named in
Schedule II hereto
Ladies and Gentlemen:
Southpoint Structured Assets, Inc., a Delaware corporation (the "Company"),
proposes to cause _____________________________ Trust 199__-____ (the "Trust")
to issue and sell $______________ [aggregate principal amount/notional amount]
of its Trust Certificates, Class ___[, Class ___] [and [list others]]
(collectively, the "Certificates"), to be issued under the trust agreement
specified in Schedule I hereto (the "Trust Agreement") between the Company,
[______________, as Administrative Agent (the "Administrative Agent")] and the
Trustee identified in such Schedule (the "Trustee"), in each case, to the
underwriters named in Schedule II hereto (the "Underwriters"), for whom you are
acting as representatives (the "Representatives"). If the firm or firms listed
in Schedule II hereto include only the firm or firms listed in Schedule I
hereto, then the terms "Underwriters" and "Representatives," as used herein,
shall each be deemed to refer to such firm or firms. The Certificates will
evidence the entire beneficial ownership interest in the Trust which consists of
the underlying securities specified in Schedule I hereto (the "Underlying
Securities").
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement (the file number of which is set forth in Schedule I hereto) on
Form S-3, relating to certain securities to be issued from time to time by
various trusts originated by the Company. The Company also has filed with, or
proposes to file with, the Commission pursuant to Rule 424 under the Securities
Act a prospectus supplement specifically relating to the Certificates. The
registration statement as amended to the date of this Agreement is hereinafter
referred to as the "Registration Statement" and the related prospectus in the
form first used to confirm sales of the Certificates is hereinafter referred to
as the "Basic Prospectus." The Basic Prospectus as supplemented by the
prospectus supplement specifically relating to the Certificates in the form
first used to confirm sales of the Certificates is hereinafter referred to as
the "Prospectus." Any preliminary form of the Prospectus Supplement which has
heretofore been filed pursuant to Rule 424, or prior to the effective date of
the Registration Statement, pursuant to Rule 402(a) or 424(a) is hereinafter
called a "Preliminary Prospectus Supplement." Any
<PAGE>
reference to "amend," "amendment" or "supplement" with respect to the
Registration Statement, the Basic Prospectus, any preliminary prospectus or the
Prospectus shall be deemed to refer to and include any documents filed under the
Exchange Act after the date of this Agreement, or the date of the Basic
Prospectus, any preliminary prospectus or the Prospectus, as the case may be,
which are deemed to be incorporated by reference therein.
The Company hereby agrees with the Underwriters as follows:
1. The Company agrees to cause the Trust to issue and sell the Certificates
to the several Underwriters as hereinafter provided, and each Underwriter, on
the basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agrees to purchase, severally and not
jointly, from the Company the respective principal amount of Certificates set
forth opposite such Underwriter's name in Schedule II hereto at the purchase
price set forth in Schedule I hereto plus accrued interest, if any, from the
date specified in Schedule I hereto to the date of payment and delivery.
2. The Company understands that the several Underwriters intend (i) to make
a public offering of their respective portions of the Securities and (ii)
initially to offer the Certificates upon the terms set forth in the Prospectus,
and the Underwriters agree that all such offers and sales by such Underwriters
shall be made in compliance with all applicable laws and regulations.
3. (a) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company agrees to sell to
the Underwriters, and the Underwriters agree to purchase from the Company, their
portion of the Certificates at a price equal to ______________% of the
[aggregate principal balance/notional amount] of the Certificates as of the
Closing Date. There will be added to the purchase price of the Certificates an
amount equal to interest accrued thereon from the Cut-off Date to but not
including the Closing Date.
(b) Delivery of and payment for the Certificates shall be made at 10:00
a.m., New York City time, on _______________, 199__, or such later date as you
shall designate, which date and time may be postponed by agreement between you
and the Company (such date and time of delivery and payment for the Certificates
being herein called the "Closing Date"). Delivery of the [Class __]
Certificates shall be made through the services of the Depository Trust Company
("DTC") [(such Certificates, the "DTC Registered Certificates")] or as otherwise
set forth in Schedule I hereto.
4. The Company represents and warrants to each Underwriter that:
(a) The Registration Statement on Form S-3 (No. 333-09883) in
respect of the Certificates has been filed with the Commission in the form
heretofore delivered or to be delivered to the Representatives and such
registration statement in such form has been declared effective by the
Commission and no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission.
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(b) The Certificates meet the requirements for use of Form S-3 under
the Securities Act, and the Registration Statement and the Prospectus
conform, and any amendments or supplements thereto will conform, in all
material respects to the requirements of the Securities Act and the rules
and regulations of the Commission thereunder, and the Registration
Statement, as of the applicable effective date, did not contain any untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and the Prospectus, including any amendments or supplements
thereto, as of the date of the Prospectus Supplement and as of the Closing
Date, does not and will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company does not make any
representations or warranties as to the information contained in or omitted
from the Registration Statement or the Prospectus or any amendment thereof
or supplement thereto relating to the information identified by underlining
or other highlighting as shown in Exhibit D (the "Excluded Information");
and provided, further, that the Company does not make any representations
or warranties as to [either (i) any information in any Computational
Materials (as hereinafter defined) required to be provided by the
Underwriter to the Company pursuant to Section 6, except to the extent of
any information set forth therein that constitutes Pool Information (as
defined below), or (ii) as to] any information contained in or omitted from
the portions of the Prospectus identified by underlining or other
highlighting as shown in Exhibit E (the "Underwriter Information"). [As
used herein, "Pool Information" means information with respect to the
characteristics of the Underlying Securities as provided by or on behalf of
the Company to the Underwriter in final form and set forth in the
Prospectus Supplement.] The Company acknowledges that, [except for any
Computational Materials,] the Underwriter Information constitutes the only
information furnished in writing by the Underwriter or on behalf of the
Underwriter for use in connection with the preparation of the Registration
Statement, any preliminary prospectus or the Prospectus, and the
Underwriter confirms that such Underwriter Information is correct. The
conditions to the use by the Company of a registration statement on Form
S-3 under the Securities Act, as set forth in the General Instructions to
Form S-3, have been satisfied with respect to the Registration Statement
and the Prospectus.
(c) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware
with corporate power and authority to enter into and perform its
obligations under this Agreement and the Trust Agreement; and the Company
is duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which the ownership or lease of its
properties or the conduct of its business requires such qualification,
except where the failure to be so qualified, considering all such cases in
the aggregate, does not have a material adverse effect on the business or
properties of the Company.
(d) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the Company
enforceable
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in accordance with its terms, except that the enforceability hereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors, rights generally,
and (ii) general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law); and except that rights to
indemnification hereunder may be limited by public policy under applicable
securities laws.
(e) The Certificates have been duly authorized by the Company and, when
executed, authenticated and delivered in accordance with the Trust Agreement and
delivered to you pursuant to this Agreement, such Certificates will have been
duly and validly issued and outstanding and will be entitled to the benefits
provided by the Trust Agreement; at the Closing Date the Trust Agreement will be
duly authorized, executed and delivered by the Company and will constitute a
valid and binding agreement of the Company enforceable in accordance with its
terms, except that the enforceability thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, and (ii) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law); and at the Closing Date the Trust Agreement and the
Certificates will conform in all material respects to the respective
descriptions thereof in the Prospectus and the representations and warranties of
the Company in the Trust Agreement will be true and correct.
(f) The issue and sale of the Certificates, the compliance by the Company
with all applicable provisions of the Certificates, the Trust Agreement and this
Agreement, and the consummation of the transactions herein or therein
contemplated will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under, or result in the creation or
imposition of any lien, mortgage, pledge, charge, security interest or
encumbrance (collectively, "Liens") upon any property or assets of the Company
pursuant to, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company is a party or by which the Company
is bound or to which any of the property or assets of the Company is subject,
nor will any such action result in any violation of the provisions of the
Certificate of Incorporation or the by-laws of the Company or of any statute or
any order, rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties; and no consent, notice,
approvals, authorization, order, registrations or qualification of or with any
such court or governmental agency or body is required for the issue and sale of
the Certificates or the consummation by the Company of the other transactions
contemplated by this Agreement or the Trust Agreement except such as have been
obtained and such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Certificates by the
Underwriters.
(g) Other than as set forth or contemplated in the Prospectus, there are no
legal or governmental proceedings pending to which the Company is a party or of
which any property of the Company is the subject which, if determined adversely
to
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such person would individually or in the aggregate have a material adverse
effect on the financial position, earnings, management, stockholders
equity or results of operations of the Company or which might interfere
with or adversely affect the consummation of the transactions contemplated
herein or in the Trust Agreement; and, to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(h) At the time of execution and delivery of the Trust Agreement, the
Company will have good and marketable title to the Underlying Securities
being transferred to the Trust pursuant thereto, free and clear of any
Liens, and will not have assigned to any person any of its rights, title or
interest therein; the Company will have the power and authority to transfer
the Underlying Securities to the Trust on the Closing Date and the Trust
will have been assigned all right, title and interest held by the Company
in and to the Underlying Securities.
(i) Any taxes, fees and other governmental charges in connection with
the execution, delivery and performance of this Agreement, the Trust
Agreement and the Certificates have been or will be paid at or prior to the
Closing Date.
(j) The Trust created by the Trust Agreement is not required to be
registered under the Investment Company Act of 1940, as amended (the "1940
Act").
5. Each Underwriter represents and warrants to and agrees with the Company
that:
(a) Such Underwriter will have funds available at __________________
in the Underwriter's account at such bank at the time all documents are
executed and the closing of the sale of the Certificates is completed
except for the transfer of funds and the delivery of the Certificates. Such
funds will be available for immediate transfer into the account of the
Company maintained at such bank.
[(b) As of the date hereof and as of the Closing Date, such
Underwriter has complied with all of its obligations hereunder including
Section 6, and, with respect to all Computational Materials provided by
such Underwriter to the Company pursuant to Section 6, if any, such
Computational Materials are accurate (except to the extent of any errors
therein that are caused by errors in the Pool Information). The
Computational Materials provided by such Underwriter to the Company
constitute a complete set of all Computational Materials that are required
to be filed with the Commission.]
6. Computational Materials. It is understood that the Underwriters may
prepare and provide to prospective investors certain Computational Materials in
connection with their offering of the Certificates, subject to the following
conditions:
(a) The Underwriters shall comply with all applicable laws and
regulations in connection with the use of Computational Materials,
including the No-Action Letter of May 20, 1994 issued by the Commission to
Kidder, Peabody Acceptance Corporation
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I, Kidder, Peabody & Co. Incorporated and Kidder Structured Asset
Corporation, as made applicable to other issuers and underwriters by the
Commission in response to the request of the Public Securities Association
dated May 24, 1994 (collectively, the "Kidder/PSA Letter").
(b) For purposes hereof, "Computational Materials" as used herein
shall have the meaning given such term in the Kidder/PSA Letter, but shall
include only those Computational Materials that have been prepared or
delivered to prospective investors by or at the direction of the
Underwriters.
(c) All Computational Materials (except those identified to the
Company on the date hereof) provided to prospective investors that are
required to be filed pursuant to the Kidder/PSA Letter shall bear a legend
on each page including the following statement:
"The information herein has been provided solely by
______________________________ [name of Underwriter]. Neither the
Issuer of the Certificates nor any of its Affiliates makes any
representation as to the accuracy or completeness of the information
herein. The information herein is preliminary, and will be superseded
by the applicable Prospectus Supplement and by any other information
subsequently filed with the Securities and Exchange Commission."
The Company shall have the right to require additional specific
legends or notations to appear on any Computational Materials, the right to
require changes regarding the use of terminology and the right to determine
the types of information appearing therein. Notwithstanding the foregoing,
this subsection (c) will be satisfied if all such Computational Materials
bear a legend in the form set forth in Exhibit G hereto.
(d) The Underwriters shall provide the Company with representative
forms of all Computational Materials prior to their first use, to the
extent such forms have not previously been approved by the Company for use
by the Underwriters. The Underwriters shall provide to the Company, for
filing on Form 8-K as provided in Section 7(j), copies (in such format as
required by the Company) of all Computational Materials that are required
to be filed with the Commission pursuant to the Kidder/PSA Letter. The
Underwriters may provide copies of the foregoing in a consolidated or
aggregated form including all information required to be filed. All
Computational Materials described in this subsection (d) must be provided
to the Company not later than 10:00 a.m. New York time one business day
before filing thereof is required pursuant to the terms of this Agreement.
(e) All information included in the Computational Materials shall be
generated based on substantially the same methodology and assumptions that
are used to generate the information in the Prospectus Supplement as set
forth therein;
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provided, however, that the Computational Materials may include information
based on alternative assumptions if specified therein. If any Computational
Materials that are required to be filed were based on assumptions with
respect to the Pool that differ from the final Pool Information in any
material respect or on Certificate structuring terms that were revised
prior to the printing of the Prospectus, the Underwriters shall prepare
revised Computational Materials based on the final Pool Information and
structuring assumptions, circulate such revised Computational Materials to
all recipients of the preliminary versions thereof and include such revised
Computational Materials (marked, "as revised") in the materials delivered
to the Company pursuant to subsection (d) above.
(f) The Company shall not be obligated to file any Computational
Materials that have been determined to contain any material error or
omission, except any such Computational Materials filed together with the
corrected Computational Materials. In the event that any Computational
Materials are determined, within the period which the Prospectus relating
to the Certificates is required to be delivered under the Securities Act,
to contain a material error or omission, the Underwriters shall prepare a
corrected version of such Computational Materials, shall circulate such
corrected Computational Materials to all recipients of the prior versions
thereof and shall deliver copies of such corrected Computational Materials
(marked, "as corrected") to the Company for filing with the Commission in a
subsequent Form 8-K submission (subject to the Company's obtaining an
accountant's comfort letter in respect of such corrected Computational
Materials, which shall be at the expense of the Underwriters).
(g) If an Underwriter does not provide any Computational Materials to
the Company pursuant to subsection (d) above, such Underwriter shall be
deemed to have represented, as of the Closing Date, that it did not provide
any prospective investors with any information in written or electronic
form in connection with the offering of the Certificates that is required
to be filed with the Commission in accordance with the Kidder/PSA Letter,
and the Underwriters shall provide the Company with a certification to that
effect on the Closing Date.
(h) In the event of any delay in the delivery by an Underwriter to
the Company of all Computational Materials required to be delivered in
accordance with subsection (d) above, or in the delivery of the
accountant's comfort letter in respect thereof pursuant to Section 7(j),
the Company shall have the right to delay the release of the Prospectus to
investors or to such Underwriter, to delay the Closing Date and to take
other appropriate actions in each case as necessary in order to allow the
Company to comply with its agreement set forth in Section 7(j) to file the
Computational Materials by the time specified therein.
(i) Each Underwriter represents that it has in place, and covenants
that it shall maintain internal controls and procedures which it reasonably
believes to be sufficient to ensure full compliance with all applicable
legal requirements of the
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Kidder/PSA Letter with respect to the generation and use of Computational
Materials in connection with the offering of the Certificates.
Each Underwriter further agrees that on or prior to the fifth day after the
Closing Date, it shall provide the Company with a certificate, substantially in
the form of Exhibit F attached hereto, setting forth (i) in the case of each
class of Certificates, (a) if less than 10% of the aggregate principal balance
of such class of Certificates has been sold to the public as of such date, the
value calculated pursuant to clause (b)(iii) of Exhibit F hereto, or, (b) if 10%
or more of such class of Certificates has been sold to the public as of such
date but no single price is paid for at least 10% of the aggregate principal
balance of such class of Certificates, then the weighted average price at which
the Certificates of such class were sold expressed as a percentage of the
principal balance of such class of Certificates sold, or (c) the first single
price at which at least 10% of the aggregate principal balance of such class of
Certificates was sold to the public, (ii) the prepayment assumption used in
pricing each class of Certificates, and (iii) such other information as to
matters of fact as the Company may reasonably request in writing to enable it to
comply with its reporting requirements with respect to each class of
Certificates to the extent such information can in the good faith judgment of
the Underwriter be determined by it.]
7. The Company covenants and agrees with the several Underwriters as
follows:
(a) to cause the Prospectus to be transmitted to the Commission for
filing pursuant to Rule 424(b) under the Securities Act by means reasonably
calculated to result in filing with the Commission pursuant to said rule;
(b) to deliver to each Representative and counsel for the
Underwriters, at the expense of the Company, a signed copy of the
Registration Statement (as originally filed) and each amendment thereto, in
each case including exhibits and, during the period mentioned in
paragraph (e) below and to each of the Underwriters as many copies of the
Prospectus (including all amendments and supplements thereto) as you may
reasonably request;
(c) from the date hereof and prior to the Closing Date, to furnish to
you a copy of any proposed amendment or supplement to the Registration
Statement or the Prospectus, for your review, and not to file any such
proposed amendment or supplement to which you reasonably object;
(d) to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company or the Trust
with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act for so long as the delivery of a prospectus is required in
connection with the offering or sale of the Certificates, and during such
same period, to advise you promptly, and to confirm such advice in writing,
(i) when any amendment to the Registration Statement shall have become
effective, (ii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or
for any additional information, (iii) of the issuance by the Commission of
any stop order
-8-
<PAGE>
suspending the effectiveness of the Registration Statement or the
initiation or threatening of any proceeding for that purpose, and (iv) of
the receipt by the Company or the Trust of any notification with respect to
any suspension of the qualification of the Certificates for offer and sale
in any jurisdiction or the initiation or threatening of any proceeding for
such purpose; and to use its best efforts to prevent the issuance of any
such stop order or notification and, if issued, to obtain as soon as
possible the withdrawal thereof;
(e) if, during such period after the first date of the public
offering of the Certificates in the opinion of counsel for the Underwriters
a prospectus relating to the Certificates is required by law to be
delivered in connection with sales by an Underwriter or dealer, any event
shall occur as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or supplement the Prospectus to
comply with law, forthwith to prepare and furnish, at the expense of the
Company, to the Underwriters and to the dealers (whose names and addressees
you will furnish to the Company) to which Certificates may have been sold
by you on behalf of the Underwriters and to any other dealers upon request,
such amendments or supplements to the Prospectus as may be necessary so
that the statements in the Prospectus as so amended or supplemented will
not, in the light of the circumstances when the Prospectus is delivered to
a purchaser, be misleading or so that the Prospectus will comply with law;
(f) to endeavor to qualify the Certificates for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request and to continue such qualification in effect so long as
reasonably required for distribution of the Certificates and to pay all
fees and expenses (including fees and disbursements of counsel to the
Underwriters) reasonably incurred in connection with such qualification and
in connection with the determination of the eligibility of the Certificates
for investment under the laws of such jurisdictions as you may designate;
provided, however, that the Company shall not be required to qualify to do
business in any jurisdiction where it is not now so qualified or to take
any action that would subject it to general or unlimited service of process
in any jurisdiction where it is not now so subject;
(g) to make generally available to its security holders and to you as
soon as practicable an earnings statement covering a period of at least
twelve months beginning with the first fiscal quarter of the Company
occurring after the effective date of the Registration Statement, which
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 of the Commission promulgated thereunder;
(h) so long as the Certificates are outstanding, to furnish to you
copies of all reports or other communications (financial or other)
furnished to holders of Certificates, and copies of any reports and
financial statements furnished to or filed with the Commission or any
national securities exchange;
-9-
<PAGE>
(i) to pay all costs and expenses incident to the performance of its
obligations hereunder, including without limiting the generality of the
foregoing, all costs and expenses (i) incident to the preparation,
issuance, execution, authentication and delivery of the Certificates,
including any expenses of the Trustee, (ii) incident to the preparation,
printing and filing under the Securities Act of the Registration Statement,
the Prospectus and any preliminary prospectus (including in each case all
exhibits, amendments and supplements thereto), (iii) incurred in connection
with the registration or qualification and determination of eligibility for
investment of the Certificates under the laws of such jurisdictions as the
Underwriters may designate (including fees of counsel for the Underwriters
and their disbursements), (iv) in connection with the listing of the
Certificates on any stock exchange, (v) related to any filing with National
Association of Securities Dealers, Inc., (vi) in connection with the
printing (including word processing and duplication costs) and delivery of
this Agreement, the Trust Agreement and the furnishing to Underwriters and
dealers of copies of the Registration Statement and the Prospectus,
including mailing and shipping, as herein provided and (vii) payable to
rating agencies in connection with the rating of the Certificates; and
[(j) to file the Computational Materials (if any) provided to it by
the Underwriters under Section 6 with the Commission pursuant to a Current
Report on Form 8-K by 10:00 a.m. on the morning the Prospectus is delivered
to the Underwriters; provided, however, that prior to such filing of the
Computational Materials by the Company, the Underwriters must comply with
their obligations pursuant to Section 6 and the Company must receive a
letter from __________________, certified public accountants, satisfactory
in form and substance to the Company and its counsel, to the effect that
such accountants have performed certain specified procedures, all of which
have been agreed to by the Company, as a result of which they determined
that all information that is included in the Computational Materials (if
any) provided by the Underwriters to the Company for filing on Form 8-K, as
provided in Section 6 and this paragraph (j), is accurate. The foregoing
letter shall be at the expense of the Underwriters. The Company also will
file with the Commission within fifteen days of the issuance of the
Certificates a Current Report on Form 8-K (for purposes of filing the Trust
Agreement).]
8. The several obligations of the Underwriters hereunder shall be subject
to the following conditions:
(a) the representations and warranties of the Company contained
herein are true and correct on and as of the Closing Date as if made on and
as of the Closing Date and the Company shall have complied with all
agreements and all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date;
(b) the Prospectus shall have been filed with the Commission pursuant
to Rule 424 within the applicable time period prescribed for such filing by
the rules and regulations under the Securities Act; no stop order
suspending the effectiveness of the Registration Statement shall be in
effect, and no proceedings for such purpose shall be
-10-
<PAGE>
pending before or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been
complied with to your satisfaction;
(c) since the respective dates as of which information is given in
the Prospectus there shall not have been any material adverse change or any
development involving a material adverse change, in or affecting the
general affairs, business, prospects, management, financial position,
stockholders' equity or results of operations of the Company, otherwise
than as set forth or contemplated in the Prospectus, the effect of which in
the judgment of the Representatives makes it impracticable or inadvisable
to proceed with the public offering or the delivery of the Certificates on
the terms and in the manner contemplated in the Prospectus;
(d) the Representatives shall have received on and as of the Closing
Date a certificate of an executive officer of the Company satisfactory to
you to the effect set forth in subsections (a) and (b) of this Section and
to the further effect that there has not occurred any material adverse
change, or any development involving a prospective material adverse change,
in or affecting the general affairs, business, prospects, management,
financial position, stockholders' equity or results of operations of the
Company from that set forth or contemplated in the Registration Statement;
(e) Chapman and Cutler, special counsel for the Company, shall have
furnished to you their written opinion, dated the Closing Date,
substantially to the effect set forth in Exhibit A-1 and A-2;
(f) ______________________, counsel to the Trustee shall have
furnished to you their opinion, dated the Closing Date, substantially to
the effect set forth in Exhibit B, in form and substance satisfactory to
you;
(g) the Underwriters shall have received on and as of the Closing
Date an opinion of _____________________________________, counsel to the
Underwriters, substantially to the effect set forth in Exhibit C in form
and substance satisfactory to you;
(h) the Certificates shall have been approved for listing on the
[insert name of stock exchange], subject to official notice of issuance;
[(i) The Underwriter shall have received from ____________________
__________, certified public accountants, a letter dated the date hereof
and satisfactory in form and substance to you and the Underwriter's
counsel, to the effect that they have performed certain specified
procedures, all of which have been agreed to by the Underwriter, as a
result of which they determined that certain information of an accounting,
financial or statistical nature set forth in the Prospectus Supplement
under the captions "Description of the Deposited Assets", "Yield on the
Certificates", "Description of the Certificates" and "Descriptions of the
Trust Agreement" agrees with the records of the Company excluding any
questions of legal interpretation;]
-11-
<PAGE>
(j) The [Class __] Certificates shall have been rated "___" by
_________ _________________ and the [Class __] Certificates shall have been
rated "___" by ___________________________ [add other Classes if any]; and
(k) on or prior to the Closing Date, the Company shall have furnished
to the Representatives such further certificates and documents as the
Representatives shall reasonably request.
9. The Company agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and liabilities (including without
limitation the legal fees and other expenses incurred in connection with any
suit, action or proceeding or any claim asserted) caused by any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representatives expressly for use therein; provided that
neither the Company nor the Underwriter will be liable in any case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein relating to the Excluded Information; and provided
further, that the foregoing indemnity with respect to any preliminary prospectus
shall not inure to the benefit of any Underwriter (or to the benefit of any
person controlling such Underwriter) from whom the person asserting any such
losses, claims, damages or liabilities purchased Certificates if such untrue
statement or omission or alleged untrue statement or omission made in such
preliminary prospectus is eliminated or remedied in the Prospectus (as amended
or supplemented if the Company shall have furnished any amendments or
supplements thereto) and, if required by law, a copy of the Prospectus (as so
amended or supplemented) shall not have been furnished to such person at or
prior to the written confirmation of the sale of such Certificates to such
person.
Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement and each person who controls the Company within the meaning of
Section 15 of the Securities Act and Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
with reference [(i)] the Underwriter Information [and (ii) the Computational
Materials, except to the extent of any errors in the Computational Materials
that are caused by errors in the Pool Information].
If any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any person
in respect of which indemnity may be sought pursuant to either of the two
preceding paragraphs, such
-12-
<PAGE>
person (the "Indemnified Person") shall promptly notify the person against whom
such indemnity may be sought (the "Indemnifying Person") in writing, and the
Indemnifying Person, upon request of the Indemnified Person, shall retain
counsel reasonably satisfactory to the Indemnified Person to represent the
Indemnified Person and any others the Indemnifying Person may designate in such
proceeding and shall pay the fees and expenses of such counsel related to such
proceeding. In any such proceeding, any Indemnified Person shall have the right
to retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Person unless (i) the Indemnifying Person and
the Indemnified Person shall have mutually agreed to the contrary, (ii) the
Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both the
Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Person
shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all Indemnified Persons, and that all
such fees and expenses shall be reimbursed as they are incurred. Any such
separate firm for the Underwriters and such control persons of Underwriters
shall be designated in writing by the first of the named Representatives on
Schedule I hereto and any such separate firm for the Company, its directors, its
officers who sign the Registration Statement and such control persons of the
Company or authorized representatives shall be designated in writing by the
Company. The Indemnifying Person shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, the Indemnifying
Person agrees to indemnify any Indemnified Person from and against any loss or
liability by reason of such settlement or judgment. No Indemnifying Person
shall, without the prior written consent of the Indemnified Person, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Person, unless such settlement includes an
unconditional release of such Indemnified Person from all liability on claims
that are the subject matter of such proceeding.
If the indemnification provided for in the first and second paragraphs of
this Section 9 is unavailable to an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraph, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid or payable by such Indemnified
Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the Underwriters on the other hand from the offering
of the Certificates or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Underwriters on the other
in connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same respective
proportions as the
-13-
<PAGE>
net proceeds from the offering of such Certificates (before deducting expenses)
received by the Company and the total underwriting discounts and the commissions
received by the Underwriters bear to the aggregate public offering price of the
Certificates. The relative fault of the Company on the one hand and the
Underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses incurred by such Indemnified Person in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 9, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Certificates underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 9 are several in proportion
to the respective principal amount of the Certificates set forth opposite their
names in Schedule I hereto, and not joint.
The indemnity and contribution agreements contained in this Section 9 are
in addition to any liability which the Indemnifying Persons may otherwise have
to the Indemnified Persons referred to above.
The indemnity and contribution agreements contained in this Section 9 and
the representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter or by or on behalf of
the Company, its officers or directors or any other person controlling the
Company and (iii) acceptance of and payment for any of the Certificates.
10. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Representatives, by notice given to
the Company, if after the execution and delivery of this Agreement and prior to
the Closing Date (i) trading generally shall have been suspended or materially
limited on or by, as the case may be, any of the
-14-
<PAGE>
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of or guaranteed by the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York shall have been declared by either
Federal or New York State authorities, or (iv) there shall have occurred any
outbreak or escalation of hostilities or any change in financial markets or any
calamity or crisis that, in the judgment of the Representatives, is material and
adverse and which, in the judgment of the Representatives, makes it
impracticable to market the Certificates on the terms and in the manner
contemplated in the Prospectus.
11. If, on the Closing Date, any one or more of the Underwriters shall
fail or refuse to purchase Certificates which it or they have agreed to purchase
under this Agreement, and the aggregate principal amount of Certificates which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase is not more than one-tenth of the aggregate principal amount of the
Certificates, the other Underwriters shall be obligated severally in the
proportions that the principal amount of Certificates set forth opposite their
respective names in Schedule I hereto bears to the aggregate principal amount of
Certificates set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as the Representatives may specify,
to purchase the Certificates which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase on such date; provided that in no event
shall the principal amount of Certificates that any Underwriter has agreed to
purchase pursuant to Section 1 be increased pursuant to this Section 11 by an
amount in excess of [one-ninth] of such principal amount of Certificates without
the written consent of such Underwriter. If, on the Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Certificates and
the aggregate principal amount of Certificates with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of
Certificates to be purchased, and arrangements satisfactory to you and the
Company for the purchase of such Certificates are not made within [36] hours
after such default, this Agreement shall terminate without liability on the
party of any non-defaulting Underwriter or the Company. In any such case either
you or the Company shall have the right to postpone the Closing Date, but in no
event for longer than [seven] days, in order that the required changes, if any,
in the Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
12. If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement or any condition of the Underwriters' obligations cannot be fulfilled,
the Company agrees to reimburse the Underwriters or such Underwriters as have so
terminated this Agreement with respect to themselves, severally, for all out-of-
pocket expenses (including the fees and expenses of their
-15-
<PAGE>
counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering of Certificates.
13. This Agreement shall inure to the benefit of and be binding upon the
Company, the Underwriters, any controlling persons referred to herein and their
respective successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person, firm or
corporation any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained. No purchaser of Certificates
from any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
14. Any action by the Underwriters hereunder may be taken by you jointly
or by the first of the named Representatives set forth in Schedule I hereto
alone on behalf of the Underwriters, and any such action taken by you jointly or
by the first of the named Representatives set forth in Schedule I hereto alone
shall be binding upon the Underwriters. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted and confirmed by any standard form of telecommunication.
Notices to the Underwriters shall be given at the address set forth in
Schedule II hereto. Notices to the Company shall be given to it at Southpoint
Structured Assets, Inc., 50 North Front Street, Memphis, Tennessee 38103, (fax:
901-579-4363); Attention: C. David Ramsey.
-16-
<PAGE>
15. This Agreement may be signed in counterparts, each of which shall be
an original and all of which together shall constitute one and the same
instrument. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to the conflicts
of laws provisions thereof.
Very truly yours,
Southpoint Structured Assets, Inc.
By ______________________________________
Name _________________________________
Title ________________________________
Accepted: ___________, 199_
[Lead Manager]
[Co-Manager]
Acting severally on behalf of themselves/2/
and the several Underwriters listed in
Schedule II hereto.
By: [Lead Manager]
By ________________________________
Name ___________________________
Title __________________________
- ------------------------------
/1/ Delete if only one Representative.
/2/ Delete if only one Representative and change "themselves" to "itself".
-17-
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Representatives:/1/ ______________________________________
Underwriting Agreement
dated: ______________________________________
<S> <C>
Registration Statement No.: 333-09883
Title of Certificates: Trust Certificates, Series 199__-[___]
$[Notional Amount] [(Approximate)], Class ___
Certificates
[_____%] [Variable] Pass-Through Rate
$[Notional Amount] [(Approximate)], Class ___
Certificates
[_____%] [Variable] Pass-Through Rate]
Underlying Assets: [Pool of publicly issued debt securities having a
term of [not less than ___ years and not more than
___ years] issued by one or more corporations,
banking organizations or insurance companies
organized under the laws of the United States or
any State]
[Pool of _____% [floating rate] publicly issued
debt securities [having a term of not less than
___ years and not more than ___ years] issued by
[the United States of America] [U.S. Government
sponsored entity issuers] [Government Trust
Certificates] [obligations guaranteed by the
United States Agency for International
Development]]
Aggregate principal amount: $______________________________________
Price to Public: ___% of the principal amount of the Certificates,
plus accrued interest, if any, from _________,
19__ to the Closing Date
Trust Agreement: Trust Agreement dated as of _________ between the
Company[, _________ as Administrative Agent] and
_____________________ as Trustee
Maturity: ________________________________________
Interest Rate: ________________________________________
Interest Payment Dates: ________________________________________
Optional Redemption
Provisions: ________________________________________
</TABLE>
____________________________
/1/ Bookrunning Representative should be named first for purposes of Sections 9
and 14.
<PAGE>
Sinking Fund Provisions: ________________________________________
Other Provisions: ________________________________________
Closing Date and Time of
Delivery: ________________________________________
Closing Location: ________________________________________
Address for Notices to
Underwriters: ________________________________________
I-2
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE II
Principal Amount
of Certificates To
Underwriter Be Purchased
<S> <C>
____________________________ .................... $
----------------
Total................................... $
================
</TABLE>
<PAGE>
EXHIBIT A-1
[CHAPMAN AND CUTLER LETTERHEAD]
[Date]
Southpoint Structured Assets, Inc.
50 North Front Street
Memphis, Tennessee 38193
[The Representatives]
Re: Southpoint Structured Assets, Inc.
Trust Certificates, Series 199__-___
------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Southpoint Structured Assets, Inc. (the
"Company") in connection with the issuance and sale by the Company of Trust
Certificates, Series 199__-_________ (the "Certificates") pursuant to a trust
agreement, dated as of _________ 1, 19___ (the "Trust Agreement"), among the
Company, [_______________________, as Administrative Agent (the "Administrative
Agent")] and ___________________________, as trustee (the "Trustee"). The
Certificates consist of [_______ classes designated as Class___, Class___ and
[list others]. The Class___ Certificates [, the Class___ Certificates (other
than a de minimis portion thereof)] [and the Class___ Certificates] are
referred to herein as the "Offered Certificates."
The Certificates will evidence the entire undivided interest in a trust
fund (the "Trust Fund") consisting primarily of a pool of [publicly issued debt
securities having a term of [not less than ___ years and not more than ___
years] issued by one or more corporations, banking organizations or insurance
companies organized under the laws of the United States or any State (the
"Underlying Securities")] [_____% [floating rate] publicly issued debt
securities [having a term not less than ___ years and not more than ___ years]
issued by [the United States of America] [U.S. Government-sponsored entities
issuers] [Government Trust Certificates] [obligations guaranteed by the United
States Agency for International Development] (the "Underlying Securities")].
The Offered Certificates are included in a Registration Statement on Form S-3
(File No. 333-09883) filed by the Company with the Securities and Exchange
Commission (the "Commission") on ___________, 199__, and declared effective on
_________________, 199__ (as amended as of the date hereof, the "Registration
Statement"), and were offered by the prospectus dated ___________, 199__, as
supplemented by the prospectus supplement dated ______________, 199__ (together,
the
<PAGE>
"Prospectus"), filed with the Commission pursuant to Rule 424(b) of the rules
and regulations of the Commission under the Securities Act of 1933, as amended
(the "Act").
The Company will sell to _____________________________ (the "Underwriter")
the Offered Certificates pursuant to an Underwriting Agreement, dated
_____________, 199__, between the Company and the Underwriter (the "Underwriting
Agreement"; the Trust Agreement, and the Underwriting Agreement, collectively,
the "Agreements"). Capitalized terms used but not defined herein shall have the
meanings set forth in the Agreements. This opinion letter is rendered pursuant
to Section 8(e) of the Underwriting Agreement.
In arriving at the opinion expressed below, we have examined and relied on
the following documents:
(a) executed copies of the Agreements;
(b) the articles of incorporation and bylaws of the Company;
(c) good standing certificates from the Secretary of State of the
State of Delaware concerning the Company;
(d) resolutions adopted by the Board of Directors of the Company at
a meeting held on __________, 199__, authorizing, among other things, the
issuance of series of certificates registered under the Registration
Statement;
(e) a Certificate of Approval executed by the________________________
and the ____________________________ of the Company, authorizing, among
other things, the issuance of the Certificates;
(f) the Registration Statement;
(g) the Prospectus;
(h) the forms of the Certificates; and
(i) the documents delivered by the Company on the Closing Date
pursuant to the Agreements.
In addition, we have examined and relied, as to factual matters, on the
representations of the Company in the Agreements and on originals or copies
certified or otherwise identified to our satisfaction of all such corporate
records of the Company and such other instruments and other certificates of
public officials, officers and representatives of the Company and the Trustee,
and we have made such investigations of law, as we have deemed appropriate as a
basis for the opinion expressed below.
Based upon such examination and having regard for legal considerations
which we deem relevant, we are of the following opinion:
<PAGE>
1. The Registration Statement has become effective under the Act, and, to
our knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and not withdrawn, and no proceedings for that purpose
have been instituted or threatened under Section 8(d) of the Act.
2. The Registration Statement, as of the date it became effective, and the
Prospectus, as of the date of the Prospectus Supplement, other than any
financial or statistical information [or Computational Materials] contained
therein as to which we express no opinion, complied as to form in all material
respects with the requirements of the Act and the applicable rules and
regulations thereunder.
3. To our knowledge, there are no material contracts, indentures, or other
documents [(not including Computational Materials)] of a character required to
be described or referred to in either the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement other than
those described or referred to therein or filed as exhibits thereto.
4. The Offered Certificates, when duly and validly executed and
authenticated in accordance with the Trust Agreement and paid for and delivered
in accordance with the Underwriting Agreement, will be entitled to the benefits
of the Trust Agreement.
5. The statements set forth in the Prospectus under the headings
"Description of the Certificates" and "Description of the Trust Agreement,"
insofar as such statements purport to summarize certain provisions of the
Certificates and the Trust Agreement, are correct in all material respects. The
statements set forth in the Prospectus under the headings "Federal Income Tax
Consequences," and "ERISA Considerations," to the extent that they constitute
matters of federal law or legal conclusions with respect thereto, are correct in
all material respects.
6. Trust Fund created by the Trust Agreement is not required to be
registered under the Investment Company Act of 1940, as amended.
7. No consent, approval, authorization or order of any federal or State of
____________ court or governmental agency or body is required for the
consummation by the Company of the transactions contemplated by the terms of the
Agreements, except (a) such as have been obtained under the Act and (b) such as
may be required under the blue sky laws of any jurisdiction in connection with
the offer and sale of the Certificates, as to which we express no opinion.
8. Neither the sale of the Offered Certificates to the Underwriter by the
Company pursuant to the Underwriting Agreement nor the consummation by the
Company of any other of the transactions contemplated by, or the fulfillment by
the Company of the terms of the Agreements will result in a breach of any term
or provision of any federal or State of __________ statute or regulation or, to
our knowledge, conflict with, result in a breach, violation or acceleration of
or constitute a
<PAGE>
default under any order of any federal or State of __________ court,
regulatory body, administrative agency or governmental body having
jurisdiction over the Company.
9. Each of the Agreements has been duly authorized, executed and
delivered by the Company and, upon due authorization, execution and
delivery by the other parties thereto, each will constitute a valid, legal
and binding agreement of the Company, enforceable against the Company in
accordance with its terms.
In addition, we have participated in conferences with your representatives
concerning the Registration Statement and the Prospectus and have considered the
matters required to be stated therein and the statements contained therein,
although we have not independently verified the accuracy, completeness or
fairness of such statements (except as described in paragraph 5 above). Based
upon and subject to the foregoing, nothing has come to our attention to cause us
to believe that the Registration Statement (excluding any exhibits filed
therewith), as of the date it became effective, contained an untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus, as of the date of the Prospectus Supplement and as of the Closing
Date, contained or contains an untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (it being understood that we have not been requested to and
we do not make any comment in this paragraph with respect to the financial
statements, schedules and other financial and statistical information contained
in the Registration Statement or the Prospectus).
With your permission we have assumed the following: (a) the authenticity of
original documents and the genuineness of all signatures; (b) the conformity to
the originals of all documents submitted to us as copies; (c) the truth,
accuracy and completeness of the information, factual matters, representations
and warranties contained in the records, documents, instruments and certificates
we have reviewed; and (d) except as specifically covered in the opinions set
forth above, the due authorization, execution and delivery on behalf of the
respective parties thereto of documents referred to herein and the legal, valid
and binding effect thereof on such parties.
Whenever a statement herein is qualified by the phrase "to our knowledge,"
it is intended to indicate that, during the course of our representation of the
Company, no information that would give us current actual knowledge of the
inaccuracy of such statement has come to the attention of those attorneys
currently in this firm who have rendered legal services in connection with this
opinion letter. However, we have not undertaken any independent investigation to
determine the accuracy of any such statement, and any limited inquiry undertaken
by us during the preparation of this opinion letter should not be regarded as
such an investigation; no inference as to our knowledge of any matters bearing
on the accuracy of any such statement should be drawn from the fact of our
representation of the Company.
A-1-4
<PAGE>
Our opinion that any document is valid, legal and binding or enforceable in
accordance with its terms is subject to: (1) eliminations imposed by bankruptcy,
insolvency, reorganization, arrangement, moratorium or other laws relating to or
affecting the enforcement of creditors' rights generally; (2) general principles
of equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law; and (3) rights to indemnification which may be
limited by applicable law or equitable principles or otherwise unenforceable as
against public policy.
With respect to our opinion set forth in paragraph 2, in passing on the
form of Registration Statement and the Prospectus, we have necessarily assumed
the correctness and completeness of the statements made therein.
We express no opinion as to matters of law other than the law of the State
of _______ and the United States of America.
This opinion letter is solely for your benefit and may not be relied upon
or used by, circulated, quoted or referred to, nor may copies hereof be
delivered to, any other person without our prior written approval. We disclaim
any obligation to update this opinion letter for events occurring or coming to
our attention after the date hereof.
Very truly yours,
[Chapman and Cutler]
A-1-5
<PAGE>
EXHIBIT A-2
[CHAPMAN AND CUTLER LETTERHEAD]
__________, 199__
[The Underwriter]
Re: Southpoint Structured Assets, Inc.
Trust Certificates, Series 199__-__
-----------------------------------------------------------
Ladies & Gentlemen:
We have acted as special counsel to Southpoint Structured Assets, Inc. (the
"Company") in connection with the issuance and sale by the Company of Trust
Certificates, Series 199__-_________ (the "Certificates") pursuant to a trust
agreement, dated as of _________ 1, 19___ (the "Trust Agreement"), among the
Company, [_______________________, as Administrative Agent (the "Administrative
Agent")] and ___________________________, as trustee (the "Trustee"). The
Certificates consist of [_______ classes designated as Class ___, Class ___ and
[list others]. The Class ___ Certificates [, the Class ___ Certificates (other
than a de minimis portion thereof)] [and the Class ___ Certificates] are
referred to herein as the "Offered Certificates."
The Certificates will evidence the entire undivided interest in a trust
fund (the "Trust Fund") consisting primarily of a pool of [publicly issued debt
securities having a term of [not less than ___ years and not more than ___
years] issued by one or more corporations, banking organizations or insurance
companies organized under the laws of the United States or any State (the
"Underlying Securities")] [_____% [floating rate] publicly issued debt
securities [having a term not less than ___ years and not more than ___ years]
issued by [the United States of America] [U.S. Government-sponsored entities
issuers] [Government Trust Certificates] [obligations guaranteed by the United
States Agency for International Development] (the "Underlying Securities")]. The
Offered Certificates are included in a Registration Statement on Form S-3 (File
No. 333-09883) filed by the Company with the Securities and Exchange Commission
(the "Commission") on ___________, 199__, and declared effective on
_________________, 199__ (as amended as of the date hereof, the "Registration
Statement"), and were offered by the prospectus dated ___________, 199__, as
supplemented by the prospectus supplement dated ______________, 199__ (together,
the "Prospectus"), filed with the Commission pursuant to Rule 424(b) of the
rules and regulations of the Commission under the Securities Act of 1933, as
amended (the "Act").
The Company will sell to _____________________________ (the "Underwriter")
the Offered Certificates pursuant to an Underwriting Agreement, dated
_____________, 199__,
<PAGE>
between the Company and the Underwriter (the "Underwriting Agreement"; the Trust
Agreement, and the Underwriting Agreement, collectively, the "Agreements").
Capitalized terms used but not defined herein shall have the meanings set forth
in the Agreements. This opinion letter is rendered pursuant to Section 8(e) of
the Underwriting Agreement.
In connection with rendering this opinion letter, we have examined the
Agreements and such other records and other documents as we have deemed
necessary and relevant. As to matters of fact, we have examined and relied upon
representations of the parties contained in the Agreements and, where we have
deemed appropriate, representations and certifications of officers of the
Company, the Trustee or public officials. We have assumed the authenticity of
all documents submitted to me as originals, the genuineness of all signatures,
the legal capacity of natural persons and the conformity to the original of all
documents submitted to me as copies. We have assumed that all parties, except
for the Company, had the corporate power and authority to enter into and perform
all obligations under such documents, and, as to such parties, we also have
assumed the due authorization by all requisite corporate action, the due
execution and delivery and the validity, binding effect and enforceability of
such documents.
In rendering this opinion letter, we do not express any opinion concerning
law other than the law of the State of [__________], the corporate law of the
State of Delaware and the federal law of the United States, and we do not
express any opinion concerning the application of the "doing business" laws or
the securities laws of the jurisdiction other than the federal securities laws
of the United States. We do not express any opinion, either implicitly or
otherwise, on any issue not expressly addressed below.
Based upon the foregoing, we are of the opinion that:
1. The Company is duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware and
has the requisite power and authority, corporate or other, to own its
properties and conduct its business, as presently conducted by it, and to
enter into and perform its obligations under the Agreements and the Offered
Certificates.
2. Each of the Agreements has been duly and validly authorized,
executed and delivered by the Company and upon due authorization, execution
and delivery by other parties thereto will constitute the valid, legal and
binding agreements of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be limited by (i)
bankruptcy, insolvency, liquidation, receivership, moratorium,
reorganization or other similar laws affecting the rights of creditors,
(ii) general principles of equity, whether enforcement is sought in a
proceeding in equity or at law, and (iii) public policy considerations
underlying the securities laws, to the extent that such public policy
considerations limit the enforceability of the provisions of the Agreements
which purport to provide indemnification from securities law violations.
A-2-2
<PAGE>
3. The Offered Certificates, when duly and validly executed,
authenticated and delivered in accordance with the Agreements and when paid
for in accordance with the Underwriting Agreement will be entitled to the
benefits of the Agreements.
4. No consent, approval, authorization or order of the State of
___________ or federal court or governmental agency or body is required for
the consummation by the Company of the transactions contemplated by the
terms of the Agreements, except for those consents, approvals,
authorizations or orders which previously have been obtained.
5. Neither the sale, issuance and delivery of the Offered
Certificates by the Company as provided in the Agreements, nor the
consummation of any other of the transactions contemplated by, or the
fulfillment by the Company of any other of the terms of, the Agreements,
will result in a breach of any term or provision of the charter or bylaws
of the Company or any State of ____________ or federal statute or
regulation or conflict with, result in a breach, violation or acceleration
of, or constitute a default under, the terms of any indenture or other
material agreement or instrument to which the Company is a party or by
which they are bound or any order or regulation of the State of
___________________ or federal court, regulatory body, administrative
agency or governmental body having jurisdiction over the Company.
This opinion letter is rendered for the sole benefit of the persons or
entities to which it is addressed, and no other person or entity is entitled to
rely hereon without our prior written consent. Copies of this opinion letter may
not be furnished to any other person or entity, nor may any portion of this
opinion letter be quoted, circulated or referred to in any other document
without my prior written consent.
Very truly yours,
[Chapman and Cutler]
A-2-3
<PAGE>
EXHIBIT B
[COUNSEL TO TRUSTEE LETTERHEAD]
__________, 199__
Southpoint Structured Assets, Inc.
50 North Front Street
Memphis, Tennessee 38103
[The Trustee]
[The Underwriters]
Ladies and Gentlemen:
We have acted as special counsel to _____________________________________
in its capacity as trustee (the "Trustee") in connection with the issuance and
sale by the Company of Trust Certificates, Series 199__-__ (the "Certificates")
pursuant to a trust agreement, dated as of _________________ 1, 19___ (the
"Trust Agreement"), among the Company, [__________________________, as
administrative agent (the "Administrative Agent")] and
_______________________________, as trustee (the "Trustee"). The Certificates
consist of [___________ classes designated as Class ___, Class ___ and [list
others]. The Class ___ Certificates [, the Class ___ Certificates] [and the
Class ___ Certificates] are referred to herein as the "Offered Certificates."
Based on the foregoing and subject to the qualifications and matters of
reliance set forth herein, it is our opinion that:
1. The Trustee is duly organized, validly existing and in good
standing as a _____________________________ under the laws of
_____________________, with full corporate and trust power and authority to
conduct its business and affairs as a Trustee.
2. The Trustee has full corporate power and authority to execute and
deliver the Trust Agreement and the Certificates and to perform its
obligations thereunder.
3. The Trustee has duly accepted the office of trustee under the
Trust Agreement.
4. The Trustee has duly authorized, executed, issued and delivered
the Trust Agreement and has duly and validly authorized, executed, issued
and delivered the Certificates as the Trustee.
<PAGE>
5. The Trust Agreement constitutes the legal, valid and binding
agreements of the Trustee, enforceable against the Trustee in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting the rights
of creditors generally and by general principles of equity and the
discretion of the court, regardless of whether such enforcement is
considered in a proceeding in equity or at law, and except as
enforceability may be determined according to or limited by the laws of
jurisdictions other than those specified below.
In rendering the foregoing opinion, we have assumed that the Trust
Agreement have been duly authorized, executed and delivered by the other parties
thereto and are valid, legal, binding and enforceable obligations of such
parties.
We express no opinion as to any matter other than as expressly set forth
above, and, in conjunction therewith, we specifically express no opinion as to
the status of the Certificates or the Trust Fund under any federal or state
securities laws, including, but not limited to, the Securities Act of 1933, as
amended, the Trust Indenture Act of 1939, as amended, and the Investment Company
Act of 1940, as amended.
This opinion is as of the date hereof and we undertake no, and disclaim
any, obligation to advise you of any change in any matter set forth herein. This
opinion has been furnished to you at your request in connection with the
transactions described herein, and it may not be relied upon by you for any
other purpose or by any other person without our prior written consent.
We are admitted to practice law under the laws of the State of
_____________ and the opinion set forth above is limited to the laws of the
State of ______________ and the laws of the United States of America.
Very truly yours,
[COUNSEL TO THE TRUSTEE]
B-2
<PAGE>
EXHIBIT C
[COUNSEL TO THE UNDERWRITER LETTERHEAD]
__________, 199__
[The Underwriters]
Re: Southpoint Structured Assets, Inc.
Trust Certificates, Series 199__-___
------------------------------------
Ladies and Gentlemen:
We have acted as counsel to ____________________________ (the
"Underwriters") in connection with the sale by Southpoint Structured Assets,
Inc., a Delaware corporation (the "Company"), and the purchase by the
Underwriters pursuant to an underwriting agreement dated __________, 199__ (the
"Underwriting Agreement") of certificates entitled Trust Certificates, Series
199__-____, [Class ___, Class ___, Class ___] [, Class ___] [and Class ___] (the
"Offered Certificates"). The Offered Certificates together with the Trust
Certificates, Series 199__-______ [Class ___] [and] [Class ___] comprise the
entire issue of Certificates entitled Trust Certificates, Series 199__-____
(collectively, the "Certificates"). The Certificates are issued pursuant to a
Trust Agreement (the "Trust Agreement"), dated as of ___________, 199__, among
the Company, ___________________ as trustee (the "Trustee") [and
______________________________, as certificate administrator (the
"administrative agent")]. The Certificates evidence in the aggregate the entire
beneficial interest in a trust fund (the "Trust Fund") consisting primarily of
[publicly issued debt securities having a term of [not less than ___ years and
not more than ___ years] issued by one or more corporations, banking
organizations or insurance companies organized under the laws of the United
States or any State (the "Underlying Securities")] [_____% [floating rate]
publicly issued debt securities [having a term not less than ___ years and not
more than ___ years] issued by [the United States of America] [U.S. Government-
sponsored entities issuers] [Government Trust Certificates] [obligations
guaranteed by the United States Agency for International Development] (the
"Underlying Securities")]. Capitalized terms used, but not defined herein,
shall have the meanings assigned to such terms in the Trust Agreement.
We have examined such documents and records as we deemed appropriate,
including the following:
1. Copy of the Certificate of Incorporation of the Company and all
amendments thereto, certified by the Secretary of State of the State of
Delaware to be a true and correct copy.
<PAGE>
2. Copy of the By-Laws of the Company certified by the Secretary of
the Company to be a true and correct copy.
3. Certificate of the Secretary of State of the State of Delaware,
dated as of recent date, to the effect that the Company is in good standing
under the laws of the State of Delaware.
4. Copy of resolutions adopted by the Board of Directors of the
Company in connection with the authorization, issuance and sale of the
Certificates, certified by the Secretary of Company to be a true and
correct copy.
5. Officer's Certificate of the Company pursuant to Section 6.3 of
the Underwriting Agreement.
6. Signed copy of the Underwriting Agreement.
7. Signed copy of the Trust Agreement.
8. Specimens of the Offered Certificates.
9. Signed copies of the Company's registration statement (File
No. 333-9883) on Form S-3 filed by the Company with the Securities and
Exchange Commission relating to Trust Certificates (the registration
statement in the form in which it became effective being hereinafter called
the "Registration Statement").
10. The final form of a prospectus dated ______________, 199__ (the
"Basic Prospectus").
11. The final form of a supplement dated _____________, 199__ to
the Basic Prospectus relating specifically to the Certificates (the
"Prospectus Supplement"; the Basic Prospectus and Prospectus Supplement are
herein collectively referred to as the "Prospectus.")
Based upon the foregoing, we are of the opinion that:
(a) The Registration Statement has become effective under the
Securities Act of 1933, as amended (the "Act"), and, to the best of our
knowledge and information, no proceedings for a stop order have been
instituted or are threatened under Section 8(d) of the Act.
(b) The Registration Statement as of its effective date and the
Prospectus as of the date of the Prospectus Supplement, other than the
numerical, financial and statistical data contained therein, as to which we
express no opinion, comply as to form in all material respects with the
requirements of the Act and the rules thereunder.
C-2
<PAGE>
(c) The Underwriting Agreement has been duly and validly authorized,
executed and delivered by the Company.
[(d) The Trust Agreement has been duly and validly authorized,
executed and delivered by the Company and, assuming that it has been duly
and validly authorized, executed and delivered by the other parties
thereto, constitutes a valid, legal and binding agreement of the Company,
enforceable against the Company in accordance with its terms subject to
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally and, as to enforceability, to general
principles of equity, regardless of whether such enforcement is considered
in a proceeding in equity or at law.]
(e) The Offered Certificates, assuming that they have been duly and
validly authorized, executed and issued by the Trustee, will, when
authenticated as specified in the Trust Agreement and delivered to the
Underwriter pursuant to the Underwriting Agreement, be entitled to the
benefits of the Trust Agreement.
(f) The statements in the Prospectus under the headings "Federal
Income Tax Consequences," and "ERISA Considerations," to the extent that
they constitute matters of New York or Federal law or legal conclusions
with respect thereto, have been reviewed by us and provide a fair summary
of such law or legal conclusions.
(g) Trust Fund is not required to be registered under the Investment
Company Act of 1940, as amended.
We have endeavored to see that the Registration Statement and the
Prospectus comply with the Act and the rules and regulations of the Securities
and Exchange Commission thereunder relating to registration statements on Form
S-3 and related prospectuses, but we cannot, of course, make any representation
to you as to the accuracy or completeness of statements of fact contained in the
Registration Statement or Prospectus. Nothing, however, has come to our
attention that would lead us to believe that the Registration Statement at the
time it became effective contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus as of the date
of the Prospectus Supplement and at the date hereof contained or contains an
untrue statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (other than the numerical, financial
and statistical data contained in the Registration Statement or the Prospectus,
as to which we express no opinion).
C-3
<PAGE>
This opinion is for your benefit only and is not to be relied upon by any
other person. The opinions expressed herein are limited to matters of Federal
law and the laws of the State of [__________].
Very truly yours,
[Counsel to the Underwriter]
C-4
<PAGE>
EXHIBIT D
EXCLUDED INFORMATION
<PAGE>
EXHIBIT E
UNDERWRITER INFORMATION
<PAGE>
EXHIBIT F
__________, 199__
Southpoint Structured Assets, Inc.
50 North Front Street
Memphis, Tennessee 38103
Re: Southpoint Structured Assets, Inc.
Trust Certificates,
Series 199__-___, [Class ___], [Class ___] and [Class ___]
----------------------------------------------------------
Pursuant to Section 6 of the Underwriting Agreement, dated _____________,
199__, among Southpoint Structured Assets, Inc., and
_________________________________, (the "Underwriter") relating to the
Certificates referenced above (the "Underwriting Agreement"), the undersigned
does hereby certify that:
(a) The prepayment assumption used in pricing the Certificates was
______% [CPR] [SPA].
(b) Set forth below is (i) the first price, as a percentage of the
principal balance of each class of Certificates, at which 10% of the
aggregate principal balance of each such class of Certificates was sold to
the public at a single price, if applicable, or (ii) if more than 10% of a
class of Certificates have been sold to the public but no single price is
paid for at least 10% of the aggregate principal balance of such class of
Certificates, then the weighted average price at which the Certificates of
such class were sold expressed as a percentage of the principal balance of
such class of Certificates, or (iii) if less than 10% of the aggregate
principal balance of a class of Certificates has been sold to the public,
the purchase price for each such class of Certificates paid by the
Underwriter expressed as a percentage of the principal balance of such
class of Certificates calculated by: (1) estimating the fair market value
of each such class of Certificates as of _____________, 199__; (2) adding
such estimated fair market value to the aggregate purchase price of each
class of Certificates described in clause (i) or (ii) above; (3) dividing
each of the fair market values determined in clause (1) by the sum obtained
in clause (2); (4) multiplying the quotient obtained for each class of
Certificates in clause (3) by the purchase price paid by the Underwriter
for all the Certificates; and (5) for each class of Certificates, dividing
the product obtained from such class of Certificates in clause (4) by the
original principal balance of such class of Certificates:
<PAGE>
[Class ___: _______________]
[Class ___: _______________]
[Class ___: _______________]
[* less than 10% has been sold to the public]
The prices set forth above do not include accrued interest with respect to
periods before closing.
[THE UNDERWRITER]
By_______________________________________
Name:__________________________________
Title:_________________________________
F-2
<PAGE>
EXHIBIT G
FORM OF LEGEND
<PAGE>
EXHIBIT 4.1
================================================================================
Standard Terms for Trust Agreements
between
Southpoint Structured Assets, Inc.,
as Depositor
and
[Trustee],
as Trustee
Trust Certificates
dated as of [__________, 199___]
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
HEADING DESCRIPTION PAGE
<S> <C> <C>
PRELIMINARY STATEMENT........................................................ 1
ARTICLE I DEFINITIONS AND ASSUMPTIONS................................... 1
Section 1.01. Definitions.............................................. 1
Section 1.02. Rules of Construction.................................... 16
Section 1.03. Compliance Certificates and Opinions; Record Date........ 16
ARTICLE II DECLARATION OF TRUSTS; ISSUANCE OF CERTIFICATES;
PURPOSE AND CLASSIFICATION OF TRUSTS.......................... 17
Section 2.01. Creation and Declaration of Trusts: Assignment of
Underlying Securities.................................... 17
Section 2.02. Acceptance by Trustee.................................... 19
Section 2.03. Representations and Warranties of the Depositor.......... 19
Section 2.04. Breach of Representation, Warranty or Covenant........... 20
Section 2.05. Agreement to Authenticate and Deliver Certificates....... 20
ARTICLE III ADMINISTRATION OF EACH TRUST.................................. 20
Section 3.01. Administration of each Trust............................. 20
Section 3.02. Collection of Certain Underlying Security Payments....... 21
Section 3.03. Certificate Account...................................... 21
Section 3.04. Liquidation of the Underlying Securities................. 22
Section 3.05. Investment of Funds in the Accounts...................... 22
Section 3.06. Maintenance of Credit Support............................ 23
Section 3.07. Realization Upon Defaulted Underlying Securities......... 23
Section 3.08. Retained Interest........................................ 24
Section 3.09. Access to Certain Documentation.......................... 24
Section 3.10. Reports by the Depositor................................. 24
Section 3.11. Charges and Expenses..................................... 25
ARTICLE IV DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS............... 25
Section 4.01. Distributions............................................ 25
Section 4.02. Distributions on Certificates............................ 26
Section 4.03. Reports to Certificateholders............................ 27
Section 4.04. Advances................................................. 28
Section 4.05. Allocation of Realized Losses and Trust Expenses......... 29
Section 4.06. Compliance with Withholding Requirements................. 29
ARTICLE V THE CERTIFICATES.............................................. 30
Section 5.01. The Certificates......................................... 30
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 5.02. Execution, Authentication and Delivery........................................................... 30
Section 5.03. Temporary Certificates........................................................................... 31
Section 5.04. Registration; Registration of Transfer and Exchange.............................................. 32
Section 5.05. Mutilated, Destroyed, Lost and Stolen Certificates............................................... 35
Section 5.06. Persons Deemed Owners............................................................................ 35
Section 5.07. Cancellation..................................................................................... 35
Section 5.08. Global Securities................................................................................ 36
Section 5.09. Notices to Depository............................................................................ 37
Section 5.10. Definitive Certificates.......................................................................... 37
Section 5.11. Conditions of Authentication and Delivery of New Series.......................................... 37
Section 5.12. Appointment of Paying Agent...................................................................... 38
Section 5.13. Authenticating Agent............................................................................. 39
Section 5.14. Voting Rights with Respect to Underlying Securities.............................................. 40
Section 5.15. Actions by Certificateholders.................................................................... 41
Section 5.16. Events of Default................................................................................ 41
Section 5.17. Judicial Proceedings Instituted by Trustee; Trustee May Bring Suit............................... 41
Section 5.18. Control by Certificateholders.................................................................... 42
Section 5.19. Waiver of Past Defaults.......................................................................... 42
Section 5.20. Right of Certificateholders to Receive Payments Not to Be Impaired............................... 43
Section 5.21. Remedies Cumulative.............................................................................. 43
ARTICLE VI THE DEPOSITOR..................................................................................... 43
Section 6.01. Liability of the Depositor....................................................................... 43
Section 6.02. Limitation on Liability of the Depositor......................................................... 43
Section 6.03. Depositor May Purchase Certificates.............................................................. 44
Section 6.04. Merger or Consolidation of the Depositor......................................................... 44
Section 6.05. No Liability of the Depositor with Respect to the Underlying Securities.......................... 45
ARTICLE VII CONCERNING THE TRUSTEE............................................................................ 45
Section 7.01. Duties of Trustee................................................................................ 45
Section 7.02. Between Trustee and Sub-Administrative Agents.................................................... 48
Section 7.03. Certain Matters Affecting the Trustee............................................................ 49
Section 7.04. Trustee Not Liable for Recitals in Certificates or Underlying Securities......................... 50
Section 7.05. Trustee May Own Certificates..................................................................... 50
Section 7.06. Trustee's Fees and Expenses...................................................................... 51
Section 7.07. Eligibility Requirements for Trustee............................................................. 52
Section 7.08. Resignation or Removal of the Trustee; Appointment of Successor Trustee.......................... 52
Section 7.09. Appointment of Office or Agency.................................................................. 53
Section 7.10. Representations and Warranties of Trustee........................................................ 53
Section 7.11. Indemnification of Trustee by the Depositor; Contribution........................................ 55
</TABLE>
-ii-
<PAGE>
Section 7.12. No Liability of the Trustee with Respect to the
Underlying Securities; Certificateholders to
Proceed Directly Against the Underlying
Securities Issuer(s) ............................... 56
Section 7.13. The Depositor To Furnish Trustee with Names and
Addresses of Certificateholders .................... 56
Section 7.14. Preservation of Information ........................ 56
Section 7.15. Reports by Trustee ................................. 57
Section 7.16. Trustee's Application for Instructions from the
Depositor .......................................... 57
[ARTICLE VIII MARKET AGENT] ........................................ 57
[Section 8.01. Market Agent] ...................................... 57
ARTICLE IX TERMINATION .......................................... 58
Section 9.01. Termination upon Liquidation of All Underlying
Securities ......................................... 58
ARTICLE X MISCELLANEOUS PROVISIONS ............................. 58
Section 10.01. Amendment .......................................... 58
Section 10.02. Limitation on Rights of Certificateholders ......... 60
Section 10.03. Governing Law ...................................... 61
Section 10.04. Notices ............................................ 61
Section 10.05. Notice to Rating Agencies .......................... 61
Section 10.06. Severability of Provisions ......................... 62
Section 10.07. Grant of Security Interest ......................... 62
Section 10.08. Nonpetition Covenant ............................... 63
Section 10.09. No Recourse ........................................ 64
Section 10.10. Article and Section References ..................... 64
Section 10.11. Counterparts ....................................... 64
Section 10.12. Trust Indenture Act Controls ....................... 64
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Standard Terms for Trust Agreements, dated as of [_________, 199___], among
Southpoint Structured Assets, Inc., a Delaware corporation, as Depositor, and
[Trustee], a _____________ banking corporation, as Trustee.
PRELIMINARY STATEMENT
The Depositor and the Trustee have duly authorized the execution and
delivery of these Standard Terms for Trust Agreements (the "Standard Terms") to
provide for one or more Series (and one or more Classes within each such Series)
of Certificates, issuable from time to time as provided in these Standard Terms.
Each such Series (inclusive of any Classes specified within such Series) of
Certificates will be issued only under a separate Series Supplement to these
Standard Terms, duly executed and delivered by the Depositor and the Trustee.
With respect to each Series, the applicable Series Supplement, together with
these Standard Terms, shall be known as the "Trust Agreement."
All representations, covenants and agreements made herein by each of the
Depositor and the Trustee are for the benefit and security of the
Certificateholders and, to the extent provided in the applicable Series
Supplement, for the benefit and security of any Credit Support Provider or any
other party as specified therein;
The Depositor is entering into these Standard Terms, and the Trustee in
accepting the trusts created hereby, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged.
ARTICLE I
DEFINITIONS AND ASSUMPTIONS
Section 1.01. Definitions. Except as otherwise specified herein r in the
applicable Series Supplement or as the contex may otherwise require, the
following terms have the respective meanings set forth below for all purposes of
this Trust Agreement.
"Account." As defined in Section 3.05.
"Accounting Date." With respect to any Series, if applicable, as
defined in the related Series Supplement.
"Advance." As defined in Section 4.04.
"Affiliate." With respect to any specified Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to
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any specified Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Allowable Expense Amount." With respect to any Series, as defined in
the related Series Supplement.
"Authenticating Agent." As defined in Section 5.13.
"Authorized Newspaper." A newspaper in an official language of the
country of publication customarily published at least once a day, and
customarily published for at least five days in each calendar week, and of
general circulation in such city or cities specified pursuant to Section 5.01
with respect to the Certificates of any Series. Where successive publications
are required to be made in Authorized Newspapers, the successive publications
may be made in the same or in different newspapers in the same city meeting the
foregoing requirements and in each case on any Business Day in such city.
"Available Funds." Unless otherwise specified in the applicable Series
Supplement, for any Distribution Date in respect of a given Series or Class, the
sum of (i) all amounts actually received on or with respect to the Underlying
Securities (including Liquidation Proceeds and investment income on amounts in
the Accounts) with respect to such Series during the related Collection Period,
(ii) all amounts received pursuant to any Credit Support Instruments with
respect to such Series for such Distribution Date and (iii) all other amounts,
if any, specified by the applicable Series Supplement.
"Basic Documents." With respect to any Series, if applicable, as
defined in the related Series Supplement.
"Beneficial Owner." Shall mean, with respect to Certificates held
through a Depository, the beneficial owner of a Certificate. For purposes only
of Section 5.15, the Trustee shall be obligated to treat a Person who claims to
be a beneficial owner of a Certificate as a "Beneficial Owner" within the
meaning of the Series Supplement only if such Person has first delivered to the
Trustee, (i) a certificate or other writing executed by such Person stating the
full name and address of such Person, the principal distribution amount of the
Certificate with respect to which such Person claims to be the Beneficial Owner,
and the participant in the Depository ("such Person's Participant") through
which such Person holds its beneficial ownership interest in the Certificates
and (ii) a certificate or other writing executed by such Person's Participant
confirming that such Person's Participant holds on its own books and records
Certificates for the account of such Beneficial Owner and identifying the
principal distribution amount held for such Beneficial Owner.
"Business Day." With respect to any Place of Distribution specified
pursuant to Section 5.01, any day that is not a Saturday, a Sunday or a legal
holiday or a day on which banking institutions or trust companies in such Place
of Distribution are authorized or obligated by law, regulation or executive
order to close or any day which is not a Business
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Day with respect to the Underlying Securities, except as otherwise specified
pursuant to Section 5.01 and any Business Day specified with respect to the
Underlying Securities.
"Call Premium Percentage." With respect to any Series (or Class with
such Series), if applicable, as defined in the related Series Supplement.
"Certificate Account." As defined in Section 3.03.
"Certificate Owners." As defined in Section 5.08.
"Certificate Principal Balance." With respect to an Outstanding
Certificate, as determined at any time, the maximum amount that the Holder
thereof is entitled to receive as distributions allocable to principal payments
on the Underlying Securities. The Certificate Principal Balance, if any, of any
Class within a given Series (other than those Classes, if any, specified in the
related Series Supplement), as of any date of determination, shall be equal to
the aggregate initial Certificate Principal Balance thereof less the sum of
(i) all amount allocable to prior distributions made to such Class in respect to
principal of the Underlying Securities, and (ii) any reductions in the
Certificate Principal Balance thereof deemed to have occurred in connection with
allocations of (A) Realized Losses in respect of principal of the Underlying
Securities and (B) expenses of the Trust, if any, only to the extent specified
in the applicable Series Supplement, each as allocated to such Class pursuant to
the applicable Series Supplement.
"Certificate Register" and "Certificate Registrar." As respectively
defined in Section 5.04.
"Certificateholder." Any Holder of a Certificate.
"Certificates." Any trust certificates authorized by, and
authenticated and delivered under, this Trust Agreement.
"Class." With respect to any Series, any one of the classes of
Certificates of such Series, each consisting of Certificates having identical
terms.
"Clearing Agency." An organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.
"Closing Date." With respect to any Series, the day on which
Certificates of such Series are first executed, authenticated and delivered.
"Code." The Internal Revenue Code of 1986, as amended, and Treasury
Regulations promulgated thereunder.
"Collection Period." With respect to any Distribution Date for a
Series (or Class within such Series), the period specified in the related Series
Supplement.
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"Commission." The Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act or, if at any time after the
execution and delivery of this Trust Agreement such Commission is not existing
and performing the duties now assigned to it, then the body then performing such
duties.
"Corporate Trust Office." The principal corporate trust office of the
Trustee located at the address set forth in the related Series Supplement or
such other addresses as the Trustee may designate from time to time by notice to
the Holders and the Depositor, or the principal corporate trust office of any
successor Trustee (or such other addresses as a successor Trustee may designate
from time to time by notice to the Holders and the Depositor).
"Credit Support." With respect to any Series (or any Class within such
Series), a letter of credit, surety bond, swap agreement, put or call option or
other asset intended to support or ensure the timely or ultimate distributions
of amounts due in respect of all or certain of the Underlying Securities for
such Series or Class, which in each case is specified as such in the related
Series Supplement.
"Credit Support Instrument." The instrument or document pursuant to
which the Credit Support for a given Series (or any Class within such Series) is
provided, as specified in the applicable Series Supplement.
"Credit Support Provider." With respect to any Series (or any Class
with such Series), the Person, if any, that will provide any Credit Support with
respect to all or a portion of the Underlying Securities for such Series or
Class as specified in the applicable Series Supplement.
"Cut-off Date." With respect to any Series, the date specified as such
in the related Series Supplement. For purposes of this Trust Agreement, any
Underlying Security acquired by the Depositor after the applicable Cut-off Date
but prior to the applicable Closing Date and included in the related Trust as of
such Closing Date shall be deemed to have been Outstanding as of such Cut-off
Date and references to the principal balance of such Underlying Security as of
such Cut-off Date shall be deemed to be to the principal balance of such
Underlying Security as of the date on which it was acquired by the Depositor.
"Definitive Certificates." As defined in Section 5.10.
"Depository." With respect to the Certificates of any Series (or Class
within such Series) issuable in whole or in part in the form of one or more
Global Securities, the Person designated as Depository by the Depositor pursuant
to Section 5.01 until a successor Depository shall have become such pursuant to
the applicable provisions of this Trust Agreement, and thereafter "Depository"
shall mean or include each Person who is then a Depository hereunder, and if at
any time there is more than one such Person, "Depository" as used with respect
to the Certificates of any such Series or Class shall mean the Depository with
respect to the Certificates of that Series or Class.
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"Depositor." Southpoint Structured Assets, Inc., a Delaware
corporation, and, if a successor Person shall have become the Depositor pursuant
to any applicable provisions of this Trust Agreement, "Depositor" shall mean
such successor Person. With respect to any provisions of this Trust Agreement
that relate to the provisions of the Trust Indenture Act, "Depositor" shall
include any obligor on the Certificates as the term obligor is defined in the
Trust Indenture Act.
"Depositor Order" or "Depositor Request." A written order or request,
respectively, signed in the name of the Depositor by any of its President or
Vice Presidents.
"Depository Agreement." If applicable, the agreement pursuant to which
the Depository will agree to act as Depository with respect to any Series (or
Class within such Series) of Certificates in accordance with Section 5.08.
"Discount Certificate." Any Certificate that is issued with "original
issue discount" within the meaning of Section 1273(a) of the Code and any other
Certificate designated by the Depositor as issued with original issue discount
for United States Federal income tax purposes.
"Distribution Date." With respect to any Series (or Class within such
Series) of Certificates, each date specified as a "Distribution Date" for such
Series (or Class) in the related Series Supplement.
"Dollar" or "$". Such currency of the United States as at the time of
payment is legal tender for the payment of public and private debts.
"Eligible Account." Either (i) an account or accounts maintained with
a Federal or State chartered depository institution or trust company the long
term unsecured debt obligations of which are rated by the Rating Agency the
higher of (x) at least the then current long-term rating of the Certificates or
(y) in one of its two highest long-term rating categories (unless otherwise
specified in the Series Supplement) at the time any amounts are held in deposit
therein or (ii) a trust account(s) maintained as a segregated account(s) and
held by a Federal or State chartered depository institution or trust company in
trust for the benefit of the Certificateholders; provided, however, that such
depository institution or trust company has a long-term rating in one of the
four highest categories by the Rating Agency.
"Eligible Expense." With respect to any Series, as specified in the
related Series Supplement.
"Eligible Investments." With respect to any Series, unless otherwise
specified in the related Series Supplement, any one or more of the following
obligations or securities; provided, however, that the total stated return
specified by the terms of each such obligation or security is at least equal to
the purchase price thereof; and provided, further, that no such instrument may
carry the symbol "R" in its rating:
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(i) direct obligations of, and obligations fully guaranteed by,
the United States, the Federal Home Loan Mortgage Corporation, the Federal
National Mortgage Association, the Federal Farm Credit System or any agency
or instrumentality of the United States the obligations of which are backed
by the full faith and credit of the United States of America; provided,
however, that obligations of, or guaranteed by, the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association or the
Federal Farm Credit System shall be Eligible Investments only if, at the
time of investment, it has the rating specified in such Series Supplement
for Eligible Investments;
(ii) demand and time deposits in, certificates of deposit of, or
banker's acceptances issued by any depository institution or trust company
(including the Trustee or any agent of the Trustee acting in their
respective commercial capacities) incorporated under the laws of the United
States or any State and subject to supervision and examination by Federal
and/or State banking authorities so long as the commercial paper and/or the
short-term debt obligations of such depository institution or trust company
(or, in the case of a depository institution which is the principal
subsidiary of a holding company, the commercial paper or other short-term
debt obligations of such holding company) at the time of such investment or
contractual commitment providing for such investment have the rating
specified in such Series Supplement for Eligible Investments; provided,
however, that such rating shall be no lower than the rating on the
Underlying Securities at the time of purchase of the investments;
(iii) repurchase agreements with respect to (a) any security
described in clause (i) above or (b) any other security issued or
guaranteed by an agency or instrumentality of the United States, with an
entity having the credit rating specified in such Series Supplement for
Eligible Investments;
(iv) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States or any
State that have the rating specified in such Series Supplement for Eligible
Investments at the time of such investment or contractual commitment
providing for such investment; provided, however, that such rating shall be
no lower than the rating on the Underlying Securities; and provided,
further, that securities issued by any particular corporation will not be
Eligible Investments to the extent that investment therein will cause the
then outstanding principal amount of securities issued by such corporation
and held as part of the Trust for such Series to exceed 10% of the
aggregate outstanding principal balances and amounts of all the Underlying
Securities and Eligible Investments held as part of the Trust for such
Series;
(v) commercial paper having at the time of such investment the
rating specified in the Series Supplement for Eligible Investments; and
(vi) a Guaranteed Investment Contract if and only if specified in
the related Series Supplement, provided that the Rating Agency Condition is
met.
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"Event of Default." With respect to any Series (or Class within such
Series) of Certificates, as specified in the related Series Supplement.
"Exchange Act." The Securities Exchange Act of 1934, as amended.
"Extraordinary Trust Expense." Unless otherwise specified in the
related Series Supplement, any and all costs, expenses or liabilities arising
out of the establishment, existence or administration of the Trust, other than
(i) Ordinary Expenses, and (ii) costs and expenses payable by a particular
Certificateholder, the Trustee or the Depositor pursuant to this Trust
Agreement.
"Final Scheduled Distribution Date." With respect to any Certificate,
the date on which all the unpaid principal of (and premium, if any, on) such
Certificate is scheduled, without giving effect to any prepayment or early
termination, to become due and payable as provided therein and in the applicable
Series Supplement.
"Fixed Pass-Through Rate." With respect to any Fixed Rate Certificate,
as defined in the related Series Supplement.
"Fixed Rate Certificate." A Certificate that provides for a payment of
interest at a Fixed Pass-Through Rate.
"Floating Pass-Through Rate." With respect to any Floating Rate
Certificate, as defined in the related Series Supplement.
"Floating Rate Certificate." A Certificate that provides for the
payment of interest at a Floating Pass-Through Rate determined periodically by
reference to a formula specified pursuant to Section 5.01 and the related Series
Supplement.
"Global Security." A Registered Certificate or Bearer Certificate
evidencing all or part of a Series (or Class within such Series) of
Certificates, issued to the Depository for such Series or Class in accordance
with Section 5.08 and bearing the legend prescribed therein.
"Grant." To sell, convey, assign, transfer, create, grant a lien upon
and a security interest in and right of set-off against, deposit, set over and
confirm to the Trustee pursuant to these Standard Terms and a related Series
Supplement; and the terms "Granted" and "Granting" have the meanings correlative
to the foregoing. A Grant of any Underlying Securities or of any other
instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal,
premium, if any, and interest payments in respect of such Underlying Securities
and all other moneys payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights and
options, to bring Proceedings in the name of the Granting party or otherwise,
and generally to do and receive anything that the Granting party is or may be
entitled to do or receive thereunder or with respect thereto.
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"Guaranteed Investment Contract." With respect to any Series (or Class
within such Series), a guaranteed investment contract or surety bond provided
for in the related Series Supplement, Granted as part of the Trust or to the
Trustee for the benefit of the Certificateholders for such Series, providing for
the investment of funds in a related Account or related Accounts and insuring a
minimum or a fixed rate of return on the investment of such funds, which
contract or surety bond shall be an obligation of an insurance company or other
entity whose rating is no lower than the rating on the Underlying Securities and
shall satisfy any other requirements specified in such Series Supplement.
"Holder." With respect to a Registered Certificate, the Registered
Holder thereof.
"Independent." When used with respect to any specified Person means
that the Person (1) is in fact independent of the Depositor and of any
Affiliate, (2) does not have any direct or indirect material financial interest
in the Depositor or in any Affiliate and (3) is not connected with the Depositor
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
"Initial Accrued Interest." With respect to any Series, shall mean,
with respect to each Underlying Security, the amount of interest which accrued
thereon from the Underlying Security Interest Payment Date of such Underlying
Security next preceding the deposit of such Underlying Security hereunder (or,
in the event that such Underlying Security Interest Payment Date is the first
Underlying Security Interest Payment Date to occur after the original issuance
of such Underlying Security, from the dated date thereof) to, but excluding, the
Closing Date.
"Letter of Credit." With respect to any Series or Class within such
Series, the letter of credit, if any, providing for the payment of all or a
portion of amounts due in respect of such Series or Class, issued to the Trustee
for the benefit of the Holders of such Series or Class, issued by the related
Credit Support Provider, all as specified in the related Series Supplement.
"Limited Guarantor." With respect to the Underlying Securities
relating to any series (or Class within such Series), a Person specified in the
related Series Supplement as providing a guarantee or insurance policy or other
credit enhancement supporting the distributions in respect of such Series (or
Class) as and to the extent specified in such Series Supplement.
"Limited Guaranty." With respect to any Series or Class within such
Series, any guarantee of or insurance policy or other comparable form of credit
enhancement with respect to amounts required to be distributed in respect of
such Series or Class or payments under all or certain of the Underlying
Securities relating to such Series or Class, executed and delivered by a limited
Guarantor in favor of the Trustee, for the benefit of the Certificateholders, as
specified in the related Series Supplement.
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"Liquidation Proceeds." The amounts received by the Trustee in
connection with (i) the liquidation of a defaulted Underlying Security or
collateral, if any, related thereto or (ii) the repurchase, substitution or sale
of a Underlying Security.
["Market Agent." Shall mean the market agent or market agents
appointed pursuant to Section 8.01, and its or their successors or assigns.]
["Market Agent Agreement." With respect to any Series shall mean the
Market Agent Agreement, dated as of the Closing Date, between the Trustee and
the Market Agent, the form of which will be attached to the Series Supplement,
and any similar agreement with a successor Market Agent, in each case as from
time to time amended or supplemented.]
"Moody's." Shall mean Moody's Investors Service Inc. and any
successors thereto.
"Notional Amount." With respect to any Class of Certificates, if
applicable, the initial notional amount specified in the related Series
Supplement on which distributions of interest may be determined at the
applicable Pass-Through Rate, as the same may be adjusted as specified in such
Series Supplement.
"Officer's Certificate." A certificate signed by anyone (or, if
specified in these Standard Terms or any Series Supplement, more than one)
Executive Officer of the Depositor, and delivered to the Trustee.
"Opinion of Counsel." A written opinion of counsel, who may, except as
otherwise expressly provided in this Trust Agreement, be counsel for the
Depositor acceptable to the Trustee, except that any opinion of counsel relating
to the qualification of any account required to be maintained pursuant to this
Trust Agreement as an Eligible Account must be an opinion of counsel who is in
fact Independent of the Depositor.
"Ordinary Expenses." The Trustee's customary fee for its services as
Trustee, including but not limited to (i) the costs and expenses of preparing,
sending and receiving all reports, statements, notices, returns, filings,
solicitation of consent or instructions, or other communications required by
this Trust Agreement, (ii) the costs and expenses of holding and making ordinary
collection or payments on the assets of the Trust and of determining and making
distributions, (iii) the costs and expenses of the Trust's or Trustee's counsel,
accountants and other experts for ordinary or routing consultation or advice in
connection with the establishment, administration and termination of the Trust,
and (iv) any other costs and expenses that are, or reasonably should have been,
expected to be incurred in the ordinary course of administration of the Trust.
"Outstanding." With respect to Certificates of a specified Series (or
Class within such Series), as of any date of determination, all such
Certificates theretofore authenticated and delivered under these Standard Terms
and the related Series Supplement except:
(i) Certificates theretofore cancelled by the Certificate
Registrar or delivered to the Certificate Registrar for cancellation; and
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(ii) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered pursuant to this Trust
Agreement, unless proof satisfactory to the Trustee is presented that any
such Certificates are held by a bona fide purchaser in whose hands such
Certificates are valid obligations of the Trust;
provided, however, that in determining whether the Holders of the required
percentage of the aggregate Voting Rights of the Certificates have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Certificates beneficially owned by the Depositor, the Trustee, or any Affiliate
thereof shall be disregarded and deemed not to be Outstanding, and the Voting
Rights to which its Holder would otherwise be entitled shall not be taken into
account in determining whether the requisite percentage of aggregate Voting
Rights necessary to effect any such consent or take any such action has been
obtained except that, in determining whether the Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice, consent
or waiver, only Certificates with respect to which the Depositor has provided
the Trustee an Officer's Certificate stating that such Certificates so owned
shall be so disregarded. Certificates so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Trustee the pledgee's right so to act with respect to such
Certificates and that the pledgee is not, to the knowledge of the Trustee, the
Depositor, or any Affiliate of any thereof. The principal amount or notional
amount, as applicable, of a Discount Certificate that shall be deemed to be
Outstanding for the definition referred to in the foregoing proviso shall be the
Certificate Principal Balance or Certificate Notional Amount, as applicable,
with respect thereto as of the date of such determination.
"Participant." A broker, dealer, bank, other financial institution or
other Person for whom from time to time a Depository effects book-entry
transfers and pledges of securities deposited with the Depository.
"Pass-Through Rate." With respect to any Series (or Class within such
Series) of Certificates (except certain Discount Certificates and Certificates
entitled to nominal or no interest distributions) the annual rate at which
interest accrues on the Certificates of such Series (or Class), which may be a
fixed rate or a floating rate of interest, determined upon the basis and in the
manner specified in the related Series Supplement.
"Paying Agent." As defined in Section 5.12.
"Percentage Interest." With respect to a Certificate of any Series or
Class within a Series, the portion of such Series or Class evidenced by such
Certificate, expressed as a percentage, equal to the product of (x) a fraction,
the numerator of which is the initial Certificate Principal Balance or Notional
Amount, as applicable, represented by such Certificate and the denominator of
which is the aggregate initial Certificate Principal Balance or Notional Amount,
as applicable, of all the Certificates of such Series or Class and (y) 100.
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"Person." Any individual, corporation, partnership, joint venture,
association, joint stock company, trust (including any beneficiary thereof),
unincorporated organization or government or any agency or political subdivision
thereof.
"Place of Distribution." With respect to any Series (or Class within such
Series) of Certificates, the place or places where the principal of (and
premium, if any) and interest on the Certificates or such Series (or Class) are
distributable as specified pursuant to Section 5.01.
"Predecessor Certificate." With respect to any particular Certificate,
every previous Certificate evidencing all or a portion of the same interest as
that evidenced by such particular Certificate; and for the purpose of this
definition, any Certificate authenticated and delivered under Section 5.05 in
lieu of a lost, destroyed or stolen Certificate shall be deemed to evidence the
same interest as the lost, destroyed or stolen Certificate.
"Prepaid Ordinary Expenses." Unless otherwise specified in the Series
Supplement, the amount (if any) paid by the Depositor to the Trustee on or
before the Closing Date to cover Ordinary Expenses, as specified in the related
Series Supplement.
"Proceeding." Any suit in equity, action at law or other judicial or
administrative proceeding.
"Rating Agency." With respect to any Series (or Class within such Series),
each nationally recognized rating organization specified in the related Series
Supplement that initially rates the Certificates of such Series (or Class).
"Rating Agency Condition." With respect to any action or occurrence,
unless otherwise specified in the applicable Series Supplement, that each Rating
Agency shall have been given 10 days (or such shorter period acceptable to each
Rating Agency) prior notice thereof and that each Rating Agency shall have
notified the Depositor and the Trustee in writing that such action or occurrence
will not result in a reduction or withdrawal of the then current rating of any
Certificate of the applicable Series.
"Realized Losses." With respect to any defaulted and liquidated Underlying
Security, the excess, if any, of (x) the principal amount of such Underlying
Security plus accrued and unpaid interest thereon, plus expenses incurred by the
Trustee in connection with the practices and procedures referred to in
Section 3.07(b) to the extent reimbursable under these Standard Terms and the
related Series Supplement, over (y) Liquidation Proceeds with respect thereto.
"Record Date." With respect to any Distribution Date for any Series (or
Class within such Series) of Registered Certificates, the date specified in the
related Series Supplement.
"Registered Certificate." Any Certificate registered as to principal,
premium, if any, and interest in the Certificate Register.
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"Registered Holder." The Person in whose name a Registered Certificate is
registered in the Certificate Register on the applicable Record Date.
"Required Interest." Unless otherwise specified in the related Series
Supplement, with respect to the Outstanding Certificates of any Series or any
Class thereof, the accrued and undistributed interest on the Certificate
Principal Balance or Notional Amount of such Outstanding Certificates, computed
at the applicable Pass-Through Rate.
"Required Percentage-Amendment." Unless otherwise specified in the related
Series Supplement, if a Rating Agency Condition is specified in the related
Series Supplement and such Rating Agency Condition is met, or, if a Rating
Agency Condition is not so specified in the related Series Supplement, 66-2/3%
of the aggregate Voting Rights of Certificates of such Series, and 100%
otherwise.
"Required Percentage-Definitive Certificates." Unless otherwise specified
in the related Series Supplement, 66-2/3% of the aggregate Voting Rights of
Certificates of such Series.
"Required Percentage-Direction of Trustee." Unless otherwise specified in
the related Series Supplement, 66-2/3% of the aggregate Voting Rights of
Certificates of such Series.
"Required Percentages-Remedies." Unless otherwise specified in the related
Series Supplement, 66-2/3% of the aggregate Voting Rights of Certificates of
such Series.
"Required Percentage-Removal of Trustee." Unless otherwise specified in
the related Series Supplement, more than 50% of the aggregate Voting Rights of
Certificates of such Series.
"Required Percentage-Waiver." Unless otherwise specified in the related
Series Supplement, 75% of the aggregate Voting Rights of Certificates of such
Series.
"Required Premium." If applicable, unless otherwise specified in the
related Series Supplement, with respect to the Certificates of any Series or any
Class thereof, an amount equal to the product, as determined on any Distribution
Date with respect to such Series and Class, of (i) the Required Principal for
such Series and Class and (ii) the Call Premium Percentage for such Series and
Class.
"Required Principal." As determined for any Distribution Date for a given
Series (or Class within such Series), unless otherwise specified in the related
Series Supplement, the amounts on deposit in the Certificate Account allocable
to principal payments on the Underlying Securities (including from Credit
Support, if any, and Advances, if any, but excluding amounts in respect of
principal payments to the extent that Advances with respect thereto were
distributed as Required Principal on a prior Distribution Date) and required to
be distributed in respect of the Certificates of such Series (or Class) in
accordance with the terms of such Certificates and such related Series
Supplement.
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"Required Rating." With respect to any Series (or Class within such
Series), the rating category (or categories) specified in the Series Supplement
that, as a condition to the issuance of such Series or Class, is (or are) the
lowest category (or categories) in which the Certificates of such Series or
Class may be categorized by the Rating Agency.
"Requisite Reserve Amount." As of any date with respect to any Series (or
Class within such Series) of Certificates, the amount, if any, required to be
maintained in the Reserve Account, if any, for such Series or Class as specified
in or determined pursuant to the related Series Supplement.
"Reserve Account." An Eligible Account, if any, created and maintained
pursuant to Section 3.06.
"Responsible Officer." With respect to the Trustee, any officer within the
Corporate Trust Office of the Trustee, including any Vice President, Assistant
Vice President, Assistant Treasurer or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's actual
knowledge of and familiarity with the particular subject.
"Retained Interest." If applicable, with respect to any Underlying
Security, an ownership interest in and a right to a portion of the payments
thereon by the obligor thereof, as specified in the related Series Supplement,
held by the Person so specified in such Series Supplement.
["Sale Procedures." Unless otherwise specified in the Series Supplement,
shall mean that, with respect to any sale of one or more Underlying Securities,
the Market Agent, on behalf of the Trust, shall sell such Underlying Security or
Underlying Securities to the highest bidders among not less than two solicited
bidders for such Underlying Securities (one of which bidders may include Morgan
Keegan & Company, Inc. or any affiliate thereof; provided, however, that neither
Morgan Keegan & Company, Inc. nor any of its affiliates will be under any
obligation to bid, and which bidders need not be limited to recognized broker
dealers).
In the sole judgment of the Market Agent, bids may be evaluated on the
basis of bids for a single Underlying Security, a portion of the Underlying
Securities or all of the Underlying Securities being sold or any other basis
selected in good faith by the Market Agent.]
"S&P." Shall mean Standard & Poor's, a division of The McGraw-Hill
Companies, Inc. and any successor thereof.
"Series." A separate series of Certificates issued pursuant to these
Standard Terms and a related Series Supplement, which series may be divided into
two or more Classes, as provided in such Series Supplement.
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"Series Supplement." An agreement incorporating these Standard Terms that
authorizes the issuance of a particular Series (and each Class within such
Series) of Certificates.
"Sub-Administration Account." As defined in Section 7.02.
"Sub-Administration Agreement." The written contract, if any, between the
Trustee and a Sub-Administrative Agent and any successor Trustee or Sub-
Administrative Agent relating to the administration of certain Underlying
Securities as provided in Section 7.02.
"Sub-Administration Agent." Any Person with which the Trustee has entered
into a Sub-Administration Agreement and which meets the qualifications of a Sub-
Administrative Agent pursuant to Section 7.02.
"Surety Bond." If so specified in the Series Supplement, with respect to
any Series (or Class within such Series) of Certificates, the surety bond
providing for the distribution under certain circumstances specified in such
Series Supplement of amounts to the Certificateholders of such Series (or
Class), which surety bond will be issued to the Trustee for the benefit of such
Certificateholders by the related Credit Support Provider, all as specified in
such Series Supplement.
"Swap Agreement." If so specified in the Series Supplement, with respect
to any Series, shall mean the ISDA Master Agreement dated as of the Closing Date
by and between the Trust and the Swap Counterparty, as the same may be amended
or supplemented from time to time as provided herein and therein.
"Swap Counterparty." If so specified in the Series Supplement, with
respect to any Series, shall be specified in the Series Supplement.
"Swap Distribution Amount." If so specified in the Series Supplement, with
respect to any Series, shall mean all amounts then due and owing to the Swap
Counterparty pursuant to the Swap Agreement, other than Swap Termination
Payments.
"Swap Guarantee." If so specified in the Series Supplement, with respect
to any Series, shall mean, the Guarantee issued by the Swap Guarantor in favor
of the Trust.
"Swap Guarantor." If so specified in the Series Supplement, with respect
to any Series, shall be specified in the Series Supplement.
"Swap Receipt Amount." If so specified in the Series Supplement, with
respect to any Series, shall mean all amounts due and owing to the Trust
pursuant to the Swap Agreement, other than Swap Termination Payments.
"Swap Termination Payment." If so specified in the Series Supplement, with
respect to any Series, means the amount payable by the Swap Counterparty to the
Trust, or by the Trust to the Swap Counterparty, pursuant to Section 6(e) of the
Swap Agreement.
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"Trust." With respect to any Series, the segregated asset or pool of
assets subject hereto, constituting the trust created hereby and by the related
Series Supplement and to be administered hereunder and thereunder, consisting of
those Underlying Securities and the Credit Support, if applicable, and all sums
distributed in respect thereof that are specified as being part of the Trust for
such Series in the related Series Supplement, all for the benefit of the
Certificateholders of such Series as of any particular time.
"Trust Agreement." With respect to each Series of Certificates, these
Standard Terms and all amendments hereof and, unless the context otherwise
requires, the related Series Supplement and all amendments thereto.
"Trustee" With respect to any Series, the Person so specified in the
applicable Series Supplement, until a successor Person shall have become the
Trustee pursuant to the applicable provisions of these Standard Terms and the
applicable Series Supplement, and thereafter "Trustee" shall mean such successor
Person.
"Trust Indenture Act." The Trust Indenture Act of 1939, as amended, as the
same is in force and effect as of the date hereof.
"Underlying Securities Issuer." Shall mean, with respect to an Underlying
Security, the issuer thereof (including, if applicable, the guarantor of the
Underlying Security) as identified in Appendix A to the Series Supplement.
"Underlying Security" or "Underlying Securities." With respect to any
Series, the asset or assets Granted as part of the Trust for such Series or
acquired (or, in the case of an agreement, entered into) by the Trustee for the
benefit of the Holders of such Series, and, if and to the extent provided in the
applicable Series Supplement, for the benefit of any Credit Support Provider,
all as identified in the Schedule A to the related Series Supplement. The
Underlying Securities for any such Series or the related Trust shall not
constitute Underlying Securities for any other Series or any other Trust.
"Underlying Security Interest Payment Date." Shall mean, with respect to
an Underlying Security, each date specified in Schedule A to the Series
Supplement as a date on which interest is scheduled, as of the Closing Date, to
be payable by or on behalf of the Underlying Securities Issuer on such
Underlying Security in accordance with its terms.
"Uniform Commercial Code." The Uniform Commercial Code as in effect in the
relevant jurisdiction or, with respect to the State of Louisiana, the equivalent
body of statutory and common law.
"United States." The United States of America (including the States), its
territories, its possessions and other areas subject to its jurisdiction.
"Voting Rights." With respect to any Series (or Class within such Series)
of Certificates, the portion of the aggregate voting rights of the Certificates
of such Series or
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Class which shall be allocated to any Certificate as specified in the applicable
Series Supplement.
Section 1.02. Rules of Construction
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting principles
as in effect in the United States from time to time;
(iii) or is not exclusive;
(iv) the words "herein," "hereof," "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision:
(v) "including" means including without limitation; and
(vi) words in the singular include the plural and words in the
plural include the singular.
Section 1.03. Compliance Certificates and Opinions; Record Date. (a) Upon
any application or request by the Depositor to the Trustee to take any action
under any provision of this Trust Agreement other than the initial issuance of
the Certificates, the Depositor shall furnish to the Trustee an Officer's
Certificate stating that, in the opinion of the signer thereof, all conditions
precedent, if any, provided for in this Trust Agreement relating to the proposed
action have been complied with and an Opinion of Counsel stating that in the
opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Trust Agreement relating to such particular application or request, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for this Trust Agreement (other than a certificate provided
pursuant to Section 3.10(d)) shall include:
(1) a statement that the individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he or she
has made such examination or investigation as is necessary to enable him or
her to express an
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informed opinion as to whether or not such covenant or condition has been
complied with; and
(4) a statement as to whether, in the opinion of such individual, such
condition or covenant has been complied with.
(b) The Depositor may at its option by delivery of an Officer's Certificate
to the Trustee set a record date to determine the Holders of any subclass of
Certificates entitled to give any consent, request, demand, authorization,
direction, notice, waiver or other act. Notwithstanding Section 316(c) of the
Trust Indenture Act, such record date shall be the record date specified in such
Officer's Certificate, which shall be a date not more than 30 days prior to the
first solicitation of Certificateholders in connection therewith. If such a
record date is fixed, such consent, request, demand, authorization, direction,
notice, waiver or other act may be given before or after such record date, but
only the Holders of record of Certificates of the applicable subclass at the
close of business on such record date shall be deemed to be Certificateholders
of such subclass for the purposes of determining whether Holders of the
requisite aggregate amount of Outstanding Certificates of such subclass have
authorized or agreed or consented to such consent, request, demand,
authorization, direction, notice, waiver or other act, and for that purpose the
aggregate amount of the Outstanding Certificates of such subclass shall be
computed as of such record date; provided, however, that no such consent,
request, demand, authorization, direction, notice, waiver or other act by the
Holders of Certificates of such subclass on such record date shall be deemed
effective unless it shall become effective pursuant to the provisions of this
Trust Agreement not later than one year after the record date.
ARTICLE II
DECLARATION OF TRUSTS; ISSUANCE OF CERTIFICATES; PURPOSE AND
CLASSIFICATION OF TRUSTS
Section 2.01. Creation and Declaration of Trusts: Assignment of Underlying
Securities. (a) The Depositor, concurrently with the execution and delivery
hereof, does hereby agree to Grant to the Trustee, on behalf and for the benefit
of the Certificateholders of each given Series of Certificates and without
recourse, all the right, title and interest of the Depositor, including any
security interest therein for the benefit of the Depositor, in, to and under
the Underlying Securities attributable to each such Series (except for the
Underlying Securities attributable to such Series which are not Granted by the
Depositor, as specified in Schedule A to the applicable Series Supplement), now
existing or hereafter acquired, in each case as identified on the applicable
Schedule A, and all other assets included or to be included in the respective
Trust for the benefit of the Certificateholders of each such Series. Each such
Grant will include all interest, premium (if any) and principal received by or
on behalf of the Depositor of, on or with respect to any such Underlying
Securities due after the applicable Cut-off Date, and, unless otherwise
specified in the Series Supplement, will exclude (i) all interest, premium (if
any) and principal of, on or with
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respect to any such Underlying Securities due on or before the applicable Cut-
off Date and (ii) any Retained Interest in any such Underlying Security.
(b) In connection with each Grant referred to in the preceding paragraph,
the Depositor shall, not later than the applicable Closing Date, either
(i) deposit the Underlying Securities for a given Series (except for the
Underlying Securities attributable to such Series which are to be acquired from
a Person other than the Depositor, as specified on the Underlying Securities
Schedule to the applicable Series Supplement) with the Trustee by physical
delivery of such Underlying Securities, duly endorsed, to the Trustee or
(ii) have delivered such Underlying Securities to a Clearing Agency, in which
event (A) the Trustee has accepted delivery of such Underlying Securities
through such Clearing Agency, and (B) the Underlying Securities have been
credited to a trust account of the Trustee, or its authorized agent, and the
Trustee shall have the right to hold and maintain such Underlying Securities on
deposit with such Clearing Agency for all purposes of this Trust Agreement.
(c) Unless otherwise specified in the applicable Series Supplement, the
Grant of such Underlying Securities by the Depositor for a given Series
accomplished hereby and by such Series Supplement is absolute and is intended by
the parties hereto as a sale.
(d) In the case of each delivery of Underlying Securities to the Trustee,
the Depositor shall be deemed thereby to represent and warrant to the Trustee
that:
(i) the Depositor is duly authorized to so deliver such Underlying
Securities;
(ii) the Underlying Securities so delivered are genuine;
(iii) at the time of delivery of the Underlying Securities, such
Underlying Securities are free and clear of any lien, pledge, encumbrance,
right, charge, claim or other security interest; and
(iv) such delivery is irrevocable and free of any continuing claim
by the Depositor except such as the Depositor may have as a
Certificateholder of a Certificate;
The above representations and warranties shall survive the delivery of such
Underlying Securities and the Certificates in respect thereof. The Depositor
shall further be deemed by such delivery to have made the representations that,
to the best of its knowledge, as of the Closing Date, no default or event of
default with respect to the Underlying Securities has occurred and is
continuing.
(e) It is the intention of all of the parties hereto that the transfer of
the Trust Property hereunder and under any Series Supplement shall constitute a
sale and the Trust created hereunder and thereunder shall constitute a fixed
investment trust for federal income tax purposes under Treasury Regulation
Section 301.7701-4, and all parties hereto and thereto agree to treat the Trust,
any distributions therefrom and the beneficial interest in the
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Certificates consistently with such characterization. The provisions of this
Trust Agreement shall be interpreted consistently with such characterization.
(f) Any Trust created hereunder shall not engage in any business or
activities other than in connection with, or relating to, the holding,
protecting and preserving of the Trust Property and the issuance of the
Certificates, and other than those required or authorized by this Trust
Agreement or incidental to and necessary to accomplish such activities. Any
Trust created hereunder shall not issue or sell any certificates or other
obligations other than the Certificates or otherwise incur, assume or guarantee
any indebtedness for money borrowed.
Section 2.02. Acceptance by Trustee. With respect to each Series, the
Trustee will acknowledge receipt by it, or by a custodian on its behalf, of the
related Underlying Securities and the related documents referred to in Section
2.01, now existing or hereafter acquired, and declares that it will hold such
Underlying Securities and documents and all other documents delivered to it
pursuant to this Trust Agreement, and that it will hold all such assets and
such other assets (including Underlying Securities acquired from a Person other
than the Depositor) comprising the Trust for a given Series of Certificates, in
trust for the exclusive use and benefit of all present and future
Certificateholders of such Series and for the purposes and subject to the terms
and conditions set forth in this Trust Agreement.
Section 2.03. Representations and Warranties of the Depositor. The
Depositor hereby represents and warrants to the Trustee that as of the Closing
Date or as of such other date specifically provided herein or in the applicable
Series Supplement:
(i) the Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware;
(ii) with respect to each Series Supplement, to the Depositor's
knowledge, the information set forth in the Series Supplement with respect
to each Underlying Security is true and correct in all material respects at
the date or dates, respecting which, such information is furnished;
(iii) the execution and delivery of this Trust Agreement by the
Depositor and its performance of and compliance with the terms of this
Trust Agreement will not violate the Depositor's articles of incorporation
or By-laws or constitute a default (or an event which, with notice or lapse
of time, or both, would constitute a default) under, or result in the
breach or acceleration of, any material contract, agreement or other
instrument to which the Depositor is a party or which may be applicable to
the Depositor or any of its assets;
(iv) the Depositor has the full power and authority to enter into
and consummate all transactions contemplated by this Trust Agreement, has
duly authorized the execution, delivery and performance of this Trust
Agreement and has duly executed and delivered this Trust Agreement. This
Trust Agreement, upon its execution and delivery by the Depositor and
assuming due authorization, execution and delivery by the Trustee, will
constitute a valid, legal and binding obligation of the
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Depositor, enforceable against it in accordance with the terms hereof,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws relating to or
affecting the rights of creditors generally, and by general equity
principles (regardless of whether such enforcement is considered a
proceeding in equity or at law); and
(v) any additional representations and warranties, if any, that may
be specified in the applicable Series Supplement.
It is understood and agreed that the representations and warranties of the
Depositor set forth in this Section 2.03 shall survive delivery of the
respective documents to the Trustee and shall inure to the benefit of the
Trustee on behalf of the Certificateholders notwithstanding any restrictive or
qualified endorsement or assignment. Upon discovery by any of the Depositor or
the Trustee of a breach of any of the foregoing representations and warranties
which materially and adversely affects the interests of the Certificateholders,
the party discovering such breach shall give prompt written notice thereof to
the other party.
Section 2.04. Breach of Representation, Warranty or Covenant. Within 90
days of the earlier of discovery by the Depositor or receipt of notice by the
Depositor of a breach of any representation or warranty of the Depositor set
forth in Section 2.03 that materially and adversely affects the interests of the
Certificateholders of a given Series of Certificates, the Depositor shall cure
such breach in all material respects.
Section 2.05. Agreement to Authenticate and Deliver Certificates. With
respect to each Series of Certificates and the related Trust, the Trustee
hereby agrees and acknowledges that it will, concurrently with the Grant to and
receipt by it of the related Underlying Securities and delivery to it by the
Depositor of executed Certificates of such Series, cause to be authenticated and
delivered to or upon the written order of the Depositor, in exchange for the
Underlying Securities and such other assets constituting the Trust for a given
Series, Certificates duly authenticated by or on behalf of the Trustee in
authorized denominations evidencing ownership of the entire Trust for such
Series, all in accordance with the terms and subject to the conditions of
Sections 5.02 and 5.11.
ARTICLE III
ADMINISTRATION OF EACH TRUST
Section 3.01. Administration of each Trust. (a) The Trustee shall
administer the Underlying Securities for each given Trust for the benefit of the
Certificateholders of the related Series. In engaging in such activities, the
Trustee shall follow or cause to be followed collection procedures in
accordance with the terms of these Standard Terms and the applicable Series
Supplement, the respective Underlying Securities and any applicable Credit
Support Instruments. With respect to each Trust, and subject only to the above-
described standards and the terms of these Standard Terms, the related Series
Supplement and the respective Underlying Securities and applicable Credit
Support Instruments, if any,
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the Trustee shall have full power and authority, acting alone or through Sub-
Administrative Agents as provided in Section 7.02, to do or cause to be done any
and all things in connection with such administration which it deems necessary
to comply with the terms of these Standard Terms and the applicable Series
Supplement.
(b) The duties of the Trustee shall be performed in accordance with
applicable local, State and Federal law, and the Trustee shall make any and all
filings, reports, notices or applications with, and seek any comments and
authorizations from, the Commission and any State securities authority on behalf
of the Trust for each Series.
Section 3.02. Collection of Certain Underlying Security Payments. With
respect to any Series or Class of Certificates, the Trustee shall make
reasonable efforts to collect all payments required to be made pursuant to the
terms of the Underlying Securities in a manner consistent with the terms of this
Trust Agreement, such Underlying Securities and any related Credit Support
Instruments.
Section 3.03. Certificate Account. (a) For each Series of Certificates,
the Trustee shall establish and maintain one or more Eligible Accounts
(collectively, the "Certificate Account"), held in trust for the benefit of the
Certificateholders of such Series. The Trustee on behalf of such
Certificateholders shall possess all right, title and interest in all funds on
deposit from time to time in each Certificate Account and in all proceeds
thereof. With respect to each Series of Certificates, the Certificate Account
shall be under the sole dominion and control of the Trustee for the benefit of
the related Certificateholders. With respect to each Series of Certificates,
not later than the close of business on the Business Day on which the Trustee
receives such amounts in the form of immediately available funds (so long as
such funds are received by the Trustee by 3:00 p.m. New York City time, and on
the next Business Day otherwise), the Trustee shall deposit or cause to be
deposited in the Certificate Account all amounts received by it with respect to
the Underlying Securities, any Credit Support and all Liquidation Proceeds
related to such Series including:
(i) all payments on account of principal of such Underlying
Securities;
(ii) all payments on account of interest on such Underlying
Securities;
(iii) all payments on account of premium (if any) on such
Underlying Securities;
(iv) any payments in respect of any such Credit Support;
(v) any Advances made as required pursuant to Section 4.03; and
(vi) any interest or investment income earned on funds deposited in
the related Accounts.
Unless otherwise specified in the applicable Series Supplement, it is
understood and agreed that payments in the nature of prepayment or redemption
penalties, late payment
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charges, default interest or reinvestment income which may be received by the
Trustee shall be deposited by the Trustee in the Certificate Account and shall
not be retained by the Trustee for its own account.
If, at any time, the Certificate Account for any Series ceases to be an
Eligible Account, the Trustee shall within 5 Business Days (or such longer
period, not to exceed 30 calendar days, as to which the Rating Agency Condition
is met) establish a new Certificate Account meeting the conditions specified
above and the Trustee shall within 5 Business Days transfer any cash and any
investments on deposit in the Certificate Account to such new Certificate
Account, and from the date such new Certificate Account is established, it shall
be the Certificate Account for such Series.
(b) The Trustee shall give notice to the Depositor and the Rating
Agency of the location of each Eligible Account constituting the Certificate
Account and prior to any change thereof.
Section 3.04. Liquidation of the Underlying Securities. If specified in the
applicable Series Supplement, upon the occurrences of specified events, the
Trustee shall direct the Market Agent to sell the Underlying Securities in
compliance with the Sale Procedures and to deposit the Liquidation Proceeds
therefrom into the Certificate Account pursuant to Section 3.03.(a) hereof.
Section 3.05. Investment of Funds in the Accounts. The Trustee on behalf
of the Trust, may direct any depository institution maintaining the Certificate
Account or the Reserve Account, if any, for the applicable Series and any other
segregated Eligible Account the contents of which are held for the benefit of
Certificateholders of such Series (each, an "Account") to invest the funds
therein at the specific written direction of the Depositor in one or more
Eligible Investments bearing interest or sold at a discount, which shall be held
to maturity unless payable on demand and which funds shall not be reinvested
upon the maturity or demand for payment of such Eligible Investment. If the
Depositor does not provide any investment directions, funds held in any Account
will be invested in the Eligible Investments specified in clause (ii) of the
definition thereof. Investments of such funds shall be invested in Eligible
Investments that will mature so that such funds will be available for
distribution on the next Distribution Date. Except as otherwise provided in the
applicable Series Supplement, any earnings with respect to such Eligible
Investments shall be paid to the Certificateholders (and, if applicable, the
Retained Interest holder) pro rata in proportion to their interest in the
invested funds. In the event amounts on deposit in an Account are at any time
invested in an Eligible Investment payable on demand, the Trustee shall:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such Eligible
Investment may otherwise mature hereunder in an amount equal to the lesser
of (1) all amounts then payable thereunder and (2) the amount required to
be withdrawn on such date; and
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(y) demand same day payment of all amounts due thereunder upon a
determination by the Trustee that such Eligible Investment would not
constitute an Eligible Investment in respect at funds thereafter on deposit
in any Account.
Section 3.06. Maintenance of Credit Support. (a) On the applicable Closing
Date, the Trustee at the written direction of the Depositor or, if so specified
in the applicable Series Supplement, the Depositor shall, to the extent
specified in the applicable Series Supplement, establish and maintain, or enter
into, as applicable, in the name of the Trustee, either as a part of the related
Trust or outside it, for the benefit of the Certificateholders of the related
Series, the Credit Support specified in the applicable Series Supplement. To the
extent specified in the applicable Series Supplement, the Depositor will make or
cause to be made any initial deposit to the Certificate Account or any Reserve
Account for the related Series as of the Closing Date. Unless the Series
Supplement for a given Series provides otherwise, if a Reserve Account exists
for such Series, collections with respect to the Underlying Securities for such
Series not distributed to the Certificateholders of such Series shall be
deposited in the Reserve Account. The Reserve Account, if any, shall be an asset
of the Depositor (and the income earned on any amounts held in the Reserve
Account shall be allocable to the Depositor, who agrees to include any such
income in its gross income for all federal, state and local income and franchise
tax purposes) and will not be a part of or otherwise be includible in the Trust
but will be held for the benefit of the Certificateholders.
(b) Amounts on deposit in the Reserve Account and amounts available
pursuant to any other Credit Support for such Series shall be applied by the
Trustee to make distributions of principal of and premium (if any) and interest
on the Certificates of such Series as required pursuant to Section 4.01 and the
applicable Series Supplement to the extent that funds are not otherwise
available for such purpose. If specified in such Series Supplement, immediately
after each Distribution Date, amounts on deposit in the Reserve Account for such
Series in excess of a specified amount shall be paid to the Person so specified
in such Series Supplement.
Section 3.07. Realization Upon Defaulted Underlying Securities.
(a) The Trustee, on behalf of the Certificateholders, shall assert claims under
each applicable Credit Support Instrument, and shall take such reasonable steps
as are necessary to receive payment or to permit recovery thereunder with
respect to any defaulted Underlying Securities, subject in all cases to the
provisions of Article VII hereof.
(b) Unless otherwise provided in the related Series Supplement, if
the Trustee, as applicable, is unable to obtain full recovery in respect of a
defaulted Underlying Security and any related Credit Support Instrument pursuant
to Section 3.07(a), the Trustee shall follow or cause to be followed such normal
practices and procedures as it deems necessary or advisable to realize upon such
defaulted Underlying Security and such Credit Support Instrument, subject in all
cases to the provisions of Article VII hereof.
(c) If the Liquidation Proceeds of a defaulted Underlying Security
are less than the sum of (i) the outstanding principal balance of the defaulted
Underlying Security, (ii) interest accrued but unpaid thereon at the applicable
interest rate and (iii) the aggregate
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amount of expenses incurred by the Trustee in connection with the practices and
procedures referred to in paragraph (b) of this Section 3.07 to the extent
reimbursable under these Standard Terms and the related Series Supplement, the
Trust for the applicable Series shall recognize a Realized Loss equal to the
amount of such difference. Any such reimbursed Realized Loss shall be allocated
pursuant to Section 4.05 among the Certificateholders of such Series in the
manner and priority set forth in the related Series Supplement.
Section 3.08. Retained Interest. The Retained Interest, if any, in any
Underlying Security shall initially be held by the Person so specified in the
related Series Supplement as and to the extent specified therein. With respect
to each Underlying Security, unless otherwise specified in the related Series
Supplement, the Retained Interest shall be deducted by the Trusted from
applicable collections in respect of such Underlying Security. Unless otherwise
provided in the applicable Series Supplement, collections in respect of Retained
Interest shall not be deposited in the Certificate Account for the applicable
Series and shall not constitute a part of the Trust for such Series, but shall
instead be distributed to the holder of such Retained Interest; provided,
however, that the Series Supplement for any Series with respect to which there
is a Retained Interest may provide that, notwithstanding the terms contained
herein, commingled amounts received in respect of assets inclusive of Underlying
Securities and Retained Interest may initially be deposited in a separate and
discrete account established by the Trustee and such Series Supplement may
provide for additional terms relating thereto. Unless otherwise provided in the
applicable Series Supplement, after deduction of all applicable fees as provided
for in this Trust Agreement, on each Distribution Date the Trustee shall
allocate on a pari passu basis any partial recovery on an Underlying Security
between (a) the Retained Interest, if any, and (b) distributions to
Certificateholders of the applicable Series.
Section 3.09. Access to Certain Documentation. The Trustee shall provide
to any Federal, State or local regulatory authority that may exercise authority
over any Certificateholder access to the documentation regarding the Underlying
Securities required by applicable laws and regulations. Such access shall be
afforded without charge, but only upon reasonable request and during normal
business hours at the offices of the Trustee designated by it. In addition,
access to the documentation regarding the Underlying Securities related to a
given Series (or Class within such Series) will be provided to any
Certificateholder of such Series (or Class) upon reasonable request during
normal business hours at the offices of the Trustee designated by it at the
expense of the Certificateholder requesting such access.
Section 3.10. Reports by the Depositor. The Depositor shall:
(a) file with the Trustee, within 30 days after the Depositor is
required to file the same with the Commission, copies of the annual reports
and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Depositor is required to file
with the Commission pursuant to Section 13 or Section 15(d) of the Exchange
Act; or, if the Depositor is not required to file information, documents or
reports pursuant to either of such sections, then to file with the Trustee
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and the Commission, in accordance with rules and regulations prescribed by
the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed in such rules and regulations;
(b) file with the Trustee and the Commission, in accordance with the
rules and regulations prescribed by the Commission, such additional
information, documents and reports with respect to compliance by the
Depositor with the conditions and covenants provided for in this Trust
Agreement, as may be required by such rules and regulations, certificates
or opinions of independent accountants, conforming to the requirements of
Section 314(e) of the Trust Indenture Act;
(c) transmit to all Certificateholders, in the manner and to the
extent provided in Section 313(c) of the Trust Indenture Act, such
summaries of any information, documents and reports required to be filed by
the Depositor pursuant to subsections (a) and (b) of this Section 3.10 as
may be required by rules and regulations prescribed by the Commission; and
(d) furnish to the Trustee, not less often than annually, a
certificate from the principal executive, financial or accounting officer
of the Depositor as to his or her knowledge of the Depositor's compliance
with all conditions and covenants under this Trust Agreement. For purposes
of this paragraph (d) such compliance shall be determined without regard to
any period of grace or requirement of notice provided under this Trust
Agreement.
Any reports, statements, documents or other information required to be
furnished by the Depositor to the Trustee pursuant to these Standard Terms or
any Series Supplement shall be deemed to have been delivered to the Trustee if
the Trustee is in possession of such reports, statements, documents or other
information at the time they are to be furnished pursuant to these Standard
Terms or any Series Supplement.
Section 3.11. Charges and Expenses. Except as otherwise provided in this
Trust Agreement or the related Series Supplement, no amounts in the nature of
fees or charges shall be payable by or withheld from the Trust, the Depositor or
any other person. There shall be no recourse or claim against the Trust or the
property of the Trust for all or any part of any fees or charges payable to any
person.
ARTICLE IV
DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS
Section 4.01. Distributions. (a) On each Distribution Date for a given
Series of Certificates, the Trustees shall apply Available Funds in the
Certificate Account for such Series in the manner and priority set forth in the
Series Supplement for such Series. In any event, however, any amounts collected
during any period shall be distributed to the
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Certificateholders no later than the Distribution Date immediately following the
receipt thereof.
(b) All distributions on the Certificates shall be payable only from
Available Funds, and no provision of this Trust Agreement shall be deemed to
create any obligation on the part of the Trustee or the Depositor to make any
distribution from any other source.
Section 4.02. Distributions on Certificates. (a) Distributions on any
Registered Certificate that are payable and are punctually paid or duly provided
for on any Distribution Date shall be distributed to the Person in whose name
such Registered Certificate (or one or more Predecessor Certificates) is
registered at the close of business on the related Record Date notwithstanding
the cancellation of such Registered Certificate upon any transfer or exchange
subsequent to such related Record Date.
The distribution of interest and principal on Registered Certificates shall
be made:
(i) if the Certificateholder is a Depository, to the Depository,
which shall credit the relevant participant's account at such Depository in
accordance with the policies and procedure of the Depository, or
(ii) if the Certificateholder is not a Depository, at the Corporate
Trust Office (except as otherwise specified pursuant to Section 5.01) or,
at that option of the Trustee, by check mailed to the address of the Person
entitled thereto as such address shall appear in the Certificate Register
or, if provided pursuant to Section 5.01 and in accordance with
arrangements satisfactory to the Trustee, at the option of the Registered
Holder by wire transfer to an account designated by the Registered Holder.
Notwithstanding the foregoing paragraph, with respect to a
Certificateholder of Certificates not held in a Depository and having at
least the Minimum Wire Denomination, such payment shall be made by wire
transfer of immediately available funds to the account designated by such
Certificateholder in a written request received by the Trustee not later
than 10 days prior to such Distribution Date; provided, however, that if a
wire transfer cannot be made for any reason, payment shall be made by
check. The Trustee shall not be required to send federal funds wires until
any corresponding payments which were not same day funds when received by
it have become same day funds.
(b) Subject to the foregoing provisions of this Section 4.02, each
Certificate delivered under this Trust Agreement upon transfer of or in exchange
for or in lieu of any other Certificate shall carry the rights to interest
accrued and undistributed, and to accrue, that were carried by such other
Certificate.
(c) All computations of interest due with respect to any Certificate of
any Series or Class within such Series shall be made as specified in the Series
Supplement applicable to that particular Series or Class of Certificates.
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(d) With respect to any computations or calculations to be made under
these Standard Terms, the applicable Series Supplement and the Certificates,
except as otherwise provided, (i) all percentages resulting from any calculation
of accrued interest will be rounded, if necessary, to the nearest 1/100,000 of
1% (.0000001), with five one-millionths of a percentage point rounded upward,
and (ii) all currency amounts will be rounded to the nearest one-hundredth of a
unit (with .005 of a unit being rounded upward).
(e) Unless specified otherwise in a Series Supplement, the final
distribution of principal and/or premium shall be made upon presentation and
surrender of such Certificates at the Corporate Trust Office.
Section 4.03. Reports to Certificateholders. Unless otherwise specified
in the application Series Supplement, on the next Business Day following each
such Distribution Date the Trustee shall forward or cause to be forwarded to the
Depositor, each Certificateholder of such Series, to each Rating Agency rating
such Series and such other Persons as may be specified in such Series
Supplement, a statement setting forth:
(i) the amounts received by the Trustee as of the last such
statement in respect of principal, interest and premium on the Underlying
Securities and the Swap Receipt Amount, if any;
(ii) the Swap Distribution Amount, if any, for such date;
(iii) the amount of the distribution on such Distribution Date to
Certificateholders of each Class of such Series allocable to principal of
and premium, if any, and interest on the Certificates of each such Class;
and the amount of aggregate unpaid interest accrued as of such Distribution
Date;
(iv) in the case of each Class of Floating Rate Certificates of such
Series, the respective Floating Pass-Through Rate applicable to each such
Class on such Distribution Date, as calculated in accordance with the
method specified in such Certificates and the related Series Supplement;
(v) such other customary information as the Trustee deems necessary
or desirable, (or that any such Certificateholder reasonably requests,) to
enable such Certificateholders to prepare their tax returns;
(vi) if the Series Supplement provides for Advances, the aggregate
amount of Advances, if any, included in such distribution, and the
aggregate amount of unreimbursed Advances, if any, at the close of business
on such Distribution Date;
(vii) the aggregate stated principal amount and, if applicable,
notional amount of the Underlying Securities related to such Series, the
current rating assigned by the Rating Agency thereon and the current
interest rate or rates thereon at the close of business on such
Distribution Date;
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(viii) the aggregate Certificate Principal Balance (or Notional
Amount, if applicable) of each Class of such series at the close of
business on such Distribution Date, separately identifying any reduction in
such aggregate Certificate Principal Balance (or Notional Amount) due to
the allocation of any Realized Losses on such Distribution Date or
otherwise;
(ix) as to any Series (or any Class within such Series) for which
Credit Support has been obtained, the amount or notional amount of coverage
of each element of Credit Support (and rating, if any, thereof) included
therein as of the close of business on such Distribution Date.
In the case of information furnished pursuant to subclauses (iii) and (v)
above, the amounts shall be expressed as a dollar amount per minimum
denomination of Certificates or for such other specified portion thereof. Within
a reasonable period of time after the end of each calendar year, the Trustee
shall furnish to each Person who at any time during each such calendar year was
a Certificateholder a statement containing the information set forth in
subclauses (iii) and (v) above, aggregated for such calendar year or the
applicable portion thereof during which such person was a Certificateholder.
Such obligation of the Trustee shall be deemed to have been satisfied to the
extent that substantially comparable information shall be provided by the
Trustee pursuant to any requirements of the Code as are from time to time in
effect. The Trustee shall supply to Certificateholders who so request all
materials received by the Trustee from the Underlying Securities Issuer.
Section 4.04. Advances. (a) Unless otherwise specified in the applicable
Series Supplement, the Trustee shall have no obligation to make Advances (as
defined below) with respect to the Underlying Securities or in favor of the
Holders of any Series (or Class within such Series) of Certificates.
(b) However, as and to the extent provided in the Series Supplement for a
given Series, and subject to the terms of paragraphs (b) and (c) of this
Section 4.04, on or prior to each Distribution Date, the Trustee shall advance
or cause to be advanced in immediately available funds for deposit in the
Certificate Account for such Series an advance (each, an "Advance") in an amount
equal, unless otherwise specified in the related Series Supplement, to the
aggregate of distributions of principal, premium (if any) and interest due on
the Underlying Securities for such Series (or Class) during the related
Collection Period, to the extent remaining unpaid at the time of such Advance.
In satisfaction of its obligation to make such Advances, the Trustee shall make
such Advances from its own funds. The Trustee may recover Advances from late
collections received by the Trustee on the applicable Underlying Securities,
proceeds from any applicable Credit Support, if any, and Liquidation Proceeds
with respect to the Underlying Securities for such Series or Class, as specified
in the related Series Supplement, as to which any such unreimbursed Advance was
made.
(c) Notwithstanding any provision herein to the contrary, no Advance
shall be required to be made hereunder if the Trustee reasonably believes that
it will be unable to recover such Advance from related late collections, Credit
Support proceeds, if any, or
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Liquidation Proceeds with respect to the applicable Underlying Securities. It is
further understood and agreed that the Trustee shall not be obligated to make
any Advances in respect of reductions in the amount of collections on the
Underlying Securities due to bankruptcy proceedings with respect to the
Underlying Securities or the obligors thereof.
(d) Notwithstanding any provision herein to the contrary, unless otherwise
provided in the Series Supplement for a given Series, any Advances made in
respect of any Underlying Securities related to such Series (or Class within
such Series) that are subsequently deemed by the Trustee to be nonrecoverable
from related late collections, Credit Support proceeds, if any, or Liquidation
Proceeds may be reimbursed to the Trustee through the application of amounts on
deposit in the Certificate Amount for such series allocable to any of such
Underlying Securities prior to the distributions of interest, premium (if any)
and principal with respect to the Certificates of such Series or Class.
Section 4.05. Allocation of Realized Losses and Trust Expenses. With
respect to any Series of Certificates, the manner and priority of the allocation
of Realized Losses, Eligible Expenses, Allowable Expense Amounts and
Extraordinary Trust Expenses, if any, on any Distribution Date among the
Classes, if any, of such Series shall be as set forth in the related Series
Supplement.
Section 4.06. Compliance with Withholding Requirements. (a)
Notwithstanding any other provision of this Trust Agreement to the contrary, the
Trustee shall comply with all Federal withholding requirements respecting
distributions to Certificateholders of interest or original issue discount that
the Trustee reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding.
(b) Each Certificateholder will provide the Trustee (and, so long as the
Certificates are held at a Depository in the form of Global Certificates, each
Beneficial Owner of the Certificates will provide such Depository and the
Trustee) with evidence that there should not be any withholding tax assessed for
Federal income tax purposes in respect of distributions to such
Certificateholder, such evidence to take the form of a statement, on a duly
executed and up-to-date Internal Revenue Service Form W-8 (or successor form),
Form W-9 (or successor Form), or Form 4224 (or successor form), as applicable,
that identifies the Beneficial Owner of the Certificate; provided, however, that
for so long as the Certificates are held at a Depository in the form of Global
Certificates, the Certificateholder shall have no obligation to provide the
Trustee with any such evidence except to the extent it has received such
evidence from Beneficial Owners of the Certificates. The Trustee shall not be
required to accept any such Internal Revenue Service forms if it believes that
they are not accurate (but the Trustee shall not be required to make any
independent investigation to determine their accuracy).
(c) If any tax or other governmental charge shall become payable by or on
behalf of the Trustee, including any tax or governmental charge required to be
withheld from any payment by the Trustee under the provisions of any applicable
law or regulation with respect to any Underlying Securities or the Certificates,
such tax or governmental charge shall be payable by the Certificateholder and
may be withheld by the Trustee. The consent
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of Certificateholder shall not be required for such withholding. In the event
the Trustee does withhold any amount from interest or original issue discount
distributions or Advances thereof to any Certificateholder pursuant to Federal
withholding requirements, the Trustee shall indicate in the statement required
pursuant to Section 4.03 the amount so withheld.
(d) The Depositor and the Trustee shall have the right to refuse the
surrender, registration of transfer or exchange of any Certificate with respect
to which such tax or other governmental charge shall be payable until such
payment shall have been made by the Certificateholder.
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates. (a) The Certificates of any Series (or
Class within such Series) shall be issued in fully registered form as Registered
Certificates and shall be substantially in the form of the exhibits with respect
thereto attached to the applicable Series Supplement.
The Certificates may be issued in one or more Series, each of which series
may, subject to the provisions of the Code and the intended status of each
Series Trust to constitute a fixed investment trust for federal income tax
purposes, be issued in one or more Classes, with such further particular
designation added or incorporated in such title for the Certificates of any
particular Series or Class within such Series as the Depositor may determine.
Each Certificate shall bear upon its face the designation so selected for the
Series and Class to which it belongs. All Certificates of the same Series and
Class shall be identical in all respects except for the denominations thereof.
All Certificates of all Classes within any one Series at any time Outstanding
shall be identical except for differences among the Certificates of the
different Classes within such Series specified in the applicable Series
Supplement. Except as otherwise provided in a Series Supplement, all
Certificates of a particular Series (and all Classes within such Series) issued
under this Trust Agreement shall be in all respects equally and ratably entitled
to the benefits hereof without preference, priority or distinction on account of
the actual time or times of authentication and delivery, all in accordance with
the terms and provisions of this Trust Agreement.
(b) Each Series (and all Classes within such Series) of Certificates shall
be created by a Series Supplement authorized by the Depositor and establishing
the terms and provisions of such Series. The several Series may, subject to the
provisions of the Code and the intended status of each Series Trust to
constitute a fixed investment trust for federal income tax purposes, differ as
between Series and any given Class may vary as between the other Classes within
any given Series.
Section 5.02. Execution, Authentication and Delivery. (a) The
Certificates shall be executed by the Depositor by its President, its Treasurer,
or one of its Vice Presidents, under its corporate seal, which may be in
facsimile form and imprinted or otherwise
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reproduced thereon and shall be attested by its Secretary or one of its
Assistant Secretaries. The signature of any of these officers may be manual or
facsimile. Certificates bearing the manual or facsimile signature of
individuals who were at any time the proper officers of the Depositor shall be
binding, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificates.
(b) Each Certificate shall be dated as of the later of the date specified
in the related Series Supplement and the date of its authentication.
(c) No Certificate appertaining thereto shall be entitled to any benefit
under this Trust Agreement or be valid or obligatory for any purpose, unless
there appears on such Certificate a certificate of authentication substantially
in one of the forms provided for herein executed by the Trustee by the manual
signature of one of its authorized signatories, and such certificate upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder and is entitled
to the benefits of this Trust Agreement.
Section 5.03. Temporary Certificates. Pending the preparation of
Definitive Certificates of any Series (or Class within each such Series), the
Depositor may execute, and upon receipt of Depositor Order, the Trustee shall
authenticate and deliver temporary Certificates which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the Definitive Certificates in lieu of which they
are issued, in registered form and with such appropriate insertions, omissions,
substitutions and other variations as may be authorized by such Depositor Order.
Any such temporary Certificate may be in global form, representing all or a
portion of the Outstanding Certificates of such Series or Class. Every such
temporary Certificate shall be executed by the Depositor and shall be
authenticated and delivered by the Trustee upon the same conditions and in
substantially the same manner, and with the same effect, as the Definitive
Certificate or Definitive Certificates in lieu of which is issued.
If temporary Certificates of any Series (or Class within such Series) are
issued, the Depositor will cause Definitive Certificates of such Series or Class
to be prepared without unreasonable delay. After the preparation of Definitive
Certificates of such Series or Class, the temporary Certificates of such Series
or Class shall be exchangeable for Definitive Certificates of such Series or
Class upon surrender of the temporary Certificates of such Series or Class at
the office of the Trustee in a Place of Distribution for such Series or Class,
without charge to the Holder, except as provided in Section 5.04 in connection
with a transfer. Upon surrender for cancellation of any one or more temporary
Certificates of any Series or Class within such Series, the Depositor shall
execute and the Trustees shall authenticate and deliver in exchange therefore
Definitive Certificates with a like Certificate Principal Balance or Notional
Amount, as applicable, of the same Series (or Class within such Series) of
authorized denominations and of like tenor. Until so exchanged, temporary
Certificates of any Series (or Class within such Series) shall in all respects
be entitled to the same benefits under this Trust Agreement as Definitive
Certificates of such Series or Class,
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except as otherwise specified in the applicable Series Supplement with respect
to the payment of interest on Global Securities in temporary form.
Upon any exchange of a portion of a temporary Global Security for a
definitive Global Security or for the individual Definitive Certificates
represented thereby pursuant to this Section 5.03 or Section 5.04, the temporary
Global Security shall be endorsed by the Trustee to reflect the reduction of the
aggregate Certificate Principal Balance or Notional Amount, as applicable,
evidenced thereby, whereupon the aggregate Certificate Principal Balance or
Notional Amount, as applicable, of such temporary Global Security shall be
reduced for all purposes by the amount so exchanged and endorsed.
Section 5.04. Registration; Registration of Transfer and Exchange. (a)
The Trustee shall cause to be kept a register for each Series of Registered
Certificates (the registers maintained in such office and in any other office or
agency of the Trustee in a Place of Distribution being herein sometimes
collectively referred to as the "Certificate Register") in which a transfer
agent and registrar (which may be the Trustee) (the "Certificate Registrar")
shall provide for the registration of Registered Certificates and the
registration of transfers and exchanges of Registered Certificates. The Trustee
is hereby initially appointed Certificate Registrar for the purpose of
registering Registered Certificates and transfers and exchanges of Registered
Certificates as herein provided; provided, however, that the Trustee may appoint
one or more co-Certificate Registrars. Upon any resignation of any Certificate
Registrar, the Depositor shall promptly appoint a successor or, in the absense
of such appointment, assume the duties of Certificate Registrar.
If a Person other than the Trustee is appointed by the Depositor as
Certificate Registrar, the Depositor will give the Trustee prompt written notice
of the appointment of a Certificate Registrar and of the location, and any
change in the location, of the Certificate Register, and the Trustee shall have
the right to rely upon a certificate executed on behalf of the Certificate
Registrar by an officer thereof as to the names and addresses of the Holders of
the Registered Certificates and the principal amounts and numbers of such
Registered Certificates.
(b) Upon surrender for registration of transfer any Registered Certificate
of any Series (or Class within such Series) at the office or agency of the
Trustee, if the requirements of Section 8-401(1) of the Uniform Commercial Code
are met to the Depositor's satisfaction, the Depositor shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Registered Certificates of any authorized
denominations, of a like Series, Class and aggregate Certificate Principal
Balance or Notional Amount, as applicable.
(c) Notwithstanding any other provisions of this Section, unless and until
it is exchanged in whole or in part for the individual Certificates represented
thereby, a Global Security representing all or a portion of the Certificates of
a Series (or Class within such Series) may not be transferred except as a whole
by the Depository for such Series or Class to a nominee of such Depository or by
a nominee of such Depository to such Depository or
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another nominee of such Depository or by such Depository or any such nominee to
a successor Depository for such Series or Class or a nominee of such successor
Depository.
(d) At the option of the Holder, Registered Certificates of any
Series (or Class within such Series) (other than a Global Security, except as
set forth below) may be exchanged for other Registered Certificates of the same
Series or Class of any authorized denomination or denominations of like tenor
and aggregate Certificate Principal Balance or Notional Amount, as applicable,
upon surrender of the Registered Certificates to be exchanged at the office or
agency of the Trustee maintained for such purpose.
(e) If at the time the Depository for the Certificates of a Series
(or Class within such Series) notifies the Depositor that it is unwilling or
unable to continue as Depository for the Certificates of such Series or Class or
if at any time the Depository for the Certificates of such Series or Class shall
no longer be eligible under Section 5.08(b), the Depositor shall appoint a
successor Depository with respect to the Certificates of such Series or Class.
If a successor Depository for the Certificates of such Series or Class is not
appointed by the Depositor within 90 days after the Depositor receives such
notice or becomes aware of such ineligibility, the Depositor's election pursuant
to Section 5.01 shall no longer be effective with respect to the Certificates of
such Series or Class and the Depositor will execute, and the Trustee, upon
receipt of a Depositor Order for the authentication and delivery of individual
Certificates of such Series or Class, will authenticate and deliver individual
Certificates of such Series or Class in an aggregate Certificate Principal
Balance or Notional Amount, as applicable, equal to the aggregate Certificate
Principal Balance or Notional Amount, as applicable, of the Global Security or
Securities representing Certificates of such Series or Class in exchange for
such Global Security or Securities.
(f) The Depositor may at any time and in its sole discretion
determine that individual Certificates of any Series (or Class within such
Series) issued in the form of one or more Global Securities shall no longer be
represented by such Global Security or Securities. In such event the Depositor
shall execute, and the Trustee, upon receipt of a Depositor Order for the
authentication and delivery of individual Certificates of such Series or Class,
shall authenticate and deliver, individual Certificates of such Series or Class
in an aggregate Certificate Principal Balance or Notional Amount, as applicable,
equal to the aggregate Certificate Principal Balance or Notional Amount, as
applicable, of the Global Security or Securities representing Certificates of
such Series or Class in exchange for such Global Security or Securities.
(g) If specified by the Depositor pursuant to Section 5.01 with
respect to a Series (or Class within such Series) of Certificates, the
Depository for such Series may surrender a Global Security for such Series or
Class in exchange in whole or in part for individual Certificates of such Series
or Class on such terms as are acceptable to the Depositor and such Depository.
Thereupon, the Depositor shall execute, and the Trustee, upon receipt of a
Depositor Order, shall authenticate and deliver, without service charge,
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(i) to each Person specified by such Depository a new individual
Certificate or Certificates of the same Series or Class, of any authorized
denomination as requested by such Person in an aggregate Certificate
Principal Balance or Notional Amount, as applicable, equal to and in
exchange for such Person's beneficial interest in the Global Security; and
(ii) to such Depository a new Global Security in a denomination equal
to the difference, if any, between the aggregate Certificate Principal
Balance or Notional Amount, as applicable, of the surrendered Global
Security and the aggregate Certificate Principal Balance or Notional
Amount, as applicable, of individual Certificates delivered to Holders
thereof.
In any exchange provided for in any of the preceding three paragraphs, the
Depositor shall execute, and the Trustee, upon receipt of a Depositor Order,
will authenticate and deliver individual Certificates in registered form in
authorized denominations.
Upon the exchange of a Global Security for individual Certificates, such
Global Security shall be cancelled by the Trustee. Individual Registered
Certificates issued in exchange for a Global Security pursuant to this Section
5.04 shall be registered in such names and in such authorized denominations as
the Depository for such Global Security, pursuant to instructions from its
Participants, any indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Registered Certificates to the Person in
whose names such Registered Certificates are so registered.
(h) All Certificates issued upon any registration of transfer or exchange
of Certificates shall constitute complete and indefeasible evidence of ownership
in the Trust related to such Certificates and be entitled to the same benefits
under this Trust Agreement as the Certificates surrendered upon such
registration of transfer or exchange.
(i) Every Registered Certificate presented or surrendered for registration
of transfer or exchange shall (if so required by the Depositor, the Trustee or
the Certificate Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Depositor, the Trustee or the
Certificate Registrar, duly executed, by the Holder thereof or his attorney duly
authorized in writing, with such signature guaranteed by a brokerage firm or
financial institution that is a member of a Securities Approved Medallion
Program such as Securities Transfer Agents Medallion Program (STAMP), Stock
Exchange Medallion Program (SEMP) or New York Stock Exchange Inc. Medallion
Signature Program (MSP).
(j) No service charge shall be made to a Holder for any registration of
transfer or exchange of Certificates, but the Depositor may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with any registration of transfer or exchange of Certificates,
other than exchanges pursuant to Section 5.03 not involving any transfer.
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Section 5.05. Mutilated, Destroyed, Lost and Stolen Certificates. If (i)
any mutilated Certificate is surrendered to the Trustee at its Corporate Trust
Office or (ii) the Depositor and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate, and there is
delivered to the Depositor and the Trustee such security or idemnity as they may
require to hold each of them and any Paying Agent harmless, and neither the
Depositor nor the Trustee receives notice that such Certificate has been
acquired by a bona fide purchaser, then the Depositor shall execute and the
Trustee, upon receipt of a Depositor Order, shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of the same Series or Class of like tenor, form,
terms and principal amount, bearing a number not contemporaneously Outstanding,
so that neither gain nor loss in interest shall result from such exchange or
substitution.
Upon the issuance of any new Certificate under this Section, the
Depositor may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in respect thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Certificate of any Series or Class issued pursuant to this
Section shall constitute complete and indefeasible evidence of ownership in the
Trust related to such Series, whether or not the destroyed, lost or stolen
Certificate shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Trust Agreement equally and proportionately with any
and all other Certificates of that Series or Class duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Certificates or
Coupons.
Section 5.06. Persons Deemed Owners. (a) The Depositor, the Trustee and
any agent of the Depositor or the Trustee may treat the Person in whose name any
Registered Certificate is registered as the owner of such Registered Certificate
for the purpose of receiving distributions of principal of (and premium, if any)
and (subject to Section 4.02) interest, if any, on such Registered Certificate
and for all other purposes whatsoever, whether or not such Registered
Certificate be overdue, and neither the Depositor or the Trustee, nor any agent
of the Depositor or the Trustee shall be affected by notice to the contrary.
(b) None of the Depositor, the Trustee or any of their agents will
have any responsibility or liability for any aspect of the records relating to
or distributions made on account of beneficial ownership interests in a Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Section 5.07. Cancellation. Unless otherwise specified pursuant to
Section 5.01 for Certificates of any Series, all Certificates surrendered for
payment, redemption, transfer or exchange shall, if surrendered to any Person
other than the Trustee, be delivered to the
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Trustee and shall be promptly cancelled by it. No Certificates shall be
authenticated in lieu of or in exchange for any Certificates cancelled as
provided in this Section, except as expressly permitted by this Trust Agreement.
Section 5.08. Global Securities. (a) If the Series Supplement pursuant to
Section 5.01 provides that a Series (or Class within such Series) of
Certificates shall be represented by one or more Global Securities that (i)
shall represent an aggregate initial Certificate Principal Balance or Notional
Amount, as applicable, equal to the aggregate initial Certificate Principal
Balance or Notional Amount, as applicable, of the Certificates of such Series or
Class to be represented by such one or more Global Securities, (ii) shall be
registered, if in registered form, in the name of the Depository for such Global
Security or Securities or the nominee of such Depository, (iii) shall be
delivered by the Trustee to such Depository or pursuant to such Depository's
instruction and (iv) shall bear a legend substantially to the following effect:
"Unless and until it is exchanged in whole or in part for the individual
Certificates represented hereby, this Global Security may not be transferred
except as a whole by the Depository to a nominee of the Depository or by a
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository."
No Holder of a Certificate of such Series or Class will receive a
Definitive Certificate representing such Holder's interest in such Certificate
or Certificates, except as provided in Section 5.10. Unless and until
definitive, fully registered Certificates (the "Definitive Certificates") have
been issued to Holders of such Series or Class pursuant to Section 5.10:
(i) the provisions of this Section 5.09 shall be in full force
and effect;
(ii) the Certificate Registrar and the Trustee shall be
entitled to deal with the Depository for all purposes of this Trust
Agreement (including the distribution of principal of, and premium, if
any, and interest on the Certificates and the giving of instructions
or directions hereunder) as the sole Holder of the Certificates of
such Series or Class, and shall have no obligation to the owners of
beneficial interests in such Series or Class (collectively, the
"Certificate Owners");
(iii) to the extent that the provisions of this Section 5.08
conflict with any other provisions of this Trust Agreement, the
provisions of this Section 5.08 shall control;
(iv) the rights of Certificate Owners of such Series or Class
shall be exercised only through the Depository and shall be limited to
those established by law and agreements between such Certificate
Owners and the Depository or its Participants; and
(v) whenever this Trust Agreement requires or permits actions
to be taken based upon instructions or directions of Holders of
Certificates of such Series or Class evidencing a specified percentage
of the aggregate Voting Rights of such Series or Class, the Depository
shall be deemed to represent such percentage only to the extent
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that it has received instructions to such effect from Certificate Owners of
such Series or Class or Participants in such Depository's system owning or
representing, respectively, such required percentage of the beneficial
interest in the Certificates of such Series or Class and has delivered such
instructions to the Trustee.
(b) Each Depository designated pursuant to Section 5.01 for a Global
Security in registered form must, at the time of its designation and at all
times while it serves as such Depository, be a clearing agency registered under
the Exchange Act and any other applicable statute or regulation.
Section 5.09. Notices to Depository. Whenever a notice or other
communication to the Holders of a Series or Class within such Series represented
by one or more Global Securities is required under this Trust Agreement, unless
and until Definitive Certificates for such Series or Class shall have been
issued to such Certificate Owners pursuant to Section 5.10, the Trustee shall
give all such notices and communications specified herein to be given to Holders
of the Certificates of such Series to the Depository, and shall have no
obligation to the Certificate Owners.
Section 5.10. Definitive Certificates. If in respect of a Series (or Class
within such Series) represented by one or more Global Securities (i) the
Depositor advises the Trustee in writing that the Depository is no longer
willing or able to properly discharge its responsibilities with respect to the
Certificates of such Series or Class and the Depositor is unable to locate a
qualified successor, (ii) the Depositor at its option advises the Trustee in
writing that it elects to terminate the book-entry system of such Series or
Class through the Depository or (iii) Certificate Owners representing beneficial
interests aggregating at least a majority (or such other Required Percentage--
Definitive Certificates that may be specified in a Series Supplement) of the
Voting Rights of the Certificates of such Series or Class advise the Depository
in writing that the continuation of a book-entry system for such Series or Class
through the Depository is no longer in the best interests of the Certificate
Owners of such Series or Class, then the Depository shall notify all Certificate
Owners or Participants in the Depository's system with respect to such Series or
Class and the Trustee of the occurrence of any such event and of the
availability of Definitive Certificates for such Series or Class to Certificate
Owners of such Series or Class requesting the same.
Upon surrender to the Trustee of the Global Securities of such Series or
Class by the Depository, accompanied by registration instructions, the Depositor
shall execute and the Trustee shall authenticate the Definitive Certificates of
such Series or Class in accordance with the instructions of the Depository. None
of the Depositor, the Certificate Registrar or the Trustee shall be liable for
any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates of a Series or Class, the Trustee shall recognize the
holders of the Definitive Certificates of such Series or Class as Holders.
Section 5.11. Conditions of Authentication and Delivery of New Series.
Certificates of a new Series may be issued at any time and from time to time
after the execution and delivery of these Standard Terms and the related Series
Supplement. The Depositor shall
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execute and deliver Certificates of such Series to the Trustee and the Trustee
shall authenticate and deliver such Certificates upon a Depositor Order and upon
delivery by the Depositor to the Trustee of the following:
(1) The delivery of the Underlying Securities in accordance with
Section 2.01(b);
(2) An Officer's Certificate of the Depositor, dated as of the
Closing Date, to the effect that all of the requirements of this
Section 5.11 have been satisfied, and that the Depositor is not in
breach of this Trust Agreement and that the issuance of the
Certificates will not result in any breach of any of the terms,
conditions, or provisions of, or constitute a default under, the
Depositor's certificate of incorporation or bylaws, or any indenture,
mortgage, deed of transfer or other agreement or instrument to which
the Depositor is a party or by which it or its property is bound or
any order of any court or administrative agency entered in any
Proceeding to which the Depositor is a party or by which it or its
property may be bound or to which it or its property may be subject;
(3) A Series Supplement consistent with the applicable
provisions of these Standard Terms;
(4) If applicable, a fully executed copy of the Swap Agreement,
together with all documents and opinions required to be delivered to
the Trust upon execution thereof pursuant to the terms thereof; and
(5) Written instructions by the Depositor to the Trustee
directing the Trustee to enter into and perform any obligations under
the Swap Agreement, if applicable, and/or the Market Agent Agreement,
if applicable.
If all the Certificates of a Series are not to be originally issued at
the same time, then the documents required to be delivered pursuant to this
Section 5.11 must be delivered only once, prior to the authentication and
delivery of the first Certificate of such Series; provided, however, that any
subsequent Depositor Order to the Trustee to authenticate Certificate of such
Series upon original issuance shall constitute a representation and warranty by
the Depositor that, as of the date of such request, the statements made in this
Section 5.11 shall be true and correct as if made on such date.
Section 5.12. Appointment of Paying Agent. The Trustee may appoint one or
more paying agents (each, a "Paying Agent") with respect to the Certificates of
any Series. Any such Paying Agent shall be authorized to make distributions to
Certificateholders of such Series from the Certificate Account for such Series
pursuant to the provisions of the applicable Series Supplement and shall report
the amounts of such distributions to the Trustee. Any Paying Agent shall have
the revocable power to withdraw funds from such Certificate Account for the
purpose of making the distributions referred to above. The Trustee may revoke
such power and remove the Paying Agent if the Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under
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this Trust Agreement in any material respect. The Paying Agent shall initially
be the Trustee and any co-paying agent chosen by the Trustee and acceptable to
the Depositor. Any Paying Agent shall be permitted to resign as Paying Agent
upon 30 days' notice to the Trustee. In the event that the Trustee shall no
longer be the Paying Agent, the Trustee shall appoint a successor or additional
Paying Agent. The Trustee shall cause each successor to act as Paying Agent to
execute and deliver to Trustee an instrument in which such successor or
additional Paying Agent shall agree with the Trustee that it will hold all sums,
if any, held by it for distribution to the Certificateholders in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be
distributed to such Certificateholders and will agree to such other matters as
are required by Section 317(b) of the Trust Indenture Act. The Paying Agent
shall return all unclaimed funds to the Trustee and upon removal shall also
return all funds in its possession to the Trustee. The provisions of Sections
7.01, 7.03, 7.04 and 7.06 shall apply to the Trustee also in its role as Paying
Agent, for so long as the Trustee shall act as Paying Agent. Any reference in
this Trust Agreement to the Paying Agent shall include any co-paying agent
unless the context requires otherwise. Notwithstanding anything contained herein
to the contrary, the appointment of a Paying Agent pursuant to this Section 5.12
shall not release the Trustee from the duties, obligations, responsibilities or
liabilities arising under this Trust Agreement other than with respect to funds
paid to such Paying Agent.
Section 5.13. Authenticating Agent. (a) The Trustee may appoint one or
more Authenticating Agents (each, an "Authenticating Agent") with respect to the
Certificates of any Series which shall be authorized to act on behalf of the
Trustee in authenticating such Certificates in connection with the issuance,
delivery and registration of transfer or exchange of such Certificates. Whenever
reference is made in this Trust Agreement to the authentication of Certificates
by the Trustee or the Trustee's certificate of authentication, such reference
shall be deemed to include authentication on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on behalf of
the Trustee by an Authenticating Agent. Each Authenticating Agent must be
acceptable to the Depositor. Notwithstanding anything contained herein to the
contrary, the appointment of an Authenticating Agent pursuant to this Section
5.13 shall not release the Trustee from the duties, obligations,
responsibilities or liabilities arising under this Trust Agreement.
(b) Any institution succeeding to the corporate agency business of any
Authenticating Agent shall continue to be an Authenticating Agent without the
execution or filing of any power or any further act on the part of the Trustee
or such Authenticating Agent. An Authenticating Agent may at any time resign by
giving notice of resignation to the Trustee and to the Depositor. The Trustee
may at any time terminate the agency of an Authenticating Agent by giving notice
of termination to such Authenticating Agent and to the Depositor. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
an Authenticating Agent shall cease to be acceptable to the Trustee or the
Depositor, the Trustee promptly may appoint a successor Authenticating Agent.
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless acceptable to the
Despositor. The Trustee agrees to pay to each
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Authenticating Agent from time to time reasonable compensation for its services
under this Section. The provisions of Section 7.01, 7.03 and 7.04 shall be
applicable to any Authenticating Agent.
(c) Pursuant to an appointment made under this Section, the Certificates
may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the Certificates described in the Standard Terms and
the related Series Supplement.
Dated:
-----------------------------------------
-----------------------------------------
as Authenticating Agent for the Trustee,
By
---------------------------------------
Section 5.14. Voting Rights with Respect to Underlying Securities. (a)
Within five Business Days after receipt of notice of any meeting of, or other
occasion for the exercise of voting rights or the giving of consents ("voting
rights") by, owners of any of the Underlying Securities, the Trustee shall give
notice to the Certificateholders, setting forth (i) such information as is
contained in such notice to owners of Underlying Securities, (ii) a statement
that the Certificateholders will be entitled, subject to any applicable
provision of law and any applicable provisions of such Underlying Securities
(and to the extent of the voting rights allocated to the Certificateholders
pursuant to subsection 5.14(b)), to instruct the Trustee as to the exercise of
voting rights, if any, pertaining to such Underlying Securities and (iii) a
statement as to the manner in which instructions may be given to the Trustee to
give a discretionary proxy to a person designated in the notice received by the
Trustee. Such notice shall be given by the Trustee to the Certificateholders of
record on such Record Date.
Upon the written request of the applicable Certificateholder, received on
or before the date established by the Trustee for such purpose, the Trustee
shall endeavor, insofar as practicable and permitted under any applicable
provision of law and any applicable provision of or governing the Underlying
Securities, to vote in accordance with any nondiscretionary instruction set
forth in such written request (in each case to the extent of the voting rights
allocated pursuant to subsection 5.14(b) to such Certificateholder). The Trustee
shall not vote except as specifically authorized and directed in written
instructions from the applicable Certificateholder entitled to give such
instructions.
(b) Unless otherwise specified in the applicable Series Supplement, the
voting rights allocable to the owners of the Underlying Securities pursuant to
the terms thereof shall be allocated among the Certificateholders pro rata, in
the proportion that the denomination of each Certificate bears to the aggregate
denomination of all Certificates.
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(c) By accepting delivery of a Certificate, whether upon original issuance
or subsequent transfer, exchange or replacement thereof, and without regard to
whether ownership is beneficial or otherwise, the Certificateholder agrees so
long as it is an owner of such Certificate that it shall not grant any consent
(i) to any conversion of the timing of payment of, or the method or rate of
accruing, interest on the Underlying Securities underlying the Certificates held
by such Certificateholder or (ii) to any redemption or prepayment of the
Underlying Securities underlying the Certificates held by such
Certificateholder. The Trustee shall not grant any consent solicited from the
owners of the Underlying Securities underlying the Certificates with respect to
the matters set forth in this Section nor shall it accept or take any action in
respect of any consent, proxy or instructions received from any
Certificateholder in contravention of the provisions of this Section.
Section 5.15. Actions by Certificateholders. (a) Wherever in this Trust
Agreement a provision is made that an action may be taken or a notice, demand or
instruction given by Certificateholders or Beneficial Owners, such action,
notice or instruction may be taken or given by any Certificateholder or
Beneficial Owner.
(b) Each Certificateholder or Beneficial Owner shall have the right to
assert any rights and privileges of a Certificateholder or Beneficial Owner, and
shall have the right to proceed directly and individually against any Person to
enforce any remedies hereunder and shall not be required to act in concert with
any other Certificateholder or Beneficial Owner or any other Person.
(c) Any request, demand, authorization, direction, notice, consent, waiver
or other act by a Certificateholder or Beneficial Owner of a Certificate shall
bind such Certificateholder or Beneficial Owner and every subsequent
Certificateholder or Beneficial Owner of such Certificate or any Certificate
issued upom the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, suffered or omitted to be done by the
Certificateholder or Beneficial Owner or the Trustee in reliance thereon,
whether or not notation of such action is made upon such Certificate.
(d) Certificateholders of Certificate are beneficial owners of the right to
receive principal payments and interest payments to which such Certificate
relate and, as such, will have the right following an event of default with
respect to any Underlying Security to proceed directly against the Underlying
Securities Issuer(s). Such Certificateholders are not required to join other
Certificateholders of Certificates, the Depositor or the Trustee in order to
proceed against the Underlying Securities Issuer(s).
Section 5.16. Events of Default. If any Event of Default shall occur and be
continuing with respect to any class of Certificates, then, and in each and
every case, the Trustee shall exercise any rights in respect of the related
Underlying Securities as provided in the applicable Series Supplement.
Section 5.17. Judicial Proceedings Instituted by Trustee; Trustee May Bring
Suit. If there shall be a failure to make payment of the principal of or
premium, if any, or interest on any Underlying Security, then the Trustee, in
its own name, and as trustee of an express
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trust, as holder of such Underlying Security, shall be, to the extent permitted
by and in accordance with the terms of the Underlying Security, subject to the
limitations on acceleration and the exercise of remedies set forth therein,
entitled and empowered to institute any suits, actions or proceedings at law, in
equity or otherwise, including the power to make a demand on the trustee in
respect of such Underlying Security, if provided for, to take action to enforce
the Underlying Security for the collection of the sums so due and unpaid on such
Underlying Security and may prosecute any such claim or proceeding to judgment
or final decree with respect to the whole amount of any such sums so due and
unpaid.
Section 5.18. Control by Certificateholders. The Holders of Certificates
of any Class holding Certificates representing not less than the Required
Percentage -- Direction of Trustee of the aggregate Voting Rights of the
Outstanding Certificates of such Class shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee under this
Trust Agreement, including any right of the Trustee as holder of the Underlying
Securities; provided, however, that:
(1) such direction shall not be in conflict with any rule of law or
with this Trust Agreement and would not involve the Trustee in personal
liability or expense;
(2) the Trustee shall not determine that the action so directed would
be unjustly prejudicial to the Holders of Certificates of such Class not
taking part in such direction; and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 5.19. Waiver of Past Defaults. The Holders of the Required
Percentage -- Waiver of Certificates of any Series may direct the Trustee to
vote such percentage of the Underlying Securities held by the Trustee as
corresponds to the percentage of the aggregate Principal Amount of the
Certificates of such Series held by such Holders to waive any past Event of
Default thereunder with respect to such Series of Certificates and its
consequences or may instruct the Trustee to waive any past default under this
Trust Agreement and its consequences, except a default:
(1) in the payment of the principal of or premium, if any, or
interest on the Underlying Securities;
(2) in respect of a covenant or provision hereof which under Article
VIII hereof cannot be modified or amended without the consent of the Holder
of each Outstanding Certificate affected; or
(3) specified in the applicable Series Supplement, if any, unless the
applicable Series Supplement provides otherwise.
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Upon any such direction, the Trustee shall vote such percentage of the
Underlying Securities of the corresponding Series held by the Trustee as
corresponds to the percentage of the aggregate Principal Amount of the
Outstanding Certificates of such Series held by Holders who directed the Trustee
to waive such default or Event of Default thereunder. Upon any waiver that is
effective under the terms of such Class of Underlying Securities to waive such
default or Event of Default, such default or Event of Default shall cease to
exist with respect to this Trust Agreement, and, in the case of a default, any
Event of Default arising therefrom shall be deemed to have been cured for every
purpose of this Trust Agreement and any direction given by the Trustee on behalf
of such Certificateholders or in respect of any Underlying Securities shall be
annulled with respect thereto; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consent
thereon.
Section 5.20. Right of Certificateholders to Receive Payments Not to Be
Impaired. Anything in this Trust Agreement to the contrary notwithstanding, the
right of any Certificateholder to receive distributions of payments required
pursuant to Section 4.01 hereof on the Certificates when due, or to institute
suit for enforcement of any such payment on or after the applicable Distribution
Date or other date specified herein for the making of such payment, shall not be
impaired or affected without the consent of such Certificateholder.
Section 5.21. Remedies Cumulative. Every remedy given hereunder to the
Trustee or to any of the Certificateholders shall not be exclusive of any other
remedy or remedies, and every such remedy shall be cumulative and in addition to
every other remedy given hereunder or now or hereafter given by statute, law,
equity or otherwise.
ARTICLE VI
THE DEPOSITOR
Section 6.01. Liability of the Depositor. (a) The Depositor shall be liable
in accordance herewith only to the extent of the obligations specifically
imposed by these Standard Terms and the related Series Supplement.
Section 6.02. Limitation on Liability of the Depositor. (a) The Depositor
shall not be under any obligation to expend or risk its own funds or otherwise
incur financial liability in the performance of its duties hereunder or under a
Series Supplement or in the exercise of any of its rights or power if reasonable
grounds exist for believing that the repayment or such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(b) Neither the Depositor nor any of its directors, officers, employees or
agents shall be under any liability to any Trust or the Certificateholders of
any Series for any action taken, or for refraining from the taking of any
action, in good faith pursuant to this Trust Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Depositor
against any breach of representations, warranties or covenants made herein or
against any liability which would otherwise be imposed by reason of willful
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misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder.
(c) The Depositor shall not be under any obligation to appear in,
prosecute or defend any legal action unless such action is related to its
respective duties under this Trust Agreement and, in its opinion, does not
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 with respect to this Trust Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. The
Depositor shall be under no obligation whatsoever to appear in, prosecute or
defend any action, suit or other proceeding in respect of any Underlying
Securities.
(d) The Depositor shall not be liable to any Certificateholder for any
action or non-action by it in reliance upon the advice of or information from
legal counsel, accountants, any Certificateholder of a Certificate or any other
person believed by it in good faith to be competent to give such advice or
information. The Depositor may rely and shall be protected in acting upon any
written notice, request, direction or other document believed by it to be
genuine and to have been signed or presented by the proper party or parties.
(e) The Depositor shall not incur any liability to any Certificateholder
if, by reason of any provision of any present or future law, or regulation
thereunder, or any governmental authority, or by any reason of any act of God or
war or other circumstance beyond the control of the relevant party, the
Depositor shall be prevented or forbidden from doing or performing any act or
thing which the terms of this Trust Agreement provide shall be done or
performed; and the Depositor shall not incur any liability to any
Certificateholder by reason of any non-performance or delay, caused as
aforesaid, in the performance of any act or thing which the terms of this Trust
Agreement provide shall or may be done or performed, or by reason of any
exercise of, or failure to exercise, any discretion provided for in this Trust
Agreement.
Section 6.03. Depositor May Purchase Certificates. The Depositor may at any
time purchase Certificates in the open market or otherwise. Certificates so
purchased by the Depositor may, at the discretion of the Depositor, be held or
resold. Certificates beneficially owned by the Depositor will be disregarded for
purposes of determining whether the required percentage of the aggregate Voting
Rights has given any request, demand, authorization, direction, notice, consent
or waiver hereunder.
Section 6.04. Merger or Consolidation of the Depositor. Nothing in this
Trust Agreement shall prevent any consolidation or merger of the Depositor with
or into any other corporation, or any consolidation or merger of any other
corporation with or into the Depositor or any sale or transfer of all or
substantially all of the property and assets of the Depositor to any other
Person lawfully entitled to acquire the same; provided, however, that, so long
as Certificates are outstanding hereunder, the Depositor covenants and agrees
that any such consolidation, merger, sale or transfers shall be upon the
condition that the due and punctual performance and observance of all the terms,
covenants and conditions of this Trust Agreement to be kept or performed by the
Depositor shall be assumed by the Person
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(if other than the Depositor) formed by or resulting from any such consolidation
or merger, or which shall have received the transfer of all or substantially all
of the property and assets of the Depositor, just as fully and effectually as if
successor Person had been the original party of the first part hereto; and in
the event of any such sale or transfer the predecessor Depositor may be
dissolved, wound up and liquidated at any time thereafter.
Section 6.05. No Liability of the Depositor with Respect to the Underlying
Securities; Certificateholders to Proceed Directly Against the Underlying
Securities Issuer(s). (a) The sole obligor with respect to any Underlying
Security is the Underlying Securities Issuer thereof. The Depositor shall not
have any obligation on or with respect to the Underlying Securities; and its
obligations with respect to Certificates shall be solely as set forth in this
Trust Agreement.
(b) The Depositor is not authorized to proceed against the Underlying
Securities Issuer of any Underlying Security in the event of a default or to
assert the rights and privileges of Certificateholders of Certificates and has
no duty in respect thereof.
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.01. Duties of Trustee. (a) The Trustee undertakes to perform such
duties and only such duties as are specifically set forth in these Standard
Terms and the related Series Supplement. The Trustee shall exercise such of the
rights and powers vested in it by this Trust Agreement, and shall use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of such person's own affairs. The
Trustee shall exercise those rights in a manner consistent with the status of
any Trust created hereunder as a fixed investment trust for federal income tax
purposes. The Trustee shall not have any power to vary the investment of any
Certificateholders of any Series or to accept any assets (other than proceeds of
the Underlying Securities) other than the Underlying Securities transferred to
it on the Closing Date of any Series. Any permissive right of the Trustee
enumerated in this Trust Agreement shall not be construed as a duty and shall be
interpreted consistently with the status of the Trust as a fixed investment
trust.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Trust Agreement, shall examine them to determine whether they
conform to the requirements of this Trust Agreement. If any such instrument is
found not to conform to the requirements of this Trust Agreement, the Trustee
shall take action as it deems appropriate to have the instrument corrected, and
if the instrument is not corrected to the Trustee's satisfaction, the Trustee
will provide notice thereof to the Depositor and Certificateholders.
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(c) No provision of this Trust Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:
(i) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Trust Agreement, the Trustee shall
not be liable except for the performance of such duties and obligations as
are specifically set forth in this Trust Agreement, no implied covenants or
obligations shall be read into this Trust Agreement against the Trustee
and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee that conform to the requirements of this
Trust Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Holders of the Required Percentage --
Direction of Trustee of the aggregate Voting Rights of a given Series (or
Class or group of Classes within such Series), as specified in the
applicable Series Supplement relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Trust
Agreement;
(iv) the Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of
its duties hereunder or in the exercise of any of its rights or powers if
there is reasonable ground for believing that the repayment of such funds
or adequate indemnity against such risk or liability is not reasonably
assured to it;
(v) except for actions expressly authorized by this Trust Agreement,
the Trustee shall take no actions reasonably likely to impair the interests
of the Trust in any Underlying Security now existing or hereafter acquired
or to impair the value of any Underlying Security now existing or hereafter
acquired;
(vi) except as expressly provided in this Trust Agreement, the
Trustee shall have no power to vary the corpus of the Trust including by
(A) accepting any substitute obligation or asset for a Underlying Security
initially assigned to the Trustee under Section 2.01, (B) adding any other
investment, obligation or security to the Trust or (C) withdrawing from the
Trust any Underlying Securities;
(vii) in the event that the Paying Agent or the Registrar shall fail
to perform any obligation, duty or agreement in the manner or on the day
required to be performed by the Paying Agent or Registrar, as the case may
be, under this Trust
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Agreement, the Trustee shall be obligated promptly upon its knowledge
thereof to perform such obligation, duty or agreement in the manner so
required;
(viii) the Trustee shall not be liable to any Certificateholder for
any action or non-action by it in reliance upon the advice of or
information from legal counsel, accountants, any Certificateholder of a
Certificate or any other person believed by it in good faith to be
competent to give such advice or information. The Trustee may rely and
shall be protected in acting upon any written notice, request, direction or
other document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(ix) the Trustee shall not incur any liability to any
Certificateholder if, by reason of any provision of any present or future
law, or regulation thereunder, or any governmental authority, or by any
reason of any act of God or war or other circumstance beyond the control of
the relevant party, the Trustee shall be prevented or forbidden from doing
or performing any act or thing which the terms of this Trust Agreement
provide shall be done or performed; and the Trustee shall not incur any
liability to any Certificateholder by reason of any non-performance or
delay, caused as aforesaid, in the performance of any act or thing which
the terms of this Trust Agreement provide shall or may be done or
performed, or by reason of any exercise of, or failure to exercise, any
discretion provided for in this Trust Agreement;
(x) the Trustee shall be under no obligation whatsoever to appear
in, prosecute or defend any action, suit or other proceeding in respect of
any Underlying Securities;
(xi) whenever in the administration of this Trust Agreement the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, conclusively rely upon an Officers'
Certificate; and
(xii) the Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in reliance thereon, unless the Trustee's taking,
suffering or omitting such action shall have been willful misconduct, in
bad faith or negligent.
(d) As promptly as practicable after, and in any event within 10 days
after, the occurrence of any default (as such term is defined below) hereunder
with respect to any Class of Certificates, the Trustee shall transmit by mail to
the Depositor and the Holders of Certificates of such Class in accordance with
Section 313(c) of the Trust Indenture Act, notice of such default hereunder
known to the Trustee, unless such default shall have been cured or waived;
provided, however, that, except in the case of a default in the payment of the
principal of or premium, if any, or interest on any Underlying Security, the
Trustee shall be protected in withholding such notice if and so long as a trust
committee of
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Responsible Officers of the Trustee in good faith determine that the withholding
of such notice is in the interests of the Holders of the Certificates of such
Class. For the purpose of this Section, the term "default" means, with respect
to any Class of Certificates, any event that is, or after notice or lapse of
time or both would become, an Event of Default with respect to such Class of
Certificates.
(e) Within five (5) Business Days after the receipt by the Trustee of a
written application by any three or more Certificateholders stating that the
applicants desire to communicate with other Certificateholders with respect to
their rights under this Trust Agreement or under the Certificates, and
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, and by reasonable proof that each such applicant
has owned its Certificates for a period of at least six (6) months preceding the
date of such application, the Trustee shall, at its election, either:
(i) afford to such applicants access to all information so furnished
to or received by the Trustee; or
(ii) inform such applicants as to the approximate number of
Certificateholders according to the most recent information so furnished to
or received by the Trustee, and as to the approximate cost of mailing to
such Certificateholders the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford to such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to all such Certificateholders copies of the form of proxy or other
communication which is specified in such request, with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of such mailing.
Section 7.02. Between Trustee and Sub-Administrative Agents. (a) Unless
otherwise provided in a Series Supplement, the Trustee may enter into Sub-
Administration Agreements with one or more Sub-Administrative Agents in order to
delegate certain of its administrative obligations with respect to a related
Series under this Trust Agreement to such Sub-Administrative Agents; provided,
however, that (i) such delegation shall not release the Trustee from the duties,
obligations, responsibilities or liabilities arising under this Trust Agreement;
(ii) the Rating Agency Condition shall have been satisfied with respect to the
entering into of any such agreement and (iii) such agreements are consistent
with the terms of these Standard Terms and, with respect to Certificates of any
Series, the related Series Supplement. With respect to any Series (or Class
within such Series) of Certificates, each Sub-Administration Agreement shall
impose on the Sub-Administrative Agent requirements conforming to the provisions
set forth in Section 3.01 and provide for administration of the related Trust
and all or certain specified Underlying Securities for such Series consistent
with the terms of this Trust Agreement. Additional requirements relating to the
scope and contents of any Sub-Administration Agreement may be provided in the
applicable Series Supplement. The Trustee shall deliver to the Depositor copies
of all
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Sub-Administration Agreements which it enters into, and any amendments or
modifications thereof, promptly upon the Trustee's execution and delivery of any
such instruments.
(b) The Trustee shall be entitled to terminate any Sub-Administration
Agreement which it enters into and the rights and obligations of any Sub-
Administrative Agent under any Sub-Administration Agreement in accordance with
the terms and conditions of any such Sub-Administration Agreement. In the event
of a termination of any Sub-Administration Agreement, the Trustee shall
simultaneously reassume direct responsibility for all obligations delegated in
such Sub-Administration Agreement without any act or deed on the part of the
applicable Sub-Administrative Agent, the Trustee shall administer directly the
related Underlying Securities or shall enter into a Sub-Administration Agreement
with a successor Sub-Administrative Agent which so qualifies under Section 7.02.
(c) Unless otherwise provided in the applicable Series Supplements, in the
event a Sub-Administrative Agent is administering one or more Underlying
Securities pursuant to a Sub-Administration Agreement, the Sub-Administrative
Agent shall be required immediately to direct the Trustee to deposit into an
Eligible Account established by such Sub-Administrative Agent (a
"Sub-Administration Account") any amounts collected with respect thereto, and
all such amounts shall be deposited into the related Certificate Account not
later than the Business Day after receipt thereof.
Section 7.03. Certain Matters Affecting the Trustee. (a) Except as
otherwise provided in this Article VII:
(i) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal
bond or other paper or document reasonably believed by it to be genuine and
to have been signed or presented by the proper party or parties;
(ii) the Trustee may consult with counsel and any Opinion of Counsel
shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any of the
trusts or powers vested in it by this Trust Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto, at the
request, order or direction of any of the Certificateholders, pursuant to
the provisions of this Trust Agreement, unless such Certificateholders
shall have offered to the Trustee reasonable security or indemnity against
the costs, expenses and liabilities which may be incurred therein or
thereby;
(iv) the Trustee shall not be personally liable for any action taken,
suffered or omitted 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
Trust Agreement.
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(v) the Trustee shall not be bound to make any investigation into the
facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
approval, bond or other paper or document believed by it to be genuine,
unless requested in writing to do so by Holders of the Required
Percentage--Direction of Trustee of the aggregate Voting Rights of the
affected Series (or Class or Classes within any such Series), as specified
by the applicable Series Supplement; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses or
liabilities likely to be incurred by it in the making of such investigation
is, in the opinion of the Trustee, not reasonably assured to the Trustee by
the security afforded to it by the terms of this Trust Agreement, the
Trustee may require reasonable indemnity against such expense or liability
as a condition to taking any such action;
(vi) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian; and
(vii) the Trustee shall not be personally liable for any loss
resulting from the investment of funds held in any Certificate Account or
Reserve Account at the direction of the Depositor pursuant to Section 3.05.
(b) All rights of action under this Trust Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates of any Series (or Class within such
Series), or the production thereof at the trial or other Proceeding relating
thereto, and any such suit, action or proceeding instituted by the Trustee shall
be brought in its name for the benefit of all the Holders of such Certificates,
subject to the provisions of this Trust Agreement.
Section 7.04. Trustee Not Liable for Recitals in Certificates or Underlying
Securities. The Trustee assumes no responsibility for the correctness of the
recitals contained herein and in the Certificates or in any document issued in
connection with the sale of the Certificates (other than the signature and
authentication on the Certificates). Except as set forth in Section 7.10, the
Trustee makes no representations or warranties as to the validity or sufficiency
of this Trust Agreement or of the Certificates of any Series (other than the
signature and authentication on the Certificates) or of any Underlying Security
or related document. The Trustee shall not be accountable for the use or
application by the Depositor, of any of the Certificates or of the proceeds of
such Certificates.
Section 7.05. Trustee May Own Certificates. The Trustee in its individual
capacity or any other capacity may become the power or pledgee of Certificates
with the same rights it would have if it were not Trustee; provided, however,
that in determining whether the required percentage of aggregate Voting Rights
shall have consented to any action hereunder requiring the consent of the
Certificateholders, the Trustee's interest shall be excluded.
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Section 7.06. Trustee's Fees and Expenses. (a) The applicable Series
Supplement shall specify the amount and circumstances of the Trustee's
compensation and the source thereof.
(b) If the Prepaid Ordinary Expenses set forth in the Series
Supplement is greater than zero, the Trustee acknowledges that the Depositor has
paid to the Trustee an amount equal to the Prepaid Ordinary Expenses, and the
Trustee agrees that the payment of such amount shall constitute full and final
satisfaction of and payment for all Ordinary Expenses.
(c) If the Prepaid Ordinary Expenses set forth in the Series
Supplement is zero, the Series Supplement may indicate that Ordinary Expenses
will be paid for by the Trust, in which case the Trustee shall be paid on a
periodic basis by the Trust or the Retained Interest at the rate or amount and
on the terms provided for in the Series Supplement. The Trustee agrees that its
right to receive such payments from the Trust shall constitute full and final
satisfaction of and payment for all Ordinary Expenses and that the Trustee shall
have no claim on payment of Ordinary Expenses from any other source, including
the Depositor.
(d) If the Prepaid Ordinary Expenses set forth in the Series
Supplement is zero, the Series Supplement may provide that the Depositor shall
pay to the Trustee from time to time a fee for its services and expenses as
Trustee as set forth in the Series Supplement payable at the times set forth
therein. The Trustee agrees that its right to receive such payments from the
Depositor shall constitute full and final satisfaction of and payment for all
Ordinary Expenses and that the Trustee shall have no claim for payment of
Ordinary Expenses from the Trust. The Trustee further agrees that,
notwithstanding any failure by the Depositor to make such periodic payments of
the Ordinary Expenses, the Trustee shall continue to perform its obligations
under this Trust Agreement. The Depositor's obligations to pay Ordinary Expenses
under this Trust Agreement shall be extinguished and of no further effect upon
the payment of Ordinary Expenses due and owing on the termination of the Trust
pursuant to Section 9.01 hereof.
(e) Subject to subsection 7.06(f), all Extraordinary Expenses, to the
extent not paid by a third party are, and shall be, obligations of the Trust and
when due and payable shall be satisfied solely by the Trust.
(f) The Trustee shall not take any action, including appearing in,
instituting or conducting any action or suit hereunder or in relation hereto and
is not indemnifiable under Section 7.11 hereof which, in the Trustee's opinion,
would or might cause it to incur costs, expenses or liabilities that are
Extraordinary Expenses unless (i) the Trustee is satisfied that it will have
adequate security or indemnity in respect of such costs, expenses and
liabilities, (ii) the Trustee has been instructed to do so by Certificateholders
representing not less than the Required Percentage--Remedies of the aggregate
principal amount of Certificates then outstanding, and (iii) the
Certificateholder's, pursuant to the instructions given under clause (ii) above,
have agreed that such costs, expenses or liabilities shall either be (x) paid by
the Trustee from the Trust, in the case of a vote of 100% of the aggregate
principal amount of Certificates then outstanding, or (y) paid by the Trustee
(which payment shall be made out of its own funds and not from monies on deposit
in the Trust) in which case the Trustee shall
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be entitled to receive, upon demand, reimbursement from those Certificateholders
who have agreed to bear the entire amount of such costs, expenses or
liabilities, on a pro rata basis among such Certificateholders.
Section 7.07. Eligibility Requirements for Trustee. (a) the Trustee
hereunder shall at all times be a corporation or an association which is not an
Affiliate of the Depositor (but may have normal banking relationships with the
Depositor and its Affiliates) organized and doing business under the laws of any
State or the United States, authorized under such laws to exercise corporate
trust powers which shall be eligible to act as a trustee under Section 310(a) of
the Trust Indenture Act, having a combined capital and surplus of at least
$50,000,000 and subject to supervision or examination by federal or state
authority. If such corporation or association publishes reports of conditions at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section the
combined capital and surplus of such corporation or association shall be deemed
to be its combined capital and surplus as set forth in its most recent report of
conditions so published. Such corporation or association must be rated in one of
the four highest rating categories by the Rating Agency. In the event that at
any time such Trustee shall cease to be eligible in accordance with the
provision of this Section, such Trustee shall resign immediately in the manner
and with the effect specified in Section 7.08.
(b) In determining whether the Trustee has a conflicting interest with
respect to any Class of Certificates under Section 310(b) of the Trust Indenture
Act and this Section, each other Class of Certificate will be treated as having
been issued under an indenture other than this Trust Agreement.
Section 7.08. Resignation or Removal of the Trustee; Appointment of
Successor Trustee. (a) The Trustee may at any time resign as Trustee hereunder
by written notice of its election so to do, delivered to the Depositor, and such
resignation shall take effect upon the appointment of a successor Trustee and
its acceptance of such appointment as hereinafter provided; provided, however,
that in the event of such resignation, the Trustee shall (a) assist the
Depositor in finding a successor Trustee acceptable to the Depositor and (b)
negotiate in good faith concerning any prepaid by unaccrued fees.
(b) The Depositor or Holders of the Required Percentage--Removal of
Trustee of Certificates may at any time remove the Trustee as Trustee hereunder
by written notice delivered to the Trustee in the manner provided in Section
7.04 hereof, and such removal shall take effect upon the appointment of the
successor trustee and its acceptance of such appointment as provided in the
succeeding paragraph; provided, however, that in the event of such removal, the
Depositor shall negotiate in good faith with the Trustee in order to agree
regarding payment of the termination costs of the Trustee resulting from such
removal.
(c) Upon the designation of a successor Trustee, following either
resignation or removal of the Trustee, the Trustee shall deliver to the
successor Trustee all records relating to the Certificates in the form and
manner then maintained by the Trustee, which shall include a hard copy thereof
upon written request of the successor Trustee.
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(d) If at any time the Trustee shall become incapable of acting 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 of affairs for the purpose of
rehabilitation, conservation or liquidation, the Depositor shall petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee. In the event the Trustee resigns or is
removed, the Trustee shall reimburse the Depositor for any fees or charges
previously paid to the Trustee in respect of duties not yet performed under this
Trust Agreement which remain to be performed by a successor Trustee.
(e) In case at any time the Trustee acting hereunder notifies the
Depositor that it elects to resign or the Depositor or Holders of the Required
Percentage--Removal of Trustee of Certificates notifies or notify the Trustee
that it or they elects or elect to remove the Trustee as Trustee, the Depositor
shall, within ninety (90) days after the delivery of the notice of resignation
or removal, appoint a successor Trustee, which shall satisfy the requirements
for a trustee under Section 7.07. If no successor Trustee has been appointed
within 90 days after the Trustee has given written notice of its election to
resign or the Depositor or Holders of the Required Percentage--Removal of
Trustee of Certificates have given written notice to the Trustee of its or their
election to remove the Trustee, as the case may be, the Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
Every successor Trustee shall execute and deliver to its predecessor and to the
Depositor an instrument in writing accepting its appointment hereunder, and
thereupon such successor Trustee, without any further act or deed, shall become
fully vested with all the rights, powers, duties and obligations of its
predecessor and for all purposes shall be the Trustee under this Trust
Agreement, and such predecessor, upon payment of all sums due it and on the
written request of the Depositor, shall execute and deliver an instrument
transferring to such successor all rights, obligations and powers of such
predecessor hereunder, and shall duly assign, transfer and deliver all right,
title and interest in the Underlying Securities and parts thereof to such
successor. Any successor Trustee shall promptly give notice of its appointment
to the Certificateholders of Certificates for which it is successor Trustee in
the manner provided in Section 7.04 hereof.
(f) Any corporation into or with which the Trustee may be merged,
consolidated or converted shall be the successor of such Trustee without the
execution or filing of any document or any further act.
Section 7.09. Appointment of Office or Agency. As specified in a Series
Supplement, the Trustee shall appoint an office or agency in the City of
__________ where the Certificates may be surrendered for registration of
transfer or exchange, and presented for the final distribution with respect
thereto, and where notices and demands to or upon the Trustee in respect of the
Certificates of the related Series and this Trust Agreement may be served.
Section 7.10. Representations and Warranties of Trustee. The Trustee
represents and warrants that:
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(i) the Trustee is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or association;
(ii) neither the execution nor the delivery by the Trustee of this
Trust Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof will
contravene any Federal or _______________ law, governmental rule or regulation
governing the banking or trust powers of the Trustee or any judgment or order
binding on it, or violate its charter documents or by-laws or constitute a
default under (or an event which, without notice or lapse of time or both, would
constitute a default) under, or result in the breach or acceleration of any
material contract, indenture, mortgage, agreement or instrument to which it is a
party or by which an of its properties may be bound.
(iii) the Trustee has full power, authority and right to execute,
deliver and perform its duties and obligations as set forth herein and in each
Series Supplement to which it is a party and has taken all necessary action to
authorize the execution, delivery and performance by it of this Trust Agreement;
(iv) this Trust Agreement has been duly executed and delivered by the
Trustee and constitutes the legal, valid and binding obligation of the Trustee,
enforceable in accordance with its terms, except as enforcement may be limited
by the applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law);
(v) the Trustee is not in violation, and the execution and delivery of
the Trust Agreement by the Trustee and its performance and compliance with the
terms thereof will not constitute a violation, of an order or decree of any
court or any order or regulation of any federal, state, municipal or
governmental agency having jurisdiction over the Trustee or its properties,
which violation would reasonably be expected to have a material adverse effect
on the condition (financial or otherwise) or operations of the Trustee or its
properties or on the performance of its duties hereunder;
(vi) there are no actions or proceedings against, or investigations
of, the Trustee pending, or, to the knowledge of the Trustee, threatened, before
any court, administrative agency or other tribunal (A) that could reasonably be
expected to prohibit its entering into the Trust Agreement, (B) seeking to
prevent the issuance of the Certificates contemplated by the Trust Agreement or
(C) that could reasonably affect the performance by the Trustee of its
obligations under, or the validity or enforceability against the Trustee of, the
Trust Agreement; and
(vii) no consent, approval, authorization or order of any court,
governmental agency or body is required for the execution, delivery and
performance by the Trustee of, or compliance by the Trustee with, the Trust
Agreement, or for the consummation of the transactions contemplated by the Trust
Agreement, except for
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such consents, approvals, authorizations and orders, if any, that have
been obtained prior to the Closing Date.
The representations and warranties of the Trustee set forth in this
Section 7.10 shall survive the receipt of Underlying Securities by the Trustee
and shall survive the delivery of the Trust Agreement by the Trustee to the
Depositor.
Section 7.11. Indemnification of Trustee by the Depositor; Contribution.
(a) The Depositor agrees, to the extent the Trustee is not reimbursed pursuant
to Section 7.06 hereof, to indemnify the Trustee against, and hold it harmless
from, any loss, expense or liability incurred in connection with any legal
action relating to this Trust Agreement or the Certificates or the performance
of any of the Trustee's duties hereunder, other than any loss, liability or
expense (i) that constitutes a specific liability of the Trustee under this
Trust Agreement or (ii) incurred by reason of willful misfeasance, bad faith or
negligence in the performance of the Trustee's duties hereunder or by reason of
reckless disregard of the Trustee's obligations and duties hereunder or as a
result of a breach of the Trustee's obligations and duties hereunder.
(b) If the indemnification provided for in the preceding paragraph is
invalid or unenforceable in accordance with its terms, then the Depositor shall
contribute to the amount paid or payable by the Trustee as a result of such
liability in such proportion as is appropriate to reflect the relative benefits
received by the Depositor on one hand and the Trustee as Trustee on the other
hand. For this purpose (i) the benefits received by the Depositor shall be the
aggregate amount received by it upon the sale of such Certificates, less the
costs and expenses of such sale, including the cost of acquisition of the
Underlying Securities or parts thereof evidenced thereby, and (ii) the benefits
received by the Trustee as Trustee shall be the aggregate amount of fees
received by it as Trustee, less costs and expenses incurred by it as Trustee in
relation to such Certificates. If, however, the allocation provided by the
immediately preceding two sentences is not permitted by applicable law, then the
Depositor shall contribute to such amount paid or payable by the Trustee in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Depositor on the one hand and the Trustee on the other
in connection with the actions or omissions which resulted in such liability, as
well as any other relevant equitable considerations.
(c) In case any claim shall be made or action brought against the Trustee
for any reason for which indemnity may be sought against the Depositor as
provided above, the Trustee may promptly notify the Depositor in writing setting
forth the particulars of such claim or action and the Depositor may assume the
defense thereof. In the event that the Depositor assumes the defense, the
Trustee shall have the right to retain separate counsel in any such action but
shall bear the fees and expenses of such counsel unless (i) the Depositor shall
have specifically authorized the retaining of such counsel or (ii) the parties
to such suit include the Trustee and the Depositor, and the Trustee has been
advised in writing by such counsel that one or more legal defenses may be
available to it which may not be available to the Depositor, in which case the
Depositor shall not be entitled to assume the defense of such suit
notwithstanding its obligation to bear the reasonable fees and expenses to such
counsel.
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(d) The term "liability," as used in this Section 7.11, shall include any
losses, claims, damages, expenses (including without limitation the Trustee's
reasonable costs and expenses) in defending itself against any losses, claims or
investigations of any nature whatsoever.
(e) The obligations of the Depositor under this Section 7.11 shall be in
addition to any liability which the Depositor may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Trustee, and to each person, if any, who controls the Trustee within the meaning
of the Exchange Act.
(f) Notwithstanding anything to the contrary contained in this Section
7.11, the Depositor shall not be liable for settlement of any such claim by the
Trustee entered into without the prior written consent of the Depositor, which
consent shall not be unreasonably withheld.
(g) The indemnity provided in this Section shall survive the termination
or discharge of this Trust Agreement.
Section 7.12. No Liability of the Trustee with Respect to the Underlying
Securities; Certificateholders to Proceed Directly Against the Underlying
Securities Issuer(s). (a) The sole obligor with respect to any Underlying
Security is the Underlying Securities Issuer thereof. The Trustee shall not
have any obligation on or with respect to the Underlying Securities; and its
obligations with respect to Certificates shall be solely as set forth in this
Trust Agreement.
(b) The Trustee is not authorized to proceed against the Underlying
Securities Issuer of any Underlying Security in the event of a default or to
assert the rights and privileges of Certificateholders and has no duty in
respect thereof except as expressly provided herein.
Section 7.13. The Depositor To Furnish Trustee with Names and Addresses of
Certificateholders. The Depositor will furnish to the Trustee within 15 days
after each Record Date with respect to any Distribution Date, and at such other
times as the Trustee may request in writing, within 30 days after receipt by the
Depositor of any such request, a list, in such form as the Trustee may
reasonably require, of all information in the possession or control of the
Depositor as to the names and addresses of the Certificateholders, in each case
as of a date not more than 15 days prior to the time such list is furnished;
provided, however, that so long as the Trustee is the sole Registrar, no such
list need be furnished.
Section 7.14 Preservation of Information. The Trustee shall preserve, in
as current a form as is reasonably practicable, the names and addresses of
Certificateholders contained in the most recent list furnished to the Trustee as
provided in Section 7.13, and the names and addresses of Certificateholders
received by the Trustee in its capacity as Registrar, if so acting. The Trustee
may destroy any list furnished to it as provided in Section 7.13, upon receipt
of a new list so furnished.
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Section 7.15. Reports by Trustee. If required, within 60 days after [May
15] of each year, commencing with the year [199_], the Trustee shall transmit to
the Certificateholders, as provided in Section 313(c) of the Trust Indenture
Act, a brief report dated as of such [May 15], if required by Section 313(a) of
the Trust Indenture Act.
Section 7.16. Trustee's Application for Instructions from the Depositor.
Any application by the Trustee for written instructions from the Depositor may,
at the option of the Trustee, set forth in writing any action proposed to be
taken or omitted by the Trustee under this Trust Agreement and the date on
and/or after which such action shall be taken or such omission shall be
effective, if, but only if, the obligations of the Trustee with respect to such
proposed action or omission are not set forth reasonably clearly in these
Standard Terms and the related Series Supplement. The Trustee shall not be
liable for any action taken by, or omission of, the Trustee in accordance with a
proposal included in such application on or after the date specified in such
application (which date shall not be less than ten (10) Business Days after the
date an officer of the Depositor actually receives such application, unless any
such officer shall have consented in writing to any earlier date) unless, prior
to taking any such action (or the effective date in the case of an omission),
the Trustee shall have received written instructions in response to such
application specifying the action to be taken or omitted; provided, however,
that this provision shall not protect the Trustee from liability for any action
or omission constituting willful misconduct, bad faith or negligence.
[ARTICLE VIII
MARKET AGENT]
[Section 8.01. Market Agent. (a) If specified for a specific Series, on
the Closing Date the Trustee shall enter into a Market Agent Agreement with
Morgan Keegan & Company, Inc., as the initial Market Agent, in the form attached
to the related Series Supplement. The Market Agent shall serve as such under
the terms and provisions hereof and of the Market Agent Agreement. The Market
Agent, including any successor appointed pursuant hereto, shall be a member of
the National Association of Securities Dealers, Inc., have capitalization of at
least $25,000,000, and be authorized by law to perform all the duties imposed
upon it by this Trust Agreement and the Market Agent Agreement. The Market
Agent may be removed at any time by the Trustee, acting at the direction of the
Depositor; provided, however, that such removal shall not take effect until the
appointment of a successor Market Agent. The Market Agent may resign upon 30
days' written notice delivered to the Trustee. The [Depositor] shall use its
best efforts to appoint a successor Market Agent that is a qualified
institution, effective as of the effectiveness of any such resignation or
removal.]
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ARTICLE IX
TERMINATION
Section 9.01. Termination upon Liquidation of All Underlying Securities.
(a) The respective obligations and responsibilities under this Trust Agreement
of the Depositor, and the Trustee (other than the obligations of the Trustee to
make distributions to Holders of the Certificates of any given Series as
hereafter set forth and to provide information reports and information tax
reporting) shall terminate upon the distribution to such Holders of all amounts
held in all the Accounts for such Series and required to be paid to such Holders
pursuant to this Trust Agreement on the Distribution Date coinciding with the
final payment on or other liquidation (which may include redemption or other
purchase thereof by the applicable Underlying Securities Issuer) (or any Advance
with respect thereto) of the last Underlying Security remaining in the Trust for
such Series or the disposition of all property acquired upon liquidation of any
such Underlying Security; provided, however, that in no event shall the trust
created hereby continue beyond the expiration of 21 years from the death of the
last survivor of the descendants of Joseph P. Kennedy, the late ambassador of
the United States to the Court of St. James, living on the date hereof.
(b) Written notice of any termination shall be provided as set forth in
Section 10.05.
(c) Upon presentation and surrender of the Certificates by the
Certificateholders on the Final Scheduled Distribution Date, or the Distribution
Date coinciding with or next following the earlier to occur of the occurrences
specified in 9.01(a), with respect to the applicable Series of Certificates, the
Trustee shall distribute to each Holder presenting and surrendering its
Certificates (i) the amount otherwise distributable on such Distribution Date in
accordance with Section 4.01 in respect of the Certificates so presented and
surrendered, or (ii) as specified in the applicable Series Supplement, if in
connection with the Trustee's sale of all the remaining Underlying Securities.
Any funds not distributed on such Distribution Date shall be set aside and held
in trust for the benefit of Certificateholders not presenting and surrendering
their Certificates in the aforesaid manner, and shall be disposed of in
accordance with this Section 9.01 and Section 4.01 hereof. Immediately
following the deposit of funds in trust hereunder, the Trust for such Series
shall terminate.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment. (a) This Trust Agreement may be amended from
time to time by the Depositor and the Trustee without the consent of any of the
Certificateholders for any of the following purposes: (i) to cure any ambiguity
or to correct or supplement any provision herein which may be defective or
inconsistent with any other provision herein or to provide for any other terms
or modify any other provisions with respect to matters or questions arising
under this Trust Agreement which shall not adversely affect the interests of the
Holders in any material respect; or (ii) to evidence and provide for the
acceptance of
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<PAGE>
appointment hereunder of a change in Trustee as Trustee for a Series of
Certificates subsequent to the Closing Date for such Series, and to add to or
change any of the provisions of this Trust Agreement as shall be necessary to
provide for or facilitate the administration of the separate Trusts hereunder by
more than one trustee, pursuant to the requirements of Section 5.01 hereof; or
(iii) to evidence and provide for the acceptance of appointment hereunder by a
successor Trustee with respect to the Certificate of one or more Series or to
add or change any of the provisions of this Trust Agreement as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder; or (iv) to provide for the issuance of a new Series of Certificates
pursuant to a Series Supplement issued hereunder pursuant to Sections 5.01 and
5.11 hereof; provided, however, that in the case of any amendment the Rating
Agency Condition shall be satisfied with respect to such amendment and that no
such amendment shall cause any Trust created hereunder to fail to qualify as a
fixed investment trust for federal income tax purposes.
(b) Without limiting the generality of the foregoing, with respect to any
Series this Trust Agreement may also be modified or amended from time to time by
the Depositor and the Trustee with the consent of the Holders of Certificates
representing the Required Percentage--Amendment of the aggregate Voting Rights
of those Certificates to which such modification or amendment relates for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Trust Agreement or of modifying in any manner the
rights of the Holders of Certificates; provided, however, that no such amendment
shall (i) reduce in any manner the amount of, or delay the timing of, payments
received on Underlying Securities which are required to be distributed on any
Certificate without the consent of the Holders of such Certificates, (ii)
adversely affect in any material respect the interests of the Holders of any
Series (or Class within such Series) of Certificates in a manner other than as
described in (i), without the consent of the Holders of Certificates of such
Series or Class evidencing not less than the Required Percentage--Amendment of
the aggregate Voting Rights of such Series or Class or (iii) reduce the
percentage of aggregate Voting Rights required by (ii) as described in (ii),
without the consent of the Holders of all Certificates of such Series or Class
then Outstanding.
Notwithstanding any other provision of this Trust Agreement, for purposes
of the giving or withholding of consents pursuant to this Section 10.01,
Certificates registered in the name of the Depositor or the Trustee or any
affiliate thereof shall be entitled to Voting Rights with respect to matters
affecting such Certificates; and provided, further, that in the event the Rating
Agency Condition is not satisfied with respect to such modification or
amendment, the Required Percentage--Amendment shall be increased to require an
aggregate percentage of the aggregate Voting Rights in the amount specified in
the applicable Series Supplement. Notwithstanding any other provision of this
Trust Agreement, this Section 10.02(b) shall not be amended without the
unanimous consent of the Holders of all such Certificates.
(c) Promptly after the execution of any such amendment or modification,
the Trustee shall furnish a copy of such amendment or modification to each
Certificateholder of the affected Series or Class and to the Rating Agency. It
shall not be necessary for the consent of Certificateholders under this Section
to approve the particular form of any
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<PAGE>
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
Section 10.02. Limitation on Rights of Certificateholders. (a) The death
or incapacity of any Certificateholder shall not operate to terminate this Trust
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the applicable Trust,
nor otherwise affect the rights, obligations and liabilities of the parties
hereto or any of then.
(b) No Certificateholder of a given Series shall have any right to
vote (except as expressly provided for herein) or in any manner otherwise
control the operation and management of any Trust, or the obligations of
the parties hereto, nor shall anything herein set forth, or contained in
the terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any
third person by reason of any action taken by the parties to this Trust
Agreement pursuant to any provision hereof.
(c) No Certificateholder of a given Series shall have any right by
virtue of any provision of this Trust Agreement to institute any suit,
action or proceeding in equity or at law upon or under or with respect to
this Trust Agreement, unless (i) such Holder previously shall have given to
the Trustee a written notice of breach and of the continuance thereof, (ii)
the Holders of Certificates of such Series evidencing not less than the
Required Percentage--Remedies of the aggregate Voting Rights of such Series
shall have made written request upon the Trustee to institute such action,
suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against
the costs, expenses and liabilities to be incurred therin or thereby, (iii)
the Trustee, for 15 days after its receipt of such notice, request and
offer of indemnity, shall have neglected or refused to institute any such
action, suit or proceeding, (iv) no direction inconsistent with such
written request has been given to the Trustee during such 15-day period by
Certificateholders evidencing not less than the Required Percentage--
Remedies of the aggregate Voting Rights of such Series. It is understood
and agreed that the Trustee shall not be obligated to make any
investigation of matters arising under this Trust Agreement or to
institute, conduct or defend any litigation hereunder or in relation hereto
at the request, order or direction of any Certificateholders unless such
Certificateholders have offered to the Trustee the reasonable indemnity
referred to above. It is further understood and agreed, and expressly
covenanted by each Certificateholder of each Series with every other
Certificateholder of such Series and the Trustee, that no one or more
Holders of Certificates of such Series shall have any right in any manner
whatever by virtue of any provision of this Trust Agreement to affect,
disturb or prejudice the rights of the Holders of any other of the
Certificates of such Series, or to obtain or seek to obtain priority over
or preference to any other such Holder, or to enforce any right under this
Trust Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders of such Series. For
the protection and enforcement of the provisions of
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<PAGE>
this Section, each and every Certificateholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.
Section 10.03. Governing Law. THIS TRUST AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK AND
WITHOUT GIVING EFFECT TO SUCH STATE'S PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 10.04. Notices. (a) All directions, demands and notices hereunder
shall be in writing and shall be delivered as set forth in the applicable Series
Supplement.
(b) Any notice required to be provided to a Holder of a Registered
Certificate shall be given by first class mail, postage prepaid, at the last
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Trust Agreement shall be conclusively
presumed to have been duly given when mailed, whether or not the
Certificateholder receives such notice.
(c) Any and all notices to be given to the Depositor shall be deemed
to have been duly given if sent by facsimile transmission to the Depositor at 50
North Front Street, Memphis, Tennessee 38103, Attention: President, through
facsimile transmission number (901) __________, telephone confirmation number
(901) 524-4100. The Depositor may change this information by written notice to
the Trustee.
(d) Any and all notices to be given to the Trustee shall be deemed to
have been duly given if sent by facsimile transmission to the Trustee at
_____________________, Attention: Corporate Trust Trustee Administration,
facsimile transmission number (____) _________, telephone confirmation number
(____) ________. The Trustee may change this information by notice to the
Depositor.
(e) Any and all notices to be given to the Swap Counterparty, if any,
will be specified in the Series Supplement.
Section 10.05. Notice to Rating Agencies. (a) The Trustee shall use its
best efforts promptly to provide notice to each Rating Agency with respect to
each of the following of which it has actual knowledge:
(i) any change or amendment to this Trust Agreement;
(ii) the resignation or termination of the Trustee;
(iii) the final payment to Holders of the Certificates of any
Class;
(iv) any change in the location of the Certificate Account; and
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<PAGE>
(v) any event that would result in the inability of the
Trustee to make Advances.
(b) In addition, the Trustee shall promptly furnish to each Rating
Agency copies of each report to Certificateholders described in
Section 4.02.
(c) Any such notice pursuant to this Section shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed
by first class mail, postage prepaid, or by express delivery service to
each Rating Agency at the address specified below or in the applicable
Series Supplement.
(d) (i) Any and all notices to be given to Moody's shall be deemed to
have been duly given if sent by facsimile transmission to Moody's at
Moody's Investors Service, Inc., 99 Church Street, New York, New York
10007, Attention: CBO/CLO Monitoring Department, facsimile transmission
number (212) 553-0355, telephone confirmation number (212) 553-1494.
Moody's may change this information by notice to the Depositor and the
Trustee.
(ii) Any and all notices to be given to S&P shall be deemed to have
been duly given if sent by facsimile transmission to S&P at Standard &
Poor's Rating Group, 26 Broadway, New York, New York 10004, Attention:
Structured Finance Surveillance Group, facsimile transmission number (212)
208-0030, telephone confirmation number (212) 208-1191. S&P may change this
information by notice to the Depositor and the Trustee.
Section 10.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Trust Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Trust Agreement and shall in no way affect the
validity or enforceability of the other provisions of this Trust Agreement or of
the Certificates or the rights of the Holders thereof.
Section 10.07. Grant of Security Interest. (a) Its is the express intent of
the parties hereto that each conveyance of any Underlying Securities by the
Depositor to the Trustee be, and be construed as, a sale of the Underlying
Security by the Depositor and not a pledge of any Underlying Securities by the
Depositor to secure a debt or other obligation of the Depositor.
(b) In the event that, notwithstanding the aforementioned intent of
the parties, any Underlying Securities are held to be property of the
Depositor, then, (x) it is the express intent of the parties that such
conveyance be deemed a pledge of such Underlying Securities by the
Depositor to the Trustee to secure a debt or other obligation of the
Depositor and (y)(1) this Trust Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the Uniform
Commercial Code as in effect from time to time in the State of New York, or
such other State as may be specified in the related Series Supplement;
(2) the conveyance provided for in Section 2.01 hereof shall be deemed to
be a grant by the Depositor to the Trustee of a security interest in all
the Depositor's right, title
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and interest in and to such Underlying Securities and all amounts payable
to the holders of such Underlying Securities in accordance with the terms
hereof and all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property including
all amounts from time to time held or invested in the applicable
Certificate Account, whether in the form of cash, instruments, securities
or other property; (3) the obligations secured by such security agreement
shall be deemed to be all the Depositor's obligations under this Trust
Agreement, including the obligation to provide to the Certificateholders
the benefits of this Trust Agreement relating to such Underlying Securities
and the applicable Trust; and (4) notifications to persons holding such
property, and acknowledgments, receipts or confirmations from persons
holding such property, shall be deemed notifications to, or
acknowledgements, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Trustee for the purpose of
perfecting such security interest under applicable law.
Accordingly, the Depositor hereby grants to the Trustee a security interest
in the Underlying Securities and all other property described in
clause(y)(2) of the preceding paragraph, for the purpose of securing to
the Trustee the performance by the Depositor of the obligations described
in clause(y)(3) of the preceding paragraph. Notwithstanding the foregoing,
the parties hereto intend the Grant pursuant to Section 2.01 to be a true,
absolute and unconditional sale of the Underlying Securities and assets
constituting the applicable Trust by the Depositor to the Trustee.
(c) The Depositor and the Trustee shall to the extent consistent with
this Trust Agreement, take such actions as may be necessary to ensure that,
if this Trust Agreement were deemed to create a security interest in the
Underlying Securities, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will
be maintained as such for so long as any of the Underlying Securities
remain outstanding. Without limiting the generality of the foregoing, the
Trustee shall file, or shall cause to be filed, all filings necessary to
maintain the effectiveness of any original filings necessary under the
Uniform Commercial Code as in effect in any jurisdiction to perfect the
Trustee's security interest in or lien on the Underlying Securities,
including (x) continuation statements and (y) such other statements as may
be occasioned by (1) any change of name of the Depositor or the Trustee,
(2) any change of location of the place of business or the chief executive
office of the Depositor or (3) any transfer of any interest of the
Depositor in any Underlying Security.
Section 10.08. Nonpetition Covenant. Notwithstanding any prior termination
of this Trust Agreement, each of the Trustee (including any Sub-Administrative
Agent, Authenticating Agent, or Paying Agent) and the Depositor agrees that it
shall not, until the date which is one year and one day after the Closing Date
acquiesce, petition or otherwise invoke or cause the Underlying Securities
Issuer to invoke the process of the United States of America, any State or other
political subdivision thereof or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government
for the purpose of commencing or sustaining a case by or against the Underlying
Securities Issuer under a Federal or state bankruptcy, insolvency or similar law
or appointing a receiver liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the
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<PAGE>
Underlying Securities Issuer or all or any part of the property or assets of the
Underlying Secuirities Issuer or ordering the winding up or liquidation of the
affairs of the Underlying Securities Issuer.
Section 10.09. No Recourse. Neither the Trustee (including any Sub-
Administrative Agent, Authenticating Agent, or Paying Agent) nor the Depositor
shall have any recourse to the Underlying Secuirites, except for as specifically
provided in the related Series Supplement.
Section 10.10. Article and Section References. All article and section
references used in these Standard Terms, unless otherwise provided, are to
articles and sections in these Standard Terms.
Section 10.11. Counterparts. These Standard Terms may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute one and the
same instrument.
Section 10.12. Trust Indenture Act Controls. This Trust Agreement is
subject to the provisions of the Trust Indenture Act and if any provision of
this Trust Agreement limits, qualifies or conflicts with another provision
hereof which is required to be included in this Trust Agreement by any of the
provisions of the Trust Indenture Act, such required provision shall control.
The Trustee agrees to take all actions within its control to prevent these
Standard Terms, as supplemented by any Series Supplements, from failing to
qualify under the Trust Indenture Act.
In Witness Whereof, the Depositor and the Trustee have caused their names
to be signed hereto by their respective officers thereunto duly authorized, in
each case as of the day and year first above written.
Southpoint Structured Assets, Inc., as
Depositor
By:
------------------------------------
Name:
Title:
[Trustee], as Trustee
By:
------------------------------------
Name:
Title:
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<PAGE>
Reconciliation and tie between the Trust Agreement dated as of _________,
199__, and the Trust Indenture Act of 1939 as amended. This reconciliation does
not constitute part of the Trust Agreement.
<TABLE>
<CAPTION>
Trust Indenture Act
of 1939 Section Trust Agreement Section
<S> <C>
310(a)(1) 7.07
(a)(2) 7.07
(a)(5) 7.07
312(a) 7.13
313(a) 7.15
314(a) 3.10
(c)(1) 1.03
(c)(2) 1.03
(e) 1.03
315(a)(1) 7.01
(a)(2) 7.03
(b) 7.01(d)
(d) 7.01(c)
316(a)(1)(A) 5.18
(a)(1)(B) 5.19
(b) 5.20
(c) 1.03(b)
317(a)(1) 5.17
(b) 5.12
318(a) 10.12
</TABLE>
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EXHIBIT 5.1
[LETTERHEAD]
September __, 1996
Southpoint Structured Assets, Inc.
50 North Front Street
Memphis, Tennessee 38103
Re: Southpoint Structured Assets, Inc.
Registration Statement on Form S-3
Registration No. 333-09883
------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Southpoint Structured Assets, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission of the Company's Registration Statement
on Form S-3 (Registration No. 333-09883), as amended to the date hereof
(together with the exhibits and any and all amendments thereto, the
"Registration Statement"), under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the registration by the Company of Trust
Certificates (the "Certificates"). As described in the Registration Statement,
the Certificates will be issued in series (and may be issued in classes within
any given series), with each series being issued by a trust (each, a "Trust") to
be formed by the Company pursuant to a Trust Agreement (each, a "Trust
Agreement") between the Company and a trustee to be determined (each, a
"Trustee").
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Registration Statement, the prospectuses
contained therein (each "Base Prospectus" and, together with the accompanying
model Prospectus Supplement contained therein and the Registration Statement,
the "Prospectus"), the form of Trust Agreement attached as an exhibit thereto,
and such corporate records, agreements, documents and other instruments
(collectively, the "Documents"), and have made such inquiries of such officers
and representatives of the Company, as we have deemed relevant and necessary as
a basis for the opinion hereinafter set forth.
<PAGE>
In such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of documents submitted to us as certified or photostactic
copies and the authenticity of the originals of such latter documents. As to all
questions of fact material to this opinion that have not been independently
established, we have relied upon certificates or comparable documents of
officers and representatives of the Company. The opinion set forth below is also
based on the assumptions that (i) the Registration Statement, as finally amended
(including any necessary post-effective amendments), has become effective under
the Securities Act, (ii) the amount, price, interest rate and other principal
terms of the Certificates have been duly approved by the Board of Directors (or
its authorized designees) of the Company, (iii) the related Trust Agreement has
been duly executed and delivered by the parties thereto substantially in the
form filed as an exhibit to the Registration Statement, and (iv) the
Certificates have been duly executed by the Company and authenticated by the
Trustee in accordance with the Trust Agreement and sold and delivered by the
Company against payment therefor.
Based on the foregoing, and subject to the qualifications stated herein, we
are of the opinion that the Certificates will be legally issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to our firm's name under the caption
"Legal Opinions" in the Prospectus without admitting that we are "experts"
within the meaning of the Act, and the rules and regulations thereunder, with
respect to any part of the Registration Statement, including this Exhibit.
This opinion is rendered solely for your benefit in connection with the
transactions described above. This opinion may not be used for any other purpose
and may not otherwise be relied upon by, or disclosed, quoted or referred to,
any other person.
Very truly yours,
CHAPMAN AND CUTLER
-2-
<PAGE>
EXHIBIT 8.1
[LETTERHEAD]
September __, 1996
Southpoint Structured Assets, Inc.
50 North Front Street
Memphis, Tennessee 38103
Re: Southpoint Structured Assets, Inc.
Registration Statement on Form S-3
Registration No. 333-09883
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Southpoint Structured Assets, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing with
the Securities and Exchange Commission (the "Commission") of the Company's
Registration Statement on Form S-3 (Registration No. 333-09883), as amended to
the date hereof (the "Registration Statement"), under the Securities Act of
1993, as amended (the "Act"). As described in the Registration Statement, the
Company may form a trust or several trusts (each, a "Trust") which may issue
various series of Trust Certificates (the "Certificates") (and may issue various
classes of Certificates within any given series) pursuant to a Trust Agreement
(each, a "Trust Agreement") between the Company and a trustee to be determined.
All capitalized terms not otherwise defined herein shall have the meanings
ascribed to them in the Registration Statement.
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of the Registration Statement, the prospectuses
contained therein (each "Base Prospectus" and, together with the accompanying
model Prospectus Supplement contained therein and the Registration Statement,
the "Prospectus"). In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of documents submitted to us as certified or
photostatic copies and the authenticity of the originals of such latter
documents.
<PAGE>
Based on the foregoing and subject to the next succeeding paragraph, it is
our opinion that the applicable statements contained in the Base Prospectus,
under the caption "RISK FACTORS--Tax Considerations" and in the Prospectus
Supplement, under the caption "FEDERAL INCOME TAX CONSEQUENCES," insofar as such
statements constitute matters of law or legal conclusions and while not
purporting to discuss all possible federal income tax consequences of an
investment in Certificates, is accurate with respect to those tax consequences
which are discussed.
The foregoing opinion is based on current provisions of the Internal
Revenue Code of 1986, the Treasury Regulations promulgated thereunder, published
pronouncements of the Internal Revenue Service, and case law, any of which may
be changed at any time with retroactive effect. Further, you should be aware
that opinions of counsel are not binding on the Internal Revenue Service or the
courts. We express no opinion either as to any matters not specifically covered
by the foregoing opinion or as to the effect on the matters covered by this
opinion of the laws of any other jurisdictions. Additionally, we undertake no
obligation to update this opinion in the event there is either a change in the
legal authorities, facts, including the taking of any action by any party to any
of the transactions described in the Documents pursuant to any opinion of
counsel as required by any of the documents relating to such transactions, or
documents on which this opinion is based, or an inaccuracy in any of the
representations or warranties upon which we have relied in rendering this
opinion.
We hereby consent to the filing of this opinion letter as an Exhibit to the
Registration Statement and to the references to our firm under the captions
"FEDERAL INCOME TAX CONSEQUENCES" and "LEGAL OPINIONS" in the Prospectus without
admitting that we are "experts" within the meaning of the Act, and the rules and
regulations thereunder, with respect to any part of the Registration Statement,
including this Exhibit. This opinion may not be used for any other purpose and
may not otherwise be relied upon by, or disclosed, quoted or referred to, any
other person.
Very truly yours,
CHAPMAN AND CUTLER
<PAGE>
EXHIBIT 25.1
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY AND QUALIFICATION UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
BANK ONE, COLUMBUS, N.A.
Not Applicable 31-4148768
(State of Incorporation (I.R.S. Employer
if not a national bank) Identification No.)
100 East Broad Street, Columbus, Ohio 43271-0181
(Address of trustee's principal (Zip Code) executive offices)
Tom Hyland
c/o Bank One Trust Company, NA
100 East Broad Street
Columbus, Ohio 43271-0181
(614) 248-6104
(Name, address and telephone number of agent for service)
SOUTHPOINT STRUCTURED ASSETS, INC.
(Exact name of obligor as specified in its charter)
Delaware 51-6503749
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
50 North Front Street
Memphis, Tennessee 38103
(Address of principal executive (Zip Code)
offices)
<PAGE>
SOUTHPOINT STRUCTURED ASSETS, INC. $10,000,000 TRUST CERTIFICATES
(Title of the Indenture securities)
GENERAL
1. GENERAL INFORMATION.
FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(A) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH
IT IS SUBJECT.
Comptroller of the Currency, Washington, D.C.
Federal Reserve Bank of Cleveland, Cleveland, Ohio
Federal Deposit Insurance Corporation, Washington, D.C.
The Board of Governors of the Federal Reserve System, Washington, D.C.
(B) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
The trustee is authorized to exercise corporate trust powers.
2. AFFILIATIONS WITH OBLIGOR AND UNDERWRITERS.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
The obligor is not an affiliate of the trustee.
16. LIST OF EXHIBITS
LIST BELOW ALL EXHIBITS FILED AS A PART OF THIS STATEMENT OF ELIGIBILITY
AND QUALIFICATION. (EXHIBITS IDENTIFIED IN PARENTHESES, ON FILE WITH THE
COMMISSION, ARE INCORPORATED HEREIN BY REFERENCE AS EXHIBITS HERETO.)
Exhibit 1 - A copy of the Articles of Association of the trustee as now in
effect.
Exhibit 2 - A copy of the Certificate of Authority of the trustee to commence
business, see Exhibit 2 to Form T-1, filed in connection with Form S-3 relating
to Wheeling-Pittsburgh Corporation 9 3/8% Senior Notes due 2003, Securities and
Exchange Commission File No. 33-50709.
Exhibit 3 - A copy of the Authorization of the trustee to exercise corporate
trust powers, see Exhibit 3 to Form T-1, filed in connection with Form S-3
relating to Wheeling-Pittsburgh Corporation 9 3/8% Senior Notes due 2003,
Securities and Exchange Commission File No. 33-50709.
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Exhibit 4 - A copy of the Bylaws of the trustee as now in effect.
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<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the trustee required by Section 321(b) of the Trust
Indenture Act of 1939, as amended.
Exhibit 7 - Report of Condition of the trustee as of the close of business on
March 31, 1996, published pursuant to the requirements of the Comptroller of the
Company.
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
Items 3 through 15 are not answered pursuant to General Instruction B which
requires responses to Item 1, 2 and 16 only, if the obligor is not in default.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended,
the Trustee, Bank One, Columbus, NA, a national banking association organized
under the National Banking Act, has duly caused this statement of eligibility
and qualification to be signed on its behalf by the undersigned, thereunto duly
authorized, all in Columbus, Ohio, on September 17, 1996.
Bank One, Columbus, NA
By: /s/ Tom Hyland
------------------------------
Tom Hyland
Authorized Signer
<PAGE>
Exhibit 1
BANK ONE, COLUMBUS, NATIONAL ASSOCIATION
ARTICLES OF ASSOCIATION
-----------------------
For the purpose of organizing an association to carry on the business of
banking under the laws of the United States, the following Articles of
Association are entered into:
FIRST. The title of this Association shall be BANK ONE, COLUMBUS, NATIONAL
ASSOCIATION.
SECOND. The main office of the Association shall be in Columbus, County of
Franklin, State of Ohio. The general business of the Association shall be
conducted at its main office and its branches.
THIRD. The Board of Directors of this Association shall consist of not
less than five nor more than twenty-five Directors, the exact number of
Directors within such minimum and maximum limits to be fixed and determined from
time-to-time by resolution of the shareholders at any annual or special meeting
thereof, provided, however, that the Board of Directors, by resolution of a
majority thereof, shall be authorized to increase the number of its members by
not more than two between regular meetings of the shareholders. Each Director,
during the full term of his directorship, shall own, as qualifying shares, the
minimum number of shares of either this Association or of its parent bank
holding company in accordance with the provisions of applicable law. Unless
otherwise provided by the laws of the United States, any vacancy in the Board of
Directors for any reason, including an increase in the number thereof, may be
filled by action of the Board of Directors.
<PAGE>
FOURTH. The annual meeting of the shareholders for the election of
Directors and the transaction of whatever other business may be brought before
said meeting shall be held at the main office of this Association or such other
place as the Board of Directors may designate, on the day of each year specified
therefor in the By-Laws, but if no election is held on that day, it may be held
on any subsequent business day according to the provisions of law; and all
elections shall be held according to such lawful regulations as may be
prescribed by the Board of Directors.
FIFTH. The authorized amount of capital stock of this Association shall be
2,073,750 shares of common stock of the par value of Ten Dollars ($10) each; but
said capital stock may be increased or decreased from time-to-time, in
accordance with the provisions of the laws of the United States.
No holder of shares of the capital stock of any class of the Association
shall have the preemptive or preferential right of subscription to any share of
any class of stock of this Association, whether now or hereafter authorized or
to any obligations convertible into stock of this Association, issued or sold,
nor any right of subscription to any thereof other than such, if any, as the
Board of Directors, in its discretion, may from time-to-time determine and at
such price as the Board of Directors may from time-to-time fix.
This Association, at any time and from time-to-time, may authorize and
issue debt obligations, whether or not subordinated, without the approval of the
shareholders.
SIXTH. The Board of Directors shall appoint one of its members President of
the Association, who shall be Chairman of the Board, unless the Board appoints
another director to be the Chairman. The Board of Directors shall have the power
to appoint one or more Vice Presidents and to appoint a Secretary and such other
officers and employees as may be required to transact the business of this
Association.
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The Board of Directors shall have the power to define the duties of the
officers and employees of this Association; to fix the salaries to be paid to
them; to dismiss them; to require bonds from them and to fix the penalty
thereof; to regulate the manner in which any increase of the capital of this
Association shall be made; to manage and administer the business and affairs of
this Association; to make all By-Laws that it may be lawful for them to make;
and generally to do and perform all acts that it may be legal for a Board of
Directors to do and perform.
SEVENTH. The Board of Directors shall have the power to change the
location of the main office to any other place within the limits of the City of
Columbus, Ohio, without the approval of the shareholders but subject to the
approval of the Comptroller of the Currency; and shall have the power to
establish or change the location of any branch or branches of this Association
to any other location, without the approval of the shareholders but subject to
the approval of the Comptroller of the Currency.
EIGHTH. The corporate existence of this Association shall continue until
terminated in accordance with the laws of the United States.
NINTH. The Board of Directors of this Association, or any three or more
shareholders owning, in the aggregate, not less than 10 percent of the stock of
this Association, may call a special meeting of shareholders at any time. Unless
otherwise provided by the laws of the United States, a notice of the time, place
and purpose of every annual and special meeting of the shareholders shall be
given by first-class mail, postage prepaid, mailed at least ten days prior to
the date of such meeting to each shareholder of record at his address as shown
upon the books of this Association.
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<PAGE>
TENTH. Every person who is or was a Director, officer or employee of the
Association or of any other corporation which he served as a Director, officer
or employee at the request of the Association as part of his regularly assigned
duties may be indemnified by the Association in accordance with the provisions
of this paragraph against all liability (including, without limitation,
judgments, fines, penalties and settlements) and all reasonable expenses
(including, without limitation, attorneys' fees and investigative expenses) that
may be incurred or paid by him in connection with any claim, action, suit or
proceeding, whether civil, criminal or administrative (all referred to hereafter
in this paragraphs as "Claims") or in connection with any appeal relating
thereto in which he may become involved as a party or otherwise or with which he
may be threatened by reason of his being or having been a Director, officer or
employee of the Association or such other corporation, or by reason of any
action taken or omitted by him in his capacity as such Director, officer or
employee, whether or not he continues to be such at the time such liability or
expenses are incurred, provided that nothing contained in this paragraph shall
be construed to permit indemnification of any such person who is adjudged guilty
of, or liable for, willful misconduct, gross neglect of duty or criminal acts,
unless, at the time such indemnification is sought, such indemnification in such
instance is permissible under applicable law and regulations, including
published rulings of the Comptroller of the Currency or other appropriate
supervisory or regulatory authority, and provided further that there shall be no
indemnification of directors, officers, or employees against expenses,
penalties, or other payments incurred in an administrative proceeding or action
instituted by an appropriate regulatory agency which proceeding or action
results in a final order assessing civil money penalties or requiring
affirmative action by an individual or individuals in the form of payments to
the Association. Every person who may be indemnified under the provisions of
this paragraph and who has been wholly successful on the merits with respect to
any Claim shall be entitled to indemnification as of right. Except as provided
in the preceding sentence, any indemnification under this paragraph shall be at
the sole discretion of the Board of Directors and shall be made only if the
Board of Directors or the Executive Committee acting by a quorum consisting of
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Directors who are not parties to such Claim shall find or if independent legal
counsel (who may be the regular counsel of the Association) selected by the
Board of Directors or Executive Committee whether or not a disinterested quorum
exists shall render their opinion that in view of all of the circumstances then
surrounding the Claim, such indemnification is equitable and in the best
interests of the Association. Among the circumstances to be taken into
consideration in arriving at such a finding or opinion is the existence or non-
existence of a contract of insurance or indemnity under which the Association
would be wholly or partially reimbursed for such indemnification, but the
existence or non-existence of such insurance is not the sole circumstance to be
considered nor shall it be wholly determinative of whether such indemnification
shall be made. In addition to such finding or opinion, no indemnification under
this paragraph shall be made unless the Board of Directors or the Executive
Committee acting by a quorum consisting of Directors who are not parties to such
Claim shall find or if independent legal counsel (who may be the regular counsel
of the Association) selected by the Board of Directors or Executive Committee
whether or not a disinterested quorum exists shall render their opinion that the
Director, officer or employee acted in good faith in what he reasonably believed
to be the best interests of the Association or such other corporation and
further in the case of any criminal action or proceeding, that the Director,
officer or employee reasonably believed his conduct to be lawful. Determination
of any Claim by judgment adverse to a Director, officer or employee by
settlement with or without Court approval or conviction upon a plea of guilty or
of nolocontendere or its equivalent shall not create a presumption that a
Director, officer or employee failed to meet the standards of conduct set forth
in this paragraph. Expenses incurred with respect to any Claim may be advanced
by the Association prior to the final disposition thereof upon receipt of an
undertaking satisfactory to the Association by or on behalf of the recipient to
repay such amount unless it is ultimately determined that he is entitled to
indemnification under this paragraph. The rights of indemnification provided in
this paragraph shall be in addition to any rights to which any Director, officer
or employee may otherwise be entitled by contract or as a matter of law.
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<PAGE>
Every person who shall act as a Director, officer or employee of this
Association shall be conclusively presumed to be doing so in reliance upon the
right of indemnification provided for in this paragraph.
ELEVENTH. These Articles of Association may be amended at any regular or
special meeting of the shareholders by the affirmative vote of the holders of a
majority of the stock of this Association, unless the vote of the holders of a
greater amount of stock is required by law, and in that case by the vote of the
holders of such greater amount.
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<PAGE>
Exhibit 4
BY-LAWS
-------
OF
--
BANK ONE, COLUMBUS, NATIONAL ASSOCIATION
----------------------------------------
ARTICLE I
---------
MEETING OF SHAREHOLDERS
-----------------------
SECTION 1.01. ANNUAL MEETING. The regular annual meeting of the Shareholders of
the Bank for the election of Directors and for the transaction of such business
as may properly come before the meeting shall be held at its main banking house,
or other convenient place duly authorized by the Board of Directors, on the
third Monday of January of each year, or on the next succeeding banking day, if
the day fixed falls on a legal holiday. If from any cause, an election of
directors is not made on the day fixed for the regular meeting of shareholders
or, in the event of a legal holiday, on the next succeeding banking day, the
Board of Directors shall order the election to be held on some subsequent day,
as soon thereafter as practicable, according to the provisions of law; and
notice thereof shall be given in the manner herein provided for the annual
meeting. Notice of such annual meeting shall be given by or under the direction
of the Secretary or such other officer as may be designated by the Chief
Executive Officer by first-class mail, postage prepaid, to all shareholders of
record of the Bank at their respective addresses as shown upon the books of the
Bank mailed not less than ten days prior to the date fixed for such meeting.
SECTION 1.02. SPECIAL MEETINGS. A special meeting of the shareholders of this
Bank may be called at any time by the Board of Directors or by any three or more
shareholders owning, in the aggregate, not less than ten percent of the stock of
this Bank. The notice of any special meeting of the shareholders called by the
Board of Directors, stating the time, place and purpose of the meeting, shall be
given by or under the direction of the Secretary, or such other officer as is
designated by the Chief Executive Officer, by first-class mail, postage prepaid,
to all shareholders of
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record of the Bank at their respective addresses as shown upon the books of the
Bank, mailed not less than ten days prior to the date fixed for such meeting.
Any special meeting of shareholders shall be conducted and its proceedings
recorded in the manner prescribed in these By-Laws for annual meetings of
shareholders.
SECTION 1.03. SECRETARY OF SHAREHOLDERS' MEETING. The Board of Directors may
designate a person to be the Secretary of the meetings of shareholders. In the
absence of a presiding officer, as designated in these By-Laws, the Board of
Directors may designate a person to act as the presiding officer. In the event
the Board of Directors fails to designate a person to preside at a meeting of
shareholders and a Secretary of such meeting, the shareholders present or
represented shall elect a person to preside and a person to serve as Secretary
of the meeting.
The Secretary of the meetings of shareholders shall cause the returns made by
the judges and election and other proceedings to be recorded in the minute book
of the Bank. The presiding officer shall notify the directors-elect of their
election and to meet forthwith for the organization of the new board.
The minutes of the meeting shall be signed by the presiding officer and the
Secretary designated for the meeting.
SECTION 1.04. JUDGES OF ELECTION. The Board of Directors may appoint as many as
three shareholders to be judges of the election, who shall hold and conduct the
same, and who shall, after the election has been held, notify, in writing over
their signatures, the secretary of the shareholders' meeting of the result
thereof and the names of the Directors elected; provided, however, that upon
failure for any reason of any judge or judges of election, so appointed by the
directors, to serve, the presiding officer of the meeting shall appoint other
shareholders or their proxies to fill the vacancies. The judges of election at
the request of the chairman of the
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<PAGE>
meeting, shall act as tellers of any other vote by ballot taken at such meeting,
and shall notify, in writing over their signatures, the secretary of the Board
of Directors of the result thereof.
SECTION 1.05. PROXIES. In all elections of Directors, each shareholder of
record, who is qualified to vote under the provisions of Federal Law, shall have
the right to vote the number of shares of record in his name for as many persons
as there are Directors to be elected, or to cumulate such shares as provided by
Federal Law. In deciding all other questions at meetings of shareholders, each
shareholder shall be entitled to one vote on each share of stock of record in
his name. Shareholders may vote by proxy duly authorized in writing. All proxies
used at the annual meeting shall be secured for that meeting only, or any
adjournment thereof, and shall be dated, and if not dated by the shareholder,
shall be dated as of the date of receipt thereof. No officer or employee of this
Bank may act as proxy.
SECTION 1.06. QUORUM. Holders of record of a majority of the shares of the
capital stock of the Bank, eligible to be voted, present either in person or by
proxy, shall constitute a quorum for the transaction of business at any meeting
of shareholders, but shareholders present at any meeting and constituting less
than a quorum may, without further notice, adjourn the meeting from time to time
until a quorum is obtained. A majority of the votes cast shall decide every
question or matter submitted to the shareholders at any meeting, unless
otherwise provided by law or by the Articles of Association.
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<PAGE>
ARTICLE II
----------
DIRECTORS
---------
SECTION 2.01. MANAGEMENT OF THE BANK. The business of the Bank shall be managed
by the Board of Directors. Each director of the Bank shall be the beneficial
owner of a substantial number of shares of BANC ONE CORPORATION and shall be
employed either in the position of Chief Executive Officer or active leadership
within his or her business, professional or community interest which shall be
located within the geographic area in which the Bank operates, or as an
executive officer of the Bank. A director shall not be eligible for nomination
and re-election as a director of the Bank if such person's executive or
leadership position within his or her business, professional or community
interests which qualifies such person as a director of Bank terminates. The age
of 70 is the mandatory retirement age as a director of the Bank. When a person's
eligibility as director of the Bank terminates, whether because of change in
share ownership, position, residency or age, within 30 days after such
termination, such person shall submit his resignation as a director to be
effective at the pleasure of the Board provided, however, that in no event shall
such person be nominated or elected as a director. Provided, however, following
a person's retirement or resignation as a director because of the age
limitations herein set forth with respect to election or re-election as a
director, such person may, in special or unusual circumstances, and at the
discretion of the Board, be elected by the directors as a Director Emeritus of
the Bank for a limited period of time. A Director Emeritus shall have the right
to participate in board meetings but shall be without the power to vote and
shall be subject to re-election by the Board at its organizational meeting
following the Bank's annual meeting of shareholders.
SECTION 2.02. QUALIFICATIONS. Each director shall have the qualification
prescribed by law. No person elected a director may exercise any of the powers
of his office until he has taken the oath of such office.
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<PAGE>
SECTION 2.03. TERM OF OFFICE/VACANCIES. A director shall hold office until
the annual meeting for the year in which his term expires and until his
successor shall be elected and shall qualify, subject, however, to his
prior death, resignation, or removal from office. Whenever any vacancy
shall occur among the directors, the remaining directors shall constitute
the directors of the Bank until such vacancy is filled by the remaining
directors, and any director so appointed shall hold office for the
unexpired term of his or her successor. Notwithstanding the foregoing, each
director shall hold office and serve at the pleasure of the Board.
SECTION 2.04. ORGANIZATION MEETING. The directors elected by the share-
holders shall meet for organization of the new board at the time fixed by
the presiding officer of the annual meeting. If at the time fixed for such
meeting there is no quorum present, the Directors in attendance may adjourn
from time to time until a quorum is obtained. A majority of the number of
Directors elected by the shareholders shall constitute a quorum for the
transaction of business.
SECTION 2.05. REGULAR MEETINGS. The regular meetings of the Board of
Directors shall be held on the third Monday of each calendar month
excluding March and July, which meeting will be held at 4:00 p.m. When any
regular meeting of the Board falls on a holiday, the meeting shall be held
on such other day as the Board may previously designate or should the Board
fail to so designate, on such day as the Chairman of the Board of President
may fix. Whenever a quorum is not present, the directors in attendance
shall adjourn the meeting to a time not later than the date fixed by the
Bylaws for the next succeeding regular meeting of the Board.
SECTION 2.06. SPECIAL MEETINGS. Special meetings of the Board of Directors
shall be held at the call of the Chairman of the Board or President, or at
the request of two or more Directors. Any special meeting may be held at
such place in Franklin County, Ohio, and at such time as may be fixed in
the call. Written or oral notice shall be given to each Director not later
than the day next preceding the day on which special meeting is to be held,
which notice may be waived in writing.
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The presence of a Director at any meeting of the Board shall be deemed a
waiver of notice thereof by him. Whenever a quorum is not present the
Directors in attendance shall adjourn the special meeting from day to day
until a quorum is obtained.
SECTION 2.07. QUORUM. A majority of the Directors shall constitute a quorum
at any meeting, except when otherwise provided by law; but a lesser number
may adjourn any meeting, from time-to-time, and the meeting may be held, as
adjourned, without further notice. When, however, less than a quorum as
herein defined, but at least one-third and not less than two of the
authorized number of Directors are present at a meeting of the Directors,
business of the Bank may be transacted and matters before the Board
approved or disapproved by the unanimous vote of the Directors present.
SECTION 2.08. COMPENSATION. Each member of the Board of Directors shall
receive such fees for, and transportation expenses incident to, attendance
at Board and Board Committee Meetings and such fees for service as a
Director irrespective of meeting attendance as from time to time are fixed
by resolution of the Board; provided, however, that payment hereunder shall
not be made to a Director for meetings attended and/or Board service which
are not for the Bank's sole benefit and which are concurrent and
duplicative with meetings attended or board service for an affiliate of the
Bank for which the Director receives payment; and provided further, that
payment hereunder shall not be made in the case of any Director in the
regular employment of the Bank or of one of its affiliates.
SECTION 2.09. EXECUTIVE COMMITTEE. There shall be a standing committee of
the Board of Directors known as the Executive Committee which shall possess
and exercise, when the Board is not in session, all powers of the Board
that may lawfully be delegated. The Executive Committee shall also exercise
the powers of the Board of Directors in accordance with the Provisions of
the "Employees Retirement Plan" and the "Agreement and Declaration of
Trust" as the same now
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exist or may be amended hereafter. The Executive Committee shall consist of
not fewer than four board members, including the Chairman of the Board and
President of the Bank, one of whom, as hereinafter required by these By-
laws, shall be the Chief Executive Officer. The other members of the
Committee shall be appointed by the Chairman of the Board or by the
President, with the approval of the Board and shall continue as members of
the Executive Committee until their successors are appointed, provided,
however, that any member of the Executive Committee may be removed by the
Board upon a majority vote thereof at any regular or special meeting of the
Board. The Chairman or President shall fill any vacancy in the Committee by
the appointment of another Director, subject to the approval of the Board
of Directors. The regular meetings of the Executive Committee shall be held
on a regular basis as scheduled by the Board of Directors. Special meetings
of the Executive Committee shall be held at the call of the Chairman or
President or any two members thereof at such time or times as may be
designated. In the event of the absence of any member or members of the
Committee, the presiding member may appoint a member or members of the
Board to fill the place or places of such absent member or members to serve
during such absence. Not fewer than three members of the Committee must be
present at any meeting of the Executive Committee to constitute a quorum,
provided, however that with regard to any matters on which the Executive
Committee shall vote, a majority of the Committee members present at the
meeting at which a vote is to be taken shall not be officers of the Bank
and, provided further, that if, at any meeting at which the Chairman of the
Board and President are both present, Committee members who are not
officers are not in the majority, then the Chairman of the Board or
President, which ever of such officers is not also the Chief Executive
Officer, shall not be eligible to vote at such meeting and shall not be
recognized for purposes of determining if a quorum is present at such
meeting. When neither the Chairman of the Board nor President are present,
the Committee shall appoint a presiding officer. The Executive Committee
shall keep a record of its proceedings and report its proceedings and the
action taken by it to the Board of Directors.
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<PAGE>
SECTION 2.10. COMMUNITY REINVESTMENT ACT AND COMPLIANCE POLICY COMMITTEE.
There shall be a standing committee of the Board of Directors known as the
Community Reinvestment Act and Compliance Policy Committee the duties of
which shall be, at least once in each calendar year, to review, develop and
recommend policies and programs related to the Bank's Community
Reinvestment Act Compliance and regulatory compliance with all existing
statutes, rules and regulations affecting the Bank under state and federal
law. Such Committee shall provide and promptly make a full report of such
review of current Bank policies with regard to Community Reinvestment Act
and regulatory compliance in writing to the Board, with recommendations, if
any, which may be necessary to correct any unsatisfactory conditions. Such
Committee may, in its discretion, in fulfilling its duties, utilize the
Community Reinvestment Act officers of the Bank, Banc One Ohio Corporation
and Banc One Corporation and may engage outside Community Reinvestment Act
experts, as approved by the Board, to review, develop and recommend
policies and programs as herein required. The Community Reinvestment Act
and regulatory compliance policies and procedures established and the
recommendations made shall be consistent with, and shall supplement, the
Community Reinvestment Act and regulatory compliance programs, policies and
procedures of Banc One Corporation and Banc One Ohio Corporation. The
Community Reinvestment Act and Compliance Policy Committee shall consist of
not fewer than four board members, one of whom shall be the Chief Executive
Officer and a majority of whom are not officers of the Bank. Not fewer than
three members of the Committee, a majority of whom are not officers of the
Bank, must be present to constitute a quorum. The Chairman of the Board or
President of the Bank, whichever is not the Chief Executive Officer, shall
be an ex officio member of the Community Reinvestment Act and Compliance
Policy Committee. The Community Reinvestment Act and Compliance Policy
Committee, whose chairman shall be appointed by the Board, shall keep a
record of its proceedings and report its proceedings and the action taken
by it to the Board of Directors.
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SECTION 2.11. TRUST COMMITTEES. There shall be two standing Committees
known as the Trust Management Committee and the Trust Examination Committee
appointed as hereinafter provided.
SECTION 2.12. OTHER COMMITTEES. The Board of Directors may appoint such
special committees from time to time as are in its judgment necessary in
the interest of the Bank.
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ARTICLE III
-----------
OFFICERS, MANAGEMENT STAFF AND EMPLOYEES
----------------------------------------
SECTION 3.01. OFFICERS AND MANAGEMENT STAFF.
- --------------------------------------------
(a) The officers of the Bank shall include a President, Secretary and
Security Officer and may include a Chairman of the Board, one or more
Vice Chairmen, one or more Vice Presidents (which may include one or
more Executive Vice Presidents and/or Senior Vice Presidents) and one
or more Assistant Secretaries, all of whom shall be elected by the
Board. All other officers may be elected by the Board or appointed in
writing by the Chief Executive Officer. The salaries of all officers
elected by the Board shall be fixed by the Board. The Board from time-
to-time shall designate the President or Chairman of the Board to
serve as the Bank's Chief Executive Officer.
(b) The Chairman of the Board, if any, and the President shall be elected
by the Board from their own number. The President and Chairman of the
Board shall be re-elected by the Board annually at the organizational
meeting of the Board of Directors following the Annual Meeting of
Shareholders. Such officers as the Board shall elect from their own
number shall hold office from the date of their election as officers
until the organization meeting of the Board of Directors following the
next Annual Meeting of Shareholders, provided, however, that such
officers may be relieved of their duties at any time by action of the
Board in which event all the powers incident to their office shall
immediately terminate.
(c) Except as provided in the case of the elected officers who are members
of the Board, all officers, whether elected or appointed, shall hold
office at the pleasure of the Board. Except as otherwise limited by law
or these By-laws, the Board assigns to Chief Executive Officer and/or
his
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designees the authority to appoint and dismiss any elected or
appointed officer or other member of the Bank's management staff and
other employees of the Bank, as the person in charge of and
responsible for any branch office, department, section, operation,
function, assignment or duty in the Bank.
(d) The management staff of the Bank shall include officers elected by
the Board, officers appointed by the Chief Executive Officer, and
such other persons in the employment of the Bank who, pursuant to
written appointment and authorization by a duly authorized officer
of the Bank, perform management functions and have management
responsibilities. Any two or more offices may be held by the same
person except that no person shall hold the office of Chairman of
the Board and/or President and at the same time also hold the office
of Secretary.
(e) The Chief Executive Officer of the Bank and any other officer of the
Bank, to the extent that such officer is authorized in writing by
the Chief Executive Officer, may appoint persons other than officers
who are in the employment of the Bank to serve in management
positions and in connection therewith, the appointing officer may
assign such title, salary, responsibilities and functions as are
deemed appropriate by him, provided, however, that nothing contained
herein shall be construed as placing any limitation on the authority
of the Chief Executive Officer as provided in this and other
sections of these By-Laws.
SECTION 3.02. CHIEF EXECUTIVE OFFICER. The Chief Executive Officer of the Bank
shall have general and active management of the business of the Bank and shall
see that all orders and resolutions of the Board of Directors are carried into
effect. Except as otherwise prescribed or limited by these By-Laws, the Chief
Executive Officer shall have full right, authority and power to control all
personnel, including elected and appointed officers, of the Bank, to employ or
direct the
-21-
<PAGE>
employment of such personnel and officers as he may deem necessary, including
the fixing of salaries and the dismissal of them at pleasure, and to define and
prescribe the duties and responsibility of all Officers of the Bank, subject to
such further limitations and directions as he may from time-to-time deem proper.
The Chief Executive Officer shall perform all duties incident to his office and
such other and further duties, as may, from time-to-time, be required of him by
the Board of Directors or the shareholders. The specification of authority in
these By-Laws wherever and to whomever granted shall not be construed to limit
in any manner the general powers of delegation granted to the Chief Executive
Officer in conducting the business of the Bank. The Chief Executive Officer or,
in his absence, the Chairman of the Board or President of the Bank, as
designated by the Chief Executive Officer, shall preside at all meetings of
shareholders and meetings of the Board. In the absence of the Chief Executive
Officer, such officer as is designated by the Chief Executive Officer shall be
vested with all the powers and perform all the duties of the Chief Executive
Officer as defined by these By-Laws. When designating an officer to serve in his
absence, the Chief Executive Officer shall select an officer who is a member of
the Board of Directors whenever such officer is available.
SECTION 3.03. POWERS OF OFFICERS AND MANAGEMENT STAFF. The Chief Executive
Officer, the Chairman of the Board, the President, and those officers so
designated and authorized by the Chief Executive Officer are authorized for an
on behalf of the Bank, and to the extent permitted by law, to make loans and
discounts; to purchase or acquire drafts, notes, stock, bonds, and other
securities for investment of funds held by the Bank; to execute and purchase
acceptances; to appoint, empower and direct all necessary agents and attorneys;
to sign and give any notice required to be given; to demand payment and/or to
declare due for any default any debt or obligation due or payable to the Bank
upon demand or authorized to be declared due; to foreclose any mortgages, to
exercise any option, privilege or election to forfeit, terminate, extend or
renew any lease; to authorize and direct any proceedings for the collection of
any money or for the enforcement
-22-
<PAGE>
of any right or obligation; to adjust, settle and compromise all claims of every
kind and description in favor of or against the Bank, and to give receipts,
releases and discharges therefor; to borrow money and in connection therewith to
make, execute and deliver notes, bonds or other evidences of indebtedness; to
pledge or hypothecate any securities or any stocks, bonds, notes or any
property real or personal held or owned by the Bank, or to rediscount any notes
or other obligations held or owned by the Bank, to employ or direct the
employment of all personnel, including elected and appointed officers, and the
dismissal of them at pleasure, and in furtherance of and in addition to the
powers hereinabove set forth to do all such acts and to take all such
proceedings as in his judgment are necessary and incidental to the operation of
the Bank.
Other persons in the employment of the Bank, including, but not limited to,
officers and other members of the management staff, may be authorized by the
Chief Executive Officer, or by an officer so designated and authorized by the
Chief Executive Officer, to perform the powers set forth above, subject,
however, to such limitations and conditions as are set forth in the
authorization given to such persons.
SECTION 3.04. SECRETARY. The Secretary or such other officers as may be
designated by the Chief Executive Officer shall have supervision and control of
the records of the Bank and, subject to the direction of the Chief Executive
Officer, shall undertake other duties and functions usually performed by a
corporate secretary. Other officers may be designated by the Chief Executive
Officer or the Board of Directors as Assistant Secretary to perform the duties
of the Secretary.
SECTION 3.05. EXECUTION OF DOCUMENTS. The Chief Executive Officer, Chairman of
the Board, President, any officer being a member of the Bank's management staff
who is also a person in charge of and responsible for any department within the
Bank and any other officer to the extent such officer is so designated and
authorized by the Chief Executive Officer, the Chairman of the
-23-
<PAGE>
Board, the President, or any other officer who is a member of the Bank's
management staff who is in charge of and responsible for any department
within the Bank, are hereby authorized on behalf of the Bank to sell,
assign, lease, mortgage, transfer, deliver and convey any real or personal
property now or hereafter owned by or standing in the name of the Bank or
its nominee, or held by this Bank as collateral security, and to execute
and deliver such deeds, contracts, leases, assignments, bills of sale,
transfers or other papers or documents as may be appropriate in the
circumstances; to execute any loan agreement, security agreement,
commitment letters and financing statements and other documents on behalf
of the Bank as a lender; to execute purchase orders, documents and
agreements entered into by the Bank in the ordinary course of business,
relating to purchase, sale, exchange or lease of services, tangible
personal property, materials and equipment for the use of the Bank; to
execute powers of attorney to perform specific or general functions in the
name of or on behalf of the Bank; to execute promissory notes or other
instruments evidencing debt of the Bank; to execute instruments pledging or
releasing securities for public funds, documents submitting public fund
bids on behalf of the Bank and public fund contracts; to purchase and
acquire any real or personal property including loan portfolios and to
execute and deliver such agreements, contracts or other papers or documents
as may be appropriate in the circumstances; to execute any indemnity and
fidelity bonds, proxies or other papers or documents of like or different
character necessary, desirable or incidental to the conduct of its banking
business; to execute and deliver settlement agreements or other papers or
documents as may be appropriate in connection with a dismissal authorized
by Section 3.01(c) of these By-laws; to execute agreements, instruments,
documents, contracts or other papers of like or difference character
necessary, desirable or incidental to the conduct of its banking business;
and to execute and deliver partial releases from and discharges or
assignments of mortgages, financing statements and assignments or surrender
of insurance policies, now or hereafter held by this Bank.
-24-
<PAGE>
The Chief Executive Officer, Chairman of the Board, President, any officer
being a member of the Bank's management staff who is also a person in charge of
and responsible for any department within the Bank, and any other officer of the
Bank so designated and authorized by the Chief Executive Officer, Chairman of
the Board, President or any officer who is a member of the Bank's management
staff who is in charge of and responsible for any department within the Bank are
authorized for and on behalf of the Bank to sign and issue checks, drafts, and
certificates of deposit; to sign and endorse bills of exchange, to sign and
countersign foreign and domestic letters of credit, to receive and receipt for
payments of principal, interest, dividends, rents, fees and payments of every
kind and description paid to the Bank, to sign receipts for property acquired by
or entrusted to the Bank, to guarantee the genuineness of signatures on
assignments of stocks, bonds or other securities, to sign certifications of
checks, to endorse and deliver checks, drafts, warrants, bills, notes,
certificates of deposit and acceptances in all business transactions of the
Bank.
Other persons in the employment of the Bank and of its subsidiaries,
including but not limited to officers and other members of the management staff,
may be authorized by the Chief Executive Officer, Chairman of the Board,
President or by an officer so designated by the Chief Executive Officer,
Chairman of the Board, or President to perform the acts and to execute the
documents set forth above, subject, however, to such limitations and conditions
as are contained in the authorization given to such person.
SECTION 3.06. PERFORMANCE BOND. All officers and employees of the Bank shall be
bonded for the honest and faithful performance of their duties for such amount
as may be prescribed by the Board of Directors.
-25-
<PAGE>
ARTICLE IV
----------
TRUST DEPARTMENT
----------------
SECTION 4.01. TRUST DEPARTMENT. Pursuant to the fiduciary powers granted to
this Bank under the provisions of Federal Law and Regulations of the
Comptroller of the Currency, there shall be maintained a separate Trust
Department of the Bank, which shall be operated in the manner specified
herein.
SECTION 4.02. TRUST MANAGEMENT COMMITTEE. There shall be a standing
Committee known as the Trust Management Committee, consisting of at least
five members, a majority of whom shall not be officers of the Bank. The
Committee shall consist of the Chairman of the Board who shall be Chairman
of the Committee, the President, and at least three other Directors
appointed by the Board of Directors and who shall continue as members of
the Committee until their successors are appointed. Any vacancy in the
Trust Management Committee may be filled by the Board at any regular or
special meeting. In the event of the absence of any member or members, such
Committee may, in its discretion, appoint members of the Board to fill the
place of such absent members to serve during such absence. Three members of
the Committee shall constitute a quorum. Any member of the Committee may be
removed by the Board by a majority vote at any regular or special meeting
of the Board. The Committee shall meet at such times as it may determine or
at the call of the Chairman, or President or any two members thereof.
The Trust Management Committee, under the general direction of the
Board of Directors, shall supervise the policy of the Trust Department
which shall be formulated and executed in accordance with Law, Regulations
of the Comptroller of the Currency, and sound fiduciary principles.
-26-
<PAGE>
SECTION 4.03. TRUST EXAMINATION COMMITTEE. There shall be a standing
Committee known as the Trust Examination Committee, consisting of three
directors appointed by the Board of Directors and who shall continue as
members of the committee until their successors are appointed. Such members
shall not be active officers of the Bank. Two members of the Committee
shall constitute a quorum. Any member of the Committee may be removed by
the Board by a majority vote at any regular or special meeting of the
Board. The Committee shall meet at such times as it may determine or at the
call of two members thereof.
This Committee shall, at least once during each calendar year and
within fifteen months of the last such audit, or at such other time(s) as
may be required by Regulations of the Comptroller of the Currency, make
suitable audits of the Trust Department or cause suitable audits to be made
by auditors responsible only to the Board of Directors, and at such time
shall ascertain whether the Department has been administered in accordance
with Law, Regulations of the Comptroller of the Currency and sound
fiduciary principles.
The Committee shall promptly make a full report of such audits in
writing to the Board of Directors of the Bank, together with a
recommendation as to what action, if any, may be necessary to correct any
unsatisfactory condition. A report of the audits together with the action
taken thereon shall be noted in the Minutes of the Board of Directors and
such report shall be a part of the records of this Bank.
SECTION 4.04. MANAGEMENT. The Trust Department shall be under the
management and supervision of an officer of the Bank or of the trust
affiliate of the Bank designated by and subject to the advice and direction
of the Chief Executive Officer. Such officer having supervisory
responsibility over the Trust Department shall do or cause to be done all
things necessary or proper in carrying on the business of the Trust
Department in accordance with provisions of law and applicable regulations.
-27-
<PAGE>
SECTION 4.05. HOLDING OF PROPERTY. Property held by the Trust Department may be
carried in the name of the Bank in its fiduciary capacity, in the name of Bank,
or in the name of a nominee or nominees.
SECTION 4.06. TRUST INVESTMENTS. Funds held by the Bank in a fiduciary capacity
awaiting investment or distribution shall not be held uninvested or
undistributed any longer than is reasonable for the proper management of the
account and shall be invested in accordance with the instrument establishing a
fiduciary relationship and local law. Where such instrument does not specify the
character or class of investments to be made and does not vest in the Bank any
discretion in the matter, funds held pursuant to such instrument shall be
invested in any investment which corporate fiduciaries may invest under local
law.
The investments of each account in the Trust Department shall be kept
separate from the assets of the Bank, and shall be placed in the joint custody
or control of not less than two of the officers or employees of the Bank or of
the trust affiliate of the Bank designated for the purpose by the Trust
Management Committee.
SECTION 4.07. EXECUTION OF DOCUMENTS. The Chief Executive Officer, Chairman of
the Board, President, any officer of the Trust Department, and such other
officers of the trust affiliate of the Bank as are specifically designated and
authorized by the Chief Executive Officer, the President, or the officer in
charge of the Trust Department, are hereby authorized, on behalf of this Bank,
to sell, assign, lease, mortgage, transfer, deliver and convey any real property
or personal property and to purchase and acquire any real or personal property
and to execute and deliver such agreements, contracts, or other papers and
documents as may be appropriate in the circumstances for property now or
hereafter owned by or standing in the name of this Bank, or its nominee, in any
fiduciary capacity, or in the name of any principal for whom this Bank may now
or hereafter be acting under a power of attorney, or as agent and to execute and
deliver partial releases from
-28-
<PAGE>
any discharges or assignments or mortgages and assignments or surrender of
insurance policies, to execute and deliver deeds, contracts, leases,
assignments, bills of sale, transfers or such other papers or documents as may
be appropriate in the circumstances for property now or hereafter held by this
Bank in any fiduciary capacity or owned by any principal for whom this Bank may
now or hereafter be acting under a power of attorney or as agent; to execute and
deliver settlement agreements or other papers or documents as may be appropriate
in connection with a dismissal authorized by Section 3.01(c) of these By-laws;
provided that the signature of any such person shall be attested in each case by
any officer of the Trust Department or by any other person who is specifically
authorized by the Chief Executive Officer, the President or the officer in
charge of the Trust Department.
The Chief Executive Officer, Chairman of the Board, President, any officer
of the Trust Department and such other officers of the trust affiliate of the
Bank as are specifically designated and authorized by the Chief Executive
Officer, the President, or the officer in charge of the Trust Department, or any
other person or corporation as is specifically authorized by the Chief Executive
Officer, the President or the officer in charge of the Trust Department, are
hereby authorized on behalf of this Bank, to sign any and all pleadings and
papers in probate and other court proceedings, to execute any indemnity and
fidelity bonds, trust agreements, proxies or other papers or documents of like
or different character necessary, desirable or incidental to the appointment of
the Bank in any fiduciary capacity and the conduct of its business in any
fiduciary capacity; also to foreclose any mortgage, to execute and deliver
receipts for payments of principal, interest, dividends, rents, fees and
payments of every kind and description paid to the Bank; to sign receipts for
property acquired or entrusted to the Bank; also to sign stock or bond
certificates on behalf of this Bank in any fiduciary capacity and on behalf of
this Bank as transfer agent or registrar; to guarantee the genuineness of
signatures on assignments of stocks, bonds or other securities, and to
authenticate bonds, debentures, land or lease trust certificates or other forms
of security issued pursuant to any indenture under which this Bank now or
hereafter is acting as
-29-
<PAGE>
Trustee. Any such person, as well as such other persons as are specifically
authorized by the Chief Executive Officer or the officer in charge of the Trust
Department, may sign checks, drafts and orders for the payment of money executed
by the Trust Department in the course of its business.
SECTION 4.08. VOTING OF STOCK. The Chairman of the Board, President, any
officer of the Trust Department, any officer of the trust affiliate of the Bank
and such other persons as may be specifically authorized by Resolution of the
Trust Management Committee or the Board of Directors, may vote shares of stock
of a corporation of record on the books of the issuing company in the name of
the Bank or in the name of the Bank as fiduciary, or may grant proxies for the
voting of such stock of the granting if same is permitted by the instrument
under which the Bank is acting in a fiduciary capacity, or by the law applicable
to such fiduciary account. In the case of shares of stock which are held by a
nominee of the Bank, such shares may be voted by such person(s) authorized by
such nominee.
-30-
<PAGE>
ARTICLE V
---------
STOCKS AND STOCK CERTIFICATES
-----------------------------
SECTION 5.01. STOCK CERTIFICATES. The shares of stock of the Bank shall be
evidenced by certificates which shall bear the signature of the Chairman of
the Board, the President, or a Vice President (which signature may be
engraved, printed or impressed), and shall be signed manually by the
Secretary, or any other officer appointed by the Chief Executive Officer
for that purpose.
In case any such officer who has signed or whose facsimile signature has
been placed upon such certificate shall have ceased to be such before such
certificate is issued, it may be issued by the Bank with the same effect as
if such officer had not ceased to be such at the time of its issue. Each
such certificate shall bear the corporate seal of the Bank, shall recite on
its fact that the stock represented thereby is transferable only upon the
books of the Bank properly endorsed and shall recite such other information
as is required by law and deemed appropriate by the Board. The corporate
seal may be facsimile engraved or printed.
SECTION 5.02. STOCK ISSUE AND TRANSFER. The shares of stock of the Bank
shall be transferable only upon the stock transfer books of the Bank and
except as hereinafter provided, no transfer shall be made or new
certificates issued except upon the surrender for cancellation of the
certificate or certificates previously issued therefor. In the case of the
loss, theft, or destruction of any certificate, a new certificate may be
issued in place of such certificate upon the furnishing of any affidavit
setting forth the circumstances of such loss, theft, or destruction and
indemnity satisfactory to the Chairman of the Board, the President, or a
Vice President. The Board of Directors, or the Chief Executive Officer, may
authorize the issuance of a new certificate therefor without the furnishing
of indemnity. Stock Transfer Books, in which all transfers of stock shall
be recorded, shall be provided.
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<PAGE>
The stock transfer books may be closed for a reasonable period and under
such conditions as the Board of Directors may at any time determine for any
meeting of shareholders, the payment of dividends or any other lawful
purpose. In lieu of closing the transfer books, the Board may, in its
discretion, fix a record date and hour constituting a reasonable period
prior to the day designated for the holding of any meeting of the
shareholders or the day appointed for the payment of any dividend or for
any other purpose at the time as of which shareholders entitled to notice
of and to vote at any such meeting or to receive such dividend or to be
treated as shareholders for such other purpose shall be determined, and
only shareholders of record at such time shall be entitled to notice of or
to vote at such meeting or to receive such dividends or to be treated as
shareholders for such other purpose.
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<PAGE>
ARTICLE VI
----------
MISCELLANEOUS PROVISIONS
------------------------
SECTION 6.01. SEAL. The impression made below is an impression of the seal
adopted by the Board of Directors of BANK ONE, COLUMBUS, NATIONAL
ASSOCIATION. The Seal may be affixed by any officer of the Bank to any
document executed by an authorized officer on behalf of the Bank, and any
officer may certify any act, proceedings, record, instrument or authority
of the Bank.
SECTION 6.02. BANKING HOURS. Subject to ratification by the Executive
Committee, the Bank and each of its Branches shall be open for business on
such days and during such hours as the Chief Executive Officer of the Bank
shall, from time to time, prescribe.
SECTION 6.03. MINUTE BOOK. The organization papers of this Bank, the
Articles of Association, the returns of the judges of elections, the By-
Laws and any amendments thereto, the proceedings of all regular and special
meetings of the shareholders and of the Board of Directors, and reports of
the committees of the Board of Directors shall be recorded in the minute
book of the Bank. The minutes of each such meeting shall be signed by the
presiding Officer and attested by the secretary of the meetings.
SECTION 6.04. AMENDMENT OF BY-LAWS. These By-Laws may be amended by vote of
a majority of the Directors.
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<PAGE>
EXHIBIT 6
Securities and Exchange Commission
Washington, D.C. 20549
CONSENT
-------
The undersigned, designated to act as Trustee under the Indenture for Southpoint
Structured Assets, Inc. described in the attached Statement of Eligibility and
Qualification, does hereby consent that reports of examinations by Federal,
State, Territorial, or District Authorities may be furnished by such authorities
to the Commission upon the request of the Commission.
This Consent is given pursuant to the provision of Section 321(b) of the Trust
Indenture Act of 1939, as amended.
Bank One, Columbus, NA
Dated: September 17, 1996
By: /s/ Tom Hyland
-----------------------------------
Tom Hyland
Authorized Signer
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<PAGE>
Board of Governors of the Federal Reserve System
OMB Number: 7100-0036
EXHIBIT 7 Federal Deposit Insurance Corporation
OMB Number: 3064-0052
Office of the Comptroller of the Currency
OMB Number: 1557-0081
Expires March 31, 1999
Federal Financial Institutions Examination Council
- --------------------------------------------------------------------------------
[LOGO] Please refer to page i, | 1 |
Table of Contents, for
the required disclosure
of estimated burden.
- --------------------------------------------------------------------------------
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices--FFIEC 031
(960630)
Report at the close of business June 30, 1996 ----------
(RCR 9999)
This report is required by law: 12 U.S.C. /Section/ 324 (State member banks); 12
U.S.C. /Section/ 1817 (State nonmember banks); and 12 U.S.C. /Section/ 161
(National banks).
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
- --------------------------------------------------------------------------------
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
I, Richard D. Nadler, Controller
---------------------------------------------------
Name and Title of Officer Authorized to Sign Report
of the named bank do hereby declare that these Reports of Condition and Income
(including the supporting schedules) have been prepared in conformance with the
instructions issued by the appropriate Federal regulatory authority and are true
to the best of my knowledge and belief.
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions.
NOTE: These instructions may in some cases differ from generally accepted
accounting principles.
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it has
been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
/s/ R. S. Nadler
- --------------------------------------------------------------------------------
Signature of Officer Authorized to Sign Report
7/26/96
- --------------------------------------------------------------------------------
Date of Signature
/s/ ????
- --------------------------------------------------------------------------------
Director (Trustee)
/s/ Alex Shumate
- --------------------------------------------------------------------------------
Director (Trustee)
/s/ William Bennett
- --------------------------------------------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
For Banks Submitting Hard Copy Report Forms:
STATE MEMBER BANKS: Return the original and one copy to the appropriate Federal
Reserve District Bank.
STATE NONMEMBER BANKS: Return the original only in the special return address
envelope provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
NATIONAL BANKS: Return the original only in the special return address envelope
provided. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
- --------------------------------------------------------------------------------
_ _
FDIC Certificate Number |_|_|_|_|_| | |
(RCR: 9050)
CALL NO. 196 31 06-30-96
STBK: 39-1580 00088 STCERT: 39-06559
BANK ONE, COLUMBUS, NATIONAL ASSOCIATION
100 EAST BROAD STREET
COLUMBUS, OH 43271
|_ _|
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
FFIEC 031
Page i
| 2 |
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices
- --------------------------------------------------------------------------------
Table of Contents
Signature Page........................................................... Cover
Report of Income
Schedule RI--Income Statement....................................... RI-1, 2, 3
Schedule RI-A--Changes in Equity Capital.................................. RI-4
Schedule RI-B--Charge-offs and Recoveries and
Changes in Allowance for Loan and Lease
Losses............................................................... RI-4, 5
Schedule RI-C--Applicable Income Taxes by
Taxing Authority........................................................ RI-5
Schedule RI-D--Income from
International Operations................................................ RI-6
Schedule RI-E--Explanations............................................ RI-7, 8
Report of Condition
Schedule RC--Balance Sheet............................................. RC-1, 2
Schedule RC-A--Cash and Balances Due
From Depository Institutions............................................ RC-3
Schedule RC-B--Securities........................................... RC-3, 4, 5
Schedule RC-C--Loans and Lease Financing
Receivables:
Part I. Loans and Leases............................................. RC-6, 7
Part II. Loans to Small Businesses and
Small Farms (included in the forms for
June 30 only).................................................... RC-7a, 7b
Schedule RC-D--Trading Assets and Liabilities
(to be completed only by selected banks)................................ RC-8
Schedule RC-E--Deposit Liabilities................................ RC-9, 10, 11
Schedule RC-F--Other Assets.............................................. RC-11
Schedule RC-G--Other Liabilities......................................... RC-11
Schedule RC-H--Selected Balance Sheet Items
for Domestic Offices................................................... RC-12
Schedule RC-I--Selected Assets and Liabilities
of IBFs................................................................ RC-13
Schedule RC-K--Quarterly Averages........................................ RC-13
Schedule RC-L--Off-Balance Sheet
Items.......................................................... RC-14, 15, 16
Schedule RC-M--Memoranda............................................. RC-17, 18
Schedule RC-N--Past Due and Nonaccrual
Loans, Leases, and Other Assets.................................... RC-19, 20
Schedule RC-O--Other Data for Deposit
Insurance Assessments.............................................. RC-21, 22
Schedule RC-R--Regulatory Capital.................................... RC-23, 24
Optional Narrative Statement Concerning
the Amounts Reported in the Reports
of Condition and Income................................................ RC-25
Special Report (to be completed by all banks)
Schedule RC-J--Repricing Opportunities (sent only to
and to be completed only by savings banks)
Disclosure of Estimated Burden
The estimated average burden associated with this information collection is 32.2
hours per respondent and is estimated to vary from 15 to 230 hours per response,
depending on individual circumstances. Burden estimates include the time for
reviewing instructions, gathering and maintaining data in the required form, and
completing the information collection, but exclude the time for compiling and
maintaining business records in the normal course of a respondent's activities.
Comments concerning the accuracy of this burden estimate and suggestions for
reducing this burden should be directed to the Office of Information and
Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503, and
to one of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
For information or assistance, National and State nonmember banks should contact
the FDIC's Call Reports Analysis Unit, 550 17th Street, NW, Washington, D.C.
20429, toll free on (800) 688-FDIC(3342), Monday through Friday between
8:00 a.m. and 5:00 p.m., Eastern time. State member banks should contact their
Federal Reserve District Bank.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-1
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Consolidated Report of Income
for the period January 1, 1996 - June 30, 1996
All report of Income schedules are to be reported on a calendar year-to-date
basis in thousands of dollars.
Schedule RI--Income Statement
<TABLE>
<CAPTION>
--------------------
I480
--------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income: ////////////////////
a. Interest and fee income on loans: ///////////////////
(1) In domestic offices: ///////////////////
(a) Loans secured by real estate................................................. 4011 57,877 1.a.(1)(a)
(b) Loans to depository institutions............................................. 4019 16 1.a.(1)(b)
(c) Loans to finance agricultural production and other loans to farmers.......... 4024 381 1.a.(1)(c)
(d) Commercial and industrial loans.............................................. 4012 33,533 1.a.(1)(d)
(e) Acceptances of other banks................................................... 4026 0 1.a.(1)(e)
(f) Loans to individuals for household, family, and other personal expenditures: ////////////////////
(1) Credit cards and related plans........................................... 4054 189,430 1.a.(1)(f)(1)
(2) Other.................................................................... 4055 54,848 1.a.(1)(f)(2)
(g) Loans to foreign governments and official institutions....................... 4056 0 1.a.(1)(g)
(h) Obligations (other than securities and leases) of states and political ////////////////////
subdivisions in the U.S.: ////////////////////
(1) Taxable obligations...................................................... 4503 78 1.a.(1)(h)(1)
(2) Tax-exempt obligations................................................... 4504 581 1.a.(1)(h)(2)
(i) All other loans in domestic offices.......................................... 4058 4,986 1.a.(1)(i)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs.................... 4059 0 1.a.(2)
b. Income from lease financing receivables: ////////////////////
(1) Taxable leases................................................................... 4505 31,773 1.b.(1)
(2) Tax-exempt leases................................................................ 4307 60 1.b.(2)
c. Interest income on balance due from depository institutions:(1) ////////////////////
(1) In domestic offices.............................................................. 4105 0 1.c.(1)
(2) In foreign offices, Edge and Agreement subsidiaries, and IBFs.................... 4106 0 1.c.(2)
d. Interest and dividend income on securities: ////////////////////
(1) U.S. Treasury securities and U.S. Government agency and corporation obligations.. 4027 11,220 1.d.(1)
(2) Securities issued by states and political subdivisions in the U.S.: ////////////////////
(a) Taxable securities........................................................... 4506 0 1.d.(2)(a)
(b) Tax-exempt securities........................................................ 4507 1,463 1.d.(2)(b)
(3) Other domestic debt securities................................................... 3657 417 1.d.(3)
(4) Foreign debt securities.......................................................... 3658 108 1.d.(4)
(5) Equity securities (including investments in mutual funds)........................ 3659 115 1.d.(5)
e. Interest income from trading assets.................................................. 4069 0 1.e.
--------------------
</TABLE>
- ----------
(1) Includes interest income on time certificates of deposit not held for
trading.
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-2
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RI--Continued
<TABLE>
<CAPTION>
----------------
Dollar Amounts in Thousands Year-to-date
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Interest income (continued) RIAD Bil Mil Thou
f. Interest income on federal funds sold and securities purchased under ////////////////////
agreements to resell in domestic offices of the bank and of its Edge ////////////////////
and Agreement subsidiaries, and in IBPs................................... 4020 6,503 1.f.
g. Total interest income (sum of items 1.a through 1.f)...................... 4107 393,389 1.g.
2. Interest expense: ////////////////////
a. Interest on deposits: ////////////////////
(1) Interest on deposits in domestic offices: ////////////////////
(a) Transaction accounts (NOW accounts, ATS accounts, and ////////////////////
telephone and preauthorized transfer accounts).................... 4508 360 2.a.(1)(a)
(b) Nontransaction accounts: ////////////////////
(1) Money market deposit accounts (MMDAs)......................... 4509 26,817 2.a.(1)(b)(1)
(2) Other savings deposits........................................ 4511 9,638 2.a.(1)(b)(2)
(3) Time certificates of deposit of $100,000 or more.............. 4174 2,160 2.a.(1)(b)(3)
(4) All other time deposits....................................... 4512 30,968 2.a.(1)(b)(4)
(2) Interest on deposits in foreign offices, Edge and Agreement ////////////////////
subsidiaries, and IBFs................................................ 4172 12,112 2.a.(2)
b. Expense of federal funds purchased and securities sold under ////////////////////
agreements to repurchase in domestic offices of the bank and of its ////////////////////
Edge and Agreement subsidiaries, and IN IBFs.............................. 4180 35,084 2.b.
c. Interest on demand notes issued to the U.S. Treasury, trading ////////////////////
liabilities, and other borrowed money..................................... 4185 22,394 2.c.
d. Interest on mortgage indebtedness and obligations under capitalized ////////////////////
leases.................................................................... 4072 187 2.d.
e. Interest on subordinated notes and debentures............................. 4200 5,914 2.e.
f. Total interest expense (sum of items 2.a through 2.e)..................... 4073 145,634 2.f.
-------------------------
3. Net interest income (item 1.g minus 2.f)..................................... //////////////////// RIAD 4074 247,755 3.
4. Provisions: //////////////////// -------------------------
a. Provision for loan and lease losses....................................... //////////////////// RIAD 4230 73,642 4.a.
b. Provision for allocated transfer risk..................................... //////////////////// RIAD 4243 0 4.b.
-------------------------
5. Noninterest income: ////////////////////
a. Income from fiduciary activities.......................................... 4070 15,993 5.a.
b. Service charges on deposit accounts in domestic offices................... 4080 19,861 5.b.
c. Trading revenue (must equal Schedule RI, sum of Memorandum ////////////////////
items 8.a through 8.d).................................................... A220 0 5.c.
d. Other foreign transaction gains (losses).................................. 4076 177 5.d.
e. Not applicable ////////////////////
f. Other noninterest income: ////////////////////
(1) Other fee income...................................................... 5407 103,509 5.f.(1)
(2) All other noninterest income*......................................... 5408 45,014 5.f.(2)
----------------------
g. Total noninterest income (sum of items 5.a through 5.f)................... //////////////////// RIAD 4079 184,554 5.
6. a. Realized gains (losses) on held-to-maturity securities.................... //////////////////// RIAD 3521 (38) 6.
b. Realized gains (losses) on available-for-sale securities.................. //////////////////// RIAD 3196 0 6.
-----------------------
7. Noninterest expense: ////////////////////
a. Salaries and employee benefits............................................ 4135 74,769 7.a.
b. Expenses of premises and fixed assets (net of rental income) ////////////////////
(excluding salaries and employee benefits and mortgage interest).......... 4217 14,205 7.b.
c. Other noninterest expense*................................................ 4092 261,658 7.c.
-----------------------
d. Total noninterest expense (sum of items 7.a through 7.c).................. //////////////////// RIAD 4093 350,632 7.
-----------------------
8. Income (loss) before income taxes and extraordinary items and other ////////////////////
-----------------------
adjustments (item 3 plus or minus items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d).... //////////////////// RIAD 4301 7,997 8.
9. Applicable income taxes (on item 8).......................................... //////////////////// RIAD 4302 971 9.
-----------------------
10. Income (loss) before extraordinary items and other adjustments (item 8 ////////////////////
-----------------------
minus 9)..................................................................... //////////////////// RIAD 4300 7,026 10.
------------------------------------------
</TABLE>
- ---------
*Describe on Schedule RI-E--Explanations.
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-3
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RI--Continued
<TABLE>
<CAPTION>
------------
Year-to-date
--------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
11. Extraordinary items and other adjustments: ////////////////////
a. Extraordinary items and other adjustments, gross of income taxes*......... 4310 0 11.a.
b. Applicable income taxes (on item 11.a)*................................... 4315 0 11.b.
c. Extraordinary items and other adjustments, net of income taxes ////////////////////
------------------------
(item 11.a minus 11.b).................................................... //////////////////// RIAD 4320 0 11.c.
12. Net income (loss) (sum of items 10 and 11.c)................................. //////////////////// RIAD 4340 7,026 12.
------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------
I481 (-
------------
Memoranda Year-to-date
--------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest expense incurred to carry tax-exempt securities, loans, and leases acquired after ////////////////////
August 7, 1986, that is not deductible for federal income tax purposes....................... 4513 305 M.1.
2. Income from the sale and servicing of mutual funds and annuities in domestic offices ////////////////////
(included in Schedule RI, item 8)............................................................ 8431 917 M.2.
3.-4. Not applicable ////////////////////
5. Number of full-time equivalent employees on payroll at end of current period (round to //// Number
nearest whole number)........................................................................ 4150 3,508 M.5.
6. Not applicable ////////////////////
7. If the reporting bank has restated its balance sheet as a result of applying push down //// MM DD YY
accounting this calendar year, report the date of the bank's acquisition..................... 9106 00/00/00 M.7.
8. Trading revenue (from cash instruments and off-balance sheet derivative instruments) ////////////////////
(sum of Memorandum items 8.a through 8.d must equal Schedule RI, item 5.c): //// Bil Mil Thou
a. Interest rate exposures................................................................... 8757 0 M.8.a.
b. Foreign exchange exposures................................................................ 8758 0 M.8.b.
c. Equity security and index exposures....................................................... 8759 0 M.8.c.
d. Commodity and other exposures............................................................. 8760 0 M.8.d.
9. Impact on income of off-balance sheet derivatives held for purposes other than trading: ////////////////////
a. Net increase (decrease) to interest income................................................ 8761 (1,237) M.9.a.
b. Net (increase) decrease to interest expense............................................... 8762 (4,342) M.9.b.
c. Other (noninterest) allocations........................................................... 8763 (3,008) M.9.c.
10. Credit losses on off-balance sheet derivatives (see instructions)............................ A251 0 M.10.
--------------------
</TABLE>
- ---------
*Describe on Schedule RI-E--Explanations.
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS,NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-4
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RI-A--Changes in Equity Capital
Indicate decreases and losses in parentheses.
<TABLE>
<CAPTION>
------
I483
--------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Total equity capital originally reported in the December 31, 1995, Reports of Condition ////////////////////
and Income.......................................................................................... 3215 501,192 1.
2. Equity capital adjustments from amended Reports of Income, net*..................................... 3216 (10,104) 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2)................................ 3217 491,088 3.
4. Net income (loss) (must equal Schedule RI, item 12)................................................. 4340 7,026 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net.................................. 4346 0 5.
6. Changes incident to business combinations, net...................................................... 4356 0 6.
7. LESS: Cash dividends declared on preferred stock.................................................... 4470 0 7.
8. LESS: Cash dividends declared on common stock....................................................... 4460 16,000 8.
9. Cumulative effect of changes in accounting principles from prior years* (see instructions for ////////////////////
this schedule)...................................................................................... 4411 0 9.
10. Corrections of material accounting errors from prior years* (see instructions for this schedule).... 4412 0 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities.................... 8433 (3,902) 11.
12. Foreign currency translation adjustments............................................................ 4414 0 12.
13. Other transactions with parent holding company* (not included in items 5, 7, or 8 above)............ 4415 0 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must equal ////////////////////
Schedule RC, item 28)............................................................................... 3210 478,212 14.
--------------------
</TABLE>
- --------
*Describe on Schedule RI-E--Explanations.
Schedule RI-B--Charge-offs and Recoveries and Changes
in Allowance for Loan and Lease Losses
Part I. Charge-offs and Recoveries on Loans and Leases
Part I excludes charge-offs and recoveries through
the allocated transfer risk reserve.
<TABLE>
<CAPTION>
------
I486
--------------------------------------------
(Column A) (Column B)
Charge-offs Recoveries
--------------------------------------------
Calendar year-to-date
--------------------------------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1. Loans secured by real estate: //////////////////// ////////////////////
a. To U.S. addressees (domicile)....................................... 4651 1,942 4661 1,199 1.a.
b. To non-U.S. addressees (domicile)................................... 4652 0 4662 0 1.b.
2. Loans to depository institutions and acceptances of other banks: //////////////////// ////////////////////
a. To U.S. banks and other U.S. depository institutions................ 4653 0 4663 0 2.a.
b. To foreign banks.................................................... 4654 0 4664 0 2.b.
3. Loans to finance agricultural production and other loans to farmers.... 4655 0 4665 0 3.
4. Commercial and industrial loans: //////////////////// ////////////////////
a. To U.S. addressees (domicile)....................................... 4645 2,006 4617 611 4.a.
b. To non-U.S. addressees (domicile)................................... 4646 0 4618 0 4.b.
5. Loans to individuals for household, family, and other personal //////////////////// ////////////////////
expenditures: //////////////////// ////////////////////
a. Credit cards and related plans...................................... 4656 78,460 4666 9,090 5.a.
b. Other (includes single payment, installment, and all student loans). 4657 12,428 4667 10,298 5.b.
6. Loans to foreign governments and official institutions................. 4643 0 4627 0 6.
7. All other loans........................................................ 4644 306 4628 312 7.
8. Lease financing receivables: //////////////////// ////////////////////
a. Of U.S. addressees (domicile)....................................... 4658 286 4668 369 8.a.
b. Of non-U.S. addressees (domicile)................................... 4659 0 4669 0 8.b.
9. Total (sum of items 1 through 8)....................................... 4635 95,428 4605 21,879 9.
--------------------------------------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-5
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RI-B--Continued
Part I. Continued
<TABLE>
<CAPTION>
--------------------------------------------
(Column A) (Column B)
Charge-offs Recoveries
--------------------------------------------
Memoranda Calendar Year-to-date
--------------------------------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1-3. Not applicable //////////////////// ////////////////////
4. Loans to finance commercial real estate, construction, and land //////////////////// ////////////////////
development activities (not secured by real estate) included in //////////////////// ////////////////////
Schedule RI-B, part I, items 4 and 7, above.......................... 5409 0 5410 42 M.4.
5. Loans secured by real estate in domestic offices (included in //////////////////// ////////////////////
Schedule RI-B, part I, item 1, above): //////////////////// ////////////////////
a. Construction and land development................................. 3582 514 3583 50 M.5.a.
b. Secured by farmland............................................... 3584 0 3585 .2 M.5.b.
c. Secured by 1-4 family residential properties: //////////////////// ////////////////////
(1) Revolving, open-end loans secured by 1-4 family residential //////////////////// ////////////////////
properties and extended under lines of credit................. 5411 977 5412 2 M.5.c.(1)
(2) All other loans secured by 1-4 family residential properties.. 5413 421 5414 463 M.5.c.(2)
d. Secured by multifamily (5 or more) residential properties......... 3588 0 3589 237 M.5.d.
e. Secured by nonfarm nonresidential properties...................... 3590 30 3591 445 M.5.e.
--------------------------------------------
</TABLE>
Part II. Changes in Allowance for Loan and Lease Losses
<TABLE>
<CAPTION>
--------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Balance originally reported in the December 31, 1995, Reports of Condition and Income.. 3124 152,121 1.
2. Recoveries (must equal part I, item 9, column B above)................................. 4605 21,879 2.
3. LESS: Charge-offs (must equal part I, item 9, column A above).......................... 4635 95,428 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a.)................ 4230 73,642 4.
5. Adjustments* (see instructions for this schedule)...................................... 4815 0 5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule RC, ////////////////////
item 4.b).............................................................................. 3123 152,214 6.
--------------------
</TABLE>
- ----------
*Describe on Schedule RI-E--Explanations.
Schedule RI-C--Applicable Income Taxes by Taxing Authority
Schedule RI-C is to be reported with the December Report of Income.
<TABLE>
<CAPTION>
------
I489
--------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Federal................................................................................ 4780 N/A 1.
2. State and local........................................................................ 4790 N/A 2.
3. Foreign................................................................................ 4795 N/A 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and 11.b)..... 4770 N/A 4.
5. Deferred portion of item 4........................................... RIAD 4772 N/A //////////////////// 5.
----------------------------------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-6
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RI-D--Income from International Operations
For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs
where international operations account for more than 10 percent of total
revenues, total assets, or net income.
Part I. Estimated Income from International Operations
<TABLE>
<CAPTION>
------
I492
--------------
Year-to-date
--------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income and expense booked at foreign offices, Edge and Agreement subsidiaries, ////////////////////
and IBFs: ////////////////////
a. Interest income booked...................................................................... 4837 108 1.a.
b. Interest expense booked..................................................................... 4838 12,112 1.b.
c. Net interest income booked at foreign offices, Edge and Agreement subsidiaries, and ////////////////////
IBFs (item 1.a minus 1.b)................................................................... 4839 (12,004) 1.c.
2. Adjustments for booking location of international operations: ////////////////////
a. Net interest income attributable to international operations booked at domestic offices..... 4840 0 2.a.
b. Net interest income attributable to domestic business booked at foreign offices............. 4841 0 2.b.
c. Net booking location adjustment (item 2.a minus 2.b)........................................ 4842 0 2.c.
3. Noninterest income and expense attributable to international operations: ////////////////////
a. Noninterest income attributable to international operations................................. 4097 0 3.a.
b. Provision for loan and lease losses attributable to international operations................ 4235 0 3.b.
c. Other noninterest expense attributable to international operations.......................... 4239 0 3.c.
d. Net noninterest income (expense) attributable to international operations (item 3.a minus ////////////////////
3.b and 3.c)................................................................................ 4843 0 3.d.
4. Estimated pretax income attributable to international operations before capital allocation ////////////////////
adjustment (sum of items 1.c, 2.c, and 3.d).................................................... 4844 (12,004) 4.
5. Adjustment to pretax income for internal allocations to international operations to reflect ////////////////////
the effects of equity capital on overall bank funding costs.................................... 4845 0 5.
6. Estimated pretax income attributable to international operations after capital allocation ////////////////////
adjustment (sum of items 4 and 5).............................................................. 4846 (12,004) 6.
7. Income taxes attributable to income from international operations as estimated in item 6....... 4797 (4,201) 7.
8. Estimated net income attributable to international operations (item 6 minus 7)................. 4341 (7,803) 8.
--------------------
</TABLE>
Memoranda
<TABLE>
<CAPTION>
--------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Intracompany interest income included in item 1.a above........................................ 4847 0 M.1.
2. Intracompany interest expense included in item 1.b above....................................... 4848 0 M.2.
--------------------
</TABLE>
Part II. Supplementary Details on Income from International Operations Required
by the Departments of Commerce and Treasury for Purposes of the U.S.
International Accounts and the U.S. National Income and Product Accounts
<TABLE>
<CAPTION>
--------------
Year-to-date
--------------------
Dollar Amounts in Thousands RIAD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interest income booked at IBFs................................................................. 4849 0 1.
2. Interest expense booked at IBFs................................................................ 4850 0 2.
3. Noninterest income attributable to international operations booked at domestic offices ////////////////////
(excluding IBFs): ////////////////////
a. Gains (losses) and extraordinary items...................................................... 5491 0 3.a.
b. Fees and other noninterest income........................................................... 5492 0 3.b.
4. Provision for loan and lease losses attributable to international operations booked at domestic ////////////////////
offices (excluding IBFs)....................................................................... 4852 0 4.
5. Other noninterest expense attributable to international operations booked at domestic offices ////////////////////
(excluding IBFs)............................................................................... 4853 0 5.
--------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-7
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RI-E--Explanations
Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.
Detail all adjustments in Schedule RI-A and RI-B, all extraordinary items and
other adjustments in Schedule RI, and all significant items of other noninterest
income and other noninterest expense in Schedule RI. (See instructions for
details.)
<TABLE>
<CAPTION>
----------
| I495 |
----------------
| Year-to-date |
----------------------
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f. (2)) | ////////////////// |
Report amounts that exceed 10% of Schedule RI, item 5.f. (2): | ////////////////// |
a. Net gains on other real estate owned......................................................... | 5415 0 | 1.a.
b. Net gains on sales of loans.................................................................. | 5416 0 | 1.b.
c. Net gains on sales of premises and fixed assets.............................................. | 5417 0 | 1.c.
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, | ////////////////// |
item 5.f. (2): | ////////////////// |
-------------
d. | TEXT 4461 | Card Processing Income | 4461 28,563 | 1.d.
----------------------------------------------------------------------------------------------
e. | TEXT 4462 | Installment Loan Servicing Income | 4462 4,943 | 1.e.
----------------------------------------------------------------------------------------------
f. | TEXT 4463 | | 4463 | 1.f.
----------------------------------------------------------------------------------------------
2. Other noninterest expense (from Schedule RI, item 7.c): | ////////////////// |
a. Amortization expense of intangible assets.................................................... | 4531 3,729 | 2.a.
Report amounts that exceed 10% of Schedule RI, item 7.c: | ////////////////// |
b. Net losses on other real estate owned........................................................ | 5418 0 | 2.b.
c. Net losses on sales of loans................................................................. | 5419 0 | 2.c.
d. Net losses on sales of premises and fixed assets............................................. | 5420 0 | 2.d.
Itemize and describe the three largest other amounts that exceed 10% of Schedule RI, | ////////////////// |
item 7.c: | ////////////////// |
-------------
e. | TEXT 4464 | Card Processing Expense | 4464 50,943 | 2.e.
----------------------------------------------------------------------------------------------
f. | TEXT 4467 | | 4467 | 2.f.
----------------------------------------------------------------------------------------------
g. | TEXT 4468 | | 4468 | 2.g.
----------------------------------------------------------------------------------------------
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a) and applicable | ////////////////// |
income tax effect (from Schedule RI, item 11.b) (itemize and describe all extraordinary | ////////////////// |
items and other adjustments): | ////////////////// |
-------------
a. (1) | TEXT 4469 | | 4469 | 3.a. (1)
------------------------------------------------------------------------------------------
(2) Applicable income tax effect | RIAD 4486 | | ////////////////// | 3.a. (2)
------------- ----------------------------
b. (1) | TEXT 4487 | | 4487 | 3.b. (1)
------------------------------------------------------------------------------------------
(2) Applicable income tax effect | RIAD 4488 | | ////////////////// | 3.b. (2)
------------- ----------------------------
c. (1) | TEXT 4489 | | 4489 | 3.c. (1)
------------------------------------------------------------------------------------------
(2) Applicable income tax effect | RIAD 4491 | | ////////////////// | 3.c. (2)
----------------------------
4. Equity capital adjustments from amended Reports of Income (from Schedule RI-A, item 2) | ////////////////// |
(itemize and describe all adjustments): | ////////////////// |
-------------
a. | TEXT 4492 | Amended Call Report (Securitization Adjustment) | 4492 (10,104)| 4.a.
----------------------------------------------------------------------------------------------
b. | TEXT 4493 | | 4493 | 4.b.
----------------------------------------------------------------------------------------------
5. Cumulative effect of changes in accounting principles from prior years | ////////////////// |
(from Schedule RI-A, item 9) (itemize and describe all changes in accounting principles): | ////////////////// |
-------------
a. | TEXT 4494 | | 4494 | 5.a.
----------------------------------------------------------------------------------------------
b. | TEXT 4495 | | 4495 | 5.b.
----------------------------------------------------------------------------------------------
6. Corrections of material accounting errors from prior years (from Schedule RI-A, item 10) | ////////////////// |
(itemize and describe all corrections): | ////////////////// |
-------------
a. | TEXT 4496 | | 4496 | 6.a.
----------------------------------------------------------------------------------------------
b. | TEXT 4497 | | 4497 | 6.b.
--------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RI-8
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RI-E--Continued
<TABLE>
<CAPTION>
----------------
| Year-to-date |
----------------------
Dollar Amounts in Thousands | RIAD Bil Mil Thou |
- ---------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C> <C>
7. Other transactions with parent holding company (from Schedule RI-A, item 13) | ////////////////// |
(itemize and describe all such transactions): | ////////////////// |
-------------
a. | TEXT 4498 | | 4498 | 7.a.
----------------------------------------------------------------------------------------------
b. | TEXT 4499 | | 4499 | 7.b.
----------------------------------------------------------------------------------------------
8. Adjustments to allowance for loan and lease losses (from Schedule RI-B, part II, item 5) | ////////////////// |
(itemize and describe all adjustments): | ////////////////// |
-------------
a. | TEXT 4521 | | 4521 | 8.a.
----------------------------------------------------------------------------------------------
b. | TEXT 4522 | | 4522 | 8.b.
--------------------------------------------------------------------------------------------------------------------
9. Other explanations (the space below is provided for the bank to briefly describe, at its | I498 | I499 |
option, any other significant items affecting the Report of Income): --------------------
No comment [__] (RIAD 4769)
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-1
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
Consolidated Report of Condition for Insured Commercial and State-Chartered
Saving Banks for June 30, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC--BALANCE SHEET
<S> <C> <C> <C>
_____
| C400| LESS THAN
---------------------
Dollar Amounts in Thousands| RCFD Bil Mil Thou |
- ---------------------------------------------------------------------------------------------------------------------
ASSETS | ////////////////// |
1. Cash and balances due from depository institutions (from Schedule RC-A): | ////////////////// |
a. Noninterest-bearing balances and currency and coin(1).................................. | 0081 654,761 | 1.a.
b. Interest-bearing balances(2)........................................................... | 0071 0 | 1.b.
2. Securities: | ////////////////// |
a. Held-to-maturity securities (from Schedule RC-B, column A)............................. | 1754 40,472 | 2.a.
b. Available-for-sale securities (from Schedule RC-B, column D)........................... | 1773 265,972 | 2.b.
3. Federal funds sold and securities purchased under agreements to resell in | ////////////////// |
domestic offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs: | ////////////////// |
a. Federal funds sold..................................................................... | 0276 354,335 | 3.a.
b. Securities purchased under agreements to recall........................................ | 0277 48,800 | 3.b.
4. Loans and lease financing receivables: _________________________| ////////////////// |
a. Loans and leases, net of unearned income (from Schedule RC-C) |RCFD 2122 | 6,372,947 | ////////////////// | 4.a.
b. LESS: Allowance for loan and lease losses.................... |RCFD 3123 | 152,214 | ////////////////// | 4.b.
c. LESS: Allocated transfer risk reserve........................ |RCFD 3128 | 0 | ////////////////// | 4.c.
d. Loans and leases, net of unearned income, -------------------------| |
allowance, and reserve (item 4.a minus 4.b and 4.c).................................... | 2125 6,220,733 | 4.d.
5. Trading assets (from Schedule RC-D)....................................................... | 3545 0 | 5.
6. Premises and fixed assets (including capitalized leases).................................. | 2145 62,342 | 6.
7. Other real estate owned (from Schedule RC-M).............................................. | 2150 5,296 | 7.
8. Investments in unconsolidated subsidiaries and associated companies (from | ////////////////// |
Schedule RC-M)............................................................................ | 2130 728 | 8.
9. Customers' liability to this bank on acceptances outstanding.............................. | 2155 6,291 | 9.
10. Intangible assets (from Schedule RC-M).................................................... | 2143 37,044 | 10.
11. Other assets (from Schedule RC-F)......................................................... | 2160 358,023 | 11.
12. Total assets (sum of items 1 through 11).................................................. | 2170 8,054,797 | 12.
-----------------
- -------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
11
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-2
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
Schedule RC--Continued
Dollar Amounts in Thousands Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E.
part 1)........................................................................ RCON 2200 4,424,918 13.a.
(1) Noninterest-bearing (1)..........................RCON 6631 1,586,160 13.a.(1)
(2) Interest-bearing.................................RCON 6636 2,838,758 13.a.(2)
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule
RC-E, part II)................................................................. RCFN 2200 995,547 13.b.
(1) Noninterest-bearing..............................RCFN 6631 0 13.b.(1)
(2) Interest-bearing.................................RCFN 6636 995,547 13.b.(2)
14. Federal funds purchased and securities sold under agreements to repurchase in
domestic offices of the bank and of its Edge and Agreement subsidiaries, and
in IBFs:
a. Federal funds purchased........................................................ RCFD 0278 1,022,036 14.a.
b. Securities sold under agreements to repurchase................................. RCFD 0279 31,160 14.b.
15. a. Demand notes issued to the U.S. Treasury....................................... RCON 2840 54,869 15.a.
b. Trading liabilities (from Schedule RC-D)....................................... RCFD 3548 0 15.b.
16. Other borrowed money:
a. With a remaining maturity of one year or less.................................. RCFD 2332 540,960 16.a.
b. With a remaining maturity of more than one year................................ RCFD 2333 151,980 16.b.
17. Mortage indebtedness and obligations under capitalized leases..................... RCFD 2910 4,000 17.
18. Bank's liability on acceptance executed and outstanding........................... RCFD 2920 6,291 18.
19. Subordinated notes and debentures................................................. RCFD 3200 189,284 19.
20. Other liabilities (from Schedule RC-G)............................................ RCFD 2930 155,540 20.
21. Total liabilities (sum of items 13 through 20).................................... RCFD 2948 7,576,585 21.
22. Limited-life preferred stock and related surplus.................................. RCFD 3282 0 22.
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus..................................... RCFD 3238 0 23.
24. Common stock...................................................................... RCFD 3230 20,738 24.
25. Surplus (exclude all surplus related to preferred stock).......................... RCFD 3839 107,356 25.
26. a. Undivided profits and capital reserves......................................... RCFD 3632 352,289 26.a.
b. Net unrealized holding gains (losses) on available-for-sale securities......... RCFD 8434 (2,171) 26.b.
27. Cumulative foreign currency translation adjustments............................... RCFD 3284 0 27.
28. Total equity capital (sum of items 23 through 27)................................. RCFD 3210 478,212 28.
29. Total liabilities limited-life preferred stock, and equity capital (sum of items
21, 22, and 28)................................................................... RCFD 3300 8,054,797 29.
----------------------------------
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best Number
describe the most comprehensive level of auditing work performed for the bank by -------------------------
independent external auditors as of any date during 1995................................... RCFD 6724 N/A M.1.
-------------------------
1 = Independent audit of the bank conducted in accordance with generally accepted auditing standards by a certified public
accounting firm which submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in accordance with generally accepted auditing standards by a
certified public accounting firm which submits a report on the consolidated holding company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally accepted auditing standards by a certified public
accounting firm (may be required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors (may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- --------------------
(1) Includes total demand deposits and noninterest-bearing time and savings deposits.
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-3
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RC-A--Cash and Balances Due From Depository Institutions
<TABLE>
<CAPTION>
Exclude assets held for trading.
----------
| C405 | <->
-----------------------------------------------
| (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
|----------------------|----------------------|
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCON Bil Mil Thou |
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Cash items in process of collection, unposted debits, and currency and | //////////////////// | //////////////////// |
coin........................................................................ | 0022 560,380 | //////////////////// | 1.
a. Cash items in process of collection and unposted debits................. | //////////////////// | 0020 515,822 | 1.a.
b. Currency and coin....................................................... | //////////////////// | 0080 44,558 | 1.b.
2. Balances due from depository institutions in the U.S........................ | //////////////////// | 0082 37,079 | 2.
a. U.S. branches and agencies of foreign banks (including their IBFs)...... | 0083 0 | //////////////////// | 2.a.
b. Other commercial banks in the U.S. and other depository institutions | //////////////////// | //////////////////// |
in the U.S. (including their IBPs)...................................... | 0085 37,079 | //////////////////// | 2.b.
3. Balances due from banks in foreign countries and foreign central banks...... | //////////////////// | 0070 4,652 | 3.
a. Foreign branches of other U.S. banks.................................... | 0073 0 | //////////////////// | 3.a.
b. Other banks in foreign countries and foreign central banks.............. | 0074 4,652 | //////////////////// | 3.b.
4. Balances due from Federal Reserve Banks..................................... | 0090 52,650 | 0090 52,650 | 4.
5. Total (sum of items 1 through 4) (total of column A must equal | //////////////////// | //////////////////// |
Schedule RC, sum of items 1.a and 1.b)..................................... | 0010 654,761 | 0010 654,761 | 5.
-----------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
------------------------
Memorandum Dollar Amounts in Thousands | RCON Bil Mil Thou |
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Noninterest-bearing balances due from commercial banks in the U.S. (included in item 2, | //////////////////// |
column B above) ............................................................................. | 0050 37,079 | M.1.
------------------------
</TABLE>
Schedule RC-B--Securities
<TABLE>
<CAPTION>
Exclude assets held for trading.
----------
| C410 | <->
---------------------------------------------------------------------------------------------
| Held-to-maturity | Available-for-sale |
---------------------------------------------------------------------------------------------
| (Column A) | (Column B) | (Column C) (Column D) |
| Amortized Cost | Fair Value | Amortized Cost Fair Value (1) |
|----------------------|----------------------|---------------------------------------------|
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. U.S. Treasury securities...... | 0211 0 | 0213 0 | 1286 125,803 | 1287 122,378 | 1.
2. U.S. Government agency | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
and corporation obligations | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
(exclude mortgage-backed | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
securities): | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
a. Issued by U.S. Govern- | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
ment agencies (2).......... | 1289 0 | 1290 0 | 1291 0 | 1293 0 | 2.a.
b. Issued by U.S. | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
Government-sponsored | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
agencies (3)............... | 1294 0 | 1295 0 | 1297 97,883 | 1298 97,490 | 2.b.
---------------------------------------------------------------------------------------------
</TABLE>
- ----------------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool
Certificates," U.S. Maritime Administration obligations, and Export-Import
Bank participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the
Farm Credit System, the Federal Home Loan Bank System, the Federal Home
Loan Mortgage Corporation, the Federal National Mortgage Association, the
Financing Corporation, Resolution Funding Corporation, the Student Loan
Marketing Association, and the Tennessee Valley Authority.
13
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-4
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
Schedule RC-B--Continued
__________________________________________________________________________________________
| Held-to-maturity Available-for-sale |
| _________________________________________________________________________________________ |
| (Column A) | (Column B) | (Column C) | (Column D) |
| Amortized Cost | Fair Value | Amortized Cost | Fair Value (1) |
| _____________________|______________________|______________________|_____________________ |
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
_______________________________|______________________|______________________|______________________|_____________________ |
3. Securities issued by states | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
and political subdivisions | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
in the U.S.: | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
a. General obligations......| 1676 11,683 | 1677 15,361 | 1678 0 | 1679 0 | 3.a.
b. Revenue obligations......| 1681 14,171 | 1686 11,920 | 1690 645 | 1691 662 | 3.b.
c. Industrial development | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
and similar obligations..| 1694 9,454 | 1695 9,495 | 1696 0 | 1697 0 | 3.c.
4. Mortgage-backed | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
securities (MBS): | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
a. Pass-through securities: | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
(1) Guaranteed by | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
GNMA.................| 1698 0 | 1699 0 | 1701 0 | 1702 0 | 4.a.(1)
(2) Issued by FNMA | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
and FHLMC............| 1703 0 | 1705 0 | 1706 14,599 | 1707 14,769 | 4.a.(2)
(3) Other pass-through | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
securities...........| 1709 2,414 | 1710 2,336 | 1711 5,864 | 1713 6,073 | 4.a.(3)
b. Other mortgage-backed | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
securities (include CMOs,| //////////////////// | //////////////////// | //////////////////// | //////////////////// |
REMICs, and stripped | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
MBS): | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
(1) Issued or guaranteed | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
by FNMA, FHLMC, | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
or GNMA..............| 1714 0 | 1715 0 | 1716 19,933 | 1717 19,931 | 4.b.(1)
(2) Collateralized | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
by MBS issued or | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
guaranteed by FNMA, | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
FHLMC, or GNMA.......| 1718 0 | 1719 0 | 1731 0 | 1732 0 | 4.b.(2)
(3) All other mortgage- | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
backed securities....| 1733 0 | 1734 0 | 1735 231 | 1736 277 | 4.b.(3)
5. Other debt securities: | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
a. Other domestic debt | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
securities...............| 1737 500 | 1738 500 | 1739 537 | 1741 548 | 5.a.
b. Foreign debt | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
securities...............| 1742 2,250 | 1743 2,250 | 1744 0 | 1746 0 | 5.b.
6. Equity securities: | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
a. Investments in mutual | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
funds....................| //////////////////// | //////////////////// | 1747 0 | 1748 0 | 6.a.
b. Other equity securities | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
with readily determin- | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
able fair values.........| //////////////////// | //////////////////// | 1749 0 | 1751 0 | 6.b.
c. All other equity | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
securities(1)............| //////////////////// | //////////////////// | 1752 3,844 | 1753 3,844 | 6.c.
7. Total (sum of items 1 | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
through 6) (total of | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
column A must equal | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
Schedule RC, item 2.a) | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
(total of column D must | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
equal Schedule RC, | //////////////////// | //////////////////// | //////////////////// | //////////////////// |
item 2.b)...................| 1754 40,472 | 1771 41,862 | 1772 269,339 | 1773 265,972 | 7.
____________________________________________________________________________________________
</TABLE>
- -------------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
14
<PAGE>
<TABLE>
<CAPTION>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-5
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
Schedule RC-B -- Continued
<S> <C> <C> <C>
_____
| C412| LESS THAN
---------------------
Memoranda Dollar Amounts in Thousands| RCFD Bil Mil Thou |
- --------------------------------------------------------------------------------------------------------------------
1. Pledged securities (2) ................................................................. | 0416 297,612 | M.1.
2. Maturity and repricing data for debt securities (2), (3), (4) (excluding those in | ////////////////// |
nonaccrual status): | ////////////////// |
a. Fixed rate debt securities with a remaining maturity of: | ////////////////// |
(1) Three months or less............................................................. | 0343 0 | M.2.a.(1)
(2) Over three months through 12 months.............................................. | 0344 2,829 | M.2.a.(2)
(3) Over one year through five years................................................. | 0345 175,627 | M.2.a.(3)
(4) Over five years.................................................................. | 0346 30,167 | M.2.a.(4)
(5) Total fixed rate debt securities (sum of Memorandum items 2.a. (1) through 2.a.(4) | 0347 208,623 | M.2.a.(5)
b. Floating rate debt securities with a repricing frequency of: | ////////////////// |
(1) Quarterly or more frequently..................................................... | 4544 91,003 | M.2.b.(1)
(2) Annually or more frequently, but less frequently than quarterly.................. | 4545 2,250 | M.2.b.(2)
(3) Every five years or more frequently, but less frequently than annually........... | 4551 0 | M.2.b.(3)
(4) Less frequently than every five years............................................ | 4552 724 | M.2.b.(4)
(5) Total floating rate debt securities (sum of Memorandum items 2.b(1) through 2.b.(4))| 4553 93,977 | M.2.b.(5)
c. Total debt securities (sum of Memorandum items 2.a.(5) and 2.b.(5)) (must equal total | ////////////////// |
debt securities from Schedule RC-B, sum of items 1 through 5, columns A and D, minus | ////////////////// |
nonaccrual debt securities included in Schedule RC-N, item 9, column C).............. | 0393 302,600 | M.2.c.
3. Not applicable | ////////////////// |
4. Held-to-maturity debt securities restructured and in compliance with modified terms | ////////////////// |
(included in Schedule RC-B, items 3 through 5, column A, above)......................... | 5365 0 | M.4.5519
5. Not applicable | ////////////////// |
6. Floating rate debt securities with a remaining maturity of one year or less (2), (4) | ////////////////// |
(included in Memorandum items 2.b.(1) through 2.b.(4) above)............................ | 5519 0 | M.6.5519
7. Amortized cost of held-to-maturity securities sold or transferred to available-for-sale | ////////////////// |
or trading securities during the calendar year-to-date (report the amortized cost at | ////////////////// |
date of sale or transfer................................................................ | 1778 0 | M.7.5519
8. High-risk mortgage securities (included in the held-to-maturity and available-for-sale | ////////////////// |
accounts in Schedule RC-B, item 4.b): | ////////////////// |
a. Amortized cost....................................................................... | 8780 0 | M.8.a.
b. Fair value........................................................................... | 8781 0 | M.8.b.
9. Structured notes (included in the held-to-maturity and available-for-sale accounts in | ////////////////// |
Schedule RC-B, items 2, 3, and 5): | ////////////////// |
a. Amortized cost....................................................................... | 8782 0 | M.9.a.
b. Fair value........................................................................... | 8783 0 | M.9.b.
</TABLE>
- -----------------------------
(2) Includes held-to-maturity securities at amortized cost and available-for-
sale securities at fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal
Reserve stock, common stock, and preferred stock.
(4) Memorandum items 2 and 6 are not applicable to savings banks that must
complete supplemental Schedule RC-J.
15
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-6
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
Schedule RC-C--Loans and Lease Financing Receivables
Part I. Loans and Leases
Do not deduct the allowance for loan and lease losses from amounts ________
reported in this schedule. Report total loans and leases, net of unearned | C415 |
income. Exclude assets held for trading. _____________________________________________
| (Column A) | (Column B) |
| Consolidated | Domestic |
| Bank | Offices |
|_____________________|______________________|
Dollar Amounts in Thousands |RCFD Bil Mil Thou | RCON Bil Mil Thou |
__________________________________________________________________________ |____________________ _______________________|
1. Loans secured by real estate........................................ | 1410 1,102,590 | //////////////////// | 1.
a. Construction and land development................................ | /////////////////// | 1415 146,576 | 1.a.
b. Secured by farmland (including farm residential and other | /////////////////// | //////////////////// |
improvements).................................................... | /////////////////// | 1420 8,443 | 1.b.
c. Secured by 1-4 family residential properties: | /////////////////// | //////////////////// |
(1) Revolving, open-end loans secured by 1-4 family residential | /////////////////// | //////////////////// |
properties and extended under lines of credit................ | /////////////////// | 1797 325,228 | 1.c.(1)
(2) All other loans secured by 1-4 family residential properties: | /////////////////// | //////////////////// |
(a) Secured by first liens .................................. | /////////////////// | 5367 214,497 | 1.c.(2)(a)
(b) Secured by junior liens ................................. | /////////////////// | 5368 50,863 | 1.c.(2)(b)
d. Secured by multifamily (5 or more) residential properties........ | /////////////////// | 1460 26,914 | 1.d.
e. Secured by nonfarm nonresidential properties..................... | /////////////////// | 1480 330,069 | 1.e.
2. Loans to depository institutions: | /////////////////// | //////////////////// |
a. To commercial banks in the U.S. ................................. | /////////////////// | 1505 306 | 2.a.
(1) To U.S. branches and agencies of foreign banks............... | 1506 0 | //////////////////// | 2.a.(1)
(2) To other commercial banks in the U.S. ....................... | 1507 306 | //////////////////// | 2.a.(2)
b. To other depository institutions in the U.S. .................... | 1517 373 | 1517 373 | 2.b.
c. To banks in foreign countries ................................... | /////////////////// | 1510 563 | 2.c.
(1) To foreign branches of other U.S. banks...................... | 1513 0 | //////////////////// | 2.c.(1)
(2) To other banks in foreign countries.......................... | 1516 563 | //////////////////// | 2.c.(2)
3. Loans to finance agricultural production and other loans to farmers. | 1590 10,277 | 1590 10,277 | 3.
4. Commercial and industrial loans: | /////////////////// | //////////////////// |
a. To U.S. addressees (domicile).................................... | 1763 859,122 | 1763 859,122 | 4.a
b. To non-U.S. addressees (domicile)................................ | 1764 0 | 1764 0 | 4.b.
5. Acceptances of other banks: | /////////////////// | //////////////////// |
a. Of U.S. banks.................................................... | /////////////////// | 1756 0 | 5.a.
b. Of foreign banks................................................. | 1756 0 | 1757 0 | 5.b.
6. Loans to individuals for household, family, and other personal | 1757 0 | //////////////////// |
expenditures (i.e., consumer loans) (includes purchased paper)...... | /////////////////// | 1975 3,270,631 | 6.
a. Credit cards and related plans (includes check credit and other | /////////////////// | //////////////////// |
revolving credit plans) ......................................... | 2008 2,328,634 | //////////////////// | 6.a.
b. Other (includes single payment, installment, and all student loans)| 2011 941,997 | //////////////////// | 6.b.
7. Loans to foreign governments and official institutions (including | /////////////////// | //////////////////// |
foreign central banks).............................................. | 2081 0 | 2081 0 | 7.
8. Obligations (other than securities and leases) of states and | /////////////////// | //////////////////// |
political subdivisions in the U.S. (includes nonrated industrial | /////////////////// | //////////////////// |
development obligations)............................................ | 2107 13,911 | 2107 13,911 | 8.
9. Other loans......................................................... | 1563 161,003 | //////////////////// | 9.
a. Loans for purchasing or carrying securities (secured and | /////////////////// | //////////////////// |
unsecured)....................................................... | /////////////////// | 1545 7,562 | 9.a.
b. All other loans (exclude consumer loans)......................... | /////////////////// | 1564 153,441 | 9.b.
10. Lease financing receivables (net of unearned income)................ | /////////////////// | 2165 955,646 |10.
a. Of U.S. addressees (domicile).................................... | 2182 955,646 | //////////////////// |10.a.
b. Of non-U.S. addressees (domicile)................................ | 2183 0 | //////////////////// |10.b.
11. LESS: Any unearned income on loans reflected in items 1-9 above..... | 2123 1,475 | 2123 1,475 |11.
12. Total loans and leases, net of unearned income (sum of items 1 | /////////////////// | //////////////////// |
through 10 minus item 11) (total of column A must equal | /////////////////// | //////////////////// |
Schedule RC, item 4.a).............................................. | 2122 6,372,947 | 2122 6,372,947 |12.
_____________________________________________
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-7
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
Schedule RC-C--Continued
Part I. Continued
---------------------------------------------
| (Column A) | (Column B) |
| Consolidated | Domestic |
Memoranda | Bank | Offices |
|---------------------------------------------
Dollar Amounts in Thousands |RCFD Bil Mil Thou | RCON Bil Mil Thou|
- -----------------------------------------------------------------------------------------------------------------------
<S> |<C> <C> | <C> <C>| <C>
1. Commercial paper included in Schedule RC-C, part I, above............. |1496 | 1496 0 | M.1.
2. Loans and leases restructured and in compliance with modified terms |///////////////////// | ////////////////////|
(included in Schedule RC-C, part I, above and not reported as past |///////////////////// | ////////////////////|
due or nonaccrual in Schedule RC-N, Memorandum item 1): |///////////////////// | ////////////////////|
a. Loans secured by real estate: |///////////////////// |---------------------|
(1) To U.S. addressees (domicile)................................. |1687 0 | M.2.a.(1)
(2) To non-U.S. Addressees (domicile)............................. |1689 0 | M.2.a.(2)
b. All other loans and all lease financing receivables (exclude loans |///////////////////// |
to individuals for household, family, and other personal |///////////////////// |
expenditures)..................................................... |8691 0 | M.2.b.
c. Commercial and industrial loans to and lease financing receivables |///////////////////// |
of non-U.S. addresses (domicile) included in Memorandum item 2.b |///////////////////// |
above............................................................. |8692 0 |
3. Maturity and repricing data for loans and leases(1) (excluding those |///////////////////// |
in nonaccrual status): |///////////////////// |
a. Fixed rate loans and leases with a remaining maturity of: |///////////////////// |
(1) Three months or less.......................................... |0348 180,625 | M.3.a.(1)
(2) Over three months through 12 months........................... |0349 329,734 | M.3.a.(2)
(3) Over one year through five years.............................. |0356 1,575,605 | M.3.a.(3)
(4) Over five years............................................... |0357 199,690 | M.3.a.(4)
(5) Total fixed rate loans and leases (sum of Memorandum |///////////////////// |
items 3.a.(1) through 3.a.(4)................................. |0358 2,285,654 | M.3.a.(5)
b. Floating rate loans with a repricing frequency of: |///////////////////// |
(1) Quarterly or more frequency................................... |4554 3,401,961 | M.3.b.(1)
(2) Annually or more frequently, but less frequently than quarterly|4555 665,784 | M.3.b.(2)
(3) Every five years or more frequently, but less frequently than |///////////////////// |
annually...................................................... |4561 6,571 | M.3.b.(3)
(4) Less frequently than every five years......................... |4564 0 | M.3.b.(4)
(5) Total floating rate loans (sum of Memorandum items 3.b.(1) |///////////////////// |
through 3.b.(4)).............................................. |4567 4,074,316 | M.3.b.(5)
c. Total loans and leases (sum of Memorandum items 3.a.(5) and |///////////////////// |
3.b.(5)) (must equal the sum of total loans and leases, net, from |///////////////////// |
Schedule RC-C, part I, item 12, plus unearned income from |///////////////////// |
Schedule RC-C, part I, item 11, minus total nonaccrual loans and |///////////////////// |
leases from Schedule RC-N, sum of items 1 through 8, column C).... |1479 6,359,970 | M.3.c
d. Floating rate loans with a remaining maturity of one year or less |///////////////////// |
(included in Memorandum items 3.b.(1) through 3.b.(4) above....... |A246 1,080,059 | M.3.d
4. Loans to finance commercial real estate, construction, and land |///////////////////// |
development activities (not secured by real estate) included in |///////////////////// |
Schedule RC-C, part I, items 4 and 9, column A, page RC-6(2).......... |2746 27,316 | M.4.
5. Loans and leases held for sale (included in Schedule RC-C, part I, |///////////////////// |
above)................................................................ |5369 0 | M.5.
6. Adjustable rate closed-end loans secured by first liens on 1-4 family |///////////////////// |----------------------
residential properties (included in Schedule RC-C, part I, items |///////////////////// | RCON Bil Mil Thou |
---------------------|
1.c.(2)(a), column B, page RC-6)...................................... |///////////////////// | 5370 93,704 | M.6.
----------------------------------------------
- --------------------
(1) Memorandum item 3 is not applicable to savings banks that must complete supplemental Schedule RC-J.
(2) Exclude loans secured by real estate that are included in Schedule RC-C, part I, item 1, column A.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-7a
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
Schedule RC-C--Continued
Part II. Loans to Small Businesses and Small Farms
Schedule RC-C, Part II is to be reported only with the June Report of Condition.
Report the number and amount currently outstanding as of June 30 of business
loans with "original amounts" of $1,000,000 or less and farm loans with
"original amounts" of $500,000 or less. The following guidelines should be used
to determine the "original amount" of a loan: (1) For loans drawn down under
lines of credit or loan commitments, the "original amount" of the loan is the
size of the line of credit or loan commitment when the line of credit or loan
commitment was most recently approved, extended, or renewed prior to the report
date. However, if the amount currently outstanding as of the report date exceeds
this size, the "original amount" is the amount currently outstanding on the
report date. (2) For loan participations and syndications, the "original amount"
of the loan participation or syndication is the entire amount of the credit
originated by the lead lender. (3) For all other loans, the "original amount"
is the total amount of the loan at origination or the amount currently
outstanding as of the report date, whichever is larger.
<S> <C>
Loans to Small Businesses
1. Indicate in the appropriate box at the right whether all or substantially all
of the dollar volume of your bank's "Loans secured by nonfarm nonresidential
properties" in domestic offices reported in Schedule RC-C, part I, item 1.e, ----------
column B, and all or substantially all of the dollar volume of your bank's | C418 | Less Than
"Commercial and industrial loans to U.S. addressees" in domestic offices ----------
reported in Schedule RC-C, part I, item 4.a, column B, have original amounts | RCON YES NO |
of $100,000 or less (If your bank has no loans outstanding in both of these ----------------------
two loan categories, place an "X" in the box marked "NO" and go to item 5; | 6999 | |///| X | 1.
otherwise, see instructions for further information.).......................... ----------------------
If YES, complete items 2.a and 2.b below, skip items 3 and 4, and go to item 5.
If NO and your bank has loans outstanding in either loan category, skip items
2.a and 2.b, complete items 3 and 4 below, and go to item 5.
<S> <C>
----------------------
| Number of Loans |
2. Report the total number of loans currently outstanding for each of the ----------------------
following Schedule RC-C, part I, loan categories: | RCON |//////////// |
-------
a. "Loans secured by nonfarm nonresidential properties" in domestic offices | ////////////////// |
reported in Schedule RC-C, part I, item 1.e, column B...................... | 5562 N/A | 2.a.
b. "Commercial and industrial loans to U.S. addressees" in domestic offices | ////////////////// |
reported in Schedule RC-C, part I, Item 4.a, column B...................... | 5563 N/A | 2.b.
----------------------
</TABLE>
<TABLE>
<S> <C> <C>
-------------------------------------------
| (Column A) | (Column B) |
| | Amount |
| | Currently |
| Number of loans | Outstanding |
-------------------------------------------
Dollar Amounts in Thousands | RCON |//////////// | RCON Bil Mil Thou |
- --------------------------------------------------------------------------------- ------- ---------------------
3. Number and amount currently outstanding of "Loans secured by nonfarm | /////////////////////////////////////// |
nonresidential properties" in domestic offices reported in Schedule RC-C, | /////////////////////////////////////// |
part I, item 1.e, column B (sum of items 3.a through 3.c must be less than | /////////////////////////////////////// |
or equal to Schedule RC-C, part I, item 1.e, column B): | /////////////////////////////////////// |
a. With original amounts of $100,000 or less ................................. | 5564 213 | 5565 8,583 | 3.a.
b. With original amounts of more than $100,000 through $250,000 .............. | 5566 215 | 5567 27,433 | 3.b.
c. With original amounts of more than $250,000 through $1,000,000 ............ | 5568 205 | 5569 73,985 | 3.c.
4. Number and amount currently outstanding of "Commercial and industrial | /////////////////////////////////////// |
loans to U.S. addressees" in domestic offices reported in Schedule RC-C, | /////////////////////////////////////// |
part I, item 4.a, column B (sum of items 4.a through 4.c must be less than | /////////////////////////////////////// |
or equal to Schedule RC-C, part I, item 4.a, column B): | /////////////////////////////////////// |
a. With original amounts of $100,000 or less ................................. | 5570 3,689 | 5571 88,822 | 4.a.
b. With original amounts of more than $100,000 through $250,000 .............. | 5572 252 | 5573 28,516 | 4.b.
c. With original amounts of more than $250,000 through $1,000,000 ............ | 5574 244 | 5575 69,513 | 4.c.
-------------------------------------------
</TABLE>
17a
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-7b
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
Schedule RC-C--Continued
Part II. Continued
Agricultural Loans to Small Farms
5. Indicate in the appropriate box at the right whether all or substantially
all of the dollar volume of your bank's "Loans secured by farmland
(including farm residential and other improvements)" in domestic offices
reported in Schedule RC-C, part I, item 1.b, column B, and all or
substantially all of the dollar volume of your bank's "Loans to finance
agricultural production and other loans to farmers" in domestic offices
reported in Schedule RC-C, part I, item 3, column B, have original amounts YES NO
of $100,000 or less (If your bank has no loans outstanding in both of these ----------------------
two loan categories, place an "X" in the box marked "NO" and do not complete | 6860| |///| X | 5.
items 7 and 8; otherwise, see instructions for further information.) ............................... -----------------------
If YES, complete items 6.a and 6.b below and do not complete items 7 and 8.
If NO and your bank has loans outstanding in either loan category, skip items 6.a and 6.b
and complete items 7 and 8 below.
6. Report the total number of loans currently outstanding for each of the -------------------------
following Schedule RC-C, part I, loan categories: | Number of Loans |
a. "Loans secured by farmland (including farm residential and other -------------------------
improvements)" in domestic offices reported in Schedule RC-C, part I, |RCON| ////////////////// |
item 1.b, column B................................................... ------
b. "Loans to finance agricultural production and other loans to farmers" |//////////////////////// |
in domestic offices reported in Schedule RC-C, part I, item 3, |5576 N/A | 6.a
column B............................................................. |//////////////////////// |
|5577 N/A | 6.b
-------------------------
------------------------------------------------
| (Column A) | (Column B) |
| | Amount |
| | Currently |
| Number of Loans | Outstanding |
------------------------------------------------
Dollar Amounts in Thousands | RCON| /////////////// | RCON Bil Mil Thou |
------ ------------------------
- -------------------------------------------------------------------------------| //////////////////////////////////////////// |
7. Number and amount currently outstanding of "Loans secured by farmland | //////////////////////////////////////////// |
(including farm residential and other improvements)" in domestic offices | //////////////////////////////////////////// |
reported in Schedule RC-C, part I, item 1.b, column B (sum of items 7.a | //////////////////////////////////////////// |
through 7.c must be less than or equal to Schedule RC-C, part I, item 1.b, | //////////////////////////////////////////// |
column B): | //////////////////////////////////////////// |
a. With original amounts of $100,000 or less.............................. | 5578 12 | 5579 511 | 7.a.
b. With original amounts of more than $100,000 through $250,000........... | 5580 6 | 5581 591 | 7.b.
c. With original amounts of more than $250,000 through $500,000........... | 5582 5 | 5583 1,526 | 7.c
8. Number and amount currently outstanding of "Loans to finance agricultural | //////////////////////////////////////////// |
production and other loans to farmers" in domestic offices reported in | //////////////////////////////////////////// |
Schedule RC-C, part I, item 3, column B (sum of items 8.a through 8.c | //////////////////////////////////////////// |
must be less than or equal to Schedule RC-C, part I, item 3, column B): | //////////////////////////////////////////// |
a. With original amounts of $100,000 or less.............................. | 5584 82 | 5585 3,106 | 8.a.
b. With original amounts of more than $100,000 through $250,000........... | 5586 28 | 5587 3,491 | 8.b.
c. With original amounts of more than $250,000 through $500,000........... | 5588 10 | 5589 3,079 | 8.c.
------------------------------------------------
</TABLE>
17b
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-8
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RC-D--Trading Assets and Liabilities
Schedule RC-D is to be completed only by banks with $1 billion or more in total
assets or with $2 billion or more in par/notional amount of off-balance sheet
derivative contracts (as reported in Schedule RC-D, items 14.a through 14.e,
columns A through D).
<TABLE>
<CAPTION>
______
| C420 |
---------------------
Dollar Amount in Thousands| //// Bil Mil Thou |
- --------------------------------------------------------------------------------------------------------------------
<S> | <C> | <C>
ASSETS | ////////////////// |
1. U.S. Treasury securities in domestic offices.............................................. | RCON 3531 0 | 1.
2. U.S. Government agency and corporation obligations in domestic offices (exclude | ////////////////// |
mortgage-backed securities)............................................................... | RCON 3532 0 | 2.
3. Securities issued by states and political subdivisions in the U.S. in domestic offices.... | RCON 3533 0 | 3.
4. Mortgage-backed securities (MBS) in domestic offices: | ////////////////// |
a. Pass-through securities issued or guaranteed by FNMA, FHLMC, or GNMA................... | RCON 3534 0 | 4.a
b. Other mortgage-backed securities issued or guaranteed by FNMA, FHLMC or GNMA (include | ////////////////// |
CMOs, REMICs, and stripped MBS)........................................................ | RCON 3535 0 | 4.b
c. All other mortgage-backed securities................................................... | RCON 3536 0 | 4.c
5. Other debt securities in domestic offices................................................. | RCON 3537 0 | 5.
6. Certificates of deposit in domestic offices............................................... | RCON 3538 0 | 6.
7. Commercial paper in domestic offices...................................................... | RCON 3539 0 | 7.
8. Bankers acceptances in domestic offices................................................... | RCON 3540 0 | 8.
9. Other trading assets in domestic offices.................................................. | RCON 3541 0 | 9.
10. Trading assets in foreign offices......................................................... | RCFN 3542 0 | 10.
11. Revaluation gains on interest rate, foreign exchange rate, and other commodity and | ////////////////// |
equity contracts: | ////////////////// |
a. In domestic offices.................................................................... | RCON 3543 0 | 11.a
b. In foreign offices..................................................................... | RCFN 3544 0 | 11.b
12. Total trading assets (sum of items 1 through 11) (must equal Schedule RC, item 5)......... | RCFD 3545 0 | 12.
--------------------
--------------------
LIABILITIES | //// Bil Mil Thou |
--------------------
13. Liability for short positions............................................................. | RCFD 3546 0 | 13.
14. Revaluation losses on interest rate, foreign exchange rate, and other commodity and | ////////////////// |
equity contracts.......................................................................... | RCFD 3547 0 | 14.
15. Total trading liabilities (sum of items 13 and 14) (must equal Schedule RC, item 15.b).... | RCFD 3548 0 | 15.
--------------------
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-9
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RC-E--Deposit Liabilities
Part I. Deposits in Domestic Offices
<TABLE>
<CAPTION>
----------
| C425 |(-
----------------------------------------------------------------------
| | Nontransaction |
| Transaction Accounts | Accounts |
----------------------------------------------------------------------
| (Column A) | (Column B) | (Column C) |
| Total transaction | Memo: Total | Total |
| accounts (including | demand deposits | nontransaction |
| total demand | (included in | accounts |
| deposits) | column A) | (including MMDAs) |
|----------------------|----------------------|----------------------|
Dollars Amounts in Thousands | RCON Bil Mil Thou | RCON Bil Mil Thou | RCON Bil Mil Thou |
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deposits of: | //////////////////// | //////////////////// | //////////////////// |
1. Individuals, partnerships, and corporations ......... | 2201 1,147,332 | 2240 1,084,872 | 2346 2,743,166 | 1.
2. U.S. Government ..................................... | 2202 7,735 | 2280 7,735 | 2520 0 | 2.
3. States and political subdivisions in the U.S. ....... | 2203 59,895 | 2290 54,880 | 2530 23,380 | 3.
4. Commercial banks in the U.S. ........................ | 2206 378,243 | 2310 378,243 | 2550 4,737 | 4.
5. Other depository institutions in the U.S............. | 2207 11,370 | 2312 11,370 | 2349 0 | 5.
6. Banks in foreign countries .......................... | 2213 3,153 | 2320 3,153 | 2236 0 | 6.
7. Foreign governments and official institutions | //////////////////// | //////////////////// | //////////////////// |
(including foreign central banks).................... | 2216 0 | 2300 0 | 2377 0 | 7.
8. Certified and official checks ....................... | 2330 45,907 | 2330 45,907 | //////////////////// | 8.
9. Total (sum of items 1 through 8) (sum of | //////////////////// | //////////////////// | //////////////////// |
columns A and C must equal Schedule RC, | //////////////////// | //////////////////// | //////////////////// |
item 13.a) .......................................... | 2215 1,653,635 | 2210 1,586,160 | 2285 2,771,283 | 9.
----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Memoranda
------------------------
Dollars Amounts in Thousands | RCON Bil Mil Thou |
- --------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Selected components of total deposits (i.e., sum of item 9, columns A and C): | //////////////////// |
a. Total Individual Retirement Accounts (IRAs) and Keogh Plan accounts ....................... | 6835 238,272 | M.1.a.
b. Total brokered deposits.................................................................... | 2365 3,321 | M.1.b.
c. Fully insured brokered deposits (included in Memorandum item 1.b above): | //////////////////// |
(1) Issued in denominations of less than $100,000.......................................... | 2343 177 | M.1.c.(1)
(2) Issued either in denominations of $100,000 or in denominations greater than | //////////////////// |
$100,000 and participated out by the broker in shares of $100,000 or less.............. | 2344 2,777 | M.1.c.(2)
d. Maturity data for brokered deposits: | //////////////////// |
(1) Brokered deposits issued in denominations of less than $100,000 with a remaining | //////////////////// |
maturity of one year or less (included in Memorandum item 1.c.(1) above)............... | A243 174 | M.1.d.(1)
(2) Brokered deposits issued in denominations of $100,000 or more with a remaining | //////////////////// |
maturity of one year or less (included in Memorandum item 1.b above)................... | A244 966 | M.1.d.(2)
e. Preferred deposits (uninsured deposits of states and political subdivisions in the U.S. | //////////////////// |
reported in item 3 above which are secured or collateralized as required under state law)| 5590 81,118 | M.1.e
2. Components of total nontransaction accounts (sum of Memorandum items 2.a through 2.d | //////////////////// |
must equal item 9, column C above): | //////////////////// |
a. Savings deposits: | //////////////////// |
(1) Money market deposit accounts (MMDAs).................................................. | 6810 1,295,869 | M.2.a.(1)
(2) Other savings deposits (excludes MMDAs)................................................ | 0352 450,266 | M.2.a.(2)
b. Total time deposits of less than $100,000.................................................. | 6648 928,401 | M.2.b.
c. Time certificates of deposit of $100,000 or more........................................... | 6645 96,747 | M.2.c.
d. Open-account time deposits of $100,000 or more............................................. | 6646 0 | M.2.d.
3. All NOW accounts (included in column A above)................................................. | 2398 67,475 | M.3.
------------------------
4. Not applicable
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-10
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
Schedule RC-E--Continued
Part I. Continued
Memoranda (continued)
______________________
Dollar Amounts in Thousands | RCON Bil Mil Thou |
________________________________________________________________________________________________|______________________
5. Maturity and repricing data for time deposits of less than $100,000 (sum of | //////////////////// |
Memorandum items 5.a.(1) through 5.b.(3) must equal Memorandum item 2.b above): (1) | //////////////////// |
a. Fixed rate time deposits of less than $100,000 with a remaining maturity of: | //////////////////// |
(1) Three months or less..................................................................| A225 176,583 | M.5.a.(1)
(2) Over three months through 12 months...................................................| A226 301,884 | M.5.a.(2)
(3) Over one year.........................................................................| A227 449,934 | M.5.a.(3)
b. Floating rate time deposits of less than $100,000 with a repricing frequency of: | //////////////////// |
(1) Quarterly or more frequently..........................................................| A228 0 | M.5.b.(1)
(2) Annually or more frequently, but less frequently than quarterly.......................| A229 0 | M.5.b.(2)
(3) Less frequently than annually.........................................................| A230 0 | M.5.b.(3)
c. Floating rate time deposits of less than $100,000 with a remaining maturity of | //////////////////// |
one year or less (included in Memorandum items 5.b.(1) through 5.b.(3) above).............| A231 0 | M.5.c.
6. Maturity and repricing data for time deposits of $100,000 or more (i.e., time certificates | //////////////////// |
of deposit of $100,000 or more and open-account time deposits of $100,000 or more) | //////////////////// |
(sum of Memorandum items 6.a.(1) through 6.b.(4) must equal the sum of Memorandum | //////////////////// |
items 2.c and 2.d above): (1) | //////////////////// |
a. Fixed rate time deposits of $100,000 or more with a remaining maturity of: | //////////////////// |
(1) Three months or less..................................................................| A232 46,682 | M.6.a.(1)
(2) Over three months through 12 months...................................................| A233 31,619 | M.6.a.(2)
(3) Over one year through five years......................................................| A234 15,883 | M.6.a.(3)
(4) Over five years.......................................................................| A235 2,563 | M.6.a.(4)
b. Floating rate time deposits of $100,000 or more with a repricing frequency of: | //////////////////// |
(1) Quarterly or more frequently..........................................................| A236 0 | M.6.b.(1)
(2) Annually or more frequently, but less frequently than quarterly.......................| A237 0 | M.6.b.(2)
(3) Every five years or more frequently, but less frequently than annually................| A238 0 | M.6.b.(3)
(4) Less frequently than every five years.................................................| A239 0 | M.6.b.(4)
c. Floating rate time deposits of $100,000 or more with a remaining maturity of | //////////////////// |
one year or less (included in Memorandum items 6.b.(1) through 6.b.(4) above).............| A240 0 | M.6.c.
______________________
</TABLE>
- -----------------
(1) Memorandum items 5 and 6 are not applicable to savings banks that must
complete supplemental Schedule RC-J.
20
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-11
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
Schedule RC-E--Continued
Part II. Deposits in Foreign Offices (including Edge and
Agreement Subsidiaries and IBFs)
______________________
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
- ---------------------------------------------------------------------------------------------------------------------------
Deposits of: | /////////////////// |
1. Individuals, partnerships, and corporations.....................................................| 2621 995,547 | 1.
2. U.S. banks (including IBFs and foreign branches of U.S. banks)..................................| 2623 0 | 2.
3. Foreign banks (including U.S. branches and agencies of foreign banks, including their IBFs).....| 2625 0 | 3.
4. Foreign governments and official institutions (including foreign central banks).................| 2650 0 | 4.
5. Certified and official checks...................................................................| 2330 0 | 5.
6. All other deposits..............................................................................| 2668 0 | 6.
7. Total (sum of items 1 through 6) (must equal Schedule RC, item 13.b)............................| 2200 995,547 | 7.
---------------------
Memorandum
---------------------
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
- ---------------------------------------------------------------------------------------------------------------------------
1. Time deposits with a remaining maturity of one year or less (included in Part II, item 7 above) | A245 0 | M.1
---------------------
Schedule RC-F--Other Assets
----------
| C430 |
------------------------
Dollar Amounts in Thousands | ///// Bil Mil Thou |
- ---------------------------------------------------------------------------------------------------------------------------
1. Income earned, not collected on loans...........................................................| RCFD 2164 60,339 | 1.
2. Net deferred tax assets(1)......................................................................| RCFD 2148 0 | 2.
3. Excess residential mortgage servicing fees receivable...........................................| RCFD 5371 0 | 3.
4. Other (itemize and describe amounts that exceed 25% of this item)...............................| RCFD 2168 297,684 | 4.
a. | TEXT 3549 | Cash Surrender Value - COLI | RCFD 3549 | 134,550 | //////////////////// | 4.a.
b. | TEXT 3550 | | RCFD 3550 | | //////////////////// | 4.b
c. | TEXT 3551 | | RCFD 3551 | | //////////////////// | 4.c
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 11)..............................| RCFD 2160 358,023 | 5.
_________________________
________________________
Memorandum Dollar Amounts in Thousands | ///// Bil Mil Thou |
- ----------------------------------------------------------------------------------------------------------------------------
1. Deferred tax assets disallowed for regulatory capital purposes..................................| RCFD 5610 0 | M.1.
|-----------------------|
Schedule RC-G--Other Liabilities -----
|c435|
Dollar Amounts in Thousands | ///// Bil Mil Thou |
- --------------------------------------------------------------------------------------------------------------------------
1. a. Interest accrued and unpaid on deposits in domestic offices (2).............................| RCON 3645 22,852 | 1.a.
b. Other expenses accrued and unpaid (includes accrued income taxes payable)...................| RCFD 3646 41,892 | 1.b.
2. Net deferred tax liabilities (1)...............................................................| RCFD 3049 47,872 | 2.
3. Minority interest in consolidated subsidiaries.................................................| RCFD 3000 0 | 3.
4. Other (itemize and describe amounts that exceed 25% of this item)..............................| RCFD 2938 42,924 | 4.
a. | TEXT 3552 | Deferred Fees Received on Swaps | RCFD 3552 | 34,898 | //////////////////// | 4.a
b. | TEXT 3553 | | RCFD 3553 | | //////////////////// | 4.b.
c. | TEXT 3554 | | RCFD 3554 | | //////////////////// | 4.c.
5. Total (sum of items 1 through 4) (must equal Schedule RC, item 20).............................| RCFD 2930 155,540 | 5.
|-----------------------|
</TABLE>
______________________
(1) See discussion of deferred income taxes in Glossary entry on "income taxes."
(2) For savings banks, include "dividends" accrued and unpaid on deposits.
21
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-12
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
Schedule RC-H--Selected Balance Sheet Items for Domestic Offices
--------
| C440 |
--------------------
| Domestic Offices |
---------------------
Dollar Amounts in Thousands | RCON Bil Mil Thou |
- ----------------------------------------------------------------------------------------------------------------------
1. Customers' liability to this bank on acceptances outstanding.................................| 2155 6,291 | 1.
2. Bank's liability on acceptances executed and outstanding.....................................| 2920 6,291 | 2.
3. Federal funds sold and securities purchased under agreements to resell.......................| 1350 403,135 | 3.
4. Federal funds purchased and securities sold under agreements to repurchase...................| 2800 1,053,196 | 4.
5. Other borrowed money.........................................................................| 3190 692,940 | 5.
EITHER | /////////////////// |
6. Net due from own foreign offices, Edge and Agreement subsidiaries, and IBFs..................| 2163 N/A | 6.
OR | /////////////////// |
7. Net due to own foreign offices, Edge and Agreement subsidiaries, and IBFs....................| 2941 994,702 | 7.
8. Total assets (excludes net due from foreign offices, Edge and Agreement subsidiaries, and | /////////////////// |
IBFs)........................................................................................| 2192 8,052,040 | 8.
9. Total liabilities (excludes net due to foreign offices, Edge and Agreement subsidiaries, | /////////////////// |
and IBFs)....................................................................................| 3129 6,579,125 | 9.
---------------------
Items 10-17 include held-to-maturity and available-for-sale securities in domestic offices.
---------------------
| RCON Bil Mil Thou |
---------------------
10. U.S. Treasury securities....................................................................| 1779 122,378 | 10.
11. U.S. Government agency and corporation obligations (exclude mortgage-backed | /////////////////// |
securities).................................................................................| 1785 97,490 | 11.
12. Securities issued by states and political subdivisions in the U.S ..........................| 1786 35,970 | 12.
13. Mortgage-backed securities (MBS): | /////////////////// |
a. Pass-through securities: | /////////////////// |
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA.........................................| 1787 14,769 | 13.a(1)
(2) Other pass-through securities........................................................| 1869 8,487 | 13.a(2)
b. Other mortgage-backed securities (include CMOs, REMICs, and stripped MBS): | /////////////////// |
(1) Issued or guaranteed by FNMA, FHLMC, or GNMA.........................................| 1877 19,931 | 13.b.(1)
(2) All other mortgage-backed securities.................................................| 2253 277 | 13.b.(2)
14. Other domestic debt securities..............................................................| 3159 548 | 14.
15. Foreign debt securities.....................................................................| 3160 0 | 15.
16. Equity securities: | /////////////////// |
a. Investments in mutual funds..............................................................| 3161 0 | 16.a.
b. Other equity securities with readily determinable fair values............................| 3162 0 | 16.b.
c. All other equity securities..............................................................| 3169 3,844 | 16.c.
17. Total held-to-maturity and available-for-sale securities (sum of items 10 through 16).......| 3170 303,694 | 17.
---------------------
Memorandum (to be completed only by banks with IBFs and other "foreign" offices)
---------------------
Dollar Amounts in Thousands | RCON Bil Mil Thou |
- -----------------------------------------------------------------------------------------------------------------------
EITHER | /////////////////// |
1. Net due from the IBF of the domestic offices of the reporting bank..........................| 3051 N/A | M.1.
OR | /////////////////// |
2. Net due to the IBF of the domestic offices of the reporting bank............................| 3059 N/A | M.2.
---------------------
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-13
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
Schedule RC-I--Selected Assets and Liabilities of IBFs
To be completed only by banks with IBFs and other "foreign" offices. -------
| C445 | (-
---------------------
Dollar Amounts in Thousands | RCFN Bil Mil Thou |
- ----------------------------------------------------------------------------------------------------------------------
1. Total IBF assets of the consolidated bank (component of Schedule RC, item 12)................| 2133 N/A | 1.
2. Total IBF loans and lease financing receivables (component of Schedule RC-C, part I, | /////////////////// |
item 12, column A)...........................................................................| 2076 N/A | 2.
3. IBF commercial and industrial loans (component of Schedule RC-C, part I, item 4, | /////////////////// |
column A)....................................................................................| 2077 N/A | 3.
4. Total IBF liabilities (component of Schedule RC, item 21)....................................| 2898 N/A | 4.
5. IBF deposit liabilities due to banks, including other IBFs (component of Schedule RC-E, | /////////////////// |
part II, items 2 and 3)......................................................................| 2379 N/A | 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II, items 1, 4, 5, and 6)....| 2381 N/A | 6.
---------------------
Schedule RC-K--Quarterly Averages(1)
--------
| C455 |
----------------------
Dollar Amounts in Thousands | ///// Bil Mil Thou |
- -----------------------------------------------------------------------------------------------------------------------
1. Interest-bearing balances due from depository institutions..................................| RCFD 3381 0 | 1.
2. U.S. Treasury securities and U.S. Government agency and corporation obligations(2)..........| RCFD 3382 325,191 | 2.
3. Securities issued by states and political subdivisions in the U.S. (2)......................| RCFD 3383 35,737 | 3.
4. a. Other debt securities(2).................................................................| RCFD 3647 12,819 | 4.a.
b. Equity securities(3) (includes investments in mutual funds and Federal Reserve stock)....| RCFD 3648 3,844 | 4.b.
5. Federal funds sold and securities purchased under agreements to resell in domestic offices | /////////////////// |
of the bank and of its Edge and Agreement subsidiaries, and in IBFs.........................| RCFD 3365 290,876 | 5.
6. Loans: | /////////////////// |
a. Loans in domestic offices: | /////////////////// |
(1) Total loans..........................................................................| RCON 3360 5,239,586 | 6.a. (1)
(2) Loans secured by real estate.........................................................| RCON 3385 1,248,488 | 6.a. (2)
(3) Loans to finance agricultural production and other loans to farmers..................| RCON 3386 8,859 | 6.a. (3)
(4) Commercial and industrial loans......................................................| RCON 3387 988,381 | 6.a. (4)
(5) Loans to individuals for household, family, and other personal expenditures..........| RCON 3388 2,950,661 | 6.a. (5)
b. Total loans in foreign offices, Edge and Agreement subsidiaries, and IBFs................| RCFN 3360 0 | 6.b.
7. Trading assets..............................................................................| RCFD 3401 0 | 7.
8. Lease financing receivables (net of unearned income)........................................| RCFD 3484 907,765 | 8.
9. Total assets(4).............................................................................| RCFD 3368 7,622,976 | 9.
LIABILITIES | /////////////////// |
10. Interest-bearing transaction accounts in domestic offices (NOW accounts, ATS accounts, | /////////////////// |
and telephone and preauthorized transfer accounts) (exclude demand deposits)................| RCON 3485 55,870 | 10.
11. Nontransaction accounts in domestic offices: | /////////////////// |
a. Money market deposit accounts (MMDAs)....................................................| RCON 3486 1,330,413 | 11.a.
b. Other savings deposits...................................................................| RCON 3487 544,004 | 11.b.
c. Time certificates of deposit of $100,000 or more.........................................| RCON 3345 99,138 | 11.c.
d. All other time deposits..................................................................| RCON 3469 941,203 | 11.d.
12. Interest-bearing deposits in foreign offices, Edge and Agreement subsidiaries, and IBFs.....| RCFN 3404 493,160 | 12.
13. Federal funds purchased and securities sold under agreements to repurchase in domestic | /////////////////// |
offices of the bank and of its Edge and Agreement subsidiaries, and in IBFs.................| RCFD 3353 1,340,756 | 13.
14. Other borrowed money........................................................................| RCFD 3355 711,324 | 14.
---------------------
</TABLE>
- ----------------
(1) For all items, banks have the option of reporting either (1) an average of
daily figures for the quarter, or (2) an average of weekly figures (i.e.,
the Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized
cost.
(3) Quarterly averages for all equity securities should be based on historical
cost.
(4) The quarterly average for total assets should reflect all debt securities
(not held for trading) at amortized cost, equity securities with readily
determinable fair values at the lower of cost or fair value, and equity
securities without readily determinable fair values at historical cost.
23
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-14
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
Schedule RC-L--Off-Balance Sheet Items
Please read carefully the instructions for the preparation of schedule RC-L. Some of the amounts
reported in schedule RC-L are regarded as volume indicators and not necessarily as measures of risk.
-------
| c460 | (-
---------------------
Dollar Amounts in Thousands | RCFD Bil Mil Thou |
- ----------------------------------------------------------------------------------------------------------------------
1. Unused commitments: | /////////////////// |
a. Revolving, open-end lines secured by 1-4 family residential properties, e.g., home | /////////////////// |
equity lines.............................................................................| 3814 372,894 | 1.a.
b. Credit card lines........................................................................| 3815 26,023,810 | 1.b.
c. Commercial real estate, construction, and land development: | /////////////////// |
(1) Commitments to fund loans secured by real estate.....................................| 3816 108,540 | 1.c.(1)
(2) Commitments to fund loans not secured by real estate.................................| 6550 18,614 | 1.c.(2)
d. Securities underwriting..................................................................| 3817 0 | 1.d.
e. Other unused commitments.................................................................| 3818 1,965,976 | 1.e.
2. Financial standby letters of credit and foreign office guarantees...........................| 3819 439,188 | 2.
----------------------
a. Amount of financial standby letters of credit conveyed to others | RCFD 3820 | 80,530 | /////////////////// | 2.a.
----------------------
3. Performance standby letters of credit and foreign office guarantees.........................| 3821 92,578 | 3.
----------------------
a. Amount of performance standby letters of credit conveyed to others | RCFD 3822 | 14,225 | /////////////////// | 3.a.
----------------------
4. Commercial and similar letters of credit....................................................| 3411 49,046 | 4.
5. Participations in acceptances (as described in the instructions) conveyed to others by the | /////////////////// |
reporting bank..............................................................................| 3428 0 | 5.
6. Participations in acceptances (as described in the instructions) acquired by the reporting | /////////////////// |
(nonaccepting) bank.........................................................................| 3429 0 | 6.
7. Securities borrowed.........................................................................| 3432 0 | 7.
8. Securities lent (including customers' securities lent where the customer is indemnified | /////////////////// |
against loss by the reporting bank).........................................................| 3433 0 | 8.
9. Loans transferred (i.e., sold or swapped) with recourse that have been treated as sold for | /////////////////// |
Call Report purposes: | /////////////////// |
a. FNMA and FHLMC residential mortgage loan pools: | /////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date.........| 3650 0 | 9.a.(1)
(2) Amount of recourse exposure on these mortgages as of the report date.................| 3651 0 | 9.a.(2)
b. Private (nongovernment-issued or -guaranteed) residential mortgage loan pools: | /////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date.........| 3652 0 9.b.(1)
(2) Amount of recourse exposure on these mortgages as of the report date.................| 3653 0 9.b.(2)
c. Farmer Mac agricultural mortgage loan pools: | /////////////////// |
(1) Outstanding principal balance of mortgages transferred as of the report date.........| 3654 0 | 9.c.(1)
(2) Amount of recourse exposure on these mortgages as of the report date.................| 3655 0 | 9.c.(2)
d. Small business obligations transferred with recourse under Section 208 of the | /////////////////// |
Riegle Community Development and Regulatory Improvement Act of 1994: | /////////////////// |
(1) Outstanding principal balance of small business obligations transferred | /////////////////// |
as of the report date................................................................| A249 0 | 9.d.(1)
(2) Amount of retained recourse on these obligations as of the report date...............| A250 0 | 9.d.(2)
10. When-issued securities: | /////////////////// |
a. Gross commitments to purchase............................................................| 3434 0 | 10.a.
b. Gross commitments to sell................................................................| 3435 0 | 10.b.
11. Spot foreign exchange contracts.............................................................| 8765 33,757 | 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet derivatives) (itemize | /////////////////// |
and describe each component of this item over 25% of Schedule RC, item 28, "Total equity | /////////////////// |
capital")...................................................................................| 3430 0 | 12.
| /////////////////// |
------------- ------------------------
a. | TEXT 3555 | | RCFD 3555 | | /////////////////// | 12.a
-----------------------------------------------------------------
b. | TEXT 3556 | | RCFD 3556 | | /////////////////// | 12.b.
-----------------------------------------------------------------
c. | TEXT 3557 | | RCFD 3557 | | /////////////////// | 12.c.
-----------------------------------------------------------------
d. | TEXT 3558 | | RCFD 3558 | | /////////////////// | 12.d.
----------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-1
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RC-L--Continued
<TABLE>
<CAPTION>
--------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
13. All other off-balance sheet assets (exclude off-balance sheet derivatives) (itemize and ////////////////////
describe each component of this item over 25% of Schedule RC, item 28, "Total equity capital") 5591 138,336 13.
--------- ------------------------------------- ////////////////////
a. TEXT 5592 __________________________________________ RCFD 5592 //////////////////// 13.a.
b. TEXT 5593 __________________________________________ RCFD 5593 //////////////////// 13.b.
c. TEXT 5594 __________________________________________ RCFD 5594 //////////////////// 13.c.
d. TEXT 5595 __________________________________________ RCFD 5595 //////////////////// 13.d.
</TABLE>
<TABLE>
<CAPTION>
------
C461
--------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity Derivative Commodity and
- --------------------------------- Contracts Contracts Contracts Other Contracts
Off-balance Sheet Derivatives --------------------------------------------------------------------------------------
Position Indicators Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil Thou Tril Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
14. Gross amounts (e.g., notional //////////////////// //////////////////// //////////////////// ////////////////////
amounts) (for each column, //////////////////// //////////////////// //////////////////// ////////////////////
sum of items 14.a through //////////////////// //////////////////// //////////////////// ////////////////////
14.e must equal sum of items //////////////////// //////////////////// //////////////////// ////////////////////
15, 16.a, and 16.b): //////////////////// //////////////////// //////////////////// ////////////////////
--------------------------------------------------------------------------------------
a. Futures contracts......... 0 0 0 0 14.a.
--------------------------------------------------------------------------------------
RCFD 8693 RCFD 8694 RCFD 8695 RCFD 8696
--------------------------------------------------------------------------------------
b. Forward contracts......... 600,000 72,807 0 0 14.b.
--------------------------------------------------------------------------------------
RCFD 8697 RCFD 8698 RCFD 8699 RCFD 8700
--------------------------------------------------------------------------------------
c. Exchange-traded option //////////////////// //////////////////// //////////////////// ////////////////////
contracts: //////////////////// //////////////////// //////////////////// ////////////////////
--------------------------------------------------------------------------------------
(1) Written options....... 0 0 0 0 14.c.(1)
--------------------------------------------------------------------------------------
RCFD 8701 RCFD 8702 RCFD 8703 RCFD 8704
--------------------------------------------------------------------------------------
(2) Purchased options..... 0 0 0 0 14.c.(2)
--------------------------------------------------------------------------------------
RCFD 8705 RCFD 8706 RCFD 8707 RCFD 8708
--------------------------------------------------------------------------------------
d. Over-the-counter option //////////////////// //////////////////// //////////////////// ////////////////////
contracts: //////////////////// //////////////////// //////////////////// ////////////////////
--------------------------------------------------------------------------------------
(1) Written options....... 2,131,388 0 0 0 14.d.(1)
--------------------------------------------------------------------------------------
RCFD 8709 RCFD 8710 RCFD 8711 RCFD 8712
--------------------------------------------------------------------------------------
(2) Purchased options..... 2,892,388 0 0 0 14.d.(2)
--------------------------------------------------------------------------------------
RCFD 8713 RCFD 8714 RCFD 8715 RCFD 8716
--------------------------------------------------------------------------------------
e. Swaps..................... 15,854,789 0 0 0 14.e.
--------------------------------------------------------------------------------------
RCFD 3450 RCFD 3826 RCFD 8719 RCFD 8720
--------------------------------------------------------------------------------------
15. Total gross notional amount //////////////////// //////////////////// //////////////////// ////////////////////
of derivative contracts held //////////////////// //////////////////// //////////////////// ////////////////////
for trading.................. 0 0 0 0 15.
--------------------------------------------------------------------------------------
RCFD A126 RCFD A127 RCFD 8723 RCFD 8724
--------------------------------------------------------------------------------------
16. Total gross notional amount //////////////////// //////////////////// //////////////////// ////////////////////
of derivative contracts held //////////////////// //////////////////// //////////////////// ////////////////////
for purposes other than //////////////////// //////////////////// //////////////////// ////////////////////
trading: //////////////////// //////////////////// //////////////////// ////////////////////
--------------------------------------------------------------------------------------
a. Contracts marked to //////////////////// //////////////////// //////////////////// ////////////////////
market.................... 305,013 72,807 0 0 16.a.
--------------------------------------------------------------------------------------
RCFD 8725 RCFD 8726 RCFD 8727 RCFD 8728
--------------------------------------------------------------------------------------
b. Contracts not marked to //////////////////// //////////////////// //////////////////// ////////////////////
market.................... 21,173,552 0 0 0 16.b.
--------------------------------------------------------------------------------------
RCFD 8729 RCFD 8730 RCFD 8731 RCFD 8732
--------------------------------------------------------------------------------------
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-16
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RC-L--Continued
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Dollar Amounts in Thousands Interest Rate Foreign Exchange Equity Derivative Commodity and
- --------------------------------- Contracts Contracts Contracts Other Contracts
Off-balance Sheet Derivatives --------------------------------------------------------------------------------------
Position Indicators RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
17. Gross fair values of //////////////////// //////////////////// //////////////////// ////////////////////
derivative contracts: //////////////////// //////////////////// //////////////////// ////////////////////
a. Contracts held for //////////////////// //////////////////// //////////////////// ////////////////////
trading: //////////////////// //////////////////// //////////////////// ////////////////////
(1) Gross positive //////////////////// //////////////////// //////////////////// ////////////////////
fair value............ 8733 0 8734 0 8735 0 8736 0 17.a.(1)
(2) Gross negative //////////////////// //////////////////// //////////////////// ////////////////////
fair value............ 8737 0 8738 0 8739 0 8740 0 17.a.(2)
b. Contracts held for //////////////////// //////////////////// //////////////////// ////////////////////
purposes other than //////////////////// //////////////////// //////////////////// ////////////////////
trading that are marked //////////////////// //////////////////// //////////////////// ////////////////////
to market: //////////////////// //////////////////// //////////////////// ////////////////////
(1) Gross positive //////////////////// //////////////////// //////////////////// ////////////////////
fair value............ 8741 988 8742 859 8743 0 8744 0 17.b.(1)
(2) Gross negative //////////////////// //////////////////// //////////////////// ////////////////////
fair value............ 8745 1,071 8746 802 8747 0 8748 0 17.b.(2)
c. Contracts held for //////////////////// //////////////////// //////////////////// ////////////////////
purposes other than //////////////////// //////////////////// //////////////////// ////////////////////
trading that are not //////////////////// //////////////////// //////////////////// ////////////////////
marked to market: //////////////////// //////////////////// //////////////////// ////////////////////
(1) Gross positive //////////////////// //////////////////// //////////////////// ////////////////////
fair value............ 8749 63,673 8750 0 8751 0 8752 0 17.c.(1)
(2) Gross negative //////////////////// //////////////////// //////////////////// ////////////////////
fair value............ 8753 79,961 8754 0 8755 0 8756 0 17.c.(2)
--------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
--------------------
Memoranda Dollar Amounts in Thousands RCFD Bil Mil Thou
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1.-2. Not applicable ////////////////////
3. Unused commitments with an original maturity exceeding one year that are reported in ////////////////////
Schedule RC-L, items 1.a through 1.e, above (report only the unused portions of commitments ////////////////////
that are fee paid or otherwise legally binding)................................................... 3833 1,034,618 M.3.
a. Participations in commitments with an original maturity ////////////////////
exceeding one year conveyed to others................................... RCFD 3834 192,122 //////////////////// M.3.a.
4. To be completed only by banks with $1 billion or more in total assets: ////////////////////
Standby letters of credit and foreign office guarantees (both financial and performance) issued ////////////////////
to non-U.S. addressees (domicile) included in Schedule RC-L, items 2 and 3, above................. 3377 932 M.4.
5. Installment loans to individuals for household, family, and other personal expenditures that ////////////////////
have been securitized and sold without recourse (with servicing retained), amounts outstanding ////////////////////
by type of loan: ////////////////////
a. Loans to purchase private passenger automobiles (to be completed for the ////////////////////
September report only)......................................................................... 2741 N/A M.5.a.
b. Credit cards and related plans (TO BE COMPLETED QUARTERLY)..................................... 2742 0 M.5.b.
c. All other consumer installment credit (including mobile home loans) (to be completed for the ////////////////////
September report only)......................................................................... 2743 N/A M.5.c.
--------------------
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-17
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RC-M--Memoranda
<TABLE>
<CAPTION>
------
C465
--------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors, principal ////////////////////
shareholders, and their related interests as of the report date: ////////////////////
a. Aggregate amount of all extensions of credit to all executive officers, directors, principal ////////////////////
shareholders, and their related interests..................................................... 6164 187,112 1.a.
b. Number of executive officers, directors, and principal shareholders to whom the amount of ////////////////////
all extensions of credit by the reporting bank (including extensions of credit to ////////////////////
related interests) equals or exceeds the lesser of $500,000 or 5 percent Number ////////////////////
of total capital as defined for this purpose in agency regulations....... RCFD 6165 15 //////////////////// 1.b.
2. Federal funds sold and securities purchased under agreements to resell with U.S. branches ////////////////////
and agencies of foreign banks(1) (included in Schedule RC, items 3.a and 3.b).................... 3405 0 2.
3. Not applicable. ////////////////////
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced for others ////////////////////
(include both retained servicing and purchased servicing): ////////////////////
a. Mortgages serviced under a GNMA contract...................................................... 5500 0 4.a.
b. Mortgages serviced under a FHLMC contract: ////////////////////
(1) Serviced with recourse to servicer........................................................ 5501 0 4.b.(1)
(2) Serviced without recourse to servicer..................................................... 5502 0 4.b.(2)
c. Mortgages serviced under a FNMA contract: ////////////////////
(1) Serviced under a regular option contract.................................................. 5503 0 4.c.(1)
(2) Serviced under a special option contract.................................................. 5504 0 4.c.(2)
d. Mortgages serviced under other servicing contracts............................................ 5505 0 4.d.
5. To be completed only by banks with $1 billion or more in total assets: ////////////////////
Customers' liability to this bank on acceptances outstanding (sum of items 5.a and 5.b must ////////////////////
equal Schedule RC, item 9): ////////////////////
a. U.S. addressees (domocile).................................................................... 2103 6,291 5.a.
b. Non-U.S. addressees (domocile)................................................................ 2104 0 5.b.
6. Intangible assets: ////////////////////
a. Mortgage servicing rights..................................................................... 3164 0 6.a.
b. Other identifiable intangible assets: ////////////////////
(1) Purchased credit card relationships....................................................... 5506 22,352 6.b.(1)
(2) All other identifiable intangible assets.................................................. 5507 2,459 6.b.(2)
c. Goodwill...................................................................................... 3163 12,233 6.c.
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10)........................ 2143 37,044 6.d.
e. Amount of intangible assets (included in item 6.b.(2) above) that have been grandfathered or ////////////////////
are otherwise qualifying for regulatory capital purposes...................................... 6442 0 6.e.
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated to ////////////////////
redeem the debt.................................................................................. 3295 0 7.
--------------------
</TABLE>
- ----------
(1) Do not report federal funds sold and securities purchased under agreements
to resell with other commercial banks in the U.S. in this item.
27
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-18
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RC-M--Continued
<TABLE>
<CAPTION>
------------------------
Dollar Amounts in Thousands Bil Mil Thou
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
8. a. Other real estate owned: ////////////////////////
(1) Direct and indirect investments in real estate ventures.......................... RCFD 5372 0 8.a.(1)
(2) All other real estate owned: ////////////////////////
(a) Construction and land development in domestic offices........................ RCON 5508 0 8.a.(2)(a)
(b) Farmland in domestic offices................................................. RCON 5509 0 8.a.(2)(b)
(c) 1-4 family residential properties in domestic offices........................ RCON 5510 296 8.a.(2)(c)
(d) Multifamily (5 or more) residential properties in domestic offices........... RCON 5511 0 8.a.(2)(d)
(e) Nonfarm nonresidential properties in domestic offices........................ RCON 5512 5,000 8.a.(2)(e)
(f) In foreign offices........................................................... RCFN 5513 0 8.a.(2)(f)
(3) Total (sum of items 8.a(1) and 8.a.(2)) (must equal Schedule RC, item 7)......... RCFD 2150 5,296 8.a.(3)
b. Investments in unconsolidated subsidiaries and associated companies: ////////////////////////
(1) Direct and indirect investments in real estate ventures.......................... RCFD 5374 0 8.b.(1)
(2) All other investments in unconsolidated subsidiaries and associated companies.... RCFD 5375 728 8.b.(2)
(3) Total (sum of items 8.b(1) and 8.b.(2)) (must equal Schedule RC, item 8)......... RCFD 2130 728 8.b.(3)
c. Total assets of unconsolidated subsidiaries and associated companies................. RCFD 5376 17,602 8.c.
9. Noncumulative perpetual preferred stock and related surplus included in Schedule RC, ////////////////////////
item 23, "Perpetual preferred stock and related surplus"................................ RCFD 3778 0 9.
10. Mutual fund and annuity sales in domestic offices during the quarter (include ////////////////////////
proprietary, private label, and third party products): ////////////////////////
a. Money market funds................................................................... RCON 6441 0 10.a.
b. Equity securities funds.............................................................. RCON 8427 13,192 10.b.
c. Debt securities funds................................................................ RCON 8428 4,779 10.c.
d. Other mutual funds................................................................... RCON 8429 0 10.d.
e. Annuities............................................................................ RCON 8430 13,929 10.e.
f. Sales of proprietary mutual funds and annuities (included in items 10.a through ////////////////////////
10.e. above)......................................................................... RCON 8784 12,693 10.f.
------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
--------------------
Memorandum Dollar Amounts in Thousands RCFD Bil Mil Thou
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interbank holdings of capital instruments (to be completed for the December report only): ////////////////////
a. Reciprocal holdings of banking organizations' capital instruments............................. 3836 N/A M.1.a.
b. Nonreciprocal holdings of banking organizations' capital instruments.......................... 3837 N/A M.1.b.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-19
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RC-N--Past Due and Nonaccrual Loans, Leases, and Other Assets
The FFIEC regards the information reported in
all of Memorandum item 1, in items 1 through 10,
column A, and in Memorandum items 2 through 4,
column A, as confidential.
<TABLE>
<CAPTION> ----------
| |
| C470 |
--------------------------------------------------------------------
(Column A) (Column B) (Column C)
Past due Past due 90 Nonaccrual
30 through 89 days or more
days and still and still
accruing accruing
--------------------------------------------------------------------
Dollar Amounts in Thousands RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1. Loans accrued by real estate: //////////////////// //////////////////// ////////////////////
a. To U.S. addressees (domicile)............. 1245 1246 3,043 1247 7,526 1.a.
b. To non-U.S. addressees (domicile)......... 1248 1249 0 1250 0 1.b.
2. Loans to depository institutions and //////////////////// //////////////////// ////////////////////
acceptances of other banks: //////////////////// //////////////////// ////////////////////
a. To U.S. banks and other U.S. depository //////////////////// //////////////////// ////////////////////
institutions.............................. 5377 5378 0 5379 0 2.a.
b. To foreign banks.......................... 5380 5381 0 5382 0 2.b.
3. Loans to finance agricultural production and //////////////////// //////////////////// ////////////////////
other loans to farmers....................... 1594 1597 0 1583 64 3.
4. Commercial and industrial loans: //////////////////// //////////////////// ////////////////////
a. To U.S. addressees (domicile)............. 1251 1252 2,381 1253 3,171 4.a.
b. To non-U.S. addressees (domicile)......... 1254 1255 0 1256 0 4.b.
5. Loans to individuals for household, family, //////////////////// //////////////////// ////////////////////
and other personal expenditures: //////////////////// //////////////////// ////////////////////
a. Credit cards and related plans............ 5383 5384 37,638 5385 0 5.a.
b. Other (includes single payment, //////////////////// //////////////////// ////////////////////
installment, and all student loans)....... 5386 5387 11,647 5388 2,770 5.b.
6. Loans to foreign governments and official //////////////////// //////////////////// ////////////////////
institutions................................. 5389 5390 0 5391 0 6.
7. All other loans.............................. 5459 5460 54 5461 76 7.
8. Lease financing receivables: //////////////////// //////////////////// ////////////////////
a. Of U.S. addressees (domicile)............. 1257 1258 575 1259 845 8.a.
b. Of non-U.S. addressees (domicile)......... 1271 1272 0 1791 0 8.b.
9. Debt securities and other assets (exclude //////////////////// //////////////////// ////////////////////
other real estate owned and other //////////////////// //////////////////// ////////////////////
repossessed assets).......................... 3505 3506 0 3507 0 9.
--------------------------------------------------------------------
</TABLE>
===============================================================================
<TABLE>
<CAPTION>
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in
items 1 through 8.
--------------------------------------------------------------------
RCFD Bil Mil Thou RCFD Bil Mil Thou RCFD Bil Mil Thou
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
10. Loans and leases reported in items 1 //////////////////// //////////////////// ////////////////////
through 8 above which are wholly or //////////////////// //////////////////// ////////////////////
partially guaranteed by the U.S. Government.. 5612 5613 7,771 5614 2,121 10.
a. Guaranteed portion of loans and leases //////////////////// //////////////////// ////////////////////
included in item 10 above................. 5615 5616 7,771 5617 2,083 10.a.
--------------------------------------------------------------------
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-1
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
Schedule RC-N--Continued
-------
| C473 |
------------------------------------------------------------------
| (Column A) | (Column B) | (Column C) |
| Past due | Past due 90 | Nonaccrual |
| 30 through 89 | days or more | |
| days and still | and still | |
| accruing | accruing | |
Memoranda |-----------------------------------------------------------------|
Dollar Amounts in Thousands | RCFD Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
- -------------------------------------------------------------------------------------------------------------------------
1. Restructured loans and leases included in | /////////////////// | /////////////////// | /////////////////// |
Schedule RC-N, items 1 through 8, above (and not | /////////////////// | /////////////////// | /////////////////// |
reported in Schedule RC-C, part I, Memorandum | /////////////////// | /////////////////// | /////////////////// |
item 2).............................................| 1658 | 1659 | 1661 | M.1.
2. Loans to finance commercial real estate, | /////////////////// | /////////////////// | /////////////////// |
construction, and land development activities | /////////////////// | /////////////////// | /////////////////// |
(not secured by real estate) included in | /////////////////// | /////////////////// | /////////////////// |
Schedule RC-N, items 4 and 7, above.................| 6558 | 6559 201 | 6560 0 | M.2.
|-----------------------------------------------------------------|
3. Loans secured by real estate in domestic offices | RCON Bil Mil Thou | RCFD Bil Mil Thou | RCFD Bil Mil Thou |
|-----------------------------------------------------------------|
(included in Schedule RC-N, item 1, above): | /////////////////// | /////////////////// | /////////////////// |
a. Construction and land development................| 2759 | 2769 751 | 3492 442 | M.3.a.
b. Secured by farmland..............................| 3493 | 3494 0 | 3495 0 | M.3.b.
c. Secured by 1-4 family residential properties: | /////////////////// | /////////////////// | /////////////////// |
(1) Revolving, open-end loans secured by | /////////////////// | /////////////////// | /////////////////// |
1-4 family residential properties and | /////////////////// | /////////////////// | /////////////////// |
extended under lines of credit...............| 5398 | 5398 577 | 5400 789 | M.3.c.(1)
(2) All other loans secured by 1-4 family | /////////////////// | /////////////////// | /////////////////// |
residential properties.......................| 5401 | 5402 1,464 | 5403 4,489 | M.3.c.(2)
d. Secured by multifamily (5 or more) residential | /////////////////// | /////////////////// | /////////////////// |
properties.......................................| 3499 | 3500 75 | 3501 0 | M.3.d.
e. Secured by nonfarm nonresidential properties.....| 3502 | 3503 176 | 3504 1,806 | M.3.e.
-------------------------------------------------------------------
---------------------------------------------
| (Column A) | (Column B) |
| Past due 30 | Past due 90 |
| through 89 days | days or more |
|-------------------------------------------|
| RCFD Bil Mil Thou | RCFD Bil Mil Thou |
---------------------------------------------
4. Interest rate, foreign exchange rate, and other | /////////////////// | /////////////////// |
commodity and equity contracts: | /////////////////// | /////////////////// |
a. Book value of amounts carried as assets..........| 3522 | 3528 0 | M.4.a.
b. Replacement cost of contracts with a | /////////////////// | /////////////////// |
positive replacement cost........................| 3529 | 3530 0 | M.4.b.
---------------------------------------------
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-21
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Schedule RC-O--Other Data for Deposit Insurance Assessments
<TABLE>
<CAPTION>
-------
| C475 |
---------------------
Dollar Amounts in Thousands | RCON Bil Mil Thou |
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1. Unposted debits (see instructions): | /////////////////// |
a. Actual amount of all unposted debits.................................................... | 0030 N/A | 1.a.
OR | /////////////////// |
b. Separate amount of unposted debits: | /////////////////// |
(1) Actual amount of unposted debits to demand deposits................................. | 0031 0 | 1.b.(1)
(2) Actual amount of unposted debits to time and savings deposits(1).................... | 0032 0 1.b.(2)
2. Unposted credits (see instructions): | /////////////////// |
a. Actual amount of all unposted credits................................................... | 3510 N/A | 2.a.
OR | /////////////////// |
b. Separate amount of unposted credits: | /////////////////// |
(1) Actual amount of unposted credits to demand deposits................................ | 3512 0 | 2.b.(1)
(2) Actual amount of unposted credits to time and savings deposits(1)................... | 3514 0 | 2.b.(2)
3. Uninvested trust funds (cash) held in bank's own trust department (not included in total | /////////////////// |
deposits in domestic offices).............................................................. | 3520 0 | 3.
4. Deposits of consolidated subsidiaries in domestic offices and in insured branches in Puerto | /////////////////// |
Rico and U.S. territories and possessions (not included in total deposits): | /////////////////// |
a. Demand deposits of consolidated subsidiaries............................................ | 2211 0 | 4.a.
b. Time and savings deposits(1) of consolidated subsidiaries............................... | 2351 0 | 4.b.
c. Interest accrued and unpaid on deposits of consolidated subsidiaries.................... | 5514 0 | 4.c.
5. Deposits in insured branches in Puerto Rico and U.S. territories and possessions: | /////////////////// |
a. Demand deposits in insured branches (included in Schedule RC-E, Part II)................ | 2229 0 | 5.a.
b. Time and savings deposits(1) in insured branches (included in Schedule RC-E, Part II)... | 2283 0 | 5.b.
c. Interest accrued and unpaid on deposits in insured branches | /////////////////// |
(included in Schedule RC-G, item 1.b)................................................... | 5515 0 | 5.c.
-----------------------
-----------------------
Item 6 is not applicable to state nonmember banks that have not been authorized by the | /////////////////// |
Federal Reserve to act as pass-through correspondents. | /////////////////// |
6. Reserve balances actually passed through to the Federal Reserve by the reporting bank on | /////////////////// |
behalf of its respondent depository institutions that are also reflected as deposit | /////////////////// |
liabilities of the reporting bank: | /////////////////// |
a. Amount reflected in demand deposits (included in Schedule RC-E, Part I, item 4 or 5, | /////////////////// |
column B).............................................................................. | 2314 0 | 6.a.
b. Amount reflected in time and savings deposits(1) (included in Schedule RC-E, Part I, | /////////////////// |
item 4 or 5, column A or C, but not column B)........................................... | 2315 0 | 6.b.
7. Unamortized premiums and discounts on time and savings deposits:(1) | /////////////////// |
a. Unamortized premiums.................................................................... | 5516 0 | 7.a.
b. Unamortized discounts................................................................... | 5517 0 | 7.b.
-----------------------
- -----------------------------------------------------------------------------------------------------------------------------
|8. To be completed by banks with "Oakar deposits." |
| ---------------------- |
| Total "Adjusted Attributable Deposits" of all institutions acquired under Section 5(d)(3) | /////////////////// | |
| of the Federal Deposit Insurance Act (from most recent FDIC Oakar Transaction Worksheet(s)).| 5518 N/A | 8. |
| ----------------------- |
- -----------------------------------------------------------------------------------------------------------------------------
-----------------------
9. Deposits in lifeline accounts.............................................................. | 5596/////////////// | 9.
10. Benefit-responsive "Depository Institution Investment Contracts" (included in total | /////////////////// |
deposits in domestic offices).............................................................. | 8432 0 |10.
-----------------------
</TABLE>
_____________________________________
1) For FDIC insurance assessment purposes, "time and savings deposits" consists
of nontransaction accounts and all transaction accounts other than demand
deposits.
31
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-22
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
<TABLE>
<CAPTION>
Schedule RC-O--Continued
<S> <C>
---------------------
Dollar Amounts in Thousands | RCON Bil Mil Thou |
- -----------------------------------------------------------------------------------------------------------------------
11. Adjustments to demand deposits in domestic offices reported in Schedule RC-B for | /////////////////// |
certain reciprocal demand balances: | /////////////////// |
a. Amount by which demand deposits would be reduced if reciprocal demand balances | /////////////////// |
between the reporting bank and savings associations were reported on a net basis | /////////////////// |
rather than a gross basis in Schedule RC-B.............................................. | 8785 0 | 11.a.
b. Amount by which demand deposits would be increased if reciprocal demand balances | /////////////////// |
between the reporting bank and U.S. branches and agencies of foreign banks were | /////////////////// |
reported on a gross basis rather than a net basis in Schedule RC-B.......................| A181 0 | 11.b.
c. Amount by which demand deposits would be reduced if cash items in process of | /////////////////// |
collection were included in the calculation of net reciprocal demand balances between | /////////////////// |
the reporting bank and the domestic offices of U.S. banks and savings associations | /////////////////// |
in Schedule RC-B.........................................................................| A182 0 | 11.c.
-----------------------
Memoranda (to be completed each quarter except as noted)
---------------------
Dollar Amounts in Thousands | RCON Bil Mil Thou |
- -----------------------------------------------------------------------------------------------------------------------
1. Total deposits in domestic offices of the bank (sum of Memorandum items 1.a.(1) and | /////////////////// |
1.b.(1) must equal Schedule RC, item 13.a): | /////////////////// |
a. Deposit accounts of $100,000 or less: | /////////////////// |
(1) Amount of deposit accounts of $100,000 or less.......................................| 2702 2,482,590 | M.1.a.(1)
(2) Number of deposit accounts of $100,000 or less (to be Number | /////////////////// |
----------------------| /////////////////// |
completed for the June report only)........................... | RCON 3779 | 566,691 | /////////////////// | M.1.a.(2)
----------------------
b. Deposit accounts of more than $100,000: | /////////////////// |
(1) Amount of deposit accounts of more than $100,000.....................................| 2710 1,942,328 | M.1.b.(1)
Number | /////////////////// |
----------------------
(2) Number of deposit accounts of more than $100,000.............. | RCON 2722 | 3,887 | /////////////////// | M.1.b.(2)
---------------------------------------------
2. Estimated amount of uninsured deposits in domestic offices of the bank:
a. An estimate of your bank's uninsured deposits can be determined by multiplying the
number of deposit accounts of more than $100,000 reported in Memorandum item 1.b.(2)
above by $100,000 and subtracting the result from the amount of deposit accounts of
more than $100,000 reported in Memorandum item 1.b.(1) above.
Indicate in the appropriate box at the right whether your bank has a method or YES NO
procedure for determining a better estimate of uninsured deposits than the -----------------------
estimate described above.................................................................| 6861 | | /// | X| M.2.a.
-----------------------
b. If the box marked YES has been checked, report the estimate of uninsured deposits | RCON Bil Mil Thou |
determined by using your bank's method or procedure .....................................| 5597 N/A | M.2.b.
-----------------------
- -----------------------------------------------------------------------------------------------------------------------
Person to whom questions about the Reports of Condition and Income should be directed: | C477 |
--------
Elizabeth G. Gilliland, Assistant Vice-President (614) 248-8563
- ----------------------------------------------------------------------- --------------------------------------------
Name and Title (TEXT 8901) Area code/phone number/extension (TEXT 8902)
</TABLE>
32
<PAGE>
<TABLE>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-23
City, State, zip: Columbus, OH 43271-1066
FDIC Certificate No: |0|6|5|5|9|
-----------
</TABLE>
Schedule RC-R--Regulatory Capital
This schedule must be completed by all banks as follows: Banks that reported
total assets of $1 billion or more in Schedule RC, item 12, for June 30, 1995,
must complete items 2 through 9 and Memoranda items 1 and 2. Banks with assets
of less than $1 billion must complete items 1 through 3 below or Schedule RC-R
in its entirety, depending on their response to item 1 below.
<TABLE>
<CAPTION>
<S> <C> <C><C>
-----------------
| |
| C480 |
1. Test for determining the extent to which Schedule RC-R must be completed. To -----------------
be completed only by banks with total assets of less than $1 billion. | YES NO |
Indicate in the appropriate box at the right whether the bank has total -----------------
capital greater than or equal to eight percent of adjusted total | RCFD 6056 | |///| | 1.
assets..................................................................... --------------------------------
For purposes of this test, adjusted total assets equals total assets less
cash, U. S. Treasuries, U.S. Government agency obligations, and 80
percent of U.S. Government-sponsored agency obligations plus the allowance
for loan and lease losses and selected off-balance sheet items as reported
on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to
complete items 2 and 3 below. If the box marked NO has been checked, the bank
must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual
risk-based capital ratio is less than eight percent or that the bank is not in
compliance with the risk-based capital guidelines.
- --------------------------------------------------------------------------------
| NOTE: All banks are required to complete items 2 and below. See optional |
| worksheet for items 3.a through 3.f. |
- -------------------------------------------------------------------------------- ------------------------------------------
Dollar Amounts in Thousands | (Column A) | (Column B) |
- -------------------------------------------------------------------------------- |Subordinated Debt(1)| Other |
2. Subordinated debt(1) and other limited-life capital instruments (original | and Intermediate | Limited-Life |
weighted average maturity of at least five years) with a remaining |Term Preferred Stock|Capital Instruments |
maturity of: |--------------------| -------------------|
|RCFD Bil Mil Thou|RCFD Bil Mil Thou|
|--------------------|--------------------|
a. One year or less........................................................ |3780 0|3786 0|2.a.
b. Over one year through two years......................................... |3781 0|3787 0|2.b.
c. Over two years through three years...................................... |3782 0|3788 0|2.c.
d. Over three years through four years..................................... |3783 0|3789 0|2.d.
e. Over four years through five years...................................... |3784 0|3790 0|2.e.
f. Over five years......................................................... |3785 189,284|3791 0|2.f.
3. Amounts used in calculating regulatory capital ratios (report amounts |////////////////////|////////////////////|
determined by the bank for its own internal regulatory capital analyses): |////////////////////|RCFD Bil Mil Thou|
a. Tier 1 capital.......................................................... |////////////////////|8274 465,691|3.a.
b. Tier 2 capital.......................................................... |////////////////////|8275 283,359|3.b.
c. Total risk-based capital................................................ |////////////////////|3792 749,050|3.c.
d. Excess allowance for loan and lease losses.............................. |////////////////////|A222 58,139|3.d.
e. Risk-weighted assets.................................................... |////////////////////|A223 7,467,863|3.e.
f. "Average total assets".................................................. |////////////////////|A224 7,608,284|3.f.
-------------------------------------------
------------------------------------------
| (Column A) | (Column B) |
Items 4-9 and Memoranda items 1 and 2 are to be completed | Assets | Credit Equiv- |
by banks that answered NO to item 1 above and | Recorded | alent Amount |
by banks with total assets of $1 billion or more. | on the | of Off-Balance |
| Balance Sheet | Sheet Items(2) |
-------------------------------------------
|RCFD Bil Mil Thou |RCFD Bil Mil Thou|
4. Assets and credit equivalent amounts of off-balance sheet items ----------------------| --------------------
assigned to the Zero percent risk category: |/////////////////////|////////////////////|
a. Assets recorded on the balance sheet: |/////////////////////|////////////////////|
(1) Securities issued by, other claims on, and claims unconditionally |/////////////////////|////////////////////|
guaranteed by, the U.S. Government and its agencies and |/////////////////////|////////////////////|
other OECD central governments...................................... |3794 127,920|////////////////////|4.a.(1)
(2) All other........................................................... |3795 101,052|////////////////////|4.a.(2)
b. Credit equivalent amount of off-balance sheet items..................... |/////////////////////|3796 47,555|4.b.
- ----------
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not report in column B the risk-weighted amount of assets reported
in column A.
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-24
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
Schedule RC-R--Continued
---------------------------------------------
| (Column A) | (Column B) |
| Assets | Credit Equivalent |
| Recorded | Amount of Off- |
| on the | Balance Sheet |
| Balance Sheet | Items (1) |
|--------------------------------------------|
Dollar Amounts in Thousands |RCFD Bil Mil Thou | RCON Bil Mil Thou|
- -----------------------------------------------------------------------------------------------------------------------
<S> |<C> <C> | <C> <C>| <C>
5. Assets and credit equivalent amounts of off-balance sheet items |///////////////////// | ////////////////////|
assigned to the 20 percent risk category: |///////////////////// | ////////////////////|
a. Assets recorded on the balance sheet: |///////////////////// | ////////////////////|
(1) Claims conditionally guaranteed by the U.S. Government and |///////////////////// | ////////////////////|
its agencies and other OECD central governments................ |3798 154,943 | ////////////////////| 5.a.(1)
(2) Claims collateralized by securities issued by the U.S. |///////////////////// | ////////////////////|
Government and its agencies and other OECD central governments; |///////////////////// | ////////////////////|
by securities issued by U.S. Government-sponsored agencies; and |///////////////////// | ////////////////////|
by cash on deposit............................................. |3799 0 | ////////////////////| 5.a.(2)
(3) All other...................................................... |3800 1,217,498 | ////////////////////| 5.a.(3)
b. Credit equivalent amount of off-balance sheet items................ |///////////////////// | 3801 298,504| 5.b.
6. Assets and credit equivalent amounts of off-balance sheet items |///////////////////// | ////////////////////|
assigned to the 50 percent risk category: |///////////////////// | ////////////////////|
a. Assets recorded on the balance sheet............................... |3802 319,605 | ////////////////////| 6.a.
b. Credit equivalent amount of off-balance sheet items................ |///////////////////// | 3803 51,269| 6.b.
7. Assets and credit equivalent amounts of off-balance sheet items |///////////////////// | ////////////////////|
assigned to the 100 percent risk cateogry: |///////////////////// | ////////////////////|
a. Assets recorded on the balance sheet .............................. |3804 6,289,360 | ////////////////////| 7.a.
b. Credit equivalent amount of off-balance sheet items................ |///////////////////// | 3805 731,708| 7.b.
8. On-balance sheet asset values excluded from the calculation of the |///////////////////// | ////////////////////|
risk-based capital ratio(2)........................................... |3806 (3,367)| ////////////////////| 8.
9. Total assets recorded on the balance sheet (sum of items 4.a., 5.a., |///////////////////// | ////////////////////|
6.a., 7.a., and 8, column A) (must equal Schedule RC, item 12 plus |///////////////////// | ////////////////////|
items 4.b and 4.c).................................................... |3807 8,207,011 | ////////////////////| 9.
---------------------- |----------------------
<S>
Memoranda -----------------------
Dollar Amounts in Thousands | RCFD Bil Mil Thou|
- -----------------------------------------------------------------------------------------------------------------------
1. Current credit exposure across all off-balance sheet derivative contracts covered by | ////////////////////|
the risk-based capital standards............................................................. | 8764 65,056| M.1.a.
---------------------
-----------------------------------------------------------------------------------------
| With a remaining maturity of |
------------------------------ ----------------------------- -----------------------------
| (Column A) | (Column B) | (Column C) |
| | | |
| One year or less | Over one year | Over five years |
| | through five years | |
2. Notional principal amounts |----------------------------| ----------------------------| ----------------------------|
of off-balance sheet |RCFD Tril Bil Mil Thou | RCFD Tril Bil Mil Thou | RCFD Tril Bil Mil Thou |
derivative contracts(3): ----------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C>
a. Interest rate contracts.|3809 6,760,205 | 8766 8,549,395| 8767 527,564 | M.2.a.
b. Foreign exchange | | | |
contracts..............|3812 72,494 | 8769 0| 8770 0 | M.2.b.
c. Gold contracts..........|8771 0 | 8772 0| 8773 0 | M.2.c.
d. Other precious metals | | | |
contracts..............|8774 0 | 8775 0| 8776 0 | M.2.d.
e. Other commodity | | | |
contracts..............|8777 0 | 8778 0| 8779 0 | M.2.e
b. Equity derivative | | | |
contracts..............|A000 0 | A001 0| A002 0 | M.2.f.
-----------------------------------------------------------------------------------------
</TABLE>
- --------------------------------
(1) Do not report in column B the risk-weighted amount of assets reported in
column A.
(2) Include the difference between the fair value and the amortized cost of
available-for-sale securities in item 8 and report the amortized cost of
these securities in items 4 through 7 above. Item 8 also includes on-balance
sheet asset values (or portions thereof) of off-balance sheet interest rate,
foreign exchange rate, and commodity contracts and those contracts (e.g.,
futures contracts) not subject to risk-based capital. Exclude from item 8
margin accounts and accrued receivables as well as any portion of the
allowance for loan and lease losses in excess of the amount that may be
included in Tier 2 capital.
(3) Exclude foreign exchange contracts with an original maturity 14 days or less
and all futures contracts.
34
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street Page RC-25
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
Optional Narrative Statement Concerning the Amounts
Reported in the Reports of Condition and Income
at close of business on June 30, 1996
BANK ONE, COLUMBUS, NA
- --------------------------------------------------------------------------------
Legal Title of Bank
Columbus , Ohio
- ----------------------------------------------- -------------------------------
City State
The management of the reporting bank may, if it wishes, submit a brief narrative
statement on the amounts reported in the Reports of Condition and Income. This
optional statement will be made available to the public, along with the publicly
available data in the Reports of Condition and Income, in response to any
request for individual bank report data. However, the information reported in
column A and in all of Memorandum item 1 of Schedule RC-N is regarded as
confidential and will not be released to the public. BANKS CHOOSING TO SUBMIT
THE NARRATIVE STATEMENT SHOULD ENSURE THAT THE STATEMENT DOES NOT CONTAIN THE
NAMES OR OTHER IDENTIFICATIONS OF INDIVIDUAL BANK CUSTOMERS, REFERENCES TO THE
AMOUNTS REPORTED IN THE CONFIDENTIAL ITEMS IN SCHEDULE RC-N, OR ANY OTHER
INFORMATION THAT THEY ARE NOT WILLING TO HAVE MADE PUBLIC OR THAT WOULD
COMPROMISE THE PRIVACY OF THEIR CUSTOMERS. Banks choosing not to make a
statement may check the "No comment" box below and should make no entries of any
kind in the space provided for the narrative statement; i.e., DO NOT enter in
this space such phrases as "No statement," "Not applicable," "N/A," "No comment,
" and "None."
The optional statement must be entered on this sheet. The statement should not
exceed 100 words. Further, regardless of the number of words, the statement must
not exceed 750 characters, including punctuation, indentation, and standard
spacing between words and sentences. If any submission should exceed 750
characters, as defined, it will be truncated at 750 characters with no notice to
the submitting bank and the truncated statement will appear as the bank's
statement both on agency computerized records and in computer-file releases to
the public.
All information furnished by the bank in the narrative statement must be
accurate and not misleading. Appropriate efforts shall be taken by the
submitting bank to ensure the statement's accuracy. The statement must be
signed, in the space provided below, by a senior officer of the bank who thereby
attests to its accuracy.
If, subsequent to the original submission, material changes are submitted for
the data reported in the Reports of Condition and Income, the existing narrative
statement will be deleted from the files, and from disclosure; the bank, at its
option, may replace it with a statement, under signature, appropriate to the
amended data.
The optional narrative statement will appear in agency records and in release to
the public exactly as submitted (or amended as described in the preceding
paragraph) by the management of the bank (except for the truncation of
statements exceeding the 750-character limit described above). THE STATEMENT
WILL NOT BE EDITED OR SCREENED IN ANY WAY BY THE SUPERVISORY AGENCIES FOR
ACCURACY OR RELEVANCE. DISCLOSURE OF THE STATEMENT SHALL NOT SIGNIFY THAT ANY
FEDERAL SUPERVISORY AGENCY HAS VERIFIED OR CONFIRMED THE ACCURACY OF THE
INFORMATION CONTAINED THEREIN. A STATEMENT TO THIS EFFECT WILL APPEAR ON ANY
PUBLIC RELEASE OF THE OPTIONAL STATEMENT SUBMITTED BY THE MANAGEMENT OF THE
REPORTING BANK.
- --------------------------------------------------------------------------------
No comment | | (RCON 6979) | C471 | C472 |(-
----- ------------------
BANK MANAGEMENT STATEMENT (please type or print clearly):
(TEXT 6980)
For regulatory purposes, the Bank defers the recognition of certain excess
income relating securitized loan sales until cash is received. The effect of
this accounting method has decreased net income for the current year $59,300,000
and decreased retained earnings on a cumulative basis $168,198,000.
/s/ William Bennett 7/26/96
-------------------------------------- -----------------------------
Signature of Executive Officer of Bank Date of Signature
35
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Legal Title of Bank: BANK ONE, COLUMBUS, NA Call Date: 6/30/96 ST-BK: 39-1580 FFIEC 031
Address: 100 East Broad Street
City, State Zip: Columbus, OH 43271-1066
FDIC Certificate No.: |0|6|5|5|9|
-----------
</TABLE>
<TABLE>
<CAPTION>
THIS PAGE IS TO BE COMPLETED BY ALL BANKS
<S> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF BANK OMB No. For OCC: 1557-0081
CALL NO. 196 31 06-30-96 OMB No. For FDIC: 3064-0052
STBK: 39-1580 00088 STCERT: 39-06559 OMB No. For Federal Reserve: 7100-0036
BANK ONE, COLUMBUS, NATIONAL ASSOCIA Expiration Date: 3/31/99
100 EAST BROAD STREET
COLUMBUS, OH 43271
</TABLE>
<TABLE>
<CAPTION>
SPECIAL REPORT
(Dollar Amounts in Thousands)
<S> <C> <C> <C> <C>
-------------------------------------------------------------------------------------
CLOSE OF BUSINESS | FDIC Certificate Number | | Less
DATE | | C-700 | Than -
6/30/96 | |0|6|5|5|9| | |
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
LOANS TO EXECUTIVE OFFICERS (Complete as of each Call Report Date)
- -------------------------------------------------------------------------------
The following information is required by Public Laws 90-44 and 102-242, but does
not constitute a part of the Report of Condition. With each Report of Condition,
these Laws require all banks to furnish a report of all loans or other
extensions of credit to their executive officers made since the date of the
previous Report of Condition. Data regarding individual loans or other
extensions of credit are not required. If no such loans or other extensions of
credit were made during the period, insert "none" against subitem (a). (Exclude
the first $15,000 of indebtedness of each executive officer under bank credit
card plan.) See Sections 215.2 and 215.3 of Title 12 of the Code of Federal
Regulations (Federal Reserve Board Regulation O) for the definitions of
"executive officer" and "extension of credit," respectively. Exclude loans and
other extensions of credit to directors and principal shareholders who are not
executive officers.
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
----------------------------------
a. Number of loans made to executive officers since the previous Call Report date......... | RCFD 3561 | | 3 a.
----------------------------------
b. Total dollar amount of above loans (in thousands of dollars) .......................... | RCFD 3562 | | 63 b.
----------------------------------
c. Range of interest charged on above loans -----------------------------------------------------------------
(example: 9 3/4% = 9.75).............................| RCFD 7701 | 9.25 | % to | RCFD 7702 | 18.00 | % c.
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------
SIGNATURE AND TITLE OF OFFICER AUTHORIZED TO SIGN REPORT | DATE (Month, Day, Year)
|
/s/ Elizabeth G. Gilliland | 7/30/96
- -----------------------------------------------------------------------------------------------------------------------------
NAME AND TITLE OF PERSON TO WHOM INQUIRIES MAY BE DIRECTED (TEXT 8903) | AREA CODE/PHONE NUMBER/EXTENSION
| (TEXT 8904)
Elizabeth G. Gilliland, Assistant Vice-President | (614) 248-8563
- -----------------------------------------------------------------------------------------------------------------------------
FDIC 8040/53 (6-95)
</TABLE>
36
