AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 28, 1996
REGISTRATION NO. 333-10371
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
AMENDMENT NO. 1
TO
FORM S-6
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
---------------------
A. EXACT NAME OF TRUST:
Glickenhaus Special Situations Trust, Series 1
B. NAME OF DEPOSITORS:
Glickenhaus & Co.
C. COMPLETE ADDRESS OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
Glickenhaus & Co.
6 East 43rd Street
New York, New York 10017
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY OF COMMENTS TO:
SETH M. GLICKENHAUS MICHAEL R. ROSELLA, Esq.
Glickenhaus & Co. Battle Fowler LLP
6 East 43rd Street Park Avenue Tower
New York, New York 10017 75 East 55th Street
New York, New York 10022
(212) 856-6858
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
6,500* Units of Glickenhaus Special Situations Trust, Series 1 is
being registered under the Securities Act of 1933 and the Investment
Company Act of 1940, as amended.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED:
$6,500,000**
G. AMOUNT OF FILING FEE (computed at one-thirty-third of 1 percent of the
proposed maximum aggregate offering price to the public):
$1,969.60***
H. APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the Registration
Statement.
_____ Check if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.
* Including 1,500 Units registered for the purpose of resale by the Depositor.
** Estimated solely for purposes of calculating filing fee.
*** $100 of this amount was previously paid.
394861.1
<PAGE>
GLICKENHAUS SPECIAL SITUATIONS TRUST,
SERIES 1
CROSS-REFERENCE SHEET
Pursuant to Rule 404 of Regulation C
Under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction as
to the Prospectus in Form S-6)
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
I. ORGANIZATION AND GENERAL INFORMATION
<S> <C> <C>
1. (a) Name of trust.......................................... Front cover of Prospectus
(b) Title of securities issued............................. Front cover of Prospectus
2. Name and address of each depositor.......................... Back cover of Prospectus
3. Name and address of trustee................................. Back cover of Prospectus, Trustee
4. Name and address of principal underwriter................... Underwriting, Back cover of Prospectus
5. State of organization of trust.............................. Front Cover of Prospectus, The
Trust--Organization
6. Execution and termination of trust agreement................ Summary of Essential Financial Information,
The Trust, Amendment and Termination of
the Trust Agreement
7. Changes of name............................................. Not Applicable
8. Fiscal year................................................. Not Applicable
9. Litigation.................................................. None
II. GENERAL DESCRIPTION OF THE TRUST AND SECURITIES OF THE TRUST
10. (a) Registered or bearer securities........................ Rights of Unit Holders
(b) Cumulative or distributive securities.................. Rights of Unit Holders
(c) Redemption............................................. Rights of Unit Holders
(d) Conversion, transfer, etc.............................. Rights of Unit Holders
(e) Periodic payment plan.................................. Not Applicable
(f) Voting rights.......................................... Amendment and Termination of the Trust
Agreement
(g) Notice to certificateholders........................... Right of Unit Holders--Reports and
Records, Sponsor--Responsibility, Trustee--Resignation,
Amendment and Termination
of the Trust Agreement
(h) Consents required...................................... Sponsor--Responsibility, Amendment and
Termination of the Trust Agreement
(i) Other provisions....................................... The Trust, Tax Status
11. Type of securities comprising units......................... The Trust--Objectives, The Trust--Portfolio
12. Certain information regarding periodic payment
certificates................................................ Not Applicable
</TABLE>
i
394861.1
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C> <C>
13. (a) Load, fees, expenses, etc.............................. Summary of Essential Information, Public
Offering--Offering Price, Public Offering--Market for Units,
Public Offering--Sponsor's and Underwriter's Profits
(b) Certain information regarding periodic
payment certificates................................... Not Applicable
(c) Certain percentages.................................... Public Offering--Offering Price
(d) Other loads, fees, expenses............................ Rights of Unit Holders--Certificates
(e) Certain profits receivable by depositors,
principal underwriters, trustee or
affiliated persons..................................... Public Offering--Offering Price, Public
Offering--Sponsor's and Underwriter's
Profits, Rights of Unit Holders--Redemption--Purchase by the
Sponsor of Units Tendered for Redemption
(f) Ratio of annual charges to income...................... Not Applicable
14. Issuance of trust's securities.............................. The Trust, Rights of Unit Holders--Certificates
15. Receipt and handling of payments from purchasers............ Public Offering--Offering Price, Public
Offering--Sponsor's and Underwriter's
Profits, Amendment and Termination of the
Trust Agreement
16. Acquisition and disposition of underlying
securities.................................................. The Trust--Organization, The Trust--
Objectives, The Trust--Portfolio, Sponsor--Responsibility
17. Withdrawal or redemption.................................... Public Offering--Market for Units, Rights
of Unit Holders--Redemption
18. (a) Receipt, custody and disposition of income............. The Trust--General Considerations,
Insurance on the Bonds, Public Offering--Offering Price,
Rights of Unit Holders--Distribution of Interest and Principal,
Rights of Unit Holders--Reports and Records,
Amendment and Termination of the Trust
Agreement
(b) Reinvestment of distributions.......................... Automatic Accumulation Account
(c) Reserves or special funds.............................. Rights of Unit Holders--Distribution of
Interest and Principal, Amendment and
Termination of the Trust Agreement
(d) Schedule of distributions.............................. Not Applicable
19. Records, accounts and reports............................... Rights of Unit Holders--Reports and
Records, Rights of Unit Holders--Distribution of Interest and
Principal, Amendment and Termination of the Trust
Agreement
</TABLE>
ii
394861.1
<PAGE>
<TABLE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<CAPTION>
<S> <C> <C>
20. Certain miscellaneous provisions of trust
agreement
(a) Amendment.............................................. Sponsor--Resignation, Trustee--Resignation,
Trustee--Limitations on Liability,
Amendment and Termination of the Trust
Agreement
(b) Termination............................................ Sponsor--Resignation, Trustee--Resignation,
Trustee--Limitations on Liability,
Amendment and Termination of the Trust
Agreement
(c) and (d) Trustee, removal and successor.................. Sponsor--Resignation, Trustee--Resignation,
Trustee--Limitations on Liability,
Amendment and Termination of the Trust
Agreement
(e) and (f) Depositor, removal and successor................ Sponsor--Resignation, Trustee--Resignation,
Trustee--Limitations on Liability,
Amendment and Termination of the Trust
Agreement
21. Loans to security holders................................... Not Applicable
22. Limitations on liability.................................... Sponsor--Limitations on Liability, Trustee--Limitations on
Liability, Evaluator--Limitations on Liability
23. Bonding arrangements........................................ Additional Information--Item A
24. Other material provisions of trust agreement................ Not Applicable
III. ORGANIZATION, PERSONNEL AND AFFILIATED PERSONS OF DEPOSITOR
25. Organization of depositor................................... Sponsor
26. Fees received by depositor.................................. Not Applicable
27. Business of depositor....................................... Sponsor
28. Certain information as to officials and affiliated
persons of depositor........................................ Contents of Registration Statement
29. Voting securities of depositor.............................. Not Applicable
30. Persons controlling depositor............................... Not Applicable
31. Payments by depositor for certain services
rendered to trust........................................... Not Applicable
32. Payments by depositor for certain other services
rendered to trust........................................... Not Applicable
33. Remuneration of employees of depositor for
certain services rendered to trust.......................... Not Applicable
34. Remuneration of other person for certain services
rendered to trust........................................... Not Applicable
IV. DISTRIBUTION AND REDEMPTION OF SECURITIES
35. Distribution of trust's securities by states................ Public Offering--Distribution of Units
</TABLE>
iii
394861.1
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C> <C>
36. Suspension of sales of trust's securities................... Not Applicable
37. Revocation of authority to distribute....................... Not Applicable
38. (a) Method of distribution................................. Public Offering--Distribution of Units,
Underwriting, Public Offering--Sponsor's
and Underwriter's Profits
(b) Underwriting agreements................................ Public Offering--Distribution of Units,
Underwriting, Public Offering--Sponsor's
and Underwriter's Profits
(c) Selling agreements..................................... Public Offering--Distribution of Units,
Underwriting, Public Offering--Sponsor's
and Underwriter's Profits
39. (a) Organization of principal underwriters................. Sponsor
(b) N.A.S.D. membership of principal
underwriters........................................... Sponsor
40. Certain fees received by principal underwriters............. Not Applicable
41. (a) Business of principal underwriters..................... Sponsor
(b) Branch offices of principal underwriters............... Not Applicable
(c) Salesmen of principal underwriters..................... Not Applicable
42. Ownership of trust's securities by certain persons.......... Not Applicable
43. Certain brokerage commissions received by
principal underwriters...................................... Not Applicable
44. (a) Method of valuation.................................... Public Offering--Market for Units, Public
Offering--Offering Price, Public Offering--Distribution of
Units
(b) Schedule as to offering price.......................... Not Applicable
(c) Variation in offering price to certain
persons................................................ Public Offering--Offering Price, Public
Offering--Distribution of Units
45. Suspension of redemption rights............................. Not Applicable
46. (a) Redemption valuation................................... Rights of Unit Holders--Redemption--Computation of Redemption
Price per Unit
(b) Schedule as to redemption price........................ Not Applicable
47. Maintenance of position in underlying securities............ Public Offering--Market for Units, Public
Offering--Sponsor's and Underwriter's
Profits, Rights of Unit Holders--Redemption--Purchase by the
Sponsor of Units Tendered for Redemption, Rights of
Unit Holders--Redemption--Computation of
Redemption Price per Unit
V. INFORMATION CONCERNING THE TRUSTEE OR CUSTODIAN
48. Organization and regulation of trustee...................... Trustee
49. Fees and expenses of trustee................................ Rights of Unit Holders--Distribution of
Interest and Principal
</TABLE>
iv
394861.1
<PAGE>
<TABLE>
<CAPTION>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
<S> <C> <C>
50. Trustee's lien.............................................. The Trust--Expenses and Charges--Other
Charges, Rights of Unit Holders--Distribution of Interest and
Principal
VI. INFORMATION CONCERNING INSURANCE OF HOLDERS OF SECURITIES
51. Insurance of holders of trust's securities.................. Not Applicable
VII. POLICY OF REGISTRANT
52. (a) Provisions of trust agreement with respect
to selection or elimination of underlying
securities............................................. The Trust--Objectives, The
Trust--Portfolio, Sponsor--Responsibility
(b) Transactions involving elimination of
underlying securities.................................. Not Applicable
(c) Policy regarding substitution or elimination
of underlying securities............................... The Trust--Substitution of Bonds,
....................................................... Sponsor--Responsibility
(d) Fundamental policy not otherwise covered............... Not Applicable
53. Tax status of trust......................................... Tax Status
VIII. FINANCIAL AND STATISTICAL INFORMATION
54. Trust's securities during last ten years.................... Not Applicable
55. Hypothetical account for issuers of periodic
payment plans............................................... Not Applicable
56. Certain information regarding periodic payment
certificates................................................ Not Applicable
57. Certain information regarding periodic payment
plans.........................................Not Applicable
58. Certain other information regarding periodic
payment plans............................................... Not Applicable
59. Financial statements (Instruction 1(c) to Form S-6)......... Statement of Condition
</TABLE>
v
394861.1
<PAGE>
5,000 Units
Dated: October 28, 1996
DUKE & COMPANY TAX FREE PORTFOLIOS - NATIONAL INSURED TRUST
<TABLE>
<S> <C>
No person is authorized to give any information or Parts A and B of this Prospectus do not contain all of the
to make any representations not contained in Parts information set forth in the registration statement and
A and B of this Prospectus; and any information exhibits relating thereto, filed with the Securities and
not contained herein must not be relied upon as Exchange Commission, Washington, D.C. under the
the Evaluator or the Sponsor. The Trust is Securities Act of 1933, and the Investment Company Act of
registered as a unit investment trust under the 1940, and to which reference is made.
Investment Company Act of 1940. Such
registration does not imply that the Trust or any of This Prospectus does not constitute an offer to sell, or a
its Units have been guaranteed, sponsored, solicitation of an offer to buy, securities in any state to any
recommended or approved by the United States or person to whom it is not lawful to make such an offer in
any state or any agency or officer thereof. such state.
Table of Contents PROSPECTUS PART A.
Part A This Prospectus consists of two parts. This Part A may not be
Summary of Essential Financial Information A-2 distributed unless accompanied by Part B. Please read and
Independent Auditors' Report A-10 retain each of the parts of this Prospectus for future reference.
Statement of Condition A-11
Portfolio A-12 The Glickenhaus Special Situations Trust, Series 1 consisting
of the underlying unit investment trust designated Duke &
Part B Company Tax Free Portfolios - National Insured Trust, was
The Trust B-1 formed for the purpose of obtaining tax-exempt interest income
Public Offering B-9 through investment in a fixed insured portfolio of long-term
Estimated Current Return and bonds, including contracts and funds for-the purchase thereof,
Estimated Long-Term Return issued by or on behalf of states, municipalities, authorities or
to Unit Holders B-12 political subdivisions thereof or issued by certain United States
Insurance on the Bonds B-13 territories or possessions, including Puerto Rico, and their
Tax Status B-17 public authorities (the "Bonds" or the "Securities"). The
Rights of Unit Holders B-21 Sponsor of the Trust is Glickenhaus & Co. On the Date of
Automatic Accumulation Account B-27 Deposit, all of the Bonds in the Trust were irrevocably insured
and therefore are rated in the category "AAA" by Standard &
Rollover and Exchange Option B-28 Poor's Corporation, "Aaa" by Moody's Investors Service, Inc.
Sponsor B-28 or "AAA" by Fitch Investors Service, Inc. The value of the
Trustee B-30 Units of the Trust will fluctuate with the value of the
Evaluator B-31 underlying Bonds. Minimum purchase: 1 Unit.
Amendment and Termination of
the Trust Agreement B-31 In the opinion of counsel, under existing law, interest income
Legal Opinions B-32 to the Trust, and, with certain exceptions, to Unit Holders is
Auditors B-32 exempt from all regular Federal income taxes and alternative
Description of Bond Ratings B-32 minimum tax for individuals, but may be subject to state and
local taxes. Capital gains, if any, are subject to tax. See "Tax
Status" in Part B of this Prospectus.
</TABLE>
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.
<PAGE>
<TABLE>
DUKE & COMPANY TAX FREE PORTFOLIOS -
NATIONAL INSURED TRUST
Glickenhaus Special Situations Trust, Series 1
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
AT OCTOBER 25, 1996 (1):
SPONSOR: GLICKENHAUS & CO.
TRUSTEE: THE BANK OF NEW YORK
EVALUATOR: MULLER DATA CORPORATION
DATE OF DEPOSIT: October 28, 1996
<S> <C>
Aggregate Principal Amount of Bonds in Trust: $5,000,000(2)
Number of Units: 5,000
Fractional Undivided Interest in Trust Per Unit: 1/5,000
Total Value of Securities in Portfolio (Based on Offering Side Valuations of Securities): $4,706,827.50
=============
Sponsors' Initial Repurchase Price Per Unit (Total Value of Securities divided by 5,000 Units): $ 941.37(3)
Plus Sales Charge of 4.95% (on sales of fewer than 250 Units) of Public Offering Price (4): 49.02
-------------
Public Offering Price Per Unit: $ 990.39(5)
=============
Redemption Price Per Unit: $ 936.92(6)
Excess of Public Offering Price Over Redemption Price Per Unit: $ 53.47
Excess of Public Offering Price Over Sponsors' Initial Repurchase Price Per Unit: $ 49.02
Weighted Average Maturity of Bonds in the Trust: 28.89 years
Evaluation Time: 12:00 P.M. New York Time on the initial Date of Deposit and 2:00 P.M. New York
Time thereafter.
Evaluator's Fee: $.55 per Bond for each valuation.
Trustee's Annual Fee: For each $1,000 principal amount of Bonds in the Trust, $1.41 under the monthly
and $1.01 under the semi-annual distribution plan.
Sponsors' Annual Fee: Maximum of $0.25 per $1,000 principal amount of underlying Securities. See "The
Trust--Expenses and Charges."
Sponsors' Profit (Loss) on Deposit: $34,307.00
Mandatory Termination Date: December 31, 2045
First Settlement Date: October 31, 1996
Minimum Principal Distribution: $1.00 per Unit
Minimum Value of the Trust under which Trust
Agreement May be Terminated: $1,000,000 or 20% of the principal amount of the Bonds
deposited in Trust, whichever is lower.
Monthly Semi-Annual
Estimated Annual Interest Income (includes cash income accrued only): $54.57 $54.57
P Less Organizational Expenses (7): .90 .90
E Less Estimated Annual Expenses: 2.59 2.09
------- -------
R Estimated Net Annual Interest Income: $51.08 $51.58
====== ======
Estimated Interest Distribution (8): $ 4.26 $25.79
U Estimated Current Return Based on Public Offering Price (includes cash
N income accrual only) (9): 5.16% 5.21%
I Estimated Long-Term Return (10): 5.19% 5.24%
T Estimated Daily Rate of Net Interest Accrual: $.141909 $.143297
Record Dates: 15th Day of Month 15th Day of
May and November
Payment Dates: 1st Day of Month 1st Day of
June and December
(continued on following page)
</TABLE>
A-2
C/M: 10726.0002 388575.4
<PAGE>
NOTES TO SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
(1) The business day prior to the date of this prospectus. The date of
this prospectus is the date on which the trust agreement was signed and the
deposit with the trustee was made.
(2) If a replacement bond is not acquired when a contract for the
purchase of bonds fails, the aggregate principal amount of the bonds may be
reduced. See "the trust--portfolio--general considerations" in part b.
(3) Based, during the initial offering period, solely upon the
offering prices of the securities and thereafter on the bid prices of such
securities. See "the trust--market for units" in this part a.
(4) After the initial offering period, units may be available for
purchase from the sponsor at a price based upon the aggregate bid price of the
bonds in the trust (as determined by the evaluator) plus a sales charge
determined in accordance with the schedule set forth in "public
offering--offering price" in part b of this prospectus, which is based upon the
maturities of each bond in the trust.
(5) No accrued interest will be added to the public offering price in
connection with purchases of units contracted for on October 28, 1996. With
respect to purchases contracted for after such date, accrued interest from
October 28, 1996 to, but not including, the date of settlement (normally three
business days after order) will be added to the public offering price.
(6) Based solely upon the bid prices of the securities. Upon tender
for redemption, the price to be paid will include accrued interest as described
in "rights of unit holders--redemption--computation of redemption price per
unit" in part B.
(7) Although historically the sponsors of unit investment trusts
("UITS") have paid all the costs of establishing such UITS, this trust (and
therefore the unit holders) will bear all or a portion of its organizational
costs. Such organizational costs include: the cost of preparing and printing
the registration statement, the trust indenture and other closing documents;
and the initial audit of the trust. Total organizational expenses will be
amortized over a five year period. See "rights of unit holders--expenses and
charges--initial expenses" in part B.
(notes continued on next page)
A-3
C/M: 10726.0002 388575.4
<PAGE>
(notes continued from preceding pages)
(8) The first monthly interest distribution of $2.13 per Unit will be
made on December 1, 1996 (the "First Distribution Date") to all monthly
certificateholders of record on November 15, 1996 (the "First Record Date").
The regular monthly payment will be $4.26 on January 1, 1997 and thereafter.
The first semi-annual interest distribution of $2.15 per Unit will be made on
December 1, 1996 to all semi-annual certificateholders of record on November
15, 1996. The regular semi-annual payment will be $25.79 on June 1, 1997 and
thereafter. In order to reduce the amount of accrued interest investors have to
pay in addition to the Public Offering Price, the Trustee has agreed to advance
to the Trust the amount of accrued interest due on Securities through and
including October 31, 1996. This accrued interest will be paid to the Sponsor
as the holder of record of all Units on such date. Consequently, when the
Sponsor sells Units, the amount of accrued interest to be added to the Public
Offering Price of the Units purchased by an investor will include only accrued
interest from October 31, 1996 to but not including the date of settlement of
the investor's purchase (normally three business days after the purchase
contract), less any distributions from the Interest Account. Since a person who
contracts to purchase Units on October 28, 1996 will settle his purchase on
October 31, 1996, no accrued interest will be added to the Public Offering
Price of Units settled on that date. The Trustee will recover its advancements
(without interest or other cost to the Trust) from interest received on the
Securities deposited in the Trust. See "Rights of Unit
Holders--Redemption--Computation at Redemption Price per Unit in Part B."
(9) Estimated Current Return is calculated by dividing the estimated
net annual interest income received in cash per Unit by the Public Offering
Price. Interest income per Unit will vary with changes in fees and expenses of
the Trust and the Evaluator, and with the redemption, maturity, exchange or
sale of Securities. This calculation, which includes cash income accrual only,
does not include discount accretion on original issue discount bonds or on zero
coupon bonds or premium amortization on bonds purchased at a premium. See "The
Trust--Tax Status" in Part B of this Prospectus and "The Trust--Estimated
Current Return and Estimated Long-Term Return to Unit Holders" in this Part A.
(10) Estimated Long-Term Return is calculated by using a formula that
takes into account the yields (including accretion of discounts and
amortization of premiums) of the individual Bonds in the Trust's portfolio,
weighted to reflect the market value and time to maturity (or, in certain
cases, to earlier call date) of such Bonds, adjusted to reflect the Public
Offering Price (including sales charge and expenses) per Unit. This calculation
does not take into account delays in payment to Unit holders for the first few
months of the Trust's operations, which reduces the Long-Term Return number.
See "The Trust--Estimated Current Return and Estimated Long-Term Return to Unit
Holders" in this Part A.
A-4
C/M: 10726.0002 388575.4
<PAGE>
The Trust
Glickenhaus Special Situations Trust (the "Fund"), Series 1 consists
of the underlying unit investment trust designated Duke & Company Tax Free
Portfolios, National Insured Trust (the "Trust), which is created under the
laws of the State of New York by a Trust Indenture and Agreement* (the "Trust
Agreement"), dated the Date of Deposit, among Glickenhaus & Co., as sponsor
(the "Sponsor"), The Bank of New York, as trustee (the "Trustee"), and Muller
Data Corporation, as evaluator (the "Evaluator"). The objective of the Trust is
to obtain tax-exempt interest income through an investment in a fixed insured
portfolio consisting primarily of various long-term municipal bonds. No
assurance can be given that the Trust's objectives will be achieved as these
objectives are subject to the continuing ability of the respective issuers of
the bonds to meet their obligations. In addition, an investment in such
portfolio can be affected by fluctuations in interest rates. On the Date of
Deposit, all of the Bonds in the Trust were rated "AAA" by Standard & Poor's
Corporation ("Standard & Poor's"), "Aaa" by Moody's Investors Service, Inc.
("Moody's") or "AAA" by Fitch Investors Service, Inc. ("Fitch") (see "The
Portfolio"). These ratings result from insurance relating only to the Bonds and
not to Units in the Trust. The Units of the Trust are not insured. The
insurance does not therefore remove market risk, as it does not guarantee the
market value of the Units.
Certain of the Bonds in the Trust may be purchased at prices which
result in the portfolio as a whole being purchased at a discount due to
original issue discount, market discount or the inclusion of zero coupon bonds.
Bonds selling at market discount tend to increase in market value as they
approach maturity when the principal amount is payable, thus increasing the
potential for gain (all or a portion of which may be taxable as ordinary
income). Any income other than any earned original issue discount will be
taxable and will not be realized until maturity, redemption or sale of the
underlying Bonds or Units of the Trust. In the case of Bonds acquired at a
market discount, gain will be treated as ordinary income to the extent of
accrued market discount. At the time of the original issuance of the Bonds held
by the Trust, opinions relating to the validity of the Bonds and the exemption
of interest thereon from Federal income tax were (or with respect to
"when-issued" Bonds will be) rendered by bond counsel to the issuing
governmental authority. The continued tax-exempt status will depend upon the
issuer's ability to comply with the provisions of the Internal Revenue Code of
1986, as amended. See "Tax Status" in Part B of this Prospectus. On the Date of
Deposit, the Sponsor deposited with the Trustee delivery statements relating to
contracts for the purchase of $5,000,000 aggregate principal amount for the
interest-bearing obligations, including funds (represented by cash, cash
equivalents and/or an irrevocable letter of credit issued by a major financial
institution) for the purchase of certain such obligations (the "Bonds" or the
"Securities"). The Trustee thereafter delivered to the Sponsor a registered
certificate of 5,000 Units, representing the entire ownership of the Trust,
which Units are being offered hereby.
In view of the Fund's objectives, the following factors, among others,
were considered in selecting the Bonds: (1) all the Bonds are obligations of
states and counties, municipalities, authorities or political subdivisions
thereof or issued by certain United States territories or possessions,
including Puerto Rico, and their public authorities so that the interest on
them will be exempt from Federal income tax under existing law; (2) the Bonds
are varied as to purpose of issue; (3) in the opinion of the Sponsor, the Bonds
are fairly valued relative to other
- --------
* References in this Prospectus to the Trust Agreement are qualified in
their entirety by the Trust Agreement which is incorporated herein by
reference.
A-5
C/M: 10726.0002 388575.4
<PAGE>
bonds of comparable quality and maturity; (4) whether such Bonds are rated AAA
by a major bond rating agency; and (5) the quality of the Bonds and whether
such Bonds are insured (see "Insurance"). Subsequent to the Date of Deposit, a
Bond may cease to be rated or its rating may be reduced. In the event a Bond's
rating is downgraded to below investment grade (i.e., "high yield" or "junk
bond" status), such a Bond, as compared to an investment grade bond, is subject
to greater risk of downward price volatility in periods of economic
uncertainty. If a Bond in the Trust is downgraded to high yield bond status, a
decrease in the net asset value of the Trust will likely result. If such a
decrease in net asset value occurs and Units of the Trust are tendered for
redemption, the Trust may be forced to liquidate some of the Bonds at a loss.
If such redemptions are substantial enough, this could trigger a complete and
unexpected liquidation of the Trust before maturity, resulting in unanticipated
losses for investors. Notwithstanding such risk, neither the downgrading of a
Bond to below investment grade nor a Bond's ceasing to be rated, requires an
elimination of such Bond from the portfolio of the Trust, but such an event may
be considered in the Sponsor's determination to direct the Trustee to dispose
of the Bonds. See "Sponsor--Responsibility" in Part B.
Public Offering Price
The Public Offering Price of the Units of the Trust during the
initial offering period is equal to the aggregate offering price of the
Securities in the respective Trust's portfolio divided by the number of Units
outstanding, plus a sales charge equal to 4.95% of the Public Offering Price of
the Trust on sales of fewer than 250 Units. In addition, for Units ordered
after the date hereof, accrued interest will be payable from the First
Settlement Date for Units of the Trust (three business days from the date
hereof) to the expected date of settlement (three business days after order).
For additional information regarding the Public Offering Price, the
descriptions of interest and principal distributions, repurchase and redemption
of Units and other essential information regarding the Trust, see the "Summary
of Essential Information" in this Part A. During the initial public offering
period, sales of at least 250 Units will be entitled to a volume discount from
the Public Offering Price. See "Public Offering--Offering Price" in Part B. If
the Units of the Trust had been available for sale on October 25, 1996, the
Public Offering Price per Unit would have been $990.39.
Estimated Current Return and Estimated Long-Term Return
Units of the Trust are offered to investors on a "dollar price" basis
(using the computation method previously described under "Public Offering
Price") as distinguished from a "yield price" basis often used in offerings of
tax exempt bonds (involving the lesser of the yield as computed to maturity of
bonds or to an earlier redemption date). Since they are offered on a dollar
price basis, the rate of return on an investment in Units of the Trust is
measured in terms of "Estimated Current Return" and "Estimated Long Term
Return."
Estimated Long Term Return is calculated by: (1) computing the yield
to maturity or to an earlier call date (whichever results in a lower yield) for
each Bond in the Trust portfolio in accordance with accepted practices, which
practices take into account not only the interest payable on the Bonds but also
the amortization of premiums or accretion of discounts, if any; (2) calculating
the average of the yields for the Bonds in the Trust portfolio by weighing each
Bond's yield by the market value of the Bond and by the amount of time
remaining to the date to which the Bond is priced (thus creating an average
yield for the portfolio of the Trust); and (3) reducing the average yield for
the portfolio of the Trust in order to reflect estimated fees and expenses of
the Trust and the maximum sales charge paid by Unit holders. The resulting
Estimated Long Term Return represents a measure of the return
A-6
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<PAGE>
to Unit holders earned over the estimated life of the Trust. The Estimated Long
Term Return as of the day prior to the Date of Deposit is stated for the Trust
under "Summary of Essential Information" in Part A.
Estimated Current Return is computed by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price per Unit. In
contrast to the Estimated Long Term Return, the Estimated Current Return does
not take into account the amortization of premium or accretion of discount, if
any, on the Bonds in the portfolio of the Trust. Moreover, because interest
rates on Bonds purchased at a premium are generally higher than current
interest rates on newly issued bonds of a similar type with comparable rating,
the Estimated Current Return per Unit may be affected adversely if such
Securities are redeemed prior to their maturity. On the day prior to the Date
of Deposit, the Estimated Net Annual Interest Income per Unit divided by the
Public Offering Price resulted in the Estimated Current Return stated for the
Trust under "Summary of Essential Information" in Part A.
The Estimated Net Annual Interest Income per Unit of the Trust will
vary with changes in the fees and expenses of the Trustee and the Evaluator
applicable to the Trust and with the redemption, maturity, sale or other
disposition of the Bonds in the Trust. The Public Offering Price will vary with
changes in the offering prices (bid prices in the case of the secondary market)
of the Bonds. Therefore, there is no assurance that the present Estimated
Current Return or Estimated Long Term Return will be realized in the future. A
schedule of cash flow projections is available from the Sponsor upon request.
Distributions
Distributions of interest received by the Trust, pro rated on an
annual basis, will be made semi-annually unless the Unit holder elects to
receive them monthly. The first monthly distribution will be $2.13 for Units of
the Trust and will be made on December 1, 1996, to monthly Unit holders of
record on November 15, 1996, and $4.26 thereafter. The first semi-annual
distribution will be $2.15 for Units of the Trust and will be made on December
1, 1996, to semi-annual Unit holders of record on November 15, 1996, and $25.79
thereafter. See "Rights of Unit Holders--Distribution of Interest and
Principal" in Part B of this Prospectus.
Each Unit of the Trust at the Date of Deposit represents 1/5,000
fractional undivided interest in the $5,000,000 face amount of underlying Bonds
and net income of the Trust in the ratio of 1 Unit for each $1,000 principal
amount of underlying Bonds (including contracts and funds for the purchase
thereof) in the Trust.
Automatic Accumulation Account
Distributions from the Trust are made semi-annually unless the Unit
holder elects to receive them monthly. Unit holders of the Trust have the
option, however, of either receiving their interest check, together with any
principal payments, from the Trustee or participating in the Automatic
Accumulation Account reinvestment program offered by the Sponsor (the "Plan").
Under the Plan, a Unit holder may elect to have distributions from Units in the
Trust automatically reinvested in shares of an open-end mutual fund.
Participation in the Plan is conditioned on the participating fund's lawful
qualification for sale in the state in which the Unit holder is a resident. The
Plan is not designed to be a complete investment program. See "Automatic
Accumulation Account" in Part B for details on how to enroll in the Plan and
how to obtain a prospectus.
A-7
C/M: 10726.0002 388575.4
<PAGE>
Insurance
Each of the Bonds in the Trust is insured by a municipal bond
guaranty insurance policy obtained by the issuers of the Bonds ("Pre-Insured
Bonds") and issued by one of the insurance companies (the "Insurance
Companies"), described under "Insurance on the Bonds" in Part B of this
Prospectus, covering scheduled payment of principal thereof and interest
thereon when such amounts shall become due for payment but shall not have been
paid by the issuer or any other insurer thereof. The insurance will also cover
any accelerated payments of principal and the increase in interest payments or
premiums, if any, payable upon mandatory redemption of the Bonds if interest on
any Bonds is ultimately deemed to be subject to regular federal income tax.
None of the insurance will cover accelerated payments of principal or penalty
interest or premiums unrelated to taxability of interest on the Bonds (although
the insurance does guarantee payment of principal and interest in such amounts
and at such times as such amounts would have been due absent such
acceleration). The insurance relates only to the prompt payment of principal of
and interest on the securities in the portfolio, and does not remove market
risks or guarantee the market value of the Units in the Trust. The terms of the
insurance are more fully described under "Insurance on the Bonds" in Part B of
this Prospectus. For a discussion of the effect of an occurrence of nonpayment
of principal or interest on any Bonds in the Trust, see "Portfolio Supervision"
in Part B of this Prospectus. No representation is made herein as to any Bond
insurer's ability to meet its obligations under a policy of insurance relating
to any of the Bonds. In addition, investors should be aware that, subsequent to
the Date of Deposit, the rating of the claims paying ability of the insurer of
an underlying Bond may be downgraded, which may result in a downgrading of the
rating of the Units in the Trust. The approximate percentage of the aggregate
principal amount of the portfolio that is insured by each insurance company is
as follows: AMBAC Indemnity Corp. ("AMBAC"), 10.00%; Connie Lee Insurance
Company ("Connie Lee"), 10.00%; Financial Guaranty Insurance Company
("Financial Guaranty"), 14.00%; Financial Security Assurance, Inc. ("Financial
Security"), 10.00%; and Municipal Bond Insurance Association ("MBIA"), 56.00%.
The Portfolio
The portfolio of the Trust contains contracts to purchase 12 issues
of Bonds issued by entities located in 8 states. All such contracts are
expected to be settled by October 31, 1996. The following information is being
supplied to inform Unit holders of circumstances affecting the Trust. 14.00% of
the aggregate principal amount of the Bonds in the portfolio are general
obligations of the governmental entity issuing them which are backed by the
taxing power thereof. None of the aggregate principal amount of the Bonds in
the portfolio are payable from appropriations. 86.00% of the aggregate
principal amount of the Bonds in the portfolio are payable from the income of
specific projects or authorities and are not supported by the issuers' power to
levy taxes. Although income to pay such Bonds may be derived from more than one
source, the primary sources of such income, the number of issues (and the
related dollar weighted percentage of such issues) deriving income from such
sources and purpose of issue are as follows: General Obligation, 2 (14.00%);
Health Care, 3 (30.00%); Higher Education, 1 (10.00%); Public Power, 3
(20.00%); Special Tax, 2 (16.00%); and Water & Sewer, 1 (10.00%). The Trust is
deemed to be concentrated in the Health Care category.* Prior to their deposit
in the Trust, all of the issues (100%) were
- --------
* A Trust is considered to be "concentrated" in a particular category or
issuer when the Bonds in that category or of that issuer constitute 25%
or more of the aggregate face amount of the portfolio. See "The
Trust--General Considerations" in Part B of this Prospectus.
A-8
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<PAGE>
rated AAA by Standard and Poor's Corporation.* See "Description of Bond
Ratings" in Part B of this Prospectus. For a more detailed discussion, it is
recommended that Unit holders consult the official statements for each security
in the portfolio of the Trust.
None of the Bonds initially deposited in the Trust have been
purchased on a "when issued" basis and none of the Bonds initially deposited in
the Trust has been purchased on a delayed settlement basis. Normally, delivery
of "when issued" Bonds and delayed settlement Bonds is expected to take place
within 30 days after the First Settlement Date. Accordingly, delivery may be
delayed or may not occur. Interest on such Bonds begins accruing to the benefit
of Unit holders on the date of delivery. Holders of Units will be "at risk"
with respect to such Bonds (i.e., may derive either gain or loss from
fluctuations in the offering side valuation of such Bonds) from the date they
commit for Units. See "The Trust--Portfolio--General Considerations" in Part B.
90.00% of the aggregate principal amount of the Bonds in the Trust
are original issue discount bonds that have mandatory sinking fund installment
provisions at redemption prices equal to the compound accreted value on the
date of redemption. Of these original issue discount bonds, 6.50% are zero
coupon bonds. 6.50% of the aggregate principal amount of the Bonds in the Trust
are zero coupon bonds that do not have mandatory sinking fund installment
provisions. Zero coupon bonds do not provide for the payment of any current
interest and provide for payment at maturity at par value unless sooner sold or
redeemed. The market for zero coupon bonds is subject to greater fluctuations
than coupon bonds in response to changes in interest rates. (See "Original
Issue Discount and Zero Coupon Bonds" in Part B of this Prospectus). On the
Date of Deposit, 20.00% of the Bonds (portfolio numbers 1 and 2) in the Trust
were purchased at a premium and are subject to retirement or refunding within
ten years of the Date of Deposit. On the Date of Deposit, based on the offering
side valuation, none of the aggregate principal amount of the Bonds were at
par, 56.00% of the aggregate principal amount of the Bonds were at a discount
from par and 44.00% of the aggregate principal amount of the Bonds were at a
premium.
An investment in Units of the Trust should be made with an
understanding of the risks entailed in investments in fixed-rate bonds,
including the risk that the value of such bonds (and, therefore, of the Units)
will decline with increases in interest rates or a decrease in the federal
income tax rate. Inflation and recession, as well as measures implemented to
address these and other economic problems, contribute to fluctuations in
interest rates and the values of fixed-rate bonds generally. Additionally,
changes in the tax treatment of bonds may have an adverse impact on the value
of the Units. The Sponsor cannot predict future economic policies or their
consequences, nor can it predict the course or extent of such fluctuations in
the future.
Underwriting
Duke & Company Inc., 909 Third Avenue, New York, New York 10022, will
act as sole underwriter (the "Underwriter") for all of the Units of the Duke &
Company Tax Free Portfolios - National Insured Trust comprising Glickenhaus
Special Situations Trust, Series 1. See "Public Offering - Distribution of
Units" in Part B.
- --------
* For the meanings of ratings, including the symbols "p" and "Con. (. .
.)," see "Description of Bond Ratings" in Part B of this Prospectus.
Security letter ratings may be modified by the addition of a plus or
minus sign, when appropriate, to show relative standing within the
major rating categories. There can be no assurance that the economic
and political conditions on which the ratings of the Bonds in any Trust
are based will continue or that particular Bond issues may not be
adversely affected by changes in economic, political or other
conditions that do not affect the above ratings. See "The
Trust--General Considerations" in Part B of this Prospectus.
A-9
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<PAGE>
INDEPENDENT AUDITORS' REPORT
The Sponsor, Trustee, and Unit Holders of Glickenhaus Special Situations Trust,
Series 1, Duke & Company Tax Free Portfolios - National Insured Trust
We have audited the Statement of Condition of the Glickenhaus Special
Situations Trust, Series 1, Duke & Company Tax Free Portfolios - National
Insured Trust, including the Portfolio as of October 28, 1996. This financial
statement is the responsibility of the Sponsor. Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by the
Sponsor, as well as evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion. An
irrevocable letter of credit deposited on October 28, 1996 in the amount
required to purchase securities, as described in the Statement of Condition,
was confirmed to us by The Bank of New York, the Trustee.
In our opinion, the Statement of Condition and Portfolio referred to
above present fairly, in all material respects, the financial position of the
Glickenhaus Special Situations Trust, Series 1, Duke & Company Tax Free
Portfolios - National Insured Trust, as of October 28, 1996 in conformity with
generally accepted accounting principles.
BDO SEIDMAN, LLP
New York, New York
October 28, 1996
A-10
C/M: 10726.0002 388575.4
<PAGE>
DUKE & COMPANY TAX FREE PORTFOLIOS - NATIONAL INSURED TRUST
Glickenhaus Special Situations Trust, Series 1
STATEMENT OF CONDITION AS OF DATE OF DEPOSIT
October 28, 1996
TRUST PROPERTY
Investment in Securities:
Contracts to purchase underlying Securities (1)(2).... $4,706,827.50
Accrued interest receivable (2)................................ 67,689.51
Organizational costs (3)....................................... 22,500.00
-------------
Total.................................. $4,797,017.01
=============
LIABILITIES AND INTEREST OF UNIT HOLDERS
Liabilities:
Accrued interest receivable (2)................................ $ 67,689.51
Accrued liability (3).......................................... 22,500.00
---------
90,189.50
Interest of Unit holders:
Units of fractional undivided interest outstanding (5,000):
Cost to investors (4)................................. 4,951,950.00
Less--gross underwriting commission (5)............... 245,122.50
-------------
Net interest of Unit holders................................... 4,706,827.50
-------------
Total.......................................... $4,797,017.01
=============
- -----------------
(1) Aggregate cost to the Trust of the Securities listed under
"Portfolio" is based on offering side valuation determined by the Evaluator on
the basis set forth under "Public Offering--Offering Price" in Part B. The
aggregate bid side evaluation of the Securities in the portfolio, as determined
by the Evaluator, as of the Date of Deposit was $4,684,597.50. An irrevocable
letter of credit issued by Bankers Trust, in an aggregate amount equal to or in
excess of $4,774,750.95, has been deposited with the Trustee. The amount of
such letter of credit includes: $4,706,827.50, the amount required to purchase
the tax-exempt securities listed in the related portfolio, plus $67,923.45
covering accrued interest through expected dates of delivery.
(2) On the basis set forth under "Rights of Unit
Holders--Distribution of Interest and Principal" in Part B the Trustee will
advance an amount equal to the accrued interest on the Securities as of October
31, 1996 (the "First Settlement Date") plus any cash received by the Trustee
with respect to interest on the Securities prior to such date, and the same
will be distributed to the Sponsors on the First Settlement Date. Consequently,
the amount of interest accrued on a Unit to be added to the public offering
price thereof will include only such accrued interest from the First Settlement
Date to the date of settlement, less all withdrawals and deductions from the
Interest Account subsequent to the First Settlement Date made with respect to
the Unit.
(3) Organizational costs incurred by the Trust have been deferred and
will be amortized over a five year period. The Trust will reimburse the
Sponsors for actual organizational costs incurred. (4) Aggregate public
offering price (exclusive of interest) is computed on 5,000 Units on the basis
set forth above under "Public Offering-- Offering Price" in Part B. (5) A sales
charge of 4.95% computed on 5,000 Units. See "Public Offering--Offering Price"
in Part B for volume discounts on sales of 250 Units or more.
A-11
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<PAGE>
DUKE & COMPANY TAX FREE PORTFOLIOS - NATIONAL INSURED TRUST
Glickenhaus Special Situations Trust, Series 1
Portfolio as of Date of Deposit, October 28, 1996
<TABLE>
<CAPTION>
Redemption Features
Port- Coupon Ant.--Anticipated
folio Rating Principal Represented by Contracts to Rate and S.F.--Sinking Fund
No. (1) Amount (2) Purchase Securities (3) Maturity Opt.--Optional (4)
- ------------------------------------------- ------------------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 AAA $500,000 Illinois Educational Facilities 6.250% 05/15/17 @ 100 S.F.
Authority Revenue Bonds, 05/15/26 05/15/06 @ 102 Opt.
Midwestern University, Series B
(Connie Lee Insured)
2 AAA 500,000 Clark County Nevada, General 6.000 07/01/22 @ 100 S.F.
Obligation (Limited Tax) Las Vegas 07/01/26 07/01/06 @ 101 Opt.
Convention and Visitors Authority
Bonds (Additionally Secured with
Pledged Revenues) Series
September 1, 1996 (FSA Insured)
3 AAA 500,000 The Special Care Facilities 5.875 11/15/20 @ 100 S.F.
Financing Authority of the City of 11/15/26 11/15/06 @ 102 Opt.
Birmingham Baptist Medical Centers
Revenue Bonds, Series 1996-A
(Baptist Health System, Inc.),
(MBIA Insured)
4 AAA 200,000 The County of Cook, Illinois, 5.875 11/15/17 @ 100 S.F.
General Obligation Capital 11/15/22 11/15/06 @ 101 Opt.
Improvement Bonds, Series 1996
(FGIC Insured)
5 AAA 500,000 New Hampshire Higher Educational 5.875 01/01/14 @ 100 S.F.
and Health Facilities Authority 01/01/20 01/01/07 @ 102 Opt.
Revenue Bonds, Crotched Mountain
Rehabilitation Center Issue, Series
1996 (MBIA Insured)
6 AAA 500,000 New York State Medical Care 5.750 02/15/15 @ 100 Ant.
Facilities Finance Agency, 02/15/25 02/15/05 @ 102 Opt.
Montefiore Medical Center FHA-
Insured Mortgage Revenue Bonds,
1995 Series A (AMBAC Insured
Series)
7 AAA 500,000 City of Peru, Illinois Electric System 5.750 05/01/14 @ 100 S.F.
Revenue Bonds, Series 1993 (FGIC 05/01/25 05/01/03 @ 101 Opt.
Insured)
8 AAA 500,000 New York City Municipal Water 5.750 06/15/21 @ 100 S.F.
Finance Authority Water and Sewer 06/15/26 06/15/06 @ 101 Opt.
System Revenue Bonds, Fiscal 1996
Series B (MBIA Insured)
</TABLE>
Port- Yield Cost of
folio to Securities
No. Maturity to Trust(5)(6)
- -----------------------------------------------
1 5.801% $518,695.00
2 5.800 507,825.00
3 5.845 501,250.00
4 5.845 200,500.00
5 5.845 501,250.00
6 5.840 493,750.00
7 5.900 489,700.00
8 5.835 494,000.00
A-12
C/M: 10726.0002 388575.4
<PAGE>
DUKE & COMPANY TAX FREE PORTFOLIOS - NATIONAL INSURED TRUST
Glickenhaus Special Situations Trust, Series 1
Portfolio as of Date of Deposit, October 28, 1996
<TABLE>
<CAPTION>
Redemption Features
Port- Coupon Ant.--Anticipated
folio Rating Principal Represented by Contracts to Rate and S.F.--Sinking Fund
No. (1) Amount (2) Purchase Securities (3) Maturity Opt.--Optional (4)
- ------------------------------------------- ------------------------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
9 AAA $200,000 Public Utility District No. 2 of 5.625% 01/01/27 @ 100 S.F.
Grant County, Washington, Priest 01/01/31 01/01/06 @ 102 Opt.
Rapids Hydroelectric Development
Second Series Revenue Bonds, 1996
A (MBIA Insured)
10 AAA 300,000 Public Utility District No. 2 of 5.625 01/01/27 @ 100 S.F.
Grant County, Washington, 01/01/31 01/01/06 @ 102 Opt.
Wanapum Hydroelectric evelop-
ment Second Series Revenue Bonds,
1996 A (MBIA Insured)
11 AAA 475,000 Pennsylvania Intergovernmental 5.625 06/15/16 @ 100 S.F.
Cooperative Authority Special Tax 06/15/23 06/15/03 @ 100 Opt.
Revenue Bonds (City of Philadelphia
Funding Program) Series of 1993
(MBIA Insured)
12 AAA 325,000 Wisconsin Center District Senior 0.000 No Sinking Fund
Dedicated Tax Revenue Bonds 12/15/27 No Optional Call
Series 1996 A (MBIA Insured)
$5,000,000
==========
</TABLE>
Port- Yield Cost of
folio to Securities
No. Maturity to Trust(5)(6)
- -------------------------------------------
9 5.855% $193,218.00
10 5.855 289,827.00
11 5.848 460,750.00
12 5.727 56,062.50
$4,706,827.50
=============
A-13
C/M: 10726.0002 388575.4
<PAGE>
FOOTNOTES TO PORTFOLIO
The symbol "NR" denotes a non-rated issue of Bonds.
(1) All ratings are by Standard & Poor's except those identified by
an asterisk (*) are by Moody's and those identified by a double asterisk (**)
are by Fitch. A brief description of the rating symbols and their meanings is
set forth under "Description of Bond Ratings" in Part B.
(2) All Bonds are represented by contracts to purchase.
(3) All contracts to purchase the Bonds were entered into from
October 18, 1996 to October 25, 1996. All contracts are expected to be settled
prior to or on the First Settlement Date of the Trust which is expected to be
October 31, 1996. These bonds are expected to be settled (and interest begins
accruing on these bonds to the benefit of Unit holders of the Trust) within 30
days after the First Settlement Date.
(4) Unless otherwise indicated, there is shown under this heading the
year in which each issue of bonds initially is redeemable and the redemption
price for that year. Each such issue continues to be redeemable at declining
prices thereafter, but not below par. "S.F." indicates a sinking fund has been
or will be established with respect to an issue of Bonds. In addition, certain
Bonds in the Trust may be redeemed in whole or in part other than by operation
of the stated optional call or sinking fund provisions under certain unusual or
extraordinary circumstances specified in the instruments setting forth the
terms and provisions of such Bonds. A sinking fund is a reserve fund
accumulated over a period of time for retirement of debt. "Ant." indicates the
existence of anticipated redemptions at a price of 100%. Under certain
circumstances, these anticipated redemptions can be altered. A callable bond is
one which is subject to redemption or refunding prior to maturity at the option
of the issuer. A refunding is a method by which a bond issue is redeemed before
maturity by the proceeds of a new bond issue.
Redemption pursuant to call provisions generally will, and redemption
pursuant to sinking fund provisions may, occur at times when the redeemed Bonds
have an offering side valuation which represents a premium over par. To the
extent that the Bonds were deposited in the Trust at a price higher than the
price at which they are redeemed, this will represent a loss of capital when
compared with the original Public Offering Price of the Units. Conversely, to
the extent that the Bonds were acquired at a price lower than the redemption
price, this will represent an increase in capital when compared with the
original Public Offering Price of the Units. Monthly and semi-annual
distributions will generally be reduced by the amount of the income which would
otherwise have been paid with respect to redeemed Bonds and there will be
distributed to Unit holders the principal amount and any premium received on
such redemption. The estimated current return in this event may be affected by
such redemptions. The Federal tax effect on Unit holders of such redemptions
and resultant distributions is described in the section entitled "The
Trust--Tax Status" in Part B.
(5) See Note (1) to "Statement of Condition as of Date of Deposit"
regarding cost of Bonds. The offering prices are greater than the current bid
prices of the Bonds which is the basis on which Redemption Price per Unit is
determined for purposes of redemption of Units (see the first paragraphs under
"Public Offering--Offering Price" and "Rights of Unit
Holders--Redemption--Computation of Redemption Price Per Unit" in Part B). On
the business day prior to the Date of Deposit the aggregate bid side valuation
of the Securities in the Trust was lower than the aggregate offering side
valuation by .472%. Yield of Bonds was computed on the basis of offering prices
on the Date of Deposit.
Bonds identified as escrowed to maturity under "Portfolio" for the
Trust in this Part A are priced to the maturity date not the call date.
(6) Annual interest income to the Trust is $272,843.75.
A-14
C/M: 10726.0002 388575.4
<PAGE>
TAX EQUIVALENT YIELDS
FEDERAL TAX FREE VS. TAXABLE INCOME
This table show the approximate yields which taxable securities must
earn in various income brackets to produce, after Federal income tax, returns
equivalent to specified tax-exempt bond yields. The table is computed on the
theory that the taxpayer's highest bracket tax rate is applicable to the entire
amount of any increase or decrease in his taxable income resulting from a
switch from taxable to tax-exempt securities or vice versa. The table reflects
projected Federal income tax rates and the tax brackets for the 1996 taxable
year. Because the Federal rate brackets are subject to adjustment based on
changes in the Consumer Price Index, the taxable equivalent yields for
subsequent years may vary somewhat from those indicated in the table. Use this
table to find your tax bracket. Read across to determine the approximate
taxable yield you would need to equal a return free of Federal income tax.
<TABLE>
1996 Tax Year
- ---------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Taxable Income Bracket Tax Exempt Yield
Federal
Joint Return Single Return Tax Rate 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
Taxable Equivalent Yield
- ---------------------------------------------------------------------------------------------------------------------------------
<S><C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0-40,100 $ 0-24,000 15.00% 4.71% 5.29% 5.88% 6.47% 7.06% 7.65%
$ 40,101-96,900 $ 24,001-58,150 28.00% 5.56 6.25 6.94 7.64 8.33 9.03
$ 96,901-117,950 $ 58,151-117,950 31.00% 5.80 6.52 7.25 7.97 8.70 9.42
$117,951-147,700 $117,951-121,300 31.93% 5.88 6.61 7.35 8.08 8.81 9.55
$147,701-263,750 $121,301-263,750 37.08% 6.36 7.15 7.95 8.74 9.54 10.33
Over $263,750 Over $263,750 40.79% 6.76 7.60 8.44 9.29 10.13 10.98
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: This table reflects the following:
1. Taxable income, as reflected in the above table, equals Federal
adjusted gross income (AGI), less personal exemptions and itemized
deductions. However, certain itemized deductions are reduced by the
lesser of (i) three percent of the amount of the taxpayer's AGI over
$117,950, or (ii) 80 percent of the amount of such itemized deductions
otherwise allowable. The effect of the three percent phase out on all
itemized deductions and not just those deductions subject to the phase
out is reflected above in the combined Federal and state tax rates
through the use of higher effective Federal tax rates. In addition,
the effect of the 80 percent cap on overall itemized deductions is not
reflected on this table. Federal income tax rules also provide that
personal exemptions are phased out at a rate of two percent for each
$2,550 (or fraction thereof) of AGI in excess of $176,950 for married
taxpayers filing a joint tax return and $117,950 for single taxpayers.
The effect of the phase out of personal exemptions is not reflected in
the above table.
2. The taxable equivalent yield table does not incorporate the effect of
graduated rate structures in determining yields. Instead, the tax
rates used are the highest marginal tax rates applicable to the income
levels indicated within each bracket.
3. Interest earned on all municipal obligations may cause certain
investors to be subject to tax on a portion of their Social Security
and/or railroad retirement benefits. The effect of this provision is
not included in the above table.
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DUKE & COMPANY TAX FREE PORTFOLIOS -
NATIONAL INSURED TRUST
Glickenhaus Special Situations Trust, Series 1
Prospectus Part B
Part B of this Prospectus may not be Distributed Unless Accompanied by Part A
THE TRUST
Organization
Glickenhaus Special Situations Trust (the "Fund"), Series 1 consisting
of the underlying unit investment trust designated Duke & Company Tax Free
Portfolios - National Insured Trust (the "Trust") was created under the laws of
the State of New York by a Trust Indenture and Agreement* (the "Trust
Agreement"), dated the Date of Deposit, among Glickenhaus & Co. as sponsor (the
"Sponsor"), The Bank of New York, as trustee (the "Trustee"), and Muller Data
Corporation, as evaluator (the "Evaluator").
On the date of this Prospectus each Unit represented the fractional
undivided interest in the Trust set forth under "Summary of Essential Financial
Information" in Part A. Thereafter, if any Units of the Trust are redeemed by
the Trustee, the fractional undivided interest in the Trust represented by each
unredeemed Unit will increase, although the actual interest in the Trust
represented by each such Unit will remain essentially the same. Units will
remain outstanding until redeemed upon tender to the Trustee by any Unit
holder, which may include the Sponsor, or until the termination of the Trust
Agreement for the related Trust. See "Rights of Unit Holders--Redemption" in
this Part B.
Objectives
The objective of the Fund is to obtain tax-exempt interest income
through an investment in a fixed portfolio consisting primarily of various
intermediate or long-term municipal bonds. No assurance can be given that the
Fund's objectives will be achieved as these objectives are subject to the
continuing ability of the respective issuers of the bonds to meet their
obligations. In addition, an investment in such portfolio can be affected by
fluctuations in interest rates and general market conditions.
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* References in this Prospectus to the Trust Agreement are qualified in their
entirety by the Trust Agreement which is incorporated herein by reference.
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Portfolio
The portfolio of the Trust consists of the Bonds described in "The
Portfolio" in Part A and are represented by the Sponsor's contracts to
purchase, which are expected to be settled by the date set forth in Part A. The
Trust may contain Bonds which have been purchased on a when, as, and if issued
basis. Accordingly, the delivery of such Bonds may be delayed or may not occur.
(See "The Portfolio" in Part A.) Interest on these Bonds begins accruing to the
benefit of Unit holders on their respective dates of delivery. Unit holders
will be "at risk" with respect to these Bonds (i.e., may derive either gain or
loss from fluctuations in the offering side evaluation of the Bonds) from the
date they commit for Units. (See "The Portfolio" in Part A.) For a discussion
of the Sponsor's obligations in the event of the failure of any contract for
the purchase of any of the Bonds and limited right to substitute other bonds to
replace any failed contract, see "Substitution of Bonds" in this Part B. On the
Date of Deposit, all of the Bonds in the Trust were rated "AAA" by Standard &
Poor's, "Aaa" by Moody's or "AAA" by Fitch because each Bond was insured by a
municipal bond guaranty insurance policy (see "Insurance On the Bonds" in this
Part B).
In view of the Fund's objectives, the following factors, among others,
were considered in selecting the Bonds: (1) All the Bonds are obligations of
states and counties, municipalities, authorities or political subdivisions
thereof or issued by certain United States territories or possessions,
including Puerto Rico, and their public authorities so that the interest on
them will be exempt from Federal income tax under existing law; (2) the Bonds
are varied as to purpose of issue; (3) in the opinion of the Sponsor, the Bonds
are fairly valued relative to other bonds of comparable quality and maturity;
(4) whether such Bonds are rated AAA by a major bond rating agency; and (5) the
quality of the Bonds and whether such Bonds are insured. Subsequent to the Date
of Deposit, a Bond may cease to be rated or its rating may be reduced. Neither
event requires an elimination of such Bond from the portfolio, but such an
event may be considered in the Sponsor's determination to direct the Trustee to
dispose of the Bonds. See "Sponsor--Responsibility" in Part B. See "The
Trust--Portfolio--General Considerations" in this Part B.
General Considerations
Because certain of the Bonds may from time to time under certain
circumstances be sold or redeemed or will mature in accordance with their terms
and the proceeds from such events will be distributed to Unit holders and will
not be reinvested, no assurance can be given that the Trust will retain for any
length of time its present size and composition. Except as described in
footnotes to "Summary of Essential Financial Information" for the Trust
interest accrues to the benefit of Unit holders commencing with the expected
date of settlement for purchase of the Units. If a Replacement Bond is not
acquired, accrued interest (at the coupon rate of the Failed Bonds or earned
original issue discount in the case of original issue discount and zero coupon
Bonds) will be paid to Unit holders (from the Deposit Date to the date the
Trustee is notified of the failure of the Sponsors to purchase a Replacement
Bond). All such interest paid to Unit holders which accrued after the date of
settlement for a purchase of Units will be paid by the Sponsor and accordingly
will not be treated as tax-exempt income. In the event a Replacement Bond is
not acquired by the Trust, the net annual interest income per Unit for the
Trust would be reduced and the estimated current return might be lowered.
Neither the Sponsor nor the Trustee shall be liable in any way for any
default, failure or defect in any Security. In the event that any contract for
the purchase of Securities in the Trust fails and no Replacement Bond as
hereinafter defined is acquired, the Sponsor shall refund to all Unit holders
the sales charge attributable to such failed contract, and the principal and
accrued interest (at the coupon rate of the relevant Security or earned
original issue discount in the case of original issue discount and zero coupon
Bonds to the date the Sponsor is notified of the failure) which are
attributable to such failed contract, shall be distributed at the next Monthly
Payment Date which is more than
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30 days after the failure to purchase Replacement Bonds. The portion of such
interest paid to a Unit holder which accrued after the expected date of
settlement for purchase of his Units will be paid by the Sponsor and
accordingly will not be treated as tax-exempt income.
The following paragraphs discuss the characteristics of the Bonds in
the Trust and of certain types of issuers of the Bonds in the Trust. These
paragraphs discuss, among other things, certain circumstances which may
adversely affect the ability of such issuers to make payment of principal of
and interest on Bonds held in the portfolio of the Trust or which may adversely
affect the ratings of such Bonds. An investment in Units of the Trust should be
made with an understanding of the risks that such an investment may entail,
certain of which are described below. Unit holders may obtain additional
information concerning a particular Bond by requesting an official statement
from the issuer of such Bond.
General Obligation Bonds
General obligation bonds are secured by the issuer's pledge of its
faith, credit and taxing power for the payment of principal and interest. The
taxing power of any governmental entity may be limited, however, by provisions
of state constitutions or laws, and an entity's credit will depend on many
factors, including potential erosion of the tax base due to population
declines, natural disasters, declines in the state's industrial base or
inability to attract new industries; economic limits on the ability to tax
without eroding the tax base; state legislative proposals or voter initiatives
to limit ad valorem real property taxes; and the extent to which the entity
relies on Federal or state aid, access to capital markets or other factors
beyond the state or entity's control.
Appropriations Bonds
Many state or local governmental entities enter into lease purchase
obligations as a means for financing the acquisition of capital projects (e.g.,
buildings or equipment, among other things). Such obligations are often made
subject to annual appropriations. Certain Bonds in the Trust may be Bonds that
are, in whole or in part, subject to and dependent upon (i) the governmental
entity making appropriations from time to time or (ii) the continued existence
of special temporary taxes which require legislative action for their
reimposition. The availability of any appropriation is subject to the
willingness of the governmental entity to continue to make such special
appropriations or to reimpose such special taxes. The obligation to make lease
payments exists only to the extent of the monies available to the governmental
entity therefor, and no liability is incurred by the governmental entity beyond
the monies so appropriated. Subject to the foregoing, once an annual
appropriation is made, the governmental entity's obligation to make lease
rental payments is absolute and unconditional without setoff or counterclaim,
regardless of contingencies, whether or not a given project is completed or
used by the governmental entity and notwithstanding any circumstances or
occurrences which might arise. In the event of non-appropriation,
certificateholders' or bondowners' sole remedy (absent credit enhancement)
generally is limited to repossession of the collateral for resale or releasing,
and the obligation of the governmental lessee is not backed by a pledge of the
general credit of the governmental lessee. In the event of non-appropriation,
the Sponsors may instruct the Trustee to sell such Bonds.
Moral Obligation Bonds. Certain of the Bonds in the Trust may be
secured by pledged revenues and additionally by the so-called "moral
obligations" of a State or a local governmental body. Should the pledged
revenues prove insufficient, the payment of such Bonds is not a legal
obligation of a State or local government, and is subject to its willingness to
appropriate funds therefor.
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Revenue Bonds
Mortgage Revenue Bonds. Certain Bonds may be "mortgage revenue bonds."
Under the Internal Revenue Code of 1986, as amended (the "Code"), (and under
similar provisions of the prior tax law) "mortgage revenue bonds" are
obligations the proceeds of which are used to finance owner-occupied residences
under programs which meet numerous statutory requirements relating to
residency, ownership, purchase price and target area requirements, ceiling
amounts for state and local issuers, arbitrage restrictions, and certain
information reporting, certification, and public hearing requirements. There
can be no assurance that additional federal legislation will not be introduced
or that existing legislation will not be further amended, revised, or enacted
after delivery of these Bonds or that certain required future actions will be
taken by the issuing governmental authorities, which action or failure to act
could cause interest on the Bonds to be subject to federal income tax. If any
portion of the Bonds proceeds are not committed for the purpose of the issue,
Bonds in such amount could be subject to earlier mandatory redemption at par,
including issues of Zero Coupon Bonds (see "Original Issue Discount and Zero
Coupon Bonds").
Housing Bonds. Some of the aggregate principal amount of Bonds of the
Trust may consist of obligations of state and local housing authorities whose
revenues are primarily derived from mortgage loans to housing projects for low
to moderate income families. Since such obligations are not general obligations
of a particular state or municipality and are generally payable primarily or
solely from rents and other fees, adverse economic developments including
failure or inability to increase rentals, fluctuations of interest rates and
increasing construction and operating costs may reduce revenues available to
pay existing obligations.
The housing bonds in the Trust, despite their optional redemption
provisions which generally do not take effect until ten years after the
original issuance dates of such Bonds (often referred to as "ten year call
protection"), do contain provisions which require the issuer to redeem such
obligations at par from unused proceeds of the issue within a stated period. In
recent periods of declining interest rates there have been increased
redemptions of housing bonds pursuant to such redemption provisions. In
addition, the housing bonds in the Trust are also subject to mandatory
redemption in part at par at any time that voluntary or involuntary prepayments
of principal on the underlying mortgages are made to the trustee for such Bonds
or that the mortgages are sold by the bond issuer. Prepayments of principal
tend to be greater in periods of declining interest rates; it is possible that
such prepayments could be sufficient to cause a housing bond to be redeemed
substantially prior to its stated maturity date, earliest call date or sinking
fund redemption date.
Public Power Revenue Bonds. General problems of the electric utility
industry include difficulty in financing large construction programs during an
inflationary period; restrictions on operations and increased costs and delays
attributable to environmental considerations; the difficulty of the capital
markets in absorbing utility debt and equity securities; the availability of
fuel for electric generation at reasonable prices, including among other
considerations the potential rise in fuel costs and the costs associated with
conversion to alternate fuel sources such as coal; technical cost factors and
other problems associated with construction, licensing, regulation and
operation of nuclear facilities for electric generation, including among other
considerations the problems associated with the use of radioactive materials
and the disposal of radioactive waste; and the effects of energy conservation.
Certain Bonds may have been issued in connection with the financing of nuclear
generating facilities. In view of recent developments in connection with such
facilities, legislative and administrative actions have been taken and proposed
relating to the development and operation of nuclear generating facilities. The
Sponsor is unable to predict whether any such actions or whether any such
proposals or litigation, if enacted or instituted, will have an adverse impact
on the revenues available to pay the debt service on the Bonds in the portfolio
issued to finance such nuclear projects.
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Each of the problems referred to above could adversely affect the
ability of the issuers of public power revenue bonds to make payments of
principal of and/or interest on such bonds. Certain municipal utilities or
agencies may have entered into contractual arrangements with investor-owned
utilities and large industrial users and consequently may be dependent in
varying degrees on the performance of such contracts for payment of bond debt
service.
Health Care Revenue Bonds. Some of the aggregate principal amount of
Bonds of the Trust may consist of hospital revenue bonds. Ratings of hospital
bonds are often initially based on feasibility studies which contain
projections of occupancy levels, revenues and expenses. Actual experience may
vary considerably from such projections. A hospital's gross receipts and net
income will be affected by future events and conditions including, among other
things, demand for hospital services and the ability of the hospital to provide
them, physicians' confidence in hospital management capability, economic
developments in the service area, competition, actions by insurers and
governmental agencies and the increased cost and possible unavailability of
malpractice insurance. Additionally, a major portion of hospital revenue
typically is derived from federal or state programs such as Medicare and
Medicaid which have been revised substantially in recent years and which are
undergoing further review at the state and federal level.
Proposals for significant changes in the health care system and the
present programs for third party payment of health care costs are under
consideration in Congress and many states. Future legislation or changes in the
areas noted above, among other things, would affect all hospitals to varying
degrees and, accordingly, any adverse change in these areas may affect the
ability of such issuers to make payment of principal and interest on such
bonds.
Higher Education Revenue Bonds. Higher education revenue bonds include
debt of state and private colleges, universities and systems, and parental and
student loan obligations. The ability of universities and colleges to meet
their obligations is dependent upon various factors, including the revenues,
costs and enrollment levels of the institutions. In addition, their ability may
be affected by declines in Federal, state and alumni financial support,
fluctuations in interest rates and construction costs, increased maintenance
and energy costs, failure or inability to raise tuition or room charges and
adverse results of endowment fund investments.
Pollution Control Facility Revenue Bonds. Bonds in the pollution
control facilities category include securities issued on behalf of a private
corporation,* including utilities, to provide facilities for the treatment of
air, water and solid waste pollution. Repayment of these bonds is dependent
upon income from the specific pollution control facility and/or the financial
condition of the project corporation.
Other Utility Revenue Bonds. Bonds in this category include securities
issued to finance natural gas supply, distribution and transmission facilities,
public water supply, treatment and distribution facilities, and sewage
collection, treatment and disposal facilities. Repayment of these bonds is
dependent primarily on revenues derived from the billing of residential,
commercial and industrial customers for utility services, as well as, in some
instances, connection fees and hook-up charges. Such utility revenue bonds may
be adversely affected by the lack of availability of Federal and state grants
and by decisions of Federal and state regulatory bodies and courts.
Solid Waste and Resource Recovery Revenue Bonds. Bonds in this category include
securities issued to finance facilities for removal and disposal of solid
municipal waste. Repayment of these bonds is dependent on factors which
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* For purposes of the description of users of facilities, all
references to "corporations" shall be deemed to include any other
nongovernmental person or entity.
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may include revenues from appropriations from a governmental entity, the
financial condition of the private project corporation and revenues derived
from the collection of charges for disposal of solid waste. Repayment of
resource recovery bonds may also be dependent to various degrees on revenues
from the sale of electric energy or steam. Bonds in this category may be
subject to mandatory redemption in the event of project non-completion, if the
project is rendered uneconomical or if it is considered an environmental
hazard.
Transportation Revenue Bonds. Bonds in this category include bonds
issued for airport facilities, bridges, turnpikes, port authorities, railroad
systems, or mass transit systems. Generally, airport facility revenue bonds are
payable from and secured by the revenues derived from the ownership and
operation of a particular airport. Payment on other transportation bonds is
often dependent primarily or solely on revenues from financed facilities,
including user fees, charges, tolls and rents. Such revenues may be adversely
affected by increased construction and maintenance costs or taxes, decreased
use, competition from alternative facilities, scarcity of fuel, reduction or
loss of rents or the impact of environmental considerations. Other
transportation bonds may be dependent primarily or solely on Federal, state or
local assistance including motor fuel and motor vehicle taxes, fees, and
licenses and, therefore, may be subject to fluctuations in such assistance.
Private Activity Bonds. The portfolio of the Trust may contain other
Bonds that are "private activity bonds," which would be primarily of two types:
(1) Bonds for a publicly owned facility that a private entity may have a right
to use or manage to some degree, such as an airport, seaport facility or water
system and (2) Bonds for facilities deemed owned or beneficially owned by a
private entity but which were financed with tax-exempt bonds of a public
issuer, such as a manufacturing facility or a pollution control facility. In
the case of the first type, bonds are generally payable from a designated
source of revenues derived from the facility and may further receive the
benefit of the legal or moral obligation of one or more political subdivisions
or taxing jurisdictions. In most cases of project financing of the first type,
receipts or revenues of the Issuer are derived from the project or the operator
or from the unexpended proceeds of the bonds. Such revenues include user fees,
service charges, rental and lease payments, and mortgage and other loan
payments.
The second type of issue will generally finance projects which are
owned by or for the benefit of, and are operated by, corporate entities.
Ordinarily, such private activity bonds are not general obligations of
governmental entities and are not backed by the taxing power of such entities,
and are solely dependent upon the creditworthiness of the corporate user of the
project or corporate guarantor.
The private activity bonds in the Trust have generally been issued
under bond resolutions, agreements or trust indentures pursuant to which the
revenues and receipts payable under the issuer's arrangements with the users or
the corporate operator of a particular project have been assigned and pledged
to the holders of the private activity bonds. In certain cases a mortgage on
the underlying project has been assigned to the holders of the private activity
bonds or a trustee as additional security. In addition, private activity bonds
are frequently directly guaranteed by the corporate operator of the project or
by another affiliated company.
Special Tax Revenue Bonds. Bonds in this category are bonds secured
primarily or solely by receipt of certain state or local taxes, including sales
and use taxes or excise taxes. Consequently, such bonds may be subject to
fluctuations in the collection of such taxes. Such bonds do not include tax
increment bonds or special assessment bonds.
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Other Revenue Bonds. Certain of the Bonds in the Trust may be revenue
bonds which are payable from and secured primarily or solely by revenues from
the ownership and operation of particular facilities, such as correctional
facilities, parking facilities, convention centers, arenas, museums and other
facilities owned or used by a charitable entity. Payment on bonds related to
such facilities is, therefore, primarily or solely dependent on revenues from
such projects, including user fees, charges and rents. Such revenues may be
affected adversely by increased construction and maintenance costs or taxes,
decreased use, competition from alternative facilities, reduction or loss of
rents or the impact of environmental considerations.
Certain of the Bonds in the Trust are secured by direct obligations of
the U.S. Government, or in some cases, obligations guaranteed by the U.S.
Government, placed in an escrow account maintained by an independent trustee
until maturity or a predetermined redemption date. In a few isolated instances
to date, bonds which were thought to be escrowed to maturity have been called
for redemption prior to maturity.
Original Issue Discount Bonds and Zero Coupon Bonds
Certain of the Bonds in the Trust may be original issue discount bonds
and/or zero coupon bonds. Original issue discount bonds are bonds that were
originally issued at less than the market interest rate. Zero coupon bonds are
original issue discount bonds that do not provide for the payment of current
interest. For Federal income tax purposes, original issue discount on such
bonds must be amortized over the term of such bonds. On sale or redemption, the
difference between the (i) the amount realized (other than amounts treated as
tax-exempt income as described below) and (ii) the tax basis of such bonds
(properly adjusted, in the circumstances described below, for amortization of
original issue discount) will be treated as taxable income or loss. See "The
Trust--Tax Status" in this Part B. The Code requires holders of tax-exempt
obligations issued with original issue discount, such as the Trust, to accrue
tax-exempt original issue discount by using the constant interest method
provided for the holders of taxable obligations. In addition, the Code provides
that the basis of a tax-exempt obligation is increased by the amount of accrued
tax-exempt original issue discount. These provisions are applicable to
obligations issued after September 3, 1982 and acquired after March 1, 1984.
Each Trust's tax basis in a Bond is increased by any accrued original issue
discount as is a Unit holder's tax basis in his Units. For Bonds issued after
June 9, 1980 that are redeemed prior to maturity, the difference between the
Trust's basis, as adjusted, and the amount received will be taxable gain or
loss to the Unit holders. All or a portion of any gain may be taxable as
ordinary income.
There can be no assurance that additional Federal legislation will not
be enacted or that existing legislation will not be amended hereafter with the
effect that all or a portion of interest on bonds becomes subject to Federal
income taxation. If the interest on the Bonds in the Trust should ultimately be
deemed to be taxable, the Trustee may sell them and, since they would be sold
as taxable securities, it is expected that they would have to be sold at a
substantial discount from current market prices.
Bonds Subject to Sinking Fund Provisions
Most of the Bonds in the Trust are subject to redemption prior to
their stated maturity date pursuant to sinking fund or call provisions. A
sinking fund is a reserve fund accumulated over a period of time for retirement
of debt. Sinking fund provisions are designed to redeem a significant portion
of an issue gradually over the life of the issue. Obligations to be redeemed
are generally chosen by lot. On the Date of Deposit, the offering valuations of
some of the Bonds in the Trust may have been at a premium and subject to
retirement or refunding within ten years of the Date of Deposit. A callable
debt obligation is one which is subject to redemption prior to maturity at the
option of the
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issuer. To the extent that obligations are deposited in the Trust at a price
higher than their par value, such redemption at par would result in a loss of
capital to a purchaser of Units at their original public offering price. The
estimated current return of the Units might also be adversely affected if the
return on the retired Bonds is greater than the average return on the Bonds in
the Trust. In general, call provisions are more likely to be exercised when the
offering side valuation is at a premium over par than when it is at a discount
from par. See "The Portfolio" in Part A for a list of original issue discount
and/or zero coupon bonds and for a breakdown of the percentage of Bonds in the
Trust with offering side valuations at a premium, discount or at par. See also
"Estimated Current Return and Estimated Long Term Return" in Part A. The
portfolio contains a listing of the sinking fund and call provisions, if any,
with respect to each of the Bonds therein.
Substitution of Bonds
In the event of a failure to deliver any Bond that has been purchased
for the Trust under a contract, including those Bonds purchased on a "when, as
and if issued" basis ("Failed Bonds"), the Sponsor is authorized to purchase
other bonds ("Replacement Bonds") which the Trustee shall pay for out of funds
held in connection with the Failed Bonds and to accept delivery of the
Replacement Bonds to make up the original corpus of the Trust. The Replacement
Bonds must be purchased within 20 days after delivery of the notice of the
failed contract, and the purchase price (exclusive of accrued interest) may not
exceed the principal attributable to the Failed Bonds. The Replacement Bonds
(i) must be tax-exempt bonds issued by states or counties, municipalities,
authorities or political subdivisions thereof or issued by certain United
States territories or possessions or their public authorities as described in
the first paragraph under "Portfolio," (ii) must have a fixed maturity date not
exceeding the maturity date of the Failed Bonds and not less than ten years
after the date of purchase, (iii) shall be purchased at a price that results in
a yield to maturity and a current return, in each case as of the Date of
Deposit, at least equal to the yield to maturity and the current return of the
Failed Bonds, (iv) shall not be "when issued" bonds, (v) must be insured by an
Insurance Company and have the benefit of such insurance under terms equivalent
to the insurance of the Insurance Company with respect to the Failed Bonds, and
(vi) must be rated at least equal to the Failed Bonds. Whenever a Replacement
Bond has been acquired for the Trust, the Trustee shall, within five days
thereafter, notify all Unit holders of the Trust of the acquisition of the
Replacement Bond and shall, on the next monthly Payment Date which is more than
30 days thereafter, make a pro rata distribution of the amount, if any, by
which the cost to the Trust of the Failed Bond exceeded the cost of the
Replacement Bond. Once the original corpus of the Trust is acquired, the
Trustee will have no power to vary the investment of the Trust, i.e., the
Trustee will have no managerial power to take advantage of market variations to
improve a Unit holder's investment.
If the right of limited substitution described in the preceding
paragraph shall not be utilized to acquire Replacement Bonds in the event of a
failed contract, the Sponsor will refund the sales charge attributable to such
Failed Bonds to all Unit holders of the Trust, and distribute the principal and
accrued interest (at the coupon rate of such Failed Bond, or earned original
issue discount in the case of zero coupon bonds, from the Deposit Date to the
date the Sponsor notifies the Trustee that it will not purchase Replacement
Bonds) attributable to such Failed Bonds on the next monthly Payment Date which
is more than 30 days thereafter. In the event a Replacement Bond is not
acquired by the Trust, the Estimated Net Annual Interest Income per Unit for
the Trust would be reduced and the Estimated Current Return thereon might be
lowered.
Other Matters
An amendment to the Federal Bankruptcy Act relating to the adjustment
of indebtedness owed by any political subdivision or public agency or
instrumentality of any state, including municipalities, became effective in
1979. Among
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other things, this amendment facilitates the use of proceedings under the
Federal Bankruptcy Act by any such entity to restructure or otherwise alter the
terms of its obligations, including those of the type comprising the Trust's
portfolio. The Sponsor is unable to predict at this time what effect, if any,
this legislation will have on the Trust.
To the best knowledge of the Sponsor, there is no litigation pending
as of the Date of Deposit in respect of any Securities which might reasonably
be expected to have a material adverse effect upon the Trust. At any time after
the Date of Deposit, litigation may be initiated on a variety of grounds with
respect to Securities in the Trust. Such litigation as, for example, suits
challenging the issuance of pollution control revenue bonds under recently
enacted environmental protection statutes, may affect the validity of such
Securities or the tax-free nature of the interest thereon. While the outcome of
such litigation can never be entirely predicted with certainty, bond counsel
has given or will give opinions to the issuing authorities of each Bond on the
date of issuance to the effect that such Securities have been validly issued
and that the interest thereon is exempt from regular Federal income tax. In
addition, other litigation or other factors may arise from time to time which
potentially may impair the ability of issuers to meet obligations undertaken
with respect to Securities.
PUBLIC OFFERING
Offering Price
The price of the Units of the Trust as of the Date of Deposit was
determined by adding to the Evaluator's determination of the aggregate offering
price of the Securities per Unit a sales charge of 4.95% thereof equal to
5.208% of the Public Offering Price. During the initial public offering period,
sales of at least 250 Units will be entitled to a volume discount from the
Public Offering Price as described below. For purchases settling after the
First Settlement Date, a proportionate share of accrued and undistributed
interest on the Securities at the date of delivery of the Units to the
purchaser is also added to the Public Offering Price.
During the initial offering period the aggregate offering price of the
Securities in the Trust is determined by the Evaluator (1) on the basis of
current offering prices for the Securities,* (2) if offering prices are not
available for any Securities, on the basis of current offering prices for
comparable securities, (3) by making an appraisal of the value of the
Securities on the basis of offering prices in the market, or (4) by any
combination of the above. Such determinations are made each business day during
the initial public offering period as of the Evaluation Time set forth in the
"Summary of Essential Financial Information" in Part A, effective for all sales
made subsequent to the last preceding determination. For information relating
to the calculation of the Redemption Price, which is based upon the aggregate
bid price of the underlying Securities and which may be expected to be less
than the aggregate offering price, see "Rights of Unit Holders--Redemption" in
Part B. See also "Rights of Unit Holders--Certificates" in Part B for
information relating to redemption of Units.
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* With respect to the evaluation of Bonds during the initial syndicate
offering period for such Bonds, the "current offering price," as determined
by the Evaluator, will normally be equal to the syndicate offering price as
of the Evaluation Time, unless the Evaluator determines that a material
event has occurred which it believes may result in the syndicate offering
price not accurately reflecting the market value of such Bonds, in which
case the Evaluator, in making its determination with respect to such Bonds,
will consider not only the syndicate offering price but also the factors
described in (2) and (3) herein.
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The secondary market Public Offering Price of the Units of the Trust
is based on the aggregate bid price of the Bonds in the Trust (as determined by
the Evaluator) plus a sales charge determined in accordance with the schedule
set forth below, which is based upon the maturities of each Bond in the Trust.
The Sponsor has implemented this variable format as a more equitable method of
assessing the sales charge for secondary market purchases. For purposes of
computation, Bonds will be deemed to mature on their expressed maturity dates
unless the Evaluator evaluates the price of the Bonds to a different date such
as a call date or a mandatory tender date, in which case the maturity will be
deemed to be such other date.
This method of sales charge computation will apply different sales
charge rates to each Bond in the Trust based upon the maturity of each such
Bond in accordance with the following schedule:
<TABLE>
<CAPTION>
Secondary Market
Period Sales Change
-------------------------------------------------------
Percentage of Percentage of
Public Offering Net Amount
Per Bond Price Invested
------------------------ -------------------------
<S> <C> <C>
Years to Maturity Per Bond
0 Months to 2 years.................................. 1.0% 1.010%
2 but less than 3.................................... 2.0% 2.091%
3 but less than 4.................................... 3.0% 3.093%
4 but less than 8.................................... 4.0% 4.167%
8 but less than 12................................... 5.0% 5.363%
12 but less than 15.................................. 5.5% 5.820%
15 or more........................................... 5.9% 6.270%
</TABLE>
A minimum sales charge of 1.0% of the Public Offering Price will be
applied to all secondary market unit purchases.
During the initial public offering period, purchasers of 250 Units or
more will be entitled to a volume discount from the Public Offering Price as
set forth in the table below:
<TABLE>
<CAPTION>
Discount From
Public Offering
Number of Units Price Per Unit
--------------- ----------------
<S> <C>
250-499......................................... $2.50
500-999......................................... 7.50
1,000-1,999..................................... 15.00
2,000 or more................................... 20.00
</TABLE>
B-10
388740.3
<PAGE>
Except as discussed under "Distribution of Units" below, the above
volume discount will be the responsibility of the Selling Underwriter or dealer
and will apply on all purchases at any one time by the same person of Units in
the Trust in the amounts stated. Units held in the name of the spouse of the
purchaser or in the name of a child of the purchaser under 21 years of age are
deemed for the purposes hereof to be registered in the name of the purchaser.
The graduated sales charges are also applicable to a trustee or other fiduciary
purchasing Units for a single trust estate or single fiduciary account.
Certain commercial banks may be making Units of the Trust available to
their customers on an agency basis. A portion of the sales charge discussed
above is retained by or remitted to such banks. Under the Glass-Steagall Act,
banks are prohibited from underwriting Trust Units; however, the Glass-Steagall
Act does permit certain agency transactions, and banking regulators have not
indicated that these particular agency transactions are not permitted under
such Act.
Market for Units
Although it is not obligated to do so, the Sponsor intends to maintain
a market for the Units of the Trust and continuously to offer to purchase Units
of the Trust during the initial offering period at prices based upon the
aggregate offering price of the Securities in the Trust; and thereafter at
prices based on the aggregate bid price of the related Securities. After the
initial offering period the Sponsor's Repurchase Price shall be not less than
the Redemption Price plus accrued interest through the expected date of
settlement. (See "Rights of Unit Holders--Redemption-- Computation of
Redemption Price per Unit" in Part B). There is no sales charge incurred when a
Unit holder sells Units back to the Sponsors. Any Units repurchased by the
Sponsor may be reoffered to the public by the Sponsor at the Public Offering
Price at the time, plus accrued interest.
If the supply of Units of any Series exceeds demand, or for some other
business reason, the Sponsor may discontinue purchases of Units of such Series
at prices based on the aggregate bid price of the Securities. The Sponsor does
not in any way guarantee the enforceability, marketability, or price of any
Security in the portfolio or of the Units of the Trust. In the event that a
market is not maintained for the Units of the Trust, a Unit holder desiring to
dispose of his Units may be able to do so only by tendering such Units to the
Trustee for redemption at the Redemption Price, which is based upon the
aggregate bid price of the underlying Securities. The aggregate bid price of
the Securities in the Trust may be expected to be less than the aggregate
offering price. If a Unit holder wishes to dispose of his Units, he should
inquire of the Sponsor as to current market prices prior to making a tender for
redemption to the Trustee.
See "Rights of Unit Holders--Redemption" and "Sponsors" in Part B.
Distribution of Units
It is the Underwriter's intention to qualify Units of the Trust for
sale in certain of the states and to effect a public distribution of the Units
solely through its own organization. Sales will be made only with respect to
whole Units, and the Sponsor reserves the right to reject, in whole or in part,
any order for the purchase of Units.
Sponsor's and Underwriter's Profits
As set forth under "Public Offering--Offering Price" in Part B, the
Underwriter will receive gross commissions equal to the specified percentages
of the Public Offering Price of the Units of the Trust. The Sponsor will
receive from the Underwriter the excess of such gross sales commission over $40
per Unit.
B-11
388740.3
<PAGE>
In addition, the Sponsor realizes a profit or sustain a loss, as the
case may be, in the amount of any difference between the cost of the Securities
to the Trust (which is based on the aggregate offering price of the Securities
on the Date of Deposit) and the purchase price of such Securities to the
Sponsor (which is the cost of such Securities at the time they were acquired
for the account of the Trust). See "Summary of Essential Financial Information"
in Part A. In addition, the Sponsor may realize profits or sustain losses with
respect to Bonds deposited in the Trust which were acquired from the Sponsor or
from underwriting syndicates of which it was a member. During the initial
offering period, the Underwriters also may realize profits or sustain losses as
a result of fluctuations after the Date of Deposit in the offering prices of
the Securities and hence in the Public Offering Price received by the
Underwriters for Units. Cash, if any, made available to the Sponsor prior to
the settlement date for the purchase of Units of the Trust may be used in the
Sponsor's businesses, subject to the limitations of the Securities Exchange Act
of 1934 and may be of benefit to the Sponsor.
The Sponsor may have participated as underwriter or as manager or
member of underwriting syndicates from which some of the aggregate principal
amount of the Bonds were acquired for the Trust in the amounts set forth in
Part A. The Sponsor has not purchased any of the Securities in the Trust from
their managed accounts.
In maintaining a market for the Units of the Trust (see "Market for
Units") the Sponsor and the Underwriter will also realize profits or sustain
losses in the amount of any difference between the price at which they buy
Units and the price at which they resell or redeem such Units and to the extent
they earn sales charges on resales.
ESTIMATED CURRENT RETURN AND ESTIMATED LONG-TERM RETURN TO UNIT HOLDERS
Units of the Trust are offered on a "dollar price" basis. In contrast,
tax-exempt bonds customarily are offered on a "yield price" basis. Therefore,
the rate of return on each Unit is measured in terms of both Estimated Current
Return and Estimated Long-Term Return. Estimated Current Return based on the
Public Offering Price per Unit and Estimated Long-Term Return per Unit, each as
of the business day prior to the Date of Deposit, is set forth under "Summary
of Essential Financial Information " in Part A. Information regarding the
estimated monthly distributions of principal and interest to Unit holders of
the Trust is available from the Sponsor on request.
Estimated Current Return is computed by dividing the Estimated Net
Annual Interest Income per Unit by the Public Offering Price. Estimated Net
Interest Income per Unit will vary with changes in fees and expenses of the
Trustee and the Evaluator and with principal prepayment, redemption, maturity,
exchange or sale of Bonds. The Public Offering Price per Unit will vary with
changes in the offering price of the Bonds. Estimated Current Return takes into
account only the interest payable on the Bonds and does not involve a
computation of yield to maturity or to an earlier redemption date nor does it
reflect any amortization of premium or discount from par value in the Bond's
purchase price. Moreover, because interest rates on Bonds purchased at a
premium are generally higher than current interest rates on newly issued bonds
of a similar type with comparable ratings, the Estimated Current Return per
Unit may be affected adversely if such Bonds are redeemed prior to their
maturity. Therefore, there is no assurance that the Estimated Current Return as
set forth under "Summary of Essential Financial Information" in Part A will be
realized in the future.
Estimated Long-Term Return is calculated using a formula that (i)
takes into consideration, and determines and factors in the relative weightings
of, the market values, yields (taking into account the amortization of premiums
and the accretion of discounts) and estimated retirements of all the Bonds in
the Trust and (ii) takes into account the
B-12
388740.3
<PAGE>
expenses and sales charge associated with each Unit of the Trust. The Estimated
Long-Term Return assumes that each Bond is retired on its pricing life date
(i.e., that date which produces the lowest dollar price when yield price
calculations are done for each optional call date and the maturity date of a
callable security). If the Bond is retired on any optional call or maturity
date other than the pricing life date, the yield to the holder of that Bond
will be greater than the initial quoted yield. Since the market values and
estimated retirements of the Bonds, the expenses of the Trust and the Net
Annual Interest Income and Public Offering Price per Unit may change, there is
no assurance that the Estimated Long-Term Return as set forth under "Summary of
Essential Financial Information" in Part A will be realized in the future.
INSURANCE ON THE BONDS
Each of the Bonds in the Trust is insured by a municipal bond guaranty
insurance policy obtained by the issuer, underwriter or prior owner of the
Bonds ("Pre-Insured Bonds"), and issued by one of the insurance companies
described below (the "Insurance Companies"). The insurance policies are
non-cancelable and will continue in force so long as the Bonds are outstanding
and the insurers remain in business. The insurance policies guarantee the
timely payment of principal and interest on the Bonds but do not guarantee the
market value of the Bonds or the value of the Units. No representation is made
herein as to any Bond insurer's ability to meet its obligations under a policy
of insurance relating to any of the Bonds. An insurance company that is
required to pay interest and/or principal in respect of any Bond will succeed
and be subrogated to the Trustee's right to collect such interest and/or
principal from the issuer and to other related rights of the Trustee with
respect to any such Bond.
Such insurance covers the scheduled payment of principal thereof and
interest thereon when such amounts shall become due for payment but shall not
have been paid by the issuer or any other insurer thereof. The insurance will
also cover any accelerated payments of principal and any increase in interest
payments or premiums, if any, payable upon mandatory redemption of the Bonds if
interest on any Bonds is ultimately deemed to be subject to regular federal
income tax. None of the insurance will cover accelerated payments of principal
or penalty interest or premiums unrelated to taxability of interest on the
Bonds. The insurance relates only to the prompt payment of principal of and
interest on the securities in the portfolios, and does not remove market risks
nor does it guarantee the market value of Units in the Trusts. The terms of the
insurance are more fully described herein. No representation is made herein as
to any Bond insurer's ability to meet its obligations under a policy of
insurance relating to any of the Pre-Insured Bonds. In addition, investors
should be aware that subsequent to the Date of Deposit the rating of the
claims-paying ability of the insurer of an underlying Pre-Insured Bond may be
down-graded.
All of the Bonds in the Trust which are insured under policies
obtained by the Bond issuers, underwriters or prior owners of the Bonds are
insured either by AMBAC Indemnity Corporation ("AMBAC"), Connie Lee Insurance
Company ("Connie Lee"), Financial Guaranty Insurance Company ("Financial
Guaranty"), Financial Security Assurance, Inc. ("Financial Security"),
Municipal Bond Insurance Association ("MBIA") or MBIA Insurance Corporation
("MBIA Corp.") (collectively the "Insurance Companies"). The cost of this
insurance is borne by the respective issuers, underwriters or prior owners of
the Pre-Insured Bonds. The percentage of each Portfolio insured by each
insurance company, if any, is set forth under "Insurance" in Part A of this
Prospectus.
AMBAC is a Wisconsin-domiciled stock insurance corporation, regulated
by the Office of the Commissioner of Insurance of the State of Wisconsin, and
licensed to do business in 50 states, the District of Columbia, the Territory
of Guam and the Commonwealth of Puerto Rico, with admitted assets (unaudited)
of approximately $2,505,000,000,
B-13
388740.3
<PAGE>
and statutory capital (unaudited) of approximately $1,384,000,000 as of June
30, 1996. Statutory capital consists of the statutory contingency reserve and
policyholders' surplus of the insurance company. AMBAC is a wholly owned
subsidiary of AMBAC Inc., a 100% publicly-held company. Standard & Poor's,
Moody's and Fitch have each assigned a triple-A claims paying ability rating to
AMBAC.
AMBAC has entered into pro rata reinsurance agreements under which a
percentage of the insurance underwritten pursuant to certain municipal bond
insurance programs of AMBAC has been and will be assumed by a number of foreign
and domestic unaffiliated reinsurers.
AMBAC has obtained a ruling from the Internal Revenue Service to the
effect that the insuring of an obligation by AMBAC will not affect the
treatment for federal income tax purposes of interest on such obligation and
that insurance proceeds representing maturing interest paid by AMBAC under
policy provisions substantially identical to those contained in its municipal
bond insurance policy shall be treated for federal income tax purposes in the
same manner as if such payments were made by issuer of the Bonds.
Connie Lee, a stock insurance company incorporated in Wisconsin, is a
wholly-owned subsidiary of College Construction Loan Insurance Association, a
stockholder-owned District of Columbia insurance holding company whose creation
was authorized by the 1986 amendments to the Higher Education Act. The United
States Department of Education and Student Loan Marketing Association are
founding shareholders of College Construction Loan Insurance Association. As a
federally authorized company, Connie Lee's structure and operational
authorities are subject to revision by amendments to the Higher Education Act
or other federal enactments. CONNIE LEE IS NOT AN AGENCY OR INSTRUMENTALITY OF
THE UNITED STATES GOVERNMENT, ALTHOUGH THE UNITED STATES GOVERNMENT IS A
STOCKHOLDER OF COLLEGE CONSTRUCTION LOAN INSURANCE ASSOCIATION. THE OBLIGATIONS
OF CONNIE LEE ARE NOT OBLIGATIONS OF THE UNITED STATES GOVERNMENT.
As of June 30, 1996, the total policyholders' surplus of Connie Lee
was $112,734,947 (unaudited) and total admitted assets were $219,098,333
(unaudited), as reported to the Commissioner of Insurance of the State of
Wisconsin.
As of the Evaluation Date, the claims-paying ability of Connie Lee has
been rated "AAA" by Standard & Poor's.
Financial Guaranty is a wholly-owned subsidiary of FGIC Corporation
("FGIC"), a Delaware holding company. FGIC is a wholly-owned subsidiary of
General Electric Capital Corporation ("GECC"). Neither FGIC nor GECC is
obligated to pay the debts of or the claims against Financial Guaranty.
Financial Guaranty is domiciled in the State of New York and is subject to
regulation by the State of New York Insurance Department. As of June 30, 1996,
the total capital and surplus of Financial Guaranty was approximately
$1,069,597,000. In addition, Financial Guaranty is currently licensed to write
insurance in 50 states and the District of Columbia.
As of the Evaluation Date, the claims-paying ability of Financial
Guaranty has been rated "AAA" by Standard & Poor's.
Financial Security is a monoline insurance company incorporated in
1984 under the laws of the State of New York and is licensed to engage in the
financial guaranty insurance business in all 50 states, the District of
Columbia and Puerto Rico.
B-14
388740.3
<PAGE>
Financial Security is a wholly owned subsidiary of Financial Security
Assurance Holdings Ltd. ("Holdings"), a New York Stock Exchange listed company.
Major shareholders of Holdings include Fund American Enterprises Holdings,
Inc., US WEST Capital Corporation and The Tokio Marine and Fire Insurance Co.,
Ltd. No shareholder of Holdings is obligated to pay any debt of Financial
Security or any claim under any insurance policy issued by Financial Security
or to make any additional contribution to the capital of Financial Security.
Pursuant to an intercompany agreement, liabilities on financial
guaranty insurance written or reinsured from third parties by Financial
Security or any of its domestic operating insurance company subsidiaries are
reinsured among such companies on an agreed upon percentage substantially
proportional to their respective capital, surplus and reserves, subject to
applicable statutory risk limitations. In addition, Financial Security
reinsures a portion of its liabilities under certain of its financial guaranty
insurance policies with other reinsurers under various quota-share treaties and
on a transaction-by-transaction basis. Such reinsurance is utilized by
Financial Security as a risk management device and to comply with certain
statutory and rating agency requirements; it does not alter or limit Financial
Security's obligations under any financial guaranty insurance policy. As of
June 30, 1996, total shareholders equity of Financial Security and its
wholly-owned subsidiaries was (unaudited) $785,072,000 and total unearned
premium reserves was (unaudited) $351,180,000.
As of the Evaluation Date, Financial Security's claims-paying ability
has been rated "AAA" by Standard & Poor's.
MBIA is an association of five insurance companies which joined
together to insure severally (and not jointly) new issues of municipal bonds.
Each insurance company comprising Municipal Bond Insurance Association ("MBIA",
also known as the "Association") will be severally and not jointly obligated
under the MBIA policy in the following respective percentages: The Aetna
Casualty and Surety Company, 33%; Fireman's Fund Insurance Company, 30%; The
Travelers Indemnity Company, 15%; Aetna Insurance Company*, 12%; and The
Continental Insurance Company, 10%. As a several obligor, each such insurance
company will be obligated only to the extent of its percentage of any claim
under the MBIA policy and will not be obligated to pay any unpaid obligation of
any other member of MBIA. Each insurance company's participation is backed by
all of its assets. However, each insurance company is a multiline insurer
involved in several lines of insurance other than municipal bond insurance, and
the assets of each insurance company also secure all of its other insurance
policy and surety bond obligations.
Some of the members of the Association are among the shareholders of
MBIA, Inc. MBIA, Inc., the parent of MBIA Corp., has no liability to the
bondholders for the obligations of the Association.
The following table sets forth certain financial information with
respect to the five insurance companies comprising MBIA. The statistics, which
have been furnished by MBIA, are as reported by the insurance companies to the
New York State Insurance Department and are determined in accordance with
statutory accounting principals. No representation is made herein as to the
accuracy or adequacy of such information or as to the absence of material
adverse changes in such information subsequent to the date thereof. In
addition, these numbers are subject to revision by the New York State Insurance
Department which, if revised, could either increase or decrease the amounts.
- -------------------------
* Now known as Cigna Property and Casualty Company.
B-15
388740.3
<PAGE>
MUNICIPAL BOND INSURANCE ASSOCIATION ("MBIA")
FIVE MEMBER COMPANIES ASSETS, LIABILITIES
AND POLICYHOLDERS' SURPLUS
AS OF MARCH 31, 1995
(000's omitted)
<TABLE>
<CAPTION>
New York New York New York
Statutory Statutory Policyholder's
Assets Liabilities Surplus
<S> <C> <C> <C>
The Aetna Casualty & Surety Company $10,225,604 $ 8,312,158 $1,913,446
Fireman's Fund Insurance Company 7,126,217 5,116,059 2,010,158
The Travelers Indemnity Company 10,461,356 8,654,130 1,807,226
Cigna Property and Casualty Company 4,260,177 3,637,513 622,664
(Formerly Aetna Insurance Company)
The Continental Insurance Company 3,060,583 2,380,723 679,860
----------- ----------- ----------
TOTAL $35,133,937 $28,100,583 $7,033,354
</TABLE>
MBIA Insurance Corporation (formerly known as Municipal Bond Investors
Assurance Corporation) ("MBIA Corp.") is the principal operating subsidiary of
MBIA Inc., a New York Stock Exchange listed company. MBIA Corp. commenced
municipal bond insurance operations on January 5, 1987. MBIA Corp. is
domiciled, in the State of New York and licensed to do business in all 50
states, the District of Columbia, the Commonwealth of Puerto Rico, the
Commonwealth of the Northern Mariana Islands, the Virgin Islands of the United
States and the Territory of Guam. MBIA Corp. is a separate and distinct entity
from the Association. MBIA Corp. has no liability to the bondholders for the
obligations of the Association under the policy.
As of June 30, 1996, MBIA Corp. had admitted assets of $4.2 billion
(unaudited), total liabilities of $2.8 billion (unaudited), and total capital
and surplus of $1.4 billion (unaudited) prepared in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. As of December 31, 1995, MBIA Corp. had admitted assets of $3.8
billion (audited), total liabilities of $2.5 billion (audited), and total
capital and surplus of $1.3 billion (audited).
As of the Evaluation Date, the claims-paying ability of MBIA and MBIA
Corp. has been rated "AAA" by Standard & Poor's and Fitch, and "Aaa" by
Moody's.
The foregoing information relating to the above insurance companies is
from published documents and other public sources and/or information provided
by such insurance companies. No representation is made herein as to the
accuracy or adequacy of such information or as to the absence of material
adverse changes in such information subsequent to the dates thereof, but the
Sponsor is not aware that the information herein is inaccurate or incomplete.
B-16
388740.3
<PAGE>
TAX STATUS
Interest income on the Bonds contained in the portfolio of the Trust
is, in the opinion of bond counsel to the issuing governmental authorities,
which opinion was rendered at the time of original issuance of the Bonds,
excludible from gross income under the Code. See "The Trust" in Part A.
Gain (or loss) realized on sale, maturity, or redemption of the Bonds
or on sale or redemption of a Unit is, however, includible in gross income as
capital gain (or loss) for Federal, state and local income tax purposes
assuming that the Unit is held as a capital asset. Such gain (or loss) does not
include any amount received in respect of accrued interest. In addition, such
gain (or loss) may be long or short term depending on the holding period of the
Units. Bonds selling at a market discount tend to increase in market value as
they approach maturity when the principal amount is payable, thus increasing
the potential for taxable gain (or reducing the potential for loss) on their
redemption, maturity, or sale. Gain on the disposition of a Bond purchased at a
market discount generally will be treated as ordinary income, rather than
capital gain, to the extent of accrued market discount. The deductibility of
capital losses is limited to the amount of capital gain; in addition, up to
$3,000 of capital losses of noncorporate Unit holders may be deducted against
ordinary income. Since the proceeds from sales of Bonds, under certain
circumstances, may not be distributed pro-rata, the Unit holder's taxable
income for any year may exceed their actual cash distributions in that year.
In the opinion of Battle Fowler LLP, special counsel for the Sponsor,
under existing law:
The Trust is not an association taxable as a corporation for
Federal income tax purposes, and interest on the Bonds which is
excludible from regular Federal gross income under the Code, when
received by the Trust, will be excludible from the regular Federal
gross income of the Unit holders of the Trust. Any proceeds paid under
the insurance policy described above issued to the Trust with respect
to the Bonds and any proceeds paid under individual policies obtained
by issuers of Bonds or other parties which represent maturing interest
on defaulted obligations held by the Trust will be excludible from
Federal gross income if, and to the same extent as, such interest
would have been so excludible if paid in the normal course by the
issuer of the defaulted obligations.
Each Unit holder will be considered the owner of a pro rata
portion of the Bonds and any other assets held in the Trust under the
grantor trust rules of Code Sections 671-679. Each Unit holder will be
considered to have received his pro rata share of income from Bonds
held by the Trust on receipt (or earlier accrual, depending on the
Unit holder's method of accounting and depending on the existence of
any original issue discount) by the Trust, and each Unit holder will
have a taxable event when an underlying Bond is disposed of (whether
by sale, redemption, or payment at maturity) or when the Unit holder
redeems or sells his Units. Gain from a sale will be treated as short
term or long term capital gain depending on how long the Bond was held
by the Trust. The total tax basis (i.e., cost) of each Unit to a Unit
holder is allocated among each of the Bonds held in the Trust (in
accordance with the proportion of the Trust comprised by each such
Bond) in order to determine his per Unit tax basis for each Bond, and
the tax basis reduction requirements of the Code relating to
amortization of bond premium will apply separately to the per Unit
cost of each such Bond. Therefore, under some circumstances, a Unit
holder may realize taxable gain when his Units are sold or redeemed
for an amount equal to his original cost. No deduction is allowed for
the amortization of bond premium on tax-exempt bonds such as the
Bonds. None of the interest received from the portfolio is subject
B-17
388740.3
<PAGE>
to the alternative minimum tax for individuals; however, some or all
of the interest received from the portfolio may be includible in the
calculation of a corporation's alternative minimum tax.
For Federal income tax purposes, when a Bond is sold, a Unit
holder may exclude from his share of the amount received any amount
that represents accrued interest but may not exclude amounts
attributable to market discount. Thus, when a Bond is sold by the
Trust, taxable gain or loss will equal the difference between (i) the
amount received (excluding the portion representing accrued interest)
and (ii) the adjusted basis (including any accrued original issue
discount, limited in the case of Bonds issued after June 8, 1980 to
the portion earned from the date of acquisition, as discussed below).
In the case of Bonds acquired at a market discount, gain will be
treated as ordinary income to the extent of accrued market discount.
A Unit holder may also realize taxable gain or loss when a
Unit is sold or redeemed. Taxable gain will result if a Unit is sold
or redeemed for an amount greater than its adjusted basis to the Unit
holder. The amount received when a Unit is sold or redeemed is
allocated among all the Bonds in the Trust in the same manner as when
the Trust disposes of Bonds, and the Unit holder may exclude accrued
interest, including the earned portion of any original issue discount,
but not amounts attributable to market discount. In the case of Bonds
acquired at a market discount gain will be treated as ordinary income
to the extent of accrued market discount. The return of a Unit
holder's tax basis is otherwise a tax-free return of capital.
If the Trust purchases any units of a previously issued
series then, based on the opinion of counsel with respect to such
series, the Trust's pro rata ownership interest in the bonds of such
series (or any previously issued series) will be treated as though it
were owned directly by the Trust.
Under the income tax laws of the State and City of New York,
the Trust is not an association taxable as a corporation and the
income of the Trust will be treated as the income of the Unit holders.
The above opinion of Battle Fowler LLP as to the tax status of the
Trust is not affected by the provision of the Trust Agreement that authorizes
the acquisition of Replacement Bonds or by the implementation of the option
automatically to reinvest principal and interest distributions from the Trust
pursuant to the Automatic Accumulation Plan, described under "Automatic
Accumulation Account" in this Part B.
Among other things, the Code provides for the following: (1) interest
on certain private activity bonds issued after August 7, 1986 is included in
the calculation of the individual's alternative minimum tax (currently taxed at
a rate of up to 28%); none of the Bonds in the Trust is a Private Activity Bond
the interest on which is subject to the alternative minimum tax; (2) interest
on certain Private Activity Bonds issued after August 7, 1986 is included in
the calculation of the corporate alternative minimum tax and 75% of the amount
by which adjusted current earnings (including interest on all tax-exempt bonds,
such as the Bonds) exceed alternative minimum taxable income, as modified for
this calculation, will be included in alternative minimum taxable income.
Interest on the Bonds is includible in the adjusted current earnings of a
corporation for purposes of such alternative minimum tax. The Code does not
otherwise require corporations, and does not require taxpayers other than
corporations, including individuals, to treat interest on the Bonds as an item
of tax preference in computing an alternative minimum tax; (3) subject to
certain exceptions, no financial institution is allowed a deduction for that
portion of the institution's interest expense allocable to tax-exempt interest
on tax-exempt bonds acquired after August 7, 1986; (4) the amount of the
deduction allowed to property and casualty insurance companies for underwriting
loss is decreased by an amount determined with regard to tax-exempt interest
income and the deductible portion of dividends received by such companies; (5)
all taxpayers are required to report for informational purposes on their
Federal income tax returns the amount of tax-exempt interest they receive;
B-18
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<PAGE>
(6) an issuer must meet certain requirements on a continuing basis in order for
interest on a tax-exempt bond to be tax-exempt, with failure to meet such
requirements resulting in the loss of tax exemption; and (7) a branch profits
tax on U.S. branches of foreign corporations is implemented which, because of
the manner in which the branch profits tax is calculated, may have the effect
of subjecting the U.S. branch of a foreign corporation to Federal income tax on
the interest on bonds otherwise exempt from such tax.
Section 86 of the Code provides that a portion of social security
benefits is includible in taxable income for taxpayers whose "modified adjusted
gross income" combined with a portion of their social security benefits exceeds
a base amount. The base amount is $25,000 for an individual, $32,000 for a
married couple filing a joint return and zero for married persons filing
separate returns. Under Section 86 of the Code, interest on tax-exempt bonds is
to be added to adjusted gross income for purposes of determining whether an
individual's income exceeds the base amount above which a portion of the
benefits would be subject to tax.
In addition, certain "S Corporations", with accumulated earnings and
profits from Subchapter C years, may be subject to minimum tax on excess
passive income, including tax-exempt interest, such as interest on the Bonds.
At the time of the original issuance of the Bonds held by the Trust,
opinions relating to the validity of the Bonds and the exemption of interest
thereon from regular Federal income tax were or (with respect to "when issued"
Bonds) were to be rendered by bond counsel to the issuing governmental
authorities. Neither the Sponsor nor its special counsel have made any review
of proceedings relating to the issuance of such Bonds or the basis for bond
counsel's opinions.
Under Section 265 of the Code, if borrowed funds are used by a Unit
holder to purchase or carry Units of the Trust, interest on such indebtedness
will not be deductible for Federal income tax purposes. Under rules used by the
Internal Revenue Service, the purchase of Units may be considered to have been
made with borrowed funds even though the borrowed funds are not directly
traceable to the purchase of Units. Similar rules are applicable for purposes
of state and local taxation. Also, under Section 291 of the Code, certain
financial institutions that acquire Units may be subject to a reduction in the
amount of interest expense that would otherwise be allowable as a deduction for
Federal income tax purposes. Investors with questions regarding this issue
should consult with their tax advisors.
The Trust may contain Bonds issued with original issue discount. The
Code requires holders of tax-exempt obligations issued with original issue
discount, such as the Trust, to accrue tax-exempt original issue discount by
using the constant interest method provided for the holders of taxable
obligations and to increase the basis of a tax-exempt obligation by the amount
of accrued tax-exempt original issue discount. These provisions are applicable
to obligations issued after September 3, 1982 and acquired after March 1, 1984.
The Trust's tax basis in a Bond is increased by any accrued original issue
discount as is a Unit holder's tax basis in his Units. For Bonds issued after
June 9, 1980 that are redeemed prior to maturity, the difference between the
Trust's basis, as adjusted, and the amount received will be taxable gain or
loss to the Unit holders.
Unit holders should consult their own tax advisors with respect to the
state and local tax consequences of owning original issue discount bonds. It is
possible that under applicable provisions governing determination of such state
and local taxes, interest on tax-exempt bonds such as any Bonds issued with
original issue discount may be deemed to be received in the year of accrual
even though there is no corresponding cash payment.
If a Unit holder's tax cost for his pro rata interest in a Bond
exceeds his pro rata interest in the Bond's face amount, the Unit holder will
be considered to have purchased his pro rata interest in the Bond at a
"premium." The
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Unit holder will be required to amortize any premium relating to his pro rata
interest in a Bond prior to the maturity of the Bond. Amortization of premium
on a Bond will reduce a Unit holder's tax basis for his pro rata interest in
the Bond, but will not result in any deduction from the Unit holder's income.
Thus, for example, a Unit holder who purchases a pro rata interest in a Bond at
a premium and resells it at the same price will recognize taxable gain equal to
the portion of the premium that was amortized during the period the Unit holder
is considered to have held such interest.
Bond premium must be amortized under the method the Unit holder
regularly employs for amortizing bond premium (assuming such method is
reasonable). With respect to a callable bond, the premium must be computed with
respect to the call price and be amortized to the first call date (and
successively to later call dates based on the call prices for those dates).
In the case of Bonds that are private activity bonds, the opinions of
bond counsel to the respective issuing authorities indicate that interest on
such Bonds is exempt from regular federal income tax. However, interest on such
Bonds will not be exempt from regular federal income tax for any period during
which such Bonds are held by a "substantial user" of the facilities financed by
the proceeds of such Bonds or by a "related person" thereof within the meaning
of the Code. Therefore, interest on any such Bonds allocable to a Unit holder
who is such a "substantial user" or "related person" thereof will not be
tax-exempt. Furthermore, in the case of Bonds that qualify for the "small
issue" exemption, the "small issue" exemption will not be available or will be
lost if, at any time during the three-year period beginning on the later of the
date the facilities are placed in service or the date of issue, all outstanding
tax-exempt IRBs, together with a proportionate share of any present issue, of
an owner or principal user (or related person) of the facilities was determined
to have exceeded $40,000,000 on the date of issue. In the case of Bonds issued
under the $10,000,000 "small issue" exemption, interest on such Bonds will
become taxable if the face amount of the Bonds plus certain capital
expenditures exceeds $10,000,000 within 3 years of the date of issue of such
Bonds.
In addition, a Bond can lose its tax-exempt status as a result of
other subsequent but unforeseeable events such as prohibited "arbitrage"
activities by the issuer of the Bond or the failure of the Bond to continue to
satisfy the conditions required for the exemption of interest thereon from
regular federal income tax. No investigation has been made as to the current or
future owners or users of the facilities financed by the Bonds, the amount of
such persons' outstanding tax-exempt private activity bonds, or the facilities
themselves, and no assurance can be given that future events will not affect
the tax-exempt status of the Bonds. Investors should consult their tax advisors
for advice with respect to the effect of these provisions on their particular
tax situation.
THE EXEMPTION OF INTEREST ON MUNICIPAL OBLIGATIONS FOR FEDERAL INCOME
TAX PURPOSES DOES NOT NECESSARILY RESULT IN EXEMPTION UNDER THE INCOME TAX LAWS
OF ANY STATE OR LOCAL GOVERNMENT. INTEREST INCOME DERIVED FROM THE BONDS IS NOT
EXCLUDED FROM NET INCOME IN DETERMINING NEW YORK STATE OR NEW YORK CITY
FRANCHISE TAXES ON CORPORATIONS OR FINANCIAL INSTITUTIONS. THE LAWS OF SUCH
STATES AND LOCAL GOVERNMENTS VARY WITH RESPECT TO THE TAXATION OF SUCH
OBLIGATIONS.
From time to time, proposals have been introduced before Congress, the
purpose of which is to restrict or eliminate the Federal income tax exemption
for interest on debt obligations similar to the Bonds in the Trust, and it can
be expected that similar proposals, including proposals for a "flat tax" or
"consumption tax", may be introduced in the future. The Sponsor cannot predict
whether additional legislation, if any, in respect of the Federal income tax
status of interest on debt obligations may be enacted and what the effect of
such legislation would be on Bonds in the Trust.
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The Revenue Reconciliation Act of 1993 increases maximum marginal tax
rates for individuals and corporations, extends the authority to issue certain
categories of tax-exempt bonds (qualified small issue bonds and qualified
mortgage bonds), expands a category of qualified tax-exempt bonds (bonds for
high-speed intercity rail facilities), limits the availability of capital gain
treatment for tax-exempt bonds purchased at a market discount, and makes a
variety of other changes. Prospective investors are urged to consult their own
tax advisors as to the effect of this Act on a possible investment in the
Trust.
In South Carolina v. Baker, the U.S. Supreme Court held that the
federal government may constitutionally require states to register bonds they
issue and subject the interest on such bonds to federal income tax if not
registered, and that there is no constitutional prohibition against the federal
government's taxing the interest earned on state or other municipal bonds. The
Supreme Court decision affirms the authority of the federal government to
regulate and control bonds such as the Bonds in the Trust and to tax interest
on such bonds in the future. The decision does not, however, affect the current
exemption from taxation of the interest earned on the Bonds in the Trust in
accordance with Section 103 of the Code.
The opinions of counsel to the issuing governmental authorities to the
effect that interest on the Bonds is exempt from regular federal income tax may
be limited to law existing at the time the Bonds were issued, and may not apply
to the extent that future changes in law, regulations or interpretations affect
such Bonds. Investors are advised to consult their own advisors for advice with
respect to the effect of any legislative changes.
RIGHTS OF UNIT HOLDERS
Certificates
Ownership of Units of the Trust is evidenced by registered
certificates executed by the Trustee and the Sponsor. The Trustee is authorized
to treat as the record owner of Units that person who is registered as such
owner on the books of the Trustee. Certificates are transferable by
presentation and surrender to the Trustee properly endorsed and accompanied by
a written instrument or instruments of transfer.
Certificates may be issued in denominations of one Unit or any
multiple thereof. A Unit holder may be required to pay $2.00 per certificate
reissued or transferred and to pay any governmental charge that may be imposed
in connection with each such transfer or interchange. For new certificates
issued to replace destroyed, stolen or lost certificates, the Unit holder must
furnish indemnity satisfactory to the Trustee and must pay such expenses as the
Trustee may incur. Mutilated certificates must be surrendered to the Trustee
for replacement.
Distribution of Interest and Principal
While interest will be distributed semi-annually or monthly, depending
on the method of distribution chosen, principal, including capital gains, will
be distributed only semi-annually; provided, however, that, other than for
purposes of redemption, no distribution need be made from the Principal Account
if the balance therein is less than $1.00 per Unit then outstanding, and that,
if at any time the pro rata share represented by the Units of cash in the
Principal Account exceeds $10.00 as of a Monthly Record Date, the Trustee
shall, on the next succeeding Monthly Distribution Date, distribute the Unit
holder's pro rata share of the balance of the Principal Account. Interest
(semi-annually or monthly) and principal, including capital gains, if any
(semi-annually), received by the Trust will be
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distributed on each Distribution Date to Unit holders of record of the Trust as
of the preceding Record Date who are entitled to such distributions at that
time under the plan of distribution chosen. All distributions will be net of
applicable expenses and funds required for the redemption of Units. See
"Summary of Essential Financial Information" in Part A, "The Trust--Expenses
and Charges" and "Rights of Unit Holders--Redemption" in Part B.
The Trustee will credit to the Interest Account for the Trust all
interest received by the Trust, including that part of the proceeds of any
disposition of Securities which represents accrued interest. Other receipts of
the Trust will be credited to the Principal Account for the Trust. The pro rata
share of the Interest Account of the Trust and the pro rata share of cash in
the Principal Account (other than amounts representing failed contracts as
previously discussed) represented by each Unit thereof will be computed by the
Trustee each month as of the Record Date. See "Summary of Essential Financial
Information" in Part A. Proceeds received from the disposition of any of the
Securities subsequent to a Record Date and prior to the next succeeding
Distribution Date will be held in the Principal Account for the Trust and will
not be distributed until the second succeeding Distribution Date. Because
interest on the Securities is not received by the Trust at a constant rate
throughout the year, any particular interest distribution may be more or less
than the amount credited to the Interest Account of the Trust as of the Record
Date. See "Summary of Essential Financial Information" in Part A. Persons who
purchase Units between a Record Date and a Distribution Date will receive their
first distribution on the second Distribution Date following their purchase of
Units under the applicable plan of distribution. No distribution need be made
from the Principal Account if the balance therein is less than an amount
sufficient to distribute $1.00 per Unit.
The difference between the estimated net interest accrued to the first
Record Date and to the related Distribution Date is an asset of the respective
Unit holder and will be realized in subsequent distributions or upon the
earlier of the sale of such Units or the maturity, redemption or sale of
Securities in the Trust.
Purchasers of Units who desire to receive distributions on a monthly
basis may elect to do so at the time of purchase during the initial public
offering period. Those indicating no choice will be deemed to have chosen the
semi-annual distribution plan. Record dates for monthly distributions will be
the fifteenth day of the preceding month and record dates for semi-annual
distributions will be the fifteenth day of May and November.
Details of estimated interest distributions under the payment plans,
on a per Unit basis, appear in footnote 9 to the "Summary of Essential
Financial Information" in Part A.
The plan of distribution selected by a Unit holder will remain in
effect until changed. Unit holders purchasing Units in the secondary market
will initially receive distributions in accordance with the election of the
prior owner. Each April, the Trustee will furnish each Unit holder a card to be
returned together with the Certificate by May 15 of such year if the Unit
holder desires to change his plan of distribution, and the change will become
effective on May 16 of such year for the ensuing twelve months. For a
discussion of redemption of Units, see "Rights of Unit Holders--
Redemption--Tender of Units" in Part B.
The Trustee will, as of the fifteenth day of each month, deduct from
the Interest Account and, to the extent funds are not sufficient therein, from
the Principal Account, amounts necessary to pay the expenses of the Trust as of
the first day of such month. See "The Trust--Expenses and Charges" in Part B.
The Trustee also may withdraw from said accounts such amounts, if any, as it
deems necessary to establish a reserve for any governmental charges payable out
of the Trust. Amounts so withdrawn shall not be considered a part of the
Trust's assets until such time as the Trustee shall return all or any part of
such amounts to the appropriate account. In addition, the Trustee may withdraw
from the Interest Account and the Principal Account such amounts as may be
necessary to cover redemption of Units
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by the Trustee. See "Rights of Unit Holders--Redemption" in Part B. Funds which
are available for future distributions, payments of expenses and redemptions
are in accounts which are non-interest bearing to the Unit holders and are
available for use by the Trustee pursuant to normal banking procedures.
Because interest on Securities in the Trust is payable at varying
intervals, usually in semi-annual installments, the interest accruing to the
Trust will not be equal to the amount of money received and available monthly
for distribution from the Interest Account to Unit holders choosing the monthly
payment plan. Therefore, on each monthly Distribution Date, the amount of
interest actually deposited in the Interest Account and available for
distribution may be slightly more or less than the monthly interest
distribution made. In order to eliminate fluctuations in monthly interest
distributions resulting from such variances during the first year of the Trust,
the Trustee is required by the Trust Agreement to advance such amounts as may
be necessary to provide monthly interest distributions of approximately equal
amounts. In addition, the Trustee has agreed to advance sufficient funds to the
Trust in order to reduce the amount of time before monthly distributions of
interest to Unit holders commence. The Trustee will be reimbursed, without
interest, for any such advances from funds available from the Interest Account
of the Trust. The Trustee's fee takes into account the costs attributable to
the outlay of capital needed to make such advances.
In order to acquire certain of the Securities subject to contract, it
may be necessary to pay on the settlement dates for delivery of such Securities
amounts covering accrued interest on such Securities which exceed the amounts
paid by Unit holders (which excess will be made available under a letter of
credit furnished by the Sponsor on the Date of Deposit). The Trustee has agreed
to pay for any amounts necessary to cover any such excess and will be
reimbursed therefor (without interest) when funds become available from
interest payments on the particular Securities with respect to which such
payments may have been made. Also, since interest on such Securities in the
portfolio of the Trust (see "The Portfolio" in Part A) does not begin accruing
as tax-exempt interest income to the benefit of Unit holders until such Bonds'
respective dates of delivery (accrued interest prior to delivery being treated
under the Code as a return of principal), the Trustee will, in order to cover
interest treated as a return of principal, adjust its fee downward in an amount
equal to the amount of interest that would have so accrued as tax-exempt
interest (if not treated as a return of principal) on such Securities between
the date of settlement for the Units and such dates of delivery.
In addition, because of the varying interest payment dates of the
Securities comprising the Trust portfolio, accrued interest at any point in
time, subsequent to the recovery of any advancements of interest made by the
Trustee, will be greater than the amount of interest actually received by the
Trust and distributed to Unit holders. Therefore, there will usually remain an
item of accrued interest that is added to the value of the Units. If a Unit
holder sells all or a portion of his Units he will be entitled to receive his
proportionate share of the accrued interest from the purchaser of his Units.
Similarly, if a Unit holder redeems all or a portion of his Units, the
Redemption Price per Unit which he is entitled to receive from the Trustee will
also include accrued interest on the Securities. Thus, the accrued interest
attributable to a Unit will not be entirely recovered until the Unit holder
either redeems or sells such Unit or until the Trust is terminated.
Expenses and Charges
Initial Expenses
All or a portion of the expenses incurred in creating and establishing
the Trust, including the cost of the initial preparation and execution of the
Trust Agreement, the initial fees and expenses of the Trustee, legal expenses
and other actual out-of-pocket expenses, will be paid by the Trust and
amortized over a five year period. All advertising
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and selling expenses, as well as any organizational expenses not paid by the
Trust, will be borne by the Sponsor at no cost to the Trust.
Fees
The Trustee's, Sponsor's and Evaluator's fees are set forth under the
"Summary of Essential Financial Information" in Part A. The Sponsor's fee,
which is earned for portfolio supervisory services, is based on the face amount
of Securities in the Trust at December 1 of each year. The Sponsor's fee, which
is not to exceed the maximum amount set forth under the "Summary of Essential
Financial Information" for the Trust, may exceed the actual costs of providing
portfolio supervisory services for the Trust, but at no time will the total
amount the Sponsor receives for portfolio supervisory services rendered to all
series of the Glickenhaus Special Situations Trust in any calendar year exceed
the aggregate cost to them of supplying such services in such year.
The Trustee will receive for its ordinary recurring services to the
Trust an annual fee in the amount set forth in the "Summary of Essential
Financial Information" for the Trust; provided, however, that such fees may be
adjusted as set forth under the "Summary of Essential Financial Information".
There is no minimum fee and, except as hereinafter set forth, no maximum fee.
For a discussion of certain benefits derived by the Trustee from the Trust's
funds, see "Rights of Unit Holders--Distribution of Interest and Principal" in
Part B. For a discussion of the services performed by the Trustee pursuant to
its obligations under the Trust Agreement, reference is made to the material
set forth under "Rights of Unit Holders" in Part B.
The Trustee's and Evaluator's fees are payable monthly on or before
each Distribution Date and the Sponsor's annual fee is payable annually on
December 1, each from the Interest Account to the extent funds are available
and then from the Principal Account. These fees may be increased without
approval of the Unit holders by amounts not exceeding proportionate increases
in consumer prices for services as measured by the United States Department of
Labor's Consumer Price Index entitled "All Services Less Rent"; except no such
increase in the Trustee's fee will be so made for the sole purpose of making up
any downward adjustment therein as described in "Summary of Essential Financial
Information". If the balances in the Principal and Interest Accounts are
insufficient to provide for amounts payable by the Trust, or amounts payable to
the Trustee which are secured by its prior lien on the Trust, the Trustee is
permitted to sell Bonds to pay such amounts.
Other Charges
The following additional charges are or may be incurred by the Trust:
all expenses (including audit and counsel fees) of the Trustee incurred in
connection with its activities under the Trust Agreement, including annual
audit expenses by independent public accountants selected by the Sponsor (so
long as the Sponsor maintains a secondary market, the Sponsor will bear any
audit expense which exceeds 50 cents per Unit), the expenses and costs of any
action undertaken by the Trustee to protect the Trust and the rights and
interests of the Unit holders; fees of the Trustee for any extraordinary
services performed under the Trust Agreement; indemnification of the Trustee
for any loss or liability accruing to it without willful misconduct, bad faith,
or gross negligence on its part, arising out of or in connection with its
acceptance or administration of the Trust; and all taxes and other governmental
charges imposed upon the Securities or any part of the Trust (no such taxes or
charges are being levied or made or, to the knowledge of the Sponsor,
contemplated). The above expenses, including the Trustee's fee, when paid by or
owing to the Trustee, are secured by a lien on the Trust. In addition, the
Trustee is empowered to sell Securities in order to make funds available to pay
all expenses.
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Reports and Records
The Trustee shall furnish Unit holders of the Trust in connection with
each distribution a statement of the amount of interest, if any, and the amount
of other receipts, if any, which are being distributed, expressed in each case
as a dollar amount per Unit. Within a reasonable time after the end of each
calendar year, the Trustee will furnish to each person who at any time during
the calendar year was a Unit holder of record, a statement providing the
following information: (1) as to the Interest Account: interest received
(including amounts representing interest received upon any disposition of
Securities and any earned original issue discount), and, if the issuers of the
Securities are located in different states or territories, the percentage of
such interest by such states or territories, deductions for payment of
applicable taxes and for fees and expenses of the Trust, redemptions of Units
and the balance remaining after such distributions and deductions, expressed
both as a total dollar amount and as a dollar amount representing the pro rata
share of each Unit outstanding on the last business day of such calendar year;
(2) as to the Principal Account: the dates of disposition of any Securities and
the net proceeds received therefrom (including any unearned original issue
discount but excluding any portion representing interest and any related
custodial fee), deductions for payments of applicable taxes and for fees and
expenses of the Trust, purchase of Replacement Bonds, redemptions of Units, the
amount of any "when issued" interest treated as a return of capital and the
balance remaining after such distributions and deductions, expressed both as a
total dollar amount and as a dollar amount representing the pro rata share of
each Unit outstanding on the last business day of such calendar year; (3) a
list of the Securities held and the number of Units outstanding on the last
business day of such calendar year; (4) the Redemption Price per Unit based
upon the last computation thereof made during such calendar year; and (5)
amounts actually distributed during such calendar year from the Interest
Account and from the Principal Account, separately stated, expressed both as
total dollar amounts and as dollar amounts representing the pro rata share of
each Unit outstanding.
The Trustee shall keep available for inspection by Unit holders at all
reasonable times during usual business hours, books of record and account of
its transactions as Trustee including records of the names and addresses of
Unit holders of the Trust, certificates issued or held, a current list of
Securities in the Trust and a copy of the Trust Agreement.
Redemption
Tender of Units
While it is anticipated that Units can be sold in the secondary
market, Units may also be tendered to the Trustee for redemption at its
corporate trust office at 101 Barclay Street, New York, New York 10286, upon
payment of any applicable tax. At the present time there are no specific taxes
related to the redemption of the Units. No redemption fee will be charged by
the Sponsor or the Trustee. Units redeemed by the Trustee will be cancelled.
Certificates for Units to be redeemed must be delivered to the Trustee
and must be properly endorsed and accompanied by a written instrument of
transfer. Thus, redemption of Units cannot be effected until certificates
representing such Units have been delivered to the person seeking redemption
(see "Rights of Unit Holders-- Certificates" in Part B). Unit holders must sign
exactly as their names appear on the face of the certificate with signature(s)
guaranteed by an officer of a national bank or trust company, a member firm of
either the New York, Midwest or Pacific Stock Exchange, or in such other manner
as may be acceptable to the Trustee. In certain instances the Trustee may
require additional documents such as, but not limited to, trust instruments,
certificates of death, appointments as executor or administrator or
certificates of corporate authority.
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Within three business days following such tender, the Unit holder will
be entitled to receive in cash an amount for each Unit tendered equal to the
Redemption Price per Unit computed as of the Evaluation Time set forth in the
"Summary of Essential Financial Information" as of the next subsequent
Evaluation Time. See "Redemption-- Computation of Redemption Price per Unit."
The "date of tender" is deemed to be the date on which Units are received by
the Trustee, except that as regards Units received after the Evaluation Time on
the New York Stock Exchange, the date of tender is the next day on which such
Exchange is open for trading or the next day on which there is a sufficient
degree of trading in Units of the Trust, and such Units will be deemed to have
been tendered to the Trustee on such day for redemption at the Redemption Price
computed on that day. For information relating to the purchase by the Sponsor
of Units tendered to the Trustee for redemption at prices in excess of the
Redemption Price, see "Redemption-- Purchase by the Sponsor of Units Tendered
for Redemption" in Part B.
Accrued interest paid on redemption shall be withdrawn from the
Interest Account, or, if the balance therein is insufficient, from the
Principal Account. All other amounts paid on redemption shall be withdrawn from
the Principal Account. The Trustee is empowered to sell Securities in order to
make funds available for redemption. Such sales, if required, could result in a
sale of Securities by the Trustee at a loss. To the extent Securities are sold,
the size and diversity of the Trust will be reduced.
The Trustee reserves the right to suspend the right of redemption and
to postpone the date of payment of the Redemption Price per Unit for any period
during which the New York Stock Exchange is closed, other than weekend and
holiday closings, or during which trading on that Exchange is restricted or
during which (as determined by the Securities and Exchange Commission by rule
or regulation) an emergency exists as a result of which disposal or evaluation
of the underlying Bonds is not reasonably practicable, or for such other
periods as the Securities and Exchange Commission has by order permitted.
Computation of Redemption Price per Unit
The Redemption Price per Unit is determined by the Trustee on the
basis of the bid prices of the Securities in the Trust, while the Public
Offering Price of Units during the initial offering period is determined on the
basis of the offering prices of the Securities, both as of the Evaluation Time
on the day any such determination is made. The bid prices of the Securities may
be expected to be less than the offering prices. This Redemption Price per Unit
is each Unit's pro rata share, determined by the Trustee, of: (1) the aggregate
value of the Securities in the Trust (determined by the Evaluator as set forth
below), (2) cash on hand in the Trust (other than cash covering contracts to
purchase Securities), and (3) accrued and unpaid interest on the Securities as
of the date of computation, less (a) amounts representing taxes or governmental
charges payable out of the Trust, (b) the accrued expenses of the Trust, and
(c) cash held for distribution to Unit holders of record as of a date prior to
the evaluation. The Evaluator may determine the value of the Securities in the
Trust (1) on the basis of current bid prices for the Securities, (2) if bid
prices are not available for any Securities, on the basis of current bid prices
for comparable bonds, (3) by appraisal, or (4) by any combination of the above.
The difference between the bid and offering prices of the Securities
may be expected to average 1 1/2% of face amount. In the case of actively
traded bonds, the difference may be as little as 1/2 of 1%, and in the case of
inactively traded bonds such difference usually will not exceed 3%. On the
business day prior to the date of this Prospectus, the aggregate bid side
evaluation was lower than the aggregate offering side evaluation by the amount
set forth in footnote 6 to the "Portfolio". For this reason, among others, the
price at which Units may be redeemed could be less than the price paid by the
Unit holder. On the Date of Deposit the aggregate current offering price of
such
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Securities per Unit exceeded the bid price of such Securities per Unit by the
amount set forth under "Summary of Essential Financial Information".
Purchase by the Sponsor of Units Tendered for Redemption
The Trust Agreement requires that the Trustee notify the Sponsor of
any tender of Units for redemption. So long as the Sponsor is maintaining a bid
in the secondary market, the Sponsor, prior to the close of business on the
second succeeding business day, will purchase any Units tendered to the Trustee
for redemption at the price so bid by making payment therefor to the Unit
holder in an amount not less than the Redemption Price on the date of tender
not later than the day on which the Units would otherwise have been redeemed by
the Trustee (see "Public Offering-- Market for Units" in this Part B). Units
held by the Sponsor may be tendered to the Trustee for redemption as any other
Units, provided that the Sponsor shall not receive for Units purchased as set
forth above a higher price than they paid, plus accrued interest.
The offering price of any Units resold by the Sponsor will be the
Public Offering Price determined in the manner provided in this Prospectus (see
"Public Offering--Offering Price" in Part B). Any profit resulting from the
resale of such Units will belong to the Sponsor which likewise will bear any
loss resulting from a lower offering or redemption price subsequent to its
acquisition of such Units (see "Public Offering--Sponsor" and Underwriters"
Profits" in this Part B).
AUTOMATIC ACCUMULATION ACCOUNT
The Sponsor expects to enter into an arrangement (the "Plan") with an
open-end, non-diversified investment company (the "Accumulation Fund") which
permits Unit holders of the Trust to elect to have distributions from Units in
the Trust automatically reinvested in shares of the Accumulation Fund. Each
Unit holder may request from The Bank of New York (the "Plan Agent"), a copy of
the current prospectus relating to the Accumulation Fund (the "Fund
Prospectus") describing the Fund, including charges and expenses, and a form by
which such Unit holder may elect to become a participant ("Participant") in the
Plan. Read the Fund Prospectus carefully before you decide to participate.
Thereafter, as directed by such person, distributions on the Participant's
Units will, on the applicable distribution date, automatically be applied as of
that date by the Trustee to purchase shares (or fractions thereof) of the
Accumulation Fund at a net asset value as computed as of the close of trading
on the New York Stock Exchange on such date, plus the applicable sales change,
if any, as described in the Fund Prospectus. Unless otherwise indicated, new
Participants in the Plan will be deemed to have elected the monthly
distribution plan with respect to their Units. Confirmations of all
transactions undertaken for each Participant in the Plan will be mailed to each
Participant by the Plan Agent indicating distributions and shares (or fractions
thereof) of the Accumulation Fund purchased on his behalf. A Participant may at
any time prior to ten days preceding the next succeeding distribution date, by
so notifying the Plan Agent in writing, elect to terminate his participation in
the Plan and receive future distributions on his Units in cash. There will be
no charge or other penalty for such termination. The Sponsor, the Trustee and
the Accumulation Fund, each will have the right to terminate this Plan at any
time for any reason. The reinvestment of distributions from the Trust through
the Plan will not affect the income tax status of such distributions.
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<PAGE>
ROLLOVER AND EXCHANGE OPTION
Unit holders may reinvest their terminating distributions into units
of a subsequent series of Glickenhaus Special Situations Trust (the "New
Series") provided one is offered or they may exchange their Units for units of
another series for which Glickenhaus & Co. acts as Sponsor (the "Exchange
Series"). Such purchaser may be entitled to a reduced sales load (as disclosed
in the prospectus for the New Series or Exchange Series) upon the purchase of
units of such New Series or Exchange Series. It is expected that the terms of
the New Series will be substantially the same as the terms of the Trust
described in this Prospectus and that a similar reinvestment program will be
offered with respect to all subsequent series of the Trust, thus giving Unit
holders opportunity to elect to "rollover" their terminating distributions into
a New Series. The availability of these options do not constitute a
solicitation of an offer to purchase Units of a New Series or Exchange Series
or any other security. A Unit holder's election to participate in either of
these options will be treated as an indication of interest only. At any time
prior to the purchase by the Unit holder of units of a New Series such Unit
holder may change his investment strategy and receive, in cash, his terminating
distribution. An election of either of these options will not prevent the Unit
holder from recognizing taxable gain or loss (except in the case of a loss, if
the New Series or Exchange Series is treated as substantially identical to the
Trust) as a result of the liquidation, even though no cash will be distributed
to pay any taxes. Unit holders should consult their own tax advisers in this
regard. The Sponsor intends to coordinate the date of deposit of future series
so that the terminating trust will terminate contemporaneously with the
creation of a New Series. The Sponsor reserves the right to modify, suspend or
terminate these reinvestment options at any time.
SPONSOR
Glickenhaus is the Sponsor of Glickenhaus Special Situations Trust,
Series 1 and all subsequent series.
Glickenhaus, a New York limited partnership, is engaged in the
underwriting and securities brokerage business, and in the investment advisory
business. It is a member of the New York Stock Exchange, Inc. and the National
Association of Securities Dealers, Inc. and is an associate member of the
American Stock Exchange. Glickenhaus acts as a sponsor for successive Series of
The Municipal Insured National Trusts and for the prior series of Empire State
Municipal Exempt Trust including those sold under the name of Municipal Exempt
Trust, New York Exempt Series 1, New York Series 2 and New York Series 3.
Glickenhaus, in addition to participating as a member of various selling groups
of other investment companies, executes orders on behalf of investment
companies for the purchase and sale of securities of such companies and sells
securities to such companies in its capacity as a broker or dealer in
securities.
Limitations on Liability
The Sponsor is liable for the performance of its obligations arising
from its responsibilities under the Trust Agreement, but will be under no
liability to the Unit holders for taking any action or refraining from any
action in good faith or for errors in judgment; nor will it be responsible in
any way for depreciation or loss incurred by reason of the sale of any Bonds,
except in cases of their willful misconduct, bad faith, gross negligence or
reckless disregard for its obligations and duties. See "The Trust--Portfolio"
and "Sponsor--Responsibility" in Part B.
B-28
388740.3
<PAGE>
Responsibility
The Trustee shall sell, for the purpose of redeeming Units tendered by
any Unit holder and for the payment of expenses for which funds are not
available, such of the Bonds in a list furnished by the Sponsor as the Trustee
in its sole discretion may deem necessary.
It is the responsibility of the Sponsor to instruct the Trustee to
reject any offer made by an issuer of any of the Securities to issue new
obligations in exchange and substitution for any Securities pursuant to a
refunding or refinancing plan, except that the Sponsor may instruct the Trustee
to accept such an offer or to take any other action with respect thereto as the
Sponsor may deem proper if the issuer is in default with respect to such
Securities or in the judgment of the Sponsor the issuer will probably default
in respect to such Securities in the foreseeable future.
Any obligations so received in exchange or substitution will be held
by the Trustee subject to the terms and conditions of the Trust Agreement to
the same extent as Securities originally deposited thereunder. Within five days
after the deposit of obligations in exchange or substitution for underlying
Securities, the Trustee is required to give notice thereof to each Unit holder,
identifying the obligations eliminated and the Securities substituted therefor.
Except as stated in this and the preceding paragraph and in the discussion
under "Portfolio--General Considerations" in Part B regarding the substitution
of Replacement Bonds for Failed Bonds, the acquisition by the Trust of any
securities other than the Securities initially deposited is prohibited.
If any default in the payment of principal or interest on any Bond
occurs and no provision for payment is made therefor within 30 days, the
Trustee is required to notify the Sponsor thereof. If the Sponsor fails to
instruct the Trustee to sell or to hold such Bond within 30 days after
notification by the Trustee to the Sponsor of such default, the Trustee may in
its discretion sell the defaulted Bond and not be liable for any depreciation
or loss thereby incurred.
See "The Trust--Insurance on the Bonds" in Part B.
The Sponsor may direct the Trustee to dispose of Bonds upon default in
the payment of principal or interest, institution of certain legal proceedings
or the existence of certain other impediments to the payment of Bonds, default
under other documents which may adversely affect debt service, default in the
payment of principal or interest on other obligations of the same issuer,
decline in projected income pledged for debt service on revenue Bonds, or
decline in price or the occurrence of other market factors, including advance
refunding, so that in the opinion of the Sponsor the retention of such Bonds in
the Trust would be detrimental to the interest of the Unit holders. The
proceeds from any such sales will be credited to the Principal Account for
distribution to the Unit holders.
Resignation
If, at any time, the Sponsor shall resign or fail to perform any of
its duties thereunder or becomes incapable of acting or becomes bankrupt or its
affairs are taken over by public authorities, then the Trustee may appoint a
successor sponsor or terminate the Trust Agreement and liquidate the Trust.
Financial Information
At September 30, 1995, the total partners' capital of Glickenhaus was
$146,106,000 (audited).
The foregoing information with regard to the Sponsor relates to the
Sponsor only, and not to any series of the Glickenhaus Special Situations
Trust. Such information is included in this Prospectus only for the purpose of
informing
B-29
388740.3
<PAGE>
investors as to the financial responsibility of the Sponsor and its ability to
carry out its contractual obligations shown herein. More comprehensive
financial information can be obtained upon request from the Sponsor.
TRUSTEE
The Trustee is The Bank of New York, a trust company organized under
the laws of New York, having its offices at 101 Barclay Street, New York, New
York 10286. The Bank of New York is subject to supervision and examination by
the Superintendent of Banks of the State of New York and the Board of Governors
of the Federal Reserve System, and its deposits are insured by the Federal
Deposit Insurance Corporation to the extent permitted by law. The Trustee must
be a banking corporation organized under the laws of the United States or any
state which is authorized under such laws to exercise corporate trust powers
and must have at all times an aggregate capital, surplus and undivided profits
of not less than $5,000,000. The duties of the Trustee are primarily
ministerial in nature. The Trustee did not participate in the selection of
Securities for the Trust.
Limitations on Liability
The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of the disposition of any monies,
Securities or certificates or in respect of any evaluation or for any action
taken in good faith reliance on prima facie properly executed documents except
in cases of its willful misconduct, bad faith, gross negligence or reckless
disregard for its obligations and duties. In addition, the Trustee shall not be
personally liable for any taxes or other governmental charges imposed upon or
in respect of the Trust which the Trustee may be required to pay under current
or future law of the United States or any other taxing authority having
jurisdiction. See "The Trust-- Portfolio" in Part A.
Responsibility
For information relating to the responsibilities of the Trustee under
the Trust Agreement, reference is made to the material set forth under "Rights
of Unit Holders," "Sponsor--Responsibility" and "Sponsor--Resignation" in this
Part B.
Resignation
By executing an instrument in writing and filing the same with the
Sponsor, the Trustee and any successor may resign. In such an event the Sponsor
is obligated to appoint a successor trustee as soon as possible. If the Trustee
becomes incapable of acting or becomes bankrupt or its affairs are taken over
by public authorities, or if the Sponsor deems it to be in the best interest of
the Unit holders, the Sponsor may remove the Trustee and appoint a successor as
provided in the Trust Agreement. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor trustee. If, upon
resignation or removal of a trustee, no successor has been appointed and has
accepted the appointment within thirty days after notification, the retiring
trustee may apply to a court of competent jurisdiction for the appointment of a
successor. The resignation or removal of a trustee becomes effective only when
the successor trustee accepts its appointment as such or when a court of
competent jurisdiction appoints a successor trustee.
B-30
388740.3
<PAGE>
EVALUATOR
Both during and after the initial offering period, the Evaluator shall
be Muller Data Corporation ("Muller Data"), a New York corporation with main
offices located at 395 Hudson Street, New York, New York 10014. Muller Data is
a wholly owned subsidiary of Thomson Publishing Corporation, a Delaware
corporation.
Limitations on Liability
The Trustee and the Sponsor may rely on any evaluation furnished by
the Evaluator and shall have no responsibility for the accuracy thereof.
Determinations by the Evaluator under the Trust Agreement shall be made in good
faith upon the basis of the best information available to it; provided,
however, that the Evaluator shall be under no liability to the Trustee, the
Sponsor or Unit holders for errors in judgement. But this provision shall not
protect the Evaluator in cases of its willful misconduct, bad faith, gross
negligence or reckless disregard of its obligations and duties.
Responsibility
The Trust Agreement requires the Evaluator to evaluate the Securities
on the basis of their bid prices on each business day after the initial
offering period, when any Unit is tendered for redemption and on any other day
such evaluation is desired by the Trustee or is requested by the Sponsor. For
information relating to the responsibility of the Evaluator to evaluate the
Securities on the basis of their offering prices, see "Public
Offering--Offering Price" in Part B.
Resignation
The Evaluator may resign or may be removed by the Sponsor and the
Trustee, and the Sponsor and the Trustee are to use their best efforts to
appoint a satisfactory successor. Such resignation or removal shall become
effective upon the acceptance of appointment by the successor evaluator. If
upon resignation of the Evaluator no successor has accepted appointment within
thirty days after notice of resignation, the Evaluator may apply to a court of
competent jurisdiction for the appointment of a successor.
AMENDMENT AND TERMINATION OF THE TRUST AGREEMENT
The Sponsor and the Trustee have the power to amend the Trust
Agreement without the consent of any of the Unit holders when such an amendment
is (1) to cure any ambiguity or to correct or supplement any provision of the
Trust Agreement which may be defective or inconsistent with any other provision
contained therein, or (2) to make such other provisions as shall not adversely
affect the interest of the Unit holders; and the Sponsor and the Trustee may
amend the Trust Agreement with the consent of the holders of Certificates
evidencing 66 2/3% of the Units then outstanding, provided that no such
amendment will reduce the interest in the Trust of any Unit holder without the
consent of such Unit holder or reduce the percentage of Units required to
consent to any such amendment without the consent of all the Unit holders. In
no event shall the Trust Agreement be amended to increase the number of Units
issuable thereunder or to permit the deposit or acquisition of securities
either in addition to or in substitution for any of the Bonds initially
deposited in the Trust, except in accordance with the provisions of each Trust
Agreement. In
B-31
388740.3
<PAGE>
the event of any amendment, the Trustee is obligated to notify promptly all
Unit holders of the substance of such amendment.
The Trust shall terminate upon the maturity, redemption, sale or other
disposition, as the case may be, of the last of the Securities. The Trustee
shall notify all Unit holders when the value of the Trust as shown by any
evaluation is less than $2,000,000 or less than 20% of the value of the Trust
as of the date hereof, whichever is lower, at which time the Trust may be
terminated (i) by the consent of 66 2/3% of the Units or (ii) by the Trustee;
provided, however, that upon affirmative written notice to the holders of their
opportunity to object to such termination and to the Sponsor at least 33 1/3%
of the Units do not instruct the Trustee not to terminate the Trust. In no
event, however, may the Trust continue beyond the Mandatory Termination Date
set forth in Part A; provided, however, that prior to such date, the Trustee
shall not dispose of any Bonds if the retention of such Bonds, until due, shall
be deemed to be in the best interest of the Unit holders. In the event of
termination, written notice thereof will be sent by the Trustee to all Unit
holders. Within a reasonable period after termination, the Trustee will sell
any remaining Securities, and, after paying all expenses and charges incurred
by the Trust, will distribute to each Unit holder, upon surrender for
cancellation of his certificate for Units, his pro rata share of the balances
remaining in the Interest and Principal Accounts of the Trust.
LEGAL OPINIONS
Certain legal matters will be passed upon by Battle Fowler LLP, 75
East 55th Street, New York, New York 10022, as special counsel for the Sponsor,
and Kroll & Tract LLP, 520 Madison Avenue, New York, New York 10022, acting as
counsel for the Trustee.
AUDITORS
The statement of condition of the Trust included in this Prospectus
has been audited by BDO Seidman, LLP, independent certified public accountants,
as stated in their report appearing herein, and has been so included in
reliance upon such report given upon the authority of that firm as experts in
accounting and auditing.
DESCRIPTION OF BOND RATINGS
The ratings are based on current information furnished to Standard &
Poor's by the issuer and obtained by Standard & Poor"s from other sources it
considers reliable. Standard & Poor"s does not perform an audit in connection
with any rating and may, on occasion, rely on unaudited financial information.
The ratings may be changed, suspended, or withdrawn as a result of changes in,
or unavailability of, such information or for other circumstances.
The ratings are based, in varying degrees, on the following
considerations:
I. Likelihood of default-capacity and willingness of the obligor as to
the timely payment of interest and repayment of principal in accordance with
the terms of the obligation;
II. Nature of and provisions of the obligation;
B-32
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<PAGE>
III. Protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization or other arrangement under the laws
of bankruptcy and other laws affecting creditors' rights.
AAA--Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal is
extremely strong.
AA--Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.
A--Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds in this category than for bonds in higher rated categories.
Plus (+) or Minus (-): to provide more detailed indications of credit
quality, the ratings from "AA" to "B" may be modified by the addition of a plus
or minus sign to show relative standing within the major rating categories.
Provisional Ratings: The letter "p" indicates that the rating is
provisional. A provisional rating assumes the successful completion of the
project being financed by the bonds being rated and indicates that payment of
debt service requirements is largely or entirely dependent upon the successful
and timely completion of the project. This rating, however, while addressing
credit quality subsequent to completion of the project, makes no comment on the
likelihood of, or the risk of default upon failure of, such completion.
Accordingly, the investor should exercise his own judgment with respect to such
likelihood and risk.
NR--Indicates that no rating has been requested, that there is
insufficient information on which to base a rating or that Standard & Poor's
does not rate a particular type of obligation as a matter of policy.
SP-1: Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics will be
given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest. SP-3:
Speculative capacity to pay principal and interest.
* Moody's Investors Service rating. A summary of the meaning of the
applicable rating symbols as published by Moody's follows:
Aaa--Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
B-33
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<PAGE>
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A--Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations. Factors
giving security to principal and interest are considered adequate, but elements
may be present which suggest a susceptibility to impairment sometime in the
future.
Baa--Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Con. (. . .)--Bonds for which the security depends upon the completion
of some act or the fulfillment of some condition are rated conditionally. These
are bonds secured by: (a) earnings of projects under construction, (b) earnings
of projects unseasoned in operating experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting
condition attaches. Parenthetical rating denotes probable credit stature upon
completion of construction or elimination of basis of condition.
Moody's applies numerical modifiers 1, 2 and 3 in each rating
classification from "Aa" through "B" in its corporate rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the security ranks in the lower end of its generic rating
category.
**Fitch Investors Service Rating. A summary of the meaning of the
applicable rating symbols as published by Fitch follows:
AAA--These bonds are considered to be investment grade and of the
highest quality. The obligor has an extraordinary ability to pay interest and
repay principal, which is unlikely to be affected by reasonably foreseeable
events.
AA--These bonds are considered to be investment grade and of high
quality. The obligor's ability to pay interest and repay principal, while very
strong, is somewhat less than for AAA rated securities or more subject to
possible change over the term of the issue.
A--These bonds are considered to be investment grade and of good
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
BBB--These bonds are considered to be investment grade and of
satisfactory quality. The obligor's ability to pay interest and repay principal
is considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to weaken this ability than bonds with
higher ratings.
A "+" or a "--" sign after a rating symbol indicates relative standing
in its rating.
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388740.3
<PAGE>
PART II--ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A--BONDING ARRANGEMENTS
The employees of Glickenhaus & Co. are covered under Brokers' Blanket
Policy, Standard Form 14, in the amount of $5,000,000.
ITEM B--CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers
and documents:
The facing sheet on Form S-6.
The Cross-Reference Sheet.
The Prospectus consisting of pages.
Undertakings.
Signatures.
Written consents of the following persons:
Battle Fowler LLP (included in Exhibit 3.1)
BDO Seidman, LLP
The following exhibits:
<TABLE>
<S> <C> <C>
*99.1.1 -- Reference Trust Agreement including certain Amendments to the Trust Indenture and
Agreement referred to under Exhibit 1.1.1 below.
*99.1.1.1 -- Trust Indenture and Agreement.
99.1.6 -- Restated Agreement of Limited Partnership of Glickenhaus & Co. (filed as Exhibit 1.3 to
Form S-6 Registration Statement No. 2-95041 of Municipal Insured National Trust Series 1
on December 21, 1984, and incorporated herein by reference).
99.1.6(a) -- Agreement of Amendment to Restated Agreement of
Limited Partnership of Glickenhaus & Co. (filed as
Exhibit 1.3(a) to Form S-6 Registration Statement No.
2-95041 of Municipal Insured National Trust Series 1
on December 21, 1984, and incorporated herein by
reference).
99.1.6(b) -- Certificate of Amendment to Restated Agreement of Limited Partnership of Glickenhaus
& Co. (filed as Exhibit 1.3(b) to Form S-6 Registration Statement No. 2-95041 of
Municipal Insured National Trust Series 1 on December 21, 1984, and incorporated herein
by reference).
99.1.6(c) -- Agreement of Amendment to Restated Agreement of Limited Partnership of Glickenhaus
& Co. (filed as Exhibit 1.3(c) to Form S-6 Registration Statement No. 2-95041 of
Municipal Insured National Trust Series 1 on December 21, 1984, and incorporated herein
by reference).
99.1.6(d) -- Agreement of Amendment to Restated Agreement of Limited Partnership of Glickenhaus
& Co. (filed as Exhibit 1.2(d) to Amendment No. 1 to Form S-6 Registration Statement
</TABLE>
- --------
* Filed herewith.
II-i
394861.1
<PAGE>
<TABLE>
<S> <C> <C>
No. 33-814 of Empire State Municipal Exempt Trust,
Guaranteed Series 23 on April 11, 1986, and
incorporated herein by reference).
*99.2.1 -- Form of Certificate.
*99.3.1 -- Opinion of Battle Fowler LLP as to the legality of the securities being registered.
99.4.1 -- Information as to Partners of Glickenhaus & Co.
(filed as Exhibit 4.1 to Amendment No. 1 to Form S-6
Registration Statement No. 33-26577 of Empire State
Municipal Exempt Trust, Guaranteed Series 46 on April
19, 1989, and incorporated herein by reference).
99.4.3 -- Affiliations of Sponsor with other investment
companies (filed as Exhibit 4.6 to Amendment No. 1 to
Form S-6 Registration Statement No. 2-95041 of
Municipal Insured National Trust Series 1 on March 21,
1985, and incorporated herein by reference).
99.4.4 -- Stockbrokers' Bond and Policy, Form B for Glickenhaus & Co. (filed as Exhibit 4.7 to
Form S-6 Registration Statement No. 2-95041 of Municipal Insured National Trust Series 1
on December 21, 1984, and incorporated herein by reference).
*99.5.1 -- Consent to be Evaluator of Muller Data Corporation.
99.6.0 -- Copies of Powers of Attorney of General Partners of
Glickenhaus & Co. (filed as Exhibit 6.0 to Form S-6
Registration Number 33-64155 of Glickenhaus Value
Portfolios, The 1996 Equity Collection on November 13,
1995, and incorporated herein by reference).
*27 -- Financial Data Schedule (for EDGAR filing only).
</TABLE>
- --------
* Filed herewith.
II-ii
394861.1
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, Glickenhaus Special Situations Trust, Series 1 has duly caused this
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, hereunto duly authorized, in the City of New York and State of New
York on the 28th day of October, 1996.
GLICKENHAUS SPECIAL SITUATIONS TRUST,
SERIES 1
By: GLICKENHAUS & CO.
(Sponsor)
By: /s/ BRIAN C. LAUX
(Brian C. Laux, Attorney-in-Fact)
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
<S> <C> <C> <C>
ALFRED FEINMAN* General Partner
(Alfred Feinman)
SETH M. GLICKENHAUS* General Partner,
(Seth M. Glickenhaus) Chief Investment Officer
STEVEN B. GREEN* Chief Financial
(Steven B. Green) Officer
*By: /s/ BRIAN C. LAUX October 28, 1996
(Brian C. Laux, Attorney-in-Fact)
</TABLE>
- --------
* Executed copies of Powers of Attorney filed as Exhibit 6.0 to
Registration Statement No. 33-64155 on November 13, 1995.
II-iii
<PAGE>
CONSENT OF COUNSEL
The consent of counsel to the use of their name in the Prospectus included
in this Registration Statement is contained in their opinion filed as Exhibit
3.1 to this Registration Statement.
CONSENT OF INDEPENDENT AUDITORS
The Sponsor and Trustee of Glickenhaus Special Situations Trust, Series 1,
Duke & Company Tax Free Portfolios - National Insured Trust
We hereby consent to the use in this Registration Statement No. 333-10371 of
our report dated October 28, 1996, relating to the Statement of Condition of
Glickenhaus Special Situations Trust, Series 1, Duke & Company Tax Free
Portfolios - National Insured Trust and to the reference to our firm under the
heading "Auditors" in the Prospectus which is a part of such Registration
Statement.
BDO SEIDMAN, LLP
New York, New York
October 28, 1996
II-iv
<PAGE>
REGISTRATION NO. 333-10371
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
EXHIBITS
FILED WITH
AMENDMENT NO. 1 TO
FORM S-6
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
------------------------
GLICKENHAUS SPECIAL SITUATIONS TRUST,
SERIES 1
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit Number DESCRIPTION PAGE
<S> <C>
*99.1.1 -- Reference Trust Agreement including certain Amendments to the Trust Indenture
and Agreement referred to under Exhibit 1.1.1
*99.1.1.1 -- Trust Indenture and Agreement.
99.1.6 -- Restated Agreement of Limited Partnership of Glickenhaus & Co. (filed as
Exhibit 1.3 to Form S-6 Registration Statement No. 2-95041 of Municipal Insured
National Trust Series 1 on December 21, 1984, and incorporated herein by
reference).
99.1.6(a) -- Agreement of Amendment to Restated Agreement of Limited
Partnership of Glickenhaus & Co. (filed as Exhibit 1.3(a)
to Form S-6 Registration Statement No. 2-95041 of Municipal
Insured National Trust Series 1 on December 21, 1984, and
incorporated herein by reference).
99.1.6(b) -- Certificate of Amendment to Restated Agreement of Limited Partnership of
Glickenhaus & Co. (filed as Exhibit 1.3(b) to Form S-6 Registration Statement
No. 2-95041 of Municipal Insured National Trust Series 1 on December 21,
1984, and incorporated herein by reference).
99.1.6(c) -- Agreement of Amendment to Restated Agreement of Limited Partnership of
Glickenhaus & Co. (filed as Exhibit 1.3(c) to Form S-6 Registration Statement
No. 2-95041 of Municipal Insured National Trust Series 1 on December 21,
1984, and incorporated herein by reference).
99.1.6(d) -- Agreement of Amendment to Restated Agreement of Limited
Partnership of Glickenhaus & Co. (filed as Exhibit 1.2(d)
to Amendment No. 1 to Form S-6 Registration Statement No.
33-814 of Empire State Municipal Exempt Trust, Guaranteed
Series 23 on April 11, 1986, and incorporated herein by
reference).
*99.2.1 -- Form of Certificate.
*99.3.1 -- Opinion of Battle Fowler LLP as to the legality of the securities being registered.
99.4.1 -- Information as to Partners of Glickenhaus & Co. (filed as Exhibit 4.1 to
Amendment No. 1 to Form S-6 Registration Statement No.
33-26577 of Empire State Municipal Exempt Trust, Guaranteed
Series 46 on April 19, 1989, and incorporated herein by
reference).
99.4.3 -- Affiliations of Sponsor with other investment companies
(filed as Exhibit 4.6 to Amendment No. 1 to Form S-6
Registration Statement No. 2-95041 of Municipal Insured
National Trust Series 1 on March 21, 1985, and incorporated
herein by reference).
99.4.4 -- Stockbrokers' Bond and Policy, Form B for Glickenhaus & Co. (filed as
Exhibit 4.7 to Form S-6 Registration Statement No. 2-95041 of Municipal Insured
National Trust Series 1 on December 21, 1984, and incorporated herein by
reference).
*99.5.1 -- Consent to be Evaluator of Muller Data Corporation.
</TABLE>
- --------
* Filed herewith.
<PAGE>
<TABLE>
<CAPTION>
Exhibit Number DESCRIPTION PAGE
<S> <C>
99.6.0 -- Copies of Powers of Attorney of General Partners of
Glickenhaus & Co. (filed as Exhibit 6.0 to Form S-6
Registration Statement Number 33-64155 of Glickenhaus Value
Portfolios, The 1996 Equity Collection on November 13,
1995, and incorporated herein by reference).
*27 -- Financial Data Schedule (for EDGAR filing only).
</TABLE>
- --------
* Filed herewith.
-2-
GLICKENHAUS SPECIAL SITUATIONS TRUST, SERIES
1 Duke & Company Tax Free Portfolios -
National Insured Trust
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated October 28, 1996 among
Glickenhaus & Co. as Depositor, The Bank of New York, as Trustee and Muller
Data Corporation, as Evaluator, sets forth certain provisions in full and
incorporates other provisions by reference to the document entitled
"Glickenhaus Special Situations Trust, Series 1, Trust Indenture and Agreement"
dated October 28, 1996 as amended in part by this Reference Trust Agreement
(herein as amended or supplemented called the "Indenture"). This Reference
Trust Agreement and the Indenture, as incorporated by reference herein, will
constitute a single instrument.
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements
herein contained, the Depositor, the Trustee, and the Evaluator agree as
follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Subject to the provisions of Part II hereof, all the
provisions contained in the Indenture are herein incorporated by reference in
their entirety and shall be deemed to be a part of this instrument as fully and
to the same extent as though said provisions had been set forth in full in this
instrument.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
The following special terms and conditions are hereby agreed
to:
(a) The interest-bearing obligations listed in the Prospectus
related to Glickenhaus Special Situations Trust, Series 1, Duke & Company Tax
Free Portfolio - National Insured Trust have been deposited in trust under this
Indenture (see
407532.1
<PAGE>
"Portfolio" in Part A of the Prospectus which for purposes of this Indenture is
the Schedule of Securities or Schedule A).
(b) For the purposes of the definition of the Unit in item
(28) of Section 1.1, the fractional undivided interest in and ownership of the
Trust is 5,000.
(c) The fiscal year for the Trust shall end on July
31st of each year.
(d) All Certificateholders of record on November 15, 1996
(the "First Monthly Record Date") who have selected the monthly distribution
plan, will receive a distribution to be made on or shortly after December 1,
1996 (the "First Distribution Date"), and thereafter distributions will be made
monthly. The first semi-annual distribution will be made on or shortly after
December 1, 1996 to all Certificateholders of record on November 15, 1996 who
have selected the semi-annual distribution plan, and thereafter distributions
will be made semi-annually.
(e) The First Settlement Date shall mean October 31, 1996.
(f) The number of Units referred to in Section 2.3 is 5,000.
(g) For the purposes of Section 4.3, the Evaluator shall
receive for each evaluation of the Bonds in the Trust $.55 per Bond for each
valuation.
(h) For purposes of Section 6.4, the Trustee shall be paid
per annum $1.41 per $1,000 principal amount of Bonds for that portion of the
Trust under the monthly distribution plan and $1.01 per $1,000 principal amount
of Bonds for that portion of the Trust under the semi-annual distribution plan.
(i) For purposes of Section 8.6, the Depositor's maximum
annual fee is hereby specified to be $.25 per $1,000 principal amount of Bonds
in the Trust.
(j) For purposes of Section 9.2, the Mandatory Termination
Date for the Trust is December 31, 2045.
(k) For purposes of this Series of Special Situations Trust,
the form of Certificate set forth in this Indenture shall be appropriately
modified to reflect the title of this Series as set forth above.
-2-
407532.1
<PAGE>
(l) For purposes of this Series of Special Situations Trust,
the execution date of this Indenture shall be the date first written above.
IN WITNESS WHEREOF, the parties hereto have caused this
Reference Trust Agreement to be duly executed on the date first above written.
[Signatures on separate pages]
-3-
407532.1
<PAGE>
GLICKENHAUS & CO.
By: /s/Brian C. Laux
---------------------
Attorney-in-Fact
for each of the
General Partners
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, Kelly McConvery, a Notary Public in and for the said
County in the State aforesaid, do hereby certify that Brian C. Laux, personally
known to me to be the same whose name is subscribed to the foregoing
instrument, appeared before me this day in person, and acknowledged that he
signed and delivered the said instrument as his free and voluntary act as
Attorney-in-Fact for each of the General Partners, and as the free and
voluntary act of said GLICKENHAUS & CO., for the uses and purposes therein set
forth.
GIVEN, under my hand and notarial seal this 28th day of
October, 1996.
/s/Kelly McConvery
------------------
Notary Public
[SEAL]
KELLY McCONVERY
Notary Public, State of New York
No. 01MC5044884
Qualified in New York County
Commission Expires June 5, 1997
<PAGE>
THE BANK OF NEW YORK, Trustee
By: /s/Jeffrey Cohen
-------------------
Vice President
ATTEST:
By /s/Jenifer Dicker
- ---------------------
(CORPORATE SEAL)
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, Emanuel T Lytle, Jr., a Notary Public in and for the said
County in the State aforesaid, do hereby certify that Jeffrey Cohen and Jenifer
Dicker personally known to me to be the same persons whose names are subscribed
to the foregoing instrument and personally known to me to be a Vice President
and Assistant Vice President, respectively, of The Bank of New York, appeared
before me this day in person, and acknowledge that they signed, sealed with the
corporate seal of The Bank of New York and delivered the said instrument as
their free and voluntary act as such Vice President and Assistant Vice
President, respectively, and as the free and voluntary act of said The Bank of
New York for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 8th day of
October, 1996.
/s/Emanuel T. Lytle, Jr.
------------------------
Notary Public
[SEAL]
My commission expires:
EMANUEL T. LYTLE, JR.
Notary Public, State of New York
No. 41-4696933
Qualified in Queens County
Commission Expires April 30, 1997
<PAGE>
MULLER DATA CORPORATION, Evaluator
By:/s/Mario S. Buscemi
-------------------------------
Mario S. Buscemi
Chief Operating Officer
ATTEST:
By:/s/Richard Birnbaum
- ----------------------
Richard Birnbaum
Vice President
[CORPORATE SEAL]
GLICKENHAUS
SPECIAL SITUATIONS TRUST,
SERIES 1
(and Subsequent Series)
===============================================================================
TRUST INDENTURE AND AGREEMENT
Among
GLICKENHAUS & CO.
as Depositor
THE BANK OF NEW YORK
as Trustee
and
MULLER DATA CORPORATION
as Evaluator
===============================================================================
Dated: October 28, 1996
406909.1
<PAGE>
TRUST INDENTURE AND AGREEMENT
GLICKENHAUS
SPECIAL SITUATIONS TRUST,
SERIES 1
(and Subsequent Series)
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS, CERTIFICATE
SECTION 1.1. Definitions.................................................. 2
SECTION 1.2. Form of Certificate.......................................... 5
ARTICLE II DEPOSIT OF BONDS, ACCEPTANCE OF TRUST, FORM AND
ISSUANCE OF CERTIFICATES, INSURANCE
SECTION 2.1. Deposit of Bonds............................................. 14
SECTION 2.2. Acceptance of Trust.......................................... 14
SECTION 2.3. Issue of Certificates........................................ 14
SECTION 2.4. Form of Certificates......................................... 14
SECTION 2.5. Bond Insurance............................................... 15
ARTICLE III ADMINISTRATION OF FUND
SECTION 3.1. Initial Cost................................................. 16
SECTION 3.2. Interest Account............................................. 17
SECTION 3.3. Principal Account............................................ 17
SECTION 3.4. Reserve Account.............................................. 18
SECTION 3.5. Distribution................................................. 18
SECTION 3.6. Distribution Statements...................................... 22
SECTION 3.7. Sale of Bonds................................................ 24
SECTION 3.8. Refunding Bonds.............................................. 26
SECTION 3.9. Bond Counsel................................................. 26
SECTION 3.10. Notice and Sale by Trustee................................... 26
SECTION 3.11. Trustee not to Amortize...................................... 26
SECTION 3.12. Liability of Depositor....................................... 27
SECTION 3.13. Notice to Depositor.......................................... 27
SECTION 3.14. Limited Replacement of Special Bonds......................... 27
ARTICLE IV EVALUATION OF BONDS; EVALUATOR
SECTION 4.1. Evaluation by Evaluator...................................... 29
SECTION 4.2. Tax Reports.................................................. 30
SECTION 4.3. Evaluator's Compensation..................................... 30
SECTION 4.4. Liability of Evaluator....................................... 30
SECTION 4.5. Successor Evaluator.......................................... 30
(i)
406909.1
<PAGE>
Page
ARTICLE V TRUST FUND EVALUATION, REDEMPTION, PURCHASE
TRANSFER, INTERCHANGE OR REPLACEMENT OF
CERTIFICATES
SECTION 5.1. Trust Fund Evaluation......................................... 32
SECTION 5.2. Redemption by Trustee; Purchases by Depositor................. 33
SECTION 5.3. Transfer or Interchange of Certificates....................... 35
SECTION 5.4. Certificates Mutilated, Destroyed, Stolen or Lost............. 35
ARTICLE VI TRUSTEE
SECTION 6.1. General Definition of Trustee's Liabilities,
Rights and Duties.................................... 36
SECTION 6.2. Books, Records and Reports.................................... 39
SECTION 6.3. Indenture and List of Bonds on File........................... 40
SECTION 6.4. Compensation.................................................. 40
SECTION 6.5. Removal and Resignation of Trustee;
Successor............................................ 41
SECTION 6.6. Qualifications of Trustee..................................... 43
ARTICLE VII RIGHTS OF CERTIFICATEHOLDERS
SECTION 7.1. Beneficiaries of Trust........................................ 43
SECTION 7.2. Rights, Terms and Conditions.................................. 43
ARTICLE VIII DEPOSITOR
SECTION 8.1. Discharge..................................................... 44
SECTION 8.2. Successors.................................................... 45
SECTION 8.3. Resignation................................................... 45
SECTION 8.4. Exclusions from Liability..................................... 45
SECTION 8.5. Annual Fee.................................................... 46
ARTICLE IX ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
SECTION 9.1. Amendments.................................................... 47
SECTION 9.2. Termination................................................... 48
SECTION 9.3. Construction.................................................. 49
SECTION 9.4. Registration of Units and Trust Fund.......................... 50
SECTION 9.5. Written Notice................................................ 50
SECTION 9.6. Severability.................................................. 50
SECTION 9.7. Dissolution of Depositor not to Terminate..................... 50
----------------------------------
This "Table of Contents" does not constitute part of the
Indenture.
(ii)
406909.1
<PAGE>
TRUST INDENTURE AND AGREEMENT DATED October 28, 1996
AMONG GLICKENHAUS & CO., as Depositor,
THE BANK OF NEW YORK, as Trustee,
and
MULLER DATA CORPORATION, as Evaluator
W I T N E S S E T H that:
WHEREAS, it is desired to expand the market for certain
obligations the interest income on which is exempt from Federal income tax
pursuant to the applicable provisions of the United States Internal Revenue
Code of 1986, as amended, or pursuant to other provisions of law, some of which
obligations, as individual issues or parts thereof, might be unavailable or
impracticable as investments to certain individual investors, and to provide
diversification to such investors, particularly those with limited investment
capital; and
WHEREAS, the Depositor desires to provide for the collection
and distribution of the principal of and interest on such obligations by the
Trustee to such persons as shall purchase an interest therein, as hereinafter
provided; and
WHEREAS, the Depositor, concurrently with the execution and
delivery hereof, is establishing Glickenhaus Special Situations Trust, Series
1, wherein certain interest bearing obligations will be deposited by the
Depositor, to be held by the Trustee in trust for the use and benefit of the
registered holders of certificates of ownership to be issued as hereinafter
provided. The parties hereto are entering into this Indenture for the purpose
of establishing certain of the terms, covenants and conditions of Glickenhaus
Special Situations Trust, Series 1 and of each additional series of such Trust
which may be established from time to time hereafter. For Glickenhaus Special
Situations Trust, Series 1 and each subsequent series of Glickenhaus Special
Situations Trust (as to which this Indenture is to be applicable) the parties
hereto shall execute a separate Reference Trust Agreement incorporating by
reference this Indenture and effecting any amendment, supplement or variation
from or to this Indenture with respect to the related series and specifying for
that series (i) the Bonds deposited in trust and the number of Units delivered
by the Trustee in exchange for the Bonds pursuant to Section 2.3; (ii) the
initial fractional undivided interest represented by each Unit; (iii) the First
Record Date; (iv) the First Distribution Date; (v) the First
406909.1
<PAGE>
Settlement Date; (vi) the Evaluator's fee; (vii) the Trustee's fee and (viii)
any other change or addition contemplated or permitted by this Indenture.
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the Depositor, the Trustee and the
Evaluator agree as follows:
ARTICLE I
DEFINITIONS, CERTIFICATE
SECTION 1.1. Definitions. Whenever used in this
Indenture, the following words and phrases, unless the context
clearly indicates otherwise, shall have the following meanings:
(1) "Bonds" shall mean such of the tax-exempt obligations,
including delivery statements, relating to "when-issued" and/or "regular way"
contracts, if any, for the purchase of certain bonds and receipts which will
entitle the Trustee to receive such tax-exempt bonds, and certified checks,
cash, or an irrevocable letter of credit or a combination thereof in the amount
required for such purchase, deposited in irrevocable trust and listed in
Schedule A, and any obligations received in exchange, substitution or
replacement for such obligations pursuant to Sections 3.8 and 3.14 hereof, as
may from time to time continue to be held as a part of the Trust Fund.
(2) "Business Day" shall mean any day other than a Saturday
or Sunday, or a legal holiday or a day on which banking institutions are
authorized by law to close in the City of New York, or a day on which the New
York Stock Exchange, Inc. is closed.
(3) "Certificate" shall mean any one of the certificates
substantially in the form hereinafter recited executed by the Trustee and the
Depositor evidencing ownership of a fractional undivided interest in the Trust
Fund.
(4) "Certificateholder" shall mean the registered holder of
any Certificate as recorded on the books of the Trustee, his legal
representatives and heirs, and the successors of any corporation, partnership
or other legal entity which is a registered holder of any Certificate and as
such shall be deemed a beneficiary of the trust created by this Indenture to
the extent of his pro rata share thereof.
(5) "Contract Bonds" shall mean Bonds which are to be
acquired by the Trust Fund pursuant to contracts, including (i) Bonds listed in
Schedule A and (ii) Bonds which the Depositor
-2-
406909.1
<PAGE>
has contracted to purchase for the Trust Fund pursuant to Sec-
tion 3.14 hereof.
(6) "Date of Deposit" shall mean the date of the applicable
Reference Trust Agreement.
(7) "Depositor" shall mean Glickenhaus & Co. and its
successors in interest, or any successor depositor or depositors
as hereinafter provided for.
(8) "Evaluation Time" shall mean 4:00 P.M. New York
Time during the initial offering period and 2:00 P.M. New York
Time thereafter.
(9) "Evaluator" shall mean Muller Data Corporation or any
corporation into which such firm may be merged or with which it may be
consolidated, or any corporation resulting from any merger or consolidation to
which such firm shall be a party, or any firm succeeding to all or
substantially all of the business of such firm as an evaluator of tax-exempt
bonds, or any successor evaluator as hereinafter provided for.
(10) "First Distribution Date" shall mean the date specified
in Part II of the applicable Reference Trust Agreement.
(11) "First Record Date" shall mean the date specified in
Part II of the applicable Reference Trust Agreement.
(12) "First Settlement Date" shall mean the date as specified
in Part II of the applicable Reference Trust Agreement.
(13) "Indenture" shall mean this Trust Indenture and
Agreement as originally executed or, if amended by an applicable Reference
Trust Agreement or as hereinafter provided, as so amended.
(14) "Insurance" shall mean the contract or contracts or
policy or policies of insurance obtained by the Depositor guaranteeing the
scheduled payment when due of the principal of and interest on the Bonds
(except Pre-Insured Bonds held pursuant and subject to this Indenture) held
pursuant and subject to this Indenture, together with the proceeds, if any,
thereof payable to or received by the Trustee for the benefit of the Trust and
the Certificateholders thereof and guaranteeing the stated payment of interest
and principal with respect to any such Bonds as long as they remain
outstanding.
(15) "Insurer" shall mean that bond insurance company from
which the Depositor, or in the case of Pre-Insured Bonds the issuer or parties
other than the Trust, has purchased Insurance or any corporation into which it
may be merged or with which it may be consolidated or any corporation resulting
from the merger
-3-
406909.1
<PAGE>
or consolidation to which it shall be a party, or any corporation succeeding to
all or substantially all of its business, or any successor bond insurer
designated as such by operation of law.
(16) "Monthly Computation Date" shall mean the fifteenth day
of each month commencing with the first such day of the month after the First
Record Date.
(17) "Monthly Distribution Date" shall mean the first day of
each month following a Monthly Computation Date.
(18) "Permanent Insurance" shall mean the insurance obtained
from the Insurer by the Trustee on a Bond upon the sale of such Bond from the
Trust, as described in the Prospectus.
(19) "Pre-insured Bonds" shall mean Bonds which are insured
as long as they are outstanding under insurance policies obtained by the
issuers of such Bonds or by parties other than the Trust.
(20) "Prospectus" shall mean the prospectus included in the
registration statement, as amended, on Form S-6 under the Securities Act of
1933, as amended, relating to the Trust on file with the Securities and
Exchange Commission at the time such registration statement, as amended,
becomes effective, except that if the prospectus filed pursuant to Rule 497(b)
under the Securities Act of 1933, as amended, differs from the prospectus on
file at the time such registration statement, as amended, becomes effective,
the term Prospectus shall refer to the Rule 497(b) prospectus from and after
the time it is mailed or otherwise delivered to the Securities and Exchange
Commission for filing.
(21) "Reference Trust Agreement" shall mean that Reference
Trust Agreement executed by the parties hereto for a particular series of
Glickenhaus Special Situations Trust into which the terms of this Indenture are
incorporated.
(22) "Reserve Account" shall mean the account established
pursuant to Section 3.4 hereof.
(23) "Schedule A" shall mean the Schedule A to the applicable
Reference Trust Agreement for this or any future series of Glickenhaus Special
Situations Trust established
pursuant to this Indenture.
(24) "Semi-Annual Computation Date" shall mean the fifteenth
day of May and November commencing with the first such day after the First
Record Date.
-4-
406909.1
<PAGE>
(25) "Semi-Annual Distribution Date" shall mean the first day
of June and December following a Semi-Annual Computation Date.
(26) "Trust Fund" shall mean the trust created by this
Indenture and the applicable Reference Trust Agreement, and which shall consist
of the Bonds held pursuant and subject to this Indenture together with all
undistributed interest received or accrued thereof, and any undistributed cash
realized from the sale, redemption, liquidation, or maturity thereof. Such
amounts as may be on deposit in the Reserve Account hereinafter established
shall be excluded from the Trust Fund.
(27) "Trustee" shall mean The Bank of New York or any
successor trustee as hereinafter provided for.
(28) "Unit" shall mean the fractional undivided interest in
and ownership of the Trust Fund set forth in Part II of the applicable
Reference Trust Agreement the denominator of which shall be decreased by the
number of any such Units redeemed as provided in section 5.2.
(29) Words importing singular number shall include the plural
number in each case and vice versa, and words importing person shall include
corporations and associations, as well as natural persons.
(30) The words "herein", "hereby", "herewith", "hereof",
"hereinafter", "hereunder", "hereinabove", "hereafter", "heretofore" and
similar words or phrases of reference and association shall refer to this
Indenture in its entirety.
SECTION 1.2. Form of Certificate. The form of
Certificate evidencing ownership of fractional undivided
interests in the Trust established hereunder shall be
substantially as follows:
-5-
406909.1
<PAGE>
[FACE]
Plan of Distribution
No. _________________ _______Units
CERTIFICATE OF OWNERSHIP
--evidencing--
An Undivided Interest
in the
GLICKENHAUS SPECIAL SITUATIONS TRUST
CUSIP [ ]
This is to certify that _______________________ is the owner
and registered holder of this Certificate evidencing the ownership of the
number of units specified on the face hereof of undivided interest in the
GLICKENHAUS SPECIAL SITUATIONS TRUST of the series specified on the face hereof
(hereinafter called the "Fund") created by the Trust Indenture and Agreement
(hereinafter called the "Indenture") among Glickenhaus & Co. (hereinafter
called the "Depositor"), The Bank of New York (hereinafter called the
"Trustee") and Muller Data Corporation (hereinafter called the "Evaluator").
The Fund consists of (1) such of the tax-exempt obligations deposited in trust
and listed in Schedule A of the Indenture and any other obligations that may be
deposited in the Fund in exchange or substitution therefor by reason of
replacement of failed contracts or refunding of the obligations initially
deposited in accordance with the Indenture, as may from time to time continue
to be held as part of the Fund, (2) such cash amounts as from time to time may
be held in the Interest Account and the Principal Account maintained under the
Indenture in the manner described on the reverse side hereof and (3) units of
previously-issued Series of the Fund.
This Certificate shall not become valid or binding for any
purpose until properly executed by the Trustee under the Indenture.
-6-
406909.1
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate
to be executed in facsimile by a General Partner thereof and The Bank of New
York, as Trustee, has caused this Certificate to be executed in its corporate
name by an authorized officer.
Date: ________________
GLICKENHAUS & CO., Depositor
By:
------------------------------------
General Partner
THE BANK OF NEW YORK, Trustee
By:
------------------------------------
Authorized Officer
-7-
406909.1
<PAGE>
[REVERSE)
GLICKENHAUS SPECIAL SITUATIONS TRUST
At any given time this Certificate shall represent a
fractional undivided interest in the Fund, the numerator of which fraction
shall be the number of units set forth on the face hereof and the denominator
of which shall be the total number of units of fractional undivided interest
represented by all Certificates of the Fund which are outstanding at such time.
The Depositor hereby grants and conveys all of its right,
title and interest in and to the Fund to the extent of the fractional undivided
interest represented hereby to the registered holder of this Certificate
subject to and in pursuance of the Indenture, all the terms, conditions and
covenants of which are incorporated herein as if fully set forth at length.
The registered holder of this Certificate is entitled at any
time upon tender of this Certificate to the Trustee at its corporate trust
office in the City of New York, and upon payment of any tax or other
governmental charges, to receive, on the third business day following the day
on which such tender is made, an amount in cash equal to the evaluation of the
fractional undivided interest in the Fund evidenced by this Certificate, upon
the basis provided for in the Indenture. The right of redemption may be
suspended and the date of payment may be postponed for any period during which
the New York Stock Exchange, Inc. is closed or trading on that Exchange is
restricted, for any period during which an emergency exists so that disposal of
the obligations held in the Fund is not reasonably practicable or it is not
reasonably practicable to determine fairly the value of such obligations, or
for such other periods as the Securities and Exchange Commission may by order
permit.
Interest received by the Trustee as part of the Fund
(including interest accrued and unpaid prior to the day of deposit of any
obligation in the Fund and that part of the proceeds of the sale, liquidation,
redemption or maturity of or any insurance on any such obligation which
represents accrued interest) shall be credited by the Trustee to the Interest
Account. The fractional undivided interest represented by this Certificate in
the balance in the Interest Account (after the deductions referred to below)
shall be computed as of the First Settlement Date, as defined in the Indenture,
and paid to the Depositor on such date. The next computation shall be made as
of the First Record Date, as defined in the Indenture, and thereafter as of May
15 and November 15 of each year commencing with the first such day following
the First Record Date.
-8-
406909.1
<PAGE>
All moneys (other than interest) received by the Trustee as
part of the Fund (including amounts received from the sale, liquidation,
redemption or maturity of or any insurance on any obligations held in the Fund)
shall be credited by the Trustee to a separate Principal Account. The
fractional undivided interest represented by this Certificate in the cash
balance in the Principal Account (after the deductions referred to below) shall
be computed as of the First Record Date and thereafter as of May 15 and
November 15 of each year commencing with the first such day following the First
Record Date. The second distribution of funds from the Interest Account shall
be made on the First Distribution Date as provided in the Indenture and,
thereafter, an amount in cash equal to the sum of said fractional undivided
interests in the Interest Account and Principal Account, computed as set forth
above, shall be distributed on the first day of June and December,
respectively, or within a reasonable period of time thereafter to the
registered holder of this Certificate at the close of business on the fifteenth
day of the month next preceding the date on which such distribution is made.
The Trustee shall not be required to make a distribution from the Principal
Account unless the cash balance on deposit therein available for such
distribution shall be sufficient to distribute at least $1.00 per unit.
Distributions from the Interest and Principal Accounts shall
be made by mail at the post office address of the holder hereof appearing in
the registration books of the Trustee.
From time to time deductions shall be made from the Interest
Account and Principal Account, as more fully set forth in the Indenture, for
redemptions, compensation of the Trustee and Evaluator, reimbursement of
certain expenses incurred by or on behalf of the Trustee, certain legal and
auditing expenses and payment of, or the establishment of a reserve for,
applicable taxes, if any.
Within a reasonable period of time after the end of each
calendar year the Trustee shall furnish to the registered holder of this
Certificate a statement setting forth, among other things, the amounts received
and deductions therefrom and the amounts distributed during the preceding year
in respect of interest on, and sales, redemptions or maturities of obligations
held in the Fund.
This Certificate shall be transferable by the registered
holder hereof by presentation and surrender hereof at the corporate trust
office of the Trustee properly endorsed and accompanied by a written instrument
or instruments of transfer in form satisfactory to the Trustee and executed by
the registered holder hereof or his authorized attorney. Certificates of the
Fund are interchangeable for one or more Certificates in an equal aggregate
number of units of undivided interest at the corporate
-9-
406909.1
<PAGE>
trust office of the Trustee, in denominations of a single unit of undivided
interest or any multiple thereof.
The holder hereof may be required to pay a charge of $2.00
per Certificate issued in connection with the transfer or interchange of this
Certificate and any tax or other governmental charge that may be imposed in
connection with the transfer, interchange or other surrender of this
Certificate.
The holder of this Certificate, by virtue of the acceptance
hereof, assents to and shall be bound by the terms of the Indenture, a copy of
which is on file and available for inspection at the corporate trust office of
the Trustee, to which reference is made for all the terms, conditions and
covenants thereof.
The Trustee may deem and treat the person in whose name this
Certificate is registered upon the books of the Trustee as the owner hereof for
all purposes and the Trustee shall not be affected by any notice to the
contrary.
The Indenture, and the trust created thereby, shall terminate
upon the maturity, redemption, sale or other disposition of the last obligation
held thereunder, provided, however, that in no event shall the Indenture and
the trust continue beyond the end of the calendar year immediately preceding
the fiftieth anniversary of the date of the Indenture. The Indenture also
provides that the trust may be terminated at any time by the written consent of
one hundred percent of the Certificateholders and under certain circumstances
which include a decrease in the value of the Fund to less than $1,000,000 or
20% of the value of the Fund as of the date of deposit therein by the
Depositor, whichever is lower. Upon any termination the Trustee shall fully
liquidate the obligations then held, if any, and distribute pro rata the funds
then held in the trust upon surrender of the Certificates, all in the manner
provided in the Indenture. Upon termination, the Trustee shall be under no
further obligation with respect to the Fund except to hold the funds in trust
without interest until distribution as aforesaid and shall have no duty upon
any such termination to communicate with the holder hereof other than by mail
at the address of such holder appearing on the registration books of the
Trustee.
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<PAGE>
STATEMENT REGARDING DISTRIBUTIONS
On the face of this Certificate it is indicated whether the
registered holder hereof has elected to receive distributions from the Interest
Account monthly or semi-annually.
The Certificate by its terms provides that distributions from
the Interest Account shall be computed as of the First Settlement Date and paid
to the Depositor on such date. The next computation shall be made as of the
First Record Date and an amount in cash equal to the share of the Interest
Account represented by this Certificate shall be distributed on the first day
of the month following the month in which the First Record Date occurs, or
within a reasonable period of time thereafter, to or upon the order of the
registered holder of this Certificate at the close of business on the First
Record Date. Thereafter distributions will be made as of the 15th day of May
and November of each year, commencing with the first such day following the
First Record Date and subsequent to the date of this Certificate, and an amount
in cash equal to the share of the Interest Account represented by this
Certificate will be distributed on the 1st day of June and December,
respectively, or within a reasonable period of time thereafter, to or upon the
order of the registered holder of this Certificate at the close of business on
the 15th day of the month next preceding the date on which the distribution is
made.
If the registered holder hereof has elected the monthly
option, then he agrees that, in lieu of the distributions provided by this
Certificate, the fractional undivided interest represented by this Certificate
in the balance of the Interest Account shall be computed monthly as indicated
on the face hereof. All Certificateholders of record, however, regardless of
the plan of distribution selected, will receive the distribution to be made on
the First Distribution Date and thereafter distributions will be made monthly
or semi-annually, depending upon the plan of distribution chosen by the holder
hereof.
If monthly distributions have been selected, the fractional
undivided interest represented by this Certificate in the balance in the
Interest Account, after the First Distribution Date and after the deductions
referred to in the Certificate, will be computed as of the 15th day of each
month of each year, commencing with the first such day after the First Record
Date, and subsequent to the date of this Certificate, and an amount in cash as
thus computed distributed to or upon the order of the holder at such date of
computation on or shortly after the 1st day of each subsequent month.
The plan of distribution chosen by the registered
holder hereof may be changed by written notice to the Trustee not
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later than May 15 in any calendar year by surrender to the Trustee of this
Certificate, together with a completed form for selection of a plan of
distribution provided by the Trustee. A plan of distribution shall continue in
effect until changed as herein provided. A change in a plan of distribution may
only be made as indicated herein and will be effective as of May 16 for the
ensuing twelve months.
In the event the amount on deposit in the Interest Account is
not sufficient for the payment of the amount of interest to be distributed to
Certificateholders participating in a distribution, the Trustee shall advance
its own funds and cause to be deposited in and credited to the Interest Account
such amounts as may be required to permit payment of the distribution to be
made and shall be entitled to be reimbursed, without interest, out of interest
received by the Fund subsequent to the date of such advance and subject to the
condition that any such reimbursement shall be made only under conditions which
will not reduce the funds in or available for the Interest Account to an amount
less than that required for the next ensuing distribution of interest.
Distributions to Certificateholders who are participating in one of the
optional plans for distributions of interest shall not be affected because of
advancements by the Trustee for the purpose of equalizing distributions to
Certificateholders participating in a different plan.
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<PAGE>
FORM OF ASSIGNMENT
For Value Received __________________________________
hereby sells, assigns and transfers unto
[ ]
Please Insert Social Security
or Other Identifying Number
of Assignee
the within Certificate and does hereby irrevocably constitute and appoint
_____________________________ attorney, to transfer the within Certificate on
the books of the Trustee, with full power of substitution in the premises.
Date:
- ---------------------
Signature Guarantee
-------------------------------
NOTICE: The signature to this
assignment must correspond with
the name as written upon the
face of the Certificate in every
particular, without any
alteration or enlargement
whatsoever.
------------------------------
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<PAGE>
ARTICLE II
DEPOSIT OF BONDS, ACCEPTANCE OF TRUST,
FORM AND ISSUANCE OF CERTIFICATES,
INSURANCE
SECTION 2.1. Deposit of Bonds. The Depositor, concurrently
with the execution and delivery hereof, has deposited with, or otherwise
transferred to, the Trustee in trust the Bonds listed in Schedule A in bearer
form or duly endorsed in blank or accompanied by all necessary instruments of
assignment and transfer in proper form to be held, administered and applied by
the Trustee as herein provided. The Depositor shall deliver the Bonds listed on
said Schedule A to the Trustee which were not actually delivered concurrently
with the execution and delivery of the Indenture within 90 days after said
execution and delivery, or if the contract to buy any Bond between the
Depositor and the seller of such Bond is terminated by such seller for any
reason beyond the control of the Depositor, the Depositor shall forthwith take
the remedial action specified in Section 3.14.
SECTION 2.2. Acceptance of Trust. The Trustee hereby
accepts the trust herein created for the use and benefit of the
Certificateholders, subject to the terms and conditions of this
Indenture.
SECTION 2.3. Issue of Certificates. The Trustee hereby
acknowledges receipt of the deposit referred to in Section 2.1, and
simultaneously with the receipt of said deposit, has executed Certificates
substantially in the form above recited representing the ownership of the
aggregate number of Units set forth in Part II of the applicable Reference
Trust Agreement. Pending receipt of evidence satisfactory to it of the
registration of the Certificates under the Securities Act of 1933, as amended,
the Certificates will be held by the Trustee for the account of the Depositor.
SECTION 2.4. Form of Certificates. Each Certificate referred
to in Section 2.3 is, and each Certificate hereafter issued shall be, in
substantially the form hereinabove recited, numbered serially for
identification, in fully registered form, transferable only on the books of the
Trustee as herein provided, executed manually by an authorized officer of the
Trustee and in facsimile by a General Partner of the Depositor and dated the
date of execution and delivery by the Trustee. Certificates bearing the manual
or facsimile signatures of individuals who were at any time the proper officers
of the Depositor and Trustee shall bind the Depositor and Trustee,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior
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<PAGE>
to the authentication and delivery of such Certificates or did not hold such
offices at the date of such Certificates.
SECTION 2.5. Bond Insurance. (a) For those Trusts in which
the Depositor has obtained Insurance, concurrently with the delivery to the
Trustee of the Bonds listed in Schedule A the Insurer shall deliver to and
deposit with the Trustee the Insurance to protect the Trust and the
Certificateholders against nonpayment of principal and interest when due on any
Bond as long as such Bond is held by the Trust pursuant and subject to this
Indenture.
The Trustee shall take all action deemed necessary or
advisable in connection with the Insurance to continue the Insurance in full
force and effect, all in such manner as in its sole discretion shall appear to
result in the most protection and least expense to the Trust.
At all times during the existence of the Trust, the Insurance
shall provide for payment by the Insurer to the Trustee of any amounts of
principal and interest due, but not paid, by the issuer of the Bond or by the
insurer of a Pre-insured Bond, as long a such Bond is held by the Trust. The
Trustee shall promptly notify the Insurer of any nonpayment, or significant
risk of nonpayment known to the Trustee, of principal or interest and the
Insurer shall, in accordance with the terms of the policy or policies, make
payment to the Trustee of all amounts of principal and interest at the time
due, but not paid.
Notwithstanding any other provision hereof, upon the making
of any payment by the Insurer to the Trustee as set forth in the preceding
paragraphs, the Insurer shall succeed to the rights of the Trustee under the
Bond or Bonds involved to the extent of the payments made. Concurrently with
the payment of any amounts by the Insurer occasioned by the nonpayment thereof
by the issuer of a Bond or by the issuer or insurer of a Pre-insured Bond, the
Trustee shall execute and deliver to the Insurer any receipt, instrument or
document required to evidence the right of the Insurer in the Bond or Bonds
involved to payment of principal and/or interest thereon to the extent of the
payments made by the Insurer to the Trustee.
With respect to Pre-insured Bond in the Trust, the Trustee
shall promptly notify both the Insurer of such Pre-insured Bonds and the
insurer of any nonpayment of such principal of or interest on such Bonds and if
such Insurer shall fail to make payments to the Trustee, shall present evidence
to the Insurer that demand for payment has been made to such Insurer. Upon
receipt of such notice and of such evidence of demand for payment made to the
Insurer, the Insurer shall pay to the Trustee any amount of principal and
interest due but not paid on such Pre-insured Bonds.
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<PAGE>
The Trustee shall also take such action required under
Sections 3.7, 3.8, 3.10, 5.2 and 6.4 hereof with respect to Permanent
Insurance.
(b) For those Trusts in which the Depositor has not obtained
Insurance, the Pre-insured Bonds shall be guaranteed from their respective date
of issuance by the respective insurance companies designated for each Bond in
the prospectus for the Trust. With respect to the Pre-insured Bonds in the
Trust, the Trustee shall promptly notify the insurer of such Pre-insured Bonds
of any nonpayment of such principal of or interest on such Bonds and if an
insurer should fail to make payment to the Trustee within 30 days after receipt
of such notice, the Trustee shall take all action against such insurer deemed
necessary by the Trustee to collect all amounts of principal and interest at
that time due, but not collected.
ARTICLE III
ADMINISTRATION OF FUND
SECTION 3.1. Initial Cost. The cost of the initial
preparation, printing and execution of the Certificates and this Indenture,
Registration Statement and other documents relating to the Trust, Federal and
State registration fees and costs, the initial fees and expenses of the Trustee
and Evaluator, legal and auditing expenses and other out-of-pocket expenses
(excluding expenses incurred in the preparation and printing of preliminary
prospectuses and prospectuses, expenses incurred in the preparation and
printing of brochures and other advertising materials and any other selling
expenses), to the extent not borne by the Depositor, shall be paid by the
Trust; provided, however, the Trust shall not bear such expenses in excess of
the amount shown in the Statement of Condition included in the Prospectus, and
any such excess shall be borne by the Depositor. To the extent the funds in the
Interest and Principal Accounts of the Trust shall be insufficient to pay the
expenses borne by the Trust specified in this Section 3.1, the Trustee shall
advance out of its own funds and cause to be deposited and credited to the
Interest Account such amount as may be required to permit payment of such
expenses. The Trustee shall be reimbursed for such advance in the manner
provided in Section 3.5, and the provisions of Section 6.4 with respect to the
reimbursement of disbursements for Trust expenses, including, without
limitation, the lien in favor of the Trustee therefor, shall apply to the
payment of expenses made pursuant to this Section. For purposes of calculation
of distributions under Section 3.5 and the addition provided in clause (4) of
Section 5.1, the expenses borne by the Trust pursuant to this Section shall be
deemed to accrue at a daily rate over the time period specified for their
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<PAGE>
amortization provided in the Prospectus; provided, however, that nothing herein
shall be deemed to prevent, and the Trustee shall be entitled to, full
reimbursement for any advances made pursuant to this Section no later than the
termination of the Trust.
SECTION 3.2. Interest Account. The Trustee shall collect the
interest on the Bonds as it becomes payable (including all interest accrued but
unpaid prior to the date of deposit of the Bonds in trust and including that
part of the proceeds of the sale, liquidation, redemption or maturity of any
Bonds or insurance on any Bonds which represents accrued interest thereon and
including all moneys representing penalties for the failure to make timely
payments on the Bonds, or as liquidated damages for default or breach of any
conditions or term of the Bonds or of any instrument underlying such Bonds) and
credit such interest to a separate account to be known as the "Interest
Account."
SECTION 3.3. Principal Account. (a) The Bonds and all moneys
(except moneys held by the Trustee pursuant to subsection (b) hereof), other
than amounts credited to the Interest Account or the Reserve Account, received
by the Trustee in respect of the Bonds or insurance on any Bonds shall be
credited to a separate account to be known as the "Principal Account."
(b) Moneys and/or irrevocable letters of credit required to
purchase Contract Bonds or deposited to secure such purchases are hereby
declared to be held specially by the Trustee for such purchases and shall not
be deemed to be part of the Principal Account until (i) the Depositor fails to
timely purchase a Contract Bond and has not given the Failed Contract Notice
(as defined in Section 3.14) at which time the moneys and/or letters of credit
attributable to the Contract Bond not purchased by the Depositor shall be
credited to the Principal Account; or (ii) the Depositor has given the Trustee
the Failed Contract Notice at which time the moneys and/or letters of credit
attributable to failed contracts referred to in such Notice shall be credited
to the Principal Account; provided, however, that if the Depositor also
notifies the Trustee in the Failed Contract Notice that it has purchased or
entered into a contract to purchase a New Bond (as defined in Section 3.14),
the Trustee shall not credit such moneys and/or letters of credit to the
Principal Account unless the New Bond shall also have failed or is not
delivered by the Depositor within two business days after the settlement date
of such New Bond, in which event the Trustee shall forthwith credit such moneys
and/or letters of credit to the Principal Account. The Trustee shall in any
case forthwith credit to the Principal Account, and/or cause the Depositor to
deposit in the Principal Account, the difference, if any, between the purchase
price of the failed Contract Bond and the purchase price of the New Bond,
together with any sales charge and accrued
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<PAGE>
interest applicable to such difference and distribute such moneys to the
Certificateholders pursuant to Section 3.5.
SECTION 3.4. Reserve Account. From time to time the Trustee
shall withdraw from the cash on deposit in the Interest Account or the
Principal Account such amounts as it, in its sole discretion, shall deem
requisite to establish a reserve for any applicable taxes or other governmental
charges that may be payable out of the Trust Fund. Such amounts so withdrawn
shall be credited to a separate account which shall be known as the "Reserve
Account." The Trustee shall not be required to distribute to the
Certificateholders any of the amount in the Reserve Account; provided, however,
that if it shall, in its sole discretion, determine that such amounts are no
longer necessary for payment of any applicable taxes or other governmental
charges, then it shall promptly deposit such amounts in the appropriate
account, or if the Trust has been terminated or shall be in the process of
termination, the Trustee shall distribute to each Certificateholder such
holder's interest in the Reserve Account in accordance with Section 9.2.
SECTION 3.5. Distribution. The Trustee, as of the First
Settlement Date, shall advance out of its own funds and cause to be deposited
in and credited to the Interest Account such amount as may be required to
permit payment of the amount of interest accrued on the Bonds in the Trust
through such date (less the amount which the Trustee is entitled to receive at
such time pursuant to Section 6.4, the amount which the Evaluator is entitled
to receive at such time pursuant to Section 4.3, the amount which the Depositor
is entitled to receive at such time pursuant to Section 8.6, and shall pay to
the Certificateholders then of record, namely the Depositor, such amount. The
Trustee shall be entitled to be reimbursed, without interest, for such
advancement, and such reimbursement shall be made from the interest received by
the Trust. Subsequent distributions shall be made as hereinafter provided.
The first distribution shall be made on the First
Distribution Date to all holders of record as of the First Record Date.
Thereafter, as of the Monthly Computation Date the Trustee shall:
(a) deduct from the Interest Account, or, to the extent funds
are not available in such Account, from the Principal Account, and pay to
itself individually the amounts that it is at the time entitled to receive
pursuant to Section 6.4 or pursuant to this Section 3.5;
(b) deduct from the Interest Account, or, to the extent funds
are not available in such Account, from the Principal Account, and pay to the
Evaluator the amount that it is at the time entitled to receive pursuant to
Section 4.3;
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<PAGE>
(c) deduct from the Interest Account, or, to the extent funds
are not available in such Account, from the Principal Account, and pay to the
Depositor the amount that it is at the time entitled to receive pursuant to
Section 8.5; and
(d) deduct from the Interest Account, or, to the extent funds
are not available in such Account, from the Principal Account, and pay to bond
counsel and auditors, as hereinafter provided for, an amount equal to unpaid
fees and expenses, if any, of such bond counsel or auditors as certified to by
the Depositor.
Any amount withdrawn from the Principal Account in order to
satisfy requirements which, pursuant to the terms of this Indenture, are first
to be satisfied out of the Interest Account to the extent funds are available
therein shall be reimbursed to the Principal Account when sufficient funds are
next available in the Interest Account.
On the Semi-Annual Distribution Date, or within a reasonable
period of time thereafter, the Trustee shall distribute by mail to each
Certificateholder of record at the close of business on the preceding
Semi-Annual Computation Date at his post office address such holder's pro rata
share of the balance of the Interest Account, plus such holder's pro rata share
of the cash balance of the Principal Account, each computed as of such
Computation Date. The Trustee shall not be required to make a distribution from
the Principal Account unless the cash balance on deposit therein available for
distribution shall be sufficient to distribute at least $1.00 per Unit.
In the event that (i) the amount on deposit in the Interest
Account on a Semi-Annual Distribution Date is not sufficient for the payment of
the amount of interest to be distributed on the basis of the foregoing
computation, the Trustee shall advance out of its own funds and cause to be
deposited in and credited to the Interest Account such amount as may be
required to permit payment of the interest distribution to be made on such
Semi-Annual Distribution Date or (ii) in order to acquire any Bond for the
Trust Fund, it is necessary to pay on the settlement date for delivery of such
Bond an amount covering accrued interest on such Bond that exceeds the amount
of interest accrued on such Bond to the date on which the Certificateholder
settles on the purchase of his Units, the Trustee shall advance out of its own
funds any amounts necessary to cover such excess, then in either event, the
Trustee shall be entitled to be reimbursed, without interest, out of interest
received by the Trust Fund on the first Semi-Annual Computation Date following
the date of such advance on which such reimbursement may be made without
reducing the amount of the Interest Account to an amount less than that
required of the next ensuing semi-annual or monthly interest distribution.
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In lieu of the semi-annual distributions of interest set
forth above, a Certificateholder may elect to receive payments from the
Interest Account, represented by the Units in a Certificate, monthly. The first
distribution to Certificateholders as of the First Record Date, however, shall
be made to or upon the order of all holders of Certificates regardless of
whether they have chosen to receive subsequent distributions on a different
basis.
Certificateholders desiring to receive monthly distributions
and who purchase their Certificates prior to the Record Date for the first
distribution may elect at the time of purchase to receive distributions on a
monthly basis by notice to the Trustee. Those indicating no preference will be
deemed to have elected to receive semi-annual distributions. Such notice shall
be effective with respect to subsequent distributions until changed by further
notice to the Trustee. In April of each year, the Trustee will furnish each
Certificateholder a card to be returned to the Trustee by May 15 of each year
if the Certificateholder wishes to change his plan of distribution. Those
wishing to change shall so indicate on the card and return it to the Trustee
and accompany the card by the surrender of the Certificate to which it relates.
Changes may be made only as herein provided and will become effective as of the
following May 16 to continue until further notice.
For monthly distributions the share of the balance in the
Interest Account to be distributed to or upon the order of a Certificateholder
who has elected to receive monthly distributions, after the First Distribution
Date, shall be computed as of the Monthly Computation Date commencing with the
first such day subsequent to the First Record Date and distribution made as
provided herein on or shortly after the Monthly Distribution Date to the
Certificateholder of record on the Monthly Computation Date. Such computation
shall be made on the basis of one-twelfth of the estimated annual interest
income to the Fund for the ensuing twelve months for the account of
Certificateholders who have elected to receive monthly distributions, after
deduction of the estimated costs and expenses to be incurred on behalf of such
Certificateholders during the twelve-month period for which such interest
income has been estimated.
If on any Monthly Computation Date the pro rata share of the
distributable cash balance of the Principal Account exceeds $10.00 per Unit
then outstanding, the Trustee shall, to the extent permitted by the Investment
Company Act of 1940 and the rules and regulations thereunder or an exemptive
order issued by the Securities and Exchange Commission thereunder, on the next
succeeding Monthly Distribution Date distribute by mail to each
Certificateholder of record as of the close of business on the immediately
preceding Monthly Computation Date at his or her address appearing on the
registration books of the Trustee, such
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<PAGE>
Certificateholder's pro rata share of the balance of the Principal Account.
To the extent practicable, the Trustee shall allocate the
expenses of the Fund among Units, giving effect to differences in
administrative and operational cost among those who have chosen to receive
distributions semi-annually or monthly.
In the event the amount on deposit in the Interest Account
for a monthly distribution is not sufficient for the payment of the amount of
interest to be distributed to Certificateholders participating in such
distributions on the basis of the aforesaid computations, the Trustee shall
advance its own funds and cause to be deposited in and credited to the Interest
Account such amounts as may be required to permit payment of the monthly
interest distribution to be made as aforesaid and shall be entitled to be
reimbursed, without interest, out of interest received by the Fund subsequent
to the date of such advance and subject to the condition that any such
reimbursement shall be made only under conditions which will not reduce the
funds in or available for the Interest Account to an amount less than required
for the next ensuing distribution of interest. Distributions to
Certificateholders who are participating in one of the optional plans for
distribution of interest shall not be affected because of advancements by the
Trustee for the purpose of equalizing distributions to Certificateholders
participating in a different plan.
If the Depositor (i) fails to replace any Special Bond (as
defined in Section 3.14) or (ii) is unable or fails to enter into any contract
for the purchase of any New Bond in accordance with Section 3.14, the Trustee
shall distribute to all Certificateholders, as of the expiration of the
Purchase Period (as defined in Section 3.14), the principal, accrued interest
(determined at the coupon rate of the Special Bond from the Date of Deposit to
the expiration of the Purchase Period) and the sales charge attributable to
such Special Bonds at the next Monthly Distribution Date which is more than
thirty days after the expiration of the Purchase Period.
If any contract for a New Bond in replacement of a Special
Bond shall fail, the Trustee shall distribute the principal, accrued interest
and sales charge attributable to the Special Bond to the Certificateholders at
the next Monthly Payment Date which is more than thirty days after the date on
which the contract in respect of such New Bond failed.
If, at the end of the Purchase Period, less than all moneys
attributable to a failed Special Bond have been applied or allocated by the
Trustee pursuant to a contract to purchase New Bonds, the Trustee shall
distribute the remaining moneys to
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<PAGE>
Certificateholders at the next Monthly Payment Date which is more than thirty
days after the end of the Purchase Period.
The amounts to be so distributed to each Certificateholder
shall be that pro rata share of the cash balance of the Interest and Principal
Accounts, computed as set forth above, as shall be represented by the Units
evidenced by the outstanding Certificate or Certificates registered in the name
of such Certificateholder.
In the computation of each such share, fractions of less than
one cent shall be omitted. After any such distribution provided for above, any
cash balance remaining in the Interest Account or the Principal Account shall
be held in the same manner as other amounts subsequently deposited in each of
such Accounts, respectively.
For the purpose of distribution as herein provided, the
holders of record on the registration books of the Trustee at the close of
business on each Semi-Annual or Monthly Computation Date shall be conclusively
entitled to such distribution, and no liability shall attach to the Trustee by
reason of payment to any such registered Certificateholder of record. Nothing
herein shall be construed to prevent the payment of amounts from the Interest
Account and the Principal Account to individual Certificateholders by means of
one check, draft or other proper instrument, provided that the appropriate
statement of such distribution shall be furnished therein as provided in
section 3.6 hereof.
SECTION 3.6. Distribution Statements. With each distribution
from the Interest or Principal Accounts the Trustee shall set forth, either in
the instrument by means of which payment of such distribution is made or in an
accompanying statement, the amount being distributed from each such account
expressed as a dollar amount per unit.
In the event that the issuer of any of the Bonds shall fail
to make payment when due of any interest or principal and such failure results
in a change in the amount which would otherwise be paid as a distribution of
interest the Trustee shall, with the first such distribution to each
Certificateholder following such failure, set forth in an accompanying
statement (a) the name of the issuer and the Bond, (b) the amount of the
reduction in the distribution per Unit resulting from such failure, (c) the
percentage of the aggregate principal amount of Bonds which such Bond
represents, and (d) to the extent then determined, information regarding any
disposition or legal action with respect to such Bonds.
Within a reasonable period of time after the last business
day of each calendar year, the Trustee shall furnish to
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each person who at any time during such calendar year was a Certificateholder a
statement setting forth, with respect to such calendar year:
(A) as to the Interest Account:
(1) the amount of interest received on the Bonds,
(2) the amounts paid in connection with purchases of
New Bonds pursuant to Section 3.14 and for
redemption pursuant to Section 5.2,
(3) the deduction for payment of applicable taxes,
compensation of the Evaluator, fees and expenses of
the Trustee and bond counsel and the annual fee of
the Depositor for portfolio supervisory services,
and
(4) the balance remaining after such distributions and
deductions, expressed both as a total dollar amount
and as a dollar amount per Unit outstanding on the
last business day of such calendar year;
(B) as to the Principal Account:
(1) the dates of the sale, maturity, liquidation or
redemption of any of the Bonds and the net
proceeds received therefrom, excluding any portion
thereof credited to the Interest Account,
(2) the amounts paid for purchases of New Bonds
pursuant to Section 3.14 and for redemptions
pursuant to Section 5.2,
(3) the deductions for payment of applicable taxes,
compensation of the Evaluator, fees and expenses of
the Trustee and bond counsel and the annual fee of
the Depositor for portfolio supervisory services,
and
(4) the balance remaining after such distributions and
deductions, expressed both as a total dollar amount
and as a dollar amount per Unit outstanding on the
last business day of such calendar year; and
(C) the following information:
(1) a list of Bonds disposed of or acquired during
such calendar year and a list of the Bonds as of
the last business day of such calendar year,
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(2) the number of Units outstanding on the last
business day of such calendar year,
(3) the Unit Value (as defined in Section 5.1) based
on the last Trust Fund evaluation made during such
calendar year; and
(4) the amounts actually distributed during such
calendar year from the Interest and Principal
Accounts, separately stated, expressed both as total
dollar amounts and as dollar amounts per Unit
outstanding on the record dates for such
distributions.
SECTION 3.7. Sale of Bonds. In order to maintain the sound
investment character of the Trust Fund, the Depositor may direct the Trustee to
sell Bonds, provided the Depositor deems such sale to be in the best interest
of Certificateholders in accordance with Section 2.5 hereof, at such price and
time and in such manner as shall be determined by the Depositor, provided that
the Depositor has determined that any one or more of the following conditions
exist:
(a) that there has been a default on such Bonds in the
payment of principal or interest, or both, when due and payable;
(b) that any action or proceeding has been instituted in law
or equity seeking to restrain or enjoin the payment of principal or interest on
any such Bonds, attacking the constitutionality of any enabling legislation or
alleging and seeking to have judicially determined the illegality of the
issuing body or the constitution of its governing body or officers, the
illegality, irregularity or omission of any necessary acts or proceedings
preliminary to the issuance of such Bonds, the tax-exempt nature of the
interest paid on such Bonds under the Internal Revenue Code of 1986, as
amended, or seeking to restrain or enjoin the performance by the officers or
employees of any such issuing body of any improper or illegal act in connection
with the administration of funds necessary for debt service on such Bonds or
otherwise; or that there exists any other legal question or impediment
affecting such Bonds or the payment of debt service on the same;
(c) that there has occurred any breach of covenant or
warranty in any resolution, ordinance, trust, indenture or other document, of
which the Depositor has received notice, which would adversely affect either
immediately or contingently the payment of debt service on such Bonds, or other
general credit standing, or otherwise impair the sound investment character of
such Bonds;
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<PAGE>
(d) that there has been a default in the payment of
principal of or interest on any other outstanding obligations of
an issuer of such Bonds;
(e) that in the case of revenue bonds, the revenues and
income of the facility or project or other special funds expressly charged and
pledged for debt service on any such Bonds shall fall substantially below the
estimated revenues or income calculated by the engineers or other proper
officials charged with the acquisition, construction or operation of such
facility or project, so that, in the opinion of the Depositor, the retention of
such Bonds would be detrimental to the sound investment character of the Trust
Fund and to the interest of the Certificateholders;
(f) that the price of any such Bonds has declined to such an
extent, or such other market or credit factor exists, so that in the opinion of
the Depositor, with consideration of the insurance, the retention of such Bonds
would be detrimental to the Trust Fund and to the interest of the
Certificateholders;
(g) that such Bonds are the subject of an advance refunding.
For the purposes of this Section 3.7(g), "an advance refunding" shall mean when
refunding bonds are issued and the proceeds thereof are deposited in
irrevocable trust to retire the Bonds on or before their redemption date; or
(h) that as of any Computation Date such Bonds are scheduled
to be redeemed and paid prior to the next succeeding Distribution Date;
provided, however, that as the result of such sale the Trustee will receive
funds in an amount sufficient to enable the Trustee to include in the
distribution from the Principal Account on such next succeeding Distribution
Date at least $1.00 per Unit.
Upon receipt of such direction from the Depositor, upon which
the Trustee shall rely, the Trustee shall proceed to sell the specified Bond in
accordance with such direction; provided, however, that the Trustee shall not
sell any Bond upon receipt of a direction from the Depositor that it is
determined that the conditions in subdivision (h) above exist, unless the
Trustee shall receive on account of such sale the full principal amount of such
Bonds, plus the premium, if any, and the interest accrued and to accrue thereon
to the date of the redemption of such Bonds. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by reason of any sale
made pursuant to any such direction of the Depositor or by reason of the
failure of the Depositor to give any direction, and in the absence of such
direction the Trustee shall have no duty to sell any Bonds under this Section
3.7 except to the extent otherwise required by Section 3.10 of this Indenture.
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SECTION 3.8. Refunding Bonds. In the event that an offer
shall be made by an obligor of any of the Bonds to issue new obligations in
exchange and substitution for any issue of Bonds pursuant to a plan for the
refunding or refinancing of such Bonds, the Depositor shall instruct the
Trustee in writing to reject such offer and either to hold or sell such Bonds
in accordance with Section 3.7, except that if (1) the issuer is in default
with respect to such Bonds or (2) in the opinion of the Depositor, given in
writing to the Trustee, the issuer will probably default with respect to such
Bonds in the reasonably foreseeable future, the Depositor shall instruct the
Trustee in writing to accept or reject such offer or take any other action with
respect thereto as the Depositor may deem proper; provided, however, that the
Trustee may accept such an offer only if such substitute or refunding bonds
shall be eligible for coverage of, and upon deposit into the Trust shall be
subject to the terms and conditions of this Indenture to the same extent as the
Bonds originally deposited hereunder. Within five days after such deposit,
notice of such exchange and deposit shall be given by the Trustee to each
Certificateholder, including an identification of the Bonds eliminated and the
Bonds substituted thereof. Except as set forth in this Section 3.8, the
acquisition by the Trust Fund of any securities other than the Bonds is
prohibited.
SECTION 3.9. Bond Counsel. The Depositor may employ from time
to time as they may deem necessary a firm of municipal bond attorneys for any
legal services that may be required in connection with the disposition of Bonds
pursuant to Section 3.7 or the substitution of any securities for Bonds as the
result of any refunding permitted under Section 3.8. The fees and expenses of
such bond counsel shall be paid by the Trustee from the Interest and Principal
Accounts as provided for in Section 3.5(d) hereof.
SECTION 3.10. Notice and Sale by Trustee. If at any time the
principal of or interest on any of the Bonds shall be in default and not paid
or provision for payment thereof shall not have been duly made, the Trustee
shall notify the Depositor thereof. If within thirty days after such
notification the Depositor has not given any instructions to sell or to hold or
have not taken any other action in connection with such Bonds, the Trustee
shall sell such Bonds forthwith in accordance with Sections 3.7 and 3.8, and
neither the Trustee nor the Depositor shall be liable or responsible in any way
for depreciation or loss incurred by reason of such sale.
SECTION 3.11. Trustee not to Amortize. Nothing in this
Indenture, or otherwise, shall be construed to require the Trustee to make any
adjustments between the Interest and Principal Accounts by reason of any
premium or discount in respect of any of the Bonds.
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SECTION 3.12. Liability of Depositor. The Depositor shall be
under no liability to the Certificateholders for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Indenture or for errors in judgment, but shall be liable only for its own gross
negligence, bad faith or willful misconduct. The Depositor may rely in good
faith on any paper, order, notice, list, affidavit, receipt, opinion,
endorsement, assignment, draft or any other document of any kind prima facie
properly executed and submitted to it by the Trustee, the Evaluator, bond
counsel, or any other person pursuant to this Indenture and in furtherance of
their duties.
SECTION 3.13. Notice to Depositor. In the event that the
Trustee shall have been notified at any time of any action to be taken or
proposed to be taken by holders of the Bonds (including but not limited to the
making of any demand, direction, request, giving of any notice, consent or
waiver or the voting with respect to any amendment or supplement to any
indenture, resolution, agreement or other instrument under or pursuant to which
the Bonds have been issued) the Trustee shall promptly notify the Depositor and
shall thereupon take such action or refrain from taking any action as the
Depositor shall in writing direct; provided, however, that if the Depositor
shall not within five business days of the giving of such notice to the
Depositor direct the Trustee to take or refrain from taking any action, the
Trustee shall take such action, subject to the requirements of Section 3.7, as
it, in its sole discretion, shall deem advisable. Neither the Depositor nor the
Trustee shall be liable to any person for any action or failure to take action
with respect to this Section 3.13.
SECTION 3.14. Limited Replacement of Special Bonds. If any
contract in respect of Contract Bonds other than a contract to purchase a New
Bond (as defined below), including those purchased on a when, as and if issued
basis, shall have failed due to any occurrence, act or event beyond the control
of the Depositor or the Trustee (such failed Contract Bonds being herein called
the "Special Bonds"), the Depositor shall notify the Trustee (such notice being
herein called the "Failed Contract Notice") of its inability to deliver the
Special Bond to the Trustee after it is notified that the Special Bond will not
be delivered by the seller thereof to the Depositor. Such Failed Contract
Notice shall be given no later than 90 days after the Date of Deposit for the
Trust. Prior to, or simultaneously with, giving the Trustee the Failed Contract
Notice, or within a maximum of twenty days after giving such Notice (such
twenty-day period being herein called the "Purchase Period", unless the
Depositor determine not to replace the Special Bond, in which case the
"Purchase Period" will terminate on the date of such determination), the
Depositor shall, if possible, purchase or enter into a contract to purchase an
obligation to be held as a Bond hereunder (herein called the "New Bond") as
part of the
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Trust in replacement of the Special Bond, subject to the satisfaction of all of
the following conditions in the case of each purchase or contract to purchase:
(a) The New Bonds (i) shall be tax-exempt bonds issued by a
state or a county, municipality, authority or political subdivision thereof or
by certain United States territories or possessions or their public
authorities, (ii) shall have a fixed maturity date (whether or not entitled to
the benefits of any sinking, redemption, purchase or similar fund) not
exceeding the date of maturity of the Special Bond they replace and not less
than ten years after the date of purchase, (iii) shall be purchased at a price
that results in a yield to maturity and a current return, in each case as of
the Date of Deposit, at least equal to the yield to maturity and the current
return of the Special Bond which they replace, (iv) shall be payable as to
principal and interest in United States currency, and (v) shall not be when, as
and if issued Bonds.
(b) Each New Bond shall be rated at least equal to the
Special Bond which it replaces by Standard & Poor's Corporation or Moody's
Investors Service, or comparably rated by any other nationally recognized
credit rating service rating debt obligations which shall be designated by the
Depositor and shall be satisfactory to the Trustee.
(c) The purchase price of the New Bonds (exclusive of accrued
interest) shall not exceed the principal attributable to the Special Bonds.
(d) The Depositor shall furnish a notice to the Trustee
(which may be part of the Failed Contract Notice) in respect of the New Bonds
purchased or to be purchased that shall (i) identify the New Bonds, (ii) state
that the contract to purchase, if any, entered into by the Depositor is
satisfactory in form and substance, and (iii) state that the foregoing
conditions of clauses (a) through (c) have been satisfied with respect to the
New Bonds.
Upon satisfaction of the foregoing conditions with respect to
any New Bond, the Depositor shall pay the purchase price for the New Bond from
its own resources or, if the Trustee has credited any moneys and/or letters of
credit attributable to the failed Special Bond to the Principal Account, the
Trustee shall pay the purchase price of the New Bond upon directions from the
Depositor from the moneys and/or letters of credit so credited to the Principal
Account. If the Depositor has paid the purchase price, and, in addition, the
Trustee has credited moneys of the Depositor to the Principal Account, the
Trustee shall forthwith return to the Depositor the portion of such moneys that
is not properly distributable to Certificateholders pursuant to Section 3.5.
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Whenever a New Bond is acquired by the Depositor pursuant to
the provisions of this Section 3.14, the Trustee shall, within five days
thereafter, mail to all Certificateholders notices of such acquisition,
including an identification of the failed Special Bond and the New Bond
acquired. The Trustee shall not be liable or responsible in any way for
depreciation or loss incurred by reason of any purchase made pursuant to any
such directions and in the absence of such directions the Trustee shall have no
duty to purchase any Bonds under this Indenture. The Depositor shall not be
liable for any failure to instruct the Trustee to purchase any New Bonds or for
errors of judgment in respect of this Section 3.14; provided, however, that
this provision shall not protect the Depositor against any liability to which
it would otherwise be subject by reason of willful misconduct, bad faith or
gross negligence in the performance of its duties.
Notwithstanding anything to the contrary in this Section
3.14, no substitution of New Bonds will be made without an opinion of counsel
that such substitution will not adversely affect the Federal income tax status
of the Trust, if such New Bonds when added to all previously purchased New
Bonds in the Trust exceed 15% of the principal amount of Bonds initially
deposited.
ARTICLE IV
EVALUATION OF BONDS; EVALUATOR
SECTION 4.1. Evaluation by Evaluator. The Evaluator shall
determine separately and promptly furnish to the Trustee and the Depositor upon
request the value of each issue of Bonds (treating separate maturities of Bonds
as separate issues) as of the Evaluation Time on the bid side of the market on
the days on which the Trustee shall make the Trust Fund Evaluation required by
Section 5.1 and, in addition, as of the Evaluation Time on the offering side of
the market each business day during the initial public offering period. In
making the evaluation the Evaluator may determine the value of each issue of
the Bonds in the Trust Fund by the following methods or any combination thereof
which it deems appropriate: (i) on the basis of current bid or offering prices
of such Bonds as obtained from investment dealers or brokers (including the
Depositor) who customarily deal in public bonds comparable to those held by the
Trust Fund, (ii) if bid or offering prices are not available for any of such
Bonds, on the basis of bid or offering prices for comparable bonds, (iii) by
appraisal, or (iv) in its evaluation of Bonds which are in default in payment
of principal or interest or, in the Depositor's opinion, in significant risk of
such default ("Defaulted Bonds"), on the basis of the value of the insurance as
well as
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the current bid and offering prices of such Bonds and the current bid and
offering prices of such issuers whose securities, if identifiable, carry
identical interest rates and maturities and are of a creditworthiness
comparable to the issuer of such Bonds prior to the default or significant risk
of default. If such other bonds are not identifiable, the Evaluator will
compare prices of bonds with substantially identical interest rates and
maturities and which are of a creditworthiness of minimum investment grade or
(v) by any combination of the above which it deems appropriate. The Evaluator
shall also make an evaluation of the Bonds deposited in the Trust Fund as of
the time said Bonds are deposited under this Indenture. Such evaluation shall
be made on the same basis set forth above and shall be based upon offering
prices of said Bonds. In addition to the methods of determining the value of
the Bonds described above, the Evaluator may make the initial evaluation in
whole or in part by reference to the Blue List of Current Municipal Offerings
(a daily publication containing the current public offering prices of public
bonds of all grades currently being offered by dealers and banks). The
Evaluator's determination of the offering price of the Bonds on the Date of
Deposit shall be included in Schedule A.
SECTION 4.2. Tax Reports. For the purpose of permitting
Certificateholders to satisfy any reporting requirements of applicable Federal
or State tax law, the Evaluator shall make available to the Trustee and the
Trustee shall transmit to any Certificateholder upon request any determinations
made by it pursuant to Section 4.1.
SECTION 4.3. Evaluator's Compensation. As compensation for
its services hereunder, the Evaluator shall receive against a statement
therefor submitted to the Trustee monthly on or before each monthly Computation
Day the amount set forth in Part II of the applicable Reference Trust
Agreement, provided that if at any time the fee of the Trustee shall have been
increased pursuant to Section 6.4, the compensation of the Evaluator shall at
the same time be ratably increased.
SECTION 4.4. Liability of Evaluator. The Trustee and the
Depositor may rely on any evaluation furnished by the Evaluator and shall have
no responsibility for the accuracy thereof. The determinations made by the
Evaluator hereunder shall be made in good faith upon the basis of the best
information available to it. The Evaluator shall be under no liability to the
Trustee, Depositor or Certificateholders for errors in judgment, provided,
however, that this provision shall not protect the Evaluator against any
liability to which it would otherwise be subject by reason of its willful
misconduct, bad faith or gross negligence.
SECTION 4.5. Successor Evaluator. (a) The Evaluator
may resign and be discharged hereunder, by executing an instru-
ment in writing resigning as Evaluator and filing the same with
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the Depositor and the Trustee, not less than 60 days before the date specified
in such instrument when, subject to Section 4.5(e), such resignation is to take
effect. Upon receiving such notice of resignation, the Depositor and the
Trustee shall use their best efforts to appoint a successor evaluator having
qualifications and at a rate of compensation satisfactory to the Depositor and
the Trustee. Such appointment shall be made by written instrument executed by
the Depositor and the Trustee, in duplicate, one copy of which shall be
delivered to the resigning Evaluator and one copy to the successor evaluator.
The Depositor and the Trustee may remove the Evaluator at any time upon 30
days' written notice and appoint a successor evaluator having qualifications
and at a rate of compensation satisfactory to the Depositor and the Trustee.
Such appointment shall be made by written instrument executed by the Depositor
and the Trustee, in duplicate, one copy of which shall be delivered to the
Evaluator so removed and one copy to the successor evaluator. Notice of such
resignation or removal and appointment of a successor evaluator shall be mailed
by the Trustee to each Certificateholder.
(b) Any successor evaluator appointed hereunder shall
execute, acknowledge and deliver to the Depositor and the Trustee an instrument
accepting such appointment hereunder, and such successor evaluator without any
further act, deed or conveyance shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder with like effect as
if originally named Evaluator herein and shall be bound by all the terms and
conditions of this Agreement.
(c) In case at any time the Evaluator shall resign and no
successor evaluator shall have been appointed and have accepted appointment
within 30 days after notice of resignation has been received by the Depositor
and the Trustee, the Evaluator may forthwith apply to a court of competent
jurisdiction for the appointment of a successor evaluator. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor evaluator.
(d) Any corporation into which the Evaluator hereunder may be
merged or with which it may consolidate, or any corporation resulting from any
merger or consolidation to which the Evaluator hereunder shall be a party,
shall be the successor evaluator under this Agreement without the execution or
filing of any paper, instrument or further act to be done on the part of the
parties hereto, anything herein, or in any agreement relating to such merger or
consolidation, by which the Evaluator may seek, to retain certain powers,
rights and privileges theretofore obtaining for any period of time following
such merger or consolidation, to the contrary notwithstanding.
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(e) Any resignation or removal of the Evaluator and
appointment of a successor evaluator pursuant to this Section 4.5 shall become
effective upon acceptance of appointment by the successor evaluator as provided
in subsection (b) hereof.
ARTICLE V
TRUST FUND EVALUATION, REDEMPTION, PURCHASE
TRANSFER, INTERCHANGE OR REPLACEMENT OF CERTIFICATES
SECTION 5.1. Trust Fund Evaluation. The Trustee shall make an
evaluation of the Trust Fund as of the Evaluation Time (i) on each Business Day
on which any Unit is tendered for redemption if prior to the Evaluation Time
that day, otherwise on the following Business Day, (ii) on each Business Day
during the initial offering period, and (iii) on any other day desired by the
Trustee or requested by the Depositor. Such evaluations shall take into account
and itemize separately (1) the cash on hand in the Trust Fund (other than cash
declared held specially for purchase of Contract Bonds under Section 3.14
hereof or cash credited to the Reserve Account) or moneys in the process of
being collected from matured interest coupons or bonds matured or called for
redemption prior to maturity, (2) the value of each issue of the Bonds
(including Contract Bonds) on the bid side of the market as determined by the
Evaluator pursuant to Section 4.1, (3) interest accrued thereon not subject to
collection and distribution, and (4) amounts representing organizational
expenses paid less amounts representing accrued organizational expenses of the
Trust. For each such evaluation there shall be deducted from the sum of the
above (i) amounts representing any applicable taxes or governmental charges
payable out of the Trust Fund and for which no deductions shall have previously
been made for the purpose of addition to the Reserve Account, (ii) amounts
representing accrued expenses of the Trust Fund including but not limited to
unpaid fees and expenses of the Trustee, the Evaluator and bond counsel and
those relating to the annual audit, in each case as reported by the Trustee to
the Evaluator on or prior to the date of evaluation, and (iii) cash held for
distribution to Certificateholders of record as of a date prior to the
evaluation then being made. The value of the pro rata share of each Unit
determined on the basis of any such evaluation shall be referred to herein as
the "Unit Value," and shall be effective as to (i) all orders received by the
Sponsors for the purchase or sale of Units and (ii) all Units received by the
Trustee for redemption prior to the Evaluation Time utilized but subsequent to
the preceding evaluation.
The Trustee shall make an evaluation of the Bonds deposited
in the Fund as of the time said Bonds are deposited under this Indenture. Such
evaluation shall be made on the same
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basis as set forth in Section 4.1, except that it shall be based upon the
offering prices of said Bonds and upon the bid prices of the Trust Units. The
Trustee, in lieu of making the evaluation required hereby, may use an
evaluation prepared by the Evaluator and in so doing shall not be liable or
responsible under any circumstances whatever for the accuracy or correctness
thereof or for any error or omission therein. The Trustee's determination of
the offering price of the Bonds on the date of deposit determined as herein
provided shall be included in Schedule A.
SECTION 5.2. Redemption by Trustee; Purchases by Depositor.
Any Certificate, properly endorsed or accompanied by a written instrument of
transfer, tendered for redemption by a Certificateholder or his duly authorized
attorney to the Trustee at its corporate trust office in the City of New York
shall be redeemed by the Trustee on the third Business Day following the day on
which tender for redemption is made (being herein called the "Redemption
Date"). Subject to payment by such Certificateholder of any tax or other
governmental charges which may be imposed thereon, such redemption is to be
made by payment on the Redemption Date of cash equivalent to the Unit Value,
determined by the Trustee as of the next subsequent Evaluation Time, multiplied
by the number of Units represented by such Certificate (herein called the
"Redemption Price").
The Trustee may in its discretion, and shall when so directed
by the Depositor, suspend the right of redemption or postpone the date of
payment of the Redemption Price for more than three Business Days following the
day on which tender for redemption is made (1) for any period during which the
New York Stock Exchange, Inc. is closed other than customary weekend and
holiday closings or during which trading on the New York Stock Exchange, Inc.
is restricted; (2) for any period during which an emergency exists as a result
of which disposal by the Trust Fund of the Bonds is not reasonably practicable
or it is not reasonably practicable fairly to determine in accordance herewith
the value of the Bonds; or (3) for such other period as the Securities and
Exchange Commission may by order permit; and neither the Trustee nor the
Depositor shall be liable to any person or in any way for any loss or damage
which may result from any such suspensions or postponement.
Not later than the close of business on the day of tender of
a Certificate for redemption by a Certificateholder other than the Depositor,
the Trustee shall notify the Depositor of such tender. The Depositor shall have
the right to purchase such Certificate by notifying the Trustee of its election
to make such purchase as soon as practicable thereafter but in no event
subsequent to the close of business on the second Business Day after the day on
which such Certificate was tendered for redemption. Such purchase shall be made
by payment for such Certificate by the Depositor to the Certificateholder not
later
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than the close of business on the Redemption Date of an amount not less than
the Redemption Price which would otherwise be payable by the Trustee to such
Certificateholder.
Any Certificate so purchased by the Depositor may at the
option of the Depositor be tendered to the Trustee for redemption at the
corporate trust office of the Trustee in the manner provided in the first
paragraph of this Section 5.2, provided that in no event shall the Depositor
receive a greater amount on such redemption than the amount the Depositor paid
in purchasing such Certificate plus accrued interest from the date of purchase
of such Certificate by the Depositor, less the amount, if any, of any
distributions from the Principal Account received by the Depositor with respect
to such Certificate.
If the Depositor does not elect to purchase any Certificate
tendered to the Trustee for redemption, or if a Certificate is being tendered
by the Depositor for redemption, that portion of the Redemption Price which
represents interest shall be withdrawn from the Interest Account to the extent
available. The balance paid on any redemption, including accrued interest, if
any, shall be withdrawn from the Principal Account to the extent that funds are
available for such purpose. If such available balance shall be insufficient,
the Trustee shall sell, in accordance with the provisions set forth below, such
of the Bonds currently designated for such purposes by the Depositor as the
Trustee in its sole discretion shall deem necessary. In the event that funds
are withdrawn from the Principal Account for payment of accrued interest, the
Principal Account shall be reimbursed for such funds so withdrawn when
sufficient funds are next available in the Interest Account.
The Depositor shall maintain with the Trustee a current list
of Bonds designated to be sold for the purpose of redemption of Certificates
tendered for redemption and not purchased by the Depositor, and for payment of
expenses hereunder, provided that if the Depositor shall for any reason fail to
maintain such a list, the Trustee, in its sole discretion, may designate a
current list of Bonds for such purposes. The net proceeds of any sales of Bonds
from such list representing principal shall be credited to the Principal
Account, and the proceeds of such sales representing accrued interest shall be
credited to the Interest Account.
Neither the Depositor nor the Trustee shall be liable or
responsible in any way for depreciation or loss incurred by reason of any sale
of Bonds made pursuant to this Section 5.2.
Certificates evidencing Units, redeemed pursuant to this
Section 5.2 shall be cancelled by the Trustee and the Units evidenced by such
Certificates shall be terminated by such redemptions.
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SECTION 5.3. Transfer or Interchange of Certificates. A
Certificate may be transferred by the registered holder thereof by presentation
and surrender of such Certificate at the corporate trust office of the Trustee
properly endorsed or accompanied by a written instrument or instruments of
transfer in form satisfactory to the Trustee and executed by the
Certificateholder or his authorized attorney, whereupon a new registered
Certificate or Certificates for the same number of Units executed by the
Trustee and the Depositor will be issued in exchange and substitution therefor.
Certificates issued pursuant to this Indenture are interchangeable for one or
more other Certificates in an equal aggregate number of Units and all
Certificates issued shall be issued in denominations of one unit or any
multiple thereof as may be requested by the Certificateholder. The Trustee may
deem and treat the person in whose name any Certificate shall be registered
upon the books of the Trustee as the owner of such Certificate for all purposes
hereunder and the Trustee shall not be affected by any notice to the contrary,
nor be liable to any person or in any way for so deeming and treating the
person in whose name any Certificate shall be so registered.
A sum sufficient to pay any tax or other governmental charge
that may be imposed in connection with any such transfer or interchange shall
be paid by the Certificateholder to the Trustee. The Trustee may require a
Certificateholder to pay $2.00 for each new Certificate issued on any such
transfer or interchange.
All Certificates cancelled pursuant to this Indenture shall
be disposed of by the Trustee without liability on its part.
SECTION 5.4. Certificates Mutilated, Destroyed, Stolen or
Lost. In case any Certificate shall become mutilated or be destroyed, stolen or
lost, the Trustee shall execute and deliver a new Certificate in exchange and
substitution therefor upon the holder's furnishing the Trustee with proper
identification and indemnity satisfactory to the Trustee, complying with such
other reasonable regulations and conditions as the Trustee may prescribe and
paying such expenses as the Trustee may incur. Any mutilated Certificate shall
be duly surrendered and cancelled before any new Certificate shall be issued in
exchange and substitution therefor. Upon the issuance of any new Certificate a
sum sufficient to pay any tax or other governmental charge and the fees and
expenses of the Trustee may be imposed. Any such new Certificate issued
pursuant to this Section shall constitute complete and indefeasible evidence of
ownership in the Trust Fund, as if originally issued, whether or not the lost,
stolen or destroyed Certificate shall be found at any time.
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In the event the Trust Fund has terminated or is in the
process of termination, the Trustee may, instead of issuing a new certificate
in exchange and substitution for any Certificate which shall have become
mutilated or shall have been destroyed, stolen or lost, make the distributions
in respect of such mutilated, destroyed, stolen or lost Certificate (without
surrender thereof except in the case of a mutilated Certificate as provided in
Section 9.2 hereof) if the Trustee is furnished with such security or indemnity
as it may require to save it harmless, and in the case of destruction, loss or
theft of a Certificate, evidence to the satisfaction of the Trustee of the
destruction, loss or theft of such Certificate and of the ownership thereof.
ARTICLE VI
TRUSTEE
SECTION 6.1. General Definition of Trustee's Liabilities,
Rights and Duties. In addition to and notwithstanding the other duties, rights,
privileges and liabilities of the Trustee, as otherwise set forth herein, the
liabilities of the Trustee are further defined as follows:
(a) all moneys deposited with or received by the Trustee
hereunder shall be held by it without interest in trust as part of the Trust
Fund or the Reserve Account until required to be disbursed in accordance with
the provisions of this Indenture and such moneys will be segregated by separate
recordation on the trust ledger of the Trustee so long as such practice
preserves a valid preference under applicable law, or if such preference is not
so preserved the Trustee shall handle such moneys in such other manner as shall
constitute the segregation and holding thereof in trust within the meaning of
the Investment Company Act of 1940;
(b) the Trustee shall be under no liability for any action
taken in good faith on any appraisal, paper, order, list, demand, request,
consent, affidavit, notice, opinion, direction, evaluation, endorsement,
assignment, resolution, draft or other document whether or not of the same kind
prima facie properly executed, or for the disposition of moneys, Bonds or
Certificates pursuant to this Indenture, or in respect of any evaluation which
it is required to make or is required or permitted to have made by others under
the Indenture or otherwise, except by reason of its own willful misconduct, bad
faith or gross negligence; provided, however, that the Trustee shall not in any
event be liable or responsible for any evaluation made by the Evaluator. The
Trustee may construe any of the provisions in this Indenture, insofar as the
same may appear to be ambiguous or inconsistent
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with any other provisions hereof, and any construction of any such provisions
hereof by the Trustee in good faith shall be binding upon the parties hereto;
(c) the Trustee shall not be responsible for or in respect of
the recitals herein, the validity or sufficiency of this Indenture or for the
due execution hereof by the Depositor or the Evaluator, or for the form,
character, genuineness, sufficiency, value or validity of any Bonds or for or
in respect of the validity or sufficiency of the Certificates or of the due
execution thereof by the Depositor, and the Trustee shall in no event assume or
incur any liability, duty or obligation to any Certificateholder or the
Depositor other than as expressly provided for herein. The Trustee shall not be
responsible for or in respect of the validity of any signatures by or on behalf
of the Depositor or the Evaluator;
(d) the Trustee shall not be under any obligation to appear
in, prosecute or defend any action, which in its opinion may involve it in
expense or liability, unless as often as required by the Trustee, it shall be
furnished with reasonable security and indemnity against such expense or
liability, and any pecuniary cost of the Trustee from such actions shall be
deductible from and a charge against the Interest and Principal Accounts. The
Trustee shall in its discretion undertake such action as it may deem necessary
at any and all times to protect the Trust Fund and the rights and interests of
the Certificate- holders pursuant to the terms of this Indenture; provided,
however, that the expenses and costs of such actions, undertakings or
proceedings shall be reimbursable to the Trustee from the Interest and
Principal Accounts, and the payment of such costs and expenses shall be secured
by a lien on the Trust Fund prior to the interests of the Certificateholders;
(e) the Trustee may employ agents, attorneys, accountants and
auditors and shall not be answerable for the default or misconduct of any such
agents, attorneys, accountants or auditors if such agents, attorneys,
accountants or auditors shall have been selected with reasonable care. The
accounts of the Trust shall be audited not less frequently than annually by
independent certified public accountants designated from time to time by the
Depositor, and the report of such accountants shall be furnished by the Trustee
to the Certificateholders upon request. The Trustee shall be fully protected in
respect of any action under this Agreement taken, or suffered, in good faith by
the Trustee, in accordance with the opinion of its counsel. The fees and
expenses charged by such agents, attorneys, accountants or auditors shall
constitute an expense of the Trustee reimbursable from the Interest and
Principal Accounts as set forth in Section 6.4 hereof;
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(f) upon the occurrence of any of the events stated in
Section 8.1(a) or Section 8.3 hereof, the Trustee may:
(1) appoint a successor depositor (having a net worth,
determined in accordance with generally accepted accounting principles, of at
least $1,000,000) who shall act hereunder in all respects in place of the
Depositor which successor shall be satisfactory to the Trustee, and which may
be compensated semi-annually, at rates deemed by the Trustee to be reasonable
under the circumstances, by deduction from the Interest Account, or, to the
extent funds are not available in such Account, from the Principal Account but
no such deduction shall be made exceeding such reasonable amount as the
Securities and Exchange Commission may prescribe in accordance with Section
26(a)(2)(C) of the Investment Company Act of 1940, or any successor provision,
or
(2) if no depositor or successor depositor has been
appointed, terminate this Agreement and the trust created hereby, and liquidate
the Trust Fund in the manner provided in Section 9.3;
(g) the Trustee shall notify all Certificateholders if the
value of the Trust Fund as shown by any evaluation by the Trustee pursuant to
Section 5.1 hereof shall be less than $2,000,000 or less than 20% of the value
of the Trust Fund as of the Date of Deposit and, after such notice is given,
this Indenture and the trust created hereby may be terminated and the Trust
Fund liquidated, all in the manner provided in Section 9.3, (i) by the consent
of 66 2/3% of the Units at the time outstanding under this Indenture or (ii) by
the Trustee, in its discretion, provided, however, upon written notification to
the Certificateholders of their opportunity to object to such termination and
to the Depositor, at least 33 1/3% of the Units at the time outstanding under
this Indenture do not instruct the Trustee not to terminate the trust and
liquidate the Trust Fund;
(h) in no event shall the Trustee be liable for any taxes or
other governmental charges imposed upon or in respect of the Bonds or upon the
interest thereon or upon it as Trustee hereunder or upon or in respect of the
Trust Fund which it may be required to pay under any present or future law of
the United States of America or of any other taxing authority having
jurisdiction in the premises. For all such taxes and charges and for any
expenses, including counsel and audit fees, which the Trustee may sustain or
incur with respect to such taxes or charges, the Trustee shall be reimbursed
and indemnified out of the Interest and Principal Accounts of the Trust Fund,
except as otherwise provided in Section 6.1(e) and the payment of such amounts
so paid by the Trustee shall be secured by a lien on the Trust Fund prior to
the interests of the Certificateholders;
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(i) the Trustee, except by reason of its own gross
negligence, bad faith or willful misconduct, shall not be liable for any action
taken, omitted or suffered to be taken by it or believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Indenture;
(j) the Trustee is authorized and empowered to execute and
file on behalf of the Trust Fund any and all documents, in connection with
consents to service of process, required to be filed under the securities laws
of the various states in order to permit the sale of Units of the Trust Fund in
such states by the Depositor; and
(k) no payment to the Depositor or to any principal
underwriter (as defined in the Investment Company Act of 1940) for the Trust or
to any affiliated person (as defined in the Investment Company Act of 1940) or
agent of a Depositor or such underwriter shall be allowed the Trustee as an
expense by the Trustee except for payment of such reasonable amounts as the
Securities and Exchange Commission may prescribe as compensation for performing
bookkeeping and other administrative services of a character normally performed
by the Trustee. Notwithstanding any provision of this Agreement to the
contrary, the Trustee is authorized and empowered, subject to the approval of
the Depositor and its counsel, to enter into a servicing arrangement or
arrangements as it deems necessary or appropriate for the performance by a
service organization (which may be a corporation under common ownership with
the Trustee) of bookkeeping, accounting, reporting, distribution and other
activities and duties allocated to it under this Agreement. The Trustee is
further authorized and empowered, subject to the approval of the Depositor and
its counsel, to amend, supplement or terminate any such servicing arrangement
or arrangements made pursuant to this provision.
SECTION 6.2. Books, Records and Reports. The Trustee shall
keep proper books of record and account of all the transactions under this
Indenture at its corporate trust office including a record of the name and
address of, and the Certificates issued by the Trust Fund and held by every
Certificateholder, and such books and records shall be open to inspection by
any Certificateholder at all reasonable times during the usual business hours,
and such books and records shall be made available to the Depositor upon the
request of the Depositor including, but not limited to, a record of the name
and address of every Certificateholder.
Unless the Depositor otherwise directs, the Trustee shall
cause audited statements as to the assets and income of the Trust to be
prepared on an annual basis by independent public accountants selected by the
Depositor, provided, however, that if the Depositor is then making a market for
units of the Trust, the
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Depositor shall bear the cost of such audit to the extent that it exceeds
$.50/unit of approximately $1,000 initial value (or such proportionate amount
in the case of units of greater or lesser initial value). In the event that the
Depositor is not making a market for the Units of a Trust, then the Depositor
may instruct the Trustee not to prepare such statements. Such audited statement
will be made available to Certificateholders upon request.
To the extent permitted under the Investment Company Act of
1940 as evidenced by an opinion of counsel to the Depositor, the Trustee shall
pay, or reimburse to the Depositor or others, the costs of the preparation of
documents and information with respect to each Trust required by law or
regulation in connection with the maintenance of a secondary market in units of
each Trust. Such costs may include but are not limited to accounting and legal
fees, blue sky registration and filing fees, printing expenses and other
reasonable expenses related to documents required under Federal and state
securities laws.
The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or federal statute or
rule or regulation thereunder.
SECTION 6.3. Indenture and List of Bonds on File. The Trustee
shall keep a certified copy in duplicate original of this Indenture on file at
its corporate trust office available for inspection at all reasonable times
during the usual business hours by any Certificateholder, together with a
current list of the Bonds.
SECTION 6.4. Compensation. For services performed under this
Indenture, the Trustee shall be paid an amount set forth in Part II of the
applicable Reference Trust Agreement; provided, however, if interest on any
bonds in the Trust Fund does not commence accruing to the benefit of
Certificateholders on the First Settlement Date due to the fact that any
contract to purchase such Bond settles after the First Settlement Date, then
the compensation of the Trustee hereunder during the first year of the Trust
Fund shall be adjusted downward to reflect the amount of interest that would
have accrued on such Bond during the period from the First Settlement Date to
the settlement on such contract to purchase. Such compensation shall be payable
in monthly installments equal to one-twelfth of the estimated annual
compensation and shall be computed on the basis of the greatest amount of such
principal amount of Bonds in the Trust Fund at any time during the period with
respect to which such compensation is being computed. The Trustee may from time
to time adjust its compensation as set forth above; provided, however, that
total adjustment upward does not, at the time of such adjustment, exceed the
percentage of the total increase, after the date
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hereof, in consumer prices for services as measured by the United States
Department of Labor Consumer Price Index entitled "All Services Less Rent." The
consent or concurrence of any Certificateholder hereunder shall not be required
for any such adjustment or increase. Such compensation shall be deemed to
provide only for the usual, normal and proper functions undertaken as Trustee
pursuant to this Indenture and, in addition, the Trustee shall charge the
Interest and Principal Accounts for any and all expenses, including the fees of
counsel which may be retained by the Trustee in connection with its activities
hereunder, and disbursements incurred hereunder and any extraordinary services
performed by the Trustee hereunder. The Trustee shall be indemnified and held
harmless against any loss or liability accruing to it without gross negligence,
bad faith or willful misconduct on its part, arising out of or in connection
with the acceptance or administration of this Trust Fund, including the costs
and expenses (including counsel fees) of defending itself against any claim or
liability in the premises. If the cash balances in the Interest and Principal
Accounts shall be insufficient to provide for any expenses of the Trust, the
Trustee shall have the power to sell, in accordance with Sections 3.7 and 5.2
(i) Bonds from the current list of Bonds designated to be sold pursuant to
Sections 3.7 and 5.2 hereof, or (ii) if no such Bonds have been so designated,
such Bonds as the Trustee deems appropriate to sell in its own discretion, and
to apply the proceeds of any such sale in payment of the amounts payable
pursuant to this Section 6.4. The Trustee shall not be liable or responsible in
any way for depreciation or loss incurred by reason of any sale of Bonds made
pursuant to this Section 6.4. Any moneys payable pursuant to this Section shall
be secured by a lien on the Trust Fund prior to the interest of the
Certificateholders.
SECTION 6.5. Removal and Resignation of Trustee;
Successor. The following provisions shall provide for the
removal and resignation of the Trustee and the appointment of any
successor trustee:
(a) the Trustee or any trustee or trustees hereafter
appointed may resign and be discharged of the trust created by this Indenture,
by executing an instrument in writing resigning as Trustee of such trust and
filing the same with the Depositor and mailing a copy of a notice of
resignation to all Certificate- holders then of record, not less than sixty
days before the date specified in such instrument when, subject to Section
6.5(e), such resignation is to take effect. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor trustee as
hereinafter provided, by written instrument, in duplicate, one copy of which
shall be delivered to the resigning Trustee and one copy to the successor
trustee. In case at any time the Trustee shall become incapable of acting, or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or
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of its property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purposes of
rehabilitation, conservation or liquidation, or the Depositor shall deem it to
be in the best interests of the Certificateholders, then in any such case the
Depositor may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which shall be delivered to the Trustee
so removed and one copy to the successor trustee; provided that a notice of
such removal and appointment of a successor trustee shall be mailed by the
Depositor to each Certificateholder then of record;
(b) any successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositor and to the retiring Trustee an
instrument accepting such appointment hereunder, and such successor trustee
without any further act, deed or conveyance shall become vested with all the
rights, powers, duties and obligations of its predecessor hereunder with like
effect as if originally named Trustee herein and shall be bound by all the
terms and conditions of this Indenture. Upon the request of such successor
trustee, the Depositor and the retiring Trustee shall, upon payment of any
amounts due the retiring Trustee, or provision therefor to the satisfaction of
such retiring Trustee, execute and deliver an instrument acknowledged by them
transferring to such successor trustee all the rights and powers of the
retiring Trustee; and the retiring Trustee shall transfer, deliver and pay over
to the successor trustee all Bonds and moneys at the time held by it hereunder,
together with all necessary instruments of transfer and assignment or other
documents properly executed necessary to effect such transfer and such of the
records or copies thereof maintained by the retiring Trustee in the
administration hereof as may be requested by the successor trustee, and shall
thereupon be discharged from all duties and responsibilities under this
Indenture. The retiring Trustee shall, nevertheless, retain a lien upon all
Bonds and moneys at the time held by it hereunder to secure any amounts then
due the retiring Trustee;
(c) in case at any time the Trustee shall resign and no
successor trustee shall have been appointed and have accepted appointment
within thirty days after notice of resignation has been received by the
Depositor, the retiring Trustee may forthwith apply to a court of competent
jurisdiction for the appointment of a successor trustee. Such court may
thereupon, after such notice, if any, as it may deem proper and prescribe,
appoint a successor trustee;
(d) any corporation into which any trustee hereunder may be
merged or with which it may be consolidated, or any corporation resulting from
any merger or consolidation to which any trustee hereunder shall be a party,
shall be the successor trustee under this Indenture without the execution or
filing of
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any paper, instrument or further act to be done on the part of the parties
hereto, anything herein, or in any agreement relating to such merger or
consolidation by which any such Trustee may seek to retain certain powers,
rights and privileges, theretofore obtaining for any period of time, following
such merger or consolidation, to the contrary notwithstanding;
(e) any resignation or removal of the Trustee and appointment
of a successor trustee pursuant to this Section shall become effective upon
acceptance of appointment by the successor trustee as provided in subsection
(b) hereof.
SECTION 6.6. Qualifications of Trustee. The Trustee shall be
a corporation organized and doing business under the laws of the United States
or the State of New York, which is authorized under such laws to exercise
corporate trust powers and having at all times an aggregate capital, surplus,
and undivided profits of not less than $5,000,000 and having its principal
office and place of business in the Borough of Manhattan, the City and State of
New York.
ARTICLE VII
RIGHTS OF CERTIFICATEHOLDERS
SECTION 7.1. Beneficiaries of Trust. By the purchase and
acceptance or other lawful delivery and acceptance of any Certificate the
Certificateholder shall be deemed to be a beneficiary of the trust created by
this Indenture and vested with all right, title and interest in the Trust Fund
to the extent of the Unit or Units set forth and evidenced by such Certificate,
subject to the terms and conditions of this Indenture and of such Certificate.
SECTION 7.2. Rights, Terms and Conditions. In addition to the
other rights and powers set forth in the other provisions and conditions of
this Indenture, the Certificateholders shall have the following rights and
powers and shall be subject to the following terms and conditions:
(a) a Certificateholder may at any time tender his
Certificate or Certificates to the Trustee for redemption in
accordance with Section 5.2;
(b) the death or incapacity of any Certificateholder shall
not operate to terminate this Indenture or the Trust, nor entitle his legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court of competent jurisdiction for a partition or winding up
of the Trust Fund, nor otherwise affect the rights, obligations and liabilities
of the
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parties hereto or any of them. Each Certificateholder expressly waives any
right he may have under any rule of law, or the provisions of any statute, or
otherwise, to require the Trustee at any time to account, in any manner other
than as expressly provided in this Indenture, in respect of the Bonds or moneys
from time to time received, held and applied by the Trustee hereunder; and
(c) except as otherwise provided herein, no Certifi-
cateholder shall have any right to vote or in any manner otherwise control the
operation and management of the Trust Fund 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 any association; nor shall any
Certificateholder ever be under any liability to any third persons by reason of
any action taken by the parties to this Indenture, or any other cause
whatsoever.
ARTICLE VIII
DEPOSITOR
SECTION 8.1. Discharge. The following provisions
shall provide for the discharge of the Depositor and the
liability of the Depositor in the event of the discharge of the
Depositor:
(a) in the event that the Depositor shall fail to undertake
or perform any of the duties which by the terms of this Agreement are required
by it to be undertaken or performed and such failure shall continue for thirty
days after notice to the Depositor from the Trustee or if the Depositor shall
become incapable of acting or shall be adjudged a bankrupt or insolvent, or a
receiver of the property of the Depositor shall be appointed or any public
officer shall take charge or control of any Depositor or its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
such Depositor shall forthwith be and shall be deemed to be discharged forever
as a Depositor hereunder; and
(b) notwithstanding the discharge of the Depositor in
accordance with this Section 8.1, or the resignation of the Depositor pursuant
to Section 8.3, such Depositor shall continue to be fully liable in accordance
with the provisions hereof in respect of action taken or refrained from under
this Indenture by the Depositor before the date of such discharge, as fully and
to the same extent as if no discharge had occurred.
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SECTION 8.2. Successors. The covenants, provisions and
agreements herein contained shall in every case be binding upon any successor
to the Depositor and shall be binding upon the General Partners of any
successor depositor which may be a partnership and upon the capital interest of
the limited partners of any successor depositor which may be a partnership. In
the event of the death, resigning or withdrawal of any partner of the Depositor
or of any successor depositor which may be a partnership, the partner so dying,
resigning or withdrawing shall be relieved of all further liability hereunder
if at the time of such death, resignation or withdrawal such Depositor or
successor depositor maintains a net worth (determined in accordance with
generally accepted accounting principles) of at least $1,000,000. In the event
of an assignment by the Depositor to a successor corporation or partnership as
permitted by the next following sentence, such Depositor shall be relieved of
all further liability under this Agreement. The Depositor may transfer all or
substantially all of its assets to a corporation or partnership which carries
on the business of such Depositor, if at the time of such transfer such
successor duly assumes all the obligations of such Depositor under this
Agreement.
SECTION 8.3. Resignation. If at any time the Depositor shall
desire to resign its position as Depositor hereunder, the Depositor may resign
by delivering to the Trustee an instrument executed by such resigning Depositor
and upon such delivery the resigning Depositor shall be discharged and shall no
longer be liable in any manner hereunder except as to acts or omissions
occurring prior to such delivery; provided, however, that concurrently with or
subsequent to such resignation the Trustee may appoint a new Depositor to
assume the duties of the resigning Depositor by an instrument executed by the
Trustee and the new Depositor. Such new Depositor shall not be under any
liability hereunder for occurrences or omissions prior to the execution of such
instrument.
SECTION 8.4. Exclusions from Liability. The following
provisions shall provide for certain exclusions from the
liability of the Depositor:
(a) no Depositor shall be under any liability to the Trust
Fund or the Certificateholders for any action taken or for refraining from the
taking of any action in good faith pursuant to this Indenture, or for errors in
judgment or liable or responsible in any way for depreciation or loss incurred
by reason of the sale of any Bonds; provided, however, that this provision
shall not protect the Depositor against any liability to which it would
otherwise be subject by reason of its own willful misconduct, bad faith or
gross negligence. The Depositor may rely in good faith on any paper, order,
notice, list, affidavit, receipt, evaluation, opinion, endorsement, assignment,
draft or any other document of any kind prima facie properly
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executed and submitted to it by the Trustee, bond counsel, the Evaluator or any
other person. The Depositor shall in no event be deemed to have assumed or
incurred any liability, duty, or obligation to any Certificateholder or the
Trustee other than as expressly provided for herein or arising as a matter of
law;
(b) the Trust shall pay and hold the Depositor harmless from
and against any loss, liability or expense incurred in acting as Depositor of
the Trust other than reason of willful misconduct, bad faith or gross
negligence in the performance of its duties, including the costs and expenses
of the defense against any claim or liability in the premises. The Depositor
shall not be under any obligation to appear in, prosecute or defend any legal
action which in their opinion may involve them in any expense or liability;
provided, however, that the Depositor may in its discretion undertake any such
action which it may deem necessary or desirable in respect of this Agreement
and the rights and duties of the parties hereto and the interest of the
Certificateholders hereunder; and
(c) none of the provisions of this Agreement shall be deemed
to protect or purport to protect the Depositor against any liability to the
Trust Fund or to the Certificateholders to which the Depositor would otherwise
be subject by reason of its own willful misconduct, bad faith or gross
negligence.
SECTION 8.5. Annual Fee. For services performed under this
Indenture, the Depositor will be paid an annual fee, against a statement
therefor submitted to the Trustee annually on or before December 1 of each
year, in an amount set forth in Part II of the applicable Reference Trust
Agreement as reimbursement of the costs incurred by the Depositor in rendering
its portfolio supervisory services with respect to the portfolio of the Trust
Fund unless such fee shall not be permitted by any governmental regulatory
agency having jurisdiction to regulate the payments of such fees. This fee may
exceed the actual costs of supervising the portfolio of this Trust but the
total amount of fees received under this Section 8.5 by the Depositor in any
calendar year, together with similar fees received by them in connection with
other guaranteed series of Glickenhaus Special Situations Trust in such
calendar year, shall not exceed the aggregate cost of supplying such services.
The Depositor will calculate the actual costs of its services by keeping
records of the amount of time spent by each employee of the Depositor working
on the portfolio supervision and determining what portion of such employee's
salary to allocate to such services. The Depositor shall also keep records of
the appropriate allocation of the costs of periodicals, computer time,
communications expenses and other related expenses.
The Depositor's annual fee may be increased from time
to time by amounts not exceeding the proportionate increase
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during the period from the date of this Indenture to the date of any such
increase in consumer prices as published either under the classification "All
Services Less Rent" in the Consumer Price Index published by the U.S.
Department of Labor or, if such index is no longer published, a similar index.
ARTICLE IX
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
SECTION 9.1. Amendments. This Indenture may be amended from
time to time by the parties hereto or their respective successors, without the
consent of any of the Certifi- cateholders (a) to cure any ambiguity or to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provision contained herein, (b) to change any
provision hereof as may be required by the Securities and Exchange Commission,
any successor governmental agency exercising similar authority, or (c) to make
such other provision in regard to matters or questions arising hereunder as
shall not adversely affect the interest of the Certificateholders; and this
Indenture may also be amended from time to time by the parties hereto or their
successors with the consent of the holders of Certificates evidencing 66 2/3%
of the Units at the time outstanding under the Indenture for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions hereof or of modifying in any manner the rights of the holders of
Certificates of the Trust Fund; provided, however, that the parties hereto may
not amend this Indenture without the consent of 100% of the Certificateholders
so as to (i) reduce the aforesaid percentage of Units the holders of which are
required to consent to certain amendments and (ii) reduce the interest in the
Trust Fund represented by Units evidenced by any Certificate; provided,
however, that the parties hereto may not amend this Indenture so as to (1)
increase the number of Units issuable hereunder above the aggregate number of
Units set forth in the applicable Reference Trust Agreement except as provided
in Section 5.4 hereof or such lesser amount as may be outstanding at any time
during the term of this Indenture or (2) subject to Section 3.8 and 3.14,
permit the deposit or acquisition hereunder of obligations or other securities
either in addition to or in substitution for any of the Bonds.
It shall not be necessary for the consent of Certifi-
cateholders under this Section 9.1 to approve the particular form of any
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.
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Promptly after the execution of any such amendment the
Trustee shall furnish written notification to all holders of then outstanding
Certificates of the substance of such amendment.
SECTION 9.2. Termination. This Indenture and the trust
created hereby shall terminate upon the maturity, redemption, sale or other
disposition, as the case may be, of the last Bond held hereunder unless sooner
terminated as hereinbefore specified and may be terminated at any time by the
written consent of 100% of the Certificateholders; provided, that in no event
shall this Trust continue beyond the Mandatory Termination Date set forth in
Part II of the applicable Reference Trust Agreement. Written notice of any
termination, specifying the time or times at which the Certificateholders may
surrender their Certificates for cancellation and the date, determined by the
Trustee, upon which the transfer books of the Trust, maintained pursuant to
Section 6.1, shall be closed, shall be given by the Trustee to each
certificateholder at the address appearing on the registration books of the
Trustee. Within a reasonable period of time after such termination the Trustee,
shall, subject to any applicable provision of law, fully liquidate the Bonds
then held, if any; provided, however, that in connection with any such
liquidation it shall not be necessary for the Trustee to dispose of any Bond or
Bonds if retention of such Bond or Bonds, until due, shall be deemed to be in
the best interest of Certificate- holders, including, but not limited to,
situations in which a Pre-Insured Bond (or Bonds), which matures after the
Mandatory Termination Date, reflects a deteriorated market price resulting from
a fear of default, and shall:
(a) deduct from the Interest Account or, to the extent that
funds are not available in such Account, from the Principal Account, and pay to
itself individually an amount equal to the sum of (1) its accrued compensation
for its ordinary recurring services, (2) any compensation due it for its
extraordinary services and (3) any costs, expenses or indemnities as provided
herein;
(b) deduct from the Interest Account, or to the extent that
funds are not available in such Account, from the Principal Account, and pay
any unpaid fees and expenses of the Evaluator and of bond counsel, if any, as
directed and certified to by the Depositor and of any successor Depositor
pursuant to Section 8.3;
(c) deduct from the Interest Account or the Principal Account
any amounts which may be required to be deposited in the Reserve Account to
provide for payment of any applicable taxes or other governmental charges and
any other amounts which may be required to meet expenses incurred under this
Indenture;
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(d) distribute to each Certificateholder, upon surrender for
cancellation of his certificate or Certificates, such holder's pro rata share
of the balance of the Interest Account;
(e) distribute to each Certificateholder, upon surrender for
cancellation of his Certificate or Certificates, such holder's pro rata share
of the balance of the Principal Account and on the conditions set forth in
Section 3.4, the Reserve Account; and
(f) together with such distribution to each Certifi-
cateholder as provided for in (d) and (e), furnish to each such
Certificateholder a final distribution statement as of the date of the
computation of the amount distributable to Certificate- holders, setting forth
the data and information in substantially the form and manner provided for in
Section 3.6 hereof.
The amounts to be so distributed to each Certificate- holder
shall be that pro rata share of the balance of the total Interest and Principal
Accounts as shall be represented by the Units therein evidenced by the
outstanding Certificate or Certificates held of record by such
Certificateholder.
The Trustee shall be under no liability with respect to
moneys held by it in the Interest, Reserve and Principal Accounts upon
termination except to hold the same in trust without interest until disposed of
in accordance with the terms of this Indenture.
In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the time
specified in the above-mentioned written notice, the Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the liquidation distribution with
respect thereto. If within one year after the second notice all the
Certificates shall not have been surrendered for cancellation, the Trustee may
take steps, or may appoint an agent to take appropriate steps, to contact the
remaining Certificateholders concerning surrender of their Certificates and the
cost thereof shall be paid out of the moneys and other assets which remain in
trust hereunder.
No distribution of funds constituting long-term capital gains
shall be in contravention of Section 19(b) of the Investment Company Act of
1940, as from time to time amended, and applicable orders, rules and
regulations thereunder.
SECTION 9.3. Construction. This Indenture is
delivered in the State of New York, and all laws or rules of
construction of such State shall govern the rights of the parties
-49-
406909.1
<PAGE>
hereto and the Certificateholders and the interpretation of the
provisions hereof.
SECTION 9.4. Registration of Units and Trust Fund. The
Depositor agrees and undertakes on its own part to register the Units and the
Glickenhaus Special Situations Trust with the Securities and Exchange
Commission or other applicable governmental agency pursuant to applicable
Federal or State statutes, if such registration shall be required, and to do
all things that may be necessary or required to comply with this provision
during the term of the Trust Fund created hereunder, and the Trustee shall not
incur any liability or be under any obligation or expense in connection
therewith.
SECTION 9.5. Written Notice. Any notice, demand, direction or
instruction to be given to the Depositor hereunder shall be in writing and
shall be duly given if mailed or delivered to the Depositor c/o Glickenhaus &
Co., 6 East 43rd Street, New York, New York 10017, or at such other address as
shall be specified by the Depositor to the other parties hereto in writing. Any
notice, demand, direction or instruction to be given to the Trustee shall be in
writing and shall be duly given if mailed or delivered to the corporate trust
office of the Trustee, 101 Barclay Street, New York, New York 10286, Attention:
UIT Administration, or such other address as shall be specified to the other
parties hereto by the Trustee in writing. Any notice, demand, direction or
instruction to be given to Muller Data Corporation shall be in writing and
shall be duly given if mailed or delivered to Muller Data Corporation,
Attention: Vice President, Municipal Bond Department, 395 Hudson Street, New
York, New York 10014, or such other address as shall be specified to the other
parties hereto by the Evaluator in writing. Any notice to be given to the
Certificateholders shall be duly given if mailed or delivered to each
Certificateholder at the address of such holder appearing on the registration
books of the Trustee.
SECTION 9.6. Severability. If any one or more of the
covenants, agreements, provisions or terms of this Indenture shall be held
contrary to any express provision of law or contrary to policy of express law,
though not expressly prohibited, or against public policy, or shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Indenture and shall in no way affect the validity
or enforceability of the other provisions of this Indenture or of the
Certificates or the rights of the holders thereof.
SECTION 9.7. Dissolution of Depositor not to
Terminate. The dissolution of the Depositor for any cause
whatsoever shall not operate to terminate this Indenture insofar
-50-
406909.1
<PAGE>
as the duties and obligations of the Trustee and Evaluator are
concerned.
IN WITNESS WHEREOF, the Depositor has caused this Trust
Indenture and Agreement to be executed for Glickenhaus & Co., by one of its
General Partners with its corporate seals to be hereto affixed and attested to
by one of its Secretaries or Assistant Secretaries; the Bank of New York has
caused this Trust Indenture and Agreement to be executed by one of its Vice
Presidents or Assistant Vice Presidents and its corporate seal to be hereto
affixed and attested to by one of its Assistant Treasurers or Vice Presidents
and Muller Data Corporation has caused this Trust Indenture and Agreement to be
executed by one of its Vice Presidents and Assistant Vice Presidents and its
corporate seal to be hereto affixed and attested to by one of its Vice
Presidents; all as of the day, month and year first above written.
[signatures and acknowledgments appear on separate pages)
-51-
406909.1
<PAGE>
GLICKENHAUS & CO.
By: /s/ Brian C. Laux
Attorney-in-Fact
for each of the
General Partners
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY NEW YORK )
I, Kelly McConvery, a Notary Public in and for the said
County in the State aforesaid, do hereby certify that personally known to me to
be the same whose name is subscribed to the foregoing instrument, appeared
before me this day in person, and acknowledged that he signed and delivered the
said instrument as his free and voluntary act as Attorney-in-Fact for each of
the General Partners, and as the free and voluntary act of said GLICKENHAUS &
CO., for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 28th day of
October, 1996.
/s/ Kelly McConvery
Notary Public
[SEAL]
My commission expires: Kelly McConvery
Notary Public State of New York
No. 01MC5044884
Qualified New York County
Commission Expires June 5, 1997
406909.1
<PAGE>
THE BANK OF NEW YORK, Trustee
By: /s/ Jeffrey Cohen
Vice President
ATTEST:
By: /s/ Jenifer Dicker
(CORPORATE SEAL)
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, Emanuel T. Lytle, a Notary Public in and for the said
County in the State aforesaid, do hereby certify that Jeffrey Cohen and Jenifer
Dicker, personally known to me to be the same persons whose names are
subscribed to the foregoing instrument and personally known to me to be a Vice
President and an Assistant Vice President, respectively, of The Bank of New
York appeared before me this day in person, and acknowledge that they signed,
sealed with the corporate seal of The Bank of New York and delivered the said
instrument as their free and voluntary act as such Vice President and Assistant
Vice President, respectively, and as the free and voluntary act of said The
Bank of New York for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 8th day of
October, 1996.
/s/ Kelly McConvery
Notary Public
(SEAL)
My commission expires: Emanuel T. Lytle, Jr.
Notary Public, State of New York
No. 41-4696933
Qualified in Queens County
Commission Expires: April 30, 1997
406909.1
<PAGE>
MULLER DATA CORPORATION,
Evaluator
By: /s/ Mario S. Buscemi
Vice President
ATTEST:
By: /s/ Richard Birnbaum
(CORPORATE SEAL)
406909.1
CERTIFICATE OF OWNERSHIP
Evidencing A Fractional Undivided Interest In
Number Glickenhaus Special Situations Units
Trust, Series 1
Description of Trust Plan of Distribution
Cusip
This is to
certify that
is the owner and registered holder of this
Certificate evidencing the ownership of
unit(s)
of fractional undivided interest in Glickenhaus Special Situations Trust of the
above Series (hereinafter called the "Trust") created under the laws of the
State of New York by a Trust Indenture and Agreement as incorporated by a
Reference Trust Agreement applicable to the above Series (hereinafter
collectively called the "Indenture") among GLICKENHAUS & CO., as Depositor,
such other co-Depositors, if any, identified in the Indenture, and THE BANK OF
NEW YORK, as Trustee. This Certificate is issued under and is subject to the
terms, provisions and conditions of the Indenture to which the holder of this
Certificate by virtue of the acceptance hereof assents and is bound, a copy of
which is on file and available for inspection at the unit investment office of
the Trustee. The Depositor(s) hereby grant and convey all of their right, title
and interest in and to the Trust to the extent of the fractional undivided
interest represented hereby to the registered holder of this Certificate
subject to and in pursuance of the Indenture. This Certificate is transferable
and interchangeable by the registered holder in person or by his duly
authorized attorney at the unit investment trust office of the Trustee upon
surrender of this Certificate properly endorsed or accompanied by a written
instrument of transfer in form satisfactory to the Trustee and payment of any
applicable fees and expenses.
C/M: 10726.0076 416731.1
<PAGE>
This Certificate shall not become valid or binding for any purpose
until properly executed by the Trustee under the Indenture.
IN WITNESS WHEREOF, Glickenhaus & Co., as Depositor and, if
applicable, as agent for its co-Depositors, has caused this Certificate to be
executed in facsimile by a duly authorized officer and The Bank of New York, as
Trustee, has caused this Certificate to be executed in its corporate name by an
authorized officer.
GLICKENHAUS & CO.
Depositor
By: Date:
Authorized Signatory
THE BANK OF NEW YORK,
Trustee
By:
Authorized Officer
The following abbreviations, when used in the inscription on the face
of this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and
not as tenants in common
UNIF GIFT MIN ACT - Custodian
(Cust)
(Minor)
C/M: 10726.0076 416731.1
<PAGE>
Under Uniform Gifts to Minors Act
(State)
Additional abbreviations may also be used though not in the above list.
C/M: 10726.0076 416731.1
<PAGE>
(FORM OF ASSIGNMENT)
For Value Received,
hereby sell, assign and transfer Units
represented by this
Certificate unto
SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE MUST BE PROVIDED
and does hereby irrevocably constitute and appoint
, attorney,
to transfer said Units on the books of the Trustee, with full power of
substitution in the premises.
Dated:
SIGNATURE(S) GUARANTEED BY
NOTICE: The signature(s)
to this
Firm or Bank assignment must
correspond with the
name(s) as written upon
the face of the
Certificate in every
particular, without
alteration or
enlargement or any change
- --------------------------------------------- whatever.
Authorized Signature
Signature(s) must be guaranteed by
a member or participant of the
Securities Transfer Agents
C/M: 10726.0076 416731.1
<PAGE>
Medallion Program (STAMP), Stock
Exchanges Medallion Program (SEMP)
or New York Stock Exchange, Inc.
Medallion Signature Program (MSP).
C/M: 10726.0076 416731.1
BATTLE FOWLER LLP
A LIMITED LIABILITY PARTNERSHIP
75 East 55th Street
New York, New York 10022
(212) 856-7000
October 28, 1996
Glickenhaus & Co.
6 East 43rd Street
New York, New York 10017
Re: GLICKENHAUS SPECIAL SITUATIONS TRUST, SERIES 1
Duke & Company Tax Free Portfolios -
National Insured Trust
----------------------------------------------
Dear Sirs:
We have acted as special counsel for Glickenhaus & Co. , as
Depositor, Sponsor and Principal Underwriter of GLICKENHAUS SPECIAL SITUATIONS
TRUST, SERIES 1, Duke & Company Tax Free Portfolio National Insured Trust (the
"Trust") in connection with the issuance by the Trust of 5,000 units of
fractional undivided interest (collectively, the "Units") in the Trust.
Pursuant to the Trust Agreement referred to below, the Depositor has
transferred to the Trust certain long-term bonds and contracts to purchase
certain long-term bonds together with an irrevocable letter of credit to be
held by the Trustee upon the terms and conditions set forth in the Trust
Agreement. (All bonds to be acquired by the Trust are collectively referred to
as the "Bonds").
In connection with our representation, we have examined
copies of the following documents relating to the creation of the Trust and the
issuance and sale of the Units: (a) the Trust Indenture and Agreement and
related Reference Trust Agreement, each of even date herewith, relating to the
Trust (the "Trust Agreements") among the Depositor, the Bank of New York, as
Trustee, and Muller Data Corporation, as Evaluator; (b) the notification of
registration on Form N-8A and the Registration Statement on Form N-8B-2, as
amended, relating to the Trust, as filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Investment Company Act of 1940
(the "1940 Act"); (c) the Registration Statement on Form S-6 (Registration No.
333-10371)
C/M: 10726.0076 407560.1
<PAGE>
2
Glickenhaus & Co.
October 28, 1996
filed with the Commission pursuant to the Securities Act of 1933 (the "1933
Act"), and Amendment No. 1 thereto (said Registration Statement, as amended by
said Amendment No. 1, being herein called the "Registration Statement"); (d)
the proposed form of final Prospectus (the "Prospectus") relating to the Units,
which is expected to be filed with the Commission this day; (e) the Restated
Agreement of Limited Partnership of Glickenhaus & Co.; and (f) a certificate of
an authorized officer or partner of the Depositor with respect to certain
factual matters contained therein.
We have also examined the applications for orders of
exemption from certain provisions of the 1940 Act, and the amendments thereto,
filed with the Commission on May 23, 1978 (file no. 812-4315), on November 7,
1978 (file no. 812-4389), on September 10, 1980 (file no. 812-4334) and on
November 9, 1984 (file no. 812-5980) and the related orders issued by the
Commission with respect thereto on June 20, 1978, January 10, 1979, December
31, 1980 and February 22, 1985, respectively.
We have not reviewed the financial statements, compilation of
the Bonds held by the Trust, or other financial or statistical data contained
in the Registration Statement and the Prospectus, as to which you have been
furnished with the reports of the accountants appearing in the Registration
Statement and the Prospectus.
In addition, we have assumed the genuineness of all
agreements, instruments and documents submitted to us as originals and the
conformity to originals of all copies thereof submitted to us. We have also
assumed the genuineness of all signatures and the legal capacity of all persons
executing agreements, instruments and documents examined or relied upon by us.
In addition, with respect to the opinion set forth in
paragraph (1) below, and insofar as that opinion relates to Glickenhaus & Co.,
we have relied, with their approval, on the opinion of Newman Tannenbaum
Helpern Syracuse & Hirsctritt dated of even date herewith.
Statements in this opinion as to the validity, binding effect
and enforceability of agreements, instruments and documents are subject: (i) to
limitations as to enforceability imposed by bankruptcy, reorganization,
moratorium, insolvency and other laws of general application relating to or
affecting the enforceability of creditors' rights, and (ii) to limitations
under equitable principles governing the availability of equitable remedies.
We are not admitted to the practice of law in any
jurisdiction but the State of New York and we do not hold ourselves out as
experts in or express any opinion as to the laws of other states or
jurisdictions except as to matters of Federal and Delaware corporate law.
C/M: 10726.0076 407560.1
<PAGE>
3
Glickenhaus & Co.
October 28, 1996
Based exclusively on the foregoing, we are of the opinion
that under existing law:
(1) The Trust Agreements have been duly authorized and
entered into by an authorized officer or General Partner of the Depositor and
are valid and binding obligations of the Depositor in accordance with their
terms.
(2) The execution and delivery of the Certificates evidencing
the Units has been duly authorized by the Depositor and such Certificates, when
executed by the Depositor and the Trustee in accordance with the provisions of
the Certificates and the Trust Agreements and issued for the consideration
contemplated therein, will constitute fractional undivided interests in the
Trust, will be entitled to the benefits of the Trust Agreements, will conform
in all material respects to the description thereof for the Units as provided
in the Trust Agreements and the Registration Statement, and the Units will be
fully paid and non-assessable by the Trust.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name in the Registration
Statement and in the Prospectus under the headings "Tax Status" and "Legal
Opinions". We authorize you to deliver copies of this opinion to the Trustee
and Duke & Company Inc. and the Trustee and Duke & Company Inc. may rely on
this opinion as fully and to the same extent as if it had been addressed to it.
This opinion is intended solely for the benefit of the
addressee and the Trustee in connection with the issuance of the Units of the
Trust and may not be relied upon in any other manner or by any other person
without our express written consent.
Very truly yours,
Battle Fowler LLP
C/M: 10726.0076 407560.1
Muller Data Corporation
TSIS
- ------------------------------------------------------------------------------
Thomson Securities Information Services
October 28, 1996
Glickenhaus & Co.
6 East 43 Street
New York, New York 10017
Re: GLICKENHAUS SPECIAL SITUATION TRUST, SERIES 1
Duke & Company Tax Free Portfolio
National Insured Trust
Gentlemen:
We have examined Registration Statement File NO. 333-10371 for the
above-captioned trust. We hereby acknowledge that Muller Data Corporation is
currently acting as the evaluator for the trust(s). We hereby consent to the
use in the Registration Statement of the reference to Muller Data Corporation
as evaluator.
In addition, we hereby confirm that the ratings indicated in the Registration
Statement for the respective bonds comprising the trust(s) portfolio are the
ratings currently indicated in our UITS database as of the date of the
evaluation report.
You are hereby authorized to file a copy of this letter with the Securities and
Exchange Commission.
Sincerely,
/s/ MARIO S. BUSCEMI
- ------------------------
Mario S. Buscemi
Chief Operating Officer
MSB:tg
395 Hudson Street o New York, NY 10014-3622 o 212-807-3800
C/M 10726.0076 419470.1
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
The schedule contains summary financial information extracted from the statement
of condition as of date of deposit and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<CURRENCY> US DOLLARS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> OCT-28-1996
<PERIOD-END> OCT-28-1996
<PERIOD-TYPE> OTHER
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 4,706,827
<RECEIVABLES> 67,690
<ASSETS-OTHER> 22,500
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4,797,017
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 90,190
<TOTAL-LIABILITIES> 90,190
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4,706,827
<SHARES-COMMON-STOCK> 5,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
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<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 4,706,827
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 941
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
