AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 2, 1997
REGISTRATION NO. 333-17307
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:
Empire State Municipal Exempt Trust, Guaranteed Series 134
B. NAME OF DEPOSITORS:
Glickenhaus & Co.
Lebenthal & Co., Inc.
C. COMPLETE ADDRESS OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
Glickenhaus & Co. Lebenthal & Co., Inc.
6 East 43rd Street 120 Broadway
New York, New York 10017 New York, New York 10281
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
<TABLE>
<CAPTION>
COPY OF COMMENTS TO:
<S> <C> <C>
SETH M. GLICKENHAUS JAMES A. LEBENTHAL MICHAEL R. ROSELLA, Esq.
Glickenhaus & Co. Lebenthal & Co., Inc. Battle Fowler LLP
6 East 43rd Street 120 Broadway 75 East 55th Street
New York, New York 10017 New York, New York 10281 New York, New York 10022
(212) 856-6858
</TABLE>
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
13,000* Units of Empire State Municipal Exempt Trust, Guaranteed
Series 134 are being registered under the Securities Act of 1933 and
the Investment Company Act of 1940.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE SECURITIES
BEING REGISTERED: $13,000,000**
G. AMOUNT OF FILING FEE (computed at one-thirty-third of 1 percent of the
proposed maximum aggregate offering price to the public): $3,939.39***
H. APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the Registration
Statement.
/x/ Check if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.
- -----------------
* Including 3,000 Units registered for the purpose of resale by the
Depositors.
** Estimated solely for purposes of calculating filing fee.
*** $100 of this amount was previously paid.
396037.1
<PAGE>
EMPIRE STATE MUNICIPAL EXEMPT TRUST,
GUARANTEED SERIES 134
CROSS-REFERENCE SHEET
Pursuant to Rule 404(e) 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.......................... Sponsors
3. Name and address of trustee................................. Trustee
4. Name and address of principal underwriters.................. Sponsors, Underwriting Account, Back
Cover
5. State of organization of trust.............................. The Trust
6. Execution and termination of trust agreement................ 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, Sponsors--Responsibility, Trustee--
Resignation, Amendment and Termination
of the Trust Agreement--Amendment
(h) Consents required...................................... Sponsors-Responsibility, Amendment and
Termination of the Trust Agreement
(i) Other provisions....................................... The Trust-Tax Status
11. Type of securities comprising units......................... Prospectus front cover, The Trust-Portfolio
12. Certain information regarding periodic payment
certificates................................................ Not Applicable
i
396037.1
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
13. (a) Load, fees, expenses, etc.............................. Prospectus front cover, Summary of
Essential Financial Information, The
Trust--Expenses and Charges, Public
Offering--Offering Price, Public Offering--
Market for Units, Public Offering--
Sponsors' and Underwriters' 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--Sponsors' and Underwriters'
Profits, Rights of Unit Holders--
Redemption--Purchase by the Sponsors 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--Sponsors' and Underwriters'
Profits, Amendment and Termination of the
Trust Agreement
16. Acquisition and disposition of underlying
securities.................................................. The Trust-Portfolio, Sponsors--
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-Portfolio--General Considerations,
The Trust--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.............................. The Trust--Expenses and Charges--Other
Charges, 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,
ii
396037.1
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
Amendment and Termination of the Trust
Agreement
20. Certain miscellaneous provisions of trust
agreement
(a) Amendment.............................................. Sponsors--Resignation, Trustee--Resignation,
Trustee--Limitations on Liability,
Amendment and Termination of the Trust
Agreement
(b) Termination............................................ Sponsors--Resignation, Trustee--Resignation,
Trustee--Limitations on Liability,
Amendment and Termination of the Trust
Agreement
(c) and (d) Trustee, removal and successor.................. Sponsors--Resignation, Trustee--Resignation,
Trustee--Limitations on Liability,
Amendment and Termination of the Trust
Agreement
(e) and (f) Depositor, removal and successor................ Sponsors--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.................................... The Trust-Portfolio, Sponsors--Limitations
on Liability, Trustee--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................................... Sponsors
26. Fees received by depositor.................................. Not Applicable
27. Business of depositor....................................... Sponsors
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
iii
396037.1
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities by states................ Public Offering--Distribution of Units
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,
Public Offering--Underwriting Account,
Public Offering--Sponsors' and
Underwriters' Profits
(b) Underwriting agreements................................ Public Offering--Distribution of Units,
Underwriting Account, Public Offering--
Sponsors' and Underwriters' Profits
(c) Selling agreements..................................... Public Offering--Distribution of Units,
Underwriting Account, Public Offering--
Sponsors' and Underwriters' Profits
39. (a) Organization of principal underwriters................. Sponsors
(b) N.A.S.D. membership of principal
underwriters........................................... Sponsors
40. Certain fees received by principal underwriters............. Not Applicable
41. (a) Business of principal underwriters..................... Sponsors
(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.................................... Prospectus front cover, 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--Sponsors' and Underwriters'
Profits, Rights of Unit Holders--
Redemption--Purchase by the Sponsors of
Units Tendered for Redemption, Rights of
Unit Holders--Redemption--Computation of
Redemption Price per Unit
iv
396037.1
<PAGE>
FORM N-8B-2 FORM S-6
ITEM NUMBER HEADING IN PROSPECTUS
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of trustee...................... Trustee
49. Fees and expenses of trustee................................ The Trust--Expenses and Charges, Rights of
Unit Holders--Distribution of Interest and
Principal
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.................. The Trust--Insurance on the Bonds
VII. Policy of Registrant
52. (a) Provisions of trust agreement with respect
to selection or elimination of underlying
securities............................................. Prospectus front cover, Sponsors--
Responsibility
(b) Transactions involving elimination of
underlying securities.................................. Not Applicable
(c) Policy regarding substitution or elimination
of underlying securities............................... Sponsors--Responsibility
(d) Fundamental policy not otherwise covered............... Not Applicable
53. Tax status of trust......................................... Prospectus front cover, The 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
396037.1
<PAGE>
10,000 UNITS
DATED: APRIL 2, 1997
EMPIRE STATE MUNICIPAL EXEMPT TRUST, GUARANTEED SERIES 134
No person is authorized to give any information or Parts A, B and C of this
Prospectus do not contain all of to make any representations not contained in
Parts the information set forth in the registration statement and A, B and C 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 having been authorized by the Trust, the
Trustee, Securities Act of 1933, and the Investment Company Act of the
Evaluator, or the Sponsors. The Trust is 1940, and to which reference is made.
registered as a unit investment trust under the
Investment Company Act of 1940. Such This Prospectus does not constitute an
offer to sell, or a registration does not imply that the Trust or any of
solicitation of an offer to buy, securities in any state to any its Units have
been guaranteed, sponsored, person to whom it is not lawful to make such an
offer in recommended or approved by the United States or such state.
any state or any agency or officer thereof.
<TABLE>
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<S> <C> <C>
PROSPECTUS PART A.
Table of Contents This Prospectus consists of three parts. This Part A may not
Part A be distributed unless accompanied by Parts B and C. Please
Summary of Essential Information A-2 read and retain each of the parts of this Prospectus for future
Report of Independent Auditors A-7 reference.
Statement of Condition A-8
Portfolio A-9 The Empire State Municipal Exempt Trust, Guaranteed Series
Underwriting Account A-11 134 (the "Trust"), is one of a series of similar but separate unit
Part B investment trusts formed for the purpose of obtaining tax-
The Trust B-1 exempt interest income through an investment in a fixed
Public Offering B-7 insured portfolio consisting primarily of various long-term
Estimated Current Return and municipal bonds with average maturities of over 10 years. The
Estimated Long-Term Return Sponsors of the Trust are Glickenhaus & Co. and Lebenthal &
to Unit Holders B-11 Co., Inc. Units of the Trust will be offered to residents of
Insurance on Bonds B-11 New York, Connecticut, Pennsylvania and Florida. On the
Tax Status B-14 Date of Deposit, all of the Units and the Bonds while in the
Rights of Unit Holders B-18 Trust will be rated AAA by Standard & Poor's Ratings
Automatic Accumulation Account B-24 Services, A Division of The McGraw-Hill Companies
Sponsors B-25 ("Standard & Poor's") and Moody's Investors Service, Inc.
Trustee B-27 ("Moody's") will assign a rating of "Aaa" to all of the Bonds
Evaluator B-27 in the Trust, as insured. The value of the Units of the Trust
Amendment and Termination of will fluctuate with the value of the underlying Bonds.
the Trust Agreement B-28 Minimum purchase: 1 Unit.
Legal Opinions B-28
Auditors B-28
Description of Bond Ratings B-28
Part C
Special Factors Affecting New York C-1
Puerto Rico Bonds C-7
</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.
452088.1
<PAGE>
SUMMARY OF ESSENTIAL FINANCIAL INFORMATION
AT APRIL 1, 1997 (1):
SPONSORS: GLICKENHAUS & CO.
LEBENTHAL & CO., INC.
<TABLE>
<CAPTION>
AGENT FOR SPONSORS: GLICKENHAUS & CO.TRUSTEE: THE BANK OF NEW YORK
EVALUATOR: MULLER DATA CORPORATION
DATE OF DEPOSIT: APRIL 2, 1997
<S> <C>
Aggregate Principal Amount of Bonds in Trust: $ 10,000,000.00(2)
Number of Units: 10,000
Fractional Undivided Interest in Trust Per Unit: 1/10,000
Total Value of Securities in Portfolio (Based on Offering Side Valuations of Securities): $ 9,489,056.25
Sponsors' Initial Repurchase Price Per Unit (Total Value of Securities divided by 10,000 Units): $ 948.90(3)
Plus Sales Charge of 4.9% (on sales of fewer than 250 Units) of Public Offering Price (4): 48.89
---------------
Public Offering Price Per Unit: $ 997.79(5)
===============
Redemption Price Per Unit: $ 943.39(6)
Excess of Public Offering Price Over Redemption Price Per Unit: $ 54.40
Excess of Public Offering Price Over Sponsors' Initial Repurchase Price Per Unit: $ 48.89
Weighted Average Maturity of Bonds in the Trust: 28.742 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.
Annual Insurance Premium (7): $7,903.00
Evaluator's Fee: $.55 per Bond for each valuation.
Trustee's Annual Fee: For each $1,000 principal amount of Bonds in the Trust, $1.35 under the monthly and $.95
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: $68,149.15
Mandatory Termination Date: December 31, 2046
First Settlement Date: April 7, 1997
Minimum Principal Distribution: $1.00 per Unit
Minimum Value of the Trust under which Trust
Agreement May be Terminated: $2,000,000 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): $55.71 $55.71
P Less Annual Premium on Portfolio Insurance: .79 .79
E Less Organizational Expenses (8): .45 .45
R Less Estimated Annual Expenses (9): 2.07 1.57
------- -------
Estimated Net Annual Interest Income: $52.40 $52.90
====== ======
U Estimated Interest Distribution (10): $4.36 $26.45
N Estimated Current Return Based on Public Offering Price (includes cash
I income accrual only) (11): 5.25% 5.30%
T Estimated Long-Term Return (12): 5.31% 5.37%
Estimated Daily Rate of Net Interest Accrual: $.145562 $.146951
Record Dates: 15th Day of Month 15th Day of
May and November
Payment Dates: 1st Day of Month 1st Day of
June and December
</TABLE>
(continued on following page)
A-2
452088.1
<PAGE>
Notes to Summary of Essential 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--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 Sponsors 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 April 2, 1997. With respect
to purchases contracted for after such date, accrued interest from April 7, 1997
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)
Based upon the aggregate principal amount of the Bonds in the Trust. If the
Trustee had exercised its right to obtain Permanent Insurance on all of the
Bonds in the Trust as of the Date of Deposit, the total cost of the Permanent
Insurance premiums for such insurance would have been $88,640.00. (8) 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; registering Units with the
Securities and Exchange Commission and the states; 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.
(9) Excluding insurance costs. (10) The first monthly interest distribution of
$1.16 per Unit will be made on May 1, 1997 (the "First Distribution Date") to
all monthly certificateholders of record on April 15, 1997 (the "First Record
Date"). The regular monthly payment will be $4.36 on June 1, 1997 and
thereafter. The first semi-annual interest distribution of $5.58 per Unit will
be made on June 1, 1997 to all semi-annual certificateholders of record on May
15, 1997. The regular semi-annual payment will be $26.45 on December 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 April 7, 1997. This accrued interest will be paid to the Sponsors as
the holders of record of all Units on such date. Consequently, when the Sponsors
sell 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 April 7, 1997 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 April 2, 1997 will settle his purchase on April 7, 1997, 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. (11) Calculated after payment of insurance premiums payable
by the Trust. The Estimated Current Return on such date on an identical
portfolio without such insurance would have been 5.38% based on the semi-annual
payment plan and 5.33% based on the monthly payment plan. See "Tax Status" and
"Estimated Current Return and Estimated Long-Term Return to Unit Holders" in
Part B. (12) Calculated after payment of insurance premiums payable by the
Trust. The Estimated Long-Term Return on such date on an identical portfolio
without such insurance would have been 5.45% based on the semi-annual payment
plan and 5.40% based on the monthly payment plan. See "Estimated Current Return
and Estimated Long-Term Return to Unit Holders" in Part B.
A-3
452088.1
<PAGE>
The Trust. 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 and New York State and City personal 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. On the Date of Deposit, the
Sponsors, acting for the Underwriting Account (see "Underwriting Account" in
this Part A), deposited with the Trustee delivery statements relating to
contracts for the purchase of $10,000,000 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 Sponsors a registered
certificate of 10,000 Units, representing the entire ownership of the Trust,
which Units are being offered hereby.
The Portfolio. The portfolio of the Trust contains contracts to purchase six
issues of Bonds issued by entities located in New York or certain United States
territories or possessions, including Puerto Rico, and their public authorities.
See "Special Factors Affecting New York" and "Puerto Rico Bonds" in Part C for a
discussion of risk factors. Except as described below, all such contracts are
expected to be settled by April 7, 1997. The following information is being
supplied to inform Unit holders of circumstances affecting the Trust. 2.05% 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. 24.00% of the aggregate principal amount of the Bonds in
the portfolio are payable from appropriations. 73.95% 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: Appropriation, 1 (24.00%); General
Obligation, 1 (2.05%); Health Care, 1 (13.95%); Higher Education, 2 (42.55%);
and Water & Sewer, 1 (17.45%). The Trust is deemed to be concentrated in the
Higher Education category.* Prior to their deposit in the Trust, four of the
issues (73.95%) were rated AAA by Standard and Poor's and two of the issues
(26.05%) were rated Baa1 by Moody's. Bonds rated Baa have adequate capacity to
pay interest and repay principal, however, such Bonds may have certain
speculative characteristics as well. Furthermore, Bonds rated Baa are more
sensitive to adverse economic changes or individual corporate developments. See
"Description of Bond Ratings" in Part B. 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. Moreover, the insurance on the Bonds in the
portfolio obtained by the Trust does not cover such Bonds until they are
delivered to the Trust. See "The Trust--General Considerations" in Part B.
100.00% of the aggregate principal
- --------
* 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-4
452088.1
<PAGE>
amount of the Bonds in the Trust are original issue discount bonds. Of these
original issue discount bonds, 100.00% 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, none are zero coupon
bonds. (See "Original Issue Discount and Zero Coupon Bonds" in Part B). On the
Date of Deposit, based on the offering side valuation, none of the aggregate
principal amount of the Bonds were at par, 100.00% of the aggregate principal
amount of the Bonds were at a discount from par and none 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 or New York State 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
Sponsors cannot predict future economic policies or their consequences, nor can
they predict the course or extent of such fluctuations in the future. Some of
the Bonds in the Trust may also have been previously insured by insurance
obtained by the issuers of such Bonds or by persons other than the Trust
("Pre-insured Bonds"). Four of the issues (73.95%) initially deposited in the
Trust were Pre-insured Bonds. All of the Bonds in the Trust are covered by
policies of insurance obtained from the MBIA Insurance Corporation (the
"Insurer") guaranteeing payment of principal and interest when due. As a result
of such issuance, the Bonds in the Trust have received a rating of "Aaa" by
Moody's and both the Bonds in the Trust and the Units of the Trust have received
a rating of "AAA" by Standard & Poor's. For the meanings of these ratings see
"Description of Bond Ratings" in Part B.
Risk Factors. Insurance does not protect against the risk of market fluctuations
on the underlying bonds in the Trust's portfolio and of the units of the Trust.
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 or of the insurer to meet its obligations
under the insurance. In addition, 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 or New York State income tax rate. Additionally, changes in the tax
treatment of bonds may have an adverse impact on the value of the Units.
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 ratings by either Standard & Poor's or
Moody's. 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 may 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. There is also risk involved with the
purchase of bonds on a "when issued" or delayed settlement basis. See "The
Trust--General Considerations" in Part B. The financial condition of the State
of New York is affected by various national, economic, social and environmental
policies and conditions. Such matters may constrain the revenue-generating
capacity of the State and its local governments and, therefore, the ability of
the issuers of the Bonds to satisfy their obligations. The economy of the State
continues to be influenced by the financial health of the City of New York,
which faces greater competition as other major cities develop financial and
business capabilities. The State has for many years had a very high state and
local tax burden relative to other states. The burden of State and local
taxation, in combination with the many other causes of regional economic
dislocation, has contributed to the decisions of some
A-5
452088.1
<PAGE>
businesses and individuals to relocate outside, or not locate within, the State.
For further information concerning New York risk factors see "Special Factors
Affecting New York" in Part C.
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 $1.16 for Units of
the Trust and will be made on May 1, 1997, to monthly Unit holders of record on
April 15, 1997, and $4.36 thereafter. The first semi-annual distribution will be
$5.58 for Units of the Trust and will be made on June 1, 1997, to semi-annual
Unit holders of record on May 15, 1997, and $26.45 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 1/10,000 fractional
undivided interest in the $10,000,000 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.
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 4.9% 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 April 1, 1997, the Public Offering
Price per Unit would have been $997.79.
Taxes. In counsel's opinion, under existing law, interest income to the Trust,
and, with certain exceptions, to Unit Holders is exempt from all regular
federal, New York State and New York City income taxes, but may be subject to
state and local taxes in other jurisdictions. Capital gains, if any, are subject
to tax. Interest on the Bonds will not be subject to the federal alternative
minimum tax. See "The Trust--Tax Status" in Part B of this Prospectus. Investors
should consult their personal tax advisor to determine the federal, state and
local income tax consequences of purchasing, owning and selling Units.
The Insurer. The Insurer is the principal operating subsidiary of MBIA Inc., a
New York Stock Exchange listed company. MBIA Inc. is not obligated to pay the
debts of or claims against the Insurer. The Insurer is a limited liability
corporation rather than a several liability association. The Insurer 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. The Insurer has two European branches, one in the Republic of
France and the other in the Kingdom of Spain.
As of September 30, 1996, the Insurer had admitted assets of $4.3 billion
(unaudited), total liabilities of $2.9 billion (unaudited), and total capital
and surplus of $1.4 billion (unaudited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. As of December 31, 1995, the Insurer 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) determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities. Copies of the Insurer's year end financial statements prepared in
accordance with statutory accounting practices are available from the Insurer.
The address of the Insurer is 113 King Street, Armonk, New York 10504.
A-6
452088.1
<PAGE>
No representation is made herein as to the accuracy of such information or as to
the absence of material adverse changes in such information subsequent to the
date thereof. The Sponsors are not aware that the information herein is
inaccurate or incomplete as of the date hereof.
Sponsors. The total partners' capital of Glickenhaus at September 30, 1996 was
$144,057,869 (audited); and the total stockholders' equity of Lebenthal at
September 30, 1996 was $5,242,035 (unaudited) and at March 31, 1996 was
$4,518,542 (audited).
The foregoing information with regard to the Sponsors relates to the Sponsors
only, and not to any series of Empire State Municipal Exempt Trust. Such
information is included in this Prospectus only for the purpose of informing
investors as to the financial responsibility of the Sponsors and their ability
to carry out their contractual obligations shown herein. More comprehensive
financial information can be obtained upon request from any Sponsor.
REPORT OF INDEPENDENT AUDITORS
The Sponsors, Trustee, and Unit Holders of Empire State Municipal Exempt Trust,
Guaranteed Series 134
We have audited the Statement of Condition of Empire State Municipal Exempt
Trust, Guaranteed Series 134, including the Portfolio as of April 2, 1997. This
financial statement is the responsibility of the Sponsors. 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
Sponsors, 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 April 2, 1997 in the amount required
to purchase securities, as described in the Statement of Condition, was
confirmed to us by the Trustee.
In our opinion, the Statement of Condition referred to above presents fairly, in
all material respects, the financial position of Empire State Municipal Exempt
Trust, Guaranteed Series 134 at April 2, 1997 in conformity with generally
accepted accounting principles.
BDO SEIDMAN, LLP
New York, New York
April 2, 1997
A-7
452088.1
<PAGE>
EMPIRE STATE MUNICIPAL EXEMPT TRUST
Guaranteed Series 134
STATEMENT OF CONDITION AS OF DATE OF DEPOSIT
April 2, 1997
<TABLE>
<CAPTION>
TRUST PROPERTY
<S> <C>
Investment in Securities:
Contracts to purchase underlying Securities (1)(2)........................................... $ 9,489,056.25
Accrued interest receivable (2)................................................................... 164,736.37
Organizational costs (3).......................................................................... 22,500.00
----------------
Total................................................................................. $ 9,676,292.62
================
LIABILITIES AND INTEREST OF UNIT HOLDERS
Liabilities:
Accrued interest receivable (2).............................................................. $ 164,736.37
Accrued liability (3)........................................................................ 22,500.00
---------------
187,236.37
Interest of Unit holders:
Units of fractional undivided interest outstanding (10,000):
Cost to investors (4)........................................................................ 9,977,956.25
Less--gross underwriting commission (5)....................................................... 488,900.00
---------------
Net interest of Unit holders...................................................................... 9,489,056.25
---------------
Total................................................................................. $ 9,676,292.62
===============
</TABLE>
- ----------------------
(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 $9,433,980.50. An irrevocable
letter of credit issued by Bankers Trust, in an aggregate amount equal to or in
excess of $9,655,849.12, has been deposited with the Trustee. The amount of such
letter of credit includes: $9,489,056.25, the amount required to purchase the
tax-exempt securities listed in the related portfolio, plus $166,792.87 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 April 7, 1997 (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 10,000 Units on the basis set forth above under "Public Offering-- Offering
Price" in Part B.
(5) A sales charge of 4.9% computed on 10,000 Units. See "Public
Offering--Offering Price" in Part B for volume discounts on sales of 250
Units or more.
A-8
452088.1
<PAGE>
<TABLE>
<CAPTION>
EMPIRE STATE MUNICIPAL EXEMPT TRUST
Guaranteed Series 134
Portfolio as of Date of Deposit, April 2, 1997
Redemption Features
Port- Coupon Ant.--Anticipated Yield Cost of
folio Rating Principal Represented by Contracts to Rate and S.F.--Sinking Fund to Securities
No. (1)(2) Amount (3) Purchase Securities (4) Maturity Opt.--Optional (5) Maturity to Trust(6)(7)
- ------- ------------ ---------- ---------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 AAA/Aaa $1,745,000 New York City Municipal Water 5.750% 06/15/21 @ 100 S.F. 5.894% $1,710,100.00
Finance Authority, Water and 06/15/2026 06/15/06 @ 101 Opt.
Sewer System Revenue Bonds,
Fiscal 1996 Series B (MBIA
Insured)
2 AAA/Aaa 1,395,000 Dormitory Authority of the 5.750 02/01/22 @ 100 S.F. 5.949 1,353,150.00
State of New York, Maimonides 08/01/2035 02/01/06 @ 102 Opt.
Medical Center, FHA-Insured
Mortgage Hospital Revenue
Bonds, Series 1996A
(MBIA Insured)
3 AAA/Aaa 2,255,000 Dormitory Authority of the 5.700 07/01/17 @ 100 S.F. 5.852 2,207,081.25
State of New York, St. John's 07/01/2026 07/01/06 @ 102 Opt.
University Insured Revenue
Bonds, Series 1996
(MBIA Insured)
4 AAA/Aaa 2,000,000 Dormitory Authority of the 5.500 07/01/20 @ 100 S.F. 5.889 1,895,000.00
State of New York, City 07/01/2024 07/01/06 @ 102 Opt.
University System Consolidated
Third General Resolution Revenue
Bonds, 1996 Series I
(MBIA Insured)
5 Baa1*/Aaa 205,000 The City of New York General 5.875 08/01/17 @ 100 S.F. 6.299 193,725.00
Obligation Bonds, Fiscal 1997 08/01/2024 08/01/06 @ 101.5 Opt.
Series F
6 Baa1*/Aaa 2,400,000 New York State Urban 5.250 01/01/17 @ 100 S.F. 6.157 2,130,000.00
Development Corporation, 01/01/21 01/01/04 @ 102 Opt.
Correctional Capital Facility
Revenue Bonds, 1993A Refunding
Series
$10,000,000 $9,489,056.25
=========== =============
</TABLE>
A-9
452088.1
<PAGE>
Notes to Portfolio
The symbol "NR" denotes a non-rated issue of Bonds.
(1) All ratings except those identified by an asterisk (*) are by Standard &
Poor's. A Standard & Poor's corporate or municipal bond rating is a current
assessment of the creditworthiness of an obligor with respect to a specific
obligation. This assessment of creditworthiness may take into consideration
obligors such as guarantors, insurers or lessees. The bond rating is not a
recommendation to purchase, sell or hold a security, inasmuch as it does not
comment as to market price or suitability for a particular investor. A brief
description of the rating symbols and their meanings is set forth under
"Description of Bond Ratings" in Part B.
(2) Ratings in the right hand column are after deposit of these issues in
the Trust and their insurance by MBIA. Moody's has assigned its "Aaa" investment
rating to all of the Bonds while in the Trust, as insured by MBIA Insurance
Corporation.
(3) All Bonds are represented by contracts to purchase.
(4) All contracts to purchase the Bonds were entered into from March 31,
1997 to April 1, 1997. All contracts are expected to be settled prior to or on
the First Settlement Date of the Trust which is expected to be April 7, 1997.
(5) 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 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 "Tax Status" in
Part B.
(6) 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 .580%. 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.
(7) Annual interest income to the Trust is $557,128.75.
(8) Yield calculated based on a call date prior to stated maturity.
A-10
452088.1
<PAGE>
UNDERWRITING ACCOUNT
The names and addresses of the Underwriters and the number of Units of
the Trust each has agreed to purchase from the Underwriting Account are:
<TABLE>
<CAPTION>
Units
Name Address Series 134
<S> <C> <C>
Glickenhaus & Co............................... 6 East 43rd Street, New York, New York 10017 3,575
Lebenthal & Co., Inc........................... 120 Broadway, New York, New York 10271 3,575
Gruntal & Co., Inc............................. 14 Wall Street, New York, New York 10005 1,200
Josephthal Lyon & Ross Incorporated............ 6 East 43rd Street, New York, New York 10017 250
Advest Incorporated............................ 90 State House Square, Hartford, Connecticut 06103 100
Bear, Stearns & Co. Inc........................ 245 Park Avenue, New York, New York 10167 100
Cadaret, Grant & Co., Inc. .................... 108 W. Jefferson Street, Syracuse, New York 13203 100
David Lerner Associates, Inc. ................. 477 Jericho Turnpike, Syosset, New York 11791 100
Everen Securities, Inc. ....................... 77 West Wacker Drive, Chicago, Illinois 60606 100
Fahnestock & Co., Inc.......................... 1500 Walnut Street, Philadelphia, Pennsylvania 19102 100
Kirlin Securities, Inc......................... 6901 Jericho Turnpike, Syosset, New York 11791 100
Oppenheimer & Company, Inc..................... World Financial Center, New York, New York 10281 100
Nathan & Lewis Securities, Inc................. 1140 Avenue of the Americas, New York, New York 10036 100
Roosevelt & Cross, Inc......................... 20 Exchange Place, New York, New York 10005 100
Sage, Rutty & Co. Inc.......................... 183 E. Main Street, Rochester, New York 14604 100
Samuel A. Ramirez & Co., Inc................... 61 Broadway, New York, New York 10006 100
Smith Barney Inc. ............................. 388 Greenwich Street, New York, New York 10013 100
Stuart, Coleman & Co., Inc..................... 11 West 42nd Street, New York, New York 10036 100
------
10,000
</TABLE>
A-11
452088.1
<PAGE>
TAX EQUIVALENT YIELDS
The following tables indicate the approximate yield resident individuals in
various income brackets must earn on a security subject to Federal, New York
State and New York City income taxes to receive an after-tax yield equivalent to
that provided by a tax-exempt bond yielding from 4.5% to 8.5%, based on
anticipated 1997 Federal, New York State and New York City marginal tax rates.
New York City taxpayers should refer to Table I. New York State taxpayers
outside of New York City should refer to Table II.
<TABLE>
<CAPTION>
TABLE I. COMBINED EFFECT OF FEDERAL, NEW YORK STATE AND NEW YORK CITY INCOME TAXES
Approx.
1997 To equal a tax-exempt yield of:
-----------------------------------------------------
Federal, .00% .00% .00% .00%
NYS 4.50%5 5.50% 6 6.50% 7 7.50% 8 8.50%
-----------------------------------------------------
If your net taxable income1
is approximately2 Marginal
Joint ReturnSingle Return Tax Rates4 A taxable investment would have to pay you:3
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$22,001-$41,200 $12,001-$24,650 24.02% 5.9% 6.6% 7.2% 7.9% 8.6% 9.2% 9.9% 10.5% 11.2%
- ---------------------------------------------------------------------------------------------------
$41,201-$99,600 $24,651-$59,750 35.73% 7.0% 7.8% 8.6% 9.3% 10.1% 10.9%11.7% 12.5% 13.2%
- ---------------------------------------------------------------------------------------------------
$99,601-$151,750 $59,751-$124,650 39.23% 7.4% 8.2% 9.1% 9.9% 10.7% 11.5%12.3% 13.2% 14.0%
- ---------------------------------------------------------------------------------------------------
$151,751-$271,050 $124,651-$271,050 43.83% 8.0% 8.9% 9.8% 10.7% 11.6% 12.5%13.4% 14.2% 15.1%
- ---------------------------------------------------------------------------------------------------
$271,050+ $271,050+ 47.14% 8.5% 9.5% 10.4% 11.4% 12.3% 13.2%14.2% 15.1% 16.1%
- ---------------------------------------------------------------------------------------------------
TABLE II. COMBINED EFFECT OF FEDERAL AND NEW YORK STATE INCOME TAXES
Approx.
1997 To equal a tax-exempt yield of:
Federal --------------------------------------------------------
NYS 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00 8.50%
--------------------------------------------------------
If your net taxable income1 A taxable investment would have to pay you:3
is approximately2 Marginal
Joint ReturnSingle Return Tax Rates5
- ---------------------------------------------------------------------------------------------------
$22,001-$41,200 $11,001-$24,650 20.82% 5.7% 6.3% 7.0% 7.6% 8.2% 8.8% 9.5% 10.1% 10.7%
- ---------------------------------------------------------------------------------------------------
$41,201-$99,600 $24,651-$59,750 32.93% 6.7% 7.5% 8.2% 9.0% 9.7% 10.4% 11.2% 11.9% 12.7%
- ---------------------------------------------------------------------------------------------------
$99,601-$151,750 $59,751-$124,650 36.59% 7.1% 7.9% 8.7% 9.5% 10.3% 11.0% 11.8% 12.6% 13.4%
- ---------------------------------------------------------------------------------------------------
$151,751-$271,050$124,651-$271,050 41.39% 7.7% 8.5% 9.4% 10.2% 11.1% 11.9% 12.8% 13.7% 14.5%
- ---------------------------------------------------------------------------------------------------
$271,050+ $271,050+ 44.85% 8.2% 9.1% 10.0% 10.9% 11.8% 12.7% 13.6% 14.5% 15.4%
- ---------------------------------------------------------------------------------------------------
</TABLE>
1 After exemptions and deductions other than state and local tax deductions.
2 The tables cover only a representative range of incomes, and income
brackets have been rounded off to facilitate illustration. Actual
Federal, New York State and New York City income brackets may differ
slightly from those in the table.
3 Yields on taxable investments have been rounded off to facilitate
illustration.
4 This rate is calculated by using the highest New York State and New
York City marginal tax rates that apply to the bracket. 5This rate is
calculated by using the highest New York State marginal tax rate that
applies to the bracket.
A-12
452088.1
<PAGE>
EMPIRE STATE MUNICIPAL EXEMPT TRUST Prospectus Part B
Part B of this Prospectus may not be Distributed Unless Accompanied by Part A
THE TRUST
Organization. The Empire State Municipal Exempt Trust, Guaranteed Series as
designated in Part A (the "Trust"), is one of a series of similar but separate
unit investment trusts 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. and Lebenthal & Co., Inc. as sponsors (the
"Sponsors"), 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 Sponsors, 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 Trust is to obtain tax-exempt interest income
through an investment in a fixed insured portfolio consisting primarily of
various long-term municipal bonds with average maturities of over 10 years. 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 and, of the Insurer to meet its obligations
under the insurance. In addition, an investment in such portfolio can be
affected by fluctuations in interest rates.
Portfolio. The portfolio of the Trust consists of the Bonds described in "The
Portfolio" in Part A and are represented by the Sponsors' 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
Sponsors' 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 "The Trust--Substitution of Bonds" in this Part
B. As a result of the MBIA Insurance Corporation insurance, Moody's Investors
Service ("Moody's") has assigned a rating of "Aaa" to all of the Bonds in the
Trust, as insured and Standard & Poor's Corporation, a division of McGraw-Hill
("Standard & Poor's") has assigned a rating of "AAA" to the Units and Bonds
while in the Trust. (See "Insurance on the Bonds" in this Part B).
In view of the Trust's objectives, the following factors, among others, were
considered in selecting the Bonds: (1) all the Bonds are obligations of the
State of New York 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, New York State and New York City
income tax under existing law; (2) the Bonds are varied as to purpose of issue;
(3) in the opinion of the Sponsors, the Bonds are fairly valued relative to
other bonds of comparable quality and maturity; and (4) MBIA Insurance
Corporation insurance for the payment of principal and interest on the Bonds is
available. 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 Sponsors'
determination to direct the Trustee to dispose of the Bonds. See
"Sponsors-Responsibility" in Part B. The insurance on the Bonds in the portfolio
obtained by the Trust does not cover such Bonds until they are delivered to the
Trust. See "The Trust--General Considerations" in this Part B.
- --------
* References in this Prospectus to the Trust Agreement are qualified in their
entirety by the Trust Agreement which is incorporated herein by reference.
<PAGE>
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 Sponsors 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 Sponsors 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 Sponsors 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 Sponsors are notified of the failure) which are attributable to
such failed contract, shall be distributed at the next Monthly Payment Date
which is more than 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 Sponsors 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. Because of the insurance obtained by the
Sponsors or by the issuers for the Trust, however, such changes should not
adversely affect the Trust's ultimate receipt of principal and interest, the
Standard & Poor's or Moody's ratings of the Bonds in the portfolio, or the
Standard & Poor's rating of the Units of the Trust. 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 issuer's industrial or economic
base or inability to attract new industries; economic limits on the ability to
tax without eroding the tax base; 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
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 or ability 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,
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<PAGE>
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 the
State or a local governmental body. Should the pledged revenues prove
insufficient, the payment of such Bonds is not a legal obligation of the State
or governmental entity, and is subject to its willingness to appropriate funds
therefor.
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 "The Trust--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 owners of housing projects for low
to moderate income families. Since such obligations are not general obligations
of a particular state or municipality or other governmental authority 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. Certain Bonds may be bonds issued to finance
public power facilities. Certain risks associated with 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
Sponsors are 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.
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 Bonds issued by public utilities. In addition, certain
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<PAGE>
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
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,
- --------
* For purposes of the description of users of facilities, all references to
"corporations" shall be deemed to include any other nongovernmental person or
entity.
B-4
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<PAGE>
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.
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 "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
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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 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 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 B. 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 Sponsors are
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 the State of New York
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 rated at least equal to the Failed Bonds and (vi) must be eligible for
coverage under the MBIA Insurance Corporation insurance policy obtained by the
Trust. 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 Sponsors 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
Sponsors notify the Trustee that they will not purchase Replacement Bonds)
attributable to such Failed Bonds on the next monthly
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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 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 Sponsors are unable to predict at this time what effect,
if any, this legislation will have on the Trust.
To the best knowledge of the Sponsors, 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, however, 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 5.152% thereof equal
to 4.9% 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. Unless Securities are
in default in payment of principal or interest or in significant risk of such
default, the Evaluator will not attribute any value to the Units due to the MBIA
Insurance Corporation insurance obtained by the Trust. See also "Rights of Unit
Holders--Certificates" and "Rights of Unit Holders--Redemption" in Part B for
information relating to redemption of Units.
The Evaluator will consider in its evaluation of Securities which are in
default in payment of principal or interest or, in the Sponsors' opinion, in
significant risk of such default ("Defaulted Bonds") and which are covered by
insurance obtained by the Trust the value of the insurance guaranteeing interest
and principal payments. The value of the
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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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insurance will be equal to the difference between (i) the market value of
Defaulted Bonds assuming the exercise of the right to obtain Permanent Insurance
(less the insurance premium attributable to the purchase of Permanent Insurance
and the related custodial fee) and (ii) the market value of such Defaulted Bonds
not covered by Permanent Insurance. In any case the Evaluator will consider the
ability of MBIA Insurance Corporation to meet its commitments under the Trust's
insurance policy, including the commitment to issue Permanent Insurance. The
Evaluator intends to use a similar valuation method with respect to Securities
insured by the Trust if there is a significant risk of default and a resulting
decrease in the market value. For a description of the circumstances under which
a full or partial suspension of the right of Unit holders to redeem their Units
may occur, see "Rights of Unit Holders--Redemption" in Part B.
If the Trustee does not exercise the right to obtain Permanent Insurance as
to any Defaulted Bonds in the Trust, it is the present intention of the Trustee,
so long as the Trust contains either some Bonds not in default or any
Pre-insured Bonds, not to sell Defaulted Bonds to effect redemptions or for any
other reason but rather to retain them in the portfolio BECAUSE VALUE
ATTRIBUTABLE TO THE INSURANCE OBTAINED BY THE TRUST CANNOT BE REALIZED UPON
SALE. Insurance obtained by the issuer of a Pre-insured Bond, or by some party
other than the Trust, is effective so long as such Pre-insured Bond is
outstanding and the insurer of such Bond continues to fulfill its obligations.
Therefore, any such insurance may be considered to represent an element of
market value in regard to the Pre-insured Bond, but the exact effect, if any, of
this insurance on such market value cannot be predicted. Regardless of whether
the insurer of a Pre-insured Bond continues to fulfill its obligations, however,
such Bond will in any case continue to be insured under the policy obtained by
the Trust from MBIA Insurance Corporation as long as the Bond is held in the
Trust.
No value has been ascribed to the MBIA Insurance Corporation insurance
obtained by the Trust as of the date of this Prospectus.
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
Sponsors have 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:
Secondary Market
Period Sales Change
------------------------------------
Percentage of Percentage of
Public Offering Net Amount
Per Bond Price Invested
--------------- --------------
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%
A minimum sales charge of 1.0% of the Public Offering Price will be
applied to all secondary market unit purchases.
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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:
Discount From
Public Offering
Number of Units Price Per Unit
--------------- --------------
250-499........................................ $ 2.50
------------
500-999........................................ 7.50
1,000-1,999.................................... 15.00
2,000 or more.................................. 20.00
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 are 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 the 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 they are not obligated to do so, the Sponsors
intend 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 Sponsors' 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
Sponsors may be reoffered to the public by the Sponsors at the Public Offering
Price at such time, plus accrued interest.
If the supply of Units of any Series exceeds demand, or for some other
business reason, the Sponsors may discontinue purchases of Units of such Series
at prices based on the aggregate bid price of the Securities. The Sponsors do
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
Sponsors 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.
Employees (and their immediate families) of Glickenhaus & Co. and Lebenthal &
Co., Inc. may, pursuant to employee benefit arrangements, purchase Units of the
Trust at a price equal to the offering side evaluation of the underlying
Securities in the Trust during the initial offering period and at the bid side
thereafter, divided by the number of Units outstanding plus a reduced sales
charge of 1.5% of the Public Offering Price. Such arrangements result in less
selling effort and selling expenses than sales to employee groups of other
companies. Resales or transfers of Units purchased under the employee benefit
arrangements may only be made through the Sponsors' secondary market, so long as
it is being maintained.
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Distribution of Units. The Underwriters of the Units of the Trust are listed in
the Underwriting Account (see "Underwriting Account" in Part A). It is the
Underwriters' 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 their own
organizations. However, Units may be sold to dealers who are members of the
National Association of Securities Dealers, Inc. at prices which represent a
concession equal to $32.00 per Unit from the related Public Offering Price
applicable to sales of fewer than 500 Units subject in each case to change from
time to time by the Agent for the Sponsors. Any volume discount (see "Offering
Price" in Part B) offered to investors will be borne by the selling Underwriter
or dealer except that, during the initial public offering period, the Sponsors
may pay the selling Underwriter or dealer $2.50 per Unit for individual sales of
more than 500 Units.
Sales will be made only with respect to whole Units, and the Sponsors reserve
the right to reject, in whole or in part, any order for the purchase of Units.
Underwriters and broker-dealers of the Trust, banks and/or others are
eligible to participate in a program in which such firms receive from the
Sponsors a nominal award for each of their registered representatives who have
sold a minimum number of units of unit investment trusts created by the Sponsors
during a specified time period. In addition, at various times the Sponsors may
implement other programs under which the sales forces of Underwriters, brokers,
dealers, banks and/or others may be eligible to win other nominal awards for
certain sales efforts, or under which the Sponsors will reallow to any such
Underwriters, brokers, dealers, banks and/or others that sponsor sales contests
or recognition programs conforming to criteria established by the Sponsors, or
participate in sales programs sponsored by the Sponsors, an amount not exceeding
the total applicable sales charges on the sales generated by such person at the
public offering price during such programs. Also, the Sponsors in their
discretion may from time to time, pursuant to objective criteria established by
the Sponsors, pay fees to qualifying Underwriters, brokers, dealers, banks
and/or others for certain services or activities which are primarily intended to
result in sales of Units of the Trust. Such payments are made by the Sponsors
out of their own assets and not out of the assets of the Trust. These programs
will not change the price Unit holders pay for their Units or the amount that
the Trust will receive from the Units sold.
Sponsors' and Underwriters' Profits. As set forth under "Public
Offering--Offering Price" in Part B, the Underwriters will receive gross
commissions equal to the specified percentages of the Public Offering Price of
the Units of the Trust. The Sponsors will receive from the Underwriters the
excess of such gross sales commission over $35 per Unit from Underwriters
underwriting 100 to 249 Units, will receive the excess over $36 per Unit from
Underwriters underwriting 250 to 499 Units, will receive the excess over $37 per
Unit from Underwriters underwriting 500 to 749 Units, will receive the excess
over $38 per Unit from Underwriters underwriting 750 to 999 Units, will receive
the excess over $39 per Unit from Underwriters underwriting 1,000 or more Units
and will receive the excess over $40 per Unit from Underwriters who underwrite
15% or more of the Units of the Trust. In addition, the Sponsors may, during the
initial public offering period, pay any Underwriter an additional $2.50 per Unit
for sales to individual purchasers of 500 or more Units. The Sponsors may also
from time to time pay, in addition to the amounts referenced above, an
additional concession, in the form of cash or other compensation, any
Underwriter who underwrites or sells, during a specific period, minimum dollar
amounts of the Units of the Trust. In no event will such additional concession
paid by the Sponsors to the Underwriter exceed the difference between the sales
charge and the Underwriter's allowance in respect of Units underwritten by the
Underwriter. Such Units then may be distributed to the public by the dealers at
the Public Offering Price then in effect.
In addition, the Sponsors realize 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 Sponsors
(which is the cost of such Securities at the time they were acquired for the
account of the Trust). The Underwriters share in the profits, if any, described
in the preceding sentence. See "Summary of Essential Financial Information" in
Part A. In addition, the Sponsors may realize profits or sustain losses with
respect to Bonds deposited in the Trust which were acquired from one or more of
the Sponsors or from underwriting syndicates of which they were members. 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
Sponsors prior to the settlement date for the purchase of Units of the Trust may
be used in the Sponsors' businesses, subject to the limitations of the
Securities Exchange Act of 1934 and may be of benefit to the Sponsors.
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The Sponsors may have participated as underwriters or as managers or members
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
Sponsors have 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 Sponsors and Underwriters 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 Sponsors on request.
Estimated Current Return is computed by dividing the Estimated Net Annual
Interest Income per Unit by the Public Offering Price. Estimated Net Annual
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 on 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 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
Insurance guaranteeing the timely payment, when due, of all principal and
interest on the Bonds in the Trust has been obtained from the Insurer by the
Trust. The Insurer has issued a policy of insurance covering each of the Bonds
in the Trust, including Pre-insured Bonds. The insurance obtained by the Trust
from the MBIA Insurance Corporation is only effective as to Bonds owned by and
held in the Trust and, consequently, does not cover Bonds for which the contract
for purchase fails. A "when issued" Bond will be covered under the MBIA
Insurance Corporation policy upon the settlement date of the issue of such "when
issued" Bond. The MBIA Insurance Corporation policy shall continue in force only
with respect to Bonds held in and owned by the Trust, and the Insurer shall not
have any liability under the policy with respect to any Bonds which do not
constitute part of the Trust. In determining to insure the Bonds, the Insurer
has applied its own standards which generally correspond to the standards it has
established for determining the insurability of new issues of municipal bonds.
See "Notes to Portfolio" in Part A of this Prospectus.
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By the terms of its policy, the Insurer will unconditionally guarantee to the
Trust the payment, when due, required of the issuer of the Bonds of an amount
equal to the principal of (either at the stated maturity or by any advancement
of maturity pursuant to a mandatory sinking fund payment) and interest on the
Bonds as such payments shall become due but not paid. No representation is made
as to the ability of the insurer to meet its commitments. Except as provided
below with respect to issues of small issue industrial development Bonds and
pollution control revenue Bonds, in the event of any acceleration of the due
date of principal by reason of mandatory or optional redemption (other than
mandatory sinking fund redemption), default or otherwise, the payments
guaranteed will be made in such amounts and at such times as would have been due
had there not been an acceleration. The Insurer will be responsible for such
payments less any amounts received by the Trust from any trustee for the Bond
issuers or from any other source. Except as provided below, the MBIA Insurance
Corporation policy does not guarantee payment on an accelerated basis, the
payment of any redemption premium or the value of the Units of the Trust. The
MBIA Insurance Corporation policy also does not insure against nonpayment of
principal of or interest on the Bonds resulting from the insolvency, negligence
or any other act or omission of the Trustee or other paying agent for the Bonds.
However, with respect to small issue industrial development Bonds and pollution
control revenue Bonds covered by the policy, the Insurer guarantees any
accelerated payments required to be made by or on behalf of an issuer of such
Bonds if there occurs pursuant to the terms of the Bonds an event which results
in the loss of the tax-exempt status of interest on such Bonds, including
principal, interest or premium payments payable thereon, if any, as and when
required to be made by or on behalf of the issuer pursuant to the terms of such
Bonds. No assurance can be given that the MBIA Insurance Corporation policy
would insure the payment of principal or interest on Bonds which is not required
to be paid by the issuer thereof because the Bonds were not validly issued. At
the respective times of issuance of the Bonds, opinions relating to the validity
thereof were rendered by bond counsel to the respective issuing authorities.
Insurance is not a substitute for the basic credit of an issuer, but
supplements the existing credit and provides additional security therefor. If an
issue is accepted for MBIA Insurance Corporation insurance, a non-cancelable
policy for the payment of interest on and principal of the bonds is issued by
the Insurer. A single or annual premium is paid by the issuer or any other party
for its insurance on Pre-insured Bonds, and a monthly premium is paid by the
Trust for the insurance it obtains from the Insurer on the Bonds in the Trust
that are not also MBIA Insurance Corporation Pre-insured Bonds or Municipal Bond
Insurance Association Pre-insured Bonds. No premium will be paid by the Trust
for the insurance it obtains from the Insurer on Bonds that are also MBIA
Insurance Corporation Pre-insured Bonds or Municipal Bond Insurance Association
Pre-insured Bonds.
The MBIA Insurance Corporation insurance policy is non-cancelable and will
continue in force so long as the Trust is in existence and the Securities
described in the policy continue to be held in and owned by the Trust. Failure
to pay premiums on the MBIA Insurance Corporation policy obtained by the Trust
will not result in the cancellation of insurance but will force the Insurer to
take action against the Trustee to recover premium payments due it. The Trustee
in turn will be entitled to recover such payments from the Trust.
The MBIA Insurance Corporation policy shall terminate as to any Bond which
has been redeemed from the Trust or sold by the Trustee on the date of such
redemption or on the settlement date of such sale, and the Insurer shall not
have any liability under the policy as to any such Bond thereafter. If the date
of such redemption or the settlement date of such sale occurs between a record
date and a date of payment of any such Bonds, the MBIA Insurance Corporation
policy will terminate as to such Bond on the business day next succeeding such
date of payment. The termination of the MBIA Insurance Corporation policy as to
any Bond shall not affect the Insurer's obligations regarding any other Bond in
the Trust or any other trust which has obtained a MBIA Insurance Corporation
insurance policy. The MBIA Insurance Corporation policy will terminate as to all
Bonds on the date on which the last of the Bonds matures, is redeemed or is sold
by the Trust.
Pursuant to an irrevocable commitment of the Insurer, the Trustee upon the
sale of a Bond in the Trust has the right to obtain permanent insurance with
respect to such Bond (i.e., insurance to maturity of the Bond) (the "Permanent
Insurance") upon the payment of a single predetermined insurance premium from
the proceeds of the sale of such Bond. Accordingly, any Bond in the Trust is
eligible to be sold on an insured basis. It is expected that the Trustee will
exercise the right to obtain Permanent Insurance for a Bond in the Trust upon
instruction from the Sponsors only if upon such exercise the Trust would receive
net proceeds (sale of Bond proceeds less the insurance premium attributable to
the Permanent Insurance and the related custodial fee) from such sale in excess
of the sale proceeds if such Bond were sold on an uninsured basis.
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The Permanent Insurance premium with respect to each Bond in the Trust is
determined based upon the insurability of each Bond as of the Date of Deposit
and will not be increased or decreased for any change in the creditworthiness of
such Bond unless such Bond is in default as to payment of principal and/or
interest. In such event, the Permanent Insurance premium shall be subject to an
increase predetermined at the Date of Deposit and payable from the proceeds of
the sale of such Bond. See the footnotes to the "Summary of Essential Financial
Information" in Part A for the Trust for the cost of Permanent Insurance as of
the Date of Deposit.
Except as indicated below, insurance obtained by the Trust has no effect on
the price or redemption value of Units thereof. lt is the present intention of
the Evaluator to attribute a value to the insurance obtained by the Trust
(including the right to obtain Permanent Insurance) for the purpose of computing
the price or redemption value of Units thereof only if the Bonds covered by such
insurance are in default in payment of principal or interest or, in the
Sponsors' opinion, in significant risk of such default. The value of the
insurance will be equal to the difference between (i) the market value of a Bond
which is in default in payment of principal or interest or in significant risk
of such default assuming the exercise of the right to obtain Permanent Insurance
(less the insurance premium attributable to the purchase of Permanent Insurance
and the related custodial fee) and (ii) the market value of such Bonds not
covered by Permanent Insurance. See "Public Offering--Offering Price" in this
Part B for a more complete description of the Evaluator's method of valuing
defaulted Bonds and Bonds which have a significant risk of default. Insurance
obtained by the issuer of a Bond or by parties other than the Trust is effective
so long as such Pre-insured Bond is outstanding and the insurer of such
Pre-insured Bond continues to fulfill its obligations.
Regardless of whether the insurer of a Pre-insured Bond continues to fulfill
its obligations, however, such Bond will continue to be insured under the policy
obtained by the Trust from the Insurer as long as the Bond is held in the Trust.
Insurance obtained by the issuer of a Bond or by other parties may be considered
to represent an element of market value in regard to the Bonds thus insured, but
the exact effect, if any, of this insurance on such market value cannot be
predicted.
In the event that interest on or principal of a Bond is due for payment but
is unpaid by reason of nonpayment by the issuer thereof, the Insurer will make
payments to its fiscal agent, State Street Bank and Trust Company, N.A., New
York, New York (the "Fiscal Agent"), equal to such unpaid amounts of principal
and interest not later than one business day after the Insurer has been notified
by the Trustee that such nonpayment has occurred (but not earlier than the date
such payment is due). The Fiscal Agent will disburse to the Trustee the amount
of principal and interest which is then due for payment but is unpaid upon
receipt by the Fiscal Agent of (i) evidence of the Trust's right to receive
payment of such principal and interest and (ii) evidence, including any
appropriate instruments of assignment, that all of the rights to payment of such
principal or interest then due for payment shall thereupon vest in the Insurer.
Upon payment by the Insurer of any principal or interest payments with respect
to any Bonds, the Insurer shall succeed to the rights of the owner of such Bonds
with respect to such payment.
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. The Sponsors are not aware that the information
herein is inaccurate or incomplete as of the date hereof.
Battle Fowler LLP, special counsel for the Sponsors, have rendered an opinion
to the effect that the payment of proceeds from the insurance will be excludible
from Federal gross income if, and to the same extent as, such interest would
have been so excludible if paid by the issuer of the defaulted obligations. See
"Tax Status" in this Part B.
The contract of insurance relating to the Trust, certain agreements relating
to the Permanent Insurance and the negotiations in respect thereof represent the
only significant relationship between the Insurer and the Trust. Otherwise,
neither the Insurer nor any associate thereof has any material business
relationship, direct or indirect, with the Trust or the Sponsors, except that
the Sponsors may from time to time in the normal course of their business,
participate as underwriters or as managers or as members of underwriting
syndicates in the distribution of new issues of municipal bonds for which a
policy of insurance guaranteeing the payment of interest and principal has been
obtained from the Insurer, and except that James A. Lebenthal, Chairman of the
Board of Directors of Lebenthal & Co., Inc., is a Director of the Insurer's
parent company, MBIA Inc. Although all issues contained in the Trust are
individually insured, neither the Trust, the Units nor the portfolio is insured
directly or indirectly by the Insurer.
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A purpose of the insurance on the Bonds in the portfolio obtained by the
Trust is to obtain a higher yield on the Trust portfolio than would be available
if all the Securities in such portfolio had Standard & Poor's "AAA" rating
and/or Moody's "Aaa" rating but were uninsured and yet at the same time to have
the protection of insurance of payment of interest and principal on the
Securities. There is, of course, no certainty that this result will be achieved.
Any Pre-insured Bonds in the Trust (all of which are rated "AAA" by Standard &
Poor's and/or "Aaa" by Moody's, respectively) may or may not have a higher yield
than uninsured bonds rated "AAA" by Standard & Poor's and/or "Aaa" by Moody's,
respectively. In selecting Pre-insured Bonds for the portfolio of the Trust, the
Sponsors have applied the criteria hereinbefore described.
Because the Securities in the Trust are insured by MBIA Insurance Corporation
as to the payment of principal and interest, Standard & Poor's has assigned its
"AAA" investment rating to the Units and Bonds in the Trust and Moody's has
assigned a rating of "Aaa" to all of the Bonds in the Trust, as insured. See
"Notes to Portfolio" in Part A. These ratings apply to the Bonds only while they
are held in the Trust. Also, these ratings reflect Standard & Poor's and Moody's
current assessments of the creditworthiness of the Insurer and their ability to
pay claims on their policies of insurance. The obtaining of these ratings by the
Trust should not be construed as an approval of the offering of the Units by
Standard & Poor's or Moody's or as a guarantee of the market value of the Trust
or of the Units. These ratings are not a recommendation to buy, hold or sell and
do not take into account the extent to which Trust expenses or portfolio asset
sales for less than the Trust's acquisition price will reduce payment to the
Unit holders of the interest or principal.
For additional information concerning the Insurer, see "The Insurer" in Part
A.
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 Sponsors, 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
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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 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.
A Unit holder who is a non-resident of New York will not be subject to
New York State or City income tax on any interest or gain derived from his
interest in the Trust's assets or upon any gain from the sale of his Units
except to the extent that such interest or gain is from property employed in
a business, trade, profession or occupation carried on by him in the State of
New York. An individual Unit holder who resides in New York State or City
will not be subject to State or City tax on interest income derived from the
Bonds held in the Trust (except in certain limited circumstances), although
he will be subject to New York State and, depending upon his place of
residence, City tax with respect to any gains realized when Bonds are sold,
redeemed or paid at maturity or when any such Units are sold or redeemed. In
addition, an individual Unit holder residing in New York State or City will
not be subject to State or City income tax on any proceeds paid under the
insurance policy or policies described above with respect to the Trust which
represent maturing interest on defaulted obligations held by the Trustee if,
and to the same extent as, such interest would have been so excludible if
paid by the issuer of the defaulted obligations. A New York State or City
resident should determine his basis and holding period for his Units for New
York State and City tax purposes in the same manner as for Federal tax
purposes.
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.
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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; (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
Sponsors nor their 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.
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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 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 Sponsors 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.
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
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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 Sponsors. 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
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, "Rights of Unit Holders--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
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Date will receive their first distribution on the second Distribution Date
following their purchase of Units under the applicable plan of distribution.
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 the footnotes 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 "Rights of Unit Holders--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 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 Sponsors 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
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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
and selling expenses, as well as any organizational expenses not paid by the
Trust, will be borne by the Sponsors at no cost to the Trust.
Fees. The Trustee's, Sponsors' and Evaluator's fees are set forth under the
"Summary of Essential Financial Information" in Part A. The Sponsors' 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 Sponsors' 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 Sponsors receive for portfolio supervisory services rendered to all
series of Empire State Municipal Exempt 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 Sponsors' 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.
Insurance Premiums. The cost of the MBIA Insurance Corporation insurance
obtained by the Trust, based on the aggregate amount of Bonds in the Trust as of
the Date of Deposit, is set forth in the "Summary of Essential Financial
Information". Premiums, which are obligations of the Trust, are payable monthly
by the Trustee on behalf of the Trust. As Securities in the portfolio mature,
are redeemed by their respective issuers or are sold by the Trustee, the amount
of the premium will be reduced in respect of those Securities no longer owned by
and held in the Trust. The Trust does not incur any premium expense for any
insurance which has been obtained by an issuer of a Pre-insured Bond, since the
premium or premiums for such insurance have been paid by such issuer or other
party. Pre-insured Bonds, however, are additionally insured by the Trust. No
premium will be paid by the Trust on Bonds which are also MBIA Insurance
Corporation Pre-insured Bonds or Municipal Bond Insurance Association
Pre-insured Bonds. The premium payable for Permanent Insurance and the related
custodial fee will be paid solely from the proceeds of
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the sale of a Bond from the Trust in the event the Trustee exercises the right
to obtain Permanent Insurance on such Bond.
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 Sponsors (so
long as the Sponsors maintain a secondary market, the Sponsors 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 Sponsors,
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.
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 (including insurance
costs), 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, with respect to the Trust the premium attributable to the Trustee's
exercise of the right to obtain Permanent Insurance 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 Sponsors 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
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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.
Within seven calendar days following such tender, or if the seventh calendar
day is not a business day, on the first business day prior thereto, 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 Sponsors
of Units tendered to the Trustee for redemption at prices in excess of the
Redemption Price, see "Rights of Unit Holders--Redemption--Purchase by the
Sponsors 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.
If the Trustee exercises the right to obtain Permanent Insurance on a Bond in
the Trust, such Bond will be sold from the Trust on an insured basis. In the
event that the Trustee does not exercise the right to obtain Permanent Insurance
on a Bond, such Bond will be sold from the Trust on an uninsured basis, since
the MBIA Insurance Corporation insurance obtained by the Trust covers the timely
payment of principal and interest when due on the Bonds only while the Bonds are
held in and owned by the Trust. If the Trustee does not obtain Permanent
Insurance on a Defaulted Bond, to the extent that Bonds which are current in
payment of interest are sold from the Trust portfolio in order to meet
redemption requests and Defaulted Bonds are retained in the Portfolio in order
to preserve the related insurance protection applicable to said Bonds, the
overall value of the Bonds remaining in the Trust will tend to diminish. See
"Sponsors--Responsibility" in Part B for the effect of selling Defaulted Bonds
to meet redemption requests.
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.
Because insurance obtained by the Trust terminates as to Bonds which are sold
by the Trustee, and because the insurance obtained by the Trust does not have a
realizable cash value which can be used by the Trustee to meet redemptions of
Units, under certain circumstances the Sponsors may apply to the Securities and
Exchange Commission for an order permitting a full or partial suspension of the
right of Unit holders to redeem their Units if a significant portion of the
Bonds in the Trust is in default in payment of principal or interest or in
significant risk of such default. No assurances can be given that the Securities
and Exchange Commission will permit the Sponsors to suspend the rights of Unit
holders to redeem their Units, and without the suspension of such redemption
rights when faced with excessive redemptions the Sponsors may not be able to
preserve the benefits of the Trust's insurance on Defaulted Bonds.
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), except for those cases in which the value
of insurance has been included, (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
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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. In determining the Redemption
Price per Unit no value will be assigned to the portfolio insurance obtained by
the Trust on the Bonds in the Trust unless such Bonds are in default in payment
of principal or interest or in significant risk of such default. On the other
hand, Pre-insured Bonds in the Trust are entitled at all times to the benefits
of insurance obtained by their respective issuers so long as the Pre-insured
Bonds are outstanding and the insurer continues to fulfill its obligations, and
such benefits are reflected and included in the market value of Pre-insured
Bonds. For a description of the situations in which the Evaluator may value the
insurance obtained by the Trust, see "Public Offering--Offering Price" in this
Part B.
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 the
footnotes 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 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 Sponsors of Units Tendered for Redemption. The Trust
Agreement requires that the Trustee notify the Sponsors of any tender of Units
for redemption. So long as the Sponsors are maintaining a bid in the secondary
market, the Sponsors, 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--Offering Price--Market for Units" in this Part B). Units held by the
Sponsors may be tendered to the Trustee for redemption as any other Units,
provided that the Sponsors 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 Sponsors 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 Sponsors which likewise will bear any loss
resulting from a lower offering or redemption price subsequent to their
acquisition of such Units (see "Public Offering--Sponsors' and Underwriters'
Profits" in this Part B).
Exchange Option. The Sponsors of the series of Empire State Municipal Exempt
Trust, (including the series of Municipal Exempt Trust, the predecessor trust to
Empire State Municipal Exempt Trust) (the "Exchange Trusts") are offering Unit
holders of the Exchange Trusts for which the Sponsors are maintaining a
secondary market an option to exchange a Unit of any series of the Exchange
Trusts for a Unit of a different series of the Exchange Trusts being offered by
the Sponsors (other than in the initial offering period) at a Public Offering
Price generally based on the bid prices of the underlying Securities divided by
the number of Units outstanding (see "Public Offering--Offering Price--Markets
for Units") plus a fixed sales charge of $15 per Unit (in lieu of the normal
sales charge). However, a Unit holder must have held his Unit for a period of at
least six months in order to exercise the exchange option or agree to pay a
sales charge based on the greater of $15 per Unit or an amount which together
with the initial sales charge paid in connection with the acquisition of Units
being exchanged equals the normal sales charge of the series into which the
investment is being converted, determined as of the date of the exchange. Such
exchanges will be effected in whole Units only. Any excess proceeds from the
Units being surrendered will be returned, and the Unit holder will not be
permitted to advance any new money in order to complete an exchange. The
Sponsors reserve the right to modify, suspend or terminate this plan at any time
without further notice to the Unit holders. In the event the exchange option is
not available to a Unit holder at the time he wishes to exercise it, the Unit
holder will be immediately notified and no action will be taken with respect to
his Units without further instructions from the Unit holder.
Unit holders are urged to consult their own tax advisors as to the tax
consequences of exchanging Units.
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AUTOMATIC ACCUMULATION ACCOUNT
The Sponsors have entered into an arrangement (the "Plan") with Empire
Builder Tax Free Bond Fund (the "Empire Builder") which permits Unit holders of
the Trust to elect to have distributions from Units in the Trust automatically
reinvested in shares of the Empire Builder. The Empire Builder is an open-end,
non-diversified investment company whose investment objective is to seek as high
a level of current income exempt from Federal income tax, New York State and New
York City income taxes as is believed to be consistent with preservation of
capital. It is the policy of the Empire Builder to invest primarily in debt
securities the interest income from which is exempt from such taxes.
The Empire Builder has an investment objective which differs in certain
respects from that of the Trust. The bonds purchased by the Empire Builder will
be of "investment grade" quality--that is, at the time of purchase by the Empire
Builder, such bonds either will be rated not lower than the four highest ratings
of either Moody's (Aaa, Aa, A or Baa) or Standard & Poor's (AAA, AA, A or BBB)
or will be unrated bonds which at the time of purchase are judged by the Empire
Builder's investment advisor to be of comparable quality to bonds rated within
such four highest grades. It is a fundamental policy of the Empire Builder that
under normal market conditions at least 90% of the income distributed to its
shareholders will be exempt from Federal income tax, New York State and New York
City personal income taxes. However, during times of adverse market conditions,
when the Empire Builder is investing for temporary defensive purposes in
obligations other than New York tax-exempt bonds, more than 10% of the Empire
Builder's income distributions could be subject to Federal income tax, New York
State and/or New York City income taxes, as described in the current prospectus
relating to the Empire Builder (the "Empire Builder Prospectus"). Glickenhaus &
Co. ("Glickenhaus"), a sponsor of the Trust, acts as the investment adviser and
distributor for the Empire Builder.
Each Unit holder may request from The Bank of New York (the "Plan Agent"), a
copy of the Empire Builder Prospectus describing the Empire Builder and a form
by which such Unit holder may elect to become a participant ("Participant") in
the Plan. 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 Empire Builder at a net asset value as computed as of the close of
trading on the New York Stock Exchange on such date, as described in the Empire
Builder Prospectus. Unless otherwise indicated, new Participants in the Empire
Builder 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 Empire Builder
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 Sponsors, the Trustee, the Empire Builder and Glickenhaus,
as investment advisor for Empire Builder, 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. For more complete information about investing in the Empire
Builder through the Plan, including charges and expenses, return the enclosed
card for a copy of the Empire Builder Prospectus. Read it carefully before you
decide to participate.
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[ALTERNATE PAGE]
AUTOMATIC ACCUMULATION ACCOUNT
For Unit holders of the Trust who are clients of Lebenthal & Co., Inc., the
Sponsors have entered into an arrangement (the "Plan") with Lebenthal New York
Municipal Bond Fund (the "Bond Fund") which permits Unit holders of the Trust to
elect to have distributions from Units in the Trust automatically reinvested in
shares of the Bond Fund. The Bond Fund is an open-end, non-diversified
investment company whose investment objective is to maximize current income
exempt from regular Federal income tax, and from New York State and New York
City income taxes, consistent with preservation of capital and with
consideration given to opportunities for capital gain. It is the policy of the
Bond Fund to invest primarily in long term investment grade tax-exempt
securities the interest income from which is exempt from such taxes.
The Bond Fund has an investment objective which differs in certain respects
from that of the Trust. The bonds purchased by the Bond Fund will be of
"investment grade" quality--that is, at the time of purchase by the Bond Fund,
such bonds either will be rated not lower than the four highest ratings of
either Moody's (Aaa, Aa, A or Baa) or Standard & Poor's (AAA, AA, A or BBB) or
will be unrated bonds which at the time of purchase are judged by the Bond
Fund's investment advisor to be of comparable quality to bonds rated within such
four highest grades. It is a fundamental policy of the Bond Fund that under
normal market conditions at least 80% of the income distributed to its
shareholders will be exempt from regular Federal income tax, and from New York
State and New York City personal income taxes. However, during times of adverse
market conditions, more than 20% of the Bond Fund's income distributions could
be subject to Federal income tax, New York State and/or New York City income
taxes, as described in the current prospectus relating to the Bond Fund (the
"Bond Fund Prospectus"). Lebenthal & Co., Inc., a sponsor of the Trust, acts as
the manager and distributor for the Bond Fund.
Each Unit holder may request from The Bank of New York (the "Plan Agent"), a
copy of the Bond Fund Prospectus describing the Bond Fund and a form by which
such Unit holder may elect to become a participant ("Participant") in the Plan.
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 Bond Fund
at a net asset value as computed as of the close of trading on the New York
Stock Exchange on such date, as described in the Bond Fund Prospectus. Unless
otherwise indicated, new Participants in the Bond Fund 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 Bond 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
Sponsors, the Trustee, the Bond Fund and Lebenthal & Co. Inc., as manager for
the Bond 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. For more complete
information about investing in the Bond Fund through the Plan, including charges
and expenses, return the enclosed card for a copy of the Bond Fund Prospectus.
Read it carefully before you decide to participate.
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SPONSORS
Glickenhaus and Lebenthal are the Sponsors of Empire State Municipal Exempt
Trust, Series 10 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 Glickenhaus
Value Portfolios and 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.
Lebenthal, a New York corporation originally organized as a New York
partnership in 1925, has been buying and selling municipal bonds for its own
account as a dealer for over 67 years; Lebenthal also buys and sells securities
as an agent and participates as an underwriter in public offerings of municipal
bonds. It acted as a sponsor of Empire State Tax Exempt Bond Trust, Series 8 and
successive Series of The Municipal Insured National Trust through Series 28.
Lebenthal is registered as a broker/dealer with the Securities and Exchange
Commission and various state securities regulatory agencies and is a member of
the National Association of Securities Dealers, Inc. and Securities Investors
Protection Corp.
Limitations on Liability. The Sponsors are jointly and severally liable for the
performance of their obligations arising from their 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 they 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 their
obligations and duties. See "The Trust--Portfolio" and
"Sponsors--Responsibility" in Part B.
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 Sponsors as the
Trustee in its sole discretion may deem necessary. In the event the Trustee does
not exercise the right to obtain Permanent Insurance on a Defaulted Bond or
Bonds in the Trust, to the extent that Bonds are sold which are current in
payment of principal and interest in order to meet redemption requests and
Defaulted Bonds are retained in the Trust in order to preserve the related
insurance protection applicable to said Bonds, the overall value of the Bonds
remaining in the Trust's Portfolio will tend to diminish. In the event the
Trustee does not exercise the right to obtain Permanent Insurance on a Defaulted
Bond or Bonds, except as described below and in certain other unusual
circumstances for which it is determined by the Trustee to be in the best
interests of the Unit holders or if there is no alternative, the Trustee is not
empowered to sell Defaulted Bonds for which value has been attributed for the
insurance obtained by the Trust. Because of such restrictions on the Trustee,
under certain circumstances the Sponsors may seek a full or partial suspension
of the right of Unit holders to redeem their Units. See "Rights of Unit
Holders--Redemption" in Part B. The Sponsors are empowered, but not obligated,
to direct the Trustee to dispose of Bonds in the event of advanced refunding.
It is the responsibility of the Sponsors 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 Sponsors may instruct the Trustee to accept
such an offer or to take any other action with respect thereto as the Sponsors
may deem proper if the issuer is in default with respect to such Securities or
in the judgment of the Sponsors 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
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as stated in this and the preceding paragraph and in the discussion under "The
Trust--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 either pursuant to the portfolio
insurance with respect to the Trust or otherwise within 30 days, the Trustee is
required to notify the Sponsors thereof. If the Sponsors fail to instruct the
Trustee to sell or to hold such Bond within 30 days after notification by the
Trustee to the Sponsors 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 "Insurance on the Bonds" in Part B.
The Sponsors 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 Sponsors 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.
Notwithstanding the foregoing, in connection with final distributions to Unit
holders, if the Trustee does not exercise the right to obtain Permanent
Insurance on any Defaulted Bond, because the portfolio insurance obtained by the
Trust is applicable only while Bonds so insured are held by the Trust, the price
to be received by the Trust upon the disposition of any such Defaulted Bond will
not reflect any value based on such insurance. Therefore, in connection with any
liquidation prior to December 31, 2045, with respect to the Trust, it shall not
be necessary for the Trustee to, and the Trustee does not currently intend to,
dispose of any Bonds if retention of such Bonds, until due, shall be deemed to
be in the best interest of Unit holders, including, but not limited to,
situations in which Bonds so insured are in default and situations in which
Bonds so insured have a deteriorated market price resulting from a significant
risk of default. Since the Pre-insured Bonds in the Trust will reflect the value
of the insurance obtained by the Bond issuer, it is the present intention of the
Sponsors not to direct the Trustee to hold any Pre-insured Bonds after the date
of termination. All proceeds received, less applicable expenses, from insurance
on Defaulted Bonds in the Trust not disposed of at the date of termination will
ultimately be distributed to Unit holders of record as of such date of
termination as soon as practicable after the date such Defaulted Bonds become
due and applicable insurance proceeds have been received by the Trustee (see
"Summary of Essential Financial Information").
Agent for Sponsors. The Sponsor named as Agent for Sponsors under "Summary of
Essential Financial Information" has been appointed by the other Sponsors as
agent for purposes of taking action under the Trust Agreement. If the Sponsors
are unable to agree with respect to action to be taken jointly by them under the
Trust Agreement and they cannot agree as to which Sponsor shall act as sole
Sponsor, then the Agent for Sponsors shall act as sole Sponsor. If one of the
Sponsors fails to perform its duties under the Trust Agreement or becomes
incapable of acting or becomes bankrupt or its affairs are taken over by public
authorities, that Sponsor is automatically discharged under the Trust Agreement
and the other Sponsors act as the Sponsors.
Resignation. Any Sponsor may resign at any time provided that at the time of
such resignation one remaining Sponsor maintains a net worth of $1,000,000 and
all the remaining Sponsors are agreeable to such resignation. Concurrent with or
subsequent to such resignation a new Sponsor may be appointed by the remaining
Sponsors and the Trustee to assume the duties of the resigning Sponsor. If, at
any time, only one Sponsor is acting under each Trust Agreement and that 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.
For financial information regarding the Sponsors see "Sponsors" in Part A.
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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 "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," "Sponsors--Responsibility" and "Sponsors--Resignation"
in this Part B.
Resignation. By executing an instrument in writing and filing the same with the
Sponsors, the Trustee and any successor may resign. In such an event the
Sponsors are 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 Sponsors deem it to be in the best
interest of the Unit holders, the Sponsors 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.
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 Sponsors 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 Sponsors 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
Sponsors. 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.
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Resignation. The Evaluator may resign or may be removed by the Sponsors and the
Trustee, and the Sponsors 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 Sponsors 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 Sponsors 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
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 Sponsors and the
holders at least 33 1/3% of the Units may 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 Sponsors, and Kroll
& Tract, 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 auditors, 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.
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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;
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.
BB, B, CCC, CC--Bonds rated BB, B, CCC and CC are regarded on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CC the highest degree of speculation. While
such bonds will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
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.
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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.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of other
terms of the contract over any long period of time may be small.
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.
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PROSPECTUS--Part C:
Note: Part C of this Prospectus may not be distributed unless accompanied by
Parts A and B.
Special Factors Affecting New York
The information set forth below is derived from the official
statements and/or preliminary drafts of official statements prepared in
connection with the issuance of New York State and New York City municipal
bonds. The Sponsors have not independently verified this information.
Economic Trends. Over the long term, the State of New York
(the "State") and the City of New York (the "City") face serious potential
economic problems. The City accounts for approximately 41% of the State's
population and personal income, and the City's financial health affects the
State in numerous ways. The State historically has been one of the wealthiest
states in the nation. For decades, however, the State has grown more slowly than
the nation as a whole, gradually eroding its relative economic affluence.
Statewide, urban centers have experienced significant changes involving
migration of the more affluent to the suburbs and an influx of generally less
affluent residents. Regionally, the older Northeast cities have suffered because
of the relative success that the South and the West have had in attracting
people and business. The City has also had to face greater competition as other
major cities have developed financial and business capabilities which make them
less dependent on the specialized services traditionally available almost
exclusively in the City.
The State has for many years had a very high State and local
tax burden relative to other states. The State and its localities have used
these taxes to develop and maintain their transportation networks, public
schools and colleges, public health systems, other social services and
recreational facilities. Despite these benefits, the burden of State and local
taxation, in combination with the many other causes of regional economic
dislocation, has contributed to the decisions of some businesses and individuals
to relocate outside, or not locate within, the State.
Notwithstanding the numerous initiatives that the State and
its localities may take to encourage economic growth and achieve balanced
budgets, reductions in Federal spending could materially and adversely affect
the financial condition and budget projections of the State and its localities.
New York City. The City, with a population of approximately
7.3 million, is an international center of business and culture. Its
non-manufacturing economy is broadly based, with the banking and securities,
life insurance, communications, publishing, fashion design, retailing and
construction industries accounting for a significant portion of the City's total
employment earnings. Additionally, the City is the nation's leading tourist
destination. The City's manufacturing activity is conducted primarily in apparel
and printing.
The national economic downturn which began in July 1990
adversely affected the local economy, which had been declining since late 1989.
As a result, the City experienced job losses in 1990 and 1991 and real Gross
City Product ("GCP") fell in those two years. Beginning in calendar year 1992,
the improvement in the national economy helped stabilize conditions in the City.
Employment losses moderated toward year-end and real GCP increased, boosted by
strong wage gains. After noticeable improvements in the City's economy during
calendar year 1994, economic growth slowed in calendar year 1995, and the City's
current four-year financial plan assumes that moderate economic growth will
continue through calendar year 2000.
For each of the 1981 through 1996 fiscal years, the City
achieved balanced operating results as reported in accordance with generally
accepted accounting principles ("GAAP"). The City was required to close
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substantial budget gaps in recent years in order to maintain balanced operating
results. There can be no assurance that the City will continue to maintain a
balanced budget as required by State law without additional tax or other revenue
increases or reductions in City services, which could adversely affect the
City's economic base.
Pursuant to the New York State Financial Emergency Act for the
City of New York, the City prepares an annual four-year financial plan, which is
reviewed and revised on a quarterly basis and which includes the City's capital,
revenue and expense projections and outlines proposed gap-closing programs for
years with projected budget gaps. The City's current four-year financial plan
projects substantial budget gaps for each of the 1998 through 2000 fiscal years.
The City is required to submit its financial plans to review bodies, including
the New York State Financial Control Board ("Control Board").
The City depends on State aid both to enable the City to
balance its budget and to meet its cash requirements. There can be no assurance
that there will not be reductions in State aid to the City from amounts
currently projected or that State budgets in future fiscal years will be adopted
by the April 1 statutory deadline and that such reductions or delays will not
have adverse effects on the City's cash flow or expenditures. In addition, the
Federal Budget negotiation process could result in a reduction in or a delay in
the receipt of Federal grants which could have additional adverse effects on the
City's cash flow or revenues.
The Mayor is responsible for preparing the City's four-year
financial plan, including the City's current financial plan for the 1997 through
2000 fiscal years (the "1997-2000 Financial Plan" or "Financial Plan"). The
City's projections set forth in the Financial Plan are based on various
assumptions and contingencies which are uncertain and which may not materialize.
Changes in major assumptions could significantly affect the City's ability to
balance its budget as required by State law and to meet its annual cash flow and
financing requirements. Such assumptions and contingencies include the condition
of the regional and local economies, the impact on real estate tax revenues of
the real estate market, wage increases for City employees consistent with those
assumed in the Financial Plan, employment growth, the results of a pending
actuarial audit of the City's pension system which is expected to significantly
increase the City's annual pension costs, the ability to implement proposed
reductions in City personnel and other cost reduction initiatives, which may
require in certain cases the cooperation of the City's municipal unions, the
ability of the New York City Health and Hospitals Corporation ("HHC") and the
Board of Education ("BOE") to take actions to offset reduced revenues, the
ability to complete revenue generating transactions and provision of State and
Federal aid and mandate relief and the impact on City revenues of proposals for
Federal and State welfare reform and any future legislation affecting Medicare
or other entitlements.
Implementation of the Financial Plan is also dependent upon
the City's ability to market its securities successfully. The City's financing
program for fiscal years 1997 through 2000 contemplates the issuance of $9.0
billion of general obligation bonds and $3.8 billion of bonds to be issued by
the proposed New York City Infrastructure Finance Authority ("Finance
Authority") to finance education and transportation projects. The creation of
Finance Authority, which is subject to the enactment of State legislation, is
being proposed as part of the City's effort to assist in keeping the City's
indebtedness within the forecast level of the constitutional restrictions on the
amount of debt the City is authorized to incur. Indebtedness subject to the
constitutional debt limit includes liability on capital contracts that are
expected to be funded with general obligation bonds, as well as general
obligation bonds. The City's projections of total debt subject to the general
debt limit that would be required to be issued to fund the updated ten-year
capital strategy published in April 1995 indicates that projected contracts for
capital projects and debt issuance may exceed the general debt limit by the end
of fiscal year 1997 and would exceed the general debt limit by a substantial
amount thereafter, unless legislation is enacted creating the Finance Authority
or other legislative initiatives are identified and implemented. Depending on a
number of factors, including whether the Legislature is expected to enact
legislation creating the Finance Authority or to take other action that would
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provide relief under the general debt limit, the City may find it necessary to
curtail its currently defined capital program before the end of fiscal year 1997
to ensure that there is ongoing capacity to enter into capital contracts
necessary to preserve projects designed to safeguard health and safety in the
City. Without the Finance Authority or other legislative relief, the City's
general obligation financed capital program with respect to new projects would
be virtually brought to a halt during the Financial Plan period. General
obligation borrowing would continue to reimburse the City's general fund for
ongoing costs of existing contractual commitments. In addition, the City issues
revenue and tax anticipation notes to finance its seasonal working capital
requirements. The success of projected public sales of City bonds and notes and
Finance Authority bonds will be subject to prevailing market conditions, and no
assurance can be given that such sales will be completed. If the City were
unable to sell its general obligation bonds and notes or bonds of the proposed
Finance Authority, it would be prevented from meeting its planned capital and
operating expenditures. Future developments concerning the City and public
discussion of such developments, as well as prevailing market conditions, may
affect the market for outstanding City general obligation bonds and notes.
On November 14, 1996, the City submitted to the Control Board
the Financial Plan for the 1997 through 2000 fiscal years, which relates to the
City, the BOE and the City University of New York ("CUNY"). The Financial Plan
is a modification to the financial plan submitted to the Control Board on June
21, 1996 (the "June Financial Plan").
The June Financial Plan identified actions to close a
previously projected gap of approximately $2.6 billion for the 1997 fiscal year.
The proposed actions in the June Financial Plan for the 1997 fiscal year
included (i) agency actions totaling $1.2 billion; (ii) a revised tax reduction
program which would increase projected tax revenues by $369 million due to the
four year extension of the 12.5% personal income tax surcharge and other
actions; (iii) savings resulting from cost containment in entitlement programs
to reduce City expenditures and additional proposed State aid of $75 million;
(iv) the assumed receipt of revenues relating to rent payments for the City's
airports, which are currently the subject of a dispute with the Port Authority
of New York and New Jersey (the "Port Authority"); (v) the sale of the City's
television station for $207 million; and (vi) pension costs savings totaling
$134 million resulting from a proposed increase in the earnings assumption for
pension assets from 8.5% to 8.75%.
The 1997-2000 Financial Plan published on November 14, 1996
reflects actual receipts and expenditures and changes in forecast revenues and
expenditures since the June Financial Plan. The 1997-2000 Financial Plan
projects revenues and expenditures for 1997 fiscal year balanced in accordance
with GAAP, and projects gaps of $1.2 billion, $2.1 billion and $3.0 billion for
the 1998, 1999 and 2000 fiscal years, respectively. Changes since the June
Financial Plan include (i) an increase in projected tax revenues of $450
million, $120 million, $50 million and $45 million in fiscal years 1997 through
2000, respectively; (ii) a delay in the assumed receipt of $304 million relating
to projected rent payments for the City airports from the 1997 fiscal year to
the 1998 and 1999 fiscal years, and a $34 million reduction in assumed State and
Federal aid for the 1997 Fiscal year; (iii) an approximately $200 million
increase in projected overtime and other expenditures in each of the fiscal
years 1997 through 2000; (iv) a $70 million increase in expenditures for BOE in
the 1997 fiscal year for school text books; (v) a reduction in projected pension
costs of $34 million, $50 million, $49 million and $47 million in fiscal years
1997 through 2000, respectively; and (vi) additional agency actions totaling
$179 million, $386 million, $473 million and $589 million in fiscal years 1997
through 2000, including personnel reductions through attrition and early
retirement.
The Financial Plan assumes (i) approval by the Governor and
the State Legislature of the extension of the 12.5% personal income tax
surcharge, which is projected to provide revenue of $170 million, $463 million,
$492 million, and $521 million, in the 1997 through 2000 fiscal years,
respectively; (ii) collection of the projected
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rent payments for the City's airports, totalling $270 million and $180 million
in the 1998 and 1999 fiscal years, respectively, which may depend on the
successful completion of negotiations with the Port Authority or the enforcement
of the City's rights under the existing leases thereto through pending legal
actions; (iii) the ability of HHC and BOE to identify actions to offset
substantial City and State revenue reductions and the receipt by BOE of
additional State aid; (iv) State approval of the cost containment initiatives
and State aid proposed by the City; and (v) a reduction in City funding for
labor settlements for certain public authorities or corporations. Legislation
extending the 12.5% personal income tax surcharge beyond December 31, 1996, was
not enacted in the special legislative session held in December 1996. Such
legislation may be enacted in the 1997 State Legislative Session. The Financial
Plan does not reflect any increased costs which the City might incur as a result
of welfare legislation recently enacted by Congress or legislation proposed by
the Governor, which would, if enacted, implement such Federal welfare
legislation. In addition, the economic and financial condition of the City may
be affected by various financial, social, economic and political factors which
could have a material effect on the City.
In January 1997, the Mayor is expected to publish a
modification (the "January Modification") to the financial plan for the City's
1997 through 2001 fiscal years and a preliminary budget for the City's 1998
fiscal year. The January Modification will reflect changes since the Financial
Plan, including the City's program to address the currently forecast gap of
approximately $1.2 billion in the 1998 fiscal year. The gap-closing program, as
proposed in the Financial Plan, is currently being further developed and is
subject to change in connection with the January Modification. The Governor
released the 1997-1998 Executive Budget on January 14, 1997, which will be
considered for adoption by the State Legislature. Based on a preliminary
evaluation of currently available information, the City's Office of Management
and Budget ("OMB") believes that the reductions in Medicaid reimbursement rates
and other entitlement and welfare initiatives proposed in the 1997-1998
Executive Budget, if approved by the State Legislature without change, would
provide the City with a portion of the $650 million of additional aid and
reductions in entitlement costs assumed in the City's gap-closing program for
the 1998 fiscal year. OMB expects that the January Modification will reflect
additional initiatives proposed by the City relating to reductions in
entitlement costs and additional governmental aid, which would be dependent upon
State legislative approval. Certain proposed cost containment and other
initiatives have been previously considered and rejected by the State
Legislature. The nature and extent of the impact on the City of the State
budget, when adopted, is uncertain, and no assurance can be given that the State
actions included in the State adopted budget may not have a significant adverse
impact on the City's budget and its Financial Plan. It can be expected that the
proposals contained in the January Modification to close the projected budget
gap for the 1998 fiscal year will engender substantial public debate which will
continue through the time the budget is scheduled to be adopted in June 1997.
The City's financial plans have been the subject of extensive
public comment and criticism. On July 16, 1996, the staff of the City
Comptroller issued a report on the June Financial Plan. The report concluded
that the City's fiscal situation remains serious, and that the City faces
budgetary risks of approximately $787 million to $941 million for the 1997
fiscal year, which increase to $4.16 billion to $4.31 billion for fiscal year
2000.
The projections for the 1997 through 2000 fiscal years reflect
the costs of the settlements with the United Federation of Teachers ("UFT") and
a coalition of unions headed by District Council 37 of the American Federation
of State, County and Municipal Employees, which together represent approximately
two-thirds of the City's workforce, and assume that the City will reach
agreement with its remaining municipal unions under terms which are generally
consistent with such settlements. The settlement provides for a wage freeze in
the first two years, followed by a cumulative effective wage increase of 11% by
the end of the five year period covered by the proposed agreements, ending in
fiscal years 2000 and 2001. Additional benefit increases would raise the total
cumulative effective increase to 13% above present costs. Costs associated with
similar settlements for all City- funded employees would total $49 million, $459
million and $1.2 billion in the 1997, 1998 and 1999 fiscal years,
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respectively, and exceed $2 billion in each fiscal year after the 1999 fiscal
year. There can be no assurance that the City will reach an agreement with the
unions that have not yet reached a settlement with the City on the terms
contained in the Financial Plan.
In the event of a collective bargaining impasse, the terms of
wage settlements could be determined through statutory impasse procedures, which
can impose a binding settlement except in the case of collective bargaining with
the UFT, which may be subject to non-binding arbitration. On January 23, 1996,
the City requested the Office of Collective Bargaining to declare an impasse
against the Patrolmen's Benevolent Association and the Uniformed Firefighters
Association.
On July 10, 1995, Standard & Poor's revised downward its
rating on City general obligation bonds from A- to BBB+ and removed City bonds
from CreditWatch. Standard & Poor's stated that "structural budgetary balance
remains elusive because of persistent softness in the City's economy,
highlighted by weak job growth and a growing dependence on the historically
volatile financial services sector". Other factors identified by Standard &
Poor's in lowering its rating on City bonds included a trend of using one-time
measures, including debt refinancings, to close projected budget gaps,
dependence on unratified labor savings to help balance the Financial Plan,
optimistic projections of additional federal and State aid or mandate relief, a
history of cash flow difficulties caused by State budget delays and continued
high debt levels.
On March 1, 1996, Moody's stated that the rating for City
general obligation bonds remains under review pending the outcome of the
adoption of the City's budget for the 1997 fiscal year, and, in light of the
status of the debate on public assistance and Medicaid reform; the enactment of
a State budget, upon which major assumptions regarding State aid are dependent,
which may be extensively delayed; and the seasoning of the City's economy with
regard to its strength and direction in the face of a potential national
economic slowdown. Since July 15, 1993, Fitch Investors Service, L.P. ("Fitch")
has rated City bonds A-. On February 28, 1996, Fitch placed the City's general
obligation bonds on FitchAlert with negative implications. On November 5, 1996,
Fitch removed the City's general obligation bonds from FitchAlert, although
Fitch stated that the outlook remains negative.
New York State and its Authorities. The State's current fiscal
year commenced on April 1, 1996, and ends on March 31, 1997, and is referred to
herein as the State's 1996-97 fiscal year. The State's budget for the 1996-97
fiscal year was enacted by the Legislature on July 13, 1996, more than three
months after the start of the fiscal year. The State Financial Plan for the
1996-97 fiscal year was formulated on July 25, 1996 and is based on the State's
budget as enacted by the Legislature and signed into law by the Governor, as
well as actual results for the first quarter of the current fiscal year. The
State's prior fiscal year commenced on April 1, 1995, and ended on March 31,
1996, and is referred to herein as the State's 1995-96 fiscal year.
The State closed projected budget gaps of $5.0 billion and
$3.9 billion for its 1995-96 and 1996-97 fiscal years, respectively. The 1997-98
gap was projected at $1.44 billion, based on the Governor's proposed budget of
December 1995. As a result of changes made in the enacted budget, that gap is
now expected to be larger. The gap, however, is not expected to be as large as
those faced in the prior two fiscal years. The Governor has indicated that he
will propose to close any potential imbalance primarily through General Fund
expenditure reductions and without increases in taxes or deferrals of scheduled
tax reductions.
The 1996-97 State Financial Plan is projected to be balanced
on a cash basis. As compared to the Governor's proposed budget as revised on
March 20, 1996, the State's adopted budget for 1996-97 increases General Fund
spending by $842 million, primarily from increases for education, special
education and higher education ($563 million). The balance represents funding
increases to a variety of other programs, including community projects and
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increased assistance to fiscally distressed cities. Resources used to fund these
additional expenditures include $540 million in increased revenues projected for
1996-97 based on higher-than-projected tax collections during the first half of
calendar 1996, $110 million in projected receipts from a new State tax amnesty
program, and other resources including certain non-recurring resources. The
total amount of non-recurring resources included in the 1996-97 State budget is
projected by the State Division of the Budget ("DOB") to be $1.3 billion, or 3.9
percent of total General Fund receipts.
The State issued its first update to the cash-basis 1996-97
State Financial Plan (the "Mid-Year Update") on October 25, 1996. The Mid-Year
Update reflects a balanced 1996-97 State Financial Plan, with a reserve for
contingencies in the General Fund of $300 million. This reserve will be utilized
to help offset a variety of potential risks and other unexpected contingencies
that the State may face during the balance of the 1996-97 fiscal year.
The State Financial Plan is based on a June 1996 projection by
DOB of national and State economic activity. The national economy has resumed a
more robust rate of growth after a "soft landing" in 1995, with over 11 million
jobs added nationally since early 1992. The State economy has continued to
expand, but growth remains somewhat slower than in the nation. Although the
State has added approximately 240,000 jobs since late 1992, employment growth in
the State has been hindered during recent years by significant cutbacks in the
computer and instrument manufacturing, utility, defense, and banking industries.
Government downsizing has also moderated these job gains.
In its Mid-Year Update the State revised its forecast of
national and State economic activity through the end of calendar year 1997 to
reflect the stronger-than-expected growth in the first half of 1996. The
national economic forecast has been changed slightly from the initial forecast
on which the original 1996-97 State Financial Plan was based. The revised
forecast projects real Gross Domestic Product growth in the nation of 2.5
percent for 1996 and 2.4 percent in 1997. The inflation rate is expected to be
3.0 percent in 1996 and 2.9 percent in 1997. The annual rate of job growth is
expected to slow gradually to about 1.8 percent in 1997, down from 2.2 percent
in 1996. Growth in personal income and wages are expected to slow accordingly.
The State economic forecast has been changed slightly from the
one formulated with the July 1996- 97 State Financial Plan. Moderate growth is
projected to continue through the second half of 1996, with employment, wages
and incomes continuing their modest rise. Personal income is projected to
increase by 5.2 percent in 1996 and 4.7 percent in 1997, reflecting robust
projected wage growth fueled in part by financial sector bonus payments. Overall
employment growth will continue as a modest rate, reflecting the slowdown in the
national economy, continued spending restraint in government, and restructuring
in the health care and financial sectors.
The forecast for continued moderate growth, and any resultant
impact on the State's 1996-97 Financial Plan, contains some uncertainties.
Stronger-than-expected gains in employment could lead to a significant
improvement in consumption spending. Investments could also remain robust.
Conversely, the prospect of a continuing deadlock on federal budget deficit
reduction or fears of excessively rapid economic growth could create upward
pressures on interest rates. In addition, the State economic forecast could
over- or underestimate the level of future bonus payments or inflation growth,
resulting in forecasted average wage growth that could differ significantly from
actual growth. Similarly, the State forecast could fail to correctly account for
expected declines in government and banking employment and the direction of
employment change that is likely to accompany telecommunications deregulation.
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The DOB believes that its projections of receipts and
disbursements relating to the current State Financial Plan, and the assumptions
on which they are based, are reasonable. Actual results, however, could differ
materially and adversely from the projections set forth below, and those
projections may be changed materially and adversely from time to time.
The economic and financial condition of the State may be
affected by various financial, social, economic and political factors. Those
factors can be very complex, may vary from fiscal year to fiscal year, and are
frequently the result of actions taken not only by the State and its agencies
and instrumentalities, but also by entities, such as the Federal government,
that are not under the control of the State. Because of the uncertainty and
unpredictability of changes in these factors, their impact cannot be fully
included in the assumptions underlying the State's projections. There can be no
assurance that the State economy will not experience results that are worse than
predicted, with corresponding material and adverse effects on the State's
financial projections.
The General Fund is the principal operating fund of the State
and is used to account for all financial transactions, except those required to
be accounted for in another fund. It is the State's largest fund and receives
almost all State taxes and other resources not dedicated to particular purposes.
In the State's 1996-97 fiscal year, the General Fund is expected to account for
approximately 47 percent of total governmental-fund receipts and 71 percent of
total governmental-fund disbursements. General Fund moneys are also transferred
to other funds, primarily to support certain capital projects and debt service
payments in other fund types.
The General Fund is projected to be balanced on a cash basis
for the 1996-97 fiscal year. Actual receipts through the first two quarters of
the 1996-96 State fiscal year reflect stronger-than-expected growth in most
taxes, with actual receipts exceeding expectations by $276 million. Based on the
revised economic outlook and actual receipts for the first six months of
1996-97, projected General Fund receipts for the 1996-97 State fiscal year have
been increased by $420 million. Most of this projected increase is in the yield
of the personal income tax ($241 million), with additional increases now
expected in business taxes ($124 million) and other tax receipts ($49 million).
Projected collections from user taxes and fees have been revised downward
slightly ($5 million). Revisions were also made to both miscellaneous receipts
and in transfers from other funds (an $11 million combined projected increase).
Disbursements through the first six months of the fiscal year
were $415 million less than projected, primarily because of delays in processing
payments following delayed enactment of the State budget. As a result, no
savings are included in the Mid-Year Update from this slower-than-expected
spending. Projections of 1996-97 General Fund disbursements are increased by
$120 million, since increased General Fund disbursements for education are
required to replace a projected decrease in lottery receipts. This modification
is shown in the form of an increased transfer of General Fund monies to the
Lottery Fund in the Special Revenue fund type. The projected closing fund
balance in the General Fund of $337 million reflects a balance of $252 million
in the Tax Stabilization Reserve Fund (following a payment of $15 million during
the current fiscal year) and a deposit of $85 million to the Contingency Reserve
Fund.
On January 13, 1992, Standard & Poor's reduced its ratings on
the State's general obligation bonds from A to A- and, in addition, reduced its
ratings on the State's moral obligation, lease purchase, guaranteed and
contractual obligation debt. Standard & Poor's also continued its negative
rating outlook assessment on State general obligation debt. On April 26, 1993,
Standard & Poor's revised the rating outlook assessment to stable. On February
14, 1994, Standard & Poor's raised its outlook to positive and, on August 5,
1996, confirmed its A- rating. On January 6, 1992, Moody's reduced its ratings
on outstanding limited-liability State lease purchase and contractual
C-7
368607.3
<PAGE>
obligations from A to Baa1. On July 26, 1996, Moody's reconfirmed its A rating
on the State's general obligation long-term indebtedness.
Litigation. The court actions in which the State is a
defendant generally involve State programs and miscellaneous tort, real
property, and contract claims. While the ultimate outcome and fiscal impact, if
any, on the State of those proceedings and claims are not currently predictable,
adverse determinations in certain of them might have a material adverse effect
upon the State's ability to maintain a balanced 1996-97 State Financial Plan.
The claims involving the City other than routine litigation
incidental to the performance of their governmental and other functions and
certain other litigation arise out of alleged constitutional violations, torts,
breaches of contract and other violations of law and condemnation proceedings.
While the ultimate outcome and fiscal impact, if any, on the City of those
proceedings and claims are not currently predictable, adverse determinations in
certain of them might have a material adverse effect upon the City's ability to
carry out the 1997- 2000 Financial Plan. The City has estimated that its
potential future liability on account of outstanding claims against it as of
June 30, 1996 amounted to approximately $2.8 billion.
Puerto Rico Bonds
Certain of the Bonds in the Trust may be general obligations
and/or revenue bonds of issuers located in Puerto Rico which will be affected by
general economic conditions in Puerto Rico. The economy of Puerto Rico is
closely integrated with that of the mainland United States. During fiscal year
1995, approximately 89% of Puerto Rico's exports were to the United States
mainland, which was also the source of 65% of Puerto Rico's imports. In fiscal
1995, Puerto Rico experienced a $4.6 billion positive adjusted trade balance.
The economy of Puerto Rico is dominated by the manufacturing and service
sectors. The manufacturing sector has experienced a basic change over the years
as a result of increased emphasis on higher wage, high technology industries
such as pharmaceuticals, electronics, computers, microprocessors, professional
and scientific instruments, and certain high technology machinery and equipment.
The service sector, including finance, insurance and real estate, wholesale and
retail trade, and hotel and related services, also plays a major role in the
economy. It ranks second only to manufacturing in contribution to the gross
domestic product and leads all sectors in providing employment. In recent years,
the service sector has experienced significant growth in response to and
paralleling the expansion of the manufacturing sector. Since fiscal 1985,
personal income, both aggregate and per capita, has increased consistently in
each fiscal year. In fiscal 1995, aggregate personal income was $27.0 billion
($22.5 billion in 1987 prices) and personal income per capita was $7,296 ($6,074
in 1987 prices). Personal income includes transfer payments to individuals in
Puerto Rico under various social programs. Total federal payments to Puerto
Rico, which include many types in addition to federal transfer payments, are
lower on a per capita basis in Puerto Rico than in any state. Transfer payments
to individuals in fiscal 1994 were $5.9 billion, of which $4.0 billion, or
67.6%, represent entitlement to individuals who had previously performed
services or made contributions under programs such as Social Security, Veterans
Benefits and Medicare. The number of persons employed in Puerto Rico during
fiscal 1996 averaged 1,092,300, an increase of 3.9% over fiscal 1995. The
unemployment rate in Puerto Rico for fiscal 1996 remained the same. The Puerto
Rico Planning Board's most recent gross product forecast for fiscal 1997, made
in February 1996, showed an increase of 2.7%. The Planning Board's Economic
Activity Index, a composite index for thirteen economic indicators, increased
1.6% for fiscal 1996 compared to fiscal 1995, and 2.0% for fiscal 1995, compared
to fiscal 1994. During the first three months of fiscal 1997 the Index decreased
0.9% compared to the same period in fiscal 1996, which period showed an increase
of 1.7% over the same period of fiscal 1995. Growth in the Puerto Rico economy
in fiscal 1997 depends on several factors, including the state of the United
States economy and the relative stability in the price of oil imports, the
exchange value of the U.S. dollar, the level of federal transfers and the cost
of borrowing.
C-8
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<PAGE>
PART II--ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A--BONDING ARRANGEMENTS
The employees of Glickenhaus & Co. and Lebenthal & Co., Inc. are covered
under Brokers' Blanket Policy, Standard Form 14, in the respective amounts of
$5,000,000 and $10,000,000.
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 99.3.1) BDO Seidman, LLP Muller Data
Corporation (included in Exhibit 99.5.1)
<TABLE>
<CAPTION>
The following exhibits:
<S> <C> <C>
*99.1.1 -- Reference Trust Agreement including certain
Amendments to the Trust Indenture and Agreement
referred to under Exhibit 99.1.1 below.
**99.1.1.1 -- Trust Indenture and Agreement dated December 18, 1990.
99.1.3 -- Form of Agreement Among Underwriters and Selected Dealers Agreement (filed as
Exhibit 1.8 to Amendment No. 1 to Form S-6 Registration Statement No. 33-28268 of
Empire State Municipal Exempt Trust, Guaranteed Series 49 on July 18, 1989, and
incorporated herein by reference).
**99.1.6 -- Restated Agreement of Limited Partnership of Glickenhaus & Co. dated September 1,
1983.
**99.1.6(a) -- Agreement of Amendment to Restated Agreement of Limited Partnership of
Glickenhaus & Co. dated January 24, 1984.
**99.1.6(b) -- Certificate of Amendment to Restated Agreement of Limited Partnership of Glickenhaus
& Co. dated January 24, 1984.
**99.1.6(c) -- Agreement of Amendment to Restated Agreement of Limited Partnership of
Glickenhaus & Co. dated September 1, 1983
**99.1.6(d) -- Agreement of Amendment to Restated Agreement of Limited Partnership of
Glickenhaus & Co. dated February 12, 1986.
- --------
* Filed herewith.
** Filed herewith for the EDGAR filing only.
II-i
396037.1
<PAGE>
**99.1.6(e) -- Agreement of Amendment to Restated Agreement of Limited Partnership of
Glickenhaus & Co. dated January 19, 1992.
99.1.6(f) -- Agreement of Amendment to Restated Agreement of Limited Partnership of
Glickenhaus & Co. (filed as Exhibit 1.3(e) to Amendment No. 1 to Form S-6
Registration Statement No. 33-78036 of MINT Group 11 on May 3, 1994, and
incorporated herein by reference).
**99.1.6.1 -- Certificate of Incorporation of Lebenthal & Co., Inc. as amended on October 23, 1981.
**99.1.6.2 -- By-Laws of Lebenthal & Co., Inc.
*99.1.7 -- Form of Insurance Policy obtained by the Trust.
99.1.7(a) -- Master Letter Agreement of Municipal Bond Investors Assurance Corporation (filed as
Exhibit 1.7(a) to Amendment No. 1 to Form S-6 Registration Statement No. 33-35124
of Empire State Municipal Exempt Trust, Guaranteed Series 59 on July 1, 1990, and
incorporated herein by reference).
99.1.7(b) -- Form of Permanent Insurance Policy of Municipal Bond Investors Assurance
Corporation (filed as Exhibit 1.7.1 to Amendment No. 1 to Form S-6 Registration
Statement No. 33-10860 of Empire State Municipal Exempt Trust, Guaranteed Series
31 on June 10, 1987, 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).
99.4.2 -- Information as to Officers and Directors of Lebenthal & Co., Inc. (filed as Exhibit 4.2
to Amendment No. 1 to Form S-6 Registration Statement No. 33-22568 of Empire State
Municipal Exempt Trust, Guaranteed Series 39 on August 9, 1988, and incorporated
herein by reference).
99.4.3 -- Affiliations of Sponsors 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).
</TABLE>
- --------
* Filed herewith.
** Filed herewith for the EDGAR filing only.
II-ii
396037.1
<PAGE>
**99.4.5 -- Stockbrokers' Blanket Bond Policy, Standard Form No. 14
for Lebenthal & Co., Inc. dated April 5, 1983.
*99.5.1 -- Consent To Be Evaluator of Muller Data Corporation and
Affirmation Letter of Standard & Poor's Corporation.
*99.5.2 -- Affirmation Letter of Moody's Investors Service.
*99.6.1 -- Copies of Powers of Attorney of General Partners of
Glickenhaus & Co.
99.6.2 -- Copies of Powers of Attorney of Directors and certain
officers of Lebenthal & Co., Inc. (filed as Exhibit 6.2
to Amendment No. 1 to Form S-6 Registration Statement
No.33-55385 of Empire State Municipal Exempt Trust,
Guaranteed Series 109 on November 2, 1994, and
incorporated herein by reference).
**27 -- Financial Data Schedule.
- --------
* Filed herewith.
** Filed herewith for the EDGAR filing only.
II-iii
396037.1
<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
The registrant hereby identifies Empire State Municipal Exempt
Trust, Guaranteed Series 55 for the purposes of the representations required by
Rule 487 and represents the following:
1) That the portfolio securities deposited in the Series as to
the securities of which this registration statement is being
filed do not differ materially in type or quality from those
deposited in such previous series;
2) That, except to the extent necessary to identify the specific
portfolio securities deposited in, and to provide essential
financial information for, the Series with respect to the
securities of which this registration statement is being
filed, this registration statement does not contain
disclosures that differ in any material respect from those
contained in the registration statements for such previous
Series as to which the effective date was determined by the
commission or the staff; and
3) That it has complied with Rule 460 under the Securities Act
of 1933.
Pursuant to the requirements of the Securities Act of 1933, the
registrant, Empire State Municipal Exempt Trust, Guaranteed Series 134 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 2nd day of April, 1997.
EMPIRE STATE MUNICIPAL EXEMPT TRUST,
GUARANTEED SERIES 134
By: GLICKENHAUS & CO.
(Sponsor)
By: /S/ JAMES VACCACIO
(James Vaccacio, 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.
NAME TITLE DATE
ALFRED FEINMAN* General Partner
(Alfred Feinman)
SETH M. GLICKENHAUS* General Partner,
(Seth M. Glickenhaus) Chief Investment Officer
STEVEN B. GREEN** Chief Financial Officer
(Steven B. Green)
*By: /S/ JAMES VACCACIO April 2, 1997
----------------------------------------
(James Vaccacio, Attorney-in-Fact)
- --------
* Executed copies of powers of attorney filed herewith.
** Executed copy of power of attorney was filed as Exhibit 6.1 to Registration
Statement No. 33-64155 on November 13, 1995.
II-iv
396037.1
<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
The registrant hereby identifies Empire State Municipal Exempt
Trust, Guaranteed Series 55 for the purposes of the representations required by
Rule 487 and represents the following:
1) That the portfolio securities deposited in the Series as to
the securities of which this registration statement is being
filed do not differ materially in type or quality from those
deposited in such previous series;
2) That, except to the extent necessary to identify the specific
portfolio securities deposited in, and to provide essential
financial information for, the Series with respect to the
securities of which this registration statement is being
filed, this registration statement does not contain
disclosures that differ in any material respect from those
contained in the registration statements for such previous
Series as to which the effective date was determined by the
commission or the staff; and
3) That it has complied with Rule 460 under the Securities Act
of 1933.
Pursuant to the requirements of the Securities Act of 1933, the
registrant, Empire State Municipal Exempt Trust, Guaranteed Series 134 has duly
caused this Amendment to the Registration Statement to be signed on its behalf
by the undersigned thereunto duly authorized, in the City of New York and State
of New York on the 2nd day of April, 1997.
EMPIRE STATE MUNICIPAL EXEMPT TRUST,
GUARANTEED SERIES 134
By: LEBENTHAL & CO., INC.
(Sponsor)
By: /s/ D. WARREN KAUFMAN
(D. Warren Kaufman, 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.
NAME TITLE DATE
H. GERARD BISSINGER, II* Director
(H. Gerard Bissinger, II)
JEFFREY M. JAMES* Director
(Jeffrey M. James)
/s/ D. WARREN KAUFMAN* Director April 2, 1997
(D. Warren Kaufman)
ALEXANDRA LEBENTHAL* Director, President
(Alexandra Lebenthal)
JAMES A. LEBENTHAL* Director, Chief Executive Officer
(James A. Lebenthal)
DUNCAN K. SMITH* Director
(Duncan K. Smith)
*By: /s/ D. WARREN KAUFMAN April 2, 1997
(D. Warren Kaufman, Attorney-In-Fact)
- --------
* An executed copy of the power of attorney was filed as Exhibit 6.2 to
Amendment No. 1 to Registration Statement No.33-55385 on
November 2, 1994.
II-v
396037.1
<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
99.3.1 to this Registration Statement.
CONSENT OF INDEPENDENT AUDITORS
The Sponsors and Trustee of Empire State Municipal Exempt Trust,
Guaranteed Series 134
We hereby consent to the use in this Amendment No. 1 to the Registration
Statement No. 333-17307 of our report dated April 2, 1997, relating to the
Statement of Condition of Empire State Municipal Exempt Trust, Guaranteed Series
134 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
April 2, 1997
II-vi
396037.1
<PAGE>
EMPIRE STATE MUNICIPAL EXEMPT TRUST
GUARANTEED SERIES 134
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement dated April 2, 1997 among
Glickenhaus & Co. and Lebenthal & Co., Inc., as Depositors, 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 "Empire State Municipal Exempt Trust, Guaranteed Series 66,
Trust Indenture and Agreement" dated December 18, 1990 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 Depositors, 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 except that for all purposes of this Empire State Municipal Exempt
Trust, Guaranteed Series 134, and all subsequent Series, the following
sections of the Indenture are amended as follows:
(a) Section 1.1(8) is hereby amended in its entirety to read as
follows:
"(8) "Evaluation Time" shall mean 12:00 p.m. New York Time on the
Business Day prior to the Date of Deposit and 2:00 p.m. New York
Time thereafter."
(b) Section 1.1(9) is hereby amended by deleting the words
"Standard and Poor's Corporation" therein and substituting the words "Muller
Data Corporation" in place thereof.
295222.1
<PAGE>
(c) Section 3.1 is hereby amended by revising it in
its entirety to read as follows:
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 Depositors, 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 Depositors. 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 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.
(d) Section 5.1 is hereby amended by revising the second sentence
thereof to read as follows:
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
-2-
295222.1
<PAGE>
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 secured
organizational expenses of the Trust.
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 for
Empire State Municipal Exempt Trust Guaranteed Series 133 have been deposited
in trust under this Indenture (see "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 10,000.
(c) The fiscal year for the Trust shall end on March 31st of
each year.
(d) All Certificateholders of record on April 15, 1997 (the
"First Monthly Record Date") who have selected the monthly distribution plan,
will receive a distribution to be made on or shortly after May 1, 1997
(the "First Distribution Date"), and thereafter distributions will be made
monthly. The first semi-annual distribution will be made on or shortly after
June 1, 1997 to all Certificateholders of record on May 15, 1997 who
have selected the semi-annual distribution plan, and thereafter distributions
will be made semi-annually.
(e) The First Settlement Date shall mean April 7, 1997.
(f) The number of Units referred to in Section 2.3 is
10,000.
-3-
295222.1
<PAGE>
(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 $1.35 per $1,000 principal amount of Bonds for
that portion of the Trust under the monthly distribution plan and $.95 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 Depositors' maximum annual
fee is hereby specified to be $0.25 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, 2046.
(k) For purposes of this Series of Empire State Municipal Exempt
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.
(l) For purposes of this Series of Empire State Municipal Exempt
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]
-4-
295222.1
<PAGE>
GLICKENHAUS & CO.
By /s/ James Vaccacio
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 James Vaccacio, 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 2nd day of April, 1997.
/s/ Kelly McConvery
Notary Public
KELLY McCONVERY
Notary Public, State of New York
No. 01MC5044884
Qualified in New York County
Commission Expires June 5, 1997
[SEAL]
313665.1
<PAGE>
Lebenthal & Co., Inc.
By: /s/James McGrath
Authorized Officer
ATTEST:
By: /s/D. Warren Kaufman
Secretary
[CORPORATE SEAL]
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 James McGrath and D. Warren
Kaufman personally known to me to be the same persons whose names are
subscribed to the foregoing instrument and personally known to me to be the
Authorized Officer and Secretary, respectively, of LEBENTHAL & CO., INC.,
appeared before me this day in person, and acknowledged that they signed,
sealed with the corporate seal of LEBENTHAL & CO., INC., and delivered the
said instrument as their free and voluntary act as such Authorized Officer and
Secretary, respectively, and as the free and voluntary act of said LEBENTHAL &
CO., INC., for the uses and purposes therein set forth.
GIVEN, under my hand and notarial seal this 2nd day of April
1997.
/s/ Kelly McConvery
Notary Public
KELLY McCONVERY
Notary Public, State of New York
No. 01MC5044884
Qualified in New York County
Commission Expires June 5, 1997
[SEAL]
313665.1
<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, Barbara A. McManus, 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 1st day of April, 1997.
/s/ Barbara A. McManus
Notary Public
BARBARA A. McMANUS
Notary Public, State of New York
No.
Qualified in Orange County
Commission Expires August 15, 1997
[SEAL]
My commission expires:
313665.1
<PAGE>
MULLER DATA CORPORATION, Evaluator
By: /s/Mario S. Buscemi
Mario S. Buscemi
Chief Operating Officer
[Seal]
ATTEST:
By: /s/ Richard Birnbaum
Vice President
313665.1
<PAGE>
EMPIRE STATE
MUNICIPAL EXEMPT TRUST
GUARANTEED SERIES 66
(and Subsequent Series)
- ------------------------------------------------------------------------------
TRUST INDENTURE AND AGREEMENT
Among
GLICKENHAUS & CO.
and
LEBENTHAL & CO., INC.
as Depositors
THE BANK OF NEW YORK
as Trustee
and
STANDARD & POOR'S CORPORATION
as Evaluator
- ------------------------------------------------------------------------------
Dated: December 18, 1990
433559.1
<PAGE>
TRUST INDENTURE AND AGREEMENT
EMPIRE STATE
MUNICIPAL EXEMPT TRUST
GUARANTEED SERIES 66
(and Subsequent Series)
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS, CERTIFICATE.................................. 2
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............. 14
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.................................... 16
SECTION 3.1. Initial Cost...................................... 16
SECTION 3.2. Interest Account.................................. 16
SECTION 3.3. Principal Account................................. 16
SECTION 3.4. Reserve Account................................... 17
SECTION 3.5. Distribution...................................... 17
SECTION 3.6. Distribution Statements........................... 22
SECTION 3.7. Sale of Bonds..................................... 23
SECTION 3.8. Refunding Bonds................................... 25
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 Depositors........................... 26
SECTION 3.13. Notice to Depositors.............................. 26
SECTION 3.14. Limited Replacement of Special Bonds.............. 27
ARTICLE IV EVALUATION OF BONDS; EVALUATOR............................ 29
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)
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ARTICLE V TRUST FUND EVALUATION, REDEMPTION, PURCHASE
TRANSFER, INTERCHANGE OR REPLACEMENT OF
CERTIFICATES........................................ 32
SECTION 5.1. Trust Fund Evaluation............................. 32
SECTION 5.2. Redemption by Trustee; Purchases by
Depositors........................................ 33
SECTION 5.3. Transfer or Interchange of Certificates........... 35
SECTION 5.4. Certificates Mutilated, Destroyed, Stolen
or Lost........................................... 35
ARTICLE VI TRUSTEE..................................... ............. 36
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......................... 42
ARTICLE VII RIGHTS OF CERTIFICATEHOLDERS.............................. 43
SECTION 7.1. Beneficiaries of Trust............................ 43
ARTICLE VIII DEPOSITORS................................................ 44
SECTION 8.1. Liabilities; Power of Attorney.................... 44
SECTION 8.2. Discharge......................................... 44
SECTION 8.3. Successors........................................ 45
SECTION 8.4. Resignation....................................... 46
SECTION 8.5. Exclusions from Liability......................... 46
SECTION 8.6. Annual Fee........................................ 47
ARTICLE IX ADDITIONAL COVENANTS; MISCELLANEOUS
PROVISIONS.......................................... 47
SECTION 9.1. Amendments........................................ 47
SECTION 9.2. Termination....................................... 48
SECTION 9.3. Construction...................................... 50
SECTION 9.4. Registration of Units and Trust Fund.............. 50
SECTION 9.5. Written Notice.................................... 51
SECTION 9.6. Severability...................................... 51
SECTION 9.7. Dissolution of Depositor not to Terminate......... 51
----------------------------------------------------
This "Table of Contents" does not
constitute part of the Indenture.
433559.1
<PAGE>
TRUST INDENTURE AND AGREEMENT DATED December 18, 1990
AMONG GLICKENHAUS & CO.,
AND
LEBENTHAL & CO., INC., as Depositors,
THE BANK OF NEW YORK, as Trustee,
and
STANDARD & POOR'S CORPORATION, as Evaluator
W I T N E 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 Depositors desire 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 Depositors, concurrently with the execution and
delivery hereof, are establishing Empire State Municipal Exempt Trust,
Guaranteed Series 66, wherein certain interest bearing obligations will be
deposited by the Depositors, 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
Empire State Municipal Exempt Trust, Guaranteed Series 66 and of each additional
series of such Trust which may be established from time to time hereafter. For
Empire State Municipal Exempt Trust, Guaranteed Series 66 and each subsequent
series of Empire State Municipal Exempt 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;
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<PAGE>
(ii) the initial fractional undivided interest represented by each Unit; (iii)
the First General Record Date; (iv) the First Distribution Date; (v) the First
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 Depositors, 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
Depositors 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.
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<PAGE>
(5) "Contract Bond" 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 Depositors have contracted to purchase for the Trust Fund
pursuant to Section 3.14 hereof.
(6) "Date of Deposit" shall mean the date of the applicable
Reference Trust Agreement.
(7) "Depositors" shall mean Glickenhaus & Co. and Lebenthal & Co.,
Inc. and their 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 Standard & Poor's 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 General 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, and any supplements or amendments thereto, of insurance (except for
such contracts, policies or amendments relating thereto obtained with respect to
Pre-insured Bonds by the issuers of those Pre-insured Bonds or by persons other
than the Trust) guaranteeing the payment when due of the principal of and
interest on the Bonds 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 or guaranteeing the stated
payment of interest and principal with respect to any such Bonds as long as they
remain in the Trust.
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<PAGE>
(15) "Insurer" shall mean the Municipal Bond Investors Assurance
Corporation, its successors and assigns, having its headquarters in Armonk, New
York, and issuing the Insurance, or any corporation into which it may be merged
or with which it may be consolidated resulting from the merger or consolidation
to which it shall be a party or any corporation succeeding to all or
substantially all of its business, or any successor 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 General
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 Empire State
Municipal Exempt 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 Empire State
Municipal Exempt Trust established
pursuant to this Indenture.
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<PAGE>
(24) "Semi-Annual Computation Date" shall mean the fifteenth day of
May and November commencing with the first such day after the First General
Record Date.
(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:
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<PAGE>
[FACE]
Plan of Distribution
No. Units
CERTIFICATE OF OWNERSHIP
--evidencing--
An Undivided Interest
in the
EMPIRE STATE
MUNICIPAL EXEMPT 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 EMPIRE STATE MUNICIPAL EXEMPT 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. and Lebenthal & Co., Inc. (hereinafter called the
"Depositors"), The Bank of New York (hereinafter called the "Trustee") and
Standard & Poor's 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.
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<PAGE>
IN WITNESS WHEREOF, each of the Depositors has caused this
Certificate to be executed in facsimile by a General Partner, the President or a
Vice President 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
LEBENTHAL & CO., INC.,
Depositor
By:
President
THE BANK OF NEW YORK, Trustee
By:
Authorized Officer
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<PAGE>
[REVERSE]
EMPIRE STATE MUNICIPAL EXEMPT 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 Depositors hereby grant and convey all of their 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 seventh calendar day following the day on which such tender
is made, or, if such calendar day is not a business day, on the first business
day prior to such calendar day, 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
Depositors on such date. The next computation shall be made as of the First
General Record Date, as defined in the Indenture, and thereafter as of May 15
and November 15 of each year
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<PAGE>
commencing with the first such day following the First General
Record Date.
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 General Record Date and thereafter as of May 15 and November 15 of
each year commencing with the first such day following the First General 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, payment of any insurance
premium, 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
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<PAGE>
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 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 $2,000,000 or 20% of
the value of the Fund as of the date of deposit therein by the Depositors,
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.
-10-
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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 Depositors on such date. The next computation shall be made as of the First
General 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 General 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
General 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 General 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 General
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.
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<PAGE>
The plan of distribution chosen by the registered holder hereof may
be changed by written notice to the Trustee not 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 Depositors, concurrently with the
execution and delivery hereof, have 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 Depositors 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 Depositors and the
seller of such Bond is terminated by such seller for any reason beyond the
control of the Depositors, the Depositors 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 Depositors.
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 or the President or one of the Vice Presidents of
each of the Depositors 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 Depositors and Trustee shall
bind the Depositors and Trustee, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the
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<PAGE>
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates.
SECTION 2.5. Bond Insurance. Concurrently with the delivery to the
Trustee of the Bonds listed in Schedule A the Insurer has delivered to and
deposited 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 as 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 Bonds 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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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.
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, the initial fees
of the Trustee and the Trustee's counsel and other reasonable expenses in
connection therewith, the fees of the Evaluator during the initial offering
period and all costs of registering the Units under the Securities Act of 1933
and the Empire State Municipal Exempt Trust under the Investment Company Act of
1940 shall be paid by the Depositors, provided, however, that the liability on
the part of the Depositors for such initial costs, fees and expenses shall not
include any fees, costs or other expenses incurred in connection herewith after
the execution of this Indenture and the deposit referred to in Section 2.1.
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 Depositors fail to timely purchase a
Contract Bond and have 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
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purchased by the Depositors shall be credited to the Principal Account; or (ii)
the Depositors have 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 Depositors also notify the Trustee in the Failed Contract Notice
that they have 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 Depositors 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 Depositors 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 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 Depositors are
entitled to receive at such time pursuant to Section 8.6 and the amount which
the Insurer is entitled to receive at such time in payment of premiums for the
Insurance delivered pursuant to Section 2.5), and shall pay to the
Certificateholders then of record, namely the Depositors,
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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 General 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;
(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
Depositors the amount that they are at the time entitled to receive pursuant to
Section 8.6;
(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 Depositors; and
(e) deduct from the Interest Account, or, to the extent funds are
not available in such Account, from the Principal Account, and pay to the
Insurer the amount equal to the premium which it is at that time entitled to
receive in accordance with the terms of the Insurance deposited with the Trustee
pursuant to Section 2.5.
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
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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.
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 General 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
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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 General 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 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
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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 Depositors (i) fail to replace any Special Bond (as defined
in Section 3.14) or (ii) are unable or fail 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 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
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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 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, insurance
premiums to the Insurer, compensation of the Evaluator, fees and expenses of the
Trustee and bond counsel and the annual fee of the Depositors 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;
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(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, insurance
premiums to the Insurer, compensation of the Evaluator, fees and expenses of the
Trustee and bond counsel and the annual fee of the Depositors 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,
(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 Depositors may direct the Trustee to
sell Bonds, provided the Depositors deem 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 Depositors, provided that the
Depositors have 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;
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(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
Depositors have 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;
(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 Depositors, 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
Depositors, with consideration of the Insurance described in Section 2.5, 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
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(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 Depositors, upon which the
Trustee shall rely, the Trustee shall determine, based upon such direction,
whether it is in the best interests of the Certificateholders to obtain
Permanent Insurance with respect to the specified Bond and then proceed to
obtain such Permanent Insurance, if applicable, and 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 Depositors
that they have 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 Depositors or by
reason of the failure of the Depositors 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.
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 Depositors 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 Depositors, given in writing to the Trustee,
the issuer will probably default with respect to such Bonds in the reasonably
foreseeable future, the Depositors shall instruct the Trustee in writing to
accept or reject such offer or take any other action with respect thereto as the
Depositors 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
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acquisition by the Trust Fund of any securities other than the
Bonds is prohibited.
SECTION 3.9. Bond Counsel. The Depositors 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 Depositors thereof. If within thirty days after such notification the
Depositors have 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 Depositors 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.
SECTION 3.12. Liability of Depositors. The Depositors 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 their own gross negligence, bad
faith or willful misconduct. The Depositors 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
them 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 Depositors. 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 Depositors and shall thereupon
take such
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action or refrain from taking any action as the Depositors shall in writing
direct; provided, however, that if the Depositors shall not within five business
days of the giving of such notice to the Depositors 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 Depositors 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
Depositors or the Trustee (such failed Contract Bonds being herein called the
"Special Bonds"), the Depositors shall notify the Trustee (such notice being
herein called the "Failed Contract Notice") of their inability to deliver the
Special Bond to the Trustee after they are notified that the Special Bond will
not be delivered by the seller thereof to the Depositors. 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
Depositors determine not to replace the Special Bond, in which case the
"Purchase Period" will terminate on the date of such determination), the
Depositors 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 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 the State
of New York 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
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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 Depositors 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 Depositors 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 identify the New Bonds, (ii) state that the contract
to purchase, if any, entered into by the Depositors 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.
(e) Each New Bond purchased must be a Bond which will be acceptable
to the Insurer to be insured under a policy or policies of insurance identical
in form and substance to the Insurance and will be so insured upon acquisition
by the Trust.
Upon satisfaction of the foregoing conditions with respect to any
New Bond, the Depositors shall pay the purchase price for the New Bond from
their 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
Depositors from the moneys and/or letters of credit so credited to the Principal
Account. If the Depositors have paid the purchase price, and, in addition, the
Trustee has credited moneys of the Depositors to the Principal Account, the
Trustee shall forthwith return to the Depositors the portion of such moneys that
is not properly distributable to Certificateholders pursuant to Section 3.5.
Whenever a New Bond is acquired by the Depositors 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 Depositors 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 Depositors against any liability to which they would otherwise be
subject by
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reason of willful misconduct, bad faith or gross negligence in
the performance of their 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 Depositors 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
Depositors) 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 Depositors' opinion, in significant risk of
such default ("Defaulted Bonds") and which are covered by the Insurance pursuant
to Section 2.5 hereof, on the basis of the value of the Insurance as well as 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. As to any evaluation of Defaulted Bonds
the value of the Insurance will be equal to the difference between (i) the
market value of Defaulted Bonds assuming the exercise of the right to obtain
Permanent Insurance
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(less the insurance premium attributable to the purchase of Permanent Insurance
and the related custodial fee) and (ii) the market value of such Defaulted Bonds
not covered by Permanent Insurance. In any case the Evaluator will consider the
ability of the Insurer to meet its commitments under the Insurance, including
the commitment to issue Permanent Insurance. 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.
SECTION 4.4. Liability of Evaluator. The Trustee and the Depositors
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, Depositors 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 instrument in writing resigning as
Evaluator and filing the same with the Depositors 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 Depositors and the Trustee shall use their best efforts to
appoint a successor evaluator having
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qualifications and at a rate of compensation satisfactory to the Depositors and
the Trustee. Such appointment shall be made by written instrument executed by
the Depositors and the Trustee, in duplicate, one copy of which shall be
delivered to the resigning Evaluator and one copy to the successor evaluator.
The Depositors 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 Depositors and the Trustee. Such
appointment shall be made by written instrument executed by the Depositors 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 Depositors 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 Depositors 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 see, to retain certain powers, rights and privileges
theretofore obtaining for any period of time following such merger or
consolidation, to the contrary notwithstanding.
(e) Any resignation or removal of the Evaluator and appointment of a
successor evaluator pursuant to this Section 4.5 shall become effective upon
acceptance of appointment by the successor evaluator as provided in subsection
(b) hereof.
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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 Depositors. 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, and (3) interest accrued thereon not subject
to collection and distribution. 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 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
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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 Depositors. 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 seventh calendar day following the day
on which tender for redemption is made, provided that if such day of redemption
is not a Business Day, then such Certificate shall be redeemed on the first
Business Day prior thereto (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
Depositors, suspend the right of redemption or postpone the date of payment of
the Redemption Price for more than seven calendar 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 Depositors 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 Depositors, the
Trustee shall notify the Depositors of such tender. The Depositors shall have
the right to purchase such Certificate by notifying the Trustee of their
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 Depositors to the Certificateholder not
later 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.
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Any Certificate so purchased by the Depositors may at the option of
the Depositors 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 Depositors receive a greater
amount on such redemption than the amount the Depositors paid in purchasing such
Certificate plus accrued interest from the date of purchase of such Certificate
by the Depositors, less the amount, if any, of any distributions from the
Principal Account received by the Depositors with respect to such Certificate.
If the Depositors do not elect to purchase any Certificate tendered
to the Trustee for redemption, or if a Certificate is being tendered by the
Depositors 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 Depositors 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 Depositors 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 Depositors, and for payment of
expenses hereunder, provided that if the Depositors 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. The Depositors shall also designate, on such
list of Bonds designated to be sold, the Bonds upon the sale of which the
Trustee shall obtain Permanent Insurance from the Insurer, provided that if the
Depositors shall for any reason fail to make such designation, the Trustee, in
its sole discretion, shall make such designation if it deems such designation to
be in the best interests of Certificateholders. The Trustee is hereby authorized
to pay and shall pay out of the proceeds of the sale of the Bonds which are
covered by Permanent Insurance, any premium for such Permanent Insurance and any
related custodial fee paid to the custodian of Bonds covered under the Permanent
Insurance and the net proceeds after such deductions shall be credited to the
Principal Account
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and the net proceeds representing accrued interest shall be
credited to the Interest Account.
Neither the Depositors 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.
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 Depositors 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
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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.
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,
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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 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 Depositors 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 Depositors, and the Trustee shall in no event assume or incur any
liability, duty or obligation to any Certificateholder or the Depositors 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
Depositors 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 Certificateholders
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
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time by the Depositors, 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; provided, however, that
an amount equal to any excess over $0.50 per outstanding Unit of the annual
audit expense shall be paid by the Depositors so long as the Depositors maintain
a secondary market;
(f) upon the occurrence of any of the events stated in Section
8.2(a) or Section 8.4 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 Depositors
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
Depositors, 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
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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;
(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 Depositors; and
(k) no payment to a 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 Depositors and their
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 Depositors and their 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
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Certificateholder, and such books and records shall be open to inspection by any
Certificateholder at all reasonable times during the usual business hours.
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 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)
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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 Depositors and mailing a copy of a notice of resignation to all
Certificateholders 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 Depositors
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 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
Depositors shall deem it to be in the best interests of the Certificateholders,
then in any such case the Depositors 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 Depositors to each Certificateholder then of record;
(b) any successor trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositors 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,
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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
Depositors 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 Depositors, 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
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
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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 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 Certificateholder 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
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persons by reason of any action taken by the parties to this Indenture, or any
other cause whatsoever.
ARTICLE VIII
DEPOSITORS
SECTION 8.1. Liabilities; Power of Attorney. The Depositors shall be
jointly and severally liable in accordance herewith for the obligations imposed
upon and taken by the Depositors hereunder; provided, however, that, without in
any way affecting or diminishing such joint and several liability, a Depositor
shall indemnify the other Depositor and hold the other Depositor harmless from
and against any and all costs, expenses and liabilities (including attorneys'
fees) which such other Depositor may suffer or incur as a result of or by reason
of any act or failure to act hereunder on the part of the indemnifying
Depositor. At all times prior to the termination of the Trust Fund and while the
Depositors shall continue to act jointly hereunder, there shall be maintained on
file with the Trustee a power of attorney executed in favor of one Depositor by
the other Depositor constituting and appointing the non-executing Depositor the
true and lawful agent and attorney-in-fact of the executing Depositor to execute
and deliver for and on behalf of the executing Depositor any and all notices,
opinions, certificates, lists, demands, directions, instruments or other
documents provided or permitted to be executed or delivered by the Depositors
hereunder or to take any other action in respect hereof. Such power of attorney
shall continue in effect as to the executing Depositor until written notice of
revocation thereof has been given by such executing Depositor to the Trustee.
Prior to receipt of such notice of revocation the Trustee shall be entitled to
rely conclusively upon such power of attorney as authorizing the non-executing
Depositor to give any notice, opinion, certificate, list, demand, direction,
instrument or other document provided for or permitted hereunder or to take any
other action in respect hereof on behalf of the executing Depositor as to which
such power of attorney is in effect.
SECTION 8.2. Discharge. The following provisions shall
provide for the discharge of a Depositor and the liability of the
Depositors in the event of the discharge of a Depositor:
(a) in the event that any 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 all Depositors from the Trustee or if any Depositor shall become
incapable of acting or shall be adjudged a bankrupt or insolvent, or a receiver
of the property of any Depositor shall be appointed
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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 thereupon the remaining
Depositor shall act hereunder without the necessity of any other or further
action on its part or their part or on the part of the Trustee;
(b) in the event that the power of attorney referred to in Section
8.1 shall be revoked by written notice given by the executing Depositor and it
shall not be replaced within one business day by another power of attorney
conforming with the requirements of said Section 8.1, the Depositors shall be
deemed to have been unable to reach agreement with respect to action to be taken
jointly by them hereunder and thereupon the Depositor which has revoked the
power of attorney executed by it shall be discharged hereunder upon the
expiration of such one-day period and thereupon the other Depositor shall act
hereunder without the necessity of any other or further action on its part or on
the part of the Trustee; and
(c) notwithstanding the discharge of a Depositor in accordance with
this Section 8.2, or the resignation of a Depositor pursuant to Section 8.4,
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 Depositors before the date of such discharge or by the
undischarged Depositor before or after the date of such discharge, as fully and
to the same extent as if no discharge had occurred.
SECTION 8.3. Successors. The covenants, provisions and agreements
herein contained shall in every case be binding upon any successor to any
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 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 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 any
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. Any 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.
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SECTION 8.4. Resignation. If at any time any Depositor shall desire
to resign its position as a Depositor hereunder and if at such time the other
Depositor maintains a net worth (determined in accordance with generally
accepted accounting principles) of at least $1,000,000 and the other Depositor
is agreeable to such resignation, the Depositor desiring to resign may resign by
delivering to the Trustee an instrument executed by such resigning Depositor and
consented to by the remaining 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 and
the remaining Depositor shall thereupon perform all duties and be entitled to
all rights under this Indenture; provided, however, that concurrently with or
subsequent to such resignation the remaining Depositor and the Trustee may
appoint a new Depositor to act with the remaining Depositor and to assume the
duties of the resigning Depositor by an instrument executed by the remaining
Depositor, 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 8.5. Exclusions from Liability. The following
provisions shall provide for certain exclusions from the
liability of the Depositors:
(a) no Depositor shall be under any liability to the other
Depositor, 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 Depositors against any
liability to which they would otherwise be subject by reason of their own
willful misconduct, bad faith or gross negligence. The Depositors may rely in
good faith on any paper, order, notice, list, affidavit, receipt, evaluation,
opinion, endorsement, assignment, draft or any other document of any kind prima
facie properly executed and submitted to them, or to any of them by the other
Depositors, the Trustee, bond counsel, the Evaluator or any other person. The
Depositors 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 Depositors 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 Depositors may in their
discretion undertake any such action which they may deem necessary or desirable
in respect of this Agreement and the rights and duties of the
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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 Depositors against any liability to the Trust
Fund or to the Certificateholders to which the Depositors would otherwise be
subject by reason of their own willful misconduct, bad faith or gross
negligence.
SECTION 8.6. Annual Fee. For services performed under this
Indenture, the Depositors 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 Depositors in rendering their
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 8.6 by the Depositors in any calendar year,
together with similar fees received by them in connection with other guaranteed
series of Empire State Municipal Exempt Trust in such calendar year, shall not
exceed the aggregate cost of supplying such services. The Depositors will
calculate the actual costs of their services by keeping records of the amount of
time spent by each employee of the Depositors working on the portfolio
supervision and determining what portion of such employee's salary to allocate
to such services. The Depositors shall also keep records of the appropriate
allocation of the costs of periodicals, computer time, communications expenses
and other related expenses.
The Depositors' annual fee may be increased from time to time by
amounts not exceeding the proportionate increase 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 Certificateholders
(a) to cure any ambiguity or to correct or supplement any
provision contained herein which may be defective or inconsistent
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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 Sections 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 Certificateholders
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.
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
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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
Certificateholders, including, but not limited to, situations in which a Bond or
Bonds insured by the Insurance reflect a deteriorated market price resulting
from a fear of default and situations in which a Bond or Bonds mature after the
Mandatory Termination Date, 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 Depositors 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;
(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 Certificateholder 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
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Certificateholders, 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 Certificateholder 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 hereto and the Certificateholders and the
interpretation of the provisions hereof.
SECTION 9.4. Registration of Units and Trust Fund. The Depositors
agree and undertake on their own parts to register the Units and the Empire
State Municipal Exempt 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.
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SECTION 9.5. Written Notice. Any notice, demand, direction or
instruction to be given to the Depositors hereunder shall be in writing and
shall be duly given if mailed or delivered to the Depositors c/o Glickenhaus &
Co., 6 East 43rd Street, New York, New York 10017, or at such other address as
shall be specified by the Depositors 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 Standard & Poor's Corporation shall be in writing and
shall be duly given if mailed or delivered to Standard & Poor's Corporation,
Attention: Vice President, Municipal Bond Department, 25 Broadway, New York, New
York 10004, 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 any or all Depositors for any cause whatsoever shall not operate
to terminate this Indenture insofar as the duties and obligations of the Trustee
and Evaluator are concerned.
IN WITNESS WHEREOF, the Depositors have caused this Trust Indenture
and Agreement to be executed for Glickenhaus & Co. by one of its General
Partners and for Lebenthal & Co., Inc. by its President with their corporate
seals to be hereto affixed and attested to by one of their respective
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 Secretaries and Standard & Poor's
Corporation has caused this Trust Indenture and Agreement to be executed by one
of its Vice
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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]
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GLICKENHAUS & CO.
By/s/ J. Kevin Lambert
Attorney-in-Fact
for each of the
General Partners
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, Fran Victory, a Notary Public in and for the said County in the
State aforesaid, do hereby certify that J. Kevin Lambert, 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 18th day of December,
1990.
/s/ Fran Victory
Notary Public
[SEAL]
Commission Expires: 5/31/92
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<PAGE>
Lebenthal & Co., Inc.
By/s/ Peter Sweetser
President
ATTEST:
By/s/ D. Warren Kaufman
Secretary
[CORPORATE SEAL]
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, Susan Mustari, a Notary Public in and for the said County in the
State aforesaid, do hereby certify that Peter Sweetser and D. Warren Kaufman,
personally known to me to be the same persons whose names are subscribed to the
foregoing instrument and personally known to me to be the President and
Secretary, respectively, of LEBENTHAL & CO., INC., appeared before me this day
in person, and acknowledged that they signed, sealed with the corporate seal of
LEBENTHAL & CO., INC., and delivered the said instrument as their free and
voluntary act as such President and Secretary, respectively, and as the free and
voluntary act of said LEBENTHAL & CO., INC., for the uses and purposes therein
set forth.
GIVEN, under my hand and notarial seal this 7th day of December,
1990.
/s/ Susan Mustari
Notary Public
[SEAL]
My commission expires: 7/10/91
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<PAGE>
THE BANK OF NEW YORK, Trustee
By/s/ Jefferey Bieselin
Vice President
ATTEST
By/s/ Patrick Giffin
(CORPORATE SEAL)
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
I, Angela Van Pelt, a Notary Public in and for the said County in
the State aforesaid, do hereby certify that Jefferey Bieselin and Patrick
Giffin, 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 12th day of December,
1990.
/s/ Angela A. Van Pelt
Notary Public
[SEAL]
My commission expires: 6/3/91
433559.1
<PAGE>
STANDARD & POOR'S CORPORATION,
Evaluator
By/s/ Joseph J. Schwarz
Vice President
ATTEST:
By/s/ Joseph J. Storen
General Manager
(CORPORATE SEAL)
433559.1
RESTATED AGREEMENT OF LIMITED PARTNERSHIP, made as of
September 1, 1983 by and among SETH M. GLICKENHAUS, SARAH B.
GLICKENHAUS, NANCY BRODY PIER, JAMES M. GLICKENHAUS, ALFRED
FEINMAN, DEAN P. GESTAL, JAMES W. SYKES, STEVEN B. GREEN,
DAVID F. MAISEL, and CONNIE J. MOAK, being all of the parties to
the Restated Agreement of Limited Partnership of Glickenhaus &
Co. made as of February 1, 1981, as amended (the "Limited
Partnership Agreement").
PREAMBLE
The Limited Partnership Agreement is hereby further amended
effective September 1, 1983 and the entire agreement as thus amended is set
forth below and substituted for all of the provisions of the existing agreement.
ARTICLE I. Formation and Purposes
The parties have heretofore formed and shall hereafter
continue a limited partnership (hereinafter referred to as the "Partnership")
pursuant to Article 8 of the New York Partnership Law. The Partnership shall
engage in business under the firm name of GLICKENHAUS & CO. The business of the
Partnership shall be the following:
(1) as dealers, to buy, hold and sell securities
of all types;
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<PAGE>
(2) as brokers, to buy, hold and sell securities
of all types;
(3) to buy, hold and sell securities of all
types for investment;
(4) all and any business activities related to
the foregoing.
ARTICLE II. General Partners and Limited Partners
SETH M. GLICKENHAUS, ALFRED FEINMAN, DEAN P. GESTAL,
JAMES W. SYKES, STEVEN B. GREEN, DAVID F. MAISEL, and CONNIE J.
MOAK shall be the general partners. SARAH B. GLICKENHAUS, NANCY
BRODY PIER and JAMES M. GLICKENHAUS shall be limited partners.
ARTICLE III. Term
(A) The Partnership term shall end on December 31, 1990,
unless sooner ended as provided in paragraph (B) below.
(B) Except as otherwise provided in paragraph (C) below, the
Partnership term shall end upon the occurrence of any one of the following:
(1) the death of any general partner;
(2) the entry by a court of competent
jurisdiction of a decree adjudicating any general partner to
be incompetent, or the appointment of a committee of his
person or property;
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<PAGE>
(3) the incapacitation of any general partner to
an extent rendering him unable to perform the obligations of
management undertaken by him in this Agreement;
(4) the making by any general partner of an
assignment for the benefit of creditors or the filing by him of a
petition in bankruptcy or a petition for relief under any section of
the Bankruptcy Act or any other bankruptcy or insolvency statute, or an
adjudication by a court of competent jurisdiction that he is bankrupt
or insolvent;
(5) the withdrawal of any general partner from
the Partnership; or
(6) a change in the ownership of the
participating interest of any general partner.
(C) Despite the occurrence of one or more of the events set
forth in paragraph (B) with respect to one or more (but fewer than all) of the
general partners, the Partnership term shall not end and the Partnership shall
not be dissolved if (1) the remaining general partners include either SETH M.
GLICKENHAUS or ALFRED FEINMAN, and (2) such of these two as remain general
partners shall agree to continue the Partnership (or, in the event of a single
remaining general partner, he shall so decide). If the remaining general
partner(s) so decide, then the Partnership shall continue but the interest of
each general partner with respect to whom one of the events in paragraph (B) has
occurred shall terminate as of the date of that event and his capital interest
as of that date, together with his share of net
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<PAGE>
profits and other compensation as of that date and not previously paid, shall be
paid promptly to him or his representatives (subject, in the case of SETH M.
GLICKENHAUS, to the provisions for delayed payment in subparagraph V(B)(3)).
ARTICLE IV. Management
(A) The general partners shall carry on, manage, and have full
control of the Partnership business, and shall use their best efforts to further
the interest of the Partnership. No limited partner shall take any part
whatsoever in the management or control of the Partnership business.
(B) SETH M. GLICKENHAUS shall be reimbursed in an amount not
to exceed per year for expenses incurred by him on behalf of the Partnership
during each year. Such reimbursement shall be made currently in equal monthly
installments.
(C) (1) JAMES W. SYKES contributes the use of his membership
in the New York Stock Exchange (the "Exchange") to the Partnership and agrees
that, insofar as may be necessary for the protection of creditors of the
Partnership, subject to the Constitution and Rules of the Exchange, the proceeds
of the transfer of his membership shall be an asset of the Partnership.
(2) Upon the death of JAMES W. SYKES and provided
that at that time he is a member of the Exchange and is the sole general partner
of the Partnership who is such a member, the remaining partners may either (a)
continue the Partnership without dissolution under the terms of paragraph
III(C), or
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<PAGE>
(b) form a new firm to continue the business of the present Partnership, and, in
either such event, JAMES W. SYKES hereby agrees that the continuing Partnership
or the new firm formed as aforesaid (as the case may be), if permitted by the
Exchange to have the status of a member firm, shall be entitled to have the use
of his membership on such Exchange from the date of his death until the
termination of such status by such continuing Partnership or new firm or until a
member of the Exchange is admitted to such Partnership or new firm as a general
partner, and that, insofar as may be necessary for the protection of creditors
of the Partnership or new firm, and subject to the Constitution and Rules of the
Exchange, the proceeds of the transfer of his membership shall be an asset of
the Partnership or new firm during such period, and any claims of his Estate
thereto shall be fully and completely subordinated in right of payment to the
claims of any and all creditors of such Partnership or of both the Partnership
and the new firm.
(3) Subject to subparagraph (C)(2) above,
JAMES W. SYKES (or his legal representative) shall have the right, upon either
(a) the termination of the Partnership or (b) the occurrence with respect to him
of one of the terminating events in paragraph III(B) (even if the Partnership is
then continued pursuant to paragraph III(C)), to elect, by giving written notice
thereof to the Partnership, to retain his membership in the Exchange upon
payment to the Partnership of the amount necessary to purchase another
membership, together with
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<PAGE>
such transfer and other fees as may be required by the Exchange to be paid in
connection with the purchase of a membership. This right of election shall
continue during a period of thirty (30) days after termination of the
Partnership or occurrence of the terminating event (as the case may be), except
that in the event of the death or incompetency of JAMES W. SYKES, his right of
election shall be deemed to expire ten (10) days after the appointment of his
legal representative or committee. Upon the Partnership receiving notice in
writing within the above-mentioned period that JAMES W. SYKES (or his legal
representative or committee) elects not to retain said membership, or upon the
expiration of said period without any such notice of election having been given
to the Partnership, then, at the option of the Partnership, JAMES W. SYKES (or
his legal representative or committee) shall, forthwith, either
(i) sell his membership and pay the proceeds over
to the Partnership; or
(ii) transfer his membership for a nominal
consideration to a person designated by the Partnership
and satisfactory to the Board of Governors of the
Exchange.
All monies received by the Partnership by virtue of the exercise of either of
the options provided for in clause (i) or (ii) above shall be distributed to the
partners of the Partnership in proportions equal to their respective interests
in the profits and losses of the Partnership.
-6-
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<PAGE>
ARTICLE V. Capital Interests
(A) As of August 31, 1983, the partners have
contributed to the capital of the Partnership, in cash or property, the sums
indicated on Schedule A attached hereto. The term "capital interest" means the
original capital contribution of a partner, less any charges against and any
withdrawals of, plus any credits toward and any additions to, such original
capital contribution.
(B) (1) All securities, cash and other property of any kind or
nature and all interests therein which may from time to time be held by the
Partnership for each general partner respectively, or on his behalf, including
all securities, cash or other property segregated or in a safekeeping account,
shall forthwith upon the receipt thereof by the Partnership become and be
Partnership property and shall be treated for all purposes as capital
contributed by each such general partner; provided, however, that solely for the
purpose of determining the rights of the general partners among themselves, all
profits, losses, income and charges in connection with such securities, cash,
property and interests therein shall be credited or charged to each general
partner's respective individual account and shall not be treated as Partnership
income or expense, and, upon the termination of the Partnership, each such
general partner shall be considered as having a claim against the Partnership
with respect to such securities, cash, property and interests therein, which
claim shall be subordinate in right of payment and subject
-7-
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<PAGE>
to the prior payment or provision for payment in full of claims of all present
and future creditors of the Partnership and any successor partnership in which
he may be a general partner, arising out of any matters occurring before the
termination of the Partnership or such successor partnership.
(2) So long as the Partnership is continued,
pursuant to paragraph III(C) or otherwise, and SETH M. GLICKENHAUS remains a
partner thereof, the interest of SARAH B. GLICKENHAUS shall not be terminated by
her death or any other cause and she shall not withdraw therefrom and she
covenants and agrees for herself and her representatives that the capital
contributed by her to the Partnership shall be retained in the Partnership.
(3) In the event that SETH M. GLICKENHAUS ceases
to be a partner (whether by reason of death, withdrawal or otherwise) and the
Partnership is continued by the remaining general partners under paragraph
III(C), then the interest of both SETH M. GLICKENHAUS and SARAH B. GLICKENHAUS
shall terminate on the date that he ceases to be a partner, but each of them
covenants and agrees for himself (or herself) and his (or her) representatives
that one-half of the capital contributed by him (or her) to the Partnership may
be retained by the Partnership and remain at risk for no longer than nine (9)
months after SETH M. GLICKENHAUS shall cease to be a partner and the remainder
of his (or her) capital may be retained and at risk for no longer than two (2)
years after he shall cease to be a partner. Each of
-8-
474147.1
<PAGE>
them shall continue to receive the share of net profits specified in paragraph
VII(C) for so long as his (or her) full capital is retained and shall continue
to receive a lesser share of net profits (reduced by the same proportion as his
(or her) capital remaining in the Partnership has been reduced) for so long as
any of his (or her) capital is retained.
(4) Except as otherwise provided in subparagraphs
(B)(2) and (B)(3) above and in paragraph IV(C), if any general partner for whom
property is held by the Partnership under subparagraph (B)(1) above ceases to be
a partner (whether by reason of death, withdrawal or otherwise) and the
Partnership is continued by the remaining or surviving partners, with or without
other partners, or a successor firm is formed by the remaining or surviving
partners with or without other partners, then such continuing Partnership or
successor firm shall, subject only to the requirements of the Exchange and the
provisions of Article X of this Agreement, have no right to retain or hold such
property but shall promptly pay out the same to such general partner or his
personal representative.
ARTICLE VI. Provision Against Admission and Transfer
No person other than the parties hereto may be admitted
into the Partnership, no person may be substituted as a partner in place of any
one of the parties hereto, and no partner may sell, assign, transfer, mortgage,
pledge or otherwise encumber or dispose of his interest in the Partnership or
any part thereof.
-9-
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<PAGE>
ARTICLE VII. Salaries and Division of Profit
(A) The following amounts shall be paid as salary, and
shall be payable whether or not the Partnership has net profits:
(1) SETH M. GLICKENHAUS
(2) ALFRED FEINMAN --
(3) DEAN P. GESTAL --
(4) STEVEN B. GREEN --
(5) DAVID F. MAISEL --
(6) CONNIE J. MOAK --
(B) JAMES W. SYKES shall be entitled to receive annually,
whether or not the Partnership has net profits, the greater of (i) or (ii) an
amount equal of the net profits of the Special Arbitrage Account (the
"Account"). Net profits of the Account shall be all gains, profits, dividends
and interest earned in the Account less all expenses for running the Account.
Such expenses shall include, but not be limited to, items such as brokerage,
clearance and settlement charges, interest on debit balances and an allocation
of the overhead expenses of the Partnership appropriate attributable to the
operation of the Account, which allocation shall be determined by the
Partnership's accountant, such determination to be final and binding on the
parties hereto.
(C) The net profits of the Partnership for each year (after
the payments under paragraphs (A) and (B) above) shall be divided among the
partners as follows:
-10-
474147.1
<PAGE>
(1) To the extent of the net profits available,
there first shall be allocated to each of the partners who has a capital
interest an amount equal to the sum of the products, for each month during the
year, of (a) the average of the prime interest rate of The Bank of New York on
the first and last business days of the month times (b) the amount of his or her
capital interest during such month.
(2) There shall then be allocated to each of the
partners a share of the remaining net profits as follows:
SETH M. GLICKENHAUS
SARAH B. GLICKENHAUS
NANCY BRODY PIER
JAMES M. GLICKENHAUS
ALFRED FEINMAN
DEAN P. GESTAL
JAMES W. SYKES
STEVEN B. GREEN
DAVID F. MAISEL
CONNIE J. MOAK
Except as otherwise provided in subparagraph V(B)(3), no partner shall have any
interest in any remaining net profits which may accrue after he or she shall
cease to be a partner, and his or her share thereof shall be allocated among the
remaining partners in proportion to their shares in the remaining net profits of
the Partnership.
-11-
474147.1
<PAGE>
Net profits of the Partnership for any year which are
allocated to a partner but not paid out to him or her during such year or within
one hundred twenty (120) days thereafter shall be added to such partner's
capital interest.
ARTICLE VIII. Losses
To the extent of their capital interests, net losses shall be
borne by the partners in the same proportions as remaining net profits are
divided as set forth in subparagraph VII(C)(2). No losses, nor any part of any
losses, shall be charged against or borne by any limited partner except to the
extent of his or her capital interest. Net losses in excess of the aggregate
capital interests shall be borne by the general partners in proportion to their
respective shares in net profits as set forth in subparagraph VII(C)(2). (For
example, if all seven of the present general partners are general partners at
the time of the loss, then DEAN P. GESTAL's share of such net losses in excess
of aggregate capital interests shall be a fraction the numerator of which is and
the denominator of which is
.)
In the event that the Partnership shall make any charitable
contribution, no part thereof shall be charged to any limited partner unless he
or she shall consent thereto in writing. The entire amount of such contribution
shall be charged to the general partners and any consenting limited partners in
the same ratio as their respective capital interests (as defined
-12-
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<PAGE>
in Article V) at the beginning of the year in which such contribution is made
shall bear to each other. If such contribution is made in the form of securities
or other property which shall have appreciated or depreciated in value, the
limited partners shall be credited or charged with their proportionate shares of
such appreciation or depreciation, notwithstanding the fact that the
non-consenting limited partners are not to be charged with the contribution
itself and notwithstanding the fact that the general partners and consenting
limited partners are to be charged according to the value of the property at the
time of the contribution.
ARTICLE IX. Withdrawals
Subject to the provisions of subparagraphs V(B)(2) and
V(B)(3), any partner may withdraw from the Partnership at any time by giving
written notice of his or her election to do so. Six (6) months after the giving
of such notice (or at such earlier time as the Exchange shall approve), the
Partnership shall pay to such withdrawing partner his or her capital interest as
of the date of such notice, together with the net profits and other compensation
allocable to him or her as of such date and not previously paid.
ARTICLE X. Liquidation
At the end of the Partnership term, the completion of
any incomplete transactions and the taking of such action as
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<PAGE>
shall be necessary for the winding up of the Partnership business and the
payment to each partner of his capital interest (together with the net profits
allocable to him and not previously paid) shall be conducted by the general
partners, or, if the Partnership shall be ended by reason of the occurrence of
any of the events listed in paragraph III(B), it shall be conducted as follows:
(1) If the event shall have occurred with respect
to any partner other than SETH M. GLICKENHAUS, it shall be
conducted by SETH M. GLICKENHAUS.
(2) If the event shall have occurred with respect to
SETH M. GLICKENHAUS, it shall be conducted by a liquidator or
liquidators (if possible, a partner or partners) selected by a majority
in number of all the then partners (or in the event of death or
incompetency of any such partner, the personal representative or
committee of such partner).
ARTICLE XI. New Firm to Continue Business of
the Partnership
(A) If the Partnership shall be ended by reason of the
occurrence of any of the events listed in paragraph III(B) with respect to
ALFRED FEINMAN, the remaining partners not having elected to continue the
Partnership pursuant to paragraph III(C), then SETH M. GLICKENHAUS, together
with such other parties as are then partners who may choose to join with him,
may form a new firm (hereinafter called the "new firm") to continue the business
-14-
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<PAGE>
of the Partnership, and the new firm shall be entitled to the
benefit and use of the Partnership name and goodwill.
(B) Notwithstanding any contrary provision in this Agreement,
in the event of the termination of the Partnership on the expiration of the term
of this Agreement, or any extension or renewal thereof, each partner agrees that
withdrawals of capital on any such termination which would cause the
Partnership's aggregate indebtedness, as determined in accordance with Rule 325
of the Exchange, to exceed the percentages specified in Rules 326(a) and 326(b)
of such Rules during the six (6) months immediately preceding the date of
termination, may be postponed for a period of up to six (6) months from the
stated date of termination, as the general partners may deem necessary to insure
compliance with such Rules; and any such capital so retained by the Partnership
after the date of termination shall continue to be subject to all debts and
obligations of the Partnership.
______________________
SETH M. GLICKENHAUS
______________________
SARAH B. GLICKENHAUS
______________________
NANCY BRODY PIER
______________________
JAMES M. GLICKENHAUS
______________________
ALFRED FEINMAN
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<PAGE>
_______________________
DEAN P. GESTAL
_______________________
JAMES W. SYKES
_______________________
STEVEN B. GREEN
_______________________
DAVID F. MAISEL
_______________________
CONNIE J. MOAK
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474147.1
<PAGE>
AGREEMENT OF AMENDMENT, made as of January 1, 1984 by and
among the parties to the Restated Agreement of Limited Partnership of
Glickenhaus & Co. made as of September 1, 1983 (the "Restated Partnership
Agreement").
RECITALS
The parties hereto wish to amend the Restated Partnership
Agreement to reflect certain changes in the compensation arrangements of the
partners.
IT IS AGREED:
1. Paragraph (A) of Article VII of the Restated
Partnership Agreement is hereby amended to read as follows:
"(A) the following amounts shall be paid as
salary, and shall be payable whether or not the Partnership has
net profits:
1. SETH M. GLICKENHAUS - per year;
2. ALFRED FEINMAN - per year;
3. DEAN P. GESTAL - per year;
4. STEVEN B. GREEN - per year;
5. DAVID F. MAISEL - per year;
6. CONNIE J. MOAK - per year."
2. The first sentence of paragraph (B) of Article VII
is hereby amended to read as follows:
474147.1
<PAGE>
"(B) JAMES W. SYKES shall be entitled to receive
annually, whether or not the Partnership has net profits, the greater of (i) or
(ii) an amount equal to of the net profits of the Special Arbitrage Account (the
"Account")."
3. The partners' percentages of net profits referred
to in subparagraph (2) of paragraph (C) of Article VII shall be
amended to read as follows:
"SETH M. GLICKENHAUS - %
SARAH B. GLICKENHAUS - %
NANCY BRODY PIER - %
JAMES M. GLICKENHAUS - %
ALFRED FEINMAN - %
DEAN P. GESTAL - %
JAMES W. SYKES - %
STEVEN B. GREEN - %
DAVID F. MAISEL - %
CONNIE J. MOAK - %."
IN WITNESS WHEREOF, the undersigned have executed this
Agreement of Amendment on January 24, 1984.
_________________________
Seth M. Glickenhaus
_________________________
Alfred Feinman
_________________________
Dean P. Gestal
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<PAGE>
_________________________
James W. Sykes
_________________________
Steven B. Green
_________________________
David F. Maisel
_________________________
Connie J. Moak
_________________________
Sarah B. Glickenhaus
_________________________
Nancy Brody Pier
_________________________
James M. Glickenhaus
-3-
474147.1
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF LIMITED PARTNERSHIP
OF
GLICKENHAUS & CO.
We, the undersigned, being all of the partners of Glickenhaus
& Co. (the "Partnership"), and desiring to amend the Certificate of Limited
Partnership filed with the County Clerk of New York County (the "Certificate"),
each hereby certifies that the Certificate, as heretofore amended, is hereby
further amended as of January 1, 1984 to reflect certain changes in the share of
net profits of the Partnership to which each of the limited partners will be
entitled to receive, as follow:
Paragraph 9 of the Certificate is hereby amended in its
entirety to read as follows:
"9. The share of the net profits for each year (after the
payment of salary to the general partners) which each limited partner
shall receive by reason of his contribution consists of (i) the sum of
the products, for each month during the year, of (A) the average of the
broker's loan interest rate of The Bank of New York on the first and
last business days of the month times (B) the amount of his or her
capital interest during such month, plus (ii) the following respective
percentages of net profits remaining after allocation to general and
limited partners of the specified percentage of their capital
interests:
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<PAGE>
Sarah B. Glickenhaus %
Nancy Brody Pier %
James M. Glickenhaus %."
IN WITNESS WHEREOF, the undersigned have executed this
Certificate of Amendment on January 24, 1984.
GENERAL PARTNERS
________________________
Seth M. Glickenhaus
________________________
Alfred Feinman
________________________
Dean P. Gestal
________________________
James W. Sykes
________________________
Steven B. Green
________________________
David F. Maisel
________________________
Connie J. Moak
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<PAGE>
LIMITED PARTNERS
________________________
Sarah B. Glickenhaus
________________________
Nancy Brody Pier
________________________
James M. Glickenhaus
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<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 24th day of January, 1984, before me personally
came SETH M. GLICKENHAUS, ALFRED FEINMAN, DEAN P. GESTAL,
JAMES W. SYKES, STEVEN B. GREEN, DAVID F. MAISEL, CONNIE J. MOAK,
SARAH B. GLICKENHAUS, NANCY BRODY PIER and JAMES M. GLICKENHAUS,
all of whom are known to me to be the individuals described in
and who executed the foregoing instrument, and each duly
acknowledged to me that he executed the same.
(Notary Seal)
______________________________
Notary Public
474147.1
<PAGE>
474147.1
<PAGE>
AGREEMENT OF AMENDMENT, made as of February 15, 1984, by and
among the parties to the Restated Agreement of Limited Partnership of
Glickenhaus & Co. made as of September 1, 1983 (the "Limited Partnership
Agreement").
RECITALS
The parties hereto wish to amend the Limited Partnership
Agreement to reflect the admission of Steven J.
Rosenberg as a general partner.
IT IS AGREED:
1. Article II of the Limited Partnership Agreement is
hereby amended to read as follows:
"Article II. General Partners and Limited Partners.
SETH M. GLICKENHAUS, ALFRED FEINMAN, DEAN P. GESTAL,
JAMES W. SYKES, STEVEN B. GREEN, DAVID F. MAISEL,
CONNIE J. MOAK and STEVEN J. ROSENBERG shall be the
general partners. SARAH B. GLICKENHAUS, NANCY BRODY
PIER and JAMES M. GLICKENHAUS shall be the limited
partners."
2. Paragraph (C) of Article VII is hereby amended by
redesignating subparagraph "2" thereof as subparagraph "3" and by adding a new
subparagraph "2" as follows:
"(2) There shall then be allocated to Steven J.
Rosenberg the sum of ."
C/M 10726.0002 474147.1
<PAGE>
3. Except as herein specifically set forth, the
Limited Partnership Agreement shall remain in full force and
effect.
_______________________ _________________________
Seth M. Glickenhaus Alfred Feinman
_______________________ _________________________
Sarah B. Glickenhaus Dean P. Gestal
_______________________ _________________________
Nancy Brody Pier James M. Glickenhaus
_______________________ _________________________
James W. Sykes David F. Maisel
_______________________ _________________________
Steven B. Green Connie J. Moak
_________________________
Steven J. Rosenberg
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<PAGE>
AGREEMENT OF AMENDMENT, made as of January 1, 1986, by and among the
parties to the Restated Agreement of Limited Partnership of Glickenhaus & Co.
made as of September 1, 1983 (the "Limited Partnership Agreement").
Recitals
The parties hereto wish to amend the Limited Part- nership Agreement
to reflect the admission of Thomas J. Metallo and S. Curtiss Roach as general
partners.
IT IS AGREED:
1. Article II of the Limited Partnership Agreement is hereby amended
to read as follows:
"Article II. General Partners and Limited Partners.
SETH M. GLICKENHAUS, ALFRED FEINMAN, DEAN P. GESTAL,
JAMES W. SYKES, STEVEN B. GREEN, DAVID F. MAISEL,
CONNIE J. HOAK, STEVEN J. ROSENBERG, THOMAS J.
METALLO and S. CURTISS ROACH shall be the general
partners. SARAH B. GLICKENHAUS, NANCY BRODY
PIER and JAMES M. GLICKENHAUS shall be the limited
partners".
2. Paragraph (A) of Article VII of the Restated Partnership Agreement
is hereby amended to read as follows:
(A) the following amounts shall be paid as salary and shall be payable
whether or not the partnership has net profits:
1. SETH M. GLICKENHAUS per year;
2. ALFRED FEINMAN per year;
3. DEAN P. GESTAL per year;
4. STEVEN B. GREEN per year;
5. DAVID F. MAISEL per year;
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<PAGE>
6. CONNIE J. HOAK per year;
7. THOMAS J. METALLO per year:
8. S. CURTISS ROACH per year;
3. The partners' percentages of net profits referred to in
subparagraph (3) of paragraph (C) of Article VII shall be amended to read as
follows:
SETH M. GLICKENHAUS %
SARAH B. GLICKENHAUS %
NANCY BRODY PIER %
JAMES GLICKENHAUS %
ALFRED FEINMAN %
DEAN P. GESTAL %
JAMES W. SYKES %
STEVEN B. GREEN %
DAVID F. MAISEL %
CONNIE J. MOAK %
THOMAS J. METALLO %
S. CURTISS ROACH %
As herein modified, the Restated Partnership Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the undersigned have executed this Agreement of
Amendment on February 12th, 1986.
_____________________________________
SETH M. GLICKENHAUS
_____________________________________
ALFRED FEINMAN
_____________________________________
DEAN P. GESTAL
_____________________________________
JAMES W. SYKES
_____________________________________
STEVEN B. GREEN
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475257.1
<PAGE>
_____________________________________
DAVID F. MAISEL
_____________________________________
CONNIE J. MOAK
_____________________________________
THOMAS J. METALLO
_____________________________________
S. CURTISS ROACH
_____________________________________
SARAH B. GLICKENHAUS
_____________________________________
NANCY BRODY PIER
_____________________________________
JAMES M. GLICKENHAUS
_____________________________________
STEVEN J. ROSENBERG
-3-
475257.1
<PAGE>
THIRD AGREEMENT OF AMENDMENT, made as of January 1, 1992, by and
among the parties to the Fourth Amended and Restated Agreement of Limited
Partnership, made as of January 1, 1991 (as amended, the "Limited Partnership
Agreement") of Glickenhaus & Co., a New York limited partnership (the
"Partnership").
RECITALS
The parties hereto wish to amend the Limited Partnership Agreement to
reflect the admission of Arthur M. Winston to the Partnership as a General
Partner, and the admission of Richard R. Freedman, George R. Hinman, Jeffrey L.
Lederer and James R. Vaccacio to the Partnership as Special Limited Partners.
IT IS AGREED:
1. The Preamble to the Limited Partnership Agreement is hereby
amended in its entirety to read as follows:
THIS FOURTH AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
(the "Agreement"), dated as of
January 1, 1991, of Glickenhaus &
Co., a New York limited partnership
(the "Partnership"), is by and among
those persons listed on Schedule A
annexed hereto (the "General Partners"),
those persons listed on Schedule B
annexed hereto (the "Regular Limited
Partners") and those persons listed
on Schedule C annexed hereto (the
"Special Limited Partners").
2. SCHEDULE A of the Limited Partnership Agreement is hereby amended
in its entirety to read as follows:
475258.1
<PAGE>
Schedule A
Name & Address
Seth M. Glickenhaus
100 Dorchester Road
Scarsdale, NY 10583
Alfred Feinman
82 Lincoln Avenue
Purchase, NY 10577
Steven B. Green
5 Deborah Court
Woodcliff Lake, NJ
Connie Moak Mazur
150 East 69th Street
New York, NY 10021
Robert Santoro
8 Meyer Road Edison, NJ 08817
Arthur M. Winston 74 Lakeridge
Drive Matawan, NJ 07747
3. A new SCHEDULE C is hereby added to the Limited Partnership
Agreement to read as follows:
SCHEDULE C
Name & Address
Richard R. Freedman
47 Lafayette Place
Apt. 6B
Greenwich, CT 06030
George R. Hinman
10 Indian Chase Road
Greenwich, Ct 06830
Jeffrey L. Lederer
823 Park Avenue
New York, NY 10021
James R. Vaccacio
2 Alice Avenue
Merrick, NY 11566
4. The first WHEREAS Clause appearing in the Recitals of the Limited
Partnership Agreement is hereby deleted in its entirety.
5. The definition of "Limited Partners" set forth in Article I of the
Limited Partnership Agreement is hereby amended in its entirety to read as
follows:
"Limited Partners" means the Regular
Limited Partners and the Special
Limited Partners, unless any or all
of the Special Limited Partners
-2-
475258.1
<PAGE>
shall expressly be excluded or the
context shall require otherwise. A
"Limited Partner" means any one of
them.
6. Article I of the Limited Partnership Agreement is hereby further
amended by added a new definition entitled "Special Limited Partners" to read as
follows:
"Special Limited Partners" means
those persons described on Schedule
C annexed thereto, and a "Special
Limited Partner" means any one of them.
7. Section 2.1 of Article II of the Limited Partnership Agreement is
hereby amended in its entirety to read as follows:
The Partners formed the Partnership by the filing of
a Limited Partnership Certificate (the "Certificate")
with the County Clerk of New York County, New York on
April 26, 1961. The Partners adopted the Revised
Limited Partnership Act (the "Partnership Law") by
filing a Certificate of Adoption of the Partnership
Law with the Department of State on November 1, 1991.
The Partnership shall be governed by the Partnership
Law and the rights and liabilities of the Partners
shall be as provided by the Partnership Law. The
General Partners shall execute, file and record an
amendment to the Certificate if and to the extent
necessary or appropriate to reflect changes in terms
therein occasioned by the execution of this
Amendment.
8. Section 3.5 of Article III of the Limited Partnership Agreement is
hereby amended in its entirety to read as follows:
No Limited Partner shall be liable
for or subject to any obligations,
losses, debts or liabilities of the
Partnership at any time in excess of
the sum of the amount of such
Limited Partner's Capital Account at
such time. Notwithstanding the
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475258.1
<PAGE>
foregoing, the Capital Accounts of
the Special Limited Partners (as
distinguished from the Regular
Limited Partners) shall not be
reduced by Partnership debts, losses
or liabilities until the Capital
Accounts of all other Partners have
been reduced to zero.
9. Section 4.3 of Article IV of the Limited Partnership Agreement is
hereby amended in its entirety to read as follows:
Except as provided in Section
4.1(c), the Limited Partners shall
take no part in the management of
the Partnership business and shall
have no power to act for or to bind
the Partnership. The Partnership
may engage any Limited Partner,
including any Special Limited
Partner, as an employee of the
Partnership, in which event his
duties and liabilities with respect
to the business and interests of the
Partnership shall be governed by his
employment agreement with the
Partnership, if any, or otherwise in
accordance with the legal principles
governing employment.
10. Section 5.1 of Article V of the Limited Partnership Agreement is
hereby amended in its entirety to read as follows:
Each General Partner agrees to
devote his full time and attention
to the business of the Partnership
and the Designated Affiliates and
shall not engage in any other
business during the term of this
Agreement, or any renewal thereof,
except for passive investments in
business activities which are not
competitive with any business
activity of the Partnership or the
Designated Affiliates. during the
term of this Agreement, no General
Partner or Special Limited Partner
shall, for his own account, without
the consent of General Partners
holding a majority in interest of
the General Partner Percentage
Interests, enter, individually, into
-4-
475258.1
<PAGE>
any dealings or transactions with respect to any
aspect of the Partnership's business or the business
of the Designated Affiliates, or otherwise directly
or indirectly own any interest in any company,
business of enterprise, which engages in business
activities competitive with any business activity of
the Partnership or the Designated Affiliates, except
that a Partner may have a direct or indirect
ownership interest of up to .5% of any class of
publicly traded equity or debt securities in any
business organization. The execution of this
Agreement shall be deemed the consent of General
Partners holding a majority interest in General
Partner Percentage Interests to the conduct of any
such activities by Seth M. Glickenhaus. Each Limited
Partner, other than the Special Limited Partners, may
engage or invest in any other venture of any nature
or description, or possess any interest therein,
independently or with others.
11. Section 6.1 of Article VI of the Limited Partnership Agreement is
hereby amended by adding the following entry to the table listed therein: "(6)
Arthur M. Winston $150,000".
12. Paragraph 7.3(a)(2)(iii) of Article VII of the Limited Partnership
Agreement is hereby amended in its entirety to read as follows:
(iii) Investment Management Profits
remaining shall be allocated among
the Partners listed below in the
following percentages:
Seth M. Glickenhaus 53.92%
Sarah B. Glickenhaus 16.87%
Nancy Brody Pier 9.73%
James M. Glickenhaus 9.73%
Steven B. Green 3.05%
Connie Moak Mazur 3.05%
Arthur M. Winston 3.05%
Robert F. Santoro .60%
------
100.00%
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475258.1
<PAGE>
13. In Paragraph 7.3(b)(1), the definition of "Real Estate Expenses"
is hereby revised to delete clause (A) and to redesignate clauses (B) and (C) to
be clauses (A) and (B).
14. Paragraph 7.3(c)(1)(ii) of Article VII of the Limited Partnership
Agreement is hereby amended in its entirety to read as follows:
(ii) Other Partnership Profits
remaining shall be allocated among
the Partners set forth below in the
following percentages (collectively, the "Percentage
Interests", individually, a "Percentage Interest",
with respect to any General Partner, a "General
Partner Percentage Interest" and, with respect to all
General Partners, collectively, the "General Partner
Percentage Interests"):
Seth M. Glickenhaus 53.64%
Sarah B. Glickenhaus 21.11%
Nancy Brody Pier 8.08%
James M. Glickenhaus 8.08%
Steven B. Green 2.53%
Connie Moak Mazur 2.53%
Arthur M. Winston 2.53%
Alfred Feinman 1.00%
Robert F. Santoro .50%
-------
100.00%
15. Paragraph 7.3(c)(2) of Article VII of the Limited Partnership
Agreement is hereby amended in its entirety to read as follows:
(2) Allocation of other Partnership Losses.
Partnership losses other than Real Estate
Losses (the "Other Partnership Losses") for
each Fiscal Year shall be allocated among the
Partners in accordance with their respective
Percentage Interests.
16. Paragraphs 11.2(a)(iii) and (iv) of Article XI of
the Limited Partnership Agreement are hereby deleted and replaced
with the following:
(iii) To each Special Limited Partner
in accordance with the positive balance
in his Capital Account, if any, or if amounts
-6-
475258.1
<PAGE>
available therefor are insufficient to repay such
amounts, proportionately to each such Partner
according to the ratio that the positive balance in
the Capital Account, if any, of such Partner bears to
the aggregate positive balances in the Capital
Accounts of all such Partners;
(iv) To each Partner other than the Special Limited
Partners in accordance with the positive balance in
his Capital Account, if any, or if amounts available
therefor are insufficient to repay such amounts,
proportionately to each such Partner according to the
ratio that the positive balance in the Capital
Account, if any, of such Partner bears to the
aggregate positive balances in the Capital Accounts
of all such Partners; and
(v) To the Partners in accordance with their
respective Percentage Interests.
-7-
475258.1
<PAGE>
17. As herein modified, the Limited Partnership Agreement shall remain
in full force and effect.
IN WITNESS WHEREOF, the parties hereto have entered into this
Amendment as of January 1, 1992.
GENERAL PARTNERS:
________________________________________
Seth M. Glickenhaus
________________________________________
Alfred Feinman
________________________________________
Steven B. Green
________________________________________
Connie Meak Mazur
________________________________________
Robert F. Santoro
________________________________________
Arthur M. Winston
LIMITED PARTNERS:
________________________________________
Sarah B. Glickenhaus
________________________________________
Nancy Brody Pier
________________________________________
James M. Glickenhaus
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475258.1
<PAGE>
SPECIAL LIMITED PARTNERS:
________________________________________
Richard R. Freedman
________________________________________
George R. Hinman
________________________________________
Jeffrey L. Lederer
________________________________________
James R. Vaccacio
-9-
475258.1
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LEBENTHAL & CO., INC.
---------------------------
Under Section 805 of the
Business Corporation Law
---------------------------
Pursuant to the provisions of Section 805 of the Business
Corporation Law, the undersigned, the President and Secretary of the
Corporation, hereby certify:
FIRST: The name of the corporation is Lebenthal & Co.,
Inc.
SECOND: That the Certificate of Incorporation of the
Corporation was filed by the Department of State, New York, on
the 17th day of March, 1960. Said Certificate of Incorporation
was duly amended on the 7th day of April, 1960.
THIRD: The Certificate of Incorporation is hereby
amended by striking out the last sentence of Paragraph Sixth
which states as follows:
"Action by the Board of Directors shall
require a 75% vote of the total membership of
said Board."
FOURTH: That the Amendment of the Certificate of
Incorporation was authorized by the unanimous vote of the holders
474183.1
<PAGE>
of all the outstanding shares entitled to vote on an amendment to
the Certificate of Incorporation.
IN WITNESS WHEREOF, we hereunto sign our names and affirm that
the statements made herein are true under the penalties of perjury, this 23rd
day of October, 1981.
LEBENTHAL & CO., INC.
__________________________
H. GERARD BISSINGER
President
___________________________
JOHN T. SULLIVAN
Secretary
-2-
474183.1
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
H. GERARD BISSINGER, being duly sworn, deposes and says that
he is the President of Lebenthal & Co., Inc., the Corporation mentioned and
described in the foregoing instrument; that he has read and signed the same and
that the statements contained therein are true.
_________________________
H. GERARD BISSINGER
President
Sworn to before me this
23rd day of October, 1981
- ---------------------------
Notary Public
-3-
474183.1
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
LEBENTHAL & CO., INC.
---------------------------
Under Section 805 of the
Business Corporation Law
---------------------------
Pursuant to the provisions of Section 805 of the Business
Corporation Law, the undersigned, the President and Secretary of the
Corporation, hereby certify:
FIRST: The name of the corporation is Lebenthal & Co.,
Inc.
SECOND: That the Certificate of Incorporation of the
Corporation was filed by the Department of State, New York, on
the 17th day of March, 1960. Said Certificate of Incorporation
was duly amended on the 7th day of April, 1960.
THIRD: The Certificate of Incorporation is hereby
amended by striking out the last sentence of Paragraph Sixth
which states as follows:
"Action by the Board of Directors shall
require a 75% vote of the total membership of
said Board."
FOURTH: That the Amendment of the Certificate of
Incorporation was authorized by the unanimous vote of the holders
474183.1
<PAGE>
of all the outstanding shares entitled to vote on an amendment to
the Certificate of Incorporation.
IN WITNESS WHEREOF, we hereunto sign our names and affirm that
the statements made herein are true under the penalties of perjury, this 23rd
day of October, 1981.
LEBENTHAL & CO., INC.
__________________________
H. GERARD BISSINGER
President
___________________________
JOHN T. SULLIVAN
Secretary
-2-
474183.1
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
H. GERARD BISSINGER, being duly sworn, deposes and says that
he is the President of Lebenthal & Co., Inc., the Corporation mentioned and
described in the foregoing instrument; that he has read and signed the same and
that the statements contained therein are true.
_________________________
H. GERARD BISSINGER
President
Sworn to before me this
23rd day of October, 1981
- ---------------------------
Notary Public
-3-
474183.1
<PAGE>
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
LEBENTHAL & CO., INC.
PURSUANT TO ss.36 OF THE STOCK CORPORATION LAW
----------------------------------------------
We, the undersigned, being all the subscribers to the Certificate of
Incorporation of Lebenthal & Co., Inc. and all the subscribers to stock in said
corporation, certify:
1. The name of this corporation is LEBENTHAL & CO., INC.
2. The Certificate of Incorporation was filed in the
office of the Secretary of State at Albany, New York on the 17th
day of March, 1960.
3. The Certificate of this corporation is hereby amended to effect
changes authorized by ss.35 of the Stock Corporation Law by (a) adding a
provision for cumulative voting at stockholders' meetings, and (b) increasing
the vote required for approval of action at meetings of the Board of Directors.
4. To accomplish the foregoing, the following change is
made to the Certificate of Incorporation of this corporation, to
wit:
Paragraph "SIXTH" of said Certificate of
Incorporation, relating to voting at stockholders' and directors' meetings, is
hereby amended to read as follows:
"SIXTH: The number of directors of the corporation shall be
not less than three (3) nor more than fifteen (15) and the
number of directors to be chosen within such limits shall be
determined in the manner prescribed by the by-laws of the
corporation. No director need be a stockholder. At all
elections of directors of this corporation, each stockholder
shall be entitled to as many votes as shall equal the number
of votes which (except for those provisions as to cumulative
voting) he would be entitled to cast for the
474186.1
<PAGE>
election of directors with respect to his shares of stock
multiplied by the number of directors to be elected, and he
may cast all of such votes for a single director or may
distribute them among the number to be voted for, or any two
or more of them, as he may see fit. Action by the Board of
Directors shall require a 75% vote of the total membership of
said Board."
IN WITNESS WHEREOF, we have made and subscribed this
Certificate this day of April, 1960.
________________________
________________________
________________________
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
On this day of April, 1960, before me personally came
WILLIAM J. BEAHAN, SAYRA F. LEBENTHAL and I. ARNOLD ROSS, to me
known to be the persons described in and who executed the
foregoing Certificate, and they thereupon severally duly
acknowledged to me that they executed the same.
______________________
-2-
474186.1
<PAGE>
STATE OF NEW YORK )
) SS.
COUNTY OF NEW YORK )
I. ARNOLD ROSS, being duly sworn, deposes and says that he is one of
the subscribers of the Certificate of Incorporation of LEBENTHAL & CO., INC.,
which Certificate was filed in the office of the Secretary of State of the State
of New York, on the 17th day of March, 1960; that no stock of said corporation
has been issued, and that the persons who executed the foregoing Certificate of
Amendment of the Certificate of Incorporation of LEBENTHAL & CO., INC. to which
this affidavit is annexed constitute all of the subscribers of the Certificate
of Incorporation and all of the subscribers to stock in said Corporation.
______________________
Subscribed and sworn to
before me this day of April,
1960.
- ---------------------------------
Notary Public
-3-
474186.1
<PAGE>
Exhibit 1.5
CERTIFICATE OF INCORPORATION
of
LEBENTHAL & CO., INC.
Pursuant to Article Two of the Stock Corporation Law
--------------------
WE, THE UNDERSIGNED, for the purpose of forming a corporation
pursuant to Article Two of the Stock Corporation Law of the State of New York,
do hereby certify:
FIRST: The name of the corporation is
Lebenthal & Co., Inc.
SECOND: The purposes for which the corporation is to
be formed are:
(a) To purchase, subscribe for, and otherwise acquire or
obtain an interest in (by original subscription, underwriting,
participation in syndicates or otherwise), own, hold, borrow, pledge,
hypothecate, mortgage, assign, lend, deposit, create trusts with
respect to, sell, exchange, or otherwise dispose of and generally deal
in and with choses in action and securities of every kind and
description (except bills of exchange), including, but without limiting
the generality of the foregoing, stocks, shares, voting trust
certificates, bonds, mortgages, debentures, notes, part paid receipts
and allotment certificates, land trust certificates, warrants, rights,
scrip, commercial paper, evidences of indebtedness, certificates of
interest, and securities of any nature, however evidenced, of
governments, states, territories, districts, municipalities and other
political or governmental divisions and subdivisions, and of
corporations, associations, partnerships, firms, trustees, syndicates,
combinations, organizations and entities whatsoever, located in or
organized under the laws of any part of the world, and of individuals;
to acquire or become interested in any such securities
474159.1
<PAGE>
irrespective of whether such securities are fully paid or subject to
further payments or assessments; and to exercise any and all rights,
powers and privileges of individual ownership or interest in respect of
any such choses in action and securities, including the right to vote
and otherwise act with respect thereto.
(b) To purchase and otherwise acquire, hold, borrow, use,
assign, pledge, mortgage, sell, exchange or otherwise dispose of,
import, export and generally deal in goods, wares and merchandise of
every kind and description, and grants, options, concessions,
franchises and contracts, and all other kinds of personal property, and
any and all interests and rights therein and thereto, without limit as
to kind or amount; and to take, buy, purchase, exchange, take on lease
and otherwise acquire, sell, assign, transfer, convey, let, sublet and
otherwise dispose of, mortgage or otherwise encumber, hold, manage,
control, maintain and develop and generally deal in real estate and
property, and any and all interests and rights therein and thereto.
(c) To institute, enter into, assist, promote, conduct and
participate in every kind of commercial, mercantile, mining or
industrial business, undertaking, venture, enterprise, transaction or
operation, in any part of the world; to make, enter into, perform and
carry out contracts of any kind necessary to its business; and, to the
extent permitted by law, to participate in any way in the business and
affairs of and to aid and to cause to be formed, merged, reorganized,
consolidated or liquidated corporations, associations, partnerships,
firms, trusts, syndicates, combinations, organizations and entities of
every kind whatsoever.
(d) To apply for, obtain, register, purchase, lease, or
otherwise acquire, hold, own, use, operate, introduce, develop,
control, sell, assign or otherwise dispose of, take and grant licenses
or other rights with respect to, and in any and all ways to exploit and
turn to account inventions, improvements, processes, copyrights,
patents, trade marks, formulae, trade names and distinctive marks and
similar rights of any and all kinds, and whether granted, registered,
or established by or under the laws of the United States or of any
state thereof, or of any other country or place.
(e) For any purpose and upon any terms, to borrow
or raise money without limit, and to issue, sell and
dispose of the corporation's bonds, debentures, notes
-2-
474159.1
<PAGE>
and other securities and obligations, secured or unsecured and however
evidenced, and as security therefor to mortgage, pledge or grant any
charge, or impose any lien upon all or any part of the real or personal
property, rights, interests, or franchises of the corporation, whether
owned by it at the time or thereafter acquired.
(f) To pay for any property acquired by the corporation in
cash or other property, rights or interests held by the corporation, or
by issuing and delivering in exchange therefor shares of its own
capital stock, bonds, debentures, notes or other securities or
obligations, or any of them however evidenced; to purchase or otherwise
acquire, hold, sell, pledge, transfer or otherwise dispose of, and to
reissue any shares of its own capital stock (so far as may be permitted
by law) and its own bonds, debentures, notes or other securities or
obligations.
(g) To conduct its business, so far as permitted by law, in
the State of New York and other states of the United States and in its
territories and the District of Columbia and all dependencies of the
United States and in foreign countries and to maintain offices and
agencies within or anywhere without the State of New York.
(h) To do any or all things herein set forth to the same
extent and as fully as natural persons might or could do, and as
principal, agent, broker, factor, contractor, or otherwise, and either
alone or in conjunction with others, and in any part of the world, and
in general to do any and all things and to exercise any and all such
powers as may be incidental to the conduct of the business of the
corporation, and in pursuance thereof to exercise all the powers
conferred upon the corporation by the Stock Corporation Law and the
General Corporation Law of the State of New York and by any other law
that may be now or hereafter applicable to the corporation.
The foregoing clauses of this Article Second shall be
construed as purposes, objects and powers, and the matters expressed in each
clause shall not be limited in any way, except as otherwise expressly provided,
by reference to or inference from the terms of any other clause (or any other
matter within
-3-
474159.1
<PAGE>
the same clause), but shall be regarded as independent purposes, objects and
powers. The enumeration of specified purposes, objects and powers shall not be
considered to exclude, limit or restrict in any manner any power, right or
privilege given to the corporation by law, or to limit or restrict the meaning
of the general terms or the general powers of the corporation, nor shall the
expression of one thing be deemed to exclude another, although it be of like
nature, not expressed.
Nothing herein contained shall be construed as authorizing the
corporation to fulfill or exercise at any time at any place any rights, powers,
or privileges not permitted to it by law.
THIRD: (1) The total number of shares that may be
issued by the corporation is 250 shares.
(2) The number of shares which are to have a par
value is none.
(3) The number of shares which are to be without
par value is 250 shares, all of one class.
(4) The capital of the corporation shall be at
least equal to the sum of the aggregate par value of all issued shares having
par value, plus the aggregate amount of consideration received by the
corporation for the issuance of shares without par value, plus such amounts as,
from time to time, by resolution of the Board of Directors, may be transferred
thereto.
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474159.1
<PAGE>
(5) The Board of Directors of the corporation
shall have authority to authorize the issuance from time to time, without any
vote or other action by the stockholders, of all or any shares of the stock of
the corporation of any class now or hereafter authorized, part-paid receipts or
allotment certificates in respect of any such shares and any securities
convertible into or exchangeable for any such shares (whether such shares,
receipts, certificates or securities be unissued, or issued and thereafter
acquired by the corporation), in each case to such corporations, associations,
firms, partnerships, individuals or others, for such consideration and on such
terms as the board of directors, from time to time in its discretion, lawfully
may fix and determine, without offering the same or any part thereof to the
holders of any stock of the corporation of any class now or hereafter
authorized. In the discretion of the board of directors any such shares,
receipts, certificates or securities may be offered from time to time to the
holders of any class or classes of stock to the exclusion of the holders of any
or all other classes of stock at the time outstanding.
(6) No holder of any stock of the corporation
shall have any right as such holder (other than such right, if any, as the board
of directors in its discretion may determine) to purchase, subscribe for or
otherwise acquire any shares of stock of the corporation of any class now or
hereafter authorized, or any part-paid receipts or allotment certificates in
respect of any such shares, or any securities convertible into
-5-
474159.1
<PAGE>
or exchangeable for any such shares, or any warrants, options or other
instruments evidencing rights or options to subscribe for, purchase or otherwise
acquire any such shares, whether such shares, receipts, certificates,
securities, warrants, options or instruments be unissued or issued and
thereafter acquired by the corporation.
(7) The corporation, upon vote of the board of
directors, from time to time may grant rights or options to subscribe for,
purchase or otherwise acquire any shares of stock of the corporation of any
class now or hereafter authorized or any bonds or other obligations or
securities of the corporation, whether such shares of stock, bonds, or other
obligations or securities be unissued, or issued and thereafter acquired by the
corporation. Such rights or options (a) may relate to such amounts of any class
or classes of such securities, may be exercisable within such periods, or
without limitation as to time, and at such price or prices and otherwise upon
such terms and conditions, and may confer such rights and privileges, (b) may be
granted for such considerations and on such terms and conditions, and to such
persons, firms, corporations or associations or others, or to the bearers or
registered holders of warrants or other instruments evidencing such rights or
options, and (c) may be granted separately or in connection with the issuance of
any shares of stock, or of any bonds or other obligations or securities of the
corporation of any class now or hereafter authorized, or otherwise, all as the
board of directors
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474159.1
<PAGE>
may determine. No vote or consent of the stockholders of any class or classes
shall be necessary to authorize any such action by the board of directors.
Nothing contained in this Article Third shall be deemed to authorize the
issuance of shares of capital stock of the corporation of any class having a par
value for less than the par value thereof.
FOURTH: The office of the corporation is to be located
in the Borough of Manhattan, City, County and State of New York.
The address to which the Secretary of State shall mail
a copy of process in any action or proceeding against the
corporation which may be served upon him is c/o I. Arnold Ross,
Esq., 150 Broadway, New York 38, N.Y.
FIFTH: The duration of the corporation shall be
perpetual.
SIXTH: The number of directors of the corporation shall be not
less than three (3) nor more than fifteen (15) and the number of directors to be
chosen within such limits shall be determined in the manner prescribed by the
by-laws of the corporation. No director need be a stockholder. Action by the
Board of Directors shall require a 60% vote of the total membership of said
Board.
SEVENTH: The names and post-office addresses of the
directors until the first annual meeting of the stockholders are:
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<PAGE>
<TABLE>
<CAPTION>
Name Post Office Addresses
<S> <C>
Sayra F. Lebenthal 815 Park Avenue, New York 21, N.Y.
Eleanor L. Bissinger II 275 Central Park West, New York 24, N.Y.
William J. Beahan 367 Cornell St., Wyckoff, N.J.
I. Arnold Ross 815 Park Avenue, New York 21, N.Y.
James A. Lebenthal 815 Park Avenue, New York 21, N.Y.
</TABLE>
EIGHTH: The names and post-office address of each subscriber
of this certificate of incorporation and a statement of the number of shares of
stock which each agrees to take are:
<TABLE>
<CAPTION>
Number
of
Name Post Office Address Shares
<S> <C> <C>
Sayra F. Lebenthal 815 Park Avenue, New York 21, N.Y. 1
I. Arnold Ross 150 Broadway, New York 38, N.Y. 1
William J. Beahan 367 Cornell St., Wyckoff, N.J. 1
</TABLE>
NINTH: All of the subscribers of this certificate are of full
age, at least two-thirds of them are citizens of the United States, at least one
of them is a resident of the State of New York and at least one of the persons
named as a director is a citizen of the United States and a resident of the
State of New York.
TENTH: The Secretary of State is designated as the
agent of the corporation upon whom process in any action or
proceeding against the corporation may be served.
ELEVENTH: In case the corporation enters into
contracts or transacts business with one or more of the directors
or with any firm of which one or more of its directors are
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<PAGE>
members or employees, or with any other corporation or association of which one
or more of its directors are stockholders, directors, officers or employees,
such contracts or transaction shall not be invalidated or in any wise affected
by the fact that such director or directors have or may have interests therein
which are or might be adverse to the interests of the corporation, even though
the vote of the director or directors having such adverse interest shall have
been necessary to obligate the corporation upon such contract or transaction;
provided, however, that in any such case the fact of such interest shall be
disclosed or known to the other directors or stockholders acting upon or in
reference to such contract or transaction. No director or directors having such
disclosed or known adverse interest shall be liable to the corporation or to any
stockholder or creditor thereof or to any other person for any loss incurred by
it under or by reason of any such contract or transaction, nor shall any such
director or directors be accountable for any gains or profits realized thereon.
The provisions of this Article Eleventh shall not be construed to invalidate or
in any way affect any contract or other transaction which otherwise would be
valid under the common or statutory law applicable thereto.
TWELFTH: The corporation reserves the right to amend,
alter, change or repeal any provision contained in this
certificate of incorporation, in the manner now or hereafter
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<PAGE>
prescribed by statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
IN WITNESS WHEREOF, we have made, signed and acknowledged this
certificate this day of March, 1960.
_____________________
_____________________
_____________________
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<PAGE>
STATE OF NEW YORK )
CITY OF NEW YORK ) SS.
COUNTY OF NEW YORK )
On this day of March, 1960, before me personally
came SAYRA F. LEBENTHAL, I. ARNOLD ROSS, and WILLIAM J. BEAHAN,
to me known to be the persons described in and who executed the
foregoing certificate of incorporation, and they thereupon
severally duly acknowledged to me that they had executed the
same.
_____________________
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<PAGE>
C E R T I F I C A T E
o f
I N C O R P O R A T I O N
o f
L E B E N T H A L & C O., I N C.
Pursuant to Article Two
of the Stock Corporation Law
DATED: MARCH , 1960
I. Arnold Ross,
150 Broadway
New York 38, N.Y.
474159.1
<PAGE>
BY-LAWS
Of
Lebenthal & Co., Inc.
ARTICLE I. OFFICES
SECTION 1.1. Principal Office. The principal office of the Corporation
shall be located in the County of New York, in the State of New York, at such
address as the Board of Directors shall determine.
SECTION 1.2. Other Offices. The Corporation may also have offices and
places of business at such other locations, within and without the State of New
York, as the Board of Directors may determine or the business of the Corporation
may require.
ARTICLE II. MEETINGS OF SHAREHOLDERS
SECTION 2.1. Place of Meetings. Meetings of the shareholders of the
Corporation shall be held at the principal office of the Corporation or at such
other place, within or without the State of New York, as the Board of Directors
may authorize, provided that any special meeting of the shareholders called at
the request of the shareholders, as provided in SECTION 2.3 of these By-laws,
shall be held in the county in which the principal office of the Corporation is
located.
SECTION 2.2. Annual Meeting. The annual meeting of the shareholders of
the Corporation for the election of directors and the transaction of such other
business as properly may come before such meeting shall be held on the 3rd
Thursday of June in each year, at 3 o'clock in the afternoon or as soon
thereafter as practicable, at such place, as may be fixed by resolution of the
Board of Directors.
SECTION 2.3. Special Meetings. Special meetings of the shareholders of
the Corporation may be called at any time by the Board of Directors or by the
Chairman of the Board or by the President. A special meeting shall be called by
the Chairman of the Board or the President or by the Secretary, immediately upon
receipt of a written request therefor by shareholders holding in the aggregate
not less than a majority of the outstanding shares of the Corporation at the
time entitled to vote at any meeting of the shareholders, which request shall
state the purpose or purposes of such meeting. If such officers shall fail to
call such meeting within twenty days after receipt of such request, any
shareholder executing such request may call such meeting. At any special meeting
of shareholders, only such business may be transacted as is related to the
purposes set forth in the notice thereof.
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<PAGE>
SECTION 2.4. Notice of Meetings; Waiver. The Secretary or any Assistant
Secretary shall cause written notice of the place, date and hour of each meeting
of the shareholders, and, in the case of a special meeting, the purpose or
purposes for which such meeting is called and by or at whose direction such
notice is being issued, to be given personally or by mail, not less than ten nor
more than fifty days prior to the meeting, to each shareholder of record
entitled to vote at such meeting. If such notice is mailed, it shall be deemed
to have been given to a shareholder when deposited in the United States mail,
postage prepaid, directed to the shareholder at his address as it appears on the
record of shareholders of the Corporation, or, if he shall have filed with the
Secretary of the Corporation a written request that notices to him be mailed to
some other address, then directed to him at such other address.
No notice of any annual or special meeting of shareholders need be
given to any shareholder who submits a signed waiver of notice, in person or by
proxy, whether before or after such meeting. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
shareholders need be specified in a written waiver of notice. The attendance of
any shareholder, in person or by proxy, at any annual or special meeting of
shareholders without protesting the lack of notice of such meeting prior to such
meeting's conclusion shall constitute a waiver of notice of such meeting by such
shareholder.
Except as set forth in SECTION 2.6 of these By-laws, no notice of any
adjourned meeting of the shareholders need be given.
SECTION 2.5. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, the presence, in person or by proxy, of the
holders of record of a majority of the Corporation's shares issued and
outstanding and entitled to vote shall constitute a quorum at all meetings of
the shareholders for the transaction of business. If a quorum is not present at
any meeting of the shareholders, the shareholders present in person or by proxy
shall have the power to adjourn any such meeting until a quorum is present.
SECTION 2.6. Adjournment. When a meeting of the shareholders of the
Corporation is adjourned to another time or place, no notice need be given other
than an announcement at the meeting at which the adjournment is taken of the
place, date and time to which such meeting is adjourned. However, if, after the
adjournment, the Board of Directors fixes a new record date for the adjourned
meeting, a notice of the adjourned meeting, conforming to the requirements of
SECTION 2.4 of these By-laws, shall be given to each shareholder of record
entitled to vote at such meeting. At any adjourned meeting at which a quorum is
present, any business may be transacted that might have been transacted on the
original date of the meeting.
SECTION 2.7. Proxies; Voting. At any meeting of the shareholders of the
Corporation, every holder of shares entitled to vote may vote in person or by
proxy, and shall, for all purposes, have one vote for each share registered in
his name unless otherwise provided by the Certificate of Incorporation. At all
elections of directors of the Corporation, each shareholder shall be entitled
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<PAGE>
to as many votes as shall equal the number of votes which (except for the
provision as to cumulative voting contained in the Certificate of Incorporation)
such shareholder would be entitled to cast for the election of directors with
respect to his/her shares multiplied by the number of directors to be elected,
and he/she may cast such votes for a single director or may distribute them
among the number to be voted for, or any two of them, as he or she may see fit,
which right when exercised shall be termed cumulative voting. The voting, except
for the election of directors, may be viva voce, but any qualified voter may
demand a share vote, whereupon such share vote shall be taken by ballot. Each
ballot shall state the name of the shareholder voting, the number of shares
voted and, if such ballot be cast by a proxy, it shall also state the name of
such proxy.
Whenever any action, other than the election of directors, is to be
taken by vote of the shareholders, except as otherwise may be required by law or
by the Certificate of Incorporation or by these By-laws, it shall be authorized
by a majority of the votes cast at a meeting of shareholders by the holders of
shares entitled to vote thereon.
SECTION 2.8. Written Consent of Shareholders in Lieu of Meeting. Any
action that may be taken by vote of the shareholders of the Corporation may be
taken without a meeting on written consent, setting forth the action so taken,
signed by the holders of all the outstanding shares entitled to vote thereon.
ARTICLE III. BOARD OF DIRECTORS
SECTION 3.1. Board of Directors. Except as otherwise provided in the
Certificate of Incorporation, the business of the Corporation shall be managed
under the direction of the Board of Directors. Each director shall be at least
eighteen years of age but need not be a shareholder.
SECTION 3.2. Number and Term of Directors. The number of directors
constituting the entire Board of Directors shall be not less than three (3) nor
more than fifteen (15) and shall be fixed by action. The number of directors
constituting the entire Board of Directors may be changed from time to time by
action of the shareholders entitled to vote for the election of directors or by
action of a majority of the entire Board of Directors, provided that the number
of directors shall not be less than three unless all the shares of the
Corporation are owned beneficially and of record by less than three
shareholders, in which event the number of directors may be less than three, but
not less than the number of shareholders. No decrease in the size of the entire
Board of Directors shall shorten the term of any incumbent director. The
directors shall be elected at the annual meetings of the shareholders of the
Corporation, and each director shall serve until the next succeeding annual
meeting and until his/her successor has been elected and has qualified.
SECTION 3.3. Removal; Resignation. Any or all of the directors may be
removed at any time, for or without cause, by vote of the shareholders of the
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<PAGE>
Corporation, provided that no director may be removed when the votes cast
against his/her removal would be sufficient to elect him/her if voted
cumulatively at an election at which the same total number of votes were cast
and the entire Board of Directors, were then being elected. Any director may
resign his office at any time, such resignation to be in writing and to be
effective upon its receipt by the Corporation or at such later date as may be
specified therein.
SECTION 3.4. Vacancies and Newly Created Directorships. Newly created
directorships resulting from an increase in the number of directors and
vacancies occurring in the Board of Directors for any reason except the removal
of directors without cause, may be filled by a majority of the directors then in
office, although less than a quorum exists, or by the shareholders, but any
director elected by the directors to fill a vacancy shall serve only until the
vacancy is filled by the shareholders. Vacancies occurring in the Board of
Directors by reason of the removal of directors without cause shall be filled by
the shareholders at a special meeting of the shareholders called for that
purpose or at an annual meeting of shareholders.
SECTION 3.5. Powers of Directors. In addition to the powers expressly
conferred upon them by these Bylaws, the Board of Directors may exercise such
powers and do such acts and things as are not prohibited by law or by the
Certificate of Incorporation or by these By-laws.
SECTION 3.6. Compensation of Directors. Directors shall not receive any
stated salary for their services as such. By resolution, the Board of Directors
may authorize the payment to directors of a fixed sum for, and/or expenses
associated with, their attendance at meetings. Nothing herein contained shall be
construed to preclude any director from serving the Corporation in any other
capacity and receiving compensation therefor.
SECTION 3.7. Place of Meetings. The Board of Directors may hold its
regular and special meetings at the principal office of the Corporation or at
such other place within or without the State of New York as the Board of
Directors shall authorize.
SECTION 3.8. Regular Meetings. The Board of Directors shall meet for
the purpose of electing officers and appointing committees, if any, and for the
transaction of such other business as may properly come before such meeting,
immediately following adjournment of the annual meeting of the shareholders of
the Corporation at the place of such annual meeting of the shareholders. The
Board of Directors may change the place, date or time of such regular meeting.
The Board of Directors may also provide for the holding of other regular
meetings and fix the place, date and time of such other regular meetings.
SECTION 3.9. Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board or by the
President and shall be called upon the written request of any two (2) of the
directors at such place, within or without the State of New York, as may be
specified in the respective notices of such meetings. Only
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<PAGE>
business related to the purposes set forth in the notice of meeting may be
transacted at a special meeting.
SECTION 3.10. Notice of Meetings; Waiver; Adjournment. No notice of
regular meetings of the Board of Directors need be given, except that if the
Board of Directors shall fix a new regular meeting or change the place or time
of any regular meeting, notice of such action shall be given promptly to each
Director who shall not have been present at the meeting at which such action was
taken. Notice of such action need not be given to any director who attends the
regular meeting with respect to which such action was taken without protesting
the lack of notice to him/her prior to or at the commencement of such meeting,
or to any director who submits a signed waiver of notice of such meeting,
whether before or after such meeting.
Special meetings of the Board of Directors may be called on not less
than twenty-four hours' notice, if notice is given to each director personally
or by telephone, telecopier, telex or similar means, or on not less than five
days' notice, if notice is mailed to each Director, addressed to him at his
usual place of business. Notice of any special meeting of the Board of Directors
need not be given to any director who attends such meeting without protesting
the lack of notice to him/her prior to or at the commencement of such meeting,
or to any director who submits a signed waiver of notice of such meeting,
whether before or after such meeting.
SECTION 3.11. Quorum. Except as otherwise may be provided by law or by
the Certificate of Incorporation or by these By-laws, at all meetings of the
Board of Directors, the presence of a majority of the directors then in office,
but not less than one-third of the entire Board of Directors, shall be necessary
to constitute a quorum and sufficient for the transaction of business at any
regular or special meeting of the Board of Directors.
SECTION 3.12. Adjournment. A majority of the directors present, whether
or not a quorum is present, may adjourn any meeting of the Board of Directors to
another time or place. No notice need be given of any adjourned meeting unless
the time and place of the adjourned meeting are not announced at the time of
adjournment, in which case notice conforming to the requirements of SECTION 3.10
of these By-Laws shall be given to each director.
SECTION 3.13. Action by the Board of Directors. Except as otherwise may
be provided by law or by the Certificate of Incorporation or by these By-laws,
the vote of the majority of the directors present at a regular or special
meeting of the Board of Directors meeting at which a quorum is present shall be
the act of the Board of Directors.
SECTION 3.14. Consent of Directors in Lieu of Meeting. Any action
required or permitted to be taken by the Board of Directors, or any committee
thereof, may be taken without a meeting if all of the members of the Board of
Directors or the committee consent in writing to the adoption of a resolution
authorizing the action.
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SECTION 3.15. Participation in Meetings by Conference Telephone. Any
one or more members of the Board of Directors, or any committee thereof, may
participate in a meeting of the Board of Directors or such committee by means of
a conference telephone or similar communications equipment allowing all persons
participating in the meeting to hear each other, and participation in a meeting
pursuant to this Section shall constitute presence in person at such meeting.
SECTION 3.16. Reliance on Accounts and Reports. In performing his/her
duties, any director shall be entitled to rely on information, opinions, reports
or statements including financial statements and other financial data, in each
case prepared or presented by:
(a) one or more officers or employees of the Corporation or of any
other corporation of which at least fifty percent of the
outstanding shares entitling the holders thereof to vote for
the election of directors is owned directly or indirectly by
the Corporation, whom such director believes to be reliable
and competent in the matters presented;
(b) counsel, public accountants or other persons as to matters
which such director believes to be within such person's
professional or expert competence; or
(c) any committee of the Board of Directors upon which he/she does
not serve, as to matters within its designated authority,
which committee such director believes to merit confidence.
ARTICLE IV. EXECUTIVE COMMITTEE AND OTHER COMMITTEES
SECTION 4.1. Committees of the Board of Directors: How Constituted. By
a resolution adopted by a majority of the entire Board of Directors, the Board
of Directors may designate from among its members an Executive Committee and
other committees of the Board of Directors, each consisting of three or more
directors. The Board of Directors may so designate one or more members as
alternate members of any such committee who may replace any absent member or
members of such committee at a meeting of such committee.
SECTION 4.2. Powers of the Executive Committee and Other Committees of
the Board of Directors. By a resolution adopted by a majority of the entire
Board of Directors, the Board of Directors may delegate to any committee of the
Board of Directors all the powers and authority of the Board of Directors to the
extent provided in such resolution, except that the Board of Directors may not
delegate to any committee any power or authority in reference to the following
matters:
(a) the submission to the shareholders of the Corporation of any
action as to which shareholder approval is required by law;
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<PAGE>
(b) the filling of vacancies in the Board of Directors or in any
committee thereof;
(c) the fixing of compensation of the directors for serving on
the Board of Directors or any committee thereof;
(d) the amendment or repeal of these By-laws, or the adoption of
new By-laws; or
(e) the amendment or repeal of any resolution of the Board of
Directors which by its terms shall not be so amended or
repealable.
The Executive Committee shall have the power to designate committees, each
consisting of three or more directors and/or officers of the Corporation and/or
any corporation of which at least fifty percent of the outstanding shares of
stock entitling the holders thereof to vote for the election of director is
owned directly or indirectly by the Corporation (but no such committee
designated by the Executive Committee shall not be a committee of the Board of
Directors). Each such committee designated by the Executive Committee shall have
such powers as may properly be delegated to it by a resolution of the Executive
Committee.
SECTION 4.3. Proceedings. Each committee of the Board of Directors and
each committee designated by the Executive Committee, shall fix its own rules of
procedure and may meet at such place, within or without the State of New York,
at such date and time and upon such notice, if any, as it shall determine from
time to time. Each committee of the Board of Directors and each committee
designated by the Executive Committee shall keep a record of its proceedings and
shall report any such proceedings to the Board of Directors or the Executive
Committee, respectively, at the first meeting of the Board of Directors or the
Executive Committee, respectively, following any such proceedings.
SECTION 4.4. Quorum and Manner of Acting. Except as otherwise may be
provided in the resolution designating such committee, at all meetings of any
committee of the Board of Directors or committee designated by the Executive
Committee, the presence of members constituting a majority of the total
authorized membership of such committee, but in no event less than two, shall
constitute a quorum for the transaction of business. The act of the majority of
the members present at any meeting at which a quorum is present, but in no event
less than two, shall be the act of such committee.
SECTION 4.5. Absent or Disqualified Members Of Committees Designated By
The Executive Committee. In the absence or disqualification of a member of any
committee designated by the Executive Committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he/she
or they constitute a quorum, may unanimously appoint a director and/or officer
of the Corporation and/or of any corporation of which at least fifty percent of
the outstanding shares of stock entitling the holders thereof to vote for the
election of directors is owned directly or indirectly by the Corporation, to act
at the meeting in the place of any such absent or disqualified member.
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SECTION 4.6. Abolition and Redesignation. Any committee, whether of the
Board of Directors or designated by the Executive Committee, may be abolished or
redesignated from time to time by resolution adopted by a majority of the entire
Board of Directors and every committee designated by the Executive Committee may
be abolished or redesignated from time to time by resolution of the Executive
Committee. Each committee designated by the Executive Committee shall serve at
the pleasure of the Board of Directors and at the pleasure of the Executive
Committee.
ARTICLE V. OFFICERS
SECTION 5.1. Generally. The officers of the Corporation shall be a
Chairman of the Board, President, a Vice President, a Secretary and a Treasurer,
and such other officers as the Board of Directors may deem necessary or
advisable for the conduct of the Corporation's business. The officers shall be
elected by the Board of Directors after the annual meeting of shareholders, and
each officer shall hold office until the meeting of the Board of Directors
following the next annual meeting of shareholders of the Corporation and until
his successor has been elected and has qualified. Any officer elected by the
Board of Directors may be removed by the Board of Directors at any time and with
or without cause. Any two or more of the foregoing offices may be held by the
same person, except that the President shall not also hold the office of
Secretary, unless all of the issued and outstanding shares of the Corporation
are owned by one person, in which event such person may hold all or any
combination of offices. Any office may be left vacant by the Board of Directors.
SECTION 5.2. Chairman of the Board. The Chairman of the Board shall
preside at all the meetings of the shareholders of the Corporation and of the
Board of Directors. Unless the Board of Directors shall by resolution designate
another officer as the chief executive officer of the Corporation, the Chairman
of the Board shall be the chief executive officer of the Corporation and,
subject to the direction of the Board of Directors, the Chairman of the Board
shall have general management and control of the business and affairs of the
Corporation and shall have all powers and perform all duties as are commonly
incident to the office of Chief Executive Officer or as from time to time may be
assigned or delegated to him/her by the Board of Directors. Unless the Board of
Directors shall by resolution designate another officer as Chief Executive
Officer of the Corporation, the Chairman of the Board shall have power to sign
all contracts and other instruments of the Corporation and shall have general
supervision and direction of all of the other officers, employees and agents of
the Corporation.
SECTION 5.3. President. The President shall be the chief operating
officer of the Corporation. Subject to the provisions of these By-laws and to
the direction of the Board of Directors and the Chairman of the Board, if the
Chairman of the Board shall be the chief executive officer of the Corporation,
the President shall have all powers and perform all duties as are commonly
incident of the office of chief operating officer and shall have such other
powers and perform such other duties as from time may be assigned or delegated
to the
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President by the Board of Directors or by the Chairman of the Board, if the
Chairman of the Board shall be the chief executive officer of the Corporation.
The President shall, unless otherwise provided in these By-laws or by resolution
of the Board of Directors, perform the duties and exercise the powers of the
Chairman of the Board in the event such office shall remain vacant or in the
event of the Chairman's absence or disability.
SECTION 5.4. Vice President. Each Vice President shall have such powers
and duties as may be delegated to him/her by the Board of Directors, the
Chairman of the Board, if the Chairman of the Board shall be the chief executive
officer of the Corporation, or the President. The Executive Vice President, if
one be elected or if there be more than one, the Executive Vice President
earliest elected to such office, or if there shall be none, a Vice President
designated by the Board of Directors shall exercise the powers and perform the
duties of the President in the event of the President's absence or disability.
SECTION 5.5. Treasurer. The Treasurer shall be in charge of the
Corporation's books and accounts; shall have the care and custody of and be
responsible for all the funds of the Corporation and shall cause the same to be
deposited in the name of the Corporation in such banks and safe deposit vaults
as may be designated by these By-laws; shall have the power to countersign all
certificates for shares signed by the Chairman of the Board, President or Vice
President; shall render a statement of the condition of the finances of the
Corporation at each meeting of the Board of Directors if called upon to do so.
The Treasurer shall keep at the office of the Corporation correct books of
account of all its business and transactions and such books of account as the
Board of Directors may require; and shall have such other powers and duties as
the Board of Directors or the Chairman of the Board, if the Chairman of the
Board shall be the Chief Executive Officer, or the President assigns.
SECTION 5.6. Secretary. The Secretary shall keep the minutes of the
meetings of the Board of Directors and of the stockholders in appropriate books;
give notice of meetings of the Corporation; be custodian of the records and of
the seal of the Corporation and affix the latter when required and may sign all
certificates for shares, not countersigned by the Treasurer; keep the share and
transfer books in such a manner as to show at any time the amount of shares, the
manner and the time the same was paid for, the names of the owners thereof
alphabetically arranged and their respective places of residence, or their post
office addresses, the number of shares owned by each of them and the time at
which each person became owner, and lay before the Board at their stated
meetings all communications addressed to him/her officially by the President or
any officer or stockholder of the Corporation, and attend to all correspondence
incident to the office of secretary; and shall have such other powers and duties
as the Board of Directors or the Chairman of the Board, if the Chairman of the
Board shall be the chief executive officer of the Corporation, or the President
shall assign. In the absence of the Secretary from any meeting or the inability
of the Secretary to act, an assistant secretary, if any shall have been
appointed, shall perform his duties and such other functions as the Board from
time to time may designate; and
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provided, further, that if no assistant secretary shall have been appointed, the
minutes shall be kept by such other person appointed for such purpose by the
presiding officer.
SECTION 5.7. Other Officers. The Board of Directors may elect such
other officers (including additional Vice Presidents, Assistant Secretaries and
Assistant Treasurers) as it shall deem necessary who shall have such authority
and shall perform such duties as shall be prescribed by the Board of Directors,
the Chairman of the Board, if the Chairman of the Board shall be the Chief
Executive Officer of the Corporation, or the President, from time to time.
SECTION 5.8. Salaries. The salaries of all officers of the Corporation
shall be fixed by the Chairman of the Board, if the Chairman of the Board shall
be the Chief Executive Officer of the Corporation, or the President.
SECTION 5.9. Delegation of Authority. In case of the absence of any
officer of the Corporation, or for any other reason that the Board of Directors
may deem sufficient, the Board of Directors temporarily may delegate the powers
or duties of such officer to any other officer, employee or agent of the
Corporation.
SECTION 5.10. Vacancies; Resignation. If any office becomes vacant for
any reason, the Board of Directors may elect a successor who shall hold office
for the unexpired term. Any officer may resign his/her office at any time, such
resignation to be in writing and to be effective upon receipt by the Corporation
or at such later date as may be specified therein.
SECTION 5.11. Reliance on Accounts and Reports. In performing his/her
duties, any officer shall be entitled to rely on information, opinions, reports
or statements including financial statements and other financial data, in or
presented by:
(a) one or more other officers or employees of the Corporation or
of any other corporation of which at least fifty percent of
the outstanding shares of stock entitling the holders thereof
to vote for the election of directors is owned directly or
indirectly by the Corporation, whom such officer believes to
be reliable and competent in the matters presented; or
(b) counsel, public accountants or other persons as to matters
which such officer believes to be within such person's
professional or expert competence.
ARTICLE VI. SHARES
SECTION 6.1. Certificates for Shares; Uncertificated Shares. The shares of
the Corporation shall be represented by certificates in such form as shall be
approved by the Board of Directors. All certificates shall be consecutively
numbered. Notwithstanding the
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<PAGE>
foregoing, the Board of Directors may provide by resolution that some or all of
any or all classes and series of the shares of the Corporation shall be
uncertificated shares, provided that such resolution shall not apply to shares
represented by a certificate until such certificate is surrendered to the
Corporation. Within a reasonable time after the issuance or transfer of
uncertificated shares, the Corporation shall send to the registered owner
thereof, a written notice containing the information required to be set forth or
stated on certificates for shares pursuant to Section 508 of the Business
Corporation Law.
SECTION 6.2. Stockholders Agreement. None of the shares of the
Corporation which shall be subject to the terms and condition of a stockholders
agreement to which the corporation shall be party shall be transferable except
in accordance with the terms and conditions of such agreement.
SECTION 6.3. Transfer of Shares. Except as may otherwise be provided in
Section 6.1 or 6.2, upon surrender to the Corporation or the transfer agent of
the Corporation of a certificate representing shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, a new certificate shall be issued to the person entitled thereto, the
old certificate canceled and the transaction recorded upon the books of the
Corporation.
SECTION 6.4. Lost, Stolen or Destroyed Certificates. The Board of
Directors may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Corporation and
alleged to have been lost or destroyed, upon the making of an affidavit of that
fact by the person claiming the certificate to be lost or destroyed. When
authorizing such issue of a new certificate or certificates, the Board of
Directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost or destroyed certificate or
certificates, or his/her legal representatives, to advertise the same in such
manner as it shall require and/or give the Corporation a bond in such sum and
with such surety or sureties as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost or destroyed.
SECTION 6.5. Registered Shareholders. The Corporation shall be entitled
to recognize the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner, and shall not
be bound to recognize any equitable or other claim to or interest in such share
or shares on the part of any other person, whether or not it shall have express
or other notice thereof, except as otherwise provided by law.
SECTION 6.6. Fixing of Record Date. For the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders of
the Corporation or any adjournment thereof, or to express consent to or dissent
from any proposal without a meeting, or for the purpose of determining the
shareholders entitled to receive payment of any dividend or the allotment of any
rights, or for the purpose of any other action, the Board
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<PAGE>
of Directors may fix, in advance, a date as the record date for any such
determination of shareholders. Such date shall not be more than fifty nor less
than ten days before the date of any meeting nor more than fifty days prior to
any other action. When a determination of shareholders of record entitled to
notice of or to vote at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any adjournment thereof, unless
the Board of Directors fixes a new record date for the adjourned meeting.
ARTICLE VII. GENERAL PROVISIONS
SECTION 7.1. Dividends. Subject to any applicable provisions of law and
of the Certificate of Incorporation, dividends or other distributions upon the
outstanding shares of the Corporation may be declared by the Board of Directors
at any regular or special meeting of the Board of Directors and any such
dividend or distribution may be paid in cash, property, bonds or shares of the
Corporation including the bonds or shares of other corporations.
SECTION 7.2. Reserves. There may be set apart from time to time out of
any funds of the Corporation available for dividends such reserve or reserves as
the Board of Directors may deem appropriate and the Board of Directors may
modify or abolish any such reserve.
SECTION 7.3. Deposits. Funds of the Corporation shall be deposited from
time to time in such banks, trust companies or other depositories or financial
institutions as shall be determined by the Board of Directors or by such
officers, employees or agents of the Corporation as may be authorized by the
Board of Directors to make such determination.
SECTION 7.4. Checks, Drafts, Etc. All notes, drafts, bills of exchange,
acceptances, checks, endorsements and other evidences of indebtedness of the
Corporation, and its orders for the payment of money shall be signed by such
officer or officers, such employee or employees, or such agent or agents of the
Corporation, and in such manner, as the Board of Directors may determine from
time to time.
SECTION 7.5. Transfer of Securities. To the extent authorized by the
Board of Directors, the President or any Vice President may sell, transfer,
endorse, and assign any shares, bonds or other securities owned by or held in
the name of the Corporation, and may make, execute and deliver in the name of
the Corporation, under its corporate seal, if requested or required, any
instruments that may be appropriate to effect any such sale, transfer,
endorsement or assignment. The Board of Directors may by resolution from time to
time confer such power and authority upon any other person or persons.
SECTION 7.6. Voting as Shareholder. Unless otherwise determined by
resolution of the Board of Directors, the Chairman of the Board, if the Chairman
of the Board shall be the Chief Executive Officer, President or any Vice
President shall have full power and authority on behalf of the Corporation to
attend any meeting of shareholders of any corporation in
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<PAGE>
which the Corporation may hold shares, and to act, vote (or execute proxies to
vote) and exercise in person or by proxy all other rights, powers and privileges
incident to the ownership of such shares. Such officers acting on behalf of the
Corporation shall have full power and authority to execute any instrument
expressing consent to or dissent from any action of any such corporation without
a meeting. The Board of Directors may by resolution from time to time confer
such power and authority upon any other person or persons.
SECTION 7.7. Fiscal Year. Unless otherwise determined by the Board of
Directors, the fiscal year of the Corporation shall, in each calendar year,
terminate on the last day of March.
SECTION 7.8. Seal. The seal of the Corporation shall be circular in
form and shall contain the name of the Corporation, the year of its
incorporation and the words "Corporate Seal" and "New York". The seal may be
used by causing it or a facsimile thereof to be impressed, affixed or
reproduced, or may be used in any other lawful manner.
SECTION 7.9. Books and Records: Inspection. Except to the extent
otherwise required by law, the books and records of the Corporation shall be
kept at such place or places within or without the State of New York as may be
determined from time to time by the Board of Directors. Subject to any right of
inspection provided by law, the Board of Directors shall determine if and/or
under what conditions the shareholders of the Corporation shall be entitled to
inspect the books and records of the Corporation.
ARTICLE VIII. NOTICE AND WAIVER OF NOTICE
Whenever, by law, under the Certificate of Incorporation or these
By-laws or by the terms of any agreement or instrument, the Corporation or the
Board of Directors, or any committee thereof, is authorized to take any action
after notice to any person or persons or after the lapse of a prescribed period
of time, such action may be taken without notice and without the lapse of such
period of time, if at any time before or after such action is completed the
person or persons entitled to such notice or entitled to participate in the
action to be taken or, in the case of a shareholder, by his attorney-in-fact,
submit a signed waiver of notice of such requirements.
ARTICLE IX. INDEMNIFICATION
The Corporation shall indemnify, to the full extent authorized by the
Business Corporation Law, any present or former director, officer, or personal
representative thereof, who is made (or threatened to be made) a party to any
civil or criminal action or proceeding by reason of the fact that he/she,
his/her testator or intestate: (a) is or was a director or officer of the
Corporation, or (b) served, at the request of the Corporation, any other
enterprise (including but not limited to any corporation, partnership, joint
venture, trust, or
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<PAGE>
employee benefit plan). This indemnification shall indemnify said persons
against judgments, fines (including excise taxes assessed on such a person in
connection with service to an employee benefit plan), amounts paid in
settlement, and reasonable expenses (including attorney's fees actually and
necessarily incurred as a result of such action or proceeding, or any appeal
therein).
For purposes of this Article, the Corporation shall be deemed to have
requested such present or former officer or director to serve an employee
benefit plan where the performance by such person of his/her duties to the
corporation also imposes duties on, or otherwise involves services by, such
person to the plan or participants or beneficiaries of the plan. The foregoing
right of indemnification shall not be deemed exclusive of any other rights to
which any such person, his/her testator or intestate, may be entitled apart from
this provision.
ARTICLE X. AMENDMENTS OF BY-LAWS
SECTION 10.1. Amendment. All By-laws of the Corporation, whether
adopted by the Board of Directors or the shareholders of the Corporation,
shall be subject to amendment, alteration or repeal, and new By-laws may be
made, either:
(a) by the shareholders at any annual or special meeting of
shareholders the notice of which shall have specified or
summarized the proposed amendment, alteration, repeal or new
By-laws; or
(b) by resolution adopted by a majority of the entire Board of
Directors at any regular or special meeting thereof, the
notice or waiver of notice of which, unless none is required
under these By-laws, shall have specified or summarized the
proposed amendment, alteration, repeal or new By-law;
provided, that the shareholders may at any time provide in the By-laws that any
specified provision or provisions of the By-laws may be amended, altered or
repealed only in the manner specified in clause (a) above, in which event such
provision or provisions shall be subject to amendment, alteration or repeal only
in such manner.
SECTION 10.2. Notice of Amendment. If any By-law regulating an
impending election of directors is adopted, amended or repealed by the Board of
Directors, there shall be set forth in the notice of the next meeting of
shareholders of the Corporation for the election of directors the By-law so
adopted, amended or repealed, together with a concise statement of the changes
made.
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474164.1
EXHIBIT 99.1.7
MBIA
FINANCIAL GUARANTY MASTER
WHILE IN TRUST WITH A PERMANENT OPTION
UNIT INVESTMENT TRUST INSURANCE POLICY
MBIA Insurance Corporation
Armonk, New York 10504
Policy No. ESGT-134-1010
MBIA Insurance Corporation (the "Insurer"), in consideration of the payment of
the premium and subject to the terms of this policy, hereby unconditionally and
irrevocably guarantees to the Trust, as hereinafter defined, the full and
complete payment required to be made by or on behalf of the issuer(s) to the
applicable Paying Agent(s) or its/their successor(s) (the "Paying Agent") of an
amount equal to (i) the principal of (either at the stated maturity or by any
advancement of maturity pursuant to a mandatory sinking fund payment) and
interest on the obligations described in Exhibit A attached hereto (referred to
herein as the "Obligations"), as such payments shall become due but shall not be
so paid (except that in the event of any acceleration of the due date of such
principal by reason of mandatory or optional redemption or acceleration
resulting from default or otherwise, other than any advancement of maturity
pursuant to a mandatory sinking fund payment, the payments guaranteed hereby
shall be made in such amounts and at such times as such payments of principal
would have been due had there not been any such acceleration); and (ii) the
reimbursement of any such payment which is subsequently recovered from the Trust
pursuant to a final judgment by a court of competent jurisdiction that such
payment constitutes an avoidable preference to the Trust within the meaning of
any applicable bankruptcy law. The amounts referred to in clauses (i) and (ii)
of the preceding sentence shall be referred to herein collectively as the
"Insured Amounts."
Upon receipt of telephonic or telegraphic notice, such notice subsequently
confirmed in writing by registered or certified mail, or upon receipt of written
notice by registered or certified mail, by the Insurer or its designee from the
Paying Agent or the Trust, that required payment of any Insured Amount has not
been made, the Insurer on the due date of such payment or within one business
day after receipt of notice of such nonpayment, whichever is later, will make a
deposit of funds, in an account with State Street Bank and Trust Company, N.A.,
in New York, New York, or its successor, sufficient for the payment of any such
Insured Amounts which are then due. Upon presentment and surrender of such
Obligations or coupons or presentment of such other proof of ownership of the
Obligations registered as to principal or as to principal and interest, together
with evidence satisfactory to State Street Bank and Trust Company, N.A. that (i)
in the case of Pre-Insured Obligations, as hereinafter defined, that demand for
payment has been made from the other insurer, and (ii) in all cases, that such
Obligations or coupons are the Obligations or coupons described in this policy
or replacements or successors thereto, and any appropriate instruments of
assignment to evidence the assignment of the Insured Amounts due on the
Obligations as are paid by the Insurer, and appropriate instruments to effect
the appointment of the Insurer as agent for the Trust in any legal proceeding
related to payment of Insured Amounts on the Obligations or coupons, such
instruments being in a form satisfactory to State Street Bank and Trust Company,
N.A, State Street Bank and Trust Company, N.A. shall disburse to the Trust or
the Paying Agent making such presentment and/or surrender payment of the Insured
Amounts due on such Obligations and coupons, less any amount held by the Paying
Agent for the payment of such Insured Amounts and legally available therefor.
This policy does not insure against loss of any prepayment premium which may at
any time be payable with respect to any Obligation or coupon.
The term "Depositor" shall mean Glickenhaus & Co and Lebenthal &
Co., Inc. and its successors or any successor Depositor.
The term "Pre-Insured Obligations" shall mean obligations, if
any, on which the payment of principal of and/or interest on shall have been
insured prior to the issuance of this policy by an insurer other than the
Insurer.
The term "Trust" shall mean the Empire State Municipal Exempt Trust, Guaranteed
Series 134, created pursuant to the Trust Indenture and Agreement dated
December 18, 1990 among the Depositor, the Trustee and Standard & Poor's
Corporation as supplemented and amended by the Reference Trust Agreement dated
as of April 2, 1997, among the Depositor, the Trustee and Muller Data
Corporation.
The term "Trustee" shall mean The Bank of New York, or any
successor trustee or co-trustee.
Any service of process on the Insurer may be made to the Insurer
at its offices located at 113 King Street, Armonk, New York 10504, and such
service of process shall be valid and binding.
<PAGE>
This policy shall only apply to Obligations held in and owned by
the Trust and shall not apply to any Obligations not deposited therein by the
Depositor. This policy shall continue in force only with respect to
Obligations held in and owned by the Trust, and, subject to the provisions of
this paragraph, the Insurer shall not have any liability under this policy
with respect to any Obligations which do not constitute part of the Trust.
This policy is non-cancellable during the term hereof for any reason, but
shall terminate as to any Obligation which has been redeemed from or sold by
the Trustee or the Trust on the date of such redemption or on the settlement
date of such sale, and the Insurer shall not have any liability under this
policy as to any such Obligation thereafter. If the date of such redemption
or the settlement date of such sale occurs between a record date and a date of
payment of any such Obligation, this policy shall terminate as to such
Obligation on the business day next succeeding such date of payment.
Notwithstanding the foregoing provisions of this paragraph, the termination of
this policy as to any Obligation shall not affect the obligations of the
Insurer regarding any other Obligation in the Trust. This policy shall
terminate as to all Obligations on the date on which the last of the
Obligations mature, are redeemed or are sold by the Trust.
The premium on this policy is not refundable for any reason,
including the payment prior to maturity of the Obligations.
This policy is issued only to the Trust and is nontransferable.
This policy shall be governed by and construed under the laws of
the State of New York.
This Policy is not covered by the Property/Casualty Insurance
Security Fund specified in Article 76 of the New York Insurance Law.
IN WITNESS WHEREOF, the Insurer has caused this policy to be
executed in facsimile on its behalf by its President and its Assistant
Secretary, this 2nd day of April, 1997. .
MBIA INSURANCE CORPORATION
Richard Weill
President
Lisa Wilson
Assistant Secretary
<PAGE>
MBIA
E N D O R S E M E N T
Attached to Policy No. ESGT-134-1010
issued by MBIA Insurance Corporation (the "Insurer"), to the Trust, as defined
in the policy issued with respect to the small issue industrial development
bonds and pollution control revenue bonds listed in Exhibit A (the "Bonds").
It is further understood that this policy shall guarantee to the Trust, as
defined in the policy, the full and complete payments required to be made by
or on behalf of the Issuer if there occurs pursuant to the terms of the Bonds
an event which results in the loss of the tax exempt status of the interest on
the Bonds, including any principal, interest or premium payments payable
thereon, if any, as and when thereby required.
This endorsement forms a part of the policy to which it is attached, effective
on the inception date of the policy.
IN WITNESS WHEREOF, the Insurer has caused this endorsement to be executed in
facsimile on its behalf by its President and its Assistant Secretary
this 2nd day of April, 1997.
MBIA INSURANCE CORPORATION
Richard Weill
President
Lisa Wilson
Assistant Secretary
<PAGE>
MBIA
CERTIFICATE OF MBIA INSURANCE CORPORATION
(EMPIRE STATE MUNICIPAL EXEMPT TRUST, GUARANTEED SERIES 134)
This Certificate is being delivered in connection with the
issuance by MBIA Insurance Corporation (the "Corporation")
of a Municipal Bond Guaranty Insurance Policy relating to EMPIRE STATE MUNICIPAL
EXEMPT TRUST, GUARANTEED SERIES 134 (the "Policy"). The undersigned, hereby
certifies that she is qualified and acting as an Assistant Secretary of
the Corporation.
The undersigned hereby certifies that:
(a) The Policy has been duly executed, is a valid and binding
obligation of the Corporation enforceable in accordance with
its terms except that the enforcement of the Policy may be
limited by laws relating to bankruptcy, insolvency,
reorganization, moratorium, receivership and other similar
laws affecting creditors' rights generally and by general
principles of equity;
(b) The information concerning the Corporation and its policy or
policies as set forth in the prospectus of the Trust filed as
part of a Registration Statement dated April 2, 1997 under
the caption entitled "The Trust -- Insurance on the Bonds,"
regarding Empire State Municipal Exempt Trust, Guaranteed
Series 134, is accurate; and
(c) The financial information as of September 30, 1996 for the
Corporation supplied to the Sponsors is true and correct
financial information provided to the New York Insurance
Department in connection with the licensing of the
Corporation, and such financial information is the most
recent financial information available.
IN WITNESS WHEREOF, the undersigned has herewith set her hand and
caused her signature to be affixed hereto on this 2nd day of April, 1997.
By
Lisa Wilson
Assistant Secretary
CERTIFICATE OF OWNERSHIP
Evidencing An Undivided
Interest in the
EMPIRE STATE
MUNICIPAL EXEMPT TRUST
Guaranteed 66
PLAN OF DISTRIBUTION:
NUMBER UNITS
**10,000**
This is to certify that Glickenhaus & Co.
Lebenthal & Co., Inc.
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
Empire State Municipal Exempt 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. and Lebenthal &
Co., Inc. (hereinafter called the "Depositors"), The Bank of New York
(hereinafter called the "Trustee") and Standard & Poor's 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.
IN WITNESS WHEREOF, each of the Depositors has caused this Certificate to
be executed in facsimile by a General Partner, the President or a Vice President
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: December 18, 1990
434172.1
<PAGE>
GLICKENHAUS & CO.,
Depositor
By:
General Partner
LEBENTHAL & CO., INC.,
Depositor
By:
President
THE BANK OF NEW YORK,
Trustee
By:
Authorized Officer
SPECIMEN SPECIMEN
CONTROL NO. EMP 98781
434172.1
<PAGE>
EMPIRE STATE MUNICIPAL EXEMPT 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 Depositors hereby grant and convey all of their 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 seventh calendar day following the day on which such tender is
made, or, if such calendar day is not a business day, on the first business day
prior to such calendar day, 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 fairly to determine 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 Depositors on such
date. The next computation shall be made as of the First General 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 General Record Date.
434172.1
<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 General Record Date, and thereafter as of May 15 and November 15 of
each year commencing with the first such day following the First General 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, payment of any insurance premium,
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
434172.1
<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 $2,000,000 or 20% of
the value of the Fund as of the date of deposit therein by the Depositors,
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.
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.
This Certificate by its terms provides that distributions
from the Interest Account shall be computed as of the First
Settlement Date and paid to the Depositors on such date. The
434172.1
<PAGE>
next computation shall be made as of the First General 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 General 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 General 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 General 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 General 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 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
434172.1
<PAGE>
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 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.
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
this Certificate in every
particular, without alteration or
enlargement whatever.
434172.1
April 2, 1997
Glickenhaus & Co.
6 East 43rd Street
New York, New York 10017
Lebenthal & Co., Inc.
120 Broadway
New York, New York 10271-0005
Re: Empire State Municipal Exempt Trust,
Guaranteed Series 134
Dear Sirs:
We have acted as special counsel for Glickenhaus & Co. and
Lebenthal & Co., Inc., as Depositors, Sponsors and Principal Underwriters
(collectively, the "Depositors") of Empire State Municipal Exempt Trust,
Guaranteed Series 134 (the "Trust") in connection with the issuance by the
Trust of 10,000 units of fractional undivided interest (collectively, the
"Units") in the Trust. Pursuant to the Trust Agreement referred to below, the
Depositors have 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 Depositors, 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
207440.1
2
<PAGE>
Glickenhaus & Co.
April 2, 1997
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. 333-17307) 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) certified resolutions of Lebenthal &
Co. Inc., authorizing the execution and delivery by it of the Trust Agreements
and the consummation of the transactions contemplated thereby; (f) the
Certificate of Incorporation and By-Laws of Lebenthal & Co., Inc. and the
Restated Agreement of Limited Partnership of Glickenhaus & Co.; and (g) a
certificate of an authorized officer or partner of each of the Depositors 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
207440.1
<PAGE>
3
Glickenhaus & Co.
April 2, 1997
bankruptcy, reorganization, moratorium, insolvency and other laws of general
application relating to or affecting the enforceability of creditors' rights,
and (ii) to limitations under equitable principles governing the availability of
equitable remedies.
We are not admitted to the practice of law in any jurisdiction but
the State of New York and we do not hold ourselves out as experts in or
express any opinion as to the laws of other states or jurisdictions except as
to matters of Federal and Delaware corporate law.
Based exclusively on the foregoing, we are of the opinion that
under existing law:
(1) The Trust Agreements have been duly authorized and entered
into by an authorized officer or General Partner of each of the Depositors and
are valid and binding obligations of the Depositors in accordance with their
terms.
(2) The execution and delivery of the Certificates evidencing the
Units has been duly authorized by the Depositors and such Certificates, when
executed by the Depositors 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 the Underwriters named in Schedule A to the Master Agreement Among
Underwriters relating to the Trust and the Trustee may rely on this opinion as
fully and to the same extent as if it had been addressed to it.
This opinion is intended solely for the benefit of the addressees
and the Trustee in connection with the issuance of the Units of the Trust and
may not be relied upon in any other manner or by any other person without our
express written consent.
Very truly yours,
Battle Fowler LLP
207440.1
INSURANCE COMPANY OF NORTH AMERICA, PHILADELPHIA, PENNSYLVANIA
- --------------------------------------------------------------------------------
BROKERS' BLANKET BOND DECLARATIONS
Form No. 14
- --------------------------------------------------------------------------------
1. NAMED
INSURED LEBENTHAL & CO., INC. S__________
(Herein called Insured) One State Street Plaza
Principal Address) New York, New York 10004
2. Bond Period from noon on October 1 1979
(Month) (Day) (Year)
3. Table of Limits of Liability
(a) Amount of Bond............................................$10,000,000.
(b) Sub-Limits
The liability of the Underwriter as stated in (a) above is
further limited to the amount specified below with respect to the
following coverages. The amounts specified below shall be a part
of and not in addition to the Amount of Bond, and Section 7 of
the bond shall be subject to the amounts specified below. (1)
Misplacement or mysterious unexplainable disappearance,
under Insuring Clause (B)................. $10,000,000.
(2) Insuring Clause (E), Securities Forgery............ $ 500,000.
(3) Trading Loss, under Insuring Clause (A). (When an
amount is shown for this Sub-Limit (3), Section 1(e)(1) is
deleted and Section 1(e)(2) is substituted
therefor).......$ 150,000.
4. Offices Covered All of the Insured's offices in existence at the time this
bond becomes effective are covered under this bond except the offices
located as follows
No Exceptions
5. Riders The liability of the Underwriter is subject to the terms of the
following riders attached hereto
Schedule of Rider at Inception
6. The insured by the acceptance of this bond gives notice to the
Underwriter terminating or canceling prior bond(s) or policy(ies) No. S
624927, such termination or cancellation to be effective as of the time
this Bond becomes effective.
7. Notification The Underwriter will mark the (UNREADABLE)
Countersigned by _________________
Attorney in fact
474204.1
<PAGE>
SCHEDULE OF RIDERS AT INCEPTION
Named Insured LEBENTHAL & CO., INC.
Effective date of rider/endorsement: From 12:01 a.m. on October 1, 1979
H.O.
To be attached to and form part of Blanket Bond or Policy, No. S 62 94 51
----------------
It is agreed that:
1. The liability of the Company is subject to the terms of the following
riders attached hereto:
1. Definition of Dishonesty (BF-7774)
2. Government Securities Exclusion (FB-310)
3. Extortion Exclusion (BF-7372a)
4. Foreign Operations Rider (RF-6E94)
5. Effective Time Rider (BF-6A96)
6. Amending of U.S. Government Securities Rider
7. 60 Days Notice of Cancellation (FB-341a)
8. Cancellation Notice: NASD (BF-343a)
9. Deductible $5,000. (BF-1B46)
10.
11.
12.
13.
14.
15.
16.
2. The attached Bond shall be subject to all its agreements, limitations and
conditions except as herein expressly modified.
Countersigned by __________________________________
Attorney in fact
474204.1
<PAGE>
DEFINITION OF DISHONESTY -- EXCLUSIONS RIDER
For use with all Financial Institution Blanket Bond
Forms (Except Form D) that do not have a Definition of Dishonesty
and to add certain exclusions
Named Insured Lebenthal & Co. Inc.
Effective date of rider From 12:01 a.m. on October 1, 1979
H.O.
To be attached to and form part of Blanket Bond No. S 62 94 51
------------------
It is agreed that:
1. The attached bond is hereby amended by deleting Insuring Agreement
(A) and by substituting in lieu thereof the following:
"(A) Loss resulting directly from one or more dishonest or fraudulent
acts of an Employee, committed anywhere and whether committed alone or in
collusion with others, including loss of Property resulting from such acts of an
Employee, which Property is held by the Insured for any purpose or in any
capacity and whether so held gratuitously or not and whether or not the Insured
is liable therefor.
Dishonest or fraudulent acts as used in this Insuring Agreement shall
mean only dishonest or fraudulent acts committed by such Employee with the
manifest intent:
(a) to cause the Insured to sustain such loss; and
(b) to obtain financial benefit for the Employee, or for any other
person or organization intended by the Employee to receive such
benefit, other than salaries, commissions, fees, bonuses,
promotions, awards, profit sharing, pensions or other employee
benefits earned in the normal course of employment."
2. In addition to the existing Exclusions in the attached bond, the
Underwriter shall not be liable under any Insuring Agreement for:
(i) Potential income, including but not limited to interest
and dividends, not realized by the Insured because of a
loss covered under this bond.
(ii) All damages of any type for which the Insured is legally
liable, except direct compensatory damages arising from a
loss covered under this bond.
(iii) All costs, fees and other expenses incurred by the Insured
in establishing the existence of or amount of loss covered
under this bond.
(iv) Loss resulting from payments made or withdrawals from a
depositor's account involving funds erroneously credited
to such account, unless such payments are made to or
withdrawn by such depositor who is within the office of
the Insured at the time of such payment or withdrawal, or
unless such loss is covered under Insuring Agreement (A).
474204.1
<PAGE>
3. The attached bond shall be subject to all its agreements, limitations and
conditions except as herein expressly modified.
Rider No. 1
Accepted Countersigned by
Attorney in fact
474204.1
<PAGE>
INSURANCE COMPANY OF NORTH AMERICA, PHILADELPHIA, PENNSYLVANIA
EXCLUSION RIDER
UNITED STATES GOVERNMENT SECURITIES
Named Insured LEBENTHAL & CO. INC.
Effective date of rider: From noon on October 1, 1979
H.O.
To be attached to and form part of Blanket Bond, Form No. 14, No. S 62 94 51
-- -------------
In consideration of the issuance or continuation of the attached bond, it is
agreed that:
1. EXCLUSION
Anything in the attached bond to the contrary notwithstanding, the
attached bond does not cover, under any Insuring Clause, any loss of
United States Government securities as defined herein, except as
provided in Paragraph 3 below. The foregoing exclusion shall apply to
loss sustained at any time but discovered after the effective date of
this rider.
DEFINITION
United States Government securities are defined as bearer securities and
coupons thereof issued by the United States Government or by Federal
Corporations. Agencies and Instrumentalities thereof authorized to issue
obligations guaranteed by or on the credit of the United States
Treasury, including but not limited to Treasury bills, notes and bonds,
tax anticipation bills, Federal National Mortgage Association issues,
EXIM Bank notes, Federal Home Loan Bank Board notes, Federal
Intermediate Credit Bank and Bank for Cooperatives notes, Federal Land
Bank, Federal Authority and Urban Renewal issues.
EXCEPTION
As respects Insuring Clause (B) only, the foregoing exclusion shall not
apply to loss of United States Government securities, as defined, in the custody
and physical possession of a bank or trust company, provided:
A. The loss occurs on the premises of such custodian bank or trust
company, and
B. The Insured has not entered into any agreement to hold such
custodian bank or trust company harmless or relieve such
custodian bank or trust company of liability in whole or in part
in the event of loss.
This exception to the exclusion shall not apply to loss of such United
States Government securities from a safe deposit box or boxes, leased or
rented vault space or similar safekeeping facility to which the Insured,
its partners, officers, employees, messengers, agents or other
representatives have physical access, accompanied or unaccompanied by a
representative of the Institution providing such safekeeping
474204.1
<PAGE>
facility. It being understood and agreed that such arrangements do not
constitute custody and physical possession by a bank or trust company
within the meaning of this section.
Accepted: Rider No. 2
Countersigned By
Attorney in fact
474204.1
<PAGE>
INSURANCE COMPANY OF NORTH AMERICA
PHILADELPHIA, PENNSYLVANIA
EXTORTION EXCLUSION/COVERAGE RIDER
FOR USE WITH ALL FINANCIAL INSTITUTION BLANKET BOND
FORMS, ON A `DECLARATIONS' FORMAT, THAT DO NOT HAVE
AN EXTORTION LOSS EXCLUSION
Named Insured LEBENTHAL & CO., INC.
Effective date of rider: From noon on October 1, 1979
H.O.
To be attached to and form part of Blanket Bond, Form No. 14, No. S 62 94 51
-- --------------
It is agreed that:
1. The attached bond is hereby amended as follows:
(a) by adding to the Exclusions Section of the attached band (i.e., the
Section beginning with the words "This bond does not cover:") the
following:
"loss through the surrender of Property away from an office of the
Insured as a result of a threat:
(1)to do bodily harm to a director or Employee of the Insured or
to any other person, except loss of Property in transit in the
custody of any person acting as messenger provided that when
such transit was initiated there was no knowledge by the
Insured of any such threat, or
(2)to do damage to premises or property,
except with respect to (1) above, when covered under Insuring
Agreement (A), or to the extent covered under the ExtortionThreats To
Persons Insuring Agreement(s) when added by this rider, and with
respect to (2) above, when covered under Insuring Agreement (A), or
to the extent covered under the Extortion--Threats To Property
Insuring Agreement when added by this rider."
(b) by adding to item 3(b), Sub-Limits, in the Table of Limits of
Liability in the Declarations, the following:
"Extortion -- Threats to Persons Coverage (Restricted
Territory)........$ NIL
"Extortion -- Threats to Persons Coverage (Outside Territorial
Restriction.$ NIL
"Extortion-- Threats to Property (Restricted Territory)................
$ NIL ---------
(c) by adding additional Insuring Agreements as follows:
"EXTORTION -- THREATS TO PERSONS COVERAGE
(Restricted Territory)
"Loss of Property surrendered away from an office of the Insured as a
result of a threat communicated to the Insured to do bodily harm to: (1)
a director of the Insured, or (2) an Employee, or (3) a relative of such
director or Employee, or (4) any other person who is, or allegedly is,
being held captive; provided, however, (1) that the surrender of such
Property arises from the taking, or alleged taking, of such captive while
such person was physically within any of the States of the United States
of America, the District of Columbia, Puerto Rico, Virgin Islands, Canal
Zone or Canada, and (2) that prior to the surrender of such Property, (a)
person receiving the threat has notified or has attempted to notify an
officer of the Insured, other than the director or Employee threatened,
concerning such threat, and (b) the Insured has notified or has attempted
to notify the Federal Bureau of Investigation or local law enforcement
authorities concerning such threat."
"EXTORTION -- THREAT TO PERSONS COVERAGE
474204.1
<PAGE>
(Outside Territorial Restrictions)
"Loss of Property surrendered away from an office of the Insured as a
result of a threat communicated to the Insured to do bodily harm to: (1)
a director of the Insured, or (2) an Employee, or (3) a relative of such
director or Employee, or (4) any other person who is, or allegedly is,
being held captive; provided, however, (1) that the surrender of such
Property arises from the taking, or alleged taking, of such captive while
such person was physically anywhere in the world other than within any of
the States of the United States of America, the District of Columbia,
Puerto Rico, Virgin Islands, Canal Zone or Canada, and (2) that prior to
the surrender of such Property, (a) person receiving the threat has
notified or has attempted to notify an officer of the Insured, other than
the director or Employee threatened, concerning such threat, and (b) the
Insured has notified or has attempted to notify the Federal Bureau of
Investigation or local law enforcement authorities concerning such
threat."
"EXTORTION -- THREATS TO PROPERTY COVERAGE
(Restricted Territory)
"Loss of Property surrendered away from an office of the Insured as a
result of a threat communicated to the Insured to do damage to the
premises or property of the Insured located within any of the states of
the United States of America, the District of Columbia, Puerto Rico,
Virgin Islands, Canal Zone or Canada, provided, however, that prior to
the surrender of such Property (a) the person [receiving the threat has
notified or has attempted . . .]
(Further conditions of this Rider are continued on the reverse side here.")
[Reverse side missing]
474204.1
<PAGE>
EXCLUSION RIDER -- FOREIGN OPERATIONS
For use with Brokers Blanket Bonds, Form 14.
Named Insured LEBENTHAL & CO. INC.
Effective date or rider/endorsement: From 12:01 a.m. on October 1, 1979
H.O.
To be attached to and form part of Blanket Bond or Policy, No. S 62 94 51
---------------
It is agreed that:
1. EXCLUSION
Anything in the attached bond to the contrary notwithstanding, the attached
bond does not cover, under any Insuring Clause, any loss arising directly or
indirectly out of the operations of any of the Insured's offices located
outside (a) any of the States of the United States of America, the District
of Columbia, Virgin Islands, Puerto Rico, Canal Zone, Canada, Europe or (b)
any territory specifically scheduled in Paragraph 2 below.
2. SCHEDULE OF ADDITIONAL COVERED TERRITORIES
None
3. LIMIT OF LIABILITY -- FOREIGN OPERATIONS
With respect to loss arising directly or indirectly out of the operations of
any of the Insured's offices located in Europe or in any territory
specifically scheduled in Paragraph 2 above, the Limits of Liability stated
in Item 3 of the Declarations are amended to read as follows:
"3. TABLE OF LIMITS OF LIABILITY
(a) Amount of Bond................................... ........$ NIL
(b) Sub-Limits
(1) Misplacement or mysterious unexplainable disappearance, under
Insuring Clause (B)$ NIL
(2) Insuring Clause (E), Securities Forgery..............$ NIL
---------
(3) Trading Loss, under Insuring Clause (A). (When an amount is
shown for this Sub-Limit (3), Section 1(e)(1) is deleted and Section
1(e)(2) is substituted therefor)$ NIL
4. The provisions of this rider shall apply to loss sustained at any time but
discovered after the effective date of this rider.
Accepted Rider No. 4
Countersigned By
Attorney in fact
474204.1
<PAGE>
EFFECTIVE TIME RIDER
ENDORSEMENT 203
Named Insured LEBENTHAL & CO. INC.
Effective date of rider: From 12:01 a.m. on October 1, 1979
H.O.
To be attached to and form part of Policy or Bond, No. S 62 94 51
------------------------
The time of inception and the time of expiration, termination or
cancellation of this policy or bond and any schedule, endorsement or rider
attached or to be attached shall be 12:01 a.m. standard time.
To the extent that coverage in this policy or bond replaces coverage in
other policies or bonds terminating at noon standard time on the inception date
of this policy or bond, coverage under this policy or bond shall not become
effective until such other coverage has terminated.
Rider No. 5
Countersigned By
Attorney in fact
474204.1
<PAGE>
Named Insured LEBENTHAL & CO., INC.
Effective date or rider/endorsement: From 12:01 a.m. on October 1, 1979
H.O.
To be attached to and form part of Blanket Bond or Policy, No. S 62 94 51
----------------
It is agreed that:
1. Notwithstanding the provisions of rider number 2, United States Government
Securities Exclusion Rider, Insuring Agreements A, B & C of the attached
bond are extended to cover United States Government Securities, as defined
in rider number 2, while in the custody of the Insured in preparation for
delivery to a bank, trust company or to a customer. This extension shall
apply from the time the securities are received by the Insured until the end
of the next business day.
2. The attached bond shall be subject to all its agreements, limitations and
conditions except as herein expressly modified.
Rider No. 6
Rider No. 7
Countersigned by
Attorney in fact
474204.1
<PAGE>
Named Insured LEBENTHAL & CO., INC.
Effective date of rider/endorsement: From 12:01 a.m. on October 1, 1979
H.O.
To be attached to and form part of Blanket Bond or Policy, No. S 62 94 51
----------------
It is agreed that:
1. Notwithstanding the provisions of rider number 2, United States Government
Securities Exclusion Rider, Insuring Agreements A, B & C of the attached
bond are extended to cover United States Government Securities, as defined
in rider number 2, while in the custody of the Insured in preparation for
delivery to a bank, trust company or to a customer. This extension shall
apply from the time the securities are received by the Insured until the end
of the next business day.
2. The attached bond shall be subject to all its agreements, limitations and
conditions except as herein expressly modified.
Rider No. 6
Countersigned by
Attorney in fact
474204.1
<PAGE>
RIDER TO PROVIDE
FOR SIXTY DAYS NOTICE
OF CANCELLATION
Named Insured LEBENTHAL & CO., INC.
Effective date or rider: From noon on October 1, 1979
H.O.
To be attached to and form part of Blanket Bond, Form 14 , No. S 62 94 51
-------- -----------
--------------------------------------------------------
FOR USE WITH ALL FINANCIAL INSTITUTION BLANKET BONDS
(EXCEPT FORM NO. 10) TO PROVIDE FOR SIXTY DAYS NOTICE
OF CANCELLATION WHEN THE BOND IS CANCELLED AS AN
ENTIRETY BY THE UNDERWRITER.
--------------------------------------------------------
It is agreed that
1. The attached bond is amended by deleting the word "thirty" from sub-section
(a) of the Section entitled "Termination", "Cancellation", or "Termination
or Cancellation" and by substituting in lieu thereof the word "sixty".
2. The attached bond shall be subject to all its agreements, limitations and
conditions except as herein expressly modified.
Rider No. 7
Countersigned By
Attorney in fact
474204.1
<PAGE>
CANCELLATION RIDER -- NATIONAL ASSOCIATION OF SECURITIES DEALERS
FOR USE WITH STOCKBROKERS BLANKET BOND, FORM NO. 14, WHEN ISSUED TO THOSE MEMBER
FIRMS OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS WHO HAVE EMPLOYEES AND
ARE REQUIRED TO JOIN THE SECURITIES INVESTOR PROTECTION CORPORATION, AND WHO ARE
SUBJECT TO RULE 15C3-1 UNDER THE SECURITIES EXCHANGE ACT OF 1934, TO PROVIDE FOR
NOTICE OF CANCELLATION, TERMINATION OR SUBSTANTIAL MODIFICATION TO SUCH
ASSOCIATION.
Named Insured LEBENTHAL & CO., INC.
Effective date or rider/endorsement: From 12:01 a.m. on October 1, 1979
H.O.
To be attached to and form part of Blanket Bond or Policy, No. S 62 94 51
----------------
It is agreed that the Underwriter will mark its records to indicate that
the National Association of Securities Dealers, Inc. is to be notified
promptly concerning the cancellation, termination or substantial
modification of the attached bond, whether at the request of the Insured or
the Underwriter, and will use its best efforts to so notify said
Association, but failure to so notify said Association shall not impair or
delay the effectiveness of any such cancellation, termination or
modification.
Rider No. 8
Countersigned By
Attorney in fact
474204.1
<PAGE>
INSURANCE COMPANY OF NORTH AMERICA
PHILADELPHIA, PENNSYLVANIA
DEDUCTIBLE RIDER
Named Insured LEBENTHAL & CO., INC.
Effective date of rider: From noon on October 1, 1979
H.O.
To be attached to and form part of Blanket Bond, Form No. 14, No. S 62 94 51
-------------
- -------------------------------------------------------------------------------
DEDUCTIBLE RIDER FOR USE WITH BROKERS BLANKET BOND FORM 14 BROAD WHEN ISSUED
AS EXCESS COVERAGE AND SUBJECT TO A DEDUCTIBLE AMOUNT. DISCOVERY FORM ONLY.
- -------------------------------------------------------------------------------
In consideration of the premium charged for the attached bond, it is hereby
agreed that:
1. The Underwriter shall not be liable under the attached bond on account of
any loss or losses specified in the Non-Reduction of Liability Section of the
attached bond, sustained at any time but discovered after the effective date of
this rider, unless the amount of such loss or losses, after deducting the net
amount of all reimbursement and/or recovery obtained or made by the Insured,
other than from any bond or policy of insurance issued by a surety or insurance
company and covering such loss or by the Underwriter on account thereof prior to
payment by the Underwriter of such loss or losses, shall exceed in the aggregate
the sum of FIVE THOUSAND AND NO/100 Dollars ($5,000.00) and then the Underwriter
shall be liable under the attached bond, as modified by this rider, for such
excess only, but in no event for more than the amount of indemnity carried under
the attached bond on such loss or losses.
2. The amount set forth above shall be deducted from any recoveries to
which the Insured is entitled in accordance with the Section of the attached
bond entitled "Distribution of Salvage."
3. The Insured shall, in the time and in the manner prescribed in the
attached bond, give the Underwriter notice of any loss coming within the terms
of the attached bond, whether the Underwriter is liable therefor or not, and
upon the request of the Underwriter shall file with it a brief statement giving
the particulars concerning such loss.
4. If the coverage of the attached bond supersedes in whole or in part the
coverage of any other bond or policy of insurance issued by an Insurer other
than the Underwriter and terminated, cancelled or allowed to expire, the
Underwriter, with respect to any loss or losses sustained prior to such
termination, cancellation or expiration and discovered within the period
permitted under such other bond or policy for the discovery of loss thereunder,
shall be liable under the attached bond only for that part of such loss or
losses covered by the attached bond as is in excess of the amount recoverable or
recovered on account of such loss or losses under such other bond or policy,
anything to the contrary in such other bond or policy notwithstanding.
5. With respect to securities, the value of which is the deductible amount
or less, for which the Underwriter issues lost instrument bond or bonds to
effect replacement thereof, the Insured will pay a service charge as agreed upon
and will indemnify and does hereby indemnify the Underwriter against all loss or
expense, if any, that the Underwriter may ultimately sustain because of the
issuance of such lost instrument bond or bonds.
6. With respect to securities, the values of which exceed the deductible
amount, for which the Underwriter issues lost instrument bond or bonds to effect
replacement thereof, the Insured will pay such service charge as agreed upon and
will indemnify and does hereby indemnify the Underwriter against all loss or
expense, if any, that the Underwriter may ultimately sustain because of the
Issuance of such lost instrument bond or bonds, such amount of indemnity being
limited, however, to an amount equal to the percentage that the deductible
amount bears to the value of the securities at the time the Insured reported the
discovery of the loss of the securities to the Underwriter as provided in
Section 3.
7. The attached bond shall be subject to all its agreements, limitations
and conditions except as herein expressly modified.
Rider No. 9 Countersigned by
Attorney in fact
474204.1
<PAGE>
Exhibit 4.9
Insurance Company of North America
127 John Street New York NY 10038
212 440 4000
Rider to be attached to and form a part of Bond Number K00493855
on behalf of LEBENTHAL & CO., INC.
(Name)
(Principal),
and in favor or MUNICIPAL ASSISTANCE CORP. & US TRUST CORP. (Obligee),
executed by the INSURANCE COMPANY OF NORTH AMERICA, as
Surety, in the amount of OPEN ($ )
------------------------------------------- -------
Dollars, effective
The Principal and the Insurance Company of North America hereby consent to
changing the said bond as follows:
EFFECTIVE FEB. 26, 1983, INSURED'S LOCATION AND P.O. ADDRESS IS
AMENDED TO 25 BROADWAY, NEW YORK, NY 10004.
Nothing herein contained shall vary, alter or extend any provision or
condition of the bond other than as above stated.
Signed, Sealed and dated this 5th day of April 19 83
------- ---------- ----
LEBENTHAL & CO., INC.
INSURANCE COMPANY OF NORTH AMERICA
By
ROBERT DONNELLY, ATTORNEY-IN-FACT
474204.1
<PAGE>
STATE OF NEW YORK
COUNTY OF NEW YORK
On this 5th day of April, 1983, before me personally appeared ROBERT DONNELLY to
me known, who, being by me duly sworn, did depose and say "That he resides in
Westwood, NJ; that he is Attorney-in-Fact of the INSURANCE COMPANY OF NORTH
AMERICA, the corporation described in and which executed for foregoing
instrument: that he knows the corporate seal of the said Corporation; that the
seal affixed to said instrument is such corporate seal; that it was so affixed
by order of the Board of Directors of said Corporation; and that he signed his
name thereto as Attorney-in-Fact by order of the Board of Directors of said
corporation and the deponent saith further that the Superintendent of Insurance
of the State of New York has, pursuant to Section 327 of the Insurance Law of
the State of New York, issued to the INSURANCE COMPANY OF NORTH AMERICA his
certificate that said Company is qualified to become and be accepted as surety
or guarantor on all bonds, undertakings and other obligations or guarantees, as
provided in the Insurance Law of the State of New York and all laws amendatory
thereof and supplementary thereto; and that such certificate has not been
revoked; and that the assets of said Company, unencumbered and liable to
execution, exceed its debts and liabilities of every nature whatsoever by, Seven
Hundred Forty Eight Million Dollars ($748,000,000)
Witness my hand and seal the day and year aforesaid:
(Seal) .....................................
COPY OF RESOLUTION
BE IT REMEMBERED, that at a regular meeting of the Board of Directors of the
INSURANCE COMPANY OF NORTH AMERICA, duly called and held at the office of the
Company, in the City of Philadelphia, State of Pennsylvania, on the 28th day of
May, 1975, a quorum being present, the following Resolution was duly adopted.
"RESOLVED, pursuant to Articles 3.6 and 5.1 of the By-Laws, the following
Rules shall govern the execution for the Company of bonds, undertakings,
recognizances, contracts and other writings in the nature thereof: (1) That the
President, or any Vice-President, Assistant Vice-President, Resident
Vice-President or Attorney-in-Fact, may execute for and in behalf of the Company
any and all bonds, undertakings, recognizances, contracts and other writings in
the nature thereof, the same to be attested when necessary by the Secretary, an
Assistant Secretary or a Resident Assistant Secretary and the seal of the
Company affixed thereto; and that the President or any Vice-President may
appoint and authorize Resident Vice-Presidents, Resident Assistant Secretaries
and Attorneys-in-Fact to so execute or attest to the execution of all such
writings on behalf of the Company and to affix the seal of the Company thereto.
(2) Any such writing executed in accordance with these Rules shall be as binding
upon the Company in any case though signed by the President and attested by the
Secretary. (3) The signature of the President or a Vice-President and the seal
of the Company may be affixed by facsimile on any power of attorney granted
pursuant to this Resolution, and the signature of a certifying officer and the
seal of the Company may be affixed by facsimile to any certificate of any such
power, and any such power or certificate bearing such facsimile signature and
seal shall be valid and binding on the Company. (4) Such Resident Officers and
Attorneys-in-Fact shall have authority to certify or verify copies of this
Resolution, the By-Laws of the Company, and any affidavit or record of the
Company necessary to the discharge of their duties. (5) The passage of this
Resolution does not revoke any earlier authority granted by Resolution of the
Board of Directors on June 9, 1953."
<TABLE>
<CAPTION>
Financial Statement December 31, 1981
Admitted Assets Liabilities
<S> <C> <C>
Cash in Office and Banks.......... $ 72,738,886 Unpaid Claims and Claim Expense $1,960,530,806
Government Bonds (amortized values) $ 507,484,323 Unearned Premiums......... $ 687,455,238
Miscellaneous Bonds (amortized values$ 1,396,991,089 Reserve for Taxes and Expense $ 53,076,505
Stocks (market value)............. $ 962,473,158 Other Liabilities......... $ 90,836,864
Accrued Interest.................. $ 39,486,241 Funds Held by Company under
Reinsurance Treaties...... $ 26,374,948
Real Estate....................... $ 20,299,133 Reinsurance in Non-Admitted
Companies................. $ 24,012,094
Premiums in Course of Collection.. $ 339,824,948 * Ceded Reinsurance Balances Payable $ 116,922,757
Funds Held by Ceding Reinsurers... $ 54,991,181 Capital Paid In........... 0
All Other Assets.................. $ 293,301,832 Surplus Paid In........... 0
Unassigned Surplus........ $ 748,381,590
$ 3,707,592,602 $3,707,592,602
=============== ==============
</TABLE>
[*Excludes premiums more than 90 days due]
It is hereby [___________] ROBERT DONNELLY has been [________________] of the
INSURANCE COMPANY OF NORTH AMERICA at NEW YORK, NY [______________________] in
full force and effect as of date hereof, that said appointment was made under
and by authority of the foregoing [_______________________] has been compared by
me with the original thereof as recorded in the minute book of said Company and
is a true and correct [________________________] in full force and effect, and
that the foregoing is a true and correct statement of the financial condition of
the said Company as of December [_________].
IN WITNESS WHEREOF I have hereunto set my hand and affixed the seal of said
corporation this 5th day of April, 19____.
---------------------------------
Secretary
474204.1
MULLER DATA CORPORATION
A Thomson Financial Services Company
April 2, 1997
Glickenhaus & Co.
6 East 43rd Street
New York, New York 10017
Lebenthal & Co., Inc.
120 Broadway
New York, New York 10271
RE: Empire State Municipal Exempt Trust,
Guaranteed Series 134
Gentlemen:
We have examined Registration Statement File No.333-10737 for the
above-captioned trust. We hereby acknowledge that Muller Data Corporation is
currently acting as the evaluator for Empire State Municipal Exempt Trust
Guaranteed Series 134. Subsequently, 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 of the bonds comprising
the Portfolio of the Trust, as indicated the Registration Statement, are the
ratings currently indicated in our Muniview 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,
Mario S. Buscemi
Chief Operating Officer
395 Hudson Street, New York,
New York 10014-3622 -- (212) 807-3800
<PAGE>
Standard & Poor'
A Division of The McGraw-Hill Companies, Inc.
Managed Fund Ratings
25 Broadway
New York, New York 10004-1064
Telephone 212/208-8000
FAX 212/208-8034
Managed Funds Ratings
April 2, 1997
Glickenhaus & Company
6 East 43rd Street
New York, New York 10017
Re: Empire State Municipal Exempt Trust, Guaranteed Series 134
Pursuant to your request for a Standard & Poor's rating on the units of the
above-captioned trust, SEC #333-17307, we have reviewed the information
presented to us and have assigned a 'AAA' rating to the units of the trust and
a 'AAA' rating to the securities contained in the trust. The ratings are
direct reflections, of the portfolios of the trust, which will be composed
solely of securities covered by bond insurance policies that insure against
default in the payment of principal and interest on the securities. Since such
policies have been issued by MBIA, which has been assigned 'AAA' claims paying
ability ratings by Standard & Poor's, Standard & Poor's has assigned a 'AAA'
rating to the units of the trust and to the securities contained in the trust.
Please note that securities covered by bond insurance policies that insure
such securities only as long as they remain in the trust are rated 'AAA' only
as long as they remain in the trust.
Standard & Poor's will maintain serveillance on the 'AAA' rating until
May 1, 1998. On this date, the rating will be automatically withdrawn by
Standard & Poor's unless a post effective letter is requested by the Trust.
You have permission to use the name of Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. and the above-assigned ratings in
connection with your dissemination of information relating to these units,
provided that it is understood that the ratings are not "market" ratings nor
recommendations to buy, hold, or sell the units of the trust or the securities
contained in the trust. Further, it should be understood the rating on the
units does not take into account the extent to which fund expenses or
portfolio asset sales for less than the fund's purchase price will reduce
payment to the unit holders of the interest and principal required to be paid
on the portfolio assets. Standard & Poor's reserves the right to advise its
own clients, subscribers, and the public of the ratings. Standard & Poor's
relies on the sponsor and its counsel, accountants, and other experts for the
accuracy and completeness of the information submitted in connection with the
ratings. Standard & Poor's does not independently verify the truth or accuracy
of any such information.
This letter evidences our consent to the use of the name of Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc. in connection
with the rating assigned to the units in the registration statement or
prospectus relating to the units or the trust. However, this letter should not
be construed as a consent by us, within the meaning of Section 7 of the
Securities Act of 1933, to the use of the name of Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc. in connection with the
ratings assigned to the securities contained in the trust. You are hereby
authorized to file a copy of this letter with the Securities and Exchange
Commission.
Please be certain to send us a copy of your final prospectus as soon as it
becomes available. Should we not receive them within a reasonable time after
the closing or should they not conform to the representations made to us, we
reserve the right to withdraw the rating.
We are pleased to have had the opportunity to be of service to you. If we can
be of further help, please do not hesitate to call upon us.
Sincerely,
Sanford B. Bragg
Managing Director
EXHIBIT 99.5.2
Moody's Investors Service
99 Church Street
New York, NY 10007
April 2, 1997
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
RE: Empire State Municipal Exempt
Trust, Guaranteed Series 134
Gentlemen:
Moody's Investors Service has assigned the rating of Aaa
(MBIA Insurance Corp.) to each of the bonds insured by MBIA
Insurance Corporation, comprising Empire State Municipal
Exempt Trust, Guaranteed Series 134. The rating is based
upon an insurance policy provided by MBIA Insurance
Corporation. The rating applies to each bond only while it is
held in such trust.
Please send us a final Prospectus when available. Should
you have any questions regarding the above, please do not
hesitate to contact the assigned analyst, Margaret
Kessler, at (212) 553-7884.
Sincerely yours,
Laura Levenstein
Vice President and Managing
Director
DNH:vlw
GENERAL PARTNER'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS I, Alfred Feinman, a General
Partner of Glickenhaus & Co., a New York Limited Partnership, (the "Sponsor"),
hereby constitute and appoint Michael J. Lynch, Anne K. Thorsen and James R.
Vaccacio, and any other General Partner, jointly and severally, his
attorneys-in-fact, each with full power of substitution, to sign on his behalf
and in his name and to file with the Securities and Exchange Commission a
Registration Statement on Form S-6 under the Securities Act of 1933, as amended,
and any and all amendments thereto, including post-effective amendments,
exhibits and any and all other appropriate documents in connection therewith,
relating to the proposed registration and issuance of units in one or more
series of Empire State Municipal Exempt Trust, Glickenhaus Special Situations
Trust, Glickenhaus Value Portfolios, or any other unit investment trust
established in accordance with the Investment Company Act of 1940 for which
Glickenhaus & Co., alone or with others, will act as Depositor or Sponsor and/or
Underwriter, and hereby grant unto each of said attorneys-in-fact full power and
authority to do and perform each and every lawful act and deed necessary to
effectuate such Registration Statements that each or any of them may lawfully do
or cause to be done.
IN WITNESS WHEREOF, the undersigned General Partner of
Glickenhaus & Co. has hereunto set his hand and this 14th day of March 1997.
/s/ Alfred Feinman
Alfred Feinman
STATE OF NEW YORK )
:
COUNTY OF NEW YORK )
On this 14th day of March 1997 personally appeared before me,
a Notary Public in and for said County and State, the person named above who is
known to me to be the person whose name and signature are affixed to the
foregoing Power of Attorney and who acknowledged the same to be his voluntary
act and deed for the intents and purposes therein set forth.
Notary Public
/s/ Barbara Ann Colucci
466241.1
<PAGE>
GENERAL PARTNER'S POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS I, Seth Glickenhaus, a General
Partner of Glickenhaus & Co., a New York Limited Partnership, (the "Sponsor"),
hereby constitute and appoint Michael J. Lynch, Anne K. Thorsen and James R.
Vaccacio, and any other General Partner, jointly and severally, his
attorneys-in-fact, each with full power of substitution, to sign on his behalf
and in his name and to file with the Securities and Exchange Commission a
Registration Statement on Form S-6 under the Securities Act of 1933, as amended,
and any and all amendments thereto, including post-effective amendments,
exhibits and any and all other appropriate documents in connection therewith,
relating to the proposed registration and issuance of units in one or more
series of Empire State Municipal Exempt Trust, Glickenhaus Special Situations
Trust, Glickenhaus Value Portfolios, or any other unit investment trust
established in accordance with the Investment Company Act of 1940 for which
Glickenhaus & Co., alone or with others, will act as Depositor or Sponsor and/or
Underwriter, and hereby grant unto each of said attorneys-in-fact full power and
authority to do and perform each and every lawful act and deed necessary to
effectuate such Registration Statements that each or any of them may lawfully do
or cause to be done.
IN WITNESS WHEREOF, the undersigned General Partner of
Glickenhaus & Co. has hereunto set his hand and this 14th day of March 1997.
/s/ Seth M. Glickenhaus
Seth M. Glickenhaus
STATE OF NEW YORK )
:
COUNTY OF NEW YORK )
On this 14th day of March 1997 personally appeared before me,
a Notary Public in and for said County and State, the person named above who is
known to me to be the person whose name and signature are affixed to the
foregoing Power of Attorney and who acknowledged the same to be his voluntary
act and deed for the intents and purposes therein set forth.
/s/ Barbara Ann Colucci
Notary Public
466241.1
<PAGE>
<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> MAR-31-1998
<PERIOD-START> APR-2-1997
<PERIOD-END> APR-2-1997
<PERIOD-TYPE> OTHER
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 9,489,056
<RECEIVABLES> 164,736
<ASSETS-OTHER> 22,500
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 9,676,292
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 187,236
<TOTAL-LIABILITIES> 187,236
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9,489,056
<SHARES-COMMON-STOCK> 10,000
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 9,489,056
<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> 10,000
<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> 9,489,056
<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> 949
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
