<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1996.
REGISTRATION NO. 333-5696
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ELMWOOD FUNDING LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CAYMAN ISLANDS N/A
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
P.O. BOX 1984
ELIZABETHAN SQUARE
GEORGE TOWN
GRAND CAYMAN
BRITISH WEST INDIES
(809) 949-8244
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
CITIBANK, N.A.
399 PARK AVENUE
11TH FLOOR
NEW YORK, NEW YORK 10043
ATTENTION: DONALD A. BENDERNAGEL
(212) 559-0985
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPY TO:
DONALD A. BENDERNAGEL, ESQ. BRIAN D. RANCE, ESQ.
CITICORP SECURITIES, INC. MILBANK, TWEED, HADLEY & MCCLOY
399 PARK AVENUE 1 CHASE MANHATTAN PLAZA
11TH FLOOR NEW YORK, NEW YORK 10005
NEW YORK, NEW YORK 10043
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined
by market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
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CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE AGGREGATE REGISTRATION
BEING REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) FEE
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<S> <C> <C> <C> <C>
Debt-Backed Pass-Through
Trust Certificates..... $1,000,000 100% $1,000,000 $344.83
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL HEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
CROSS-REFERENCE SHEET FURNISHED
PURSUANT TO RULE 404(A)
<TABLE>
<CAPTION>
ITEMS AND CAPTION IN FORM S-3 HEADING IN PROSPECTUS
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<C> <S> <C>
1. Forepart of the Registration
Statement Outside Front Cover Forepart of Registration Statement and
Page of Prospectus............. Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus...... Inside Front Page of Prospectus
3. Summary Information, Risk
Factors and Ratio of Earnings Summary of Terms; Risk Factors;
to Fixed Charges............... Maturity and Yield Considerations.
4. Use of Proceeds................ Use of Proceeds
5. Determination of Offering
Price.......................... *
6. Dilution....................... *
7. Selling Security Holders....... *
8. Plan of Distribution........... Plan of Distribution
9. Description of Securities to be
Registered..................... Description of Certificates
10. Interests of Named Experts and
Counsel........................ Legal Opinions
11. Material Changes............... *
12. Incorporation of Certain Incorporation of Certain Documents by
Information by Reference....... Reference
13. Disclosure of Commission
Position on Indemnification for
Securities Act Liabilities..... *
</TABLE>
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* Answer negative or item inapplicable.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS +
+OF ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PRELIMINARY PROSPECTUS
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TRUST CERTIFICATES
(ISSUABLE IN SERIES)
ELMWOOD FUNDING LIMITED
(A COMPANY INCORPORATED WITH LIMITED LIABILITY
IN THE CAYMAN ISLANDS ON SEPTEMBER 17, 1996)
DEPOSITOR
The Trust Certificates (the "Certificates") offered hereby and by supplements
(each a "Prospectus Supplement") to this Prospectus will be offered from time
to time in one or more series (each a "Series"), denominated in dollars or in
one or more foreign or composite currencies, which may include the European
Currency Unit ("ECU"). Certificates of each respective Series will be offered
on terms to be determined at the time of sale as described in the related
Prospectus Supplement accompanying the delivery of this Prospectus.
Certificates may be sold for United States dollars or for one or more foreign
or composite currencies, and the principal of, premium, if any, and any
interest to be distributed in respect of Certificates may be payable in United
States dollars or in one or more foreign or composite currencies. Each Series
of Certificates may be issuable as individual securities in registered form
without coupons ("Registered Certificates") or in bearer form with or without
coupons attached ("Bearer Certificates") or as one or more global securities in
registered or bearer form (each a "Global Security").
Each Series of Certificates will represent in the aggregate the entire
beneficial ownership interest in a publicly issued, fixed income debt security
or a pool of such debt securities (the "Underlying Securities"), together with
certain other assets described herein and in the related Prospectus Supplement
(such assets, together with the Underlying Securities, the "Deposited Assets"),
to be deposited in a trust (the "Trust") for the benefit of holders of
Certificates of such Series ("Certificateholders") by Elmwood Funding Limited,
a company incorporated with limited liability in the Cayman Islands on
September 17, 1996 (the "Depositor"), pursuant to a Trust Agreement and a
series supplement thereto with respect to any given Series (collectively, the
"Trust Agreement") among the Depositor, the administrative agent, if any (the
"Administrative Agent") and the trustee (the "Trustee") named in the related
Prospectus Supplement. The Underlying Securities will be purchased by the
Depositor in the secondary market (either directly or through an affiliate of
the Depositor), and will not be acquired from the issuer thereof as part of any
distribution by or pursuant to any agreement with such issuer. The Underlying
Securities discussed herein and in the related Prospectus Supplement represent
the obligation of one or more corporations, banking organizations or insurance
companies organized under the laws of the United States or any State, which are
subject to the information requirements of the Securities Exchange Act of 1934,
as amended, and which, in accordance therewith, file reports and other
information with the Securities Exchange Commission. See "Description of
Certificates".
Except as otherwise provided herein and in the applicable Prospectus
Supplement, the Depositor's only obligations with respect to each Series of
Certificates will be, pursuant to certain representations and warranties
concerning the Deposited Assets, to assign and deliver the Deposited Assets and
certain related documents to the applicable Trustee and, in certain cases, to
provide for the Credit Support, if any. The principal obligations of an
Administrative Agent, if any is named in the applicable Prospectus Supplement,
with respect to a Series of Certificates will perform its contractual
administrative obligations to the extent provided in the related Prospectus
Supplement.
The Certificates of each Series will not represent an obligation of or interest
in the Depositor, any Administrative Agent or any of their respective
affiliates, except to the limited extent described herein and in the related
Prospectus Supplement. Neither the Certificates nor the Deposited Assets
(unless otherwise specified in such Prospectus Supplement) will be guaranteed
or insured by any governmental agency or instrumentality, or by the Depositor,
any Administrative Agent or their respective affiliates.
Application will be made to list each Series of Certificates on the New York
Stock Exchange. At the time of issue, each Series of Certificates offered
hereby will be rated in one of the investment grade categories recognized by
one or more nationally recognized rating agencies.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH HEREIN UNDER "RISK
FACTORS," BEGINNING ON PAGE 4.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The Certificates may be offered and sold to or through underwriters, dealers or
agents or directly to purchasers, as more fully described under "Plan of
Distribution" and in the related Prospectus Supplement. This Prospectus may not
be used to consummate sales of Certificates offered hereby unless accompanied
by a Prospectus Supplement.
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CITICORP SECURITIES, INC.
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Subject to Completion, dated September 30, 1996
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a Series of Certificates to be offered
thereby and hereby will set forth, among other things, the following with
respect to such Series: (a) the specific designation and aggregate principal
amount, (b) the currency or currencies in which the principal (the "Specified
Principal Currency"), premium, if any (the "Specified Premium Currency"), and
any interest (the "Specified Interest Currency") are distributable (the
Specified Principal Currency, the Specified Premium Currency and the Specified
Interest Currency being collectively referred to as the "Specified Currency"),
(c) certain information concerning the type, characteristics and
specifications of the Deposited Assets, (d) the name of the Trustee and the
Administrative Agent, if any, for such Series, (e) the Pass Through Rate (as
defined below) or the terms relating to the applicable method of calculation
thereof, (f) the time and place of distribution (each such date, a
"Distribution Date") of any interest, premium (if any) and/or principal, (g)
the date of issue, (h) the scheduled final Distribution Date, if applicable,
(i) the offering price, and (j) any exchange, whether mandatory or optional,
the redemption terms and any other specific terms of Certificates of each such
Series. See "Description of Certificates--General" for a listing of other
items that may be specified in the applicable Prospectus Supplement.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (together with all
amendments and exhibits, the "Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act"), relating to the Certificates.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information,
reference is hereby made to the Registration Statement.
The Depositor will be subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith will file reports and other information with the
Commission. Reports and other information concerning the Depositor can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and
at the Commission's Regional Offices at Seven World Trade Center, New York,
New York 10048, and Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Copies of such material can be obtained upon
written request addressed to the Commission, Public Reference Section, 450
Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Depositor
does not intend to send any financial reports to Certificateholders.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Depositor pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Certificates shall be deemed to be
incorporated by reference in this Prospectus. Any statement contained herein
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Depositor will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of any such
person, a copy of any or all of the documents incorporated herein by
reference, except the exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Written requests
for such copies should be directed to Elmwood Funding Limited, c/o Deutsche
Morgan Grenfell (Cayman) Limited, P.O. Box 1984, Elizabethan Square, George
Town, Grand
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Cayman, British West Indies, Attention: Darren Riley. Telephone requests for
such copies should be directed to Elmwood Funding Limited, c/o Deutsche Morgan
Grenfell (Cayman) Limited at 809-949-8244.
REPORTS TO CERTIFICATEHOLDERS
Except as otherwise specified in the applicable Prospectus Supplement,
unless and until definitive Certificates are issued, on each Distribution Date
unaudited reports containing information concerning the related Trust will be
prepared by the related Trustee and sent on behalf of each Trust only to Cede
& Co. ("Cede"), as nominee of DTC and registered holder of the Certificates.
See "Description of Certificates--Global Securities" and "Description of the
Trust Agreement--Reports to Certificateholders; Notice". Such reports will not
constitute financial statements prepared in accordance with generally accepted
accounting principles. The Depositor, on behalf of each Trust, will cause to
be filed with the Commission such periodic reports as are required under the
Exchange Act.
IMPORTANT CURRENCY INFORMATION
Purchasers are required to pay for each Certificate in the Specified
Principal Currency for such Certificate. Currently, there are limited
facilities in the United States for conversion of U.S. dollars into foreign
currencies and vice versa, and banks do not currently offer non-U.S. dollar
checking or savings account facilities in the United States (except in certain
limited circumstances). However, if requested by a prospective purchaser of a
Certificate having a Specified Principal Currency other than U.S. dollars,
Citicorp Securities, Inc. (the "Offering Agent") will arrange for the exchange
of U.S. dollars into such Specified Principal Currency to enable the purchaser
to pay for such Certificate. Such request must be made on or before the fifth
Business Day (as defined below) preceding the date of delivery of such
Certificate or by such later date as is determined by the Offering Agent. Each
such exchange will be made by the Offering Agent on such terms and subject to
such conditions, limitations and charges as the Offering Agent may from time
to time establish in accordance with its regular foreign exchange practice (or
in accordance with the regular foreign exchange practice of an affiliated
foreign exchange dealer selected by the Offering Agent). All costs of exchange
will be borne by the purchaser.
References herein to "U.S. dollars," "U.S.$," "USD," "dollar" or "$" are to
the lawful currency of the United States.
3
<PAGE>
RISK FACTORS
Limited Liquidity. There will be no market for any Series of Certificates
prior to the issuance thereof, and there can be no assurance that a secondary
market will develop or, if it does develop, that it will provide
Certificateholders with liquidity of investment or will continue for the life
of such Certificates.
Certain Legal Aspects. The applicable Prospectus Supplement may set forth
certain legal considerations that are applicable to a specific Series of
Certificates being offered in connection with that Prospectus Supplement or
the assets assigned and delivered to the related Trust.
Limited Obligations and Interest. The Certificates will not represent a
recourse obligation of or interest in the Depositor or any of its affiliates.
Unless otherwise specified in the applicable Prospectus Supplement, the
Certificates of each Series will not be insured or guaranteed by any
government agency or instrumentality, the Depositor, the Offering Agent, any
person or entity affiliated with the Depositor or the Offering Agent, or any
other person or entity. The obligations, if any, of the Depositor with respect
to the Certificates of any Series will only be pursuant to certain limited
representations and warranties with respect to an Underlying Security, and
recourse with respect to the satisfaction of any such obligations will be
limited to any recourse for a breach of a corresponding representation or
warranty that the Depositor may have against the seller of such Underlying
Security to the Depositor. The Depositor does not have, and is not expected in
the future to have, any significant assets with which to satisfy any claims
arising from a breach of any representation or warranty. If, for example, the
Depositor were required to repurchase an Underlying Security with respect to
which the Depositor has breached a representation or warranty, its only source
of funds to make such repurchase would be from funds obtained from the
enforcement of a corresponding obligation, if any, on the part of the seller
of such Underlying Security to the Depositor.
Limited Assets. The only material assets of any Trust will be the Deposited
Assets corresponding to the related Series of Certificates being offered. The
Certificates do not represent obligations of the Depositor, the Offering
Agent, any Administrative Agent or any of their affiliates and, unless
otherwise specified in the applicable Prospectus Supplement, are not insured
or guaranteed by the Depositor, any Administrative Agent, any of their
affiliates or any other person or entity. Accordingly, Certificateholders'
receipt of distributions in respect of the Certificates will depend entirely
on the performance of and the Trust's receipt of payments with respect to the
Deposited Assets. See "Description of Deposited Assets and Credit Support".
Maturity and Redemption Considerations. The timing of distributions of
interest, premium (if any) and principal of any Series of Certificates is
affected by a number of factors, including the performance of the related
Deposited Assets, the extent of any early redemption, repayment or extension
of maturity with respect to the related Underlying Securities (including
acceleration resulting from any default or rescheduling resulting from the
bankruptcy or similar insolvency proceeding with respect to an Underlying
Securities Issuer). Certain of these factors may be influenced by a variety of
accounting, tax, economic, social and other factors. The related Prospectus
Supplement will describe the material terms of any calls, puts or other
redemption options, any extension of maturity provisions and certain other
material terms applicable to such Underlying Securities and any other
Deposited Assets. See "Maturity and Yield Considerations".
Tax Considerations. The Federal income tax consequences of the purchase,
ownership and disposition of the Certificates and the tax treatment of the
Trust will depend on the specific terms of the Certificates, the Trust and the
Deposited Assets. See the description under "Certain Federal Income Tax
Considerations" in the related Prospectus Supplement.
Ratings of the Certificates. At the time of issue, the Certificates of any
given Series offered hereby will be rated in one of the investment grade
categories recognized by one or more nationally recognized rating agencies (a
"Rating Agency"). Unless otherwise specified in the applicable Prospectus
Supplement, the rating of any Series of Certificates is based primarily on the
related Deposited Assets. The rating is not a recommendation to purchase, hold
or sell Certificates, inasmuch as such rating does not comment as to market
price or suitability
4
<PAGE>
for a particular investor. There can be no assurance that the rating will
remain for any given period of time or that the rating will not be lowered or
withdrawn entirely by the Rating Agency if in its judgment circumstances in
the future so warrant.
Global Securities. Unless otherwise specified in the related Prospectus
Supplement, the Certificates of each Series will initially be represented by
one or more Global Securities deposited with, or on behalf of, a Depository
(as defined below) and will not be issued as individual definitive
Certificates to the purchasers of such Certificates. Consequently, unless and
until such individual definitive Certificates of a particular Series are
issued, such purchasers will not be recognized as Certificateholders under the
Trust Agreement. Hence, until such time, such purchasers will only be able to
exercise the rights of Certificateholders indirectly through the Depository
and its respective participants and, as a result, the ability of any such
purchaser to pledge that Certificate to persons or entities that do not
participate in the Depository's system, or otherwise to act with respect to
such Certificate, may be limited. See "Description of Certificates--Global
Securities" and "Limitations on Issuance of Bearer Certificates" and any
further description contained in the related Prospectus Supplement.
Currency Risks. The Certificates of any given Series may be denominated in a
currency other than U.S. dollars to the extent specified in the applicable
Prospectus Supplement. This Prospectus does not describe all the risks of an
investment in such Certificates, and the Depositor disclaims any
responsibility to advise prospective purchasers of such risks as they exist
from time to time. Prospective purchasers of such Certificates should consult
their own financial and legal advisors as to the risks entailed by an
investment in such Certificates denominated in a currency other than U.S.
dollars. Such Certificates are not an appropriate investment for persons who
are unsophisticated with respect to foreign currency transactions. See
"Currency Risks".
Passive Nature of the Trust. The Trustee with respect to any Series of
Certificates will hold the Deposited Assets for the benefit of the
Certificateholders. Each Trust will generally hold the related Deposited
Assets to maturity and not dispose of them, regardless of adverse events,
financial or otherwise, which may affect any Underlying Securities Issuer or
the value of the Deposited Assets. Under certain circumstances, the holders of
the Certificates may direct the Trustee to dispose of the Underlying
Securities or take certain other actions in respect of the Deposited Assets.
The Prospectus Supplement for each Series of Certificates will set forth
information regarding additional risk factors, if any, applicable to such
Series.
THE DEPOSITOR
The Depositor was incorporated in the Cayman Islands on September 17, 1996.
The registered office of the Depositor is P.O. Box 309, Ugland House, South
Church Street, George Town, Grand Cayman, Cayman Islands, British West Indies.
The principal business office of the Depositor is at P.O. Box 1984,
Elizabethan Square, George Town, Grand Cayman, Cayman Islands, British West
Indies.
The Memorandum and Articles of Association of the Depositor provide that the
Depositor may conduct any lawful activities necessary or incidental to serving
as depositor of one or more trusts that may issue and sell Certificates.
Formation of a grantor trust will not relieve the Depositor of its obligation
to issue only securities, except for subordinated securities, rated in one of
the four highest rating categories. Pursuant to the terms of the Trust
Agreement, the Depositor may not issue any securities which would result in
the lowering of the then current ratings of the outstanding Certificates of
any Series.
5
<PAGE>
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement, the net
proceeds to be received from the sale of each Series of Certificates (whether
or not offered hereby) will be used by the Depositor to purchase the related
Deposited Assets. Any remaining net proceeds, if any, will be used by the
Depositor for general corporate purposes.
FORMATION OF THE TRUST
The Depositor will assign and deliver the Deposited Assets for each Series
of Certificates to the Trustee named in the applicable Prospectus Supplement,
in its capacity as Trustee, for the benefit of the Certificateholders of such
Series. See "Description of the Trust Agreement--Assignment of Deposited
Assets". The Trustee named in the applicable Prospectus Supplement will
administer the Deposited Assets pursuant to the Trust Agreement and will
receive a fee for such services (the "Trustee's Fee"). Any Administrative
Agent named in the applicable Prospectus Supplement will perform such tasks as
are specified therein and in the Trust Agreement and will receive a fee for
such services (the "Administration Fee") as specified in the Prospectus
Supplement. See "Description of the Trust Agreement--Collection and Other
Administrative Procedures" and "--Retained Interest; Administrative Agent
Compensation and Payment of Expenses". The Trustee or an Administrative Agent,
if applicable, will take such steps as may be necessary to ensure that, to the
extent the assignment of the Deposited Assets to the Trust by the Depositor
could be treated under applicable law as a financing as opposed to an absolute
sale, the Trust will have a first priority perfected security interest (or its
equivalent) in the Deposited Assets as against other creditors of the
Depositor.
Unless otherwise stated in the Prospectus Supplement, the Depositor's
assignment of the Deposited Assets to the Trustee will be without recourse to
the Depositor (except as to certain limited representations and warranties).
To the extent provided in the applicable Prospectus Supplement, the
obligations of an Administrative Agent so named therein with respect to the
Deposited Assets will consist primarily of its contractual administrative
obligations, if any, under the Trust Agreement.
Unless otherwise provided in the related Prospectus Supplement, each Trust
will consist of (i) such Deposited Assets, or interests therein, exclusive of
any interest in such assets (the "Excluded Interest") retained or acquired by
the Depositor, or any previous owner thereof or any other person or entity, as
from time to time are specified in the Trust Agreement; (ii) such assets as
from time to time are identified as deposited in the related Certificate
Account; (iii) property, if any, acquired on behalf of Certificateholders by
foreclosure or repossession and any revenues received thereon; and (iv) the
rights under the agreement or agreements pursuant to which the Trustee has
acquired such Deposited Assets.
MATURITY AND YIELD CONSIDERATIONS
Each Prospectus Supplement will, to the extent applicable, contain
information with respect to the type and maturities of the related Underlying
Securities and the terms, if any, upon which such Underlying Securities may be
subject to early redemption (either by the applicable obligor or pursuant to a
third-party call option), repayment (at the option of the holders thereof) or
extension of maturity. The provisions of the Underlying Securities with
respect to the foregoing will, unless otherwise specified in the applicable
Prospectus Supplement, affect the weighted average life of the related Series
of Certificates.
The effective yield to holders of the Certificates of any Series may be
affected by certain aspects of the Deposited Assets. With respect to any
Series of Certificates the Underlying Securities of which consist of one or
more redeemable securities, extendable securities or securities subject to a
third-party call option, the yield to maturity of such Series may be affected
by any optional or mandatory redemption or repayment or extension of the
related Underlying Securities, or by the exercise of such call option, prior
to the stated maturity thereof. A
6
<PAGE>
variety of tax, accounting, economic and other factors will influence whether
an issuer exercises any right of redemption in respect of its securities. All
else remaining equal, if prevailing interest rates fall significantly below
the interest rates on the related Underlying Securities, the likelihood of
redemption would be expected to increase. There can be no certainty as to
whether any Underlying Security redeemable at the option of the Underlying
Security Issuer or otherwise, or callable at the option of a third party, will
be repaid or called prior to its stated maturity.
Unless otherwise specified in the related Prospectus Supplement, each of the
Underlying Securities will be subject to acceleration upon the occurrence of
certain Underlying Security Events of Default (as defined below). The maturity
and yield on the Certificates will be affected by any early repayment of the
Underlying Securities as a result of the acceleration of the Outstanding Debt
Securities (as defined below) by the holders thereof. See "Description of the
Deposited Assets--Underlying Securities Indenture". If an Underlying
Securities Issuer becomes subject to a bankruptcy or similar insolvency
proceeding, the timing and amount of payments with respect to both interest
and principal may be materially and adversely affected. A variety of factors
influence the performance of private debt issuers and correspondingly may
affect an Underlying Securities Issuer's ability to satisfy its obligations
under the Underlying Securities, including the Underlying Securities Issuer's
operating and financial condition, capital structure and social, geographic,
legal and economic factors.
The extent to which the yield to maturity of such Certificates may vary from
the anticipated yield due to the rate and timing of payments on the Deposited
Assets will depend upon the degree to which they are purchased at a discount
or premium and the degree to which the timing of payments thereon is sensitive
to the rate and timing of payments on the Deposited Assets.
The yield to maturity of any Series of Certificates will also be affected by
variations in the interest rates applicable to, and the corresponding payments
in respect of, such Certificates, to the extent that the Pass-Through Rate for
such Series is based on variable or adjustable interest rates. With respect to
any Series of Certificates representing an interest in a pool of corporate
debt securities, disproportionate principal payments (whether resulting from
differences in amortization schedules, payments due on scheduled maturity or
upon early redemption) on the related Underlying Securities having interest
rates higher or lower than the then applicable Pass-Through Rates applicable
to such Certificates may affect the yield thereon.
The Prospectus Supplement for each Series of Certificates will set forth
additional information regarding yield and maturity considerations applicable
to such Series and the related Deposited Assets, including the applicable
Underlying Securities.
DESCRIPTION OF CERTIFICATES
Each Series of Certificates will be issued pursuant to a Trust Agreement and
a separate series supplement thereto among the Depositor, the Administrative
Agent, if any, and the Trustee named in the related Prospectus Supplement, a
form of which Trust Agreement is attached as an exhibit to the Registration
Statement. The provisions of the Trust Agreement (as so supplemented) may vary
depending upon the nature of the Certificates to be issued thereunder and the
nature of the Deposited Assets and related Trust. The following summaries
describe certain provisions of the Trust Agreement which may be applicable to
each Series of Certificates. The applicable Prospectus Supplement for a Series
of Certificates will describe any provision of the Trust Agreement that
materially differs from the description thereof contained in this Prospectus.
The following summaries do not purport to be complete and are subject to the
detailed provisions of the form of Trust Agreement to which reference is
hereby made for a full description of such provisions, including the
definition of certain terms used, and for other information regarding the
Certificates. Article and section references in parentheses below are to
articles and sections in the Trust Agreement. Wherever particular sections or
defined terms of the Trust Agreement are referred to, such sections or defined
terms are incorporated herein by reference as part of the statement made, and
the statement is qualified in its entirety by such reference. As used herein
with respect to any Series, the term "Certificate" refers to all the
Certificates of that Series, whether or not offered hereby and by the related
Prospectus Supplement, unless the context otherwise requires.
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A copy of the applicable series supplement to the Trust Agreement relating
to each Series of Certificates issued from time to time will be filed by the
Depositor as an exhibit to a Current Report on Form 8-K to be filed with the
Commission following the issuance of such Series.
GENERAL
There is no limit on the amount of Certificates that may be issued under the
Trust Agreement (Section 5.01). Each Series of Certificates to be issued under
the Trust Agreement will represent the entire beneficial ownership interest in
the Trust for such Series created pursuant to the Trust Agreement.
Reference is made to the related Prospectus Supplement for a description of
the following terms of the Series of Certificates in respect of which this
Prospectus and such Prospectus Supplement are being delivered:
(i) the title of such Certificates;
(ii) the Series of such Certificates;
(iii) certain information concerning the type, characteristics and
specifications of the Deposited Assets being deposited into the related
Trust by the Depositor (and, with respect to any Underlying Security which
at the time of such deposit represents a significant portion of all such
Deposited Assets, certain information concerning the terms of each such
Underlying Security, the identity of the issuer thereof and where publicly
available information regarding such issuer may be obtained);
(iv) the dates on which or periods during which such Series of
Certificates may be issued (each, an "Original Issue Date"), the offering
price thereof and the applicable Distribution Dates on which the principal,
if any, of (and premium, if any, on) such Series will be distributable;
(v) whether the Certificates of such Series are Fixed Rate Certificates
or Floating Rate Certificates (each as defined below) and the applicable
interest rate (the "Pass-Through Rate"), or the terms relating to the
particular method of calculation thereof applicable to such Series, if
variable (a "Variable Pass-Through Rate"); the date or dates from which
such interest will accrue; the applicable Distribution Dates on which
interest, principal and premium, in each case as applicable, on such Series
will be distributable and the related Record Dates, if any;
(vi) the option, if any, of any specified Certificateholder of such
Series to withdraw a portion of the assets of the Trust in exchange for
surrendering such Certificateholder's Certificate or of the Depositor or
Administrative Agent, if any, or another third party to purchase or
repurchase any Deposited Assets (in each case to the extent not
inconsistent with continued satisfaction of the applicable requirements for
exemption under Rule 3a-7 under the Investment Company Act of 1940 and all
applicable rules, regulations and interpretations thereunder) and the
periods within which or the dates on which, and the terms and conditions
upon which any such option may be exercised, in whole or in part;
(vii) the rating of each Series offered hereby;
(viii) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which such Series will be issuable;
(ix) whether the Certificates of such Series are to be issued as
Registered Certificates or Bearer Certificates or both and, if Bearer
Certificates are to be issued, whether coupons ("Coupons") will be attached
thereto; whether Bearer Certificates of such Series may be exchanged for
Registered Certificates of such Series and the circumstances under which
and the place or places at which any such exchanges, if permitted, may be
made;
(x) whether the Certificates of such Series are to be issued in the form
of one or more Global Securities and, if so, the identity of the Depository
(as defined below), if other than The Depository Trust Company, for such
Global Security or Securities;
(xi) if a temporary Certificate is to be issued with respect to such
Series, whether any interest thereon distributable on a Distribution Date
prior to the issuance of a permanent Certificate of such Series will be
credited to the account of the persons entitled thereto on such
Distribution Date;
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(xii) if a temporary Global Security is to be issued with respect to such
Series, the terms upon which beneficial interests in such temporary Global
Security may be exchanged in whole or in part for beneficial interests in a
definitive Global Security or for individual Definitive Certificates (as
defined below) of such Series and the terms upon which beneficial interests
in a definitive Global Security, if any, may be exchanged for individual
Definitive Certificates of such Series;
(xiii) if other than U.S. dollars, the Specified Currency applicable to
the Certificates of such Series for purposes of denominations and
distributions on such Series and the circumstances and conditions, if any,
when such Specified Currency may be changed, at the election of the
Depositor or a Certificateholder, and the currency or currencies in which
any principal of or any premium or any interest on such Series are to be
distributed pursuant to such election;
(xiv) all applicable Required Percentages and Voting Rights (each as
defined below) relating to the manner and percentage of votes of
Certificateholders of such Series required with respect to certain actions
by the Depositor or the applicable Administrative Agent, if any, or Trustee
under the Trust Agreement or with respect to the applicable Trust; and
(xv) any other terms of such Series of Certificates not inconsistent with
the provisions of the Trust Agreement relating to such Series.
Unless otherwise indicated in the applicable Prospectus Supplement,
Certificates of each Series will be issued only as Registered Certificates in
denominations of $1,000 and any integral multiple thereof and will be payable
only in U.S. dollars (Section 5.01). The authorized denominations of
Registered Certificates of a given Series having a Specified Currency other
than U.S. dollars will be set forth in the applicable Prospectus Supplement.
The United States Federal income tax consequences and ERISA consequences
relating to any Series of Certificates will be described in the applicable
Prospectus Supplement. In addition, any special considerations, the specific
terms and other information with respect to the issuance of any Series of
Bearer Certificates or Certificates on which the principal of and any premium
and interest are distributable in a Specified Currency other than U.S. dollars
will be described in the applicable Prospectus Supplement. Unless otherwise
specified in the applicable Prospectus Supplement, the U.S. dollar equivalent
of the public offering price or purchase price of a Certificate having a
Specified Principal Currency other than U.S. dollars will be determined on the
basis of the noon buying rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank of
New York (the "Market Exchange Rate") for such Specified Principal Currency on
the applicable issue date. As specified in the applicable Prospectus
Supplement, such determination will be made by the Depositor, the Trustee, the
Administrative Agent, if any, or an agent thereof as exchange rate agent for
the relevant Series of Certificates (the "Exchange Rate Agent").
Unless otherwise provided in the applicable Prospectus Supplement,
Registered Certificates may be transferred or exchanged for like Certificates
of the same Series at the corporate trust office or agency of the applicable
Trustee in the City and State of New York, subject to the limitations provided
in the Trust Agreement, without the payment of any service charge, other than
any tax or governmental charge payable in connection therewith (Section 5.04).
Bearer Certificates will be transferable by delivery. Provisions with respect
to the exchange of Bearer Certificates will be described in the applicable
Prospectus Supplement. Unless otherwise specified in the applicable Prospectus
Supplement, Registered Certificates may not be exchanged for Bearer
Certificates. The Depositor may at any time purchase Certificates at any price
in the open market or otherwise. Certificates so purchased by the Depositor
may, at the discretion of the Depositor, be held, resold or surrendered to the
Trustee for cancellation of such Certificates.
DISTRIBUTIONS
Distributions allocable to principal, premium (if any) and interest on the
Certificates of each Series will be made in the Specified Currency for such
Certificates by or on behalf of the Trustee on each Distribution Date as
specified in the related Prospectus Supplement, and the amount of each
distribution will be determined as of the
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close of business on the date specified in the related Prospectus Supplement
(the "Determination Date"). If the Specified Currency for a given Series is
other than U.S. dollars, the Administrative Agent, if any, or otherwise the
Trustee will (unless otherwise specified in the applicable Prospectus
Supplement) arrange to convert all payments in respect of each Certificate of
such Series to U.S. dollars in the manner described in the following
paragraph. The Certificateholder of a Registered Certificate of a given Series
denominated in a Specified Currency other than U.S. dollars may (if the
applicable Prospectus Supplement and such Certificate so indicate) elect to
receive all distributions in respect of such Certificate in the Specified
Currency by delivery of a written notice to the Trustee and Administrative
Agent, if any, for such Series not later than 15 calendar days prior to the
applicable Distribution Date, except under the circumstances described under
"Currency Risks--Payment Currency" below. Such election will remain in effect
until revoked by written notice to such Trustee and Administrative Agent, if
any, received by each of them not later than 15 calendar days prior to the
applicable Distribution Date.
Unless otherwise specified in the applicable Prospectus Supplement, in the
case of a Registered Certificate of a given Series having a Specified Currency
other than U.S. dollars, the amount of any U.S dollar distribution in respect
of such Registered Certificate will be determined by the Exchange Rate Agent
based on the highest firm bid quotation expressed in U.S. dollars received by
the Exchange Rate Agent at approximately 11:00 a.m., New York City time, on
the second Business Day preceding the applicable Distribution Date (or, if no
such rate is quoted on such date, the last date on which such rate was
quoted), from three (or, if three are not available, then two) recognized
foreign exchange dealers in The City of New York (one of which may be the
Offering Agent and another of which may be the Exchange Rate Agent) selected
by the Exchange Rate Agent, for the purchase by the quoting dealer, for
settlement on such Distribution Date, of the aggregate amount payable in such
Specified Currency on such payment date in respect of all Registered
Certificates. All currency exchange costs will be borne by the
Certificateholders of such Registered Certificates by deductions from such
distributions. If no such bid quotations are available, such distributions
will be made in such Specified Currency, unless such Specified Currency is
unavailable due to the imposition of exchange controls or to other
circumstances beyond the Depositor's control, in which case such distributions
will be made as described under "Currency Risks--Payment Currency" below. The
applicable Prospectus Supplement will specify such information with respect to
Bearer Certificates.
Unless otherwise provided in the applicable Prospectus Supplement and except
as provided in the succeeding paragraph, distributions with respect to
Certificates will be made (in the case of Registered Certificates) at the
corporate trust office or agency of the Trustee specified in the applicable
Prospectus Supplement in The City of New York or (in the case of Bearer
Certificates) at the principal London office of the applicable Trustee;
provided that any such amounts distributable on the final Distribution Date of
a Certificate will be distributed only upon surrender of such Certificate at
the applicable location set forth above (Sections 4.01 and 9.01). Except as
otherwise provided in the applicable Prospectus Supplement, no distribution on
a Bearer Certificate will be made by mail to an address in the United States
or by wire transfer to an account maintained by the Certificateholder thereof
in the United States.
Unless otherwise specified in the applicable Prospectus Supplement,
distributions on Registered Certificates in U.S. dollars will be made, except
as provided below, by check mailed to the Registered Certificateholders of
such Certificates (which, in the case of Global Securities, will be a nominee
of the Depository); provided that, in the case of a Series of Registered
Certificates issued between a Record Date (as defined below) and the related
Distribution Dates, interest for the period beginning on the issue date for
such Series and ending on the last day of the interest accrual period ending
immediately prior to or coincident with such Distribution Date will, unless
otherwise specified in the applicable Prospectus Supplement, be distributed on
the next succeeding Distribution Date to the Registered Certificateholders of
the Registered Certificates of such Series on the related Record Date. A
Certificateholder of $10,000,000 (or the equivalent thereof in a Specified
Principal Currency other than U.S. dollars) or more in aggregate principal
amount of Registered Certificates of a given Series shall be entitled to
receive such U.S. dollar distributions by wire transfer of immediately
available funds, but only if appropriate wire transfer instructions have been
received in writing by the Trustee for such Series not later than 15 calendar
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days prior to the applicable Distribution Date. Simultaneously with the
election by any Certificateholder to receive payments in a Specified Currency
other than U.S. dollars (as provided above), such Certificateholder shall
provide appropriate wire transfer instructions to the Trustee for such Series,
and all such payments will be made by wire transfer of immediately available
funds to an account maintained by the payee with a bank located outside the
United States.
Except as otherwise specified in the applicable Prospectus Supplement,
"Business Day" with respect to any Certificate means any day, other than a
Saturday or Sunday, that is (i) not a day on which banking institutions are
authorized or required by law or regulation to be closed in (a) The City of
New York or (b) if the Specified Currency for such Certificate is other than
U.S. dollars, the financial center of the country issuing such Specified
Currency (which, in the case of ECU, shall be Brussels, Belgium) and (ii) if
the Pass-Through Rate for such Certificate is based on LIBOR, a London Banking
Day. "London Banking Day" with respect to any Certificate means any day on
which dealings in deposits in the Specified Currency of such Certificate are
transacted in the London interbank market. The Record Date with respect to any
Distribution Date for a Series of Registered Certificates shall be specified
as such in the applicable Prospectus Supplement.
INTEREST ON THE CERTIFICATES
Fixed Rate Certificates. Each Series of Certificates with a fixed Pass-
Through Rate ("Fixed Rate Certificates") will bear interest, on the
outstanding Certificate Principal Balance, from its Original Issue Date, or
from the last date to which interest has been paid, at the fixed Pass-Through
Rate stated on the face thereof and in the applicable Prospectus Supplement
until the principal amount thereof is distributed or made available for
repayment, except that, if so specified in the applicable Prospectus
Supplement, the Pass-Through Rate for such Series may be subject to adjustment
from time to time in response to designated changes in the rating assigned to
such Certificates by one or more rating agencies, in accordance with a
schedule or otherwise, all as described in such Prospectus Supplement. Unless
otherwise set forth in the applicable Prospectus Supplement, interest on each
Series of Fixed Rate Certificates will be distributable in arrears on each
Distribution Date specified in such Prospectus Supplement. Each such
distribution of interest shall include interest accrued through the day
specified in the applicable Prospectus Supplement. Unless otherwise specified
in the applicable Prospectus Supplement, interest on Fixed Rate Certificates
will be computed on the basis of a 360-day year of twelve 30-day months.
Floating Rate Certificates. Each Series of Certificates with a variable
Pass-Through Rate ("Floating Rate Certificates") will bear interest, on the
outstanding Certificate Principal Balance, from its Original Issue Date to the
first Interest Reset Date (as defined below) for such Series at the Initial
Pass-Through Rate set forth on the face thereof and in the applicable
Prospectus Supplement. Thereafter, the Pass-Through Rate on such Series for
each Interest Reset Period (as defined below) will be determined by reference
to an interest rate basis (the "Base Rate"), plus or minus the Spread, if any,
or multiplied by the Spread Multiplier, if any. The "Spread" is the number of
basis points (one basis point equals one one-hundredth of a percentage point)
that may be specified in the applicable Prospectus Supplement as being
applicable to such Series, and the "Spread Multiplier" is the percentage that
may be specified in the applicable Prospectus Supplement as being applicable
to such Series, except that if so specified in the applicable Prospectus
Supplement, the Spread or Spread Multiplier on such Series of Floating Rate
Certificates may be subject to adjustment from time to time in response to
designated changes in the rating assigned to such Certificates by one or more
rating agencies, in accordance with a schedule or otherwise, all as described
in such Prospectus Supplement. The applicable Prospectus Supplement, unless
otherwise specified therein, will designate one of the following Base Rates as
applicable to a Floating Rate Certificate: (i) LIBOR (a "LIBOR Certificate"),
(ii) the Commercial Paper Rate (a "Commercial Paper Rate Certificate"), (iii)
the Treasury Rate (a "Treasury Rate Certificate"), (iv) the Federal Funds Rate
(a "Federal Funds Rate Certificate"), (v) the CD Rate (a "CD Rate
Certificate") or (vi) such other Base Rate (which may be based on, among other
things, one or more market indices or the interest and/or other payments
(whether scheduled or otherwise) paid, accrued or available with respect to a
designated asset, pool of assets or type of asset) as is set forth in such
Prospectus Supplement and in such Certificate. The "Index Maturity" for any
Series of Floating Rate Certificates is the period of maturity of the
instrument or obligation from which the Base Rate
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is calculated. "H.15(519)" means the publication entitled "Statistical Release
H.15(519), Selected Interest Rates," or any successor publication, published
by the Board of Governors of the Federal Reserve System. "Composite
Quotations" means the daily statistical release entitled "Composite 3:30 p.m.
Quotations for U.S. Government Securities", or any successor publication,
published by the Federal Reserve Bank of New York. Interest will be payable
only from cash received by the Trustee from the Deposited Assets or other
assets deposited in the Trust and available for application to such payment,
notwithstanding the accrual of interest on the Certificate Principal Balance
at a higher rate.
As specified in the applicable Prospectus Supplement, Floating Rate
Certificates of a given Series may also have either or both of the following
(in each case expressed as a rate per annum on a simple interest basis): (i) a
maximum limitation, or ceiling, on the rate at which interest may accrue
during any interest accrual period specified in the applicable Prospectus
Supplement ("Maximum Pass-Through Rate") and (ii) a minimum limitation, or
floor, on the rate at which interest may accrue during any such interest
accrual period ("Minimum Pass-Through Rate"). In addition to any Maximum Pass-
Through Rate that may be applicable to any Series of Floating Rate
Certificates, the Pass-Through Rate applicable to any Series of Floating Rate
Certificates will in no event be higher than the maximum rate permitted by
applicable law, as the same may be modified by United States law of general
application. The Floating Rate Certificates will be governed by the law of the
State of New York and, under such law as of the date of this Prospectus, the
maximum rate of interest, with certain exceptions, is 25% per annum on a
simple interest basis.
The Depositor will appoint, and enter into agreements with, agents (each a
"Calculation Agent") to calculate Pass-Through Rates on each Series of
Floating Rate Certificates. The applicable Prospectus Supplement will set
forth the identity of the Calculation Agent for each Series of Floating Rate
Certificates. All determinations of interest by the Calculation Agent shall,
in the absence of manifest error, be conclusive for all purposes and binding
on the holders of Floating Rate Certificates of a given Series.
The Pass-Through Rate will be reset daily, weekly, monthly, quarterly,
semiannually or annually (such period being the "Interest Reset Period", and
the first day of each Interest Reset Period being an "Interest Reset Date"),
as specified in the applicable Prospectus Supplement. Interest Reset Dates
with respect to each Series will be specified in the applicable Prospectus
Supplement; provided that unless otherwise specified in such Prospectus
Supplement, the Pass-Through Rate in effect for the ten days immediately prior
to the Scheduled Final Distribution Date will be that in effect on the tenth
day preceding such Scheduled Final Distribution Date. If an Interest Reset
Date for any Series of Floating Rate Certificates would otherwise be a day
that is not a Business Day, such Interest Reset Date will occur on a prior or
succeeding Business Day, as specified in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, interest
payable in respect of Floating Rate Certificates shall be the accrued interest
from and including the Original Issue Date of such Series or the last Interest
Reset Date to which interest has accrued and been distributed, as the case may
be, to but excluding the immediately following Distribution Date.
With respect to a Floating Rate Certificate, accrued interest shall be
calculated by multiplying the Certificate Principal Balance of such
Certificate by an accrued interest factor. Such accrued interest factor will
be computed by adding the interest factors calculated for each day in the
period for which accrued interest is being calculated. Unless otherwise
specified in the applicable Prospectus Supplement, the interest factor
(expressed as a decimal calculated to seven decimal places without rounding)
for each such day is computed by dividing the Pass-Through Rate in effect on
such day by 360, in the case of LIBOR Certificates, Commercial Paper Rate
Certificates, Federal Funds Rate Certificates and CD Rate Certificates or by
the actual number of days in the year, in the case of Treasury Rate
Certificates. For purposes of making the foregoing calculation, the variable
Pass-Through Rate in effect on any Interest Reset Date will be the applicable
rate as reset on such date.
Unless otherwise specified in the applicable Prospectus Supplement, all
percentages resulting from any calculation of the Pass-Through Rate on a
Floating Rate Certificate will be rounded, if necessary, to the nearest
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1/100,000 of 1% (.0000001), with five one-millionths of a percentage point
rounded upward, and all currency amounts used in or resulting from such
calculation on Floating Rate Certificates will be rounded to the nearest one-
hundredth of a unit (with .005 of a unit being rounded upward).
Interest on any Series of Floating Rate Certificates will be distributable
on the Distribution Dates and for the interest accrual periods as and to the
extent set forth in the applicable Prospectus Supplement.
Upon the request of the holder of any Floating Rate Certificate of a given
Series, the Calculation Agent for such Series will provide the Pass-Through
Rate then in effect and, if determined, the Pass-Through Rate that will become
effective on the next Interest Reset Date with respect to such Floating Rate
Certificate.
(1) CD Rate Certificates. Each CD Rate Certificate will bear interest for
each Interest Reset Period at the Pass-Through Rate calculated with reference
to the CD Rate and the Spread or Spread Multiplier, if any, specified in such
Certificate and in the applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the "CD
Rate" for each Interest Reset Period shall be the rate as of the second
Business Day prior to the Interest Reset Date for such Interest Reset Period
(a "CD Rate Determination Date") for negotiable certificates of deposit having
the Index Maturity designated in the applicable Prospectus Supplement as
published in H.15(519) under the heading "CDs (Secondary Market)". In the
event that such rate is not published prior to 3:00 p.m., New York City time,
on the Calculation Date (as defined below) pertaining to such CD Rate
Determination Date, then the "CD Rate" for such Interest Reset Period will be
the rate on such CD Rate Determination Date for negotiable certificates of
deposit of the Index Maturity designated in the applicable Prospectus
Supplement as published in Composite Quotations under the heading
"Certificates of Deposit". If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the "CD Rate" for such Interest Reset Period will
be calculated by the Calculation Agent for such CD Rate Certificate and will
be the arithmetic mean of the secondary market offered rates as of 10:00 a.m.,
New York City time, on such CD Rate Determination Date, of three leading
nonbank dealers in negotiable U.S. dollar certificates of deposit in The City
of New York selected by the Calculation Agent for such CD Rate Certificate for
negotiable certificates of deposit of major United States money center banks
of the highest credit standing (in the market for negotiable certificates of
deposit) with a remaining maturity closest to the Index Maturity designated in
the related Prospectus Supplement in a denomination of $5,000,000; provided
that if the dealers selected as aforesaid by such Calculation Agent are not
quoting offered rates as mentioned in this sentence, the "CD Rate" for such
Interest Reset Period will be the same as the CD Rate for the immediately
preceding Interest Reset Period (or, if there was no such Interest Reset
Period, the Initial Pass-Through Rate).
The "Calculation Date" pertaining to any CD Rate Determination Date shall be
the first to occur of (a) the tenth calendar day after such CD Rate
Determination Date or, if such day is not a Business Day, the next succeeding
Business Day or (b) the second Business Day preceding the date any
distribution of interest is required to be made following the applicable
Interest Reset Date.
(2) Commercial Paper Rate Certificates. Each Commercial Paper Rate
Certificate will bear interest for each Interest Reset Period at the Pass-
Through Rate calculated with reference to the Commercial Paper Rate and the
Spread or Spread Multiplier, if any, specified in such Certificate and in the
applicable Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Commercial Paper Rate" for each Interest Reset Period will be determined by
the Calculation Agent for such Commercial Paper Rate Certificate as of the
second Business Day prior to the Interest Reset Date for such Interest Reset
Period (a "Commercial Paper Rate Determination Date") and shall be the Money
Market Yield (as defined below) on such Commercial Paper Rate Determination
Date of the rate for commercial paper having the Index Maturity specified in
the applicable Prospectus Supplement, as such rate shall be published in
H.15(519) under the heading "Commercial Paper". In the event that such rate is
not published prior to 3:00 p.m., New York City time, on the Calculation Date
(as defined below) pertaining to such Commercial Paper Rate Determination
Date, then the "Commercial Paper
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Rate" for such Interest Reset Period shall be the Money Market Yield on such
Commercial Paper Rate Determination Date of the rate for commercial paper of
the specified Index Maturity as published in Composite Quotations under the
heading "Commercial Paper". If by 3:00 p.m., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the "Commercial Paper Rate" for such Interest Reset
Period shall be the Money Market Yield of the arithmetic mean of the offered
rates, as of 11:00 a.m., New York City time, on such Commercial Paper Rate
Determination Date of three leading dealers of commercial paper in The City of
New York selected by the Calculation Agent for such Commercial Paper Rate
Certificate for commercial paper of the specified Index Maturity placed for an
industrial issuer whose bonds are rated "AA" or the equivalent by a nationally
recognized rating agency; provided that if the dealers selected as aforesaid
by such Calculation Agent are not quoting offered rates as mentioned in this
sentence, the "Commercial Paper Rate" for such Interest Reset Period will be
the same as the Commercial Paper Rate for the immediately preceding Interest
Reset Period (or, if there was no such Interest Reset Period, the Initial
Pass-Through Rate).
"Money Market Yield" shall be a yield calculated in accordance with the
following formula:
Money Market Yield = D X 360 X 100
360 - (D X M)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the specified Index Maturity.
The "Calculation Date" pertaining to any Commercial Paper Rate Determination
Date shall be the first to occur of (a) the tenth calendar day after such
Commercial Paper Rate Determination Date or, if such day is not a Business
Day, the next succeeding Business Day or (b) the second Business Day preceding
the date any distribution of interest is required to be made following the
applicable Interest Reset Date.
(3) Federal Funds Rate Certificates. Each Federal Funds Rate Certificate
will bear interest for each Interest Reset Period at the Pass-Through Rate
calculated with reference to the Federal Funds Rate and the Spread or Spread
Multiplier, if any, specified in such Certificate and in the applicable
Prospectus Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Federal Funds Rate" for each Interest Reset Period shall be the effective
rate on the Interest Reset Date for such Interest Reset Period (a "Federal
Funds Rate Determination Date") for Federal Funds as published in H.15(519)
under the heading "Federal Funds (Effective)". In the event that such rate is
not published prior to 3:00 p.m., New York City time, on the Calculation Date
(as defined below) pertaining to such Federal Funds Rate Determination Date,
the "Federal Funds Rate" for such Interest Reset Period shall be the rate on
such Federal Funds Rate Determination Date as published in Composite
Quotations under the heading "Federal Funds/Effective Rate". If by 3:00 p.m.,
New York City time, on such Calculation Date such rate is not yet published in
either H.15(519) or Composite Quotations, then the "Federal Funds Rate" for
such Interest Reset Period shall be the rate on such Federal Funds Rate
Determination Date made publicly available by the Federal Reserve Bank of New
York which is equivalent to the rate which appears in H.15(519) under the
heading "Federal Funds (Effective)"; provided that if such rate is not made
publicly available by the Federal Reserve Bank of New York by 3:00 p.m., New
York City time, on such Calculation Date, the "Federal Funds Rate" for such
Interest Reset Period will be the same as the Federal Funds Rate in effect for
the immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Pass-Through Rate). Unless otherwise
specified in the applicable Prospectus Supplement, in the case of a Federal
Funds Rate Certificate that resets daily, the Pass-Through Rate on such
Certificate for the period from and including a Monday to but excluding the
succeeding Monday will be reset by the Calculation Agent for such Certificate
on such second Monday (or, if not a Business Day, on the next succeeding
Business Day) to a rate equal to the average of the Federal Funds Rate in
effect with respect to each such day in such week.
The "Calculation Date" pertaining to any Federal Funds Rate Determination
Date shall be the next succeeding Business Day.
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(4) LIBOR Certificates. Each LIBOR Certificate will bear interest for each
Interest Reset Period at the Pass-Through Rate calculated with reference to
LIBOR and the Spread or Spread Multiplier, if any, specified in such
Certificate and in the applicable Prospectus Supplement.
With respect to LIBOR indexed to the offered rate for U.S. dollar deposits,
unless otherwise specified in the applicable Prospectus Supplement, "LIBOR"
for each Interest Reset Period will be determined by the Calculation Agent for
any LIBOR Certificate as follows:
(i) On the second London Banking Day prior to the Interest Reset Date for
such Interest Reset Period (a "LIBOR Determination Date"), the Calculation
Agent for such LIBOR Certificate will determine the arithmetic mean of the
offered rates for deposits in U.S. dollars for the period of the Index
Maturity specified in the applicable Prospectus Supplement, commencing on
such Interest Reset Date, which appear on the Reuters Screen LIBO Page at
approximately 11:00 a.m., London time on such LIBOR Determination Date.
"Reuters Screen LIBO Page" means the display designated as page "LIBOR" on
the Reuters Monitor Money Rates Service (or such other page may replace
that page on that service for the purpose of displaying London interbank
offered rates of major banks).
(ii) If fewer than two offered rates appear on the Reuters Screen LIBO
Page on such LIBOR Determination Date, the Calculation Agent for such LIBOR
Certificate will request the principal London offices of each of four major
banks in the London interbank market selected by such Calculation Agent to
provide such Calculation Agent with their offered quotations for deposits
in U.S. dollars for the period of the specified Index Maturity, commencing
on such Interest Reset Date, to prime banks in the London interbank market
at approximately 11:00 a.m., London time, on such LIBOR Determination Date
and in a principal amount equal to an amount of not less than $1,000,000
that is representative of a single transaction in such market at such time.
If at least two such quotations are provided, "LIBOR" for such Interest
Reset Period will be the arithmetic mean of such quotations. If fewer than
two such quotations are provided, "LIBOR" for such Interest Reset Period
will be the arithmetic mean of rates quoted by three major banks in The
City of New York selected by the Calculation Agent for such LIBOR
Certificate at approximately 11:00 a.m., New York City time, on such LIBOR
Determination Date for loans in U.S. dollars to leading European banks, for
the period of the specified Index Maturity, commencing on such Interest
Reset Date, and in a principal amount equal to an amount of not less than
$1,000,000 that is representative of a single transaction in such market at
such time; provided that if fewer than three banks selected as aforesaid by
such Calculation Agent are quoting rates as mentioned in this sentence,
"LIBOR" for such Interest Reset Period will be the same as LIBOR for the
immediately preceding Interest Reset Period (or, if there was no such
Interest Reset Period, the Initial Pass-Through Rate).
If LIBOR with respect to any LIBOR Certificate is indexed to the offered
rates for deposits in a currency other than U.S. dollars, the applicable
Prospectus Supplement will set forth the method for determining such rate.
(5) Treasury Rate Certificates. Each Treasury Rate Certificate will bear
interest for each Interest Reset Period at the Pass-Through Rate calculated
with reference to the Treasury Rate and the Spread or Spread Multiplier, if
any, specified in such Certificate and in the applicable Prospectus
Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the
"Treasury Rate" for each Interest Reset Period will be the rate for the
auction held on the Treasury Rate Determination Date (as defined below) for
such Interest Reset Period of direct obligations of the United States
("Treasury bills") having the Index Maturity specified in the applicable
Prospectus Supplement, as such rate shall be published in H.15(519) under the
heading "U.S. Government Certificate-Treasury bills auction average
(investment)" or, in the event that such rate is not published prior to 3:00
p.m., New York City time, on the Calculation Date (as defined below)
pertaining to such Treasury Rate Determination Date, the auction average rate
(expressed as a bond equivalent on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) on such Treasury Rate Determination
Date as otherwise announced by the United States Department of the Treasury.
In the event that the results of the auction of Treasury bills having the
specified Index Maturity are not published or reported as
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provided above by 3:00 p.m., New York City time, on such Calculation Date, or
if no such auction is held on such Treasury Rate Determination Date, then the
"Treasury Rate" for such Interest Reset Period shall be calculated by the
Calculation Agent for such Treasury Rate Certificate and shall be a yield to
maturity (expressed as a bond equivalent on the basis of a year of 365 or 366
days, as applicable, and applied on a daily basis) of the arithmetic mean of
the secondary market bid rates, as of approximately 3:30 p.m., New York City
time, on such Treasury Rate Determination Date, of three leading primary
United States government securities dealers selected by such Calculation Agent
for the issue of Treasury bills with a remaining maturity closest to the
specified Index Maturity; provided that if the dealers selected as aforesaid
by such Calculation Agent are not quoting bid rates as mentioned in this
sentence, then the "Treasury Rate" for such Interest Reset Period will be the
same as the Treasury Rate for the immediately preceding Interest Reset Period
(or, if there was no such Interest Reset Period, the Initial Pass-Through
Rate).
The "Treasury Rate Determination Date" for such Interest Reset Period will
be the day of the week in which the Interest Reset Date for such Interest
Reset Period falls on which Treasury bills would normally be auctioned.
Treasury bills are normally sold at auction on Monday of each week, unless
that day is a legal holiday, in which case the auction is normally held on the
following Tuesday, except that such auction may be held on the preceding
Friday. If, as the result of a legal holiday, an auction is so held on the
preceding Friday, such Friday will be the Treasury Rate Determination Date
pertaining to the Interest Reset Period commencing in the next succeeding
week. Unless otherwise specified in the applicable Prospectus Supplement, if
an auction date shall fall on any day that would otherwise be an Interest
Reset Date for a Treasury Rate Certificate, then such Interest Reset Date
shall instead be the Business Day immediately following such auction date.
The "Calculation Date" pertaining to any Treasury Rate Determination Date
shall be the first to occur of (a) the tenth calendar day after such Treasury
Rate Determination Date or, if such a day is not a Business Day, the next
succeeding Business Day or (b) the second Business Day preceding the date any
distribution of interest is required to be made following the applicable
Interest Reset Date.
PRINCIPAL OF THE CERTIFICATES
Unless the related Prospectus Supplement provides otherwise, each
Certificate will have a "Certificate Principal Balance" which, at any time,
will equal the maximum amount that the holder thereof will be entitled to
receive in respect of principal out of the future cash flows on the Deposited
Assets and other assets included in the related Trust. Unless otherwise
specified in the related Prospectus Supplement, distributions generally will
be applied to undistributed accrued interest on, then to principal of, and
then to premium (if any) on, each such Certificate until the aggregate
Certificate Principal Balance has been reduced to zero. The outstanding
Certificate Principal Balance of a Certificate will be reduced to the extent
of distributions of principal thereon, and, if applicable pursuant to the
terms of the related Series, by the amount of any net losses realized on any
Deposited Asset ("Realized Losses") allocated thereto. Unless the related
Prospectus Supplement provides otherwise, the initial aggregate Certificate
Principal Balance of Certificates of a Series will equal the outstanding
aggregate principal balance of the related Deposited Assets as of the
applicable Cut-off Date. The initial aggregate Certificate Principal Balance
of a Series will be specified in the related Prospectus Supplement.
Distributions of principal in respect of any Series of Certificates will be
made on a pro rata basis among all the Certificates of such Series.
FOREIGN CURRENCY CERTIFICATES
If the specified currency of any Certificate is not U.S. dollars (a "Foreign
Currency Certificate"), certain provisions with respect thereto will be set
forth in the related Prospectus Supplement which will specify the
denominations, the currency or currencies in which the principal and interest
with respect to such Certificate are to be paid and any other terms and
conditions relating to the non-U.S. dollar denominations or otherwise
applicable to the Certificates.
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OPTIONAL EXCHANGE
If a (or a specified) holder may exchange Certificates of any given Series
for a pro rata portion of the Deposited Assets, the applicable Prospectus
Supplement will designate such Series as an "Exchangeable Series". The terms
upon which a (or a specified) holder may exchange Certificates of any
Exchangeable Series for a pro rata portion of the Deposited Assets of the
related Trust will be specified in the related Prospectus Supplement; provided
that any right of exchange shall be exercisable only to the extent that such
exchange would not be inconsistent with continued satisfaction of the
applicable requirements for exemption under Rule 3a-7 under the Investment
Company Act of 1940 and all applicable rules, regulations and interpretations
thereunder. Such terms may relate to, but are not limited to, the following:
(a) a requirement that the exchanging holder tender to the Trustee all
Certificates within such Exchangeable Series;
(b) a minimum Certificate Principal Balance with respect to each
Certificate being tendered for exchange;
(c) a requirement that the Certificate Principal Balance of each
Certificate tendered for exchange be an integral multiple of an amount
specified in the Prospectus Supplement;
(d) specified dates during which a holder may effect such an exchange
(each, an "Optional Exchange Date");
(e) limitations on the right of an exchanging holder to receive any
benefit upon exchange from any assets (other than non-Underlying
Securities) deposited in the applicable Trust; and
(f) adjustments to the value of the proceeds of any exchange based upon
the required prepayment of future expense allocations and the establishment
of a reserve for any anticipated Extraordinary Trust Expenses.
Unless otherwise specified in the related Prospectus Supplement, in order
for a Certificate of a given Exchangeable Series to be exchanged by the
applicable Certificateholder, the trustee for such Certificate must receive,
at least 30 (or such shorter period acceptable to the Trustee) but not more
than 45 days prior to an Optional Exchange Date (i) such Certificate with the
form entitled "Option to Elect Exchange" on the reverse thereof duly
completed, or (ii) in the case of Registered Certificates, a telegram, telex,
facsimile transmission or letter from a member of a national securities
exchange or the National Association of Securities Dealers, Inc., the
Depository (in accordance with its normal procedures) or a commercial bank or
trust company in the United States setting forth the name of the holder of
such Registered Certificate, the Certificate Principal Balance of such
Registered Certificate to be exchanged, the certificate number or a
description of the tenor and terms of such Registration Certificate, a
statement that the option to elect exchange is being exercised thereby and a
guarantee that the Registered Certificate to be exchanged with the form
entitled "Option to Elect Exchange" on the reverse of the Registered
Certificate duly completed will be received by such Trustee not later than
five Business Days after the date of such telegram, telex, facsimile
transmission or letter. If the procedure described in clause (ii) of the
preceding sentence is followed, then such Registered Certificate and form duly
completed must be received by such Trustee by such fifth Business Day. Any
tender of a Certificate by the holder for exchange shall be irrevocable. The
exchange option may be exercised by the holder of a Certificate for less than
the entire Certificate Principal Balance of such Certificate provided that the
Certificate Principal Balance of such Certificate remaining outstanding after
redemption is an authorized denomination and all other exchange requirements
set forth in the related Prospectus Supplement are satisfied. Upon such
partial exchange, such Certificate shall be cancelled and a new Certificate or
Certificates for the remaining Certificate Principal Balance thereof shall be
issued (which, in the case of any Registered Certificate, shall be in the name
of the holder of such exchanged Certificate).
Unless otherwise specified in the applicable Prospectus Supplement, because
initially and until Definitive Certificates are issued each Certificate will
be represented by a Global Security, the Depository's nominee will be the
Certificateholder of such Certificate and therefore will be the only entity
that can exercise a right of
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exchange. In order to ensure that the Depository's nominee will timely
exercise a right of exchange with respect to a particular Certificate, the
beneficial owner of such Certificate must instruct the broker or other direct
or indirect participant through which it holds an interest in such Certificate
to notify the Depository of its desire to exercise a right of exchange.
Different firms have different cut-off times for accepting instructions from
their customers and, accordingly, each beneficial owner should consult the
broker or other direct or indirect participant through which it holds an
interest in a Certificate in order to ascertain the cut-off time by which such
an instruction must be given in order for timely notice to be delivered to the
Depository.
Unless otherwise provided in the applicable Prospectus Supplement, upon the
satisfaction of the foregoing conditions and any applicable conditions with
respect to the related Deposited Assets, as described in such Prospectus
Supplement, the applicable Certificateholder will be entitled to receive a
distribution of a pro rata share of the Deposited Assets related to the
Exchangeable Series being exchanged, in the manner and to the extent described
in such Prospectus Supplement. Alternatively, to the extent so specified in
the applicable Prospectus Supplement, the applicable Certificateholder, upon
satisfaction of such conditions, may direct the related Trustee to sell, on
behalf of such Certificateholder, such pro rata share of the Deposited Assets,
in which event the Certificateholder shall be entitled to receive the net
proceeds of such sale, less any costs and expenses incurred by such Trustee in
facilitating such sale, subject to any additional adjustments set forth in the
Prospectus Supplement.
GLOBAL SECURITIES
Unless otherwise specified in the applicable Prospectus Supplement, all
Certificates of a given Series will, upon issuance, be represented by one or
more Global Securities that will be deposited with, or on behalf of, The
Depository Trust Company, New York (for Registered Certificates denominated
and payable in U.S. dollars), or such other depositary identified in the
related Prospectus Supplement (the "Depository"), and registered in the name
of a nominee of the Depository. Global Securities may be issued in either
registered or bearer form and in either temporary or definitive form. See
"Limitations on Issuance of Bearer Certificates" for provisions applicable to
Certificates issued in bearer form. Unless and until it is exchanged in whole
or in part for the individual Certificates represented thereby (each a
"Definitive Certificate"), a Global Security may not be transferred except as
a whole by the Depository for such Global Security to a nominee of such
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository or by such Depository or any such nominee to a
successor of such Depository or a nominee of such successor (Sections 5.02 and
5.04).
The Depository Trust Company has advised the Depositor as follows: The
Depository Trust Company is a limited-purpose trust company organized under
the laws of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. The Depository Trust Company was created to hold
securities of its participants and to facilitate the clearance and settlement
of securities transactions among the institutions that have accounts with such
Depository ("participants") in such securities through electronic book-entry
changes in accounts of the participants, thereby eliminating the need for
physical movement of securities certificates. Such Depository's participants
include securities brokers and dealers (including the Offering Agent), banks,
trust companies, clearing corporations and certain other organizations, some
of which (and/or their representatives) own such Depository. Access to such
Depository's book-entry system is also available to others, such as banks,
brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly. The
Depository Trust Company has confirmed to the Depositor that it intends to
follow such procedures.
Upon the issuance of a Global Security, the Depository for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Certificates represented by
such Global Security to the accounts of its participants. The accounts to be
accredited shall be designated by the underwriters of such Certificates, or,
if such Certificates are offered and sold directly through one or more agents,
by the Depositor or such agent or agents. Ownership of beneficial interests in
a Global Security will be
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limited to participants or persons or entities that may hold beneficial
interests through participants. Ownership of beneficial interests in a Global
Security will be shown on, and the transfer of that ownership will be effected
only through, records maintained by the Depository for such Global Security or
by participants or persons or entities that hold through participants. The
laws of some states require that certain purchasers of securities take
physical delivery of such securities. Such limits and such laws may limit the
market for beneficial interests in a Global Security.
So long as the Depository for a Global Security, or its nominee, is the
owner of such Global Security, such Depository or such nominee, as the case
may be, will be considered the sole Certificateholder of the individual
Certificates represented by such Global Security for all purposes under the
Trust Agreement governing such Certificates. Except as set forth below, owners
of beneficial interests in a Global Security will not be entitled to have any
of the individual Certificates represented by such Global Security registered
in their names, will not receive or be entitled to receive physical delivery
of any such Certificates and will not be considered the Certificateholders
thereof under the Trust Agreement governing such Certificates. Because the
Depository can only act on behalf of its participants, the ability of a holder
of any Certificate to pledge that Certificate to persons or entities that do
not participate in the Depository's system, or to otherwise act with respect
to such Certificate, may be limited due to the lack of a physical certificate
for such Certificate.
Subject to the restrictions discussed under "Limitations on Issuance of
Bearer Certificates" below, distributions of principal of (and premium, if
any) and any interest on individual Certificates represented by a Global
Security will be made to the Depository or its nominee, as the case may be, as
the Certificateholder of such Global Security. None of the Depositor, the
Administrative Agent, if any, the Trustee for such Certificates, any Paying
Agent or the Certificate Registrar for such Certificates will have
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial interests in such Global Security or
for maintaining, supervising or reviewing any records relating to such
beneficial interests.
The Depositor expects that the Depository for Certificates of a given
Series, upon receipt of any distribution of principal, premium or interest in
respect of a definitive Global Security representing any of such Certificates,
will immediately credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of such Global Security as shown on the records of such Depository. The
Depositor also expects that payments by participants to owners of beneficial
interests in such Global Security held through such participants will be
governed by standing instructions and customary practices, as is now the case
with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such
participants. Receipt by owners of beneficial interests in a temporary Global
Security of payments of principal, premium or interest in respect thereof will
be subject to the restrictions discussed below under "Limitations on Issuance
of Bearer Certificates" below.
If the Depository for Certificates of a given Series is at any time
unwilling or unable to continue as depositary and a successor depositary is
not appointed by the Depositor within 90 days, the Depositor will issue
individual Definitive Certificates in exchange for the Global Security or
Securities representing such Certificates. In addition, the Depositor may at
any time and in its sole discretion determine not to have any Certificates of
a given Series represented by one or more Global Securities and, in such
event, will issue Definitive Certificates of such Series in exchange for the
Global Security or Securities representing such Certificates. Further, if the
Depositor so specifies with respect to the Certificates of a given Series, an
owner of a beneficial interest in a Global Security representing Certificates
of such Series may, on terms acceptable to the Depositor and the Depository
for such Global Security, receive individual Definitive Certificates in
exchange for such beneficial interest. In any such instance, an owner of a
beneficial interest in a Global Security will be entitled to physical delivery
of individual Definitive Certificates of the Series represented by such Global
Security equal in principal amount to such beneficial interest and to have
such Definitive Certificates registered in its name (if the Certificates of
such Series are issuable as Registered Certificates). Individual Definitive
Certificates of such Series so issued will be issued (a) as Registered
Certificates in denominations, unless otherwise specified by the Depositor, of
$1,000 and integral multiples thereof if the Certificates of such Series are
issuable as Registered
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Certificates, (b) as Bearer Certificates in the denomination or denominations
specified by the Depositor if the Certificates of such Series are issuable as
Bearer Certificates or (c) as either Registered or Bearer Certificates, if the
Certificates of such Series are issuable in either form (Section 5.03). See,
however, "Limitations on Issuance of Bearer Certificates" below for a
description of certain restrictions on the issuance of individual Bearer
Certificates in exchange for beneficial interests in a Global Security.
The applicable Prospectus Supplement will set forth any specific terms of
the depositary arrangement with respect to any Series of Certificates being
offered thereby to the extent not set forth or different from the description
set forth above.
DESCRIPTION OF DEPOSITED ASSETS
GENERAL
Each Certificate of each Series will represent an ownership interest
specified for such Series of Certificates in a designated, publicly issued,
fixed income debt security or a pool of such debt securities (the "Underlying
Securities"), purchased by the Depositor (or an affiliate thereof) in the
secondary market and assigned and delivered to a Trust as described in the
applicable Prospectus Supplement. The Underlying Securities will represent
direct obligations of one or more corporations, banking organizations or
insurance companies organized under the laws of the United States or any
state, which are subject to the informational requirements of the Exchange Act
and which, in accordance therewith, file reports and other information with
the Commission (with respect to each Underlying Security, an "Underlying
Securities Issuer").
This Prospectus relates only to the Certificates offered hereby and does not
relate to the Underlying Securities. The following description of the
Underlying Securities is intended only to summarize certain characteristics of
the Underlying Securities that the Depositor is permitted to deposit in a
Trust and does not purport to be a complete description of any Underlying
Security Prospectus and Underlying Security Indenture (as defined below).
UNDERLYING SECURITIES INDENTURE
General. Unless otherwise specified in the related Prospectus Supplement,
each Underlying Security will have been issued pursuant to an agreement (each,
an "Underlying Securities Indenture") between the Underlying Securities Issuer
and a trustee (the "Underlying Securities Trustee"). Unless otherwise
specified in the related Prospectus Supplement, the Underlying Securities
Indenture and the Underlying Securities Trustee will be qualified under the
Trust Indenture Act of 1939 (the "Trust Indenture Act") and the Underlying
Securities Indenture will contain certain provisions required by the Trust
Indenture Act.
Certain Covenants. Indentures generally contain covenants intended to
protect security holders against the occurrence or effects of certain
specified events, including restrictions limiting the issuer's, and in some
cases one or more of the issuer's subsidiaries', ability to: (i) consolidate,
merge, or transfer or lease assets; (ii) incur or suffer to exist any lien,
charge or encumbrance upon any of its property or assets, or to incur, assume,
guarantee or suffer to exist any indebtedness for borrowed money if the
payment of such indebtedness is secured by the grant of such a lien; (iii)
declare or pay any cash dividends, or make any distributions on or in respect
of, or purchase, redeem, exchange or otherwise acquire or retire for value any
capital stock or subordinated indebtedness of the issuer. An indenture may
also contain financial covenants which, among other things, require the
maintenance of certain financial ratios or the creation or maintenance of
reserves or permit certain actions to be taken only if compliance with such
covenants can be demonstrated at the time the actions are to be taken. Subject
to certain exceptions, indentures typically may be amended or supplemented and
past defaults may be waived with the consent of the indenture trustee, the
consent of the holders of not less than a specified percentage of the
outstanding securities or both.
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The Underlying Securities Indenture related to one or more Underlying
Securities included in a Trust may include some, all or none of the foregoing
provisions or variations thereof, together with additional covenants not
discussed herein. To the extent that the Underlying Securities are investment
grade debt, they are unlikely to contain significant restrictive covenants,
although certain non-investment grade debt may not be subject to significant
restrictive covenants. There can be no assurance that any such provision will
protect the Trust as a holder of the Underlying Securities against losses. The
Prospectus Supplement used to offer any Series of Certificates will describe
material covenants in relation to any Concentrated Underlying Security (as
defined below) and, as applicable, will describe material covenants which are
common to any pool of Underlying Securities.
Events of Default. Indentures generally provide that any one of a number of
specified events will constitute an event of default with respect to the
securities issued thereunder. Such events of default typically include the
following or variations thereof: (i) failure by the issuer to pay an
installment of interest or principal on the securities at the time required
(subject to any specified grace period) or to redeem any of the securities
when required (subject to any specified grace period); (ii) failure by the
issuer to observe or perform any covenant, agreement or condition contained in
the securities or the indenture which failure is materially adverse to
security holders and continues for a specified period after notice thereof is
given to the issuer by the indenture trustee or the holders of not less than a
specified percentage of the outstanding securities; (iii) failure by the
issuer and/or one or more of its subsidiaries to make any required payment of
principal (and premium, if any) or interest with respect to other materials
outstanding debt obligations or the acceleration by or on behalf of the
holders thereof of such securities; and (iv) certain events of bankruptcy or
insolvency with respect to the issuer and/or one or more of its subsidiaries.
Remedies. Indentures generally provide that upon the occurrence of an event
of default, the indenture trustee may, and upon the written request of the
holders of not less than a specified percentage of the outstanding securities
must, take such action as it may deem appropriate to protect and enforce the
rights of the security holders. Certain indentures provide that the indenture
trustee or a specified percentage of the holders of the outstanding securities
have the right to declare all or a portion of the principal and accrued
interest on the outstanding securities immediately due and payable upon the
occurrence of certain events of default, subject to the issuer's right to
cure, if applicable. Generally, an indenture will contain a provision
entitling the trustee thereunder to be indemnified by the security holders
prior to proceeding to exercise any right or power under such indenture with
respect to such securities at the request of such security holders. An
indenture is also likely to limit a security holder's right to institute
certain actions or proceedings to pursue any remedy under the indenture unless
certain conditions are satisfied, including obtaining the consent of the
indenture trustee, that the proceeding be brought for the ratable benefit of
all holders of the security and/or that the indenture trustee, after being
requested to institute a proceeding by the owners of at least a specified
minimum percentage of the securities, shall have refused or neglected to
comply with such request within a reasonable time.
Each Underlying Securities Indenture may include some, all or none of the
foregoing provisions or variations thereof, together with additional events of
default and/or remedies not discussed herein. The Prospectus Supplement with
respect to any Series of Certificates will describe the events of default
under the Underlying Securities Indenture with respect to any Concentrated
Underlying Security ("Underlying Security Events of Default") and applicable
remedies with respect thereto. With respect to any Trust comprising a pool of
securities, the applicable Prospectus Supplement will describe certain common
Underlying Security Events of Default with respect to such pool. There can be
no assurance that any such provision will protect the Trust, as a holder of
the Underlying Securities, against losses. If a Underlying Security Event of
Default occurs and the Trustee as a holder of the Underlying Securities is
entitled to vote or take such other action to declare the principal amount of
a Underlying Security and any accrued and unpaid interest thereon to be due
and payable, the Certificateholders' objectives may differ from those of
holders of other securities of the same series and class as any Underlying
Security (all such securities of the same series and class, herein
"Outstanding Debt Securities") in determining whether to require the
acceleration of the Underlying Securities.
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Subordination. As set forth in the applicable Prospectus Supplement, certain
of the Underlying Securities with respect to any Trust may be either senior
("Senior Underlying Securities") or subordinated ("Subordinated Underlying
Securities") in right to payment to other existing or future indebtedness of
the Underlying Securities Issuer. With respect to Subordinated Underlying
Securities, to the extent of the subordination provisions of such securities,
and after the occurrence of certain events, security holders and direct
creditors whose claims are senior to Subordinated Underlying Securities, if
any, may be entitled to receive payment of the full amount due thereon before
the holders of any subordinated debt securities are entitled to receive
payment on account of the principal (and premium, if any) or any interest on
such securities. Consequently, the Trust as a holder of subordinated debt may
suffer a greater loss than if it held unsubordinated debt of the Underlying
Securities Issuer. There can be no assurance, however, that in the event of a
bankruptcy or similar insolvency proceeding the Trust as a holder of Senior
Underlying Securities would receive all payments in respect of such securities
even if holders of subordinated securities receive amounts in respect of such
securities. Reference is made to the Prospectus Supplement used to offer any
Series of Certificates for a description of any subordination provisions with
respect to any Concentrated Underlying Securities and the percentage of Senior
Underlying Securities and Subordinated Underlying Securities, if any, in a
Trust comprised of a pool of securities.
Secured Obligations. Certain of the Underlying Securities with respect to
any Trust may represent secured obligations of the Underlying Securities
Issuer ("Secured Underlying Securities"). Generally, unless an event of
default shall have occurred, or with respect to certain collateral or as
otherwise set forth in the indenture pursuant to which such securities were
offered and sold, an issuer of secured obligations has the right to remain in
possession and retain exclusive control of the collateral securing a security
and to collect, invest and dispose of any income related to the collateral.
The indenture pursuant to which any secured indebtedness is issued may also
contain certain provisions for release, substitution or disposition of
collateral under certain circumstances with or without the consent of the
indenture trustee or upon the direction of not less than a specified
percentage of the security holders. The indenture pursuant to which any
secured indebtedness is issued will also provide for the disposition of the
collateral upon the occurrence of certain events of default with respect
thereto. In the event of a default in respect of any secured obligation,
security holders may experience a delay in payments on account of principal
(and premium, if any) or any interest on such securities pending the sale of
any collateral and prior to or during such period the related collateral may
decline in value. If proceeds of the sale of collateral following an indenture
event of default are insufficient to repay all amounts due in respect of any
secured obligations, the holders of such securities (to the extent not repaid
from the proceeds of the sale of the collateral) would have only an unsecured
claim ranking pari passu with the claims of all other general unsecured
creditors.
The Underlying Securities Indenture with respect to Secured Underlying
Securities may include, some, all or none of the foregoing provisions or
variations thereof. The Prospectus Supplement used to offer any Series of
Certificates that includes Concentrated Underlying Securities which are
Secured Underlying Securities will describe the security provisions of such
Underlying Securities and the related collateral. With respect to any Trust
composed of a pool of securities, a substantial portion of which are Secured
Underlying Securities, the applicable Prospectus Supplement will disclose
certain general information with respect to such security provisions and the
collateral.
PRINCIPAL ECONOMIC TERMS OF UNDERLYING SECURITIES
Reference is made to the applicable Prospectus Supplement with respect to
each Series of Certificates for a description of the following terms, as
applicable, of any Concentrated Underlying Security: (i) the title and series
of such Underlying Securities, and the aggregate principal amount,
denomination and form thereof; (ii) whether such securities are senior or
subordinated to any other obligations of the Underlying Securities Issuer;
(iii) whether any of the obligations are secured or unsecured and the nature
of any collateral; (iv) the limit, if any, upon the aggregate principal amount
of such debt securities; (v) the dates on which, or the range of dates within
which, the principal of (and premium, if any, on) such debt securities will be
payable; (vi) the rate or rates or the method of determination thereof, at
which such Underlying Securities will bear interest, if any ("Underlying
Securities Rate"); the date or dates from which such interest will accrue
("Underlying Securities Interest Accrual
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Periods"); and the dates on which such interest will be payable ("Underlying
Securities Payment Dates"); (vii) the obligation, if any, of the Underlying
Securities Issuer to redeem the Outstanding Debt Securities pursuant to any
sinking fund or analogous provisions, or at the option of a holder thereof,
and the periods within which or the dates on which, the prices at which and
the terms and conditions upon which such debt securities may be redeemed or
repurchased, in whole or in part, pursuant to such obligation; (viii) the
periods within which or the dates on which, the prices at which and the terms
and conditions upon which such debt securities may be redeemed, if any, in
whole or in part, at the option of the Underlying Securities Issuer; (ix)
whether the Underlying Securities were issued at a price lower than the
principal amount thereof; (x) if other than United States dollars, the foreign
or composite currency in which such debt securities are denominated, or in
which payment of the principal of (and premium, if any) or any interest on
such Underlying Securities will be made (the "Underlying Securities
Currency"), and the circumstances, if any, when such currency of payment may
be changed; (xi) material events of default or restrictive covenants provided
for with respect to such Underlying Securities; (xii) the rating thereof, if
any, and (xiii) any other terms of such Underlying Securities deemed by the
Offering Agent to be material to an investment in the Certificates.
With respect to a Trust comprised of a pool of Underlying Securities, the
related Prospectus Supplement will describe the composition of the Underlying
Securities pool as of the Cut-off Date, certain material events of default or
restrictive covenants common to the Underlying Securities, and, on an
aggregate, percentage or weighted average basis, as applicable, the
characteristics of the pool with respect to the terms set forth in (ii),
(iii), (v), (vi), (vii), (viii) and (ix) of the preceding paragraph and any
other material terms regarding such pool of securities.
In addition to the foregoing, with respect to each Concentrated Underlying
Security the applicable Prospectus Supplement will disclose the identity of
the applicable obligor and the Underlying Securities Trustee, and will
describe the existence and type of certain information that is made publicly
available by each obligor regarding such Underlying Security or Underlying
Securities and will disclose where and how prospective purchasers of the
Certificates may obtain such publicly available information with respect to
each such obligor. Such publicly available information will typically consist
of the quarterly and annual reports filed under the Exchange Act with, and
which are available from, the Commission.
If an obligor on Concentrated Underlying Securities ceases to file periodic
reports under the Exchange Act, the Depositor will continue to be subject to
the reporting requirements of the Exchange Act but certain information with
respect to such obligor may be unavailable.
OTHER DEPOSITED ASSETS
In addition to the Underlying Securities, the Depositor may also deposit
into a given Trust, or the Trustee on behalf of the Certificateholders of a
Trust may enter into an agreement constituting or providing for the purchase
of, to the extent described in the related Prospectus Supplement, certain
assets related or incidental to one or more of such Underlying Securities or
to some other asset deposited in the Trust, including hedging contracts and
other similar arrangements (such as puts, calls, interest rate swaps, currency
swaps, floors, caps and collars, cash and assets ancillary or incidental to
the foregoing or to the Underlying Securities (including assets obtained
through foreclosure or in settlement of claims with respect thereto) and
direct obligations of the United States (all such assets for any given Series,
together with the related Underlying Securities, the "Deposited Assets"). The
applicable Prospectus Supplement will, to the extent appropriate, contain
analogous disclosure with respect to the foregoing assets as referred to above
with respect to the Underlying Securities.
Unless otherwise specified in the related Prospectus Supplement, the
Deposited Assets for a given Series of Certificates and the related Trust will
not constitute Deposited Assets for any other Series of Certificates and the
related Trust, and the Certificates of a given Series will possess an equal
and ratable undivided ownership interest in such Deposited Assets.
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COLLECTIONS
The Trust Agreement will establish procedures by which the Trustee or such
other person specified in the Prospectus Supplement is obligated, for the
benefit of the Certificateholders of each Series of Certificates, to
administer the related Deposited Assets, including making collections of all
payments made thereon, depositing from time to time prior to any applicable
Distribution Date such collections into a segregated trust account maintained
or controlled by the applicable Trustee for the benefit of such Series (each a
"Certificate Account"). An Administrative Agent, if any is appointed pursuant
to the applicable Prospectus Statement, will direct the Trustee, and otherwise
the Trustee will make all determinations, as to the appropriate application of
such collections and other amounts available for distribution to the payment
of any administrative or collection expenses (such as the administrative fee)
and to the payment of amounts then due and owing on the Certificates of such
Series, all in the manner and priorities described in the related Prospectus
Supplement. The applicable Prospectus Supplement will specify the collection
periods, if applicable, and Distribution Dates for a given Series of
Certificates and the particular requirements relating to the segregation and
investment of collections received on the Deposited Assets during a given
collection period or on or by certain specified dates. There can be no
assurance that amounts received from the Deposited Assets for a particular
Series of Certificates over a specified period will be sufficient, after
payment of all prior expenses and fees for such period, to pay amounts then
due and owing to holders of such Certificates.
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DESCRIPTION OF THE TRUST AGREEMENT
GENERAL
The following summary of certain provisions of the Trust Agreement and the
Certificates does not purport to be complete and such summary is qualified in
its entirety by reference to the detailed provisions of the form of Trust
Agreement filed as an exhibit to the Registration Statement. Article and
section references in parentheses below are to articles and sections in the
Trust Agreement. Wherever particular sections or defined terms of the Trust
Agreement are referred to, such sections or defined terms are incorporated
herein by reference as part of the statement made, and the statement is
qualified in its entirety by such reference.
ASSIGNMENT OF DEPOSITED ASSETS
At the time of issuance of any Series of Certificates, the Depositor will
cause the Underlying Securities to be included in the related Trust, and any
other Deposited Asset specified in the Prospectus Supplement, to be assigned
and delivered to the related Trustee, together with all principal, premium (if
any) and interest received by or on behalf of the Depositor on or with respect
to such Deposited Assets after the cut-off date specified in the Prospectus
Supplement (the "Cut-off Date"), other than principal, premium (if any) and
interest due on or before the Cut-off Date and other than any Retained
Interest (Section 2.01). The Trustee will, concurrently with such assignment,
deliver the Certificates to the Depositor in exchange for certain assets to be
deposited in the Trust (Section 2.05). Each Deposited Asset will be identified
in a schedule appearing as an exhibit to the Trust Agreement. Such schedule
will include certain summary identifying information with respect to each
Underlying Security and each other Deposited Asset as of the Cut-off Date, and
in the event any Underlying Security represents 10% or more of the total
Underlying Securities with respect to any Series of Certificates (a
"Concentrated Underlying Security"), such schedule will include, to the extent
applicable, information regarding the payment terms thereof, the Retained
Interest, if any, with respect thereto, the maturity or terms thereof, the
rating, if any, thereof and certain other information with respect thereto.
In addition, the Depositor will, with respect to each Deposited Asset,
deliver or cause to be delivered to the Trustee (or to the custodian
hereinafter referred to) all documents necessary to transfer ownership of such
Deposited Asset to the Trustee. The Trustee (or such custodian) will review
such documents upon receipt thereof or within such period as is permitted in
the Prospectus Supplement, and the Trustee (or such custodian) will hold such
documents in trust for the benefit of the Certificateholders (Sections 2.01
and 2.02).
With respect to certain types of Deposited Assets specified in the
applicable Prospectus Supplement if and to the extent provided therein, if any
such document is found to be missing or defective in any material respect, the
Trustee (or such custodian) shall immediately notify the Administrative Agent,
if any, and the Depositor, and the Administrative Agent, if any, and the
Depositor shall immediately notify the relevant person who sold the applicable
Deposited Asset to the Depositor (a "Deposited Asset Provider"). If and to the
extent specified in the applicable Prospectus Supplement, if the Deposited
Asset Provider cannot cure such omission or defect within 60 days after
receipt of such notice, the Deposited Asset Provider will be obligated, within
90 days of receipt of such notice, to repurchase the related Deposited Asset
from the Trustee at the Purchase Price (as defined below) or provide a
substitute for such Deposited Asset. There can be no assurance that a
Deposited Asset Provider will fulfill this repurchase or substitution
obligation. Although the Administrative Agent, if any, or otherwise the
Trustee is obligated to use its best efforts to enforce such obligation,
neither such Administrative Agent nor the Depositor will be obligated to
repurchase or substitute for such Deposited Asset if the Deposited Asset
Provider defaults on its obligation. Unless otherwise specified in the related
Prospectus Supplement, when applicable, this repurchase or substitution
obligation constitutes the sole remedy available to the Certificateholders or
the Trustee for omission of, or a material defect in, or failure to provide, a
constituent document (Section 2.03).
Each of the Depositor and the Administrative Agent, if any, will make
certain representations and warranties regarding its authority to enter into,
and its ability to perform its obligations under, the Trust Agreement. Upon a
breach of any such representation of the Depositor or any such Administrative
Agent, as the case may be, which
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materially and adversely affects the interests of the Certificateholders, the
Depositor or any such Administrative Agent, respectively, will be obligated to
cure the breach in all material respects (Sections 2.04 and 2.05).
COLLECTION AND OTHER ADMINISTRATIVE PROCEDURES
General. With respect to any Series of Certificates the Trustee or such
other person specified in the Prospectus Supplement directly or through sub-
administrative agents, will make reasonable efforts to collect all scheduled
payments under the Deposited Assets and will follow or cause to be followed
such collection procedures, if any, as it would follow with respect to
comparable financial assets that it held for its own account, provided that
such procedures are consistent with the Trust Agreement and provided that,
except as otherwise expressly set forth in the applicable Prospectus
Supplement, it shall not be required to expend or risk its own funds or
otherwise incur personal financial liability.
Sub-Administration. Any Trustee or Administrative Agent may delegate its
obligations in respect of the Deposited Assets to third parties that it deems
qualified to perform such obligations (each, a "Sub-Administrative Agent"),
but the Trustee or Administrative Agent will remain obligated with respect to
such obligations under the Trust Agreement. Each Sub-Administrative Agent will
be required to perform the customary functions of an administrator of
comparable financial assets, including, if applicable, collecting payments
from obligors and remitting such collections to the Trustee; maintaining
accounting records relating to the Deposited Assets, attempting to cure
defaults and delinquencies; and enforcing any other remedies with respect
thereto all as and to the extent provided in the applicable Sub-Administration
Agreement (as defined below).
The agreement between any Administrative Agent or Trustee and a Sub-
Administrative Agent (a "Sub-Administration Agreement") will be consistent
with the terms of the Trust Agreement, and any such delegation to the Sub-
Administrator will not be permitted if it would result in a withdrawal or
downgrading of the rating of the relevant Series of Certificates issued
pursuant to the Trust Agreement. With respect to any Sub-Administrative
Agreement between an Administrative Agent and a Sub-Administrative Agent,
although each such Sub-Administration Agreement will be a contract solely
between such Administrative Agent and the Sub-Administrative Agent, the Trust
Agreement pursuant to which a Series of Certificates is issued will provide
that, if for any reason such Administrative Agent for such Series of
Certificates is no longer acting in such capacity, the Trustee or any
successor Administrative Agent must recognize the Sub-Administrative Agent's
rights and obligations under such Sub-Administration Agreement.
The Administrative Agent or Trustee, as applicable, will be solely liable
for all fees owed by it to any Sub-Administrative Agent, irrespective of
whether the compensation of the Administrative Agent or Trustee, as
applicable, pursuant to the Trust Agreement with respect to the particular
Series of Certificates is sufficient to pay such fees. Each Sub-Administrative
Agent will be reimbursed by the Administrative Agent, if any, or otherwise the
Trustee for certain expenditures which it makes, generally to the same extent
the Administrative Agent or Trustee, as applicable, would be reimbursed under
the terms of the Trust Agreement relating to such Series. See "--Retained
Interest; Administrative Agent Compensation and Payment of Expenses".
The Administrative Agent or Trustee, as applicable, may require any Sub-
Administrative Agent to agree to indemnify the Administrative Agent or
Trustee, as applicable, for any liability or obligation sustained by the
Administrative Agent or Trustee, as applicable, in connection with any act or
failure to act by the Sub-Administrative Agent.
Realization upon Defaulted Deposited Assets. Unless otherwise provided in
the applicable Prospectus Supplement, the Trustee will be obligated to follow
or cause to be followed such normal practices and procedures as it deems
necessary or advisable to realize upon any defaulted Deposited Asset (Section
3.12), provided that, except as otherwise expressly provided in the applicable
Prospectus Supplement, it shall not be required to expend or risk its own
funds or otherwise incur personal financial liability. If the proceeds of any
liquidation of the defaulted Deposited Asset are less than the sum of (i) the
outstanding principal balance of the defaulted Deposited Asset, (ii) interest
accrued thereon at the applicable interest rate and (iii) the aggregate amount
of
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expenses incurred by the Administrative Agent and the Trustee, as applicable,
in connection with such proceedings to the extent reimbursable from the assets
of the Trust under the Trust Agreement, the Trust will realize a loss in the
amount of such difference (Section 3.12). Only if and to the extent provided
in the applicable Prospectus Supplement, the Administrative Agent or Trustee,
as so provided, may be entitled to withdraw or cause to be withdrawn from the
related Certificate Account out of the net proceeds recovered on any defaulted
Deposited Asset, prior to the distribution of such proceeds to
Certificateholders, amounts representing its normal administrative
compensation on the Deposited Asset, unreimbursed administrative expenses
incurred with respect to the Deposited Asset and any unreimbursed advances of
delinquent payments made with respect to the Deposited Asset.
RETAINED INTEREST; ADMINISTRATIVE AGENT COMPENSATION AND PAYMENT OF EXPENSES
The Prospectus Supplement for a Series of Certificates will specify whether
there will be any Retained Interest in the Deposited Assets, and, if so, the
owner thereof (which may include the Offering Agent or any of its affiliates).
If so provided, the Retained Interest will be established on an asset-by-asset
basis and will be specified in an exhibit to the applicable series supplement
to the Trust Agreement. A Retained Interest in a Deposited Asset represents a
specified interest therein. Payments in respect of the Retained Interest will
be deducted from payments on the Deposited Assets as received and, in general,
will not be deposited in the applicable Certificate Account or become a part
of the related Trust. The applicable Prospectus Supplement will specify the
allocation of any partial recovery of amounts owing in respect of a Deposited
Asset between the Retained Interest (if any) and the Certificateholders.
The applicable Prospectus Supplement will specify the Administrative
Agent's, if any, and the Trustee's compensation, and the source, manner and
priority of payment thereof, with respect to a given Series of Certificates.
If and to the extent specified in the applicable Prospectus Supplement, in
addition to amounts payable to any the Administrative Agent or Sub-
Administrative Agent, (a) the Trustee will pay from its compensation certain
expenses incurred in connection with its ordinary administration of the
Deposited Assets and the related Trust, including, without limitation, payment
of the fees and disbursements of the Trustee and independent accountants,
payment of expenses incurred in connection with distributions and reports to
Certificateholders and payment of any other expenses described in the related
Prospectus Supplement and (b) the Trustee will pay certain expenses of the
Depositor (Section 3.14). To the extent such compensation and expenses payable
to the Trustee and the Depositor fall short of the expected amount thereof, if
any, specified in the applicable Prospectus Supplement, the holder of a
Retained Interest specified in the applicable Prospectus Supplement may be
entitled to receipt of the amount of such shortfall.
CERTAIN MATTERS REGARDING THE ADMINISTRATIVE AGENT AND THE DEPOSITOR
If Administrative Agent is to be appointed with respect to each Series of
Certificates under the Trust Agreement, it will be named in the related
Prospectus Supplement. The entity serving as Administrative Agent for any such
Series may be the Trustee, the Depositor, an affiliate of either thereof, the
Deposited Asset Provider or any third party and may have other normal business
relationships with the Trustee, the Depositor, their affiliates or the
Deposited Asset Provider.
The Trust Agreement will provide that an Administrative Agent may resign
from its obligations and duties under the Trust Agreement with respect to any
Series of Certificates only if such resignation, and the appointment of a
successor, will not result in a withdrawal or downgrading of the rating of
such Series or upon a determination that its duties under the Trust Agreement
with respect to such Series are no longer permissible under applicable law. No
such resignation will become effective until the Trustee or a successor has
assumed the Administrative Agent's obligations and duties under the Trust
Agreement with respect to such Series (Section 6.04).
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The Trust Agreement will further provide that neither such an Administrative
Agent nor the Depositor nor any director, officer, employee or agent or the
Administrative Agent or the Depositor will incur any liability to the related
Trust or Certificateholders for any action taken, or for refraining from
taking any action, in good faith pursuant to the Trust Agreement or for errors
in judgment; provided that none of the Administrative Agent, the Depositor nor
any such person will be protected against any liability that would otherwise
be imposed by reason of willful misfeasance, bad faith or gross negligence in
the performance of duties thereunder or by reason of reckless disregard of
obligations and duties thereunder. The Trust Agreement will further provide
that, unless otherwise provided in the applicable Series supplement thereto,
such an Administrative Agent, the Depositor and any director, officer,
employee or agent of the Administrative Agent or the Depositor will be
entitled to indemnification by the related Trust and will be held harmless
against any loss, liability or expense incurred in connection with any legal
action relating to the Trust Agreement or the Certificates, other than any
loss, liability or expense incurred by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties thereunder or by reason
of reckless disregard of obligations and duties thereunder. In addition, the
Trust Agreement will provide that neither such an Administrative Agent nor the
Depositor will be under any obligation to appear in, prosecute or defend any
legal action which is not incidental to their respective responsibilities
under the Trust Agreement or which in its opinion may involve it in any
expense or liability. Each of such Administrative Agent or the Depositor may,
however, in its discretion undertake any such action which it may deem
necessary or desirable with respect to the Trust Agreement and the rights and
duties of the parties thereto and the interests of the Certificateholders
thereunder (Section 6.03). The applicable Prospectus Supplement will describe
how such legal expenses and costs of such action and any liability resulting
therefrom will be allocated.
Any person into which an Administrative Agent may be merged or consolidated,
or any person resulting from any merger or consolidation to which an
Administrative Agent is a part, or any person succeeding to the business of an
Administrative Agent, will be the successor of the Administrative Agent under
the Trust Agreement with respect to the Certificates of any given Series
(Section 6.02).
ADMINISTRATIVE AGENT TERMINATION EVENTS; RIGHTS UPON ADMINISTRATIVE AGENT
TERMINATION EVENT
Unless otherwise provided in the related Prospectus Supplement,
"Administrative Agent Termination Events" under the Trust Agreement with
respect to any given Series of Certificates will consist of the following: (i)
any failure by an Administrative Agent to remit to the Trustee any funds in
respect of collections on the Deposited Assets as required under the Trust
Agreement, that continues unremedied for five days after the giving of written
notice of such failure to the Administrative Agent by the Trustee or the
Depositor, or to the Administrative Agent, the Depositor and the Trustee by
the holders of such Certificates evidencing not less than 25% of the Voting
Rights (as defined below); (ii) any failure by an Administrative Agent duly to
observe or perform in any material respect any of its other covenants or
obligations under the Trust Agreement with respect to such Series which
continues unremedied for 30 days after the giving of written notice of such
failure to the Administrative Agent by the Trustee or the Depositor, or to the
Administrative Agent, the Depositor and the Trustee by the holders of such
Certificates evidencing not less than 25% of the Voting Rights; and (iii)
certain events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings and certain actions by or on behalf of an
Administrative Agent indicating its insolvency or inability to pay its
obligations (Section 7.01). Any additional Administrative Agent Termination
Events with respect to any given Series of Certificates will be set forth in
the applicable Prospectus Supplement. In addition, the applicable Prospectus
Supplement and the related Series supplement to the Trust Agreement will
specify as to each matter requiring the vote of holders of Certificates of a
given Series, the circumstances and manner in which the Required Percentage
(as defined below) applicable to each such matter is calculated. "Required
Percentage" means with respect to any matter requiring a vote of holders of
Certificates of a given Series, the specified percentage (computed on the
basis of outstanding Certificate Principal Balance) of Certificates of such
Series applicable to such matter, all as specified in the applicable
Prospectus Supplement and the related Series supplement to the Trust
Agreement. "Voting Rights" evidenced by any Certificate will be the portion of
the voting rights of all the Certificates in the related Series allocated in
the manner described in the related Prospectus Supplement (Article I).
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Unless otherwise specified in the applicable Prospectus Supplement, so long
as an Administrative Agent Termination Event under the Trust Agreement with
respect to a given Series of Certificates remains unremedied, the Depositor or
the Trustee may, and at the direction of holders of such Certificates
evidencing not less than the "Required Percentage--Administrative Agent
Termination" of the Voting Rights, the Trustee will, terminate all rights and
obligations of such Administrative Agent under the Trust Agreement relating to
the applicable Trust and in and to the related Deposited Assets (other than
any Retained Interest of such Administrative Agent), whereupon the Trustee
will succeed to all the responsibilities, duties and liabilities of such
Administrative Agent under the Trust Agreement with respect to such Series and
will be entitled to similar compensation arrangements. In the event that the
Trustee is unwilling or unable to act, it may or, at the written request of
the holders of such Certificates evidencing not less than the "Required
Percentage--Administrative Agent Termination" of the Voting Rights, it will
appoint, or petition a court of competent jurisdiction for the appointment of,
an administration agent acceptable to the Rating Agency with a net worth at
the time of such appointment of at least $15,000,000 to act as successor to
such Administrative Agent under the Trust Agreement with respect to such
Series. Pending such appointment, the Trustee is obligated to act in such
capacity. The Trustee and any such successor may agree upon the compensation
be paid to such successor, which in no event may be greater than the
compensation payable to such Administrative Agent under the Trust Agreement
with respect to such Series (Sections 7.01 and 7.02).
No Certificateholder will have the right under the Trust Agreement to
institute any proceeding with respect thereto unless such holder previously
has given to the Trustee written notice of breach and unless the holders of
Certificates evidencing not less than the "Required Percentage--Remedies" of
the Voting Rights have made written request upon the Trustee to institute such
proceeding in its own name as Trustee thereunder and have offered to the
Trustee reasonable indemnity, and the Trustee for 15 days has neglected or
refused to institute any such proceeding (Section 10.03). The Trustee,
however, is under no obligation to exercise any of the trusts or powers vested
in it by the Trust Agreement or to make any investigation of matters arising
thereunder or to institute, conduct or defend any litigation thereunder or in
relation thereto at the request, order or direction of any of the holders of
Certificates covered by the Trust Agreement, unless such Certificateholders
have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby
(Section 8.02).
MODIFICATION AND WAIVER
Unless otherwise specified in the applicable Prospectus Supplement, the
Trust Agreement for each Series of Trust Certificates may be amended by the
Depositor and the Trustee with respect to such Series, without notice to or
consent of the Certificateholders, for certain purposes including (i) to cure
any ambiguity, (ii) to correct or supplement any provision therein which may
be inconsistent with any other provision therein or in the Prospectus
Supplement, (iii) to add to the covenants, restrictions or obligations of the
Depositor, the Administrative Agent, if any, or the Trustee for the benefit of
the Certificateholders, (iv) to add, change or eliminate any other provisions
with respect to matters or questions arising under such Trust Agreement so
long as (x) any such addition, change or elimination will not, as evidenced by
an opinion of counsel, affect the tax status of the Trust or result in a sale
or exchange of any Certificate for tax purposes and (y) the Trustee has
received written confirmation from each Rating Agency rating such Certificates
that such amendment will not cause such Rating Agency to reduce or withdraw
the then current rating thereof, or (v) to comply with any requirements
imposed by the Code (as defined below). Without limiting the generality of the
foregoing, unless otherwise specified in the applicable Prospectus Supplement,
the Trust Agreement may also be modified or amended from time to time by the
Depositor, and the Trustee, with the consent of the holders of Certificates
evidencing not less than the "Required Percentage--Amendment" of the Voting
Rights of those Certificates that are materially adversely affected by such
modification or amendment for the purpose of adding any provision to or
changing in any manner or eliminating any provision of the Trust Agreement or
of modifying in any manner the rights of such Certificateholders; provided
that in the event such modification or amendment would materially adversely
affect the rating of any Series by each Rating Agency, the "Required
Percentage--Amendment" specified in the related Series supplement to the Trust
Agreement shall include an additional specified percentage of the Certificates
of such Series.
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Except as otherwise set forth in the applicable Prospectus Supplement, no
such modification or amendment may, however, (i) reduce in any manner the
amount of or alter the timing of, distributions or payments which are required
to be made on any Certificate without the consent of the holder of such
Certificate or (ii) reduce the aforesaid Required Percentage of Voting Rights
required for the consent to any such amendment without the consent of the
holders of all Certificates covered by the Trust Agreement then outstanding.
Unless otherwise specified in the applicable Prospectus Supplement, holders
of Certificates evidencing not less than the "Required Percentage--Waiver" of
the Voting Rights of a given Series may, on behalf of all Certificateholders
of that Series, (i) waive, insofar as that Series is concerned, compliance by
the Depositor, the Trustee or the Administrative Agent, if any, with certain
restrictive provisions, if any, of the Trust Agreement before the time for
such compliance and (ii) waive any past default under the Trust Agreement with
respect to Certificates of that Series, except a default in the failure to
distribute amounts received as principal of (and premium, if any) or any
interest on any such Certificate and except a default in respect of a covenant
or provision the modification or amendment of which would require the consent
of the holder of each outstanding Certificate affected thereby (Section 7.04).
REPORTS TO CERTIFICATEHOLDERS; NOTICES
Reports to Certificateholders. Unless otherwise provided in the applicable
Prospectus Supplement, with each distribution to Certificateholders of a given
Series, the Administrative Agent or the Trustee, as provided in the related
Prospectus Supplement, will forward or cause to be forwarded to each such
Certificateholder, to the Depositor and to such other parties as may be
specified in the Trust Agreement, a statement setting forth:
(i) the amount of such distribution allocable to principal of or interest
or premium, if any, on the Certificates of such Series; and the amount of
aggregate unpaid interest as of such Distribution Date;
(ii) in the case of Certificates with a variable Pass-Through Rate, the
Pass-Through Rate applicable to such Distribution Date, as calculated in
accordance with the method specified herein and in the related Prospectus
Supplement;
(iii) the amount of compensation received by the Administrative Agent, if
any, and the Trustee for the period relating to such Distribution Date,
such other customary information as the Administrative Agent, if any, or
otherwise the Trustee deems necessary or desirable to enable
Certificateholders to prepare their tax returns;
(iv) the aggregate stated principal amount of the Deposited Assets and
the current interest rate thereon at the close of business on such
Distribution Date; and
(v) the aggregate Certificate Principal Balance at the close of business
on such Distribution Date, separately identifying any reduction in such
aggregate Certificate Principal Balance due to the allocation of any
Realized Losses or otherwise.
In the case of information furnished pursuant to subclauses (i) and (iii)
above, the amounts shall be expressed as a U.S. dollar amount (or equivalent
thereof in any other Specified Currency) per minimum denomination of
Certificates or for such other specified portion thereof. Within a reasonable
period of time after the end of each calendar year, the Administrative Agent
or the Trustee, as provided in the related Prospectus Supplement, shall
furnish to each person who at any time during the calendar year was a
Certificateholder a statement containing the information set forth in
subclauses (i) and (iii) above, aggregated for such calendar year or the
applicable portion thereof during which such person was a Certificateholder.
Such obligation of the Administrative Agent or the Trustee, as applicable,
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Administrative Agent or the
Trustee, as applicable, pursuant to any requirements of the Code as are from
time to time in effect (Section 4.02).
Notices. Unless otherwise provided in the applicable Prospectus Supplement,
any notice required to be given to a holder of a Registered Certificate will
be mailed to the last address of such holder set forth in the applicable
Certificate Register. Any notice required to be given to a holder of a Bearer
Certificate will be
30
<PAGE>
published in a daily morning newspaper of general circulation in the city or
cities specified in the Prospectus Supplement relating to such Bearer
Certificate.
EVIDENCE AS TO COMPLIANCE
Unless otherwise specified in the applicable Prospectus Supplement, the
Trust Agreement will provide that commencing on a certain date and on or
before a specified date in each year thereafter, a firm of independent public
accountants will furnish a statement to the Trustee to the effect that such
firm has examined certain documents and records relating to the administration
of the Deposited Assets during the related 12-month period (or, in the case of
the first such report, the period ending on or before the date specified in
the Prospectus Supplement, which date shall not be more than one year after
the related Original Issue Date) and that, on the basis of certain agreed upon
procedures considered appropriate under the circumstances, such firm is of the
opinion that such administration was conducted in compliance with the terms of
the Trust Agreement, except for such exceptions as such firm shall believe to
be immaterial and such other exceptions and qualifications as shall be set
forth in such report (Section 3.16).
The Trust Agreement will also provide for delivery to the Depositor, the
Administrative Agent, if any, and the Trustee on behalf of the
Certificateholders, on or before a specified date in each year, of an annual
statement signed by two officers of the Trustee to the effect that the Trustee
has fulfilled its obligations under the Trust Agreement throughout the
preceding year with respect to any Series of Certificates (Section 3.15).
Copies of the annual accountants' statement, if any, and the statement of
officers of the Trustee may be obtained by Certificateholders without charge
upon written request to either the Administrative Agent or the Trustee, as
applicable, at the address set forth in the related Prospectus Supplement.
REPLACEMENT CERTIFICATES
Unless otherwise provided in the applicable Prospectus Supplement, if a
Certificate is mutilated, destroyed, lost or stolen, it may be replaced at the
corporate trust office or agency of the applicable Trustee in the City and
State of New York (in the case of Registered Certificates) or at the principal
London office of the applicable Trustee (in the case of Bearer Certificates),
or such other location as may be specified in the applicable Prospectus
Supplement, upon payment by the holder of such expenses as may be incurred by
the applicable Trustee in connection therewith and the furnishing of such
evidence and indemnity as such Trustee may require. Mutilated Certificates
must be surrendered before new Certificates will be issued (Section 5.05).
TERMINATION
The obligations created by the Trust Agreement for each Series of
Certificates will terminate upon the payment to Certificateholders of that
Series of all amounts held in the related Certificate Account or by an
Administrative Agent, if any, and required to be paid to them pursuant to the
Trust Agreement following the earlier of (i) the final payment or other
liquidation of the last Deposited Asset subject thereto or the disposition of
all property acquired upon foreclosure or liquidation of any such Deposited
Asset and (ii) the purchase of all the assets of the Trust by the party
entitled to effect such termination, under the circumstances and in the manner
set forth in the related Prospectus Supplement. In no event, however, will any
trust created by the Trust Agreement continue beyond the respective date
specified in the related Prospectus Supplement. Written notice of termination
of the obligations with respect to the related Series of Certificates under
the Trust Agreement will be provided as set forth above under "--Reports to
Certificateholders; Notices--Notices," and the final distribution will be made
only upon surrender and cancellation of the Certificates at an office or
agency appointed by the Trustee which will be specified in the notice of
termination (Section 9.01).
Any such purchase of Deposited Assets and property acquired in respect of
Deposited Assets evidenced by a Series of Certificates shall be made at a
price approximately equal to the aggregate fair market value of all the assets
in the Trust (as determined by the Trustee, the Administrative Agent, if any,
and, if different than both
31
<PAGE>
such persons, the person entitled to effect such termination), in each case
taking into account accrued interest at the applicable interest rate to the
first day of the month following such purchase or, to the extent specified in
the applicable Prospectus Supplement, a specified price as determined therein
(such price, a "Purchase Price"). The exercise of such right will effect early
retirement of the Certificates of that Series, but the right of the person
entitled to effect such termination is subject to the aggregate principal
balance of the outstanding Deposited Assets for such Series at the time of
purchase being less than the percentage of the aggregate principal balance of
the Deposited Assets at the Cut-off Date for that Series specified in the
related Prospectus Supplement (Section 9.01).
DUTIES OF THE TRUSTEE
The Trustee makes no representations as to the validity or sufficiency of
the Trust Agreement, the Certificates of any Series or any Deposited Asset or
related document and is not accountable for the use or application by or on
behalf of any Administrative Agent of any funds paid to such Administrative
Agent or its designee in respect of such Certificates or the Deposited Assets,
or deposited into or withdrawn from the related Certificate Account or any
other account by or on behalf of such Administrative Agent (Section 8.03). If
no Administrative Agent Termination Event has occurred and is continuing with
respect to any given Series, the Trustee is required to perform only those
duties specifically required under the Trust Agreement with respect to such
Series. However, upon receipt of the various certificates, reports or other
instruments required to be furnished to it, the Trustee is required to examine
such documents and to determine whether they conform to the applicable
requirements of the Trust Agreement (Section 8.01).
THE TRUSTEE
The Trustee for any given Series of Certificates under the Trust Agreement
will be named in the related Prospectus Supplement. The commercial bank,
national banking association or trust company serving as Trustee will be
unaffiliated with, but may have normal banking relationships with, the
Depositor, any Administrative Agent and their respective affiliates.
LIMITATIONS ON ISSUANCE OF BEARER CERTIFICATES
In compliance with United States Federal income tax laws and regulations,
including without limitation the Internal Revenue Code (the "Code"), the
Depositor and any underwriter, agent or dealer participating in the offering
of any Bearer Certificate will agree that, in connection with the original
issuance of such Bearer Certificate and during the period ending 40 days after
the issue of such Bearer Certificate, they will not offer, sell or deliver
such Bearer Certificate, directly or indirectly, to a U.S. Person or to any
person within the United States; except to the extent permitted under U.S.
Treasury regulations.
Bearer Certificates will bear a legend to the following effect: "Any United
States Person who holds this obligation will be subject to limitations under
the United States income tax laws, including the limitations provided in
Sections 165(j) and 1287(a) of the Internal Revenue Code". The sections
referred to in the legend provide that, with certain exceptions, a United
States taxpayer who holds Bearer Certificates will not be allowed to deduct
any loss with respect to, and will not be eligible for capital gain treatment
with respect to any gain realized on a sale, exchange, redemption or other
disposition of, such Bearer Certificates.
As used herein, "United States" means the United States of America and its
possessions, and "U.S. Person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in or
under the laws of the United States, or an estate or trust the income of which
is subject to United States Federal income taxation regardless of its source.
Pending the availability of a definitive Global Security or individual
Bearer Certificates, as the case may be, Certificates that are issuable as
Bearer Certificates may initially be represented by a single temporary Global
32
<PAGE>
Security, without interest coupons, to be deposited with a common depositary
in London for Morgan Guaranty Trust Company of New York, Brussels Office, as
operator of the Euroclear System ("Euroclear"), and Cedel Bank, societe
anonyme ("CEDEL") for credit to the accounts designated by or on behalf of the
purchasers thereof. Following the availability of a definitive Global Security
in bearer form, without coupons attached, or individual Bearer Certificates
and subject to any further limitations described in the applicable Prospectus
Supplement, the temporary Global Security will be exchangeable for interests
in such definitive Global Security or for such individual Bearer Certificates,
respectively, only upon receipt of a "Certificate of Non-U.S. Beneficial
Ownership". A "Certificate of Non-U.S. Beneficial Ownership" is a certificate
to the effect that a beneficial interest in a temporary Global Security is
owned by a person that is not a U.S. Person or is owned by or through a
financial institution in compliance with applicable U.S. Treasury regulations.
No Bearer Certificate will be delivered in or to the United States. If so
specified in the applicable Prospectus Supplement, interest on a temporary
Global Security will be distributed to each of Euroclear and CEDEL with
respect to that portion of such temporary Global Security held for its
account, but only upon receipt as of the relevant Distribution Date of a
Certificate of Non-U.S. Beneficial Ownership.
CURRENCY RISKS
EXCHANGE RATES AND EXCHANGE CONTROLS
An investment in a Certificate having a Specified Currency other than U.S.
dollars entails significant risks that are not associated with a similar
investment in a security denominated in U.S. dollars. Such risks include,
without limitation, the possibility of significant changes in rates of
exchange between the U.S. dollar and such Specified Currency and the
possibility of the imposition or modification of foreign exchange controls
with respect to such Specified Currency. Such risks generally depend on
factors over which the Depositor has no control, such as economic and
political events and the supply of and demand for the relevant currencies.
Rates of exchange between the U.S. dollar and certain currencies have in
recent years been highly volatile, and such volatility may be expected in the
future. Fluctuations in any particular exchange rate that have occurred in the
past are not necessarily indicative, however, of fluctuations in the rate that
may occur during the term of any Certificate. Depreciation of the Specified
Currency for a Certificate against the U.S. dollar would result in a decrease
in the effective yield of such Certificate below its Pass-Through Rate and, in
certain circumstances, could result in a loss to the investor on a U.S. dollar
basis.
Governments have from time to time imposed, and may in the future impose,
exchange controls that could affect exchange rates as well as the availability
of a Specified Currency for making distributions in respect of Certificates
denominated in such currency. At present, the Depositor has identified the
following currencies in which distributions of principal, premium and interest
on Certificates may be made: Australian dollars, Canadian dollars, Danish
kroner, Italian lire, Japanese yen, New Zealand dollars, U.S. dollars and the
ECU. However, Certificates distributable with Specified Currencies other than
those listed may be issued at any time. There can be no assurance that
exchange controls will not restrict or prohibit distributions of principal,
premium or interest in any Specified Currency. Even if there are no actual
exchange controls, it is possible that, on a Distribution Date with respect to
any particular Certificate, the currency in which amounts then due to be
distributed in respect of such Certificate are distributable would not be
available. In that event, such payments will be made in the manner set forth
above under "Description of Certificates--General" or as otherwise specified
in the applicable Prospectus Supplement.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL ADVISORS
AS TO THE RISKS ENTAILED BY AN INVESTMENT IN CERTIFICATES DENOMINATED IN A
CURRENCY OTHER THAN U.S. DOLLARS. SUCH CERTIFICATES ARE NOT AN APPROPRIATE
INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN
CURRENCY TRANSACTIONS.
33
<PAGE>
The information set forth in this Prospectus is directed to prospective
purchasers of Certificates who are United States residents. The applicable
Prospectus Supplement for certain issuances of Certificates may set forth
certain information applicable to prospective purchasers who are residents of
countries other than the United States with respect to matters that may affect
the purchase or holding of, or receipt of distributions of principal, premium
or interest in respect of, such Certificates.
Any Prospectus Supplement relating to Certificates having a Specified
Currency other than U.S. dollars will contain information concerning
historical exchange rates for such currency against the U.S. dollar, a
description of such currency, any exchange controls affecting such currency
and any other required information concerning such currency.
PAYMENT CURRENCY
Except as set forth below or unless otherwise provided in the applicable
Prospectus Supplement, if distributions in respect of a Certificate are
required to be made in a Specified Currency other than U.S. dollars and such
currency is unavailable due to the imposition of exchange controls or other
circumstances beyond the Trustee's control or is no longer used by the
government of the country issuing such currency or for the settlement of
transactions by public institutions of or within the international banking
community, then all distributions in respect of such Certificate shall be made
in U.S. dollars until such currency is again available or so used. The amounts
so payable on any date in such currency shall be converted into U.S. dollars
on the basis of the most recently available Market Exchange Rate for such
currency or as otherwise indicated in the applicable Prospectus Supplement.
If a distribution in respect of a Certificate is required to be made in ECUs
and ECUs are no longer used in the European Monetary System, then all
distributions in respect of such Certificate shall be made in U.S. dollars
until ECUs are again so used. The amount of each distribution in U.S. dollars
shall be computed on the basis of the equivalent of the ECU in U.S. dollars,
determined as described below, as of the second Business Day prior to the date
on which such distribution is to be made. The component currencies of the ECU
for this purpose (the "Components") shall be the currency amounts that were
components of the ECU as of the last date on which the ECU was used in the
European Monetary System. The equivalent of the ECU in U.S. dollars shall be
calculated by aggregating the U.S. dollar equivalents, as of such second
Business Day preceding the distribution, of the Components. The U.S. dollar
equivalent of each of the Components shall be determined by such Trustee on
the basis of the most recently available Market Exchange Rates for such
Components or as otherwise indicated in the applicable Prospectus Supplement.
If the official unit of any component currency is altered by way of
combination or subdivision, the number of units of that currency as a
Component shall be divided or multiplied in the same proportion. If two or
more component currencies are consolidated into a single currency, the amounts
of those currencies as Components shall be replaced by an amount in such
single currency equal to the sum of the amounts of the consolidated component
currencies expressed in such single currency. If any component currency is
divided into two or more currencies, the amount of that currency as a
Component shall be replaced by amounts of such two or more currencies, each of
which shall be equal to the amount of the former component currency divided by
the number of currencies into which that currency was divided.
All determinations referred to above made by the applicable Trustee shall be
at its sole discretion and shall, in the absence of manifest error, be
conclusive for all purposes and binding on the related Certificateholders of
such Series.
FOREIGN CURRENCY JUDGMENTS
Unless otherwise specified in the applicable Prospectus Supplement, the
Certificates will be governed by and construed in accordance with the law of
the State of New York. Courts in the United States customarily have not
rendered judgments for money damages denominated in any currency other than
the U.S. dollar. A 1987
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<PAGE>
amendment to the Judiciary Law of the State of New York provides, however,
that an action based upon an obligation denominated in a currency other than
U.S. dollars will be rendered in the foreign currency of the underlying
obligation and converted into U.S. dollars at the rate of exchange prevailing
on the date of the entry of the judgment or decree.
PLAN OF DISTRIBUTION
Certificates may be offered in any of three ways: (i) through underwriters
or dealers; (ii) directly to one or more purchasers; or (iii) through agents.
The applicable Prospectus Supplement will set forth the terms of the offering
of any Series of Certificates, which may include the names of any
underwriters, or initial purchasers, the purchase price of such Certificates
and the proceeds to the Depositor from such sale, any underwriting discounts
and other items constituting underwriters' compensation, any initial public
offering price, any discounts or concessions allowed or reallowed or paid to
dealers, any securities exchanges on which such Certificates may be listed,
any restrictions on the sale and delivery of Certificates in bearer form and
the place and time of delivery of the Certificates to be offered thereby.
If underwriters are used in the sale, Certificates will be acquired by the
underwriters for their own account and may be resold from time to time in one
or more transactions, including negotiated transactions, at a fixed public
offering price or at varying prices determined at the time of sale. Such
Certificates may be offered to the public either through underwriting
syndicates represented by managing underwriters or by underwriters without a
syndicate. Such managing underwriters or underwriters in the United States
will include Citicorp Securities, Inc. Unless otherwise set forth in the
applicable Prospectus Supplement, the obligations of the underwriters to
purchase such Certificates will be subject to certain conditions precedent,
and the underwriters will be obligated to purchase all such Certificates if
any of such Certificates are purchased. Any initial public offering price and
any discounts or concessions allowed or reallowed or paid to dealers may be
changed from time to time.
Certificates may also be sold through agents designated by the Depositor
from time to time. Any agent involved in the offer or sale of Certificates
will be named, and any commissions payable by the Depositor to such agent will
be set forth, in the applicable Prospectus Supplement. Unless otherwise
indicated in the applicable Prospectus Supplement, any such agent will act on
a best efforts basis for the period of its appointment.
If so indicated in the applicable Prospectus Supplement, the Depositor will
authorize agents, underwriters or dealers to solicit offers by certain
specified institutions to purchase Certificates at the public offering price
described in such Prospectus Supplement pursuant to delayed delivery contracts
providing for payment and delivery on a future date specified in such
Prospectus Supplement. Such contracts will be subject only to those conditions
set forth in the applicable Prospectus Supplement and such Prospectus
Supplement will set forth the commissions payable for solicitation of such
contracts.
Any underwriters, dealers or agents participating in the distribution of
Certificates may be deemed to be underwriters and any discounts or commissions
received by them on the sale or resale of Certificates may be deemed to be
underwriting discounts and commissions under the Securities Act. Agents and
underwriters may be entitled under agreements entered into with the Depositor
to indemnification by the Depositor against certain civil liabilities,
including liabilities under the Securities Act, or to contribution with
respect to payments that the agents or underwriters may be required to make in
respect thereof. Agents and underwriters may be customers of, engage in
transactions with, or perform services for, the Depositor or its affiliates in
the ordinary course of business.
Only Certificates rated in one of the investment grade rating categories by
a Rating Agency will be offered hereby.
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<PAGE>
Affiliates of the Underwriters may act as agents or underwriters in
connection with the sale of the Certificates. Any affiliate of the
Underwriters so acting will be named, and its affiliation with the
Underwriters described, in the related Prospectus Supplement. Also, affiliates
of the Underwriters may act as principals or agents in connection with market-
making transactions relating to the Certificates. A Prospectus Supplement will
be prepared with respect to the Certificates for use by such affiliates in
connection with offers and sales related to market-making transactions in the
Certificates.
LEGAL OPINIONS
Certain legal matters with respect to the Certificates will be passed upon
for the Depositor and the underwriters by Milbank, Tweed, Hadley & McCloy New
York, New York or other counsel identified in the applicable Prospectus
Supplement.
36
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses expected to be incurred in connection with the issuance and
distribution of the securities being registered, other than underwriting
compensation, are as set forth below. All such expenses, except for the SEC
registration and filing fees, are estimated:
<TABLE>
<S> <C>
SEC Registration Fee............................................. $344.83*
Legal Fees and Expenses.......................................... $ **
Accounting Fees and Expenses..................................... $ **
Trustee's Fees and Expenses (including counsel Fees)............. $ **
Blue Sky Qualification Fees and expenses......................... $ **
Printing and Engraving Fees...................................... $ **
Rating Agency Fees............................................... $ **
Miscellaneous.................................................... $ **
--------
Total........................................................ $ **
========
</TABLE>
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* Previously paid.
** To be provided by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 123 of the Articles of Association of the Registrant provides that
the directors and officers of the Registrant and any trustee acting in
relation to any of the affairs of the Registrant and the heirs, executors,
administrators and personal representatives of any of the foregoing shall be
indemnified out of the assets of the Registrant from and against all actions,
proceedings, costs, charges, losses, damages and expenses incurred or
sustained by any of them by reason of any act done or omitted in connection
with their executing their duties in their respective offices or trusts,
except where such actions, proceedings, costs, charges, losses, damages or
expenses were incurred or sustained through the wilful neglect or default of
such director, officer or trustee. Section 123 further provides that no such
director, officer or trustee shall be answerable for (a) the act, receipt,
neglect or default of any other director, officer or trustee, (b) joining in
any receipt for the sake of conformity, (c) the solvency or honesty of any
banker or other person with whom any monies or effects belonging to the
Registrant may be lodged or deposited for safe custody, (d) any insufficiency
of any security upon which any monies of the Registrant may be invested or (e)
any other loss or damage resulting from any of the foregoing or incurred or
sustained in connection with the execution of his or her office or trust
unless the same shall result from the wilful neglect or default of such
director, officer or trustee.
Reference is made to Section 7 of the form of Underwriting Agreement filed
as Exhibit 1.1 hereto for provisions relating to the indemnification of
directors, officers and controlling persons against certain liabilities
including liabilities under the Securities Act of 1933, as amended.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
*1.1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of Elmwood Funding Limited as currently
in effect
3.2 Memorandum and Articles of Association of Elmwood Funding Limited as
currently in effect
*4.1 Form of Trust Agreement
*4.2 Form of Underlying Securities Indenture
*5.1 Opinion of Milbank, Tweed, Hadley & McCloy as to legality (including
consent of such firm)
*8.1 Opinion of Milbank, Tweed, Hadley & McCloy as to certain tax matters
(including consent of such firm)
*23.1 Consent of Milbank, Tweed, Hadley & McCloy (included in Exhibits 5.1
and 8.1)
</TABLE>
II-1
<PAGE>
<TABLE>
<C> <S>
*23.2 Consent of auditors of Elmwood Funding Limited
24.1 Power of Attorney (included at page 46)
*25.1(a) Statement of eligibility of Trustee
</TABLE>
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* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
A. UNDERTAKING PURSUANT TO RULE 415.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change of such information in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) To file a post-effective amendment to the Registration Statement to
include any financial statements required by Rule 3-19 of Regulation S-X
throughout the continuous offering.
B. FILING INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
C. UNDERTAKING IN RESPECT OF INDEMNIFICATION.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant, pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant, will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE UNDERSIGNED
HEREBY CERTIFIES ON BEHALF OF ELMWOOD FUNDING LIMITED (THE "COMPANY") THAT HE
HAS REASONABLE GROUNDS TO BELIEVE THAT THE COMPANY MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN GEORGE TOWN, GRAND CAYMAN, BRITISH WEST INDIES, ON THE 27TH DAY
OF SEPTEMBER, 1996.
Elmwood Funding Limited
/s/ Derrie Boggess
By: _________________________________
Director
Each person whose signature appears below hereby constitutes and appoints
Darren Riley and Derrie Boggess, and each of them, each with full power to act
without the other, his or her true and lawful attorneys-in-fact and agents,
each with full power of substitution and resubstitution, for him or her and in
his or her name, place and stead, in any and all capacities, to sign any or
all amendments (including post-effective amendments) to this Registration
Statement and other documents in connection with the same, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto each of said
attorneys-in-fact and agents full power and authority to do and perform each
and every act and thing requisite, necessary or proper to be done in and about
the premises, as fully to all intents and purposes as he or she might or could
do in person, hereby ratifying and confirming all that each of said attorneys-
in-fact and agents or his or her substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE PERSONS LISTED BELOW IN THE
CAPACITIES AND ON THE DATES INDICATED BELOW:
SIGNATURE POSITION DATE
/s/ Elizabeth Kearns Director September 27, 1996
_____________________________________
ELIZABETH KEARNS
/s/ David Egglishaw Director September 27, 1996
_____________________________________
DAVID EGGLISHAW
/s/ Derrie Boggess Director September 27, 1996
_____________________________________
DERRIE BOGGESS
Elmwood Funding Limited has no executive officers; therefore, Derrie Boggess
has been temporarily designated as Chief Executive Officer and Elizabeth
Kearns has been temporarily designated as Chief Financial Officer and Chief
Accounting Officer, in each case solely for the purpose of complying with the
instructions for the filing of a Registration Statement on Form S-3.
AUTHORIZED REPRESENTATIVE
/s/ Philip Nisbet
_____________________________________
Philip Nisbet, as the duly
authorized representative of Elmwood
Funding Limited in the United States
Date: September 27, 1996
II-3
<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
EXHIBITS
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
ELMWOOD FUNDING LIMITED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
----------- ----------- ----
<C> <S> <C>
*1.1 Form of Underwriting Agreement
3.1 Certificate of Incorporation of Elmwood Funding Limited as
currently in effect
3.2 Memorandum and Articles of Association of Elmwood Funding
Limited as currently in effect
*4.1 Form of Trust Agreement
*4.2 Form of Underlying Securities Indenture
*5.1 Opinion of Milbank, Tweed, Hadley & McCloy as to legality
(including consent of such firm)
*8.1 Opinion of Milbank, Tweed, Hadley & McCloy as to certain
tax matters (including consent of such firm)
*23.1 Consent of Milbank, Tweed, Hadley & McCloy (included in
Exhibits 5.1 and 8.1)
*23.2 Consent of auditors of Elmwood Funding Limited
24.1 Power of Attorney (included at page 46)
*25.1(a) Statement of eligibility of Trustee
</TABLE>
- --------
* To be filed by amendment
<PAGE>
Exhibit 3.1
<PAGE>
Certificate of Incorporation [SEAL OF CAYMAN ISLANDS
REGISTRAR OF COMPANIES
APPEARS HERE]
[SEAL OF CAYMAN ISLANDS APPEARS HERE]
I, CINDY YVONNE JEFFERSON, Deputy Registrar of Companies of the Cayman Islands
DO HEREBY CERTIFY, pursuant to the Companies Law (Revised), that all the
requirements of the said Law in respect of registration were complied with by
ELMWOOD FUNDING LIMITED
an Exempted Company incorporated in the Cayman Islands with Limited Liability
with effect from the 17th Day of September One Thousand Nine Hundred Ninety-Six.
Given under my hand and Seal at George
Town in the Island of Grand Cayman,
this Seventeenth day of September One
Thousand Nine Hundred Ninety-Six
CERTIFIED TO BE A TRUE AND CORRECT COPY (SGD. C.Y. JEFFERSON)
SIG. /s/ Cindy Y. Jefferson
----------------------- Deputy Registrar
CINDY Y. JEFFERSON of Companies, Cayman Islands, B.W.I.
Dep. Registrar of Companies
DATE 17th September 1996
--------------------
<PAGE>
Exhibit 3.2
<PAGE>
THE COMPANIES LAW (1995 REVISION)
---------------------------------
COMPANY LIMITED BY SHARES [STAMP OF REGISTRAR
------------------------- APPEARS HERE]
MEMORANDUM OF ASSOCIATION
OF
ELMWOOD FUNDING LIMITED
1. The name of the Company is Elmwood Funding Limited.
2. The Registered Office of the Company shall be at the offices of
Maples and Calder, Attorneys-at-Law, Ugland House, P.O. Box 309, George Town,
Grand Cayman, Cayman Islands, British West Indies or at such other place as the
Directors may from time to time decide.
3. The objects for which the Company is established are unrestricted and
shall include, but without limitation, the following:
(i) (a) To carry on the business of an investment company and to act as
promoters and entrepreneurs and to carry on business as financiers, capitalists,
concessionaires, merchants, brokers, traders, dealers, agents, importers and
exporters and to undertake and carry on and execute all kinds of investment,
financial, commercial, mercantile, trading and other operations.
(b) To carry on whether as principals, agents or otherwise howsoever the
business of realtors, developers, consultants, estate agents or managers,
builders, contractors, engineers, manufacturers, dealers in or vendors of all
types of property including services.
(ii) To exercise and enforce all rights and powers conferred by or
incidental to the ownership of any shares, stock, obligations or other
securities including without prejudice to the
[SEAL OF REGISTRAR APPEARS HERE]
<PAGE>
2
generality of the foregoing all such powers of veto or control as may be
conferred by virtue of the holding by the Company of some special proportion of
the issued or nominal amount thereof, to provide managerial and other executive,
supervisory and consultant services for or in relation to any company in which
the Company is interested upon such terms as may be thought fit.
(iii) To purchase or otherwise acquire, to sell, exchange, surrender, lease,
mortgage, charge, convert, turn to account, dispose of deal with real and
personal property and rights of all kinds and, in particular, mortgages,
debentures, produce, concessions, options, contracts, patents annuities,
licences, stocks, shares, bonds, policies, book debts, business concerns,
undertakings, claims, privileges and choses in action of all kinds.
(iv) To subscribe for, conditionally or unconditionally, to underwrite,
issue on commission or otherwise, take, hold, deal in and convert stocks,
shares and securities of all kinds and to enter into partnership or into any
arrangement for sharing profits, reciprocal concessions or cooperation with any
person or company and to promote and aid in promoting, to constitute, form or
organise any company, syndicate or partnership of any kind, for the purpose of
acquiring and undertaking any property and liabilities of the Company or of
advancing, directly or indirectly, the objects of the Company or for any other
purpose which the Company may think expedient.
(v) To stand surety for or to guarantee, support or secure the performance
of all or any of the obligations of any person, firm or company whether or not
related or affiliated to the Company in any manner and whether by personal
covenant or by mortgage, charge or lien upon
<PAGE>
3
the whole or any part of the undertaking, property and assets of the Company,
both present and future, including its uncalled capital or by any such method
and whether or not the Company shall receive valuable consideration therefor.
(vi) To engage in or carry on any other lawful trade, business or enterprise
which may at any time appear to the Directors of the Company capable of being
conveniently carried on in conjunction with any of the aforementioned businesses
or activities or which may appear to the Directors or the Company likely to be
profitable to the Company.
In the interpretation of this Memorandum of Association in general and of this
Clause 3 in particular no object, business or power specified or mentioned shall
be limited or restricted by reference to or inference from any other object,
business or power, or the name of the Company, or by the juxtaposition of two or
more objects, businesses or powers and that, in the event of any ambiguity in
this clause or elsewhere in this Memorandum of Association, the same shall be
resolved by such interpretation and construction as will widen and enlarge and
not restrict the objects, businesses and powers of and exercisable by the
Company.
4. Except as prohibited or limited by the Companies Law (1995 Revision),
the Company shall have full power and authority to carry out any object and
shall have and be capable of from time to time and at all times exercising any
and all of the powers at any time or from time to time exercisable by a natural
person or body corporate in doing in any part of the world whether as principal,
agent, contractor or otherwise whatever may be considered by
<PAGE>
4
if necessary for the attainment of its objects and whatever else may be
considered by it as incidental or conducive thereto or consequential, thereon,
including, but without in any way restricting the generality of the foregoing,
the power to make any alterations or amendments to this Memorandum of
Association and the Articles of Association of the Company considered necessary
or convenient in the manner set out in the Articles of Association of the
Company, and the power to do any of the following acts or things, viz:
to pay all expenses of and incidental to the promotion, formation and
incorporation of the Company; to register the Company to do business in any
other jurisdiction; to sell, lease or dispose of any property of the Company; to
draw, make, accept, endorse, discount, execute and issue promissory notes,
debentures, bills of exchange, bills of lading, warrants and other negotiable or
transferable instruments; to lend money or other assets and to act as
guarantors; to borrow or raise money on the security of the undertaking or on
all or any of the assets of the Company including uncalled capital or without
security; to invest monies of the Company in such manner as the Directors
determine; to promote other companies; to sell the undertaking of the Company
for cash or any other consideration; to distribute assets in specie to Members
of the Company; to make charitable or benevolent donations; to pay pensions or
gratuities or provide other benefits in cash or kind to Directors, officers,
employees, past or present and their families; to purchase Directors and
officers liability insurance and to carry on any trade or business and generally
to do all acts and things which, in the opinion of the Company or the Directors,
may be conveniently or profitably or usefully acquired and dealt with, carried
on,
<PAGE>
5
executed or done by the Company in connection with the business aforesaid
PROVIDED THAT the Company shall only carry on the businesses for which a licence
is required under the laws of the Cayman Islands when so licensed under the
terms of such laws.
5. The liability of each Member is limited to the amount from time to time
unpaid on such Member's shares.
6. The share capital of the Company is US$50,000 divided into 50,000 shares
of a nominal or par value of US$1.00 each with power for the Company insofar as
is permitted by law, to redeem or purchase any of its shares and to increase or
reduce the said capital subject to the provisions of the Companies Law (1995
Revision) and the Articles of Association and to issue any part of its capital,
whether original, redeemed or increased with or without any preference, priority
or special privilege or subject to any postponement of rights or to any
conditions or restrictions and so that unless the conditions of issue shall
otherwise expressly declare every issue of shares whether declared to be
preference or otherwise shall be subject to the powers hereinbefore contained.
7. If the Company is registered as exempted, its operations will be carried
on subject to the provisions of Section 192 of the Companies Law (Revision 1995)
and, subject to the provisions of the Companies Law (Revision 1995) and the
Articles of Association, it shall have the power to register by way of
continuation as a body corporate limited by shares under the laws of any
jurisdiction outside the Cayman Islands and to be deregistered in the Cayman
Islands.
<PAGE>
6
WE the several persons whose names and addresses are subscribed are desirous of
being formed into a company in pursuance of this Memorandum of Association and
we respectively agree to take the number of shares in the capital of the Company
set opposite our respective names.
DATED the 17th day of September, 1996
SIGNATURE and ADDRESS NUMBER OF SHARES
OF EACH SUBSCRIBER TAKEN BY EACH
- ------------------ -------------
/s/ Henry Smith
- ------------------------------------
Henry Smith, Attorney at Law One
PO Box 309, Grand Cayman
/s/ Paul Lumsden
- ------------------------------------
Paul Lumsden, Attorney at Law, One
PO Box 309, Grand Cayman
[SIGNATURE APPEARS HERE]
- ------------------------------------
Witness to the above signatures
I, CINDY Y. JEFFERSON DEP, Registrar of Companies in and for the Cayman Islands
HEREBY CERTIFY that this is a true and correct copy of the Memorandum of
Association of this Company duly incorporated on the 17th day of Sept. 1996
[SIGNATURE APPEARS HERE]
---------------------------------
Dep REGISTRAR OF COMPANIES
[SEAL OF REGISTRAR
APPEARS HERE]
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS FOR ARTICLES OF ASSOCIATION
<S> <C>
CERTIFICATES FOR SHARES................................................... 2
ISSUE OF SHARES........................................................... 3
TRANSFER OF SHARES........................................................ 3
REDEEMABLE SHARES......................................................... 4
VARIATION OF RIGHTS OF SHARES............................................. 4
COMMISSION ON SALES OF SHARES............................................. 4
NON-RECOGNITION OF TRUSTS................................................. 5
LIEN ON SHARES............................................................ 5
CALL ON SHARES............................................................ 6
FORFEITURE OF SHARES...................................................... 7
REGISTRATION OF EMPOWERING INSTRUMENTS.................................... 8
TRANSMISSION OF SHARES.................................................... 8
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL..................... 9
CLOSING REGISTER OF MEMBERS OR FIXING RECORD DATE.........................10
GENERAL MEETING...........................................................11
NOTICE OF GENERAL MEETINGS................................................12
PROCEEDINGS AT GENERAL MEETINGS...........................................12
VOTES OF MEMBERS..........................................................14
PROXIES...................................................................15
DIRECTORS.................................................................16
</TABLE>
<PAGE>
ALTERNATE DIRECTORS.................................................... 17
POWERS AND DUTIES OF DIRECTORS......................................... 18
MANAGEMENT............................................................. 19
MANAGING DIRECTORS..................................................... 19
PROCEEDINGS OF DIRECTORS............................................... 20
VACATION OF OFFICE OF DIRECTOR......................................... 22
APPOINTMENT AND REMOVAL OF DIRECTORS................................... 22
PRESUMPTION OF ASSENT.................................................. 22
SEAL................................................................... 23
OFFICERS............................................................... 23
DIVIDENDS, DISTRIBUTIONS AND RESERVE................................... 23
CAPITALISATION......................................................... 24
BOOKS OF ACCOUNT....................................................... 25
AUDIT.................................................................. 26
NOTICES................................................................ 26
WINDING UP............................................................. 27
INDEMNITY.............................................................. 28
FINANCIAL YEAR......................................................... 28
AMENDMENTS OF ARTICLES................................................. 29
TRANSFER BY WAY OF CONTINUATION........................................ 29
<PAGE>
THE COMPANIES LAW (1995 REVISION)
---------------------------------
[STAMP OF REGISTRAR
COMPANY LIMITED BY SHARES APPEARS HERE]
-------------------------
ARTICLES OF ASSOCIATION
OF
ELMWOOD FUNDING LIMITED
1. In these Articles Table A in the Schedule to the Statute does
not apply and, unless there be something in the subject or context inconsistent
therewith.
"Articles" means these Articles as originally framed or as
from time to time altered by Special Resolution.
"Auditors" means the persons for the time being performing
the duties of auditors of the Company.
"Company" means the above-named Company.
"debenture" means debenture stock, mortgages, bonds and any
other such securities of the Company whether
constituting a charge on the assets of the
Company or not.
"Directors" means the directors for the time being of the
Company.
"dividend" includes bonus.
"Member" shall bear the meaning as ascribed to it in the
Statute.
"month" means calendar month.
"paid-up" means paid-up and/or credited as paid-up.
"registered officer" means the registered office for the time being
of the Company.
"Seal" means the common seal of the Company and
includes every duplicate seal.
[SEAL OF REGISTRAR APPEARS HERE]
<PAGE>
2
"Secretary" includes an Assistant Secretary and any person
appointed to perform the duties of Secretary of the
Company.
"share" includes a fraction of a share.
"Special Resolution" has the same meaning as in the Statute and includes a
resolution approved in writing as described therein.
"Statute" means the Companies Law of the Cayman Islands as
amended and every statutory modification or re-
enactment thereof for the time being in force.
"written" and
"in writing" include all modes of representing or reproducing
words in visible form.
Words importing the singular number only include the plural number and
vice-versa.
Words importing the masculine gender only include the feminine gender.
Words importing persons only include corporations.
2. The business of the Company may be commenced as soon after
incorporation as the Directors shall see fit, notwithstanding that part only of
the shares may have been allotted.
3. The Directors may pay, out of the capital or any other monies of the
Company, all expenses incurred in or about the formation and establishment of
the Company including the expenses of registration.
CERTIFICATES FOR SHARES
-----------------------
4. Certificates representing shares of the Company shall be in such form
as shall be determined by the Directors. Such certificates may be under Seal.
All certificates for shares shall be consecutively numbered or otherwise
identified and shall specify the shares to which they relate. The name and
address of the person to whom the shares represented thereby are issued, with
the number of shares and date of issue, shall be entered in the register of
Members of the Company. All certificates surrendered to the Company for transfer
shall be cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall
<PAGE>
3
have been surrendered and cancelled. The Directors may authorise certificates to
be issued with the seal and authorised signature(s) affixed by some method or
system of mechanical process.
5. Notwithstanding Article 4 of these Articles, if a share certificate be
defaced, lost or destroyed, it may be renewed on payment of a fee of one dollar
(US$1.00) or such less sum and on such terms (if any) as to evidence and
indemnity and the payment of the expenses incurred by the Company in
investigating evidence, as the Directors may prescribe.
ISSUE OF SHARES
---------------
6. Subject to the provisions, if any, in that behalf in the Memorandum of
Association and to any direction that may be given by the Company in general
meeting and without prejudice to any special rights previously conferred on the
holders of existing shares, the Directors may allot, issue, grant options over
or otherwise dispose of shares of the Company (including fractions of a share)
with or without preferred, deferred or other special rights or restrictions,
whether in regard to dividend, voting, return of capital or otherwise and to
such persons, at such times and on such other terms as they think proper.
7. The Company shall maintain a register of its Members and every person
whose name is entered as a Member in the register of Members shall be entitled
without payment to receive within two months after allotment or lodgement of
transfer (or within such other period as the conditions of issue shall provide)
one certificate for all his shares or several certificates each for one or more
of his shares upon payment of fifty cents (US$0.50) for every certificate after
the first or such less sum as the Directors shall from time to time determine
provided that in respect of a share or shares held jointly by several persons
the Company shall not be bound to issue more than one certificate and delivery
of a certificate for a share to one of the several joint holders shall be
sufficient delivery to all such holders.
TRANSFER OF SHARES
------------------
8. The instrument of transfer of any share shall be in writing and shall
be executed by or on behalf of the transferor and the transferor shall be deemed
to remain the holder of a share until the name of the transferee is entered in
the register in respect thereof.
9. The Directors may in their absolute discretion decline to register any
transfer of shares without assigning any reason therefor. If the Directors
refuse to register a transfer they shall notify the transferee within two months
of such refusal.
<PAGE>
4
10. The registration of transfers may be suspended at such time and for
such periods as the Directors may from time to time determine, provided always
that such registration shall not be suspended for more than forty-five days in
any year.
REDEEMABLE SHARES
-----------------
11. (a) Subject to the provisions of the Statute and the Memorandum of
Association, shares may be issued on the terms that they are, or at the option
of the Company or the holder are, to be redeemed on such terms and in such
manner as the Company, before the issue of the shares, may by Special Resolution
determine.
(b) Subject to the provisions of the Statute and the Memorandum of
Association, the Company may purchase its own shares (including fractions of a
share), including any redeemable shares, provided that the manner of purchase
has first been authorised by the Company in general meeting and may make payment
therefor in any manner authorised by the Statute, including out of capital.
VARIATION OF RIGHTS OF SHARES
----------------------------
12. If at any time the share capital of the Company is divided into
different classes of shares, the rights attached to any class (unless otherwise
provided by the terms of issue of the shares of that class) may, whether or not
the Company is being wound-up, be varied with the consent in writing of the
holders of three-fourths of the issued shares of that class, or with the
sanction of a Special Resolution passed at a general meeting of the holders of
the shares of that class.
The provisions of these Articles relating to general meetings shall
apply to every such general meeting of the holders of one class of shares except
that the necessary quorum shall be one person holding or representing by proxy
at least one-third of the issued shares of the class and that any holder of
shares of the class present in person or by proxy may demand a poll.
13. The rights conferred upon the holders of the shares of any class
issued with preferred or other rights shall not, unless otherwise expressly
provided by the terms of issue of the shares of that class, be deemed to be
varied by the creation or issue of further shares ranking pari passu therewith.
<PAGE>
5
COMMISSION ON SALE OF SHARES
----------------------------
14. The Company may in so far as the Statute from time to time permits pay
a commission to any person in consideration of his subscribing or agreeing to
subscribe whether absolutely or conditionally for any shares of the Company.
Such commissions may be satisfied by the payment of cash or the lodgement of
fully or partly paid-up shares or partly in one way and partly in the other. The
Company may also on any issue of shares pay such brokerage as may be lawful.
NON-RECOGNITION OF TRUSTS
-------------------------
15. No person shall be recognised by the Company as holding any share upon
any trust and the Company shall not be bound by or be compelled in any way to
recognise (even when having notice thereof) any equitable, contingent, future,
or partial interest in any share, or any interest in any fractional part of a
share, or (except only as is otherwise provided by these Articles or the
Statute) any other rights in respect of any share except an absolute right to
the entirety thereof in the registered holder.
LIEN ON SHARES
--------------
16. The Company shall have a first and paramount lien and charge on all
shares (whether fully paid-up or not) registered in the name of a Member
(whether solely or jointly with others) for all debts, liabilities or
engagements to or with the Company (whether presently payable or not) by such
Member or his estate, either alone or jointly with any other person, whether a
Member or not, but the Directors may at any time declare any share to be wholly
or in part exempt from the provisions of this Article. The registration of a
transfer of any such share shall operate as a waiver of the Company's lien (if
any) thereon. The Company's lien (if any) on a share shall extend to all
dividends or other monies payable in respect thereof.
17. The Company may sell, in such manner as the Directors think fit, any
shares on which the Company has a lien, but no sale shall be made unless a sum
in respect of which the lien exists is presently payable, nor until the
expiration of fourteen days after a notice in writing stating and demanding
payment of such part of the amount in respect of which the lien exists as is
presently payable, has been given to the registered holder or holders for the
time being of the share, or the person, of which the Company has notice,
entitled thereto by reason of his death or bankruptcy.
<PAGE>
6
18. To give effect to any such sale the Directors may authorise some
person to transfer the shares sold to the purchaser thereof. The purchaser
shall be registered as the holder of the shares comprised in any such transfer,
and he shall not be bound to see to the application of the purchase money, nor
shall his title to the shares be affected by any irregularity or invalidity in
the proceedings in reference to the sale.
19. The proceeds of such sale shall be received by the Company and applied
in payment of such part of the amount in respect of which the lien exists as is
presently payable and the residue, if any, shall (subject to a like lien for
sums not presently payable as existed upon the shares before the sale) be paid
to the person entitled to the shares at the date of the sale.
CALL ON SHARES
--------------
20. (a) The Directors may from time to time make calls upon the Members in
respect of any monies unpaid on their shares (whether on account of the nominal
value of the shares or by way of premium or otherwise) and not by the conditions
of allotment thereof made payable at fixed terms, provided that no call shall be
payable at less than one month from the date fixed for the payment of the last
preceding call, and each Member shall (subject to receiving at least fourteen
days notice specifying the time or times of payment) pay to the Company at the
time or times so specified the amount called on the shares. A call may be
revoked or postponed as the Directors may determine. A call may be made payable
by instalments.
(b) A call shall be deemed to have been made at the time when the
resolution of the Directors authorising such call was passed.
(c) The joint holders of a share shall be jointly and severally liable to
pay all calls in respect thereof.
21. If a sum called in respect of a share is not paid before or on a day
appointed for payment thereof, the persons from whom the sum is due shall pay
interest on the sum from the day appointed for payment thereof to the time of
actual payment at such rate not exceeding ten per cent per annum as the
Directors may determine, but the Directors shall be at liberty to waive payment
of such interest either wholly or in part.
22. Any sum which be the terms of issue of a share becomes payable on
allotment or at any fixed date, whether on account of the nominal value of the
share or by way of premium or otherwise, shall for the purposes of these
Articles be deemed to be a call duly made, notified and payable on the date on
which by the terms of issue the same becomes payable, and
<PAGE>
7
in the case of non-payment all the relevant provisions of these Articles as to
payment of interest forfeiture or otherwise shall apply as if such sum had
become payable by virtue of a call duly made and notified.
23. The Directors may, on the issue of shares, differentiate between the
holders as to the amount of calls or interest to be paid and the times of
payment.
24. (a) The Directors may, if they think fit, receive from any Member willing
to advance the same, all or any part of the monies uncalled and unpaid upon any
shares held by him, and upon all or any of the monies so advanced may (until the
same would but for such advances, become payable) pay interest at such rate not
exceeding (unless the Company in general meeting shall otherwise direct) seven
per cent per annum, as may be agreed upon between the Directors and the Member
paying such sum in advance.
(b) No such sum paid in advance of calls shall entitle the Member paying
such sum to any portion of a dividend declared in respect of any period prior to
the date upon which such sum would, but for such payment, become presently
payable.
FORFEITURE OF SHARES
--------------------
25. (a) If a Member fails to pay any call or instalment of a call or to make
any payment required by the terms of issue on the day appointed for payment
thereof, the Directors may, at any time thereafter during such time as any part
of the call, instalment or payment remains unpaid, give notice requiring payment
of so much of the call, instalment or payment as is unpaid, together with any
interest which may have accrued and all expenses that have been incurred by the
Company by reason of such non-payment. Such notice shall name a day (not earlier
than the expiration of fourteen days from the date of giving of the notice) on
or before which the payment required by the notice is to be made, and shall
state that, in the event of non-payment at or before the time appointed the
shares in respect of which such notice was given will be liable to be forfeited.
(b) If the requirements of any such notice as aforesaid are not complied
with, any share in respect of which the notice has been given may at any time
thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture
shall include all dividends declared in respect of the forfeited share and not
actually paid before the forfeiture.
<PAGE>
8
(c) A forfeited share may be sold or otherwise disposed of on such terms
and in such manner as the Directors think fit and at any time before a sale or
disposition the forfeiture may be cancelled on such terms as the Directors think
fit.
26. A person whose shares have been forfeited shall cease to be a Member
in respect of the forfeited shares, but shall, notwithstanding, remain liable to
pay to the Company all monies which, at the date of forfeiture were payable by
him to the Company in respect of the shares together with interest thereon, but
his liability shall cease if and when the Company shall have received payment in
full of all monies whenever payable in respect of the shares.
27. A certificate in writing under the hand of one Director or the
Secretary of the Company that a share in the Company has been duly forfeited on
a date stated in the declaration shall be conclusive evidence of the fact therin
stated as against all persons claiming to be entitled to the share. The Company
may receive the consideration given for the share on any sale or disposition
thereof and may execute a transfer of the share in favour of the person to whom
the share is sold or disposed of and he shall thereupon be registered as the
holder of the share and shall not be bound to see to the application of the
purchase money, if any, nor shall his title to the share be affected by any
irregularity or invalidity in the proceedings in reference to the forfeiture,
sale or disposal of the share.
28. The provisions of these Articles as to forfeiture shall apply in the
case of non-payment of any sum which, by the terms of issue of a share, becomes
payable at a fixed time, whether on account of the nominal value of the share or
by way of premium as if the same had been payable by virtue of a call duly made
and notified.
REGISTRATION OF EMPOWERING INSTRUMENTS
--------------------------------------
29. The Company shall be entitled to charge a fee not exceeding one dollar
(US$1.00) on the registration of every probate, letters of administration,
certificate of death or marriage, power of attorney, notice in lieu of
distringas, or other instrument.
TRANSMISSION OF SHARES
----------------------
30. In case of the death of a Member, the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole holder, shall be the only persons recognised by the
Company as having any title to his interest in the shares, but nothing herein
contained shall release the estate of any such deceased holder
<PAGE>
9
from any liability in respect of any shares which had been held by him solely or
jointly with other persons.
31. (a) Any person becoming entitled to a share in consequence of the death or
bankruptcy or liquidation or dissolution of a Member (or in any other way than
by transfer) may, upon such evidence being produced as may from time to time be
required by the Directors and subject as hereinafter provided, elect either to
be registered himself as holder of the share or to make such transfer of the
share to such other person nominated by him as the deceased or bankrupt person
could have made and to have such person registered as the transferee thereof,
but the Directors shall, in either case, have the same right to decline or
suspend registration as they would have had in the case of a transfer of the
share by that Member before his death or bankruptcy as the case may be.
(b) If the person so becoming entitled shall elect to be registered
himself as holder he shall deliver or send to the Company a notice in writing
signed by him stating that he so elects.
32. A person becoming entitled to a share by reason of the death or
bankruptcy or liquidation or dissolution of the holder (or in any other case
than by transfer) shall be entitled to the same dividends and other advantages
to which he would be entitled if he were the registered holder of the share,
except that he shall not, before being registered as a Member in respect of the
share, be entitled in respect of it to exercise any right conferred by
membership in relation to meetings of the Company PROVIDED HOWEVER that the
Directors may at any time give notice requiring any such person to elect either
to be registered himself or to transfer the share and if the notice is not
complied with within ninety days the Directors may thereafter withhold payment
of all dividends, bonuses or other monies payable in respect of the share until
the requirements of the notice have been complied with.
AMENDMENT OF MEMORANDUM OF ASSOCIATION, CHANGE OF
LOCATION OF REGISTERED OFFICE & ALTERATION OF CAPITAL
-----------------------------------------------------
33. (a) Subject to and in so far as permitted by the provisions of the
Statute, the Company may from time to time by ordinary resolution alter or amend
its Memorandum of Association otherwise than with respect to its name and
objects and may, without restricting the generality of the foregoing:
i. increase the share capital by such sum to be divided into shares
of such amount or without nominal or par value as the resolution
shall prescribe
<PAGE>
10
and with such rights, priorities and privileges annexed
thereto, as the Company in general meeting may determine.
ii. consolidate and divide all or any of its share capital
into shares of larger amounts than its existing shares.
iii. by subdivision of its existing shares or any of them
divide the whole or any part of its share capital into
shares of smaller amounts than is fixed by the Memorandum
of Association or into shares without nominal or par
value;
iv. cancel any shares which at the date of the passing of
the resolution have not been taken or agreed to be taken
by any person.
(b) All new shares created hereunder shall be subject to the same
provisions with reference to the payment of calls, liens, transfer,
transmission, forfeiture and otherwise as the shares in the original share
capital.
(c) Subject to the provisions of the Statue, the Company may by
Special Resolution change its name or alter its objects.
(d) Without prejudice to Article 11 hereof and subject to the
provisions of the Statute, the Company may by Special Resolution reduce its
share capital and any capital redemption reserve fund.
(e) Subject to the provisions of the Statute, the Company may by
resolution of the Directors change the location of its registered office.
CLOSING REGISTER OF MEMBERS OF FIXING RECORD DATE
-------------------------------------------------
34. For the purpose of determining Members entitled to notice of or
to vote at any meeting of Members or any adjournment thereof, or Members
entitled to receive payment of any dividend, or in order to make a determination
of Members for any other proper purpose, the Directors of the Company may
provide that the register or Members shall be closed for transfers for a stated
period but not to exceed in any case forty days. If the register of Members
shall be so closed for the purpose of determining Members entitled to notice of
or to vote at a meeting of Members such register shall be so closed for at least
ten days immediately preceding such meeting and the record date for such
determination shall be the date of the closure of the register of Members.
<PAGE>
11
35. In lieu of or apart from closing the register of Members, the
Directors may fix in advance a date as the record date for any such
determination of Members entitled to notice of or to vote at a meeting of the
Members and for the purpose of determining the Members entitled to receive
payment of any dividend the Directors may, at or within 90 days prior to the
date of declaration of such dividend fix a subsequent date as the record date
for such determination.
36. If the register of Members is not so closed and no record date is
fixed for the determination of Members entitled to notice of or to vote at a
meeting of Members or Members entitled to receive payment of a dividend, the
date on which notice of the meeting is mailed or the date on which the
resolution of the Directors declaring such dividend is adopted, as the case may
be, shall be the record date for such determination of Members. When a
determination of Members entitled to vote at any meeting of Members has been
made as provided in this section, such determination shall apply to any
adjournment thereof.
GENERAL MEETING
---------------
37. (a) Subject to paragraph (c) hereof, the Company shall within one year of
its incorporation and in each year of its existence thereafter hold a general
meeting as its annual general meeting and shall specify the meeting as such in
the notices calling it. The annual general meeting shall be held at such time
and place as the Directors shall appoint and if no other time and place is
prescribed by them, it shall be held at the registered office on the second
Wednesday in December of each year at ten o' clock in the morning.
(b) At these meetings the report of the Directors (if any) shall be
presented.
(c) If the Company is exempted as defined in the Statute it may but shall
not be obliged to hold an annual general meeting.
38. (a) The Directors may whenever they think fit, and they shall on the
requisition of Members of the Company holding at the date of the deposit of the
requisition not less than one-tenth of such of the paid-up capital of the
Company as at the date of the deposit carries the right of voting at general
meetings of the Company, proceed to convene a general meeting of the Company.
(b) The requisition must state the objects of the meeting and must be
signed by the requisitionists and deposited at the registered office of the
Company and may consist of several documents in like form each signed by one or
more requisitionists.
<PAGE>
12
(c) If the Directors do not within twenty-one days from the date of the
deposit of the requisition duly proceed to convene a general meeting, the
requisitionists, or any of them representing more than one-half of the total
voting rights of all of them, may themselves convene a general meeting, but any
meeting so convened shall not be held after the expiration of three months
after the expiration of the said twenty-one days.
(d) A general meeting convened as aforesaid by requisitionists shall be
convened in the same manner as nearly as possible as that in which general
meetings are to be convened by Directors.
NOTICE OF GENERAL MEETINGS
--------------------------
39. At least five days' notice shall be given of an annual general meeting
or any other general meeting. Every notice shall be exclusive of the day on
which it is given or deemed to be given and of the day for which it is given and
shall specify the place, the day and the hour of the meeting and the general
nature of the business and shall be given in the manner hereinafter mentioned or
in such other manner if any as may be prescribed by the Company PROVIDED that a
general meeting of the Company shall, whether or not the notice specified in
this regulation has been given and whether or not the provisions of Article 38
have been complied with, be deemed to have been duly convened if it is so
agreed:
(a) in the case of a general meeting called as an annual general meeting
by all the Members entitled to attend and vote thereat or their
proxies; and
(b) in the case of any other general meeting by a majority in number of
the Members having a right to attend and vote at the meeting, being a
majority together holding not less than seventy-five per cent in
nominal value or in the case of shares without nominal or par value
seventy-five per cent of the shares in issue, or their proxies.
40. The accidental omission to give notice of a general meeting to, or the
non-receipt of notice of a meeting by any person entitled to receive notice
shall not invalidate the proceedings of that meeting.
<PAGE>
13
PROCEEDINGS AT GENERAL MEETINGS
-------------------------------
41. No business shall be transacted at any general meeting unless a quorum
of Members is present at the time when the meeting proceeds to business; two
Members present in person or by proxy shall be a quorum provided always that if
the Company has one Member of record the quorum shall be that one Member present
in person or by proxy.
42. A resolution (including a Special Resolution) in writing (in one or
more counterparts) signed by all Members for the time being entitled to receive
notice of and to attend and vote at general meetings (or being corporations by
their duly authorised representatives) shall be as valid and effective as if the
same had been passed at a general meeting of the Company duly convened and held.
43. If within half an hour from the time appointed for the meeting a
quorum is not present, the meeting, if convened upon the requisition of Members,
shall be dissolved and in any other case it shall stand adjourned to the same
day in the next week at the same time and place or to such other time or such
other place as the Directors may determine and if at the adjourned meeting a
quorum is not present within half an hour from the time appointed for the
meeting the Members present shall be a quorum.
44. The Chairman, if any, of the Board of Directors shall preside as
Chairman at every general meeting of the Company, of if there is no such
Chairman, or if he shall not be present within fifteen minutes after the time
appointed for the holding of the meeting, or is unwilling to act, the Directors
present shall elect one of their number to be Chairman of the meeting.
45. If at any general meeting no Director is willing to act as Chairman or
if no Director is present within fifteen minutes after the time appointed for
holding the meeting, the Members present shall choose one of their number to be
Chairman of the meeting.
46. The Chairman may, with the consent of any general meeting duly
constituted hereunder, and shall if so directed by the meeting, adjourn the
meeting from time to time and from place to place, but no business shall be
transacted at any adjourned meeting other than the business left unfinished at
the meeting from which the adjournment took place. When a general meeting is
adjourned for thirty days or more, notice of the adjourned meeting shall be
given as in the case of an original meeting; save as aforesaid it shall not be
necessary to give any notice of an adjournment or of the business to be
transacted at an adjourned general meeting.
<PAGE>
14
47. At any general meeting a resolution put to the vote of the meeting shall
be decided on a show of hands unless a poll is, before or on the declaration of
the result of the show of hands, demanded by the Chairman or any other Member
present in person or by proxy.
48. Unless a poll be so demanded a declaration by the Chairman that a
resolution has on a show of hands been carried, or carried unanimously, or by a
particular majority, or lost, and an entry to that effect in the Company's
Minute Book containing the Minutes of the proceedings of the meeting shall be
conclusive evidence of that fact without proof of the number or proportion of
the votes recorded in favour of or against such resolution.
49. The demand for a poll may be withdrawn.
50. Except as provided in Article 52, if a poll is duly demanded it shall be
taken in such manner as the Chairman directs and the result of the poll shall be
deemed to be the resolution of the general meeting at which the poll was
demanded.
51. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the general meeting at which the show of hands takes place
or at which the poll is demanded, shall be entitled to a second or casting vote.
52. A poll demanded on the election of a Chairman or on a question of
adjournment shall be taken forthwith. A poll demanded on any other question
shall be taken at such time as the Chairman of the general meeting directs and
any business other than that upon which a poll has been demanded or is
contingent thereon may be proceeded with pending the taking of the poll.
VOTE OF MEMBERS
---------------
53. Subject to any rights or restrictions for the time being attached to any
class or classes of shares, on a show of hands every Member of record present in
person or by proxy at a general meeting shall have one vote and on a poll every
Member of record present in person or by proxy shall have one vote for each
share registered in his name in the register of Members.
54. In the case of joint holders of record the vote of the senior who
tenders a vote, whether in person or by proxy, shall be accepted to the
exclusion of the votes of the other joint holders, and for this purpose
seniority shall be determined by the order in which the names stand in the
register of Members.
<PAGE>
15
55. A Member of unsound mind, or in respect of whom an order has been made
by any court, having jurisdiction in lunacy, may vote, whether on a show of
hands or on a poll, by his committee, receiver, curator bonis, or other person
in the nature of a committee, receiver or curator bonis appointed by that court,
and any such committee, receiver, curator bonis or other persons may vote by
proxy.
56. No Member shall be entitled to vote at any general meeting unless he
is registered as a shareholder of the Company on the record date for such
meeting nor unless all calls or other sums presently payable by him in respect
of shares in the Company have been paid.
57. No objection shall be raised to the qualification of any voter except
at the general meeting or adjourned general meeting at which the vote objected
to is given or tendered and every vote not disallowed at such general meeting
shall be valid for all purposes. Any such objection made in due time shall be
referred to the Chairman of the general meeting whose decision shall be final
and conclusive.
58. On a pool or on a show of hands votes may be given either personally
or by proxy.
PROXIES
-------
59. The instrument appointing a proxy shall be in writing and shall be
executed under the hand of the appointor or of his attorney duly authorised in
writing, or, if the appointor is a corporation under the hand of an officer or
attorney duly authorised in that behalf. A proxy need not be a Member of the
Company.
60. The instrument appointing a proxy shall be deposited at the registered
office of the Company or at such other place as is specified for that purpose in
the notice convening the meeting no later than the time for holding the meeting,
or adjourned meeting provided that the Chairman of the Meeting may at his
discretion direct that an instrument of proxy shall be deemed to have been duly
deposited upon receipt of telex, cable or telecopy confirmation from the
appointor that the instrument of proxy signed is in the course of transmission
to the Company.
61. The instrument appointing a proxy may be in any usual or common form
and may be expressed to be for a particular meeting or any adjournment thereof
or generally until revoked. An instrument appointing a proxy shall be deemed to
include the power to demand or join or concur in demanding a poll.
<PAGE>
16
62. A vote given in accordance with the terms of an instrument of proxy
shall be valid notwithstanding the previous death or insanity of the principal
or revocation of the proxy or of the authority under which the proxy was
executed, or the transfer of the share in respect of which the proxy is given
provided that no intimation in writing of such death, insanity, revocation or
transfer as aforesaid shall have been received by the Company at the registered
office before the commencement of the general meeting, or adjourned meeting at
which it is sought to use the proxy.
63. Any corporation which is a Member of record of the Company may in
accordance with its Articles or in the absence of such provision by resolution
of its Directors or other governing body authorise such person as it thinks fit
to act as its representative at any meeting of the Company or of any class of
Members of the Company, and the person so authorised shall be entitled to
exercise the same powers on behalf of the corporation which he represents as the
corporation could exercise if it were an individual Member of record of the
Company.
64. Shares of its own capital belonging to the Company or held by it in a
fiduciary capacity shall not be voted, directly or indirectly, at any meeting
and shall not be counted in determining the total number of outstanding shares
at any given time.
DIRECTORS
---------
65. There shall be a Board of Directors consisting of not less than one or
more than ten persons (exclusive of alternate Directors) PROVIDED HOWEVER that
the Company may from time to time by ordinary resolution increase or reduce the
limits in the number of Directors. The first Directors of the Company shall be
determined in writing by, or appointed by a resolution of, the subscribers of
the Memorandum of Association or a majority of them.
66. The remuneration to be paid to the Directors shall be such
remuneration as the Directors shall determine. Such remuneration shall be deemed
to accrue from day to day. The Directors shall also be entitled to be paid their
travelling, hotel and other expenses properly incurred by them in going to,
attending and returning from meetings of the Directors, or any committee of the
Directors, or general meetings of the Company, or otherwise in connection with
the business of the Company, or to receive a fixed allowance in respect thereof
as may be determined by the Directors from time to time, or a combination partly
of one such method and partly the other.
67. The Directors may by resolution award special remuneration to any
Director of the Company undertaking any special work or services for, or
undertaking any special mission on behalf of, the Company other than his
ordinary routine work as a Director. Any fees paid
<PAGE>
17
to a Director who is also counsel or solicitor to the Company, or otherwise
serves it in a professional capacity shall be in addition to his remuneration as
a Director.
68. A Director or alternate Director may hold any other office or place of
profit under the Company (other than the office of Auditor) in conjunction with
his office of Director for such period and on such terms as to remuneration and
otherwise as the Directors may determine.
69. A Director or alternate Director may act by himself or his firm in a
professional capacity for the Company and he or his firm shall be entitled to
remuneration for professional services as if he were not Director or alternate
Director.
70. A shareholding qualification for Directors may be fixed by the Company
in general meeting, but unless and until so fixed no qualification shall be
required.
71. A Director or alternate Director of the Company may be or become a
director or other officer of or otherwise interested in any company promoted by
the Company or in which the Company may be interested as shareholder or
otherwise and no such Director or alternate Director shall be accountable to the
Company for any remuneration or other benefits received by him as a director or
officer of, or from his interest in, such other company.
72. No person shall be disqualified from the office of Director or
alternate Director or prevented by such office from contracting with the
Company, either as vendor, purchaser or otherwise, nor shall any such contract
or any contract or transaction entered into by or on behalf of the Company in
which any Director or alternate Director shall be in any way interested be or be
liable to be avoided, nor shall any Director or alternate Director so
contracting or being so interested be liable to account to the Company for any
profit realised by any such contract or transaction by reason of such Director
holding office or of the fiduciary relation thereby established. A Director (or
his alternate Director in his absence) shall be at liberty to vote in respect of
any contract or transaction in which he is so interested as aforesaid PROVIDED
HOWEVER that the nature of the interest of any Director or alternate Director in
any such contract or transaction shall be disclosed by him or the alternate
Director appointed by him at or prior to its consideration and any vote thereon.
73. A general notice that a Director or alternate Director is a
shareholder of any specified firm or company and is to be regarded as interested
in any transaction with such firm or company shall be sufficient disclosure
under Article 72 and after such general notice it shall not be necessary to give
special notice relating to any particular transaction.
<PAGE>
18
ALTERNATE DIRECTORS
-------------------
74. Subject to the exception contained in Article 82, a Director who
expects to be unable to attend Directors' Meetings because of absence, illness
or otherwise may appoint any person to be an alternate Director to act in his
stead and such appointee whilst he holds office as an alternate Director shall,
in the event of absence therefrom of his appointor, be entitled to attend
meetings of the Directors and to vote thereat and to do, in the place and stead
of his appointor, any other act or thing which his appointor is permitted or
required to do by virtue of his being a Director as if the alternate Director
were the appointor, other than appointment of an alternate to himself, and he
shall ipso facto vacate office if and when his appointor ceases to be a Director
or removes the appointee from office. Any appointment or removal under this
Article shall be effected by notice in writing under the hand of the Director
making the same.
POWERS AND DUTIES OF DIRECTORS
------------------------------
75. The business of the Company shall be managed by the Directors (or a
sole Director if only one is appointed) who may pay all expenses incurred in
promoting, registering and setting up the Company, and may exercise all such
powers of the Company as are not, from time to time by the Statute, or by these
Articles, required to be exercised by the Company in general meeting subject
nevertheless to any of these regulations, to the provisions of the Statute and
to such regulations being not inconsistent with the aforesaid regulations or
provisions, as may be prescribed by the Company in general meeting PROVIDED
HOWEVER that no regulations made by the Company in general meeting shall
invalidate any prior act of the Directors which would have been valid if that
regulation had not been made.
76. The Directors may from time to time and at any time by powers of
attorney appoint any company, firm, person or body of persons, whether nominated
directly or indirectly by the Directors, to be the attorney or attorneys of the
Company for such purpose and with such powers, authorities and discretions (not
exceeding those vested in or exercisable by the Directors under these Articles)
and for such period and subject to such conditions as they may think fit, and
any such powers of attorney may contain such provisions for the protection and
convenience of persons dealing with any such attorneys as the Directors may
think fit, and may also authorise any such attorney to delegate all or any of
the powers, authorities and discretions vested in him.
77. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments and all receipts for monies paid to the Company shall be
signed, drawn, accepted, endorsed or otherwise executed as the case may be in
such manner as the Directors shall from time to time by resolution determine.
<PAGE>
19
78. The Directors shall cause minutes to be made in books provided for the
purpose:
(a) of all appointments of officers made by the Directors;
(b) of the names of the Directors (including those represented therat by
an alternate or by proxy) present at each meeting Directors and of any
committee of the Directors;
(c) of all resolutions and proceedings at all meetings of the Company and
of the Directors and of committees of Directors.
79. The Directors on behalf of the Company may pay a gratuity or pension
or allowance on retirement to any Director who has held any other salaried
office or place of profit with the Company or to his widow or dependants and may
make contributions to any fund and pay premiums for the purchase or provision of
any such gratuity, pension or allowance.
80. The Directors may exercise all the powers of the Company to borrow
money and to mortgage or charge its undertaking, property and uncalled capital
or any part thereof and to issue debentures, debenture stock and other securi-
ties whether outright or as security for any debt, liability or obligation of
the Company or of any third party.
MANAGEMENT
----------
81. (a) The Directors may from time to time provide for the management of the
affairs of the Company in such manner as they shall think fit and the provisions
contained in the three next following paragraphs shall be without prejudice to
the general powers conferred by this paragraph.
(b) The Directors from time to time and at any time may establish any
committees, local boards or agencies for managing any of the affairs of the
Company and may appoint any persons to be members of such committees or local
boards or any managers or agents and may fix their remuneration.
(c) the Directors from time to time and at any time may delegate to any
such committee, local board, manager or agent any of the powers, authorities and
discretions for the time being vested in the Directors and may authorise the
members for the time being of any such local board, or any of them to fill up
any vacancies therein and to act notwithstanding vacancies and any such
appointment or delegation may be made on such terms and subject to such
conditions as the Directors may think fit and the Directors may at any time
remove any person
<PAGE>
20
so appointed and may annul or vary any such delegation, but no person dealing in
good faith and without notice of any such annulment or variation shall be
affected thereby.
(d) Any such delegates as aforesaid may be authorised by the Directors to
subdelegate all or any of the powers, authorities, and discretions for the time
being vested in them.
MANAGING DIRECTORS
------------------
82. The Directors may, from time to time, appoint one or more of their
body (but not an alternate Director) to the office of Managing Director for
such term and at such remuneration (whether by way of salary, or commission, or
participation in profits, or partly in one way and partly in another) as they
may think fit but his appointment shall be subject to determination ipso facto
if he ceases from any cause to be a Director and no alternate Director appointed
by him can act in his stead as a Director or Managing Director.
83. The Directors may entrust to and confer upon a Managing Director any
of the powers exercisable by them upon such terms and conditions and with such
restrictions as they may think fit and either collaterally with or to the
exclusion of their own powers and may from time to time revoke, withdraw, alter
or vary all or any of such powers.
PROCEEDINGS OF DIRECTORS
------------------------
84. Except as otherwise provided by these Articles, the Directors shall
meet together for the despatch of business, convening, adjourning and otherwise
regulating their meetings as they think fit. Questions arising at any meeting
shall be decided by a majority of votes of the Directors and alternate Directors
present at a meeting at which there is a quorum, the vote of an alternate
Director not being counted if his appointor be present at such meeting. In case
of an equality of votes, the Chairman shall have a second or casting vote.
85. A Director or alternate Director may, and the Secretary on the
requisition of a Director or alternate Director shall, at any time summon a
meeting of the Directors by at least two days' notice in writing to every
Director and alternate Director which notice shall set forth the general nature
of the business to be considered unless notice is waived by all the Directors
(or their alternates) either at, before or after the meeting is held and
PROVIDED FURTHER if notice is given in person, by cable, telex or telecopy the
same shall be deemed to have been given on the day it is delivered to the
Directors or transmitting organisation as the case may be. The provisions of
Article 40 shall apply mutatis mutandis with respect to notices of meetings of
Directors.
<PAGE>
21
86. The quorum necessary for the transaction of the business of the
Directors may be fixed by the Directors and unless so fixed shall be two, a
Director and his appointed alternate Director being considered only one person
for this purpose, PROVIDED ALWAYS that if there shall at any time be only a sole
Director the quorum shall be one. For the purposes of this Article an alternate
Director or proxy appointed by a Director shall be counted in a quorum at a
meeting at which the Director appointing him is not present.
87. The continuing Directors may act notwithstanding any vacancy in their
body, but if and so long as their number is reduced below the number fixed by or
pursuant to these Articles as the necessary quorum of Directors the continuing
Directors or Director may act for the purpose of increasing the number of
Directors to that number, or of summoning a general meeting of the Company, but
for no other purpose.
88. The Directors may elect a Chairman of their Board and determine the
period for which he is to hold office; but if no such Chairman is elected, or if
at any meeting the Chairman is not present within five minutes after the time
appointed for holding the same, the Directors present may choose one of their
number to be Chairman of the meeting.
89. The Directors may delegate any of their powers to committees
consisting of such member or members of the Board of Directors (including
Alternate Directors in the absence of their appointors) as they think fit; any
committee so formed shall in the exercise of the powers so delegated conform to
any regulations that may be imposed on it by the Directors.
90. A committee may meet and adjourn as it thinks proper. Questions
arising at any meeting shall be determined by a majority of votes of the members
present, and in the case of an equality of votes the Chairman shall have a
second or casting vote.
91. All acts done by any meeting of the Directors or of a committee of
Directors (including any person acting as an alternate Director) shall,
notwithstanding that it be afterwards discovered that there was some defect in
the appointment of any Director or alternate Director, or that they or any of
them were disqualified, be as valid as if every such person had been duly
appointed and qualified to be a Director or alternate Director as the case may
be.
92. Members of the Board of Directors or of any committee thereof may
participate in a meeting of the Board or of such committee by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other and participation in a
meeting pursuant to this provision shall constitute presence in person at such
meeting. A resolution in writing (in one or more counterparts), signed by all
the Directors for the time being or all the members of a committee of Directors
(an alternate Director being entitled to sign such resolution on behalf of his
appointor) shall be as valid and
<PAGE>
22
effectual as if it had been passed at a meeting of the Directors or committee as
the case may be duly convened and held.
93. (a) A Director may be represented at any meetings of the Board of
Directors by a proxy appointed by him in which event the presence or vote of
the proxy shall for all purposes be deemed to be that of the Director.
(b) The provisions of Articles 59-62 shall mutatis mutandis apply to the
appointment of proxies by Directors.
VACATION OF OFFICE OF DIRECTOR
------------------------------
94. The office of a Director shall be vacated:
(a) if he gives notice in writing to the Company that he resigns the
office of Director;
(b) if he is absent himself (without being represented by proxy or an
alternate Director appointed by him) form three consecutive meetings
of the Board of Directors without special leave of absence from the
Directors, and they pass a resolution that he has by reason of such
absence vacated office;
(c) if he dies, becomes bankrupt or makes any arrangement or composition
with his creditors generally;
(d) if he is found a lunatic or becomes of unsound mind.
APPOINTMENT AND REMOVAL OF DIRECTORS
------------------------------------
95. The Company may by ordinary resolution appoint any person to be a
Director and may in like manner remove any Director and may in like manner
appoint another person in his stead.
96. The Directors shall have power at any time and from time to time to
appoint any person to be a Director, either to fill a casual vacancy or as an
addition to the existing Directors but so that the total amount of Directors
(exclusive of alternate Directors) shall not at any time exceed the number fixed
in accordance with these Articles.
<PAGE>
23
PRESUMPTION OF ASSENT
---------------------
97. A Director of the Company who is present at a meeting of the Board of
Directors at which action on any Company matter is taken shall be presumed to
have assented to the action taken unless his dissent shall be entered in the
Minutes of the meeting or unless he shall file his written dissent from such
action with the person acting as the Secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered mail to such
person immediately after the adjournment of the meeting. Such right to dissent
shall not apply to a Director who voted in favour of such action.
SEAL
----
98. (a) The Company may, if the Directors so determine, have a Seal which
shall, subject to paragraph (c) hereof, only be used by the authority of the
Directors or of a committee of the Directors authorised by the Directors in
that behalf and every instrument to which the Seal has been affixed shall be
signed by one person who shall be either a Director or the Secretary or
Secretary-Treasurer or some person appointed by the Directors for the purpose.
(b) The Company may have for use in any place or places outside the Cayman
Islands a duplicate Seal or Seals each of which shall be a facsimile of the
Common Seal of the Company and, if the Directors so determine, with the addition
on its face of the name of every place where it is to be used.
(c) A Director, Secretary or other officer or representative or attorney
may without further authority of the Directors affix the Seal of the Company
over his signature alone to any document of the Company required to be
authenticated by him under Seal or to be filed with the Registrar of Companies
in the Cayman Islands or elsewhere wheresoever.
OFFICERS
--------
99. The Company may have a President, a Secretary or Secretary-Treasurer
appointed by the Directors who may also from time to time appoint such other
officers as they consider necessary, all for such terms, at such remuneration
and to perform such duties, and subject to such provisions as to
disqualification and removal as the Directors from time to time prescribe.
<PAGE>
24
DIVIDENDS, DISTRIBUTIONS AND RESERVE
------------------------------------
100. Subject to the Statute, the Directors may from time to time declare
dividends (including interim dividends) and distributions on shares of the
Company outstanding and authorise payment of the same out of the funds of the
Company lawfully available therefor.
101. The Directors may, before declaring any dividends or distributions,
set aside such sums as they think proper as a reserve or reserves which shall at
the discretion of the Directors, be applicable for any purpose of the Company
and pending such application may, at the like discretion, be employed in the
business of the Company.
102. No dividend or distribution shall be payable except out of the profits
of the Company, realised or unrealised, or out of the share premium account or
as otherwise permitted by the Statute.
103. Subject to the rights of persons, if any, entitled to shares with
special rights as to dividends or distributions, if dividends or distributions
are to be declared on a class of shares they shall be declared and paid
according to the amounts paid or credited as paid on the shares of such class
outstanding on the record date for such dividend or distribution as determined
in accordance with these Articles but no amount paid or credited as paid on a
share in advance of calls shall be treated for the purpose of this Article as
paid on the share.
104. The Directors may deduct from any dividend or distribution payable to
any Member all sums of money (if any) presently payable by him to the Company on
account of calls or otherwise.
105. The Directors may declare that any dividend or distribution be paid
wholly or partly by the distribution of specific assets and in particular of
paid up shares, debentures, or debenture stock of any other company or in any
one or more of such ways and where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient and in
particular may issue fractional certificates and fix the value for distribution
of such specific assets or any part thereof and may determine that cash payments
shall be made to any Members upon the footing of the value so fixed in order to
adjust the rights of all Members and may vest any such specific assets in
trustees as may seem expedient to the Directors.
106. Any dividend, distribution, interest or other monies payable in cash
in respect of shares may be paid by cheque or warrant sent through the post
directed to the registered address of the holder or, in the case of joint
holders, to the holder who is first named on the register of Members or to such
person and to such address as such holder or joint holders may in writing
direct. Every such cheque or warrant shall be made payable to the order of the
person to whom
<PAGE>
25
it is sent. Any one of two or more joint holders may give effectual receipts for
any dividends, bonuses, or other monies payable in respect of the share held by
them as joint holders.
107 No dividend or distribution shall bear interest against the Company.
CAPITALISATION
--------------
108. The Company may upon the recommendation of the Directors by ordinary
resolution authorise the Directors to capitalise any sum standing to the credit
of any of the Company's reserve accounts (including share premium account and
capital redemption reserve fund) or any sum standing to the credit of profit and
loss account or otherwise available for distribution and to appropriate such sum
to Members in the proportions in which such sum would have been divisible
amongst them had the same been a distribution of profits by way of dividend and
to apply such sum on their behalf in paying up in full unissued shares for
allotment and distribution credited as fully paid up to and amongst them in the
proportion aforesaid. In such event the Directors shall do all acts and things
required to give effect to such capitalisation, with full power to the Directors
to make such provisions as they think fit for the case of shares becoming
distributable in fractions (including provisions whereby the benefit of
fractional entitlements accrue to the Company rather than to the Members
concerned). The Directors may authorise any person to enter on behalf of all of
the Members interested into an agreement with the Company providing for such
capitalisation and matters incidental thereto and any agreement made under such
authority shall be effective and binding on all concerned.
BOOKS OF ACCOUNT
----------------
109. The Directors shall cause proper books of account to be kept with
respect to:
(a) all sums of money received and expended by the Company and the matters
in respect of which the receipt or expenditure takes place;
(b) all sales and purchases of goods by the Company;
(c) the assets and liabilities of the Company.
Proper books shall not be deemed to be kept if there are not kept such books of
account as are necessary to give a true and fair view of the state of the
Company's affairs and to explain its transactions.
<PAGE>
26
110. The Directors shall from time to time determine whether and to what
extent and at what times and places and under what conditions or regulations the
accounts and books of the Company or any of them shall be open to the inspection
of Members not being Directors and no Member (not being a Director) shall have
any right of inspecting any account or book or document of the Company except as
conferred by Statute or authorised by the Directors or by the Company in general
meeting.
111. The Directors may from time to time cause to be prepared and to be
laid before the Company in general meeting profit and loss accounts, balance
sheets, group accounts (if any) and such other reports and accounts as may be
required by law.
AUDIT
-----
112. The Company may at any annual general meeting appoint an Auditor or
Auditors of the Company who shall hold office until the next annual general
meeting and may fix his or their remuneration.
113. The Directors may before the first annual general meeting appoint an
Auditor or Auditors of the Company who shall hold office until the first annual
general meeting unless previously removed by an ordinary resolution of the
Members in general meeting in which case the Members at that meeting may appoint
Auditors. The Directors may fill any casual vacancy in the office of Auditor but
while any such vacancy continues the surviving or continuing Auditor or
Auditors, if any, may act. The remuneration of any Auditor appointed by the
Directors under this Article may be fixed by the Directors.
114. Every Auditor of the Company shall have a right of access at all times
to the books and accounts and vouchers of the Company and shall be entitled to
require from the Directors and Officers of the Company such information and
explanation as may be necessary for the performance of the duties of the
auditors.
115. Auditors shall at the next annual general meeting following their
appointment and at any other time during their term of office, upon request of
the Directors or any general meeting of the Members, make a report on the
accounts of the Company in general meeting during their tenure of office.
<PAGE>
27
NOTICES
-------
116. Notices shall be in writing and may be given by the Company to any
Member either personally or by sending it by post, cable, telex or telecopy to
him or to his address as shown in the register of Members, such notice, if
mailed, to be forwarded airmail if the address be outside the Cayman Islands.
117. (a) Where a notice is sent by post, service of the notice shall be deemed
to be effected by properly addressing, pre-paying and posting a letter
containing the notice, and to have been effected at the expiration of sixty
hours after the letter containing the same is posted as aforesaid.
(b) Where a notice is sent by cable, telex, or telecopy, service of the
notice shall be deemed to be effected by properly addressing, and sending such
notice through a transmitting organisation and to have been effected on the day
the same is sent as aforesaid.
118. A notice may be given by the Company to the joint holders of record of
a share by giving the notice to the joint holder first named on the register of
Members in respect of the share.
119. A notice may be given by the Company to the person or persons which
the Company has been advised are entitled to a share or shares in consequence of
the death or bankruptcy of a Member by sending it through the post as aforesaid
in a pre-paid letter addressed to them by name, or by the title of
representatives of the deceased, or trustee of the bankrupt, or by any like
description at the address supplied for that purpose by the persons claiming to
be so entitled, or at the option of the Company by giving the notice in any
manner in which the same might have been given if the death or bankruptcy had
not occurred.
120. Notice of every general meeting shall be given in any manner
hereinbefore authorised to:
(a) every person shown as a Member in the register of Members as of the
record date for such meeting except that in the case of joint holders
the notice shall be sufficient if given to the joint holder first
named in the register of Members.
(b) every person upon whom the ownership of a share devolves by reason of
his being a legal personal representative or a trustee in bankruptcy
of a Member of record where the Member of record but for his death or
bankruptcy would be entitled to receive notice of the meeting; and
<PAGE>
28
No other person shall be entitled to receive notices of general meetings.
WINDING UP
----------
121. If the Company shall be wound up the liquidator may, with the
sanction of a Special Resolution of the Company and any other sanction required
by the Statute, divide amongst the Members in specie or kind the whole or any
part of the assets of the Company (whether they shall consist of property of the
same kind or not) and may for such purpose set such value as he deems fair upon
any property to be divided as aforesaid and may determine how such division
shall be carried out as between the Members or different classes of Members.
The liquidator may with the like sanction, vest the whole or any part of such
assets in trustees upon such trusts for the benefit of the contributories as the
liquidator, with the like sanction, shall think fit, but so that no Member shall
be compelled to accept any shares or other securities whereon there is any
liability.
122. If the Company shall be wound up, and the assets available for
distribution amongst the Members as such shall be insufficient to repay the
whole of the paid-up capital, such assets shall be distributed so that, as
nearly as may be, the losses shall be borne by the Members in proportion to the
capital paid up, or which ought to have been paid up, at the commencement of the
winding up on the shares held by them respectively. And if in a winding up the
assets available for distribution amongst the Members shall be more than
sufficient to repay the whole of the capital paid up at the commencement of the
winding up, the excess shall be distributed amongst the Members in proportion to
the capital paid up at the commencement of the winding up on the shares held by
them respectively. This Article is to be without prejudice to the rights of the
holders of shares issued upon special terms and conditions.
INDEMNITY
---------
123. The Directors and officers for the time being of the Company and
any trustee for the time being acting in relation to any of the affairs of the
Company and their heirs, executors, administrators and personal representatives
respectively shall be indemnified out of the assets of the Company from and
against all actions, proceedings, costs, charges, losses, damages and expenses
which they or any of them shall or may incur or sustain by reason of any act
done or omitted in or about the execution of their duty in their respective
offices or trusts, except such (if any) as they shall incur or sustain by or
through their own wilful neglect or default respectively and no such Director,
officer or trustee shall be answerable for the acts, receipts, neglects or
defaults of any other Director, officer or trustee or for joining in any receipt
for the sake of conformity or for the solvency or honesty of any banker or other
persons with whom
<PAGE>
29
any monies or effects belonging to the Company may be lodged or deposited for
safe custody or for any insufficiency of any security upon which any monies of
the Company may be invested or for any other loss or damage due to any such
cause as aforesaid or which may happen in or about the execution of his office
or trust unless the same shall happen through the wilful neglect or default of
such Director, Officer or trustee.
FINANCIAL YEAR
--------------
124. Unless the Directors otherwise prescribe, the financial year of the
Company shall end on 31st December in each year and, following the year of
incorporation, shall begin on 1st January in each year.
AMENDMENTS OF ARTICLES
----------------------
125. Subject to the Statute, the Company may at any time and from time to
time by Special Resolution alter or amend these Articles in whole or in part.
TRANSFER BY WAY OF CONTINUATION
-------------------------------
126. If the Company is exempted as defined in the Statute, it shall, subject
to the provisions of the Statute and with the approval of a Special Resolution,
have the power to register by way of continuation as a body corporate under the
laws of any jurisdiction outside the Cayman Islands and to be deregistered in
the Cayman Islands.
<PAGE>
30
DATED the 17th day of September, 1996
/s/ Henry Smith
- -------------------------------------
Henry Smith, Attorney at Law
PO Box 309, Grand Cayman
/s/ Paul Lumsden
- -------------------------------------
Paul Lumsden, Attorney at Law
PO Box 309, Grand Cayman
[SIGNATURE APPEARS APPEAR]
- -------------------------------------
Witness to the above signatures
I, CINDY Y. JEFFERSON DEP, Registrar of Companies in and for the Cayman Islands
HEREBY CERTIFY that this is a true and correct copy of the Articles of
Association of this Company duly incorporated on the 17th day of Sept. 1996
/s/ Cindy Y. Jefferson
------------------------------
Registrar of Companies
[SEAL OF REGISTRAR APPEARS HERE]
