<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 4, 1997.
REGISTRATION NO. 333-5698
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
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)
DEUTSCHE MORGAN GRENFELL (CAYMAN) LIMITED
P.O. BOX 1984
ELIZABETHAN SQUARE
GEORGE TOWN
GRAND CAYMAN
BRITISH WEST INDIES
ATTENTION: DARREN RILEY
(809) 949-8244
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
DONALD A. BENDERNAGEL, ESQ.COPIES TO: 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
---------------
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(2)
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<S> <C> <C> <C> <C>
Debt-Backed Pass-Through
Trust Certificates......... $35,000,000 100% $35,000,000 $12,068.96
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</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) $344.83 has been previously paid.
---------------
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>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 U.S. dollars.
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.
Each Series of Certificates will represent in the aggregate the entire
beneficial ownership interest in a publicly issued, fixed income debt security
issued pursuant to an effective registration statement filed with the
Securities and Exchange Commission (the "Commission") or a pool of such debt
securities (the "Underlying Securities"), together with other assets (such as
guarantees, letters of credit, financial insurance, interest rate and or
currency swaps and other derivative transactions that credit enhance or
otherwise support the Underlying Securities) designed to assure the servicing
or timely distribution of payments to holders of the Certificates, all as
described 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") between
the Depositor and the trustee (the "Trustee") named in the related Prospectus
Supplement. The Underlying Securities will represent senior debt obligations
issued by one or more corporations organized under the laws of the United
States of America or any state thereof. As a condition to the deposit into a
Trust of Underlying Securities constituting 10% or more of the total Underlying
Securities with respect to the related Series of Certificates, as of the date
of the issuance of such Series, the issuer of such Underlying Securities will
be subject to the periodic reporting requirements of the Securities Exchange
Act of 1934, as amended, and in accordance therewith will file reports,
including reports on Forms 10-K and 10-Q, and other information with the
Commission and will meet certain other criteria described under the heading
"Description of Deposited Assets--Underlying Securities Issuer". The Underlying
Securities will be purchased by the Depositor in the secondary market and,
correspondingly, will not be acquired from the issuer thereof (whether as part
of any distribution by or pursuant to any agreement with such issuer or
otherwise). No such issuer will participate in the offering of the
Certificates, nor will such issuer receive any of the proceeds from the sale of
the Underlying Securities to the Depositor or from the issuance by the
Depositor of the Certificates, and none of the Depositor, Citicorp Securities,
Inc. (the "Offering Agent") or any of their respective affiliates will have
participated in the initial public offering of the Underlying Securities. 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. The Certificates of each
Series will not represent an obligation of or interest in the Depositor,
Citicorp Securities, Inc. or any of their respective affiliates. 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, Citicorp Securities, Inc. 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. 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 the Certificates. To locate the definition of a defined term
herein, see the "Index of Defined Terms" located at the back of this
Prospectus.
Each Series of Certificates initially will be represented by one or more global
securities (each, a "Global Security") registered in the name of CEDE & Co., as
nominee of The Depository Trust Company ("DTC"). The interests of beneficial
owners of such Certificates will be represented by book entries on the records
of participating members of DTC ("Participants"). Definitive certificates in
registered form without coupons ("Definitive Certificates") will be available
only under the limited circumstances described herein under the heading
"Description of the Certificates--Global Securities".
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 February 4, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT...................................................... 2
AVAILABLE INFORMATION...................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 2
REPORTS TO CERTIFICATEHOLDERS.............................................. 3
ENFORCEMENT OF CIVIL LIABILITIES........................................... 3
RISK FACTORS............................................................... 4
THE DEPOSITOR.............................................................. 7
USE OF PROCEEDS............................................................ 7
FORMATION OF THE TRUST..................................................... 7
DESCRIPTION OF CERTIFICATES................................................ 9
General.................................................................. 9
Distributions............................................................ 10
Interest on the Certificates............................................. 11
Principal of the Certificates............................................ 16
Optional Exchange........................................................ 16
Call Right............................................................... 18
Global Securities........................................................ 18
DESCRIPTION OF DEPOSITED ASSETS............................................ 20
General.................................................................. 20
Underlying Securities Issuer............................................. 20
Underlying Securities Indenture.......................................... 21
Principal Economic Terms of Underlying Securities........................ 23
Other Deposited Assets................................................... 24
Collections.............................................................. 25
DESCRIPTION OF THE TRUST AGREEMENT......................................... 26
General.................................................................. 26
Assignment of Deposited Assets........................................... 26
Collection and Other Administrative Procedures........................... 26
Retained Interest........................................................ 27
Trustee Compensation and Payment of Expenses............................. 27
Distributions on Certificates............................................ 28
Optional Exchange........................................................ 29
Voting Rights with Respect to Underlying Securities...................... 29
Limitations on Rights of Certificateholders.............................. 30
Modification and Waiver.................................................. 30
Reports to Certificateholders; Notices................................... 31
Evidence as to Compliance................................................ 32
Replacement Certificates................................................. 32
Termination.............................................................. 32
Duties of the Trustee.................................................... 32
The Trustee.............................................................. 33
PLAN OF DISTRIBUTION....................................................... 33
LEGAL OPINIONS............................................................. 34
</TABLE>
1
<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 thereof, (b) a description of the material economic terms of the
Deposited Assets, (c) the identity of each issuer of the Underlying Securities
and each obligor with respect to any of the other Deposited Assets, (d) the
name of the Trustee, (e) the Pass-Through Rate (as defined below) or 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 other
material terms of Certificates of such Series (including terms relating to the
rights of the Trust or any third party to redeem or purchase such Certificates
prior to the scheduled final Distribution Date). 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 periodic reporting 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
Commission maintains a Web site at http://www.sec.gov containing reports,
proxy statements and other information regarding registrants that file
electronically with the Commission. 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
2
<PAGE>
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 the related Trust only
to Cede & Co. ("Cede"), as nominee of DTC and registered holder of the
Certificates. If Definitive Certificates are issued, such reports will be
prepared by the related Trustee and sent on behalf of the related Trust
directly to the Certificateholders in accordance with the Trust Agreement. 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.
ENFORCEMENT OF CIVIL LIABILITIES
The Depositor is a Cayman Islands company and its directors are residents of
various jurisdictions outside the United States. All or a substantial portion
of the assets of such directors and the Depositor, at any one time, are or may
be located in jurisdictions outside the United States. Therefore, it
ordinarily could be difficult for investors to effect service of process
within the United States on any of these parties who reside outside the United
States or to recover against them on judgments of United States courts
predicated upon civil liability under the United States federal securities
laws. Notwithstanding the forgoing, the Depositor has irrevocably agreed that
it may be served with process with respect to actions based on offers and
sales of Certificates made hereby in the United States by serving Donald A.
Bendernagel, Esq., Citibank, N.A., 399 Park Avenue, 11th Floor, New York, New
York 10043, its United States agent appointed for that purpose. The Depositor
has been advised by Maples and Calder, its Cayman Islands counsel, that there
is doubt as to whether the courts of the Cayman Islands would enforce (i)
judgments of United States courts obtained in actions against such persons or
the Depositor predicated upon the civil liability provisions of the United
States federal securities laws and (ii) original actions brought in the Cayman
Islands against such persons or the Depositor predicated solely upon United
States federal securities laws. There is no treaty in effect between the
United States and the Cayman Islands providing for such enforcement, and there
are grounds upon which Cayman Islands courts may not enforce judgments of
United States courts. Certain remedies available under the United States
federal securities laws would not be allowed in Cayman Islands courts as
contrary to that nation's public policy.
References herein to "U.S. dollars," "U.S.$," "USD," "dollar" or "$" are to
the lawful currency of the United States.
3
<PAGE>
RISK FACTORS
In connection with an investment in the Certificates of any Series,
prospective purchasers should consider, among other things, (1) the risk
factors set forth below and (2) any additional risk factors set forth in the
relevant Prospectus Supplement.
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. The Depositor has been advised by the Offering Agent
that the Offering Agent intends to make a market in the Certificates, as
permitted by applicable laws and regulations, after the issuance thereof. The
Offering Agent is not obligated, however, to make a market in the Certificates
of any Series and any such market making activity may be discontinued at any
time without notice at the sole discretion of the Offering Agent. If an active
public market for the Certificates does not develop or continue, the market
prices and liquidity of the Certificates may be adversely affected.
LIMITED OBLIGATIONS AND INTEREST. The Certificates will not represent a
recourse obligation of or interest in the Depositor, the Offering Agent or any
of their respective 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
or any of their respective affiliates and, unless otherwise specified in the
applicable Prospectus Supplement, are not insured or guaranteed by the
Depositor, the Offering Agent, any of their respective 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 YIELD CONSIDERATIONS. The timing of distributions of interest,
premium (if any) and principal of any Series of Certificates is affected by a
number of factors. In particular, the type and maturities of the Underlying
Securities and the terms, if any, upon which the Underlying Securities may be
subject to early redemption or purchase (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 will generally affect the weighted
average life of the related Series of Certificates. The effective yield to
holders of the Certificates of any Series may also 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 variety of tax,
accounting, economic and other factors will influence whether an issuer or
call option holder exercises any right of redemption or call right in respect
of its securities. All else remaining unchanged, if interest rates fall
4
<PAGE>
significantly below the interest rates prevailing at the time of issuance of
the Certificates, the likelihood of redemption or call would be expected to
increase. In addition, if there is a material reduction in the credit risk
associated with the Underlying Securities Issuer, the likelihood of redemption
of any redeemable Underlying Securities 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.
The Underlying Securities will generally be subject to acceleration upon the
occurrence of certain Underlying Security Events of Default. See "Description
of the Deposited Assets--Underlying Securities Indenture" below. The maturity
and yield on the Certificates will be affected by any early repayment of the
Underlying Securities as a result of the acceleration of the Outstanding Debt
Securities by the holders thereof. 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 with respect
to the Underlying Securities, including the Underlying Securities Issuer's
operating and financial condition, its capital structure and other 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 also 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 applicable Prospectus Supplement for a Series of Certificates will set
forth additional information regarding yield and maturity considerations
applicable to such Series and the related Deposited Assets, including the
related Underlying Securities.
UNDERLYING SECURITIES ISSUERS. A prospective purchaser of Certificates
should obtain and evaluate the same information concerning each Underlying
Securities Issuer as it would obtain and evaluate if it were investing
directly in the Underlying Securities or in other securities issued by the
Underlying Securities Issuer. Except for as described below under "Description
of Deposited Assets--Underlying Securities Issuer", none of the Depositor, the
Trustee, the Offering Agent or any of their respective affiliates assumes any
responsibility for the accuracy or completeness of any information concerning
any Underlying Securities Issuer (including, without limitation, no
investigation as to its financial condition or creditworthiness) or concerning
the Underlying Securities (whether or not such information is filed with the
Commission) or otherwise considered by a purchaser of the Certificates in
making its investment decision in connection therewith. The issuance of
Certificates of any Series should not be construed as an endorsement by the
Depositor, the Offering Agent or the Trustee of the financial condition or
business prospects of any Underlying Securities Issuer.
If an obligor on any Concentrated Underlying Securities ceases to file
periodic reports under the Exchange Act, the Depositor will instruct the
Trustee of the relevant Trust to sell all of such Concentrated Underlying
Securities, which sale will result in a loss to the Certificateholders of the
relevant Series if the sale price is less than the purchase price for such
Concentrated Underlying Securities.
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.
5
<PAGE>
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"). The rating is not a recommendation to purchase, hold or sell
Certificates, inasmuch as such rating does not comment as to market price or
suitability for a particular investor. There can be no assurance that the
rating will remain for any given period of time or that the rating will not be
lowered or withdrawn entirely by the Rating Agency if in its judgment
circumstances in the future so warrant.
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 any further description contained in the related Prospectus
Supplement.
PASSIVE NATURE OF THE TRUST. The Trustee with respect to any Series of
Certificates will hold the Deposited Assets for the benefit of the
Certificateholders. Each Trust will generally hold the related Deposited
Assets to maturity and not dispose of them, regardless of adverse events,
financial or otherwise, which may affect any Underlying Securities Issuer or
the value of the Deposited Assets. Except as indicated below, a holder will
not be able to dispose of or take other actions with respect to any Deposited
Assets. As a result, in the event that the value of a Deposited Asset
declines, an investor in Certificates of the relevant Series that would have
disposed of a direct investment in that Deposited Asset prior to such decline
will incur losses by reason of its investment in the Certificates and the
Trust's continued holding of such Deposited Asset. Under certain circumstances
described in the applicable Prospectus Supplement, the Trustee will (or will
at the direction of a specified percentage of Certificateholders of the
relevant Series) dispose of, or take certain other actions in respect of, the
Deposited Assets. In certain limited circumstances, such as a mandatory
redemption of Underlying Securities or the exercise by a third party of the
right to purchase Underlying Securities (and as described below under
"Description of Deposited Assets--Principal Economic Terms of Underlying
Securities"), the Trustee may dispose of the Deposited Assets prior to
maturity. The applicable Prospectus Supplement will describe the particular
circumstances, if any, under which a Deposited Asset may be disposed of prior
to maturity.
The Prospectus Supplement for each Series of Certificates will set forth
information regarding additional risk factors, if any, applicable to such
Series.
AMENDMENT OF TRUST AGREEMENT. By its own terms, the Trust Agreement may be
amended or otherwise modified with the consent of a percentage of
Certificateholders specified in the Prospectus Supplement (which percentage
will not be less than a majority). Any such amendment or other modification
could have a material adverse effect on those Certificateholders of the
relevant Series that do not consent to such amendment or other modification.
However, the Trust Agreement provides that any amendment or other modification
that would reduce the amount of, or defer the date of, distributions to
Certificateholders of a Series may become effective only with the consent of
each affected Certificateholder of that Series and that, if so specified in
the applicable Prospectus Supplement, any such amendment or other modification
that would result in the reduction or withdrawal of the then current rating
assigned to the Certificates of a Series by a Rating Agency would require the
consent of a higher percentage of Certificateholders of that Series (as
specified in the Prospectus Supplement).
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GENERAL UNAVAILABILITY OF OPTIONAL EXCHANGE. Although the Prospectus
Supplement for a Series of Certificates may designate such Series as an
"Exchangeable Series" and may provide that a Certificateholder may exchange
Certificates of the Exchangeable Series for a pro rata portion of the
Deposited Assets of the related Trust, any such right of exchange will be
exercisable only to the extent that such exchange would not be inconsistent
with continued satisfaction of Rule 3a-7 under the Investment Company Act of
1940, as amended, and all applicable rules, regulations and interpretations
thereunder and would not affect the characterization of the Trust as a
"grantor trust" for U.S. Federal income tax purposes. See "Description of the
Certificates--Optional Exchange". Accordingly, the right of optional exchange
described in this Prospectus under the heading "Description of the
Certificates--Optional Exchange" and further described in the relevant
Prospectus Supplement will generally be available only to the Depositor and
the Offering Agent and their respective affiliates and designees. Other
Certificateholders will generally not be able to exchange their Certificates
of an Exchangeable Series for a pro rata portion of the Deposited Assets of
the related Trust.
THE DEPOSITOR
The Depositor was incorporated in the Cayman Islands on September 17, 1996
by a firm of attorneys at law with its principal place of business in the
Cayman Islands. 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 affairs of the Depositor are administered by Deutsche Morgan Grenfell
(Cayman) Limited ("DMG") pursuant to an Administration Agreement dated as of
, 1997 between the Depositor and DMG. As of the date hereof, DMG is
located at P.O. Box 1984, Elizabethan Square, George Town, Grand Cayman,
Cayman Islands, British West Indies, Telephone: 809-949-8244.
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.
All of the issued capital stock of the Depositor is held by a trust
established by DMG, as trustee, for the benefit of one or more organizations
or entities that under the laws of the Cayman Islands would be recognized as
exclusively charitable, each of which organizations and/or entities will be
identified by the trustee during the three month period after the termination
of such trust in accordance with its terms. The Depositor is not affiliated
with Citicorp Securities, Inc.
USE OF PROCEEDS
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 purposes related to the deposit of Deposited Assets into one
or more Trusts and the preparation, distribution and filing by the Depositor
of periodic reports and other information, including, but not limited to, the
fees and expenses of the Depositor (or any administrator thereof) incurred in
connection with the ongoing activities of a Trust.
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
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Agreement and will receive a fee for such services (the "Trustee's Fee"). The
Trustee 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).
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) rights under the agreement or agreements pursuant to which the
Trustee has acquired such Deposited Assets; and (iv) any cash or other
property received upon the sale, exchange, collection or other disposition of
any of the foregoing.
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DESCRIPTION OF CERTIFICATES
Each Series of Certificates will be issued pursuant to a Trust Agreement and
a separate series supplement thereto between the Depositor 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 material 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 material provision of the Trust Agreement that is not described herein or
the description of which is different in any material respect from the
description contained herein. 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.
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
With respect to each Trust, the entire beneficial ownership in the Deposited
Assets held by such Trust under the related Trust Agreement will be
represented by the Certificates of the relevant Series.
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) material information concerning the type, characteristics and
specifications of the Deposited Assets being deposited into the related
Trust by the Depositor (including, with respect to any Underlying Security
which at the time of such deposit represents a significant portion of all
such Deposited Assets, information concerning the material 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 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 receive a portion of the assets of the Trust (or of the proceeds
obtained by the Trust upon the sale or other disposition of such assets) in
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exchange for surrendering such Certificateholder's Certificate (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 for treatment of the Trust as a "grantor
trust" for U.S. Federal income tax purposes) 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 option, if any, of any specified third party (which may include
one or more of the Depositor, the Offering Agent or their respective
affiliates) to purchase Certificates held by a Certificateholder 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;
(viii) the rating of each Series offered hereby;
(ix) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which such Series will be issuable;
(x) the identity of the Depository (as defined below), if other than The
Depository Trust Company, for such Certificates;
(xi) 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 Trustee under the Trust Agreement or with respect
to the applicable Trust; and
(xii) all other material terms of such Series of Certificates.
The United States Federal income tax consequences and ERISA consequences
relating to any Series of Certificates will be described in the applicable
Prospectus Supplement.
Transfers of beneficial ownership interests in any Global Security will be
effected in accordance with the normal procedures of The Depository Trust
Company or any other specified Depositary. In the event that Definitive
Certificates are issued in the limited circumstances described herein, they
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. 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 by or on behalf of the Trustee on
each Distribution Date as specified in the related Prospectus Supplement, and
the amount of each distribution will be determined as of the close of business
on the date specified in the related Prospectus Supplement (the "Determination
Date").
Unless otherwise provided in the applicable Prospectus Supplement and except
as provided in the succeeding paragraph, distributions with respect to
Certificates will be made at the corporate trust office or agency of the
Trustee specified in the applicable Prospectus Supplement in The City of New
York; 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.
Unless otherwise specified in the applicable Prospectus Supplement,
distributions on Certificates will be made, except as provided below, by check
mailed to the Certificateholders listed on the relevant Record Date in the
ownership register maintained for that purpose under the Trust Agreement
(which, in the case of Global Securities, will be a nominee of the
Depository). A Certificateholder of $10,000,000 or more in aggregate
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principal amount of Certificates of a given Series, and any holder of a Global
Security, shall be entitled to receive such 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 days prior to the applicable Distribution Date.
Except as otherwise specified in the applicable Prospectus Supplement,
"Business Day" with respect to any Certificate means any day, other than a
Saturday or Sunday, that is (i) not a day on which banking institutions are
authorized or required by law or regulation to be closed in The City of New
York and (ii) if the Pass-Through Rate for such Certificate is based on LIBOR,
a London Banking Day. "London Banking Day" with respect to any Certificate
means any day on which dealings in deposits in U.S. dollars are transacted in
the London interbank market. The Record Date with respect to any Distribution
Date for a Series of 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 Base Rate for any Series
of Certificates will, as described in greater detail below, be a fluctuating
rate of interest that is publicly available and is established by reference to
quotations provided by third parties of the interest rate from time to time
prevailing on loans or other extensions of credit in a specified credit
market. 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") or (v) the CD Rate (a "CD Rate 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 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
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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,
if made on a commercially reasonable basis and in good faith, 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
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).
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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 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
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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.
(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.
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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 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
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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. 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.
Ordinary 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.
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 and would not affect the characterization of the Trust as a
"grantor trust" for U.S. Federal income tax purposes. See "Risk Factors--
General Unavailability of Optional Exchange". Such terms may relate to, but
are not limited to, the following:
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(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 securities that are not
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, 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 Certificate,
the Certificate Principal Balance of such Certificate to be exchanged, the
certificate number or a description of the tenor and terms of such
Certificate, a statement that the option to elect exchange is being exercised
thereby and a guarantee that the Certificate to be exchanged with the form
entitled "Option to Elect Exchange" on the reverse of the 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. Such
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 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 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
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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.
CALL RIGHT
If one or more specified persons has the right to purchase all or a portion
of the Trust Certificates of any given Series, the applicable Prospectus
Supplement will designate such Series as a "Callable Series". The terms upon
which any such specified person or entity may exercise its right to purchase
all or a portion of the Trust Certificates of a Series will be specified in
the related Prospectus Supplement. Such terms may relate to, but are not
limited to, the following:
(a) a minimum Certificate Principal Balance with respect to each
Certificate being purchased;
(b) a requirement that the Certificate Principal Balance of each
Certificate being purchased be an integral multiple of an amount specified
in the Prospectus Supplement;
(c) specified dates during which such a purchase may be effected (each, a
"Call Date"); and
(d) the price at which such a purchase may be effected (the "Call
Price").
After receiving notice of the exercise of such a call right, the Trustee
will provide notice thereof as specified in the applicable Prospectus
Supplement. Upon the satisfaction of any applicable conditions to the exercise
of such right to purchase of the Trust Certificates described in such
Prospectus Supplement, each Certificateholder will be entitled to receive a
distribution of a pro rata share of the Call Price paid in connection with
such exercise, in the manner and to the extent described in such Prospectus
Supplement.
Unless otherwise specified in the applicable Prospectus Supplement, the call
right will not be exercised unless the value of any Trust Certificate being
purchased exceeds the Call Price payable upon exercise to the
Certificateholder in respect of such Trust Certificate.
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, or such other depositary identified in the
related Prospectus Supplement (the "Depository"), and registered in the name
of a nominee of the Depository. Unless and until it is exchanged in whole or
in part for the individual Certificates represented thereby (each a
"Definitive Certificate"), a Global Security may not be transferred except as
a whole by the Depository for such Global Security to a nominee of such
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository or by such Depository or any such nominee to a
successor of such Depository or a nominee of such successor.
The Depository Trust Company has advised the Depositor as follows: The
Depository Trust Company is a limited-purpose trust company organized under
the laws of the State of New York, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act. The Depository Trust Company was created to hold
securities of its participants and to facilitate the clearance and settlement
of securities transactions among the institutions that have accounts with such
Depository ("participants") in such securities through electronic book-entry
changes in accounts of the participants, thereby eliminating the need for
physical movement of securities certificates. Such Depository's participants
include securities brokers and dealers (including the Offering Agent), banks,
trust companies, clearing corporations and certain other organizations, some
of 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
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by such Global Security to the accounts of its participants. The accounts to
be accredited shall be designated by the underwriters of such Certificates,
or, if such Certificates are offered and sold directly through one or more
agents, by the Depositor or such agent or agents. Ownership of beneficial
interests in a Global Security will be limited to participants or persons 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.
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 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
registered in "street name" and will be the responsibility of such
participants.
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. Individual Definitive
Certificates of such Series so issued will be issued in denominations, unless
otherwise specified by the Depositor, of $1,000 and integral multiples
thereof.
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.
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DESCRIPTION OF DEPOSITED ASSETS
GENERAL
Each Series of Certificates will represent in the aggregate the entire
beneficial ownership interest in a publicly issued, fixed income debt security
issued pursuant to an effective registration statement filed with the
Commission or a pool of such debt securities (the "Underlying Securities"),
together with other assets (such as guarantees, letters of credit, financial
insurance, interest rate and/or currency swaps and other derivative
transactions that credit enhance or otherwise support the Underlying
Securities) designed to assure the servicing or timely distribution of
payments to holders of the Certificates, all as described in the related
Prospectus Supplement (such assets, together with the Underlying Securities,
the "Deposited Assets"). The Underlying Securities will represent senior debt
obligations issued by one or more Underlying Securities Issuers, each of which
will satisfy certain Eligibility Criteria described below under "Underlying
Securities Issuer". The Underlying Securities will be purchased by the
Depositor in the secondary market and, correspondingly, will not be acquired
from any Underlying Securities Issuer (whether as part of any distribution by
or pursuant to any agreement with such Underlying Securities Issuer or
otherwise). No Underlying Securities Issuer will participate in the offering
of the Certificates, nor will an Underlying Securities Issuer receive any of
the proceeds from the sale of Underlying Securities to the Depositor or from
the issuance by the Depositor of the Certificates, and none of the Depositor,
Citicorp Securities, Inc. or any of their respective affiliates will have
participated in the initial public offering of any Underlying Securities.
This Prospectus relates only to the Certificates offered hereby and does not
relate to the Underlying Securities. The following description of the
Underlying Securities and the Underlying Securities Issuer is intended only to
summarize material 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 prospectus relating to Underlying Securities or of
any Underlying Securities Indenture (as defined below).
UNDERLYING SECURITIES ISSUER
Each Underlying Securities Issuer will be a corporation organized under the
laws of the United States of America or any state thereof. Each Prospectus
Supplement will include the following information concerning the identity of
each Underlying Securities Issuer: (i) its jurisdiction of incorporation; (ii)
the date of its incorporation; (iii) the address of its principal executive
offices; and (iv) its Internal Revenue Service employer identification number
(collectively, "Identifying Information"). Identifying Information will be
obtained by the Depositor from publicly available sources.
As a condition to the deposit into a Trust of any Underlying Securities
constituting 10% or more of the total Underlying Securities with respect to
the related Series of Certificates (a "Concentrated Underlying Security"),
such Underlying Securities and the related Underlying Securities Issuer will,
at the time of such deposit, meet the following criteria (collectively, the
"Eligibility Criteria"):
(1) the Underlying Securities will have been issued pursuant to an
effective registration statement filed under the Securities Act;
(2) a class of equity securities of the Underlying Securities Issuer will
have been registered under Section 12(b) or 12(g) of the Exchange Act;
(3) the Underlying Securities Issuer will be subject to the periodic
reporting requirements of the Exchange Act and, in accordance therewith,
will be obligated to file reports, including reports on Forms 10-K and 10-
Q, and other information with the Commission;
(4) the Underlying Securities Issuer: (a) will have been subject to the
periodic reporting requirements of Section 12 or 15(d) of the Exchange Act
for a period of at least twelve calendar months immediately preceding the
deposit date; and (b) will have filed in a timely manner all reports
required to be filed under such periodic reporting requirements during the
twelve calendar months and any portion of a month immediately preceding the
deposit date;
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(5) the Underlying Securities Issuer will have outstanding voting
securities (excluding securities held by affiliates of the Underlying
Securities Issuer) having an aggregate market value of at least
$75,000,000; and
(6) the Underlying Securities will be rated at least "BBB-" or "Baa3" by
Standard & Poor's Ratings Services or Moody's Investors Service, Inc. (or
any comparable rating by another nationally recognized statistical rating
organization).
The determination of whether Concentrated Underlying Securities and the
related Underlying Securities Issuer meet the Eligibility Criteria will be
made by reference to publicly available sources (and without other independent
investigation).
Reports and information referred to in paragraph (3) above may be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: New York Regional Office, Room 1100, 7 World Trade
Center, New York, New York 10048 and Chicago Regional Office, Suite 1400,
Northwestern Atrium Center, 500 W. Madison Street, Chicago, Illinois 60661-
2511, and copies of such material can be obtained from the Public Reference
Section of the Commission, Washington, D.C. 20549, at prescribed rates. The
Commission maintains a Web site at http://www.sec.gov containing reports,
proxy statements and other information regarding registrants that file
electronically with the Commission. Such reports and other information may
also be inspected at the Information Center of the New York Stock Exchange
Inc., 20 Broad Street, New York, New York 10005.
WITH RESPECT TO ANY UNDERLYING SECURITIES, A PROSPECTIVE CERTIFICATEHOLDER
SHOULD OBTAIN AND EVALUATE THE SAME INFORMATION CONCERNING THE RELEVANT
UNDERLYING SECURITIES ISSUER AS IT WOULD OBTAIN AND EVALUATE IF IT WERE
INVESTING DIRECTLY IN THE UNDERLYING SECURITIES OR IN OTHER SECURITIES ISSUED
BY THE UNDERLYING SECURITIES ISSUER. Except (i) for Identifying Information
referred to above, (ii) for information of the type described under
"Underlying Securities Indenture" and "Principal Economic Terms of Underlying
Securities", to the extent expressly included in an applicable Prospectus
Supplement, and (iii) as to whether Concentrated Underlying Securities and the
related Underlying Securities Issuer meet the "Eligibility Criteria" described
above, none of the Depositor, the Trustee, the Offering Agent or any of their
respective affiliates assumes any responsibility for the accuracy or
completeness of any publicly available information concerning any Underlying
Securities Issuer (including, without limitation, no investigation as to its
financial condition or creditworthiness) or concerning any Underlying
Securities (whether or not such information is filed with the Commission) or
otherwise considered by a purchaser of the Certificates in making its
investment decision in connection therewith.
UNDERLYING SECURITIES INDENTURE
General. 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"). 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; or (ii) incur or suffer to exist any lien,
charge or encumbrance upon all or some specified portion 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. 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
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past defaults may be waived with the consent of the indenture trustee, the
consent of the holders of not less than a specified percentage of the
outstanding securities or both.
The Underlying Securities Indenture related to one or more Underlying
Securities included in a Trust may include some, all or none of the foregoing
provisions or variations thereof, together with additional covenants not
discussed herein. Concentrated Underlying Securities, because they are
investment grade debt, are unlikely to be subject to extensive restrictive
covenants. Other Underlying Securities, if not rated investment grade,
generally will be subject to more extensive restrictive covenants. In any
event, there can be no assurance that any type of Underlying Securities will
be subject to any such covenants or that any such covenants 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. Any material risk factors associated
with non-investment grade Underlying Securities deposited into a Trust will be
set forth in the applicable Prospectus Supplement.
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 material
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. Furthermore, a holder of
Certificates will have no independent legal right to exercise any remedies
with respect to the Underlying Securities and will be required to rely on the
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Trustee of the applicable Trust to pursue any available remedies on behalf of
the relevant Certificateholders in accordance with the terms of the Trust
Agreement. If an Underlying Security Event of Default occurs and the Trustee
as a holder of the Underlying Securities is entitled to vote or take such
other action to declare the principal amount of an Underlying Security and any
accrued and unpaid interest thereon to be due and payable, the
Certificateholders' objectives may differ from those of holders of other
securities of the same series and class as any Underlying Security (all such
securities of the same series and class, herein "Outstanding Debt Securities")
in determining whether to require the acceleration of the Underlying
Securities.
Subordination. If specified 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 no 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 material 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 material 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
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such securities are senior or subordinated to any other existing or future
obligations of the Underlying Securities Issuer; (iii) whether any of the
obligations are secured and the nature of any collateral; (iv) the limit, if
any, upon the aggregate principal amount of such debt securities; (v) the
dates on which, or the range of dates within which, the principal of (and
premium, if any, on) such debt securities will be payable; (vi) the rate or
rates or the method of determination thereof, at which such Underlying
Securities will bear interest, if any ("Underlying Securities Rate"); the date
or dates from which such interest will accrue ("Underlying Securities Interest
Accrual Periods"); and the dates on which such interest will be payable
("Underlying Securities Payment Dates"); (vii) the obligation, if any, of the
Underlying Securities Issuer to redeem the Outstanding Debt Securities
pursuant to any sinking fund or analogous 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
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, (xiii) the
principal United States market on which the Underlying Securities are traded
and (xiv) any other material terms of such Underlying Securities.
With respect to a Trust comprised of a pool of Underlying Securities, the
applicable 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.
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. In the event such obligor ceases
to file periodic reports under the Exchange Act, the Depositor will instruct
the Trustee of the relevant Trust to sell all of such Concentrated Underlying
Securities (with the proceeds of such sale being distributable to the
Certificateholders of the relevant Series as otherwise described herein). Any
such sale will result in a loss to the Certificateholders of the relevant
Series if the sale price is less than the purchase price for such Concentrated
Underlying Securities.
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, other assets
(such as guarantees, letters of credit, financial insurance, interest rate
and/or currency swaps and other derivative transactions that credit enhance or
otherwise support the Underlying Securities) designed to assure the servicing
or timely distribution of payments to holders of the Certificates, all as
described in the applicable Prospectus Supplement. With respect to any such
other assets that are material to the amount or timing of payments on the
Certificates of any Series, the applicable Prospectus Supplement will contain
a description of the material terms thereof and, if relevant, information
relating to any obligor thereon or issuer thereof, all in a manner analogous
to the description of 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"). 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 material provisions of the Trust Agreement does not
purport to be complete, and such summary is qualified in its entirety by
reference to the detailed provisions of the Standard Terms for Trust
Agreements filed as an exhibit to the Registration Statement. Article and
section references in parentheses below are to articles and sections in the
Standard Terms for Trust Agreements. Wherever particular sections or defined
terms of the Standard Terms for Trust Agreements 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 and any other Deposited Asset specified in the
Prospectus Supplement to be assigned and delivered to the Trustee to be
deposited in the related Trust, together with all principal, premium (if any)
and interest received by or on behalf of the Depositor on or with respect to
such Underlying Securities and other 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) Concurrently with such
assignment, the Depositor will execute, and the Trustee will authenticate and
deliver, the Certificates to the Depositor in exchange for the Underlying
Securities and other Deposited Assets, if any. (Section 2.05) Each Deposited
Asset will be identified in a schedule 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.
Such schedule will include, to the extent applicable, information regarding
the payment terms of any Concentrated Underlying Security, the Retained
Interest, if any, with respect thereto, the maturity or terms thereof, the
rating, if any, thereof and any other material 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 will hold such documents in trust
for the benefit of the Certificateholders. (Sections 2.01 and 2.02)
The Depositor 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
which materially and adversely affects the interests of the
Certificateholders, the Depositor 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, directly
or through sub-administrative agents, will establish and maintain certain
accounts for the benefit of the holders of the relevant Certificates and will
deposit in such accounts all amounts received by it with respect to the
Deposited Assets. (Section 3.03) The Trustee on behalf of the Trust may direct
any depository institution maintaining such accounts to invest the funds in
such accounts in one or more eligible investments bearing interest or sold at
a discount. Except as otherwise provided in the applicable Series Supplement,
any earnings with respect to such investments will be paid to, and any losses
with respect to such investments will be solely for the account of, the
Certificateholders (and, if applicable, the holder of the Retained Interest)
pro rata in proportion to their interest in the invested funds. (Section 3.05)
The Trustee will make reasonable efforts to collect all scheduled payments
under the Deposited Assets in a manner consistent with the Trust Agreement.
(Section 3.02) Except as otherwise expressly set forth in the Trust Agreement
or the applicable Series Supplement, however, the Trustee will not be required
to expend or risk its own funds or otherwise incur personal financial
liability in the performance of any of its duties under the Trust
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Agreement or in the exercise of any of its rights or powers if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(Section 7.01)
Sub-Administration. The Trustee may enter into agreements (each a "Sub-
Administration Agreement") with one or more agents meeting the qualifications
set forth in the Trust Agreement (each a "Sub-Administrative Agent") in order
to delegate certain of its administrative obligations in respect of the
Deposited Assets to such Sub-Administrative Agents, provided that the Trustee
will remain obligated with respect to its obligations under the Trust
Agreement. (Section 7.02) 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.
Each Sub-Administration Agreement will be consistent with the terms of the
Trust Agreement, and any such delegation to a Sub-Administrative Agent 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. (Section 7.02)
The Trustee will be solely liable for all fees owed by it to any Sub-
Administrative Agent, irrespective of whether the compensation of the Trustee,
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 Trustee for certain expenditures which it makes,
generally to the same extent the Trustee would be reimbursed under the terms
of the Trust Agreement relating to such Series. See "Trustee Compensation and
Payment of Expenses".
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
3.07), provided that, except as otherwise expressly provided in the applicable
Prospectus Supplement, it will not be required to expend or risk its own funds
or otherwise incur financial liability. (Section 6.02) 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 but unpaid thereon at the applicable interest rate and (iii) the
aggregate amount of expenses incurred by the Trustee in connection with such
proceedings to the extent reimbursable from the assets of the Trust under the
Trust Agreement, the Trust for the applicable Series will realize a loss in
the amount of such difference. (Section 3.07)
RETAINED INTEREST
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. (Section 3.08) A Retained Interest in a Deposited Asset
represents a specified ownership interest therein and a right to a portion of
the payments thereon. (Section 1.01) Payments in respect of the Retained
Interest will be deducted from payments on the Deposited Assets as received
and, in general, will not be deposited in the applicable Certificate Account
or become a part of the related Trust. Unless otherwise provided in the
applicable Prospectus Supplement, after deduction of all applicable fees as
provided for in the Trust Agreement, the Trustee will allocate on a pari passu
basis any partial recovery on an Underlying Security between the Retained
Interest (if any) and the Certificateholders of the applicable Series.
(Section 3.08)
TRUSTEE COMPENSATION AND PAYMENT OF EXPENSES
The applicable Prospectus Supplement will specify the Trustee's
compensation, and the source, manner and priority of payment thereof, with
respect to a given Series of Certificates. (Section 7.06)
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The applicable Series Supplement may provide for the payment by the
Depositor of certain Prepaid Ordinary Expenses of the Trustee. If the Prepaid
Ordinary Expenses set forth in the Series Supplement are greater than zero,
the Trustee will be deemed to agree that the payment of such amount
constitutes full and final satisfaction of and payment for all Ordinary
Expenses. If the Prepaid Ordinary Expenses set forth in the Series Supplement
are zero, the Series Supplement may indicate that Ordinary Expenses will be
paid for by the Trust, in which case the Trustee will be paid on a periodic
basis by the Trust or the Retained Interest at the rate or amount and on the
terms provided for in the Series Supplement. The Trustee has agreed, pursuant
to the Trust Agreement, that its right to receive such payments from the Trust
will constitute full and final satisfaction of and payment for all Ordinary
Expenses and that the Trustee will have no claim on payment of Ordinary
Expenses from any other source, including the Depositor. If the Prepaid
Ordinary Expenses set forth in the Series Supplement are zero, the Series
Supplement may provide that the Depositor will pay to the Trustee from time to
time a fee for its services and expenses as Trustee as set forth in the Series
Supplement payable at the times set forth therein. The Trustee will agree,
pursuant to the Trust Agreement, that its right to receive such payments from
the Depositor will constitute full and final satisfaction of and payment for
all Ordinary Expenses and that the Trustee will have no claim for payment of
Ordinary Expenses from the Trust. The Trustee has further agreed that,
notwithstanding any failure by the Depositor to make such periodic payments of
Ordinary Expenses, the Trustee will continue to perform its obligations under
the Trust Agreement. The Depositor's obligations to pay Ordinary Expenses
under the Trust Agreement will be extinguished and of no further effect upon
the payment of Ordinary Expenses due and owing on the termination of the Trust
pursuant to the terms of the Trust Agreement.
Subject to the terms of the Trust Agreement, all Extraordinary Expenses (as
defined in the Trust Agreement), to the extent not paid by a third party, are
obligations of the Trust, and when due and payable will be satisfied solely by
the Trust.
The Trustee will not take any action, including appearing in, instituting or
conducting any action or suit under the Trust Agreement or in relation thereto
which, in the Trustee's opinion, would or might cause it to incur costs,
expenses or liabilities that are Extraordinary Expenses unless (i) the Trustee
is satisfied that it will have adequate security or indemnity in respect of
such costs, expenses and liabilities, (ii) the Trustee has been instructed to
do so by Certificateholders representing not less than the "Required
Percentage--Remedies" (as defined in the Trust Agreement) of the aggregate
principal amount of Certificates then outstanding, and (iii) the
Certificateholders, pursuant to the instructions given under clause (ii)
above, have agreed that such costs, expenses or liabilities will either be (x)
paid by the Trustee from the Trust, in the case of a vote of 100% of the
aggregate principal amount of Certificates then outstanding, or (y) paid by
the Trustee (which payment will be made out of its own funds and not from
monies on deposit in the Trust) in which case the Trustee will be entitled to
receive, upon demand, reimbursement from those Certificateholders who have
agreed to bear the entire amount of such costs, expenses or liabilities, on a
pro rata basis among such Certificateholders.
DISTRIBUTIONS ON CERTIFICATES
The distribution of interest and principal on Certificates issued in
registered form will be made (i) if the Certificates are held in book-entry
form, to the relevant book-entry depository, which will credit the relevant
participant's account at such book-entry depository in accordance with the
policies and procedure of such book-entry depository or (ii) if the
Certificates are not held in book-entry form, at the corporate trust office of
the Trustee as specified in the Trust Agreement or, at the option of the
Trustee, by check mailed to the address of the Person entitled thereto as such
address appears in the Certificate register. (Section 4.02) Subject to the
terms and conditions of the Trust Agreement, with respect to Certificates not
held in book-entry form and having the minimum wire denomination specified in
the Trust Agreement, such payment will be made by wire transfer of immediately
available funds to the account designated by the holder in a written request
received by the Trustee not later than 10 days prior to the relevant
distribution date; provided that if a wire transfer cannot be made for any
reason, payment will be made by check. The Trustee will not be required to
send federal funds wires until any corresponding payments which were not same
day funds when received by it have become same day funds.
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Unless specified otherwise in a Series Supplement, the final distribution of
principal, interest and/or premium will be made upon presentation and
surrender of such Certificates at the corporate trust office of the Trustee as
specified in the Trust Agreement.
OPTIONAL EXCHANGE
The terms and conditions, if any, upon which Certificates of any Series may
be exchanged for a pro rata portion of the Underlying Securities of the
related Trust will be specified in the related Series Supplement; provided
that any right of exchange will be exercisable only to the extent that the
Depositor provides upon the Trustee's request an opinion of counsel that (i)
such exchange would not be inconsistent with the Depositor's and the Trustee's
continued satisfaction of the applicable requirements under the Investment
Company Act of 1940, as amended, and (ii) such exchange would not affect the
characterization of the Trust as a "grantor trust" for United States federal
income tax purposes.
Any tender of a Certificate by the holder thereof for exchange will be
irrevocable. Unless otherwise provided in the applicable Series Supplement,
the exchange option may be exercised by the holder of a Certificate for less
than aggregate principal amount of such Certificate as long as the aggregate
principal amount outstanding after such exchange is an authorized denomination
and all other exchange requirements set forth in the related Series Supplement
are satisfied. Upon such partial exchange, such Certificate will be cancelled
and a new Certificate or Certificates for the remaining principal amount of
the Certificate will be issued (which, in the case of any Certificate issued
in registered form, will be in the name of the holder of such exchanged
Certificate).
VOTING RIGHTS WITH RESPECT TO UNDERLYING SECURITIES
Within five Business Days after receipt of notice of any meeting of, or
other occasion for the exercise of voting rights or the giving of consents by,
owners of any of the Underlying Securities, the Trustee will give notice to
the Certificateholders, setting forth (i) such information as is contained in
such notice to owners of Underlying Securities, (ii) a statement that the
Certificateholders will be entitled, subject to any applicable provision of
law and any applicable provisions of such Underlying Securities, to instruct
the Trustee as to the exercise of voting rights, if any, pertaining to such
Underlying Securities and (iii) a statement as to the manner in which
instructions may be given to the Trustee to give a discretionary proxy to a
person designated in the notice received by the Trustee. The Trustee will give
such notice to the Certificateholders of record on the relevant record date.
Upon the written request of the applicable Certificateholder, received on or
before the date established by the Trustee for such purpose, the Trustee will
endeavor, insofar as practicable and permitted under any applicable provision
of law and any applicable provision of or governing the Underlying Securities,
to vote in accordance with any nondiscretionary instruction set forth in such
written request. The Trustee will not vote except as specifically authorized
and directed in written instructions from the applicable Certificateholder
entitled to give such instructions. Notwithstanding the foregoing, if the
Trustee determines (based upon advice furnished by nationally recognized
independent tax counsel, whether at the request of any Certificateholder or
otherwise) that the exercise of voting rights with respect to any Underlying
Securities could result in a "sale or other disposition" of such Underlying
Securities within the meaning of Section 1001(a) of the Internal Revenue Code
of 1986, as amended, the Trustee will exercise such voting rights in a manner
that would not result in any such sale or other disposition. The Trustee will
have no responsibility to make any such determination.
Unless otherwise specified in the applicable Series Supplement, the voting
rights allocable to the owners of the Underlying Securities pursuant to the
terms thereof will be allocated among the Certificateholders pro rata, in the
proportion that the denomination of each Certificate bears to the aggregate
denomination of all Certificates.
By accepting delivery of a Certificate, whether upon original issuance or
subsequent transfer, exchange or replacement thereof, and without regard to
whether ownership is beneficial or otherwise, the Certificateholder
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agrees so long as it is an owner of such Certificate that it will not grant
any consent (i) to any conversion of the timing of payment of, or the method
or rate of accruing, interest on the Underlying Securities underlying the
Certificates held by such Certificateholder or (ii) to any redemption or
prepayment of the Underlying Securities underlying the Certificates held by
such Certificateholder. (Section 5.14) The Trustee will not grant any consent
solicited from the owners of the Underlying Securities underlying the
Certificates with respect to the matters set forth in Section 5.14 of the
Trust Agreement nor will it accept or take any action in respect of any
consent, proxy or instructions received from any Certificateholder in
contravention of the provisions of such Section.
LIMITATIONS ON RIGHTS OF CERTIFICATEHOLDERS
No Certificateholder will have the right under the Trust Agreement to
institute any proceeding with respect to the Trustee or the Trust unless such
holder previously has given to the Trustee written notice of breach and unless
(i) such holder has previously given to the Trustee a written notice of breach
and of the continuance thereof, (ii) the holders of Certificates of such
Series evidencing not less than the "Required Percentage --Remedies" of the
Voting Rights of such Series 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, (iii) the Trustee for 15 days has
neglected or refused to institute any such proceeding and (iv) no direction
inconsistent with such written request has been given to the Trustee during
such 15-day period by Certificateholders evidencing not less than the
"Required Percentage--Remedies" of the aggregate Voting Rights of such Series.
(Section 10.02) 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 10.02)
MODIFICATION AND WAIVER
The Trust Agreement may be amended from time to time by the Depositor and
the Trustee without the consent of any of the Certificateholders for any of
the following purposes: (i) to cure any ambiguity or to correct or supplement
any provision therein which may be defective or inconsistent with any other
provision therein or to provide for any other terms or modify any other
provisions with respect to matters or questions arising under the Trust
Agreement which will not adversely affect the interests of the Holders in any
material respect; (ii) to evidence and provide for the acceptance of
appointment thereunder of a change in Trustee as Trustee for a Series of
Certificates subsequent to the Closing Date for such Series, and to add to or
change any of the provisions of the Trust Agreement as shall be necessary to
provide for or facilitate the administration of the separate Trusts thereunder
by more than one trustee, pursuant to the requirements of Section 5.01
thereof; or (iii) to evidence and provide for the acceptance of appointment
thereunder by a successor Trustee with respect to the Certificates of one or
more Series or to add or change any of the provisions of the Trust Agreement
as shall be necessary to provide for or facilitate the administration of the
trusts thereunder; provided that no amendment will be permitted if it would
result in a withdrawal or downgrading of the rating of the relevant Series of
Certificates or if such amendment would cause any Trust created under the
Trust Agreement to fail to qualify as a "grantor trust" for U.S. Federal
income tax purposes. (Section 10.01)
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 no such amendment will
(i) reduce in any manner the amount of, or delay the timing of, payments
received on Deposited Assets which are required to be distributed on any
Certificate without the consent of the
30
<PAGE>
holders of such Certificates or (ii) reduce the percentage of aggregate Voting
Rights required to take any action specified in the Trust Agreement, without
the consent of the Holders of all Certificates of such Series or Class then
Outstanding. (Section 10.01)
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 or the Trustee 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 5.19).
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 Trustee 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 amounts received by the Trustee as of the last such statement in
respect of principal, interest and premium on the Underlying Securities and
any amounts received by the Trustee with respect to any swap agreement
entered into by the Trust pursuant to the terms of the Trust Agreement;
(ii) any amounts payable by the Trust for such date pursuant to any swap
agreement entered into by the Trust pursuant to the terms of the Trust
Agreement;
(iii) the amount of such distribution allocable to principal of and
premium, if any, and interest on the Certificates of such Series, and the
amount of aggregate unpaid interest accrued as of such distribution date;
(iv) in the case of Certificates bearing interest on a floating rate
basis, the respective floating rate applicable to such Certificates on such
distribution date, as calculated in accordance with the method specified in
such Certificates and the related Series Supplement;
(v) such other customary information as the Trustee deems necessary or
desirable, (or that any such Certificateholder reasonably requests in
writing) to enable such Certificateholders to prepare their tax returns;
(vi) if the Series Supplement provides for Advances (as defined in the
Trust Agreement), the aggregate amount of Advances, if any, included in
such distribution, and the aggregate amount of unreimbursed Advances, if
any, at the close of business on such distribution date;
(vii) the aggregate stated principal amount and, if applicable, notional
amount of the Underlying Securities related to such Series, the current
rating assigned by the applicable rating agency thereon and the current
interest rate or rates thereon at the close of business on such
distribution date;
(viii) the aggregate principal amount (or notional amount, if applicable)
of each Series at the close of business on such distribution date,
separately identifying any reduction in such aggregate principal amount (or
notional amount) due to the allocation of certain realized losses on such
distribution date or otherwise, as provided in the Trust Agreement; and
(ix) as to any Series for which credit support has been obtained, the
amount or notional amount of coverage of each element of credit support
(and rating, if any, thereof) included therein as of the close of business
on such distribution date.
In the case of information furnished pursuant to subclauses (i), (ii), (iii)
and (v) above, the amounts will be expressed as a U.S. dollar amount (or
equivalent thereof in any other specified currency) per minimum
31
<PAGE>
denomination of Certificates or for such other specified portion thereof.
Within a reasonable period of time after the end of each calendar year, the
Trustee will 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), (ii), (iii) and (v) above, aggregated for such calendar year
or the applicable portion thereof during which such person was a
Certificateholder. Such obligation of the Trustee will be deemed to have been
satisfied to the extent that substantially comparable information is provided
by the Trustee pursuant to any requirements of the Code as are from time to
time in effect. (Section 4.03)
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. (Section 10.04)
EVIDENCE AS TO COMPLIANCE
The Trust Agreement will also provide for delivery to the Trustee on behalf
of the Certificateholders, on or before a specified date in each year, of an
annual statement from the principal executive, financial or accounting officer
of the Depositor as to his or her knowledge of the Depositor's compliance with
all conditions and covenants under the Trust Agreement. (Section 3.10).
Copies of the annual statement of an officer of the Depositor may be
obtained by Certificateholders without charge upon written request to the
Trustee 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 Trustee in the City and State of New
York, 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 Trustee in connection therewith and the furnishing of such security and
indemnity as the Trustee and the Depositor may require to hold each of them
and any Paying Agent harmless. (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 and required to
be paid to them pursuant to the Trust Agreement following 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. 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)
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 the
Depositor, of any of the Certificates or of the proceeds of such Certificates.
(Section 7.04) 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 7.01)
32
<PAGE>
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 and its affiliates.
PLAN OF DISTRIBUTION
Certificates may be offered in any of three ways: (i) through underwriters
or dealers; (ii) directly to one or more purchasers; or (iii) through agents.
The applicable Prospectus Supplement will set forth the material 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 at a fixed price 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 and their affiliates 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 or their
affiliates 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.
33
<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 MATTERS
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.
34
<PAGE>
INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
$.................................................................... 3
Base Rate............................................................ 10
Business Day......................................................... 10
Calculation Date..................................................... 12, 13, 15
Calculation Agent.................................................... 11
Callable Series...................................................... 17
Call Date............................................................ 17
Call Price........................................................... 17
CD Rate.............................................................. 12
CD Rate Certificate.................................................. 10
CD Rate Determination Date........................................... 12
CDs (Secondary Market)............................................... 12
Cede................................................................. 3
Certificate.......................................................... cover, 8
Certificate Account.................................................. 24
Certificate Principal Balance........................................ 15
Certificateholders................................................... cover
clearing agency...................................................... 17
clearing corporation................................................. 17
Commercial Paper Rate Certificate.................................... 10
Commercial Paper Rate Determination Date............................. 12
Commercial Paper Rate................................................ 12, 13
Commercial Paper..................................................... 12
Commission........................................................... cover, 2
Company.............................................................. II-3
Composite Quotations................................................. 10
Concentrated Underlying Security..................................... 19
Cut-off Date......................................................... 25
Definitive Certificate............................................... cover, 17
Deposited Assets..................................................... cover, 19
Depositor............................................................ cover
Depository........................................................... 17
Determination Date................................................... 9
Distribution Date.................................................... 2
dollar............................................................... 3
DTC.................................................................. cover
Eligibility Criteria................................................. 19
Exchange Act......................................................... 2
Exchangeable Series.................................................. 6, 15
Excluded Interest.................................................... 7
Federal Funds Rate................................................... 13
Federal Funds Rate Certificate....................................... 10
Federal Funds Rate Determination Date................................ 13
Federal Funds (Effective)............................................ 13
Federal Funds/Effective Rate......................................... 13
Fixed Rate Certificates.............................................. 10
Floating Rate Certificates........................................... 10
Global Security...................................................... cover
H.15(519)............................................................ 10
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Identifying Information............................................... 19
Index Maturity........................................................ 10
Interest Reset Date................................................... 11
Interest Reset Period................................................. 11
LIBOR Determination Date.............................................. 14
LIBOR Certificate..................................................... 10
LIBOR................................................................. 14
London Banking Day.................................................... 10
Maximum Pass-Through Rate............................................. 11
Minimum Pass-Through Rate............................................. 11
Money Market Yield.................................................... 13
Offering Agent........................................................ cover
Option to Elect Exchange.............................................. 16
Optional Exchange Date................................................ 16
Original Issue Date................................................... 8
Outstanding Debt Securities........................................... 22
participants.......................................................... cover, 17
Pass-Through Rate..................................................... 8
Prospectus Supplement................................................. cover
Rating Agency......................................................... 5
Realized Losses....................................................... 15
Registration Statement................................................ 2
Required Percentage--Waiver........................................... 30
Required Percentage--Amendment........................................ 29
Required Percentage--Remedies......................................... 27, 29
Reuters Screen LIBO Page.............................................. 14
Secured Underlying Securities......................................... 22
Securities Act........................................................ 2
Senior Underlying Securities.......................................... 22
Spread................................................................ 10
Spread Multiplier..................................................... 10
Sub-Administration Agreement.......................................... 26
Sub-Administrative Agent.............................................. 26
Subordinated Underlying Securities.................................... 22
Treasury Rate Certificate............................................. 10
Treasury Rate Determination Date...................................... 15
Treasury Rate......................................................... 14, 15
Treasury bills........................................................ 14
Trust................................................................. cover
Trust Agreement....................................................... cover
Trust Indenture Act................................................... 20
Trustee............................................................... cover
Trustee's Fee......................................................... 7
U.S. dollars.......................................................... 3
U.S.$................................................................. 3
Underlying Securities Issuer.......................................... 19
Underlying Securities Indenture....................................... 20
Underlying Securities................................................. cover, 19
Underlying Securities Trustee......................................... 20
Underlying Securities Payment Dates................................... 23
Underlying Securities Currency........................................ 23
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Underlying Securities Interest Accrual Periods............................. 23
Underlying Securities Rate................................................. 23
Underlying Security Events of Default...................................... 21
USD........................................................................ 3
Variable Pass-Through Rate................................................. 8
</TABLE>
37
<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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS SUPPLEMENT
(To Prospectus Dated February [ ], 1997)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$35,000,000
DEBT-BACKED PASS-THROUGH CERTIFICATES, SERIES 1997-DU PONT
(Underlying Securities will be 8.25% Notes due September 15, 2006 issued by
E.I. du Pont de Nemours and Company)
% Fixed Rate Pass-Through Certificates
The Debt-Backed Pass-Through Certificates, Series 1997-Du Pont offered hereby
(collectively, the "Certificates") represent in the aggregate the entire
beneficial ownership interest in a trust (the "Trust") formed pursuant to the
Trust Agreement dated as of February [ ], 1997 between Elmwood Funding
Limited, a Cayman Islands exempted limited liability company (the "Depositor"),
and United States Trust Company of New York, as trustee (the "Trustee").
The sole assets of the Trust will be $35,000,000 aggregate principal amount of
8.25% Notes due September 15, 2006 (the "Underlying Securities") issued by E.I.
du Pont de Nemours and Company (the "Underlying Securities Issuer"), having the
characteristics described herein under "Description of the Underlying
Securities".
As of the date of this Prospectus Supplement, the Underlying Securities Issuer
is subject to the periodic reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files
reports, including reports on Forms 10-K and 10-Q, and other information with
the Securities and Exchange Commission (the "Commission") and meets certain
other criteria described under the heading "Description of the Underlying
Securities--Eligibility Criteria". The Underlying Securities will be purchased
by the Depositor in the secondary market and, correspondingly, will not be
acquired from the Underlying Securities Issuer (whether as part of any
distribution by or pursuant to any agreement with the Underlying Securities
Issuer or otherwise). The Underlying Securities Issuer is not participating in
the offering of the Certificates, will not receive any of the proceeds from the
sale of the Underlying Securities to the Depositor or from the issuance by the
Depositor of the Certificates, and none of the Depositor, Citicorp Securities,
Inc. (the "Offering Agent") or any of their respective affiliates have
participated in the initial public offering of the Underlying Securities.
The Underlying Securities were originally issued pursuant to a supplemental
indenture dated as of September 28, 1990 to an indenture dated as of October 3,
1988, as supplemented by a supplemental indenture dated as of November 15, 1988
(as so supplemented, the "Underlying Securities Indenture"), by and between the
Underlying Securities Issuer and The Chase Manhattan Bank (as successor by
merger to Manufacturers Hanover Trust Company), as trustee (the "Underlying
Securities Trustee"). The Underlying Securities were offered and sold pursuant
to (a) an effective registration statement on Form S-3 (Registration
No. 33-37012) dated October 4, 1990 relating to the shelf registration of an
aggregate principal amount of $1,000,000,000 of the debt securities (the "Debt
Securities") of the Underlying Securities Issuer pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Securities Act"), and (b) a prospectus
supplement dated September 31, 1991 relating to the issuance of the Underlying
Securities.
Distributions of interest and principal on the Certificates will be made on or
about March 15 and September 15 of each year, beginning on March 15, 1997
(each, a "Distribution Date"). The Certificates will receive interest
distributions at a rate of % per annum, and will receive principal
distributions as principal is received on the Underlying Securities (the
original principal amount of the Underlying Securities is due at maturity
thereof on September 15, 2006) or, as described herein, from the exercise of
the Call Right by the holder of such right on any Distribution Date on or after
September 15, 1997. The last day on which distributions on the Certificates are
scheduled to be made is September 15, 2006 (the "Final Scheduled Distribution
Date").
The Depositor's only obligations with respect to the Certificates are to assign
and deliver the Underlying Securities and certain related documents to the
Trustee. The Certificates do not represent an obligation of or interest in the
Depositor, the Offering Agent, or any of their respective affiliates. Neither
the Certificates not the Deposited Assets will be guaranteed or insured by any
governmental agency or instrumentality, or by the Depositor, the Offering Agent
or their respective affiliates.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH HEREIN UNDER "RISK
FACTORS", BEGINNING ON PAGE [S-12] AND IN THE PROSPECTUS ON PAGES 4 THROUGH
7. (cover continued on next page)
----------
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN THE DEPOSITOR, THE OFFERING AGENT OR ANY OF
THEIR RESPECTIVE AFFILIATES. THE CERTIFICATES DO NOT REPRESENT A DIRECT
OBLIGATION OF THE UNDERLYING SECURITIES ISSUER OR ANY OF ITS AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
----------
The Certificates offered hereby will be purchased by the Offering Agent from
the Depositor at a fixed price and will be offered by the Offering Agent from
time to time in negotiated transactions or otherwise at varying prices to be
determined at the time of sale. The Offering Agent has agreed to purchase the
Certificates from the Depositor at % of the outstanding principal balance
thereof ($34,475,000 aggregate proceeds to the Depositor, before deducting
expenses), subject to the terms and conditions set forth in the Underwriting
Agreement referred to herein under "Method of Distribution". For further
information with respect to the plan of distribution and any discounts,
commissions or profits that may be deemed underwriting discounts or
commissions, see "Method of Distribution". The Certificates are offered subject
to receipt and acceptance by the Offering Agent, to prior sale and to the
Offering Agent's right to reject any order in whole or in part and to withdraw,
cancel or modify the offer without notice. It is expected that delivery of the
Certificates will be made in book-entry form through the facilities of The
Depository Trust Company on or about February [ ], 1997 (the "Original Issue
Date").
----------
CITICORP SECURITIES, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Subject to Completion, dated February 4, 1997
<PAGE>
(cover page continued)
The Certificates are a "Callable Series" as defined in the Prospectus and,
upon exercise of the Call Right by the holder thereof, are redeemable in whole
on any Distribution Date occurring on or after the Distribution Date in
September 1997 at a price (the "Call Price") equal to the principal amount of
the Certificates being called plus accrued and unpaid interest. See "Risk
Factors--Maturity and Yield Considerations" herein and in the Prospectus and
"Description of the Certificates--Call Right" herein.
The Certificates are an "Exchangeable Series" as defined in the Prospectus
and, subject to the conditions set forth under "Description of the
Certificates--Optional Exchange", the holder of the Optional Exchange Right
(as defined herein) will be entitled to require the Trustee, on any Business
Day (as defined herein) to effect a redemption of one or more Certificates
held by such holder. See "Description of the Certificates--Optional Exchange".
The Certificates have been authorized for listing, upon official notice of
issuance, with the New York Stock Exchange ("NYSE"). It is a condition to the
issuance of the Certificates that the Certificates have ratings assigned by
Moody's Investors Service, Inc. ("Moody's") and by Duff & Phelps Credit Rating
Co. ("Duff" and, collectively with Moody's, the "Rating Agencies") equivalent
to the ratings of the Underlying Securities, which, as of the date of this
Prospectus Supplement, were "Aa3" by Moody's and "AA-" by Standard & Poor's
Ratings Services ("S&P").
As and to the extent described herein, collections received by the Trustee
with respect to the Underlying Securities will be distributed to
Certificateholders in the manner and priority described herein.
There is currently no secondary market for the Certificates, and there can be
no assurance that a secondary market for the Certificates will develop or, if
it does develop, that it will provide Certificateholders with liquidity of
investment or will continue for the life of the Certificates. See "Risk
Factors" in the Prospectus.
To locate the definition of a defined term herein, see the "Index of Defined
Terms" located at the back of this Prospectus.
The Certificates initially will be represented by one or more global
securities (each a "Global Security") registered in the name of Cede & Co., as
nominee of The Depository Trust Company ("DTC"). The interests of beneficial
owners of such Certificates will be represented by book entries on the records
of participating members of DTC ("Participants"). Definitive certificates in
registered form without coupons ("Definitive Certificates") will be available
only under the limited circumstances described herein under the heading
"Description of the Certificates--Definitive Certificates".
THE CERTIFICATES OFFERED BY THIS PROSPECTUS SUPPLEMENT WILL CONSTITUTE A
SEPARATE SERIES OF CERTIFICATES BEING OFFERED PURSUANT TO THE PROSPECTUS DATED
FEBRUARY [ ], 1997, OF WHICH THIS PROSPECTUS SUPPLEMENT IS A PART AND WHICH
ACCOMPANIES THIS PROSPECTUS SUPPLEMENT. THE PROSPECTUS CONTAINS IMPORTANT
INFORMATION REGARDING THIS OFFERING WHICH IS NOT CONTAINED HEREIN, AND
PROSPECTIVE INVESTORS ARE URGED TO READ THE PROSPECTUS AND THIS PROSPECTUS
SUPPLEMENT IN FULL. IN PARTICULAR, INVESTORS SHOULD CONSIDER CAREFULLY THE
FACTORS SET FORTH UNDER "RISK FACTORS" IN THE PROSPECTUS AND IN THIS
PROSPECTUS SUPPLEMENT.
UNTIL 90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT, ALL DEALERS
EFFECTING TRANSACTIONS IN THE OFFERED CERTIFICATES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS TO WHICH IT RELATES. THIS DELIVERY REQUIREMENT
IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS
SUPPLEMENT AND PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO
THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
TABLE OF CONTENTS.......................................................... 3
PROSPECTUS................................................................. 4
SUMMARY.................................................................... 5
The Certificates......................................................... 5
The Underlying Securities................................................ 9
RISK FACTORS............................................................... 12
THE DEPOSITOR.............................................................. 14
USE OF PROCEEDS............................................................ 14
THE TRUST.................................................................. 14
DESCRIPTION OF THE UNDERLYING SECURITIES................................... 15
General.................................................................. 15
Underlying Securities Issuer............................................. 15
Eligibility Criteria..................................................... 16
Underlying Securities Indenture.......................................... 16
Certain Covenants...................................................... 17
Definitions............................................................ 18
Events of Default; Notice and Waiver................................... 19
Modification of the Underlying Securities Indenture.................... 20
DESCRIPTION OF THE CERTIFICATES............................................ 21
General.................................................................. 21
Collections and Distributions............................................ 21
Interest on the Certificates............................................. 22
Principal of the Certificates............................................ 22
Retained Interest........................................................ 23
Call Right............................................................... 23
Optional Exchange........................................................ 24
Global Security.......................................................... 24
Definitive Certificates.................................................. 25
Listing on the New York Stock Exchange................................... 25
DESCRIPTION OF THE TRUST AGREEMENT......................................... 25
General.................................................................. 25
The Trustee.............................................................. 25
Events of Default........................................................ 26
Voting Rights............................................................ 26
Termination of the Trust................................................. 27
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.................................... 28
General.................................................................. 28
Tax Status of Trust...................................................... 28
Income of Certificateholders............................................. 28
Deductibility of Trust's Fees and Expenses............................... 29
Purchase and Sale of a Certificate....................................... 29
Call Premium; Exercise of Call Right..................................... 30
Backup Withholding....................................................... 30
Foreign Certificateholders............................................... 30
ERISA CONSIDERATIONS....................................................... 31
METHOD OF DISTRIBUTION..................................................... 32
LEGAL MATTERS.............................................................. 32
RATINGS.................................................................... 32
INDEX OF DEFINED TERMS..................................................... 33
</TABLE>
S-3
<PAGE>
PROSPECTUS
The Certificates offered by this Prospectus Supplement constitute a separate
Series of Certificates being offered pursuant to the Prospectus (the
"Prospectus") dated February [ ], 1997, which Prospectus has been filed by
the Depositor with the Securities and Exchange Commission (the "Commission")
as part of 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"). The Prospectus accompanies, and is an
integral part of, this Prospectus Supplement. THE PROSPECTUS CONTAINS
IMPORTANT INFORMATION REGARDING THIS OFFERING NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT, AND PROSPECTIVE INVESTORS IN THE CERTIFICATES OFFERED HEREBY ARE
URGED TO READ IN FULL BOTH THE PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT.
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SUMMARY
The following summary of certain pertinent information does not purport to be
complete and is qualified in its entirety by reference to the detailed
information appearing elsewhere herein and in the Prospectus, including under
the headings "Description of the Certificates" and "Description of the
Underlying Securities". Certain capitalized terms used herein are defined
elsewhere in this Prospectus Supplement on the pages indicated in the "Index of
Defined Terms" or, to the extent not defined herein, have the meanings assigned
to such terms in the Prospectus.
THE CERTIFICATES
CERTIFICATES OFFERED......... The Debt-Backed Pass-Through Certificates,
Series 1997-Du Pont (the "Certificates"). The
Certificates, each of which represents a
fractional undivided beneficial interest in the
Trust, will be issued pursuant to the Trust
Agreement and will consist of a single class
offered hereby. The Underlying Securities will
be the sole assets of the Trust from which
Certificateholders will receive any
distributions.
THE TRUST.................... The Debt-Backed Pass-Through Certificates Trust,
Series 1997-Du Pont (the "Trust"). The Trust
will be formed pursuant to the Standard Terms
for Trust Agreements dated as of February [ ],
1997 (the "Standard Terms for Trust
Agreements"), between the Depositor and the
Trustee, as supplemented by the Series 1997-Du
Pont Supplement dated as of the Original Issue
Date (the "Series Supplement" and, together
with the Standard Terms for Trust Agreements,
the "Trust Agreement").
DEPOSITOR.................... Elmwood Funding Limited, a Cayman Islands
exempted limited liability company (the
"Depositor"), will deposit the Underlying
Securities into the Trust. See "The Depositor"
herein and in the Prospectus.
TRUSTEE...................... United States Trust Company of New York
INITIAL AGGREGATE
CERTIFICATE PRINCIPAL
BALANCE.....................
$35,000,000
ORIGINAL ISSUE DATE.......... February [ ], 1997
FINAL SCHEDULED DISTRIBUTION September 15, 2006
DATE........................
TRUST ASSETS................. The sole assets of the Trust will be $35,000,000
aggregate principal amount of the 8.25% Notes
due September 15, 2006 (the "Underlying
Securities") issued by E.I. du Pont de Nemours
and Company (the "Underlying Securities
Issuer"), having the characteristics described
herein. The assets of the Trust will be subject
to the rights of the holder of the Retained
Interest, described below.
RETAINED INTEREST............ Under the Trust Agreement, the holder of the
Retained Interest will retain the rights with
respect to the Underlying Securities to
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receive on each Distribution Date, from
payments received on the Underlying Securities,
a distribution equal to % per annum
multiplied by the principal amount of the
Underlying Securities (the "Interest Strip"),
subject to payment of "Ordinary Expenses" of
the Trustee and "Depositor Administration
Expenses" of the Depositor as described below.
The rights of the holder of the Retained
Interest to the Interest Strip from payments
received on the Underlying Securities is of
equal priority with the rights of
Certificateholders to receive distributions of
interest. See "Description of the Underlying
Securities". The holder of the Retained
Interest will also retain the right to receive
interest on the Underlying Securities accrued
with respect to the period from and including
September 15, 1996 (the "Cut-Off Date") to but
excluding the Original Issue Date. The initial
holder of the Retained Interest will be the
Offering Agent or an affiliate thereof. The
Retained Interest is not being offered hereby.
DISTRIBUTION DATES........... March 15 and September 15 of each year (or if
such date is not a Business Day, the next
succeeding Business Day); commencing on March
15, 1997 and ending on the earlier of the Final
Scheduled Distribution Date or the Call Date
(each, a "Distribution Date").
Certificateholders will be entitled to receive
on each Distribution Date interest on the
Certificates at the Pass-Through Rate and all
principal amounts received from the Underlying
Securities Issuer in respect of the Underlying
Securities during the applicable Collection
Period. "Business Day" with respect to any
Certificate means any day, other than a
Saturday or Sunday, that is not a day on which
banking institutions are authorized or required
by law or regulation to be closed in The City
of New York. See "Description of the
Certificates--Collection and Distributions"
herein.
PASS-THROUGH RATE............ The Certificates are "Fixed Rate Certificates"
as defined in the Prospectus. The Pass-Through
Rate applicable to the calculation of the
interest distributable on any Distribution Date
on the Certificates is fixed at % per annum
and will be calculated on the basis of a year
of 360 days and twelve 30-day months.
INTEREST ACCRUAL PERIODS..... For any Distribution Date, the period from and
including the preceding Distribution Date (or,
in the case of the first Interest Accrual
Period, from and including the Original Issue
Date) to but excluding the current Distribution
Date.
THE CALL RIGHT............... The Call Right represents a right by the holder
thereof to purchase all, but not less than all,
of the outstanding Certificates from the
holders thereof on any Call Date (as defined
below) at a price equal to the Call Price. The
initial holder of the Call Right will be the
Offering Agent or an affiliate thereof.
CALL DATE.................... Any Distribution Date occurring on or after the
Distribution Date in March 1998.
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CALL PRICE................... The aggregate Certificate Principal Balance,
together with unpaid interest thereon accrued
to but excluding the Distribution Date as of
which the Call Right is exercised.
CALL RIGHT PROVISIONS........ The holder of the Call Right must provide notice
to the Trustee (a "Call Request") not less than
three Business Days prior to the relevant Call
Date that it intends to exercise the Call Right
on such Call Date.
On any Call Date as of which the Call Right has
been exercised, Certificateholders will be
entitled to receive the aggregate Certificate
Principal Balance of all outstanding
Certificates, together with interest thereon at
the Pass-Through Rate accrued to but excluding
such Call Date. Having acquired the
Certificates pursuant to its exercise of the
Call Right, the holder of the Call Right will
be entitled to receive any amounts
distributable on the Certificates on each
Distribution Date occurring from and after such
Call Date.
The Call Right will not be exercised unless the
value of the Trust Certificates being purchased
exceeds the Call Price payable upon exercise
thereof.
OPTIONAL EXCHANGE RIGHT...... The holder of the Optional Exchange Right will
be entitled to require the Trustee, on any
Business Day, to effect an Optional Redemption
of one or more Certificates held by such holder
(the "Subject Certificates"), all as described
below. The initial holder of the Optional
Exchange Right will be the Offering Agent or an
affiliate thereof.
OPTIONAL EXCHANGE Any exercise of the Optional Exchange Right by
PROVISIONS................... the holder thereof is subject to the conditions
that: (i) the holder of the Optional Exchange
Right is also the holder of the Call Right and
the Retained Interest and (ii) the outstanding
aggregate principal amount of the Subject
Certificates shall be an amount equal to an
authorized denomination of the Underlying
Securities. There may be one or more exercises
of the Optional Exchange Right.
The holder of the Optional Exchange right must
provide notice to the Trustee (an "Optional
Exchange Request") not less than four Business
Days prior to the Business Day on which it
intends to exercise the Optional Exchange Right
(the "Optional Exchange Date").
On the Optional Exchange Date, the Subject
Certificates will be redeemed by the Trustee in
exchange for (x) delivery by the Trustee to the
holder of the Optional Exchange Right of
Underlying Securities in an outstanding
aggregate principal amount equal to the
outstanding aggregate principal amount of the
Subject Certificates and (y) payment by the
Trustee to such holder of funds on deposit in
the Certificate Account established under the
Trust Agreement that are attributable to the
Subject Certificates. No Optional Exchange
Request with respect to all outstanding
Certificates shall be effective unless the
holder of the Optional Exchange Right satisfies
the claims of all creditors of the Trust.
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RECORD DATE.................. With respect to each Distribution Date, the
third Business Day preceding such Distribution
Date.
DENOMINATIONS................ The Certificates will be denominated and payable
in U.S. dollars and will be available for
purchase in minimum denominations of $1,000 and
integral multiples thereof.
FORM OF SECURITY............. Book-entry Certificates with The Depository
Trust Company ("DTC"), except in certain
limited circumstances. See "Description of the
Certificates--Definitive Certificates" herein.
Distributions thereon will be settled in
immediately available (same-day) funds.
CUSIP NUMBER................. [ ]
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES................
In the opinion of special Federal tax counsel to
the Offering Agent, the Trust will be
classified for Federal income tax purposes as a
grantor trust and not as an association taxable
as a corporation. See "Certain Federal Income
Tax Consequences" herein.
RATINGS...................... It is a condition to the issuance of the
Certificates that the Certificates have ratings
assigned by Moody's Investors Service, Inc.
("Moody's") and by Duff & Phelps Credit Rating
Co. ("Duff") equivalent to the ratings of the
Underlying Securities, which, as of the date of
this Prospectus Supplement, were "Aa3" by
Moody's and "AA-" by Standard & Poor's Ratings
Services ("S&P"). The rating of the
Certificates by each of Moody's and Duff
addresses the likelihood of the ultimate
payment of principal and interest on the
Certificates to the Certificateholders. There
is no assurance that any such rating will
continue for any period of time or that it will
not be revised or withdrawn entirely by the
related Rating Agency if, in its judgment,
circumstances (including, without limitation,
the rating of the Underlying Securities) so
warrant. A revision or withdrawal of such
rating may have an adverse effect on the value
of the Certificates. A security rating is not a
recommendation to buy, sell or hold securities.
The rating on the Certificates does not
constitute a statement regarding the occurrence
or frequency of redemptions on, or extensions
of the maturity of, the Underlying Securities,
or the likelihood that the Call Right will be
exercised, and the corresponding effect on
yield to investors. See "Ratings" herein.
ERISA CONSIDERATIONS......... An employee benefit plan subject to the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"), including an individual
retirement account or Keogh plan, may purchase
Certificates if the Offering Agent is able to
confirm the existence
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of at least 100 independent purchasers. See
"ERISA Considerations" herein.
THE UNDERLYING SECURITIES
UNDERLYING SECURITIES........ $35,000,000 aggregate principal amount of the
8.25% Notes due September 15, 2006 of E.I. du
Pont de Nemours and Company which rank on a
parity with all other unsecured and
unsubordinated debt of E.I. du Pont de Nemours
and Company. Interest on the Underlying
Securities accrues at the Underlying Securities
Rate for each Underlying Securities Accrual
Period and is payable on each Underlying
Securities Payment Date. The entire principal
amount of the Underlying Securities will be
payable on the Underlying Securities Maturity
Date. As of the date of this Prospectus
Supplement, the Underlying Securities have a
remaining term to maturity of approximately ten
years. The Retained Interest in the Underlying
Securities will initially be held by the
Offering Agent or an affiliate thereof.
UNDERLYING SECURITIES E.I. du Pont de Nemours and Company is a
ISSUER...................... Delaware corporation whose principal executive
offices are located at 1007 Market Street,
Wilmington, Delaware 19898 and whose telephone
number is 302-774-1000. The Underlying
Securities Issuer is subject to the periodic
reporting requirements of the Exchange Act, and
in accordance therewith files reports,
including reports on Forms 10-K and 10-Q, and
other information with Commission and meets
certain other criteria described under the
heading "Description of the Underlying
Securities--Eligibility Criteria" herein.
UNDERLYING SECURITIES
ORIGINAL ISSUE DATE.........
September 23, 1991
UNDERLYING SECURITIES September 15, 2006
MATURITY DATE...............
AMORTIZATION................. None
DENOMINATIONS; UNDERLYING
SECURITIES CURRENCY.........
The Underlying Securities are denominated and
payable in U.S. dollars and are available in
minimum denominations of $1,000 and integral
multiples thereof.
UNDERLYING SECURITIES March 15 and September 15, commencing March 15,
PAYMENT DATES............... 1992.
UNDERLYING SECURITIES RATE... 8.25% per annum, calculated on the basis of a
year of 360 days and twelve 30-day months.
UNDERLYING SECURITIES
INTEREST ACCRUAL PERIODS....
Semi-annually
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PRIORITY..................... The Underlying Securities rank on a parity with
all other unsecured and unsubordinated
indebtedness of the Underlying Securities
Issuer.
SECURITY..................... None
REDEMPTION/PUT/OTHER None
FEATURES....................
FORM OF UNDERLYING Book-entry debt securities with DTC.
SECURITIES..................
CUSIP NUMBER................. 263534AW9
RECORD DATES................. March 1 and September 1, as the case may be,
immediately preceding the related Underlying
Securities Payment Date.
UNDERLYING SECURITIES The Chase Manhattan Bank (as successor by merger
TRUSTEE..................... to Manufacturers Hanover Trust Company) (the
"Underlying Securities Trustee"). The
Underlying Securities have been issued pursuant
to a supplemental indenture dated as of
September 28, 1990 to an indenture dated as of
October 3, 1988, as supplemented by a
supplemental indenture dated as of November 15,
1988 (as so supplemented, the "Underlying
Securities Indenture"), by and between the
Underlying Securities Trustee and the
Underlying Securities Issuer.
RATINGS OF THE UNDERLYING
SECURITIES AS OF THE
ORIGINAL ISSUE DATE.........
Aa3 by Moody's and AA- by S&P.
INFORMATION WITH RESPECT TO
THE UNDERLYING SECURITIES
ISSUER...................... E.I. du Pont de Nemours and Company is subject
to the informational requirements of the
Exchange Act and in accordance therewith files
reports, including reports on Forms 10-K and
10-Q, and other information with the
Commission. Such reports and other information
may be inspected and copied at the public
reference facilities maintained by the
Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following
Regional Offices of the Commission: New York
Regional Office, Room 1100, 7 World Trade
Center, New York, New York 10048 and Chicago
Regional Office, Suite 1400, Northwestern
Atrium Center, 500 W. Madison Street, Chicago,
Illinois 60661-2511, and copies of such
material can be obtained from the Public
Reference Section of the Commission,
Washington, D.C. 20549, at prescribed rates.
The Commission maintains a Web site at
http://www.sec.gov containing reports, proxy
statements and other information regarding
registrants that file electronically with the
Commission. Such reports and other information
may also be inspected at the Information Center
of the New York Stock Exchange Inc., 20 Broad
Street, New York, New York 10005.
A PROSPECTIVE PURCHASER OF CERTIFICATES SHOULD OBTAIN AND EVALUATE THE SAME
INFORMATION CONCERNING THE UNDERLYING SECURITIES ISSUER AS IT WOULD OBTAIN AND
EVALUATE IF IT WERE INVESTING DIRECTLY IN THE UNDERLYING SECURITIES OR IN OTHER
SECURITIES ISSUED BY THE UNDERLYING SECURITIES ISSUER.
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All information contained in this Prospectus Supplement regarding the
Underlying Securities Issuer and the Underlying Securities is derived from
publicly available sources. Except for (i) the limited identifying information
with respect to the Underlying Securities Issuer set forth below under
"Description of the Underlying Securities--Underlying Securities Issuer", (ii)
the information set forth above under "SUMMARY--The Underlying Securities" and
below under "Description of the Underlying Securities--Underlying Securities
Indenture" and (iii) the determination that the Underlying Securities and the
Underlying Securities Issuer meet the "Eligibility Criteria" described below
under "Description of the Underlying Securities--Eligibility Criteria", none of
the Depositor, the Trustee, the Offering Agent or any of their respective
affiliates assumes any responsibility for the accuracy or completeness of any
information concerning the Underlying Securities Issuer (including, without
limitation, no investigation as to its financial condition or creditworthiness)
or concerning the Underlying Securities (whether or not such information is
filed with the Commission) or otherwise considered by a purchaser of the
Certificates in making its investment decision in connection therewith.
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RISK FACTORS
In connection with an investment in the Certificates, prospective purchasers
should consider, among other things, (1) the risk factors described in pages 4
through 7 of the Prospectus and (2) the risk factors set forth below (which
are in addition to, or which supplement, the risk factors described in the
Prospectus):
MATURITY AND YIELD CONSIDERATIONS. GIVEN THE EXISTENCE OF THE CALL RIGHT (AS
DESCRIBED HEREIN), THERE IS NO ASSURANCE THAT AN INVESTMENT IN THE
CERTIFICATES MAY BE HELD TO MATURITY. In particular, if the Call Right is
exercised by the holder thereof, the investment represented by the
Certificates will have a shorter maturity than if such right were not
exercised. The likelihood that the Call Right will be exercised will increase
as interest rates generally prevailing in the market for U.S. dollar-
denominated debt securities fall relative to those in effect on the Original
Issue Date. Because the Underlying Securities bear interest at a fixed rate,
any such reduction in interest rates will generally result in an increase in
the value of the Underlying Securities, making the exercise of the Call Right
more likely. Given such a reduction, the interest rates at which proceeds
received by Certificateholders from the exercise of the Call Right may be
reinvested may be lower than the return that would have been earned over the
remaining life of the Certificates if the Call Right had not been exercised.
The Underlying Securities will be subject to acceleration upon the
occurrence of Underlying Securities Events of Default described below under
"Description of the Underlying Securities--Underlying Securities Indenture--
Events of Default; Notice and Waiver". 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 Underlying Securities by the
holders thereof. If the 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 the 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.
RATINGS OF THE CERTIFICATES. At the time of issuance, the Certificates will
have ratings assigned by Moody's and Duff equivalent to the ratings of the
Underlying Securities, which, as of the date of this Prospectus Supplement,
were "Aa3" by Moody's and "AA-" by S&P.
Any rating issued with respect to the Certificates is not a recommendation
to purchase, sell or hold a security inasmuch as such ratings do not comment
on the market price of the Certificates or their suitability for a particular
investor. There can be no assurance that the ratings will remain for any given
period of time or that the ratings will not be revised or withdrawn entirely
by the related Rating Agency if, in its judgment, circumstances (including,
without limitation, the rating of the Underlying Securities) so warrant. A
revision or withdrawal of such rating may have an adverse effect on the value
of the Certificates.
AMENDMENT OF TRUST AGREEMENT. By its own terms, the Trust Agreement may be
amended or otherwise modified with the consent of 66 2/3% of the
Certificateholders. Any such amendment or other modification could have a
material adverse effect on those Certificateholders that do not consent to
such amendment or other modification. However, the Trust Agreement requires
that any amendment or other modification that would reduce the amount of, or
defer the date of, distributions to Certificateholders may become effective
only with the consent of each affected Certificateholder and that any such
amendment or other modification that would result in the reduction or
withdrawal of the then current rating assigned to the Certificates by a Rating
Agency requires the consent of 100% of the Certificateholders.
CREDIT RISK OF ONE OBLIGOR. The Certificates represent interests in
obligations of a single obligor, E.I. du Pont de Nemours and Company. In
particular, the Certificates will be subject to all the risks associated with
a direct investment in unsecured debt obligations of E.I. du Pont de Nemours
and Company. None of the Offering Agent, the Depositor, or any of their
respective affiliates has guaranteed or is otherwise obligated with respect to
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the Certificates. Certificates are not entitled to the benefit of any deposit
or other insurance and will not be guaranteed by any governmental or other
agency.
A PROSPECTIVE PURCHASER OF CERTIFICATES SHOULD OBTAIN AND EVALUATE THE SAME
INFORMATION CONCERNING E.I. DU PONT DE NEMOURS AND COMPANY AS IT WOULD OBTAIN
AND EVALUATE IF IT WERE INVESTING DIRECTLY IN THE UNDERLYING SECURITIES OR IN
OTHER SECURITIES ISSUED BY E.I. DU PONT DE NEMOURS AND COMPANY. The issuance
of the Certificates should not be construed as an endorsement by the
Depositor, the Offering Agent or the Trustee of the financial condition or
business prospects of E.I. du Pont de Nemours and Company.
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THE DEPOSITOR
Elmwood Funding Limited (the "Depositor") is a company incorporated with
limited liability in the Cayman Islands on September 17, 1996 by a firm of
attorneys at law with its principal place of business in the Cayman Islands.
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. See "The Depositor" in the Prospectus for additional information.
USE OF PROCEEDS
The net proceeds to be received from the sale of the Certificates will be
used by the Depositor to purchase the Underlying Securities. Any remaining net
proceeds will be used by the Depositor for other purposes related to the
deposit of the Underlying Securities into the Trust and the preparation,
distribution and filing by the Depositor of periodic reports and other
information, including, but not limited to, reimbursement of the Depositor
Administration Expenses (as defined below) incurred in connection with the
ongoing activities of the Trust.
THE TRUST
The Trust will be formed pursuant to the Standard Terms for Trust
Agreements, as supplemented by the Series 1997-Du Pont Supplement (the "Series
Supplement" and together with the Standard Terms for Trust Agreements, the
"Trust Agreement") between the Depositor and the Trustee. Concurrently with
the execution and delivery of the Series Supplement, the Depositor will
deposit the Underlying Securities into the Trust, subject to the Retained
Interest, the Call Right and the right of Optional Exchange (each, as
described below under "Description of the Certificates"). The Trustee, on
behalf of the Trust, will accept such Underlying Securities and will deliver
the Certificates to or upon the order of the Depositor. The Depositor's
assignment of the Underlying Securities to the Trustee is without recourse to
the Depositor (except as to certain limited representations and warranties).
The Trustee will take such steps as may be necessary to ensure that, to the
extent the assignment of the Underlying Securities 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 Underlying Securities as against other
creditors of the Depositor.
The Underlying Securities will be purchased by the Depositor in the
secondary market and, correspondingly, will not be acquired from the
Underlying Securities Issuer (whether as part of any distribution by or
pursuant to any agreement with the Underlying Securities Issuer or otherwise).
The Underlying Securities Issuer is not participating in the offering of the
Certificates, will not receive any of the proceeds from the sale of the
Underlying Securities to the Depositor or from the issuance by the Depositor
of the Certificates, and none of the Depositor, the Offering Agent or any of
their respective affiliates have participated in the initial public offering
of the Underlying Securities.
The Trust consists of (i) the Underlying Securities, exclusive of the
Retained Interest; (ii) such assets as from time to time are identified as
deposited in the Certificate Account established under the Trust Agreement;
(iii) property, if any, acquired on behalf of Certificateholders by
foreclosure or repossession and any revenues received thereon; and (iv) any
cash or other property received upon the sale, exchange, collection or other
disposition of any of the foregoing.
Pursuant to the Trust Agreement, the Depositor shall receive compensation
for Depositor Administration Expenses (as defined below), which amounts shall
be deducted from payments to the holder of the Retained Interest. The Trustee
will be permitted to deduct such compensation from periodic distributions on
the Interest Strip for payment to the Depositor.
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DESCRIPTION OF THE UNDERLYING SECURITIES
GENERAL
The material economic terms of the Underlying Securities are described above
under "SUMMARY--The Underlying Securities".
The Underlying Securities will be deposited into the Trust subject to the
right of the holder of the Retained Interest to receive on each Distribution
Date, from payments received on the Underlying Securities, a distribution
equal to % per annum multiplied by the principal amount of the Underlying
Securities (the "Interest Strip"), subject to payment of "Ordinary Expenses"
of the Trustee and "Depositor Administration Expenses" of the Depositor as
described below. The right of the holder of the Retained Interest to receive
the Interest Strip is of equal priority with the rights of the
Certificateholders to receive distributions of interest on the Certificates.
The Underlying Securities represent the sole assets of the Trust that are
available to make distributions in respect of the Certificates. BECAUSE THE
UNDERLYING SECURITIES ARE THE ONLY MATERIAL ASSETS OF THE TRUST FROM WHICH TO
MAKE DISTRIBUTIONS OF AMOUNTS DUE IN RESPECT OF THE CERTIFICATES, THE RECEIPT
BY THE CERTIFICATEHOLDERS OF DISTRIBUTIONS IN RESPECT OF THE CERTIFICATES
(ABSENT EXERCISE OF THE CALL RIGHT, OF WHICH THERE CAN BE NO ASSURANCE) WILL
DEPEND ENTIRELY ON THE TRUST'S RECEIPT OF PAYMENTS ON THE UNDERLYING
SECURITIES. PROSPECTIVE PURCHASERS OF THE CERTIFICATES SHOULD CONSIDER
CAREFULLY THE UNDERLYING SECURITIES ISSUER'S FINANCIAL CONDITION AND ITS
ABILITY TO MAKE PAYMENTS IN RESPECT OF SUCH UNDERLYING SECURITIES. THIS
PROSPECTUS SUPPLEMENT RELATES ONLY TO THE CERTIFICATES BEING OFFERED HEREBY
AND DOES NOT RELATE TO THE UNDERLYING SECURITIES OR THE UNDERLYING SECURITIES
ISSUER. ALL INFORMATION CONTAINED IN THIS PROSPECTUS SUPPLEMENT REGARDING THE
UNDERLYING SECURITIES ISSUER AND THE UNDERLYING SECURITIES IS DERIVED FROM
PUBLICLY AVAILABLE SOURCES.
A PROSPECTIVE PURCHASER OF THE CERTIFICATES SHOULD OBTAIN AND EVALUATE THE
SAME INFORMATION CONCERNING THE RELEVANT UNDERLYING SECURITIES ISSUER AS IT
WOULD OBTAIN AND EVALUATE IF IT WERE INVESTING DIRECTLY IN THE UNDERLYING
SECURITIES OR IN OTHER SECURITIES ISSUED BY THE UNDERLYING SECURITIES ISSUER.
Except for (i) the limited identifying information with respect to the
Underlying Securities Issuer set forth below under "--Underlying Securities
Issuer", (ii) the information set forth above under "SUMMARY--The Underlying
Securities" and below under "--Underlying Securities Indenture" and (iii) the
determination that the Underlying Securities and the Underlying Securities
Issuer meet the "Eligibility Criteria" described below under "--Eligibility
Criteria", none of the Depositor, the Trustee, the Offering Agent or any of
their respective affiliates assumes any responsibility for the accuracy or
completeness of any information concerning the Underlying Securities Issuer
(including, without limitation, no investigation as to its financial condition
or creditworthiness) or concerning the Underlying Securities (whether or not
such information is filed with the Commission) or otherwise considered by a
purchaser of the Certificates in making its investment decision in connection
therewith. None of the Depositor, the Trustee, the Offering Agent or any of
their respective affiliates has participated in the preparation of any
publicly available documents relating to the Underlying Securities Issuer or
the Underlying Securities or has made any independent inquiry with respect to
such publicly available information. There can be no assurance that events
affecting the Underlying Securities or the Underlying Securities Issuer have
not occurred or have not yet been publicly disclosed which would affect the
accuracy or completeness of the information described above.
UNDERLYING SECURITIES ISSUER
According to publicly available sources of information, E.I. du Pont de
Nemours and Company was founded in 1802 and was incorporated in the State of
Delaware in 1915. Its principal executive offices are located at 1007 Market
Street, Wilmington, Delaware 19898 and its telephone number is 302-774-1000.
Its Internal Revenue Service Employer Identification Number is 51-0014090.
The Underlying Securities Issuer is subject to the informational
requirements of the Exchange Act and in accordance therewith files reports and
other information with the Commission. Such reports and other
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information may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following Regional Offices of the Commission: New York
Regional Office, Room 1100, 7 World Trade Center, New York, New York 10048 and
Chicago Regional Office, Suite 1400, Northwestern Atrium Center, 500 W.
Madison Street, Chicago, Illinois 60661-2511, and copies of such material can
be obtained from the Public Reference Section of the Commission, Washington,
D.C. 20549, at prescribed rates. The Commission maintains a Web site at
http://www.sec.gov containing reports, proxy statements and other information
regarding registrants that file electronically with the Commission.
Such reports and other information may also be inspected at the Information
Center of the New York Stock Exchange Inc., 20 Broad Street, New York, New
York 10005.
ELIGIBILITY CRITERIA
As a condition to the deposit into the Trust of the Underlying Securities,
the Underlying Securities and the Underlying Securities Issuer will, at the
time of such deposit, meet the following criteria (collectively, the
"Eligibility Criteria"):
(1) the Underlying Securities will have been issued pursuant to an
effective registration statement under the Securities Act;
(2) a class of equity securities of the Underlying Securities Issuer will
have been registered under Section 12(b) or 12(g) of the Exchange Act;
(3) the Underlying Securities Issuer will be subject to the periodic
reporting requirements of the Exchange Act and, in accordance therewith,
will be obligated to file reports, including reports on Forms 10-K and 10-
Q, and other information with the Commission;
(4) the Underlying Securities Issuer: (a) will have been subject to the
periodic reporting requirements of Section 12 or 15(d) of the Exchange Act
for a period of at least twelve calendar months immediately preceding the
deposit date; and (b) will have filed in a timely manner all reports
required to be filed under such periodic reporting requirements during the
twelve calendar months and any portion of a month immediately preceding the
deposit date;
(5) the Underlying Securities Issuer will have outstanding voting
securities (excluding securities held by affiliates of the Underlying
Securities Issuer) having an aggregate market value of at least
$75,000,000; and
(6) the Underlying Securities will be rated at least "BBB-" or "Baa3" by
S&P or Moody's (or any comparable rating by another nationally recognized
statistical rating organization).
The Depositor will determine, by reference to publicly available sources
(and without other independent investigation), that, at the time of the
deposit of the Underlying Securities into the Trust, the Underlying Securities
and the Underlying Securities Issuer meet the Eligibility Criteria.
UNDERLYING SECURITIES INDENTURE
The Underlying Securities have been issued pursuant to a supplemental
indenture dated as of September 28, 1990 to an indenture dated as of October
3, 1988, as supplemented by a supplemental indenture dated as of November 15,
1988 (as so supplemented, the "Underlying Securities Indenture"), by and
between the Underlying Securities Issuer and the Underlying Securities
Trustee. The following summary describes certain general terms of such
Underlying Securities Indenture and is based upon (a) disclosure contained in
(i) an effective registration statement on Form S-3 (Registration No. 33-
37012) dated October 4, 1990 relating to the shelf registration of an
aggregate principal amount of $1,000,000,000 of the debt securities (the "Debt
Securities") issued by the Underlying Securities Issuer pursuant to Rule 415
under the Securities Act, and (ii) a prospectus supplement dated September 31,
1991 relating to the issuance of the Underlying Securities and (b) review of
the Underlying Securities Indenture, as supplemented to September 28, 1990 and
as filed with the Commission. However, investors should refer to the
Underlying Securities Indenture itself for all of the terms governing the
Underlying Securities.
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The Underlying Securities Indenture does not limit the amount of Debt
Securities that may be issued thereunder and provides that Debt Securities may
be issued thereunder from time to time in one or more series.
Certain Covenants.
The Underlying Securities Issuer covenants that, so long as any of the Debt
Securities remain outstanding, it will not nor will it permit any Restricted
Subsidiary (see "Definitions" below) to issue, assume, or guarantee any debt
for money borrowed (herein referred to as "Debt") if such Debt is secured by a
mortgage on any Principal Property (see "Definitions" below), or on any shares
of stock or indebtedness of any Restricted Subsidiary (whether such Principal
Property, shares of stock, or indebtedness are now owned or hereafter
acquired) without in any such case effectively providing that the Debt
Securities shall be secured equally and ratably with such Debt. This
restriction, however, shall not apply to: (i) mortgages on property, shares of
stock, or indebtedness of any corporation existing at the time such
corporation becomes a Restricted Subsidiary; (ii) mortgages on property
existing at the time that it is acquired, or to secure Debt incurred for the
purpose of financing the purchase price of such property or improvements or
construction on the property, which Debt is incurred prior to, at the time of
or within one year after such acquisition, completion of such construction, or
the commencement of commercial operation of such property thereon; (iii)
mortgages securing Debt owing by any Restricted Subsidiary to the Underlying
Securities Issuer or another Restricted Subsidiary; (iv) mortgages on property
of a corporation existing at the time such corporation is merged into or
consolidated with the Underlying Securities Issuer or a Restricted Subsidiary
or at the time of a sale, lease or other disposition of the properties of a
corporation as an entirety or substantially as an entirety to the Underlying
Securities Issuer or a Restricted Subsidiary; (v) mortgages on property of the
Underlying Securities Issuer or a Restricted Subsidiary in favor of the United
States of America or any State thereof, or any department, agency or
instrumentality or political subdivision of the United States of America or
any State thereof or in favor of any other country, or any political
subdivision thereof, to secure certain payments pursuant to any contract or
statute or to secure any indebtedness incurred for the purpose of financing
all or any part of the purchase price or the cost of construction of the
property subject to such mortgages (including without limitation mortgages
incurred in connection with pollution control, industrial revenue or similar
financings); (vi) mortgages existing at the date of the Underlying Securities
Indenture; (vii) mortgages on particular property (or any proceeds of the sale
thereof) to secure all or any part of the cost of exploration, drilling,
mining or development thereof (including construction of facilities for field
processing of minerals) intended to obtain or materially increase the
production and sale or other disposition of oil, gas, coal, uranium, copper or
other minerals therefrom, or any indebtedness created, issued, assumed or
guaranteed to provide funds for any or all such purposes; or (viii) any
extension, renewal or replacement (or successive extensions, renewals or
replacements), in whole or in part, of any mortgage referred to in the
foregoing clauses (i) through (vii) inclusive. Notwithstanding the above, the
Underlying Securities Issuer and one or more Restricted Subsidiaries may,
without securing the Debt Securities, issue, assume, or guarantee secured Debt
which would otherwise be subject to the above restrictions, provided that the
aggregate amount of such Debt which would then be outstanding (not including
secured Debt permitted under the foregoing exceptions) and the aggregate
Attributable Debt (see "Definitions" below) of sale and leaseback transactions
subject to the restrictions described in the second following paragraph and in
existence at such time (not including any sale and leaseback transaction as to
which the Underlying Securities Issuer has complied with clause (b) of such
paragraph) does not at any one time exceed 10% of the Consolidated Net
Tangible Assets (see "Definitions" below) of the Underlying Securities Issuer
and its consolidated Subsidiaries. (Section 1004)
For the purposes of the foregoing covenant, the following types of
transactions shall not be deemed to create Debt secured by a mortgage: the
sale or other transfer of (i) oil, gas, coal, uranium, copper or other
minerals in place for a period of time until, or in an amount such that, the
purchaser will realize therefrom a specified amount of money (however
determined) or a specified amount of such minerals or (ii) any other interest
in property of the character commonly referred to as a "production payment".
(Section 1004)
Sale and leaseback transactions by the Underlying Securities Issuer or any
Restricted Subsidiary of any Principal Property are prohibited unless (a) the
Underlying Securities Issuer or such Restricted Subsidiary would
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be entitled (pursuant to the provisions of the second preceding paragraph) to
issue, assume, or guarantee Debt secured by the property involved at least
equal in amount to the Attributable Debt in respect of such transaction
without equally and ratably securing the Debt Securities or (b) an amount
equal to such Attributable Debt is applied to the retirement of
nonsubordinated Debt of the Underlying Securities Issuer or a Restricted
Subsidiary which by its terms matures at or is extendible or renewable at the
option of the obligor to a date more than twelve months after the creation of
such Debt. (Section 1005)
The Underlying Securities Issuer covenants that it will not consolidate or
merge with or dispose of all or substantially all of its property to any
corporation unless the surviving corporation (or other than the Underlying
Securities Issuer) shall assume the obligations of the Underlying Securities
Issuer under the Underlying Securities Indenture and under the Debt
Securities. (Section 801) If on any consolidation or merger of the Underlying
Securities Issuer or any Restricted Subsidiary with or into any other
corporation, or any sale, conveyance, or lease of substantially all of its
properties, any Principal Property or any shares of stock or indebtedness of
any Restricted Subsidiary would then become subject to any mortgage, pledge,
security interest, or other lien or encumbrance, the Underlying Securities
Issuer, prior to such event, will secure the Debt Securities by a direct lien
on such Principal Property, shares of stock or indebtedness, prior to all
liens other than any previously existing. (Section 802)
Definitions.
"Attributable Debt" is defined by the Underlying Securities Indenture to
mean the present value (discounted at the rate of 1% per annum over the
weighted average yield to maturity of the outstanding Debt Securities, such
average being weighted by the outstanding principal amount of the Debt
Securities of each series (or, in the case of Debt Securities issued with
original issue discount, such amount to be determined as provided in the
Underlying Securities Indenture) of the obligation of a lessee for rental
payments (excluding from such rental payments, however, amounts payable with
respect to income and property taxes, insurance, maintenance, and other
similar charges and contingent rents, such as those based on sales) during the
remaining term of any lease (including any period for which such lease has
been extended). (Section 1005)
"Consolidated Net Tangible Assets" is defined by the Underlying Securities
Indenture to mean the total amount of assets (less applicable reserves and
other properly deductible items) after deducting therefrom (a) all current
liabilities (excluding any thereof which are by their terms extendible or
renewable at the option of the obligor thereon to a time more than 12 months
after the time as of which the amount thereof is being computed), and (b) all
goodwill, trade names, trademarks, patents, purchased technology, unamortized
debt discount and other like intangible assets, all as set forth on the most
recent quarterly balance sheet of the Underlying Securities Issuer and its
consolidated Subsidiaries and computed in accordance with generally accepted
accounting principles. (Section 101)
"Principal Property" is defined by the Underlying Securities Indenture to
mean any manufacturing plant or facility or any mineral producing property or
any research facility owned by the Underlying Securities Issuer or any
Restricted Subsidiary which is located within the continental United States of
America except any such plant or facility or property or research facility
which, in the opinion of the board of directors of the Underlying Securities
Issuer, is not of material importance to the total business conducted by the
Underlying Securities Issuer and its Restricted Subsidiaries as an entity.
(Section 101)
"Restricted Subsidiary" is defined by the Underlying Securities Indenture to
mean any wholly-owned Subsidiary (i) substantially all the property of which
is located within the continental United States of America, (ii) which owns a
Principal Property, and (iii) in which the Underlying Securities Issuer's
investment exceeds 1% of the consolidated assets of the Underlying Securities
Issuer as of the end of the last preceding year; provided that the term
"Restricted Subsidiary" does not include any wholly-owned Subsidiary which is
principally engaged in leasing or in financing installment receivables or
which is principally engaged in financing the Underlying Securities Issuer's
operations outside the continental United States. (Section 101)
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"Subsidiary" is defined by the Underlying Securities Indenture to mean any
corporation which is consolidated in the Underlying Securities Issuer's
accounts and any corporation of which at least a majority of the outstanding
stock having voting power under ordinary circumstances to elect a majority of
the board of directors of said corporation shall at the time be owned or
controlled by the Underlying Securities Issuer or by the Underlying Securities
Issuer and one or more Subsidiaries or by one or more Subsidiaries. (Section
101)
Events of Default; Notice and Waiver.
The Underlying Securities Indenture defines an event of default with respect
to any series of Debt Securities as being any one of the following events and
such other event as may be established for the Debt Securities of a particular
series: (a) default for 30 days in any payment of interest on such series; (b)
default in any payment of principal, and premium, if any, on such series when
due; (c) default in the payment of any sinking fund installment when due; (d)
default for 60 days after appropriate notice in performance of any other
covenant in the Underlying Securities Indenture; or (e) certain events
involving bankruptcy, insolvency or reorganization. No event of default with
respect to a particular series of Debt Securities issued under the Underlying
Securities Indenture necessarily constitutes an event of default with respect
to any other series of Debt Securities issued thereunder. (Section 501) The
Underlying Securities Issuer is required to file with the Underlying
Securities Trustee annually an Officers' Certificate indicating whether the
Underlying Securities Issuer is in default under the Underlying Securities
Indenture. (Section 1008)
The Underlying Securities Indenture provides that if an event of default
specified therein shall occur and be continuing with respect to any series of
Debt Securities, either the Underlying Securities Trustee or the holders of
25% in principal amount of the Debt Securities of such series (in the case of
defaults under clauses (d) and (e), of all the Debt Securities) then
outstanding may declare the principal (or in the case of Debt Securities
issued with original issue discount, such portion of the principal amount
thereof as may be specified in the terms thereof) of the Debt Securities of
such series (or of all the Debt Securities, as the case may be) to be due and
payable. (Section 502) In certain cases, the holders of a majority in
principal amount of the outstanding Debt Securities of any series (or in the
case of defaults under clauses (d) and (e), of all the Debt Securities) may on
behalf of the holders of all the Debt Securities of any such series (or of all
the Debt Securities, as the case may be) and any related coupons waive any
past default or event of default except a default not theretofore cured in
payment of the principal of or premium, if any, or interest on any of the Debt
Securities of such series (or of all the Debt Securities, as the case may be)
and any related coupons. (Sections 502 and 513)
The Underlying Securities Indenture contains a provision entitling the
Underlying Securities Trustee, subject to the duty of the Underlying
Securities Trustee during default to act with the required standard of care,
to be indemnified by the holders of the Debt Securities of any series or any
related coupons before proceeding to exercise any right or power under the
Underlying Securities Indenture with respect to such series at the request of
such holders. (Section 603) The Underlying Securities Indenture provides that
no holder of any Debt Securities of any series or any related coupons may
institute any proceeding, judicial or otherwise, to enforce such Underlying
Securities Indenture except where the Underlying Securities Trustee has, for
60 days after it is given notice of default, failed to act, and where there
has been both a request to enforce such Underlying Securities Indenture by the
holders of not less than 25% in aggregate principal amount of the then
outstanding Debt Securities of such series and an offer of reasonable
indemnity to the Underlying Securities Trustee. (Section 507) This provision
will not prevent any holder of Debt Securities or any related coupons from
enforcing payment of the principal thereof and premium, if any, and interest
thereon at the respective due dates thereof. (Section 508) The holders of a
majority in aggregate principal amount of the Debt Securities of any series
then outstanding may direct the time, method and place of conducting any
proceedings for any remedy available to the Underlying Securities Trustee or
exercising any trust or power conferred on it with respect to the Debt
Securities of such series. However, the Underlying Securities Trustee may
refuse to follow any direction that conflicts with law or the Underlying
Securities Indenture or which would be unjustly prejudicial to holders not
joining therein. (Section 512)
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The Underlying Securities Indenture provides that the Underlying Securities
Trustee will, within 90 days after the occurrence of a default with respect to
any series of Debt Securities known to it, give to the holders of Debt
Securities of such series notice of such default if not cured or waived, but,
except in the case of a default in the payment of principal of (or premium, if
any), or interest on, any Debt Securities, the Underlying Securities Trustee
shall be protected in withholding such notice if it determines in good faith
that the withholding of such notice is in the interests of the holders of such
Debt Securities. (Section 607)
Modification of the Underlying Securities Indenture.
The Underlying Securities Indenture contains provisions permitting the
Underlying Securities Issuer and the Underlying Securities Trustee, with the
consent of the holders of not less than a majority in aggregate principal
amount of the Debt Securities at the time outstanding of all series to be
affected (voting as one class), to execute supplemental indentures adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Underlying Securities Indenture or modifying in any manner the rights
of the holders of the Debt Securities of each such series (or waiving any
covenant or condition set forth with respect to Section 1004 (Limitation on
Liens) or Section 1005 (Limitation on Sale and Lease-Back)); provided that no
such supplemental indenture shall (i) change the stated maturity of the
principal of, or any instalment of interest thereon or any premium payable
upon redemption thereof, or change any obligation of the Underlying Securities
Issuer to pay additional amounts thereon, or reduce the amount of the
principal of a Debt Security issued with original issue discount that would be
due and payable upon a declaration of acceleration of the majority thereof, or
change any place of payment, or change the coin or currency in which any Debt
Security or the interest thereon or any coupon is payable, or impair the right
to institute suit for the enforcement of any such payment on or after the
stated maturity thereof (or, in the case of redemption, on or after the
applicable redemption date), without the consent of the holder of each Debt
Security so affected, or (ii) reduce the aforesaid percentage of Debt
Securities, the holders of which are required to consent to any such
supplemental indenture or for any waiver of compliance with certain provisions
of the Underlying Securities Indenture or certain defaults thereunder and
their consequences, without the consent of the holder of each Debt Security
affected.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will have an initial Certificate Principal Balance equal to
$35,000,000 and will be issued on February [ ], 1997.
The Final Scheduled Distribution Date for the Certificates will be September
15, 2006.
The Certificates will be denominated and payable in U.S. Dollars and will be
issued in registered form in minimum denominations of $1,000 and integral
multiples thereof.
COLLECTIONS AND DISTRIBUTIONS
Collections on the Underlying Securities that are received by the Trustee
for a given Collection Period pursuant to the collection procedures described
herein and in the Prospectus and deposited from time to time into the
Certificate Account established under the Trust Agreement will be applied by
the Trustee on each applicable Distribution Date to the following
distributions in the following order of priority, solely to the extent of
Available Funds (as defined below) on such Distribution Date:
(i) to the Certificateholders and the holder of the Retained Interest in
payment of Pass-Through Interest and the Interest Strip, respectively, pro
rata according to the respective amounts thereof then due and payable; and
(ii) to the Certificateholders, Required Principal (if any).
If the Trustee has not received payment on the Underlying Securities on or
prior to a Distribution Date, such distribution will be made upon receipt of
payment on the Underlying Securities. No additional amounts will accrue on the
Certificates or be owed to Certificateholders as a result of any such delay.
All amounts received on or with respect to the Underlying Securities,
including amounts received in connection with the exercise of the Call Right
by the holder thereof, which are not distributed to Certificateholders on the
date of receipt, shall be invested by the Trustee in Eligible Investments.
Income on such investments will not constitute property of the Trust and will
not be available to Certificateholders.
There can be no assurance that collections received from the Underlying
Securities over a specified period will be sufficient to make all required
distributions to the Certificateholders and the holder of the Retained
Interest. To the extent Available Funds are insufficient to make any such
distributions, any shortfall will be carried over and will be distributable on
the next Distribution Date on which sufficient funds exist to pay such
shortfalls. The holder of the Retained Interest will pay the Ordinary Expenses
of the Trustee and Depositor Administration Expenses from amounts otherwise
distributable as the Interest Strip.
For purposes of this Prospectus Supplement, the following terms have the
following meanings:
"Available Funds" for any Distribution Date means the sum of all amounts
received on or with respect to the Underlying Securities during the
preceding Collection Period.
"Business Day" with respect to any Certificate means any day, other than
a Saturday or Sunday, that is not a day on which banking institutions are
authorized or required by law or regulation to be closed in The City of New
York.
"Depositor Administration Expenses" means fees and expenses payable by
the Depositor to its administrator (currently Deutsche Morgan Grenfell
(Cayman) Limited) pursuant to an administration agreement, which fees and
expenses include (a) a one-time arrangement fee, (b) an annual fee and
(c) reasonable out-of-pocket expenses incurred by the administrator in
connection with the administration of the Depositor in accordance with such
administration agreement.
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"Eligible Investments" means, with respect to the Certificates, those
investments, consistent with the Trust's status as a grantor trust for
Federal income tax purposes and acceptable to the Rating Agencies as being
consistent with the rating of such Certificates, as specified in the Trust
Agreement. Generally, Eligible Investments must be limited to obligations
or securities that mature not later than the Business Day prior to the
succeeding Distribution Date.
"Interest Accrual Period" means, for any Distribution Date, the period
from and including the preceding Distribution Date (or, in the case of the
first Interest Accrual Period, from and including the Original Issue Date)
to but excluding the current Distribution Date.
"Interest Strip" allocable to the Retained Interest for any Distribution
Date means accrued and unpaid interest on the outstanding principal balance
of the Certificates, computed at a rate per annum equal to %, except
that the Interest Strip for the first Distribution Date will include the
right to receive interest on the Underlying Securities accrued with respect
to the period from and including September 15, 1996 (the "Cut-Off Date") to
but excluding the Original Issue Date.
"Pass-Through Interest" for the Certificates for any Distribution Date
means accrued and unpaid interest on the outstanding principal balance of
the Certificates, computed at a rate per annum equal to the Pass-Through
Rate.
"Required Principal" for the Certificates for any Distribution Date means
the amount received on the Underlying Securities attributable to principal
payments thereon during the related Collection Period.
Except as provided in the succeeding paragraph, distributions with respect
to Certificates will be made at the corporate trust office or agency of the
Trustee specified below under "Description of the Trust Agreement--The
Trustee"; provided that any such amounts distributable on the Final Scheduled
Distribution Date will be distributed only upon surrender of such Certificate
at the location set forth above.
Distributions on the Certificates will be made, except as provided below, by
check mailed to the Certificateholder listed on the relevant Record Date in
the ownership register maintained for that purpose under the Trust Agreement
(which, in the case of a Global Security, will be a nominee of the Clearing
Agency). A Certificateholder of $10,000,000 or more in aggregate principal
amount of Certificates shall be entitled to receive such distributions by wire
transfer of immediately available funds, but only if appropriate wire transfer
instructions have been received in writing by the Trustee not later than 15
calendar days prior to the applicable Distribution Date.
INTEREST ON THE CERTIFICATES
The Certificates are "Fixed Rate Certificates" as defined in the Prospectus.
The Pass-Through Rate applicable to the calculation of the interest
distributable on any Distribution Date on the Certificates is fixed at %
per annum and will be calculated on the basis of a year of 360 days and twelve
30-day months. Interest on the Certificates will be distributable in arrears
on or about March 15 and September 15 of each year, beginning on March 15,
1997 (each, a "Distribution Date"). Each such distribution of interest shall
include interest accrued during the period from and including the preceding
Distribution Date (or, in the case of the first Interest Accrual Period, from
and including the Original Issue Date) to but excluding the current
Distribution Date.
PRINCIPAL OF THE CERTIFICATES
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
Underlying Securities. 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. The initial aggregate Certificate Principal Balance equals
the
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outstanding aggregate principal balance of the Underlying Securities as of the
Cut-off Date. Distributions of principal will be made on a pro rata basis
among all the Certificates.
RETAINED INTEREST
The holder of the Retained Interest is entitled under the Trust Agreement to
receive on each Distribution Date, from payments received on the Underlying
Securities, a distribution equal to % per annum multiplied by the
principal amount of the Underlying Securities (the "Interest Strip"), subject
to payment of "Ordinary Expenses" of the Trustee and "Depositor Administration
Expenses" of the Depositor as described herein. The rights of the holder of
the Retained Interest to the Interest Strip from payments received on the
Underlying Securities is of equal priority with the rights of
Certificateholders to receive distributions of interest. The holder of the
Retained Interest will also have the right under the Trust Agreement to
receive interest on the Underlying Securities accrued with respect to the
period prior to, and including, the Cut-Off Date. The initial holder of the
Retained Interest will be the Offering Agent or an affiliate thereof. The
Retained Interest is not being offered hereby.
Under the terms of the Trust Agreement, Certificateholders will not be
entitled to terminate the Trust or cause the sale or other disposition of the
Underlying Securities without the consent of the holder of the Retained
Interest. In addition, amendment of the Trust Agreement may require, and
amendment of the Retained Interest generally will require, consent of the
holder of the Retained Interest. See "Description of the Trust Agreement--
Voting Rights" herein.
CALL RIGHT
General
The Call Right represents a right by the holder thereof to purchase all, but
not less than all, of the outstanding Certificates from the holders thereof on
any Call Date (as defined below) at a price equal to the Call Price. The
initial holder of the Call Right will be the Offering Agent or an affiliate
thereof. No Call Right is being offered hereby.
Under the terms of the Call Right and the Trust Agreement,
Certificateholders will not be entitled to terminate the Trust or cause the
sale or other disposition of the Underlying Securities without the consent of
the holder of the Call Right. In addition, amendment of the Trust Agreement
may require, and amendment of the Call Right generally will require, consent
of the holder of the Call Right. See "Description of the Trust Agreement--
Voting Rights" herein.
Exercise
The Certificates are a "Callable Series" as defined in the Prospectus. The
Call Right may be exercised on any Distribution Date (or the next succeeding
Business Day if such Distribution Date is not a Business Day) occurring on or
after the Distribution Date in March 1998 (the "Call Date") at a price (the
"Call Price") equal to the aggregate Certificate Principal Balance, together
with unpaid interest thereon accrued to but excluding the Distribution Date as
of which the Call Right is exercised.
The holder of the Call Right must provide notice to the Trustee (a "Call
Request") not less than three Business Days prior to the relevant Call Date
that it intends to exercise the Call Right on such Call Date.
On any Call Date as of which the Call Right has been exercised,
Certificateholders will be entitled to receive the aggregate Certificate
Principal Balance of all outstanding Certificates, together with interest
thereon at the Pass-Through Rate accrued to but excluding such Call Date.
Having acquired the Certificates pursuant to its exercise of the Call Right,
the holder of the Call Right will be entitled to receive any amounts
distributable on the Certificates on each Distribution Date occurring from and
after such Call Date.
The Call Right will not be exercised unless the value of the Trust
Certificates being purchased exceeds the Call Price payable upon exercise
thereof.
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OPTIONAL EXCHANGE
General
The Certificates are an "Exchangeable Series" as defined in the Prospectus.
The holder of the Optional Exchange Right will be entitled to require the
Trustee, on any Business Day, to effect an Optional Redemption of one or more
Certificates held by such holder (the "Subject Certificates"); provided that
(i) the holder of the Optional Exchange Right is also the holder of the Call
Right and the Retained Interest and (ii) the outstanding aggregate principal
amount of the Subject Certificates shall be an amount equal to an authorized
denomination of the Underlying Securities. Any such Optional Redemption will
also be subject to compliance with the applicable conditions specified in the
Prospectus under "Description of the Certificates--Optional Exchange." There
may be one or more exercises of the Optional Exchange Right.
The Optional Exchange Right will be issued to the Offering Agent or an
affiliate of the Offering Agent and may, upon notice to the Trustee, be
transferred by the holder thereof (in whole but not in part) to another Person
at the sole option of the transferor without the consent of the
Certificateholders or any other Person.
Under the terms of the Optional Exchange Right and the Trust Agreement,
amendment of the Optional Exchange Right will require consent of all
Certificateholders and of the holders of the Retained Interest and the Call
Right. See "Description of the Trust Agreement--Voting Rights" herein.
Exercise
The holder of the Optional Exchange right must provide notice to the Trustee
(an "Optional Exchange Request") not less than four Business Days prior to the
Business Day on which it intends to exercise the Optional Exchange Right (the
"Optional Exchange Date").
On the Optional Exchange Date, the Subject Certificates will be redeemed by
the Trustee in exchange for (x) delivery by the Trustee to the holder of the
Optional Exchange Right of Underlying Securities in an outstanding aggregate
principal amount equal to the outstanding aggregate principal amount of the
Subject Certificates and (y) payment by the Trustee to such holder of funds in
the Certificate Account established under the Trust Agreement that are
attributable to the Subject Certificates. No Optional Exchange Request with
respect to all outstanding Certificates shall be effective unless the holder
of the Optional Exchange Right satisfies the claims of all creditors of the
Trust.
GLOBAL SECURITY
The Certificates will initially be represented by one or more global
securities (each a "Global Security") registered in the name of Cede & Co., as
nominee of The Depository Trust Company ("DTC" and, together with any
successor clearing agency selected by the Depositor, the "Clearing Agency").
The interests of beneficial owners of such Certificates will be represented by
book entries on the records of participating members of DTC ("Participants").
Transfers of beneficial ownership in any Global Security will be effected in
accordance with the normal procedures of the Clearing Agency. No holder of a
beneficial interest in a Global Security will be entitled to receive a
definitive certificate (a "Definitive Certificate") representing such person's
interest, except as set forth below under "--Definitive Certificates". Unless
and until Definitive Certificates are issued under the limited circumstances
described herein, all references to actions by Certificateholders with respect
to any such Certificates shall refer to actions taken by DTC upon instructions
from its Participants. See " --Definitive Certificates" herein and
"Description of Certificates--Global Securities" in the Prospectus.
Under the rules, regulations and procedures creating and affecting DTC and
its operations, DTC will take action permitted to be taken by a
Certificateholder under the Trust Agreement only at the direction of one or
more Participants to whose DTC account such Certificates are credited.
Additionally, DTC will take such actions with respect to specified Voting
Rights only at the direction and on behalf of Participants whose holdings of
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such Certificates evidence such specified Voting Rights. DTC may take
conflicting actions with respect to Voting Rights, to the extent that
Participants whose holdings of Certificates evidence such Voting Rights,
authorize divergent action.
DEFINITIVE CERTIFICATES
Definitive Certificates will be issued to Certificateholders or their
nominees in exchange for their respective beneficial interests in any Global
Security only if (i) the Depositor advises the Trustee in writing that DTC is
no longer willing or able to discharge properly its responsibilities as
Clearing Agency with respect to the Certificates and the Depositor is unable
to locate a qualified successor or (ii) the Depositor, at its option, elects
to terminate the book-entry system through DTC.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee is required to notify all Participants of the
availability through DTC of Definitive Certificates. Upon surrender by DTC of
the Global Securities representing the Certificates and receipt of
instructions for re-registration, the Trustee will reissue such Certificates
as Definitive Certificates issued in the respective principal amounts owned by
the individual owners of such Certificates and thereafter an owner of a
beneficial interest in a Global Security will be entitled to physical delivery
of individual Definitive Certificates equal in principal amount to such
beneficial interest and to have such Definitive Certificates registered in its
name. Individual Definitive Certificates so issued will be issued in
registered form in denominations, unless otherwise specified by the Depositor,
of $1,000 and integral multiples thereof.
LISTING ON THE NEW YORK STOCK EXCHANGE
The Certificates have been authorized for listing, upon official notice of
issuance, with the NYSE. There can be no assurance that the Certificates, once
listed, will continue to be eligible for trading on the NYSE.
DESCRIPTION OF THE TRUST AGREEMENT
GENERAL
The Certificates will be issued pursuant to the Trust Agreement, a form of
which is filed as an exhibit to the Registration Statement. A Current Report
on Form 8-K relating to the Certificates containing a copy of the Trust
Agreement as executed will be filed by the Depositor with the Commission
following the issuance and sale of the Certificates. The Trust created under
the Trust Agreement (including the Series 1997-Du Pont Supplement) will
consist of (i) the Underlying Securities, exclusive of the Retained Interest;
(ii) such assets as from time to time are identified as deposited in the
Certificate Account established under the Trust Agreement; (iii) property, if
any, acquired on behalf of Certificateholders by foreclosure or repossession
and any revenues received thereon; and (iv) any cash or other property
received upon the sale, exchange, collection or other disposition of any of
the foregoing. Reference is made to the Prospectus for important information
in addition to that set forth herein regarding the Trust, the terms and
conditions of the Trust Agreement and the Certificates. The following
summaries of certain provisions of the Trust Agreement do not purport to be
complete and are subject to the detailed provisions contained in the form of
Trust Agreement, to which reference is hereby made for a full description of
such provisions, including the definition of certain terms used herein.
THE TRUSTEE
The United States Trust Company of New York will act as trustee (the
"Trustee") for the Certificates and the Trust pursuant to the Trust Agreement.
The Trustee's offices are located at 114 West 47th Street, 15th Floor, New
York, New York 10036 and its telephone number is (212) 852-1623.
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Pursuant to the Trust Agreement, the Trustee shall receive compensation for
Ordinary Expenses, payable by the holder of the Retained Interest. The Trustee
will be permitted to deduct its compensation from periodic distributions on
the Interest Strip.
"Ordinary Expenses" are defined in the Trust Agreement and are generally
described as the Trustee's customary fee for its services as Trustee,
including but not limited to (i) the costs and expenses of preparing, sending
and receiving all reports, statements, notices, returns, filings, solicitation
of consent or instructions, or other communications required by the Trust
Agreement, (ii) the costs and expenses of holding and making ordinary
collection or payments on the assets of the Trust and of determining and
making distributions, (iii) the costs and expenses of the Trust's or Trustee's
counsel, accountants and other experts for ordinary or routine consultation or
advice in connection with the establishment, administration and termination of
the Trust, and (iv) any other costs and expenses that are, or reasonably
should have been, expected to be incurred in the ordinary course of
administration of the Trust.
The Trust Agreement provides that the Trustee may not take any action which,
in the Trustee's opinion, would or might cause it to incur Extraordinary Trust
Expenses, unless (i) the Trustee is satisfied that it will have adequate
security or indemnity in respect of such costs, expenses and liabilities and
(ii) the Trustee has been instructed to do so by Certificateholders
representing not less than 66 2/3% of the Certificates then outstanding.
"Extraordinary Trust Expenses" are defined in the Trust Agreement as any and
all costs, expenses or liabilities arising out of the establishment, existence
or administration of the Trust, other than (i) Ordinary Expenses and (ii)
costs and expenses payable by a particular Certificateholder, the Trustee or
the Depositor pursuant to the Trust Agreement.
Extraordinary Trust Expenses will not be paid out of the Trust property
unless (i) such Extraordinary Trust Expenses relate to a time when the
Underlying Securities Issuer was in default of any payment obligation under
the Underlying Securities Indenture, or (ii) Certificateholders representing
100% of the aggregate Voting Rights of the Certificates have voted to require
the Trustee to incur such Extraordinary Trust Expenses.
EVENTS OF DEFAULT
An event of default with respect to the Certificates under the Trust
Agreement (an "Event of Default") will consist of (i) a default in the payment
of any interest on any Underlying Security after the same becomes due and
payable (subject to any applicable grace period) and (ii) a default in the
payment of the principal of or any installment of principal of any Underlying
Security when the same becomes due and payable.
The Trust Agreement will provide that, within 30 days after the occurrence
of an Event of Default in respect of the Certificates, the Trustee will give
notice to the Certificateholders, the holder of the Call Right and the holder
of the Retained Interest, transmitted by mail, of all such uncured or unwaived
events of default known to it. However, except in the case of an Event of
Default relating to the payment of principal of or interest on any of the
Underlying Securities, the Trustee will be protected in withholding such
notice if in good faith it determines that the withholding of such notice is
in the interest of the Certificateholders, the holder of the Call Right and
the holder of the Retained Interest.
VOTING RIGHTS
At all times, 100% of all Voting Rights shall be allocated among all
Certificateholders in proportion to the then outstanding principal balances of
their respective Certificates; provided that any exercise of Voting Rights
that would adversely affect in any material respect the Retained Interest, the
Call Right or the Optional Exchange Right shall require the consent of the
holder thereof.
The Required Percentage-Amendment of Voting Rights of those Certificates
that are materially adversely affected by any modification or amendment of the
Trust Agreement necessary to consent to such modification or amendment shall
be 66 2/3%, if each Rating Agency shall have notified the Depositor and the
Trustee in writing
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<PAGE>
that such modification or amendment will not result in a reduction or
withdrawal of the then current rating of the Certificates, and otherwise 100%.
In addition to the other restrictions on modification and amendment
contained in the Trust Agreement, the Trustee shall not agree to or enter into
any amendment or modification of the Trust Agreement which would adversely
affect in any material respect (i) the Retained Interest without the consent
of the holder thereof, (ii) the Call Right without the consent of the holder
thereof or (iii) the Optional Exchange Right without the consent of all the
Certificateholders and of the holders of the Retained Interest and the Call
Right; provided that no such amendment or modification will be permitted which
would alter the status of the Trust as a grantor trust for Federal Income tax
purposes.
In addition to the other restrictions on modification and amendment
contained in the Trust Agreement, the Trustee shall not agree to or enter into
any amendment or modification of the Retained Interest, the Call Right or the
Optional Exchange Right without the consent of the holder thereof or which
would adversely affect in any material respect the interests of the
Certificateholders without the consent of Certificateholders representing 66
2/3% of the aggregate Voting Rights of those Certificates that are materially
adversely affected by such modification or amendment and without confirmation
by each Rating Agency that such amendment will not result in a downgrading or
withdrawal of its rating of the Certificates; provided that (i) no such
amendment or modification will be permitted which would alter the status of
the Trust as a grantor trust for Federal Income tax purposes and (ii) any
amendment or modification of the Trust Agreement or the Call Right which would
alter the timing or amount of any payment of the Call Price shall require the
consent of Certificateholders representing 100% of the aggregate Voting Rights
of the Certificates.
TERMINATION OF THE TRUST
The Trust shall terminate upon the earlier to occur of the payment in full
of the Certificates at maturity and the settlement by the Trust of all
payments and deliveries required in connection with any exercise of the
Optional Exchange Right. See "Description of the Trust Agreement--Termination"
in the Prospectus. Under the terms of the Trust Agreement, the
Certificateholders will not be entitled to terminate the Trust or cause the
sale or other disposition of the Underlying Securities without the consent of
the holder of the Retained Interest or the Call Right if and for so long as
the Retained Interest or the Call Right, respectively, remains outstanding.
S-27
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a general discussion of all material Federal income tax
consequences of the purchase, ownership and disposition of the Certificates by
an initial holder of Certificates.
This summary is based upon laws, regulations, rulings and decisions
currently in effect, all of which are subject to change, possibly on a
retroactive basis. The discussion does not deal with all Federal tax
consequences applicable to all categories of investors, some of which may be
subject to special rules. In addition, this summary is generally limited to
investors who will hold the Certificates as "capital assets" (generally,
property held for investment) within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended (the "Code"), and who do not hold
their Certificates as part of a "straddle", a "hedge" or a "conversion
transaction". Investors should consult their own tax advisors to determine the
Federal, state, local and other tax consequences of the purchase, ownership
and disposition of the Certificates.
The Trust will be provided with an opinion of Milbank, Tweed, Hadley &
McCloy, special Federal tax counsel to the Offering Agent ("Federal Tax
Counsel"), regarding certain Federal income tax matters discussed below. An
opinion of Federal Tax Counsel, however, is not binding on the Internal
Revenue Service (the "IRS") or the courts. Prospective investors should note
that no rulings have been or will be sought from the IRS with respect to any
of the Federal income tax consequences discussed below, and no assurance can
be given that the IRS will not take contrary positions.
THE TAX DISCUSSION CONTAINED HEREIN ASSUMES THAT THE AGGREGATE DEEMED
PURCHASE PRICE OF THE CERTIFICATES (AS DESCRIBED HEREIN) WILL AT LEAST EQUAL
THE STATED PRINCIPAL AMOUNT OF THE UNDERLYING SECURITIES.
TAX STATUS OF TRUST
In the opinion of Federal Tax Counsel, the Trust will be classified as a
grantor trust and not as an association (or publicly traded partnership)
taxable as a corporation for Federal income tax purposes. Accordingly, each
Certificateholder will be subject to Federal income taxation as if it owned
directly the portion of the Underlying Securities allocable to such
Certificates, as if it issued directly the portion of the Call Right allocable
to such Certificates and as if it paid directly its share of reasonable
expenses paid by the Trust and deducted from distributions in respect of the
Certificates. The following discussion assumes that the Underlying Securities
were not issued with original issue discount ("OID") and, accordingly, the
Certificateholders will not realize OID except with respect to a "stripped
bond" (as defined below).
INCOME OF CERTIFICATEHOLDERS
In General. A Certificateholder will allocate the amount it paid (or, as
explained in the next sentence, is deemed to have paid) for its Certificate
among the portions of the Underlying Securities allocable to such Certificate,
in proportion to their relative fair market values on the date of purchase of
the Certificate. In addition, a Certificateholder should be deemed to have
paid for its Certificates the full fair market value of the portion of the
Underlying Securities that are allocable to its Certificates and, to the
extent that the aggregate amount of such fair market values exceeds the amount
a Certificateholder actually paid for a Certificate, should be deemed to have
been paid such excess by the holder of the Call Right as a Call Premium. A
Certificateholder would calculate separately its income, gain, loss or
deduction realized with respect to each such asset.
The Underlying Securities represented by such Certificate will be considered
to be a "stripped bond" within the meaning of Section 1286 of the Code,
because the holder of the Retained Interest is entitled to receive part of the
interest on the Underlying Securities but no principal on the Underlying
Securities. Under Section 1286 of the Code, as stripped bonds the portion of
the Underlying Securities represented by the Certificate are treated as having
OID if their principal amount exceeds their ratable share of the deemed
purchase price, as described
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above. If there is OID, a holder would (subject to a de-minimis exception) be
required to include in income the portion of the OID allocable to such
Underlying Securities based upon the constant yield method. [Because the
Underlying Securities are being purchased at a premium, the application of
Section 1286 should not result in any OID.] If, however, a subsequent
purchaser purchases the Certificates for an amount such that its deemed
purchase price of the portion of the Underlying Securities represented by the
Certificates is less than the principal amount of such Underlying Securities
by more than the de-minimis amount, the Underlying Securities represented by
the Certificates so purchased will be treated as having OID.
Based upon the foregoing, each Certificateholder will be required to report
on its Federal income tax return, in a manner consistent with its method of
accounting, its share of the gross income of the Trust, including interest
earned on the Underlying Securities, and any gain or loss upon collection or
disposition of the Underlying Securities. The portion of each payment to a
Certificateholder that is allocable to principal on the Underlying Securities
will represent a recovery of capital, which will reduce the tax basis of such
Certificateholder's undivided interest in the Underlying Securities.
Bond Premium. To the extent that the portion of the (deemed) purchase price
of a Certificate allocated to a Certificateholder's undivided interest in the
Underlying Securities is greater than the portion of the principal balance of
the Underlying Securities allocable to the Certificate, such interest in the
Underlying Securities will have been acquired at a premium. In determining the
amount of such premium, a portion of the purchase price for a Certificate will
be allocated to the accrued interest on the Underlying Securities at the time
of purchase as though such accrued interest were a separate asset, thus
reducing the portion of the purchase price allocable to the
Certificateholder's undivided interest in the Underlying Securities. Premium
will be amortizable by the Certificateholder as an offset to interest income
(with a corresponding reduction in the Certificateholder's basis) under a
constant yield method over the term of the Underlying Securities if an
election under Section 171 of the Code is made or was previously in effect.
Any such election would also apply to all debt instruments held by the
Certificateholder during the year in which the election is made and all debt
instruments acquired thereafter.
Modification or Exchange of Underlying Securities. Depending upon the
circumstances, it is possible that a modification of the terms of the
Underlying Securities, or a substitution of other assets for the Underlying
Securities following a default on the Underlying Securities, would be a
taxable event to Certificateholders on which they would recognize gain or
loss.
DEDUCTIBILITY OF TRUST'S FEES AND EXPENSES
In computing its Federal income tax liability, a Certificateholder will be
entitled to deduct, consistent with its method of accounting, its share of
reasonable administrative fees, trustee fees and other fees paid or incurred
by the Trust and paid out of the Trust corpus as provided in Section 162 or
212 of the Code. Because certain fees and expenses paid to the Trustee and the
Depositor will be borne by the holder of the Retained Interest, it is possible
that such fees and expenses will be treated as having been constructively
received by the Trust from the holder of the Retained Interest. In that case,
a Certificateholder will be required to include in its income and will be
entitled to deduct its pro-rata share of such fees. If a Certificateholder is
an individual, estate or trust, the deduction for his share of fees will be a
miscellaneous itemized deduction that may be disallowed in whole or in part.
PURCHASE AND SALE OF A CERTIFICATE
Upon purchase of a Certificate, a Certificateholder should be deemed to have
acquired its pro-rata share of the Underlying Securities at a price equal to
their fair market value and as having received a payment in respect of the
Call Warrant allocable to such Underlying Securities equal to the difference
between the fair market value of such Underlying Securities and the purchase
price of the Certificate (excluding any amount paid in respect of accrued
interest on the Underlying Securities). Accordingly, the Certificateholder's
basis in its interest in the Underlying Security will be greater than the
amount the Certificateholder paid for its Certificate.
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Upon sale of a Certificate, the selling Certificateholder should be treated
a having received proceeds in respect of the Underlying Securities equal to
their fair market value (excluding accrued interest) and as having paid an
amount equal to the difference between such fair market value and the proceeds
received in respect of the Certificates (excluding the portion thereof
attributable to accrued interest) to terminate its obligation under the Call
Warrant. Gain or loss should be determined separately for the portion of the
Underlying Securities and the Call Warrant allocable to the Certificates.
Gain or loss with respect to the Call Warrants will equal the difference
between the amount deemed to have been received with respect to the Call
Warrants upon the purchase of the Certificates and the amount deemed paid by
the Certificateholder in respect of the discharge of its obligations under the
Call Warrant in connection with the sale of the Certificates. Any such gain or
loss will be short term gain or loss, regardless of the holding period for the
Certificates. Gain or loss with respect to the Underlying Securities will
equal the difference between the amount deemed received in respect of the
Underlying Securities (excluding accrued interest, which will be treated as
interest received) and the Certificateholder's basis therefor. Subject to the
discussion below under "Application of the Straddle Rules," such gain or loss
will be long-term capital gain or loss if the Certificates have been held for
more than one year and short-term otherwise.
CALL PREMIUM; EXERCISE OF CALL RIGHT
As described above, each Certificateholder should be deemed to have received
at the time of its purchase of its Certificate a Call Premium in an amount
equal to the fair market value of the portion of the Call Right allocable to
its Certificate. The receipt of such Call Premium should not be a taxable
event to the Certificateholder until such time as the Call Right so allocable
to its Certificate is exercised or lapses. If the Call Right lapses
unexercised, the Certificateholder will be required to include the Call
Premium in income for the taxable year the Call Right terminated as short-term
capital gain. If the Call Right is exercised, the proceeds of sale of the
Certificate will be increased by the amount of the Call Premium. The gain from
such sale will be long-term if the Certificate was then held for more than one
year and short-term otherwise.
APPLICATION OF THE STRADDLE RULES
It is possible that a Certificateholder's interest in the Underlying
Security and the Call Warrant may constitute positions in a "straddle." If so,
a Certificateholder selling its Certificate would be required to treat any
gain or loss recognized with respect to the Underlying Security as short term
gain or loss, regardless of the period for which the Certificate is held. In
addition, the straddle rules might require a Certificateholder to capitalize,
rather than deduct, interest and carrying charges allocable to the
Certificateholder's interest in its Certificates. Further, if the Internal
Revenue Service were to take the position that a Certificateholder's interest
in the Underlying Security and the Call Warrant constituted a "conversion
transaction" as well as a straddle, then a portion of any gain realized with
respect to the Underlying Security or Call Warrant may be characterized as
ordinary income.
BACKUP WITHHOLDING
Payments made on the Certificates and proceeds from the sale of the
Certificates will not be subject to a "backup" withholding tax of 31% unless,
in general, the Certificateholder fails to comply with certain reporting
procedures and is not an exempt recipient under applicable provisions of the
Code.
FOREIGN CERTIFICATEHOLDERS
Amounts paid to Certificateholder that are not United States persons
("Foreign Certificateholders") generally will not be subject to the annual 30%
withholding tax, provided that such Foreign Certificateholder fulfills certain
certification requirements. Under such requirements, the holder must certify,
under penalties of perjury, that it is not a "United States person" and
provide its name and address. A "United States person" means a citizen or
resident of the U.S., a corporation, partnership or other entity created or
organized in or under
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the laws of the U.S. or any political subdivision thereof, or an estate or
trust the income of which is includable in gross income for U.S. Federal
income tax purposes, regardless of its source.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code impose certain requirements on (a) an employee benefit plan (as
defined in Section 3(3) of ERISA), (b) a plan described in Section 4975(e)(i)
of the Code or (e) any entity whose underlying assets include plan assets by
reason of a plan's investment in the entity (each, a "Plan").
In accordance with ERISA's general fiduciary standards, before investing in
a Certificate, a Plan fiduciary should determine whether such an investment is
permitted under the governing Plan instruments and appropriate for the Plan in
view of the Plan's overall investment policy and the composition and
diversification of its portfolio. Other provisions of ERISA and the Code
prohibit certain transactions involving the assets of a Plan and persons who
have certain specified relationships to the Plan ("parties in interest" within
the meaning of ERISA or "disqualified persons" within the meaning of the
Code). Thus, a Plan fiduciary considering an investment in Certificates should
also consider whether such an investment might constitute or give rise to a
prohibited transaction under ERISA or the Code.
An investment in Certificates by a Plan might result in the assets of the
Trust being deemed to constitute Plan assets, which in turn might mean that
certain aspects of such investment, including the operation of the trust,
might be prohibited transactions under ERISA and the Code. Neither ERISA nor
the Code defines the term "plan assets". Under Section 2510.3-101 of the
United States Department of Labor ("DOL") regulations (the "Regulation"), a
Plan's assets may include an interest in the underlying assets of an entity
(such as a trust) for certain purposes, including the prohibited transaction
provisions of ERISA and the Code, if the Plan acquires an "equity interest" in
such entity. Thus, if a Plan acquired a Certificate, for certain purposes
under ERISA and the Code (including the prohibited transaction provisions) the
Plan would be considered to own its share of the underlying assets of the
Trust unless (1) such Certificate is a "publicly-offered security" or (2)
equity participation by "benefit plan investors" is not "significant".
Under the Regulations, a publicly-offered security is a security that is (1)
freely transferable, (2) part of a class of securities that is owned by 100 or
more investors independent of the issuer and of one another at the conclusion
of the initial offering and (3) either is (A) part of a class of securities
registered under Section 12(b) or 12(g) of the Exchange Act, or (B) sold to
the Plan as part of an offering of securities to the public pursuant to an
effective registration statement under the Securities Act and the class of
securities of which such security is a part is registered under the Exchange
Act within 120 days (or such later time as may be allowed by the Commission)
after the end of the fiscal year of the issuer during which the offering of
such securities to the public occurred. The Depositor anticipates that the
Certificates will be considered publicly-offered securities within the meaning
of the Regulation.
Participation by benefit plan investors in the Certificates would not be
significant if immediately after the most recent acquisition of a Certificate,
whether or not from the Depositor or an Agent or Offering Agent, less than 25%
of the value of such Certificates were held by benefit plan investors, which
are defined as Plans and employee benefit plans not subject to ERISA (for
example, governmental plans).
If the assets of the Trust were deemed to be plan assets, certain
transactions involving the Trust, including the acquisition of the
Certificates themselves by a Plan, could be prohibited transactions. If, for
example, an obligor with respect to any of the Underlying Securities, or any
of such obligor's affiliates, were a party in interest or disqualified person
with respect to an acquiring Plan, the acquisition of the Certificate could be
construed as a prohibited indirect loan from the Plan to the obligor.
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Certificates will not be sold to any Plan unless the Depositor is able to
confirm the existence of at least 100 independent purchasers of the
Certificates.
ANY PLAN OR INSURANCE COMPANY INVESTING ASSETS OF ITS GENERAL ACCOUNT
PROPOSING TO ACQUIRE CERTIFICATES SHOULD CONSULT WITH ITS COUNSEL.
METHOD OF DISTRIBUTION
Subject to the terms and conditions set forth in the Underwriting Agreement,
dated as of February [ ], 1997 (the "Underwriting Agreement"), the Depositor
has agreed to sell to Citicorp Securities, Inc. (the "Offering Agent"), and
the Offering Agent has agreed to purchase, the Certificates.
The Depositor has been advised by the Offering Agent that the Offering Agent
proposes to offer the Certificates from time to time in negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. The Offering Agent may effect such transactions by selling Certificates
to or through dealers and such dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Offering Agent and
any purchasers of Certificates for whom they may act as agents. The Offering
Agent and any dealers that participate with the Offering Agent in the
distribution of Certificates may be deemed to be underwriters, and any profit
on the resale of Certificates by them may be deemed to be underwriting
discounts, or commissions under the Securities Act. Discounts and concessions
to dealers will vary but will not exceed % of the face amount of the
Certificates. The acquisition by the Offering Agent of the Call Right, the
Retained Interest and the Optional Exchange Right at a discount to their value
may be deemed to represent underwriting compensation.
LEGAL MATTERS
Certain legal matters relating to the Certificates will be passed upon for
the Depositor and the Offering Agent by Milbank, Tweed, Hadley & McCloy, New
York, New York.
RATINGS
It is a condition to the issuance of the Certificates that the Certificates
have ratings assigned by Moody's Investors Service, Inc. ("Moody's") and by
Duff & Phelps Credit Rating Co. ("Duff") equivalent to the ratings of the
Underlying Securities, which, as of the date of this Prospectus Supplement,
were "Aa3" by Moody's and "AA-" by Standard & Poor's Ratings Services ("S&P").
The rating of the Certificates by each of Moody's and Duff addresses the
likelihood of the ultimate payment of principal of and interest on the
Certificates. The ratings address the likelihood of the receipt by
Certificateholders of payments required under the Trust Agreement, and are
based primarily on the credit quality of the Underlying Securities. The rating
on the Certificates does not, however, constitute a statement regarding the
occurrence or frequency of redemptions or prepayments on, or extensions of the
maturity of, the Underlying Securities, and the corresponding effect on yield
to investors.
A security rating is not a recommendation to buy, sell or hold securities
and may be subject to revision or withdrawal at any time by the assigning
Rating Agency. Each security rating should be evaluated independently of
similar ratings on different securities.
The Depositor has not requested a rating on the Certificates by any rating
agency other than the Rating Agencies. However, there can be no assurance as
to whether any other rating agency will rate the Certificates, or, if it does,
what rating would be assigned by any such other rating agency. A rating on the
Certificates by another rating agency, if assigned at all, may be lower than
the ratings assigned to the Certificates by the Rating Agencies.
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INDEX OF DEFINED TERMS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Funds............................................................ 21
Business Day............................................................... 21
Call Date.................................................................. 23
Call Price................................................................. 23
Call Request............................................................... 23
Certificate Principal Balance.............................................. 23
Certificates............................................................... 5
Clearing Agency............................................................ 24
Code....................................................................... 28
Commission................................................................. 4
Cut-Off Date............................................................... 22
Debt Securities............................................................ 16
Definitive Certificate..................................................... 24
Depositor.................................................................. 14
Depositor Administration Expenses.......................................... 21
Distribution Date.......................................................... 22
DOL........................................................................ 31
DTC........................................................................ 24
Duff....................................................................... 32
Eligibility Criteria....................................................... 16
Eligible Investments....................................................... 22
ERISA...................................................................... 31
Event of Default........................................................... 26
Exchange Act............................................................... 1
Extraordinary Trust Expenses............................................... 26
Federal Tax Counsel........................................................ 28
Final Scheduled Distribution Date.......................................... 1
Foreign Certificateholders................................................. 30
Global Security............................................................ 24
Interest Accrual Period.................................................... 22
Interest Strip............................................................. 22
IRS........................................................................ 28
Moody's.................................................................... 32
NYSE....................................................................... 2
Offering Agent............................................................. 32
OID........................................................................ 28
Optional Exchange Date..................................................... 24
Optional Exchange Request.................................................. 24
Ordinary Expenses.......................................................... 26
Original Issue Date........................................................ 1
Participants............................................................... 24
Pass-Through Interest...................................................... 22
Plan....................................................................... 31
Prospectus................................................................. 4
Rating Agencies............................................................ 2
Registration Statement..................................................... 4
Regulation................................................................. 31
Required Principal......................................................... 22
S&P........................................................................ 32
Securities Act............................................................. 4
</TABLE>
S-33
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Series Supplement.......................................................... 14
Standard Terms for Trust Agreements........................................ 5
Subject Certificates....................................................... 24
Trust...................................................................... 5
Trust Agreement............................................................ 14
Trustee.................................................................... 25
Underlying Securities...................................................... 5
Underlying Securities Indenture............................................ 16
Underlying Securities Issuer............................................... 5
Underlying Securities Trustee.............................................. 10
Underwriting Agreement..................................................... 32
United States person....................................................... 30
</TABLE>
S-34
<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.......................................... $12,068.96*
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>
- --------
* $344.83 has been 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
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
25.1(a) Statement of eligibility of Trustee
</TABLE>
- --------
*Previously filed.
**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 AMENDMENT TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN GEORGE TOWN, GRAND CAYMAN, BRITISH WEST INDIES,
ON THE 16TH DAY OF JANUARY, 1997.
Elmwood Funding Limited
/s/ Darren Riley
By: _________________________________
Darren Riley, Director
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE PERSONS LISTED BELOW IN
THE CAPACITIES AND ON THE DATES INDICATED BELOW:
SIGNATURE POSITION DATE
Director
/s/ Darren Riley January 16, 1997
_____________________________________
DARREN RILEY
Director
/s/ David Egglishaw January 16, 1997
_____________________________________
DAVID EGGLISHAW
Elmwood Funding Limited has no executive officers; therefore, David
Egglishaw has been temporarily designated as Chief Executive Officer and
Darren Riley 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: January 22, 1997
Mr. Philip Nisbet
c/o Citicorp Securities, Inc.
399 Park Avenue
7th Floor
New York, NY 10043
II-3
<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
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
25.1(a) Statement of eligibility of Trustee
</TABLE>
- --------
* Previously filed.
** To be filed by amendment.
<PAGE>
Exhibit 1.1
ELMWOOD FUNDING LIMITED
PASS THROUGH TRUST CERTIFICATES
UNDERWRITING AGREEMENT
----------------------
February __, 1997
CITICORP SECURITIES, INC.
399 Park Avenue
New York, New York 10043
Ladies and Gentlemen:
Elmwood Funding Limited, a Cayman Islands exempted limited liability
company (the "COMPANY"), proposes that United States Trust Company of New York,
as trustee (the "TRUSTEE") will from time to time sell to Citicorp Securities,
Inc. (the "UNDERWRITER") pass through trust certificates (the "SECURITIES") on
the terms and conditions set forth herein. The Securities are to be issued from
time to time in series (each a "SERIES") pursuant to a Trust Agreement (the
"TRUST AGREEMENT") between the Company, as depositor, and the Trustee. Each
Series of Securities 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 other assets,
if any, designed to assure the servicing or timely distribution of payments to
holders of the Securities, to be deposited by the Company in a trust (the
"TRUST") for the benefit of the holders of Securities of such Series. Each
Trust Agreement will consist of (a) the Standard Terms for Trust Agreements
dated as of February [__], 1997 (the "STANDARD TERMS FOR TRUST AGREEMENTS"),
between the Company and the Trustee and (b) a Supplement dated as of the date of
issuance of the related Series of Securities (the "SERIES SUPPLEMENT") relating
to such Series of Securities. The Securities of a Series shall have the terms
described in the Prospectus and the relevant Prospectus Supplement referred to
in Section 1(a), as such documents may be amended or supplemented from time to
time. The form of the Standard Terms for Trust Agreements has been filed as an
exhibit to the Registration Statement (as defined below). This is to confirm
the agreement concerning the purchase of the Securities from the Company by the
Underwriter.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. On the
Closing Date (as defined below) for each Series of Securities, the Company
represents and warrants to and agrees with the Underwriter that:
(a) A registration statement on Form S-3 (RegistrationNo. 333-5696),
including a form of prospectus, relating to the Securities and the
offering thereof from time to time in accordance with Rule 415 under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), has
been prepared by the Company in conformity with the
<PAGE>
-2-
requirements of the Securities Act and the rules and regulations
thereunder (the "RULES AND REGULATIONS") of the Securities and
Exchange Commission (the "COMMISSION") and has been filed by the
Company with the Commission. The Company may have filed one or more
amendments thereto, including the related preliminary prospectus, each
of which has previously been furnished to the Underwriter. The Company
will file with the Commission either (i) prior to effectiveness of
such registration statement, a further amendment to such registration
statement (including the form of final prospectus) or (ii) after
effectiveness of such registration statement, a final prospectus in
accordance with Rules 430A and 424(b)(1) or (4). In the case of clause
(ii), the Company has included in such registration statement, as
amended at the Effective Time (as defined below), all information
(other than information permitted to be omitted from the Registration
Statement when it becomes effective pursuant to Rule 430A ("RULE 430A
INFORMATION")) required by the Securities Act and the Rules and
Regulations to be included in the final prospectus with respect to the
Securities and the offering thereof. As filed, such amendment and form
of final prospectus, or such final prospectus, shall contain all Rule
430A Information, together with all other such required information,
with respect to the Securities and the offering thereof and, except to
the extent the Underwriter shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to the
Underwriter prior to the execution of this Agreement or, to the extent
not completed at such time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus and Prospectus Supplement) as the
Company has advised the Underwriter, prior to the execution of this
Agreement, will be included or made therein. For purposes of this
Agreement, "EFFECTIVE TIME" means the date and time as of which such
registration statement, or the most recent post-effective amendment
thereto, if any, was or is declared effective by the Commission.
"PRELIMINARY PROSPECTUS" means each prospectus included in such
registration statement, or amendments thereof, before it becomes
effective under the Securities Act, any prospectus filed with the
Commission by the Company pursuant to Rule 424(a) and the prospectus
included in the Registration Statement at the Effective Time that
omits Rule 430A Information. Such registration statement, as amended
at the Effective Time, including any documents incorporated by
reference therein and all Rule 430A Information, if any, is
hereinafter referred to as the "REGISTRATION STATEMENT", and the form
of prospectus relating to the Securities, as first filed with the
Commission pursuant to and in accordance with Rule 424(b) or, if no
such filing is required, as included in the Registration Statement is
hereinafter referred to as the "PROSPECTUS". The Registration
Statement includes a basic prospectus referred to below which, as
supplemented from time to time, will be used in connection with the
offering of each Series of Securities. A prospectus supplement or
supplements reflecting the terms of each Series of Securities, the
terms of the offering thereof and other matters relating to such
Series of Securities will be prepared and filed with the Commission,
such prospectus supplement, in the form first filed on or after the
date hereof pursuant to Rule 424 under the Securities Act is herein
referred to as a "PROSPECTUS SUPPLEMENT" and any such prospectus
supplement in the form or forms filed prior to the filing of the
Prospectus Supplement is herein referred to as a "PRELIMINARY
PROSPECTUS SUPPLEMENT". Reference made herein to any Preliminary
Prospectus or Preliminary Prospectus Supplement or to any Prospectus
or Prospectus Supplement shall be deemed to refer to and include any
documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the Securities Act, as of the date of such
<PAGE>
-3-
Preliminary Prospectus, Preliminary Prospectus Supplement, Prospectus
Supplement or the Prospectus, as the case may be, and any reference to
any amendment or supplement to any Preliminary Prospectus, Preliminary
Prospectus Supplement, Prospectus Supplement or the Prospectus shall
be deemed to refer to and include any document filed under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),
after the date of such Preliminary Prospectus, Preliminary Prospectus
Supplement, Prospectus Supplement or Prospectus, as the case may be,
and incorporated by reference in such Preliminary Prospectus,
Prospectus Supplement or the Prospectus, as the case may be; and any
reference to any amendment to the Registration Statement shall be
deemed to include any annual report of the Company filed with the
Commission pursuant to Section 13(a) or 15(d) of the Exchange Act
after the Effective Time that is incorporated by reference in the
Registration Statement.
(b) The Commission has not issued any order preventing or suspending the
use of any Preliminary Prospectus, Preliminary Prospectus Supplement,
Prospectus Supplement or the Prospectus. At the Effective Time, the
Registration Statement did or will, and when the Prospectus and any
Prospectus Supplement is first filed (if required) in accordance with
Rule 424(b) and on the Closing Date, the Prospectus and any Prospectus
Supplement will, comply in all material respects with the applicable
requirements of the Securities Act and the Trust Indenture Act of
1939, as amended (the "TRUST INDENTURE ACT"), and the respective rules
thereunder; at the Effective Time, the Registration Statement did not
or will not include any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; at the Effective
Time and on each Closing Date, the Trust Agreement did or will comply
in all material respects with the applicable requirements of the Trust
Indenture Act and the rules thereunder; and, at the Effective Time,
the Prospectus, if not filed pursuant to Rule 424(b), did not or will
not, and on the date of any filing pursuant to Rule 424(b) and on each
Closing Date, the Prospectus and the relevant Prospectus Supplement
will not, include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. The preceding sentence does not apply to (i) that
part of the Registration Statement which shall constitute the
Statement of Eligibility and Qualification (Form T-1) of the Trustee
under the Trust Indenture Act or (ii) information contained in or
omitted from the Registration Statement or the Prospectus or any
Prospectus Supplement in reliance upon and in conformity with written
information furnished to the Company by the Underwriter specifically
for use therein (the "UNDERWRITER'S INFORMATION"). The Trust
Agreement conforms in all respects to the requirements of the Trust
Indenture Act, and the rules and regulations of the Commission
thereunder.
(c) The documents incorporated by reference in the Prospectus and any
Prospectus Supplement, when filed with the Commission, conformed in
all material respects to the requirements of the Exchange Act and the
rules and regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and any further documents
so filed and incorporated by reference in the Prospectus or any
Prospectus Supplement, when such documents are filed with the
Commission, will conform in all material respects to the
<PAGE>
-4-
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(d) The Company has been duly organized and is validly existing as an
exempted limited liability company under the laws of the Cayman
Islands and has all power and authority necessary to own or hold its
properties and to conduct the business in which it is engaged.
(e) The Company has full right, power and authority to execute and deliver
this Agreement and each Trust Agreement and to perform its obligations
hereunder and thereunder; and all corporate action required to be
taken for the due and proper authorization, execution, delivery and
performance by the Company of this Agreement and each Trust Agreement
and the consummation of the transactions contemplated by this
Agreement and each Trust Agreement have been duly and validly taken.
(f) Each Trust Agreement, when duly executed by the proper directors of
the Company and delivered by the Company, will constitute a valid and
binding agreement of the Company enforceable against the Company in
accordance with its terms; and the Securities, when duly executed,
authenticated and delivered as provided in the relevant Trust
Agreement, will be duly and validly issued and outstanding and will be
entitled to the benefits of such Trust Agreement; and each Trust
Agreement and the Securities conform to the descriptions thereof
contained in the Prospectus and the relevant Prospectus Supplement.
(g) The execution, delivery and performance of this Agreement and each
Trust Agreement by the Company and the consummation of the
transactions contemplated hereby and thereby will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company
is a party or by which the Company is bound or to which any of the
property or assets of the Company is subject, nor will such actions
result in any violation of the provisions of the memorandum and
articles of association of the Company or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its properties or assets; and
except for the registration of the Securities under the Securities
Act, the qualification of each Trust Agreement under the Trust
Indenture Act and such consents, approvals, authorizations,
registrations or qualifications as may be required under the Exchange
Act and applicable state securities laws in connection with the
purchase and distribution of the Securities by the Underwriter, no
consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement
or any Trust Agreement by the Company and the consummation of the
transactions contemplated hereby and thereby.
(h) There are no contracts or other documents which are required to be
described in the Prospectus or Prospectus Supplement or filed as
exhibits to the Registration Statement by the Securities Act or by the
Rules and Regulations and which have not been so described or filed.
<PAGE>
-5-
(i) There are no legal or governmental proceedings pending to which the
Company is a party or of which any property or assets of the Company
is the subject.
(j) The Company (i) is not in violation of its memorandum and articles of
association, (ii) is not in default in any material respect, and no
event has occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any material indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which
any of its property or assets is subject or (iii) is not in violation
in any respect of any law, ordinance, governmental rule, regulation or
court decree to which it or its property or assets may be subject.
(k) The Company possesses all material licenses, certificates,
authorizations and permits issued by, and has made all declarations
and filings with, the appropriate state, federal or foreign regulatory
agencies or bodies which are necessary or desirable for the ownership
of its properties or the conduct of its business as described in the
Prospectus, and the Company has not received notification of any
revocation or modification of any such license, authorization or
permit and has no reason to believe that any such license,
certificate, authorization or permit will not be renewed.
(l) The Company (i) does not have any material lending relationship with
any bank or lending affiliate of the Underwriter, and (ii) does not
intend to use any of the proceeds from the sale of the Securities
hereunder to repay any outstanding debt owed to any affiliate of the
Underwriter.
(m) The conditions for use of Form S-3, as set forth in the General
Instructions thereto, have been satisfied.
(n) There is no withholding or other tax, assessment or governmental
charge imposed by the Cayman Islands or any political subdivision
thereof or taxing authority therein on account of the Securities, this
Agreement, or any payments thereon or hereunder.
2. PURCHASE BY THE UNDERWRITER. On the Closing Date for each Series
of Securities, in reliance upon the representations, warranties and agreements
contained herein, and subject to the terms and conditions set forth herein, the
Company agrees to sell to the Underwriter, and the Underwriter agrees to
purchase from the Company, the Securities of such Series at the purchase price
therefor specified in the relevant Prospectus Supplement.
The Company shall not be obligated to deliver any Securities of any
Series except upon payment for all the Securities of such Series to be purchased
as provided in the relevant Prospectus Supplement.
3. DELIVERY OF AND PAYMENT FOR THE SECURITIES. Delivery of and
payment for the Securities of each Series shall be made at the office of
Milbank, Tweed, Hadley & McCloy, or at such other place as shall be agreed upon
by the Underwriter and the Company, at 10:00 A.M., New York City time, on the
closing date specified for such Series in the relevant Prospectus Supplement, or
at such other date or time, not later than seven full business days thereafter,
as shall be agreed upon by the Underwriter and the Company (such date and time
being referred to herein as the "CLOSING
<PAGE>
-6-
DATE" for such Series). On the Closing Date for each Series, the Company shall
deliver the duly executed and authenticated Securities of such Series in global
form to The Depository Trust Company ("DTC") or to its agent on its behalf
against payment to or upon the order of the Company of the purchase price
therefor by certified or official bank check or checks drawn in New York
Clearinghouse Funds or similar next-day funds. The Underwriter shall instruct
DTC as to the allocation of interests in the Securities of such Series among the
accounts of DTC participants. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligation of the Underwriter hereunder.
4. FURTHER AGREEMENTS OF THE COMPANY. The Company agrees with the
Underwriter:
(a) That, if the Effective Time is prior to the execution and delivery of
this Agreement, it will file the Prospectus with the Commission
pursuant to and in accordance with subparagraph (1) (or, if applicable
and if consented to by the Underwriter, subparagraph (4)) of Rule
424(b) within the time period prescribed by such Rule and will provide
evidence satisfactory to the Underwriter of such timely filing.
(b) To advise the Underwriter promptly of any proposal to amend or
supplement the registration statement as filed or the related
prospectus or the Registration Statement or the Prospectus or any
Prospectus Supplement and not to effect such amendment or supplement
without the consent of the Underwriter; to file promptly all reports
and any definitive proxy or information statements required to be
filed by the Company with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the
Prospectus for so long as the delivery of a prospectus is required in
connection with the offering or sale of any Securities; to advise the
Underwriter promptly of the receipt of any comments from the
Commission and of the effectiveness of the Registration Statement (in
each case if the Effective Time is subsequent to the execution and
delivery of this Agreement) and of any amendment or supplement to the
Registration Statement or the Prospectus or any Prospectus Supplement,
or of any request by the Commission therefor, and of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that
purpose; to advise the Underwriter promptly of any order preventing or
suspending the use of any prospectus relating to the Securities, of
the suspension of the qualification of the Securities for offering or
sale in any jurisdiction and of the initiation or threatening of any
proceeding for any such purpose; and to use best efforts to prevent
the issuance of any stop order or of any such order preventing or
suspending the use of any prospectus relating to the Securities or
suspending any such qualification and, if any such stop order or order
of suspension is issued, to obtain the lifting thereof at the earliest
possible time.
(c) To furnish promptly to the Underwriter and counsel for the Underwriter
a signed copy of the registration statement as originally filed with
the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith; and to deliver
promptly without charge to the Underwriter such number of the
following documents as the Underwriter may from time to time
reasonably request: (i) conformed copies of the registration
statement as originally filed with the Commission and each amendment
thereto (in each case excluding exhibits other than
<PAGE>
-7-
this Agreement, the Standard Terms for Trust Agreements and any
supplements thereto), (ii) each Preliminary Prospectus, the
Prospectus, each Preliminary Prospectus Supplement, each Prospectus
Supplement and any amended or supplemented Prospectus or Prospectus
Supplement, and (iii) any document incorporated by reference in the
Prospectus or any Prospectus Supplement (excluding exhibits thereto);
that the Company consents to the use of the Preliminary Prospectus,
the Prospectus, each Preliminary Prospectus Supplement and each
Prospectus Supplement and any amendment or supplement thereto by the
Underwriter and by all dealers to whom the Securities may be sold,
both in connection with the offering or sale of any Securities
contemplated herein and for such period of time thereafter as delivery
of a prospectus relating to the Securities is required under the
Securities Act; that the Company will provide or cause to be provided
to the Underwriter, a copy of the Report on Form SR filed by the
Company as required by Rule 463 under the Securities Act.
(d) If the delivery of a prospectus is required at any time in connection
with the sale of any Securities and if at such time any events shall
have occurred as a result of which the Prospectus or any Prospectus
Supplement as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus or
Prospectus Supplement is delivered, not misleading, or if for any
other reason it shall be necessary at such time to amend or supplement
the Prospectus or any Prospectus Supplement or to file under the
Exchange Act any document incorporated by reference in the Prospectus
or any Prospectus Supplement in order to comply with the Securities
Act or the Exchange Act, to notify the Underwriter immediately
thereof, and, subject to Section 4(b), to promptly prepare and file
with the Commission, at the Company's expense, an amended Prospectus
or Prospectus Supplement or a supplement to the Prospectus or
Prospectus Supplement which will correct such statement or omission or
effect such compliance, or to file such document for incorporation by
reference into the Prospectus or Prospectus Supplement.
(e) To file promptly with the Commission any amendment to the Registration
Statement, the Prospectus or any Prospectus Supplement that may, in
the judgment of the Company or the Underwriter, be required by the
Securities Act or requested by the Commission or advisable in
connection with the distribution of the Securities.
(f) Prior to filing with the Commission (i) any Preliminary Prospectus or
Preliminary Prospectus Supplement, (ii) any amendment to the
Registration Statement or any Prospectus Supplement, (iii) any
document incorporated by reference in the Prospectus or any Prospectus
Supplement or (iv) any Prospectus or Prospectus Supplement pursuant to
Rule 424 of the Rules and Regulations, to furnish a copy thereof to
the Underwriter and counsel for the Underwriter, and not to file any
such document to which the Underwriter shall reasonably object after
having been given reasonable notice of the proposed filing thereof.
(g) As soon as practicable to deliver to the Underwriter an earnings
statement of the Company (which need not be audited) complying with
Section 11(a) of the Securities Act and the Rules and Regulations
(including, at the option of the Company, Rule 158).
<PAGE>
-8-
(h) For so long as any Securities are outstanding, to furnish to the
Underwriter copies of all public reports and all reports and financial
statements furnished by the Company to the Commission pursuant to the
Exchange Act or any rule or regulation of the Commission thereunder.
(i) Promptly from time to time to take such action as the Underwriter may
reasonably request to qualify the Securities of any Series for
offering and sale under the securities laws of such political
subdivisions of the United States of America and its territories and
possessions as the Underwriter may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the
distribution of the Securities of such Series; provided that in
connection therewith the Company shall not be required to qualify as a
foreign corporation or to file a general consent to service of process
in any jurisdiction.
(j) The Company will apply the net proceeds from the sale of Securities of
each Series as set forth under "Use of Proceeds" in the Prospectus and
the relevant Prospectus Supplement.
(k) To apply for the listing of the Securities of each Series on the New
York Stock Exchange and to use all reasonable efforts to complete that
listing, subject only to official notice of issuance, prior to the
Closing Date for such Series.
5. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. The obligations of the
Underwriter hereunder are subject to the accuracy, when made and on the Closing
Date for each Series, of the representations and warranties of the Company
contained herein, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Prospectus and the Prospectus Supplement with respect to the
relevant Series shall have been timely filed with the Commission in
accordance with Section 4(a) of this Agreement. Prior to the Closing
Date for each Series, no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued
and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and any request of the Commission for
inclusion of additional information in the Registration Statement or
the Prospectus or the relevant Prospectus Supplement or otherwise
shall have been complied with to the reasonable satisfaction of the
Underwriter.
(b) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Securities,
the relevant Trust Agreement, the Registration Statement, the
Prospectus, and the relevant Prospectus Supplement and all other legal
matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in all material respects to
counsel for the Underwriter, and the Company shall have furnished to
such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.
<PAGE>
-9-
(c) Maples & Calder shall have furnished to the Underwriter their written
opinion, as special Cayman Islands counsel to the Company, addressed
to the Underwriter and dated the Closing Date for the relevant Series,
in form and substance reasonably satisfactory to the Underwriter, to
the effect that:
i. The Company has been duly organized and is validly existing as a
limited liability company under the laws of the Cayman Islands
and has all power and authority necessary to own or hold its
properties and to conduct the business in which it is engaged;
ii. The Company has full right, power and authority to execute and
deliver this Agreement and the relevant Trust Agreement and to
perform its obligations hereunder and thereunder; and all
corporate action required to be taken for the due and proper
authorization, execution, delivery and performance of this
Agreement and the relevant Trust Agreement and the consummation
of the transactions contemplated by this Agreement and the
relevant Trust Agreement have been duly and validly taken;
iii. This Agreement has been duly authorized, executed and delivered
by the Company;
iv. The relevant Trust Agreement has been duly authorized, executed
and delivered by the Company;
v. The execution, delivery and performance of this Agreement and the
relevant Trust Agreement by the Company and the consummation of
the transactions contemplated hereby and thereby will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the
Company is a party or by which the Company is bound or to which
any of the property or assets of the Company is subject, nor will
such actions result in any violation of the provisions of the
memorandum and articles of association of the Company or any
statute or any order, rule or regulation known to such counsel of
any court or governmental agency or body having jurisdiction over
the Company or any of its properties or assets; and no consent,
approval, authorization or order of, or filing or registration
with, any court or governmental agency or body in the Cayman
Islands is required for the execution, delivery and performance
of this Agreement and the relevant Trust Agreement by the Company
and the consummation of the transactions contemplated hereby and
thereby; and
vii. To the best of such counsel's knowledge, there are no legal or
governmental proceedings pending to which the Company is a party
or of which any property or assets of the Company is the subject,
and to the best of such counsel's knowledge no such proceedings
are threatened.
(d) The Underwriter shall have received from Milbank, Tweed, Hadley &
McCloy, counsel for the Underwriter, their written opinion, addressed
to the Underwriter and
<PAGE>
-10-
dated the Closing Date for the relevant Series, in form and substance
reasonably satisfactory to the Underwriter, to the effect that:
i. the Registration Statement was declared effective under the
Securities Act and the relevant Trust Agreement was qualified
under the Trust Indenture Act as of the date and time specified
in such opinion; the Prospectus and the relevant Prospectus
Supplement was filed with the Commission pursuant to the
subparagraph of Rule 424(b) of the Rules and Regulations
specified in such opinion on the date specified therein; and no
stop order suspending the effectiveness of the Registration
Statement has been issued;
ii. the Registration Statement and the Prospectus and the relevant
Prospectus Supplement and any further amendments or supplements
to the Registration Statement or the Prospectus or the relevant
Prospectus Supplement (other than any financial statements and
related schedules therein, as to which such counsel need express
no opinion) made by the Company prior to the Closing Date for the
relevant Series comply as to form in all material respects with
the requirements of the Securities Act and the Rules and
Regulations; and the documents incorporated by reference in the
Prospectus and the Relevant Prospectus Supplement (other than any
financial statements and related schedules therein, as to which
such counsel need express no opinion), when they were filed with
the Commission complied as to form in all material respects with
the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder;
iii. such counsel has no reason to believe that the Registration
Statement (or any post-effective amendment thereto), at the time
of its effective date, contained any untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, or that the Prospectus or the relevant Prospectus
Supplement, including any documents incorporated therein by
reference, contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
and
iv. the Underwriter is entitled to rely on any opinion letter
rendered by such counsel to the Company on the Closing Date as if
such opinion letter were addressed to the Underwriter.
(e) The Company shall have furnished to the Underwriter a certificate,
dated the Closing Date for the relevant Series, of two of its
directors stating that (A) such directors have carefully examined the
Registration Statement, the Prospectus and the Prospectus Supplement
relating to such Series, (B) in their opinion, as of the Effective
Time or (in the case of such Prospectus Supplement) the Closing Date
for such Series, the Registration Statement, the Prospectus and such
Prospectus Supplement, including the documents incorporated therein by
reference, did not include any untrue statement of a material fact and
did not omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and since the
Effective Time, no event has occurred which should have been set forth
in a supplement or amendment
<PAGE>
-11-
to the Registration Statement or the Prospectus or such Prospectus
Supplement and (C) to the best of his or her knowledge after
reasonable investigation, as of the Closing Date for such Series, the
representations and warranties of the Company in this Agreement are
true and correct, the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date, no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or, to the best of
his or her knowledge, are contemplated by the Commission.
(f) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the
Registration Statement (exclusive of any amendment thereof) and the
Prospectus (exclusive of any supplement thereto), there shall not have
occurred any of the following: (i) trading in securities generally on
the New York Stock Exchange, the American Stock Exchange or the over-
the-counter market shall have been suspended or limited, or minimum
prices shall have been established on either of such exchanges or such
market by the Commission, by such exchange or by any other regulatory
body or governmental authority having jurisdiction, or trading in
securities of the Company on any exchange or in the over-the-counter
market shall have been suspended or (ii) a general moratorium on
commercial banking activities shall have been declared by Federal or
New York State authorities or (iii) an outbreak or escalation of
hostilities or a declaration by the United States of a national
emergency or war or such a material adverse change in general
economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) as to make it, in the judgment of the Underwriter,
impracticable or inadvisable to proceed with the public offering or
the delivery of the Securities of the relevant Series on the terms and
in the manner contemplated in the Prospectus and the relevant
Prospectus Supplement.
(g) The New York Stock Exchange shall have approved the Securities of the
relevant Series for listing, subject only to official notice of
issuance.
(h) As of the Closing Date for the relevant Series, the Securities of such
Series will carry the rating specified in the relevant Prospectus
Supplement (but in any event not lower than (i) "BBB-" from Moody's
Investors Service, Inc. or (ii) any equivalent rating from another
nationally recognized statistical rating organization).
(i) On or before the Closing Date for a Series, the Underwriter and
counsel for the Underwriter shall have received such further
certificates, documents or other information as they may have
reasonably requested from the Company.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriter.
6. TERMINATION. The obligations of the Underwriter hereunder may be
terminated by the Underwriter, in its absolute discretion, by notice given to
and received by the Company prior to delivery of and payment for Securities if,
prior to that time, any of the events described in Section 5(f) shall have
occurred.
<PAGE>
-12-
7. [INTENTIONALLY OMITTED].
8. REIMBURSEMENT OF UNDERWRITER'S EXPENSES. If (a) notice shall have been
given pursuant to Section 6 preventing this Agreement from becoming effective,
(b) the Company shall fail to tender Securities for delivery to the Underwriter
for any reason not permitted under this Agreement or (c) the Underwriter shall
decline to purchase Securities for any reason permitted under this Agreement,
the Company shall reimburse the Underwriter for the fees and expenses of its
counsel and for such other out-of-pocket expenses as shall have been reasonably
incurred by the Underwriter in connection with this Agreement and the proposed
purchase of Securities, and upon demand the Company shall pay the full amount
thereof to the Underwriter.
9. INDEMNIFICATION. (a) The Company shall indemnify and hold harmless
the Underwriter and each person, if any, who controls the Underwriter within the
meaning of the Securities Act or the Exchange Act (collectively referred to for
the purposes of this Section 9 and Section 10 as "the Underwriter") against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which the Underwriter may become subject, under the Securities Act,
the Exchange Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, any
Preliminary Prospectus Supplement, the Registration Statement, the Prospectus or
any Prospectus Supplement or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
shall reimburse the Underwriter for any legal or other expenses reasonably
incurred by the Underwriter in connection with investigating or preparing to
defend or defending against or appearing as a third party witness in connection
with any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or action
arises out of or is based upon an untrue statement or alleged untrue statement
in or omission or alleged omission from any Preliminary Prospectus, any
Preliminary Prospectus Supplement, the Registration Statement, the Prospectus or
any Prospectus Supplement or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by the
Underwriter specifically for use therein; and provided, further, that the
Company will not be liable to the Underwriter or any person controlling the
Underwriter with respect to any such untrue statement or omission made in any
Preliminary Prospectus that is corrected in the Prospectus (or any amendment or
supplement thereto) if the person asserting any loss, claim, damage or liability
purchased Securities from the Underwriter but was not sent or given a copy of
the Prospectus (as amended or supplemented) by the Underwriter, other than the
documents incorporated by reference therein, at or prior to the written
confirmation of the sale of such Securities to such person in any case where
such delivery of the Prospectus (as amended or supplemented) is required by the
Securities Act and the untrue statement or alleged untrue statement of a
material fact, or the omission or alleged omission to state a material fact,
that is found to be or is alleged to be the basis of liability in such
Preliminary Prospectus was corrected in the Prospectus as amended or
supplemented and if the Underwriter would not have been liable had a copy of
such Prospectus been so sent or given by the Underwriter, unless such failure to
deliver the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 4(c).
(b) The Underwriter shall indemnify and hold harmless the Company, each of
its directors and each person, if any, who controls the Company within the
meaning of the Securities Act (collectively referred to for the purposes of this
Section 9 and Section 10 as "the Company"), against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which the
<PAGE>
-13-
Company may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of or is based upon (i)
any untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, any Preliminary Prospectus Supplement, the
Registration Statement, the Prospectus or any Prospectus Supplement or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, but in each case only to the extent that
the untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Company by the Underwriter specifically for use therein, and shall
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or preparing to defend or defending
against or appearing as third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section 9 of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party in writing of the
claim or the commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability which it
may have under this Section 9 unless and except to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses; and, provided, further,
that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 9. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party; provided, however, that if the defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be one or more legal defenses available
to it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party, the indemnifying party shall not have
the right to direct the defense of such action on behalf of such indemnified
party or parties and such indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 9 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
(it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, designated by the Underwriter in the
case of paragraph (a) of this Section 8, representing the indemnified parties
under such paragraph (a) who are parties to such action or actions) or (ii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 9(a) and 9(b), shall
use all reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim. No indemnifying party shall be liable for
any settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold
<PAGE>
-14-
harmless any indemnified party from and against any loss or liability by reason
of such settlement or judgment.
The obligations of the Company and the Underwriter in this Section 9 and in
Section 10 are in addition to any other liability which the Company or the
Underwriter, as the case may be, may otherwise have.
10. CONTRIBUTION. If the indemnification provided for in Section 9 is
unavailable or insufficient to hold harmless an indemnified party under Section
9(a) or (b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriter on the
other from the offering of the Securities or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and the
Underwriter on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriter on the other with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Securities purchased under this
Agreement (before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriter with respect
to the Securities purchased under this Agreement, in each case as set forth in
the table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriter on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriter agree that it
would not be just and equitable if contributions pursuant to this Section 10
were to be determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 10 shall be deemed to include, for purposes of
this Section 10, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 10, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Securities underwritten by it and distributed to the
public were offered to the public less the amount of any damages which the
Underwriter has otherwise paid or become liable to pay by reason of any untrue
or alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
11. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall inure
to the benefit of and be binding upon the Underwriter, the Company and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriter, the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 9 and 10
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
<PAGE>
-15-
12. EXPENSES. The Company agrees with the Underwriter to pay (a) all fees
and expenses of the Trustee; (b) all other costs; and expenses incident to the
performance of the obligations of the Company under this Agreement; and (c) any
meetings with prospective investors in the Securities (other than as shall have
been specifically approved by the Underwriter to be paid for by the
Underwriter).
13. SURVIVAL. The respective indemnities, rights of contribution,
representations, warranties and agreements of the Company and the Underwriter
contained in this Agreement, or made by them pursuant to this Agreement, shall
survive the delivery of and payment for the Securities of any Series and shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of any of them or
any person controlling any of them.
14. NOTICES, ETC. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriter, shall be delivered or sent by mail, telex or
facsimile transmission to Citicorp Securities, Inc., 399 Park Avenue,
New York, New York 10043, Attention: Mr. Philip Nisbet, with a copy to
Citibank, N.A., 399 Park Avenue, New York, New York 10043, Attention:
Donald A. Bendernagel, Esq.; and
(b) if to the Company, shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the
Registration Statement.
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.
15. DEFINITIONS OF CERTAIN TERMS. For purposes of this Agreement,
"BUSINESS DAY" means any day on which the New York Stock Exchange, Inc. is open
for trading.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS
CONFLICTS OF LAWS PRINCIPLES.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
18. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
19. WITHHOLDING TAXES. All amounts payable by the Company in respect of
this Agreement shall be paid in U.S. dollars without set-off or counterclaim and
free and clear of, and without deduction or withholding for or on account of,
any present or future tax, assessment or other governmental charge or any
interest or penalty thereon (collectively, "TAX") imposed, levied, collected,
assessed, or required to be deducted, withheld or paid by or for the account of
the Cayman Islands or any taxing authority or political subdivision thereof or
therein. If any such Tax is required by law to be withheld or deducted from any
such payment, the Company shall pay the full amount of such Tax and pay such
additional amounts as may be necessary to ensure that the net amount actually
received
<PAGE>
-16-
by the Underwriter in respect of such payment is equal to the amount the
Underwriter would have received had no such Tax been withheld or deducted from
such payment.
20. SERVICE OF PROCESS. The Company, for the benefit of the Underwriter
and the holders from time to time of the Securities, hereby irrevocably agrees
that service of process in the manner provided for notices to the Company under
Section 10.04 of the Standard Terms and Conditions for Trust Agreements shall be
deemed in every respect effective service of process upon the Company in any
suit, action or proceeding relating to this Agreement or the Securities.
Nothing herein contained shall, however, in any manner limit the rights of the
Underwriter or the holders of any Securities to serve process in any other
manner permitted by applicable law or to obtain jurisdiction over the Company or
to bring suits, actions or proceedings against the Company in such other
jurisdictions, and in such manner, as may be permitted by applicable law.
21. WAIVER OF IMMUNITY. The Company irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction or order for specific performance or
for recovery of property, (iv) attachment of the Company's assets (whether
before or after judgment) and (v) execution or enforcement of any judgment to
which the Company or its revenues or assets might otherwise be entitled in any
suit, action or proceeding in the courts of any jurisdiction and irrevocably
agrees, to the extent permitted by applicable law, that the Company will not
claim any such immunity in any suit, action or proceeding.
22. CONSENT TO JURISDICTION. The Company irrevocably and unconditionally
submits to the exclusive jurisdiction of any state or federal court sitting in
the City of New York, New York over any suit, action or proceeding arising out
of or relating to this Agreement or the Securities. The Company irrevocably and
unconditionally waives any objection to the laying of venue of any such suit,
action or proceeding brought in any such court and any claim that any such suit,
action or proceeding has been brought in an inconvenient forum. The Company
agrees that a final judgment in any such suit, action or proceeding brought in
any such court shall be conclusive and binding upon the Company and may be
enforced in any other courts to whose jurisdiction the Company is or may be
subject, by suit upon judgment.
23. NONPETITION COVENANT; LIMITED RECOURSE. Notwithstanding any prior
termination of all Trust Agreements with respect to all previously issued Series
of Securities, the Underwriter agrees that it shall not, until the date which is
one year and one day after such termination, acquiesce, petition or otherwise
invoke or cause the Company to invoke the process of any body, authority, agency
or other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government for the purpose of
commencing or sustaining a case by or against the Company under a bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Company or all
or any part of the property or assets of the Company or ordering the winding up
or liquidation of the affairs of the Company. In addition, the Underwriter
agrees that each conveyance of any Deposited Assets (as defined in the
Prospectus) by the Company to the Trustee be treated as a absolute sale and
transfer of the Deposited Assets by the Company and that, accordingly, the
Underwriter will not have any recourse to any Deposited Assets unless otherwise
expressly provided with respect to a Series of Securities in the relevant
Prospectus Supplement.
<PAGE>
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If the foregoing is in accordance with your understanding of the agreement
between the Company and the Underwriter, kindly indicate your acceptance in the
space provided for that purpose below.
Very truly yours,
ELMWOOD FUNDING LIMITED
By ______________________
Name:
Title:
Accepted:
CITICORP SECURITIES, INC.
By _______________________
Authorized Signatory
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Exhibit 4.1
STANDARD TERMS FOR TRUST AGREEMENTS
between
ELMWOOD FUNDING LIMITED,
as Depositor
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
[NAME OF] CERTIFICATES
Dated as of February [__], 1997
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND ASSUMPTIONS
1.01. Definitions................................................... 1
1.02. Rules of Construction......................................... 17
1.03. Compliance Certificates and Opinions; Record Date............. 17
ARTICLE II
DECLARATION OF TRUSTS; ISSUANCE OF CERTIFICATES;
PURPOSE AND CLASSIFICATION OF TRUSTS
2.01. Creation and Declaration of Trusts; Assignment of Underlying
Securities..................................................... 18
2.02. Acceptance by Trustee......................................... 20
2.03. Representations and Warranties of the Depositor............... 20
2.04. Breach of Representation, Warranty or Covenant................ 21
2.05. Agreement to Authenticate and Deliver Certificates............ 21
ARTICLE III
ADMINISTRATION OF EACH TRUST
3.01. Administration of each Trust.................................. 22
3.02. Collection of Certain Underlying Security Payments............ 22
3.03. Certificate Account........................................... 22
3.04. Liquidation of the Underlying Securities...................... 23
3.05. Investment of Funds in the Accounts........................... 24
3.06. Maintenance of Credit Support................................. 24
3.07. Realization Upon Defaulted Underlying Securities.............. 25
3.08. Retained Interest............................................. 26
3.09. Access to Certain Documentation............................... 26
3.10. Reports by the Depositor...................................... 26
3.11. Charges and Expenses.......................................... 27
ARTICLE IV
DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS
4.01. Distributions................................................. 28
4.02. Distributions on Certificates................................. 28
4.03. Reports to Certificateholders................................. 29
4.04. Advances...................................................... 30
4.05. Allocation of Realized Losses and Trust Expenses.............. 31
4.06. Compliance with Withholding Requirements...................... 31
4.07. Optional Exchange............................................. 32
ARTICLE V
THE CERTIFICATES
5.01. The Certificates.............................................. 34
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5.02. Execution, Authentication and Delivery........................ 34
5.03. Temporary Certificates........................................ 35
5.04. Registration; Registration of Transfer and Exchange........... 36
5.05. Mutilated, Destroyed, Lost and Stolen Certificates............ 39
5.06. Persons Deemed Owners......................................... 39
5.07. Cancellation.................................................. 40
5.08. Global Securities............................................. 40
5.09. Notices to Depository......................................... 41
5.10. Definitive Certificates....................................... 41
5.11. Conditions of Authentication and Delivery of New Series....... 42
5.12. Appointment of Paying Agent................................... 43
5.13. Authenticating Agent.......................................... 44
5.14. Voting Rights with Respect to Underlying Securities........... 45
5.15. Actions by Certificateholders................................. 46
5.16. Events of Default............................................. 47
5.17. Judicial Proceedings Instituted by Trustee; Trustee May Bring
Suit........................................................... 47
5.18. Control by Certificateholders................................. 47
5.19. Waiver of Past Defaults....................................... 47
5.20. Right of Certificateholders to Receive Payments Not to Be
Impaired....................................................... 48
5.21. Remedies Cumulative........................................... 48
ARTICLE VI
THE DEPOSITOR
6.01. Liability of the Depositor.................................... 48
6.02. Limitation on Liability of the Depositor...................... 49
6.03. Depositor May Purchase Certificates........................... 50
6.04. Merger or Consolidation of the Depositor...................... 50
6.05. No Liability of the Depositor with Respect to the Underlying
Securities; Certificateholders to Proceed Directly Against the
Underlying Securities Issuer(s)................................ 50
ARTICLE VII
CONCERNING THE TRUSTEE
7.01. Duties of Trustee............................................. 51
7.02. Between Trustee and Sub-Administrative Agents................. 54
7.03. Certain Matters Affecting the Trustee......................... 55
7.04. Trustee Not Liable for Recitals in Certificates or Underlying
Securities..................................................... 56
7.05. Trustee May Own Certificates.................................. 56
7.06. Trustee's Fees and Expenses................................... 57
7.07. Eligibility Requirements for Trustee.......................... 58
7.08. Resignation or Removal of the Trustee; Appointment of Successor
Trustee........................................................ 58
7.09. Appointment of Office or Agency............................... 60
7.10. Representations and Warranties of Trustee..................... 60
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7.11. Indemnification of Trustee by the Depositor; Contribution..... 61
7.12. No Liability of the Trustee with Respect to the Underlying
Securities; Certificateholders to Proceed Directly Against the
Underlying Securities Issuer(s)................................ 62
7.13. The Depositor To Furnish Trustee with Names and Addresses of
Certificateholders............................................. 63
7.14. Preservation of Information................................... 63
7.15. Reports by Trustee............................................ 63
7.16. Trustee's Application for Instructions from the Depositor..... 63
ARTICLE VIII
MARKET AGENT
8.01. Market Agent.................................................. 64
ARTICLE IX
TERMINATION
9.01. Termination upon Liquidation of All Underlying Securities..... 64
ARTICLE X
MISCELLANEOUS PROVISIONS
10.01. Amendment.................................................... 65
10.02. Limitation on Rights of Certificateholders................... 66
10.03. Governing Law................................................ 67
10.04. Notices...................................................... 68
10.05. Notice to Rating Agencies.................................... 68
10.06. Severability of Provisions................................... 69
10.07. Grant of Security Interest................................... 69
10.08. Nonpetition Covenant......................................... 70
10.09. No Recourse.................................................. 71
10.10. Article and Section References............................... 71
10.11. Counterparts................................................. 71
10.12. Trust Indenture Act Controls................................. 71
<PAGE>
STANDARD TERMS FOR TRUST AGREEMENTS dated as of February [__],
1997, among ELMWOOD FUNDING LIMITED, a Cayman Islands company, as Depositor,
and UNITED STATES TRUST COMPANY OF NEW YORK, a New York corporation, as
Trustee.
PRELIMINARY STATEMENT
The Depositor and the Trustee have duly authorized the execution
and delivery of these Standard Terms for Trust Agreements (the "STANDARD
TERMS") to provide for one or more Series (and one or more Classes within
each such Series) of Certificates, issuable from time to time as provided in
these Standard Terms.
Each such Series (inclusive of any Classes specified within such
Series) of Certificates will be issued only under a separate Series Supplement
to these Standard Terms, duly executed and delivered by the Depositor and the
Trustee. With respect to each Series of Certificates, these Standard Terms and
all amendments hereof and, unless the context otherwise requires, the related
Series Supplement and all amendments thereto shall be known as the "TRUST
AGREEMENT".
All representations, covenants and agreements made herein by each
of the Depositor and the Trustee are for the benefit and security of the
Certificateholders and, to the extent provided in the applicable Series
Supplement, for the benefit and security of any Credit Support Provider or any
other party as specified therein.
The Depositor is entering into these Standard Terms, and the
Trustee is accepting the trust created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.
ARTICLE I
DEFINITIONS AND ASSUMPTIONS
Section 1.01. Definitions. Except as otherwise specified
-----------
herein or in the applicable Series Supplement or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Trust Agreement.
"ACCOUNT": As defined in Section 3.05.
"ACCOUNTING DATE": With respect to any Series, if applicable,
as defined in the related Series Supplement.
"ADVANCE": As defined in Section 4.04.
"AFFILIATE": With respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified
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Person. For the purposes of this definition, "CONTROL", when used with
respect to any specified Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "CONTROLLING"
and "CONTROLLED" have meanings correlative to the foregoing.
"ALLOWABLE EXPENSE AMOUNT": With respect to any Series, as
defined in the related Series Supplement.
"AUTHENTICATING AGENT": As defined in Section 5.13.
"AVAILABLE FUNDS": Unless otherwise specified in the
applicable Series Supplement, for any Distribution Date in respect of a given
Series or Class, the sum of (i) all amounts actually received on or with
respect to the Underlying Securities (including Liquidation Proceeds and
investment income on amounts in the Accounts) with respect to such Series
during the related Collection Period, (ii) all amounts received pursuant to any
Credit Support Instruments with respect to such Series for such Distribution
Date and (iii) all other amounts, if any, specified by the applicable Series
Supplement.
"BASIC DOCUMENTS": With respect to any Series, if applicable,
as defined in the related Series Supplement.
"BENEFICIAL OWNER": With respect to Certificates held through
a Depository, the beneficial owner of a Certificate. For purposes only of
Section 5.15, the Trustee shall be obligated to treat a Person who claims to be
a beneficial owner of a Certificate as a "BENEFICIAL OWNER" within the
meaning of the Series Supplement only if such Person has first delivered to the
Trustee, (i) a certificate or other writing executed by such Person stating the
full name and address of such Person, the principal distribution amount of the
Certificate with respect to which such Person claims to be the Beneficial
Owner, and the participant in the Depository ("SUCH PERSON'S PARTICIPANT")
through which such Person holds its beneficial ownership interest in the
Certificates and (ii) a certificate or other writing executed by such Person's
Participant confirming that such Person's Participant holds on its own books
and records Certificates for the account of such Beneficial Owner and
identifying the principal distribution amount held for such Beneficial Owner.
"BUSINESS DAY": Any day that is not a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies in The
City of New York are authorized or obligated by law, regulation or executive
order to close and that is also a Business Day specified with respect to the
Underlying Securities.
"CALL PREMIUM PERCENTAGE": With respect to any Series (or
Class with such Series), if applicable, as defined in the related Series
Supplement.
"CERTIFICATE ACCOUNT": As defined in Section 3.03.
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"CERTIFICATE OWNERS": As defined in Section 5.08.
"CERTIFICATE PRINCIPAL BALANCE": With respect to an
Outstanding Certificate, as determined at any time, the maximum amount that the
Holder thereof is entitled to receive as distributions allocable to principal
payments on the Underlying Securities. The Certificate Principal Balance, if
any, of any Class within a given Series (other than those Classes, if any,
specified in the related Series Supplement), as of any date of determination,
shall be equal to the aggregate initial Certificate Principal Balance thereof
less the sum of (i) all amounts allocable to prior distributions made to such
Class in respect to principal of the Underlying Securities, (ii) any reductions
attributable to Certificates surrendered in exchange for Underlying Securities,
as and to the extent provided in the applicable Series Supplement and (iii) any
reductions in the Certificate Principal Balance thereof deemed to have occurred
in connection with allocations of (A) Realized Losses in respect of principal
of the Underlying Securities and (B) expenses of the Trust if any only to the
extent specified in the applicable Series Supplement, each as allocated to such
Class pursuant to the applicable Series Supplement.
"CERTIFICATEHOLDER": Any Holder of a Certificate.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR": As
respectively defined in Section 5.04.
"CERTIFICATES": Any trust certificates authorized by, executed
pursuant to and authenticated and delivered under, this Trust Agreement.
"CLASS": With respect to any Series, any one of the classes of
Certificates of such Series, each consisting of
Certificates having identical terms.
"CLEARING AGENCY": An organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"CLOSING DATE": With respect to any Series, the day on which
Certificates of such Series are first executed,
authenticated and delivered.
"CODE": The Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
"COLLECTION PERIOD": With respect to any Distribution Date for
a Series (or Class within such Series), the period specified in the related
Series Supplement.
"COMMISSION": The Securities and Exchange Commission, as from
time to time constituted, created under the Exchange Act or, if at any time
after the execution and delivery of this Trust Agreement such Commission is not
existing and performing the duties now assigned to it, then the body then
performing such duties.
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"CONCENTRATED UNDERLYING SECURITIES": Any Underlying
Securities that constitute 10% or more of the total Underlying Securities with
respect to a Series of Certificates.
"CORPORATE TRUST OFFICE": The principal corporate trust office
of the Trustee located at the address set forth in the related Series
Supplement or such other addresses as the Trustee may designate from time to
time by notice to the Holders and the Depositor, or the principal corporate
trust office of any successor Trustee (or such other addresses as a successor
Trustee may designate from time to time by notice to the Holders and the
Depositor).
"CREDIT SUPPORT": With respect to any Series (or any Class
within such Series), a letter of credit, surety bond, swap agreement, put or
call option or other asset intended to support or ensure the timely or ultimate
distributions of amounts due in respect of all or certain of the Underlying
Securities for such Series or Class, which in each case is specified as such in
the related Series Supplement.
"CREDIT SUPPORT INSTRUMENT": The instrument or document
pursuant to which the Credit Support for a given Series (or any Class within
such Series) is provided, as specified in the applicable Series Supplement.
"CREDIT SUPPORT PROVIDER": With respect to any Series (or any
Class with such Series), the Person, if any, that will provide any Credit
Support with respect to all or a portion of the Underlying Securities for such
Series or Class as specified in the applicable Series Supplement.
"CUT-OFF DATE": With respect to any Series, the date specified
as such in the related Series Supplement. For purposes of this Trust
Agreement, any Underlying Security acquired by the Depositor after the
applicable Cut-off Date but prior to the applicable Closing Date and included
in the related Trust as of such Closing Date shall be deemed to have been
Outstanding as of such Cut-off Date and references to the principal balance of
such Underlying Security as of such Cut-off Date shall be deemed to be to the
principal balance of such Underlying Security as of the date on which it was
acquired by the Depositor.
"DEFINITIVE CERTIFICATES": As defined in Section 5.08.
"DELIVERY OFFICE": Unless otherwise specified in the
applicable Series Supplement, the office of the Trustee located at 111
Broadway, Lower Level, New York, New York 10006 or such other addresses as the
Trustee may designate from time to time by notice to the Holders and the
Depositor, or the office of any successor Trustee at which certificated
securities are delivered for registration of transfer, cancellation or exchange
(or such other addresses as a successor Trustee may designate from time to time
by notice to the Holders and the Depositor).
"DEPOSITOR": Elmwood Funding Limited, a Cayman Islands
company, and, if a successor Person shall have become the Depositor pursuant to
any applicable provisions of this Trust
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Agreement, "DEPOSITOR" shall mean such successor Person. With respect to
any provisions of this Trust Agreement that relate to the provisions of the
Trust Indenture Act, "DEPOSITOR" shall include any obligor on the
Certificates as the term obligor is defined in the Trust Indenture Act.
"DEPOSITOR ORDER" or "DEPOSITOR REQUEST": A written order
or request, respectively, signed in the name of the
Depositor by any of its President or Vice Presidents.
"DEPOSITORY": With respect to the Certificates of any Series
(or Class within such Series) issuable in whole or in part in the form of one
or more Global Securities, the Person designated as Depository by the Depositor
pursuant to Section 5.01 until a successor Depository shall have become such
pursuant to the applicable provisions of this Trust Agreement, and thereafter
"DEPOSITORY" shall mean or include each Person who is then a Depository
hereunder, and if at any time there is more than one such Person,
"DEPOSITORY" as used with respect to the Certificates of any such Series or
Class shall mean the Depository with respect to the Certificates of that Series
or Class.
"DEPOSITORY AGREEMENT": If applicable, the agreement pursuant
to which the Depository will agree to act as Depository with respect to any
Series (or Class within such Series) of Certificates in accordance with Section
5.08.
"DISCOUNT CERTIFICATE": Any Certificate that is issued with
"original issue discount" within the meaning of Section 1273(a) of the Code and
any other Certificate designated by the Depositor as issued with original issue
discount for United States Federal income tax purposes.
"DISTRIBUTION DATE": With respect to any Series (or Class
within such Series) of Certificates, each date specified as a "Distribution
Date" for such Series (or Class) in the related Series Supplement.
"DOLLAR" or "$" or "USD": Such currency of the United
States as at the time of payment is legal tender for the payment of public and
private debts.
"ELIGIBLE ACCOUNT": Either (i) an account or accounts
maintained with a Federal or State chartered depository institution or trust
company the long term unsecured obligations of which are rated by the Rating
Agency the higher of (x) at least the then current long-term rating of the
Certificates or (y) in one of its two highest long-term rating categories
(unless otherwise specified in the Series Supplement) at the time any amounts
are held in deposit therein or (ii) a trust account(s) maintained as a
segregated account(s) and held by a Federal or State chartered depository
institution or trust company in trust for the benefit of the
Certificateholders; provided, however, that such depository institution or
trust company has a long-term rating in one of the four highest categories by
the Rating Agency.
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"ELIGIBLE EXPENSE": With respect to any Series, as specified
in the related Series Supplement.
"ELIGIBLE INVESTMENTS": With respect to any Series, unless
otherwise specified in the related Series Supplement, any one or more of the
following obligations or securities; provided, however, that the total stated
return specified by the terms of each such obligation or security is at least
equal to the purchase price thereof; and provided, further, that no such
instrument may carry the symbol "r" in its rating:
(i) direct obligations of, and obligations fully guaranteed by,
the United States, the Federal Home Loan Mortgage Corporation, the
Federal National Mortgage Association, the Federal Farm Credit System or
any agency or instrumentality of the United States the obligations of
which are backed by the full faith and credit of the United States of
America; provided, however, that obligations of, or guaranteed by, the
Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association or the Federal Farm Credit System shall be Eligible
Investments only if, at the time of investment, such investment has the
rating specified in such Series Supplement for Eligible Investments;
(ii) demand and time deposits in, certificates of deposit of, or
banker's acceptances issued by any depository institution or trust
company (including the Trustee or any agent of the Trustee acting in
their respective commercial capacities) incorporated under the laws of
the United States or any State and subject to supervision and examination
by Federal and/or State banking authorities so long as the commercial
paper and/or the short-term debt obligations of such depository
institution or trust company (or, in the case of a depository institution
which is the principal subsidiary of a holding company, the commercial
paper or other short-term debt obligations of such holding company) at
the time of such investment or contractual commitment providing for such
investment have the rating specified in such Series Supplement for
Eligible Investments; provided, however, that such rating shall be no
lower than the rating on the Underlying Securities at the time of
purchase of the investments;
(iii) repurchase agreements with respect to (a) any security
described in clause (i) above or (b) any other security issued or
guaranteed by an agency or instrumentality of the United States, with an
entity having the credit rating specified in such Series Supplement for
Eligible Investments;
(iv) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States or any
State that have the rating specified in such Series Supplement for
Eligible Investments at the time of such investment or contractual
commitment providing for such investment; provided, however, that such
rating shall be no lower than the rating on the Underlying Securities;
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and provided, further, that securities issued by any particular
corporation will not be Eligible Investments to the extent that
investment therein will cause the then outstanding principal amount of
securities issued by such corporation and held as part of the Trust for
such Series to exceed 10% of the aggregate outstanding principal balances
and amounts of all the Underlying Securities and Eligible Investments
held as part of the Trust for such Series;
(v) commercial paper having at the time of such investment the
rating specified in the Series Supplement for Eligible Investments; and
(vi) a Guaranteed Investment Contract if and only if specified in
the related Series Supplement, provided that the Rating Agency Condition
is met.
"EVENT OF DEFAULT": With respect to any Series (or Class
within such Series) of Certificates, as specified in the related Series
Supplement.
"EXCHANGE ACT": The Securities Exchange Act of 1934, as
amended.
"EXECUTIVE OFFICER": With respect to any Series, a member of
the board of directors of any specified Person or any president or vice
president of such specified Person, except as otherwise provided in the related
Series Supplement.
"EXTRAORDINARY TRUST EXPENSE": Unless otherwise specified in
the related Series Supplement, any and all costs, expenses or liabilities
arising out of the establishment, existence or administration of the Trust,
other than (i) Ordinary Expenses, and (ii) costs and expenses payable by a
particular Certificateholder, the Trustee or the Depositor pursuant to this
Trust Agreement.
"FINAL SCHEDULED DISTRIBUTION DATE": With respect to any
Certificate, the date on which all the unpaid principal of (and premium, if
any, on) and interest on such Certificate is scheduled, without giving effect
to any prepayment, exchange or early termination, to become due and payable as
provided therein and in the applicable Series Supplement.
"FIXED PASS-THROUGH RATE": With respect to any Fixed Rate
Certificate, as defined in the related Series Supplement.
"FIXED RATE CERTIFICATE": A Certificate that provides for a
payment of interest at a Fixed Pass-Through Rate.
"FLOATING PASS-THROUGH RATE": With respect to any Floating
Rate Certificate, as defined in the related Series Supplement.
"FLOATING RATE CERTIFICATE": A Certificate that provides for
the payment of interest at a Floating Pass-Through Rate determined periodically
by reference to a formula specified pursuant to Section 5.01 and the related
Series Supplement.
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"GLOBAL SECURITY": A Certificate evidencing all or part of a
Series (or Class within such Series) of Certificates, issued to the Depository
for such Series or Class in accordance with Section 5.08 and bearing the legend
prescribed therein.
"GRANT": To sell, convey, assign, transfer, create, grant a
lien upon and a security interest in and right of set-off against, deposit, set
over and confirm to the Trustee pursuant to these Standard Terms and a related
Series Supplement; and the terms "GRANTED" and "GRANTING" have the
meanings correlative to the foregoing. A Grant of any Underlying Securities or
of any other instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal, premium, if any, and interest payments in respect of such Underlying
Securities and all other moneys payable thereunder, to give and receive notices
and other communications, to make waivers or other agreements, to exercise all
rights and options, to bring Proceedings in the name of the Granting party or
otherwise, and generally to do and receive anything that the Granting party is
or may be entitled to do or receive thereunder or with respect thereto.
"GUARANTEED INVESTMENT CONTRACT": With respect to any Series
(or Class within such Series), a guaranteed investment contract or surety bond
provided for in the related Series Supplement, Granted as part of the Trust or
to the Trustee for the benefit of the Certificateholders for such Series,
providing for the investment of funds in a related Account or related Accounts
and insuring a minimum or a fixed rate of return on the investment of such
funds, which contract or surety bond shall be an obligation of an insurance
company or other entity whose rating is no lower than the rating on the
Underlying Securities and shall satisfy any other requirements specified in
such Series Supplement.
"HOLDER": The Person in whose name a Certificate is registered
in the Certificate Register on the applicable Record Date.
"INDEPENDENT": When used with respect to any specified Person
means that the Person (1) is in fact independent of the Depositor and of any
Affiliate, (2) does not have any direct or indirect material financial interest
in the Depositor or in any Affiliate and (3) is not connected with the
Depositor as an officer, employee, promoter, underwriter, trustee, partner,
director or person performing similar functions.
"INITIAL ACCRUED INTEREST": With respect to any Series, shall
mean, with respect to each Underlying Security, the amount of interest which
accrued thereon from the Underlying Security Interest Payment Date of such
Underlying Security next preceding the deposit of such Underlying Security
hereunder (or, in the event that such Underlying Security Interest Payment Date
is the first Underlying Security Interest Payment Date to occur after the
original issuance of such Underlying Security, from the dated date thereof) to,
but excluding, the Closing Date.
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"LETTER OF CREDIT": With respect to any Series or Class within
such Series, the letter of credit, if any, providing for the payment of all or
a portion of amounts due in respect of such Series or Class, issued to the
Trustee for the benefit of the Holders of such Series or Class, issued by the
related Credit Support Provider, all as specified in the related Series
Supplement.
"LIMITED GUARANTOR": With respect to the Underlying Securities
relating to any series (or Class within such Series), a Person specified in the
related Series Supplement as providing a guarantee or insurance policy or other
credit enhancement supporting the distributions in respect of such Series (or
Class) as and to the extent specified in such Series Supplement.
"LIMITED GUARANTY": With respect to any Series or Class within
such Series, any guarantee of or insurance policy or other comparable form of
credit enhancement with respect to amounts required to be distributed in
respect of such Series or Class or payments under all or certain of the
Underlying Securities relating to such Series or Class, executed and delivered
by a limited Guarantor in favor of the Trustee, for the benefit of the
Certificateholders, as specified in the related Series Supplement.
"LIQUIDATION PROCEEDS": The amounts received by the Trustee in
connection with (i) the liquidation of a defaulted Underlying Security or
collateral, if any, related thereto or (ii) the repurchase, substitution or
sale of a Underlying Security.
"MARKET AGENT": The market agent or market agents appointed
pursuant to Section 8.01, and its or their successors or assigns.
"MARKET AGENT AGREEMENT": With respect to any Series, the
Market Agent Agreement, dated as of the Closing Date, between the Trustee and
the Market Agent, the form of which will be attached to the Series Supplement,
and any similar agreement with a successor Market Agent, in each case as from
time to time amended or supplemented.
"MINIMUM WIRE DENOMINATION": With respect to any Series, the
amount specified as the "Minimum Wire Denomination" in the related Series
Supplement.
"MOODY'S": Moody's Investors Service Inc. and any successors
thereto.
"NOTIONAL AMOUNT": With respect to any Class of Certificates,
if applicable, the initial notional amount specified in the related Series
Supplement on which distributions of interest may be determined at the
applicable Pass-Through Rate, as the same may be adjusted as specified in such
Series Supplement.
"OFFICER'S CERTIFICATE": A certificate signed by any (or, if
specified in these Standard Terms or any Series
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Supplement, more than one) Executive Officer of the Depositor, and delivered to
the Trustee.
"OPINION OF COUNSEL": A written opinion of counsel, who may,
except as otherwise expressly provided in this Trust Agreement, be counsel for
the Depositor acceptable to the Trustee, except that any opinion of counsel
relating to the qualification of any account required to be maintained pursuant
to this Trust Agreement as an Eligible Account must be an opinion of counsel
who is in fact Independent of the Depositor.
"OPTIONAL EXCHANGE DATE": With respect to any Series (or Class
with such Series), as defined, if applicable, in the related Series Supplement.
"ORDINARY EXPENSES": Unless otherwise provided in a Series
Supplement, the Trustee's customary fee for its services as Trustee, including
but not limited to (i) the costs and expenses of preparing, sending and
receiving all reports, statements, notices, returns, filings, solicitation of
consent or instructions, or other communications required by this Trust
Agreement, (ii) the costs and expenses of holding and making ordinary
collection or payments on the assets of the Trust and of determining and making
distributions, (iii) the costs and expenses of the Trust's or Trustee's
counsel, accountants and other experts for ordinary or routine consultation or
advice in connection with the establishment, administration and termination of
the Trust, and (iv) any other costs and expenses that are, or reasonably should
have been, expected to be incurred in the ordinary course of administration of
the Trust.
"OUTSTANDING": With respect to Certificates of a specified
Series (or Class within such Series), as of any date of determination, all such
Certificates theretofore executed, authenticated and delivered under these
Standard Terms and the related Series Supplement except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Certificate Registrar for cancellation; and
(ii) Certificates in exchange for or in lieu of which other
Certificates have been executed, authenticated and delivered pursuant to
this Trust Agreement, unless proof satisfactory to the Trustee is
presented that any such Certificates are held by a bona fide purchaser in
whose hands such Certificates are valid obligations of the Trust;
provided, however, that in determining whether the Holders of the required
percentage of the aggregate Voting Rights of the Certificates have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Certificates beneficially owned by the Depositor, the Trustee, or any Affiliate
thereof shall be disregarded and deemed not to be Outstanding, and the Voting
Rights to which its Holder would otherwise be entitled shall not be taken into
account in determining whether the requisite percentage of aggregate Voting
Rights necessary to effect any such consent or take any such
<PAGE>
- 11 -
action has been obtained except that, in determining whether the Trustee shall
be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Certificates with respect to which
the Depositor has provided the Trustee an Officer's Certificate stating that
such Certificates so owned shall be so disregarded. Certificates so owned that
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so to act
with respect to such Certificates and that the pledgee is not, to the knowledge
of the Trustee, the Depositor, or any Affiliate of any thereof. The principal
amount or notional amount, as applicable, of a Discount Certificate that shall
be deemed to be Outstanding for the determination referred to in the foregoing
proviso shall be the Certificate Principal Balance or Certificate Notional
Amount, as applicable, with respect thereto as of the date of such
determination.
"PARTICIPANT": A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
"PASS-THROUGH RATE": With respect to any Series (or Class
within such Series) of Certificates (except certain Discount Certificates and
Certificates entitled to nominal or no interest distributions) the annual rate
at which interest accrues on the Certificates of such Series (or Class), which
may be a fixed rate or a floating rate of interest, determined upon the basis
and in the manner specified in the related Series Supplement.
"PAYING AGENT": As defined in Section 5.12.
"PERCENTAGE INTEREST": With respect to a Certificate of any
Series or Class within a Series, the portion of such Series or Class evidenced
by such Certificate, expressed as a percentage, equal to the product of (x) a
fraction, the numerator of which is the initial Certificate Principal Balance
or Notional Amount, as applicable, represented by such Certificate and the
denominator of which is the aggregate initial Certificate Principal Balance or
Notional Amount, as applicable, of all the Certificates of such Series or Class
and (y) 100.
"PERSON": Any individual, limited liability company,
corporation, partnership, joint venture, association, joint stock company,
trust (including any beneficiary thereof), unincorporated organization or
government or any agency or political subdivision thereof.
"PREDECESSOR CERTIFICATE": With respect to any particular
Certificate, every previous Certificate evidencing all or a portion of the same
interest as that evidenced by such particular Certificate; and for the purpose
of this definition, any Certificate executed, authenticated and delivered under
Section 5.05 in lieu of a lost, destroyed or stolen Certificate shall be deemed
to evidence the same interest as the lost, destroyed or stolen Certificate.
<PAGE>
- 12 -
"PREPAID ORDINARY EXPENSES": Unless otherwise specified in the
Series Supplement, the amount (if any) paid by the Depositor to the Trustee on
or before the Closing Date to cover Ordinary Expenses, as specified in the
related Series Supplement.
"PROCEEDING": Any suit in equity, action at law or other
judicial or administrative proceeding.
"RATING AGENCY": With respect to any Series (or Class within
such Series), each nationally recognized statistical rating organization
specified in the related Series Supplement that initially rates the
Certificates of such Series (or Class).
"RATING AGENCY CONDITION": With respect to any action or
occurrence, unless otherwise specified in the applicable Series Supplement,
that each Rating Agency shall have been given 10 days (or such shorter period
acceptable to each Rating Agency) prior notice thereof and that each Rating
Agency shall have notified the Depositor and the Trustee in writing that such
action or occurrence will not result in a reduction or withdrawal of the then
current rating of any Certificate of the applicable Series.
"REALIZED LOSSES": With respect to any defaulted and
liquidated Underlying Security, the excess, if any, of (x) the principal amount
of such Underlying Security plus accrued and unpaid interest thereon, plus
expenses incurred by the Trustee in connection with the practices and
procedures referred to in Section 3.07(b) to the extent reimbursable under
these Standard Terms and the related Series Supplement, over (y) Liquidation
Proceeds with respect thereto.
"RECORD DATE": With respect to any Distribution Date for any
Series (or Class within such Series) of Certificates, the date specified in the
related Series Supplement.
"REQUIRED INTEREST": Unless otherwise specified in the related
Series Supplement, with respect to the Outstanding Certificates of any Series
or any Class thereof, the accrued and undistributed interest on the Certificate
Principal Balance or Notional Amount of such Outstanding Certificates, computed
at the applicable Pass-Through Rate.
"REQUIRED PERCENTAGE-AMENDMENT": Unless otherwise specified in
the related Series Supplement, if a Rating Agency Condition is specified in the
related Series Supplement and such Rating Agency Condition is met, or, if a
Rating Agency Condition is not so specified in the related Series Supplement,
66-2/3% of the aggregate Voting Rights of Certificates of such Series, and 100%
otherwise.
"REQUIRED PERCENTAGE-DEFINITIVE CERTIFICATES": Unless
otherwise specified in the related Series Supplement, 66-2/3% of the aggregate
Voting Rights of Certificates of such Series.
<PAGE>
- 13 -
"REQUIRED PERCENTAGE-DIRECTION OF TRUSTEE": Unless otherwise
specified in the related Series Supplement, 66-2/3% of the aggregate Voting
Rights of Certificates of such Series.
"REQUIRED PERCENTAGES-REMEDIES": Unless otherwise specified in
the related Series Supplement, 66-2/3% of the aggregate Voting Rights of
Certificates of such Series.
"REQUIRED PERCENTAGE-REMOVAL OF TRUSTEE": Unless otherwise
specified in the related Series Supplement, more than 50% of the aggregate
Voting Rights of Certificates of such Series.
"REQUIRED PERCENTAGE-WAIVER": Unless otherwise specified in
the related Series Supplement, 66-2/3% of the aggregate Voting Rights of
Certificates of such Series.
"REQUIRED PREMIUM": If applicable, unless otherwise specified
in the related Series Supplement, with respect to the Certificates of any
Series or any Class thereof, an amount equal to the product, as determined on
any Distribution Date with respect to such Series and Class, of (i) the
Required Principal for such Series and Class and (ii) the Call Premium
Percentage for such Series and Class.
"REQUIRED PRINCIPAL": As determined for any Distribution Date
for a given Series (or Class within such Series), unless otherwise specified in
the related Series Supplement, the amounts on deposit in the Certificate
Account allocable to principal payments on the Underlying Securities (including
from Credit Support, if any, and Advances, if any, but excluding amounts in
respect of principal payments to the extent that Advances with respect thereto
were distributed as Required Principal on a prior Distribution Date) and
required to be distributed in respect of the Certificates of such Series (or
Class) in accordance with the terms of such Certificates and such related
Series Supplement.
"REQUIRED RATING": With respect to any Series (or Class within
such Series), the rating category (or categories) specified in the Series
Supplement that, as a condition to the issuance of such Series or Class, is (or
are) the lowest category (or categories) in which the Certificates of such
Series or Class may be categorized by the Rating Agency.
"REQUISITE RESERVE AMOUNT": As of any date with respect to any
Series (or Class within such Series) of Certificates, the amount, if any,
required to be maintained in the Reserve Account, if any, for such Series or
Class as specified in or determined pursuant to the related Series Supplement.
"RESERVE ACCOUNT": An Eligible Account, if any, created and
maintained pursuant to Section 3.06.
"RESPONSIBLE OFFICER": With respect to the Trustee, any
officer within the Corporate Trust Office of the Trustee, including any
Managing Director, Senior Vice President, Vice
<PAGE>
- 14 -
President, Assistant Vice President, Assistant Treasurer or any other officer
of the Trustee customarily performing functions similar to those performed by
any of the above designated officers and also, with respect to a particular
matter, any other officer to whom such matter is referred because of such
officer's actual knowledge of and familiarity with the particular subject.
"RETAINED INTEREST": If applicable, with respect to any
Underlying Security, an ownership interest in and a right to a portion of the
payments thereon by the obligor thereof, as specified in the related Series
Supplement, held by the Person so specified in such Series Supplement.
"SALE PROCEDURES": Unless otherwise specified in the Series
Supplement, shall mean that, with respect to any sale of one or more Underlying
Securities, the Market Agent, on behalf of the Trust, shall sell such
Underlying Security or Underlying Securities to the highest bidders among not
less than two solicited bidders for such Underlying Securities (one of which
bidders may include Citicorp Securities, Inc. or any affiliate thereof;
provided, however, that neither Citicorp Securities, Inc. nor any of its
affiliates will be under any obligation to bid, and which bidders need not be
limited to recognized broker dealers). In the sole judgment of the Market
Agent, bids may be evaluated on the basis of bids for a single Underlying
Security, a portion of the Underlying Securities or all of the Underlying
Securities being sold or any other basis selected in good faith by the Market
Agent.
"S&P": Standard & Poor's Ratings Services and any successor
thereof.
"SERIES": A separate series of Certificates issued pursuant to
these Standard Terms and a related Series Supplement, which series may be
divided into two or more Classes, as provided in such Series Supplement.
"SERIES SUPPLEMENT": An agreement incorporating these Standard
Terms that authorizes the issuance of a particular Series (and each Class
within such Series) of Certificates.
"SUB-ADMINISTRATION ACCOUNT": As defined in Section 7.02.
"SUB-ADMINISTRATION AGREEMENT": The written contract, if any,
between the Trustee and a Sub-Administrative Agent and any successor Trustee or
Sub-Administrative Agent relating to the administration of certain Underlying
Securities as provided in Section 7.02.
"SUB-ADMINISTRATION AGENT": Any Person with which the Trustee
has entered into a Sub-Administration Agreement and which meets the
qualifications of a Sub-Administrative Agent pursuant to Section 7.02.
"SURETY BOND": If so specified in the Series Supplement, with
respect to any Series (or Class within such Series) of Certificates, the surety
bond providing for the
<PAGE>
- 15 -
distribution under certain circumstances specified in such Series Supplement of
amounts to the Certificateholders of such Series (or Class), which surety bond
will be issued to the Trustee for the benefit of such Certificateholders by the
related Credit Support Provider, all as specified in such Series Supplement.
"SWAP AGREEMENT": If so specified in the Series Supplement
with respect to any Series, the ISDA Master Agreement dated as of the Closing
Date by and between the Trust and the Swap Counterparty, the form of which
Schedule is attached thereto as Exhibit C, as the same may be amended or
supplemented by Confirmations from time to time as provided herein and therein.
"SWAP COUNTERPARTY": If so specified in the Series Supplement,
with respect to any Series, shall be specified in the Series Supplement.
"SWAP DISTRIBUTION AMOUNT": If so specified in the Series
Supplement with respect to any Series, all amounts then due and owing to the
Swap Counterparty pursuant to the Swap Agreement, other than Swap Termination
Payments.
"SWAP GUARANTEE": If so specified in the Series Supplement
with respect to any Series, the Guarantee issued by the Swap Guarantor in favor
of the Trust substantially in the form attached as Exhibit D to the Swap
Agreement.
"SWAP GUARANTOR": If so specified in the Series Supplement
with respect to any Series, the guarantor specified as such in the Series
Supplement.
"SWAP RECEIPT AMOUNT": If so specified in the Series
Supplement with respect to any Series, all amounts due and owing to the Trust
pursuant to the Swap Agreement, other than Swap Termination Payments.
"SWAP TERMINATION PAYMENT": If so specified in the Series
Supplement with respect to any Series, the amount payable by the Swap
Counterparty to the Trust, or by the Trust to the Swap Counterparty, pursuant
to Section 6(e) of the Swap Agreement.
"TRUST": With respect to any Series, the segregated asset or
pool of assets subject hereto, constituting the trust created hereby and by the
related Series Supplement and to be administered hereunder and thereunder,
consisting of those Underlying Securities and the Credit Support, if
applicable, and all sums distributed in respect thereof that are specified as
being part of the Trust for such Series in the related Series Supplement, all
for the benefit of the Certificateholders of such Series as of any particular
time.
"TRUST AGREEMENT": With respect to each Series of
Certificates, these Standard Terms and all amendments hereof and, unless the
context otherwise requires, the related Series Supplement and all amendments
thereto.
<PAGE>
- 16 -
"TRUSTEE": With respect to any Series, the Person so specified
in the applicable Series Supplement, until a successor Person shall have become
the Trustee pursuant to the applicable provisions of these Standard Terms and
the applicable Series Supplement, and thereafter "TRUSTEE" shall mean such
successor Person.
"TRUST INDENTURE ACT": The Trust Indenture Act of 1939, as
amended, as the same is in force and effect as of the date hereof.
"TRUST PROPERTY": Unless otherwise specified in the related
Series Supplement, the Underlying Securities.
"UNDERLYING SECURITIES ISSUER": With respect to an Underlying
Security, the issuer thereof (including, if applicable, the guarantor of the
Underlying Security) as identified in Appendix A to the Series Supplement.
"UNDERLYING SECURITY" or "UNDERLYING SECURITIES": With
respect to any Series, the asset or assets Granted as part of the Trust for
such Series or acquired (or, in the case of an agreement, entered into) by the
Trustee for the benefit of the Holders of such Series, and, if and to the
extent provided in the applicable Series Supplement, for the benefit of any
Credit Support Provider, all as identified in the Schedule A to the related
Series Supplement. The Underlying Securities for any such Series or the
related Trust shall not constitute Underlying Securities for any other Series
or any other Trust.
"UNDERLYING SECURITY INTEREST PAYMENT DATE": With respect to
an Underlying Security, each date specified in Schedule A to the Series
Supplement as a date on which interest is scheduled, as of the Closing Date, to
be payable by or on behalf of the Underlying Securities Issuer on such
Underlying Security in accordance with its terms.
"UNDERLYING SECURITY PAYMENT DATE": A Scheduled Underlying
Security Payment Date and any other date on which interest, principal and/or
redemption premium is payable on an Underlying Security in accordance with its
terms.
"UNIFORM COMMERCIAL CODE": The Uniform Commercial Code as in
effect in the relevant jurisdiction or, with respect to the State of Louisiana,
the equivalent body of statutory and common law.
"UNITED STATES": The United States of America (including the
States), its territories, its possessions and other areas subject to its
jurisdiction.
"VOTING RIGHTS": With respect to any Series (or Class within
such Series) of Certificates, the portion of the aggregate voting rights of the
Certificates of such Series or Class which shall be allocated to any
Certificate as specified in the applicable Series Supplement.
<PAGE>
- 17 -
Section 1.02. Rules of Construction. Unless the context
---------------------
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect in the United States from time to time;
(iii) "or" is not exclusive;
(iv) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision;
(v) "including" means including without limitation; and
(vi) words in the singular include the plural and words in the
plural include the singular.
Section 1.03. Compliance Certificates and Opinions; Record
---------------------------------------------
Date. (a) Upon any application or request by the Depositor to the Trustee to
- ----
take any action under any provision of this Trust Agreement other than the
initial issuance of the Certificates, the Depositor shall furnish to the
Trustee an Officer's Certificate stating that, in the opinion of the signer
thereof, all conditions precedent, if any, provided for in this Trust Agreement
relating to the proposed action have been complied with and an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Trust Agreement relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Trust Agreement (other than a
certificate provided pursuant to Section 3.10(d)) shall include:
(1) a statement that the individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he or she
has made such examination or investigation as is necessary to enable him
or her to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
<PAGE>
- 18 -
(4) a statement as to whether, in the opinion of such individual,
such condition or covenant has been complied with.
(b) The Depositor may at its option by delivery of an Officer's
Certificate to the Trustee set a record date to determine the Holders of any
subclass of Certificates entitled to give any consent, request, demand,
authorization, direction, notice, waiver or other act. Notwithstanding Section
316(c) of the Trust Indenture Act, such record date shall be the record date
specified in such Officer's Certificate, which shall be a date not more than 30
days prior to the first solicitation of Certificateholders in connection
therewith. If such a record date is fixed, such consent, request, demand,
authorization, direction, notice, waiver or other act may be given before or
after such record date, but only the Holders of record of Certificates of the
applicable subclass at the close of business on such record date shall be
deemed to be Certificateholders of such subclass for the purposes of
determining whether Holders of the requisite aggregate Principal Amount of
Outstanding Certificates of such subclass have authorized or agreed or
consented to such consent, request, demand, authorization, direction, notice,
waiver or other act, and for that purpose the aggregate Principal Amount of the
Outstanding Certificates of such subclass shall be computed as of such record
date; provided, however, that no such consent, request, demand, authorization,
direction, notice, waiver or other act by the Holders of Certificates of such
subclass on such record date shall be deemed effective unless it shall become
effective pursuant to the provisions of this Trust Agreement not later than one
year after the record date.
ARTICLE II
DECLARATION OF TRUSTS; ISSUANCE OF CERTIFICATES;
PURPOSE AND CLASSIFICATION OF TRUSTS
Section 2.01. Creation and Declaration of Trusts; Assignment of
--------------------------------------------------
Underlying Securities. (a) The Depositor, concurrently with the execution
- ---------------------
and delivery hereof, does hereby agree to Grant to the Trustee, on behalf and
for the benefit of the Certificateholders of each given Series of Certificates
and without recourse, all the right, title and interest of the Depositor,
including any security interest therein for the benefit of the Depositor, in,
to and under the Underlying Securities attributable to each such Series (except
for the Underlying Securities attributable to such Series which are not Granted
by the Depositor, as specified in Schedule A to the applicable Series
Supplement), now existing or hereafter acquired, in each case as identified on
the applicable Schedule A, and all other assets included or to be included in
the respective Trust for the benefit of the Certificateholders of each such
Series. Each such Grant will include all interest, premium (if any) and
principal received by or on behalf of the Depositor of, on or with respect to
any such Underlying Securities due after the applicable Cut-off Date, and,
unless otherwise specified in the Series Supplement, will exclude
<PAGE>
- 19 -
(i) all interest, premium (if any) and principal of, on or with respect to any
such Underlying Securities due on or before the applicable Cut-off Date and
(ii) any Retained Interest in any such Underlying Security. With respect to
any Concentrated Underlying Security, Schedule A to the applicable Series
Supplement shall include information regarding the payment terms of the
Concentrated Underlying Security, the Retained Interest, if any, with respect
thereto, the maturity or terms thereof, the rating, if any, thereof and any
other material information with respect thereto.
(b) In connection with each Grant referred to in the preceding
paragraph, the Depositor shall, not later than the applicable Closing Date,
either (i) deposit the Underlying Securities for a given Series (except for the
Underlying Securities attributable to such Series which are to be acquired from
a Person other than the Depositor, as specified on the Underlying Securities
Schedule to the applicable Series Supplement) with the Trustee by physical
delivery of such Underlying Securities, duly endorsed, together with any
documents necessary to transfer ownership of such Underlying Securities, to the
Trustee or (ii) have delivered such Underlying Securities to a Clearing Agency,
in which event (A) the Trustee has accepted delivery of such Underlying
Securities through such Clearing Agency, and (B) the Underlying Securities have
been credited to a trust account of the Trustee, or its authorized agent, and
the Trustee shall have the right to hold and maintain such Underlying
Securities on deposit with such Clearing Agency for all purposes of this Trust
Agreement.
(c) Unless otherwise specified in the applicable Series Supplement,
the Grant of such Underlying Securities by the Depositor for a given Series
accomplished hereby and by such Series Supplement is absolute and is intended
by the parties hereto as a sale.
(d) In the case of each delivery of Underlying Securities to the
Trustee, the Depositor shall be deemed thereby to represent and warrant to the
Trustee that:
(i) the Depositor is duly authorized to so deliver such Underlying
Securities;
(ii) the Underlying Securities so delivered are genuine;
(iii) at the time of delivery of the Underlying Securities, such
Underlying Securities are free and clear of any lien, pledge,
encumbrance, right, charge, claim or other security interest (other than
the lien created by the Trust Agreement); and
(iv) such delivery is irrevocable and free of any continuing claim
by the Depositor except such as the Depositor may have as a
Certificateholder of a Certificate.
The above representations and warranties shall survive the delivery
of such Underlying Securities and the Certificates
<PAGE>
- 20 -
in respect thereof. The Depositor shall further be deemed by such delivery to
have made the representations that, to the Depositor's knowledge but without
having made any independent inquiry, as of the Closing Date, no default or
event of default with respect to the Underlying Securities has occurred and is
continuing.
(e) It is the intention of all of the parties hereto that the
transfer of the Trust Property hereunder and under any Series Supplement shall
constitute a sale and the Trust created hereunder and thereunder shall
constitute a fixed investment trust for federal income tax purposes under
Treasury Regulation Section 301.7701-4, and all parties hereto and thereto
agree to treat the Trust, any distributions therefrom and the beneficial
interest in the Certificates consistently with such characterization. The
provisions of this Trust Agreement shall be interpreted consistently with such
characterization.
(f) Any Trust created hereunder shall not engage in any business or
activities other than in connection with, or relating to, the holding,
protecting and preserving of the Trust Property and the issuance of the
Certificates, and other than those required or authorized by this Trust
Agreement or incidental to and necessary to accomplish such activities. Any
Trust created hereunder shall not issue or sell any certificates or other
obligations other than the Certificates or otherwise incur, assume or guarantee
any indebtedness for money borrowed.
Section 2.02. Acceptance by Trustee. With respect to each
---------------------
Series, the Trustee will acknowledge receipt by it, or by a custodian on its
behalf, of the related Underlying Securities, now existing or hereafter
acquired, and declares that it will hold such Underlying Securities and
documents and all other documents delivered to it pursuant to this Trust
Agreement, and that it will hold all such assets and such other assets
(including Underlying Securities acquired from a Person other than the
Depositor) comprising the Trust for a given Series of Certificates, in trust
for the exclusive use and benefit of all present and future Certificateholders
of such Series and for the purposes and subject to the terms and conditions set
forth in this Trust Agreement.
Section 2.03. Representations and Warranties of the Depositor.
-----------------------------------------------
The Depositor hereby represents and warrants to the Trustee that as of the
Closing Date or as of such other date specifically provided herein or in the
applicable Series Supplement:
(i) the Depositor is a corporation duly organized, validly existing
and in good standing under the laws of the Cayman Islands;
(ii) with respect to each Series Supplement, to the Depositor's
knowledge but without having made any independent inquiry, the
information set forth in the Underlying Security Schedule with respect to
each Underlying Security is true and correct in all material respects at
the
<PAGE>
- 21 -
date or dates, respecting which, such information is furnished;
(iii) the execution and delivery of this Trust Agreement by the
Depositor and its performance of and compliance with the terms of this
Trust Agreement will not violate the Depositor's Memorandum and Articles
of Association or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or result in
the breach or acceleration of, any material contract, agreement or other
instrument to which the Depositor is a party or which may be applicable
to the Depositor or any of its assets;
(iv) the Depositor has the full power and authority to enter into
and consummate all transactions contemplated by this Trust Agreement, has
duly authorized the execution, delivery and performance of this Trust
Agreement and has duly executed and delivered this Trust Agreement. This
Trust Agreement, upon its execution and delivery by the Depositor and
assuming due authorization, execution and delivery by the Trustee, will
constitute a valid, legal and binding obligation of the Depositor,
enforceable against it in accordance with the terms hereof, except as
such enforcement may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws relating to or
affecting the rights of creditors generally, and by general equity
principles (regardless of whether such enforcement is considered a
proceeding in equity or at law); and
(v) any additional representations and warranties, if any, that may
be specified in the applicable Series Supplement.
It is understood and agreed that the representations and warranties
of the Depositor set forth in this Section 2.03 shall survive delivery of the
respective documents to the Trustee and shall inure to the benefit of the
Trustee on behalf of the Certificateholders notwithstanding any restrictive or
qualified endorsement or assignment. Upon discovery by any of the Depositor or
the Trustee of a breach of any of the foregoing representations and warranties
which materially and adversely affects the interests of the Certificateholders,
the party discovering such breach shall give prompt written notice thereof to
the other party.
Section 2.04. Breach of Representation, Warranty or Covenant.
----------------------------------------------
Within 90 days of the earlier of discovery by the Depositor or receipt of
notice by the Depositor of a breach of any representation or warranty of the
Depositor set forth in Section 2.03 that materially and adversely affects the
interests of the Certificateholders of a given Series of Certificates, the
Depositor shall cure such breach in all material respects.
Section 2.05. Agreement to Authenticate and Deliver
--------------------------------------
Certificates. With respect to each Series of Certificates and the related
- ------------
Trust, the Trustee hereby agrees and acknowledges
<PAGE>
- 22 -
that it will, concurrently with the Grant to and receipt by it of the related
Underlying Securities and delivery to it by the Depositor of executed
Certificates of such Series, cause to be authenticated and delivered to or upon
the written order of the Depositor, in exchange for the Underlying Securities
and such other assets constituting the Trust for a given Series, Certificates
duly authenticated by or on behalf of the Trustee in authorized denominations
evidencing ownership of the entire Trust for such Series, all in accordance
with the terms and subject to the conditions of Sections 5.02 and 5.13.
ARTICLE III
ADMINISTRATION OF EACH TRUST
Section 3.01. Administration of each Trust. (a) The Trustee
----------------------------
shall administer the Underlying Securities for each given Trust for the benefit
of the Certificateholders of the related Series. In engaging in such
activities, the Trustee shall follow or cause to be followed collection
procedures in accordance with the terms of these Standard Terms and the
applicable Series Supplement, the respective Underlying Securities and any
applicable Credit Support Instruments. With respect to each Trust, and subject
only to the above-described standards and the terms of these Standard Terms,
the related Series Supplement and the respective Underlying Securities and
applicable Credit Support Instruments, if any, the Trustee shall have full
power and authority, acting alone or through Sub-Administrative Agents as
provided in Section 7.02, to do or cause to be done any and all things in
connection with such administration which it deems necessary to comply with the
terms of these Standard Terms and the applicable Series Supplement.
(b) The duties of the Trustee shall be performed in accordance with
applicable local, State and Federal law.
Section 3.02. Collection of Certain Underlying Security
------------------------------------------
Payments. With respect to any Series or Class of Certificates, the Trustee
- --------
shall make reasonable efforts to collect all payments required to be made
pursuant to the terms of the Underlying Securities in a manner consistent with
the terms of this Trust Agreement, such Underlying Securities and any related
Credit Support Instruments.
Section 3.03. Certificate Account. (a) For each Series of
-------------------
Certificates, the Trustee shall establish and maintain one or more Eligible
Accounts (collectively, the "CERTIFICATE ACCOUNT"), held in trust for the
benefit of the Certificateholders of such Series. The Trustee on behalf of
such Certificateholders shall possess all right, title and interest in all
funds on deposit from time to time in each Certificate Account and in all
proceeds thereof. With respect to each Series of Certificates, the Certificate
Account shall be under the sole dominion and control of the Trustee for the
benefit of the related Certificateholders. With respect to each Series of
Certificates, not later than the close of business on the Business Day on which
the Trustee receives such amounts in the
<PAGE>
- 23 -
form of immediately available funds (so long as such funds are received by the
Trustee by 3:00 p.m. New York City time, and on the next Business Day
otherwise), the Trustee shall deposit or cause to be deposited in the
Certificate Account all amounts received by it with respect to the Underlying
Securities, any Credit Support and all Liquidation Proceeds related to such
Series including:
(i) all payments on account of principal of such Underlying
Securities;
(ii) all payments on account of interest on such Underlying
Securities;
(iii) all payments on account of premium (if any) on such
Underlying Securities;
(iv) any payments in respect of any such Credit Support;
(v) any Advances made as required pursuant to Section 4.04; and
(vi) any interest or investment income earned on funds deposited in
the related Accounts.
Unless otherwise specified in the applicable Series Supplement, it
is understood and agreed that payments in the nature of prepayment or
redemption penalties, late payment charges, default interest or reinvestment
income which may be received by the Trustee shall be deposited by the Trustee
in the Certificate Account and shall not be retained by the Trustee for its own
account.
If, at any time, the Certificate Account for any Series ceases to
be an Eligible Account, the Trustee shall within five Business Days (or such
longer period, not to exceed 30 calendar days, as to which the Rating Agency
Condition is met) establish a new Certificate Account meeting the conditions
specified above and the Trustee shall within five Business Days transfer any
cash and any investments on deposit in the Certificate Account to such new
Certificate Account, and from the date such new Certificate Account is
established, it shall be the Certificate Account for such Series.
(b) The Trustee shall give notice to the Depositor of the location
of each Eligible Account constituting the Certificate Account and prior to any
change thereof if such Eligible Account is or will be located at an institution
other than United States Trust Company of New York.
Section 3.04. Liquidation of the Underlying Securities. (a)
----------------------------------------
If specified in the applicable Series Supplement, upon the occurrences of
specified events, the Trustee shall direct the Market Agent to sell the
Underlying Securities in compliance with the Sale Procedures and to deposit the
Liquidation Proceeds therefrom into the Certificate Account pursuant to Section
3.03(a) hereof.
<PAGE>
- 24 -
(b) If the Trustee is notified by the Depositor that the Underlying
Securities Issuer of any Concentrated Underlying Securities has ceased to be a
reporting company under the Exchange Act, the Trustee shall direct the Market
Agent to sell all of such Concentrated Underlying Securities in compliance with
the Sale Procedures and to deposit the Liquidation Proceeds therefrom into the
Certificate Account pursuant to Section 3.03(a) hereof to be distributed to the
Holders in accordance with Section 4.02 hereof.
Section 3.05. Investment of Funds in the Accounts. The
-----------------------------------
Trustee on behalf of the Trust may direct any depository institution
maintaining the Certificate Account or the Reserve Account, if any, for the
applicable Series and any other segregated Eligible Account the contents of
which are held for the benefit of Certificateholders of such Series (each, an
"ACCOUNT") to invest the funds therein at the specific written direction of
the Depositor in one or more Eligible Investments bearing interest or sold at a
discount, which shall be held to maturity unless payable on demand and which
funds shall not be reinvested upon the maturity or demand for payment of such
Eligible Investment. If the Depositor does not provide any investment
directions by 10:00 a.m. on any Business Day, funds held in any Account will be
invested in the Eligible Investments specified in clause (ii) of the definition
thereof until receipt of investment directions to the contrary. Investments of
such funds shall be invested in Eligible Investments that will mature so that
such funds will be available for distribution on the next Distribution Date.
Except as otherwise provided in the applicable Series Supplement, any earnings
with respect to such Eligible Investments shall be paid to, and any losses with
respect to such Eligible Investments shall be solely for the account of, the
Certificateholders (and, if applicable, the Retained Interest holder) pro rata
in proportion to their interest in the invested funds. In the event amounts on
deposit in an Account are at any time invested in an Eligible Investment
payable on demand, the Trustee shall:
(x) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such Eligible
Investment may otherwise mature hereunder in an amount equal to the
lesser of (1) all amounts then payable thereunder and (2) the amount
required to be withdrawn on such date; and
(y) demand same day payment of all amounts due thereunder upon a
determination by the Trustee that such Eligible Investment would not
constitute an Eligible Investment in respect of funds thereafter on
deposit in any Account.
Neither the Trustee nor the Depositor shall in any way be held liable by reason
of any insufficiency in any Account resulting from any loss on any Eligible
Investment made in accordance with this Trust Agreement.
Section 3.06. Maintenance of Credit Support. (a) On the
-----------------------------
applicable Closing Date, the Trustee at the written direction
<PAGE>
- 25 -
of the Depositor or, if so specified in the applicable Series Supplement, the
Depositor shall, to the extent specified in the applicable Series Supplement,
establish and maintain, or enter into, as applicable, in the name of the
Trustee, either as a part of the related Trust or outside it, for the benefit
of the Certificateholders of the related Series, the Credit Support specified
in the applicable Series Supplement. To the extent specified in the applicable
Series Supplement, the Depositor will make or cause to be made any initial
deposit to the Certificate Account or any Reserve Account (which shall be an
Eligible Account) for the related Series as of the Closing Date. Unless the
Series Supplement for a given Series provides otherwise, if a Reserve Account
exists for such Series, collections with respect to the Underlying Securities
for such Series not distributed to the Certificateholders of such Series shall
be deposited in the Reserve Account. The Reserve Account, if any, shall be an
asset of the Depositor (and the income earned on any amounts held in the
Reserve Account shall be allocable to the Depositor, who agrees to include any
such income in its gross income for all federal, state and local income and
franchise tax purposes) and will not be a part of or otherwise be includible in
the Trust but will be held for the benefit of the Certificateholders.
(b) Amounts on deposit in the Reserve Account and amounts available
pursuant to any other Credit Support for such Series shall be applied by the
Trustee to make distributions of principal of and premium (if any) and interest
on the Certificates of such Series as required pursuant to Section 4.01 and the
applicable Series Supplement to the extent that funds are not otherwise
available for such purpose. If specified in such Series Supplement,
immediately after each Distribution Date, amounts on deposit in the Reserve
Account for such Series in excess of a specified amount shall be paid to the
Person so specified in such Series Supplement.
Section 3.07. Realization Upon Defaulted Underlying
--------------------------------------
Securities. (a) The Trustee, on behalf of the Certificateholders, shall
- ----------
assert claims under each applicable Credit Support Instrument, and shall take
such reasonable steps as are necessary to receive payment or to permit recovery
thereunder with respect to any defaulted Underlying Securities, subject in all
cases to the provisions of Article VII hereof.
(b) Unless otherwise provided in the related Series Supplement, if
the Trustee, as applicable, is unable to obtain full recovery in respect of a
defaulted Underlying Security and any related Credit Support Instrument
pursuant to Section 3.07(a), the Trustee shall follow or cause to be followed
such normal practices and procedures as it deems necessary or advisable to
realize upon such defaulted Underlying Security and such Credit Support
Instrument, subject in all cases to the provisions of Article VII hereof.
(c) If the Liquidation Proceeds of a defaulted Underlying Security
are less than the sum of (i) the outstanding principal balance of the defaulted
Underlying Security, (ii) interest accrued but unpaid thereon at the applicable
interest rate and (iii) the aggregate amount of expenses incurred
<PAGE>
- 26 -
by the Trustee in connection with the practices and procedures referred to in
paragraph (b) of this Section 3.07 to the extent reimbursable under these
Standard Terms and the related Series Supplement, the Trust for the applicable
Series shall recognize a Realized Loss equal to the amount of such difference.
Any such reimbursed Realized Loss shall be allocated pursuant to Section 4.05
among the Certificateholders of such Series in the manner and priority set
forth in the related Series Supplement.
Section 3.08. Retained Interest. The Retained Interest, if
-----------------
any, in any Underlying Security shall initially be held by the Person so
specified in the related Series Supplement as and to the extent specified
therein. With respect to each Underlying Security, unless otherwise specified in
the related Series Supplement, the Retained Interest shall be deducted by the
Trustee from applicable collections in respect of such Underlying Security.
Unless otherwise provided in the applicable Series Supplement, collections in
respect of Retained Interest shall not be deposited in the Certificate Account
for the applicable Series and shall not constitute a part of the Trust for such
Series, but shall instead be distributed to the holder of such Retained
Interest; provided, however, that the Series Supplement for any Series with
respect to which there is a Retained Interest may provide that, notwithstanding
the terms contained herein, commingled amounts received in respect of assets
inclusive of Underlying Securities and Retained Interest may initially be
deposited in a separate and discrete account established by the Trustee and such
Series Supplement may provide for additional terms relating thereto. Unless
otherwise provided in the applicable Series Supplement, after deduction of all
applicable fees as provided for in this Trust Agreement, on each Distribution
Date the Trustee shall allocate on a pari passu basis any partial recovery on an
Underlying Security between (a) the Retained Interest, if any, and (b)
distributions to Certificateholders of the applicable Series.
Section 3.09. Access to Certain Documentation. The Trustee
-------------------------------
shall provide to any Federal, State or local regulatory authority that may
exercise authority over any Certificateholder access to the documentation in
the Trustee's possession regarding the Underlying Securities required by
applicable laws and regulations. Such access shall be afforded without charge,
but only upon reasonable written request and during normal business hours at
the offices of the Trustee designated by it. In addition, access to the
documentation in the Trustee's possession regarding the Underlying Securities
related to a given Series (or Class within such Series) will be provided to any
Certificateholder of such Series (or Class) upon reasonable written request
during normal business hours at the offices of the Trustee designated by it at
the expense of the Certificateholder requesting such access.
Section 3.10. Reports by the Depositor. The Depositor shall:
------------------------
(a) file with the Trustee, within 30 days after the Depositor is
required to file the same with the Commission, copies of the annual reports and
of the information, documents
<PAGE>
- 27 -
and other reports (or copies of such portions of any of the foregoing as the
Commission may from time to time by rules and regulations prescribe) which the
Depositor is required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act; or, if the Depositor is not required to file
information, documents or reports pursuant to either of such sections, then to
file with the Trustee and the Commission, in accordance with rules and
regulations prescribed by the Commission, such of the supplementary and
periodic information, documents and reports which may be required pursuant to
Section 13 of the Exchange Act in respect of a security listed and registered
on a national securities exchange as may be prescribed in such rules and
regulations;
(b) file with the Trustee and the Commission, in accordance with
the rules and regulations prescribed by the Commission, such additional
information, documents and reports with respect to compliance by the Depositor
with the conditions and covenants provided for in this Trust Agreement, as may
be required by such rules and regulations, certificates or opinions of
independent accountants, conforming to the requirements of Section 314(e) of
the Trust Indenture Act;
(c) transmit to all Certificateholders, in the manner and to the
extent provided in Section 313(c) of the Trust Indenture Act, such summaries of
any information, documents and reports required to be filed by the Company
pursuant to subsections (a) and (b) of this Section 3.10 as may be required by
rules and regulations prescribed by the Commission; and
(d) furnish to the Trustee, not less often than annually, a
certificate from the principal executive, financial or accounting officer of
the Depositor as to his or her knowledge of the Depositor's compliance with all
conditions and covenants under this Trust Agreement. For purposes of this
paragraph (d) such compliance shall be determined without regard to any period
of grace or requirement of notice provided under this Trust Agreement.
Any reports, statements, documents or other information required to be
furnished by the Depositor to the Trustee pursuant to these Standard Terms or
any Series Supplement shall be deemed to have been delivered to the Trustee if
the Trustee is in possession of such reports, statements, documents or other
information at the time they are to be furnished pursuant to these Standard
Terms or any Series Supplement.
Section 3.11. Charges and Expenses. Except as otherwise
--------------------
provided in this Trust Agreement or the related Series Supplement, no amounts
in the nature of fees or charges shall be payable by or withheld from the
Trust, the Depositor or any other person. There shall be no recourse or claim
against the Trust or the property of the Trust for all or any part of any fees
or charges payable to any person.
<PAGE>
- 28 -
ARTICLE IV
DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS
Section 4.01. Distributions. (a) On each Distribution Date
-------------
for a given Series of Certificates, the Trustee shall apply Available Funds in
the Certificate Account for such Series in the manner and priority set forth in
the Series Supplement for such Series. In any event, however, any amounts
collected during any period shall be distributed to the Certificateholders in
Dollars no later than the Distribution Date immediately following the receipt
thereof.
(b) All distributions on the Certificates shall be payable in
Dollars only from Available Funds, and no provision of this Trust Agreement
shall be deemed to create any obligation on the part of the Trustee or the
Depositor to make any distribution from any other source.
Section 4.02. Distributions on Certificates. (a)
-----------------------------
Distributions on any Certificate that are payable and are punctually paid or
duly provided for on any Distribution Date shall be distributed to the Person
in whose name such Certificate (or one or more Predecessor Certificates) is
registered at the close of business on the related Record Date notwithstanding
the cancellation of such Certificate upon any transfer or exchange subsequent
to such related Record Date.
The distribution of interest and principal on Certificates (in
Dollars) shall be made:
(i) if the Certificateholder is a Depository, to the Depository,
which shall credit the relevant Participant's account at such Depository
in accordance with the policies and procedure of the Depository, or
(ii) if the Certificateholder is not a Depository, at the Corporate
Trust Office (except as otherwise specified pursuant to Section 5.01) or,
at the option of the Trustee, by check mailed to the address of the
Person entitled thereto as such address shall appear in the Certificate
Register or, if provided pursuant to Section 5.01 and in accordance with
arrangements satisfactory to the Trustee, at the option of the Holder by
wire transfer to an account designated by the Holder. Notwithstanding
the foregoing paragraph, with respect to a Certificateholder of
Certificates not held in a Depository and having at least the Minimum
Wire Denomination, such payment shall be made by wire transfer of
immediately available funds to the account designated by such
Certificateholder in a written request received by the Trustee not later
than 10 days prior to such Distribution Date; provided, however, that if
a wire transfer cannot be made for any reason, payment shall be made by
check. The Trustee shall not be required to send federal funds wires
until any corresponding payments which were not same day funds when
received by it have become same day funds.
<PAGE>
- 29 -
(b) Each Certificate delivered under this Trust Agreement upon
transfer of or in exchange for or in lieu of any other Certificate shall carry
the rights to interest accrued and undistributed, and to accrue, that were
carried by such other Certificate.
(c) All computations of interest due with respect to any
Certificate of any Series or Class within such Series shall be made as
specified in the Series Supplement applicable to that particular Series or
Class of Certificates.
(d) With respect to any computations or calculations to be made
under these Standard Terms, the applicable Series Supplement and the
Certificates, except as otherwise provided, (i) all percentages resulting from
any calculation of accrued interest will be rounded, if necessary, to the
nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage
point rounded upward, and (ii) all currency amounts will be rounded to the
nearest one-hundredth of a unit (with .005 of a unit being rounded upward).
(e) Unless specified otherwise in a Series Supplement, the final
distribution of principal and/or premium shall be made upon presentation and
surrender of such Certificates at the Corporate Trust Office.
Section 4.03. Reports to Certificateholders. Unless otherwise
-----------------------------
specified in the applicable Series Supplement, on the fifth Business Day
following each such Distribution Date the Trustee shall forward or cause to be
forwarded to the Depositor, each Certificateholder of such Series, to each
Rating Agency rating such Series and such other Persons as may be specified in
such Series Supplement, a statement setting forth:
(i) the amounts received by the Trustee as of the last such
statement in respect of principal, interest and premium on the Underlying
Securities and the Swap Receipt Amount, if any;
(ii) the Swap Distribution Amount, if any, for such date;
(iii) the amount of the distribution on such Distribution Date to
Certificateholders of each Class of such Series allocable to principal of
and premium, if any, and interest on the Certificates of each such Class,
and the amount of aggregate unpaid interest accrued as of such
Distribution Date;
(iv) in the case of each Class of Floating Rate Certificates of
such Series, the respective Floating Pass-Through Rate applicable to each
such Class on such Distribution Date, as calculated in accordance with
the method specified in such Certificates and the related Series
Supplement;
(v) such other customary information as the Trustee deems necessary
or desirable, (or that any such
<PAGE>
- 30 -
Certificateholder reasonably requests in writing) to enable such
Certificateholders to prepare their tax returns;
(vi) if the Series Supplement provides for Advances, the aggregate
amount of Advances, if any, included in such distribution, and the
aggregate amount of unreimbursed Advances, if any, at the close of
business on such Distribution Date;
(vii) the aggregate stated principal amount and, if applicable,
notional amount of the Underlying Securities related to such Series, the
current rating assigned by the Rating Agency thereon and the current
interest rate or rates thereon at the close of business on such
Distribution Date;
(viii) the aggregate Certificate Principal Balance (or Notional
Amount, if applicable) of each Class of such Series at the close of
business on such Distribution Date, separately identifying any reduction
in such aggregate Certificate Principal Balance (or Notional Amount) due
to the allocation of any Realized Losses on such Distribution Date or
otherwise; and
(ix) as to any Series (or any Class within such Series) for which
Credit Support has been obtained, the amount or notional amount of
coverage of each element of Credit Support (and rating, if any, thereof)
included therein as of the close of business on such Distribution Date.
In the case of information furnished pursuant to subclauses (i), (ii), (iii)
and (v) above, the amounts shall be expressed as a dollar amount per minimum
denomination of Certificates or for such other specified portion thereof.
Within a reasonable period of time after the end of each calendar year, the
Trustee shall furnish to each Person who at any time during each such calendar
year was a Certificateholder a statement containing the information set forth
in subclauses (i), (ii), (iii) and (v) above, aggregated for such calendar year
or the applicable portion thereof during which such person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Trustee pursuant to any requirements of the Code as are from
time to time in effect. The Trustee shall supply to Certificateholders who so
request in writing at such Certificateholder's expense all materials received
by the Trustee from the Underlying Securities Issuer.
Section 4.04. Advances. (a) Unless otherwise specified in the
--------
applicable Series Supplement, the Trustee shall have no obligation to make
Advances (as defined below) with respect to the Underlying Securities or in
favor of the Holders of any Series (or Class within such Series) of
Certificates.
(b) However, as and to the extent provided in the Series Supplement
for a given Series, and subject to the terms of paragraphs (b) and (c) of this
Section 4.04, on or prior to each Distribution Date, the Trustee shall advance
or cause to be advanced in immediately available funds for deposit in the
<PAGE>
- 31 -
Certificate Account for such Series an advance (each, an "ADVANCE") in an
amount equal, unless otherwise specified in the related Series Supplement, to
the aggregate of distributions of principal, premium (if any) and interest due
on the Underlying Securities for such Series (or Class) during the related
Collection Period, to the extent remaining unpaid at the time of such Advance.
In satisfaction of its obligation to make such Advances, the Trustee shall make
such Advances from its own funds. The Trustee may recover Advances from late
collections received by the Trustee on the applicable Underlying Securities,
proceeds from any applicable Credit Support, if any, and Liquidation Proceeds
with respect to the Underlying Securities for such Series or Class, as
specified in the related Series Supplement, as to which any such unreimbursed
Advance was made.
(c) Notwithstanding any provision herein to the contrary, no
Advance shall be required to be made hereunder if the Trustee reasonably
believes that it will be unable to recover such Advance from related late
collections, Credit Support proceeds, if any, or Liquidation Proceeds with
respect to the applicable Underlying Securities. It is further understood and
agreed that the Trustee shall not be obligated to make any Advances in respect
of reductions in the amount of collections on the Underlying Securities due to
bankruptcy proceedings with respect to the Underlying Securities or the
obligors thereof.
(d) Notwithstanding any provision herein to the contrary, unless
otherwise provided in the Series Supplement for a given Series, any Advances
made in respect of any Underlying Securities related to such Series (or Class
within such Series) that are subsequently deemed by the Trustee to be
nonrecoverable from related late collections, Credit Support proceeds, if any,
or Liquidation Proceeds may be reimbursed to the Trustee through the
application of amounts on deposit in the Certificate Account for such Series
allocable to any of such Underlying Securities prior to the distributions of
interest, premium (if any) and principal with respect to the Certificates of
such Series or Class.
Section 4.05. Allocation of Realized Losses and Trust
----------------------------------------
Expenses. With respect to any Series of Certificates, the manner and
- --------
priority of the allocation of Realized Losses, Eligible Expenses, Allowable
Expense Amounts and Extraordinary Trust Expenses, if any, on any Distribution
Date among the Classes, if any, of such Series shall be as set forth in the
related Series Supplement.
Section 4.06. Compliance with Withholding Requirements. (a)
----------------------------------------
Notwithstanding any other provision of this Trust Agreement to the contrary,
the Trustee shall comply with all Federal withholding requirements respecting
distributions to Certificateholders of interest or original issue discount that
the Trustee believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding.
(b) Each Certificateholder will provide the Trustee (and, so long
as the Certificates are held at a Depository in the form of Global
Certificates, each Beneficial Owner of the
<PAGE>
- 32 -
Certificates will provide such Depository and the Trustee) with evidence that
there should not be any withholding tax assessed for Federal income tax
purposes in respect of distributions to such Certificateholder, such evidence
to take the form of a statement, on a duly executed and up-to-date Internal
Revenue Service Form W-8 (or successor form), Form W-9 (or successor Form), or
Form 4224 (or successor form), as applicable, that identifies the Beneficial
Owner of the Certificate; provided, however, that for so long as the
Certificates are held at a Depository in the form of Global Certificates, the
Certificateholder shall have no obligation to provide the Trustee with any such
evidence except to the extent it has received such evidence from Beneficial
Owners of the Certificates. The Trustee shall not be required to accept any
such Internal Revenue Service forms if it believes that they are not accurate
(but the Trustee shall not be required to make any independent investigation to
determine their accuracy).
(c) If any tax or other governmental charge shall become payable by
or on behalf of the Trustee, including any tax or governmental charge required
to be withheld from any payment by the Trustee under the provisions of any
applicable law or regulation with respect to any Underlying Securities or the
Certificates, such tax or governmental charge shall be payable by the
Certificateholder and may be withheld by the Trustee. The consent of
Certificateholder shall not be required for such withholding. In the event the
Trustee does withhold any amount from interest or original issue discount
distributions or Advances thereof to any Certificateholder pursuant to Federal
withholding requirements, the Trustee shall indicate in the statement required
pursuant to Section 4.03 the amount so withheld.
(d) The Depositor and the Trustee shall have the right to refuse
the surrender, registration of transfer or exchange of any certificate with
respect to which such tax or other governmental charge shall be payable until
such payment shall have been made by the Certificateholder.
Section 4.07. Optional Exchange. (a) The terms and
-----------------
conditions, if any, upon which Certificates of any Series (or Class within such
Series) may be exchanged for a pro rata portion of the Underlying Securities of
the related Trust will be specified in the related Series Supplement; provided,
however, that any right of exchange shall be exercisable only to the extent
that the Depositor provides upon the Trustee's request an Opinion of Counsel
that (i) such exchange would not be inconsistent with the Depositor's and the
Trustee's continued satisfaction of the applicable requirements for exemption
under Rule 3a-7 (or other applicable rule or exemption) under the Investment
Company Act of 1940, as amended, and all applicable rules, regulations and
interpretations thereunder and (ii) such exchange would not affect the
characterization of the Trust as a "grantor trust" for federal income tax
purposes. Such terms may relate to, but are not limited to, the following:
(1) a requirement that the exchanging Holder tender to the Trustee
Certificates of each Class within such Series;
<PAGE>
- 33 -
(2) a minimum Certificate Principal Balance or Notional Amount, as
applicable, with respect to Certificates being tendered for exchange by a
single Holder:
(3) a requirement that the Certificate Principal Balance or
Notional Amount, as applicable, of each certificate tendered for exchange
be an integral multiple of an amount specified in such Series Supplement;
(4) specified dates during which a Holder may effect such an
exchange (each, an Optional Exchange Date);
(5) limitations on the right of an exchanging Holder to receive any
benefit upon exchange from any Credit Support or Underlying Securities
which are not debt securities; and
(6) adjustments to the value of the proceeds of any exchange based
upon required prepayment of future expense allocations and the
establishment of a reserve for any anticipated Extraordinary Trust
Expenses.
(b) Unless otherwise provided in the applicable Series Supplement,
no Certificate may be exchanged pursuant to the preceding paragraph unless the
Trustee has received at least 30 days but not more than 45 days prior to an
Optional Exchange Date in accordance with delivery instructions specified in
the applicable Series Supplement 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 Certificate, the Certificate
Principal Balance or Notional Amount of such Certificate to be exchanged and
the Certificate number or a description of the tenor and the terms of such
Certificate, a statement that the option to elect exchange is being exercised
thereby and an assurance that the Certificate to be exchanged with the form
entitled "Option to Elect Exchange" on the reverse of the Certificate duly
completed will be received by such Trustee not later than five Business Days
after the date at such telegram, telex, facsimile transmission or letter, and
such Certificate and form duly completed must be received by such Trustee by
such fifth Business Day. Any tender of a Certificate by the Holder thereof for
exchange shall be irrevocable. Unless otherwise provided in the applicable
Series Supplement, the exchange option may be exercised pursuant to this
Section by the Holder of a Certificate for less than the Certificate Principal
Balance or Notional Amount of such Certificate as long as the Certificate
Principal Balance or Notional Amount remaining Outstanding after such exchange
is an authorized denomination and all other exchange requirements set forth in
the related Series Supplement are satisfied upon such partial exchange such
Certificate shall be cancelled and a new Certificate or Certificates for the
remaining Certificate Principal Balance or Notional Amount thereof shall be
issued (which shall be in the name of the Holder of such exchanged
Certificate).
<PAGE>
- 34 -
(c) Upon the completion of any such Optional Exchange, the Trustee
shall give prompt written notice thereof to each Rating Agency.
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates. (a) The Certificates of any
----------------
Series (or Class within such Series) shall be issued in fully registered form
without coupons and shall be substantially in the form of the exhibit with
respect thereto attached to the applicable Series Supplement.
The Certificates may be issued in one or more Series, each of which
series may, subject to the provisions of the Code and the intended status of
each Series Trust to constitute a fixed investment trust for federal income tax
purposes, be issued in one or more Classes, with such further particular
designation added or incorporated in such title for the Certificates of any
particular Series or Class within such Series as the Depositor may determine.
Each Certificate shall bear upon its face the designation so selected for the
Series and Class to which it belongs. All Certificates of the same Series and
Class shall be identical in all respects except for the denominations thereof.
All Certificates of all Classes within any one Series at any time Outstanding
shall be identical except for differences among the Certificates of the
different Classes within such Series specified in the applicable Series
Supplement. Except as otherwise provided in a Series Supplement, all
Certificates of a particular Series (and all Classes within such Series) issued
under this Trust Agreement shall be in all respects equally and ratably
entitled to the benefits hereof without preference, priority or distinction on
account of the actual time or times of authentication and delivery, all in
accordance with the terms and provisions of this Trust Agreement.
(b) Each Series (and all Classes within such Series) of
Certificates shall be created by a Series Supplement authorized by the
Depositor and the Trustee and establishing the terms and provisions of such
Series. The several Series may, subject to the provisions of the Code and the
intended status of each Series Trust to constitute a fixed investment trust for
federal income tax purposes, differ as between Series and any given Class may
vary as between the other Classes within any given Series.
Section 5.02. Execution, Authentication and Delivery. (a) The
--------------------------------------
Certificates shall be executed by the Trustee by a corporate trust officer
thereof, under its corporate seal, which may be in facsimile form and imprinted
or otherwise reproduced thereon. The signature of any of these officers may be
manual or facsimile. Certificates bearing the manual or facsimile signature of
individuals who were at any time the proper officers of the Trustee shall be
binding, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Certificates
or did not hold such offices at the date of such Certificates.
<PAGE>
- 35 -
(b) Each Certificate shall be dated as of the later of the date
specified in the related Series Supplement and the date of its authentication.
(c) No Certificate shall be entitled to any benefit under this
Trust Agreement or be valid or obligatory for any purpose, unless there appears
on such Certificate a certificate of authentication substantially in one of the
forms provided for herein executed by the Trustee by the manual signature of
one of its authorized signatories, and such certificate upon any Certificate
shall be conclusive evidence, and the only evidence, that such Certificate has
been duly authenticated and delivered hereunder and is entitled to the benefits
of this Trust Agreement.
Section 5.03. Temporary Certificates. Pending the preparation
----------------------
of Definitive Certificates of any Series (or Class within each such Series),
the Depositor may execute, and upon receipt of a Depositor Order, the Trustee
shall authenticate and deliver temporary Certificates which are printed,
lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the Definitive
Certificates in lieu of which they are issued, in registered form and with such
appropriate insertions, omissions, substitutions and other variations as may be
authorized by such Depositor Order. Any such temporary Certificate may be in
global form, representing all or a portion of the Outstanding Certificates of
such Series or Class. Every such temporary Certificate shall be executed by
the Depositor and shall be authenticated and delivered by the Trustee upon the
same conditions and in substantially the same manner, and with the same effect,
as the Definitive Certificate or Definitive Certificates in lieu of which is
issued.
If temporary Certificates of any Series (or Class within such
Series) are issued, the Trustee will cause Definitive Certificates of such
Series or Class to be prepared without unreasonable delay. After the
preparation of Definitive Certificates of such Series or Class, the temporary
Certificates of such Series or Class shall be exchangeable for Definitive
Certificates of such Series or Class upon surrender of the temporary
Certificates of such Series or Class at the Delivery Office of the Trustee,
without charge to the Holder, except as provided in Section 5.04 in connection
with a transfer. Upon surrender for cancellation of any one or more temporary
Certificates of any Series or Class within such Series, the Trustee shall
execute, authenticate and deliver in exchange therefore Definitive Certificates
with a like Certificate Principal Balance or Notional Amount, as applicable, of
the same Series (or Class within such Series) of authorized denominations and
of like tenor. Until so exchanged, temporary Certificates of any Series (or
Class within such Series) shall in all respects be entitled to the same
benefits under this Trust Agreement as Definitive Certificates of such Series
or Class, except as otherwise specified in the applicable Series Supplement
with respect to the payment of interest on Global Securities in temporary form.
<PAGE>
- 36 -
Upon any exchange of a portion of a temporary Global Security for a
definitive Global Security or for the individual Definitive Certificates
represented thereby pursuant to this Section 5.03 or Section 5.04, the
temporary Global Security shall be endorsed by the Trustee to reflect the
reduction of the aggregate Certificate Principal Balance or Notional Amount, as
applicable, evidenced thereby, whereupon the aggregate Certificate Principal
Balance or Notional Amount, as applicable, of such temporary Global Security
shall be reduced for all purposes by the amount so exchanged and endorsed.
Section 5.04. Registration; Registration of Transfer and
-------------------------------------------
Exchange. (a) The Trustee shall cause to be kept a register for each Series
- --------
of Registered Certificates (the "CERTIFICATE REGISTER") in which a transfer
agent and registrar (which may be the Trustee) (the "CERTIFICATE
REGISTRAR") shall provide for the registration of Certificates and the
registration of transfers and exchanges of Certificates. The Trustee is hereby
initially appointed Certificate Registrar for the purpose of registering
Certificates and transfers and exchanges of Certificates as herein provided;
provided, however, that the Trustee may appoint one or more co-Certificate
Registrars. Upon any resignation of any Certificate Registrar, the Depositor
shall promptly appoint a successor or, in the absence of such appointment,
assume the duties of Certificate Registrar.
If a Person other than the Trustee is appointed by the Depositor as
Certificate Registrar, the Depositor will give the Trustee prompt written
notice of the appointment of a Certificate Registrar and of the location, and
any change in the location, of the Certificate Register, and the Trustee shall
have the right to rely upon a certificate executed on behalf of the Certificate
Registrar by an Executive Officer thereof as to the names and addresses of the
Holders and the principal amounts and numbers of the Certificates held by each
Holder.
(b) Upon surrender for registration of transfer any Certificate of
any Series (or Class within such Series) at the office or agency of the
Trustee, if the requirements of Section 8-401(1) of the Uniform Commercial Code
are met to the Depositor's satisfaction, the Trustee shall execute,
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of any authorized denominations, of a
like Series, Class and aggregate Certificate Principal Balance or Notional
Amount, as applicable.
(c) Notwithstanding any other provisions of this Section, unless
and until it is exchanged in whole or in part for the individual Certificates
represented thereby, a Global Security representing all or a portion of the
Certificates of a Series (or Class within such Series) may not be transferred
except as a whole by the Depository for such Series or Class to a nominee of
such Depository or by a nominee of such Depository to such Depository or
another nominee of such Depository or by such Depository or any such nominee to
a successor Depository for such Series or Class or a nominee of such successor
Depository.
<PAGE>
- 37 -
(d) At the option of the Holder, Certificates of any Series (or
Class within such Series) (other than a Global Security, except as set forth
below) may be exchanged for other Certificates of the same Series or Class of
any authorized denomination or denominations of like tenor and aggregate
Certificate Principal Balance or Notional Amount, as applicable, upon surrender
of the Certificates to be exchanged at the office or agency of the Trustee
maintained for such purpose.
(e) If at the time the Depository for the Certificates of a Series
(or Class within such Series) notifies the Depositor that it is unwilling or
unable to continue as Depository for the Certificates of such Series or Class
or if at any time the Depository for the Certificates of such Series or Class
shall no longer be eligible under Section 5.08(b), the Depositor shall appoint
a successor Depository with respect to the Certificates of such Series or
Class. If a successor Depository for the Certificates of such Series or Class
is not appointed by the Depositor within 90 days after the Depositor receives
such notice or becomes aware of such ineligibility, the Depositor's election
pursuant to Section 5.01 shall no longer be effective with respect to the
Certificates of such Series or Class and the Depositor will execute, and the
Trustee, upon receipt of a Depositor Order for the authentication and delivery
of individual Certificates of such Series or Class, will authenticate and
deliver individual Certificates of such Series or Class in an aggregate
Certificate Principal Balance or Notional Amount, as applicable, equal to the
aggregate Certificate Principal Balance or Notional Amount, as applicable, of
the Global Security or Securities representing Certificates of such Series or
Class in exchange for such Global Security or Securities.
(f) The Depositor may at any time and in its sole discretion
determine that individual Certificates of any Series (or Class within such
Series) issued in the form of one or more Global Securities shall no longer be
represented by such Global Security or Securities. In such event the Trustee
shall execute, and, upon receipt of a Depositor Order for the authentication
and delivery of individual Certificates of such Series or Class, shall
authenticate and deliver, individual Certificates of such Series or Class in an
aggregate Certificate Principal Balance or Notional Amount, as applicable,
equal to the aggregate Certificate Principal Balance or Notional Amount, as
applicable, of the Global Security or Securities representing Certificates of
such Series or Class in exchange for such Global Security or Securities.
(g) If specified by the Depositor pursuant to Section 5.01 with
respect to a Series (or Class within such Series) of Certificates, the
Depository for such Series may surrender a Global Security for such Series or
Class in exchange in whole or in part for individual Certificates of such
Series or Class on such terms as are acceptable to the Depositor and such
Depository. Thereupon, the Trustee shall execute, and, upon receipt of a
Depositor Order, shall authenticate and deliver, without service charge,
<PAGE>
- 38 -
(i) to each Person specified by such Depository a new individual
Certificate or Certificates of the same Series or Class, of any
authorized denomination as requested by such Person in an aggregate
Certificate Principal Balance or Notional Amount, as applicable, equal to
and in exchange for such Person's beneficial interest in the Global
Security; and
(ii) to such Depository a new Global Security in a denomination
equal to the difference, if any, between the aggregate Certificate
Principal Balance or Notional Amount, as applicable, of the surrendered
Global Security and the aggregate Certificate Principal Balance or
Notional Amount, as applicable, of individual Certificates delivered to
Holders thereof.
In any exchange provided for in any of the preceding three
paragraphs, the Trustee shall execute, and, upon receipt of a Depositor Order,
will authenticate and deliver individual Certificates in registered form in
authorized denominations.
Upon the exchange of a Global Security for individual Certificates,
such Global Security shall be cancelled by the Trustee. Individual
Certificates issued in exchange for a Global Security pursuant to this Section
5.04 shall be registered in such names and in such authorized denominations as
the Depository for such Global Security, pursuant to instructions from its
Participants, any indirect participants or otherwise, shall instruct the
Trustee. The Trustee shall deliver such Certificates to the Person in whose
names such Certificates are so registered.
(h) All Certificates issued upon any registration of transfer or
exchange of Certificates shall constitute complete and indefeasible evidence of
ownership in the Trust related to such Certificates and be entitled to the same
benefits under this Trust Agreement as the Certificates surrendered upon such
registration of transfer or exchange.
(i) Every Certificate presented or surrendered for registration of
transfer or exchange shall (if so required by the Depositor, the Trustee or the
Certificate Registrar) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Depositor, the Trustee or
the Certificate Registrar, duly executed, by the Holder thereof or his attorney
duly authorized in writing, with such signature guaranteed by a brokerage firm
or financial institution that is a member of a Securities Approved Medallion
Program such as Securities Transfer Agents Medallion Program (STAMP), Stock
Exchange Medallion Program (SEMP) or New York Stock Exchange Inc. Medallion
Signature Program (MSP).
(j) No service charge shall be made to a Holder for any
registration of transfer or exchange of Certificates, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates,
<PAGE>
- 39 -
other than exchanges pursuant to Section 5.03 not involving any transfer.
Section 5.05. Mutilated, Destroyed, Lost and Stolen
--------------------------------------
Certificates. If (i) any mutilated Certificate is surrendered to the Trustee
- ------------
at the Delivery Office or (ii) the Depositor and the Trustee receive evidence
to their satisfaction of the destruction, loss or theft of any Certificate, and
there is delivered to the Depositor and the Trustee such security or indemnity
as they may require to hold each of them and any Paying Agent harmless, and
neither the Depositor nor the Trustee receives notice that such Certificate has
been acquired by a bona fide purchaser, then the Trustee shall execute and,
upon receipt of a Depositor Order, shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a
new Certificate of the same Series or Class of like tenor, form, terms and
principal amount, bearing a number not contemporaneously Outstanding.
Upon the issuance of any new Certificate under this Section, the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in respect thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Certificate of any Series or Class issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership
in the Trust related to such Series, whether or not the destroyed, lost or
stolen Certificate shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Trust Agreement equally and
proportionately with any and all other Certificates of that Series or Class
duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06. Persons Deemed Owners. (a) The Depositor, the
---------------------
Trustee and any agent of the Depositor or the Trustee may treat the Person in
whose name any Certificate is registered as the owner of such Certificate for
the purpose of receiving distributions of principal of (and premium, if any)
and (subject to Section 4.02) interest, if any, on such Certificate and for all
other purposes whatsoever, whether or not such Certificate be overdue, and
neither the Depositor or the Trustee, nor any agent of the Depositor or the
Trustee shall be affected by notice to the contrary.
(b) None of the Depositor, the Trustee or any of their agents will
have any responsibility or liability for any aspect of the records relating to
or distributions made on account of beneficial ownership interests in a Global
Security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
<PAGE>
- 40 -
Section 5.07. Cancellation. Unless otherwise specified
------------
pursuant to Section 5.01 for Certificates of any Series, all Certificates
surrendered for payment, redemption, transfer or exchange shall, if surrendered
to any Person other than the Trustee, be delivered to the Trustee and shall be
promptly cancelled by the Trustee. No Certificates shall be authenticated in
lieu of or in exchange for any Certificates cancelled as provided in this
Section, except as expressly permitted by this Trust Agreement.
Section 5.08. Global Securities. (a) If the Series Supplement
-----------------
pursuant to Section 5.01 provides that a Series (or Class within such Series)
of Certificates shall be represented by one or more Global Securities, then the
Depositor shall execute and, upon receipt of a Depositor Order, the Trustee
shall authenticate and deliver one or more Global Securities that (i) shall
represent an aggregate initial Certificate Principal Balance or Notional
Amount, as applicable, equal to the aggregate initial Certificate Principal
Balance or Notional Amount, as applicable, of the Certificates of such Series
or Class to be represented by such one or more Global Securities, (ii) shall be
registered in the name of the Depository for such Global Security or Securities
or the nominee of such Depository, (iii) shall be delivered by the Trustee to
such Depository or pursuant to such Depository's instruction and (iv) shall
bear a legend substantially to the following effect: "Unless and until it is
exchanged in whole or in part for the individual Certificates represented
hereby, this Global Security may not be transferred except as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository or
by the Depository or any such nominee to a successor Depository or a nominee of
such successor Depository."
No Holder of a Certificate of such Series or Class will receive a
Definitive Certificate representing such Holder's interest in such Certificate
or Certificates, except as provided in Section 5.10. Unless and until
definitive, fully registered Certificates (the "DEFINITIVE CERTIFICATES")
have been issued to Holders of such Series or Class pursuant to Section 5.10:
(i) the provisions of this Section 5.08 shall be in full force and
effect;
(ii) the Certificate Registrar and the Trustee shall be entitled to
deal with the Depository for all purposes of this Trust Agreement
(including the distribution of principal of, and premium, if any, and
interest on the Certificates and the giving of instructions or directions
hereunder) as the sole Registered Holder of the Certificates of such
Series or Class, and shall have no obligation to the owners of beneficial
interests in such Series or Class (collectively, the "CERTIFICATE
OWNERS");
(iii) to the extent that the provisions of this Section 5.08
conflict with any other provisions of this Trust Agreement, the
provisions of this Section 5.08 shall control;
<PAGE>
- 41 -
(iv) the rights of Certificate Owners of such Series or class shall
be exercised only through the Depository and shall be limited to those
established by law and agreements between such Certificate Owners and the
Depository or its Participants; and
(v) whenever this Trust Agreement requires or permits actions to be
taken based upon instructions or directions of Registered Holders of
Certificates of such Series or Class evidencing a specified percentage of
the aggregate Voting Rights of such Series or Class, the Depository shall
be deemed to represent such percentage only to the extent that it has
received instructions to such effect from Certificate Owners of such
Series or Class or Participants in such Depository's system owning or
representing, respectively, such required percentage of the beneficial
interest in the Certificates of such Series or Class and has delivered
such instructions to the Trustee.
(b) Each Depository designated pursuant to Section 5.01 for a
Global Security must, at the time of its designation and at all times while it
serves as such Depository, be a clearing agency registered under the Exchange
Act and any other applicable statute or regulation.
Section 5.09. Notices to Depository. Whenever a notice or
---------------------
other communication to the Holders of a Series or Class within such Series
represented by one or more Global Securities is required under this Trust
Agreement, unless and until Definitive Certificates for such Series or Class
shall have been issued to such Certificate Owners pursuant to Section 5.10, the
Trustee shall give all such notices and communications specified herein to be
given to Holders of the Certificates of such Series to the Depository, and
shall have no obligation to the Certificate Owners.
Section 5.10. Definitive Certificates. If in respect of a
-----------------------
Series (or Class within such Series) represented by one or more Global
Securities (i) the Depositor advises the Trustee in writing that the Depository
is no longer willing or able to properly discharge its responsibilities with
respect to the Certificates of such Series or Class and the Depositor is unable
to locate a qualified successor, (ii) the Depositor at its option advises the
Trustee in writing that it elects to terminate the book-entry system of such
Series or Class through the Depository or (iii) Certificate Owners representing
beneficial interests aggregating at least a majority (or such other Required
Percentage-Definitive Certificates that may be specified in a Series
Supplement) of the Voting Rights of the Certificates of such Series or Class
advise the Depository in writing that the continuation of a book-entry system
for such Series or Class through the Depository is no longer in the best
interests of the Certificates Owners of such Series or Class, then the
Depository shall notify all Certificate Owners or Participants in the
Depository's system with respect to such Series or Class and the Trustee of the
occurrence of any such event and of the availability of Definitive Certificates
for such Series or Class
<PAGE>
- 42 -
to Certificate Owners of such Series or Class requesting the same.
Upon surrender to the Trustee of the Global Securities of such
Series or Class by the Depository, accompanied by registration instructions,
the Depositor shall execute and the Trustee shall authenticate the Definitive
Certificates of such Series or Class in accordance with the instructions of the
Depository. None of the Depositor, the Certificate Registrar or the Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Certificates of Series or Class, the Trustee
shall recognize the holders of the Definitive Certificates of such Series or
Class as Holders.
Section 5.11. Conditions of Authentication and Delivery of New
-------------------------------------------------
Series. Certificates of a new Series may be issued at any time and from time
- ------
to time after the execution and delivery of these Standard Terms and the
related Series Supplement. The Depositor shall execute and deliver
Certificates of such Series to the Trustee and the Trustee shall authenticate
and deliver such Certificates upon a Depositor Order and upon delivery by the
Depositor to the Trustee of the following:
(1) The delivery of the Underlying Securities in accordance with
Section 2.01(b);
(2) An Officer's Certificate of the Depositor, dated as of the
Closing Date, to the effect that all of the requirements of this Section
5.11 have been satisfied, and that the Depositor is not in breach of this
Trust Agreement and that the issuance of the Certificates will not result
in any breach of any of the terms, conditions, or provisions of, or
constitute a default under, the Depositor's Memorandum and Articles of
Association, or any indenture, mortgage, deed of transfer or other
agreement or instrument to which the Depositor is a party or by which it
or its property is bound or any order of any court or administrative
agency entered in any Proceeding to which the Depositor is a party or by
which it or its property may be bound or to which it or its property may
be subject;
(3) A Series Supplement consistent with the applicable provisions
of these Standard Terms;
(4) All agreements, instruments or other documents called for by
the applicable Series Supplement as a condition to the issuance of the
Certificates of such Series;
(5) If applicable, a fully executed copy of the Swap Agreement,
together with all documents and opinions required to be delivered to the
Trust upon execution thereof pursuant to the terms thereof; and
(6) Written instructions by the Depositor to the Trustee directing
the Trustee to enter into and perform any
<PAGE>
- 43 -
obligations under the Swap Agreement, if applicable, and/or the Market
Agent Agreement, if applicable.
If all the Certificates of a Series are not to be originally issued
at the same time, then the documents required to be delivered pursuant to this
Section 5.11 must be delivered only once, prior to the authentication and
delivery of the first Certificate of such Series; provided, however, that any
subsequent Depositor Order to the Trustee to authenticate Certificates of such
Series upon original issuance shall constitute a representation and warranty by
the Depositor that, as of the date of such request, the statements made in this
Section 5.11 shall be true and correct as if made on such date.
Section 5.12. Appointment of Paying Agent. The Trustee may
---------------------------
appoint one or more paying agents (each, a "PAYING AGENT") with respect to
the Certificates of any Series. Any such Paying Agent shall be authorized to
make distributions to Certificateholders of such Series from the Certificate
Account for such Series pursuant to the provisions of the applicable Series
Supplement and shall report the amounts of such distributions to the Trustee.
Any Paying Agent shall have the revocable power to withdraw funds from such
Certificate Account for the purpose of making the distributions referred to
above. The Trustee may revoke such power and remove the Paying Agent if the
Trustee determines in its sole discretion that the Paying Agent shall have
failed to perform its obligations under this Trust Agreement in any material
respect. The Paying Agent shall initially be the Trustee and any co-paying
agent chosen by the Trustee and acceptable to the Depositor, including, if and
so long as any Series or Class within such Series is listed on the Luxembourg
Stock Exchange and such exchange so requires, a co-paying agent in Luxembourg
or another European city. Any Paying Agent shall be permitted to resign as
Paying Agent upon 30 days' notice to the Trustee. In the event that the
Trustee shall no longer be the Paying Agent, the Trustee shall appoint a
successor or additional Paying Agent. The Trustee shall cause each successor
to act as Paying Agent to execute and deliver to Trustee an instrument in which
such successor or additional Paying Agent shall agree with the Trustee that it
will hold all sums, if any, held by it for distribution to the
Certificate-holders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be distributed to such Certificateholders and
will agree to such other matters as are required by Section 317(b) of the Trust
Indenture Act. The Paying Agent shall return all unclaimed funds to the
Trustee and upon removal shall also return all funds in its possession to the
Trustee. The provisions of Sections 7.01, 7.03, 7.04 and 7.06 shall apply to
the Trustee also in its role as Paying Agent, for so long as the Trustee shall
act as Paying Agent. Any reference in this Trust Agreement to the Paying Agent
shall include any co-paying agent unless the context requires otherwise.
Notwithstanding anything contained herein to the contrary, the appointment of a
Paying Agent pursuant to this Section 5.12 shall not release the Trustee from
the duties, obligations, responsibilities or liabilities arising under this
Trust Agreement other than with respect to funds paid to such Paying Agent.
<PAGE>
- 44 -
Section 5.13. Authenticating Agent. (a) The Trustee may
--------------------
appoint one or more Authenticating Agents (each, an "AUTHENTICATING AGENT")
with respect to the Certificates of any Series which shall be authorized to act
on behalf of the Trustee in authenticating such Certificates in connection with
the issuance, delivery and registration of transfer or exchange of such
Certificates. Whenever reference is made in this Trust Agreement to the
authentication of Certificates by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication on
behalf of the Trustee by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent must be acceptable to the Depositor. Notwithstanding
anything contained herein to the contrary, the appointment of an Authenticating
Agent pursuant to this Section 5.13 shall not release the Trustee from the
duties, obligations, responsibilities or liabilities arising under this Trust
Agreement.
(b) Any institution succeeding to the corporate agency business of
any Authenticating Agent shall continue to be an Authenticating Agent without
the execution or filing of any power or any further act on the part of the
Trustee or such Authenticating Agent. An Authenticating Agent may at any time
resign by giving notice of resignation to the Trustee and to the Depositor. The
Trustee may at any time terminate the agency of an Authenticating Agent by
giving notice of termination to such Authenticating Agent and to the Depositor.
Upon receiving such a notice of resignation or upon such a termination, or in
case at any time an Authenticating Agent shall cease to be acceptable to the
Trustee or the Depositor, the Trustee promptly may appoint a successor
Authenticating Agent. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers and duties
of its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless acceptable to the Depositor. The Trustee agrees to pay to each
Authenticating Agent from time to time reasonable compensation for its services
under this Section. The provisions of Section 7.01, 7.03 and 7.04 shall be
applicable to any Authenticating Agent.
(c) Pursuant to an appointment made under this Section, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
<PAGE>
- 45 -
"This is one of the Certificates described in the Standard Terms
and the related Series Supplement.
NAME OF TRUSTEE,
not in its individual
capacity but solely as
Trustee,
By:___________________________
Authorized Officer"
Section 5.14. Voting Rights with Respect to Underlying
-----------------------------------------
Securities. (a) Within five Business Days after receipt of notice of any
- ----------
meeting of, or other occasion for the exercise of voting rights or the giving
of consents ("VOTING RIGHTS") by, owners of any of the Underlying
Securities, the Trustee shall give notice to the Certificateholders, setting
forth (i) such information as is contained in such notice to owners of
Underlying Securities, (ii) a statement that the Certificateholders will be
entitled, subject to any applicable provision of law and any applicable
provisions of such Underlying Securities (and to the extent of the voting
rights allocated to the Certificateholders pursuant to Section 5.14(b)), to
instruct the Trustee as to the exercise of voting rights, if any, pertaining to
such Underlying Securities and (iii) a statement as to the manner in which
instructions may be given to the Trustee to give a discretionary proxy to a
person designated in the notice received by the Trustee. Such notice shall be
given by the Trustee to the Certificateholders of record on such Record Date.
Upon the written request of the applicable Certificateholder,
received on or before the date established by the Trustee for such purpose, the
Trustee shall endeavor, insofar as practicable and permitted under any
applicable provision of law and any applicable provision of or governing the
Underlying Securities, to vote in accordance with any nondiscretionary
instruction set forth in such written request. The Trustee shall not vote
except as specifically authorized and directed in written instructions from the
applicable Certificateholder entitled to give such instructions.
Notwithstanding the foregoing, if the Trustee determines (based upon advice
furnished by nationally recognized independent tax counsel, whether at the
request of any Certificateholder or otherwise) that the exercise of voting
rights with respect to any Underlying Securities could result in a "sale or
other disposition" of such Underlying Securities within the meaning of Section
1001(a) of the Internal Revenue Code of 1986, as amended, the Trustee shall
exercise such voting rights in a manner that would not result in any such sale
or other disposition. The Trustee will have no responsibility to undertake on
its own initiative to determine that any exercise of voting rights will result
in any such sale or other disposition.
(b) Unless otherwise specified in the applicable Series Supplement,
the voting rights allocable to the owners of the Underlying Securities pursuant
to the terms thereof shall be
<PAGE>
- 46 -
allocated among the Certificateholders pro rata, in the proportion that the
denomination of each Certificate bears to the aggregate denomination of all
Certificates.
(c) By accepting delivery of a Certificate, whether upon original
issuance or subsequent transfer, exchange or replacement thereof, and without
regard to whether ownership is beneficial or otherwise, the Certificateholder
agrees so long as it is an owner of such Certificate that it shall not grant
any consent (i) to any conversion of the timing of payment of, or the method or
rate of accruing, interest on the Underlying Securities underlying the
Certificates held by such Certificateholder or (ii) to any redemption or
prepayment of the Underlying Securities underlying the Certificates held by
such Certificateholder. The Trustee shall not grant any consent solicited from
the owners of the Underlying Securities underlying the Certificates with
respect to the matters set forth in this Section nor shall it accept or take
any action in respect of any consent, proxy or instructions received from any
Certificateholder in contravention of the provisions of this Section.
Section 5.15. Actions by Certificateholders. (a) Wherever in
-----------------------------
this Trust Agreement a provision is made that an action may be taken or a
notice, demand or instruction given by Certificateholders or Beneficial Owners,
such action, notice or instruction may be taken or given by any
Certificateholder or Beneficial Owner.
(b) Each Certificateholder or Beneficial Owner shall have the right
to assert any rights and privileges of a Certificateholder or Beneficial Owner,
and shall have the right to proceed directly and individually against any
Person to enforce any remedies hereunder and shall not be required to act in
concert with any other Certificateholder or Beneficial Owner or any other
Person.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Certificateholder or Beneficial Owner of a Certificate
shall bind such Certificateholder or Beneficial Owner and every subsequent
Certificateholder or Beneficial Owner of such Certificate or any Certificate
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, suffered or omitted to be done by the
Certificateholder or Beneficial Owner or the Trustee in reliance thereon,
whether or not notation of such action is made upon such Certificate.
(d) Certificateholders of Certificates are beneficial owners of the
right to receive principal payments and interest payments to which such
Certificates relate and, as such, will have the right following an event of
default with respect to any Underlying Security to proceed directly against the
Underlying Securities Issuer(s). Such Certificateholders are not required to
join other Certificateholders of Certificates, the Depositor or the Trustee in
order to proceed against the Underlying Securities Issuer(s).
<PAGE>
- 47 -
Section 5.16. Events of Default. If any Event of Default
-----------------
shall occur and be continuing with respect to any Class of Certificates, then,
and in each and every case, the Trustee shall exercise any rights in respect of
the related Underlying Securities as provided in the applicable Series
Supplement.
Section 5.17. Judicial Proceedings Instituted by Trustee;
--------------------------------------------
Trustee May Bring Suit. If there shall be a failure to make payment of the
- ----------------------
principal of or premium, if any, or interest on any Underlying Security, then
the Trustee, in its own name, and as trustee of an express trust, as holder of
such Underlying Security, shall be, to the extent permitted by and in
accordance with the terms of the Underlying Security, subject to the
limitations on acceleration and the exercise of remedies set forth therein,
entitled and empowered to institute any suits, actions or proceedings at law,
in equity or otherwise, including the power to make a demand on the trustee in
respect of such Underlying Security, if provided for, to take action to enforce
the Underlying Security for the collection of the sums so due and unpaid on
such Underlying Security and may prosecute any such claim or proceeding to
judgment or final decree with respect to the whole amount of any such sums so
due and unpaid.
Section 5.18. Control by Certificateholders. The Holders of
-----------------------------
Certificates of any Class holding Certificates representing not less than the
Required Percentage-Direction of Trustee of the aggregate Voting Rights of the
Outstanding Certificates of such Class shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee or exercising any trust or power conferred on the Trustee under this
Trust Agreement, including any right of the Trustee as holder of the Underlying
Securities; provided, that:
(1) such direction shall not be in conflict with any rule of law or
with this Trust Agreement and would not involve the Trustee in personal
liability or expense;
(2) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the Holders of Certificates of such
Class not taking part in such direction;
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 5.19. Waiver of Past Defaults. The Holders of the
-----------------------
Required Percentage-Waiver of Certificates of any Series may direct the Trustee
to vote such percentage of the Underlying Securities held by the Trustee as
corresponds to the percentage of the aggregate Principal Amount of the
Certificates of such Series held by such Holders to waive any past Event of
Default thereunder with respect to such Series of Certificates and its
consequences or may instruct the Trustee to waive any past default under this
Trust Agreement and its consequences, except a default:
<PAGE>
- 48 -
(1) in the payment of the principal of or premium, if any, or
interest on the Underlying Securities;
(2) in respect of a covenant or provision hereof which under
Article VIII hereof cannot be modified or amended without the consent of
the Holder of each Outstanding Certificate affected; or
(3) specified in the applicable Series Supplement, if any, unless
the applicable Series Supplement provides otherwise.
Upon any such direction, the Trustee shall vote such percentage of
the Underlying Securities of the corresponding Series held by the Trustee as
corresponds to the percentage of the aggregate Principal Amount of the
Outstanding Certificates of such Series held by Holders who directed the
Trustee to waive such default or Event of Default thereunder. Upon any waiver
that is effective under the terms of such Class of Underlying Securities to
waive such default or Event of Default, such default or Event of Default shall
cease to exist with respect to this Trust Agreement, and, in the case of a
default, any Event of Default arising therefrom shall be deemed to have been
cured for every purpose of this Trust Agreement and any direction given by the
Trustee on behalf of such Certificateholders or in respect of any Underlying
Securities shall be annulled with respect thereto; but no such waiver shall
extend to any subsequent or other default or Event of Default or impair any
right consequent thereon.
Section 5.20. Right of Certificateholders to Receive Payments
------------------------------------------------
Not to Be Impaired. Anything in this Trust Agreement to the contrary
- ------------------
notwithstanding, the right of any Certificateholder to receive distributions of
payments required pursuant to Section 4.01 hereof on the Certificates when due,
or to institute suit for enforcement of any such payment on or after the
applicable Distribution Date or other date specified herein for the making of
such payment, shall not be impaired or affected without the consent of such
Certificateholder.
Section 5.21. Remedies Cumulative. Every remedy given
-------------------
hereunder to the Trustee or to any of the Certificateholders shall not be
exclusive of any other remedy or remedies, and every such remedy shall be
cumulative and in addition to every other remedy given hereunder or now or
hereafter given by statute, law, equity or otherwise.
ARTICLE VI
THE DEPOSITOR
Section 6.01. Liability of the Depositor. The Depositor shall
--------------------------
be liable in accordance herewith only to the extent of the obligations
specifically imposed by these Standard Terms and the related Series Supplement.
<PAGE>
- 49 -
Section 6.02. Limitation on Liability of the Depositor. (a)
----------------------------------------
The Depositor shall not be under any obligation to expend or risk its own funds
or otherwise incur financial liability in the performance of its duties
hereunder or under a Series Supplement or in the exercise of any of its rights
or power if reasonable grounds exist for believing that the repayment or such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it.
(b) Neither the Depositor nor any of its directors, officers,
employees or agents shall be under any liability to any Trust or the
Certificateholders of any Series for any action taken, or for refraining from
the taking of any action, in good faith pursuant to this Trust Agreement, or
for errors in judgment; provided, however, that this provision shall not
protect the Depositor against any breach of representations, warranties or
covenants made herein, or against any liability which would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties hereunder.
(c) The Depositor shall not be under any obligation to appear in,
prosecute or defend any legal action unless such action is related to its
respective duties under this Trust Agreement and, in its opinion, does not
involve it in any expense or liability; provided, however, that the Depositor
may in its discretion undertake any such action which it may deem necessary or
desirable with respect to this Trust Agreement and the rights and duties of the
parties hereto and the interests of the Certificateholders hereunder. The
Depositor shall be under no obligation whatsoever to appear in, prosecute or
defend any action, suit or other proceeding in respect of any Underlying
Securities.
(d) The Depositor shall not be liable to any Certificateholder for
any action or non-action by it in reliance upon the advice of or information
from legal counsel, accountants, any Certificateholder of a Certificate or any
other person believed by it in good faith to be competent to give such advice
or information, including, without limitation, the Calculation Agent, the
Market Agent or the other party to this Trust Agreement. The Depositor may
rely and shall be protected in acting upon any written notice, request,
direction or other document believed by it to be genuine and to have been
signed or presented by the proper party or parties.
(e) The Depositor shall not incur any liability to any
Certificateholder if, by reason of any provision of any present or future law,
or regulation thereunder, or any governmental authority, or by any reason of
any act of God or war or other circumstance beyond the control of the relevant
party, the Depositor shall be prevented or forbidden from doing or performing
any act or thing which the terms of this Trust Agreement provide shall be done
or performed; and the Depositor shall not incur any liability to any
Certificateholder by reason of any non-performance or delay, caused as
aforesaid, in the performance of any act or thing which the terms of this Trust
<PAGE>
- 50 -
Agreement provide shall or may be done or performed, or by reason of any
exercise of, or failure to exercise, any discretion provided for in this Trust
Agreement.
Section 6.03. Depositor May Purchase Certificates. The
-----------------------------------
Depositor may at any time purchase Certificates in the open market or
otherwise. Certificates so purchased by the Depositor may, at the discretion
of the Depositor, be held or resold. Certificates beneficially owned by the
Depositor will be disregarded for purposes of determining whether the required
percentage of the aggregate Voting Rights has given any request, demand,
authorization, direction, notice, consent or waiver hereunder.
Section 6.04. Merger or Consolidation of the Depositor.
----------------------------------------
Nothing in this Trust Agreement shall prevent any consolidation or merger of
the Depositor with or into any other corporation, or any consolidation or
merger of any other corporation with or into the Depositor or any sale or
transfer of all or substantially all of the property and assets of the
Depositor to any other Person lawfully entitled to acquire the same; provided,
however, that, so long as Certificates are outstanding hereunder, the Depositor
covenants and agrees that any such consolidation, merger, sale or transfer
shall be upon the condition that the due and punctual performance and
observance of all the terms, covenants and conditions of this Trust Agreement
to be kept or performed by the Depositor shall be assumed by the Person (if
other than the Depositor) formed by or resulting from any such consolidation or
merger, or which shall have received the transfer of all or substantially all
of the property and assets of the Depositor, just as fully and effectually as
if successor Person had been the original party of the first part hereto; and
in the event of any such sale or transfer the predecessor Depositor may be
dissolved, wound up and liquidated at any time thereafter.
Section 6.05. No Liability of the Depositor with Respect to the
--------------------------------------------------
Underlying Securities; Certificateholders to Proceed Directly Against the
- --------------------------------------------------------------------------
Underlying Securities Issuer(s). (a) The sole obligor with respect to any
- -------------------------------
Underlying Security is the Underlying Securities Issuer(s). The Depositor
shall not have any obligation on or with respect to the Underlying Securities;
and its obligations with respect to Certificates shall be solely as set forth
in this Trust Agreement.
(b) The Depositor is not authorized to proceed against the
Underlying Securities Issuer in the event of a default or to assert the rights
and privileges of Certificateholders of Certificates and has no duty in respect
thereof.
<PAGE>
- 51 -
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.01. Duties of Trustee. (a) The Trustee undertakes
-----------------
to perform such duties and only such duties as are specifically set forth in
these Standard Terms and the related Series Supplement. In case an Event of
Default has occurred and is continuing, the Trustee shall exercise such of the
rights and powers vested in it by this Trust Agreement, and shall use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of such person's own affairs. The
Trustee shall exercise those rights in a manner consistent with the status of
any Trust created hereunder as a fixed investment trust for federal income tax
purposes. The Trustee shall not have any power to vary the investment of any
Certificateholders of any Series or to accept any assets (other than proceeds
of the Underlying Securities) other than the Underlying Securities transferred
to it on the Closing Date of any Series. Any permissive right of the Trustee
enumerated in this Trust Agreement shall not be construed as a duty and shall
be interpreted consistently with the status of the Trust as a fixed investment
trust.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Trust Agreement, shall examine them to determine whether they
conform to the requirements of this Trust Agreement. If any such instrument is
found not to conform to the requirements of this Trust Agreement, the Trustee
shall take action as it deems appropriate to have the instrument corrected, and
if the instrument is not corrected to the Trustee's satisfaction, the Trustee
will provide notice thereof to the Depositor and Certificateholders.
(c) No provision of this Trust Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own misconduct; provided, however, that:
(i) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Trust Agreement, the Trustee
shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Trust Agreement, no
implied covenants or obligations shall be read into this Trust Agreement
against the Trustee and, in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Trustee that conform to the
requirements of this Trust Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it
<PAGE>
- 52 -
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Trustee shall not be personally liable with respect to
any action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Holders of the Required
Percentage-Direction of Trustee of the aggregate Voting Rights of a given
Series (or Class or group of Classes within such Series), as specified in
the applicable Series Supplement relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Trust Agreement;
(iv) the Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of
its duties hereunder or in the exercise of any of its rights or powers if
there is reasonable ground for believing that the repayment of such funds
or adequate indemnity against such risk or liability is not reasonably
assured to it;
(v) except for actions expressly authorized by this Trust
Agreement, the Trustee shall take no actions reasonably likely to impair
the interests of the Trust in any Underlying Security now existing or
hereafter acquired or to impair the value of any Underlying Security now
existing or hereafter acquired;
(vi) except as expressly provided in this Trust Agreement, the
Trustee shall have no power to vary the corpus of the Trust including by
(A) accepting any substitute obligation or asset for an Underlying
Security initially assigned to the Trustee under Section 2.01, (B) adding
any other investment, obligation or security to the Trust or (C)
withdrawing from the Trust any Underlying Securities;
(vii) in the event that the Paying Agent or the Registrar shall
fail to perform any obligation, duty or agreement in the manner or on the
day required to be performed by the Paying Agent or Registrar, as the
case may be, under this Trust Agreement, the Trustee shall be obligated
promptly upon its knowledge thereof to perform such obligation, duty or
agreement in the manner so required;
(viii) the Trustee shall not be liable to any Certificateholder for
any action or non-action by it in reliance upon the advice of or
information from legal counsel, accountants, any Certificateholder of a
Certificate or any other person believed by it in good faith to be
competent to give such advice or information, including, without
limitation, the Calculation Agent, the Market Agent or the other party to
this Trust Agreement. The Trustee may rely and shall be protected in
acting upon any written notice, facsimile transmission, request,
direction or other
<PAGE>
- 53 -
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(ix) the Trustee shall not incur any liability to any
Certificateholder if, by reason of any provision of any present or future
law, or regulation thereunder, or any governmental authority, or by any
reason of any act of God or war or other circumstance beyond the control
of the relevant party, the Trustee shall be prevented or forbidden from
doing or performing any act or thing which the terms of this Trust
Agreement provide shall be done or performed; and the Trustee shall not
incur any liability to any Certificateholder by reason of any
non-performance or delay, caused as aforesaid, in the performance of any
act or thing which the terms of this Trust Agreement provide shall or may
be done or performed, or by reason of any exercise of, or failure to
exercise, any discretion provided for in this Trust Agreement;
(x) the Trustee shall be under no obligation whatsoever to appear
in, prosecute or defend any action, suit or other proceeding in respect
of any Underlying Securities;
(xi) whenever in the administration of this Trust Agreement the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) may, in the
absence of bad faith on its part, conclusively rely upon an Officers'
Certificate; and
(xii) the Trustee may consult with counsel of its selection and, in
the absence of bad faith or willful misconduct, the advice of such
counsel or any Opinion of Counsel selected by the Trustee with due care
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in reliance thereon.
(d) As promptly as practicable after, and in any event within 10
days after, the occurrence of any default (as such term is defined below)
hereunder with respect to any Class of Certificates, the Trustee shall transmit
by mail to the Depositor and the Holders of Certificates of such Class in
accordance with Section 313(c) of the Trust Indenture Act, notice of such
default hereunder known to the Trustee, unless such default shall have been
cured or waived; provided, however, that, except in the case of a default in
the payment of the principal of or premium, if any, or interest on any
Underlying Security, the Trustee shall be protected in withholding such notice
if and so long as a trust committee of Responsible Officers of the Trustee in
good faith determine that the withholding of such notice is in the interests of
the Holders of the Certificates of such Class. For the purpose of this
Section, the term "DEFAULT" means, with respect to any Class of
Certificates, any event that is, or after notice or lapse of time or both would
become, an Event of Default with respect to such Class of Certificates.
<PAGE>
- 54 -
(e) Within five Business Days after the receipt by the Trustee of a
written application by any three or more Certificateholders stating that the
applicants desire to communicate with other Certificateholders with respect to
their rights under this Trust Agreement or under the Certificates, and
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, and by reasonable proof that each such
applicant has owned its Certificates for a period of at least six months
preceding the date of such application, the Trustee shall, at its election,
either:
(i) afford to such applicants access to all information so
furnished to or received by the Trustee; or
(ii) inform such applicants as to the approximate number of
Certificateholders according to the most recent information so furnished
to or received by the Trustee, and as to the approximate cost of mailing
to such Certificateholders the form of proxy or other communication, if
any, specified in such application.
If the Trustee shall elect not to afford to such applicants access to such
information, the Trustee shall, upon the written request of such applicants,
mail to all such Certificateholders copies of the form of proxy or other
communication which is specified in such request, with reasonable promptness
after a tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of such mailing.
Section 7.02. Between Trustee and Sub-Administrative Agents.
---------------------------------------------
(a) Unless otherwise provided in a Series Supplement, the Trustee may enter
into Sub-Administration Agreements with one or more Sub-Administrative Agents
in order to delegate certain of its administrative obligations with respect to
a related Series under this Trust Agreement to such Sub-Administrative Agents;
provided, however, that (i) such delegation shall not release the Trustee from
the duties, obligations, responsibilities or liabilities arising under this
Trust Agreement; (ii) the Rating Agency Condition shall have been satisfied
with respect to the entering into of any such agreement and (iii) such
agreements are consistent with the terms of these Standard Terms and, with
respect to Certificates of any Series, the related Series Supplement. With
respect to any Series (or Class within such Series) of Certificates, each
Sub-Administration Agreement shall impose on the Sub-Administrative Agent
requirements conforming to the provisions set forth in Section 3.01 and provide
for administration of the related Trust and all or certain specified Underlying
Securities for such Series consistent with the terms of this Trust Agreement.
Additional requirements relating to the scope and contents of any
Sub-Administration Agreement may be provided in the applicable Series
Supplement. The Trustee shall deliver to the Depositor copies of all
Sub-Administration Agreements which it enters into, and any amendments or
modifications thereof, promptly upon the Trustee's execution and delivery of
any such instruments.
<PAGE>
- 55 -
(b) The Trustee shall be entitled to terminate any
Sub-Administration Agreement which it enters into and the rights and
obligations of any Sub-Administrative Agent under any Sub-Administration
Agreement in accordance with the terms and conditions of any such
Sub-Administration Agreement. In the event of a termination of any
Sub-Administration Agreement, the Trustee shall simultaneously reassume direct
responsibility for all obligations delegated in such Sub-Administration
Agreement without any act or deed on the part of the applicable
Sub-Administrative Agent, the Trustee shall administer directly the related
Underlying Securities or shall enter into a Sub-Administration Agreement with a
successor Sub-Administrative Agent which so qualifies under Section 7.02.
(c) Unless otherwise provided in the applicable Series Supplement,
in the event a Sub-Administrative Agent is administering one or more Underlying
Securities pursuant to a Sub-Administration Agreement, the Sub-Administrative
Agent shall be required immediately to direct the Trustee to deposit into an
Eligible Account established by such Sub-Administrative Agent (a
"SUB-ADMINISTRATION ACCOUNT") any amounts collected with respect thereto,
and all such amounts shall be deposited into the related Certificate Account
not later than the Business Day after receipt thereof.
Section 7.03. Certain Matters Affecting the Trustee. (a)
-------------------------------------
Except as otherwise provided in this Article VII:
(i) the Trustee may request and rely upon and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, facsimile transmission, request,
consent, order, appraisal, bond or other paper or document reasonably
believed by it to be genuine and to have been signed or presented by the
proper party or parties;
(ii) the Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it hereunder in
good faith and in accordance with such Opinion of Counsel;
(iii) the Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Trust Agreement or to
institute, conduct or defend any litigation hereunder or in relation
hereto, at the request, order or direction of any of the
Certificateholders, pursuant to the provisions of this Trust Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby;
(iv) the Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Trust Agreement;
<PAGE>
- 56 -
(v) the Trustee shall not be bound to make any investigation into
the facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, facsimile transmission, request,
consent, order, appraisal, approval, bond or other paper or document
believed by it to be genuine, unless requested in writing to do so by
Holders of the Required Percentage-Direction of Trustee of the aggregate
Voting Rights of the affected Series (or Class or Classes within any such
Series), as specified by the applicable Series Supplement; provided,
however, that if the payment within a reasonable time to the Trustee of
the costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the
terms of this Trust Agreement, the Trustee may require reasonable
indemnity against such expense or liability as a condition to taking any
such action;
(vi) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys or a custodian; and
(vii) the Trustee shall not be personally liable for any loss
resulting from the investment of funds held in any Certificate Account or
Reserve Account in accordance with Section 3.05.
(b) All rights of action under this Trust Agreement or under any of
the Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates of any Series (or Class within such
Series), or the production thereof at the trial or other Proceeding relating
thereto, and any such suit, action or proceeding instituted by the Trustee
shall be brought in its name for the benefit of all the Holders of such
Certificates, subject to the provisions of this Trust Agreement.
Section 7.04. Trustee Not Liable for Recitals in Certificates or
---------------------------------------------------
Underlying Securities. The Trustee assumes no responsibility for the
- ---------------------
correctness of the recitals contained herein and in the Certificates or in any
document issued in connection with the sale of the Certificates (other than the
signature and authentication on the Certificates). Except as set forth in
Section 7.10, the Trustee makes no representations or warranties as to the
validity or sufficiency of this Trust Agreement or of the Certificates of any
Series (other than the signature and authentication on the Certificates) or of
any Underlying Security or related document. The Trustee shall not be
accountable for the use or application by the Depositor, of any of the
Certificates or of the proceeds of such Certificates.
Section 7.05. Trustee May Own Certificates. The Trustee in
----------------------------
its individual capacity or any other capacity may become the owner or pledgee
of Certificates with the same rights it would have if it were not Trustee;
provided, however, that in determining whether the required percentage of
aggregate Voting
<PAGE>
- 57 -
Rights shall have consented to any action hereunder requiring the consent of
the Certificateholders, the Trustee's interest shall be excluded.
Section 7.06. Trustee's Fees and Expenses. (a) The applicable
---------------------------
Series Supplement shall specify the amount and circumstances of the Trustee's
compensation and the source thereof.
(b) If the Prepaid Ordinary Expenses set forth in the Series
Supplement is greater than zero, the Trustee acknowledges that the Depositor
has paid to the Trustee an amount equal to the Prepaid Ordinary Expenses, and
the Trustee agrees that the payment of such amount shall constitute full and
final satisfaction of and payment for all Ordinary Expenses.
(c) If the Prepaid Ordinary Expenses set forth in the Series
Supplement is zero, the Series Supplement may indicate that Ordinary Expenses
will be paid for by the Trust, in which case the Trustee shall be paid on a
periodic basis by the Trust or the Retained Interest at the rate or amount and
on the terms provided for in the Series Supplement. The Trustee agrees that
its right to receive such payments from the Trust shall constitute full and
final satisfaction of and payment for all Ordinary Expenses and that the
Trustee shall have no claim on payment of Ordinary Expenses from any other
source, including the Depositor.
(d) If the Prepaid Ordinary Expenses set forth in the Series
Supplement is zero, the Series Supplement may provide that the Depositor shall
pay to the Trustee from time to time a fee for its services and expenses as
Trustee as set forth in the Series Supplement payable at the times set forth
therein. The Trustee agrees that its right to receive such payments from the
Depositor shall constitute full and final satisfaction of and payment for all
Ordinary Expenses and that the Trustee shall have no claim for payment of
Ordinary Expenses from the Trust. The Trustee further agrees that,
notwithstanding any failure by the Depositor to make such periodic payments of
the Ordinary Expenses, the Trustee shall continue to perform its obligations
under this Trust Agreement. The Depositor's obligations to pay Ordinary
Expenses under this Trust Agreement shall be extinguished and of no further
effect upon the payment of Ordinary Expenses due and owing on the termination
of the Trust pursuant to Section 9.01 hereof.
(e) Subject to subsection 7.06(f), all Extraordinary Expenses, to
the extent not paid by a third party are, and shall be, obligations of the
Trust and when due and payable shall be satisfied solely by the Trust.
(f) The Trustee shall not take any action, including appearing in,
instituting or conducting any action or suit hereunder or in relation hereto
and is not indemnifiable under Section 7.11 hereof which, in the Trustee's
opinion, would or might cause it to incur costs, expenses or liabilities that
are Extraordinary Expenses unless (i) the Trustee is satisfied that it will
have adequate security or indemnity in respect of such
<PAGE>
- 58 -
costs, expenses and liabilities, (ii) the Trustee has been instructed to do so
by Certificateholders representing not less than the Required
Percentage-Remedies of the aggregate principal amount of Certificates then
outstanding, and (iii) the Certificateholders, pursuant to the instructions
given under clause (ii) above, have agreed that such costs, expenses or
liabilities shall either be (x) paid by the Trustee from the Trust, in the case
of a vote of 100% of the aggregate principal amount of Certificates then
outstanding, or (y) paid by those Certificateholders who have agreed to bear
the entire amount of such costs, expenses or liabilities, on a pro rata basis
among such Certificateholders.
Section 7.07. Eligibility Requirements for Trustee. (a) The
------------------------------------
Trustee hereunder shall at all times be a corporation or an association which
is not an Affiliate of the Depositor (but may have normal banking relationships
with the Depositor and its Affiliates) organized and doing business under the
laws of any State or the United States, authorized under such laws to exercise
corporate trust powers which shall be eligible to act as a trustee under
Section 310(a) of the Trust Indenture Act, having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
Federal or State authority. If such corporation or association publishes
reports of conditions at least annually, pursuant to law or to the requirements
of the aforesaid supervising or examining authority, then for the purposes of
this Section the combined capital and surplus of such corporation or
association shall be deemed to be its combined capital and surplus as set forth
in its most recent report of conditions so published. In the event that at any
time such Trustee shall cease to be eligible in accordance with the provisions
of this Section, such Trustee shall resign immediately in the manner and with
the effect specified in Section 7.08.
(b) In determining whether the Trustee has a conflicting interest
with respect to any Class of Certificates under Section 310(b) of the Trust
Indenture Act and this Section, each other Class of Certificate will be treated
as having been issued under an indenture other than this Trust Agreement.
Section 7.08. Resignation or Removal of the Trustee; Appointment
---------------------------------------------------
of Successor Trustee. (a) The Trustee may at any time resign as Trustee
- --------------------
hereunder by written notice of its election so to do, delivered to the
Depositor, and such resignation shall take effect upon the appointment of a
successor Trustee and its acceptance of such appointment as hereinafter
provided; provided, however, that in the event of such resignation, the Trustee
shall (a) assist the Depositor in finding a successor Trustee acceptable to the
Depositor and (b) negotiate in good faith concerning any prepaid but unaccrued
fees.
(b) The Depositor or Holders of the Required Percentage-Removal of
Trustee of Certificates may at any time remove the Trustee as Trustee hereunder
by written notice delivered to the Trustee in the manner provided in Section
10.04 hereof, and such removal shall take effect upon the appointment of the
successor trustee and its acceptance of such appointment
<PAGE>
- 59 -
as provided in the succeeding paragraph; provided, however, that in the event
of such removal, the Depositor shall negotiate in good faith with the Trustee
in order to agree regarding payment of the termination costs of the Trustee
resulting from such removal.
(c) Upon the designation of a successor Trustee, following either
resignation or removal of the Trustee, the Trustee shall deliver to the
successor Trustee all records relating to the Certificates in the form and
manner then maintained by the Trustee, which shall include a hard copy thereof
upon written request of the successor Trustee.
(d) If at any time the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of
its property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property of affairs for the purpose of
rehabilitation, conservation or liquidation, the Depositor shall petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee. In the event the Trustee resigns or is
removed, the Trustee shall reimburse the Depositor for any fees or charges
previously paid to the Trustee in respect of duties not yet performed under
this Trust Agreement which remain to be performed by a successor Trustee.
(e) In case at any time the Trustee acting hereunder notifies the
Depositor that it elects to resign or the Depositor or Holders of the Required
Percentage-Removal of Trustee of Certificates notifies or notify the Trustee
that it or they elects or elect to remove the Trustee as Trustee, the Depositor
shall, within 90 days after the delivery of the notice of resignation or
removal, appoint a successor Trustee, which shall satisfy the requirements for
a trustee under Section 7.07. If no successor Trustee has been appointed
within 90 days after the Trustee has given written notice of its election to
resign or the Depositor or Holders of the Required Percentage-Removal of
Trustee of Certificates have given written notice to the Trustee of its or
their election to remove the Trustee, as the case may be, the Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee. Every successor Trustee shall execute and deliver to its predecessor
and to the Depositor an instrument in writing accepting its appointment
hereunder, and thereupon such successor Trustee, without any further act or
deed, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor and for all purposes shall be the Trustee under
this Trust Agreement, and such predecessor, upon payment of all sums due it and
on the written request of the Depositor, shall execute and deliver an
instrument transferring to such successor all rights, obligations and powers of
such predecessor hereunder, and shall duly assign, transfer and deliver all
right, title and interest in the Underlying Securities and parts thereof to
such successor. Any successor Trustee shall promptly give notice of its
appointment to the Certificateholders of Certificates for which it is successor
Trustee in the manner provided in Section 10.04 hereof.
<PAGE>
- 60 -
(f) Any corporation into or with which the Trustee may be merged,
consolidated or converted shall be the successor of such Trustee without the
execution or filing of any document or any further act.
Section 7.09. Appointment of Office or Agency. As specified
-------------------------------
in a Series Supplement, the Trustee shall appoint an office or agency in The
City of New York where the Certificates may be surrendered for registration of
transfer or exchange, and presented for the final distribution with respect
thereto, and where notices and demands to or upon the Trustee in respect of the
Certificates of the related Series and this Trust Agreement may be served.
Section 7.10. Representations and Warranties of Trustee. The
-----------------------------------------
Trustee represents and warrants that:
(i) the Trustee is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or
association;
(ii) neither the execution nor the delivery by the Trustee of this
Trust Agreement, nor the consummation by it of the transactions
contemplated hereby nor compliance by it with any of the terms or
provisions hereof will contravene any Federal or New York law,
governmental rule or regulation governing the banking or trust powers of
the Trustee or any judgment or order binding on it, or violate its
charter documents or by-laws or constitute a default under (or an event
which, without notice or lapse of time or both, would constitute a
default) under, or result in the breach or acceleration of any material
contract, indenture, mortgage, agreement or instrument to which it is a
party or by which any of its properties may be bound.
(iii) the Trustee has full power, authority and right to execute,
deliver and perform its duties and obligations as set forth herein and in
each Series Supplement to which it is a party and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Trust Agreement;
(iv) this Trust Agreement has been duly executed and delivered by
the Trustee and constitutes the legal, valid and binding obligation of
the Trustee, enforceable in accordance with its terms, except as
enforcement may be limited by the applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at
law);
(v) the Trustee is not in violation, and the execution and delivery
of the Trust Agreement by the Trustee and its performance and compliance
with the terms thereof will not constitute a violation, of any order or
decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction over the Trustee
<PAGE>
- 61 -
or its properties, which violation would reasonably be expected to have a
material adverse effect on the condition (financial or otherwise) or
operations of the Trustee or its properties or on the performance of its
duties hereunder;
(vi) there are no actions or proceedings against, or investigations
of, the Trustee pending, or, to the knowledge of the Trustee, threatened,
before any court, administrative agency or other tribunal (A) that could
reasonably be expected to prohibit its entering into the Trust Agreement,
(B) seeking to prevent the issuance of the Certificates contemplated by
the Trust Agreement or (C) that could reasonably affect the performance
by the Trustee of its obligations under, or the validity or
enforceability against the Trustee of, the Trust Agreement; and
(vii) no consent, approval, authorization or order of any court,
governmental agency or body is required for the execution, delivery and
performance by the Trustee of, or compliance by the Trustee with, the
Trust Agreement, or for the consummation of the transactions contemplated
by the Trust Agreement, except for such consents, approvals,
authorizations and orders, if any, that have been obtained prior to the
Closing Date.
The representations and warranties of the Trustee set forth in this Section
7.10 shall survive the receipt of Underlying Securities by the Trustee and
shall survive the delivery of the Trust Agreement by the Trustee to the
Depositor.
Section 7.11. Indemnification of Trustee by the Depositor;
---------------------------------------------
Contribution. (a) The Depositor agrees, to the extent the Trustee is not
- ------------
reimbursed pursuant to Section 7.06 hereof, to indemnify the Trustee against,
and hold it harmless from, any loss, expense or liability incurred in
connection with any legal action relating to this Trust Agreement or the
Certificates or the performance of any of the Trustee's duties hereunder, other
than any loss, liability or expense (i) that constitutes a specific liability
of the Trustee under this Trust Agreement or (ii) incurred by reason of wilful
misfeasance, bad faith or negligence in the performance of the Trustee's duties
hereunder or by reason of reckless disregard of the Trustee's obligations and
duties hereunder or as a result of a breach of the Trustee's obligations and
duties hereunder.
(b) If the indemnification provided for in the preceding paragraph
is invalid or unenforceable in accordance with its terms, then the Depositor
shall contribute to the amount paid or payable by the Trustee as a result of
such liability in such proportion as is appropriate to reflect the relative
benefits received by the Depositor on one hand and the Trustee as Trustee on
the other hand. For this purpose (i) the benefits received by the Depositor
shall be the aggregate amount received by it upon the sale of such
Certificates, less the costs and expenses of such sale, including the cost of
acquisition of the Underlying Securities or parts thereof evidenced thereby,
and (ii) the benefits received by the Trustee as Trustee shall be the aggregate
amount of fees received by it as Trustee, less costs
<PAGE>
- 62 -
and expenses incurred by it as Trustee in relation to such Certificates. If,
however, the allocation provided by the immediately preceding two sentences is
not permitted by applicable law, then the Depositor shall contribute to such
amount paid or payable by the Trustee in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Depositor on the one hand and the Trustee on the other in connection with the
actions or omissions which resulted in such liability, as well as any other
relevant equitable considerations.
(c) In case any claim shall be made or action brought against the
Trustee for any reason for which indemnity may be sought against the Depositor
as provided above, the Trustee may promptly notify the Depositor in writing
setting forth the particulars of such claim or action and the Depositor may
assume the defense thereof. In the event that the Depositor assumes the
defense, the Trustee shall have the right to retain separate counsel in any
such action but shall bear the fees and expenses of such counsel unless (i) the
Depositor shall have specifically authorized the retaining of such counsel or
(ii) the parties to such suit include the Trustee and the Depositor, and the
Trustee has been advised in writing by such counsel that one or more legal
defenses may be available to it which may not be available to the Depositor, in
which case the Depositor shall not be entitled to assume the defense of such
suit notwithstanding its obligation to bear the reasonable fees and expenses of
such counsel.
(d) The term "LIABILITY", as used in this Section 7.11, shall
include any losses, claims, damages, expenses (including without limitation the
Trustee's reasonable costs and expenses) in defending itself against any
losses, claims or investigations of any nature whatsoever.
(e) The obligations of the Depositor under this Section 7.11 shall
be in addition to any liability which the Depositor may otherwise have and
shall extend, upon the same terms and conditions, to each officer and director
of the Trustee, and to each person, if any, who controls the Trustee within the
meaning of the Exchange Act.
(f) Notwithstanding anything to the contrary contained in this
Section 7.11, the Depositor shall not be liable for settlement of any such
claim by the Trustee entered into without the prior written consent of the
Depositor, which consent shall not be unreasonably withheld.
(g) The indemnity provided in this Section shall survive the
termination or discharge of this Trust Agreement.
Section 7.12. No Liability of the Trustee with Respect to the
------------------------------------------------
Underlying Securities; Certificateholders to Proceed Directly Against the
- --------------------------------------------------------------------------
Underlying Securities Issuer(s). (a) The sole obligor with respect to any
- -------------------------------
Underlying Security is the Underlying Securities Issuer(s). The Trustee shall
not have any obligation on or with respect to the Underlying Securities; and
<PAGE>
- 63 -
its obligations with respect to Certificates shall be solely as set forth in
this Trust Agreement.
(b) The Trustee is not authorized to proceed against the Underlying
Securities Issuer in the event of a default or to assert the rights and
privileges of Certificateholders of Certificates and has no duty in respect
thereof except as expressly provided herein.
Section 7.13. The Depositor To Furnish Trustee with Names and
------------------------------------------------
Addresses of Certificateholders. The Depositor will furnish to the Trustee
- -------------------------------
within 15 days after each Record Date with respect to any Distribution Date,
and at such other times as the Trustee may request in writing, within 30 days
after receipt by the Depositor of any such request, a list, in such form as the
Trustee may reasonably require, of all information in the possession or control
of the Depositor as to the names and addresses of the Certificateholders, in
each case as of a date not more than 15 days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the sole
Registrar, no such list need be furnished.
Section 7.14. Preservation of Information. The Trustee shall
---------------------------
preserve, in as current a form as is reasonably practicable, the names and
addresses of Certificateholders contained in the most recent list furnished to
the Trustee as provided in Section 7.13, and the names and addresses of
Certificateholders received by the Trustee in its capacity as Registrar, if so
acting. The Trustee may destroy any list furnished to it as provided in
Section 7.13, upon receipt of a new list so furnished.
Section 7.15. Reports by Trustee. If required, within 60 days
------------------
after [________] of each year, commencing with the year 199__, the Trustee
shall transmit to the Certificateholders, as provided in Section 313(c) of the
Trust Indenture Act, a brief report dated as of such [________], if required by
Section 313(a) of the Trust Indenture Act.
Section 7.16. Trustee's Application for Instructions from the
------------------------------------------------
Depositor. Any application by the Trustee for written instructions from the
- ---------
Depositor may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Trust Agreement and
the date on and/or after which such action shall be taken or such omission
shall be effective, if, but only if, the obligations of the Trustee with
respect to such proposed action or omission are not set forth reasonably
clearly in these Standard Terms and the related Series Supplement. The Trustee
shall not be liable for any action taken by, or omission of, the Trustee in
accordance with a proposal included in such application on or after the date
specified in such application (which date shall not be less than 10 Business
Days after the date an officer of the Depositor actually receives such
application, unless any such officer shall have consented in writing to any
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken
<PAGE>
- 64 -
or omitted; provided, however, that this provision shall not protect the
Trustee from liability for any action or omission constituting willful
misconduct, bad faith or negligence.
ARTICLE VIII
MARKET AGENT
Section 8.01. Market Agent. (a) If specified for a specific
------------
Series, on the Closing Date the Trustee shall enter into a Market Agent
Agreement with Citicorp Securities, Inc., as the initial Market Agent, in the
form attached to the related Series Supplement. The Market Agent shall serve
as such under the terms and provisions hereof and of the Market Agent
Agreement. The Market Agent, including any successor appointed pursuant
hereto, shall be a member of the National Association of Securities Dealers,
Inc., have capitalization of at least $25,000,000, and be authorized by law to
perform all the duties imposed upon it by this Trust Agreement and the Market
Agent Agreement. The Market Agent may be removed at any time by the Trustee,
acting at the written direction of the Depositor; provided, however, that such
removal shall not take effect until the appointment of a successor Market
Agent. The Market Agent may resign upon 30 days' written notice delivered to
the Trustee. The Depositor shall use its best efforts to appoint a successor
Market Agent that is a qualified institution, effective as of the effectiveness
of any such resignation or removal.
ARTICLE IX
TERMINATION
Section 9.01. Termination upon Liquidation of All Underlying
-----------------------------------------------
Securities. (a) The respective obligations and responsibilities under this
- ----------
Trust Agreement of the Depositor and the Trustee (other than the obligations of
the Trustee to make distributions to Holders of the Certificates of any given
Series as hereafter set forth and to provide information reports and
information tax reporting) shall terminate upon the distribution to such
Holders of all amounts held in all the Accounts for such Series and required to
be paid to such Holders pursuant to this Trust Agreement on the Distribution
Date coinciding with the final payment on or other liquidation (which may
include redemption or other purchase thereof by the applicable Underlying
Securities Issuer) (or any Advance with respect thereto) of the last Underlying
Security remaining in the Trust for such Series or the disposition of all
property acquired upon liquidation of any such Underlying Security; provided,
however, that in no event shall the trust created hereby continue beyond the
expiration of 21 years from the death of the last survivor of the descendants
of Joseph P. Kennedy, the late ambassador of the United States to the Court of
St. James, living on the date hereof.
(b) Written notice of any termination shall be provided as set
forth in Section 10.04.
<PAGE>
- 65 -
(c) Upon presentation and surrender of the Certificates by the
Certificateholders on the Final Scheduled Distribution Date, or the
Distribution Date coinciding with or next following the earlier to occur of the
occurrences specified in 9.01(a), with respect to the applicable Series of
Certificates, the Trustee shall distribute to each Holder presenting and
surrendering its Certificates (i) the amount otherwise distributable on such
Distribution Date in accordance with Section 4.01 in respect of the
Certificates so presented and surrendered, or (ii) as specified in the
applicable Series Supplement, if in connection with the Trustee's sale of all
the remaining Underlying Securities. Any funds not distributed on such
Distribution Date shall be set aside and held in trust for the benefit of
Certificateholders not presenting and surrendering their Certificates in the
aforesaid manner, and shall be disposed of in accordance with this Section 9.01
and Section 4.01 hereof. Immediately following the deposit of funds in trust
hereunder, the Trust for such Series shall terminate. Subject to applicable
escheat laws, the Trustee shall pay to the Depositor any cash that remains
unclaimed, together with interest, if any, thereon, held by the Trustee on the
date two years after such termination.
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment. (a) This Trust Agreement may be
---------
amended from time to time by the Depositor and the Trustee without the consent
of any of the Certificateholders for any of the following purposes: (i) to cure
any ambiguity or to correct or supplement any provision herein which may be
defective or inconsistent with any other provision herein or to provide for any
other terms or modify any other provisions with respect to matters or questions
arising under this Trust Agreement which shall not adversely affect the
interests of the Holders in any material respect; (ii) to evidence and provide
for the acceptance of appointment hereunder of a change in Trustee as Trustee
for a Series of Certificates subsequent to the Closing Date for such Series,
and to add to or change any of the provisions of this Trust Agreement as shall
be necessary to provide for or facilitate the administration of the separate
Trusts hereunder by more than one trustee, pursuant to the requirements of
Section 5.01 hereof; or (iii) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the Certificate of
one or more Series or to add or change any of the provisions of this Trust
Agreement as shall be necessary to provide for or facilitate the administration
of the trusts hereunder; provided, however, that in the case of any amendment
the Rating Agency Condition shall be satisfied with respect to such amendment
and that no such amendment shall cause any Trust created hereunder to fail to
qualify as a "grantor trust" for U.S. Federal income tax purposes.
(b) Without limiting the generality of the foregoing, with respect
to any Series this Trust Agreement may also be modified or amended from time to
time by the Depositor and the Trustee with the consent of the Holders of
Certificates
<PAGE>
- 66 -
representing the Required Percentage-Amendment of the aggregate Voting Rights
of those Certificates to which such modification or amendment relates for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Trust Agreement or of modifying in any manner the
rights of the Holders of Certificates; provided, however, that no such
amendment shall (i) reduce in any manner the amount of, or delay the timing of,
payments received on Underlying Securities which are required to be distributed
on any Certificate without the consent of the Holders of such Certificates,
(ii) adversely affect in any material respect the interests of the Holders of
any Series (or Class within such Series) of Certificates in a manner other than
as described in (i), without the consent of the Holders of Certificates of such
Series or Class evidencing not less than the Required Percentage-Amendment of
the aggregate Voting Rights of such Series or Class or (iii) reduce the
percentage of aggregate Voting Rights required by (ii), as described in (ii),
without the consent of the Holders of all Certificates of such Series or Class
then Outstanding.
Notwithstanding any other provision of this Trust Agreement, for
purposes of the giving or withholding of consents pursuant to this Section
10.01, Certificates registered in the name of the Depositor or the Trustee or
any affiliate thereof shall be entitled to Voting Rights with respect to
matters affecting such Certificates; and provided, further, that in the event
the Rating Agency Condition is not satisfied with respect to such modification
or amendment, the Required Percentage-Amendment shall be increased to require
an aggregate percentage of the aggregate Voting Rights in the amount specified
in the applicable Series Supplement. Notwithstanding any other provision of
this Trust Agreement, this Section 10.01(b) shall not be amended without the
unanimous consent of the Holders of all such Certificates.
(c) Promptly after the execution of any such amendment or
modification, the Trustee shall furnish a copy of such amendment or
modification to each Certificateholder of the affected Series or Class and to
the Rating Agency. It shall not be necessary for the consent of
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
Section 10.02. Limitation on Rights of Certificateholders.
------------------------------------------
(a) The death or incapacity of any Certificateholder shall not operate to
terminate this Trust Agreement or the Trust, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
applicable Trust, nor otherwise affect the rights, obligations and liabilities
of the parties hereto or any of them.
(b) No Certificateholder of a given Series shall have any right to
vote (except as expressly provided for herein) or in
<PAGE>
- 67 -
any manner otherwise control the operation and management of any Trust, or the
obligations of the parties hereto, nor shall anything herein set forth, or
contained in the terms of the Certificates, be construed so as to constitute
the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any
third person by reason of any action taken by the parties to this Trust
Agreement pursuant to any provision hereof.
(c) No Certificateholder of a given Series shall have any right by
virtue of any provision of this Trust Agreement to institute any suit, action
or proceeding in equity or at law upon or under or with respect to this Trust
Agreement, unless (i) such Holder previously shall have given to the Trustee a
written notice of breach and of the continuance thereof, (ii) the Holders of
Certificates of such Series evidencing not less than the Required
Percentage-Remedies of the aggregate Voting Rights of such Series shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, (iii) the Trustee, for 15
days after its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute any such action, suit or proceeding, and
(iv) no direction inconsistent with such written request has been given to the
Trustee during such 15-day period by Certificateholders evidencing not less
than the Required Percentage-Remedies of the aggregate Voting Rights of such
Series. It is understood and agreed that the Trustee shall not be obligated to
make any investigation of matters arising under this Trust Agreement or to
institute, conduct or defend any litigation hereunder or in relation hereto at
the request, order or direction of any Certificateholders unless such
Certificateholders have offered to the Trustee the reasonable indemnity
referred to above. It is further understood and agreed, and expressly
covenanted by each Certificateholder of each Series with every other
Certificateholder of such Series and the Trustee, that no one or more Holders
of Certificates of such Series shall have any right in any manner whatever by
virtue of any provision of this Trust Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates of such Series, or
to obtain or seek to obtain priority over or preference to any other such
Holder, or to enforce any right under this Trust Agreement, except in the
manner herein provided and for the equal, ratable and common benefit of all
Certificateholders of such Series. For the protection and enforcement of the
provisions of this Section, each and every Certificateholder and the Trustee
shall be entitled to such relief as can be given either at law or in equity.
Section 10.03. Governing Law. THIS TRUST AGREEMENT SHALL BE
-------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN THE STATE OF
NEW YORK AND WITHOUT GIVING EFFECT TO SUCH STATE'S PRINCIPLES OF CONFLICTS OF
LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
<PAGE>
- 68 -
JURISDICTION WOULD BE REQUIRED THEREBY, AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
Section 10.04. Notices. (a) All directions, demands and
-------
notices hereunder shall be in writing and shall be delivered as set forth in
the applicable Series Supplement.
(b) Any notice required to be provided to a Holder shall be given
by first class mail, postage prepaid, at the last address of such Holder as
shown in the Certificate Register. Any notice so mailed within the time
prescribed in this Trust Agreement shall be conclusively presumed to have been
duly given when mailed, whether or not the Certificateholder receives such
notice.
(c) Any and all notices to be given to the Depositor shall be
deemed to have been duly given if sent by facsimile transmission to the
Depositor at P.O. Box 1984, Elizabethan Square, George Town, Grand Cayman,
Cayman Islands, British West Indies. The Depositor may change this information
by written notice to the Trustee.
(d) Any and all notices to be given to the Trustee shall be deemed
to have been duly given if sent by facsimile transmission to the Trustee at 114
West 47th Street, 15th Floor, New York, New York 10036, Attention: Trust
Certificates, Elmwood Funding Limited, referencing the designation of the
applicable Series of Certificates, facsimile transmission number (212)
852-1625, telephone confirmation number (212) 852-1623. The Trustee may change
this information by notice to the Depositor.
(e) Any and all notices to be given to the Swap Counterparty, if
any, will be specified in the Series Supplement.
Section 10.05. Notice to Rating Agencies. (a) The Trustee
-------------------------
shall use its best efforts promptly to provide notice to each Rating Agency
with respect to each of the following of which it has actual knowledge:
(i) any change or amendment to this Trust Agreement;
(ii) the resignation or termination of the Trustee;
(iii) the final payment to Holders of the Certificates of any
Class;
(iv) any change in the location of the Certificate Account; and
(v) any event that would result in the inability of the Trustee to
make Advances.
(b) In addition, the Trustee shall promptly furnish to each Rating
Agency copies of each report to Certificateholders described in Section 4.02.
<PAGE>
- 69 -
(c) Any such notice pursuant to this Section shall be in writing
and shall be deemed to have been duly given if personally delivered or mailed
by first class mail, postage prepaid, or by express delivery service to each
Rating Agency at the address specified below or in the applicable Series
Supplement.
(d) (i) Any and all notices to be given to Moody's shall be deemed
to have been duly given if sent by facsimile transmission to Moody's at Moody's
Investors Service, Inc., 99 Church Street, New York, New York 10007, Attention:
CBO/CLO Monitoring Department, facsimile transmission number (212) 553-0355,
telephone confirmation number (212) 553-1494. Moody's may change this
information by notice to the Depositor and the Trustee.
(ii) Any and all notices to be given to S&P shall be deemed to have
been duly given if sent by facsimile transmission to S&P at Standard & Poor's
Rating Group, 26 Broadway, New York, New York 10004, Attention: Structured
Finance Surveillance Group, facsimile transmission number (212) 208-0030,
telephone confirmation number (212) 208-1191. S&P may change this information
by notice to the Depositor and the Trustee.
Section 10.06. Severability of Provisions. If any one or more
--------------------------
of the covenants, agreements, provisions or terms of this Trust Agreement shall
be for any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Trust Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Trust
Agreement or of the Certificates or the rights of the Holders thereof.
Section 10.07. Grant of Security Interest. (a) It is the
--------------------------
express intent of the parties hereto that each conveyance of any Underlying
Securities by the Depositor to the Trustee be, and be construed as, a sale of
the Underlying Securities by the Depositor and not a pledge of any Underlying
Securities by the Depositor to secure a debt or other obligation of the
Depositor.
(b) In the event that, notwithstanding the aforementioned intent of
the parties, any Underlying Securities are held to be property of the
Depositor, then, (x) it is the express intent of the parties that such
conveyance be deemed a pledge of such Underlying Securities by the Depositor to
the Trustee to secure a debt or other obligation of the Depositor and (y)(1)
this Trust Agreement shall also be deemed to be a security agreement within the
meaning of Articles 8 and 9 of the Uniform Commercial Code as in effect from
time to time in the State of New York, or such other State as may be specified
in the related Series Supplement; (2) the conveyance provided for in Section
2.01 hereof shall be deemed to be a grant by the Depositor to the Trustee of a
security interest in all the Depositor's right, title and interest in and to
such Underlying Securities and all amounts payable to the holders of such
Underlying Securities in accordance with the terms hereof and all proceeds of
the conversion, voluntary or involuntary, of the
<PAGE>
- 70 -
foregoing into cash, instruments, securities or other property including all
amounts from time to time held or invested in the applicable Certificate
Account, whether in the form of cash, instruments, securities or other
property; (3) the obligations secured by such security agreement shall be
deemed to be all the Depositor's obligations under this Trust Agreement,
including the obligation to provide to the Certificateholders the benefits of
this Trust Agreement relating to such Underlying Securities and the applicable
Trust; and (4) notifications to persons holding such property, and
acknowledgements, receipts or confirmations from persons holding such property,
shall be deemed notifications to, or acknowledgements, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Trustee for the purpose of perfecting such security interest under
applicable law.
Accordingly, the Depositor hereby grants to the Trustee a security
interest in the Underlying Securities and all other property described in
clause (y)(2) of the preceding paragraph, for the purpose of securing to the
Trustee the performance by the Depositor of the obligations described in clause
(y)(3) of the preceding paragraph. Notwithstanding the foregoing, the parties
hereto intend the Grant pursuant to Section 2.01 to be a true, absolute and
unconditional sale of the Underlying Securities and assets constituting the
applicable Trust by the Depositor to the Trustee.
(c) The Depositor and the Trustee shall, to the extent consistent
with this Trust Agreement, take such actions as may be necessary to ensure
that, if this Trust Agreement were deemed to create a security interest in the
Underlying Securities, such security interest would be deemed to be a perfected
security interest of first priority under applicable law and will be maintained
as such for so long as any of the Underlying Securities remain outstanding.
Without limiting the generality of the foregoing, the Trustee shall file, or
shall cause to be filed, all filings necessary to maintain the effectiveness of
any original filings necessary under the Uniform Commercial Code as in effect
in any jurisdiction to perfect the Trustee's security interest in or lien on
the Underlying Securities, including (x) continuation statements and (y) such
other statements as may be occasioned by (1) any change of name of the
Depositor or the Trustee, (2) any change of location of the place of business
or the chief executive office of the Depositor or (3) any transfer of any
interest of the Depositor in any Underlying Security.
Section 10.08. Nonpetition Covenant. Notwithstanding any
--------------------
prior termination of this Trust Agreement, each of the Trustee (including any
Sub-Administrative Agent, Authenticating Agent, Calculation Agent and Paying
Agent) and the Depositor agrees that it shall not, until the date which is one
year and one day after such termination, acquiesce, petition or otherwise
invoke or cause the Trust to invoke the process of the United States of
America, any State or other political subdivision thereof or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government for the purpose of commencing or
sustaining a case by or against the Trust under a Federal or state bankruptcy,
<PAGE>
- 71 -
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trust or all
or any part of the property or assets of the Trust or ordering the winding up
or liquidation of the affairs of the Trust.
Section 10.09. No Recourse. Neither the Trustee (including
-----------
any Sub-Administrative Agent, Authenticating Agent, Calculation Agent, or
Paying Agent) nor the Depositor shall have any recourse to the Underlying
Securities, except as specifically provided in the related Series Supplement.
Section 10.10. Article and Section References. All article
------------------------------
and section references used in these Standard Terms, unless otherwise provided,
are to articles and sections in these Standard Terms.
Section 10.11. Counterparts. These Standard Terms may be
------------
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute one and the same instrument.
Section 10.12. Trust Indenture Act Controls. This Trust
----------------------------
Agreement is subject to the provisions of the Trust Indenture Act and shall, to
the extent applicable, be governed by such provisions. The Trustee agrees to
take all actions within its control to prevent these Standard Terms, as
supplemented by any Series Supplements, from failing to qualify under the Trust
Indenture Act.
<PAGE>
- 72 -
IN WITNESS WHEREOF, the Depositor and the Trustee have caused their
names to be signed hereto by their respective officers thereunto duly
authorized, in each case as of the day and year first above written.
ELMWOOD FUNDING LIMITED,
as Depositor
By:_____________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK,
as Trustee
By:_____________________________
Name:
Title:
<PAGE>
- 73 -
Reconciliation and tie between the Trust Agreement, dated as of
February [__], 1997, and the Trust Indenture Act of 1939, as amended. This
reconciliation does not constitute part of Trust Agreement.
Trust Indenture Act Trust
of 1939 Section Agreement Section
-----------------
310(a)(1) 7.07
(a)(2) 7.07
(a)(5) 7.07
312(a) 7.14
313(a) 7.16
314(a) 3.10
(b) 3.11(d)
(c)(1) 1.03
(c)(2) 1.03
(e) 1.03
315(a)(1) 7.01
315(a)(2) 7.03
315(b) 7.01(d)
315(d) 7.01(c)
316(a)(1)(A) 5.18
(a)(1)(B) 5.19
(b) 5.20
(c) 1.03(b)
317(a)(1) 5.17
(b) 5.12
318(a) 10.12
<PAGE>
SERIES SUPPLEMENT
[NAME OF] CERTIFICATES
SERIES 199[__]-[SERIES DESIGNATION]
between
ELMWOOD FUNDING LIMITED,
as Depositor
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
[NAME OF] CERTIFICATES
Dated as of [Month __, 199_]
<PAGE>
TABLE OF CONTENTS
SCHEDULE I SERIES 199[__]-[SERIES DESIGNATION] UNDERLYING
SECURITIES SCHEDULE
SCHEDULE II DESCRIPTION OF THE RETAINED INTEREST
SCHEDULE III DESCRIPTION OF THE CALL WARRANT
EXHIBIT A STANDARD TERMS FOR TRUST AGREEMENTS
EXHIBIT B FORM OF TRUST CERTIFICATE
EXHIBIT C FORM OF MARKET AGENT AGREEMENT
<PAGE>
[NAME OF] CERTIFICATES
SERIES SUPPLEMENT
SERIES 199[__]-[SERIES DESIGNATION]
SERIES SUPPLEMENT, SERIES 199[__]-[SERIES DESIGNATION], dated as of
[Month __, 199_] (the "SERIES SUPPLEMENT"), by and between ELMWOOD FUNDING
LIMITED, a Cayman Islands company as Depositor (the "DEPOSITOR"), and
UNITED STATES TRUST COMPANY OF NEW YORK, as Trustee (the "TRUSTEE").
W I T N E S S E T H:
WHEREAS, the Depositor desires to create the Trust designated
herein (the "TRUST") by executing and delivering this Series Supplement,
which shall incorporate the terms of the Standard Terms for Trust Agreements,
dated as of February [__], 1997 (the "STANDARD TERMS"; together with this
Series Supplement, the "TRUST AGREEMENT"), by and between the Depositor and
the Trustee, as modified by this Series Supplement;
WHEREAS, the Depositor desires to deposit the Underlying Securities
set forth on Schedule I attached hereto (the "UNDERLYING SECURITIES
SCHEDULE") into the Trust;
WHEREAS, in connection with the creation of the Trust and the
deposit therein of the Underlying Securities, it is desired to provide for the
issuance of trust certificates (the "CERTIFICATES"), the Retained Interest
(the "RETAINED INTEREST") and the Call Warrant (the "CALL WARRANT")
evidencing undivided interests in the Trust; and
WHEREAS, the Trustee has joined in the execution of the Standard
Terms and this Series Supplement to evidence the acceptance by the Trustee of
the Trust;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants expressed herein, it is hereby agreed by and between the
Depositor and the Trustee as follows:
Section 1. Incorporation of Standard Terms. All of the
-------------------------------
provisions of the Standard Terms, a copy of which is attached hereto as Exhibit
A, are hereby incorporated herein by reference in their entirety and this
Series Supplement and the Standard Terms shall form a single agreement between
the parties. In the event of any inconsistency between the provisions of this
Series Supplement and the provisions of the Standard Terms, the provisions of
this Series Supplement will control with respect to the transactions described
herein.
Section 2. Definitions. Except as otherwise specified herein
-----------
or as the context may otherwise require, the following terms shall have the
respective meanings set forth below for all
<PAGE>
- 2 -
purposes under this Series Supplement. Capitalized terms used but not defined
herein shall have the meanings assigned to them in the Standard Terms.
* * *
Section 3. Designation of Trust and Certificates. (a) The
-------------------------------------
Trust created hereby shall be known as the "[Name of] Certificates Trust,
Series 199[__]-[SERIES DESIGNATION]", the Certificates evidencing certain
undivided ownership interests therein shall be known as "[Name of]
Certificates, Series 199[__]-[SERIES DESIGNATION]", the Retained Interest
evidencing certain undivided ownership interests in the remainder of the
Underlying Securities (as described on Schedule II hereto) shall be known as
the "Series 199[__]-[SERIES DESIGNATION] Retained Interest" and the Call
Warrant evidencing certain undivided ownership interests in the remainder of
the Underlying Securities (as described on Schedule III hereto) shall be known
as the "Series 199[__]-[SERIES DESIGNATION] Call Warrant".
(b) The Certificates shall be held through the Depository in
book-entry form and shall be substantially in the form attached hereto as
Exhibit B. The Certificates shall be issued in minimum denominations of $1,000
and integral multiples of $1,000 in excess thereof. Except as provided in the
Standard Terms, the Trust shall not issue additional Certificates or incur any
indebtedness.
(c) The Retained Interest will be uncertificated and shall be as
described in Schedule II attached hereto. The Retained Interest will be issued
to the Depositor and may be transferred by the Depositor to another party at
the sole option of the Depositor without the consent of the Certificateholders
or any other party. The beneficial ownership interest in the Retained Interest
will be recorded on the records of the Trustee. On each Distribution Date,
payments will be made on the Retained Interest by wire transfer to the
account(s) of holder(s) thereof on the related Record Date as specified in
written instructions to the Trustee. Notwithstanding any other provision of
this Agreement, the Trustee shall not agree to any amendment or modification of
this Agreement (including the Standard Terms) which would adversely affect in
any material respect the holder of the Retained Interest without the consent of
the holder of the Retained Interest.
Section 4. Satisfaction of Conditions to Initial Execution and
----------------------------------------------------
Delivery of Trust Certificates. The Trustee hereby acknowledges receipt, on
- ------------------------------
or prior to the Closing Date, of:
(i) the Underlying Securities set forth on the Underlying
Securities Schedule; and
(ii) all documents required to be delivered to the Trustee pursuant
to Section 2.01 of the Standard Terms.
Section 5. Distributions. (a) On each Distribution Date other
-------------
than the Redemption Date, the Trustee shall apply
<PAGE>
- 3 -
Available Funds in the Certificate Account as follows (subject to Section 5(c)
below):
(i) first, to the Certificateholders and the holder of the Retained
Interest, proportionately to the ratio of their respective entitlements
to interest, the Required Interest and the Interest Strip, respectively;
and
(ii) second, to the Certificateholders, Required Principal, if any.
(b) On the Redemption Date, if applicable, the Trustee shall apply
Available Funds in the Certificate Account as follows:
(i) first, to the Certificateholders and the holder of the Retained
Interest, proportionately to the ratio of their respective entitlements
to interest, the Required Interest and the Interest Strip, respectively;
(ii) second, to the Certificateholders, Required Principal;
(iii) third, to any creditors of the Trust in satisfaction of
liabilities thereto; and
(iv) fourth, to the Warrantholder, any remaining amounts.
(c) Amounts recovered in respect of the Underlying Securities
following a default by the Underlying Securities Issuer under the Underlying
Securities Indenture shall, to the extent allocable to interest, be distributed
in accordance with the provisions of Section 5(a)(i), and, to the extent
allocable to principal, in accordance with the provisions of Section 5(a)(ii).
Section 6. Trustee's Fees. (a) As compensation for its
--------------
services hereunder, the Trustee shall be entitled to Ordinary Expenses. The
Ordinary Expenses will be paid to the Trustee by the holder of the Retained
Interest which, for convenience, may be retained out of the Interest Strip on
each Distribution Date.
(b) Extraordinary Expenses shall not be paid out of the Trust
Property unless (i) such Extraordinary Expenses relate to a time when the
Underlying Securities Issuer was in default of any payment obligation under the
Underlying Securities Indenture, or (ii) Certificateholders representing 100%
of the aggregate Voting Rights of the Certificates have voted to require the
Trustee to incur such Extraordinary Expenses.
Section 7. Events of Default. Within 30 days of the
-----------------
occurrence of an Event of Default, the Trustee will give notice to the
Certificateholders, the Warrantholder and the holder of the Retained Interest,
transmitted by mail, of all such uncured or unwaived Events of Default known to
it.
<PAGE>
- 4 -
Section 8. Miscellaneous.
-------------
(a) The Trustee shall forward reports to Certificateholders
pursuant to Section 4.03 of the Standard Terms to the New York Stock Exchange.
(b) In any conflict between the provisions of the Prospectus
Supplement and this Agreement (including the Standard Terms), the provisions of
the Prospectus Supplement shall prevail. Any affirmative statement of rights
or obligations of Certificateholders or the parties hereto included in the
Prospectus Supplement shall be deemed to be included herein.
(c) If the Trustee has not received payment with respect to a
Collection Period on the Underlying Securities on or prior to the related
Distribution Date, such distribution will be made promptly upon receipt of such
payment. No additional amounts shall accrue on the Certificates or be owed to
Certificateholders as a result of such delay; provided, however, that any
additional interest owed and paid by the Underlying Securities Issuer as a
result of such delay shall be paid to the Certificateholders and the holder of
the Retained Interest, proportionately to the ratio of their respective
entitlements to interest.
(d) In any conflict between the provisions of this Series
Supplement and the Standard Terms, the provisions of this Series Supplement
shall control.
(e) The outstanding principal balance of the Certificates shall not
be reduced by the amount of any Realized Loss (as defined in the Standard
Terms).
Section 9. Notices. All directions, demands and notices
-------
hereunder or under the Standard Terms shall be in writing and shall be
delivered as set forth below (unless written notice is otherwise provided to
the Trustee).
If to the Depositor, to:
Elmwood Funding Limited
399 Park Avenue
New York, New York 10043
Attention: Mr. Philip Nisbet
Telephone: (212) 291-7527
Facsimile: (212) 291-1291
With a copy to the Directors:
c/o Deutsche Morgan
Grenfell (Cayman) Limited
P.O. Box 1984
George Town
Grand Cayman
Cayman Islands
British West Indies
Telephone: (809) 949-8244
Facsimile: (809) 949-8178
<PAGE>
- 5 -
If to the Trustee, to:
United States Trust Company of New York
114 West 47th Street
15th Floor
New York, New York 10036
Attention: Trust Certificates
Elmwood Funding Limited
Referencing: The designation of the applicable Series of
Certificates
Attention: (212) 852-1623
Facsimile: (212) 852-1625
If to the Rating Agencies, to:
Moody's Investors Service, Inc.
99 Church Street 21W
New York, New York 10007
Attention: CBO/CLO Monitoring Department
Telephone: (212) 553-1494
Facsimile: (212) 553-0355
and to:
Standard & Poor's
26 Broadway
New York, New York 10004
Attention: Structured Finance Surveillance Group
Telephone: (212) 208-1191
Facsimile: (212) 208-0030
If to the New York Stock Exchange, to:
New York Stock Exchange, Inc.
20 Broad Street
New York, New York 10005
Attention: Michael Hyland
Telephone: (212) 656-5868
Facsimile: (212) 656-7094
Section 10. Governing Law. THIS SERIES SUPPLEMENT AND THE
-------------
TRANSACTIONS DESCRIBED HEREIN SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND
PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE CHOICE OF
LAWS PROVISIONS THEREOF.
Section 11. Counterparts. This Series Supplement may be
------------
executed in any number of counterparts, each of which shall be deemed to be an
original, and all such counterparts shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Series
Supplement to be duly executed by their respective authorized officers as of
the date first written above.
ELMWOOD FUNDING LIMITED,
as Depositor
<PAGE>
- 6 -
By:_____________________________
Name:
Title:
UNITED STATES TRUST COMPANY OF
NEW YORK,
as Trustee
By:_____________________________
Name:
Title:
<PAGE>
SCHEDULE I
SERIES 199[__]-[SERIES DESIGNATION]
UNDERLYING SECURITIES SCHEDULE
Underlying Securities: [__.__]% Debentures due [DATE], subject to
the Retained Interest and the Call Warrant
Underlying Securities Issuer: [_____________]
CUSIP Number: [__________]
Principal Amount Deposited: $[Amount]
Original Issue Date: [DATE]
Principal Amount of
Underlying Securities
Originally Issued: $[Amount]
Maturity Date: [DATE]
Principal Payment Date: [DATE]
Interest Rate: [__.__]% per annum
Interest Payment Dates: [Date] and [Date], commencing [Date]
Initial Accrued Interest: $[Amount]
Redemption Dates: None
Redemption Prices: None
Priority: Based upon the Prospectus relating to the
Underlying Securities, the Underlying
Securities rank on a parity with all other
unsecured and unsubordinated indebtedness
of the Underlying Securities Issuer
Security: None
Rating as of Closing: "[___]" by Moody's and "[___]" by S&P.
Form of
Underlying Securities: Book-entry debt security with DTC
Retained Interest: As described on Schedule II hereto
<PAGE>
SCHEDULE II
SERIES 199[__]-[SERIES DESIGNATION]
DESCRIPTION OF THE RETAINED INTEREST
The holder of the Retained Interest will retain the right with
respect to the Underlying Securities to receive (i) on the [First Month]
Distribution Date occurring in 1996, the Initial Accrued Interest, and (ii) on
each Distribution Date, from payments received on the Underlying Securities, a
distribution equal to [__.__]% per annum of the principal amount of the
Underlying Securities (the "INTEREST STRIP"). The rights of the holder of
the Retained Interest to the Interest Strip are of equal priority with the
rights of the Certificateholders to receive distributions of interest.
The Retained Interest will be issued to [__________] and may be
transferred by [__________] to another party at the sole option of [__________]
without the consent of the Certificateholders or any other party but upon
written notice to the Trustee. The beneficial ownership interest in the
Retained Interest will be recorded on the records of the Trustee. On each
Distribution Date, payments will be made on the Retained Interest by wire
transfer to the account of the holder thereof on the related Record Date as
specified in written instructions to the Trustee. The Trustee shall not agree
to any amendment or modification of the Standard Terms or the Series Supplement
which would adversely affect in any material respect the holder of the Retained
Interest without the consent of the holder of the Retained Interest.
<PAGE>
EXHIBIT A
Standard Terms for Trust Agreements
(begins on next page)
<PAGE>
EXHIBIT B
Form of Certificate
No. ___ $[Amount]
CUSIP NO. _________
SEE REVERSE FOR CERTAIN DEFINITIONS
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE
OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
(AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED
BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE REPRESENTS A FRACTIONAL UNDIVIDED INTEREST IN THE
TRUST AND DOES NOT EVIDENCE AN OBLIGATION OF, OR AN INTEREST IN, AND IS NOT
GUARANTEED BY THE DEPOSITOR OR THE TRUSTEE OR ANY OF THEIR RESPECTIVE
AFFILIATES. NEITHER THIS CERTIFICATE NOR THE TRUST ASSETS ARE INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY OR ANY OTHER PERSON.
ELMWOOD FUNDING LIMITED
[NAME OF] CERTIFICATES
SERIES 199[__]-[SERIES DESIGNATION]
$[AMOUNT] PRINCIPAL BALANCE
[__.__]% PASS-THROUGH RATE
evidencing a fractional undivided beneficial ownership interest in the Trust,
as defined below, the property of which consists principally of $[Amount]
aggregate principal amount of [__.__]% Debentures due [DATE] of [__________]
(the "UNDERLYING SECURITY ISSUER") and all payments received thereon (the
"TRUST PROPERTY"), deposited in trust by [Elmwood Funding Limited] (the
"DEPOSITOR").
THIS CERTIFIES THAT CEDE & CO. is the registered owner of $[Amount] DOLLARS
nonassessable, fully-paid, fractional undivided interest in the [Name of]
Certificates Trust, Series 199[__]-[SERIES DESIGNATION], formed by the
Depositor.
The Trust was created pursuant to a Standard Terms for Trust
Agreements, dated as of February [__], 1997 (the "STANDARD TERMS"), between
the Depositor and [Name of Trustee], a New York banking corporation, not in its
individual capacity but solely as Trustee (the "TRUSTEE"), as supplemented
by the Series Supplement, Series 199[__]-[SERIES DESIGNATION], dated as of
[Month __, 199_] (the "SERIES SUPPLEMENT" and, together with the Standard
Terms, the "TRUST AGREEMENT"), between the Depositor and the Trustee. This
Certificate does not purport to summarize the
<PAGE>
- 2 -
Trust Agreement and reference is hereby made to the Trust Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby and the rights, duties and obligations of
the Trustee with respect hereto. A copy of the Trust Agreement may be obtained
from the Trustee by written request sent to the Corporate Trust Office.
Capitalized terms used but not defined herein have the meanings assigned to
them in the Trust Agreement.
This Certificate is one of the duly authorized Certificates
designated as the "[Name of] Certificates, Series 199[__]-[SERIES DESIGNATION]"
(herein called the "CERTIFICATES"). This Certificate is issued under and
is subject to the terms, provisions and conditions of the Trust Agreement, to
which Trust Agreement the Holder of this Certificate by virtue of the
acceptance hereof assents and by which such Holder is bound. The Trust
Property consists of: (i) Underlying Securities described in the Trust
Agreement; (ii) all payments on or collections in respect of the Underlying
Securities accrued on or after [Month __, 199_] (the "CLOSING DATE")
together with any proceeds thereof, subject to the Retained Interest; and (iii)
all funds from time to time deposited with the Trustee relating to the
Certificates and any investments thereof, together with any and all income,
proceeds and payments with respect thereto.
Subject to the terms and conditions of the Trust Agreement
(including the availability of funds for distributions) and until the
obligation created by the Trust Agreement shall have terminated in accordance
therewith, distributions will be made on each Distribution Date, to the Person
in whose name this Certificate is registered on the applicable Record Date, in
an amount equal to such Certificateholder's fractional undivided interest in
the amount required to be distributed to the Holders of the Certificates on
such Distribution Date. The Record Date applicable to any Distribution Date is
the close of business on the day immediately preceding such Distribution Date
(whether or not a Business Day). If a payment with respect to the Underlying
Securities is made to the Trustee after the date on which such payment was due,
then the Trustee will distribute any such amounts received on the next
occurring Business Day (a "SPECIAL DISTRIBUTION DATE").
Each Certificateholder, by its acceptance of a Certificate,
covenants and agrees that such Certificateholder will not at any time institute
against the Trust, or join in any institution against the Trust of, any
bankruptcy proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Certificates or
the Trust Agreement.
Distributions made on this Certificate will be made as provided in
the Trust Agreement by the Trustee by wire transfer in immediately available
funds, or check mailed to the Certificateholder of record in the Certificate
Register without the presentation or surrender of this Certificate or the
making of any notation hereon, except that with respect to Certificates
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee shall be Cede & Co.),
<PAGE>
- 3 -
payments will be made by wire transfer in immediately available funds to the
account designated by such nominee. Except as otherwise provided in the Trust
Agreement and notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of
such distribution and only upon presentation and surrender of this Certificate
at the Delivery Office or such other location as may be specified in such
notice.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by or on behalf of the Trustee, by manual signature, this Certificate shall not
entitle the Holder hereof to any benefit under the Trust Agreement or be valid
for any purpose.
THIS CERTIFICATE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS, AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE HOLDER HEREOF SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed as of the date set forth below.
[NAME OF] CERTIFICATES
TRUST, SERIES 199[__]-[SERIES
DESIGNATION],
By: [NAME OF TRUSTEE] not in its
individual capacity but solely as
Trustee,
By:___________________________
Authorized Officer
Dated: [Month __, 199_]
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the [Name of] Certificates, Series 199[__]-[SERIES
DESIGNATION], described in the Trust Agreement referred to herein.
[NAME OF TRUSTEE],
not in its individual
capacity but solely as
Trustee,
Date: By:___________________________
Authorized Officer
<PAGE>
(REVERSE OF CERTIFICATE)
The Certificates are limited in right of distribution to certain
payments and collections respecting the Underlying Securities, all as more
specifically set forth herein and in the Trust Agreement. The registered
Holder hereof, by its acceptance hereof, agrees that it will look solely to the
[Trust Property] (to the extent of its rights therein) for distributions
hereunder.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Depositor and the Trustee and the rights of the
Certificateholders under the Trust Agreement at any time by the Depositor and
the Trustee with the consent of the Holders of Certificates evidencing greater
than 66-2/3% of the aggregate Voting Rights of the Certificates subject to
certain provisions set forth in the Trust Agreement. Any such consent by the
Holder of this Certificate (or any predecessor Certificate) shall be conclusive
and binding on such Holder and upon all future Holders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Trust Agreement also permits the amendment thereof, in
certain limited circumstances, without the consent of the Holders of any of the
Certificates.
The Certificates are issuable in fully registered form only in
minimum original principal amounts of $1,000 and integral multiples of $1,000
in excess thereof.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Certificate Register upon surrender of this Certificate for registration
of transfer at the offices or agencies of the Certificate Registrar maintained
by the Trustee in the Borough of Manhattan, The City of New York, duly endorsed
by or accompanied by an assignment in the form below and by such other
documents as required by the Trust Agreement, and thereupon one or more new
Certificates of the same class in authorized denominations evidencing the same
principal amount will be issued to the designated transferee or transferees.
The initial Certificate Registrar appointed under the Trust Agreement is [Name
of Trustee].
No service charge will be made for any registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.
The Depositor and the Trustee and any agent of the Depositor or the
Trustee may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and neither the Depositor, the Trustee, nor
any such agent shall be affected by any notice to the contrary.
<PAGE>
- 2 -
It is the intention of the parties to the Trust Agreement that the
Trust created thereunder shall constitute a fixed investment trust for federal
income tax purposes under Treasury Regulation Section 301.7701-4, and the
Certificateholder agrees to treat the Trust, any distributions therefrom and
its beneficial interest in the Certificates consistently with such
characterization.
The Trust may not engage in any business or activities other than
in connection with, or relating to, the holding, protecting and preserving of
the Trust Property and the issuance of the Certificates, and other than those
required or authorized by the Trust Agreement or incidental and necessary to
accomplish such activities. The Trust may not issue or sell any certificates
or other obligations other than the Certificates or otherwise incur, assume or
guarantee any indebtedness for money borrowed.
The Trust and the obligations of the Depositor and the Trustee
created by the Trust Agreement with respect to the Certificates shall terminate
upon the earliest to occur of (i) the distribution in full of all amounts due
to Certificateholders and retirement of the Underlying Securities, (ii) the
distribution in full of all amounts due to Certificateholders on any Redemption
Date, and (iii) the expiration of 21 years from the death of the last survivor
of the descendants of Joseph P. Kennedy, the late Ambassador of the United
States to the Court of St. James, living on the date hereof.
An employee benefit plan subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), including an individual
retirement account or Keogh plan (any such plan or account, a "PLAN") may
purchase Certificates if either (i) the Underwriter is able to confirm the
existence of at least 100 independent purchasers or (ii) the Plan can represent
that its purchase of the Certificates would not be prohibited under ERISA or
the Code.
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
____________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
____________________________________________________________
the within Certificate, and all rights thereunder,
hereby irrevocably constituting and appointing
____________________________________________________________
Attorney to transfer said Certificate on the books of the Certificate Register,
with full power of substitution in the premises.
Dated:
_______________________*
Signature Guaranteed:
_______________________*
*NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a brokerage firm or financial institution that is a member of a
Securities Approved Medallion Program such as Securities Transfer Agents
Medallion Program (STAMP), Stock Exchange Medallion Program (SEMP) or New York
Stock Exchange Inc. Medallion Signature Program (MSP).
<PAGE>
EXHIBIT C
Form of Market Agent Agreement
(begins on next page)
<PAGE>
Exhibit 5.1
[Form of Opinion of Milbank, Tweed, Hadley & McCloy]
February __, 1997
Elmwood Funding Limited
P.O. Box 1984
Elizabethan Square
George Town
Grand Cayman
British West Indies
Re: Elmwood Funding Limited
Registration Statement on Form S-3 (Reg. No. 333-5696)
------------------------------------------------------
Ladies and Gentlemen:
We have acted as special United States counsel to Elmwood Funding
Limited (the "Company") in connection with (i) the above-referenced Registration
-------
Statement on Form S-3 (as amended, the "Registration Statement") filed on
----------------------
October 2, 1996 with the Securities and Exchange Commission (the "Commission")
----------
pursuant to the Securities Act of 1933, as amended (the "Act"), (ii) the
---
prospectus included therein (the "Prospectus") and (iii) the prospectus
----------
supplement thereto (the "Prospectus Supplement") relating to the issuance of
---------------------
Debt-Backed Pass-Through Certificates, Series 1997-DuPont (the "Certificates").
------------
The Certificates represent fractional undivided beneficial interests in a trust
(the "Trust") formed pursuant to the Trust Agreement (the "Trust Agreement", the
----- ---------------
form of which was filed with the Commission as Exhibit 4.1 to the Registration
Statement) dated as of February [__], 1997 between the Company, as depositor,
and United States Trust Company of New York, as trustee (the "Trustee").
-------
In rendering the opinions expressed below, we have examined the
following agreements, instruments and other documents: (a) the Registration
Statement; (b) the Prospectus; (c) the Prospectus Supplement; (d) the Trust
Agreement; (e) the Certificates; and (f) such other documents as we have deemed
necessary as a basis for the opinions expressed below.
<PAGE>
-2-
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with authentic original documents of all documents submitted to us as
copies. When relevant facts were not independently established, we have relied
upon statements or certificates of governmental officials and upon
representations made in or pursuant to the agreements, instruments and other
documents referred to above.
In rendering the opinions expressed below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that:
(i) such documents have been duly authorized by, have been duly executed
and delivered by, and (except, to the extent set forth in the
opinions expressed below, as to the Company and the Trustee)
constitute legal, valid, binding and enforceable obligations of, all
of the parties to such documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and validly
existing and have the power and authority (corporate, partnership or
other) to execute, deliver and perform such documents.
Based upon and subject to the foregoing and subject also to the
comments and qualifications set forth below, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
expressed below, we are of the opinion that:
1. The Trust Agreement constitutes the legal, valid and binding
obligation of each of the Company and the Trustee, enforceable against each
of the Company and the Trustee in accordance with its terms, except as may
be limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or transfer or other similar laws relating to or
affecting the rights of creditors generally (and to the possible judicial
application of foreign laws or governmental action affecting the rights of
creditors generally) and except as the enforceability of the Trust
Agreement is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including, without limitation, (a) the possible unavailability of specific
performance, injunctive relief or any other equitable remedy and (b)
concepts of materiality, reasonableness, good faith and fair dealing.
2. When the Certificates have been duly authorized, executed and
authenticated in accordance with the Trust
<PAGE>
-3-
Agreement, the Certificates will be legally and validly issued and
outstanding, fully paid and nonassessable and entitled to the benefits
provided for by the Trust Agreement.
The foregoing opinions are subject to the following comments and
qualifications:
(A) The enforceability of Section 7.11 of the Trust Agreement may be
limited by laws limiting the enforceability of provisions exculpating or
exempting a party from, or requiring indemnification of a party for, its
own action or inaction, to the extent such action or inaction involves
gross negligence, recklessness or wilful or unlawful conduct.
(B) We express no opinion as to (i) paragraph (b) or (c) of Section
10.07 of the Trust Agreement or (ii) Section 10.08 of the Trust Agreement.
The foregoing opinions are limited to matters involving the Federal
laws of the United States of America and the law of the State of New York, and
we do not express any opinion as to the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to Milbank, Tweed, Hadley & McCloy
under the heading "Legal Matters" in the Prospectus and the Prospectus
Supplement.
Very truly yours,
Milbank, Tweed, Hadley & McCloy
BDR/FCP
<PAGE>
Exhibit 8.1
[Form of Tax Opinion of Milbank, Tweed, Hadley & McCloy]
February __, 1997
Elmwood Funding Limited
P.O. Box 1984
Elizabethan Square
George Town
Grand Cayman
British West Indies
Re: Elmwood Funding Limited
Registration Statement on Form S-3 (Reg. No. 333-5696)
------------------------------------------------------
Ladies and Gentlemen:
We have acted as special United States counsel to Elmwood Funding
Limited (the "Company") in connection with (i) the above-referenced Registration
-------
Statement on Form S-3 (as amended, the "Registration Statement") filed on
----------------------
October 2, 1996 with the Securities and Exchange Commission (the "Commission")
----------
pursuant to the Securities Act of 1933, as amended (the "Act"), (ii) the
---
prospectus included therein (the "Prospectus") and (iii) the prospectus
----------
supplement thereto (the "Prospectus Supplement") relating to the issuance of
---------------------
Debt-Backed Pass-Through Certificates, Series 1997-DuPont (the "Certificates").
------------
The Certificates represent fractional undivided beneficial interests in a trust
(the "Trust") formed pursuant to the Trust Agreement (the "Trust Agreement", the
----- ---------------
form of which was filed with the Commission as Exhibit 4.1 to the Registration
Statement) dated as of February [__], 1997 between the Company, as depositor,
and United States Trust Company of New York, as trustee (the "Trustee").
-------
In rendering the opinions referred to below, we have examined the
following agreements, instruments and other documents: (a) the Registration
Statement; (b) the Prospectus; (c) the Prospectus Supplement; (d) the Trust
Agreement; (e) the Certificates; and (f) such other documents as we have deemed
necessary as a basis for the opinions referred to below.
<PAGE>
-2-
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity with authentic original documents of all documents submitted to us as
copies. When relevant facts were not independently established, we have relied
upon statements or certificates of governmental officials and upon
representations made in or pursuant to the agreements, instruments and other
documents referred to above.
In rendering the opinions referred to below, we have assumed, with
respect to all of the documents referred to in this opinion letter, that:
(i) such documents have been duly authorized by, have been duly executed
and delivered by, and constitute legal, valid, binding and
enforceable obligations of, all of the parties to such documents;
(ii) all signatories to such documents have been duly authorized; and
(iii) all of the parties to such documents are duly organized and validly
existing and have the power and authority (corporate, partnership or
other) to execute, deliver and perform such documents.
Based upon and subject to the foregoing, and having considered such
questions of law as we have deemed necessary as a basis for the opinions
referred to below, we hereby confirm that the statements set forth in the
Prospectus Supplement under the heading "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES" represent our opinions to the extent such statements constitute
matters of law or legal conclusions.
The opinions referred to above are limited to matters involving the
Federal laws of the United States of America, and we do not express any opinion
as to the laws of any other jurisdiction.
<PAGE>
-3-
We hereby consent to the filing of this opinion letter as an exhibit
to the Registration Statement and to the reference to Milbank, Tweed, Hadley &
McCloy under the headings "Certain Federal Income Tax Consequences" and "Legal
Matters" in the Prospectus and the Prospectus Supplement.
Very truly yours,
Milbank, Tweed, Hadley & McCloy
BK/BDR/FCP
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
--------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)
---------
--------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification No.)
114 West 47th Street 10036-1532
New York, New York (Zip Code)
(Address of principal
executive offices)
--------------------
ELMWOOD FUNDING LIMITED
(and the other OBLIGORS named in the attached schedule)
Cayman Islands N/A
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
P.O. BOX 1984
ELIZABETHAN SQUARE
GEORGE TOWN
GRAND CAYMAN
BRITISH WEST INDIES
(809) 949-8244
(Address of principal executive offices)
Debt-Backed Pass-Through Trust Certificates
--------------------
<PAGE>
-2-
GENERAL
l. General Information
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System).
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
2. Affiliations with the Obligor
-----------------------------
If the obligor is an aftiliate of the trustee, describe each such
affiliation.
None.
3. Voting Securities of the Trustee
--------------------------------
2,999,020 shares of Common Stock - par value $5 per share
4. Trusteeships under Other Indentures
-----------------------------------
Not applicable.
5. Interlocking Directorates and Similar Relationships with the Obligor or
-----------------------------------------------------------------------
Underwriters
------------
Not applicable.
<PAGE>
-3-
6. Voting Securities of the Trustee Owned by the Obligor or its Officials
----------------------------------------------------------------------
Not applicable.
7. Voting Securities of the Trustee Owned by Underwriters or their Officials
-------------------------------------------------------------------------
Not applicable.
8. Securities of the Obligor Owned or Held by the Trustee
------------------------------------------------------
Not applicable.
9. Securities of Underwriters Owned or Held by the Trustee
-------------------------------------------------------
Not applicable.
10. Ownership or Holdings by the Trustee of Voting Securities of Certain
---------------------------------------------------------------------
Affiliates or Securities Holders of the Obligor
-----------------------------------------------
Not applicable.
11. Ownership or Holdings by the Trustee of any Securities of a Person Owning
-------------------------------------------------------------------------
50 Percent or More of the Voting Securities of the Obligor
----------------------------------------------------------
Not applicable.
12. Indebtedness of the Obligor to the Trustee
------------------------------------------
Not applicable.
13. Defaults by the Obligor
-----------------------
Not applicable.
14. Affiliations with the Underwriters
----------------------------------
Not applicable.
<PAGE>
-4-
15. Foreign Trustee
---------------
Not applicable.
16. List of Exhibits
----------------
T-1.1 -- Organization Certificate, as amended, issued by the State of
New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to Form
T-1 filed on October 6, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 in an amended filing to an
original Registration Statement filed on August 28, 1995
(Registration No. 33-96262).
T-1.2 - Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to Form
T-1 filed on October 6, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 in an amended filing to an
original Registration Statement filed on August 28, 1995
(Registration No. 33-96262).
T-1.6 -- The consent of the trustee required by Section 321(b) of the
Trust Indenture Act of 1939, as amended by the Trust Indenture
Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of January 31, 1997, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U. S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States Trust
Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility, as to matters peculiarly
within the knowledge of the obligor or its directors, the trustee has relied
upon information furnished to it by the obligor and will rely on information to
be furnished by the obligor and the trustee disclaims responsibility for the
accuracy or completeness of such information.
<PAGE>
-5-
Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
United States Trust Company of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of New York, and State of New York, on the 31st day
of January, 1997.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
By: /s/ Andres E. Serrano
---------------------
Andres E. Serrano
Assistant Vice President
<PAGE>
EXHIBIT T-1.6
-------------
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
-----------------------
By: /S/ Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
SEPTEMBER 30, 1996
------------------
(IN THOUSANDS)
ASSETS
------
Cash and Due from Banks $ 38,257
Short-Term Investments 82,377
Securities, Available for Sale 861,975
Loans 1,404,930
Less: Allowance for Credit Losses 13,048
---------
Net Loans 1,391,882
Premises and Equipment 60,012
Other Assets 133.673
---------
TOTAL ASSETS $ 2,568.176
LIABILITIES
-----------
Deposits:
Non-Interest Bearing $ 466,849
Interest Bearing 1.433,894
-----------
Total Deposits 1,900,743
Short-Term Credit Facilities 369,045
Accounts Payable and Accrued Liabilities 143.604
---------
TOTAL LIABILITIES $ 2,413.392
STOCKHOLDER'S EQUITY
--------------------
Common Stock 14,995
Capital Surplus 42,394
Retained Earnings 98,402
Unrealized Gains (Losses) on Securities
Available for Sale, Net of Taxes (1.007)
---------
TOTAL STOCKHOLDER'S EQUITY 154,784
TOTAL LIABILITIES AND ---------
STOCKHOLDER'S EQUITY $ 2,568.176
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkman, SVP & Controller
October 24, 1996
