MARKED TO SHOW CHANGES
As filed with the Securities and Exchange Commission on August 26, 1997.
Registration No. 333-29015
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------
MERRILL LYNCH DEPOSITOR, INC.
(Exact name of registrant as specified in its charter)
------------------
Delaware 13-3891329
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
World Financial Center
New York, New York 10281
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
------------------
Frank D. Ronan
Merrill Lynch & Co.
World Financial Center
New York, New York 10281
(212) 449-1000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------
Copies to:
Robert Evans III
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
(212) 848-4000
------------------
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. [_]
------------------
CALCULATION OF REGISTRATION FEE
===============================================================================
Proposed
Maximum Amount of
Title of Aggregate Offering Registration
Securities to be Registered(1) Price(2) Fee
- -------------------------------------------------------------------------------
STEERS(R)
Trust Certificates $500,000,000 $151,517.00
===============================================================================
(1) This registration statement also registers an indeterminate amount of Trust
Certificates to be sold by the Underwriter in connection with market-making
activities.
(2) Estimated solely for purposes of calculating the registration fee, of which
$304.00 has already been 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.
<PAGE>
2
EXPLANATORY NOTE
This Registration Statement includes a basic prospectus, as well as a form
of prospectus supplement which is intended to serve as the basis for an offering
of STEERS(R) Trust Certificates representing a proportionate undivided
beneficial interest in certain distributions to be made by the trust described
therein. The Underlying Securities for the offering of STEERS(R) Trust
Certificates described in the form of prospectus supplement shall consist of
fixed rate, publicly traded, unsecured debt, or other eligible, securities. The
Underlying Securities contemplated to be offered pursuant to the form of
prospectus supplement included herein do not include all of the types of
securities which may constitute Underlying Securities, as further disclosed in
the basic prospectus.
<PAGE>
SUBJECT TO COMPLETION, DATED [ ] __, 1997
PROSPECTUS SUPPLEMENT
(To Prospectus dated [ ] __, 1997)
Merrill Lynch Depositor, Inc.
Depositor
$[ ]
STEERS(R) TRUST CERTIFICATES, Series 199_-[ ]
(UNDERLYING SECURITIES WILL BE [___]% [DEBENTURES][OTHER SECURITIES] DUE
[ ] __, 20__ ISSUED BY
[ ])
Each STEERS(R) Trust Certificate, Series 199_-[ ] offered hereby (collectively,
the "Trust Certificates") represents a beneficial interest in a trust (the
"Trust") formed pursuant to the Trust Agreement dated as of [ ] __, 1997 between
Merrill Lynch Depositor, Inc. (the "Depositor") and United States Trust Company
of New York, trustee (the "Trustee"). The Trust Certificates will be issued in
two Classes, Class _-1 and Class _-2.
The principal assets of the Trust will be $[ ] aggregate principal amount of
[ ]% [Debentures][Senior Notes][other securities] due [ ] __, 20__ (the
"Underlying Securities") issued by [Name of Underlying Securities Issuer] (the
"Underlying Securities Issuer"), having the characteristics described herein
under "Description of the Underlying Securities".
The Underlying Securities Issuer is not participating in, and will not receive
any proceeds in connection with, the offering of the Trust Certificates, and is
not an affiliate of the Depositor. The Underlying Securities were originally
issued and sold as part of a public offering [in] [ ] 19__, were acquired in the
secondary market and will be deposited by the Depositor into the Trust for the
benefit of the holders of the Trust Certificates (the "Trust
Certificateholders").
The holders of the Class _-1 Trust Certificates will be entitled to receive, on
[ ] __ and [ ] __ of each year (or if such date is not a Business Day, the next
succeeding Business Day) (each, a "Distribution Date"), commencing [ ] __, 199_
and ending on the Final Scheduled Distribution Date (as defined below), as and
if interest is received on the Underlying Securities, interest distributions at
a rate of [ ]% per annum on the Notional Amount of the Class _-1 Trust
Certificates. [The Class _-1 Trust Certificates will amortize on each
Distribution Date on a level yield basis.] The holders of the Class _-2 Trust
Certificates will not be entitled to distributions of interest. On [ ] __, 20__
(the "Final Scheduled Distribution Date"), the Class _-2 Trust Certificates will
be entitled to a distribution of all Underlying Securities held by the Trust as
of such date. All distributions of interest and principal (in the case of the
Class _-1 Trust Certificates) or Underlying Securities (in the case of the Class
_-2 Trust Certificates) will be made on a pro rata basis to the holders of the
respective Trust Certificate Class. It is a condition to the issuance of the
Trust Certificates that the Trust Certificates have ratings assigned by Moody's
Investors Service, Inc. ("Moody's") and by Standard & Poor's Ratings Services, a
division of the McGraw-Hill Companies, Inc. ("S&P"), equivalent to the ratings
of the Underlying Securities, which, as of the date of this Prospectus
Supplement were "[ ]" by Moody's and "[ ]" by S&P.
Application will be made to list the Class _-1 and Class _-2 Trust Certificates
on the New York Stock Exchange ("NYSE").
Prospective investors should consider the factors set forth herein under
"Risk Factors", beginning on page S-11 and in the Prospectus on page 7.
(cover continued on next page)
S-1
<PAGE>
THE TRUST CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT OBLIGATIONS OF OR INTERESTS IN THE DEPOSITOR OR ANY OF ITS
AFFILIATES. THE TRUST 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.
----------------------
INITIAL TRUST
AGGREGATE CERTIFICATE
PRINCIPAL INTEREST FINAL SCHEDULED
CLASS AMOUNT RATE DISTRIBUTION DATE CUSIP NUMBER
----- ------ ---- ----------------- ------------
Class _-1 $ [ ](1) [ ]%(1) [ ] __, 20__ [ ]
Class _-2 $ [ ] (2) [ ] __, 20__(2) [ ]
- --------------
(1) The holders of the Class _-1 Trust Certificates will be entitled to
receive, on [ ] __ and [ ] __ of each year, commencing on [ ] __, 199_
and ending on the Final Scheduled Distribution Date, interest
distributions at a rate of [ ]% per annum on the outstanding principal
amount of the Class _-1 Trust Certificates. The Class _-1 Trust
Certificates will amortize on each Distribution Date on a level yield
basis.
(2) The holders of the Class _-2 Trust Certificates will not be entitled to
distributions of interest. On the Final Scheduled Distribution Date,
the Class _-2 Trust Certificates will be entitled to a distribution of
all of the Underlying Securities then held by the Trust.
The Class _-1 and Class _-2 Trust Certificates offered hereby will be
purchased by Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch & Co." or the "Underwriter") from the Depositor and
will be offered by the Underwriter from time to time in negotiated transactions
or otherwise at varying prices to be determined at the time of sale. The
aggregate proceeds to the Depositor from the sale of the Class _-1 and Class _-2
Trust Certificates will be approximately $[ ], before deducting expenses payable
by the Depositor, subject to the terms and conditions set forth in the
Underwriting Agreement referred to herein under "Underwriting." The Trust
Certificates are offered by the Underwriter, subject to prior sale, when, as and
if delivered to and accepted by them, and subject to approval of certain legal
matters by counsel for the Underwriter and certain other conditions. The
Underwriter reserves the right to withdraw, cancel or modify such offer and to
reject orders in whole or in part. It is expected that delivery of the Trust
Certificates will be made in New York, New York on or about [ ] __, 199_ (the
"Closing Date") against payment therefor in immediately available funds.
---------------------------
Merrill Lynch & Co.
-------------------
S-2
<PAGE>
The date of this Prospectus Supplement is [ ] __, 199_.
(cover page continued)
As and to the extent described herein, collections received by the
Trustee with respect to the Underlying Securities will be distributed to Trust
Certificateholders in the manner and priority described herein.
The Trust Certificates initially will be represented by certificates
registered in the name of Cede & Co. ("Cede"), as nominee of The Depository
Trust Company (the "Depositary" or "DTC"). The interests of beneficial owners of
such Trust Certificates will be represented by book entries on the records of
persons that have accounts with DTC for such Global Security ("Participants").
Definitive certificates will be available for such Trust Certificates only under
the limited circumstances described herein. See "Description of the Trust
Certificates--Definitive Trust Certificates".
THE TRUST CERTIFICATES OFFERED BY THIS PROSPECTUS SUPPLEMENT WILL
CONSTITUTE A SEPARATE SERIES OF TRUST CERTIFICATES BEING OFFERED BY THE
DEPOSITOR PURSUANT TO ITS PROSPECTUS DATED [ ] __, 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.
For definitions of certain terms used herein, refer to "Index of
Defined Terms", beginning on page I-1 of the Prospectus.
S-3
<PAGE>
PROSPECTUS SUPPLEMENT SUMMARY
The following summary of certain 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. Certain
capitalized terms used herein are defined elsewhere in this Prospectus
Supplement or, to the extent not defined herein, have the meanings assigned to
such terms in the Prospectus. See "Index of Defined Terms."
THE TRUST CERTIFICATES
SECURITIES OFFERED............... The Trust Certificates, Series 199_-[ ] (the
"Trust Certificates"). The Trust
Certificates will be offered in two Classes,
Class _-1 and Class _-2. Each Class of Trust
Certificates represents a proportionate
undivided beneficial interest in certain
distributions to be made by the Trust, and
will be issued pursuant to the Trust
Agreement (as defined below). Payments on
the Trust Certificates will be derived
solely from the Underlying Securities.
THE TRUST........................ The Trust Certificates, Series 199_-[ ]
Trust (the "Trust"). The Trust will be
formed pursuant to the Supplement, Series
1997-[ ] (the "Series Supplement"), which
incorporates the Standard Terms (together
with the Series Supplement, the "Trust
Agreement by and between the Depositor and
the Trustee.
DEPOSITOR........................ Merrill Lynch Depositor, Inc. (the
"Depositor"), a company incorporated in the
State of Delaware as an indirect, wholly
owned, limited-purpose subsidiary of Merrill
Lynch & Co., will deposit the Underlying
Securities into the Trust. See "The
Depositor" in the Prospectus.
TRUSTEE.......................... United States Trust Company of New York. The
Trustee will receive compensation at the
rate set forth in the Series Supplement,
payable on each Distribution Date (the
"Trustee Fee").
CLOSING DATE..................... [ ] __, 199_.
CUT-OFF DATE..................... [ ] __, 199_.
TRUST ASSETS..................... The initial assets of the Trust will be $[ ]
aggregate principal amount of the [ ]%
[Debentures][Senior Notes][other securities]
due [ ] __, 20__ (the "Underlying
Securities") issued by the Underlying
Securities Issuer.
INITIAL AGGREGATE PRINCIPAL
AMOUNT OF CLASS _-1
TRUST CERTIFICATES............. $[ ].
S-4
<PAGE>
PRINCIPAL AMOUNT AT MATURITY OF
CLASS _-2 TRUST CERTIFICATES... $[ ].
FINAL SCHEDULED DISTRIBUTION
DATE ........................ [ ] __, 20__.
DISTRIBUTIONS
GENERAL..................... The Underlying Securities will be the sole
source of distributions on the Trust
Certificates.
All distributions of payments (in the case
of the Class _-1 Trust Certificates) or
Underlying Securities (in the case of the
Class _- 2 Trust Certificates) will be made
on a pro rata basis to the holders of the
respective Trust Certificate Class.
CLASS _-1 TRUST CERTIFICATES
The Class _-1 Trust Certificates will be
issued in an initial principal amount of
$[ ]. The Class _-1 Trust Certificates will
be entitled to receive, on [ ] __ and [ ] __
of each year (or if such date is not a
Business Day, the next succeeding Business
Day) (each, a "Distribution Date"),
commencing [ ] __, 199_ and ending on the
Final Scheduled Distribution Date, the
interest payment, if any, received on the
Underlying Securities, which will represent
a return of principal on the Class _-1 Trust
Certificates in accordance with the
amortization schedule set forth herein under
"Description of the Trust
Certificates--General", and the payment of
interest at a rate of [ ]% per annum on the
outstanding principal amount of the Class
_-1 Trust Certificates. The Class _-1 Trust
Certificates will amortize on each
Distribution Date on a level yield basis.
CLASS _-2 TRUST CERTIFICATES The Class _-2 Trust Certificates will have a
principal amount at maturity of $[ ] and
will not be entitled to distributions of
interest. The Class _-2 Trust Certificates
will accrete principal at the rate of [ ]%
per annum to a principal amount of $[ ] on
[ ] __, 20__ in accordance with the
accretion schedule set forth herein under
"Description of the Trust
Certificates--General". On [ ] __, 20__ (the
"Final Scheduled Distribution Date"), the
Class _-2 Trust Certificates will be
entitled to a distribution of all of the
Underlying Securities held by the Trust as
of such date.
SALE OR DISTRIBUTION OF
THE TRUST CERTIFICATES IN THE EVENT
OF A DEFAULT ON THE
UNDERLYING SECURITIES.......... In the event of a payment default on the
Underlying Securities or acceleration of the
maturity of the Underlying Securities, the
Trustee will (x) sell the Underlying
Securities and allocate the proceeds from
the sale of the Underlying Securities
between the Class _-1 Trust Certificates and
the Class _-2 Trust Certificates
S-5
<PAGE>
in accordance with the Allocation Ratio (as
set forth below) or (y) distribute the
Underlying Securities between the Class _-1
Trust Certificates and the Class _-2 Trust
Certificates in accordance with the
Allocation Ratio.
As used herein, "Allocation Ratio" means the
ratio of the Class _-1 Allocation to the
Class _-2 Allocation. The "Class _-1
Allocation" means the sum of the present
values (discounted at the rate of [ ]% per
annum) of each of the unpaid interest
coupons due or to become due on the
Underlying Securities on or prior to the
Final Scheduled Distribution Date. The
"Class _- 2 Allocation" means the sum of the
present values (discounted at the rate of
[ ]% per annum) of each of the unpaid
interest coupons due or to become due on the
Underlying Securities after the Final
Scheduled Distribution Date plus the sum of
the present values (discounted as the rate
of [ ]% per annum) of each of the principal
amounts of the Underlying Securities (in
each case assuming that the Underlying
Securities were paid when due and were not
redeemed prior to their stated maturity).
DISTRIBUTION ON THE TRUST CERTIFICATES
UPON THE ADVANCE OF MATURITY OR
OPTIONAL REDEMPTION
OF THE UNDERLYING SECURITIES
FOLLOWING A TAX EVENT.......... In the event of an optional redemption of
the Underlying Securities upon the
occurrence of a Tax Event (as defined below)
(see "Description of the Underlying
Securities--Advance of Maturity Date or
Optional Redemption in Case of Tax Event"
herein), the proceeds of such redemption
will be allocated between the Class _-1
Trust Certificates and the Class _-2 Trust
Certificates in accordance with the
Allocation Ratio.
In the event of an advance of maturity of
the Underlying Securities upon the
occurrence of a Tax Event (see "Description
of the Underlying Securities--Advance of
Maturity Date or Optional Redemption in Case
of Tax Event" herein), the Underlying
Securities will be sold and the proceeds
from such sale will be allocated between the
Class _-1 Trust Certificates and the Class
_-2 Trust Certificates in accordance with
the Allocation Ratio.
RECORD DATES..................... The day immediately preceding each
Distribution Date.
DENOMINATIONS AND
SPECIFIED CURRENCY............. The Trust Certificates will be denominated
and payable in U.S. dollars (the "Specified
Currency"). The Trust Certificates will be
issued in minimum principal amounts of
[$____] and in integral multiples thereof.
[One Trust Certificate of each Class may be
issued in an amount other than an integral
multiple of the applicable minimum
denomination.]
S-6
<PAGE>
FORM OF SECURITY................. Book-entry Trust Certificates with The
Depository Trust Company ("DTC"), except in
certain limited circumstances. See
"Description of the Trust
Certificates--Definitive Trust
Certificates". Distributions thereon will be
settled in immediately available (same-day)
funds.
CUSIP NUMBERS.................... Class _-1 Trust Certificates: [ ].
Class _-2 Trust Certificates: [ ].
CERTAIN FEDERAL INCOME
TAX CONSEQUENCES............... In the opinion of tax counsel to the Trust,
the Trust will be classified for U.S.
Federal income tax purposes as a grantor
trust and not as an association (or publicly
traded partnership) taxable as a
corporation. The Class _-1 Trust
Certificates will be treated by the Trust as
newly-issued self-amortizing debt
obligations maturing on the Final Scheduled
Distribution Date, although it is unclear
whether the Trust Certificates will receive
such treatment under the Internal Revenue
Code of 1986, as amended (the "Code"). The
Class _-2 Trust Certificates will be deemed
to be issued with original issue discount
("OID"). See "Certain Federal Income Tax
Consequences".
LISTING.......................... Application will be made to list the Class
_-1 and Class _-2 Trust Certificates on the
New York Stock Exchange ("NYSE").
RATINGS.......................... It is a condition to the issuance of the
Trust Certificates that the Trust
Certificates have ratings assigned by
Moody's Investors Service, Inc. ("Moody's")
and by Standard & Poor's Ratings Services, a
division of the McGraw-Hill Companies, Inc.
("S&P"), equivalent to the ratings of the
Underlying Securities, which, as of the date
of this Prospectus Supplement were "[ ]" by
Moody's and "[ ]" by S&P.
The rating of the Trust Certificates by
Moody's addresses the likelihood of the
ultimate payment of principal and interest
on the Trust Certificates or any Underlying
Securities distributed in respect thereof.
The rating of the Trust Certificates by S&P
addresses the likelihood of timely receipt
of interest on the Class _-1 Trust
Certificates or any Underlying Securities
distributed in respect of Trust
Certificates. 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 market price
of Trust Certificates. A security rating is
not a recommendation to buy, sell or hold
securities. The rating on the Trust
Certificates does not constitute a statement
regarding the occurrence or frequency of
redemption on, the Underlying Securities,
and the corresponding effect on yield to
investors. See "Ratings".
S-7
<PAGE>
ERISA CONSIDERATIONS............. If an employee benefit plan subject to the
Employee Retirement Income Security Act of
1974, as amended ("ERISA"), including an
individual retirement account (an "IRA") or
Keogh plan (each, a "Plan"), acquires an
equity interest in the underlying assets of
an entity such as the Trust, certain aspects
of such investment, including the operation
of the Trust, might be subject to the
prohibited transaction provisions under
ERISA and the Code, unless certain
exemptions apply. A Plan should consult its
advisors concerning the ability of such Plan
to purchase Trust Certificates under ERISA
or the Code. These issues are discussed more
fully below under "ERISA Considerations".
S-8
<PAGE>
THE UNDERLYING SECURITIES
The Underlying Securities were issued under an Indenture dated as of
[ ] __, 19__, between the Underlying Securities Issuer and [Name of Trustee]
providing for the issuance of debt securities by the Underlying Securities
Issuer (the "Debt Securities"). The Underlying Securities were part of an issue
totalling $[ ] million. The following summary of certain provisions of the
Underlying Securities and the Indenture does not purport to be complete and is
based upon the Prospectus dated [ ] __, 19__, [and the Prospectus Supplement
dated [ ] __, 19__,] of the Underlying Securities Issuer, and is subject to, and
is qualified in its entirety by reference to, all provisions of the Underlying
Securities and the Indenture, including the definitions therein of certain
terms.
UNDERLYING SECURITIES............ $[ ] aggregate principal amount of the [ ]%
[Debentures][Senior Notes][other securities]
due [ ] __, 20__, comprising a portion of a
[fixed rate, publicly traded, unsecured
debt, or other eligible, security issue of]
the Underlying Securities Issuer. 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.
UNDERLYING SECURITIES
ISSUER......................... The Underlying Securities Issuer is a [ ]
corporation whose principal executive
offices are located at [Address], and whose
telephone number is (___) ___-____. See
"Description of the Underlying Securities".
UNDERLYING SECURITIES
ISSUER: Commission
Filing Number................. [ ]
UNDERLYING SECURITIES:
RANKING........................ According to the Prospectus relating to the
Underlying Securities, the Underlying
Securities are unsecured and unsubordinated
indebtedness of the Underlying Securities
Issuer.
UNDERLYING SECURITIES:
COLLATERAL..................... None.
UNDERLYING SECURITIES:
ORIGINAL ISSUE DATE............ [ ] __, 19__.
UNDERLYING SECURITIES:
ORIGINAL AMOUNT ISSUED......... $[ ].
UNDERLYING SECURITIES:
MATURITY DATE.................. [ ] __, 20__.
UNDERLYING SECURITIES:
AMORTIZATION................... None.
S-9
<PAGE>
UNDERLYING SECURITIES:
INTEREST PAYMENT DATES......... [ ] __ and [ ] __.
UNDERLYING SECURITIES:
INTEREST RATE.................. [ ]% per annum.
UNDERLYING SECURITIES:
INTEREST ACCRUAL PERIODS....... [Semi-annual].
UNDERLYING SECURITIES:
DENOMINATIONS;
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:
FORM ........................ Book-entry debt securities with DTC [listed
on the NYSE] [specify other listing, if
any].
UNDERLYING SECURITIES:
CUSIP NUMBER................... [ ].
UNDERLYING SECURITIES:
RECORD DATES................... [ ] and [ ].
UNDERLYING SECURITIES TRUSTEE.... [Name of Trustee] (the "Underlying
Securities Trustee"). The Underlying
Securities have been issued pursuant to an
indenture dated as of [ ] __, 19__ as
amended or supplemented from time to time
(the "Indenture"), between the Underlying
Securities Trustee and the Underlying
Securities Issuer.
UNDERLYING SECURITIES:
RATINGS AS OF THE DATE
OF THIS PROSPECTUS
SUPPLEMENT..................... "[ ]" by Moody's and "[ ]" by S&P (each, a
"Rating Agency, and collectively, the
"Rating Agencies").
UNDERLYING SECURITIES:
INFORMATION WITH RESPECT TO
THE UNDERLYING SECURITIES
ISSUER......................... [ ] is subject to the informational
requirements of the Securities Exchange Act
of 1934 (the "Exchange Act"), as amended,
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").
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
S-10
<PAGE>
Regional Office, Room 1100, 7 World Trade
Center, New York, New York 10048 and Chicago
Regional Office, Suite 1400, Northwestern
Atrium Center, 500 West Madison Street,
Suite 1400, 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. Such material may also be
accessed electronically by means of the
Commission's home page on the Internet at
http://www.sec.gov. [In addition, reports
and other information concerning [the
Underlying Securities Issuer] may also be
inspected at the Information Center of the
New York Stock Exchange Inc., 20 Broad
Street, New York, New York 10005.]
This Prospectus Supplement does not provide information with respect to
the Underlying Securities Issuer. No investigation of the Underlying Securities
Issuer (including, without limitation, no investigation as to its financial
condition or creditworthiness) or of the Underlying Securities (including,
without limitation, no investigation as to its rating) has been made. A
potential Trust Certificateholder should obtain and evaluate the same
information concerning the Underlying Securities Issuer as one would obtain and
evaluate if investing directly in the Underlying Securities or in other
securities issued by the Underlying Securities Issuer. None of the Depositor,
the Trustee, the Underwriter, or any of their affiliates, assumes any
responsibility for the accuracy or completeness of any publicly available
information of the Underlying Securities Issuer filed with the Commission or
otherwise made publicly available or considered by a purchaser of the Trust
Certificates in making its investment decision in connection therewith.
S-11
<PAGE>
RISK FACTORS
Prospective purchasers should consider, among other things, the
following factors (as well as the factors set forth under "Risk Factors" in the
Prospectus) in connection with an investment in the Trust Certificates.
Limited Liquidity
There can be no assurance that an active public market for any Series
of Trust Certificates will develop or, if a public market develops, as to the
liquidity of the trading market for such Trust Certificates. Merrill Lynch & Co.
has advised the Depositor that it intends to make a market in the Trust
Certificates, as permitted by applicable laws and regulations, after the
issuance thereof. Merrill Lynch & Co. is not obligated, however, to make a
market in the Trust Certificates of any Series or Class within such Series and
any such market-making activity may be discontinued at any time without notice
at the sole discretion of Merrill Lynch & Co. If an active public market for the
Trust Certificates does not develop or continue, the market prices and liquidity
of the Trust Certificates may be adversely affected.
Maturity and Yield Considerations; Reinvestment Risk
The yield realized by a holder of a Trust Certificate depends upon
several factors, including the purchase price of the Trust Certificates, the
time of acquisition, and whether a Tax Event occurs. The Depositor has not
formulated an opinion as to the likelihood of a Tax Event. If a Tax Event occurs
and the Underlying Securities Issuer exercises its right to advance the maturity
of or redeem the Underlying Securities, or if the Underlying Securities are paid
or sold prior to maturity as a result of a default, or because the Underlying
Securities Issuer ceases to file reports under the Exchange Act, an investor's
investment in the Trust Certificates and the Underlying Securities will have a
shorter average maturity than if such right were not exercised or if such
default had not occurred. Prevailing interest rates at the time of such early
redemption may be lower than the yield on the Trust Certificates. Therefore, an
investor in the Trust Certificates may be unable to realize a comparable yield
upon reinvestment of the funds from such early redemption.
Zero Coupon Nature of the Class _-2 Trust Certificates
Because the Class _-2 Trust Certificates do not receive allocations of
either interest or principal until the Final Scheduled Distribution Date, the
changes in market value of the Class _-2 Trust Certificates as a result of
changes in interest rates or spreads are expected to be more than for the
Underlying Securities. Although the Class _-2 Trust Certificates will not
receive any cash flow during the term of the Trust, the Class _-2 Trust
Certificates will be deemed to be issued with OID. See "Certain Federal Income
Tax Consequences" herein.
Limited Assets
The Trust has no significant assets other than the Underlying
Securities. If the Underlying Securities are insufficient to make payments or
distributions on the Trust Certificates, no other assets will be available for
payment of the deficiency.
No Management of Underlying Securities
Except as described herein, the Trust will not dispose of any
Underlying Security, regardless of adverse events, financial or otherwise, which
may affect the value of the Underlying Security or the Underlying Securities
Issuer. If there is a payment default on any Underlying Security or any other
default which may result in acceleration of the Underlying Security, the Trust
will only dispose of or otherwise deal with the defaulted Underlying Security in
the manner provided in the Trust Agreement. If a payment default on or
acceleration of the Underlying Securities occurs, the Trust Agreement will
provide that the Trust will sell or distribute the Underlying Securities
notwithstanding market conditions at the time, and the Trustee will have no
discretion to
S-12
<PAGE>
do otherwise. Such sale or distribution may result in greater losses than might
occur if the Trust continued to hold the Underlying Securities.
Credit Risk
The Trust Certificates represent interests in obligations of a single
obligor. In particular, the Trust Certificates will be subject to all the risks
associated with a direct investment in unsecured debt obligations of the
Underlying Securities Issuer.
Underlying Securities are Unsecured
In a liquidation, holders of the Underlying Securities will be paid
only after holders of secured obligations of the Underlying Securities Issuer.
According to the Prospectus relating to the Underlying Securities, the
Underlying Securities are general unsecured obligations of the Underlying
Securities Issuer, which rank on a parity with all other unsecured and
unsubordinated indebtedness of the Underlying Securities Issuer, but which are
effectively subordinated to the Underlying Securities Issuer's existing and
future senior secured indebtedness to the extent of the collateral therefor.
No Investigation of Underlying Securities
None of the Depositor, the Underwriter or the Trustee will (i) make any
investigation of the business condition, financial or otherwise, of the
Underlying Securities Issuer, or (ii) verify any reports or information filed by
the Underlying Securities Issuer with the Commission. Investors are encouraged
to consider publicly available financial and other information regarding the
Underlying Securities Issuer. The issuance of the Trust Certificates should not
be construed as an endorsement by the Depositor, the Underwriter or the Trustee
of the financial condition or business prospects of the Underlying Securities
Issuer.
Ratings of the Trust Certificates Subject to Change
At the time of issuance, the Trust Certificates will have ratings
assigned by Moody's and S&P equivalent to the ratings of the Underlying
Securities, which, as of the date of this Prospectus Supplement were "[ ]" by
Moody's and "[ ]" by S&P. Any rating issued with respect to the Trust
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 Trust
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 market price of the Trust Certificates.
THE TRUST
The Trust will be formed pursuant to the Series Supplement, by and
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. The Trustee, on behalf of the Trust, will accept such
Underlying Securities and will deliver the Trust Certificates to or upon the
order of the Depositor.
The Underlying Securities were purchased in the secondary market. The
Underlying Securities were not acquired from the Underlying Securities Issuer as
part of any distribution by or pursuant to any agreement with the Underlying
Securities Issuer. The Underlying Securities Issuer is not participating in this
offering and will not receive any of the proceeds of the sale of the Underlying
Securities to the Depositor or the issuance of the Trust Certificates.
S-13
<PAGE>
DESCRIPTION OF THE UNDERLYING SECURITIES
General
The Underlying Securities represent the sole assets of the Trust that
are available to make Distributions in respect of the Trust Certificates. The
aggregate principal amount of the Underlying Securities is $[ ]. The primary
economic terms of the Underlying Securities are described in "Prospectus
Supplement Summary--The Underlying Securities" herein.
This Prospectus Supplement sets forth certain relevant terms with
respect to the Underlying Securities, but does not provide detailed information
with respect to the Underlying Securities or the Underlying Securities Issuer.
This Prospectus Supplement relates only to the Trust Certificates offered hereby
and does not relate to the Underlying Securities. All disclosure contained
herein with respect to the Underlying Securities Issuer and the Underlying
Securities is derived from publicly available documents.
The Underlying Securities Issuer is not participating in, and will not
receive any proceeds in connection with, the offering of the Trust Certificates.
The Underlying Securities were purchased in the secondary market and will be
deposited into the Trust. The Underlying Securities were not acquired either
from the Underlying Securities Issuer or pursuant to any distribution by or
agreement with the Underlying Securities Issuer.
The Underlying Securities convert into cash in a finite time period and
the Underlying Securities Issuer is (a) subject to the periodic reporting
requirements of the Exchange Act; and (b) eligible to use a Registration
Statement on Form S-3 for a primary offering. The rating on the Underlying
Securities will allow at least one investment-grade rating of the Trust
Certificates by a Rating Agency.
According to the Underlying Securities Issuer's publicly available
documents, its principal executive offices are located at [Address] and its
telephone number is (___) ___-____. 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 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 West
Madison Street, Suite 1400, 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. Such material may also be accessed
electronically by means of the Commission's home page on the Internet at
http://www.sec.gov. [In addition, reports and other information concerning the
Underlying Securities Issuer may also be inspected at the Information Center of
the New York Stock Exchange Inc., 20 Broad Street, New York, New York 10005.]
Although the Depositor has no reason to believe the information
concerning the Underlying Securities or the Underlying Securities Issuer
contained in the Prospectus related to the Underlying Securities is not
reliable, the Depositor has not participated in the preparation of such
documents, or made any due diligence inquiry with respect to the information
provided therein. There can be no assurance that events affecting the Underlying
Securities or the Underlying Securities Issuer have not occurred or have not yet
been publicly disclosed which would affect the accuracy or completeness of the
publicly available documents described above.
THE TRUST WILL HAVE NO ASSETS OTHER THAN UNDERLYING SECURITIES FROM
WHICH TO MAKE DISTRIBUTIONS OF AMOUNTS DUE IN RESPECT OF THE TRUST CERTIFICATES.
CONSEQUENTLY, THE ABILITY OF TRUST CERTIFICATEHOLDERS TO RECEIVE DISTRIBUTIONS
IN RESPECT OF THE TRUST CERTIFICATES WILL DEPEND ENTIRELY ON THE TRUST'S RECEIPT
OF PAYMENTS ON THE UNDERLYING SECURITIES. PROSPECTIVE PURCHASERS OF THE TRUST
S-14
<PAGE>
CERTIFICATES SHOULD CONSIDER CAREFULLY THE FINANCIAL CONDITION OF THE UNDERLYING
SECURITIES ISSUER AND ITS ABILITY TO MAKE PAYMENTS IN RESPECT OF SUCH UNDERLYING
SECURITIES. THIS PROSPECTUS SUPPLEMENT RELATES ONLY TO THE TRUST 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 DOCUMENTS. NEITHER THE DEPOSITOR,
THE UNDERWRITER NOR THE TRUSTEE PARTICIPATED IN THE PREPARATION OF SUCH
DOCUMENTS OR TAKES ANY RESPONSIBILITY FOR THE ACCURACY OR COMPLETENESS OF THE
INFORMATION PROVIDED THEREIN.
Underlying Securities Indenture
The Underlying Securities were issued under an Indenture dated as of [
] __, 19__ as amended or supplemented from time to time (the "Indenture"),
between the Underlying Securities Issuer and the Underlying Securities Trustee
providing for the issuance of Debt Securities. The Underlying Securities were [
]% of an issue totalling $[ ] million. The following summaries of certain
provisions of the Debt Securities and the Indenture do not purport to be
complete and are based upon the Prospectus dated [ ] __ 19__[, and the
Prospectus Supplement dated [ ] __, 19__ [(together, ]the "Underlying Securities
Prospectus")], relating to the Debt Securities, of which the Underlying
Securities are a series of the Underlying Securities Issuer, and are subject to,
and are qualified in their entirety by reference to, all provisions of the
Underlying Securities and the Indenture, including the definitions therein of
certain terms. Wherever particular sections or defined terms of the Indenture
are referred to, it is intended that such sections or defined terms shall be
incorporated herein by reference. Investors should refer to the Indenture itself
for all terms governing the Underlying Securities.
[The Indenture does not limit the amount of Debt Securities which can
be issued thereunder and additional Debt Securities may be issued thereunder up
to the aggregate principal amount which may be authorized from time to time by,
or pursuant to a resolution of, the Underlying Securities Issuer's Board of
Directors or by supplemental indenture.] Reference is made to the Prospectus
Supplement of the Underlying Securities for the terms of the Underlying
Securities not set forth herein. Principal, premium, if any, and interest will
be payable, and the Underlying Securities will be transferable, in the manner
described in the Underlying Securities Prospectus.
The Underlying Securities constitute unsecured and unsubordinated
indebtedness of the Underlying Securities Issuer, and rank on a parity with the
Underlying Securities Issuer's other indebtedness. [However, since the
Underlying Securities Issuer is a holding company, the right of the Underlying
Securities Issuer and, hence, the right of creditors of the Underlying
Securities Issuer (including the holders of the Underlying Securities) to
participate in any distribution of the assets of any subsidiaries of the
Underlying Securities Issuer, whether upon liquidation, reorganization, or
otherwise, is subject to prior claims of creditors of the subsidiary, except to
the extent that claims of the Underlying Securities Issuer itself as a creditor
of a subsidiary may be recognized.]
Federal income tax consequences applicable to the Underlying Securities
are described in the Underlying Securities Prospectus.
[Covenants; Events of Default]
The Indenture limits the Underlying Securities Issuer's ability to
engage in certain activities and transactions and requires that the Underlying
Securities Issuer perform certain obligations with respect to the Underlying
Securities. [Describe common restrictive, financial and other covenants on the
Underlying Securities Issuer contained in the Indenture.]
S-15
<PAGE>
[The following is a summary of the Underlying Security Events of
Default for the Debt Securities:
(a) failure to make payments of principal (and premium,
if any) and interest to holders of the Debt Securities in the time
periods given in the Indenture;
(b) material breaches of certain representations, warranties
or covenants or failure to observe or perform in any material respect
any covenant or agreement under an Indenture continuing for a specified
period of time after notice thereof is given to the Underlying
Securities Issuer by the Underlying Securities Trustee or the holders
of not less than a specified percentage of the Debt Securities;
(c) failure by the Underlying Securities Issuer to make any
required payment of principal (and premium, if any) or interest with
respect to certain of the other outstanding debt obligations of the
Underlying Securities Issuer or the acceleration by or on behalf of the
holders thereof of such securities; [and]
(d) certain events of bankruptcy or insolvency relating to the
Underlying Securities Issuer and the subsidiaries thereof; and
[(e) describe any additional events of default with respect to
the Underlying Securities].]
Advance of Maturity Date; Optional Redemption in Case of Tax Event
The Underlying Securities may not be redeemed by the Underlying
Securities Issuer except if a Tax Event occurs. A "Tax Event" is a change in the
treatment of such Underlying Securities under the Code pursuant to which an
Underlying Securities Issuer has the right to shorten the maturity of or
repurchase such Underlying Securities. [Describe specific terms of tax call]
Concerning the Underlying Securities Trustee
The Underlying Securities Issuer and certain of its affiliates may
maintain banking relationships in the ordinary course of business with the
Underlying Securities Trustee. In addition, the Underlying Securities Trustee
and certain of its affiliates may serve as trustee, authenticating agent, or
paying agent with respect to certain Debt Securities of the Underlying
Securities Issuer and certain of its affiliates.
Global Underlying Securities
The Underlying Securities and the other Debt Securities comprising the
same series were issued in the form of one or more fully registered Global
Securities that were deposited with, or on behalf of, DTC as more fully
described in the Underlying Securities Prospectus. Unless and until it is
exchanged for Debt Securities in definitive registered form, a Global Security
may not be transferred except as a whole by the Depositary for such Global
Security to a nominee of such Depositary or by a nominee of such Depositary to
such Depositary or another nominee of such Depositary or by such Depositary or
any such nominee to a successor of such Depositary or a nominee of such
successor.
Ownership of beneficial interests in a Global Security will be limited
to Participants or persons that may hold interests through Participants.
Ownership of beneficial interests in such Global Security will be shown on, and
the transfer of that ownership will be effected only through, records maintained
by the Depositary for such Global Security or on the record of Participants. The
laws of some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and such laws may
impair the ability to transfer beneficial interests in a Global Security.
S-16
<PAGE>
So long as the Depositary for a Global Security, or its nominee, is the
registered owner of such Global Security, such Depositary or such nominee, as
the case may be, will be considered the sole owner or holder of the Underlying
Securities represented by such Global Security for all purposes under the
Indenture governing such Underlying Securities. Except as provided below, the
Trust as the owner of beneficial interests in a Global Security will not be
entitled to have Underlying Securities of the series represented by such Global
Security registered in its name, will not receive or be entitled to receive
physical delivery of Underlying Securities of such series in definitive form and
will not be considered the owners or holders thereof under the Indenture
governing such Underlying Securities. Principal, premium, if any, and interest
payments on Underlying Securities registered in the name of a Depositary or its
nominee will be made to the Depositary or its nominee, as the case may be, as
the registered owner of the Global Security representing such Underlying
Securities. Neither the Underlying Securities Issuer, the Underlying Securities
Trustee, any Paying Agent nor the Security Registrar for such Underlying
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Security for such Underlying Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
The Underlying Securities Issuer may at any time and in its sole
discretion determine not to have the Underlying Securities represented by a
Global Underlying Security and, in such event, will issue Underlying Securities
in definitive form in exchange for the Global Underlying Security representing
such Underlying Securities.
DESCRIPTION OF THE TRUST CERTIFICATES
General
The Trust Certificates will be denominated and distributions with
respect thereto will be payable in U.S. dollars (the "Specified Currency"). The
Class _-1 Trust Certificates have an initial aggregate principal amount of $[ ].
The Class _-2 Trust Certificates have a principal amount at maturity of $[ ].
The holders of the Class _-1 Trust Certificates will be entitled to
receive, on each Distribution Date, commencing [ ] __, 199_ and ending on the
Final Scheduled Distribution Date, the interest, if any, received on the
Underlying Securities, which will represent a return of principal on the Class
_-1 Trust Certificates in accordance with the amortization schedule set forth
below, and the payment of interest at a rate of [ ]% per annum on the
outstanding principal amount of the Class _-1 Trust Certificates. The Class _-1
Trust Certificates will amortize on each Distribution Date on a level yield
basis. The Class _-1 Trust Certificates generally will not be entitled to any
allocation of any principal payments received on the Underlying Securities.
Interest on the Class _-1 Trust Certificates will be calculated on a
360-day year of twelve 30-day months and will accrue from and including the
prior Distribution Date (or, in the case of the first Interest Accrual Period,
from and including [ ] __, 199_) to but excluding the current Distribution Date.
The Class _-2 Trust Certificates will be issued in an initial principal
amount of $[ ] and the holders thereof will not be entitled to distributions of
interest. The Class _-2 Trust Certificates will accrete principal at the rate of
[ ]% per annum, in accordance with the accretion schedule set forth below, to a
principal amount of $[ ] on [ ] __, 20__. On [ ] __, 20__ the holders of the
Class _-2 Trust Certificates will be entitled to a distribution of all of the
Underlying Securities held by the Trust as of such date. On or prior to the 60th
day preceding [ ] __, 20__, the Trustee shall request instructions from the
registered holders of the Class _-2 Trust Certificates regarding the account or
accounts to which transfer of the Underlying Securities should be made, and
other information relevant to such transfer.
S-17
<PAGE>
AMORTIZATION SCHEDULE--CLASS _-1 TRUST CERTIFICATES
<TABLE>
<CAPTION>
PRINCIPAL TOTAL INTEREST OUTSTANDING
INTEREST PAYABLE AMORTIZATION PLUS PRINCIPAL PRINCIPAL ON
CLOSING DATE OR ON DISTRIBUTION ON DISTRIBUTION PAYABLE ON CLOSING DATE OR
DISTRIBUTION DATE DATE DATE DISTRIBUTION DATE DISTRIBUTION DATE*
----------------- ---------------- --------------- ----------------- ------------------
<S> <C> <C> <C> <C>
[ ] __, 1997 ...... $[ ]
[ ] __, 1997 ...... $[ ] $[ ] $[ ] [ ]
[ ] __, 1998 ...... [ ] [ ] [ ] [ ]
[ ] __, 1998 ...... [ ] [ ] [ ] [ ]
[ ] __, 1999 ...... [ ] [ ] [ ] [ ]
[ ] __, 1999 ...... [ ] [ ] [ ] [ ]
[ ] __, 2000 ....... [ ] [ ] [ ] [ ]
[ ] __, 2000 ....... [ ] [ ] [ ] [ ]
[ ] __, 2001 ....... [ ] [ ] [ ] [ ]
[ ] __, 2001 ....... [ ] [ ] [ ] [ ]
[ ] __, 2002 ....... [ ] [ ] [ ] [ ]
[ ] __, 2002 ....... [ ] [ ] [ ] [ ]
[ ] __, 2003 ....... [ ] [ ] [ ] [ ]
[ ] __, 2003 ....... [ ] [ ] [ ] [ ]
[ ] __, 2004 ....... [ ] [ ] [ ] [ ]
[ ] __, 2004 ....... [ ] [ ] [ ] [ ]
[ ] __, 2005 ....... [ ] [ ] [ ] [ ]
[ ] __, 2005 ....... [ ] [ ] [ ] [ ]
[ ] __, 2006 ....... [ ] [ ] [ ] [ ]
[ ] __, 2006 ....... [ ] [ ] [ ] [ ]
[ ] __, 2007 ....... [ ] [ ] [ ] [ ]
[ ] __, 2007 ....... [ ] [ ] [ ] [ ]
[ ] __, 2008 ....... [ ] [ ] [ ] [ ]
[ ] __, 2008 ....... [ ] [ ] [ ] [ ]
[ ] __, 2009 ....... [ ] [ ] [ ] [ ]
[ ] __, 20__ ....... [ ] [ ] [ ] 0
</TABLE>
- ---------------
* Principal amount on Closing Date or at close of business on the Distribution
Date.
S-18
<PAGE>
ACCRETION SCHEDULE--CLASS _-2 TRUST CERTIFICATES
<TABLE>
<CAPTION>
PRINICPAL TOTAL INTEREST ACCRETED
INTEREST PAYABLE AMORTIZATION PLUS PRINCIPAL PRINCIPAL ON
CLOSING DATE OR ON DISTRIBUTION ON DISTRIBUTION PAYABLE ON CLOSING DATE OR
DISTRIBUTION DATE DATE DATE DISTRIBUTION DATE DISTRIBUTION DATE*
----------------- ---------------- --------------- ----------------- ------------------
<S> <C> <C> <C> <C>
[ ] __, 1997 ....... $[ ]
[ ] __, 1997 ....... $[ ] $[ ] $[ ] [ ]
[ ] __, 1998 ....... [ ] [ ] [ ] [ ]
[ ] __, 1998 ....... [ ] [ ] [ ] [ ]
[ ] __, 1999 ....... [ ] [ ] [ ] [ ]
[ ] __, 1999 ....... [ ] [ ] [ ] [ ]
[ ] __, 2000 ....... [ ] [ ] [ ] [ ]
[ ] __, 2000 ....... [ ] [ ] [ ] [ ]
[ ] __, 2001 ....... [ ] [ ] [ ] [ ]
[ ] __, 2001 ....... [ ] [ ] [ ] [ ]
[ ] __, 2002 ....... [ ] [ ] [ ] [ ]
[ ] __, 2002 ....... [ ] [ ] [ ] [ ]
[ ] __, 2003 ....... [ ] [ ] [ ] [ ]
[ ] __, 2003 ....... [ ] [ ] [ ] [ ]
[ ] __, 2004 ....... [ ] [ ] [ ] [ ]
[ ] __, 2004 ....... [ ] [ ] [ ] [ ]
[ ] __, 2005 ....... [ ] [ ] [ ] [ ]
[ ] __, 2005 ....... [ ] [ ] [ ] [ ]
[ ] __, 2006 ....... [ ] [ ] [ ] [ ]
[ ] __, 2006 ....... [ ] [ ] [ ] [ ]
[ ] __, 2007 ....... [ ] [ ] [ ] [ ]
[ ] __, 2007 ....... [ ] [ ] [ ] [ ]
[ ] __, 2008 ....... [ ] [ ] [ ] [ ]
[ ] __, 2008 ....... [ ] [ ] [ ] [ ]
[ ] __, 2009 ....... [ ] [ ] [ ] [ ]
[ ] __, 20__ ....... [ ] [ ] [ ] [ ]
</TABLE>
- --------------
* Principal amount on Closing Date or at close of business on the Distribution
Date.
The Trust Certificates will be delivered in registered form. The Trust
Certificates will be issued, maintained and transferred on the book-entry
records of DTC and its Participants in minimum principal amounts of $[----] and
integral multiples thereof. [One Trust Certificate of each Class may be issued
in an amount other than an integral multiple of the applicable minimum
denomination.] Each Class of Trust Certificates will each initially be
represented by one or more global certificates registered in the name of the
nominee of DTC (together with any successor clearing agency selected by the
Depositor, the "Clearing Agency") except as provided below. The Depositor has
been informed by DTC that DTC's nominee will be Cede. No holder of any such
Trust Certificate will be entitled to receive a certificate representing such
person's interest, except as set forth below under "--Definitive Trust
Certificates". Unless and until Definitive Trust Certificates are issued under
the limited circumstances described herein, all references to actions by Trust
Certificateholders with respect
S-19
<PAGE>
to any such Trust Certificates shall refer to actions taken by DTC upon
instructions from its Participants. See "--Definitive Trust Certificates" below
and "Description of Trust 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 Trust
Certificateholder under the Trust Agreement only at the direction of one or more
Participants to whose DTC account such Trust Certificates are credited.
Additionally, DTC will take such actions with respect to specified Voting Rights
only at the direction and on behalf of Participants whose holdings of such
certificates evidence such specified Voting Rights. DTC may take conflicting
actions with respect to Voting Rights, to the extent that Participants whose
holdings of Trust Certificates evidence such Voting Rights authorize divergent
action.
Definitive Trust Certificates
Definitive Trust Certificates will be issued to Trust
Certificateholders or their nominees, respectively, rather than to DTC or its
nominee, only if (i) the Depositor advises the Trustee in writing that DTC is no
longer willing or able to discharge properly its responsibilities as Clearing
Agency with respect to the Trust 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 Trust Certificates. Upon surrender by DTC
of the definitive certificates representing the Trust Certificates and receipt
of instructions for re-registration, the Trustee will reissue such Trust
Certificates as Definitive Trust Certificates issued in the respective principal
amounts owned by the individual owners of such Trust Certificates, and
thereafter the Trustee will recognize the holders of such Definitive Trust
Certificates as Trust Certificateholders under the Trust Agreement.
Listing on the New York Stock Exchange
Application will be made to list the Class _-1 and Class _-2 Trust
Certificates on the NYSE. There can be no assurance that the Trust Certificates,
once listed, will continue to be eligible for trading on the NYSE.
Collections and Distributions
Collections on the Underlying Securities that are received by the
Trustee for a Collection Period pursuant to the collection procedures described
herein and in the Prospectus and deposited from time to time into the Trust
Certificate Account will be applied by the Trustee on each applicable
Distribution Date to the following distributions in the following order of
priority, solely to the extent of Available Funds (as defined below) on such
Distribution Date:
(a) to the Trustee, the Trustee Fee and reimbursement for any
Ordinary Expenses, and for Extraordinary Expenses incurred by the
Trustee in accordance with the Trust Agreement pursuant to instructions
of not less than 100% of the Trust Certificateholders;
(b) to the holders of the Class _-1 Trust Certificates [and
the Retained Interest], interest at the rate of [ ]% per annum on the
principal amount of the Class _-1 Trust Certificates [and the Retained
Interest] and principal distributable on such Class _-1 Trust
Certificates on such Distribution Date;
S-20
<PAGE>
(c) to the holders of the Class_-1 Trust Certificates, if
available, any additional interest owed and paid by the Underlying
Securities Issuer as a result of delay in the receipt by the Trustee of
any payment on the Underlying Securities;
(d) to the holders of the Class _-2 Trust Certificates, on the
Final Scheduled Distribution Date only, a distribution of all
Underlying Securities held by the Trust as of such date; and
(e) to the extent there are Available Funds in the Certificate
Account, to any creditors of the Trust in satisfaction of liabilities
thereto.
"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 except for Eligible Investments. In order to
reimburse the Trustee for Extraordinary Expenses, however, not less than 100% of
the Trust Certificateholders may elect to sell a portion of the Underlying
Securities such that the proceeds of such sale would be sufficient to reimburse
the Trustee for such Extraordinary Expenses.
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
Trust Certificates or be owed to Trust Certificateholders as a result of any
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
Class _-1 Trust Certificateholders. In the event of a payment default on the
Underlying Securities, approved Extraordinary Expenses (see "Description of the
Trust Agreement--The Trustee" herein) of the Trustee may be reimbursed to the
Trustee out of Available Funds before any distributions to Trust
Certificateholders are made.
All amounts received on or with respect to the Underlying Securities,
which are not distributed to Trust Certificateholders on the date of receipt,
shall be invested by the Trustee in Eligible Investments. Income on such
investments will constitute property of the Trust. "Eligible Investments" means,
with respect to the Trust Certificates, those investments consistent with the
Trust's status as a grantor trust under the Code and acceptable to the Rating
Agencies as being consistent with the rating of such Trust Certificates, as
specified in the Trust Agreement. Generally, Eligible Investments must be
limited to obligations or securities that mature not later than the Business Day
prior to the next succeeding Distribution Date.
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 Trust Certificateholders. To the extent Available Funds are
insufficient to make any such distributions due to any Class of Trust
Certificate, 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 Depositor will pay the Ordinary Expenses of the Trustee.
Exchange of Trust Certificates
On each Distribution Date, or the next succeeding Business Day if such
Distribution Date is not a Business Day, Merrill Lynch & Co. or any of its
affiliates may, if it holds Class _-2 Trust Certificates of a certain principal
amount at maturity and Class _-1 Trust Certificates representing a like
outstanding principal amount thereof, notify the Trustee, not less than at least
30 (or such shorter period acceptable to the Trustee) but not more than 45 days
prior to such Distribution Date, that it intends to tender such Trust
Certificates to the Trustee on such Distribution Date; provided that such
distribution will not be made if either (i) it would cause the Trustee or
Depositor to fail to satisfy the applicable requirements for exemption under
Rule 3a-7 under the Investment Company Act of 1940 or (ii) such distribution
would affect the characterization of the Trust as a "grantor trust" under the
Code. See "Description of the Trust Certificates--Optional Exchange" in the
Prospectus. Upon such tender, the Trustee will deliver Deposited Assets having a
principal amount equal to the
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combined principal amounts of the Class _-1 Trust Certificates and Class _-2
Trust Certificates being tendered to such Trust Certificateholder.
Default on Underlying Securities
If there is a payment default on the Underlying Securities or an
acceleration of the maturity of the Underlying Securities, the Trustee will
[sell the Underlying Securities and allocate the proceeds from the sale of the
Underlying Securities between the Class _-1 Trust Certificates and the Class _-2
Trust Certificates in accordance with the Allocation Ratio][distribute the
Underlying Securities between the Class _-1 Trust Certificates and the Class _-2
Trust Certificates in accordance with the Allocation Ratio][submit to a vote of
the Trust Certificateholders to decide the appropriate remedy].
[Distributions upon Optional Redemption or Advance of Maturity
If there is an optional redemption of the Underlying Securities upon
the occurrence of a Tax Event (see "Description of the Underlying
Securities--Advance of Maturity Date or Optional Redemption in Case of Tax
Event" herein), the proceeds of such redemption will be allocated between the
Class _-1 Trust Certificates and the Class _-2 Trust Certificates in accordance
with the Allocation Ratio. If there is an advance of maturity of the Underlying
Securities upon the occurrence of a Tax Event (see "Description of the
Underlying Securities--Advance of Maturity Date or Optional Redemption in Case
of Tax Event" herein), the Underlying Securities will be sold and the proceeds
from such sale will be allocated between the Class _-1 Trust Certificates and
the Class _-2 Trust Certificates in accordance with the Allocation Ratio.]
THE DEPOSITOR
The Depositor, a Delaware corporation, is an indirect, wholly owned,
limited-purpose subsidiary of Merrill Lynch & Co., Inc. The Depositor has not
guaranteed and is not otherwise obligated with respect to the Trust
Certificates.
The principal office of the Depositor is located at c/o Merrill Lynch &
Co., World Financial Center, New York, New York 10281 (Telephone: (212)
449-1000). See "The Depositor" in the Prospectus.
DESCRIPTION OF THE TRUST AGREEMENT
General
The Trust 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 Trust Certificates containing a copy of the
Series Supplement as executed will be filed by the Depositor with the Commission
following the issuance and sale of the Trust Certificates. The Trust created
under the Series Supplement will consist of (i) the Deposited Assets and (ii)
all payments on or collections in respect of the Deposited Assets due after the
Cut-off Date. 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 Trust 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 therein, to which reference is
hereby made for a full description of such provisions, including the definition
of certain terms used herein.
The discussions in the Prospectus under "Description of the Trust
Agreement--Advances in Respect of Delinquencies", "--Certain Matters Regarding
the Administrative Agent and the Depositor" (to the extent the discussion
relates to the Administrative Agent), "--Administrative Agent Termination
Events; Rights upon
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Administrative Agent Termination Event", and "--Evidence as to Compliance" are
not applicable to the Trust Certificates.
The Trustee
United States Trust Company of New York will act as the Trustee for the
Trust Certificates and the Trust pursuant to the Trust Agreement. The Trustee's
offices are located at 114 West 47th Street, New York, New York 10036 and its
telephone number is (212) 852-1623.
Pursuant to the Trust Agreement, the Trustee shall receive compensation
equal to [_______].
The Trust Agreement will provide that the Trustee may not take any
action which, in the Trustee's opinion, would or might cause it to incur
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 Trust
Certificateholders representing not less than the Required Percentage-Remedies
(as defined below) of the aggregate Voting Rights, and (iii) the Trust
Certificateholders have agreed that such costs will be paid by the Trustee (x)
from the Trust (in the case of an affirmative vote of 100% of the Trust
Certificateholders) or (y) out of the Trustee's own funds (in which case the
Trustee can receive reimbursement from the Trust Certificateholders voting in
favor of such proposal). Extraordinary Expenses that may be reimbursed to the
Trustee from the Trust may be reimbursed out of Available Funds on any
Distribution Date before any distributions to Trust Certificateholders on such
Distribution Date are made.
Events of Default
An event of default with respect to the Trust Certificates under the
Trust Agreement (an "Event of Default") will consist of (i) a default in the
payment of any interest on any Underlying Security after the same becomes due
and payable (subject to any applicable grace period); (ii) a default in the
payment of the principal of or any installment of principal of any Underlying
Security when the same becomes due and payable; and (iii) any other event
specified as an event of default in the Indenture.
The Trust Agreement will provide that, within 10 days after the
occurrence of an Event of Default in respect of the Trust Certificates, the
Trustee will give notice to the Trust Certificateholders, 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 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 Trust Certificateholders.
No Trust Certificateholder will have the right to institute any
proceeding with respect to the Trust Agreement, unless (i) such Trust
Certificateholder previously has given to the Trustee written notice of a
continuing breach, (ii) Trust Certificateholders evidencing not less than the
Required Percentage-Remedies of the aggregate Voting Rights have requested in
writing that the Trustee institute such proceeding in its own name as Trustee,
(iii) such Trust Certificateholder or Trust Certificateholders have offered the
Trustee reasonable indemnity, (iv) the Trustee has for 15 days failed to
institute such proceeding and (v) no direction inconsistent with such written
request has been given to the Trustee during such 15-day period by Trust
Certificateholders evidencing not less than the Required Percentage-Remedies of
the aggregate Voting Rights. "Required Percentage-Remedies" shall mean 662/3% of
the Voting Rights.
Voting Rights
At all times, 100% of all Voting Rights will be allocated between the
Class _-1 Trust Certificates and the Class _-2 Trust Certificates in accordance
with the Allocation Ratio. Within each such Class, Voting Rights shall be
allocated among Trust Certificateholders in proportion to the then outstanding
principal amounts, or
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notional amounts, of their respective Trust Certificates. The "Required
Percentage-Amendment" of Voting Rights necessary to consent to such modification
or amendment shall be 662/3%. Notwithstanding the foregoing, in addition to the
other restrictions on modification and amendment, the Trustee will not enter
into any amendment or modification of the Trust Agreement which would adversely
affect in any material respect the interests of the holders of a Class of Trust
Certificates without the consent of the holders of 100% of such Class of Trust
Certificates; provided, however, that no such amendment or modification will be
permitted which would alter the status of the Trust as a grantor trust under the
Code. See "Description of the Trust Agreement--Modification and Waiver" in the
Prospectus.
Voting of Underlying Securities, Modification of Indenture
The Trustee, as holder of the Underlying Securities, has the right to
vote and give consents and waivers in respect of such Underlying Securities as
permitted by DTC and except as otherwise limited by the Trust Agreement. If the
Trustee receives a request from DTC, the Underlying Securities Trustee or the
Underlying Securities Issuer for its consent to any amendment, modification or
waiver of the Underlying Securities, the Indenture or any other document
thereunder or relating thereto, or receives any other solicitation for any
action with respect to the Underlying Securities, the Trustee shall mail a
notice of such proposed amendment, modification, waiver or solicitation to each
Trust Certificateholder of record as of such date. The Trustee shall request
instructions from the Trust Certificateholders as to whether or not to consent
to or vote to accept such amendment, modification, waiver or solicitation. The
Trustee shall consent or vote, or refrain from consenting or voting, in the same
proportion (based on the relative outstanding principal balances of the Trust
Certificates) as the Trust Certificates of the Trust were actually voted or not
voted by the Trust Certificateholders thereof as of a date determined by the
Trustee prior to the date on which such consent or vote is required, after
weighing the votes of the Class _-1 Trust Certificateholders and the votes of
the Class _-2 Trust Certificateholders according to the Allocation Ratio;
provided, however, that, notwithstanding anything to the contrary, the Trustee
shall at no time vote or consent to any matter (i) unless such vote or consent
would not (based on an opinion of counsel) alter the status of the Trust as a
grantor trust under the Code, (ii) which would alter the timing or amount of any
payment on the Underlying Securities, including, without limitation, any demand
to accelerate the Underlying Securities, except in the event of an Underlying
Security event of default or an event which with the passage of time would
become an Underlying Security event of default and with the unanimous consent of
all outstanding Class _-1 and Class _-2 Trust Certificateholders, or (iii) which
would result in the exchange or substitution of any of the outstanding
Underlying Securities pursuant to a plan for the refunding or refinancing of
such Underlying Securities except in the event of a default under the Indenture
and only with the consent of Trust Certificateholders representing 100% of the
outstanding Class _-1 and Class _-2 Trust Certificates. The Trustee shall have
no liability for any failure to act resulting from Trust Certificateholders'
late return of, or failure to return, directions requested by the Trustee from
the Trust Certificateholders.
If an offer is made by the Underlying Securities Issuer to issue new
obligations in exchange and substitution for any of the Underlying Securities,
pursuant to a plan for the refunding or refinancing of the outstanding
Underlying Securities or any other offer is made for the Underlying Securities,
the Trustee shall notify the Class _-1 and Class _-2 Trust Certificateholders of
such offer as promptly as practicable. The Trustee must reject any such offer
unless the Trustee is directed by the affirmative vote of all of the holders of
the Class _-1 and Class _-2 Trust Certificates to accept such offer and the
Trustee has received the tax opinion described above.
If an event of default under the Indenture occurs and is continuing and
if directed by all of the outstanding Class _-1 and Class _-2 Trust
Certificateholders, the Trustee shall vote the Underlying Securities in favor of
directing, or take such other action as may be appropriate to direct, the
Underlying Securities Trustee to declare the unpaid principal amount of the
Underlying Securities and any accrued and unpaid interest thereon to be due and
payable. In connection with a vote concerning whether to declare the
acceleration of the Underlying
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Securities, the interests of the Trust Certificateholders may differ from each
other and from those of other holders of outstanding Debt Securities issued by
the Underlying Securities Issuer.
Termination of The Trust
The Trust shall terminate upon the earliest to occur of (i) the payment
in full or sale of the Underlying Securities by the Trust after a payment
default on or an acceleration of the Underlying Securities, (ii) the
distribution in full of all amounts due to the Class _-1 and Class _-2 Trust
Certificateholders and (iii) the Final Scheduled Distribution Date. See
"Description of the Trust Agreement--Termination" in the Prospectus.
FEDERAL INCOME TAX CONSEQUENCES
General
The following is a general discussion of certain of the material
Federal income tax consequences of the purchase, ownership and disposition of
the Trust Certificates by an initial holder of Trust 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 Trust Certificates as "capital assets" (generally,
property held for investment) within the meaning of Section 1221 of the Code,
and who do not hold their Trust Certificates as part of a "straddle," a "hedge"
or a "conversion transaction". Furthermore, no authority exists concerning the
tax treatment of some aspects of the Trust Certificates, and there can be no
assurance that the Treasury Department will not issue regulations under Section
1286 of the Code which would modify the treatment described below. Accordingly,
the way Trust Certificates are ultimately treated under the Code may differ
substantially from that described below. 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 Trust Certificates.
Tax Status of Trust
In the opinion of Shearman & Sterling, special Federal income tax
counsel to the Depositor, the Trust will be classified as a grantor trust and
not as an association (or publicly traded partnership) taxable as a corporation
under the Code. Accordingly, each Trust Certificateholder will be subject to
Federal income taxation as if it owned directly the portion of the Underlying
Securities allocable to such Trust Certificates and as if it paid directly its
share of reasonable expenses paid by the Trust.
Income of Trust Certificateholders
In General. Under Section 1286 of the Code, the Trust Certificates
represent ownership of newly-issued debt instruments under the Code. The Class
__-2 Trust Certificates will be treated as an interest in a newly issued debt
instrument issued with OID.
The Trust intends to take the position that the Class __-1 Trust
Certificates represent interests in a newly issued self-amortizing debt
instrument having a principal amount generally equal to the purchase price of
the Class __-1 Trust Certificates and maturing on the Final Scheduled
Distribution Date. Under this approach, payments made on the Class __-1 Trust
Certificates on each Distribution Date will partially represent a return of
principal and partially represent interest, as calculated based upon the Trust
Certificate's yield to maturity. Trust Certificateholders that report income
under the cash method of accounting would include in income upon receipt
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that portion of the payment representing interest. The Internal Revenue Service
could take the position, however, that the Class __-1 Trust Certificates
represent a newly issued debt issued with OID.
In the case of a Trust Certificate that represents ownership of a debt
instrument issued with OID, the amount of the OID is equal to the excess of: (i)
the stated redemption price (generally all payments made with respect to the
Underlying Securities on that Trust Certificate); over (ii) the purchase price
of the Trust Certificate (less accrued interest). The holder of such a Trust
Certificate, whether using the cash or accrual method of accounting, generally
will be required to include OID in income in advance of the receipt of some or
all of the related cash payments. The amount of OID allocable to any accrual
period is an amount equal to the product of the instrument's adjusted issued
price at the beginning of the accrual period and its yield to maturity
(determined on the basis of compounding at the close of each accrual period).
The adjusted issue price at the beginning of any accrual period is equal to the
purchase price, increased by the accrual OID for each prior accrual period and
reduced by the amount of any cash payments.
Modification or Exchange of Underlying Securities. Depending upon the
circumstances, it is possible that a modification of the terms of the Underlying
Securities, including advancing their maturity date following a Tax Event, or a
substitution of other assets for the Underlying Securities following a default
on the Underlying Securities or following a Tax Event, would be a taxable event
to Trust Certificateholders on which they would recognize gain or loss.
Deductibility of Trust's Fees and Expenses
In computing its Federal income tax liability, a Trust
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 as provided in Section 162 or 212 of the Code
and any allowable amortization deductions with respect to certain other assets
of the Trust. If a Trust 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 Trust Certificate
A Trust Certificateholder's tax basis in a Trust Certificate generally
will equal the cost of such Trust Certificate (A) increased by any amounts of
OID and (B) reduced by any payments of principal, in the case of a Trust
Certificate representing ownership of a debt instrument issued without OID, or
reduced by any payments included in the stated redemption price, in the case of
a Trust Certificate representing ownership of a debt instrument issued with OID.
If a Trust Certificate or Underlying Security is sold, gain or loss
will be recognized equal to the difference between the proceeds of sale
allocable to the Trust Certificateholder and the Trust Certificateholder's
adjusted basis in its Trust Certificate. Any gain or loss will be a capital gain
or loss if the Trust Certificate was held as a capital asset.
Distributions on Class _-2 Trust Certificates
The distribution of the Underlying Securities to the Class _-2 Trust
Certificateholders on the Final Scheduled Distribution Date should not
constitute a taxable transaction to the recipients. Similarly, a redemption by
the Trust of Trust Certificates in exchange for the Underlying Securities upon
the tender by a Trust Certificateholder of Class _-2 Trust Certificates of a
certain principal amount and Class _-1 Trust Certificates representing a like
percentage of the outstanding principal amount thereof should not constitute a
taxable transaction to the Trust Certificateholder.
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Backup Withholding
Payments made on the Trust Certificates and proceeds from the sale of
the Trust Certificates will not be subject to a "backup" withholding tax of 31%
unless, in general, the Trust Certificateholder fails to comply with certain
reporting procedures and is not an exempt recipient under applicable provisions
of the Code.
Foreign Trust Certificateholders
To the extent that amounts paid to Trust Certificateholders that are
not United States Persons ("Foreign Trust Certificateholders are treated as
interest with respect to Underlying Securities originated after July 18, 1984,
such amounts generally will not be subject to the annual 30% withholding tax,
provided that such Foreign Trust 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. The foregoing discussion of the tax treatment of Foreign
Trust Certificateholders applies if the Trust is classified as a grantor trust.
If the Trust were not classified as a grantor trust, the Trust would be treated
as a partnership under the Code. Foreign Trust Certificateholders should consult
their tax advisors regarding the withholding tax risks associated with the
classification of the Trust as a partnership.
A "United States Person" means a citizen or resident of the U.S., a
corporation, partnership or other entity created or organized in or under the
laws of the U.S. or any political subdivision thereof, or an estate the income
of which is includable in gross income for U.S. Federal income tax purposes,
regardless of its source, or a trust if a court within the United States is able
to exercise primary supervision of the administration of the trust and one or
more U.S. Persons have the authority to control all substantive decisions of the
trust.
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)(1) of the Code or (c) any entity whose underlying assets include Plan
Assets by reason of any such plan's investment in the entity (each, a "Plan").
In accordance with ERISA's general fiduciary standards, before
investing in a Trust 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 its overall investment policy and the composition and
diversification of its portfolio. Other provisions of ERISA and the Code
prohibit certain transactions involving the assets of a Plan and persons who
have certain specified relationships to the Plan ("Parties in Interest" within
the meaning of ERISA or "Disqualified Persons" within the meaning of the Code).
Thus, a Plan fiduciary considering an investment in Trust Certificates should
also consider whether such an investment might constitute or give rise to a
non-exempt prohibited transaction under ERISA or the Code.
Under a "look-through rule" set forth in Section 2510.3-101 of the
United States Department of Labor regulations, a Plan's assets may include an
interest in the underlying assets of an entity (such as a trust) for certain
purposes under ERISA if the Plan acquires an equity interest in such entity.
Thus, unless an exception to the look-through rule applies, an investment in
Trust 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 subject to
the prohibited transaction provisions under ERISA and the Code.
If the assets of the Trust were deemed to be Plan Assets, transactions
involving the Depositor, Underwriter, Trustee, Underlying Securities Trustee and
the Underlying Securities Issuer might constitute prohibited transactions with
respect to a Plan holding a Trust Certificate unless (i) one or more prohibited
transaction exemptions ("PTEs") applies or (ii) in the case of the Underlying
Securities Issuer, it is not a
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Disqualified Person or party in interest with respect to such Plan. Plans
maintained or contributed to by the Depositor, Underwriter, Trustee, Underlying
Securities Trustee and the Underlying Securities Issuer, or any of their
affiliates, should not acquire or hold any Trust Certificate.
If the Trust is deemed to hold Plan Assets, the Underlying Securities
would appear to be an indirect loan between the Underlying Securities Issuer and
any Plan owning Trust Certificates; however, such loan, by itself, would not
constitute a prohibited transaction unless the Underlying Securities Issuer is a
party in interest or Disqualified Person with respect to such Plan.
The Underwriter is a broker-dealer registered under the Exchange Act,
and customarily purchases and sells securities for its own account in the
ordinary course of its business as a broker-dealer. Accordingly, the sale of
Trust Certificates by the Underwriter to Plans may be exempt under PTE 75-1 if
the following conditions are satisfied: (i) the Underwriter is not a fiduciary
with respect to the Plan and is a party in interest or Disqualified Person
solely by reason of Section 3(14)(B) of ERISA or Section 4975(e)(2)(B) of the
Code or a relationship to a person described in such Sections, (ii) the
transaction is at least as favorable to the Plan as an arm's-length transaction
with an unrelated party and is not a prohibited transaction within the meaning
of Section 503(b) of the Code, and (iii) the Plan maintains for at least six
years such records as are necessary to determine whether the conditions of PTE
75-1 have been met.
The custodial and other services rendered by the Trustee, and
Underlying Securities Trustee might be exempt pursuant to Section 408(b)(2) of
ERISA and Section 4975(d)(2) of the Code, which exempt services necessary for
the establishment or operation of a Plan under a reasonable contract or
arrangement and for which no more than reasonable compensation is paid. An
arrangement would not be treated as reasonable unless it can be terminated upon
reasonably short notice under the circumstances without penalty. The Trustee may
be terminated upon 60 days' prior notice and the approval of Trust
Certificateholders owning more than 662/3% of the aggregate beneficial interest
of Trust Certificates. The Depositor believes the compensation of the Trustee
and is reasonable under the circumstances. The statutory exemption for services
noted above does not provide exemptive relief from prohibited transactions
described in Section 406(b) of ERISA or Section 4975(c)(1)(E) or (F) of the
Code. In that regard, a fiduciary with respect to a Plan should consider whether
a sale of the Underlying Securities to Merrill Lynch & Co. or its affiliates
might constitute a non-exempt prohibited transaction, notwithstanding the sale
procedure to accept the highest bid submitted and the certification of the
highest bid and identity of bidders to the Trustee. [The Trustee shall, prior to
any sale of Underlying Securities to Merrill Lynch & Co. or any of its
affiliates, certify that any such purchaser submitted the highest of at least
three bids and shall identify the other bidders.]
Other prohibited transaction exemptions could apply to the acquisition
and holding of Trust Certificates by Plans, and the operation of the Trust,
including, but not limited to: PTE 84-14 (an exemption for certain transaction
determined by an independent qualified professional asset manager), PTE 91-38
(an exemption for certain transactions involving bank collective investment
funds), PTE 90-1 (an exemption for certain transactions involving insurance
company pooled separate accounts) or PTE 95-60 (an exemption for certain
transactions involving insurance company general accounts).
By acquiring and holding a Trust Certificate, a Plan shall be deemed to
have represented and warranted to the Depositor, Trustee, and Underwriter that
such acquisition and holding of a Trust Certificate does not involve a
non-exempt prohibited transaction with respect to such Plan, including with
respect to the activities of the Trust.
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UNDERWRITING
Subject to the terms and conditions set forth in the Purchase
Agreement, dated as of _______ __, 1997 (the "Underwriting Agreement"), the
Depositor has agreed to sell to Merrill Lynch & Co., and Merrill Lynch & Co. has
agreed to purchase, the Trust Certificates.
The Depositor has been advised by the Underwriter that the Underwriter
proposes to offer the Trust Certificates from time to time in negotiated
transactions or otherwise at varying prices to be determined at the time of
sale. The Underwriter may effect such transactions by selling Trust Certificates
to or through dealers and such dealers may receive compensation in the form of
underwriting discounts, concessions or commissions from the Underwriter and any
purchasers of Trust Certificates for whom they may act as agents. The
Underwriter and any dealers that participate with the Underwriter in the
distribution of Trust Certificates may be deemed to be underwriters, and any
profit on the resale of Trust 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 Trust Certificates.
[The Underwriter has from time to time provided investment banking and
other financial services to the Underlying Securities Issuer and expects in the
future to provide such services, for which it has received and will receive
customary fees and commissions.]
The Underwriting Agreement provides that the Depositor will indemnify
the Underwriter against certain civil liabilities, including liabilities under
the Securities Act, or will contribute to payments the Underwriter may be
required to make in respect thereof.
VALIDITY OF THE TRUST CERTIFICATES
The validity of the Trust Certificates will be passed upon for the
Depositor and the Underwriter by Shearman & Sterling, New York, New York.
RATINGS
It is a condition to the issuance of the Trust Certificates that the
Trust Certificates have ratings assigned by Moody's and by S&P, equivalent to
the ratings of the Underlying Securities, which, as of the date of this
Prospectus Supplement, were "[ ]" by Moody's and "[ ]" by S&P.
The rating of the Trust Certificates by Moody's addresses the
likelihood of the ultimate payment of principal of and interest on the Trust
Certificates or any Underlying Securities distributed in respect thereof. The
rating of the Trust Certificates by S&P addresses the likelihood of timely
receipt of interest on the Class _-1 Trust Certificates or any Underlying
Securities distributed in respect of the Class _-2 Trust Certificates and
ultimate receipt of principal on any Underlying Securities distributed in
respect of the Class _-2 Trust Certificates. The ratings address the likelihood
of the receipt by Trust Certificateholders of payments required under the Trust
Agreement, and are based primarily on the credit quality of the Underlying
Securities. The rating on the Trust 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.
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The Depositor has not requested a rating on the Trust Certificates by
any rating agency other than Moody's and S&P. However, there can be no assurance
as to whether any other rating agency will rate the Trust Certificates, or, if
it does, what rating would be assigned by any such other rating agency. A rating
on the Trust Certificates by another rating agency, if assigned at all, may be
lower than the ratings assigned to the Trust Certificates by Moody's and S&P.
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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.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED [ ] __, 1997
PROSPECTUS
STEERS(R) TRUST CERTIFICATES
(ISSUABLE IN SERIES)
Merrill Lynch Depositor, Inc.
DEPOSITOR
The STEERS(R) Trust Certificates (the "Trust Certificates") offered
hereby and by supplements (each, a "Prospectus Supplement") to this Prospectus
will be offered from time to time in one or more series (each, a "Series") and
in one or more classes within each such Series (each, a "Class"), denominated in
U.S. dollars or in one or more other currencies or composite currencies. Trust
Certificates of each respective Series will be offered in amounts, at prices and
on terms to be determined at the time of sale as described in the Prospectus
Supplement accompanying this Prospectus. Each Series of Trust Certificates will
represent in the aggregate the entire beneficial ownership interest in a
publicly traded debt, or other eligible, security or a pool of such securities
(the "Underlying Securities"), together with certain other assets, if
applicable, described herein or in the applicable 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 Trust
Certificates of such Series ("Trust Certificateholders") by Merrill Lynch
Depositor, Inc., a Delaware corporation that is an indirect, wholly owned,
limited-purpose subsidiary of Merrill Lynch & Co., Inc. (the "Depositor,
pursuant to the Standard Terms for Trust Agreements (the "Standard Terms") and a
supplement thereto (the "Series Supplement") with respect to a Series
(collectively, the "Trust Agreement") between the Depositor and the trustee (the
"Trustee") named in the applicable Prospectus Supplement. If so specified in the
applicable Prospectus Supplement, the Trust for a Series of Trust Certificates
may also include, or the Trust Certificateholders of such Trust Certificates may
have the benefit of, any combination of insurance policies, letters of credit,
Reserve Accounts (as defined below) and other types of rights or assets designed
to support or ensure the servicing and distribution of amounts due in respect of
the Deposited Assets (collectively, "Credit Support"). The Underlying Securities
will represent debt securities issued by the Government of the United States of
America ("Government Securities") or senior or subordinated publicly-traded debt
obligations of one or more corporations, general or limited partnerships,
preferred securities of trusts organized by such issuers to issue certain
trust-originated preferred securities, in each case organized under the laws of
the United States of America or any state thereof (each, an "Underlying
Securities Issuer"). As a condition to the deposit into a Trust of Underlying
Securities (other than Government Securities) constituting 10% or more of the
total Underlying Securities with respect to the related Series of Trust
Certificates ("Concentrated Underlying Securities"), 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 (the "Exchange Act"), and in accordance therewith will file
reports and other information with the Securities and Exchange Commission (the
"Commission"). See "Description of Deposited Assets--Underlying Securities
Issuer". Except for Government Securities, the Underlying Securities will be
purchased in the secondary market; they will not be acquired from the issuer
thereof. No such issuer will participate in the offering of the Trust
Certificates, nor will such issuer receive any of the proceeds from the sale of
the Underlying Securities to the Depositor or from the issuance of the Trust
Certificates. See "Description Deposited Assets--General". Except as otherwise
provided herein and in the applicable Prospectus Supplement, the Depositor's
only obligations with respect to each Series of Trust Certificates will be to
assign and deliver the Deposited Assets and certain related documents to the
applicable Trustee and, in certain cases, to arrange for Credit Support, if any.
An administrative agent (the "Administrative Agent"), if any is named in the
applicable Prospectus Supplement with respect to a Series of Trust Certificates,
may assume certain contractual administrative obligations of the Trustee, to the
extent provided in the applicable Prospectus Supplement, including certain cash
advances in the event of payment delinquencies on the Deposited Assets. See
"Description of the Trust Agreement--Advances in Respect of Delinquencies". The
Trust Certificates of each Series will not represent an obligation of or
interest in the Depositor or Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner
& Smith Incorporated ("Merrill Lynch & Co.") or any of their affiliates. Neither
the Trust Certificates nor the Deposited Assets will be guaranteed or insured by
the Depositor or Merrill Lynch & Co. or their affiliates.
Application will be made to list certain Series of Trust Certificates
on the New York Stock Exchange ("NYSE"). At the time of issue, each Series of
Trust Certificates offered hereby will be rated in one of the investment grade
categories recognized by one or more nationally recognized rating agencies.
There can be no assurance that an active public market for any Series of Trust
Certificates will develop or, if a public market develops, as to the liquidity
of the trading market for such Trust Certificates. Unless otherwise specified in
the applicable Prospectus Supplement, each Series of Trust Certificates
initially will be represented by one or more global securities (each, a "Global
Security") registered in the name of Cede & Co. ("Cede"), as nominee of The
Depository Trust Company (the "Depositary" or "DTC"). The interests of
beneficial owners of such Trust Certificates will be represented by book entries
on the records of participating members of DTC. Definitive certificates in
registered form without coupons will be available only under the limited
circumstances described herein under the heading "Description of the Trust
Certificates--Global Securities".
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH HEREIN
UNDER "RISK FACTORS", BEGINNING ON PAGE 7.
------------------
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 Trust 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 applicable Prospectus
Supplement. This Prospectus may not be used to consummate sales of Trust
Certificates offered hereby unless accompanied by a Prospectus Supplement.
------------------
MERRILL LYNCH & CO.
------------------
The date of this Prospectus is [ ] __, 1997.
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a Series of Trust Certificates to
be offered hereby will set forth with respect to such Series: (a) the specific
designation and aggregate principal amount thereof; (b) the currency or
currencies in which the principal, premium, if any, and any interest are
distributable (the "Specified Currency"), (c) a description of the material
terms of the Deposited Assets, including the Underlying Securities, and Credit
Support, if any; (d) the number of Classes and, with respect to each such Class,
its designation, aggregate principal amount or, if applicable, Notional Amount
(as defined below), and the minimum denomination of the Trust Certificates; (e)
the relative rights and priorities of each Series or Class (including the type,
characteristics and specifications of the Deposited Assets and Credit Support,
if any, for such Series or Class); (f) the identity of each issuer of the
Underlying Securities and each obligor with respect to any of the other
Deposited Assets; (g) the name of the Trustee and the Administrative Agent, if
any; (h) the Trust Certificate Rate (as defined below) or the applicable method
of calculation thereof; (i) the date of distribution (each, a "Distribution
Date") of any interest, premium (if any) and/or principal; (j) the date of
issue; (k) the final scheduled Distribution Date (the "Final Scheduled
Distribution Date"), if applicable; (l) the offering price or prices; (m);
remedies upon the occurrence of a payment default on the Underlying Securities;
(n) applicable Required Percentages and Voting Rights (as defined below) with
regard to certain actions by the Depositor or the Trustee under the Trust
Agreement or with regard to the applicable Trust; and (o) any other material
terms of the Trust Certificates (including terms relating to the rights of the
Trust or any third party to redeem or purchase such Trust Certificates prior to
the Final Scheduled Distribution Date). See "Description of the Trust
Certificates--General" for a listing of other terms 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 Trust 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. Such reports and other information
concerning the Depositor may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the Commission:
New York Regional Office, Room 1100, 7 World Trade Center, New York, New York
10048 and Chicago Regional Office, Suite 1400, Northwestern Atrium Center, 500
West Madison Street, Suite 1400, 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. Such material may also
be accessed electronically by means of the Commission's home page on the
Internet at http://www.sec.gov.
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 Trust Certificates shall be
deemed to be incorporated by reference in this Prospectus. Such documents may
include, without limitation, Annual Reports on Form 10-K and Current Reports on
Form 8-K. 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 Merrill Lynch Depositor, Inc.,
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c/o World Financial Center, New York, New York 10281, Attention: Secretary.
Telephone requests for such copies should be directed to Merrill Lynch
Depositor, Inc. at 212-449-1000.
REPORTS TO TRUST CERTIFICATEHOLDERS
Except as otherwise specified in the applicable Prospectus Supplement,
unless and until definitive Trust Certificates (as defined below) are issued,
unaudited reports containing information concerning the related Trust will be
prepared annually by the related Trustee and sent on behalf of the related Trust
only to Cede, as nominee of DTC and registered holder of the Trust Certificates.
If Definitive Trust Certificates are issued, such reports will be prepared by
the related Trustee and sent on behalf of the related Trust directly to the
Trust Certificateholders in accordance with the Trust Agreement. See
"Description of the Trust Certificates--Global Securities" and "Description of
the Trust Agreement--Reports to Trust Certificateholders; Notices". 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. The Depositor does not intend to send any financial
reports to Trust Certificateholders.
References herein to "U.S. dollars", "US$", "dollar" or "$" are to the
lawful currency of the United States.
For definitions of certain terms used herein, refer to "Index of
Defined Terms", beginning on page I-1.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified
in its entirety by reference to the detailed information appearing elsewhere in
this Prospectus. Certain capitalized terms used herein are defined elsewhere in
this Prospectus. See "Index to Defined Terms".
SECURITIES OFFERED............. STEERS(R)Trust Certificates, to be offered
from time to time in one or more Series and
in one or more Classes within each such
Series, will be denominated in U.S. dollars
or in one or more other currencies or
composite currencies. Trust Certificates of
each respective Series will be offered in
amounts, at prices and on terms to be
determined at the time of sale as described
in the applicable Prospectus Supplement. For
a description of the kinds of terms which
will be set forth in the applicable
Prospectus Supplement, see "Description of
the Trust Certificates--General".
DEPOSITED ASSETS............... Each Series of Trust Certificates will
represent in the aggregate the entire
beneficial ownership interest in the
Underlying Securities, together with certain
other assets, if applicable. Such other
assets may include cash, cash equivalents,
guarantees, letters of credit, financial
insurance, interest rate, currency, equity,
commodity and credit-linked swaps, caps,
floors, collars and options, forward
contracts, structured securities and other
instruments and transactions that credit
enhance, hedge or otherwise support the
Underlying Securities designed to assure the
servicing or timely distribution of payments
to holders of the Trust Certificates. Such
assets will be described in the applicable
Prospectus Supplement See "Description of
Deposited Assets".
UNDERLYING SECURITIES.......... The Underlying Securities will represent debt
securities issued by the Government of the
United States of America or senior or
subordinated publicly-traded debt obligations
of one or more corporations, general or
limited partnerships, or preferred securities
of trusts organized by such issuers to issue
certain trust- originated preferred
securities, in each case 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 (other
than Government Securities) constituting 10%
or more of the total Underlying Securities
with respect to the related Series of
Certificates ("Concentrated Underlying
Securities"), 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 Exchange Act,
and in accordance therewith will file reports
and other information with the Commission.
See "Description of Deposited
Assets--Underlying Securities Issuer." Except
for Government Securities, the Underlying
Securities will be purchased in the secondary
market; they will not be acquired from the
issuer thereof. No such issuer will
participate in the offering of the
Certificates, nor will such issuer receive
any of the proceeds from
4
<PAGE>
the sale of the Underlying Securities to the
Depositor or from the issuance of the
Certificates. See "Description Deposited
Assets--General".
CREDIT SUPPORT................. If so specified in the applicable Prospectus
Supplement, the Trust for a Series of Trust
Certificates may also include, or the
Certificateholders of such Series may have
the benefit of, any combination of insurance
policies, letters of credit, Reserve
Accounts, and other types of rights or assets
designated to support or ensure the servicing
and distribution of amounts due in respect of
the Deposited Assets. See "Description of the
Deposited Assets--Credit Support".
THE DEPOSITOR.................. The Depositor, a Delaware corporation, is an
indirect, wholly owned, limited-purpose
subsidiary of Merrill Lynch & Co., Inc. The
principal office of the Depositor is c/o
Merrill Lynch & Co., Inc., World Financial
Center, New York, New York 10281. The
Certificate of Incorporation of the Depositor
provides 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.
THE TRUST...................... The Depositor will assign and deliver the
Deposited Assets for each Series of Trust
Certificates to the Trustee named in the
applicable Prospectus Supplement, in its
capacity as Trustee, for the benefit of the
Trust Certificateholders of such Series. See
"Description of the Trust
Agreement--Assignment of Deposited Assets".
The Trustee named in the applicable
Prospectus Supplement will administer the
Deposited Assets pursuant to the Trust
Agreement and will receive the Trustee Fee.
FEDERAL INCOME TAX
CONSEQUENCES................... The arrangement pursuant to which the Trust
Certificates will be created and sold and the
Underlying Securities will be administered
will be treated as a grantor trust under
subpart E, part I of subchapter J of the
Code. Each Trust Certificateholder will be
treated as the owner of a pro rata undivided
interest in the ordinary income and corpus of
the Underlying Securities in the grantor
trust. See "Federal Income Tax Consequences".
ERISA
CONSIDERATIONS................. An employee benefit plan subject to the
Employee Retirement Income Security Act of
1974, as amended ("ERISA"), an individual
retirement account, or an entity whose
underlying assets include plan assets by
reason of a plan's investment in the entity
(each, a "Plan") may purchase Trust
Certificates provided that either (a) the
offering has been structured so that
participation by "benefit plan investors" is
not "significant" or so that there are at
least 100 independent purchasers of the class
of Trust Certificates being offered, or (b)
the Plan can represent that its purchase of
Trust Certificates would not be prohibited
under ERISA or the Internal Revenue Code of
1986, as amended (the "Code"). See "ERISA
Considerations".
5
<PAGE>
RATINGS ...................... At the time of issuance, the Certificates of
a Series (or Class of such Series) will be
rated in one of the investment grade
categories by one or more nationally
recognized Rating Agencies. Any rating issued
with respect to a Certificate is not a
recommendation to purchase, sell or hold a
Certificate and there can be no assurance
that the ratings will remain for any given
period of time or that any rating will not be
revised or withdrawn by the related Rating
Agency. See "Risk Factors--Ratings of the
Certificates Subject to Change".
LISTING ...................... Application may be made to list certain
Series of Trust Certificates on the New York
Stock Exchange.
FORM OF SECURITY............... Unless otherwise specified in the applicable
Prospectus Supplement, each Series of Trust
Certificates will be initially represented by
one or more Global Securities registered in
the name of Cede as nominee of the DTC. The
interests of beneficial owners of Trust
Certificates will be represented by book
entries of participating members of DTC.
Definitive certificates in registered form
without coupons will be available only under
the limited circumstances described under the
heading "Description of the Trust
Certificates--Global Securities".
6
<PAGE>
RISK FACTORS
In connection with an investment in the Trust 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
applicable Prospectus Supplement.
Limited Liquidity
There can be no assurance that an active public market for any Series
(or Class within such Series) of Trust Certificates will develop or, if a public
market develops, as to the liquidity of the trading market for such Trust
Certificates. Merrill Lynch & Co. has advised the Depositor that it intends to
make a market in the Trust Certificates, as permitted by applicable laws and
regulations, after the issuance thereof. Merrill Lynch & Co. is not obligated,
however, to make a market in the Trust Certificates of any Series or Class
within such Series and any such market-making activity may be discontinued at
any time without notice at the sole discretion of Merrill Lynch & Co. If an
active public market for the Trust Certificates does not develop or continue,
the market prices and liquidity of the Trust Certificates may be adversely
affected.
Limited Recourse
The Trust Certificates will not represent a recourse obligation of or
interest in the Depositor, any Administrative Agent, Merrill Lynch & Co., the
Underlying Securities Issuer or any of their affiliates. Trust Certificates will
not be insured or guaranteed by the Depositor, Merrill Lynch & Co. or any of
their affiliates. The obligations, if any, of the Depositor with respect to the
Trust Certificates of any Series will only be pursuant to certain limited
representations and warranties with respect to an Underlying Security or other
Deposited Assets, 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 or other Deposited Assets to the Depositor. The
Depositor does not have, and is not expected in the future to have, any assets
with which to satisfy any claims arising from a breach of any representation or
warranty.
Limited Assets
The only material assets expected to be in a Trust are Underlying
Securities and any other Deposited Assets corresponding to the related Series
(or Class within such Series) of Trust Certificates being offered. The Trust
Certificates do not represent obligations of the Depositor, any Administrative
Agent, Merrill Lynch & Co. or any of their affiliates and, unless otherwise
specified in the applicable Prospectus Supplement, are not insured or guaranteed
by the Depositor, any Administrative Agent or Merrill Lynch & Co. Accordingly,
Trust Certificateholders' receipt of distributions in respect of the Trust
Certificates will depend entirely on the performance of and the Trust's receipt
of payments with respect to the Deposited Assets.
Reinvestment Risk; Reduction in Yield to Maturity: Redemption, Repayment or
Call Right
Several factors affect the timing of distributions on any Series (or
Class within such Series) of Trust Certificates. In particular, provisions in an
Underlying Securities indenture for optional or mandatory redemption or
repayment prior to stated maturity, if exercised, will reduce the weighted
average life of such Underlying Securities and the related Series (or Class
within such Series) of Trust Certificates. A variety of tax, accounting,
economic, and other factors will influence whether an Underlying Securities
Issuer exercises any right of redemption in respect of its securities. All else
remaining equal, if prevailing interest rates are below the interest rates on
the related Underlying Securities, the likelihood of redemption would be
expected to increase. There can be no assurance that any Underlying Security
redeemable at the option of the Underlying Security Issuer will remain
outstanding until its stated maturity. In addition, the effective yield to
holders of the Trust Certificates of any Series (and Class within such Series)
may be affected by certain terms of the Deposited Assets or the manner and
priorities of allocations of collections with respect to such Deposited Assets
between Classes of a given Series. The applicable Prospectus Supplement will
discuss any calls, puts or other redemption options, and certain other terms
applicable to such Underlying Securities and any other Deposited Assets.
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<PAGE>
If an Underlying Securities Issuer becomes subject to a bankruptcy or
similar insolvency proceeding, the timing and amount of payments with respect to
the principal of, premium on, if any, and any interest to be distributed in
respect of such Trust Certificates may be materially and adversely affected.
Several factors influence the performance of issuers that are corporations or
other business entities; these factors 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 economic, geographic, legal and
social factors.
Certain Series of Trust Certificates may be subject to a Call Right (as
defined below) by Merrill Lynch & Co., the Depositor or others, as specified in
the applicable Supplement. See "Description of the Trust Certificates--Call
Right". There is no assurance that an investment in the Trust Certificates of a
Callable Series (as defined below) may be held to maturity. In particular, if a
Call Right is exercised by the holder thereof, the investment represented by the
Trust Certificates will have a shorter maturity than if such right were not
exercised. The likelihood that Call Right will be exercised increases as
interest rates generally prevailing in the market for debt securities fall
relative to those in effect on the Original Issue Date (as defined below). Any
such reduction in interest rates would increase the value of the Underlying
Securities, making the exercise of a Call Right more likely. Given a reduction
in interest rates, the interest rates at which proceeds received by Trust
Certificateholders from the exercise of a Call Right may be reinvested may be
lower than the return that would have been earned over the remaining life of the
Trust Certificates if those Trust Certificates had not been called.
The extent to which the yield to maturity of such Trust 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.
To the extent that the Trust Certificate Rate for a Series is based on
variable or adjustable interest rates, variations in the interest rates
applicable to, and the corresponding payments in respect of, such Trust
Certificates, will affect the yield to maturity of such Series. There may be
disproportionate principal payments (whether resulting from differences in
amortization schedules, payments due on scheduled maturity or upon early
redemption) on Trust Certificates backed by a pool of Underlying Securities
having interest rates higher or lower than the then applicable Trust Certificate
Rate, which may adversely affect the yield on such Series of Trust Certificates.
The applicable Prospectus Supplement for a Series of Trust 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.
Currency Risk: Exchange Rates and Exchange Controls
An investment in a Trust Certificate having a Specified Currency other
than U.S. dollars entails significant risks that are not associated with a
similar investment in a U.S. dollar-denominated security. Such risks include,
without limitation, the possibility of significant changes in rates of exchange
between the U.S. dollar and such Specified Currency and the possibility of the
imposition or modification of foreign exchange controls with respect to such
Specified Currency. Such risks generally depend on factors over which the
Depositor has no control, such as economic and political events and the supply
of and demand for the relevant currencies. In recent years, rates of exchange
between the U.S. dollar and certain currencies have been highly volatile, and
such volatility may be expected in the future. Past fluctuations in any
particular exchange rate do not necessarily indicate, however, fluctuations in
the rate that may occur during the term of any Trust Certificate. Depreciation
of the Specified Currency for a Trust Certificate against the U.S. dollar would
decrease the effective yield of such Trust Certificate below its Trust
Certificate Rate and, in certain circumstances, could result in a loss to the
investor on a U.S. dollar basis.
Governments have from time to time imposed, and may in the future
impose, exchange controls that could affect exchange rates and the availability
of a Specified Currency for making distributions in respect of Trust
Certificates denominated in such currency. There can be no assurance that
exchange controls will not restrict or prohibit distributions of principal,
premium or interest in any Specified Currency. Even if there are no actual
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<PAGE>
exchange controls, it is possible that, on a Distribution Date with respect to
any particular Trust Certificate, the currency in which amounts then due to be
distributed in respect of such Trust Certificate would not be available.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN TRUST CERTIFICATES
DENOMINATED IN A CURRENCY OTHER THAN U.S. DOLLARS. SUCH TRUST CERTIFICATES ARE
NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT
TO FOREIGN CURRENCY TRANSACTIONS.
Derivatives
A Trust may include various derivative instruments, including interest
rate, currency, securities, commodity and credit swaps, caps, floors, collars
and options and structured securities having embedded derivatives (such as
structured notes). Swaps involve the exchange with another party of their
respective commitments to pay or receive amounts computed by reference to
specified fixed or floating interest rates, currency rates, securities prices,
yields or returns (including baskets of securities or securities indices) or
commodity prices and a notional principal amount (i.e., the reference amount
with respect to which such obligations are determined, although no actual
exchange of principal occurs except for currency swaps); for example, an
exchange of floating rate payments for fixed rate payments. Interim payments are
generally netted, with the difference being paid by one party to the other. The
purchase of a cap entitles the purchaser, to the extent that a specified rate,
price, yield or return exceeds a predetermined level, to receive payments
computed by reference to a specified fixed or floating rate, price, yield or
return and a notional principal amount from the party selling such cap. The
purchase of a floor entitles the purchaser, to the extent that a specified rate,
price, yield or return declines below a predetermined level, to receive payments
computed by reference to a specified fixed or floating rate, price, yield or
return and a notional principal amount from the party selling such floor.
Options function in a manner similar to caps and floors, and exist on various
underlying securities, such as bonds, equities, currencies and commodities.
Options can also be structured as securities such as warrants or can be embedded
in securities such as certain commodity or equity-linked bonds with option-like
characteristics. Forward contracts involve the purchase and sale of a specified
security, commodity, currency or other financial instrument at a specified price
and date in the future, and may be settled by physical delivery or cash payment.
Credit derivatives involve swap and option contracts designed to assume or lay
off credit risk on loans, debt securities or other assets, or in relation to a
particular reference entity or country, in return for either swap payments or
payment of premium. Credit derivatives may also be embedded in other instruments
such as notes or warrants. Credit derivatives give one party to a transaction
the right to dispose of or acquire an asset (or group of assets), or the right
to receive or make a payment from the other party, upon the occurrence of
specified credit events.
Fluctuations in securities, currency and commodity rates, prices,
yields and returns may have a significant effect on the yield to maturity of
derivatives or the levels of support that derivatives can provide to a Trust. In
addition, derivatives may be limited to covering only certain risks. Continued
payments on derivatives may be affected by the financial condition of the
counterparties thereto (or, in come instances, the guarantor thereunder). There
can be no assurance that counterparties will be able to perform their
obligations. Failure by a counterparty (or the related guarantor, if any) to
make required payments may result in the delay or failure to make payments on
the related securities and risks. In addition, the notional amounts on which
payments are made may vary under certain circumstances and may not bear any
correlation to principal amounts of the related securities. The terms and risks
of the relevant derivatives will be described in the related Prospectus
Supplement. Further, the relevant Prospectus Supplement will identify the
material terms, the material risks and the counterparty for any derivative
instrument in a Trust which is the result of an agreement with such counterparty
to the extent that such agreement is material.
Information Concerning Underlying Securities Issuers; Risk of Loss if Public
Information Not Available
A prospective purchaser of Trust 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.
The publicly-available information
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concerning an Underlying Securities Issuer is important in considering whether
to invest in or sell Trust Certificates. To the extent such information ceases
to be available, an investor's ability to make an informed decision to purchase
or sell Trust Certificates could be impeded. None of the Depositor, the Trustee,
Merrill Lynch & Co. or any of their affiliates assumes any responsibility for
the continued availability, accuracy or completeness of any information
concerning any Underlying Securities Issuer (including, without limitation,
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 Trust Certificates in
making its investment decision in connection therewith; provided that the
foregoing shall not apply to any information concerning the Underlying
Securities and any Underlying Securities Issuer that is expressly set forth in
this Prospectus or an applicable Prospectus Supplement. The issuance of Trust
Certificates of any Series should not be construed as an endorsement by the
Depositor, Merrill Lynch & Co. or the Trustee of the financial condition or
business prospects of any Underlying Securities Issuer.
If an issuer of Concentrated Underlying Securities ceases to file
periodic reports under the Exchange Act, then the Trustee of the relevant Trust
will exercise one of the following remedies: (i) sell all of such Concentrated
Underlying Securities and distribute the proceeds from such sale to the Trust
Certificateholders in accordance with the Allocation Ratio (as defined below)
(any such sale will result in a loss to the Trust Certificateholders of the
relevant Series if the sale price is less than the purchase price for such
Concentrated Underlying Securities), (ii) distribute such Concentrated
Underlying Securities in kind to the Trust Certificateholders in accordance with
the Allocation Ratio, (iii) elect either (i) or (ii) based upon a majority of
votes cast by the affected Trust Certificateholders, or (iv) in the case of an
Underlying Securities Issuer who is eligible to use Form S-3 for a primary
common stock offering, take no action. The choice of remedies will be set forth
for a given Series in the Prospectus Supplement, and the Trustee, Depositor and
Trust Certificateholders will have no discretion in this respect.
Ratings of the Trust Certificates Subject to Change
At the time of issuance, the Trust Certificates of a Series (or each
Class of such Series) will be rated in one of the investment grade categories by
one or more nationally recognized rating agencies (each, a "Rating Agency"). The
Rating Agencies may rate a Series or Class of Trust Certificates on the basis of
several factors, including the related Deposited Assets, any Credit Support and
the relative priorities of the Trust Certificateholders of such Series or Class
to receive collections from, and to assert claims against, the Trust with
respect to such Deposited Assets and any Credit Support. The Rating Agencies are
solely responsible for selecting the criteria for rating the Trust Certificates.
Any rating issued with respect to the Trust Certificates is not a
recommendation to purchase, sell or hold a security; such ratings do not comment
on the market price of the Trust 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 any rating 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 market price of the Trust Certificates.
Global Securities Limit Direct Voting; Pledge of Trust Certificates
Unless otherwise specified in the applicable Prospectus Supplement, the
Trust Certificates of each Series will initially be represented by one or more
Global Securities deposited with, or on behalf of, a Depositary (as defined
below) and will not be issued as individual definitive Trust Certificates to the
purchasers of such Trust Certificates. Consequently, unless and until such
individual definitive Trust Certificates of a particular Series are issued, such
purchasers will not be recognized as Trust Certificateholders under the Trust
Agreement. Until such time, such purchasers will only be able to exercise the
rights of Trust Certificateholders indirectly through the Depositary and its
respective Participants (as defined below) and, as a result, the ability of any
such purchaser to pledge that Trust Certificate to persons or entities that do
not participate in the Depositary's system, or otherwise to act with respect to
such Trust Certificate, may be limited. See "Description of the Trust
Certificates--Global Securities" and any further description contained in the
applicable Prospectus Supplement.
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Limitation on Remedies Due to Passive Nature of the Trust
The remedies available to a Trustee of a relevant Trust are
predetermined and therefore an investor in the Trust Certificates has less
discretion over the exercise of remedies than if such investor directly invested
in the Underlying Securities. 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. Under certain circumstances described in the applicable
Prospectus Supplement, the Trustee will (or will at the direction of a specified
percentage of Trust 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
(as described below under "Description of Deposited Assets--Principal 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.
Amendment of Trust Agreement Without Unanimous Consent
The Trust Agreement may be amended or otherwise modified with the
consent of a percentage of Trust 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
Trust Certificateholders of the relevant Series that do not consent to such
amendment or other modification. However, the Trust Agreement will provide that
any amendment or other modification that would reduce the amount of, or defer
the date of, distributions to Trust Certificateholders of a Series (or Class
within such Series) may become effective only with the consent of each affected
Trust Certificateholder of that Series (or Class within such 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 Trust Certificates of a Series (or Class within
such Series) by a Rating Agency would require the consent of a specified higher
percentage of Trust Certificateholders of that Series (or Class within such
Series).
General Unavailability Of Optional Exchange
Although the Prospectus Supplement for a Series of Trust Certificates
may designate such Series as an Exchangeable Series (as defined below) and may
provide that a Trust Certificateholder may exchange Trust Certificates of the
Exchangeable Series for a pro rata portion of Deposited Assets of the related
Trust, any such Optional Exchange Right will be exercisable only to the extent
that the exercise of such right does not affect the Trust's ability to be exempt
under 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" under the Code.
See "Description of the Trust Certificates--Optional Exchange". Accordingly, the
Optional Exchange Right described in this Prospectus under the heading
"Description of the Trust Certificates--Optional Exchange" and further described
in the relevant Prospectus Supplement will be available only to the Depositor
and Merrill Lynch & Co. and their respective affiliates and designees. Other
Trust Certificateholders will generally not be able to exchange their Trust
Certificates of an Exchangeable Series for a pro rata portion of the Deposited
Assets of the related Trust. In addition, the exercise of an Optional Exchange
Right will decrease the aggregate amount of Trust Certificates of the applicable
Exchangeable Series outstanding.
------------------
The Prospectus Supplement for each Series of Trust Certificates will
set forth information regarding additional risk factors, if any, applicable to
such Series (and each Class within such Series).
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THE DEPOSITOR
The Depositor, a Delaware corporation, is an indirect, wholly owned,
limited-purpose subsidiary of Merrill Lynch & Co., Inc. The principal office of
the Depositor is c/o Merrill Lynch & Co., Inc., World Financial Center, New
York, New York 10281. The Certificate of Incorporation of the Depositor provides
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 Trust
Certificates.
USE OF PROCEEDS
If the related Deposited Assets are to be purchased by the Depositor,
the net proceeds to be received from the sale of each Series of Trust
Certificates (whether or not offered hereby) for such purchase. In addition, the
Depositor will use such net proceeds to arrange certain Credit Support, if any,
including, if specified in the applicable Prospectus Supplement, required
deposits into any Reserve Account or the applicable Trust Certificate Account
(as defined below) for the benefit of the Trust Certificateholders of such
Series or Class. The 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 incurred in connection with the ongoing activities
of the Trust(s).
FORMATION OF THE TRUST
The Depositor will assign and deliver the Deposited Assets for each
Series of Trust Certificates to the Trustee named in the applicable Prospectus
Supplement, in its capacity as Trustee, for the benefit of the Trust
Certificateholders of such Series. See "Description of the Trust
Agreement--Assignment of Deposited Assets". The Trustee named in the applicable
Prospectus Supplement will administer the Deposited Assets pursuant to the Trust
Agreement and will receive a fee for such services (the "Trustee Fee"). The
Trustee or an Administrative Agent, if applicable, will either cause the
assignment of the Deposited Assets to be recorded on the books and records of
The Depository Trust Company or will obtain an opinion of counsel that no
recordation is required to obtain a first priority perfected security interest
in such Deposited Assets.
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, if any).
The applicable Prospectus Supplement will set forth the property of
each Trust, which may consist of (i) such Deposited Assets, or interests
therein, exclusive of any interest in such assets (the "Retained 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 Trust Certificate Account; (iii) rights under the agreement or
agreements pursuant to which the Trustee has acquired such Deposited Assets;
(iv) those elements of Credit Support, if any, provided with respect to any
Series (or Class within such Series) within such Series that are specified as
being part of the related Trust in the applicable Prospectus Supplement, as
described therein and under "Description of Deposited Assets--Credit Support";
and (v) any cash or other property received upon the sale, exchange, collection
or other disposition of any of the foregoing.
MATURITY AND YIELD CONSIDERATIONS
Each Prospectus Supplement will, to the extent applicable, contain
information with respect to the types and maturities of the related Underlying
Securities and the terms, if any, upon which such Underlying Securities may be
subject to early redemption or repayment. Provisions for optional or mandatory
redemption or repayment prior to stated maturity, if exercised, will reduce the
weighted average life of Underlying Securities and the related Series (or Class
within such Series) of Trust Certificates. A variety of tax, accounting,
economic, and other factors will influence whether an Underlying Securities
Issuer exercises any right of redemption in respect of its securities.
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All else remaining equal, if prevailing interest rates are below the interest
rates on the related Underlying Securities, the likelihood of redemption would
be expected to increase. There can be no assurance that any Underlying Security
redeemable at the option of the Underlying Security Issuer will remain
outstanding until its stated maturity.
In addition, the effective yield to holders of the Trust Certificates
of any Series (and Class within such Series) may be affected by certain terms of
the Deposited Assets or the manner and priorities of allocations of collections
with respect to such Deposited Assets between Classes of a given Series.
As specified in the applicable Prospectus Supplement, each of the
Underlying Securities may be subject to acceleration upon the occurrence of
certain events of default under the terms of the Underlying Securities. The
maturity and yield on the Trust Certificates will be affected by any early
repayment of the Underlying Securities as a result of the acceleration of the
Underlying Securities by or on behalf of the holders thereof. See "Description
of Deposited Assets--Underlying Securities Indenture". If an Underlying
Securities Issuer becomes subject to a bankruptcy proceeding, the timing and
amount of payments with respect to the principal of, the premium on, if any, and
the interest to be distributed in respect of the Trust Certificates may be
materially and adversely affected. Several factors influence the performance of
issuers that are corporations or other business entities; these factors may
affect an Underlying Securities Issuer's ability to satisfy its obligations
under the Underlying Securities, including the company's operating and financial
condition, leverage, and economic, geographic, legal and social factors.
The extent to which the yield to maturity of such Trust Certificates
may vary from the anticipated yield due to the rate and timing of payments on
the Deposited Assets will depend upon the degree to which they are purchased at
a discount or premium and the degree to which the timing of payments thereon is
sensitive to the rate and timing of payments on the Deposited Assets.
The yield to maturity of any Series (or Class) of Trust Certificates
will also be affected by variations in the interest rates applicable to, and the
corresponding payments in respect of, such Trust Certificates, to the extent
that the Trust Certificate Rate, if any, for such Series (or Class) is based on
variable or adjustable interest rates. With respect to any Series of Trust
Certificates representing an interest in a pool of debt, or other eligible,
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 Trust Certificate Rates, if any,
applicable to such Trust Certificates may affect the yield thereon.
The Prospectus Supplement for each Series of Trust Certificates will
set forth additional information regarding yield and maturity considerations
applicable to such Series (and each Class within such Series) and the related
Deposited Assets, including the applicable Underlying Securities.
DESCRIPTION OF THE TRUST CERTIFICATES
Each Series (or, if more than one Class exists, the Classes within such
Series) of Trust Certificates will be issued pursuant to the Standard Terms and
a supplement thereto (the "Series Supplement") between the Depositor and the
Trustee named in the applicable Prospectus Supplement; a form of which Trust
Agreement is attached as an exhibit to the Registration Statement. The
provisions of the Trust Agreement may vary depending upon the terms of both the
Trust Certificates to be issued thereunder and the Deposited Assets, the Credit
Support, if any, and related Trust. The following summaries describe material
provisions of the Trust Agreement which may be applicable to each Series of
Trust Certificates. The applicable Prospectus Supplement for a Series of Trust
Certificates will describe any material provision of the Trust Agreement that is
not described herein or the description of which is materially different from
the description 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 Trust Certificates. Wherever particular defined terms of the Trust
Agreement are referred to, such 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
"Trust Certificate"
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refers to all the Trust Certificates of that Series (and each Class within such
Series), whether or not offered hereby and by the applicable Prospectus
Supplement, unless the context otherwise requires.
A copy of the Series Supplement relating to each Series of Trust
Certificates issued from time to time will be filed by the Depositor as an
exhibit to a Current Report on Form 8-K, which will be filed with the Commission
following the issuance of such Series.
General
There is no limit on the amount of Trust Certificates that may be
issued under the Trust Agreement, and the Trust Agreement will provide that
Trust Certificates of the applicable Series may be issued in multiple Classes.
The Series (or Classes within such Series) of Trust Certificates to be issued
under the Trust Agreement will represent the entire beneficial ownership
interest in the Trust for such Series created pursuant to the Trust Agreement
and each such Class will be allocated certain relative priorities to receive
specified collections from, and a certain percentage ownership interest of the
assets deposited in, such Trust, all as identified and described in the
applicable Prospectus Supplement. See "Description of Deposited
Assets--Collections". Reference is made to the applicable Prospectus Supplement
for a description of the following terms of the Series of Trust Certificates in
respect of which this Prospectus and such Prospectus Supplement are being
delivered:
(i) the title of such Trust Certificates;
(ii) the Series of such Trust Certificates and, if
applicable, the number and designation of Classes of
such Series;
(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
and any related Credit Support, if any, 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 Trust Certificates may be issued (each, an
"Original Issue Date") and the offering price
thereof;
(v) the limit, if any, upon the aggregate principal\
amount or Notional Amount, as applicable, of each
Class thereof;
(vi) if applicable, the relative rights and priorities of
each such Class (including the method for allocating
collections from and defaults or losses on the
Deposited Assets to the Trust Certificateholders of
each such Class);
(vii) whether the Trust Certificates of such Series are
Fixed Rate Trust Certificates or Floating Rate Trust
Certificates (each, as defined below) and the
applicable interest rate (the "Trust Certificate
Rate"), or the method of calculation thereof
applicable to such Series, if variable (a "Floating
Trust Certificate Rate"); the date or dates from
which such interest will accrue; the applicable
Distribution Dates on which interest, principal and
premium, in each case as applicable, on such Series
or Class will be distributable and the related Record
Dates (as defined below), if any;
(viii) the circumstances and conditions under which any of
the Depositor, Merrill Lynch & Co. or the Trustee, or
their respective designees, may exercise an Optional
Exchange Right (to the extent that the exercise of
such right does not affect the Trust's ability to be
exempt under Rule 3a-7 under the Investment Company
Act of 1940, as amended, and all applicable rules,
regulations and interpretations thereunder and for
treatment of the
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Trust as a "grantor trust" under the Code) and the
periods within which or the dates on which, and the
terms and conditions upon which any such Optional
Exchange may be exercised, in whole or in part;
(ix) the option, if any, of any specified third party
(which may include one or more of the Depositor,
Merrill Lynch & Co. or their affiliates) to purchase
Trust Certificates held by a Trust 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;
(x) the rating of each Series or each Class within such
Series offered hereby;
(xi) the denominations in which such Series or each Class
within such Series will be issuable;
(xii) whether the Trust Certificates of any Class within a
given Series are to be entitled to (1) principal
distributions, with disproportionate, nominal or no
interest distributions, or (2) interest
distributions, with disproportionate, nominal or no
principal distributions ("Strip Trust Certificates"),
and the applicable terms thereof;
(xiii) the identity of the Depositary (as defined below), if
other than the Depository Trust Company, for such
Trust Certificates;
(xiv) the Specified Currency applicable to the Trust
Certificates of such Series or Class for purposes of
denominations and distributions on such Series or
each Class within such Series and the circumstances
and conditions, if any, when such Specified Currency
may be changed, at the election of the Depositor or a
Trust Certificateholder, and the currency or
currencies in which any principal of or any premium
or any interest on such Series or Class are to be
distributed pursuant to such election;
(xv) all applicable Required Percentages and Voting Rights
relating to the manner and percentage of votes of
Trust Certificateholders of such Series and each
Class within 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;
(xvi) remedies upon the occurrence of a payment default on
the Underlying Securities on an acceleration of the
Underlying Securities; and
(xvii) all other material terms of such Series or Class
within such Series of Trust Certificates.
The United States Federal income tax consequences and ERISA
consequences relating to any Series or any Class within such Series of Trust
Certificates will be described in the applicable Prospectus Supplement. In
addition, any special considerations, the specific terms and other information
with respect to the issuance of any Series or Class within such Series of Trust
Certificates on which the principal of and any premium and interest are
distributable in a Specified Currency other than U.S. dollars will be described
in the applicable Prospectus Supplement. The U.S. dollar equivalent of the
public offering price or purchase price of a Trust Certificate having a
Specified Currency other than U.S. dollars will be determined on the basis of
the noon buying rate in New York City for cable transfers in foreign currencies
as certified for customs purposes by the Federal Reserve Bank of New York for
such Specified Currency on the applicable issue date. As specified in the
applicable Prospectus Supplement, such determination will be made by the
Depositor, the Trustee, the Administrative Agent, if any, or an agent thereof as
exchange rate agent for each Series of Trust Certificates. If a noon buying rate
is not published for a Specified Currency, the applicable Prospectus Supplement
will set forth another source for all exchange rate calculations.
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. If Definitive Trust
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Certificates are issued in the limited circumstances described herein, they may
be transferred or exchanged for like Trust 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 set forth in the Trust Agreement,
without the payment of any service charge, other than any tax or governmental
charge payable in connection therewith.
Distributions
Distributions allocable to principal, premium (if any) and interest on
the Trust Certificates of each Series (and each Class within such Series) will
be made by or on behalf of the Trustee on each Distribution Date as specified in
the applicable Prospectus Supplement, and the amount of each distribution will
be determined as of the close of business on the date specified in the
applicable Prospectus Supplement (the "Record Date").
Except as provided in the succeeding paragraph, distributions with
respect to Trust 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
Scheduled Distribution Date of a Trust Certificate will be distributed only upon
surrender of such Trust Certificate at the applicable location set forth above.
Distributions on Trust Certificates will be made, except as provided
below, by check mailed to the Trust 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 Depositary). A Trust Certificateholder of $10,000,000 or more in aggregate
principal amount of Trust 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 10 calendar days prior to the applicable Distribution Date.
"Business Day" with respect to any Trust Certificate means any day
other than (i) 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 or (ii) a business day,
as such term is used in the indenture for the Underlying Securities (the
"Indenture").
Interest on the Trust Certificates
Each Class of Trust Certificates (other than certain Classes of Strip
Trust Certificates) of a given Series may have a different Trust Certificate
Rate, which may be a fixed or floating Trust Certificate Rate, as described
below. In the case of Strip Trust Certificates with a nominal or no Trust
Certificate Principal Balance, such distributions of interest will be in an
amount described in the applicable Prospectus Supplement. For purposes hereof,
"Notional Amount" means the notional principal amount specified in the
applicable Prospectus Supplement on which interest on Strip Trust Certificates
with a nominal or no Trust Certificate Principal Balance will be made on each
Distribution Date. Reference to the Notional Amount of a Class of Strip Trust
Certificates herein or in a Prospectus Supplement does not indicate that such
Trust Certificates represent the right to receive any distribution in respect of
principal in such amount, but rather the term "Notional Amount" is used solely
as a basis for calculating the amount of required distributions and determining
certain relative Voting Rights, all as specified in the applicable Prospectus
Supplement. The Trust Certificate Rate will be described in the applicable
Prospectus Supplement and will be based upon the rate of interest received on
the Underlying Securities, Credit Support, if any, and any payments payable in
respect of the Retained Interest (if any). The Trust Certificate Rate may be
either a fixed rate or a floating rate.
Fixed Rate Trust Certificates. Each Series of Trust Certificates with a
fixed Trust Certificate Rate ("Fixed Rate Trust Certificates") will bear
interest, on the outstanding Trust Certificate Principal Balance, from its
Original Issue Date, or from the last date to which interest has been paid, at
the fixed Trust Certificate Rate stated on the face thereof and in the
applicable Prospectus Supplement until the principal amount thereof is
distributed or made available for repayment (or, in the case of Fixed Rate Trust
Certificates with a nominal or no principal amount, until
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the Notional Amount thereof is reduced to zero), except that, if so specified in
the applicable Prospectus Supplement, the Trust Certificate Rate for such Series
or any such Class or Classes may be subject to adjustment from time to time in
response to designated changes in the rating assigned to such Trust Certificates
by one or more Rating Agencies, in accordance with a schedule or otherwise, all
as described in such Prospectus Supplement. Unless otherwise set forth in the
applicable Prospectus Supplement, interest on each Series or Class of Fixed Rate
Trust 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 Trust Certificates will be computed on the
basis of a 360-day year of twelve 30-day months.
Floating Rate Trust Certificates. Each Series of Trust Certificates
with a variable Trust Certificate Rate ("Floating Rate Trust Certificates") will
bear interest, on the outstanding Trust Certificate Principal Balance, from its
Original Issue Date to but excluding the first Interest Reset Date (as defined
below) for such Series at the Initial Trust Certificate Rate set forth on the
face thereof and in the applicable Prospectus Supplement. Thereafter, the Trust
Certificate 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 Trust 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
Trust Certificates may be subject to adjustment from time to time in response to
designated changes in the rating assigned to such Trust 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 Trust Certificate: (i) the CD Rate ("CD
Rate Trust Certificate"), (ii) the Commercial Paper Rate ("Commercial Paper Rate
Trust Certificate"), (iii) the Federal Funds Rate ("Federal Funds Rate Trust
Certificate"), (iv) LIBOR ("LIBOR Trust Certificate"), (v) the Prime Rate
("Prime Rate Trust Certificate"), (vi) the Treasury Rate ("Treasury Rate Trust
Certificate") or (vii) another Base Rate, as set forth in the applicable
Prospectus Supplement. The "Index Maturity" for any Series of Floating Rate
Trust 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 of the Board of Governors of the Federal Reserve System.
"Composite Quotations" means the daily statistical release entitled "Composite
3:30 p.m. Quotations for U.S. Government Securities", or any successor
publication, published by the Federal Reserve Bank of New York. Interest will be
payable only from cash received by the Trustee from the Deposited Assets or
other assets deposited in the Trust and available for application to such
payment, notwithstanding the accrual of interest on the Trust Certificate
Principal Balance at a higher rate.
As specified in the applicable Prospectus Supplement, Floating Rate
Trust 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 Trust Certificate Rate") and (ii) a minimum limitation, or
floor, on the rate at which interest may accrue during any such interest accrual
period ("Minimum Trust Certificate Rate"). In addition to any Maximum Trust
Certificate Rate that may be applicable to any Series of Floating Rate Trust
Certificates, the Trust Certificate Rate applicable to any Series of Floating
Rate Trust Certificates will in no event be higher than the maximum rate
permitted by applicable New York and United States federal law. Under applicable
New York and United States federal 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 Floating Trust Certificate Rates on
each Series of Floating Rate Trust Certificates. The applicable Prospectus
Supplement will set forth the identity of the Calculation Agent for each Series
of Floating Rate Trust Certificates. All determinations of interest by the
Calculation Agent shall, if made on a commercially reasonable
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basis and in good faith, be conclusive for all purposes and binding on the
holders of Floating Rate Trust Certificates of a given Series.
The Floating Trust Certificate 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 Trust Certificate Rate in effect for the 10 days
immediately prior to the Final Scheduled Distribution Date will be that in
effect on the tenth day preceding such Final Scheduled Distribution Date. If an
Interest Reset Date for any Series of Floating Rate Trust Certificates would
otherwise be a day that is not a Business Day, such Interest Reset Date will
occur on the next Business Day, except that, in the case of a LIBOR Trust
Certificate, if such Business Day would fall in the next calendar month, such
Interest Reset Date will be the immediately preceding Business Day.
Unless otherwise specified in the applicable Prospectus Supplement,
interest payable in respect of Floating Rate Trust 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 Trust Certificate, accrued interest shall
be calculated by multiplying the Trust Certificate Principal Balance of such
Trust 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 Trust Certificate Rate in effect on
such day by 360, in the case of LIBOR Trust Certificates, Commercial Paper Rate
Trust Certificates, Federal Funds Rate Trust Certificates, Prime Rate Trust
Certificates and CD Rate Trust Certificates or by the actual number of days in
the year, in the case of Treasury Rate Trust Certificates. For purposes of
making the foregoing calculation, the variable Trust Certificate 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 Trust Certificate Rate on a
Floating Rate Trust 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 Trust Certificates will be rounded to the nearest
one-hundredth of a unit (with .005 of a unit being rounded upward).
Interest on any Series of Floating Rate Trust 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.
The "Calculation Date", where applicable, pertaining to a Record Date
will be the earlier of (i) the tenth calendar day after such Record Date or, if
any such day is not a Business Day, the next succeeding Business Day or (ii) the
Business Day preceding the applicable Distribution Date.
Upon the request of the holder of any Floating Rate Trust Certificate
of a given Series, the Calculation Agent for such Series will provide the Trust
Certificate Rate then in effect and, if determined, the Trust Certificate Rate
that will become effective on the next Interest Reset Date with respect to such
Floating Rate Trust Certificate.
CD Rate Trust Certificates. CD Rate Trust Certificates will bear
interest at the interest rates (calculated with reference to the CD Rate and the
Spread and/or the Spread Multiplier, if any) specified in the applicable
Prospectus Supplement.
The "CD Rate" means, with respect to any Record Date, the rate on such
date for negotiable certificates of deposit having the applicable Index
Maturity, as published by the Board of Governors of the Federal Reserve System
in H.15(519) under the heading "CDs (Secondary Market)". If such rate is not
published by 9:00 a.m., New York City time, on the Calculation Date pertaining
to such Record Date, the CD Rate will be the rate on such Record Date for
negotiable certificates of deposit of the applicable Index Maturity, as
published by the Federal Reserve Bank of New York in Composite Quotations, under
the heading "Trust Certificates of Deposit". If such
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rate is not published in Composite Quotations by 3:00 p.m., New York City time,
on the Calculation Date pertaining to such Record Date, then the CD Rate for
such Record Date will be calculated by the Calculation Agent and will be the
arithmetic mean of the secondary market offered rates as of 10:00 a.m., New York
City time, on such Record 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 after consultation with the Depositor, 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 applicable Index Maturity in a denomination of
$5,000,000; provided that, if the dealers selected as aforesaid by the
Calculation Agent are not quoting such rates, the interest rate for the period
commencing on the Interest Reset Date following such Record Date will be the
interest rate borne by such CD Rate Trust Certificates on such Record Date.
CD Rate Trust Certificates, like other Trust Certificates, are not
deposit obligations of a bank and are not insured by the Federal Deposit
Insurance Corporation.
Commercial Paper Rate Trust Certificates. Commercial Paper Rate Trust
Certificates will bear interest at the interest rates (calculated with reference
to the Commercial Paper Rate and the Spread and/or the Spread Multiplier, if
any) specified in the applicable Prospectus Supplement.
The "Commercial Paper Rate" means, with respect to any Record Date, the
Money Market Yield (as defined below) on such date of the rate for commercial
paper having the applicable Index Maturity, as published in H.15(519) under the
heading "Commercial Paper". If such rate is not published prior to 9:00 a.m.,
New York City time, on the Calculation Date pertaining to such Record Date, the
Commercial Paper Rate will be the Money Market Yield on such Record Date of the
rate for commercial paper of the applicable Index Maturity, as published by the
Federal Reserve Bank of New York in Composite Quotations under the heading
"Commercial Paper". If such rate is not published in Composite Quotations by
3:00 p.m., New York City time, on the Calculation Date pertaining to such Record
Date, then the Commercial Paper Rate for such Record Date will be calculated by
the Calculation Agent and will 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 Record Date
of three leading dealers of commercial paper in The City of New York, selected
by the Calculation Agent after consultation with the Depositor, for commercial
paper of the applicable Index Maturity, placed for industrial issuers whose bond
rating (as determined by a nationally recognized rating agency) is "AA" or the
equivalent; provided that, if the dealers selected as aforesaid by the
Calculation Agent are not quoting such rates, the interest rate for the period
commencing on the Interest Reset Date following such Record Date will be the
interest rate borne by such Commercial Paper Rate Trust Certificates on such
Record Date.
"Money Market Yield" will 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 applicable period for which interest is being calculated.
Federal Funds Rate Trust Certificates. Federal Funds Rate Trust
Certificates will bear interest at the interest rates (calculated with reference
to the Federal Funds Rate and the Spread and/or the Spread Multiplier, if any)
specified in the applicable Prospectus Supplement.
The "Federal Funds Rate" means, with respect to any Record Date, the
rate on such date for federal funds, as published in H.15(519) under the heading
"Federal Funds (Effective)". If such rate is not published by 9:00 a.m., New
York City time, on the Calculation Date pertaining to such Record Date, the
Federal Funds Rate will be the rate on such Record Date, as published by the
Federal Reserve Bank of New York in Composite Quotations under the heading
"Federal Funds/Effective Rate". If such rate is not published in Composite
Quotations by 3:00 p.m., New York City time, on the Calculation Date pertaining
to such Record Date, then the Federal Funds Rate for such Record Date will be
calculated by the Calculation Agent and will be the arithmetic mean of the rates
for the last transaction in overnight federal funds arranged by three leading
brokers of federal funds transactions in The
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City of New York, selected by the Calculation Agent after consultation with the
Depositor, as of 9:00 a.m., New York City time, on such Record Date; provided
that, if the brokers selected as aforesaid by the Calculation Agent are not
arranging such transactions, the interest rate for the period commencing on the
Interest Reset Date following such Record Date will be the interest rate borne
by such Federal Funds Trust Certificates on such Record Date.
LIBOR Trust Certificates. LIBOR Trust Certificates will bear interest
at the interest rates (calculated with reference to LIBOR and the Spread and/or
the Spread Multiplier, if any) specified in the applicable Prospectus
Supplement.
"LIBOR" means, with respect to any Record Date, the rate determined by
the Calculation Agent in accordance with either clause (1) or clause (2) below,
as specified in the applicable Prospectus Supplement:
(1) The rate for deposits in U.S. dollars of the Index
Maturity specified in the applicable Prospectus Supplement, commencing
on the second London Banking Day immediately following such Record
Date, that appears on the Telerate Page 3750 as of 11:00 a.m., London
time, on such Record Date ("LIBOR Telerate"). "Telerate Page 3750"
means the display designated as page "3750" on the Telerate Service (or
such other page as may replace the page 3750 on that service or such
other service or services as may be designated by the British Bankers'
Association for the purpose of displaying London interbank offered
rates for U.S. dollar deposits).
(2) The arithmetic mean of the offered rates for deposits in
U.S. dollars having the Index Maturity specified in the applicable
Prospectus Supplement, commencing on the second London Banking Day
immediately following such Record Date, that appear on the Reuters
Screen LIBO Page as of 11:00 a.m., London time, on such Record Date, if
at least two such offered rates appear on the Reuters Screen LIBO Page
("LIBOR Reuters"). "Reuters Screen LIBO Page" means the display
designated as Page "LIBO" on the Reuters Monitor Money Rate Service (or
such other page as may replace the LIBO page on that service for the
purpose of displaying London interbank offered rates of major banks).
If neither LIBOR Telerate nor LIBOR Reuters is specified in the
applicable Prospectus Supplement, LIBOR will be determined as if LIBOR Telerate
had been specified.
If (i) in the case where paragraph (1) above applies, no rate appears
on the Telerate Page 3750 or (ii) in the case where paragraph (2) above applies,
fewer than two offered rates appear on the Reuters Screen LIBO Page, LIBOR in
respect of such Record Date will be determined by the Calculation Agent on the
basis of the rates at which deposits in U.S. dollars of the Index Maturity
specified in the applicable Prospectus Supplement are offered to prime banks in
the London interbank market at approximately 11:00 a.m., London time, on such
Record Date by four major banks ("Reference Banks") in the London interbank
market, selected by the Calculation Agent, commencing on the second London
Banking Day immediately following such Record Date in a principal amount of not
less than $1,000,000 that is representative for a single transaction in such
market at such time. The Calculation Agent will request the principal London
office of each of the Reference Banks to provide a quotation of its rate. If at
least two such quotations are provided, LIBOR for such Record Date will be the
arithmetic mean of such quotations. If fewer than two quotations are provided,
LIBOR for such Record Date will be the arithmetic mean of the rates quoted at
approximately 11:00 a.m., New York City time, on such Record Date by three major
commercial or investment banks (which may include Merrill Lynch & Co. or any of
its affiliates) in The City of New York, selected by the Calculation Agent, for
U.S. dollar loans of the applicable Index Maturity to leading European banks,
commencing on the second London Banking Day immediately following such Record
Date, in a principal amount of not less than $1,000,000 that is representative
for a single transaction in such market at such time; provided that, if the
banks selected as aforesaid by the Calculation Agent are not quoting such rates,
the interest rate for the period commencing on the Interest Reset Date following
such Record Date will be the interest rate borne by such LIBOR Notes on such
Record Date.
If any LIBOR Trust Certificate is indexed to the offered rates for
deposits in a Specified Currency other than U.S. dollars, the applicable
Prospectus Supplement will set forth the method for determining such rates.
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Prime Rate Trust Certificates. Prime Rate Trust Certificates will bear
interest at the interest rates (calculated with reference to the Prime Rate and
the Spread and/or the Spread Multiplier, if any) specified in the applicable
Prospectus Supplement.
The "Prime Rate" means, with respect to any Record Date, the rate on
such date, as published in H.15(519) under the heading "Bank Prime Loan". If
such rate is not published by 9:00 a.m., New York City time, on the Calculation
Date pertaining to such Record Date, the Prime Rate will be determined by the
Calculation Agent and will be the arithmetic mean of the rates of interest
publicly announced by each bank named on the "Reuters Screen NYMF Page" as such
bank's prime rate or base lending rate as in effect for such Record Date.
"Reuters Screen NYMF Page" means the display designated as page "NYMF" on the
Reuters Monitor Money Rates Service (or such other page as may replace the NYMF
page on that service for the purpose of displaying prime rates or base lending
rates of major U.S. banks). If fewer than four but more than one such rate
appears on the Reuters Screen NYMF Page for such Record Date, the Prime Rate
will be determined by the Calculation Agent and will be the arithmetic mean of
the prime rates, quoted on the basis of the actual number of days in the year
divided by 360, as of the close of business on such Record Date by four major
money center banks in The City of New York, selected by the Calculation Agent
after consultation with the Depositor. If fewer than two such rates appear on
the Reuters Screen NYMF Page, the Prime Rate will be calculated by the
Calculation Agent and will be the arithmetic mean of the prime rates in effect
for such Record Date as furnished in The City of New York by at least three
substitute banks or trust companies organized and doing business under the laws
of the United States, or any state thereof, in each case having total equity
capital of at least $500,000,000 and subject to supervision or examination by
federal or state authority, selected by the Calculation Agent after consultation
with the Depositor; provided that, if the banks or trust companies selected as
aforesaid by the Calculation Agent are not quoting such rates, the interest rate
for the period commencing on the Interest Reset Date following such Record Date
will be the interest rate borne by such Prime Rate Trust Certificates on such
Record Date.
Treasury Rate Trust Certificates. Treasury Rate Trust Certificates will
bear interest at the interest rates (calculated with reference to the Treasury
Rate and the Spread and/or the Spread Multiplier, if any) specified in the
applicable Prospectus Supplement.
The "Treasury Rate" means, with respect to any Record Date, the rate
for the auction held on such Record Date of treasury bills of the Index Maturity
specified in the applicable Prospectus Supplement, as published in H.15(519)
under the heading "U.S. Government Securities--Treasury bills-auction average
(investment)". If such rate is not published by 9:00 a.m., New York City time,
on the Calculation Date pertaining to such Record Date, the Prime Rate will be
the auction average rate for such Record Date (expressed as a bond equivalent,
rounded to the nearest one-hundredth of one percent, with five one-thousandths
of a percent rounded upward, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) as otherwise announced by the United
States Department of the Treasury. If the results of the auction of treasury
bills having the applicable 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 Record Date, then the Treasury Rate will be
calculated by the Calculation Agent and will be a yield to maturity (expressed
as a bond equivalent on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 p.m., New York City time, on such Record Date,
of three leading primary United States government securities dealers, selected
by the Calculation Agent after consultation with the Depositor, for the issue of
treasury bills with a remaining maturity closest to the applicable Index
Maturity; provided that, if the dealers selected as aforesaid by the Calculation
Agent are not quoting such rates, the interest rate for the period commencing on
the Interest Reset Date following such Record Date will be the interest rate
borne by such Treasury Rate Trust Certificates on such Record Date.
Principal of the Trust Certificates
Each Trust Certificate (other than certain Classes of Strip Trust
Certificates) will have a "Trust 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. The applicable Prospectus Supplement will include a section entitled
"Description of the Trust Certificates--Collections and Distributions" which
will set forth the priority of distributions on each Class of Trust Certificates
in a given Series. The
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outstanding Trust Certificate Principal Balance of a Trust 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. The
initial aggregate Trust Certificate Principal Balance of Trust 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 Trust
Certificate Principal Balance of a Series will be specified in the applicable
Prospectus Supplement.
Optional Exchange
The applicable Prospectus Supplement may provide that any of the
Depositor, Merrill Lynch & Co. or the Trustee, or their respective designees,
may exchange Trust Certificates of any given Series (an "Exchangeable Series")
for a pro rata portion of the Deposited Assets (an "Optional Exchange Right").
The applicable Prospectus Supplement will specify the terms upon which an
Optional Exchange Right may be exercised; provided that (a) any Optional
Exchange Right shall be exercisable only to the extent that the exercise of such
right does not affect the Trust's ability to be exempt under 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" under the Code and (b) if the
Deposited Assets constitute a pool of Underlying Securities, any exercise of the
Optional Exchange Right will be effected so that, with respect to each series or
issue of Underlying Securities included in such pool (together with any related
assets that credit enhance or otherwise support that series or issue of
Underlying Securities), the proportion that the principal amount of such series
or issue of Underlying Securities (together with such related assets) bears to
the aggregate principal amount of Trust Certificates immediately prior to such
exercise will be equal to the proportion that the principal amount of such
series or issue of Underlying Securities (together with such related assets)
bears to the aggregate principal amount of Trust Certificates immediately after
such exercise. In addition, the exercise of an Optional Exchange Right will
decrease the aggregate amount of Trust Certificates of the applicable
Exchangeable Series outstanding. See "Risk Factors--General Unavailability of
Optional Exchange".
While the exercise of an Optional Exchange will decrease the aggregate
amount of Trust Certificates of the applicable Exchangeable Series outstanding,
the availability of the Optional Exchange Right may increase liquidity for the
Trust Certificateholders. The ability to exchange Trust Certificates for
Underlying Securities enables the Depositor, Merrill Lynch & Co. or the Trustee,
or their respective designees, to sell the Underlying Security, which may be
part of a more liquid issue than the Trust Certificates, at a better price for
the holder than the sale of the less liquid Trust Certificates.
Default and Remedies
If there is a payment default on or acceleration of the Underlying
Securities, then the Trustee of the relevant Trust will exercise one of the
following remedies: (i) sell all of such Underlying Securities and distribute
the proceeds from such sale to the Trust Certificateholders in accordance with
the Allocation Ratio (any such sale may result in a loss to the Trust
Certificateholders of the relevant Series if the sale price is less than the
purchase price for such Underlying Securities), (ii) distribute such Underlying
Securities in kind to the Trust Certificateholders in accordance with the
Allocation Ratio, or (iii) elect either (i) or (ii) based upon a majority of
votes cast by the affected Trust Certificateholders. The choice of remedies will
be set forth for a given Series in the Prospectus Supplement, and the Trustee,
Depositor and Trust Certificateholders will have no discretion in this respect.
The "Allocation Ratio" is the allocation between Classes of a given
Series of the total expected cash flows from the Deposited Assets of that
Series. The Prospectus Supplement for any Series with more than one Class will
set forth the Allocation Ratio for that Series. In addition to default or
acceleration on Underlying Securities, the Allocation Ratio relates to voting
rights held by owners of Underlying Securities because such rights will be
allocated among the Trust Certificateholders of different Classes of a given
Series in accordance with their economic interests. Further, the Allocation
Ratio applies in the event of a sale or distribution of Underlying Securities
once an issuer of Concentrated Underlying Securities ceases to file periodic
reports under the Exchange Act, as discussed below under "Description of
Deposited Assets--Principal Terms of Underlying Securities".
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Call Right
Merrill Lynch & Co. or the Depositor or, if so specified in the
relevant Prospectus Supplement, a transferee as a result of a private placement
to eligible investors may hold the right to purchase all or some of the Trust
Certificates of a given Series or Class from the holders thereof, prior to
maturity (a "Call Right"). If one or more specified persons holds a Call Right,
the applicable Prospectus Supplement will designate such Series as a "Callable
Series". The terms upon which any such specified person or entity may exercise a
Call Right will be specified in the applicable Prospectus Supplement. Such terms
may relate to, but are not limited to, the following:
(a) a requirement that the Trust Certificate Principal
Balance of each Trust Certificate being purchased be
an integral multiple of an amount specified in the
Prospectus Supplement;
(b) specified dates during which a Call Right may be
exercised, which may include any and all times that
the Trust Certificates remain outstanding; and
(c) the price or prices at which a Call Right may be
exercised, which may include fixed dollar amounts or
be calculated as a percentage of the principal amount
of the Trust Certificates outstanding (each, a "Call
Price").
After receiving notice of the exercise of a Call Right, the Trustee
will provide notice thereof as specified in the Standard Terms. Upon the
satisfaction of any applicable conditions to the exercise of a Call Right, each
Trust Certificateholder will be entitled to receive (in the case of a purchase
of less than all of the Trust Certificates) a pro rata distribution of the
proceeds paid in connection with such exercise, in accordance with the
Allocation Ratio. The Call Right will not be exercised unless the value of the
Underlying Securities exceeds the Call Price payable upon exercise of the Call
Right.
Put Right
In the event that the Underlying Securities permit the holder thereof
to require the Underlying Securities Issuer to repurchase or otherwise repay
such Underlying Securities (the "Puttable Underlying Securities"), the Trust
will take one of the following actions: (i) distribute the Puttable Underlying
Securities in kind to the Trust Certificateholders in accordance with the
Allocation Ratio or (ii) exercise the put (A) as a result of a vote of the Trust
Certificateholders, (B) in accordance with a formula, or (C) automatically. The
action to be taken with respect to a given Series will be set forth for in the
relevant Prospectus Supplement.
Global Securities
Unless otherwise specified in the applicable Prospectus Supplement, all
Trust 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
Depositary, and registered in the name of a nominee of the Depositary. Unless
and until it is exchanged in whole or in part for the individual Trust
Certificates represented thereby (each, a "Definitive Trust Certificate"), a
Global Security may not be transferred except as a whole by the Depositary for
such Global Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any such nominee to a successor of such Depositary 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
Depositary ("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 Depositary's Participants
include securities brokers and dealers (including Merrill Lynch & Co.), banks,
trust companies, clearing corporations and certain other organizations, some of
which (and/or their representatives) own such Depositary. Access to such
Depositary's book-entry system
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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 Depositary for such Global
Security will credit, on its book-entry registration and transfer system, the
respective principal amounts of the individual Trust Certificates represented by
such Global Security to the accounts of its Participants. The accounts to be
accredited shall be designated by the underwriters of such Trust Certificates,
or, if such Trust 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
Depositary 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 Depositary for a Global Security, or its nominee, is the
owner of such Global Security, such Depositary or such nominee, as the case may
be, will be considered the sole Trust Certificateholder of the individual Trust
Certificates represented by such Global Security for all purposes under the
Trust Agreement governing such Trust Certificates. Except as set forth below,
owners of beneficial interests in a Global Security will not be entitled to have
individual Trust Certificates represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of any
such Trust Certificates and will not be considered the Trust Certificateholders
thereof under the Trust Agreement governing such Trust Certificates. Because the
Depositary can only act on behalf of its Participants, the ability of a holder
of any Trust Certificate to pledge that Trust Certificate to persons or entities
that do not participate in the Depositary's system, or to otherwise act with
respect to such Trust Certificate, may be limited due to the lack of a physical
certificate for such Trust Certificate.
Distributions of principal of (and premium, if any) and any interest on
individual Trust Certificates represented by a Global Security will be made to
the Depositary or its nominee, as the case may be, as the Trust
Certificateholder of such Global Security. None of the Depositor, the Trustee
for such Trust Certificates, any Paying Agent or the Trust Certificate Registrar
for such Trust 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 Depositary for Trust 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 Trust
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 Depositary. The
Depositary 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 Depositary for Trust Certificates of a given Series is at any
time unwilling or unable to continue as depository and a successor depository is
not appointed by the Depositor within 90 days, the Depositor will issue
individual Definitive Trust Certificates in exchange for the Global Security or
Securities representing such Trust Certificates. In addition, the Depositor may
at any time and in its sole discretion determine not to have any Trust
Certificates of a given Series represented by one or more Global Securities and,
in such event, will issue Definitive Trust Certificates of such Series in
exchange for the Global Security or Securities representing such Trust
Certificates. Further, if the Depositor so specifies with respect to the Trust
Certificates of a given Series, an owner of a beneficial interest in a Global
Security representing Trust Certificates of such Series may, on terms acceptable
to the Depositor and the Depositary for such Global Security, receive individual
Definitive Trust 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 Trust Certificates of the
Series represented by such Global Security equal in principal amount to such
beneficial interest and to have such Definitive Trust Certificates registered in
its name.
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The applicable Prospectus Supplement will set forth any specific terms
of the depository arrangement with respect to any Series of Trust Certificates
being offered thereby to the extent not set forth or different from the
description set forth above.
DESCRIPTION OF DEPOSITED ASSETS
General
Each Series of Trust Certificates (or, if more than one Class exists,
each Class within such Series) will represent in the aggregate the entire
beneficial ownership interest in the Underlying Securities (which shall be
Government Securities, senior or subordinated publicly-traded debt obligations
of one or more corporations, general or limited partnerships, preferred
securities of TOPrS(sm) trusts (as defined below) organized by such issuers, or
securities that are similar to those issued by TOPrS(sm) trusts, in each case
organized under the laws of the United States of America or any state thereof,
together with other assets. Such other assets may include cash, cash
equivalents, guarantees, letters of credit, financial insurance, interest rate,
currency, equity, commodity and credit- linked swaps, caps, floors, collars and
options, forward contracts, structured securities and other instruments and
transactions that credit enhance, hedge or otherwise support the Underlying
Securities (also described under "Risk Factors--Derivatives") designed to assure
the servicing or timely distribution of payments to holders of the Trust
Certificates. Such assets will be described in the applicable Prospectus
Supplement (such assets, together with the Underlying Securities, the "Deposited
Assets"). Underlying Securities will have been issued pursuant to an effective
registration statement filed with the Commission (or an exemption therefrom). If
the Underlying Securities represent obligations issued by one or more Underlying
Securities Issuers, such Underlying Securities will satisfy certain eligibility
criteria described below under "Underlying Securities Issuer". Except for
Government Securities, the Underlying Securities will be purchased in the
secondary market and 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). The Underlying Securities will
represent direct obligations of the United States Government, one or more
corporations, general or limited partnerships, preferred securities of TOPrs
Trusts organized by such issuers, or securities that are similar to TOPrS(sm),
in each case, organized under the laws of the United States or any state
thereof. No Underlying Securities Issuer will participate in the offering of the
Trust Certificates, nor will an Underlying Securities Issuer receive any of the
proceeds from the sale of Underlying Securities or from the issuance of the
Trust Certificates.
Deposited Assets for a given Series of Trust Certificates and the
related Trust will not constitute Deposited Assets for any other Series of Trust
Certificates and the related Trust, and the Trust Certificates of a given Series
will possess an equal and ratable undivided ownership interest in such Deposited
Assets. The applicable Prospectus Supplement may, however, specify that certain
assets constituting a part of the Deposited Assets relating to any given Series
may be beneficially owned solely by or deposited solely for the benefit of one
Class or a group of Classes within such Series. In such event, the other Classes
of such Series will not possess any beneficial ownership interest in those
specified assets constituting a part of the Deposited Assets.
This Prospectus relates only to the Trust 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 related Indenture.
The applicable Prospectus Supplement will describe the material terms
of the Deposited Assets, including the material terms of any derivative
instruments that are included in the Deposited Assets.
Underlying Securities Issuer
The Underlying Securities Issuers will be the United States Government,
one or more corporations, general or limited partnerships, TOPrS(sm) trusts
organized by such issuers, or by issuers of preferred securities that are
similar to TOPrS(sm), in each case organized under the laws of the United States
or any state thereof. The applicable
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Prospectus Supplement will provide only limited information about each
Underlying Securities Issuer, such as its name, place of incorporation and the
address of its principal offices, unless a Trust consists of Underlying
Securities of a Concentrated Underlying Securities issuer. In that event, the
applicable Prospectus Supplement will include audited financial statements of
such Concentrated Underlying Securities issuer; provided that if such Underlying
Securities Issuer is eligible to use Form S-3 for a primary offering, then the
applicable Prospectus Supplement will only refer to the periodic reports filed
with the Commission by such Underlying Securities Issuer, which periodic reports
should be reviewed by any prospective Trust Certificateholder of the Trust
containing such Underlying Securities. See "Risk Factors--Information Concerning
Underlying Securities Issuers; Risk of Loss if Public Information not
Available".
Reports and information referred to in the preceding paragraph 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 West Madison Street, Suite
1400, 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. Such material may also be accessed electronically by means of
the Commission's home page on the Internet at http://www.sec.gov.
WITH RESPECT TO ANY UNDERLYING SECURITIES, A PROSPECTIVE TRUST
CERTIFICATE HOLDER 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 THE ISSUER THEREOF.
None of the Depositor, the Trustee, Merrill Lynch & Co. or any of their
affiliates assumes any responsibility for the accuracy or completeness of any
publicly available information concerning any Underlying Securities Issuer
(including, without limitation, any 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 Trust Certificates in making its investment decision in
connection therewith; provided that the foregoing shall not apply to any
information concerning the Underlying Securities and any Underlying Securities
Issuer that is expressly set forth in this Prospectus or an applicable
Prospectus Supplement (i.e., identifying information, information of the type
described in an applicable Prospectus Supplement under "Description of the
Underlying Securities--General" and "Description of the Underlying
Securities--Underlying Securities Indenture".
Underlying Securities Indenture
General. Except for Government Securities or unless otherwise specified
in the applicable Prospectus Supplement, each Underlying Security will have been
issued pursuant to an Indenture between the Underlying Securities Issuer and a
trustee (the "Underlying Securities Trustee"). The Indenture and the Underlying
Securities Trustee will be qualified under the Trust Indenture Act of 1939 (the
"Trust Indenture Act") and the Indenture will contain certain provisions
required by the Trust Indenture Act. Government Securities are not issued
pursuant to an indenture, are exempt from the Securities Act under Section
3(a)(2) thereof and from the Trust Indenture Act under Section 304(a)(4)
thereof.
Certain Covenants. Indentures generally contain covenants intended to
protect security holders against the occurrence or effects of certain specified
events, including restrictions limiting the issuer's, and in some cases one or
more of the issuer's subsidiaries', ability to: (i) consolidate, merge, or
transfer or lease assets; (ii) incur or suffer to exist any lien, charge or
encumbrance upon 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; or
(iii) declare or pay any cash dividends, or make any distributions on or in
respect of, or purchase, redeem, exchange or otherwise acquire or retire for
value, any capital stock or subordinated indebtedness of the issuer or its
subsidiaries, if any. An indenture may also contain financial covenants which,
among other things, require the maintenance of certain financial ratios or the
creation or maintenance of reserves 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
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amended or supplemented and past defaults may be waived with the consent of the
indenture trustee, the consent of the holders of not less than a specified
percentage of the outstanding securities, or both.
The Indenture for 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. 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 Trust Certificates will describe material covenants concerning any
Concentrated Underlying Security 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 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
the indenture trustee 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 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 for any Series
of Trust Certificates will describe the events of default under the Indenture
for any Concentrated Underlying Security and the applicable remedies. The
Prospectus Supplement for any Trust consisting of a pool of Underlying
Securities 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 Trust Certificateholder will have no independent legal
right to exercise any remedies with respect to the Underlying Securities and
will be required to rely on the Trustee of the applicable Trust to pursue any
available remedies on behalf of the relevant Trust 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 Trust Certificateholders' objectives may differ from those of
holders of other securities of the same Series and Class as any Underlying
Security in determining whether to require the acceleration of the Underlying
Securities. See "Risk Factors--Limitation on Remedies Due to Passive Nature of
the Trust".
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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 Trust 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 issued, an issuer
of secured obligations has the right to remain in possession and retain
exclusive control of the collateral 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 typically 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 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 Trust 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 Terms of Underlying Securities
Reference is made to the applicable Prospectus Supplement for each
Series of Trust Certificates for a description of the following terms, as
applicable, of any Concentrated Underlying Security: (i) the title and series of
such Underlying Securities, and the aggregate principal amount, denomination and
form thereof; (ii) whether such securities are senior or subordinated to any
other 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 securities;
(v) the dates on which, or the range of dates within which, the principal of
(and premium, if any, on) such 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; and the dates on which such
interest will be payable; (vii) the obligation, if any, of the Underlying
Securities Issuer to redeem such Underlying Securities and other securities of
the same Class or Series pursuant to any sinking fund or similar 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
securities may be redeemed or repurchased, in whole or in part, pursuant to such
obligation; (viii) the periods
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within which or the dates on which, the prices at which and the terms and
conditions upon which such securities may be redeemed, if any, in whole or in
part, at the option of the Underlying Securities Issuer; (ix) the periods within
which or the dates on which, the prices at which and the terms and conditions
upon which the holder of the Underlying Securities may require the issuer of the
Puttable Underlying Securities to repurchase or otherwise repay such Puttable
Underlying Securities; (x) whether the Underlying Securities were issued at a
price lower than the principal amount thereof; (xi) if other than U.S. dollars,
the currency in which such 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, and the circumstances, if any, when such currency of
payment may be changed; (xii) material events of default or restrictive
covenants provided for with respect to such Underlying Securities; (xiii) the
rating thereof, if any; (xv) the principal United States market on which the
Underlying Securities are traded, if any; 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 subclauses
(ii), (iii), (v), (vi), (vii), (viii), (ix), (x) and (xi) of the preceding
paragraph and any other material terms regarding such pool of securities.
Other than publicly traded debt securities which satisfy the necessary
requirements set forth herein for Underlying Securities, the Underlying
Securities may consist of, or be similar in structure to, Trust Originated
Preferred Securities ("TOPrS(sm)") in respect of eligible corporations or
general or limited partnerships. (Trust Originated Preferred Securities and
TOPrS(sm) are service marks of Merrill Lynch & Co.)
If an issuer of 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 issuer may be unavailable. In such cases, the
Trustee of the relevant Trust will exercise one of the following remedies: (i)
sell all of such Concentrated Underlying Securities and distribute the proceeds
from such sale to the Trust Certificateholders in accordance with the Allocation
Ratio (any such sale will result in a loss to the Trust Certificateholders of
the relevant Series if the sale price is less than the purchase price for such
Concentrated Underlying Securities), (ii) distribute such Concentrated
Underlying Securities in accordance with the Allocation Ratio, or (iii) elect
either (i) or (ii) based upon a majority of votes cast by the affected Trust
Certificateholders. The applicable Prospectus Supplement will specify which of
these two remedies must be exercised by the Trustee, and the Trustee, the
Depositor and the Trust Certificateholders will have no discretion in this
respect.
Credit Support
As specified in the applicable Prospectus Supplement for a given Series
of Trust Certificates, the Trust for any Series of Trust Certificates may
include, or the Trust Certificateholders of such Series (or any Class or group
of Classes within such Series) may have the benefit of, Credit Support for any
Class or group of Classes within such Series. Credit Support directly benefits
the relevant Trust and thereby benefits Trust Certificateholders. Such Credit
Support may be provided by any combination of the following means described
below or any other means described in the applicable Prospectus Supplement. The
applicable Prospectus Supplement will set forth whether the Trust for any Class
or Classes of Trust Certificates contains, or the Trust Certificateholders of
such Trust Certificates have the benefit of, Credit Support and, if so, the
amount, type and other relevant terms of each element of Credit Support with
respect to any such Class or Classes and certain information with respect to the
obligors of each such element, including financial information with respect to
any such obligor providing Credit Support for 20% or more of the aggregate
principal amount of such Class or Classes.
Subordination. As discussed below under "--Collections", the rights of
the Trust Certificateholders of any given Class within a Series of Trust
Certificates to receive collections from the Trust for such Series and any
Credit Support obtained for the benefit of the Trust Certificateholders of such
Series (or Classes within such Series) may be subordinated to the rights of the
Trust Certificateholders of one or more other Classes of such Series to the
extent described in the applicable Prospectus Supplement. Such subordination
accordingly provides some additional Credit
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Support to those Trust Certificateholders of those other Classes. For example,
if losses are realized during a given period on the Deposited Assets relating to
a Series of Trust Certificates such that the collections received thereon are
insufficient to make all distributions on the Trust Certificates of such Series,
those Realized Losses would be allocated to the Trust Certificateholders of any
Class of any such Series that is subordinated to another Class, to the extent
and in the manner provided in the applicable Prospectus Supplement. In addition,
if so provided in the applicable Prospectus Supplement, certain amounts
otherwise payable to Trust Certificateholders of any Class that is subordinated
to another Class may be required to be deposited into a Reserve Account.
If so provided in the applicable Prospectus Supplement, the Credit
Support for any Series or Class of Trust Certificates may also include other
forms of Credit Support, described below. Any such other forms of Credit Support
that are solely for the benefit of a given Class will be limited to the extent
necessary to make required distributions to the Trust Certificateholders of such
Class or as otherwise specified in the applicable Prospectus Supplement. In
addition, if so provided in the applicable Prospectus Supplement, the obligor of
any other forms of Credit Support may be reimbursed for amounts paid pursuant to
such Credit Support out of amounts otherwise payable to one or more of the
Classes of the Trust Certificates of such Series. Further, payments to be made
in respect of any forms of Credit Support arranged for on behalf of the Trust
Certificateholders may be required to be paid prior to any distributions that
must be made to Trust Certificateholders.
Letter of Credit; Surety Bond. The Trust Certificateholders of any
Series (or Class or group of Classes of Trust Certificates within such Series)
may, if specified in the applicable Prospectus Supplement, have the benefit of a
letter or letters of credit (a "Letter of Credit") issued by a bank (a "Letter
of Credit Bank") or a surety bond or bonds (a "Surety Bond") issued by a surety
company (a "Surety"). In either case, the Trustee or such other person specified
in the applicable Prospectus Supplement will use its reasonable efforts to cause
the Letter of Credit or the Surety Bond, as the case may be, to be obtained, to
be kept in full force and effect (unless coverage thereunder has been exhausted
through payment of claims) and to pay timely the fees or premiums therefor
unless, as described in the applicable Prospectus Supplement, the payment of
such fees or premiums is otherwise provided for. The Trustee or such other
person specified in the applicable Prospectus Supplement will make or cause to
be made draws under the Letter of Credit or the Surety Bond, as the case may be,
under the circumstances and to cover the amounts specified in the applicable
Prospectus Supplement. Any amounts otherwise available under the Letter of
Credit or the Surety Bond will be reduced to the extent of any prior
unreimbursed draws thereunder. The applicable Prospectus Supplement will provide
the manner, priority and source of funds by which any such draws are to be
repaid.
Unless otherwise specified in the applicable Prospectus Supplement, if
the Letter of Credit Bank or the Surety, as applicable, ceases to satisfy any
credit rating or other applicable requirements specified in the applicable
Prospectus Supplement, the Trustee or such other person specified in the
applicable Prospectus Supplement will use its reasonable efforts to obtain or
cause to be obtained a substitute Letter of Credit or Surety Bond, as
applicable, or other form of credit enhancement providing similar protection,
that meets such requirements and provides the same coverage to the extent
available for the same cost. There can be no assurance that any Letter of Credit
Bank or any Surety, as applicable, will continue to satisfy such requirements or
that any such substitute Letter of Credit, Surety Bond or similar credit
enhancement will be available providing equivalent coverage for the same cost.
To the extent not so available, the Credit Support otherwise provided by the
Letter of Credit or the Surety Bond (or similar credit enhancement) may be
reduced to the level otherwise available for the same cost as the original
Letter of Credit or Surety Bond.
Reserve Accounts. If so provided in the applicable Prospectus
Supplement, the Trustee or such other person specified in the Prospectus
Supplement will deposit or cause to be deposited into an account maintained with
an eligible institution (which may be the Trustee) (a "Reserve Account") any
combination of cash or permitted investments in specified amounts, which will be
applied and maintained in the manner and under the conditions specified in such
Prospectus Supplement. In the alternative or in addition to such deposit, a
Reserve Account may be funded through application of a portion of collections
received on the Deposited Assets for a given Series of Trust Certificates, in
the manner and priority specified in the applicable Prospectus Supplement.
Amounts may be distributed to Trust Certificateholders of such Class or group of
Classes within such Series, or may be used for other purposes, in the manner and
to the extent provided in the applicable Prospectus Supplement. Amounts
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deposited in any Reserve Account will be invested in certain permitted
investments by, or at the direction of, the Trustee, the Depositor or such other
person as may be specified in the applicable Prospectus Supplement.
Collections
The Trust Agreement will establish procedures by which the Trustee or
such other person as may be specified in the Prospectus Supplement is obligated,
for the benefit of the Trust Certificateholders of each Series of Trust
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 "Trust Certificate Account"). An Administrative Agent, if
any is appointed, will direct the Trustee, and otherwise the Trustee will make
all determinations, as to the appropriate application of such collections and
other amounts available for distribution to the payment of any administrative or
collection expenses (such as the administrative fee) and certain Credit
Support-related ongoing fees (such as insurance premiums, letter of credit fees
or any required account deposits) and to the payment of amounts then due and
owing on the Trust Certificates of such Series (and Classes within such Series),
all in the manner and priorities described in the applicable Prospectus
Supplement. The applicable Prospectus Supplement will specify the collection
periods, if applicable, and Distribution Dates for a given Series of Trust
Certificates and the particular requirements relating to the segregation and
investment of collections received on the Deposited Assets during a given
collection period or on or by certain specified dates. There can be no assurance
that amounts received from the Deposited Assets and any Credit Support obtained
for the benefit of Trust Certificateholders for a particular Series or Class of
Trust 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 Trust Certificates. The applicable Prospectus Supplement will
also set forth the manner and priority by which any Realized Loss will be
allocated among the Classes of any Series of Trust Certificates, if applicable.
The relative priorities of distributions with respect to collections
from the assets of the Trust assigned to Classes of a given Series of Trust
Certificates may permanently or temporarily change over time upon the occurrence
of certain circumstances specified in the applicable Prospectus Supplement.
Moreover, the applicable Prospectus Supplement may specify that the Allocation
Ratio in respect of each Class of a given Series for purposes of payments of
certain amounts, such as principal, may be different from the Allocation Ratio
assigned to each such Class for payments of other amounts, such as interest or
premium.
DESCRIPTION OF THE TRUST AGREEMENT
General. The following summary of 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 form of Trust Agreement
filed as an exhibit to the Registration Statement. Wherever particular sections
or defined terms of the Standard Terms 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 any Series of Trust Certificates is issued, the Depositor
will cause the Underlying Securities and the Deposited Assets specified in the
Prospectus Supplement, if any, 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. Concurrently with such assignment, the
Depositor will execute, and the Trustee will authenticate and deliver, the Trust
Certificates to the Depositor in exchange for the Underlying Securities and
other Deposited Assets, if any. 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,
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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 (or such custodian) will hold such documents
in trust for the benefit of the Trust Certificateholders.
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
Trust Certificateholders, the Depositor will be obligated to cure the breach in
all material respects.
Collection and Other Administrative Procedures
General. With respect to any Series of Trust Certificates, the Trustee
or such other person specified in the Prospectus Supplement, directly or through
administrative agents, will establish and maintain certain accounts for the
benefit of the holders of the relevant Trust Certificates and will deposit in
such accounts all amounts received by it in respect of the Deposited Assets. 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 (as defined in the Trust Agreement) bearing interest or sold at a
discount. 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
Trust Certificateholders (and, if applicable, the holder of the Retained
Interest) in accordance with the Allocation Ratio. Further, the Trustee or such
other person specified in the Prospectus Supplement, will make reasonable
efforts to collect all scheduled payments under the Deposited Assets and will
follow or cause to be followed such collection procedures, if any, as it would
follow with respect to comparable financial assets that it held for its own
account, provided that such procedures are consistent with the Trust Agreement
and any related instrument governing any Credit Support and provided further
that, except as otherwise expressly set forth in the applicable Prospectus
Supplement, it shall not be required to expend or risk its own funds or
otherwise incur personal financial liability.
Realization upon Defaulted Deposited Assets. The Trustee, as
administrator with respect to the Deposited Assets, on behalf of the Trust
Certificateholders of a given Series (or any Class or Classes within such
Series), will present claims under each applicable Credit Support instrument and
will take such reasonable steps as are necessary to receive payment or to permit
recovery thereunder with respect to defaulted Deposited Assets. As set forth
above, all collections by or on behalf of the Trustee under any Credit Support
instrument are to be deposited in the Trust Certificate Account for the related
Trust, subject to withdrawal as described above.
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; provided that, the Trustee will be required
to expend or risk its own funds or otherwise incur financial liability if and
only to the extent specified in the applicable Prospectus Supplement. 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. To the extent provided in the applicable
Prospectus Supplement, the Trustee will be entitled to withdraw or cause to be
withdrawn from the related Trust Certificate Account out of the net proceeds
recovered on any defaulted Deposited Asset, prior to the distribution of such
proceeds to Trust Certificateholders, amounts representing its normal
administrative compensation on the Deposited Asset, unreimbursed administrative
expenses incurred with respect to the Deposited Asset and any unreimbursed
advances of delinquent payments made with respect to the Deposited Asset.
Retained Interest
The Prospectus Supplement for a Series of Trust Certificates will
specify whether there will be any Retained Interest in the Deposited Assets,
and, if so, the owner thereof. If so provided, the Retained Interest will
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be established on an asset-by-asset basis and will be specified in an exhibit to
the applicable Series Supplement. A Retained Interest in a Deposited Asset
represents a specified ownership interest therein and a right to a portion of
the payments thereon. 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 Trust Certificate Account or become a part of
the related Trust. After the Trustee deducts all applicable fees (as provided
for in the Trust Agreement) from any partial recovery on an Underlying Security,
the Trustee will allocate any such partial recovery between the holder of the
Retained Interest (if any) and the Trust Certificateholders of the applicable
Series.
Advances in Respect of Delinquencies
Unless otherwise specified in the applicable Prospectus Supplement, the
Trustee will have no obligation to make any advances with respect to collections
on the Deposited Assets or in favor of the Trust Certificateholders of the
related Series of Trust Certificates. However, to the extent provided in the
applicable Prospectus Supplement, the Trustee will advance on or before each
Distribution Date its own funds or funds held in the Trust Certificate Account
for such Series that are not part of the funds available for distribution for
such Distribution Date, in an amount equal to the aggregate of payments of
principal, premium (if any) and interest (net of related fees and any Retained
Interest) with respect to the Deposited Assets that were due during the related
Collection Period and were delinquent on the related Record Date, subject to (i)
the Trustee's good faith determination that such advances will be reimbursable
from Related Proceeds (as defined below) and (ii) such other conditions as may
be specified in the Prospectus Supplement.
Advances are intended to maintain a regular flow of scheduled interest,
premium (if any) and principal payments to holders of the Class or Classes of
Trust Certificates entitled thereto, rather than to guarantee or insure against
losses. Unless otherwise provided in the applicable Prospectus Supplement,
advances of the Trustee's funds, if any, will be reimbursable only out of
related recoveries on the Deposited Assets (and amounts received under any form
of Credit Support) for such Series with respect to which such advances were made
(as to any Deposited Assets, "Related Proceeds"); provided, however, that any
such advance will be reimbursable from any amounts in the Trust Certificate
Accounts for such Series to the extent that the Trustee shall determine, in its
sole judgment, that such advance is not ultimately recoverable from Related
Proceeds. If advances have been made by the Trustee from excess funds in the
Trust Certificate Account for any Series, the Trustee will replace such funds in
such Trust Certificate Account on any future Distribution Date to the extent
that funds in such Trust Certificate Account on such Distribution date are less
than payments required to be made to Trust Certificateholders on such date. If
so specified in the applicable Prospectus Supplement, the obligations, if any,
of the Trustee to make advances may be secured by a cash advance reserve fund or
a surety bond. If applicable, information regarding the characteristics of, and
the identity of any obligor on, any such surety bond will be set forth in the
applicable Prospectus Supplement.
Certain Matters Regarding the Trustee, the Administrative Agent, and the
Depositor
The Trustee may enter into agreements ("Administration Agreements")
with one or more Administrative Agents in order to delegate certain of its
administrative obligations with respect to a related Series under the Trust
Agreement; provided, however, that (i) such delegation shall not release the
Trustee from the duties, obligations, responsibilities or liabilities arising
under the Trust Agreement; (ii) such Administrative Agreement shall not affect
the rating of any Class of Trust Certificates of such Series; (iii) such
agreements must be consistent with the terms of the Trust Agreement, (iv) the
Trustee will remain solely liable for all fees and expenses it may owe to such
Administrative Agent; (v) the Administrative Agent shall give representations
and warranties in such Administration Agreement which are the same in substance
as those required of the Trustee; and (vi) such Administrative Agent shall meet
the eligibility requirements of the Trustee pursuant to the Trust Agreement. An
Administrative Agent, if any, for each Series of Trust Certificates under the
Trust Agreement will be named in the applicable Prospectus Supplement. The
entity serving as Administrative Agent for any such Series may be the Trustee,
the Depositor, an affiliate of either thereof, or any third party and may have
other business relationships with the Trustee, the Depositor or their
affiliates. The applicable Prospectus Supplement will specify the Administrative
Agent's compensation, if any, and the source, manner and priority of payment
thereof, with respect to a given Series of Trust Certificates.
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The Trust Agreement will provide that an Administrative Agent may
resign from its obligations and duties under the Trust Agreement with respect to
any Series of Trust Certificates only if such resignation, and the appointment
of a successor, will not result in a withdrawal or downgrading of the rating of
any Class of Trust Certificates of such Series or upon a determination that its
duties under the Trust Agreement with respect to such Series are no longer
permissible under applicable law. No such resignation will become effective
until the Trustee or a successor has assumed the Administrative Agent's
obligations and duties under the Trust Agreement with respect to such Series.
The Trust Agreement will further provide that neither such
Administrative Agent, the Depositor, the Trustee nor any director, officer,
employee, or agent of the Trustee, the Administrative Agent or the Depositor
will incur any liability to the related Trust or Trust Certificateholders for
any action taken, or for refraining from taking any action, in good faith
pursuant to the Trust Agreement or for errors in judgment; provided, however,
that none of the Trustee, the Administrative Agent, the Depositor nor any such
director, officer, employee or agent will be protected against any liability
that would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties thereunder or by reason of
reckless disregard of obligations and duties thereunder. The Trust Agreement
will further provide that the Trustee, an Administrative Agent, the Depositor
and any director, officer, employee or agent of any of them will be entitled to
indemnification by the related Trust and will be held harmless against any loss,
liability or expense incurred in connection with any legal action relating to
the Trust Agreement or the Trust Certificates, other than any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
in the performance of duties thereunder or by reason of reckless disregard of
obligations and duties thereunder. In addition, the Trust Agreement will provide
that the Trustee, an Administrative Agent, and the Depositor are under no
obligation to appear in, prosecute or defend any legal action which is not
incidental to their respective responsibilities under the Trust Agreement or
which in their respective opinions may involve it in any expense or liability.
Each of the Trustee, an Administrative Agent, and the Depositor may, however, in
its discretion undertake any such action which it may deem necessary or
desirable with respect to the Trust Agreement and the rights and duties of the
parties thereto and the interests of the Trust Certificateholders thereunder.
The applicable Prospectus Supplement will describe how such legal expenses and
costs of such action and any liability resulting therefrom will be allocated.
The Trustee, Depositor, and any Administrative Agent shall have no
obligations with respect to the Underlying Securities. The Depositor is not
authorized to proceed against the Underlying Securities Issuer in the event of a
default. Except as expressly provided in the Trust Agreement, the Trustee is not
authorized to proceed against the Underlying Securities Issuer or to assert the
rights and privileges of Trust Certificateholders.
Any person into which the Trustee, the Depositor, or an Administrative
Agent may be merged or consolidated, or any person resulting from any merger of
consolidation to which the Trustee, Depositor, or an Administrative Agent is a
part, or any person succeeding to the business of the Trustee, Depositor, or an
Administrative Agent, will be the successor of the Trustee, Depositor, or such
Administrative Agent (as the case may be) under the Trust Agreement with respect
to the Trust Certificates of a Series.
Administrative Agent Termination Events; Rights upon Administrative Agent
Termination Event
"Administrative Agent Termination Events" under the Trust Agreement
with respect to any given Series of Trust Certificates will consist of the
following: (i) any failure by an Administrative Agent to remit to the Trustee
any funds in respect of collections on the Deposited Assets and Credit Support,
if any, as required under the Trust Agreement, that continues unremedied for
five days after the giving of written notice of such failure to the
Administrative Agent by the Trustee or the Depositor, or to the Administrative
Agent, the Depositor and the Trustee by the holders of such Trust Certificates
evidencing not less than 25% of the Voting Rights; (ii) any failure by an
Administrative Agent duly to observe or perform in any material respect any of
its other covenants or obligations under its agreement with the Trustee with
respect to such Series which continues unremedied for 30 days after the giving
of written notice of such failure to the Administrative Agent by the Trustee or
the Depositor, or to the Administrative Agent, the Depositor and the Trustee by
the holders of such Trust Certificates evidencing not less than 25% of the
Voting Rights; and (iii) certain events of insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings and certain actions
by or on behalf of an Administrative Agent indicating its insolvency or
inability to pay its obligations. Any additional Administrative Agent
Termination Events with respect
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to any given Series of Trust Certificates will be set forth in the applicable
Prospectus Supplement. In addition, the applicable Prospectus Supplement and the
related Series Supplement will specify as to each matter requiring the vote of
holders of Trust Certificates of a Class or group of Classes within a given
Series, the circumstances and manner in which the Required Percentage applicable
to each such matter is calculated. "Required Percentage" means, with respect to
any matter requiring a vote of holders of Trust Certificates of a given Series,
the specified percentage of the aggregate Voting Rights of Trust Certificates of
such Series applicable to such matter. "Voting Rights" are the portion of the
aggregate voting rights of Underlying Securities allocated to Trust
Certificateholders of each Class within a given Series (and to the holder of the
Retained Interest) in direct proportion to the Allocation Ratio, as set forth in
the applicable Prospectus Supplement.
Upon the occurrence of an Administrative Agent Termination Event, the
Trustee may terminate the relevant Administration Agreement and the rights and
obligations of any such Administrative Agent under any Administration Agreement
in accordance with the terms and conditions of any such Administration
Agreement. In the event of a termination of any such Administration Agreement,
the Trustee shall simultaneously reassume direct responsibility for all
obligations delegated in such Administration Agreement without any act or deed
on the part of the applicable Administrative Agent, and the Trustee shall
administer directly the related Underlying Securities or shall enter into an
Administration Agreement with a successor Administrative Agent which so
qualifies under the requirements set forth above. If the Trustee is unwilling or
unable to act, it may appoint, or petition a court of competent jurisdiction for
the appointment of, an Administrative Agent which so qualifies under the
requirements set forth above. Pending such appointment, the Trustee must act in
such capacity (except that if the Trustee is prohibited by law from obligating
itself to make advances regarding delinquent Deposited Assets, then the Trustee
will not be so obligated).
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 Trust Certificates.
The applicable Series Supplement may provide for the payment by the
Depositor of certain Prepaid Ordinary Expenses (as defined below) 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 he 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, 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. "Extraordinary
Expenses" are 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 Trust
Certificateholder, the Trustee or the Depositor pursuant to the Trust Agreement.
"Ordinary Expenses" are defined in the Series Supplement and generally will
consist of the Trustee's ordinary expenses and overhead in connection with its
services as Trustee, including (i) the costs and expenses of preparing, sending
and receiving all reports, statements, notices, returns, filings, solicitations
of consent or instructions, or other communications required by
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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
payments of interest or principal, (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. If and to the extent specified in the applicable
Series Supplement, in addition to amounts payable to any Administrative Agent,
the Trustee will pay from its compensation certain expenses incurred in
connection with its administration of the Deposited Assets, including, without
limitation, payment of the fees and disbursements of the Trustee, if applicable,
and independent accountants, payment of expenses incurred in connection with
distributions and reports to Trust Certificateholders, and payment of any other
expenses described in the applicable Prospectus Supplement.
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 is not indemnifiable under the Trust Agreement 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 Trust
Certificate holders representing not less than the Required Percentage-Remedies,
and (iii) the Trust Certificate holders, 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 Trust 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 Trust
Certificateholders who have agreed to bear the entire amount of such costs,
expenses or liabilities on a pro rata basis among such Trust Certificateholders.
Optional Exchange
The terms and conditions, if any, upon which Trust Certificates of any
Series may be exchanged for a pro rata portion of the Deposited Assets of the
related Trust will be specified in the related Series Supplement; provided that
any such Optional Exchange Right 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 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" under the Code; and provided further, that no Trust Certificate
may be exchanged unless the Trustee has received at least 30 days' but not more
than 45 days' notice prior to an Optional Exchange Date (as defined in the
Supplement), as more particularly described in the Trust Agreement.
Any tender of a Trust Certificate by the holder thereof for exchange
will be irrevocable. Unless otherwise provided in the applicable Series
Supplement, the Optional Exchange Right may be exercised by the holder of a
Trust Certificate for less than the aggregate principal amount of such Trust
Certificate as long as the aggregate principal amount outstanding after such
exchange is a multiple of the minimum denomination of such Trust Certificate and
all other exchange requirements set forth in the related Series Supplement are
satisfied. Upon such partial exchange, such Trust Certificate will be cancelled
and a new Trust Certificate or Trust Certificates for the remaining principal
amount of the Trust Certificate will be issued (which, in the case of any Trust
Certificate issued in registered form, will be in the name of the holder of such
exchanged Trust 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
Trust Certificateholders, setting forth (i) such information as is contained in
such notice to owners of Underlying Securities, (ii) a statement that the Trust
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
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received by the Trustee. The Trustee will give such notice to the Trust
Certificateholders of record on the relevant record date.
Upon the written request of the applicable Trust 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 Trust
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 Trust
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 "Code"), 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.
By accepting delivery of a Trust Certificate, whether upon original
issuance or subsequent transfer, exchange or replacement thereof, and without
regard to whether ownership is beneficial or otherwise, the Trust
Certificateholder agrees so long as it is an owner of such Trust 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 Trust Certificates held by such Trust
Certificateholder or (ii) to any redemption or prepayment of the Underlying
Securities underlying the Trust Certificates held by such Trust
Certificateholder. The Trustee will not grant any consent solicited from the
owners of the Underlying Securities underlying the Trust Certificates with
respect to the matters set forth under this section, "Description of the Trust
Agreement--Voting Rights with Respect to Underlying Securities," nor will it
accept or take any action in respect of any consent, proxy or instructions
received from any Trust Certificateholder in contravention of the provisions of
such Section.
Limitations on Rights of Trust Certificateholders
No Trust Certificateholder of a given Series will have the right under
the Trust Agreement to institute any proceeding with respect thereto unless (i)
such Trust Certificateholder previously has given to the Trustee written notice
of a continuing breach, (ii) Trust Certificateholders evidencing not less than
the Required Percentage- Remedies of the aggregate Voting Rights have made
written request upon the Trustee to institute such proceeding in its own name as
Trustee, (iii) such Trust Certificateholder or Trust Certificateholders have
offered the Trustee reasonable indemnity, (iv) the Trustee for 15 days has
failed to institute any such proceeding and (v) no direction inconsistent with
such written request has been given to the Trustee during such 15 day period by
Trust Certificateholders evidencing not less than the Required
Percentage-Remedies of the aggregate Voting Rights. The Trustee, however, is
under no obligation to exercise any of the trusts or powers vested in it by the
Trust Agreement, to make any investigation into the facts of matters arising
under the Trust Agreement or stated in any document believed by it to be
genuine, unless requested in writing to do so by Trust Certificateholders of the
Required Percentage-Direction of Trustee (as defined in the Trust Agreement) 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 Trust Certificates
covered by the Trust Agreement, unless such Trust Certificateholders have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which may be incurred therein or thereby.
Modification and Waiver
Unless otherwise specified in the applicable Prospectus Supplement, the
Trust Agreement may be amended from time to time by the Depositor and the
Trustee without notice to or the consent of any of the Trust Certificateholders
for any of the following purposes: (i) to cure any ambiguity; (ii) to correct or
supplement any provision therein which may be inconsistent with any other
provision therein or in the Prospectus Supplement; (iii) to appoint a change in
Trustee for a Series of Trust Certificates subsequent to the Closing Date (as
defined in the applicable Supplement) for such Series; (iv) to provide for
administration of separate Trusts by more than one trustee; (v) to provide for a
successor Trustee with respect to Trust Certificates of one or more Series; (vi)
to provide for the issuance of a new Series of Trust Certificates pursuant to a
Supplement; (vii) to add or supplement any Credit Support for the benefit of any
Trust Certificateholders (provided that if any such addition affects any
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series or Class of Trust Certificateholders differently than any other Series or
Class of Trust Certificateholders, then such addition will not, as evidenced by
an opinion of counsel, have a material adverse effect on the interests of any
affected Series or Class of Trust Certificateholders; (viii) to add to the
covenants, restrictions or obligations of the Depositor, the Administrative
Agent, if any, or the Trustee for the benefit of the Trust Certificateholders;
(ix) to comply with any requirements imposed by the Code; or (x) to add, change
or eliminate any other provisions with respect to matters or questions arising
under this Trust Agreement; provided, however, that in the case of any amendment
the Rating Agency Condition shall be satisfied with respect to such amendment
and that no such amendment shall cause any Trust created hereunder to fail to
qualify as a fixed investment trust (or "grantor trust") under the Code.
Without limiting the generality of the foregoing, unless otherwise
specified in the applicable Prospectus Supplement, the Trust Agreement may also
be modified or amended from time to time by the Depositor and the Trustee, with
the consent of the holders of Trust Certificates evidencing the Required
Percentage-Amendment of the aggregate Voting Rights of those Trust 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 Trust Certificateholders; provided, however, that if such modification or
amendment would materially adversely affect the rating of any Series or Class by
each Rating Agency, the Required Percentage specified in the related Series
Supplement shall include an additional specified percentage of the Trust
Certificates of such Series or Class, and provided further, 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 Trust Certificate without the consent of the holders of such Trust
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 Trust Certificates of such Series or Class then Outstanding.
Unless otherwise specified in the applicable Prospectus Supplement,
holders of Trust Certificates evidencing not less than the Required Percentage
to waive the Voting Rights of a given Series may, on behalf of all Trust
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 Trust
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 Trust 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 Trust Certificate affected thereby.
Reports to Trust Certificateholders; Notices
Reports to Trust Certificateholders. With each distribution to Trust
Certificateholders of a Series, the Trustee will forward or cause to be
forwarded to each such Trust 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 derivatives transaction entered into by the Trust
pursuant to the terms of the Trust Agreement;
(ii) any amounts payable by the Trust as of such date pursuant
to any derivatives transaction entered into by the Trust pursuant to
the terms of the Trust Agreement;
(iii) the amount of compensation received by the
Administrative Agent, if any, and the Trustee for the period relating
to such Distribution Date, and such other customary information as the
Administrative Agent, if any, or otherwise the Trustee deems necessary
or desirable (or that such Certificateholder reasonably requests in
writing) to enable Trust Certificateholders to prepare their tax
returns;
(iv) the amount of the distribution on such Distribution Date
to Trust Certificateholders of each Class of such Series allocable to
principal of and premium, if any, and interest on the Trust
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Certificates of each such Class, and the amount of aggregate unpaid
interest accrued as of such Distribution Date;
(v) in the case of Trust Certificates bearing interest on a
floating rate basis, the respective floating rate applicable to such
Trust Certificates on such Distribution Date, as calculated in
accordance with the method specified in such Trust Certificates and the
related Series Supplement;
(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 interest rate or rates thereon at the close of
business on such Distribution Date and, if such rating has changed
since the last Distribution Date, the current rating assigned thereon
by the applicable Rating Agency;
(viii) the aggregate principal amount (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 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;
(ix) as to any Series (or 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; and
(x) any other information appropriate for a Series, as
specified in the applicable Prospectus Supplement.
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 Trust Certificateholder a statement containing the information set forth
in subclause (iii) above, aggregated for such calendar year during which such
person was a Trust 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.
Notices. Any notice required to be given to a holder of a Registered
Trust Certificate will be mailed to the last address of such holder set forth in
the applicable Trust Certificate Register. Any notice so mailed within the time
period prescribed in the Trust Agreement or Series Supplement shall be
conclusively presumed to have been duly given when mailed, whether or not the
Trust Certificateholder receives such notice.
Evidence as to Compliance
The Trust Agreement will provide that commencing on a certain date and
on or before a specified date in each year thereafter, a firm of independent
public accountants will furnish a statement to the Trustee to the effect that
such firm has examined certain documents and records relating to the
administration of the Deposited Assets during the related 12-month period (or,
in the case of the first such report, the period ending on or before the date
specified in the Prospectus Supplement, which date shall not be more than one
year after the related Original Issue Date) and that, on the basis of certain
agreed upon procedures considered appropriate under the circumstances, such firm
is of the opinion that such administration was conducted in compliance with the
terms of the Trust Agreement, except for such exceptions as such firm shall
believe to be immaterial and such other exceptions and qualifications as shall
be set forth in such report.
The Trust Agreement will also provide for delivery to the Depositor,
the Administrative Agent, if any, and the Trustee on behalf of the Trust
Certificateholders, on or before a specified date in each year, of an annual
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statement signed by two officers of the Trustee to the effect that the Trustee
has fulfilled its obligations under the Trust Agreement throughout the preceding
year with respect to any Series of Trust Certificates.
Copies of the annual accountants' statement, if any, and the statement
of officers of the Trustee may be obtained by Trust Certificateholders without
charge upon written request to either the Administrative Agent or the Trustee,
as applicable, at the address set forth in the applicable Prospectus Supplement.
Replacement Trust Certificates
If a mutilated Trust Certificate is surrendered at the corporate trust
office or agency of the Trustee in the City and State of New York or the
Depositor and the Trustee receive satisfactory evidence that such Trust
Certificate has been lost, destroyed or stolen it may be replaced 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;
provided that neither the Depositor nor the Trustee has received notice that
such Trust Certificate was acquired by a bona fide purchaser.
Termination
The obligations created by the Trust Agreement for each Series of Trust
Certificates will terminate upon the payment to Trust Certificateholders of that
Series of all amounts held in the related Trust Certificate Account and required
to be paid to them pursuant to the Trust Agreement following final payment or
other liquidation of any remaining Deposited Assets or Credit Support subject
thereto or the disposition of all property acquired upon foreclosure or
liquidation of any such Deposited Assets or Credit Support. In no event,
however, will any Trust created by the Trust Agreement continue beyond the
respective date specified in the applicable Prospectus Supplement, nor will such
Trust continue to exist if its existence would result in a violation of the
common-law Rule Against Perpetuities. Written notice of termination of the
obligations with respect to the related Series of Trust Certificates under the
Trust Agreement will be provided as set forth above under "--Reports to Trust
Certificateholders; Notices", and the final distribution will be made only upon
surrender and cancellation of the Trust Certificates at an office or agency
appointed by the Trustee which will be specified in the notice of termination.
Any such purchase of Deposited Assets or Credit Support and property
acquired in respect of Deposited Assets or Credit Support evidenced by a Series
of Trust Certificates shall be made at a price approximately equal to the
aggregate fair market value of all the assets in the Trust (as determined by the
Trustee, the Administrative Agent, if any, and, if different than both such
persons, the person entitled to effect such termination), in each case taking
into account accrued interest at the applicable interest rate to the first day
of the month following such purchase or, to the extent specified in the
applicable Prospectus Supplement, a specified price as determined therein. The
exercise of such right will effect early retirement of the Trust Certificates of
that Series, but the right of the person entitled to effect such termination is
subject to the aggregate principal balance of the outstanding Deposited Assets
or Credit Support for such Series at the time of purchase being less than the
percentage of the aggregate principal balance of the Deposited Assets or the
Credit Support at the Cut-off Date (as defined in the Trust Agreement) for the
Series specified in the applicable Prospectus Supplement.
Duties of the Trustee
The Trustee makes no representations as to the validity or sufficiency
of the Trust Agreement, the recitals contained therein, the Trust 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 Trust Certificates or
the Deposited Assets, or the proceeds thereof. The Trustee is required to
perform only those duties specifically required under the Trust Agreement with
respect to such Series. However, upon receipt of the various certificates,
reports or other instruments required to be furnished to it, the Trustee is
required to examine such documents and to determine whether they conform to the
applicable requirements of the Trust Agreement.
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The Trustee
The Trustee for any given Series of Trust Certificates under the Trust
Agreement will be named in the applicable Prospectus Supplement. The commercial
bank, national banking association or trust company serving as Trustee will be
unaffiliated with, but may have banking relationships with or provide financial
services to, the Depositor, any Administrative Agent and their affiliates.
CURRENCY RISKS
An investment in a Trust Certificate having a Specified Currency other
than U.S. dollars entails significant risks that are not associated with a
similar investment in a U.S. dollar-denominated security. Such risks include,
without limitation, the possibility of significant changes in rates of exchange
between the U.S. dollar and such Specified Currency and the possibility of the
imposition or modification of foreign exchange controls with respect to such
Specified Currency. Such risks generally depend on factors over which the
Depositor has no control, such as economic and political events and the supply
of and demand for the relevant currencies. In recent years, rates of exchange
between the U.S. dollar and certain currencies have been highly volatile, and
such volatility may be expected in the future. Past fluctuations in any
particular exchange rate do not necessarily indicate, however, fluctuations in
the rate that may occur during the term of any Trust Certificate. Depreciation
of the Specified Currency for a Trust Certificate against the U.S. dollar would
decrease the effective yield of such Trust Certificate below its Trust
Certificate Rate and, in certain circumstances, could result in a loss to the
investor on a U.S. dollar basis.
Governments have from time to time imposed, and may in the future
impose, exchange controls that could affect exchange rates and the availability
of a Specified Currency for making distributions in respect of Trust
Certificates denominated in such currency. At present, the Depositor has
identified the following currencies in which distributions of principal, premium
and interest on Trust Certificates may be made: Australian dollars, Canadian
dollars, Danish kroner, Italian lire, Japanese yen, New Zealand dollars, U.S.
dollars and ECU. However, Trust Certificates distributable in another Specified
Currency may be issued at any time, based upon investor demand for Trust
Certificates denominated in such currencies. There can be no assurance that
exchange controls will not restrict or prohibit distributions of principal,
premium or interest in any Specified Currency. Even if there are no actual
exchange controls, it is possible that, on a Distribution Date with respect to
any particular Trust Certificate, the currency in which amounts then due to be
distributed in respect of such Trust Certificate would not be available.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN TRUST CERTIFICATES
DENOMINATED IN A CURRENCY OTHER THAN U.S. DOLLARS. SUCH TRUST CERTIFICATES ARE
NOT AN APPROPRIATE INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT
TO FOREIGN CURRENCY TRANSACTIONS.
Any Prospectus Supplement relating to Trust Certificates having a
Specified Currency other than U.S. dollars will contain historical exchange
rates for such currency against the U.S. dollar, a description of such currency,
any exchange controls affecting such currency and any other required information
concerning such currency. Such Prospectus Supplement will also discuss risk
factors relating to any such Specified Currency.
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FEDERAL INCOME TAX CONSEQUENCES
This summary is based on the Internal Revenue Code of 1986, as amended
to the date hereof (the "Code"), revenue rulings, judicial decisions and
existing and proposed Treasury regulations, including final regulations
concerning the tax treatment of debt instruments issued with original issue
discount (the "OID Regulations"), changes to any of which subsequent to the date
of the Prospectus may affect the tax consequences described herein.
This summary discusses only Trust Certificates held by Trust
Certificateholders as capital assets within the meaning of Section 1221 of the
Code. It does not discuss all of the tax consequences that may be relevant to a
Trust Certificateholder in light of its particular circumstances or to Trust
Certificateholders subject to special rules, such as certain financial
institutions, insurance companies, dealers or Trust Certificateholders holding
the Trust Certificates as part of a hedging transaction or straddle. Further,
the tax consequences arising from the ownership of any Series of Trust
Certificates with special characteristics will be set forth in the applicable
Prospectus Supplement. In all cases, prospective investors are advised to
consult their own tax advisors regarding the federal tax consequences to them of
holding, owning and disposing of Trust Certificates, including the advisability
of making any of the elections described below, as well as any tax consequences
arising under the law of any state or other taxing jurisdiction.
For purposes of this discussion "U.S. Person" means an individual who,
for federal income tax purposes, is a citizen or resident of the United States
or a corporation, partnership or other entity created or organized in or under
the laws of the United States, any state thereof, or an estate that is subject
to U.S. federal income tax regardless of the source of its income, or a trust if
a court within the United States is able to exercise primary supervision of the
administration of the trust and one or more U.S. persons have the authority to
control all substantial decisions of the trust. "U.S. Owner" means a Trust
Certificateholder that is a U.S. Person and "Non- U.S. Owner" means a Trust
Certificateholder that is not a U.S. Person.
Classification of Investment Arrangement
The arrangement pursuant to which the Trust Certificates will be
created and sold and the Underlying Securities will be administered will be
treated as a grantor trust under subpart E, part I of subchapter J of the Code.
Each Trust Certificateholder will be treated as the owner of a pro rata
undivided interest in the ordinary income and corpus of the Underlying
Securities in the grantor trust.
U.S. Owners
In General
Each Trust Certificateholder will be required to report on its federal
income tax return its pro rata share of the entire income from the Underlying
Securities, including gross interest income at the interest rate on the
Underlying Securities, in accordance with its method of accounting.
Original Issue Discount
The Underlying Securities may have originally been sold at a discount
below their principal amount. As provided in the Code and the OID Regulations,
the excess of the "stated redemption price" (as defined below) of each such
Underlying Security over its "issue price" (defined as the initial offering
price to the public, excluding bond houses and brokers, at which a substantial
amount of such Underlying Securities has been sold) will be original issue
discount if such excess equals or exceeds a de minimis amount (i.e., one-quarter
of one percent of such Underlying Security's stated redemption price multiplied
by the number of complete years to its maturity). An Underlying Security having
more than a de minimis amount of original issue discount is referred to herein
as an "OID Underlying Security." A U.S. Owner of an Underlying Security with a
de minimis amount of original issue discount will include any de minimis
original issue discount in income, as capital gain, on a pro rata basis as
principal payments are made on the Underlying Security. The "stated redemption
price" of an Underlying Security is equal to the sum of all payments on the
Underlying Security other than interest based on a fixed rate (or a
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variable rate, unless an applicable Prospectus Supplement otherwise states) and
payable unconditionally at least annually.
U.S. Owners are required to include original issue discount in income
as it accrues, which may be before the receipt of the cash attributable to such
income, based on a compounding of interest at a constant rate (using the yield
to maturity of the Underlying Security as originally issued). Under these rules,
U.S. Owners generally must include in income increasingly greater amounts of
original issue discount in successive accrual periods, unless payments that are
part of the state redemption price at maturity of an Underlying Security are
made before its final maturity. The OID Regulations permit U.S. Owners to use
accrual periods of any length up to one year (including daily accrual periods)
to compute accruals of original issue discount, provided each scheduled payment
of principal or interest occurs either on the first or the last day of an
accrual period.
Acquisition Premium and Market Discount
In the event that a U.S. Owner purchases an OID Underlying Security at
an acquisition premium (i.e., at a price in excess of its "adjusted issue price"
but less than its stated redemption price), the amount includible in income in
each taxable year as original issue discount is reduced by that portion of the
excess properly allocable to such year. The adjusted issue price is defined as
the sum of the issue price of the Underlying Security and the aggregate amount
of previously accrued original issue discount, less any prior payments of
amounts included in its stated redemption price. Unless a U.S. Owner makes the
accrual method election described below, acquisition premium is allocated on a
pro rata basis to each accrual of original issue discount, so that the U.S.
Owner is allowed to reduce each accrual of original issue discount by a constant
fraction.
A U.S. Owner that purchases at a "market discount" (i.e., at a price
less than the stated redemption price or, in the case of an OID Underlying
Security, the adjusted issue price) will be required (unless such difference is
less than a de minimis amount) to treat any principal payments on, or any gain
realized upon the disposition or retirement of, the Underlying Security as
interest income to the extent of the market discount that accrued while such
U.S. Owner held such Underlying Security, unless the U.S. Owner elects to
include such market discount in income on a current basis. Market discount is
considered to be de minimis if it is less than one-quarter of one percent of
such Underlying Security's stated redemption price multiplied by the number of
complete years to maturity after the U.S. Owner acquired the Trust Certificate.
If an Underlying Security with more than a de minimis amount of market discount
is disposed of in a nontaxable transaction (other than a nonrecognition
transaction described in Section 1276(d) of the Code), accrued market discount
will be includible as ordinary income to the U.S. Owner as if such U.S. Owner
had sold the Trust Certificate at its then fair market value. A U.S. Owner that
acquired at a market discount and that does not elect to include market discount
in income on a current basis also may be required to defer the deduction for a
portion of the interest expense on any indebtedness incurred or continued to
purchase or carry the Trust Certificate until the deferred income is realized.
Premium
Except as noted below, a U.S. Owner that purchases for an amount in
excess of the principal amount, or in the case of an OID Underlying Security,
the remaining stated redemption price, will be treated as having premium with
respect to the Underlying Security in the amount of such excess. A U.S. Owner
that purchases an OID Underlying Security at a premium is not required to
include in income any original issue discount with respect to such Underlying
Security. If such a U.S. Owner makes an election under Section 171(c)(2) of the
Code to treat such premium as "amortizable bond premium," the amount of interest
that must be included in such U.S. Owner's income for such accrual period (where
such Underlying Security is not optionally redeemable prior to its maturity
date) will be reduced by the portion of the premium allocable to such period
based on the Underlying Security's yield to maturity. If such Underlying
Security may be called prior to maturity after the U.S. Owner has acquired it,
the U.S. Owner generally may not assume that the call will be exercised and must
amortize premium to the maturity date. If the Underlying Security is in fact
called, any unamortized premium may be deducted in the year of the call. If a
U.S. Owner makes the election under Section 171(c)(2), the election also shall
apply to all bonds the interest on which is not excludible from gross income
("Fully Taxable Bonds") held by the U.S. Owner at the beginning of the first
taxable year to which the election applies and to all such Fully Taxable Bonds
thereafter
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acquired by it, and is irrevocable without the consent of the IRS. If such an
election is not made, such a U.S. Owner must include the full amount of each
interest payment in income in accordance with its regular method of accounting
and will receive a tax benefit from the premium only in computing its gain or
loss upon the sale or other disposition or retirement of the Underlying
Security.
Accrual Method Election
Under the OID Regulations, a U.S. Owner is permitted to elect to
include in gross income its entire return on an Underlying Security (i.e., the
excess of all remaining payments to be received on the Underlying Security over
the amount paid for the Trust Certificate by such U.S. Owner) based on the
compounding of interest at a constant rate. Such an election for an Underlying
Security with amortizable bond premium (or market discount) will result in a
deemed election for all of the U.S. Owner's debt instruments with amortizable
bond premium (or market discount) and may be revoked only with permission of the
IRS.
Disposition or Retirement of Trust Certificates
Upon the sale, exchange or other disposition of a Trust Certificate, or
upon the retirement of a Trust Certificate, a U.S. Owner will recognize gain or
loss equal to the difference, if any, between the amount realized upon the
disposition or retirement and the U.S. Owner's tax basis in the Trust
Certificate. A U.S. Owner's tax basis for determining gain or loss on the
disposition or retirement of a Trust Certificate will be the cost of such Trust
Certificate to such U.S. Owner, increased by the amount of original issue
discount and any market discount includible in such U.S. Owner's gross income
with respect to the Underlying Security, and decreased by the amount of any
payments under the Underlying Security that are part of its stated redemption
price and by the portion of any premium applied to reduce interest payments as
described above.
Gain or loss upon the disposition or retirement of a Trust Certificate
will be capital gain or loss, except to the extent the gain represents accrued
stated interest, original issue or market discount on the Trust Certificate not
previously included in gross income, to which extent such gain or loss would be
treated as ordinary income. Any capital gain or loss will be long-term capital
gain or loss if at the time of disposition or retirement the Trust Certificate
has been held for more than one year.
Non-U.S. Owners
Interest
Interest (including original issue discount) on an Underlying Security
of a Non-U.S. Owner will be subject to a 30 percent federal income and
withholding tax, unless an exemption is established.
Disposition or Retirement of Trust Certificates
A Non-U.S. Owner that does not have certain present or former
connections with the United States (e.g., holding such Non-U.S. Owner's Trust
Certificate in connection with the conduct of a trade or business within the
United States or being present in the United States for 183 days or more during
a taxable year) generally will not be subject to federal income tax, and no
withholding of such tax will be required, with respect to any gain realized upon
the disposition or retirement of a Trust Certificate.
Information Reporting and Backup Withholding
Payments made on the Underlying Securities and proceeds from the sale
of the Trust Certificates will not be subject to a "backup" withholding tax of
31 percent unless, in general, the Trust Certificateholder fails to comply with
certain reporting procedures and is not an exempt recipient under applicable
provisions of the Code.
THE FEDERAL TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A TRUST
CERTIFICATEHOLDER'S PARTICULAR SITUATION. TRUST CERTIFICATEHOLDERS SHOULD
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CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF
THE OWNERSHIP AND DISPOSITION OF THE TRUST CERTIFICATES, INCLUDING THE TAX
CONSEQUENCES UNDER THE TAX LAWS OF THE UNITED STATES, STATES, LOCALITIES,
COUNTRIES OTHER THAN THE UNITED STATES AND ANY OTHER TAXING JURISDICTIONS AND
THE POSSIBLE EFFECTS OF CHANGES IN SUCH TAX LAWS.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Code impose certain requirements on (a) an employee benefit
plan (as defined in Section 3(3) of ERISA), (b) a plan described in Section
4975(e)(i) of the Code or (c) any entity whose underlying assets include Plan
Assets (as defined below) 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 Trust 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 Trust 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 Trust 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 regulations (the "Regulation"), "Plan 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 Trust 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 Trust Certificate is a "publicly-offered security" or (2) equity
participation by "benefit plan investors" is not "significant".
Under the Regulation, 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.
Participation by benefit plan investors in the Trust Certificates would
not be significant if immediately after the most recent acquisition of a Trust
Certificate, whether or not from the Depositor or Merrill Lynch & Co., less than
25% of (1) the value of such Class of Trust Certificates and (2) the value of
any other Class of Trust Certificates that is not a publicly-offered security
under the Regulation, were held by benefit plan investors, which are defined as
Plans and employee benefit plans not subject to ERISA (for example, governmental
plans).
It is anticipated that certain offerings of Trust Certificates will be
structured so that assets of the Trust will not be deemed to constitute Plan
Assets. In such cases, the relevant Prospectus Supplement will indicate either
that the Trust Certificates will be considered publicly offered securities under
the Regulation or that participation by benefit plan investors will not be
significant for purposes of the Regulation.
In other instances, however, the offering of Trust Certificates may not
be so structured. Thus, the assets of the Trust may be deemed to be Plan Assets
and transactions involving the Depositor, an underwriter, the Trustee, any
trustee with respect to Underlying Securities, any obligors with respect to
Underlying Securities or affiliates
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of such obligors might constitute prohibited transactions with respect to a Plan
holding a Trust Certificate unless (i) one or more prohibited transaction
exemptions ("PTEs") applies or (ii) in the case of an issuer of Underlying
Securities, it is not a Disqualified Person or party in interest with respect to
such Plan. Plans maintained or contributed to by the Depositor, an underwriter,
the Trustee, a trustee with respect to Underlying Securities, any issuer of
underlying securities, or any of their affiliates, should not acquire or hold
any Trust Certificate.
If the Trust is deemed to hold Plan Assets, the Underlying
Securities would appear to be an indirect loan between the issuer of the
Underlying Securities and any Plan owning Trust Certificates; however, such
loan, by itself, would not constitute prohibited transaction unless such issuer
is a party in interest or Disqualified Person with respect to such Plan.
If the underwriter with respect to an offering of Trust
Certificates is a broker-dealer registered under the Exchange Act, and
customarily purchases and sells securities for its own account in the ordinary
course of its business as a broker-dealer, sales of Trust Certificates by such
underwriter to Plans may be exempt under PTE 75-1 if the following conditions
are satisfied: (i) the underwriter is not a fiduciary with respect to the Plan
and is party in interest or Disqualified Person solely by reason of Section
3(14)(B) of ERISA or Section 4975(e)(2)(B) of the Code or a relationship to a
person described in such Sections, (ii) the transaction is at least as favorable
to the Plan as an arms-length transaction with an unrelated party and is not a
prohibited transaction within the meaning of Section 503(b) of the Code, and
(iii) the Plan maintains for at least six years such records as are necessary to
determine whether the conditions)s of PTE 75-1 have been met.
The custodial and other services tendered by the Trustee and any
trustee with respect to Underlying Securities might be exempt pursuant to
Section 408(b)(2) of ERISA and Section 4975(d)(2) of the Code, which exempt
services necessary for the establishment or operation of a Plan under a
reasonable contract or arrangement and for which no more than reasonable
compensation is paid. An arrangement would not be treated as reasonable unless
it can be terminated upon reasonably short notice under the circumstances
without penalty. The statutory exemption for services noted above does not
provide exemptive relief from prohibited transactions described in Section
406(b) of ERISA or Section 4975(c)(1)(E) or (F) of the Code.
Other prohibited transaction exemptions could apply to the
acquisition and holding of Trust Certificates by Plans, and the operation of the
Trust, including, but not limited to: PTE 84-14 (an exemption for certain
transaction determined by An independent qualified professional asset manager),
PTE 91-38 (an exemption for certain transactions involving bank collective
investment funds), PTE 90-1 (an exemption for certain transactions involving
insurance company pooled separate accounts) or PTE 95-60 (an exemption for
certain transactions involving insurance company pooled general accounts).
The Prospectus Supplement relating to any offering of Trust
Certificates that will result in the Trust Assets being deemed to constitute
Plan Assets will provide that, by acquiring and holding a Trust Certificate, a
Plan shall be deemed to have represented and warranted to the Depositor,
Trustee, and underwriter that such acquisition and holding of a Trust
Certificate does not involve a non-exempt prohibited transaction with respect to
such Plan, including with respect to the activities of the Trust.
ANY PLAN OR INSURANCE COMPANY INVESTING ASSETS OF ITS GENERAL ACCOUNT
PROPOSING TO ACQUIRE TRUST CERTIFICATES SHOULD CONSULT WITH ITS COUNSEL.
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PLAN OF DISTRIBUTION
Trust 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 Trust Certificates, which may include the
names of any underwriters, or initial purchasers, the purchase price of such
Trust 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 Trust
Certificates may be listed, and the place and time of delivery of the Trust
Certificates to be offered thereby.
If underwriters are used in the sale, Trust 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 Trust 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 Merrill Lynch & Co. The obligations of such
underwriters to purchase such Trust Certificates will be subject to certain
conditions precedent and the underwriters will be obligated to purchase all such
Trust Certificates if any of such Trust 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.
Trust Certificates may also be sold through agents designated by the
Depositor from time to time. Any agent involved in the offer or sale of Trust
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 Trust 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 Trust
Certificates may be deemed to be underwriters and any discounts or commissions
received by them on the sale or resale of Trust Certificates may be deemed to be
underwriting discounts and commissions under the Securities Act. Agents and
underwriters may be entitled under agreements entered into with the Depositor to
indemnification by the Depositor against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments that the agents or underwriters or their affiliates may be required to
make in respect thereof. Agents and underwriters and their affiliates may be
customers of, engage in transactions with, or perform services for, the
Depositor or its affiliates in the ordinary course of business.
Only Trust Certificates rated in one of the investment grade rating
categories by a Rating Agency will be offered hereby. Affiliates of the
underwriters may act as agents or underwriters in connection with the sale of
the Trust Certificates. Any affiliate of the underwriters so acting will be
named, and its affiliation with the underwriters described, in the applicable
Prospectus Supplement. The underwriters or their affiliates may act as
principals or agents in connection with market-making transactions relating to
the Trust Certificates. The original Prospectus Supplement related to the Trust
Certificates for which a market is being made will be delivered with respect to
the Trust Certificates for use by such underwriters or affiliates in connection
with offers and sales related to market-making transactions in the Trust
Certificates.
The Depositor is an affiliate of Merrill Lynch & Co.
47
<PAGE>
LEGAL MATTERS
The validity of the Trust Certificates will be passed upon for the
Depositor and the underwriters by Shearman & Sterling, New York, New York or
other counsel identified in the applicable Prospectus Supplement.
48
<PAGE>
INDEX OF DEFINED TERMS
Page
----
Administration Agreements.....................................................33
Administrative Agent...........................................................1
Allocation Ratio .......................................................S-6, 22
Available Funds ..........................................................S-21
Base Rate ............................................................17
Business Day ............................................................16
Calculation Agent ............................................................17
Calculation Date ............................................................23
Call Price ............................................................23
Callable Series ............................................................23
CD Rate ............................................................18
CD Rate Trust Certificate.....................................................17
Cede ........................................................S-3, 1
Class .............................................................1
Class _-1 Allocation.........................................................S-6
Class _-2 Allocation.........................................................S-6
Clearing Agency ......................................................S-19, 23
clearing corporation..........................................................23
Closing Date ...........................................................S-2
Code ....................................................S-7, 5, 37
Commercial Paper Rate.........................................................19
Commercial Paper Rate Trust Certificate.......................................17
Commission ....................................................S-10, 1, 2
Composite Quotations..........................................................17
Concentrated Underlying Securities.............................................1
Credit Support .............................................................1
Cut-off Date ............................................................31
Debt Securities ...........................................................S-9
Definitive Trust Certificate..................................................23
Depositary ........................................................S-3, 1
Deposited Assets .........................................................1, 25
Depositor ...................................................S-1, S-4, 1
Disqualified Persons....................................................S-27, 45
Distribution Date ...................................................S-1, S-5, 2
DTC ...................................................S-3, S-7, 1
Eligible Investments........................................................S-21
Event of Default ..........................................................S-23
Exchangeable Series...........................................................22
Exchange Act ....................................................S-10, 1, 2
Extraordinary Expenses........................................................35
Federal Funds Rate............................................................19
Federal Funds Rate Trust Certificate..........................................17
Final Scheduled Distribution Date....................................S-1, S-5, 2
Fixed Rate Trust Certificates.................................................16
Floating Rate Trust Certificates..............................................17
Floating Trust Certificate Rate...............................................14
Foreign Trust Certificateholders............................................S-27
Global Security .............................................................1
Government Securities..........................................................1
grantor trust.................................................................38
H.15(519).....................................................................17
I-1
<PAGE>
Page
----
Indenture.........................................................S-10, S-15, 16
Index Maturity................................................................17
Interest Reset Date...........................................................18
Interest Reset Period.........................................................18
IRA..........................................................................S-8
Letter of Credit..............................................................30
Letter of Credit Bank.........................................................30
LIBOR.........................................................................20
LIBOR Reuters.................................................................20
LIBOR Telerate................................................................20
LIBOR Trust Certificate.......................................................17
Maximum Trust Certificate Rate................................................17
Merrill Lynch & Co........................................................S-2, 1
Minimum Trust Certificate Rate................................................17
Money Market Yield............................................................19
Moody's.................................................................S-1, S-7
Notional Amount...............................................................16
NYSE.................................................................S-1, S-7, 1
OID..........................................................................S-7
Optional Exchange Right.......................................................22
Ordinary Expenses...........................................................S-35
Original Issue Date...........................................................14
Participants.............................................................S-3, 23
Parties in Interest.....................................................S-27, 45
Plan............................................................S-8, S-27, 5, 45
Plan Assets...................................................................45
Prime Rate....................................................................21
Prime Rate Trust Certificate..................................................17
Prospectus Supplement..........................................................1
PTEs....................................................................S-27, 46
Puttable Underlying Securities................................................23
Purchase Price................................................................40
Rating Agency...........................................................S-10, 10
Rating Agent................................................................S-10
Realized Losses...............................................................22
Record Date...................................................................16
Reference Banks...............................................................20
Registration Statement.........................................................2
Regulation....................................................................45
Related Proceeds..............................................................33
Required Percentage...........................................................35
Required Percentage-Amendment...............................................S-24
Required Percentage-Remedies................................................S-23
Reserve Account...............................................................30
Retained Interest.............................................................12
Reuters Screen LIBO Page......................................................20
Reuters Screen NYMF Page......................................................20
Risk Factors-Derivatives......................................................25
S&P.....................................................................S-1, S-7
Secured Underlying Securities.................................................28
Securities Act.................................................................2
Senior Underlying Securities..................................................28
I-2
<PAGE>
Page
----
Series.........................................................................1
Specified Currency..................................................S-6, S-17, 2
Spread........................................................................17
Spread Multiplier.............................................................17
Standard Terms.................................................................1
Strip Trust Certificates......................................................15
Subordinated Underlying Securities............................................28
Surety........................................................................30
Surety Bond...................................................................30
Tax Event...................................................................S-16
Telerate Page 3750............................................................20
TOPrS(sm).....................................................................29
Treasury Rate.................................................................21
Treasury Rate Trust Certificate...............................................17
Trust................................................................S-1, S-4, 1
Trust Agreement...........................................................S-4, 1
Trust Certificate Account.....................................................31
Trust Certificate Rate........................................................14
Trust Certificateholders..................................................S-1, 1
Trust Certificates....................................................S-4, 1, 13
Trust Indenture Act...........................................................26
Trustee...................................................................S-1, 1
Trustee Fee..............................................................S-4, 12
U.S. dollars, US$, dollar or $.................................................3
Underlying Securities................................................S-1, S-4, 1
Underlying Securities Issuer..........................................S-1, 1, 25
Underlying Securities Rate....................................................28
Underlying Securities Prospectus............................................S-15
Underlying Securities Trustee...........................................S-10, 26
Underwriter..................................................................S-2
Underwriting Agreement......................................................S-29
United States Person........................................................S-27
Voting Rights.................................................................35
I-3
<PAGE>
================================================================================
No dealer, sales person or other person has been authorized to give any
information or make any representation not contained in this Prospectus and if
given or made, such information or representation must not be relied upon as
having been authorized by the Depositor or Merrill Lynch & Co. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy, any
of the Trust Certificates offered hereby in any jurisdiction to any person to
whom it is unlawful to make such offer in such jurisdiction. Neither the
delivery of this Prospectus nor any sale hereunder shall, under any
circumstances, create any implication that the information herein is correct as
of any time subsequent to the date hereof or that there has been no change in
the affairs of the Company since such date.
------------------
TABLE OF CONTENTS
Page
----
PROSPECTUS SUPPLEMENT
PROSPECTUS SUPPLEMENT SUMMARY...............................................S-4
RISK FACTORS...............................................................S-12
THE TRUST..................................................................S-13
DESCRIPTION OF THE UNDERLYING SECURITIES...................................S-14
DESCRIPTION OF THE TRUST CERTIFICATES......................................S-17
THE DEPOSITOR..............................................................S-22
DESCRIPTION OF THE TRUST AGREEMENT.........................................S-22
FEDERAL INCOME TAX CONSEQUENCES............................................S-25
ERISA CONSIDERATIONS.......................................................S-27
UNDERWRITING...............................................................S-29
VALIDITY OF THE TRUST CERTIFICATES.........................................S-29
RATINGS....................................................................S-29
PROSPECTUS
PROSPECTUS SUPPLEMENT....................................................... 2
AVAILABLE INFORMATION....................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE.............................................................. 2
REPORTS TO TRUST CERTIFICATEHOLDERS......................................... 3
PROSPECTUS SUMMARY.......................................................... 4
RISK FACTORS................................................................ 7
THE DEPOSITOR............................................................... 12
USE OF PROCEEDS............................................................. 12
FORMATION OF THE TRUST...................................................... 12
MATURITY AND YIELD CONSIDERATIONS........................................... 12
DESCRIPTION OF THE TRUST CERTIFICATES....................................... 13
DESCRIPTION OF DEPOSITED ASSETS............................................. 25
DESCRIPTION OF THE TRUST AGREEMENT.......................................... 31
CURRENCY RISKS.............................................................. 41
FEDERAL INCOME TAX CONSEQUENCES............................................. 42
ERISA CONSIDERATIONS........................................................ 45
PLAN OF DISTRIBUTION........................................................ 47
LEGAL MATTERS............................................................... 48
INDEX OF DEFINED TERMS......................................................I-1
Until [25][90] days after the date of this Prospectus, all dealers
affecting transactions in the offered Trust Certificates, whether or not
participating in this distribution, may be required to deliver a Prospectus
Supplement and the Prospectus to which it relates. This 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>
================================================================================
[ ]
STEERS[R] TRUST
CERTIFICATES
Series 199_-[ ]
----------
PROSPECTUS
SUPPLEMENT
----------
Merrill Lynch & Co.
[ ] __, 1997
================================================================================
<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. Except for the registration fee payable to
the Securities and Exchange Commission, all such expenses are estimated:
Securities and Exchange Commission registration fee............... $151,517
Fees and expenses of Trustee (including legal fees)............... 30,000
Printing and engraving expenses................................... 10,000
Legal fees and expenses........................................... 300,000
Rating agency fees................................................ 100,000
Miscellaneous..................................................... 33,483
-------
Total.................................. $625,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law provides, in
summary, that directors and officers of Delaware corporations are entitled,
under certain circumstances, to be indemnified against all expenses and
liabilities (including attorney's fees) incurred by them as a result of suits
brought against them in their capacity as directors or officers, if they acted
in good faith and in a manner they reasonably believed to be in or not opposed
to the best interests of the company, and, with respect to any criminal action
or proceeding, if they had no reasonable cause to believe their conduct was
unlawful; provided that no indemnification may be made against expenses in
respect of any claim, issue or matter as to which they shall have been adjudged
to be liable to the company, unless and only to the extent that the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of liability but in view of all the circumstances of
the case, they are fairly and reasonably entitled to indemnity for such expenses
which the court shall deem proper. Any such indemnification may be made by the
company only as authorized in each specific case upon a determination by the
stockholders of disinterested directors that indemnification is proper because
the indemnitee has met the applicable standard of conduct.
The Registrant's Amended and Restated Certificate of Incorporation
provides that no director of the Registrant shall be personally liable to the
Registrant or its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability: (i) for any breach of the director's duty
of loyalty to the Registrant or its stockholders; (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law; (iii) in respect of certain unlawful dividend payments or stock redemptions
or purchases; or (iv) for any transaction from which the director derived an
improper personal benefit.
The Registrant's Amended and Restated Certificate of Incorporation and
By-Laws provide for indemnification of its directors and officers to the fullest
extent permitted by Delaware law, as the same may be amended from time to time.
Reference is made to Section 6 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.
II-1
<PAGE>
ITEM 16. EXHIBITS.
1.1 Underwriting Agreement
3.1 Amended and Restated Certificate of Incorporation of Merrill Lynch
Depositor, Inc.*
3.2 By-laws of Merrill Lynch Depositor, Inc.*
4.1 Standard Terms of Trust Agreement
5.1 Opinion of Shearman & Sterling as to legality (including consent
of such firm)
23.1 Consent of Shearman & Sterling (included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature page of Amendment
No. 2 to the Registration Statement)
26.1 Form T-1 Statement of Eligibility and Qualification under the
Trust Indenture Act of 1939, of United States Trust Company of
New York*
- ------------------
* Previously filed.
ITEM 17. UNDERTAKINGS.
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 to 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.
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 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 that time
shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or
497(h) under the Securities Act of 1933 shall be deemed to be a part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
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.
II-2
<PAGE>
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 of 1933 and is, therefore, unenforceable. If 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 of 1933 and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant hereby certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 1 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, on the 22nd day
of August, 1997.
MERRILL LYNCH DEPOSITOR, INC.
By: /s/ Frank D Ronan
-----------------------
Name: Frank D. Ronan
Title: President
POWER OF ATTORNEY
We, the undersigned directors and officers of Merrill Lynch Depositor,
Inc. do hereby constitute and appoint Frank D. Ronan, Barry N. Finkelstein and
Stephen R. Padovano, and each of them, our true and lawful attorneys and agents,
to do any and all acts and things in our names and on our behalf in our
capacities as directors and officers and to execute any and all instruments, for
us and in our names in the capacities indicated below, which said attorneys and
agents, or either of them, may deem necessary or advisable to enable said
Corporation to comply with the Securities Act of 1933 and any rules, regulations
and requirements of the Securities and Exchange Commission, in connection with
this Amendment No. 2 to the Registration Statement, including specifically, but
without limitation, power and authority to sign for us or any of us in our names
in the capacities indicated below, any and all amendments hereto relating to the
offering covered by this Amendment No. 2 to the Registration Statement; and we
do hereby ratify and confirm all that said attorneys and agents, or either of
them, shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 2 to the Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Frank D. Ronan Chairman of the Board, August 22, 1997
- ---------------------------- Principal Executive Officer
Frank D. Ronan and Director
/s/ Barry N. Finkelstein Principal Accounting Officer, August 22, 1997
- ---------------------------- Principal Financial Officer
Barry N. Finkelstein and Director
II-4
<PAGE>
INDEX TO EXHIBITS
Sequential page
Exhibits numbers
- -------- -------
1.1 Underwriting Agreement
3.1 Amended and Restated Certificate of Incorporation of Merrill Lynch
Depositor, Inc.*
3.2 By-laws of Merrill Lynch Depositor, Inc.*
4.1 Standard Terms of Trust Agreement
5.1 Opinion of Shearman & Sterling as to legality (including consent of such
firm)
23.1 Consent of Shearman & Sterling (included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature page of Amendment No. 2 to
the Registration Statement)
25.1 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939, of United States Trust Company of New York*
- ------------------
* Previously filed.
================================================================================
Merrill Lynch Depositor, Inc.
(a Delaware corporation)
STEERS Trust Certificates
UNDERWRITING AGREEMENT
Dated: August __, 1997
================================================================================
<PAGE>
Table of Contents
UNDERWRITING AGREEMENT....................................................... 1
SECTION 1. Representations and Warranties............................. 3
(a) Representations and Warranties by the Company.................. 3
(1) Compliance with Registration Requirements......... 3
(2) Incorporated Documents............................ 4
(3) No Material Adverse Change in Business............ 4
(4) Good Standing of the Company...................... 5
(5) Authorization of this Underwriting Agreement and
Terms Agreement................................. 5
(6) Authorization of Securities....................... 5
(7) Authorization of the Standard Terms and the
Applicable Series Supplement.................... 6
(8) Descriptions of the Underwritten Securities and
Trust Agreement................................. 6
(9) Absence of Defaults and Conflicts................. 6
(10) Absence of Proceedings............................ 7
(11) Accuracy of Exhibits.............................. 7
(12) Absence of Further Requirements................... 7
(13) Possession of Licenses and Permits................ 7
(14) Commodity Exchange Act............................ 8
(15) Investment Company Act............................ 8
(b) Officers' Certificates......................................... 8
SECTION 2. Sale and Delivery to Underwriters; Closing................. 8
(a) Underwritten Securities........................................ 8
(b) Payment........................................................ 8
(c) Denominations; Registration.................................... 9
SECTION 3. Covenants of the Company................................... 9
(a) Compliance with Securities Regulations and Commission
Requests................................................... 9
(b) Filing of Amendments........................................... 9
(c) Delivery of Registration Statements............................ 10
(d) Delivery of Prospectuses....................................... 10
(e) Continued Compliance with Securities Laws...................... 10
(f) Blue Sky Qualifications........................................ 11
(g) Earnings Statement............................................. 11
(h) Use of Proceeds................................................ 11
(i) Listing........................................................ 11
(j) Restriction on Sale of Securities.............................. 11
i
<PAGE>
SECTION 4. Payment of Expenses........................................ 12
(a) Expenses....................................................... 12
(b) Termination of Agreement....................................... 12
SECTION 5. Conditions of Underwriters' Obligations.................... 12
(a) Effectiveness of Registration Statement........................ 13
(b) Opinion of Counsel for Company................................. 13
(c) Opinion of Counsel for Underwriters............................ 13
(d) Officers' Certificate.......................................... 13
(e) Ratings........................................................ 14
(f) Approval of Listing............................................ 14
(g) No Objection................................................... 14
(h) Additional Documents........................................... 14
(i) Termination of Terms Agreement................................. 14
SECTION 6. Indemnification............................................ 15
(a) Indemnification of Underwriters................................ 15
(b) Indemnification of Company, Directors and Officers............. 16
(c) Actions against Parties; Notification.......................... 16
(d) Settlement without Consent if Failure to Reimburse............. 17
SECTION 7. Contribution............................................... 17
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery................................................. 18
SECTION 9. Termination................................................ 19
(a) Underwriting Agreement......................................... 19
(b) Terms Agreement................................................ 19
(c) Liabilities.................................................... 19
SECTION 10. Default by One or More of the Underwriters...................... 19
SECTION 11. Notices......................................................... 20
SECTION 12. Parties......................................................... 20
SECTION 13. GOVERNING LAW AND TIME.......................................... 21
SECTION 14. Effect of Headings.............................................. 21
ii
<PAGE>
MERRILL LYNCH DEPOSITOR, INC.
(a Delaware corporation)
STEERS Trust Certificates
UNDERWRITING AGREEMENT
August __, 1997
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Merrill Lynch Depositor, Inc., a Delaware corporation (the "Company"),
proposes that United States Trust Company of New York (the "Trustee") will issue
and sell up to $__________ aggregate initial public offering price of its STEERS
Trust Certificates (the "Securities"), from time to time, in or pursuant to one
or more offerings on terms to be determined at the time of sale.
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, in the
aggregate, represent 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 August __, 1997 (the
"Standard Terms"), between the Company and the Trustee and (b) a supplement
dated as of the date of issuance of the related Series of Securities (each, a
"Series Supplement") and shall have the terms described in the Prospectus and
the relevant Prospectus Supplement, each, as defined below, as such documents
may be amended or
<PAGE>
supplemented from time to time. The form of the Standard Terms has been filed as
an exhibit to the Registration Statement (as defined below).
Whenever the Company determines to make an offering of Securities
through Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch"), or through an underwriting syndicate managed by Merrill
Lynch, the Company will enter into an agreement (each, a "Terms Agreement")
providing for the sale of such Securities to, and the purchase and offering
thereof by, Merrill Lynch and such other underwriters, if any, selected by
Merrill Lynch (the "Underwriters", which term shall include Merrill Lynch,
whether acting as sole Underwriter or as a member of an underwriting syndicate,
as well as any Underwriter substituted pursuant to Section 10 hereof). The Terms
Agreement relating to the offering of Securities shall specify the aggregate
principal amount of Securities to be issued (the "Underwritten Securities"), the
name of each Underwriter participating in such offering (subject to substitution
as provided in Section 10 hereof) and the name of any Underwriter other than
Merrill Lynch acting as co-manager in connection with such offering, the number
or aggregate principal amount, as the case may be, of Underwritten Securities
which each such Underwriter severally agrees to purchase, whether such offering
is on a fixed or variable price basis and, if on a fixed price basis, the
initial offering price, the price at which the Underwritten Securities are to be
purchased by the Underwriters, the form, time, date and place of delivery and
payment of the Underwritten Securities and any other material variable terms of
the Underwritten Securities. The Terms Agreement, which shall be substantially
in the form of Exhibit A hereto, may take the form of an exchange of any
standard form of written telecommunication between the Company and Merrill
Lynch, acting for itself and, if applicable, as representative of any other
Underwriters. Each offering of Underwritten Securities through Merrill Lynch as
sole Underwriter or through an underwriting syndicate managed by Merrill Lynch
will be governed by this Underwriting Agreement, as supplemented by the
applicable Terms Agreement.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-29015) and
pre-effective amendments nos. 1 and 2 thereto for the registration of the
Securities under the Securities Act of 1933, as amended (the "1933 Act"), and
the offering thereof from time to time in accordance with Rule 415 of the rules
and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations"). Such registration statement has been declared effective by the
Commission and the Trust Agreement has been duly qualified under the Trust
Indenture Act of 1939, as amended (the "1939 Act"). Such registration statement,
including the information, if any, deemed to be a part thereof pursuant to Rule
430A(b) of the 1933 Act Regulations (the "Rule 430A Information") is referred to
herein as the "Registration Statement"; and the final prospectus and the final
prospectus supplement relating to the offering of the Underwritten Securities,
in the form first furnished to the Underwriters by the Company for use in
connection with the offering of the Underwritten Securities, are collectively
referred to herein as the "Prospectus"; provided, however, that all references
to the "Registration Statement" and the "Prospectus" shall also be deemed to
include all documents incorporated therein by reference pursuant to the
Securities Exchange Act of
2
<PAGE>
1934, as amended (the "1934 Act"), prior to the execution of the applicable
Terms Agreement; provided, further, that if the Company files a registration
statement with the Commission pursuant to Rule 462(b) of the 1933 Act
Regulations (the "Rule 462(b) Registration Statement"), then, after such filing,
all references to "Registration Statement" shall also be deemed to include the
Rule 462 Registration Statement. A "preliminary prospectus" shall be deemed to
refer to any prospectus used before the registration statement became effective
and any prospectus that omitted, as applicable, the Rule 430A Information or
other information to be included upon pricing in a form of prospectus filed with
the Commission pursuant to Rule 424(b) of the 1933 Act Regulations, that was
used after such effectiveness and prior to the execution and delivery of the
applicable Terms Agreement. For purposes of this Underwriting Agreement, all
references to the Registration Statement, Prospectus or preliminary prospectus
or to any amendment or supplement to any of the foregoing shall be deemed to
include any copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").
All references in this Underwriting Agreement to financial statements
and schedules and other information which is "contained," "included" or "stated"
(or other references of like import) in the Registration Statement, Prospectus
or preliminary prospectus shall be deemed to mean and include all such financial
statements and schedules and other information which is incorporated by
reference in the Registration Statement, Prospectus or preliminary prospectus,
as the case may be; and all references in this Underwriting Agreement to
amendments or supplements to the Registration Statement, Prospectus or
preliminary prospectus shall be deemed to mean and include the filing of any
document under the 1934 Act which is incorporated by reference in the
Registration Statement, Prospectus or preliminary prospectus, as the case may
be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company The Company
represents and warrants to Merrill Lynch, as of the date hereof, and to each
Underwriter named in the applicable Terms Agreement, as of the date thereof, as
of the Closing Time (as defined below) and, if applicable, as of each Date of
Delivery (as defined below) (in each case, a "Representation Date"), as follows:
(1) Compliance with Registration Requirements. The Company meets
the requirements for use of Form S-3 under the 1933 Act. The
Registration Statement (including any Rule 462(b) Registration
Statement) has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement (or such
Rule 462(b) Registration Statement) has been issued under the 1933 Act
and no proceedings for that purpose have been instituted or are pending
or, to the knowledge of the Company, are contemplated by the
Commission, and any request on the part of the Commission for
additional information has been complied with. In addition, the Trust
Agreement and has been duly qualified under the 1939 Act.
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At the respective times the Registration Statement (including any
Rule 462(b) Registration Statement) and any post-effective amendments
thereto (including the filing of the Company's most recent Annual
Report on Form 10-K with the Commission (the "Annual Report on Form
10-K")) became effective and at each Representation Date, the
Registration Statement (including any Rule 462(b) Registration
Statement) and any amendments thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations and the 1939 Act and the rules and regulations of the
Commission under the 1939 Act (the "1939 Act Regulations") and did not
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. At the date of the
Prospectus, at the Closing Time and at each Date of Delivery, if any,
neither the Prospectus nor any amendments and supplements thereto
included or will include an untrue statement of a material fact or
omitted or will 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. Notwithstanding the foregoing,
the representations and warranties in this subsection shall not apply
to statements in or omissions from the Registration Statement or the
Prospectus made in reliance upon and in conformity with information
furnished to the Company in writing by any Underwriter through Merrill
Lynch expressly for use in the Registration Statement or the
Prospectus.
Each preliminary prospectus and prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied
when so filed in all material respects with the 1933 Act Regulations
and each preliminary prospectus and the Prospectus delivered to the
Underwriters for use in connection with the offering of Underwritten
Securities will, at the time of such delivery, be identical to any
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(2) Incorporated Documents. The documents of the Company
incorporated or deemed to be incorporated by reference in the
Registration Statement and the Prospectus, at the time they were or
hereafter are filed with the Commission, complied and will comply in
all material respects with the requirements of the 1934 Act and the
rules and regulations of the Commission thereunder (the "1934 Act
Regulations") and, when read together with the other information in the
Prospectus, at the date of the Prospectus, at the Closing Time and at
each Date of Delivery, if any, did not and will not include an untrue
statement of a material fact or omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(3) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement
and the Prospectus, except as otherwise stated therein, (A) there has
been no material adverse change in the
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condition, financial or otherwise, or in the earnings, business affairs
or business prospects of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) there have been no
transactions entered into by the Company or any of its subsidiaries,
other than those arising in the ordinary course of business, which are
material with respect to the Company and its subsidiaries considered as
one enterprise and (C) there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its
capital stock.
(4) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectus and to enter into and perform
its obligations under, or as contemplated under, this Underwriting
Agreement and the applicable Terms Agreement. The Company is duly
qualified as a foreign corporation to transact business and is in good
standing in each other jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to so qualify or be
in good standing would not result in a Material Adverse Effect.
(5) Authorization of this Underwriting Agreement and Terms
Agreement. This Underwriting Agreement has been, and the applicable
Terms Agreement as of the date thereof will have been, duly authorized,
executed and delivered by the Company.
(6) Authorization of Securities. The Underwritten Securities have
been, or as of the date of such Terms Agreement will have been, duly
authorized by the Company for issuance and sale pursuant to this
Underwriting Agreement and such Terms Agreement. Such Underwritten
Securities, when issued and authenticated in the manner provided for in
the applicable Series Supplement and delivered against payment of the
consideration therefor specified in such Terms Agreement, will
constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or other similar laws affecting
the enforcement of creditors' rights generally or by general equitable
principles (regardless of whether enforcement is considered in a
proceeding in equity or at law), and except further as enforcement
thereof may be limited by requirements that a claim with respect to any
Securities payable in a foreign or composite currency (or a foreign or
composite currency judgment in respect of such claim) be converted into
U.S. dollars at a rate of exchange prevailing on a date determined
pursuant to applicable law or by governmental authority to limit, delay
or prohibit the making of payments outside the United States. Such
Underwritten Securities will be in the form contemplated by, and each
registered holder thereof is entitled to the benefits of, the Standard
Terms and the applicable Series Supplement.
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(7) Authorization of the Standard Terms and the Applicable Series
Supplement. The Standard Terms and each applicable Series Supplement
have been, or prior to the issuance of the Securities thereunder will
have been, duly authorized, executed and delivered by the Company and,
upon such authorization, execution and delivery, will constitute a
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency (including, without
limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally or by general equitable principles
(regardless of whether enforcement is considered in a proceeding in
equity or at law).
(8) Descriptions of the Underwritten Securities and Trust
Agreement. The Underwritten Securities being sold pursuant to the
applicable Terms Agreement and each applicable Series Supplement, as of
each Representation Date, will conform in all material respects to the
statements relating thereto contained in the Prospectus and will be in
substantially the form filed or incorporated by reference, as the case
may be, as an exhibit to the Registration Statement.
(9) Absence of Defaults and Conflicts. The Company is not in
violation of its charter or by-laws or in default in the performance or
observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to which
the Company is a party or by which it may be bound, or to which any of
the property or assets of the Company is subject (collectively,
"Agreements and Instruments"), except for such defaults that would not
result in a Material Adverse Effect. The execution, delivery and
performance of this Underwriting Agreement, the applicable Terms
Agreement and each applicable Indenture, Series Supplement and any
other agreement or instrument entered into or issued or to be entered
into or issued by the Company in connection with the transactions
contemplated hereby or thereby or in the Registration Statement and the
Prospectus and the consummation of the transactions contemplated herein
and in the Registration Statement and the Prospectus (including the
issuance and sale of the Underwritten Securities and the use of the
proceeds from the sale of the Underwritten Securities as described
under the caption "Use of Proceeds") and compliance by the Company with
its obligations hereunder and thereunder have been duly authorized by
all necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any assets, properties or operations of the
Company pursuant to, any Agreements and Instruments nor will such
action result in any violation of the provisions of the charter or
by-laws of the Company or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its assets, properties or
operations. As used herein, a "Repayment Event"
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means any event or condition which gives the holder of any note,
debenture or other evidence of indebtedness (or any person acting on
such holder's behalf) the right to require the repurchase, redemption
or repayment of all or a portion of such indebtedness by the Company.
(10) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or to the knowledge
of the Company threatened, against or affecting the Company which is
required to be disclosed in the Registration Statement and the
Prospectus (other than as stated therein), or which might reasonably be
expected to result in a Material Adverse Effect, or which might
reasonably be expected to materially and adversely affect the assets,
properties or operations thereof or the consummation of the
transactions contemplated under this Underwriting Agreement, the
applicable Terms Agreement or any applicable Series Supplement or the
performance by the Company of its obligations hereunder and thereunder.
The aggregate of all pending legal or governmental proceedings to which
the Company is a party or of which any of its assets, properties or
operations is the subject which are not described in the Registration
Statement and the Prospectus, including ordinary routine litigation
incidental to the business, could not reasonably be expected to result
in a Material Adverse Effect.
(11) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
(12) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency, domestic or foreign, is necessary or required for the due
authorization, execution and delivery by the Company of this
Underwriting Agreement or the applicable Terms Agreement or for the
performance by the Company of the transactions contemplated under the
Prospectus, this Underwriting Agreement, such Terms Agreement or any
applicable Series Supplement except such as have been already made,
obtained or rendered, as applicable.
(13) Possession of Licenses and Permits. The Company possesses
such permits, licenses, approvals, consents and other authorizations
(collectively, "Governmental Licenses") issued by the appropriate
federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by it. The Company is in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure so to comply would not, singly or in
the aggregate, result in a Material Adverse Effect. All of the
Governmental Licenses are valid and in full force and effect, except
where the invalidity of such Governmental Licenses or the failure of
such Governmental Licenses to be in full force and effect would not
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result in a Material Adverse Effect. The Company has not received any
notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in
a Material Adverse Effect.
(14) Commodity Exchange Act. The Securities, upon issuance, will be
excluded or exempted under, or beyond the purview of, the Commodity
Exchange Act, as amended (the "Commodity Exchange Act"), and the rules
and regulations of the Commodity Futures Trading Commission under the
Commodity Exchange Act (the "Commodity Exchange Act Regulations").
(15) Investment Company Act. The Company is not, and upon the
issuance and sale of the Underwritten Securities as herein contemplated
and the application of the net proceeds therefrom as described in the
Prospectus will not be, an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act").
(b) Officers' Certificates. Any certificate signed by any officer of
the Company and delivered to any Underwriter or to counsel for the Underwriters
in connection with the offering of the Underwritten Securities shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby on the date of such certificate and, unless subsequently amended
or supplemented, at each Representation Date subsequent thereto.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Underwritten Securities. The several commitments of the
Underwriters to purchase the Underwritten Securities pursuant to the applicable
Terms Agreement shall be deemed to have been made on the basis of the
representations and warranties herein contained and shall be subject to the
terms and conditions herein set forth.
(b) Payment. Payment of the purchase price for, and delivery of, the
Initial Underwritten Securities shall be made at the offices of Shearman &
Sterling or at such other place as shall be agreed upon by Merrill Lynch and the
Company, at 10:00 A.M. (Eastern time) on the third (fourth, if the pricing
occurs after 4:30 P.M. (Eastern time) on any given day) business day after the
date of the applicable Terms Agreement (unless postponed in accordance with the
provisions of Section 10 hereof), or such other time not later than ten business
days after such date as shall be agreed upon by Merrill Lynch and the Company
(such time and date of payment and delivery being herein called "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
Merrill Lynch for the respective accounts of the Underwriters of the
Underwritten Securities to be purchased by them. It is understood that each
Underwriter has authorized Merrill Lynch, for its account,
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to accept delivery of, receipt for, and make payment of the purchase price for,
the Underwritten Securities which it has severally agreed to purchase. Merrill
Lynch, individually and not as representative of the Underwriters, may (but
shall not be obligated to) make payment of the purchase price for the
Underwritten Securities to be purchased by any Underwriter whose funds have not
been received by the Closing Time or the relevant Date of Delivery, as the case
may be, but such payment shall not relieve such Underwriter from its obligations
hereunder.
(c) Denominations; Registration. The Underwritten Securities shall be
in such denominations and registered in such names as Merrill Lynch may request
in writing at least one full business day prior to the Closing Time or the
relevant Date of Delivery, as the case may be. The Underwritten Securities will
be made available for examination and packaging by Merrill Lynch in The City of
New York not later than 10:00 A.M. (Eastern time) on the business day prior to
the Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. Covenants of the Company. The Company covenants with Merrill
Lynch and with each Underwriter participating in the offering of Underwritten
Securities, as follows:
(a) Compliance with Securities Regulations and Commission
Requests. The Company, subject to Section 3(b), will comply with the
requirements of Rule 430A of the 1933 Act Regulations, if and as
applicable, and will notify the Representative(s) immediately, and
confirm the notice in writing, of (i) the effectiveness of any
post-effective amendment to the Registration Statement or the filing of
any supplement or amendment to the Prospectus, (ii) the receipt of any
comments from the Commission, (iii) any request by the Commission for
any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, and (iv)
the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing
or suspending the use of any preliminary prospectus, or of the
suspension of the qualification of the Underwritten Securities for
offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Company
will promptly effect the filings necessary pursuant to Rule 424 and
will take such steps as it deems necessary to ascertain promptly
whether the Prospectus transmitted for filing under Rule 424 was
received for filing by the Commission and, in the event that it was
not, it will promptly file the Prospectus. The Company will make every
reasonable effort to prevent the issuance of any stop order and, if any
stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) Filing of Amendments. The Company will give Merrill Lynch
notice of its intention to file or prepare any amendment to the
Registration Statement (including any filing under Rule 462(b) of the
1933 Act Regulations) or any amendment, supplement or revision to
either the prospectus included in the Registration Statement at the
time it became effective or to the Prospectus, whether pursuant to the
1933
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Act, the 1934 Act or otherwise, will furnish Merrill Lynch with copies
of any such documents a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file or use
any such document to which Merrill Lynch or counsel for the
Underwriters shall object.
(c) Delivery of Registration Statements. The Company has furnished
or will deliver to Merrill Lynch and counsel for the Underwriters,
without charge, signed copies of the Registration Statement as
originally filed and of each amendment thereto (including exhibits
filed therewith or incorporated by reference therein and documents
incorporated or deemed to be incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will
also deliver to Merrill Lynch, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment
thereto (without exhibits) for each of the Underwriters. The
Registration Statement and each amendment thereto furnished to the
Underwriters will be identical to any electronically transmitted copies
thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company will deliver to each
Underwriter, without charge, as many copies of each preliminary
prospectus as such Underwriter may reasonably request, and the Company
hereby consents to the use of such copies for purposes permitted by the
1933 Act. The Company will furnish to each Underwriter, without charge,
during the period when the Prospectus is required to be delivered under
the 1933 Act or the 1934 Act, such number of copies of the Prospectus
as such Underwriter may reasonably request. The Prospectus and any
amendments or supplements thereto furnished to the Underwriters will be
identical to any electronically transmitted copies thereof filed with
the Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act
and the 1934 Act Regulations so as to permit the completion of the
distribution of the Underwritten Securities as contemplated in this
Underwriting Agreement and the applicable Terms Agreement and in the
Registration Statement and the Prospectus. If at any time when the
Prospectus is required by the 1933 Act or the 1934 Act to be delivered
in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the
opinion of counsel for the Underwriters or for the Company, to amend
the Registration Statement in order that the Registration Statement
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 or to amend or supplement
the Prospectus in order that the Prospectus will not include an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements therein not misleading in the light of
the circumstances existing at the time it is delivered to a purchaser,
or if it shall be necessary, in the opinion of such counsel, at any
such time to amend the Registration
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Statement or amend or supplement the Prospectus in order to comply with
the requirements of the 1933 Act or the 1933 Act Regulations, the
Company will promptly prepare and file with the Commission, subject to
Section 3(b), such amendment or supplement as may be necessary to
correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the
Company will furnish to the Underwriters, without charge, such number
of copies of such amendment or supplement as the Underwriters may
reasonably request.
(f) Blue Sky Qualifications. The Company will use its best
efforts, in cooperation with the Underwriters, to qualify the
Underwritten Securities and any related Underlying Securities for
offering and sale under the applicable securities laws of such states
and other jurisdictions (domestic or foreign) as Merrill Lynch may
designate and to maintain such qualifications in effect for a period of
not less than one year from the date of the applicable Terms Agreement;
provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which
it is not so qualified or to subject itself to taxation in respect of
doing business in any jurisdiction in which it is not otherwise so
subject. In each jurisdiction in which the Underwritten Securities or
any related Underlying Securities have been so qualified, the Company
will file such statements and reports as may be required by the laws of
such jurisdiction to continue such qualification in effect for a period
of not less than one year from the date of such Terms Agreement.
(g) Earnings Statement. The Company will timely file such reports
pursuant to the 1934 Act as are necessary in order to make generally
available to its securityholders as soon as practicable an earnings
statement for the purposes of, and to provide the benefits contemplated
by, the last paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds
received by it from the sale of the Underwritten Securities in the
manner specified in the Prospectus under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect the
listing of the Underwritten Securities and any related Underlying
Securities, prior to the Closing Time, on any national securities
exchange or quotation system if and as specified in the applicable
Terms Agreement.
(j) Restriction on Sale of Securities. Between the date of the
applicable Terms Agreement and the Closing Time or such other date
specified in such Terms Agreement, the Company will not, without the
consent of Merrill Lynch, directly or indirectly, issue, sell, offer or
contract to sell, grant any option for the sale of, or otherwise
dispose of, the securities specified in such Terms Agreement.
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(k) Reporting Requirements. The Company, during the period when
the Prospectus is required to be delivered under the 1933 Act or the
1934 Act, will file all documents required to be filed with the
Commission pursuant to the 1934 Act within the time periods required by
the 1934 Act and the 1934 Act Regulations.
SECTION 4. Payment of Expenses. (a) Expenses. The Company will pay all
expenses incident to the performance of its obligations under this Underwriting
Agreement or the applicable Terms Agreement, including (i) the preparation,
printing and filing of the Registration Statement (including financial
statements and exhibits) as originally filed and of each amendment thereto, (ii)
the preparation, printing and delivery to the Underwriters of this Underwriting
Agreement, any Terms Agreement, any Agreement among Underwriters, the Standard
Terms, any Series Supplement and such other documents as may be required in
connection with the offering, purchase, sale, issuance or delivery of the
Underwritten Securities, (iii) the preparation, issuance and delivery of the
Underwritten Securities to the Underwriters, including any transfer taxes and
any stamp or other duties payable upon the sale, issuance or delivery of the
Underwritten Securities to the Underwriters, (iv) the fees and disbursements of
the Company's counsel, accountants and other advisors or agents (including
transfer agents and registrars), as well as the fees and disbursements of the
Trustee, any Depositary and any Warrant Agent, and their respective counsel, (v)
the qualification of the Underwritten Securities under state securities laws in
accordance with the provisions of Section 3(f) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation, printing and
delivery of the Blue Sky Survey, and any amendment thereto, (vi) the printing
and delivery to the Underwriters of copies of each preliminary prospectus, any
Term Sheet, and the Prospectus and any amendments or supplements thereto, (vii)
the fees charged by nationally recognized statistical rating organizations for
the rating of the Underwritten Securities, (viii) the fees and expenses incurred
with respect to the listing of the Underwritten Securities, if applicable, (ix)
the filing fees and disbursements of counsel to the Underwriters in connection
with, the review, if any, by the National Association of Securities Dealers,
Inc. (the "NASD") of the terms of the sale of the Underwritten Securities and
any related Underlying Securities, and (x) the fees and expenses of any
Underwriter acting in the capacity of a "qualified independent underwriter" (as
defined in Section 2(l) of Schedule E of the bylaws of the NASD), if applicable.
(b) Termination of Agreement. If the applicable Terms Agreement is
terminated by Merrill Lynch in accordance with the provisions of Section 5 or
Section 9(b)(i) hereof, the Company shall reimburse the Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of
the Underwriters to purchase and pay for the Underwritten Securities pursuant to
the applicable Terms Agreement are subject to the accuracy of the
representations and warranties of the Company contained in Section 1 hereof or
in certificates of any officer of the Company or any of its subsidiaries
delivered pursuant to the provisions hereof, to the performance by the
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Company of its covenants and other obligations hereunder, and to the following
further conditions:
(a) Effectiveness of Registration Statement. The Registration
Statement, including any Rule 462(b) Registration Statement, has become
effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement shall have been issued
under the 1933 Act and no proceedings for that purpose shall have been
instituted or be pending or threatened by the Commission, and any
request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of counsel to
the Underwriters. A prospectus containing information relating to the
description of the Underwritten Securities, the specific method of
distribution and similar matters shall have been filed with the
Commission in accordance with Rule 424(b)(1), (2), (3), (4) or (5), as
applicable (or any required post-effective amendment providing such
information shall have been filed and declared effective in accordance
with the requirements of Rule 430A).
(b) Opinion of Counsel for Company. At Closing Time, Merrill Lynch
shall have received the favorable opinion, dated as of Closing Time, of
Shearman & Sterling, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, together with signed or
reproduced copies of such letter for each of the other Underwriters.
(c) Opinion of Counsel for Underwriters. At Closing Time, Merrill
Lynch shall have received the favorable opinion, dated as of Closing
Time, of Shearman & Sterling, counsel for the Underwriters, together
with signed or reproduced copies of such letter for each of the other
Underwriters, in form and substance satisfactory to the Underwriters.
In giving such opinion, such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the State
of New York, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to Merrill Lynch. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to
the extent they deem proper, upon certificates of officers of the
Company and certificates of public officials.
(d) Officers' Certificate. At Closing Time, there shall not have
been, since the date of the applicable Terms Agreement or since the
respective dates as of which information is given in the Prospectus,
any material adverse change in the condition, financial or otherwise,
or in the earnings, business affairs or business prospects of the
Company, whether or not arising in the ordinary course of business, and
Merrill Lynch shall have received a certificate of the President or a
Vice President of the Company and of the Treasurer, dated as of Closing
Time, to the effect that (i) there has been no such material adverse
change, (ii) the representations and warranties in Section 1(a) are
true and correct with the same force and effect as though expressly
made at and as of the Closing Time, (iii) the Company has complied with
all
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agreements and satisfied all conditions on its part to be performed or
satisfied at or prior to the Closing Time, and (iv) no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted, are
pending or, to the best of such officer's knowledge, are threatened by
the Commission.
(e) Ratings. At Closing Time and at any relevant Date of Delivery,
the Underwritten Securities shall have the ratings accorded by any
"nationally recognized statistical rating organization", as defined by
the Commission for purposes of Rule 436(g)(2) of the 1933 Act
Regulations, if and as specified in the applicable Terms Agreement, and
the Company shall have delivered to Merrill Lynch a letter, dated as of
such date, from each such rating organization, or other evidence
satisfactory to Merrill Lynch, confirming that the Underwritten
Securities have such ratings. Since the time of execution of such Terms
Agreement, there shall not have occurred a downgrading in, or
withdrawal of, the rating assigned to the Underwritten Securities or
any of the Company's other securities by any such rating organization,
and no such rating organization shall have publicly announced that it
has under surveillance or review its rating of the Underwritten
Securities or any of the Company's other securities.
(f) Approval of Listing. At Closing Time, the Underwritten
Securities shall have been approved for listing, subject only to
official notice of issuance, if and as specified in the applicable
Terms Agreement.
(g) No Objection. If the Registration Statement or an offering of
Underwritten Securities has been filed with the NASD for review, the
NASD shall not have raised any objection with respect to the fairness
and reasonableness of the underwriting terms and arrangements.
(h) Additional Documents. At Closing Time, counsel for the
Underwriters shall have been furnished with such documents and opinions
as they may require for the purpose of enabling them to pass upon the
issuance and sale of the Underwritten Securities as herein
contemplated, or in order to evidence the accuracy of any of the
representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company
in connection with the issuance and sale of the Underwritten Securities
as herein contemplated shall be satisfactory in form and substance to
Merrill Lynch and counsel for the Underwriters.
(i) Termination of Terms Agreement. If any condition specified in
this Section 5 shall not have been fulfilled when and as required to be
fulfilled, the applicable Terms Agreement may be terminated by Merrill
Lynch by notice to the Company at any time at or prior to the Closing
Time, and such termination shall be without liability of any party to
any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain in
full force and effect.
14
<PAGE>
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows:
(1) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A
Information deemed to be a part thereof, if applicable, or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the Prospectus
(or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading;
(2) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission; provided that (subject to
Section 6(d) below) any such settlement is effected with the written
consent of the Company; and
(3) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch),
reasonably incurred in investigating, preparing or defending against
any litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any such untrue statement or omission, or any such alleged untrue
statement or omission, to the extent that any such expense is not paid
under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through Merrill Lynch expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information deemed
to be a part thereof, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto).
Insofar as this indemnity agreement may permit indemnification for
liabilities under the 1933 Act of any person who is a partner of an Underwriter
or who controls an
15
<PAGE>
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act and who is a director or officer of the Company or controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act, such indemnity agreement is subject to the undertaking of the Company
in the Registration Statement under Item 13 of Form S-3.
(b) Indemnification of Company, Directors and Officers. Each
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information deemed
to be a part thereof, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through Merrill Lynch expressly for use in the Registration Statement (or any
amendment thereto) or such preliminary prospectus or the Prospectus (or any
amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to
16
<PAGE>
or an admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, on the one
hand, and the Underwriters, on the other hand, from the offering of the
Underwritten Securities pursuant to the applicable Terms Agreement or (ii) if
the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company, on
the one hand, and the Underwriters, on the other hand, in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the
Underwritten Securities pursuant to the applicable Terms Agreement shall be
deemed to be in the same respective proportions as the total net proceeds from
the offering of such Underwritten Securities (before deducting expenses)
received by the Company and the total underwriting discount received by the
Underwriters, in each case as set forth on the cover of the Prospectus, or, if
Rule 434 is used, the corresponding location on the Term Sheet bear to the
aggregate initial public offering price of such Underwritten Securities as set
forth on such cover.
The relative fault of the Company, on the one hand, and the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
17
<PAGE>
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall
be required to contribute any amount in excess of the amount by which the total
price at which the Underwritten Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such Underwriter has otherwise been required to pay by reason of any such untrue
or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such Underwriter, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company. The Underwriters'
respective obligations to contribute pursuant to this Section 7 are several in
proportion to the number or aggregate principal amount, as the case may be, of
Underwritten Securities set forth opposite their respective names in the
applicable Terms Agreement, and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Underwriting Agreement or the applicable Terms Agreement or in certificates of
officers of the Company submitted pursuant hereto or thereto shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any Underwriter or controlling person, or by or on behalf of the
Company, and shall survive delivery of and payment for the Underwritten
Securities.
18
<PAGE>
SECTION 9. Termination.
(a) Underwriting Agreement. This Underwriting Agreement (excluding the
applicable Terms Agreement) may be terminated for any reason at any time by the
Company or by Merrill Lynch upon the giving of 30 days' prior written notice of
such termination to the other party hereto.
(b) Terms Agreement. Merrill Lynch may terminate the applicable Terms
Agreement, by notice to the Company, at any time at or prior to the Closing Time
or any relevant Date of Delivery, if (i) there has been, since the time of
execution of such Terms Agreement or since the respective dates as of which
information is given in the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, whether or not arising in the ordinary course
of business, or (ii) there has occurred any material adverse change in the
financial markets in the United States or, if the Underwritten Securities are
denominated or payable in, or indexed to, one or more foreign or composite
currencies, in the international financial markets, or any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of Merrill Lynch, impracticable to market
the Underwritten Securities or to enforce contracts for the sale of the
Underwritten Securities, or (iii) trading in any securities of the Company has
been suspended or materially limited by the Commission, or if trading generally
on the New York Stock Exchange or the American Stock Exchange or in the Nasdaq
National Market has been suspended or materially limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by either of said exchanges or by such system or by order of the
Commission, the NASD or any other governmental authority, or (iv) a banking
moratorium has been declared by either Federal or New York authorities or, if
the Underwritten Securities are denominated or payable in, or indexed to, one or
more foreign or composite currencies, by the relevant authorities in the related
foreign country or countries.
(c) Liabilities. If this Underwriting Agreement or the applicable Terms
Agreement is terminated pursuant to this Section 9, such termination shall be
without liability of any party to any other party except as provided in Section
4 hereof, and provided further that Sections 1, 6, 7 and 8 shall survive such
termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more
of the Underwriters shall fail at the Closing Time, as the case may be, to
purchase the Underwritten Securities which it or they are obligated to purchase
under the applicable Terms Agreement (the "Defaulted Securities"), then Merrill
Lynch shall have the right, within 24 hours thereafter, to make arrangements for
one or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; if, however, Merrill
Lynch shall not have completed such arrangements within such 24-hour period,
then:
19
<PAGE>
(a) if the aggregate principal amount of Defaulted Securities does
not exceed 10% of the aggregate principal amount of Underwritten
Securities to be purchased on such date pursuant to such Terms
Agreement, the non-defaulting Underwriters shall be obligated,
severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations under such
Terms Agreement bear to the underwriting obligations of all
non-defaulting Underwriters, or
(b) if the aggregate principal amount of Defaulted Securities
exceeds 10% of the aggregate principal amount of Underwritten
Securities to be purchased on such date pursuant to such Terms
Agreement, such Terms Agreement shall terminate without liability on
the part of any non-defaulting Underwriter.
No action taken pursuant to this Section 10 shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of the applicable Terms Agreement, either Merrill Lynch or the Company shall
have the right to postpone the Closing Time for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
the Prospectus or in any other documents or arrangements.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to Merrill Lynch at World Financial Center, North
Tower, New York, New York 10281-1201, and notices to the Company shall be
directed to it at World Financial Center, North Tower, New York, New York 10281,
attention of Frank D. Ronan.
SECTION 12. Parties. This Underwriting Agreement and the applicable
Terms Agreement shall each inure to the benefit of and be binding upon the
Company, Merrill Lynch and, upon execution of such Terms Agreement, any other
Underwriters and their respective successors. Nothing expressed or mentioned in
this Underwriting Agreement or such Terms Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Underwriters
and the Company and their respective successors and the controlling persons and
officers and directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Underwriting Agreement or such Terms Agreement or any provision
herein or therein contained. This Underwriting Agreement and such Terms
Agreement and all conditions and provisions hereof and thereof are intended to
be for the sole and exclusive benefit of the parties hereto and thereto and
their respective successors, and said controlling persons and officers and
directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. No purchaser of Underwritten Securities from
any Underwriter shall be deemed to be a successor by reason merely of such
purchase.
20
<PAGE>
SECTION 13. GOVERNING LAW AND TIME. THIS UNDERWRITING
AGREEMENT AND ANY APPLICABLE TERMS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY
TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
21
<PAGE>
Exhibit A
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
STEERS TRUST CERTIFICATES
TERMS AGREEMENT
____________ __, 199_
To: Merrill Lynch Depositor, Inc.
World Financial Center
North Tower
New York, New York 10281
Attention: Frank D. Ronan
Ladies and Gentlemen:
We understand that Merrill Lynch Depositor, Inc., a Delaware
corporation (the "Company"), proposes to issue and sell $__________ aggregate
principal amount of its STEERS Trust Certificates (the "Underwritten
Securities").
Subject to the terms and conditions set forth below and subject to the
terms of the Underwriting Agreement which are incorporated by reference herein,
we [the underwriters named below (the "Underwriters")] offer to purchase [,
severally and not jointly,] the principal amount of Underwritten Securities
[opposite their names set forth below] at the purchase price set forth below.
[Principal Amount]
Underwriter of Underwritten Securities
----------------
Total [$]
A-1
<PAGE>
The Underwritten Securities shall have the following terms:
Title:
Rank:
Ratings:
Aggregate principal amount:
Denominations:
Currency of payment:
Interest rate or formula:
Interest payment dates:
Regular record dates:
Stated maturity date:
Redemption provisions:
Sinking fund requirements:
Conversion provisions:
Listing requirements:
Black-out provisions:
Fixed or Variable Price Offering: [Fixed] [Variable] Price Offering
If Fixed Price Offering, initial public offering price per share: % of
the principal amount, plus accrued interest [amortized original issue
discount], if any, from _________________.
Purchase price per share: ___% of principal amount, plus accrued interest
[amortized original issue discount], if any, from _________________.
Form:
Other terms and conditions:
Closing date and location:
A-2
<PAGE>
Please accept this offer no later than ____ o'clock P.M. (New York City
time) on ______________ by signing a copy of this Terms Agreement in the space
set forth below and returning the signed copy to us.
Very truly yours,
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By _________________________
Authorized Signatory
[Acting on behalf of itself and the other
named Underwriters.]
Accepted:
MERRILL LYNCH DEPOSITOR, INC.
By _________________________
Name: Frank D. Ronan
Title: President
A-3
STANDARD TERMS FOR TRUST AGREEMENTS
between
MERRILL LYNCH DEPOSITOR, INC.,
as Depositor
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
DEBT UNITS
Dated as of ________ __, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS AND ASSUMPTIONS
Section 1.01. Definitions................................................... 1
Section 1.02. Rules of Construction......................................... 18
Section 1.03. Compliance Certificates and Opinions; Record Date............. 18
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....................................... 19
Section 2.02. Acceptance by Trustee......................................... 21
Section 2.03. Representations and Warranties of the Depositor............... 21
Section 2.04. Breach of Representation, Warranty or Covenant................ 22
Section 2.05. Agreement to Authenticate and Deliver Certificates............ 23
ARTICLE III
ADMINISTRATION OF EACH TRUST
Section 3.01. Administration of Each Trust.................................. 23
Section 3.02. Collection of Certain Underlying Security Payments............ 23
Section 3.03. Certificate Account........................................... 24
Section 3.04. Distribution or Sale of the Underlying Securities............. 25
Section 3.05. Investment of Funds in the Accounts........................... 25
Section 3.06. Maintenance of Credit Support................................. 26
Section 3.07. Realization upon Defaulted Underlying Securities.............. 26
Section 3.08. Retained Interest............................................. 27
Section 3.09. Access to Certain Documentation............................... 27
Section 3.10. Reports by the Depositor...................................... 27
Section 3.11. Charges and Expenses.......................................... 28
ARTICLE IV
DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS
Section 4.01. Distributions................................................. 29
<PAGE>
ii
Section 4.02. Distributions on Certificates................................. 29
Section 4.03. Reports to Certificateholders................................. 30
Section 4.04. Advances...................................................... 32
Section 4.05. Allocation of Realized Losses and Trust Expenses.............. 32
Section 4.06. Compliance with Withholding Requirements...................... 33
Section 4.07. Optional Exchange............................................. 33
Section 4.08. Call Right.................................................... 35
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates.............................................. 37
Section 5.02. Execution, Authentication and Delivery........................ 38
Section 5.03. Temporary Certificates........................................ 38
Section 5.04. Registration; Registration of Transfer and Exchange........... 39
Section 5.05. Mutilated, Destroyed, Lost and Stolen Certificates............ 40
Section 5.06. Persons Deemed Owners......................................... 41
Section 5.07. Cancellation.................................................. 41
Section 5.08. Global Securities............................................. 42
Section 5.09. Notices to Depository......................................... 43
Section 5.10. Definitive Certificates....................................... 43
Section 5.11. Currency of Distributions..................................... 45
Section 5.12. Conditions of Authentication and Delivery of New Series....... 45
Section 5.13. Appointment of Paying Agent................................... 47
Section 5.14. Authenticating Agent.......................................... 48
Section 5.15. Voting Rights with Respect to Underlying Securities........... 49
Section 5.16. Actions by Certificateholders................................. 50
Section 5.17. Events of Default............................................. 51
Section 5.18. Judicial Proceedings Instituted by Trustee; Trustee May
Bring Suit.................................................. 51
Section 5.19. Control by Certificateholders................................. 51
Section 5.20. Waiver of Past Defaults....................................... 51
Section 5.21. Right of Certificateholders to Receive Payments Not to
Be Impaired................................................. 52
Section 5.22. Remedies Cumulative........................................... 52
ARTICLE VI
THE DEPOSITOR
Section 6.01. Liability of the Depositor.................................... 53
<PAGE>
iii
Section 6.02. Limitation on Liability of the Depositor...................... 53
Section 6.03. Depositor May Purchase Certificates........................... 54
Section 6.04. Merger or Consolidation of the Depositor...................... 54
Section 6.05. No Liability of the Depositor with Respect to the Underlying
Securities; Certificateholders to Proceed Directly
Against the Underlying Securities Issuer(s)................. 54
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.01. Duties of Trustee............................................. 55
Section 7.02. Agreements Between Trustee and Administrative Agents.......... 58
Section 7.03. Certain Matters Affecting the Trustee......................... 60
Section 7.04. Trustee Not Liable for Recitals in Certificates or
Underlying Securities....................................... 61
Section 7.05. Trustee May Own Certificates.................................. 61
Section 7.06. Trustee's Fees and Expenses................................... 61
Section 7.07. Eligibility Requirements for Trustee.......................... 62
Section 7.08. Resignation or Removal of the Trustee; Appointment of
Successor Trustee........................................... 63
Section 7.09. Appointment of Office or Agency............................... 64
Section 7.10. Representations and Warranties of Trustee..................... 64
Section 7.11. Indemnification of Trustee by the Depositor; Contribution..... 66
Section 7.12. No Liability of the Trustee with Respect to the Underlying
Securities; Certificateholders to Proceed Directly
Against the Underlying Securities Issuer(s)................. 67
Section 7.13. The Depositor to Furnish Trustee with Names and
Addresses of Certificateholders............................. 67
Section 7.14. Preservation of Information................................... 68
Section 7.15. Reports by Trustee............................................ 68
Section 7.16. Trustee's Application for Instructions from the Depositor..... 68
ARTICLE VIII
MARKET AGENT
Section 8.01. Market Agent.................................................. 68
<PAGE>
iv
ARTICLE IX
TERMINATION
Section 9.01. Termination upon Liquidation of All Underlying Securities.... 69
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment.................................................... 70
Section 10.02. Limitation on Rights of Certificateholders................... 71
Section 10.03. Governing Law................................................ 72
Section 10.04. Notices...................................................... 72
Section 10.05. Notice to Rating Agencies.................................... 73
Section 10.06. Severability of Provisions................................... 74
Section 10.07. Grant of Security Interest................................... 74
Section 10.08. Nonpetition Covenant......................................... 75
Section 10.09. No Recourse.................................................. 76
Section 10.10. Article and Section References............................... 76
Section 10.11. Counterparts................................................. 76
Section 10.12. Trust Indenture Act.......................................... 76
<PAGE>
STANDARD TERMS FOR TRUST AGREEMENTS dated as of ________ __,
1997, between MERRILL LYNCH DEPOSITOR, INC., a Delaware corporation, as
Depositor (the "Depositor"), and UNITED STATES TRUST COMPANY OF NEW YORK, a New
York corporation, as Trustee (the "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 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
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
Holders and, to the extent provided in the applicable 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 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 Supplement.
<PAGE>
2
"Administration Account": As defined in Section 7.02.
"Administrative Agent": Any Person with which the Trustee has
entered into an Administration Agreement and which meets the qualifications of
an Administrative Agent, pursuant to Section 7.02.
"Administration Agreement": The written contract, if any,
between the Trustee and an Administrative Agent and any successor Trustee or
Administrative Agent providing that the Trustee can delegate certain of its
administrative obligations with respect to any Series hereunder.
"Administrative Agent Termination Event": With respect to any
given Series of Certificates, any of the following: (i) any failure by an
Administrative Agent to remit to the Trustee any funds in respect of collections
on the Underlying Securities and Credit Support, if any, as required under this
Trust Agreement, that continues unremedied for five days after the giving of
written notice of such failure to the Administrative Agent by the Trustee or the
Depositor, or to the Administrative Agent, the Depositor and the Trustee by the
Holders of not less than 25% of the Voting Rights; (ii) any failure by an
Administrative Agent duly to observe or perform in any material respect any of
its other covenants or obligations under the Administration Agreement with
respect to such Series which continues unremedied for thirty days after the
giving of written notice of such failure to the Administrative Agent by the
Trustee or the Depositor, or to the Administrative Agent, the Depositor and the
Trustee by the Holders of not less than 25% of the Voting Rights; and (iii)
events of insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings and certain actions by or on behalf of an
Administrative Agent indicating its insolvency or inability to pay its
obligations. Any additional Administrative Agent Termination Event with respect
to any given Series of Certificates may be set forth in the applicable
Supplement.
"Advance": As defined in Section 4.04.
"Affiliate": With respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "Control", when used with respect to 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.
"Allocation Ratio": As defined in the related Supplement.
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"Allowable Expense Amount": With respect to any Series, as
defined in the related Supplement.
"Authenticating Agent": As defined in Section 5.14.
"Authorized Denomination": The minimum denomination in which a
Certificate may be issued, or any multiple thereof, as specified in Section 3(b)
of the related Supplement.
"Available Funds": Unless otherwise specified in the
applicable 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 Supplement less any amount
held for the benefit of the Retained Interest.
"Beneficial Owner": With respect to Certificates held through
a Depository, the beneficial owner of a Certificate. For purposes only of
Section 5.16, 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 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 (i) 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 or (ii) not a business day, as such term is used in the indenture
for the Underlying Securities and specified in the Supplement.
"Calculation Agent": As specified in the applicable
Supplement.
"Call Date": The date on which the Call Right may be
exercised, as specified in the applicable Supplement.
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"Call Price": As specified in the applicable Supplement.
"Callable Series": A Series of Certificates or Class within
such Series subject to a Call Right, as specified in the applicable Supplement.
"Call Right": The right of the holder thereof (or any
successor), as named in the applicable Supplement, to repurchase Certificates of
a Callable Series from the Holders thereof pursuant to the Call Terms .
"Call Terms": The terms pursuant to which a Call Right may be
exercised, as set forth in the applicable Supplement.
"Certificate Account": As defined in Section 3.03.
"Certificateholder": Any holder of a Certificate or a Retained
Interest.
"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 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 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 Supplement, each as allocated to such Class
pursuant to the applicable Supplement.
"Certificate Register" and "Certificate Registrar": As defined
in Section 5.04.
"Certificates": Any trust certificates authorized by, executed
pursuant to and authenticated and delivered under, this Trust Agreement, and
unless the context requires otherwise, "Certificates" shall also be deemed to
refer to the Retained Interest.
"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.
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5
"Closing Date": With respect to any Series, the day on which
Certificates of such Series are first executed, authenticated and delivered, as
specified in the related Supplement.
"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
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.
"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 Supplement or
such other address 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, Limited Guaranty, 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 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 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 Supplement.
"Cut-off Date": With respect to any Series, the date specified
as such in the related Supplement. For purposes of this Trust Agreement, any
Underlying Security
<PAGE>
6
acquired by the Depositor after the applicable Cut-off Date but prior to the
applicable Closing Date and included in the related Trust as of such Closing
Date shall be deemed to have been Outstanding as of such Cut-off Date and
references to the principal balance of such Underlying Security as of such
Cut-off Date shall be deemed to be to the principal balance of such Underlying
Security as of the date on which it was acquired by the Depositor.
"Definitive Certificates": As defined in Section 5.10.
"Depositor": Merrill Lynch Depositor, Inc., a Delaware
corporation, and, if a successor Person shall have become the Depositor pursuant
to any applicable provisions of this Trust Agreement, "Depositor" shall mean
such successor Person. With respect to any provisions of this Trust Agreement
that relate to the provisions of the Trust Indenture Act, "Depositor" shall
include any obligor on the Certificates as the term obligor is defined in the
Trust Indenture Act.
"Depositor Order": A written order or request, respectively,
signed in the name of the Depositor by any one of its Executive Officers.
"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 so designated in the applicable Supplement,
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.
"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 Supplement.
"Distribution Election": With respect to any Series, as
specified in the related Supplement.
"Dollar" or "$" or "US": Such currency of the United States as
at the time of payment is legal tender for the payment of public and private
debts.
"Duff": Duff & Phelps Credit Rating Co. and any successor
thereto.
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7
"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 Supplement) at the time any amounts are held
in deposit therein or (ii) a trust account(s) maintained as a segregated
account(s) and held by a Federal or State chartered depository institution or
trust company in trust for the benefit of the Certificateholders; provided,
however, that such depository institution or trust company has a long-term
rating in one of the four highest categories by the Rating Agency.
"Eligible Expense": With respect to any Series, as specified
in the related Supplement.
"Eligible Investments": With respect to any Series, unless
otherwise specified in the related 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;
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 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 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;
<PAGE>
8
(iii) unleveraged repurchase obligations with respect to (a)
any security described in clause (i) above or (b) any other security
guaranteed by an agency or instrumentality of the United States (in
each case without regard to the stated maturity of such security), in
either case entered into with a depository institution or trust company
(acting as principal) described in clause (ii) above or entered into
with a corporation (acting as principal) whose long-term rating is not
less than "Aa2" by Moody's and "AA" by S&P or whose short-term credit
rating is "P-1" by Moody's and "A-1+" by S&P at the time of such
investment; provided, however, that if such security has a maturity of
longer than 91 days, the issuer thereof must also have at the time of
such investment a long-term credit rating of not less than "Aa2" by
Moody's and "AA" by S&P;
(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 Supplement for
Eligible Investments at the time of such investment or contractual
commitment providing for such investment; provided, however, that such
rating shall be no lower than the rating on the Underlying Securities;
and provided further that securities issued by any particular
corporation will not be Eligible Investments to the extent that
investment therein will cause the then outstanding principal amount of
securities issued by such corporation and held as part of the Trust for
such Series to exceed 10% of the aggregate outstanding principal
balances and amounts of all the Underlying Securities and Eligible
Investments held as part of the Trust for such Series;
(v) commercial paper having at the time of such investment the
rating specified in the Supplement for Eligible Investments; and
(vi) a Guaranteed Investment Contract if and only if specified
in the related 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 Supplement.
"Exchange Act": The Securities Exchange Act of 1934, as
amended.
"Exchange Rate Agent": With respect to any Series (or Class
within such Series) of Certificates, as specified in the related Supplement.
"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
Supplement.
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9
"Extraordinary Trust Expenses": 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 Supplement.
"Fitch": Fitch Investors Service, L.P., and any successor
thereof.
"Fixed Pass-Through Rate": With respect to any Fixed Rate
Certificate, as defined in the related 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 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 in the related Supplement.
"Global Security": A registered 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
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.
<PAGE>
10
"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 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 Supplement.
"Holder": The Person in whose name a Certificate or Retained
Interest is registered in the Certificate Register on the applicable Record
Date. Where the context requires, "Holder" may refer to the Voting Rights
accompanying a Certificate.
"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.
"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 Supplement.
"Limited Guarantor": With respect to the Underlying Securities
relating to any Series (or Class within such Series), a Person specified in the
related 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 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 Supplement.
"Liquidation Price" shall mean the price at which the Market
Agent sells the Underlying Securities on behalf of the Trustee.
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11
"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 an 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
agreement, dated as of the Closing Date, between the Trustee and the Market
Agent, the form of which will be attached to the Supplement as Exhibit C
thereto, and any similar agreement with a successor Market Agent, in each case
as from time to time amended or supplemented.
"Merrill Lynch & Co.": Merrill Lynch & Co., a Delaware
corporation.
"Minimum Wire Denomination": $10,000,000 or the equivalent in
any Specified Currency.
"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 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 Supplement.
"Officer's Certificate": A certificate signed by any (or, if
specified in these Standard Terms or any 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" shall mean the exchange of Certificates of
any Series (or Class within such Series) for a pro rata portion of the
Underlying Securities of the related Trust.
"Optional Exchange Date": With respect to any Series (or Class
with such Series), as defined, if applicable, in the related Supplement.
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12
"Ordinary Expenses": The Trustee's customary fee for its
services as Trustee, as set forth in the related Supplement, 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 Supplement except:
(i) Certificates theretofore cancelled by the Certificate
Registrar; 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 any request, demand,
authorization, direction, notice, consent or waiver hereunder has been given by
the required percentage of the aggregate Voting Rights, Voting Rights
accompanying Certificates beneficially owned by the Depositor, the Trustee, or
any Affiliate thereof shall be disregarded and deemed not to be Outstanding, and
such Voting Rights shall not be taken into account in determining whether the
requisite percentage of aggregate Voting Rights necessary to effect any such
consent or take any such action has been obtained except that, in determining
whether the Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Certificates with
respect to which the Depositor has provided the Trustee an Officer's Certificate
stating that such Certificates are 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.
"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.
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13
"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 Supplement.
"Paying Agent": As defined in Section 5.13.
"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": As defined in Section 5.05.
"Prepaid Ordinary Expenses": 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 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 Supplement, that initially rates the Certificates of
such Series (or Class within such Series).
"Rating Agency Condition": With respect to any action or
occurrence, unless otherwise specified in the applicable 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 Loss": 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 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 Supplement.
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"Related Assets": Any assets held by a Trust the return of
which is linked to one or more Underlying Securities, which shall be described
in a Supplement or a schedule thereto.
"Required Percentage--Amendment": Unless otherwise specified
in the related Supplement, if a Rating Agency Condition is specified in the
related Supplement and such Rating Agency Condition is met, or, if a Rating
Agency condition is not so specified in the related Supplement, 66-2/3% of the
aggregate Voting Rights of such Series, and 100% otherwise.
"Required Percentage--Direction of Trustee": Unless otherwise
specified in the related Supplement, 66-2/3% of the aggregate Voting Rights of
such Series.
"Required Percentage--Remedies": Unless otherwise specified in
the related Supplement, 66-2/3% of the aggregate Voting Rights of such Series.
"Required Percentage--Removal of Trustee": Unless otherwise
specified in the related Supplement, more than 50% of the aggregate Voting
Rights of such Series.
"Required Percentage--Waiver": Unless otherwise specified in
the related Supplement, 66-2/3% of the aggregate Voting Rights of such Series.
"Required Principal": As determined for any Distribution Date
for a given Series (or Class within such Series), unless otherwise specified in
the related 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 Supplement.
"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 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, including any Managing Director,
Senior Vice President, Vice President, Assistant Vice President, Assistant
Secretary or any other officer of the Trustee
<PAGE>
15
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 Supplement,
held by the Person so specified in such Supplement.
"Sale Procedures": Unless otherwise specified in the
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 Merrill Lynch & Co. or any Affiliate thereof; provided, however, that
neither Merrill Lynch & Co. 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 Group, and any successor
thereof.
"Series": A separate series of Certificates issued pursuant to
these Standard Terms and a related Supplement, which series may be divided into
two or more Classes, as provided in such Supplement.
"Supplement": An agreement incorporating these Standard Terms
that authorizes the issuance of a particular Series (and each Class within such
Series) of Certificates.
"Specified Currency": As specified in the related Supplement
for the applicable Series or Class, which may be a currency issued by the
government of any country or a composite currency the value of which is
determined by reference to the values of the currencies of any group of
countries.
"Surety Bond": If so specified in the Supplement, with respect
to any Series (or Class within such Series) of Certificates, the surety bond
providing for the distribution under certain circumstances specified in such
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 Supplement.
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"Swap Agreement": If so specified in the 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 is attached
thereto as Exhibit D, as the same may be amended or supplemented from time to
time as provided therein.
"Swap Counterparty": If so specified in the Supplement, with
respect to any Series, shall be specified in the Supplement.
"Swap Distribution Amount": If so specified in the 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 Supplement with
respect to any Series, the Guarantee issued by the Swap Guarantor in favor of
the Trust substantially in the form attached as an exhibit to the Swap
Agreement.
"Swap Guarantor": If so specified in the Supplement with
respect to any Series, the guarantor specified as such in the Supplement.
"Swap Receipt Amount": If so specified in the 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 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 the Swap Agreement.
"Tax Event": The right of an Underlying Securities Issuer to
shorten the maturity of or repurchase such Underlying Securities, in accordance
with the terms of the indenture for the Underlying Securities, due to a change
in the treatment of such Underlying Securities under the Code, as specified in
the Supplement.
"Trust": With respect to any Series, the segregated asset or
pool of assets subject hereto, constituting the trust created hereby and by the
related Supplement and to be administered hereunder and thereunder, consisting
of those Underlying Securities and the Credit Support, if applicable, and the
Swap Agreement, if any, and all sums distributed in respect thereof that are
specified as being part of the Trust for such Series in the related Supplement,
all for the benefit of the Certificateholders of such Series as of any
particular time.
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"Trust Agreement": With respect to each Series of
Certificates, these Standard Terms and all amendments hereof and, unless the
context otherwise requires, the related Supplement and all amendments thereto.
"Trustee": With respect to any Series, the Person so specified
in the applicable Supplement, until a successor Person shall have become the
Trustee pursuant to the applicable provisions of these Standard Terms and the
applicable 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": As specified in the related Supplement.
"Underlying Securities Issuer": With respect to an Underlying
Security, the issuer thereof (including, if applicable, the guarantor of the
Underlying Security) as identified in the Underlying Securities Schedule.
"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 Supplement, for the benefit of any Credit Support Provider, all
as identified in the Underlying Securities Schedule. 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 the Underlying Securities
Schedule 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 Securities Schedule": Schedule I to the applicable
Supplement.
"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, unless a particular
jurisdiction is specified.
"United States": The United States of America (including the
States), its territories, its possessions and other areas subject to its
jurisdiction.
"Voting Rights": The voting rights with respect to the
Underlying Securities which shall be allocated to Certificateholders of each
Class within a given Series (and to the
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18
holders of the Retained Interest and Call Right, if any) in accordance with the
Allocation Ratio.
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.l0(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;
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(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
(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
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 at the close of business on such record date shall be deemed
to be Holders for the purposes of determining whether the requisite aggregate
Voting Rights have authorized or agreed or consented to such consent, request,
demand, authorization, direction, notice, waiver or other act, and for that
purpose the aggregate Voting Rights 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 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
<PAGE>
20
specified in the Underlying Securities Schedule), now existing or hereafter
acquired, in each case as identified on the applicable Underlying Securities
Schedule, and all other assets included or to be included in the respective
Trust for the benefit of the Certificateholders of the related Series, as
specified in the Supplement. 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 Supplement, will exclude 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. With respect to any
Concentrated Underlying Security, the Underlying Securities Schedule shall
include information regarding the payment terms of the Concentrated Underlying
Security, 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 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 Supplement,
the Grant of such Underlying Securities by the Depositor for a given Series
accomplished hereby and by such 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
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21
(iv) such delivery is irrevocable and free of any continuing
claim by the Depositor except such as the Depositor may have as a
Certificateholder of a Certificate.
The above representations and warranties shall survive the
delivery of such Underlying Securities and the Certificates in respect thereof.
The Depositor shall further be deemed by such delivery to have made the
representations that to the 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 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 and the related documents referred
to in Section 2.01, now existing or hereafter acquired, and declares that it
will hold such Underlying Securities and documents and all other documents
delivered to it pursuant to this Trust Agreement, and that it will hold all such
assets and such other assets (including Underlying Securities acquired from a
Person other than the Depositor) comprising the Trust for a given Series of
Certificates, in trust for the exclusive use and benefit of all present and
future Certificateholders of such Series and for the purposes and subject to the
terms and conditions set forth in this Trust Agreement.
Section 2.03. Representations and Warranties of the Depositor.
The Depositor hereby represents and warrants to the Trustee that as of the
Closing Date or as of such other date specifically provided herein or in the
applicable Supplement:
(i) the Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
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22
(ii) with respect to each Supplement, to the Depositor's
knowledge but without having made any independent inquiry, the
information set forth in the Underlying Securities Schedule with
respect to each Underlying Security is true and correct in all material
respects at the date or dates, respecting which, such information is
furnished;
(iii) the execution and delivery of this Trust Agreement by
the Depositor and its performance of and compliance with the terms of
this Trust Agreement will not violate the Depositor's certificate of
incorporation or by-laws or constitute a default (or an event which,
with notice or lapse of time, or both, would constitute a default)
under, or result in the breach or acceleration of, any material
contract, agreement or other instrument to which the Depositor is a
party or which may be applicable to the Depositor or any of its assets;
(iv) the Depositor has the full power and authority to enter
into and consummate all transactions contemplated by this Trust
Agreement, has duly authorized the execution, delivery and performance
of this Trust Agreement and has duly executed and delivered this Trust
Agreement. This Trust Agreement, upon its execution and delivery by the
Depositor and assuming due authorization, execution and delivery by the
Trustee, will constitute a valid, legal and binding obligation of the
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 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 and the Underlying Securities 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
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23
materially and adversely affects the interests of the Certificateholders of a
given Series of Certificates, the Depositor shall cure such breach in all
material respects.
Section 2.05. Agreement to Authenticate and Deliver
Certificates. With respect to each Series of Certificates and the related Trust,
the Trustee hereby agrees and acknowledges that it will, concurrently with the
Grant to and receipt by it of the related Underlying Securities and delivery to
it by the Depositor of executed Certificates of such Series, cause to be
authenticated and delivered to or upon the written order of the Depositor, in
exchange for the Underlying Securities and such other assets constituting the
Trust for a given Series, Certificates duly authenticated by or on behalf of the
Trustee in an Authorized Denomination evidencing ownership of the entire Trust
for such Series, all in accordance with the terms and subject to the conditions
of Section 5.02.
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 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 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
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 Supplement.
(b) The duties of the Trustee shall be performed in accordance
with applicable local, State and Federal law, and the Trustee shall, at the
direction of the Depositor, make any and all filings, reports, notices or
applications with (as prepared by the Depositor), and seek any comments and
authorizations from, the Commission and any State securities authority on behalf
of the Trust for each Series.
Section 3.02. Collection of Certain Underlying Security
Payments. With respect to any Series or Class of Certificates, the Trustee shall
make reasonable efforts to collect all payments required to be made pursuant to
the terms of the Underlying Securities in a manner consistent with the terms of
this Trust Agreement, such Underlying Securities and any related Credit Support
Instruments, if applicable.
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24
Section 3.03. Certificate Account. (a) For each series of
Certificates, the Trustee shall establish and maintain one or more Eligible
Accounts (collectively, the "Certificate Account"), held in trust for the
benefit of the Certificateholders of such Series. The Trustee on behalf of such
Certificateholders shall possess all right, title and interest in all funds on
deposit from time to time in each Certificate Account and in all proceeds
thereof. With respect to each Series of Certificates, the Certificate Account
shall be under the sole dominion and control of the Trustee for the benefit of
the related Certificateholders. With respect to each Series of Certificates, not
later than the close of business on the Business Day on which the Trustee
receives such amounts in the form of immediately available funds (so long as
such funds are received by the Trustee by 3:00 p.m., New York City time, and on
the next Business Day otherwise), the Trustee shall deposit or cause to be
deposited in the Certificate Account all amounts received by it with respect to
the Underlying Securities, any Credit Support and all Liquidation Proceeds
related to such Series including:
(i) all payments on account of principal of such Underlying
Securities;
(ii) all payments on account of interest on such Underlying
Securities;
(iii) all payments on account of premium (if any) on such
Underlying Securities;
(iv) any payments in respect of any such Credit Support;
(v) any Advances made as required pursuant to Section 4.04;
and
(vi) any interest or investment income earned on funds
deposited in the related Accounts.
Unless otherwise specified in the applicable 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.
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25
(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. Distribution or Sale of the Underlying
Securities. If (i) there occurs a payment default on the Underlying Securities,
(ii) there occurs an acceleration of the date of maturity of the Underlying
Securities, or (iii) the Underlying Securities Issuer of any Concentrated
Underlying Securities ceases to be a reporting company under the Exchange Act,
then the Trustee, upon receiving notice of the events set forth in (i), (ii) or
(iii) shall exercise one of the following remedies, in accordance with the
Distribution Election: (A) immediately direct the Market Agent to sell the
Underlying Securities and a pro rata portion of the Related Assets held by such
Trust, in accordance with the Sales Procedures, and the Liquidation Proceeds, if
any, shall be deposited into the Certificate Account for distribution in
accordance with the Allocation Ratio; (B) distribute the Underlying Securities
and a pro rata portion of the Related Assets in accordance with the Allocation
Ratio to each Holder's last address as it appears in the Certificate Register;
or (C) provide that the Holders of a given Series or Class may vote in favor of
either (A) or (B), which shall be decided by a majority of votes cast by the
affected Holders. In the case of a sale by the Market Agent of Underlying
Securities and Related Assets pursuant to Subsection (A) of this Section 3.04,
the Trustee shall only deliver such Underlying Securities and Related Assets to
the purchaser of such Underlying Securities and Related Assets against payment
in same day funds and the Trustee shall deposit the same into the Certificate
Account.
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 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
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:
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26
(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 of the Depositor
or, if so specified in the applicable Supplement, the Depositor shall, to the
extent specified in the applicable Supplement, establish and maintain, or enter
into, as applicable in the name of the Trustee, either as 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 Supplement. To the extent
specified in the applicable 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 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 included 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 Supplement to the extent that funds are not otherwise
available for such purpose. If specified in such 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 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
<PAGE>
27
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 Supplement, if
the Trustee 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 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 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 in accordance with Section 4.05.
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 Supplement as and to the extent specified therein.
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 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
<PAGE>
28
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 Depositor pursuant to subsections (a) and (b) of this
Section 3.10 as may be required by rules and regulations prescribed by
the Commission; and
(d) furnish to the Trustee, not less often than annually, a
certificate from the principal executive, financial or accounting
officer of the Depositor as to his or her knowledge of the Depositor's
compliance with all conditions and covenants under this Trust
Agreement. For purposes of this paragraph (d), such compliance shall be
determined without regard to any period of grace or requirement of
notice provided under this Trust Agreement.
Any reports, statements, documents or other information required to be furnished
by the Depositor to the Trustee pursuant to these Standard Terms or any
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
Supplement.
Section 3.11. Charges and Expenses. Except as otherwise
provided in this Trust Agreement or the related 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.
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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
Supplement for such Series. In any event, however, any amounts collected during
any period shall be distributed to the Holders no later than the Distribution
Date immediately following the receipt thereof.
(b) All distributions to Holders shall be payable only from
Available Funds, and no provision of this Trust Agreement shall be deemed to
create any obligation on the part of the Trustee or the Depositor to make any
distribution from any other source.
Section 4.02. Distributions on Certificates. (a) Distributions
on any 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
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 Holder is not a Depository, at the Corporate Trust
Office (except as otherwise specified pursuant to the applicable
Supplement) 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 the applicable
Supplement and in accordance with arrangements satisfactory to the
Trustee, at the option of the registered Holder by wire transfer to an
account designated by the registered Holder. Notwithstanding the
foregoing paragraph, with respect to a Holder 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 Holder 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.
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(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 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 Supplement and the Certificates,
except as otherwise provided, 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.
(e) 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. On the fifth
Business Day following each such Distribution Date the Trustee shall forward or
cause to be forwarded to the Depositor, each Holder of such Series, to each
Rating Agency rating such Series and such other Persons as may be specified in
such 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, the Swap Receipt Amount, if any, and any other
derivatives transaction that may be entered into by the Trust pursuant
to the terms of this Trust Agreement and the related Supplement;
(ii) the Swap Distribution Amount, if any, received by the
Trustee as of such Distribution Date and any other amounts payable
pursuant to any other derivatives transaction that may be entered into
by the Trust pursuant to the terms of this Trust Agreement and the
related Supplement;
(iii) the amount of compensation received by the Trustee, and
any Administrative Agent, for the period relating to such Distribution
Date, and such other customary information as the Administrative Agent,
if any, or otherwise the Trustee deems necessary or desirable (or that
such Holder reasonably requests in writing) to enable Holders to
prepare their tax returns;
(iv) the amount of the distribution on such Distribution Date
to
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Holders allocable to principal of and premium, if any, and interest on
the Certificates of each such Class and to the Retained Interest, and
the amount of aggregate unpaid interest accrued as of such Distribution
Date;
(v) 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
Supplement;
(vi) if the 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 interest rate or rates thereon at the close of
business on such Distribution Date and, if such rating has changed
since the last Distribution Date and the Trustee has been advised in
writing of such change, the current rating assigned thereon by the
applicable rating agency;
(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 as may be specified by the Depositor;
(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; and
(x) any other information appropriate for a Series, as
specified in the applicable Prospectus Supplement.
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 Holder a statement containing the information set forth in subclause
(iii) above, aggregated for such calendar year during which such person was a
Holder. 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 Holders in writing at such Holder's expense
who so request all materials received by the Trustee from the Underlying
Securities Issuer.
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Section 4.04. Advances. (a) Unless otherwise specified in the
applicable 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 Supplement
for a given Series, and subject to the terms of paragraphs (b) and (c) of this
Section 4.04 on or prior to each Distribution Date, the Trustee shall advance or
cause to be advanced in immediately available funds for deposit in the
Certificate Account for such Series an advance (each, an "Advance") in an amount
equal, unless otherwise specified in the related 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
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 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, Realized Losses, Eligible
Expenses, Allowable Expense Amounts and Extraordinary Trust Expenses, if any,
shall be allocated on any Distribution Date in accordance with the Allocation
Ratio, provided, however, that distributions pursuant to Section 3.04 shall be
completed as the earliest practicable date.
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33
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 Holders of interest or original issue discount that the Trustee
believes are applicable under the Code. The consent of Holders shall not be
required for such withholding.
(b) Each Holder will provide the Trustee (and, so long as the
Certificates are held at a Depository in the form of Global Certificates, each
Beneficial Owner of the Certificates will provide such Depository and the
Trustee) with evidence that there should not be any withholding tax assessed for
Federal income tax purposes in respect of distributions to such Holder, 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
Holder 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 Holder
and may be withheld by the Trustee. The consent of the Holder 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 Holder 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 Holder thereof.
Section 4.07. Optional Exchange. (a) The terms and conditions,
if any, of an Optional Exchange will be specified in the related Supplement;
provided, however, that any right of Optional 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 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)
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such exchange would not affect the characterization of the Trust as a "grantor
trust" under the Code. The terms of an Optional Exchange may include, 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;
(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 Authorized Denomination;
(4) specified dates during which a Holder may effect such an
Optional Exchange (each, an "Optional Exchange Date" (as specified in
the applicable Supplement));
(5) limitations on the right of an exchanging Holder to
receive any benefit upon Optional Exchange from any Credit Support; and
(6) adjustments to the value of the proceeds of any Optional
Exchange based upon required prepayment of future expense allocations
and the establishment of a reserve for any unanticipated Extraordinary
Trust Expenses.
(b) Unless otherwise provided in the applicable Supplement, no
Certificate may be exchanged pursuant to this Section 4.07 unless the Trustee
has received at least 30 days 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, the Certificate Principal Balance or Notional Amount of such
Registered Certificate to be exchanged and the number or a description of the
tenor and the terms of such Certificate, a statement that the Optional Exchange
is being exercised thereby and an assurance that the Registered Certificate to
be exchanged with the form entitled "Option to Elect Exchange" on the reverse of
the Registered Certificate duly completed will be received by such Trustee not
later than five Business Days after the date of such telegram, telex, facsimile
transmission or letter, and such Certificate and form duly completed must be
received by such Trustee by such fifth Business Day. Any tender by the Holder
thereof for Optional Exchange shall be irrevocable. Unless otherwise provided in
the applicable Supplement, the Optional Exchange option may be exercised
pursuant to this Section 4.07 by
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35
the Holder of a Certificate for less than the aggregate Certificate Principal
Balance or Notional Amount of such Certificate as long as the Certificate
Principal Balance or Notional Amount remaining Outstanding after such Optional
Exchange is an Authorized Denomination and all other requirements set forth in
the related 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).
(c) Upon the completion of any such Optional Exchange, the
Trustee shall give prompt written notice thereof to each Rating Agency.
Section 4.08. Call Right. (a) The holder of a Call Right may
purchase Certificates of a given Series or Class from the Holders thereof prior
to maturity if the applicable Supplement designates such Series or Class as a
Callable Series, or upon the occurrence of a Tax Event. The Call Terms will be
set forth in the applicable Supplement. Such terms shall include, without
limitation, the following:
(i) the initial holder of the Call Right;
(ii) whether the Certificate Principal Balance or Notional Amount
of each Certificate being purchased pursuant to the Call Right
must be an Authorized Denomination;
(iii) the Call Date or Dates; and
(iv) the Call Price.
(b) A Call Right may be exercised at the option of the holder
thereof, in accordance with the Call Terms, upon not less than 30 nor more than
60 days' prior notice mailed by first class mail to the Trustee at the Corporate
Trust Office. If the holder of the Call Right elects to purchase Certificates
pursuant to this Section 4.08, it shall also notify the Trustee in writing of
the Call Date on which such Call Right shall be exercised.
In addition, such notices shall state:
(i) the Certificate Principal Balance (or Notional
Amount) of Certificates to be purchased;
(ii) the Call Price;
(iii) the name and address of the Paying Agent;
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36
(iv) that Certificates called for purchase must be
surrendered to the Paying Agent in order to collect
the Call Price;
(v) that interest on Certificates called for purchase
pursuant to the Call Right ceases to accrue on and
after the Call Date, and the only remaining right of
Holders of such Certificates is to receive payment of
the Call Price upon surrender of the Certificates to
the Paying Agent; and
(vi) that, if any Certificate contains a CUSIP, CINS or
ISIN number, no representation is being made as to
the correctness of the CUSIP, CINS or ISIN number
either as printed on the Certificates or as contained
in such notice and that reliance may be placed only
on the other identification numbers printed on the
Certificates.
(c) If less than all of the Certificates are to be purchased
pursuant to the exercise of the Call Right, the Trustee shall select the
Certificates to be purchased in accordance with the requirements of the
principal national securities exchange on which the Certificates are listed or,
if the Certificates are not listed on a national securities exchange, on a pro
rata basis, by lot or by such other method as such Trustee in its sole
discretion shall deem to be fair and appropriate. The Trustee shall notify the
Depositor and the Certificate Registrar promptly in writing of the Certificates
or portions of the Certificates to be purchased by the holder of the Call Right,
provided, however, that this Section 4.08(c) shall not apply to Certificates
subject to a Call Right due to a Tax Event.
(d) Once such notice is mailed, the Certificates called for
purchase become due and payable on the Call Date and at the Call Price. Upon
surrender of any Certificates to the Paying Agent, such Certificates shall be
paid the Call Price. Notice of purchase shall be deemed to be given when mailed,
whether or not the Holder receives the notice. In any event, failure to give
such notice, or any defect therein, shall not affect the validity of the
proceedings for the purchase of Certificates held by Holders to whom such notice
was properly given.
(e) At or prior to 12:00 noon on the Call Date, the holder of
the Call Right to be exercised shall deposit with the Paying Agent by wire
transfer in same-day funds money sufficient to pay the Call Price of the
Certificates to be redeemed on that date.
(f) If a notice has been given in the manner provided above,
the Certificates or portion of Certificates specified in such notice to be
purchased shall become due and payable on the Call Date at the Call Price stated
therein, together with accrued interest (if applicable) on and after such dates.
Upon surrender of any Certificate in
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connection with the Call Right, such Certificate shall be paid and redeemed by
the holder of the Call Right at the Call Price.
(g) Upon surrender of any Certificate that is purchased in
part, the Depositor shall execute and the Trustee shall authenticate and deliver
to the Holder a new Certificate equal in principal amount to the unredeemed
portion of such surrendered Certificate.
(h) Notwithstanding anything to the contrary in these Standard
Terms or any Supplement, a Series or Class will be subject to a Call Right in
respect of a Tax Event if the Underlying Securities Issuer gives notice of a Tax
Event, regardless of whether such Series or Class is also designated a Callable
Series in the applicable Supplement; and, provided, further, that in the case of
a Tax Event, the required notice of the Call Right shall be the lesser of the
time set forth in Section 4.08(b) and the time set forth in the notice
provisions relating to such Tax Event in the indenture of the Underlying
Securities Issuer as specified in the related Supplement.
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 attached
to the applicable Supplement.
(b) Each Series (and all Classes within such Series) of
Certificates shall be created by a Supplement authorized by the Depositor and
establishing the terms and provisions of such Series. Each Trust must be a fixed
investment trust under the Code. Each such Series may 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 Supplement. Except as otherwise provided in a 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.
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Section 5.02. Execution, Authentication and Delivery. (a) The
Certificates shall be executed by the Depositor by one of its Executive
Officers, which may be in facsimile form and imprinted or otherwise reproduced
thereon. The signature of any of the Executive Officers may be manual or
facsimile. Certificates bearing the manual or facsimile signature of individuals
who were at any time the Executive Officers of the Depositor shall be binding,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates.
(b) Each Certificate shall be dated as of the later of the
date specified in the related 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 Responsible Officers, and such signature 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 or permanent Global Securities 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 or permanent Global Securities 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
Certificates or permanent Global Securities 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 or Global
Securities 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 or permanent Global Securities of such Series or Class
upon surrender of the temporary Certificates of such Series or Class at the
Corporate Trust Office, without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Certificates of any Series or Class
within such Series, the Depositor shall execute, and the Trustee, upon receipt
of a Depositor Order, shall authenticate and deliver in
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exchange therefor Definitive Certificates or permanent Global Securities with a
like Certificate Principal Balance or Notional Amount, as applicable, of the
same Series (or Class within such Series) of Authorized Denomination 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 or permanent Global Securities of
such Series or Class, except as otherwise specified in the applicable
Supplement.
Upon any exchange of a portion of a temporary Global Security
for a permanent definitive Global Security or for the individual Definitive
Certificates represented thereby, 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
Certificates (the registers maintained in such office and in any other office or
agency of the Trustee being herein sometimes collectively referred to as the
"Certificate Register") in which a transfer agent and registrar (which may be
the Trustee) (the "Certificate Registrar") shall provide for the registration of
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 as in effect in the State of New York as of the date these
Standard Terms are executed (or the applicable successor statute) are met to the
Depositor's satisfaction, the Depositor shall execute, and the Trustee, upon
receipt of a Depositor Order, shall authenticate and deliver, in the name of the
designated transferee or
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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.
(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 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) 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.
(f) 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).
(g) 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, 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
its Corporate Trust Office or (ii) the Depositor and the Trustee receive
evidence to their satisfaction of the destruction, loss or
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41
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 Depositor shall execute and the Trustee, upon receipt of a Depositor Order,
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of the same
Series or Class of like tenor, form, terms and principal amount, bearing a
number not contemporaneously Outstanding. Any Certificate executed,
authenticated and delivered under this Section 5.05 in lieu of a lost, destroyed
or stolen Certificate (a "Predecessor Certificate") shall be deemed to evidence
the same interest as the Predecessor Certificate.
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 5.05 shall constitute complete and indefeasible evidence of
ownership in the Trust related to such Series, whether or not the Predecessor
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 Predecessor 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 by the Depository to Beneficial Owners of interests in
a Global Security or for maintaining, supervising or reviewing any records
relating to such Beneficial Owners.
Section 5.07. Cancellation. Unless otherwise specified
pursuant to Section 5.01 for Certificates of any Series, all Certificates
surrendered for payment, redemption,
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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 Supplement
provides that a Series (or Class within such Series) of Certificates shall be
held by the Depository in book-entry form, 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 THIS GLOBAL SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF A NOMINEE OF THE DEPOSITORY (AND
ANY PAYMENT IS MADE TO A NOMINEE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF HAS AN INTEREST HEREIN.
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 TO THE DEPOSITORY OR TO ANOTHER NOMINEE OF THE
DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITORY."
(b) 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 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
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principal of, and premium, if any, and interest on the Certificates and
the giving of instructions or directions hereunder) as the sole Holder
of the Certificates of such Series or Class, and shall have no
obligation to the Beneficial Owners of interests in such Series or
Class;
(iii) to the extent that the provisions of this Section 5.08
conflict with any other provisions of this Trust Agreement, the
provisions of this Section 5.08 shall control;
(iv) the rights of Beneficial 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 Beneficial Owners
and the Depository or its Participants; and
(v) whenever this Trust Agreement requires or permits actions
to be taken based upon instructions or directions of Holders of a
specified percentage of the aggregate Voting Rights of a 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
Beneficial 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.
(c) Each Depository 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 Beneficial 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 Beneficial Owners.
Section 5.10. Definitive Certificates. (a) 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 does not
appoint a successor within 90 days or (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, then the Depository shall notify all
Beneficial Owners or Participants
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44
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, fully
registered Certificates ("Definitive Certificates") for such Series or Class to
Beneficial 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 upon receipt of a Depositor Order for
the authentication and delivery of Definitive Certificates of such Series or
Class, will authenticate and deliver Definitive 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. 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 exchange of a Global Security for Definitive Certificates, such Global
Security shall be cancelled by the Trustee. Definitive Certificates issued in
exchange for a Global Security 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. 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.
(b) In addition, if the Depositor so specifies with respect to
the Certificates of a given Series, a Beneficial Owner may, on terms acceptable
to the Depositor and the Depository for such Global Security, receive individual
Definitive Certificates in exchange for such beneficial interest. Upon the
request of such Beneficial Owner, the Depositor shall execute and the Trustee
upon receipt of a Depositor Order shall authenticate and deliver, without
service charge,
(i) to each such Person specified, 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 an Authorized
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.
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In any exchange provided for above, the Depositor shall
execute, and the Trustee, upon receipt of a Depositor Order, will authenticate
and deliver individual Certificates in registered form in Authorized
Denominations.
Section 5.11. Currency of Distributions. (a) Except as
otherwise specified pursuant to the applicable Supplement, distributions of the
principal of (and premium, if any) and interest in respect of Certificates of
any Series or Class will be made in Dollars.
(b) In the case of a Series denominated in a Specified
Currency other than the Dollar, all exchange rate calculations shall be based
upon the noon buying rate in New York City for cable transfers as certified for
customs purposes by the Federal Reserve Bank of New York for such Specified
Currency. If the Federal Reserve Bank of New York does not publish a noon buying
rate for the applicable Specified Currency, the applicable Supplement will
designate the source for calculating the Dollar value of such Specified
Currency.
(c) With respect to any Series, any decision or determination
to be made regarding exchange rates shall be made by an Exchange Rate Agent,
provided, however, that such Exchange Rate Agent shall accept such appointment
in writing and the terms of such appointment shall be acceptable to the Trustee
and shall require such Exchange Rate Agent to make such determination by the
method provided in Section 5.11(b) for the making of such decisions or
determination. All decisions and determinations of such Exchange Rate Agent
regarding exchange rates shall be in its sole discretion and shall, in the
absence of manifest error, be conclusive for all purposes and irrevocably
binding upon the Depositor, the Trustee and all Holders of such Series.
(d) If distributions in respect of a Series must be made in a
Specified Currency other than Dollars and such currency is unavailable due to
the imposition of exchange controls or other circumstances beyond the control of
the Trustee and the Depositor or is no longer used by the government of the
country issuing such Specified Currency or is no longer commonly used for the
settlement of transactions by public institutions of or within the international
banking community, then all distributions in respect of such Series shall be
made in Dollars until such Specified Currency is available.
Section 5.12. 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
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);
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(2) An Opinion of Counsel to the Depositor, addressed to the Trustee,
stating:
(a) that the form or forms of such Certificates have been
established in conformity with the provisions of this
Trust Agreement;
(b) that the terms of such Certificates have been
established in conformity with the provisions of this
Trust Agreement;
(c) that such Certificates, when completed by appropriate
insertions and executed and delivered by the
Depositor to the Trustee for authentication in
accordance with this Trust Agreement, authenticated
and delivered by the Trustee in accordance with this
Trust Agreement and issued by the Trust in the manner
and subject to any conditions specified in such
Opinion of Counsel, will constitute the legal, valid
and binding obligations of the Depositor, enforceable
in accordance with their terms, subject to applicable
bankruptcy, insolvency, reorganization and other
similar laws of general applicability relating to or
affecting the enforcement of creditors' rights, to
general equitable principles and to such other
qualifications as such counsel shall conclude do not
materially affect the rights of Holders of such
Certificates;
(d) that all laws and requirements in respect of the
execution and delivery by the Depositor of such
Certificates have been complied with and that
authentication and delivery of such Certificates by
the Trustee will not violate the terms of this Trust
Agreement;
(e) that the Depositor has the corporate power to execute
and deliver this Trust Agreement and the related
Supplement and such Certificates, and has duly taken
all necessary corporate action with respect to such
execution and delivery; and
(f) that the execution and delivery of this Trust
Agreement and the related Supplement and such
Certificates will not contravene the certificate of
incorporation or by-laws of the Depositor or result
in any violation of any of the terms or provisions of
any law or regulation or of any indenture, mortgage
or other agreement known to such counsel by which the
Depositor is bound.
(3) An Officer's Certificate of the Depositor, dated as of the Closing
Date, to the effect that all of the requirements of this Section 5.12 have been
satisfied, and that the Depositor is not in breach of this Trust Agreement and
that the execution and delivery of this
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47
Trust Agreement and the related Supplement and the Certificates will not result
in any breach of any of the terms, conditions, or provisions of, or constitute a
default under, the Depositor's certificate of incorporation and by-laws, 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;
(4) A Supplement consistent with the applicable provisions of this
Trust Agreement;
(5) All agreements, instruments or other documents called for by the
applicable Supplement as a condition to the issuance of the Certificates of such
Series;
(6) 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
(7) Written instructions by the Depositor to the Trustee directing the
Trustee to enter into and perform any obligations under the Swap Agreement, if
applicable, and/or the Market Agent Agreement, if applicable.
If all the Certificates of a Series are not to be originally
issued at the same time, then the documents required to be delivered pursuant to
this Section 5.12 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 5.12 shall be true and correct as if made on such date.
Section 5.13. 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 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
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and such exchange so requires, a co-paying agent in Luxembourg or another
European city, as specified in the related Supplement. Any Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' notice to the Trustee. In the
event that the Trustee shall no longer be the Paying Agent, the Trustee shall
appoint a successor or additional Paying Agent. The Trustee shall cause each
successor to act as Paying Agent to execute and deliver to Trustee an instrument
in which such successor or additional Paying Agent shall agree with the Trustee
that it will hold all sums, if any, held by it for distribution to the
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be distributed to such Certificateholders and will
agree to such other matters as are required by Section 317(b) of the Trust
Indenture Act. The Paying Agent shall return all unclaimed funds to the Trustee
and upon removal shall also return all funds in its possession to the Trustee.
The provisions of Sections 7.01, 7.03, 7.04 and 7.06 shall apply to the Trustee
also in its role as Paying Agent, for so long as the Trustee shall act as Paying
Agent. Any reference in this Trust Agreement to the Paying Agent shall include
any co-paying agent unless the context requires otherwise. Notwithstanding
anything contained herein to the contrary, the appointment of a Paying Agent
pursuant to this Section 5.13 shall not release the Trustee from the duties,
obligations, responsibilities or liabilities arising under this Trust Agreement
other than with respect to funds paid to such Paying Agent.
Section 5.14. 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 5.14 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 which may be the Trustee. Any successor
Authenticating Agent upon acceptance of its appointment
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49
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 Sections 7.01, 7.03 and 7.04 shall be
applicable to any Authenticating Agent.
(c) Pursuant to an appointment made under this Section, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
"This is one of the Certificates described in the Standard
Terms and the related Supplement.
Dated: [NAME OF AUTHENTICATING AGENT]
as Authenticating Agent
for the Trustee,
By:______________________
Authorized Officer"
Section 5.15. 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 by owners of any of the Underlying Securities, the Trustee shall give
notice to the Holders, setting forth (i) such information as is contained in
such notice to owners of Underlying Securities, (ii) a statement that Holders
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. Such notice shall be given by the Trustee to the
Holders of record on such Record Date.
Upon the written request of the applicable Holder, 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 Holder
entitled to give such instructions. Notwithstanding the foregoing, if the
Trustee determines (based solely upon advice furnished by nationally recognized
independent tax counsel, whether at the
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50
request of any Holder 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 Code, 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) 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 Holder
agrees so long as it is an owner thereof 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 Holder or (ii) to any redemption or prepayment of the Underlying
Securities underlying the Certificates held by such Holder. 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 Holder in contravention of the provisions of
this Section.
Section 5.16. 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) Holders 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
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other Holders of Certificates, the Depositor or the Trustee in order to proceed
against the Underlying Securities Issuer(s).
Section 5.17. 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 Supplement.
Section 5.18. 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, and further subject
to the provisions of Sections 7.01(c) and 7.06(f), herein entitled and empowered
to institute 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
Proceeding to judgment or final decree with respect to the whole amount of any
such sums so due and unpaid.
Section 5.19. 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 determine, based upon an Opinion of
Counsel, that the action so directed would not be unjustly prejudicial
to the Holders of Certificates of such Class not taking part in such
direction; and
(3) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
Section 5.20. 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
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of the aggregate Principal Amount of the Certificates of such Series held by
such Holders to waive any past Event of Default thereunder with respect to such
Series of Certificates and its consequences or may instruct the Trustee to waive
any past default under this Trust Agreement and its consequences, except a
default:
(1) in the payment of the principal of or premium, if any, or
interest on the Underlying Securities;
(2) in respect of a covenant or provision hereof which under
Article VIII hereof cannot be modified or amended without the consent
of the Holder of each Outstanding Certificate affected; or
(3) specified in the applicable Supplement, if any, unless the
applicable 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 he 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 5.21. 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 5.22. 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.
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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 Supplement.
Section 6.02. Limitation on Liability of the Depositor. (a)
The Depositor shall not be under any obligation to expend or risk its own funds
or otherwise incur financial liability in the performance of its duties
hereunder or under a Supplement or in the exercise of any of its rights or
powers 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, and a 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 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.
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(e) The Depositor shall not incur any liability to any
Certificateholder if, by reason of any provision of any present or future law,
or regulation thereunder, or any governmental authority, or by any reason of any
act of God or war or other circumstance beyond the control of the relevant
party, the Depositor shall be prevented or forbidden from doing or performing
any act or thing which the terms of this Trust Agreement provide shall be done
or performed; and the Depositor shall not incur any liability to any
Certificateholder by reason of any non-performance or delay, caused as
aforesaid, in the performance of any act or thing which the terms of this Trust
Agreement provide shall or may be done or performed, or by reason of any
exercise of, or failure to exercise, any discretion provided for in this Trust
Agreement.
Section 6.03. Depositor May Purchase Certificates. The
Depositor may at any time purchase Certificates in the open market or otherwise.
Certificates so purchased by the Depositor may, at the discretion of the
Depositor, be held or resold. Certificates beneficially owned by the Depositor
will be disregarded for purposes of determining whether the required percentage
of the aggregate Voting Rights has given any request, demand, authorization,
direction, notice, consent or waiver hereunder.
Section 6.04. Merger or Consolidation of the Depositor.
Nothing in this Trust Agreement shall prevent any consolidation or merger of the
Depositor with or into any other corporation, or any consolidation or merger of
any other corporation with or into the Depositor or any sale or transfer of all
or substantially all of the property and assets of the Depositor to any other
Person lawfully entitled to acquire the same; provided, however, that, so long
as Certificates are outstanding hereunder, the Depositor covenants and agrees
that any such consolidation, merger, sale or 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.
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(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 and has no duty in respect thereof.
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.01. Duties of Trustee. (a) The Trustee undertakes to
perform such duties and only such duties as are specifically set forth in these
Standard Terms and the related Supplement. In case of default, 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
person 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 as directed by the Depositor. 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, in its best judgment, 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
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correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee that conform to the requirements of
this Trust Agreement;
(ii) the Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(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 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 Certificate
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 Certificate 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 or any other person believed by it in good faith to
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57
be competent to give such advice or information, including, without
limitation, 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
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 Proceeding in respect of any
Underlying Securities;
(xi) whenever in the administration of this Trust Agreement
the Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence be herein specifically
prescribed) may, in the absence of bad faith on its part, conclusively
rely upon an Officers' Certificate; and
(xii) the Trustee may consult with counsel of its selection
and, the advice of such counsel or any Opinion of Counsel 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 actually 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
7.01(d), the term "Default" means, with respect to any Class of Certificates,
any
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event that is, or after notice or lapse of time or both would become, an Event
of Default with respect to such Class of Certificates.
(e) Within five (5) Business Days after the receipt by the
Trustee of a written application by any three or more Certificateholders stating
that such Certificateholders 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 Certificateholders propose to transmit, and by
reasonable proof that each such Certificateholder has owned its Certificates for
a period of at least six (6) months preceding the date of such application, the
Trustee shall, at its election, either:
(i) afford to such Certificateholders access to all
information so furnished to or received by the Trustee; or
(ii) inform such Certificateholders 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 Certificateholders access to
such information, the Trustee shall, upon the written request of such
Certificateholders, 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.
(f) The Trustee shall prepare for filing periodic reports
pursuant to the Exchange Act, and the rules and regulations promulgated
thereunder on behalf of the Depositor. The Depositor will respond reasonably
promptly to any inquiry of the Trustee concerning such reports.
Section 7.02. Agreements Between Trustee and Administrative
Agents. (a) The Trustee may enter into Administration Agreements with one or
more Administrative Agents in order to delegate to such Administrative Agents
certain of its administrative obligations with respect to a Series hereunder;
provided, however, that (i) such delegation shall not release the Trustee from
the duties, obligations, responsibilities or liabilities arising hereunder; (ii)
the Rating Agency Condition shall have been satisfied with respect to the
entering into of any such agreement; (iii) such agreement must be consistent
with these Standard Terms and, with respect to Certificates of any Series, the
related Supplement; (iv) the Trustee will remain solely liable for all fees and
expenses it may owe to such Administrative Agent; (v) the Administrative Agent
shall give representations and
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warranties in such Administration Agreement which are the same in substance as
those set forth in Section 7.10 herein (references therein to the Trust
Agreement, the Trustee and the Depositor, shall be to the applicable
Administration Agreement, Administrative Agent and the Trustee, respectively,
for purposes of this Section 7.02(a)); and (vi) such Administrative Agent shall
meet the eligibility requirements of a Trustee pursuant to Section 7.07 herein.
An Administration Agreement must provide that an entity serving as
Administrative Agent may resign from its obligations and duties under this Trust
Agreement with respect to any Series only if such resignation, and the
appointment of a successor, would satisfy the Rating Agency Condition or upon a
determination that the duties of the Administrative Agent with respect to such
Series are no longer permissible under applicable law. No such resignation shall
become effective until the Trustee or a successor Administrative Agent has
assumed the obligations of such Administrative Agent with respect to such
Series. In addition, with respect to any Series (or Class within such Series) of
Certificates, each Administration Agreement shall impose on the 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
Administration Agreement may be provided in the applicable Supplement. The
Trustee shall deliver to the Depositor copies of all Administration Agreements
into which it enters, and any amendments or modifications thereof, promptly upon
the Trustee's execution and delivery of any such instruments.
(b) Upon the occurrence of an Administrative Agent Termination
Event, the Trustee shall be entitled to terminate the relevant Administration
Agreement and the rights and obligations of any such Administrative Agent under
any Administration Agreement in accordance with the terms and conditions of any
such Administration Agreement. If such Administration Agreement is terminated,
the Trustee shall simultaneously reassume direct responsibility for all
obligations delegated in such Administration Agreement without any act or deed
on the part of the applicable Administrative Agent, and the Trustee shall
administer directly the related Underlying Securities or shall enter into an
Administration Agreement with a successor Administrative Agent which so
qualifies under Section 7.02(a). If the Trustee is unwilling or unable to act,
it may appoint, or petition a court of competent jurisdiction for the
appointment of, an Administrative Agent which so qualifies under Section
7.02(a). Pending such appointment, the Trustee must act in such capacity (except
that if the Trustee is prohibited by law from doing so, then the Trustee will
not be so obligated).
(c) If an Administrative Agent is administering one or more
Underlying Securities pursuant to an Administration Agreement, the Trustee shall
deposit into an Eligible Account established by such Administrative Agent (an
"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.
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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;
(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 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
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custodian and shall not be liable for any misconduct or negligence of
any such agents or attorneys selected with due care by it; 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 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 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
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
Supplement is greater than zero, the Trustee acknowledges that the Depositor has
paid to the Trustee an amount equal to the Prepaid Ordinary Expenses specified
therein, and the Trustee agrees that the payment of such amount shall constitute
full and final satisfaction of and payment for all such expenses.
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(c) If the Prepaid Ordinary Expenses set forth in the
Supplement is zero, the 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 at the rate or amount and on the terms provided for in the
Supplement. In such cases, 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
Supplement is zero, the 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 Supplement payable at the times set forth therein. In such
cases, 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 Trust
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
which 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 Trust Expenses unless (i) the Trustee is satisfied that it
will have adequate security or indemnity in respect of such costs, expenses and
liabilities, (ii) the Trustee has been instructed to do so by Certificateholders
representing not less than the Required Percentage--Remedies of the aggregate
principal amount of Certificates then outstanding, and (iii) the
Certificateholders, pursuant to the instructions given under clause (ii) above,
have agreed that such costs, expenses or liabilities shall be paid by the
Trustee from the Trust, in the case of a vote of 100% of the aggregate principal
amount of Certificates then outstanding.
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
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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 7.07 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 7.07, 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 under Section 310(b) of the Trust Indenture Act with respect to any
Class of Certificates 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
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
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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 sixty (60) 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 sixty (60) 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.
(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 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:
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(i) the Trustee is duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation or
association;
(ii) neither the execution nor the delivery by the Trustee of
this Trust Agreement, nor the consummation by it of the transactions
contemplated hereby nor compliance by it with any of the terms or
provisions hereof will contravene any Federal or 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 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, subject to due execution by the
Depositor, 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 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
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(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 Proceeding 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 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.
(b) If the indemnification provided for in the preceding
paragraph is invalid or unenforceable in accordance with its terms, then the
Depositor shall contribute to the amount paid or payable by the Trustee as a
result of such liability in such proportion as is appropriate to reflect the
relative benefits received by the Depositor on one hand and the Trustee as
Trustee on the other hand. For this purpose (i) the benefits received by the
Depositor shall be the aggregate amount received by it upon the sale of such
Certificates, less the costs and expenses of such sale, including the cost of
acquisition of the Underlying Securities or parts thereof evidenced thereby, and
(ii) the benefits received by the Trustee, as Trustee shall be the aggregate
amount of fees received by it as Trustee, less costs and expenses incurred by it
as Trustee in relation to such Certificates. If, however, the allocation
provided by the immediately preceding two sentences is not permitted by
applicable law, then the Depositor shall contribute to such amount paid or
payable by the Trustee in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Depositor on the one
hand and the Trustee on the other in connection with the actions or omissions
which resulted in such liability, as well as any other relevant equitable
considerations.
(c) In case any claim shall be made or action brought against
the Trustee for any reason for which indemnity may be sought against the
Depositor as provided above, the Trustee may promptly notify the Depositor in
writing setting forth the particulars of such claim or action and the Depositor
may assume the defense thereof. In the event that the Depositor assumes the
defense, the Trustee shall have the right to retain separate counsel in
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67
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, expenses and attorneys' fees 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 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
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68
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 7.14, 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
7.14, upon receipt of a new list so furnished.
Section 7.15. Reports by Trustee. If required, within 60 days
after May 15 of each year, commencing with the year 1998, the Trustee shall
transmit to the Certificateholders, as provided in Section 313(c) of the Trust
Indenture Act, a brief report dated as of such May 15, if required by Section
313(a) of the Trust Indenture Act.
Section 7.16. Trustee's Application for Instructions from the
Depositor. Any application by the Trustee for written instructions from the
Depositor may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Trust Agreement and
the date on and/or after which such action shall be taken or such omission shall
be effective, if, but only if, the obligations of the Trustee with respect to
such proposed action or omission, in the view of the Trustee, are not set forth
reasonably clearly in these Standard Terms and the related Supplement. The
Trustee shall not be liable for any action taken by, or omission of, the Trustee
in accordance with a proposal included in such application on or after the date
specified in such application (which date shall not be less than ten (10)
Business Days after the date a Responsible Officer of the Depositor actually
receives such application, unless any such Responsible Officer shall have
consented in writing to any earlier date) unless, prior to taking any such
action (or the effective date in the case of an omission), the Trustee shall
have received written instructions in response to such application specifying
the action to be taken or omitted; provided, however, that this provision shall
not protect the Trustee from liability for any action or omission constituting
willful misconduct, bad faith or negligence.
ARTICLE VIII
MARKET AGENT
Section 8.01. Market Agent. (a) If specified for a specific
Series, on the Closing Date the Trustee shall enter into a Market Agent
Agreement with Merrill Lynch & Co. as the initial Market Agent, in the form
attached to the related Supplement. The Market Agent shall serve as such under
the terms and provisions hereof and of the Market Agent
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69
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 any trust
created hereby continue beyond the earlier of (1) any date set forth in Section
13 of the applicable Supplement as the termination date for such trust or (2)
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.
(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 Section 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 Supplement,
if
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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) Unless otherwise specified in
the applicable Supplement, this Trust Agreement may be amended from time to time
by the Depositor and the Trustee without notice to or consent of any of the
Certificateholders, for any of the following purposes: (i) to cure any
ambiguity; (ii) to correct or supplement any provision herein which may be
inconsistent with any other provision herein or in the Supplement; (iii) to
change the Trustee for a Series of Certificates subsequent to the Closing Date
for such Series; (iv) to provide for administration of separate Trusts by more
than one trustee; (v) to provide for a successor Trustee with respect to
Certificates of one or more Series; (vi) to provide for the issuance of a new
Series of Certificates pursuant to a Supplement issued hereunder pursuant to
Sections 5.01 and 5.12 hereof; (vii) to add or supplement any Credit Support for
the benefit of any Certificateholders (provided, however, that if any such
addition affects any Series or Class of Certificateholders differently than any
other Series or Class of Certificateholders, then such addition will not, as
evidenced by an Opinion of Counsel, have a material adverse effect on the
interests of any affected Series or Class of Certificateholders; (viii) to add
to the covenants, restrictions or obligations of the Depositor the Trustee or
the Administrative Agent, if any, for the benefit of the Certificateholders;
(ix) to comply with any requirements imposed by the Code; or (x) to add, change
or eliminate any other provisions with respect to matters or questions arising
under this Trust Agreement; provided, however, that in the case of any amendment
the Rating Agency Condition shall be satisfied with respect to such amendment
and that no such amendment shall cause any Trust created hereunder to fail to
qualify as a fixed investment trust (or "grantor trust") for federal income tax
purposes.
(b) Without limiting the generality of the foregoing, unless
otherwise specified in the applicable Supplement, with respect to any Series,
this Trust Agreement may also be modified or amended from time to time by the
Depositor and the Trustee with the consent of the Holders of Certificates
representing the Required Percentage--Amendment of the aggregate Voting Rights
of those Certificates that are adversely affected by such
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modification or amendment for the purpose of adding any provision 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, or (ii) reduce the percentage of aggregate Voting Rights
required to take any action specified in this Trust Agreement, 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. 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 10.01 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 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 other than
pursuant to the provisions hereof.
(c) No Certificateholder of a given Series shall have any
right by virtue of any provision of this Trust Agreement to institute any
Proceeding in equity or at law upon or
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under or with respect to this Trust Agreement, unless (i) such Holder previously
shall have given to the Trustee a written notice of breach of this Trust
Agreement 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 Proceeding in its own name as Trustee hereunder, (iii)
such Certificateholder or Certificateholders 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, (iv) 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 Proceeding, and (v) 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 Proceeding 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 the laws of the State of New York, without regard to choice-of-law
provisions.
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 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 the Corporation
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Trust Company, 1209 Orange Street, Wilmington, DE 19801. 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 United States Trust Company of New York, 114 West 47th Street, 25th Floor,
New York, New York 10036, Attention: STEERS, 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 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
4.03.
(c) Any such notice pursuant to this Section 10.05 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
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.
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(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.
(iii) Any and all notices to be given to Duff shall be deemed
to have been duly given in sent by facsimile transmission to Duff at Duff &
Phelps Credit Rating Co., 55 E. Monroe Street, Suite 3500, Chicago, IL
60603-5701, Attention: Karen O'Donnell, facsimile transmission number (312)
368-3155, telephone confirmation number (312) 368- 3100. Duff may change this
information by notice to the Depositor and the Trustee.
(iv) Any and all notices to be given to Fitch shall be deemed
to have been duly given in sent by facsimile transmission to Fitch at Fitch
Investors Service, L.P., One State Street Plaza, New York, NY 10004, facsimile
transmission number (212) 480-4435, telephone confirmation number (212)
908-0500. Duff 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 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
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conversion, voluntary or involuntary, of the foregoing into cash, instruments,
securities or other property including all amounts from time to time held or
invested in the applicable Certificate Account, whether in the form of cash,
instruments, securities or other property; (3) the obligations secured by such
security agreement shall be deemed to be all the Depositor's obligations under
this Trust Agreement, including the obligation to provide to the
Certificateholders the benefits of this Trust Agreement relating to such
Underlying Securities and the applicable Trust; and (4) notifications to persons
holding such property, and 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, at
the direction of the Depositor, 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
Administrative Agent, Authenticating Agent and Paying Agent) and the Depositor
agrees that it shall not, until the date which is one year and one day after the
termination of a Series, acquiesce, petition or otherwise invoke or cause a
Trust to invoke the process of the United States, 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,
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insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of such Trust or all
or any part of the property or assets of such Trust or ordering the winding up
or liquidation of the affairs of such Trust.
Section 10.09. No Recourse. Neither the Trustee (including any
Administrative Agent, Authenticating Agent or Paying Agent) nor the Depositor
shall have any recourse to the Underlying Securities, except as specifically
provided in the related 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. 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 Supplements, from failing to qualify under the Trust Indenture Act.
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IN WITNESS WHEREOF, the Depositor and the Trustee have caused
these Standard Terms to be duly executed by their respective officers thereunto
duly authorized, in each case as of the day and year first above written.
MERRILL LYNCH DEPOSITOR, INC.,
as Depositor
By:
-------------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
By:
-------------------------------------
Name:
Title:
<PAGE>
Reconciliation and tie between the Trust Agreement, dated as
of ________ __, 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
- --------------------------------------------------------------------------------
(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) 5.19
- --------------------------------------------------------------------------------
(a)(1)(B) 5.20
- --------------------------------------------------------------------------------
(b) 5.21
- --------------------------------------------------------------------------------
(c) 1.03(b)
- --------------------------------------------------------------------------------
317(a)(1) 5.18
- --------------------------------------------------------------------------------
(b) 5.13
- --------------------------------------------------------------------------------
318(a) 10.12
================================================================================
<PAGE>
[FORM OF SERIES SUPPLEMENT]
DEBT UNITS
SERIES 199[__] - [SERIES DESIGNATION]
between
MERRILL LYNCH DEPOSITOR, INC.
as Depositor
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
DEBT UNITS
Dated as of ________ __, 199_
<PAGE>
i
Section 1. Incorporation of Standard Terms...................................
Section 2. Definitions.......................................................
Section 3. Designation of Trust and Certificates.............................
Section 4. Satisfaction of Conditions to Initial
Execution and Delivery of Trust Certificates....................
Section 5. Distributions.....................................................
Section 6. Trustee's Fees....................................................
Section 7. Optional Exchange ................................................
Section 8. Events of Default; Remedies.......................................
Section 9. Miscellaneous.....................................................
Section 10. Notices...........................................................
Section 11. Governing Law.....................................................
Section 12. Counterparts......................................................
Section 13. Termination of the Trust..........................................
Section 14. Sale of Underlying Securities, Tax Event[, Callable Series].......
Section 15. Amendments........................................................
Section 16. Voting of Underlying Securities...................................
SCHEDULE I SERIES 199[__] - [SERIES DESIGNATION] UNDERLYING
SECURITIES SCHEDULE
SCHEDULE II AMORTIZATION SCHEDULE -- CLASS _-1 DEBT UNITS
SCHEDULE III ACCRETION SCHEDULE -- CLASS _-2 DEBT UNITS
EXHIBIT A STANDARD TERMS FOR TRUST AGREEMENTS
EXHIBIT B FORM OF TRUST CERTIFICATE
EXHIBIT C FORM OF MARKET AGENT AGREEMENT
<PAGE>
DEBT UNITS
Supplement
SERIES 199[__] - [SERIES DESIGNATION]
Supplement, SERIES 199[_] - [SERIES DESIGNATION], dated as of
________ __, 199 (the "Supplement"), by and between MERRILL LYNCH DEPOSITOR,
INC., a Delaware corporation, 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 Supplement, which shall
incorporate the terms of the Standard Terms for Trust Agreements, dated as of
________ __, 1997 (the "Standard Terms"; together with this Supplement, the
"Trust Agreement"), by and between the Depositor and the Trustee, as modified by
this Supplement;
WHEREAS, the Depositor desires to deposit the Underlying
Securities set forth on Schedule I attached hereto 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 the Certificates evidencing undivided interests in the Trust; and
WHEREAS, the Trustee has joined in the execution of the
Standard Terms and this 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. (a) 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
Supplement and the Standard Terms shall form a single agreement between the
parties. In the event of any inconsistency between the provisions of this
Supplement and the provisions of the Standard Terms, the provisions of this
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
<PAGE>
2
below for all purposes under this Supplement. (Section 2(b) below sets forth
terms listed in the Standard Terms which are not applicable to this Series.)
Capitalized terms used but not defined herein shall have the meanings assigned
to them in the Standard Terms.
"Administrative Agent Termination Event" shall mean, in
addition to the events set forth in the definition thereof in the Standard
Terms, [_______________].
"Allocation Ratio" shall mean the allocation among the
[holders of the Class _- 1 Certificates, the Class _-2 Certificates, the
Retained Interest and the Call Right]as follows:
Class_-1 Class_-2
Voting Rights: % %
Call Price: % %
Liquidation Proceeds: % %
Realized Losses: % %
Eligible Expenses: % %
Allowable Expense Amounts: % %
Extraordinary Trust Expenses: % %
[all in accordance with the ratio of the Class _-1 Allocation to the Class _-2
Allocation.]
"Available Funds" shall have the meaning specified in the
Standard Terms, except that investment income earned on funds invested pursuant
to Section 3.05 of the Standard Terms shall not be included in Available Funds.
"Call Price:" [________]
"Class _-1 Allocation" shall mean the sum of the present
values (discounted at the rate of [__.__]% per annum) of each of the unpaid
interest coupons due or to become due on the Underlying Securities on or prior
to the Final Scheduled Distribution Date.
"Class _-1 Certificates" shall mean [_______________].
"Class _-2 Allocation" means the sum of the present values
(discounted at the rate of [__.__]% per annum) of each of the unpaid interest
coupons due or to become due on the Underlying Securities after the Final
Scheduled Distribution Date plus the sum of the present values (discounted at
the rate of [__.__] per annum) of each of the principal amounts of the
Underlying Securities (in each case assuming that the Underlying Securities were
paid when due and were not redeemed prior to their stated maturity).
"Class _-2 Certificates" shall mean [_______________].
<PAGE>
3
"Closing Date" shall mean ________ __, 199_.
"Collection Period" shall mean, (i) with respect to each
________ Distribution Date, the period beginning on the day after the ________
Distribution Date of the previous year and ending on such ________ Distribution
Date, inclusive, except for the ________ 199_ Distribution Date, as to which the
Collection Period shall be the period beginning on ________ __, 199_ and ending
on such ________ 199_ Distribution Date, inclusive and, (ii) with respect to
each ________ Distribution Date, the period beginning on the day after the
________ Distribution Date of that year and ending on such ________ Distribution
Date, inclusive; provided, however, that clauses (i) and (ii) shall be subject
to Section 9(h) hereof.
"Corporate Trust Office" shall mean [____________________];
provided, however, that the office at which certificated securities are
delivered for registration of transfer, cancellation or exchange shall be the
office of the Trustee, located at 111 Broadway, Lower Level, New York, New York
10006.
"Cut-off Date" shall mean the Closing Date.
"Depository" shall mean the Depository Trust Company, its
nominees and their respective successors.
"Distribution Date" shall mean ________ __ and ________ __ of
each year (or if such date is not a Business Day, the next succeeding Business
Day), commencing on ________ __, ____ and ending on the Final Scheduled
Distribution Date.
"Distribution Election" shall mean [____________].
"Eligible Investments" shall be as defined in the Standard
Terms; provided, however, that (i) the minimum required rating for long-term
instruments will be equal to the rating of the Underlying Securities, and (ii)
the rating of any short-term instruments will be [___] by S&P and [___] by
Moody's; and provided, further, that any such investment matures no later than
the Business Day prior to any related Distribution Date.
"Event of Default" shall mean (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 and (iii) any other event specified as an
"Event of Default" in the Underlying Securities Indenture.
"Final Scheduled Distribution Date" shall mean: ________ __,
20__.
"Fixed Pass-Through Rate" shall mean: [__.__]% per annum.
<PAGE>
4
"Interest Accrual Period" shall mean 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 Closing Date)
to but excluding the current Distribution Date.
"Liquidation Price" shall mean the price at which the Market
Agent sells the Underlying Securities on behalf of the Trustee.
"Optional Exchange Date" shall mean any Distribution Date on
which Underlying Securities subject to Optional Exchange are distributed to
Merrill Lynch & Co. in accordance with Section 4.07 of the Standard Terms and
Section 7 of this Supplement.
"Ordinary Expenses" shall mean the compensation due the
Trustee for Ordinary Expenses as defined in the Standard Terms, other than the
expenses described in clause (iii) of such definition, which shall be fixed at
$2,000 per annum (payable in semi-annual installments of $1,000), payable from
amounts paid in respect of interest on the Underlying Securities.
"Pass-Through Rate" shall mean: [__.__]%
"Prepaid Ordinary Expenses" shall be zero (0) for this Series.
"Prospectus Supplement" shall mean the Prospectus Supplement,
dated ________ __, 199_, relating to the Certificates.
"Rating Agency" shall mean Moody's and S&P.
"Record Date" shall mean the day immediately preceding each
Distribution Date.
"Related Assets" shall mean [_____________].
"Series" shall mean Series 199[_]-[Series Designation].
"Specified Currency" shall mean Dollars.
"Trust Property" shall mean the Underlying Securities
described on Schedule I hereto.
"Underlying Securities" shall mean [_______________].
<PAGE>
5
"Underlying Securities Indenture" shall mean the indenture
pursuant to which the Underlying Securities were issued.
"Underlying Securities Issuer" shall mean [_______________].
"Voting Rights" shall, in the entirety, be allocated among all
Class _-1 Certificateholders and Class _-2 Certificateholders in accordance with
the Allocation Ratio. Within each class, Voting Rights shall be allocated among
Certificateholders in proportion to the then outstanding principal balances of
their respective Certificates.
(b) The terms listed below are not applicable to this Series.
"Accounting Date"
"Advance"
"Allowable Expense Amount"
"Calculation Agent"
"Credit Support"
"Credit Support Instrument"
"Credit Support Provider"
"Eligible Expense"
"Exchange Rate Agent"
"Floating Pass-Through Rate"
"Guaranteed Investment Contract"
"Letter of Credit"
"Limited Guarantor"
"Limited Guaranty"
"Liquidation Price"
<PAGE>
6
"Notional Amount"
"Requisite Reserve Amount"
"Retained Interest"
"Surety Bond"
"Swap Agreement"
"Swap Counterparty"
"Swap Distribution Amount"
"Swap Guarantee"
"Swap Guarantor"
"Swap Receipt Amount"
"Swap Termination Payment"
"Tax Event"
Section 3. Designation of Trust and Certificates. (a) The
Trust created hereby shall be known as the "Debt Units Trust, Series 199 [__] -
[SERIES DESIGNATION]". The Certificates evidencing certain undivided ownership
interests therein shall be known as the "Debt Units, Series 199[_] - [SERIES
DESIGNATION]".
(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 authorized denominations of
[$1,000] (the "Authorized Denomination") 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 Class _-1 Certificates have an initial aggregate
principal amount of $[ ]. The Class _-2 Certificates have an initial aggregate
principal amount of $[ ]. The Class _-1 Certificates will be entitled to receive
on each Distribution Date the interest received on the Underlying Securities,
which will represent a return of principal on the Class _-1 Certificates in
accordance with the amortization schedule set forth in Schedule II hereto and
the payment of interest at a rate of [__.__]% per annum on the outstanding
principal
<PAGE>
7
amount of the Class _-1 Certificates. The Class _-2 Certificates will not be
entitled to distributions of interest. The Class _-2 Certificates will accrete
principal at the rate of [__.__]% per annum, in accordance with the accretion
schedule set forth in Schedule III hereto, to a principal amount of $[ ] on [ ]
__ 20__. On [ ] __, 20__, the Class _-2 Certificates will be entitled to a
distribution of all of the Underlying Securities held by the Trust as of such
date. On or prior to the 60th day preceding [ ] __, 20__, the Trustee shall
request instructions from the registered holders of the Class _-2 Certificates
regarding the account or accounts to which transfer of the Underlying Securities
should be made, and other information relevant to such transfer.
(d) Any reference to the principal amount of the Certificates
shall be construed as a reference to the amortized amount of the Class _-1
Certificates and the accreted amount of the Class _-2 Certificates, unless
otherwise indicated.
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 Schedule I hereto;
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 applicable Distribution
Date, the Trustee shall apply solely to the extent of Available Funds in the
Certificate Account as follows (subject to Section 5(c) below):
(i) first, to the Trustee, the Ordinary Expenses and
reimbursement for any approved Extraordinary Trust Expenses incurred by
the Trustee in accordance with Section 6(b) below and approved by 100%
of the Certificateholders;
(ii) second, to the Class _-1 Certificateholders, interest
accrued during the related Interest Accrual Period at the rate of
[__.__]% per annum on the principal amount of the Class _-1
Certificates and principal distributable on such Class_-1 Certificates
on such Distribution Date;
(iii) third, to the Class _-1 Certificateholders, if
available, any additional interest owed and paid by the Underlying
Securities Issuer as a result of a delay in the receipt by the Trustee
of any payment on the Underlying Securities; [Retained Interest holder]
<PAGE>
8
(iv) fourth, to the Class _-2 Certificateholders, on the Final
Scheduled Distribution Date only, a distribution of all Underlying
Securities held by the Trust as of such date;
(v) fifth, to the extent there are Available Funds in the
Certificate Account, to any creditors of the Trust in satisfaction of
liabilities thereto.
(b) On the Optional Exchange Date, if applicable, the Trustee
shall distribute to Merrill Lynch & Co. Underlying Securities in accordance with
Section 7 hereof.
Subject to Section 9(f) hereof, to the extent Available Funds
are insufficient to make any required distributions due to any Class of
Certificates on any Distribution Date, any shortfall will be carried over and
will be distributed on the next Distribution Date on which sufficient funds are
available on the Available Funds to pay such shortfall.
Section 6. Trustee's Fees. (a) As compensation for its
services hereunder, the Trustee shall be entitled to Ordinary Expenses.
(b) Extraordinary Trust Expenses shall not be paid out of the
Trust Property unless (i) the Trustee is satisfied that it will have adequate
security or indemnity in respect of such costs, expenses and liabilities, and
(ii) either (a) all the Certificateholders of each of Class A-1 and Class A-2
Certificates then outstanding have voted to require the Trustee to incur such
Extraordinary Trust Expenses; or (b) any lesser percentage of the
Certificateholders requesting such action pursuant hereto have agreed to
reimburse the Trustee for the cost thereof from their own funds. If
Extraordinary Trust Expenses are not approved unanimously as set forth in clause
(ii)(a), such Extraordinary Trust Expenses shall not be an obligation of the
Trust, and the Trustee shall not file any claim against the Trust therefor
notwithstanding failure of Certificateholders to reimburse the Trustee.
Section 7. Optional Exchange. (a) On each Optional Exchange
Date, Merrill Lynch & Co. may tender Certificates to the Trustee and receive a
distribution of [Underlying Securities] having a principal amount equal to the
combined principal amounts and principal amounts at maturity, respectively of
the Class _-1 Certificates and Class _-2 Certificates, respectively, being
tendered by Merrill Lynch & Co. to the Trustee.
(b) Of the requirements set forth in Section 4.097 of the
Standard Terms, the following do not apply: [___________].
Section 8. Events of Default. Within 30 days of the occurrence
of an Event of Default, the Trustee will give notice to the Certificateholders,
transmitted by mail, of all such uncured or unwaived Events of Default actually
known to it. However, unless there is
<PAGE>
9
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.
Section 9. Miscellaneous. (a) The provisions of Section 4.04,
Advances, of the Standard Terms shall not apply to the Series 199[_] - [Series
Designation] Certificates.
(b) The provisions of Section 4.07, Optional Exchange, of the
Standard Terms shall not apply to the Series 199[_] - [Series Designation]
Certificates in the case of an Optional Exchange pursuant to Section 7 hereof.
(c) The Trustee shall forward to the New York Stock Exchange
the reports to Certificateholders delivered pursuant to Section 4.03 of the
Standard Terms.
(d) The Certificateholders shall not be entitled to terminate
the Trust or cause the sale or other dispositions of the Underlying Securities.
(e) 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 Class _-1 Certificateholders,
proportionately to the ratio of their respective entitlements to interest.
(f) The outstanding principal balance of the Certificates
shall not be reduced by the amount of any Realized Loss (as defined in the
Standard Terms).
(g) 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.
(h) Notwithstanding anything in the Trust Agreement to the
contrary, the Trustee may be removed upon 60 days prior written notice delivered
by the Holders of Class _-1 and Class _-2 Certificates representing the Required
Percentage--Removal.
<PAGE>
10
Section 10. 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:
Merrill Lynch Depositor, Inc.
c/o Merrill Lynch & Co.
World Financial Center
New York, NY 10281
Attention: Frank D. Ronan
Telephone: (212) 449-1000
Facsimile: (212) ___-____
[With a copy to the Directors:
c/o [_______________]
Address
City
Telephone:
Facsimile:
If to the Market Agent, to:
[Market Agent]
Address
City
Attention:
Telephone:
Facsimile:
If to the Trustee, to:
United States Trust Company of New York
114 West 47th Street
25th Floor
New York, New York 10036
Attention: STEERS [Series designation]
Referencing:
Telephone: (212) 852-1667
<PAGE>
11
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 11. Governing Law. This Supplement and the
transactions described herein shall be governed by the laws of the State of New
York without reference to choice- of-law provisions.
Section 12. Counterparts. This 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.
Section 13. Termination of the Trust. The Trust shall
terminate upon the earliest to occur of (i) the payment in full at maturity or
sale by the Trust after a payment default on or an acceleration or other early
payment of the Underlying Securities and the distribution in full of all amounts
due to the Class _-1 and Class _-2 Certificateholders and
<PAGE>
12
(ii) the Final Scheduled Distribution Date. To the extent that the provisions of
this Section 13 conflict with Section 9.01 of the Trust Agreement, the latter
shall control.
Section 14. Sale of Underlying Securities, Tax Event[,
Callable Series]. (a) In the case of Extraordinary Trust Expenses approved by
100% of the Certificateholders of a given Class, pursuant to Section 6(b)
hereof, the Trustee may sell the Underlying Securities to pay such Extraordinary
Trust Expenses.
[(b) [[set forth the Series or any Class thereof that is a
Callable Series] is a Callable Series, pursuant to Section 4.08 of the Standard
Terms. Except in the case of a Tax Event, the Call Terms are as follows:
(i) [______________] is the initial holder of the Call Right;
(ii) the [Certificate Principal Balance] [Notional Amount] of each
Certificate being purchased pursuant to the Call Right must be
an Authorized Denomination;
(iii) the Call Right may be exercised on ________ __, ____ [any
regular Distribution Date, beginning ____, ] (the "Call
Date[s]"); and
(iv) [______________] shall be the Call Price for any exercise of
the Call Right[, except in the case of a Call Right exercised
in connection with a Tax Event].
[(b)][(c)] If a Tax Event occurs, the Call Terms are as follows:
(i) the Certificate of each Holder is subject to the Call Right to
the extent of the ratio of (A) the [principal
amount][principal amount at maturity] of the Underlying
Securities subject to the Tax Event over (B) the aggregate
[Certificate Principal Balance][Notional Amount] of such
[Series][Class] Outstanding;
(ii) the Call Date is the earliest practicable date following
notice of a Tax Event by the Underlying Securities Issuer or
the Underlying Securities trustee; and
(iii) [______________] shall be the Call Price for any exercise of
the Call Right in connection with a Tax Event.
Section 15. Amendments. Notwithstanding anything in the Trust
Agreement to the contrary, in addition to the other restrictions on modification
and amendment contained herein, the Trustee shall not enter into any amendment
or modification of the Trust Agreement which would adversely affect in any
material respect the interests of the Holders of any Class of Certificates
without the consent of the Holders of 100% of such Class of
<PAGE>
13
Certificates; provided, however, that no such amendment or modification will be
permitted if the Trustee has been advised by the Depositor that such amendment
or modification would alter the status of the Trust as a grantor trust for
federal income tax purposes. Further, no amendment shall be permitted which
would adversely affect in any material respect the interests of any Class of
Certificateholders without confirmation by each Rating Agency that such
amendment will not result in a downgrading or withdrawal of its rating of such
Certificates.
Section 16. Voting of Underlying Securities, Modification of
Indenture. The Trustee, as holder of the Underlying Securities, has the right to
vote and give consents and waivers in respect of the Underlying Securities as
permitted by the Depository and except as otherwise limited by the Trust
Agreement. In the event that the Trustee receives a request from the Depository,
the Underlying Securities trustee or the Underlying Securities Issuer for its
consent to any amendment, modification or waiver of the Underlying Securities,
the Underlying Securities Indenture or any other document thereunder or relating
thereto, or receives any other solicitation for any action with respect to the
Underlying Securities, the Trustee shall mail a notice of such proposed
amendment, modification, waiver or solicitation to each Certificateholder of
record as of such date. The Trustee shall request instructions from the
Certificateholders as to whether or not to consent to or vote to accept such
amendment, modification, waiver or solicitation. The Trustee shall consent or
vote, or refrain from consenting or voting, in the same proportion (based on the
relative outstanding principal balances of the Certificates) as the Certificates
of the Trust were actually voted or not voted by the Certificateholders thereof
as of a date determined by the Trustee prior to the date on which such consent
or vote is required, after weighing the votes of the Class _-1
Certificateholders and the votes of the Class _-2 Certificateholders according
to the Allocation Ratio; provided, however, that, notwithstanding anything in
the Trust Agreement to the contrary, the Trustee shall at no time vote on or
consent to any matter (i) unless such vote or consent would not (based on an
Opinion of Counsel) alter the status of the Trust as a grantor trust for federal
income tax purposes or result in the imposition of tax upon the
Certificateholders, (ii) which would alter the timing or amount of any payment
on the Underlying Securities, including, without limitation, any demand to
accelerate the Underlying Securities, except in the event of a default under the
Underlying Securities or an event which with the passage of time would become an
event of default under the Underlying Securities and with the unanimous consent
of all outstanding Class _-1 and Class _-2 Certificateholders, or (iii) which
would result in the exchange or substitution of any of the outstanding
Underlying Securities pursuant to a plan for the refunding or refinancing of
such Underlying Securities except in the event of a default under the Underlying
Securities Indenture and only with the consent of Certificateholders
representing 100% of the Class _-2 Certificates and 100% of the Class _-1
Certificates. The Trustee shall have no liability for any failure to act
resulting from Certificateholders' late return of, or failure to return,
directions requested by the Trustee from the Certificateholders.
<PAGE>
14
In the event that an offer is made by the Underlying
Securities Issuer to issue new obligations in exchange and substitution for any
of the Underlying Securities, pursuant to a plan for the refunding or
refinancing of the outstanding Underlying Securities or any other offer is made
for the Underlying Securities, the Trustee shall notify the Class _-1 and Class
_-2 Certificateholders of such offer promptly. The Trustee must reject any such
offer unless the Trustee is directed by the affirmative vote of the Holders of
100% of the Class _-1 and Class _-2 Certificates to accept such offer and the
Trustee has received the tax opinion described above.
If an event of default under the Underlying Securities
Indenture occurs and is continuing, and if directed by all of the outstanding
Class _-1 and Class _-2 Certificateholders, the Trustee shall vote the
Underlying Securities in favor of directing, or take such other action as may be
appropriate to direct, the Underlying Securities trustee to declare the unpaid
principal amount of the Underlying Securities and any accrued and unpaid
interest thereon to be due and payable.
<PAGE>
15
IN WITNESS WHEREOF, the parties hereto have caused this
Supplement to be duly executed by their respective authorized officers as of the
date first written above.
Merrill Lynch Depositor, Inc.
as Depositor
By:
----------------------------------------
Name:
Title:
United States Trust Company of New York,
as Trustee
By:
----------------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
DEBT UNITS, SERIES 199[_] - [SERIES DESIGNATION]
UNDERLYING SECURITIES SCHEDULE
Underlying Securities: [___.___]% [Debentures][Senior Notes][Senior
Discount Notes][Senior Subordinated
Notes][specify other security] due ________
__, 20__.
Underlying Securities Issuer: [_____________]
[Underlying Securities guarantor: [_____________]]
Underlying Securities
[CUSIP][CINS][ISIN] Number: [__________]
Underlying Securities
Original Issue Date: ________ __, 199_
Underlying Securities
Original Issue Price: ___.__
Underlying Securities
Principal Amount[at maturity]
originally issued: $____________
Underlying Securities
Listing: [NYSE]
Underlying Securities
Registration: [registered with the Commission on Form
S-3][issued pursuant to an exemption [state
whether Rule 144(k) or other exemption
applies]]
[Principal Amount][Principal
Amount at Maturity] of
Underlying Securities
not Granted to the Trust: $_____________
Underlying Securities
Maturity Date: ________ __, 20__
Underlying Securities
Principal Payment Date: ________ __, 20__
<PAGE>
Underlying Securities
Interest Rate: [__.__]% per annum
[Underlying Securities
Interest Payment Dates: ________ __ and ________ __,
commencing ________ __, 199_]
Underlying Securities
Record Dates: [ ] __ and [ ] __
[Underlying Securities
Optional Redemption:]
Underlying Securities
Ranking: 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]]
Underlying Securities
Collateral: [None]
Underlying Securities
Amortization: [None]
Underlying Securities
Interest Accrual Periods: [semi-annual]
Underlying Securities
Authorized Denomination
and Specified Currency: [$1,000]
Underlying Securities
Rating as of Closing: "[___]" by [Moody's] and "[___]" by [S&P].
Underlying Securities
Form: [Book-entry debt security with
[DTC[Euroclear][Cedel]]
<PAGE>
SCHEDULE II
Amortization Schedule -- Class _-1 Certificates
(to be provided)
<PAGE>
SCHEDULE III
Accretion Schedule -- Class _-2 Certificates
(to be provided)
<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.
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR THE
INDIVIDUAL CERTIFICATES REPRESENTED HEREBY, THIS CERTIFICATE MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY DTC TO CEDE & CO. OR BY CEDE & CO. TO DTC OR TO
ANOTHER NOMINEE OF DTC OR BY DTC OR CEDE & CO. TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY.
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.
[---------------]
[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 ________ __, 199_ of
[_______________] (the "Underlying Security Issuer") and all payments received
thereon (the "Trust Property"), deposited in trust by Public STEERS Ltd. (the
"Depositor").
<PAGE>
B-2
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 ________ __, 1997 (the "Standard Terms"), between the
Depositor and United States Trust Company of New York, a New York [banking]
corporation, not in its individual capacity but solely as Trustee (the
"Trustee"), as supplemented by the Supplement, Series 199[___] - [SERIES
DESIGNATION], dated as of ________ __, 199__] (the "Supplement" and, together
with the Standard Terms, the "Trust Agreement"), between the Depositor and the
Trustee. This Certificate does not purport to summarize the 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 ________ __, 199__] (the "Closing Date"); 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
<PAGE>
B-3
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.), 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 Corporate Trust 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, 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 CHOICE- OF-LAW PROVISIONS,
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE HOLDER HEREOF SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
<PAGE>
B-4
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: [---------------] not in its
individual capacity but solely as
Trustee,
By:
------------------------------
Authorized Officer
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.
[---------------],
not in its individual capacity but
solely as Trustee,
Dated: By:
------------------------------
Authorized Officer
<PAGE>
B-5
(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 [_______________].
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.
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
<PAGE>
B-6
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 the Final
Scheduled Distribution 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).] [Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank or
trust company.]
<PAGE>
OPTION TO ELECT EXCHANGE
If you wish to have this Certificate, or a portion thereof,
exchanged by the Trustee pursuant to Section 4.07 of the Standard Terms, check
the Box: |_|
If you wish to have less than all of this Certificate exchanged, state
the amount:
$-------------------.
Date:
------------------
Your Signature:
-----------------------------------------------------------------
(Sign exactly as your name appears on the other side of this
Certificate)
Signature Guarantee:
----------------------------------------
<PAGE>
EXHIBIT C
Form of Market Agent Agreement
(begins on next page)
<PAGE>
EXHIBIT D
Form of Swap Agreement
(begins on next page)
August 26, 1997
Merrill Lynch Depositor, Inc.
c/o Merrill Lynch & Co., Inc.
World Financial Center
New York, New York 10281
Merrill Lynch Depositor, Inc.
Registration Statement on Form S-3
Registration No. 333-29015
--------------------------
Ladies and Gentlemen:
We are acting as special counsel to Merrill Lynch Depositor,
Inc. (the "Company"), in connection with the Registration Statement on Form S-3
(Registration No. 333-29015) (together with the exhibits and any and all
amendments thereto, the "Registration Statement") filed with the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the registration by the Company of STEERS(R)
Trust Certificates (the "Trust Certificates"). As described in the Registration
Statement, the Certificates will be issued in series (each, a "Series") (and may
be issued in classes within any given Series), with each Series to be issued by
a trust (each, a "Trust") to be formed by the Company pursuant to the Standard
Terms for Trust Agreements (the "Standard Terms") and, in each case, a series
supplement to the Standard Terms (each, a "Series Supplement", and, together
with the Standard Terms, the "Trust Agreement").
In this capacity, we have examined (a) a signed copy of the
Registration Statement and (b) a copy of the Standard Terms and form of Series
Supplement. We have also examined originals, or copies certified or otherwise
identified to our satisfaction, of such other corporate records of the Company,
such other certificates and advice of public officials and of officers of the
Company, including resolutions of the Board of Directors of the Company, and
such other agreements, instruments and documents as we have deemed necessary as
a basis for the opinions expressed below. In such examination we have assumed
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, and the conformity with the originals of all documents
submitted to us as copies. As to questions of fact material to such opinions, we
have relied upon such certificates and advice. The opinions set forth below are
also based upon the assumptions that: (i) the
<PAGE>
Registration Statement, as finally amended (including any post-effective
amendments), has become effective under the Securities Act; (ii) the amount,
price, interest rate and other principal terms of the Certificates and the
applicable Series Supplement have been approved by the Board of Directors of the
Company or an authorized designee thereof; (iii) the related Trust Agreement
will be duly authorized, executed and delivered by the parties thereto
substantially in the form filed as an exhibit to the Registration Statement; and
(iv) the Certificates will be duly authenticated by the Trustee in accordance
with the Trust Agreement and sold and delivered by the Company against payment
therefor.
Our opinions expressed herein are limited to the laws of the
State of New York, the General Corporation Law of the State of Delaware and the
Federal law of the United States, and we do not express any opinion herein
concerning any other law.
Based upon and subject to the foregoing, and having regard for
such legal considerations as we have deemed relevant, we are of the opinion that
the Certificates will be legally issued, fully paid and nonassessable, will be
legal, valid and binding obligations of the applicable Trust, enforceable
against such Trust in accordance with their terms, except as enforcement thereof
may be limited by bankruptcy, insolvency (including, without limitation, all
laws relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless of
whether enforcement is considered in a proceeding at law or in equity).
We hereby consent to the use of this opinion as an exhibit to
the Registration Statement and to the use of our name under the heading "Legal
Opinions" in the Prospectus. In giving this consent, we do not thereby concede
that we come within the category of persons whose consent is required by the
Securities Act or the General Rules and Regulations promulgated thereunder.
The opinions expressed above are given only as of the date
hereof, and we do not assume (and shall not have) any obligation to update such
opinions.
Very truly yours,
/s/ Shearman & Sterling
RE/PDF
