MARKED TO SHOW CHANGES
As filed with the Securities and Exchange Commission on August 1, 1997.
Registration No. 333-29015
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO.1
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
- -------------------------------------------------------------------------------
Debt Units $1,000,000 $304.00
===============================================================================
(1) This registration statement also registers an indeterminate amount of Debt
Units to be sold by the Underwriter in connection with market-making
activities.
(2) Estimated solely for purposes of calculating the registration fee.
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 Debt Units representing a proportionate undivided beneficial interest in
certain distributions to be made by the trust described therein. The Underlying
Securities for the offering of Debt Units 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
$[ ]
DEBT UNITS, Series 199_-[ ]
(UNDERLYING SECURITIES WILL BE [___]% [DEBENTURES][OTHER SECURITIES] DUE
[ ] __, 20__ ISSUED BY
[ ])
Each Debt Unit, Series 199_-[ ] offered hereby (collectively, the "Debt
Units") 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 Debt Units 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 Debt Units, 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 Debt Units (the "Debt Unitholders").
The holders of the Class _-1 Debt Units 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 Debt Units.
[The Class _-1 Debt Units will amortize on each Distribution Date on a level
yield basis.] The holders of the Class _-2 Debt Units will not be entitled to
distributions of interest. On [ ] __, 20__ (the "Final Scheduled Distribution
Date"), the Class _-2 Debt Units 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 Debt Units) or Underlying
Securities (in the case of the Class _-2 Debt Units) will be made on a pro rata
basis to the holders of the respective Debt Unit Class. It is a condition to the
issuance of the Debt Units that the Debt Units 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 Debt Units 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 4.
(cover continued on next page)
S-1
<PAGE>
THE DEBT UNITS REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN THE DEPOSITOR OR ANY OF ITS AFFILIATES.
THE DEBT UNITS 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
AGGREGATE DEBT UNIT
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 Debt Units 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 Debt Units.
The Class _-1 Debt Units will amortize on each Distribution Date on a level
yield basis.
(2) The holders of the Class _-2 Debt Units will not be entitled to
distributions of interest. On the Final Scheduled Distribution Date, the
Class _-2 Debt Units will be entitled to a distribution of all of the
Underlying Securities then held by the Trust.
The Class _-1 and Class _-2 Debt Units 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 Debt
Units 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 Debt Units 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 Debt Units 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.
-------------------
The date of this Prospectus Supplement is [ ] __, 199_.
S-2
<PAGE>
(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 Debt
Unitholders in the manner and priority described herein.
The Debt Units 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 Debt
Units 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 Debt Units only under the limited
circumstances described herein. See "Description of the Debt Units--Definitive
Debt Units".
THE DEBT UNITS OFFERED BY THIS PROSPECTUS SUPPLEMENT WILL CONSTITUTE A
SEPARATE SERIES OF DEBT UNITS 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 DEBT UNITS
SECURITIES OFFERED................. The Debt Units, Series 199_-[ ] (the
"Debt Units"). The Debt Units will be
offered in two Classes, Class _-1 and
Class _-2. Each Class of Debt Units
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 Debt Units will be derived solely
from the Underlying Securities.
THE TRUST.......................... The Debt Units, 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
DEBT UNITS....................... $[ ].
S-4
<PAGE>
PRINCIPAL AMOUNT AT MATURITY
OF CLASS _-2 DEBT UNITS.......... $[ ].
FINAL SCHEDULED DISTRIBUTION
DATE .......................... [ ] __, 20__.
DISTRIBUTIONS .....................
GENERAL....................... The Underlying Securities will be the
sole source of distributions on the Debt
Units.
All distributions of payments (in the
case of the Class _-1 Debt Units) or
Underlying Securities (in the case of
the Class _-2 Debt Units) will be made
on a pro rata basis to the holders of
the respective Debt Unit Class.
CLASS _-1 DEBT UNITS.......... The Class _-1 Debt Units will be issued
in an initial principal amount of $[ ].
The Class _-1 Debt Units 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
Debt Units in accordance with the
amortization schedule set forth herein
under "Description of the Debt
Units--General", and the payment of
interest at a rate of [ ]% per annum on
the outstanding principal amount of the
Class _-1 Debt Units. The Class _-1 Debt
Units will amortize on each Distribution
Date on a level yield basis.
CLASS _-2 DEBT UNITS.......... The Class _-2 Debt Units will have a
principal amount at maturity of $[ ] and
will not be entitled to distributions of
interest. The Class _-2 Debt Units 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 Debt
Units--General". On [ ] __, 20__ (the
"Final Scheduled Distribution Date"),
the Class _-2 Debt Units 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 DEBT UNITS 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 Debt Units and the Class _-2 Debt
Units in accordance with the Allocation
Ratio (as set forth below) or (y)
distribute the Underlying Securities
between the Class _-1 Debt Units and
S-5
<PAGE>
the Class _-2 Debt Units 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 DEBT UNITS
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 Debt Units and the
Class _-2 Debt Units 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 Debt Units and the Class
_-2 Debt Units in accordance with the
Allocation Ratio.
RECORD DATES....................... The day immediately preceding each
Distribution Date.
DENOMINATIONS AND
SPECIFIED CURRENCY............... The Debt Units will be denominated and
payable in U.S. dollars (the "Specified
Currency"). The Debt Units will be
issued in minimum principal amounts of
[$____] and in integral multiples
thereof. [One Debt Unit of each Class
may be issued in an amount other than an
integral multiple of the applicable
minimum denomination.]
FORM OF SECURITY................... Book-entry Debt Units with The
Depository Trust Company ("DTC"), except
in certain limited circumstances. See
"Description of the Debt
Units--Definitive Debt Units".
S-6
<PAGE>
Distributions thereon will be settled in
immediately available (same-day) funds.
CUSIP NUMBERS...................... Class _-1 Debt Units: [ ].
Class _-2 Debt Units: [ ].
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 Debt
Units 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 Debt Units will
receive such treatment under the
Internal Revenue Code of 1986, as
amended (the "Code"). The Class _-2 Debt
Units 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 Debt Units on
the New York Stock Exchange ("NYSE").
RATINGS............................ It is a condition to the issuance of the
Debt Units that the Debt Units 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 Debt Units by Moody's
addresses the likelihood of the ultimate
payment of principal and interest on the
Debt Units or any Underlying Securities
distributed in respect thereof. The
rating of the Debt Units by S&P
addresses the likelihood of timely
receipt of interest on the Class _-1
Debt Units or any Underlying Securities
distributed in respect of Debt Units.
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
Debt Units. A security rating is not a
recommendation to buy, sell or hold
securities. The rating on the Debt Units
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".
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
S-7
<PAGE>
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 Debt Units 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:
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.
UNDERLYING SECURITIES:
INTEREST PAYMENT DATES........... [ ] __ and [ ] __.
S-9
<PAGE>
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 Debt Unitholder 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 Debt Units 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 Debt Units.
Limited Liquidity
There can be no assurance that an active public market for any Series
of Debt Units will develop or, if a public market develops, as to the liquidity
of the trading market for such Debt Units. Merrill Lynch & Co. has advised the
Depositor that it intends to make a market in the Debt Units, as permitted by
applicable laws and regulations, after the issuance thereof. Merrill Lynch & Co.
is not obligated, however, to make a market in the Debt Units 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 Debt Units does not develop or continue, the market
prices and liquidity of the Debt Units may be adversely affected.
Maturity and Yield Considerations; Reinvestment Risk
The yield realized by a holder of a Debt Unit depends upon several
factors, including the purchase price of the Debt Units, 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 Debt Units 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 Debt Units. Therefore, an investor in the Debt
Units may be unable to realize a comparable yield upon reinvestment of the funds
from such early redemption.
Zero Coupon Nature of the Class _-2 Debt Units
Because the Class _-2 Debt Units do not receive allocations of either
interest or principal until the Final Scheduled Distribution Date, the changes
in market value of the Class _-2 Debt Units as a result of changes in interest
rates or spreads are expected to be more than for the Underlying Securities.
Although the Class _-2 Debt Units will not receive any cash flow during the term
of the Trust, the Class _-2 Debt Units 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 Debt Units, 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
S-12
<PAGE>
distribute the Underlying Securities notwithstanding market conditions at the
time, and the Trustee will have no discretion to 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 Debt Units represent interests in obligations of a single obligor.
In particular, the Debt Units 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 Debt Units 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 Debt Units Subject to Change
At the time of issuance, the Debt Units 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 Debt Units is not a recommendation to
purchase, sell or hold a security inasmuch as such ratings do not comment on the
market price of the Debt Units 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
Debt Units.
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 Debt Units 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
S-13
<PAGE>
will not receive any of the proceeds of the sale of the Underlying Securities to
the Depositor or the issuance of the Debt Units.
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 Debt Units. 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 Debt Units 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 Debt Units. 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 Debt Units 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 DEBT UNITS.
S-14
<PAGE>
CONSEQUENTLY, THE ABILITY OF DEBT UNITHOLDERS TO RECEIVE DISTRIBUTIONS IN
RESPECT OF THE DEBT UNITS WILL DEPEND ENTIRELY ON THE TRUST'S RECEIPT OF
PAYMENTS ON THE UNDERLYING SECURITIES. PROSPECTIVE PURCHASERS OF THE DEBT UNITS
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 DEBT UNITS 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
S-15
<PAGE>
Underlying Securities. [Describe common restrictive, financial and other
covenants on the Underlying Securities Issuer contained in the Indenture.]
[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 or 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. There have been several recent proposals
to disallow interest deductions under the Code on any debt instrument that has a
maturity date of more than 40 years, or is payable in stock, or is convertible
into the stock of the issuer or a related party. There are also some proposals
to deny interest deductions under the Code on debt securities with maturities
greater than 15 years that are not accounted for as debt on an issuer's
financial statements. [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.
S-16
<PAGE>
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.
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 DEBT UNITS
General
The Debt Units will be denominated and distributions with respect
thereto will be payable in U.S. dollars (the "Specified Currency"). The Class
_-1 Debt Units have an initial aggregate principal amount of $[ ]. The Class _-2
Debt Units have a principal amount at maturity of $[ ].
The holders of the Class _-1 Debt Units 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 Debt
Units 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 Debt Units. The Class _-1 Debt Units will amortize on
each Distribution Date on a level yield basis. The Class _-1 Debt Units
generally will not be entitled to any allocation of any principal payments
received on the Underlying Securities.
Interest on the Class _-1 Debt Units 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 Debt Units will be issued in an initial principal amount
of $[ ] and the holders thereof will not be entitled to distributions of
interest. The Class _-2 Debt Units 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 Debt Units 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
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<PAGE>
60th day preceding [ ] __, 20__, the Trustee shall request instructions from the
registered holders of the Class _-2 Debt Units regarding the account or accounts
to which transfer of the Underlying Securities should be made, and other
information relevant to such transfer.
S-18
<PAGE>
AMORTIZATION SCHEDULE--CLASS _-1 DEBT UNITS
<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-19
<PAGE>
ACCRETION SCHEDULE--CLASS _-2 DEBT UNITS
<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.
The Debt Units will be delivered in registered form. The Debt Units
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 Debt Unit of each Class may be issued in an amount other than an
integral multiple of the applicable minimum denomination.] Each Class of Debt
Units 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 Debt Unit will be entitled to receive a
certificate representing such person's interest, except as set forth below under
"--Definitive Debt Units". Unless and until Definitive Debt Units are issued
under the limited circumstances described herein, all references to actions by
Debt Unitholders with respect to any such Debt Units shall refer to actions
taken by
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<PAGE>
DTC upon instructions from its Participants. See "--Definitive Debt Units" below
and "Description of Debt Units--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 Debt
Unitholder under the Trust Agreement only at the direction of one or more
Participants to whose DTC account such Debt Units 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 Debt
Units evidence such Voting Rights authorize divergent action.
Definitive Debt Units
Definitive Debt Units will be issued to Debt Unitholders 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 Debt Units 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 Debt Units. Upon surrender by DTC of the
definitive certificates representing the Debt Units and receipt of instructions
for re-registration, the Trustee will reissue such Debt Units as Definitive Debt
Units issued in the respective principal amounts owned by the individual owners
of such Debt Units, and thereafter the Trustee will recognize the holders of
such Definitive Debt Units as Debt Unitholders under the Trust Agreement.
Listing on the New York Stock Exchange
Application will be made to list the Class _-1 and Class _-2 Debt Units
on the NYSE. There can be no assurance that the Debt Units, 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 Debt Unit
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 Debt Unitholders;
(b) to the holders of the Class _-1 Debt Units [and the
Retained Interest], interest at the rate of [ ]% per annum on the
principal amount of the Class _-1 Debt Units [and the Retained
Interest] and principal distributable on such Class _-1 Debt Units on
such Distribution Date;
(c) to the holders of the Class_-1 Debt Units, 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;
S-21
<PAGE>
(d) to the holders of the Class _-2 Debt Units, 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 Debt Unitholders 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
Debt Units or be owed to Debt Unitholders 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 Debt
Unitholders. 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 Debt Unitholders are made.
All amounts received on or with respect to the Underlying Securities,
which are not distributed to Debt Unitholders 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 Debt Units, 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 Debt Units, 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 Debt Unitholders. To the extent Available Funds are
insufficient to make any such distributions due to any Class of Debt Unit, 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 Debt Units
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 Debt Units of a certain principal amount
at maturity and Class _-1 Debt Units 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 Debt Units 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 Debt
Units--Optional Exchange" in the Prospectus. Upon such tender, the Trustee will
deliver Deposited Assets having a principal amount equal to the combined
principal amounts of the Class _-1 Debt Units and Class _-2 Debt Units being
tendered to such Debt Unitholder.
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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 Debt Units and the Class _-2 Debt
Units in accordance with the Allocation Ratio][distribute the Underlying
Securities between the Class _-1 Debt Units and the Class _-2 Debt Units in
accordance with the Allocation Ratio][submit to a vote of the Debt Unitholders
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 Debt Units and the Class _-2 Debt Units 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 Debt Units and the Class
_-2 Debt Units 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 Debt Units.
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 Debt Units 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 Debt Units 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 Debt Units. 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 Debt Units. 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 Administrative Agent Termination Event", and "--Evidence as
to Compliance" are not applicable to the Debt Units.
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The Trustee
United States Trust Company of New York will act as the Trustee for the
Debt Units 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 Debt Unitholders
representing not less than the Required Percentage-Remedies (as defined below)
of the aggregate Voting Rights, and (iii) the Debt Unitholders 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 Debt Unitholders) or (y) out of the Trustee's
own funds (in which case the Trustee can receive reimbursement from the Debt
Unitholders 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 Debt Unitholders on
such Distribution Date are made.
Events of Default
An event of default with respect to the Debt Units 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 Debt Units, the Trustee will
give notice to the Debt Unitholders, 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 Debt Unitholders.
No Debt Unitholder will have the right to institute any proceeding with
respect to the Trust Agreement, unless (i) such Debt Unitholder previously has
given to the Trustee written notice of a continuing breach, (ii) Debt
Unitholders 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 Debt Unitholder or Debt
Unitholders 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 Debt Unitholders 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 Debt Units and the Class _-2 Debt Units in accordance with the
Allocation Ratio. Within each such Class, Voting Rights shall be allocated among
Debt Unitholders in proportion to the then outstanding principal amounts, or
notional amounts, of their respective Debt Units. 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
S-24
<PAGE>
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 Debt Units
without the consent of the holders of 100% of such Class of Debt Units;
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
Debt Unitholder of record as of such date. The Trustee shall request
instructions from the Debt Unitholders 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 Debt
Units) as the Debt Units of the Trust were actually voted or not voted by the
Debt Unitholders 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 Debt Unitholders and the votes of the Class _-2 Debt Unitholders
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 Debt Unitholders, 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 Debt Unitholders representing 100% of the outstanding Class _-1
and Class _-2 Debt Units. The Trustee shall have no liability for any failure to
act resulting from Debt Unitholders' late return of, or failure to return,
directions requested by the Trustee from the Debt Unitholders.
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 Debt Unitholders 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 Debt Units 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 Debt Unitholders,
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
Securities, the interests of the Debt Unitholders may differ from each other and
from those of other holders of outstanding Debt Securities issued by the
Underlying Securities Issuer.
S-25
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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 Debt
Unitholders and (iii) the Final Scheduled Distribution Date. See "Description of
the Trust Agreement--Termination" in the Prospectus.
CERTAIN 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 Debt Units by an initial holder of Debt Units.
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 Debt Units as "capital assets" (generally, property
held for investment) within the meaning of Section 1221 of the Code, and who do
not hold their Debt Units as part of a "straddle," a "hedge" or a "conversion
transaction". Furthermore, no authority exists concerning the tax treatment of
some aspects of the Debt Units, 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 Debt Units 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 Debt Units.
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 Debt Unitholder will be subject to Federal
income taxation as if it owned directly the portion of the Underlying Securities
allocable to such Debt Units and as if it paid directly its share of reasonable
expenses paid by the Trust.
Income of Debt Unitholders
In General. Under Section 1286 of the Code, the Debt Units represent
ownership of newly-issued debt instruments under the Code. The Class __-2 Debt
Units 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 Debt Units
represent interests in a newly issued self-amortizing debt instrument having a
principal amount generally equal to the purchase price of the Class __-1 Debt
Units and maturing on the Final Scheduled Distribution Date. Under this
approach, payments made on the Class __-1 Debt Units on each Distribution Date
will partially represent a return of principal and partially represent interest,
as calculated based upon the Debt Unit's yield to maturity. Debt Unitholders
that report income under the cash method of accounting would include in income
upon receipt that portion of the payment representing interest. The Internal
Revenue Service could take the position, however, that the Class __-1 Debt Units
represent a newly issued debt issued with OID.
S-26
<PAGE>
In the case of a Debt Unit 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 Debt Unit); over (ii) the purchase price of the
Debt Unit (less accrued interest). The holder of such a Debt Unit, 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 Debt Unitholders on which they would recognize gain or loss.
Deductibility of Trust's Fees and Expenses
In computing its Federal income tax liability, a Debt Unitholder 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
Debt Unitholder 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 Debt Unit
A Debt Unitholder's tax basis in a Debt Unit generally will equal the
cost of such Debt Unit (A) increased by any amounts of OID and (B) reduced by
any payments of principal, in the case of a Debt Unit 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 Debt Unit representing ownership of a
debt instrument issued with OID.
If a Debt Unit or Underlying Security is sold, gain or loss will be
recognized equal to the difference between the proceeds of sale allocable to the
Debt Unitholder and the Debt Unitholder's adjusted basis in its Debt Unit. Any
gain or loss will be a capital gain or loss if the Debt Unit was held as a
capital asset.
Distributions on Class _-2 Debt Units
The distribution of the Underlying Securities to the Class _-2 Debt
Unitholders on the Final Scheduled Distribution Date should not constitute a
taxable transaction to the recipients. Similarly, a redemption by the Trust of
Debt Units in exchange for the Underlying Securities upon the tender by a Debt
Unitholder of Class _-2 Debt Units of a certain principal amount and Class _-1
Debt Units representing a like percentage of the outstanding principal amount
thereof should not constitute a taxable transaction to the Debt Unitholder.
Backup Withholding
Payments made on the Debt Units and proceeds from the sale of the Debt
Units will not be subject to a "backup" withholding tax of 31% unless, in
general, the Debt Unitholder fails to comply with certain reporting procedures
and is not an exempt recipient under applicable provisions of the Code.
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<PAGE>
Foreign Debt Unitholders
To the extent that amounts paid to Debt Unitholders that are not United
States Persons ("Foreign Debt Unitholders") 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 Debt Unitholder 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 Debt Unitholders 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 Debt
Unitholders 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 or trust the
income of which is includable in gross income for U.S. Federal income tax
purposes, regardless of its source.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Code impose certain requirements on (a) an employee benefit
plan (as defined in Section 3(3) of ERISA), (b) a plan described in Section
4975(e)(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 Debt Unit, 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 Debt Units 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
Debt Units 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 Debt Unit unless (i) one or more prohibited
transaction exemptions ("PTEs") applies or (ii) in the case of the Underlying
Securities Issuer, it is not a 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
Debt Unit.
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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 Debt Units; 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
Debt Units 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 Debt Unitholders
owning more than 66 2/3% of the aggregate beneficial interest of Debt Units. 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 Debt Units 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 Debt Unit, a Plan shall be deemed to have
represented and warranted to the Depositor, Trustee, and Underwriter that such
acquisition and holding of a Debt Unit does not involve a non-exempt prohibited
transaction with respect to such Plan, including with respect to the activities
of the Trust.
S-29
<PAGE>
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 Debt Units.
The Depositor has been advised by the Underwriter that the Underwriter
proposes to offer the Debt Units 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 Debt Units 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
Debt Units for whom they may act as agents. The Underwriter and any dealers that
participate with the Underwriter in the distribution of Debt Units may be deemed
to be underwriters, and any profit on the resale of Debt Units 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 Debt Units.
[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 DEBT UNITS
The validity of the Debt Units 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 Debt Units that the Debt Units
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 Debt Units by Moody's addresses the likelihood of the
ultimate payment of principal of and interest on the Debt Units or any
Underlying Securities distributed in respect thereof. The rating of the Debt
Units by S&P addresses the likelihood of timely receipt of interest on the Class
_-1 Debt Units or any Underlying Securities distributed in respect of the Class
_-2 Debt Units and ultimate receipt of principal on any Underlying Securities
distributed in respect of the Class _-2 Debt Units. The ratings address the
likelihood of the receipt by Debt Unitholders of payments required under the
Trust Agreement, and are based primarily on the credit quality of the Underlying
Securities. The rating on the Debt Units 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.
S-30
<PAGE>
The Depositor has not requested a rating on the Debt Units 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 Debt Units, or, if it does,
what rating would be assigned by any such other rating agency. A rating on the
Debt Units by another rating agency, if assigned at all, may be lower than the
ratings assigned to the Debt Units by Moody's and S&P.
S-31
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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
- ----------
DEBT UNITS
(ISSUABLE IN SERIES)
Merrill Lynch Depositor, Inc.
DEPOSITOR
The Debt Units (the "Debt Units") 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. Debt Units 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 Debt Units 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 Debt Units of such Series ("Debt Unitholders") 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 Debt Units may also
include, or the Debt Unitholders of such Debt Units 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 Debt Units ("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 Debt Units, 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 Debt Units. 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 Debt Units 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 Debt Units, 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 Debt Units 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 Debt Units 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 Debt Units on the
New York Stock Exchange ("NYSE"). At the time of issue, each Series of Debt
Units 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 Debt Units will develop
or, if a public market develops, as to the liquidity of the trading market for
such Debt Units
Unless otherwise specified in the applicable Prospectus Supplement,
each Series of Debt Units 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 Debt Units 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 Debt Units--Global Securities".
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH HEREIN
UNDER "RISK FACTORS", BEGINNING ON PAGE 4.
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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 Debt Units 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 Debt Units offered hereby unless
accompanied by a Prospectus Supplement.
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MERRILL LYNCH & CO.
------------------
The date of this Prospectus is [ ] __, 1997.
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a Series of Debt Units 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 Debt Units; (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 Debt Unit 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 Debt Units
(including terms relating to the rights of the Trust or any third party to
redeem or purchase such Debt Units prior to the Final Scheduled Distribution
Date). See "Description of the Debt Units--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 Debt Units. 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 Debt Units 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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<PAGE>
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 DEBT UNITHOLDERS
Except as otherwise specified in the applicable Prospectus Supplement,
unless and until definitive Debt Units (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 Debt Units. If Definitive
Debt Units are issued, such reports will be prepared by the related Trustee and
sent on behalf of the related Trust directly to the Debt Unitholders in
accordance with the Trust Agreement. See "Description of the Debt Units--Global
Securities" and "Description of the Trust Agreement--Reports to Debt
Unitholders; 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 Debt Unitholders.
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>
RISK FACTORS
In connection with an investment in the Debt Units 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 Debt Units will develop or, if a public market
develops, as to the liquidity of the trading market for such Debt Units. Merrill
Lynch & Co. has advised the Depositor that it intends to make a market in the
Debt Units, as permitted by applicable laws and regulations, after the issuance
thereof. Merrill Lynch & Co. is not obligated, however, to make a market in the
Debt Units 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 Debt Units does not
develop or continue, the market prices and liquidity of the Debt Units may be
adversely affected.
Limited Recourse
The Debt Units 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. Debt Units 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 Debt Units 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 Debt Units being offered. The Debt Units 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, Debt
Unitholders' receipt of distributions in respect of the Debt Units 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
Several factors affect the timing of distributions on any Series (or
Class within such Series) of Debt Units. 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 Debt Units. 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 Debt Units
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.
4
<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 Debt Units 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 Debt Units 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 Debt Units--Call Right". There is
no assurance that an investment in the Debt Units 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 Debt Units
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 Debt Unitholders 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 Debt Units if those Debt Units had
not been called.
The extent to which the yield to maturity of such Debt Units 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 Debt Unit 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 Debt Units, 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 Debt Units backed by a
pool of Underlying Securities having interest rates higher or lower than the
then applicable Debt Unit Rate, which may adversely affect the yield on such
Series of Debt Units.
The applicable Prospectus Supplement for a Series of Debt Units 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 Debt Unit 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 Debt Unit. Depreciation of the
Specified Currency for a Debt Unit against the U.S. dollar would decrease the
effective yield of such Debt Unit below its Debt Unit 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 Debt Units
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 exchange
5
<PAGE>
controls, it is possible that, on a Distribution Date with respect to any
particular Debt Unit, the currency in which amounts then due to be distributed
in respect of such Debt Unit would not be available.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN DEBT UNITS DENOMINATED IN
A CURRENCY OTHER THAN U.S. DOLLARS. SUCH DEBT UNITS 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.
Information Concerning Underlying Securities Issuers; Risk of Loss if Public
Information Not Available
A prospective purchaser of Debt Units 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 concerning an Underlying Securities Issuer is
important in considering whether to invest in or sell Debt Units. To the extent
such information ceases to be available, an investor's ability to make an
informed decision to purchase or sell Debt Units 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
6
<PAGE>
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 Debt Units 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 Debt Units 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 Debt
Unitholders in accordance with the Allocation Ratio (as defined below) (any such
sale will result in a loss to the Debt Unitholders 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 Debt Unitholders in accordance with the Allocation Ratio, or (iii) elect
either (i) or (ii) based upon a majority of votes cast by the affected Debt
Unitholders. The choice of remedies will be set forth for a given Series in the
Prospectus Supplement, and the Trustee, Depositor and Debt Unitholders will have
no discretion in this respect.
Ratings of the Debt Units Subject to Change
At the time of issuance, the Debt Units 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 Debt Units on the basis of several
factors, including the related Deposited Assets, any Credit Support and the
relative priorities of the Debt Unitholders 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 Debt Units.
Any rating issued with respect to the Debt Units is not a
recommendation to purchase, sell or hold a security; such ratings do not comment
on the market price of the Debt Units 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
Debt Units.
Global Securities Limit Direct Voting; Pledge of Debt Units
Unless otherwise specified in the applicable Prospectus Supplement, the
Debt Units 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 Debt Units to the purchasers of such
Debt Units. Consequently, unless and until such individual definitive Debt Units
of a particular Series are issued, such purchasers will not be recognized as
Debt Unitholders under the Trust Agreement. Until such time, such purchasers
will only be able to exercise the rights of Debt Unitholders indirectly through
the Depositary and its respective Participants (as defined below) and, as a
result, the ability of any such purchaser to pledge that Debt Unit to persons or
entities that do not participate in the Depositary's system, or otherwise to act
with respect to such Debt Unit, may be limited. See "Description of the Debt
Units--Global Securities" and any further description contained in the
applicable Prospectus Supplement.
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 Debt Units 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 Debt
Unitholders of the relevant
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<PAGE>
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 Debt Unitholders 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
Debt Unitholders 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 Debt Unitholders of a Series (or Class within such Series) may
become effective only with the consent of each affected Debt Unitholder 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
Debt Units of a Series (or Class within such Series) by a Rating Agency would
require the consent of a specified higher percentage of Debt Unitholders of that
Series (or Class within such Series).
General Unavailability Of Optional Exchange
Although the Prospectus Supplement for a Series of Debt Units may
designate such Series as an Exchangeable Series (as defined below) and may
provide that a Debt Unitholder may exchange Debt Units 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 such
exchange would not be inconsistent with continued satisfaction of Rule 3a-7
under the Investment Company Act of 1940, as amended, and all applicable rules,
regulations and interpretations thereunder and would not affect the
characterization of the Trust as a "grantor trust" under the Code. See
"Description of the Debt Units--Optional Exchange". Accordingly, the Optional
Exchange Right described in this Prospectus under the heading "Description of
the Debt Units--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 Debt Unitholders will
generally not be able to exchange their Debt Units 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
Debt Units of the applicable Exchangeable Series outstanding.
------------------
The Prospectus Supplement for each Series of Debt Units will set forth
information regarding additional risk factors, if any, applicable to such Series
(and each Class within such Series).
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 Debt Units.
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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 Debt Units
(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 Debt Unit Account (as defined below) for the
benefit of the Debt Unitholders 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 Debt Units to the Trustee named in the applicable Prospectus
Supplement, in its capacity as Trustee, for the benefit of the Debt Unitholders
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 Debt Unit 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 Debt Units. 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 Debt Units 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.
SS_NYL3A/20887.1
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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 Debt Units 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 Debt Units 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 Debt Units 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 Debt Units will also
be affected by variations in the interest rates applicable to, and the
corresponding payments in respect of, such Debt Units, to the extent that the
Debt Unit Rate, if any, for such Series (or Class) is based on variable or
adjustable interest rates. With respect to any Series of Debt Units 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 Debt Unit Rates, if any, applicable to such Debt Units may
affect the yield thereon.
The Prospectus Supplement for each Series of Debt Units 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 DEBT UNITS
Each Series (or, if more than one Class exists, the Classes within such
Series) of Debt Units 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
Debt Units 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 Debt Units. The
applicable Prospectus Supplement for a Series of Debt Units 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 Debt Units. 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 "Debt Unit" refers to all the Debt Units 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 Debt Units
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.
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General
There is no limit on the amount of Debt Units that may be issued under
the Trust Agreement, and the Trust Agreement will provide that Debt Units of the
applicable Series may be issued in multiple Classes. The Series (or Classes
within such Series) of Debt Units 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 Debt Units in respect of which this Prospectus and such Prospectus
Supplement are being delivered:
(i) the title of such Debt Units;
(ii) the Series of such Debt Units 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 Debt Units 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 Debt Unitholders of each such
Class);
(vii) whether the Debt Units of such Series are Fixed Rate
Debt Units or Floating Rate Debt Units (each, as
defined below) and the applicable interest rate (the
"Debt Unit Rate"), or the method of calculation
thereof applicable to such Series, if variable (a
"Floating Debt Unit 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 not inconsistent with
continued satisfaction of the applicable requirements
for exemption 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 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
Debt Units held by a Debt
11
<PAGE>
Unitholder 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 Debt Units 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 Debt Units"), and the
applicable terms thereof;
(xiii) the identity of the Depositary (as defined below), if
other than the Depository Trust Company, for such
Debt Units;
(xiv) the Specified Currency applicable to the Debt Units
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 Debt Unitholder,
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
Debt Unitholders 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 Debt Units.
The United States Federal income tax consequences and ERISA
consequences relating to any Series or any Class within such Series of Debt
Units 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 Debt Units
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 Debt Unit 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 Debt Units. 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 Debt Units are issued
in the limited circumstances described herein, they may be transferred or
exchanged for like Debt Units 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
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<PAGE>
Distributions allocable to principal, premium (if any) and interest on
the Debt Units 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 Debt Units 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 Debt Unit will be distributed only upon surrender of such
Debt Unit at the applicable location set forth above.
Distributions on Debt Units will be made, except as provided below, by
check mailed to the Debt Unitholders 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 Debt
Unitholder of $10,000,000 or more in aggregate principal amount of Debt Units 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 Debt Unit 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 Debt Units
Each Class of Debt Units (other than certain Classes of Strip Debt
Units) of a given Series may have a different Debt Unit Rate, which may be a
fixed or floating Debt Unit Rate, as described below. In the case of Strip Debt
Units with a nominal or no Debt Unit 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
Debt Units with a nominal or no Debt Unit Principal Balance will be made on each
Distribution Date. Reference to the Notional Amount of a Class of Strip Debt
Units herein or in a Prospectus Supplement does not indicate that such Debt
Units 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 Debt Unit 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 Debt Unit Rate may be either a
fixed rate or a floating rate.
Fixed Rate Debt Units. Each Series of Debt Units with a fixed Debt Unit
Rate ("Fixed Rate Debt Units") will bear interest, on the outstanding Debt Unit
Principal Balance, from its Original Issue Date, or from the last date to which
interest has been paid, at the fixed Debt Unit 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
Debt Units with a nominal or no principal amount, until the Notional Amount
thereof is reduced to zero), except that, if so specified in the applicable
Prospectus Supplement, the Debt Unit 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 Debt Units 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 Debt Units 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 Debt Units will be computed on the basis of a 360-day year of twelve 30-day
months.
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Floating Rate Debt Units. Each Series of Debt Units with a variable
Debt Unit Rate ("Floating Rate Debt Units") will bear interest, on the
outstanding Debt Unit Principal Balance, from its Original Issue Date to but
excluding the first Interest Reset Date (as defined below) for such Series at
the Initial Debt Unit Rate set forth on the face thereof and in the applicable
Prospectus Supplement. Thereafter, the Debt Unit 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
Debt Units 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 Debt Units may be subject to adjustment from time to
time in response to designated changes in the rating assigned to such Debt Units
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 Debt Unit: (i) the CD Rate
("CD Rate Debt Unit"), (ii) the Commercial Paper Rate ("Commercial Paper Rate
Debt Unit"), (iii) the Federal Funds Rate ("Federal Funds Rate Debt Unit"), (iv)
LIBOR ("LIBOR Debt Unit"), (v) the Prime Rate ("Prime Rate Debt Unit"), (vi) the
Treasury Rate ("Treasury Rate Debt Unit") or (vii) another Base Rate, as set
forth in the applicable Prospectus Supplement. The "Index Maturity" for any
Series of Floating Rate Debt Units 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 Debt
Unit Principal Balance at a higher rate.
As specified in the applicable Prospectus Supplement, Floating Rate
Debt Units 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 Debt Unit Rate") and (ii) a minimum limitation, or floor, on the rate
at which interest may accrue during any such interest accrual period ("Minimum
Debt Unit Rate"). In addition to any Maximum Debt Unit Rate that may be
applicable to any Series of Floating Rate Debt Units, the Debt Unit Rate
applicable to any Series of Floating Rate Debt Units 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 Debt Unit Rates on each
Series of Floating Rate Debt Units. The applicable Prospectus Supplement will
set forth the identity of the Calculation Agent for each Series of Floating Rate
Debt Units. All determinations of interest by the Calculation Agent shall, if
made on a commercially reasonable basis and in good faith, be conclusive for all
purposes and binding on the holders of Floating Rate Debt Units of a given
Series.
The Floating Debt Unit 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 Debt Unit Rate in effect for the ten 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 Debt Units 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 Debt Unit, if such Business Day would
fall in the next calendar month, such Interest Reset Date will be the
immediately preceding Business Day.
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Unless otherwise specified in the applicable Prospectus Supplement,
interest payable in respect of Floating Rate Debt Units 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 Debt Unit, accrued interest shall be calculated by
multiplying the Debt Unit Principal Balance of such Debt Unit 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 Debt Unit Rate in effect on such day by 360, in the case of LIBOR Debt
Units, Commercial Paper Rate Debt Units, Federal Funds Rate Debt Units, Prime
Rate Debt Units and CD Rate Debt Units or by the actual number of days in the
year, in the case of Treasury Rate Debt Units. For purposes of making the
foregoing calculation, the variable Debt Unit 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 Debt Unit Rate on a Floating
Rate Debt Unit 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
Debt Units 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 Debt Units 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 Debt Unit of a
given Series, the Calculation Agent for such Series will provide the Debt Unit
Rate then in effect and, if determined, the Debt Unit Rate that will become
effective on the next Interest Reset Date with respect to such Floating Rate
Debt Unit.
CD Rate Debt Units. CD Rate Debt Units 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 "Debt Units of Deposit". 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 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 Debt
Units on such Record Date.
CD Rate Debt Units, like other Debt Units, are not deposit obligations
of a bank and are not insured by the Federal Deposit Insurance Corporation.
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Commercial Paper Rate Debt Units. Commercial Paper Rate Debt Units 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 Debt Units 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 Debt Units. Federal Funds Rate Debt Units 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 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 Debt
Units on such Record Date.
LIBOR Debt Units. LIBOR Debt Units 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
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("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 Debt Unit 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.
Prime Rate Debt Units. Prime Rate Debt Units 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
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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 Debt Units on such Record Date.
Treasury Rate Debt Units. Treasury Rate Debt Units 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 Debt Units on such Record Date.
Principal of the Debt Units
Each Debt Unit (other than certain Classes of Strip Debt Units) will
have a "Debt Unit 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 Debt
Units--Collections and Distributions" which will set forth the priority of
distributions on each Class of Debt Units in a given Series. The outstanding
Debt Unit Principal Balance of a Debt Unit 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 Debt Unit
Principal Balance of Debt Units 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 Debt Unit Principal Balance of a Series will be
specified in the applicable Prospectus Supplement.
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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 Debt Units 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 such exchange would not be
inconsistent with continued satisfaction of the applicable requirements for
exemption under Rule 3a-7 under the Investment Company Act of 1940, 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 Debt Units 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 Debt Units immediately after
such exercise. In addition, the exercise of an Optional Exchange Right will
decrease the aggregate amount of Debt Units of the applicable Exchangeable
Series outstanding. See "Risk Factors--General Unavailability of Optional
Exchange".
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 Debt Unitholders in accordance with the
Allocation Ratio (any such sale may result in a loss to the Debt Unitholders 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 Debt Unitholders in accordance with the Allocation Ratio, or (iii) elect
either (i) or (ii) based upon a majority of votes cast by the affected Debt
Unitholders. The choice of remedies will be set forth for a given Series in the
Prospectus Supplement, and the Trustee, Depositor and Debt Unitholders 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 Debt Unitholders 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".
Call Right
Merrill Lynch & Co., the Depositor or another party may hold the right
to purchase all or some of the Debt Units 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 Debt Unit Principal Balance of
each Debt Unit 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; and
(c) the price or prices at which a Call Right may be
exercised (each, a "Call Price").
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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
Debt Unitholder will be entitled to receive (in the case of a purchase of less
than all of the Debt Units) 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.
Global Securities
Unless otherwise specified in the applicable Prospectus Supplement, all
Debt Units 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 Debt Units represented
thereby (each, a "Definitive Debt Unit"), 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 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 Debt Units represented by such
Global Security to the accounts of its Participants. The accounts to be
accredited shall be designated by the underwriters of such Debt Units, or, if
such Debt Units 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 Debt Unitholder of the individual Debt Units
represented by such Global Security for all purposes under the Trust Agreement
governing such Debt Units. Except as set forth below, owners of beneficial
interests in a Global Security will not be entitled to have individual Debt
Units represented by such Global Security registered in their names, will not
receive or be entitled to receive physical delivery of any such Debt Units and
will not be considered the Debt Unitholders thereof under the Trust Agreement
governing such Debt Units. Because the Depositary can only act on behalf of its
Participants, the ability of a holder of any Debt Unit to pledge that Debt Unit
to persons or entities that do not participate in the Depositary's system, or to
otherwise act with respect to such Debt Unit, may be limited due to the lack of
a physical certificate for such Debt Unit.
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Distributions of principal of (and premium, if any) and any interest on
individual Debt Units represented by a Global Security will be made to the
Depositary or its nominee, as the case may be, as the Debt Unitholder of such
Global Security. None of the Depositor, the Trustee for such Debt Units, any
Paying Agent or the Debt Unit Registrar for such Debt Units 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 Debt Units 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 Debt Units,
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 Debt Units 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 Debt Units in exchange for the Global Security or Securities
representing such Debt Units. In addition, the Depositor may at any time and in
its sole discretion determine not to have any Debt Units of a given Series
represented by one or more Global Securities and, in such event, will issue
Definitive Debt Units of such Series in exchange for the Global Security or
Securities representing such Debt Units. Further, if the Depositor so specifies
with respect to the Debt Units of a given Series, an owner of a beneficial
interest in a Global Security representing Debt Units of such Series may, on
terms acceptable to the Depositor and the Depositary for such Global Security,
receive individual Definitive Debt Units 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 Debt
Units of the Series represented by such Global Security equal in principal
amount to such beneficial interest and to have such Definitive Debt Units
registered in its name.
The applicable Prospectus Supplement will set forth any specific terms
of the depository arrangement with respect to any Series of Debt Units 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 Debt Units (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 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 Debt Units. 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
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securities that are similar to TOPrS, 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 Debt Units, nor will an Underlying Securities
Issuer receive any of the proceeds from the sale of Underlying Securities or
from the issuance of the Debt Units.
Deposited Assets for a given Series of Debt Units and the related Trust
will not constitute Deposited Assets for any other Series of Debt Units and the
related Trust, and the Debt Units 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 Debt Units 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 trusts
organized by such issuers, or by issuers of preferred securities that are
similar to TOPrS, in each case organized under the laws of the United States or
any state thereof. The applicable 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 Debt
Unitholder 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 DEBT
UNITHOLDER 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 Debt Units in making its investment decision in connection
therewith; provided that the foregoing shall not apply to any information
concerning the Underlying Securities and any
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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
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 Debt Units 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
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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 Debt Units 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
Debt Unitholder 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 Debt Unitholders 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 Debt Unitholders'
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".
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 Debt Units 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
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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 Debt Units 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 Debt Units 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 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) whether the Underlying Securities were issued at a price lower than the
principal amount thereof; (x) 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; (xi)
material events of default or restrictive covenants provided for with respect to
such Underlying Securities; (xii) the rating thereof, if any; (xiii) the
principal United States market on which the Underlying Securities are traded, 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) and (x) 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 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 Debt Unitholders in accordance with the Allocation Ratio
(any such sale will result in a loss to the Debt Unitholders 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 Debt Unitholders. The
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applicable Prospectus Supplement will specify which of these two remedies must
be exercised by the Trustee, and the Trustee, the Depositor and the Debt
Unitholders will have no discretion in this respect.
Credit Support
As specified in the applicable Prospectus Supplement for a given Series
of Debt Units, the Trust for any Series of Debt Units may include, or the Debt
Unitholders 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 Debt Unitholders. 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 Debt Units
contains, or the Debt Unitholders of such Debt Units 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 Debt Unitholders of any given Class within a Series of Debt Units to receive
collections from the Trust for such Series and any Credit Support obtained for
the benefit of the Debt Unitholders of such Series (or Classes within such
Series) may be subordinated to the rights of the Debt Unitholders 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 Support to those Debt Unitholders of those other Classes. For example, if
losses are realized during a given period on the Deposited Assets relating to a
Series of Debt Units such that the collections received thereon are insufficient
to make all distributions on the Debt Units of such Series, those Realized
Losses would be allocated to the Debt Unitholders 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 Debt
Unitholders 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 Debt Units 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 Debt Unitholders 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
Debt Units of such Series. Further, payments to be made in respect of any forms
of Credit Support arranged for on behalf of the Debt Unitholders may be required
to be paid prior to any distributions that must be made to Debt Unitholders.
Letter of Credit; Surety Bond. The Debt Unitholders of any Series (or
Class or group of Classes of Debt Units 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
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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 Debt Units, in the manner
and priority specified in the applicable Prospectus Supplement. Amounts may be
distributed to Debt Unitholders 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 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 Debt Unitholders of each Series of Debt Units, 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
"Debt Unit 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 Debt Units 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 Debt Units 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 Debt Unitholders for a particular
Series or Class of Debt Units 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 Debt Units. 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 Debt Units, 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 Debt Units
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.
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DESCRIPTION OF THE TRUST AGREEMENT
General. The following summary of material provisions of the Trust
Agreement does not purport to be complete, and such summary is qualified in its
entirety by reference to the detailed provisions of the 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 Debt Units 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 Debt
Units 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, 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 Debt Unitholders.
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
Debt Unitholders, 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 Debt Units, 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 Debt Units 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
Debt Unitholders (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 Debt
Unitholders 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,
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all collections by or on behalf of the Trustee under any Credit Support
instrument are to be deposited in the Debt Unit 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 Debt Unit Account out of the net proceeds recovered
on any defaulted Deposited Asset, prior to the distribution of such proceeds to
Debt Unitholders, 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 Debt Units 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 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 Debt Unit 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 Debt Unitholders 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 Debt Unitholders of the related
Series of Debt Units. 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 Debt Unit 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
Debt Units 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 Debt Unit 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 Debt Unit Account for any
Series, the Trustee will replace such funds in such Debt Unit Account on any
future Distribution Date to the extent that funds in such Debt Unit Account on
such Distribution date are less than payments required to be made to Debt
Unitholders 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
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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 Debt Units 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 Debt Units 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 Debt Units.
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 Debt Units 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 Debt Units 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 Debt Unitholders 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 Debt Units, 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 Debt Unitholders 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 Debt Unitholders.
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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 Debt Units 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 Debt Units 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 Debt Units 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 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 such
Debt Units 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
to any given Series of Debt Units 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 Debt Units 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 Debt Units of a given Series, the
specified percentage of the aggregate Voting Rights of Debt Units of such Series
applicable to such matter. "Voting Rights" are the portion of the aggregate
voting rights of Underlying Securities allocated to Debt Unitholders 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 Debt Units.
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
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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 Debt Unitholder,
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 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 Debt Unitholders, 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 Debt
Unit holders representing not less than the Required Percentage-Remedies, and
(iii) the Debt Unit 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 Debt Units 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 Debt Unitholders who have agreed to bear
the entire amount of such costs, expenses or liabilities on a pro rata basis
among such Debt Unitholders.
Optional Exchange
The terms and conditions, if any, upon which Debt Units 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 Debt Unit may be
exchanged unless the Trustee has received at least 30 days but not more than 45
days notice
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prior to an Optional Exchange Date (as defined in the Supplement), as more
particularly described in the Trust Agreement.
Any tender of a Debt Unit 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 Debt Unit for less
than the aggregate principal amount of such Debt Unit as long as the aggregate
principal amount outstanding after such exchange is a multiple of the minimum
denomination of such Debt Unit and all other exchange requirements set forth in
the related Series Supplement are satisfied. Upon such partial exchange, such
Debt Unit will be cancelled and a new Debt Unit or Debt Units for the remaining
principal amount of the Debt Unit will be issued (which, in the case of any Debt
Unit issued in registered form, will be in the name of the holder of such
exchanged Debt Unit).
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
Debt Unitholders, setting forth (i) such information as is contained in such
notice to owners of Underlying Securities, (ii) a statement that the Debt
Unitholders will be entitled, subject to any applicable provision of law and any
applicable provisions of such Underlying Securities, to instruct the Trustee as
to the exercise of Voting Rights, if any, pertaining to such Underlying
Securities and (iii) a statement as to the manner in which instructions may be
given to the Trustee to give a discretionary proxy to a person designated in the
notice received by the Trustee. The Trustee will give such notice to the Debt
Unitholders of record on the relevant record date.
Upon the written request of the applicable Debt Unitholder, 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 Debt Unitholder 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 Debt Unitholder 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 Debt Unit, whether upon original issuance or
subsequent transfer, exchange or replacement thereof, and without regard to
whether ownership is beneficial or otherwise, the Debt Unitholder agrees so long
as it is an owner of such Debt Unit 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 Debt Units held by such
Debt Unitholder or (ii) to any redemption or prepayment of the Underlying
Securities underlying the Debt Units held by such Debt Unitholder. The Trustee
will not grant any consent solicited from the owners of the Underlying
Securities underlying the Debt Units 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 Debt Unitholder in
contravention of the provisions of such Section.
Limitations on Rights of Debt Unitholders
No Debt Unitholder of a given Series will have the right under the
Trust Agreement to institute any proceeding with respect thereto unless (i) such
Debt Unitholder previously has given to the Trustee written notice of a
continuing breach, (ii) Debt Unitholders 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 Debt Unitholder or Debt Unitholders have offered the Trustee reasonable
indemnity, (iv) the Trustee for fifteen 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 fifteen day period by Debt Unitholders
evidencing not less than
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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 Debt Unitholders 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 Debt Units
covered by the Trust Agreement, unless such Debt Unitholders 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 Debt Unitholders 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 Debt Units 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 Debt Units of one or more Series; (vi) to provide for
the issuance of a new Series of Debt Units pursuant to a Supplement; (vii) to
add or supplement any Credit Support for the benefit of any Debt Unitholders
(provided that if any such addition affects any series or Class of Debt
Unitholders differently than any other Series or Class of Debt Unitholders, 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 Debt
Unitholders; (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 Debt Unitholders; (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 Debt Units evidencing the Required
Percentage-Amendment of the aggregate Voting Rights of those Debt Units 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 Debt Unitholders; 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 Debt Units 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 Debt Unit without
the consent of the holders of such Debt Units 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 Debt Units of such Series
or Class then Outstanding.
Unless otherwise specified in the applicable Prospectus Supplement,
holders of Debt Units evidencing not less than the Required Percentage to waive
the Voting Rights of a given Series may, on behalf of all Debt Unitholders 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 Debt Units 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 Debt Unit 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 Debt Unit affected
thereby.
Reports to Debt Unitholders; Notices
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Reports to Debt Unitholders. With each distribution to Debt Unitholders
of a Series, the Trustee will forward or cause to be forwarded to each such Debt
Unitholder, 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 to enable Debt Unitholders to prepare their tax returns;
(iv) the amount of the distribution on such Distribution Date
to Debt Unitholders of each Class of such Series allocable to principal
of and premium, if any, and interest on the Debt Units of each such
Class, and the amount of aggregate unpaid interest accrued as of such
Distribution Date;
(v) in the case of Debt Units bearing interest on a floating
rate basis, the respective floating rate applicable to such Debt Units
on such Distribution Date, as calculated in accordance with the method
specified in such Debt Units and the related Series Supplement;
(vi) such other customary information as the Trustee deems
necessary or desirable (or that any such Debt Unitholder reasonably
requests in writing) to enable such Debt Unitholders to prepare their
tax returns;
(vii) 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;
(viii) 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;
(ix) 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;
(x) 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
(xi) 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 Debt Unitholder a statement containing the information set forth in
subclauses (i), (ii), (iii), (iv) and (vi) above, aggregated for such calendar
year or the applicable portion thereof during which such person was a Debt
Unitholder. 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.
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Notices. Any notice required to be given to a holder of a Registered
Debt Unit will be mailed to the last address of such holder set forth in the
applicable Debt Unit 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 Debt Unitholder
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 Debt
Unitholders, on or before a specified date in each year, of an annual statement
signed by two officers of the Trustee to the effect that the Trustee has
fulfilled its obligations under the Trust Agreement throughout the preceding
year with respect to any Series of Debt Units.
Copies of the annual accountants' statement, if any, and the statement
of officers of the Trustee may be obtained by Debt Unitholders 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 Debt Units
If a mutilated Debt Unit 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 Debt Unit 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 Debt Unit
was acquired by a bona fide purchaser.
Termination
The obligations created by the Trust Agreement for each Series of Debt
Units will terminate upon the payment to Debt Unitholders of that Series of all
amounts held in the related Debt Unit 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 Debt Units under the Trust Agreement will be provided as
set forth above under "--Reports to Debt Unitholders; Notices", and the final
distribution will be made only upon surrender and cancellation of the Debt Units
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 Debt Units 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
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exercise of such right will effect early retirement of the Debt Units 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 Debt Units 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 Debt Units 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.
The Trustee
The Trustee for any given Series of Debt Units 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 Debt Unit 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 Debt Unit. Depreciation of the
Specified Currency for a Debt Unit against the U.S. dollar would decrease the
effective yield of such Debt Unit below its Debt Unit 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 Debt Units
denominated in such currency. At present, the Depositor has identified the
following currencies in which distributions of principal, premium and interest
on Debt Units may be made: Australian dollars, Canadian dollars, Danish kroner,
Italian lire, Japanese yen, New Zealand dollars, U.S. dollars and ECU. However,
Debt Units distributable in another Specified Currency may be issued at any
time, based upon investor demand for Debt Units 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 Debt Unit, the currency in which amounts
then due to be distributed in respect of such Debt Unit would not be available.
PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR OWN FINANCIAL AND LEGAL
ADVISORS AS TO THE RISKS ENTAILED BY AN INVESTMENT IN DEBT UNITS DENOMINATED IN
A CURRENCY OTHER THAN U.S. DOLLARS. SUCH DEBT UNITS ARE NOT AN APPROPRIATE
INVESTMENT FOR PERSONS WHO ARE UNSOPHISTICATED WITH RESPECT TO FOREIGN CURRENCY
TRANSACTIONS.
Any Prospectus Supplement relating to Debt Units 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
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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.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The applicable Prospectus Supplement will set forth the material
Federal income tax consequences of the purchase, ownership and disposition of
any Series of Debt Units.
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 Debt Unit, 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 Debt Units should also
consider whether such an investment might constitute or give rise to a
prohibited transaction under ERISA or the Code.
An investment in Debt Units 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 Debt Unit, 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 Debt Unit 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 Debt Units would not be
significant if immediately after the most recent acquisition of a Debt Unit,
whether or not from the Depositor or Merrill Lynch & Co., less than 25% of (1)
the value of such Class of Debt Units and (2) the value of any other Class of
Debt Units 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 Debt Units 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 Debt Units 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.
38
<PAGE>
In other instances, however, the offering of Debt Units 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 of such obligors might constitute prohibited
transactions with respect to a Plan holding a Debt Unit 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 Debt Unit.
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 Debt Units; 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 Debt Units 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 Debt Units 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 Debt Units 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 Debt Units
that will result in the Trust Assets being deemed to constitute Plan Assets will
provide that, by acquiring and holding a Debt Unit, a Plan shall be deemed to
have represented and warranted to the Depositor, Trustee, and underwriter that
such acquisition and holding of a Debt Unit 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 DEBT UNITS SHOULD CONSULT WITH ITS COUNSEL.
39
<PAGE>
PLAN OF DISTRIBUTION
Debt Units 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 Debt Units, which may include the names
of any underwriters, or initial purchasers, the purchase price of such Debt
Units 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 Debt Units may be listed, and
the place and time of delivery of the Debt Units to be offered thereby.
If underwriters are used in the sale, Debt Units 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 Debt Units 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 Debt Units will be subject to certain conditions precedent and the
underwriters will be obligated to purchase all such Debt Units if any of such
Debt Units 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.
Debt Units may also be sold through agents designated by the Depositor
from time to time. Any agent involved in the offer or sale of Debt Units 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 Debt Units 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 Debt Units
may be deemed to be underwriters and any discounts or commissions received by
them on the sale or resale of Debt Units 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 Debt Units 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 Debt Units. 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 Debt Units. The original
Prospectus Supplement will be delivered with respect to the Debt Units for use
by such underwriters or affiliates in connection with offers and sales related
to market-making transactions in the Debt Units.
The Depositor is an affiliate of Merrill Lynch & Co.
40
<PAGE>
LEGAL MATTERS
The validity of the Debt Units 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.
41
<PAGE>
INDEX OF DEFINED TERMS
Page
----
Administration Agreement....................................................30
Administrative Agent.........................................................1
Allocation Ratio .....................................................S-6, 19
Available Funds ........................................................S-21
Base Rate ..........................................................14
Business Day ..........................................................13
Calculation Agent ..........................................................14
Calculation Date ..........................................................15
Call Right..................................................................19
Call Price ..........................................................19
Callable Series ..........................................................19
CD Rate ..........................................................15
CD Rate Debt Unit ..........................................................14
Cede ......................................................S-3, 1
Class ...........................................................1
Class _-1 Allocation.......................................................S-6
Class _-2 Allocation.......................................................S-6
Clearing Agency ....................................................S-19, 20
clearing corporation........................................................20
Closing Date .........................................................S-2
Code .....................................................S-7, 33
Commercial Paper Rate.......................................................16
Commercial Paper Rate Debt Unit.............................................14
Commission ..................................................S-10, 1, 2
Composite Quotations........................................................14
Concentrated Underlying Securities...........................................1
Credit Support...............................................................1
Cut-off Date ..........................................................37
Debt Securities .........................................................S-9
Debt Unit .............................................S-1, S-4, 1, 10
Debt Unit Account ..........................................................27
Debt Unit Rate ..........................................................11
Debt Unitholders ......................................................S-1, 1
Definitive Debt Unit........................................................20
Depositary ......................................................S-3, 1
Deposited Assets .......................................................1, 21
Depositor .................................................S-1, S-4, 1
Disqualified Persons..................................................S-27, 38
Distribution Date .................................................S-1, S-5, 2
DTC .................................................S-3, S-6, 1
Eligible Investments..................................................S-21, 28
ERISA ...............................................S-8, S-27, 38
Event of Default ........................................................S-23
Exchangeable Series.........................................................19
Exchange Act ..................................................S-10, 1, 2
Extraordinary Expenses......................................................32
Federal Funds Rate..........................................................16
Federal Funds Rate Debt Unit................................................14
I-1
<PAGE>
Page
----
Final Scheduled Distribution Date..................................S-1, S-5, 2
Fixed Rate Debt Units.......................................................13
Floating Debt Unit Rate.....................................................11
Floating Rate Debt Units....................................................14
Foreign Debt Unitholders..................................................S-27
Global Security ...........................................................1
Government Securities........................................................1
H.15(519) ..........................................................14
Indenture ..............................................S-10, S-15, 13
Index Maturity ..........................................................14
Interest Reset Date.........................................................13
Interest Reset Period.......................................................13
Letter of Credit ..........................................................25
Letter of Credit Bank.......................................................25
LIBOR ..........................................................15
LIBOR Debt Unit ..........................................................13
LIBOR Reuters ..........................................................16
LIBOR Telerate ..........................................................16
Maximum Debt Unit Rate......................................................14
Merrill Lynch & Co......................................................S-2, 1
Minimum Debt Unit Rate......................................................14
Money Market Yield..........................................................15
Moody's ....................................................S-1, S-7
Notional Amount ..........................................................12
NYSE .................................................S-1, S-7, 1
OID .........................................................S-7
Optional Exchange Right.....................................................18
Ordinary Expenses ........................................................S-32
Original Issue Date.........................................................10
Participants .....................................................S-3, 20
Parties in Interest.................................................. S-27, 38
Plan ...............................................S-8, S-27, 38
Plan Assets ..........................................................38
Prime Rate ..........................................................16
Prime Rate Debt Unit........................................................14
Prospectus Supplement........................................................1
PTEs ....................................................S-27, 39
Rating Agency .....................................................S-10, 7
Realized Losses ..........................................................18
Record Date ..........................................................13
Reference Banks ..........................................................17
Registration Statement.......................................................2
Regulation ..........................................................38
Related Proceeds ..........................................................29
Required Percentage.........................................................31
Required Percentage-Amendment.............................................S-23
Required Percentage-Direction of Trustee....................................34
Required Percentage-Remedies..............................................S-23
Reserve Account ..........................................................27
Retained Interest ...........................................................9
I-2
<PAGE>
Page
----
Reuters Screen LIBO Page....................................................17
Reuters Screen NYMF Page....................................................17
S&P ....................................................S-1, S-7
Secured Underlying Securities...............................................24
Securities Act ...........................................................2
Senior Underlying Securities................................................24
Series ...........................................................1
Series Supplement....................................................S-4, 1, 9
Specified Currency................................................S-6, S-17, 2
Spread ..........................................................14
Spread Multiplier ..........................................................14
Standard Terms ........................................................., 1
Strip Debt Units ..........................................................12
Subordinated Underlying Securities..........................................24
Surety ..........................................................26
Surety Bond ..........................................................26
Tax Event ........................................................S-16
Telerate Page 3750..........................................................17
TOPrS(sm) ..........................................................25
Treasury Rate ..........................................................18
Treasury Rate Debt Unit.....................................................14
Trust .................................................S-1, S-4, 1
Trust Agreement ......................................................S-4, 1
Trust Indenture Act.........................................................23
Trustee ......................................................S-1, 1
Trustee Fee ......................................................S-4, 8
U.S. dollars, US$, dollar or $...............................................3
Underlying Securities..............................................S-1, S-4, 1
Underlying Securities Issuer............................................S-1, 1
Underlying Securities Prospectus............................................15
Underlying Securities Rate..................................................25
Underlying Securities Trustee.........................................S-10, 23
Underwriter .........................................................S-2
Underwriting Agreement....................................................S-29
United States Person......................................................S-27
Voting Rights ..........................................................31
I-3
<PAGE>
================================================================================
No dealer, salesperson 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 Debt Units 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 DEBT UNITS..............................................S-17
THE DEPOSITOR..............................................................S-22
DESCRIPTION OF THE TRUST AGREEMENT.........................................S-22
CERTAIN FEDERAL INCOME TAX CONSEQUENCES....................................S-25
ERISA CONSIDERATIONS.......................................................S-27
UNDERWRITING...............................................................S-29
VALIDITY OF THE DEBT UNITS.................................................S-29
RATINGS....................................................................S-29
PROSPECTUS
PROSPECTUS SUPPLEMENT..................................................... 2
AVAILABLE INFORMATION..................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS
BY REFERENCE............................................................ 2
REPORTS TO DEBT UNITHOLDERS............................................... 3
RISK FACTORS.............................................................. 4
THE DEPOSITOR............................................................. 8
USE OF PROCEEDS........................................................... 9
FORMATION OF THE TRUST.................................................... 9
MATURITY AND YIELD CONSIDERATIONS......................................... 9
DESCRIPTION OF THE DEBT UNITS............................................. 10
DESCRIPTION OF DEPOSITED ASSETS........................................... 21
DESCRIPTION OF THE TRUST AGREEMENT........................................ 28
CURRENCY RISKS............................................................ 37
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES............................................................ 38
ERISA CONSIDERATIONS...................................................... 38
PLAN OF DISTRIBUTION...................................................... 40
LEGAL MATTERS............................................................. 41
INDEX OF DEFINED TERMS.................................................... I-1
Until [25][90] days after the date of this Prospectus, all dealers
affecting transactions in the offered Debt Units, 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.
================================================================================
[ ]
Debt Units
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. All such expenses are estimated:
Securities and Exchange Commission registration fee....... $ 150,000
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
NYSE listing fees......................................... *
$ *
Total..........................
- -------------------
* To be supplied by amendment.
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.
1 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
- ----------------------
* To be filed by amendment.
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 30th day
of July, 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. 1 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. 1 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. 1 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, July 30, 1997
Frank D. Ronan Principal Executive Officer
and Director
/s/ Barry N. Finkelstein
- ---------------------------- Principal Accounting Officer, July 30, 1997
Barry N. Finkelstein Principal Financial Officer
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. 1 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
- ------------------
* To be filed by amendment.
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
MERRILL LYNCH DEPOSITOR, INC.
ARTICLE I
NAME
----
The name of the corporation is Merrill Lynch Depositor, Inc. (the
"Corporation").
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
--------------------------------------
The registered office of the Corporation in the State of Delaware is
located at Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of the Corporation's registered agent
is The Corporation Trust Company.
ARTICLE III
CORPORATE PURPOSES
------------------
The nature of business or purposes to be conducted and promoted by the
Corporation is to engage solely in the following activities:
(a) to acquire, own, hold, transfer, pledge, sell, deliver,
invest in or otherwise purchase or dispose of (and enter into
agreements in connection with) (i) bonds, notes, debt or equity
securities, obligations, Certificates (as defined herein), Debt
Obligations (as defined herein), and other securities and instruments,
in one or more series, each of which series may consist of one or more
classes ("Securities"); (ii) receivables, including, without
limitation, recreational and consumer product inventory receivables
and other trade receivables ("Receivables"); (iii) loan agreements,
promissory notes or other evidences of indebtedness secured by
Receivables or Participation Interests (as defined herein) ("Loans");
and (iv) participation interests in pools of Receivables
("Participation Interests"), in each case, together with any related
insurance contracts and agreements with dealers, originators and
servicers of such Receivables;
<PAGE>
(b) to act as settlor or depositor of trusts formed under a
trust agreement, pooling and servicing agreement or other agreement
("Agreement") to issue series (any of which series may be issued in
one or more classes) of trust certificates ("Certificates")
representing undivided interests in Securities, Receivables, Loans,
Participation Interests, Subordinated Interests (as defined herein)
and/or Residual Interests (as defined herein) and/or to issue series
(any of which series may be issued in one or more classes) of bonds,
notes or other evidences of indebtedness ("Debt Obligations")
collateralized by Securities, Receivables, Loans, Participation
Interests, Subordinated Interests and/or Residual Interests, and to
enter into any other agreement in connection with the authorization,
purchase, issuance, sale and delivery of Certificates or Debt
Obligations;
(c) to arrange or otherwise provide for support for any series
of Certificates or Debt Obligations by various forms of credit
enhancement, including but not limited to cash deposits, insurance
policies, guaranteed investment contracts, investment agreements,
letters of credit, reserve accounts, minimum payment agreements,
guarantees, hedging contracts or other similar arrangements, such as
puts, calls, interest rate swaps, currency swaps, floors, caps and
collars, and other forms of credit enhancement including arrangements
whereby, for a given series of Certificates or Debt Obligations,
payments on one or more classes are subordinated to, and constitute
additional security for, payments due on one or more other classes of
Certificates or Debt Obligations in such series;
(d) to use proceeds from the Certificates as provided in the
Agreements;
(e) to hold, pledge, transfer or otherwise deal with
Certificates, Debt Obligations and any Certificates or Debt
Obligations representing a subordinated undivided interest in
Receivables, Loans and/or Participation Interests ("Subordinated
Interests") or a residual interest in Receivables ("Residual
Interests");
(f) to loan or invest or otherwise apply proceeds received in
respect of Certificates, Debt Obligations, Receivables, Loans,
Participation Interests, Subordinated Interests and/or Residual
Interests and any other income, as determined by the board of
directors of the Corporation (the "Board of Directors");
(g) to authorize, issue, sell and deliver instruments
evidencing the Corporation's indebtedness which is completely
subordinated to any Certificates and Debt Obligations and to enter
into agreements by which the Corporation incurs such indebtedness; and
(h) to exercise all powers enumerated in the General
Corporation Law of the State of Delaware (the "GCL") necessary or
convenient to the conduct, promotion or attainment of the business or
purposes set forth herein, subject to the limitations set forth in
Articles III, V, VIII and IX herein.
2
<PAGE>
ARTICLE IV
AUTHORIZED SHARES AND STOCKHOLDER MEETINGS
------------------------------------------
The total number of shares of stock which the Corporation shall have
authority to issue is one thousand (1,000) shares and the par value of each such
share is one cent ($0.01). All such shares are of one class and are common stock
("Common Stock"). The Common Stock shall have voting rights for the election of
directors and for all other purposes, each holder of Common Stock being entitled
to one vote for each share thereof held by such holder, except as otherwise
required by law.
Meetings of stockholders and the Board of Directors may be held within
or without the state of Delaware, as the By-Laws may provide. The books and
records of the Corporation may be kept (subject to any provision contained in
the GCL) outside the State of Delaware.
ARTICLE V
POWERS OF BOARD OF DIRECTORS
----------------------------
Section 1. There shall be two directors of the Corporation. Election
of directors need not be by written ballot unless the By-Laws so provide.
Section 2. In furtherance and not in limitation of the powers
conferred by statute, the Board of Directors is expressly authorized:
(a) To make, alter, amend or repeal the By-Laws, except as
otherwise expressly provided in any By-Law enacted by the holders of
the Common Stock of the Corporation entitled to vote thereon. Any
By-Law may be altered, amended or repealed by the stockholders of the
Corporation entitled to vote thereon at any annual meeting or at any
special meeting called for that purpose.
(b) To determine the use and disposition of any surplus and
net profits of the Corporation, including the determination of the
amount of working capital required, to set apart out of any of the
funds of the Corporation, whether or not available for dividends, a
reserve or reserves for any proper purpose and to abolish any such
reserve (in the manner in which it was created).
(c) To exercise, in addition to those powers and authorities
hereinbefore or by law conferred upon it, any such powers and
authorities and to all such acts and things as may be exercised or
done by the Corporation, subject, nevertheless, to the provisions of
the laws of the State of Delaware and of this Certificate of
Incorporation and of the By-Laws of the Corporation.
3
<PAGE>
ARTICLE VI
LIMITATION OF DIRECTORS' LIABILITY; INDEMNIFICATION BY CORPORATION
------------------------------------------------------------------
Section 1. Limitation of Directors' Liability. (a) No director shall
be personally liable to the Corporation or any of 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 Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) pursuant to section
174 of the GCL or (iv) for any transaction from which the director derived an
improper personal benefit. If the GCL is hereafter amended to authorize
corporate action further limiting or eliminating the personal liability of
directors, then the liability of each director of the Corporation shall be
limited or eliminated to the full extent permitted by the GCL as so amended from
time to time.
(b) Neither the amendment nor repeal of this Article VI, nor
the adoption of any provision of this Certificate of Incorporation inconsistent
with this Article VI shall eliminate or reduce the effect of this Article VI, in
respect of any matter occurring, or any cause of action, suit or claim that, but
for this Article VI, would accrue or arise, prior to such amendment, repeal or
adoption of an inconsistent provision.
(c) A director of the Corporation shall not in the absence of
fraud be disqualified by his office from dealing or contracting with the
Corporation either as a vendor, purchaser or otherwise, nor, in the absence of
fraud shall a director of the Corporation be liable to account to the
Corporation for any profit realized by him from or through any transaction or
contract of the Corporation by reason of the fact that he, or any firm of which
he is a member, or any Corporation of which he is an officer, director or
stockholder, was interested in such transaction or contract if such transaction
or contract has been authorized, approved or ratified in the manner provided in
the GCL for authorization, approval or ratification of transactions or contracts
between the Corporation and one or more of its directors or officers, or between
the Corporation and any other Corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest.
Section 2. Indemnification By Corporation. (a) The Corporation shall
indemnify any person who is or was a director or officer of the Corporation,
with respect to actions taken or omitted by such person in any capacity in which
such person serves the Corporation, to the full extent authorized or permitted
by law, as now or hereafter in effect, and such right to indemnification shall
continue as to a person who has ceased to be a director or officer, as the case
may be, and shall inure to the benefit of such person's heirs, executors and
personal and legal representatives; provided, however, that, except for
proceedings to enforce rights to indemnification, the Corporation shall not be
obligated to indemnify any person in connection with a proceeding (or part
thereof) initiated by such person unless such proceeding (or part thereof) was
authorized in advance, or unanimously consented to, by the Board of Directors.
4
<PAGE>
(b) Directors and officers of the Corporation shall have the
right to be paid by the Corporation expenses incurred in defending or otherwise
participating in any proceeding in advance of its final disposition.
(c) The Corporation may, to the extent authorized from time to
time by the Board of Directors, provide rights to indemnification and to the
advancement of expenses to employees and agents of the Corporation.
(d) The rights to indemnification and to the advancement of
expenses conferred in this Section 2 of Article VI shall not be exclusive of any
other right that any person may have or hereafter acquire under this Certificate
of Incorporation, the By-Laws, any statute, agreement, vote of stockholders or
disinterested directors, or otherwise.
(e) Any repeal or modification of this Section 2 of Article VI
by the stockholders of the Corporation shall not adversely affect any rights to
indemnification and to advancement of expenses that any person may have at the
time of such repeal or modification with respect to any acts or omissions
occurring prior to such repeal or modification.
ARTICLE VII
DISSOLUTION OR RECEIVERSHIP OF THE CORPORATION
----------------------------------------------
Whenever a compromise or arrangement is proposed between the
Corporation and its creditors or any class of them and/or between the
Corporation and its stockholders, any court of equitable jurisdiction within the
State of Delaware may, on the application (in a summary way) of the Corporation
or of any creditor or stockholder thereof or on the application of any receiver
or receivers appointed for the Corporation under the provisions of Section 291
of the GCL or on the application of trustees in dissolution or of any receiver
or receivers appointed for the Corporation under the provisions of Section 279
of the GCL, order a meeting of the creditors or class of creditors, and/or of
the stockholders of the Corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing
three-fourths in value of the creditors or class of creditors, and/or of the
stockholders of the Corporation, as the case may be, agree to any compromise or
arrangement and to any reorganization of the Corporation as a consequence of
such compromise or arrangement, the said compromise or arrangement and the said
reorganization shall, if sanctioned by the court to which the said application
has been made, be binding on all the creditors or class of creditors, and/or on
all the stockholders of the Corporation, as the case may be, and also on the
Corporation.
5
<PAGE>
ARTICLE VIII
NONCONSOLIDATION OF CORPORATION
-------------------------------
For so long as Certificates are outstanding, in order to preserve and
ensure its separate and distinct corporate identity, in addition to the other
provisions set forth in this Certificate of Incorporation, the Corporation shall
conduct its affairs in accordance with the following provisions:
It shall establish and maintain an office through which its
business shall be conducted separate and apart from those of its
parent.
It shall pay compensation to directors and officers and any
other liabilities with its own funds.
It shall maintain separate corporate records, books and
financial statements from those of its parent and any affiliate
thereof.
The Corporation's funds and other assets will not be
commingled with those of any of its stockholders or of any direct or
indirect parent of the Corporation or of any affiliate of any such
parent, nor shall it guarantee or become obligated for the debts of
its parent, pledge its assets or hold out its credit as being
available to satisfy the obligations of its parent.
The Board of Directors shall hold appropriate meetings (or act
by unanimous consent) to authorize all appropriate corporate actions.
For purposes of this Article VIII, the following terms shall
have the following meanings:
"affiliate" means any person controlling or
controlled by or under common control with the parent, but
shall not include the Corporation. For 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.
"parent" means, with respect to the Corporation, any
other corporation owning or controlling, directly or
indirectly, fifty percent (50%) or more of the voting stock of
the Corporation.
"person" means any individual, corporation,
partnership, joint venture, association, joint stock company,
trust (including any beneficiary thereof),
6
<PAGE>
unincorporated organization, or government or any agency or
political subdivision thereof.
ARTICLE IX
MERGER, CONSOLIDATION OR BANKRUPTCY OF CORPORATION
--------------------------------------------------
The Corporation shall not consolidate or merge with or into any other
entity or convey or transfer its properties and assets substantially as an
entirety to any entity unless (i) the entity (if other than the Corporation)
formed or surviving such consolidation or merger or that acquires by conveyance
or transfers the properties and assets of the Corporation substantially as an
entirety (a) shall be organized and existing under the laws of the United States
of America or any State or the District of Columbia, (b) shall include in its
charter or Articles of Incorporation the same limitations set forth in Articles
III, V, VIII, and IX, and (c) shall expressly assume the due and punctual
performance of the Corporation's obligations under the Agreements, as defined in
Article III; and (ii) immediately after giving effect to such transaction, no
default or event of default under the Agreements shall have been committed by
the Corporation and be continuing.
ARTICLE X
RESERVATION OF RIGHT TO AMEND CERTIFICATE OF INCORPORATION
----------------------------------------------------------
The Corporation reserves the right to amend, alter, change or repeal
any provisions contained in this Certificate of Incorporation in the manner now
or hereafter prescribed by law, and all the provisions of this Certificate of
Incorporation and all rights and powers conferred in this Certificate of
Incorporation on stockholders, directors and officers are subject to this
reserved power.
7
BYLAWS
OF
MERRILL LYNCH DEPOSITOR, INC.
(a Delaware corporation)
ARTICLE I
Stockholders
------------
SECTION 1. Annual Meetings. The annual meeting of stockholders
for the election of directors and for the transaction of such other business as
may properly come before the meeting shall be held each year at such date and
time, within or without the State of Delaware, as the Board of Directors shall
determine.
SECTION 2. Special Meetings. Special meetings of stockholders
for the transaction of such business as may properly come before the meeting may
be called by order of the Board of Directors or by stockholders holding together
at least a majority of all the shares of the Corporation entitled to vote at the
meeting, and shall be held at such date and time, within or without the State of
Delaware, as may be specified by such order. Whenever the directors shall fail
to fix such place, the meeting shall be held at the principal executive office
of the Corporation.
SECTION 3. Notice of Meetings. Written notice of all meetings
of the stockholders shall be mailed or delivered to each stockholder not less
than 10 nor more than 60 days prior to the meeting. Notice of any special
meeting shall state in general terms the purpose or purposes for which to
meeting is to be held.
SECTION 4. Adjournments. Any meeting of stockholders, annual
or special, may adjourn from time to time to reconvene at the same or some other
place, and notice need not be given of any such adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken; provided, however, that if the adjournment is for more than thirty days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting. At the adjourned meeting the Corporation
may transact any business that might have been transacted at the original
meeting.
SECTION 5. Stockholder Lists. The officer who has charge of
the stock ledger of the Corporation shall prepare and make, at least 10 days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing the
address of each stockholder and the number of shares
<PAGE>
2
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, either
at a place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present.
The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the Corporation, or to vote in person or by proxy at any
meeting of stockholders.
SECTION 6. Quorum. Except as otherwise provided by law or the
Corporation's Certificate of Incorporation, a quorum for the transaction of
business at any meeting of stockholders shall consist of the holders of record
of a majority of the issued and outstanding shares of the capital stock of the
Corporation entitled to vote at the meeting, present in person or by proxy. At
all meetings of the stockholders at which a quorum is present, all matters,
except as otherwise provided by law or the Certificate of Incorporation, shall
be decided by the vote of the holders of a majority of the shares entitled to
vote thereat present in person or by proxy. If there be no such quorum, the
holders of a majority of such shares so present or represented may adjourn the
meeting from time to time, without further notice, until a quorum shall have
been obtained. When a quorum is once present it is not broken by the subsequent
withdrawal of any stockholder.
SECTION 7. Organization. Meetings of stockholders shall be
presided over by the Chairman, if any, or none or in the Chairman's absence the
Vice-Chairman, if any, or if none or in the Vice-Chairman's absence the
President, if any, or if none or in the President's absence a Vice-President or,
if none of the foregoing is present, by a chairman to be chosen by the
stockholders entitled to vote who are present in person or by proxy at the
meeting. The Secretary of the Corporation, or in the Secretary's absence an
Assistant Secretary, shall act as secretary of every meeting, but if neither the
Secretary nor an Assistant Secretary is present, the presiding officer of the
meeting shall appoint any person present to act as secretary of the meeting.
SECTION 8. Voting; Proxies; Required Vote. (a) At each meeting
of stockholders, every stockholder shall be entitled to vote in person or by
proxy appointed by instrument in writing, subscribed by such stockholder or by
such stockholder's duly authorized attorney-in-fact (but no such proxy shall be
voted or acted upon after three years from its date, unless the proxy provides
for a longer period), and, unless the Certificate of Incorporation provides
otherwise, shall have one vote for each share of stock entitled to vote
registered in the name of such stockholder on the books of the Corporation, on
the applicable record date fixed pursuant to these Bylaws. At all elections of
directors the voting may but need not be by ballot and a plurality of the votes
cast there shall elect. Except as otherwise required by
<PAGE>
3
law or the Certificate of Incorporation, any other action shall be authorized by
a majority of the votes cast.
(b) Any action required or permitted to be taken at any
meeting of stockholders may, except as otherwise required by law or the
Certificate of Incorporation, be taken without a meeting, without prior notice
and without a vote, if a consent in writing, setting forth the action so taken,
shall be signed by the holders of record of the issued and outstanding capital
stock of the Corporation having a majority of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted, and the writing or writings are filed with the
permanent records of the Corporation. Prompt notice of the taking of corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing.
(c) Where a separate vote by a class or classes, present in
person or represented by proxy, shall constitute a quorum entitled to vote on
that matter, the affirmative vote of the majority of shares of such class or
classes present in person or represented by proxy at the meeting shall be the
act of such class, unless otherwise provided in the Corporation's Certificate of
Incorporation.
SECTION 9. Inspectors. The Board of Directors, in advance of
any meeting, may, but need not, appoint one or more inspectors of election to
act at the meeting or any adjournment thereof. If an inspector or inspectors are
not so appointed, the person presiding at the meeting may, but need not, appoint
one or more inspectors. In case any person who may be appointed as an inspector
fails to appear or act, the vacancy may be filled by appointment made by the
directors in advance of the meeting or at the meeting by the person presiding
thereat. Each inspector, if any, before entering upon the discharge of his or
her duties, shall take and sign an oath faithfully to execute the duties of
inspector at such meeting with strict impartiality and according to the best of
his or her ability. The inspectors, if any, shall determine the number of shares
of stock outstanding and the voting power of each, the shares of stock
represented at the meeting, the existence of a quorum, and the validity and
effect of proxies, and shall receive votes, ballots or consents, hear and
determine all challenges and questions arising in connection with the right to
vote, count and tabulate all votes, ballots or consents, determine the result,
and do such acts as are proper to conduct the election or vote with fairness to
all stockholders. On request of the person presiding at the meeting, the
inspector or inspectors, if any, shall make a report in writing of any
challenge, question or matter determined by such inspector or inspectors and
execute a certificate of any fact found by such inspector or inspectors.
<PAGE>
4
ARTICLE II
Board of Directors
------------------
SECTION 1. General Powers. The business, property and affairs
of the Corporation shall be managed by, or under the direction of, the Board of
Directors.
SECTION 2. Qualification; Number; Term; Remuneration. (a) Each
director shall be at least 18 years of age. A director need not be a
stockholder, a citizen of the United States or a resident of the State of
Delaware. The Board shall consist of one or more members, the number thereof to
be determined from time to time by action of the stockholders or Board of
Directors. The Board of Directors may select one of its members to be its
chairman. The use of the phrase "entire Board" herein refers to the total number
of directors that the Corporation would have if there were no vacancies on the
Board of Directors.
(b) Directors who are elected at an annual meeting of
stockholders, and directors who are elected in the interim to fill vacancies and
newly created directorships, shall hold office until the next annual meeting of
stockholders and until their successors are elected and qualified or until their
earlier resignation or removal.
(c) Directors may be paid their expenses, if any, of
attendance at each meeting of the Board of Directors and may be paid a fixed sum
for attendance at each meeting of the Board of Directors or a stated salary as
director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
SECTION 3. Quorum and Manner of Voting. Except as otherwise
provided by law, a majority of the entire Board shall constitute a quorum. A
majority of the directors present, whether or not a quorum is present, may
adjourn a meeting from time to time to another time and place without notice.
The vote of the majority of the directors present at a meeting at which a quorum
is present shall be the act of the Board of Directors unless the Certificate of
Incorporation or these Bylaws shall require the vote of a greater number.
SECTION 4. Places of Meetings. Meetings of the Board of
Directors may be held at any place within or without the State of Delaware, as
may from time to time be fixed by resolution of the Board of Directors or as may
be specified in the notice of meeting.
SECTION 5. Annual Meeting. Following the annual meeting of
stockholders, the newly elected Board of Directors shall meet for the purpose of
the election of officers and the transaction of such other business as may
properly come before the meeting. Such
<PAGE>
5
meeting may be held without notice immediately after the annual meeting of
stockholders at the same place at which such stockholders' meeting is held.
SECTION 6. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such time and places as the Board of Directors shall
from time to time by resolution determine. Notice need not be given of regular
meetings of the Board of Directors held at times and places fixed by resolution
of the Board of Directors.
SECTION 7. Special Meetings. Special meetings of the Board of
Directors shall be held whenever called by the Chairman of the Board, Chief
Executive Officer, President, or by a majority of the directors then in office.
SECTION 8. Notice of Meetings. A notice of the place, date and
time and the purpose or purposes of each meeting of the Board of Directors,
other than regular meetings held at times and places fixed by resolution of the
Board of Directors, shall be given to each director by mailing the same at least
two days before the meeting, or by telegraphing or telephoning the same or by
delivering the same personally not later than the day before the day of the
meeting.
SECTION 9. Organization. At all meetings of the Board of
Directors, the Chairman, if any, or if none or in the Chairman's absence or
inability to act the President, or in the President's absence or inability to
act any Vice-President who is a member of the Board of Directors, or in such
Vice-President's absence or inability to act a chairman chosen by the directors,
shall preside. The Secretary of the Corporation shall act as secretary at all
meetings of the Board of Directors when present, and, in the Secretary's
absence, the presiding officer may appoint any person to act as secretary.
SECTION 10. Resignation. Any director may resign at any time
upon written notice to the Corporation and such resignation shall take effect
upon receipt thereof by the President or Secretary, unless otherwise specified
in the resignation. Any or all of the directors may be removed, with or without
cause, by the holders of a majority of the shares of stock outstanding and
entitled to vote for the election of directors.
SECTION 11. Vacancies. Unless otherwise provided in these
Bylaws, vacancies on the Board of Directors, whether caused by resignation,
death, disqualification, removal, an increase in the authorized number of
directors or otherwise, may be filled by the affirmative vote of a majority of
the remaining directors, although less than a quorum, or by a sole remaining
director, or at a special meeting of the stockholders, by the holders of shares
entitled to vote for the election of directors.
SECTION 12. Action by.Written Consent; Telephonic Meetings.
Any action required or permitted to be taken at any meeting of the Board of
Directors may be taken
<PAGE>
6
without a meeting if all the directors consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors. Subject to applicable notice provisions, members of the Board of
Directors may participate in and hold meetings by means of conference telephone
or similar communications equipment by means of which all persons participating
in the meeting can hear each other, and participation in such meeting shall be
deemed presence in person at such meeting, except where a person's participation
is for the express purpose of objecting to the transaction of any business on
the ground that the meeting is not lawfully called or convened.
ARTICLE III
Committees
----------
SECTION 1. Appointment. From time to time the Board of
Directors by a resolution adopted by a majority of the entire Board may appoint
any committee or committees for any purpose or purposes, to the extent lawful,
which shall have powers as shall be determined and specified by the Board of
Directors in the resolution of appointment.
SECTION 2. Procedures, Quorum and Manner of Acting. Each
committee shall fix its own rules of procedure, and shall meet where and as
provided by such rules or by resolution of the Board of Directors. Except as
otherwise provided by law, the presence of a majority of the then appointed
members of a committee shall constitute a quorum for the transaction of business
by that committee, and in every case where a quorum is present the affirmative
vote of a majority of the members of the committee present shall be the act of
the committee. Each committee shall keep minutes of its proceedings, and actions
taken by a committee shall be reported to the Board of Directors.
SECTION 3. Acting by Written Consent; Telephonic Meetings. Any
action required or permitted to be taken at any meeting of any committee of the
Board of Directors may be taken without a meeting if all the members of the
committee consent thereto in writing, and the writing or writings and filed with
the minutes or proceedings of the committee. Subject to applicable notice
provisions, members of any committee of the Board of Directors may participate
in and hold meetings by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such meeting shall be deemed presence in person
at such meeting, except where a person's participation is for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened.
SECTION 4. Terms; Termination. In the event any person shall
cease to be a director of the Corporation, such person shall simultaneously
therewith cease to be a member of any committee appointed by the Board of
Directors.
<PAGE>
7
ARTICLE IV
Officers
--------
SECTION 1. Election and Qualifications. The Board of Directors
shall elect the officers of the Corporation, which shall include a President and
a Secretary, and may include, by election or appointment, one or more
Vice-Presidents (any one or more of whom may be given an additional designation
of rank or function), a Treasurer and such assistant secretaries, such assistant
treasurers and such other officers as the Board may from time to time deem
proper. Each officer shall have such powers and duties as may be prescribed by
these Bylaws and as may be assigned by the Board of Directors or the President.
Any two or more offices may be held by the same person except the offices of
President and Secretary.
SECTION 2. Term of Office and Remuneration. The term of office
of all officers shall be one year or until their respective successors have been
elected and qualified, but any officer may be removed from office, either with
or without cause, at any time by the Board of Directors. Any vacancy in any
office arising from any cause may be filled for the unexpired portion of the
term by the Board of Directors. The remuneration of all officers of the
Corporation may be fixed by the Board of Directors or in such manner as the
Board of Directors shall provide.
SECTION 3. Resignation; Removal. Any officer may resign at any
time upon written notice to the Corporation, and such resignation shall take
effect upon receipt thereof by the President or Secretary, unless otherwise
specified in the resignation. Any officer shall be subject to removal, with or
without cause, at any time by vote of a majority of the entire Board.
SECTION 4. Chairman of the Board The Chairman of the Board of
Directors, if there be one, shall preside at all meetings of the Board of
Directors and shall have such other powers and duties as may from time to time
be assigned by the Board of Directors.
SECTION 5. President and Chief Executive Officer. The
President shall be the chief executive officer of the Corporation and shall have
such duties as customarily pertain to that office. The President also shall be a
director of the Corporation. If, at any time and for any reason, the President's
term of office as a director of the Corporation terminates or is terminated,
then his term of office as President of the Corporation shall also be
automatically terminated. The President shall have general management and
supervision of the property, business and affairs of the Corporation and over
its other officers; may appoint and remove assistant officers and other agents
and employees, other than officers referred to in Section 1
<PAGE>
8
of this Article IV; and may execute and deliver in the name of the Corporation
powers of attorney, contracts, bonds and other obligations and instruments.
SECTION 6. Vice-President. A Vice-President may execute and
deliver in the name of the Corporation contracts and other obligations and
instruments pertaining to the regular course of the duties of said office, and
shall have such other authority as from time to time may be assigned by the
Board of Directors or the President.
SECTION 7. Treasurer. The Treasurer shall in general have all
duties incident to the position of Treasurer and such other duties as may be
assigned by the Board of Directors or the President.
SECTION 8. Secretary. The Secretary shall in general have all
the duties incident to the office of Secretary and such other duties as may be
assigned by the Board of Directors or the President.
SECTION 9. Assistant Officers. Any assistant officer shall
have such powers and duties of the officer such assistant officer assists as
such officer or the Board of Directors shall from time to time prescribe.
ARTICLE V
Indemnification
---------------
SECTION 1. Indemnification of Directors, Officers and
Employees. The Corporation shall indemnify to the fullest extent permitted by
law any person made or threatened to be made a party to any action, suit or
proceeding, whether criminal, civil, administrative or investigative, by reason
of the fact that such person or such person's testator or intestate is or was a
director, officer or employee of the Corporation or serves or served at the
request of the Corporation as a director, officer or employee of any other
enterprise. Expenses incurred by any such person in defending any such action,
suit or proceeding shall be paid or reimbursed by the Corporation promptly upon
receipt by it of an undertaking of such person to repay such expenses if it
shall ultimately be determined that such person is not entitled to be
indemnified by the Corporation. The rights provided to any person by this Bylaw
shall be enforceable against the Corporation by such person who shall be
presumed to have relied upon it in serving or continuing to serve as a director,
officer or employee as provided above. No amendment of this Bylaw shall impair
the rights of any person arising at any time with respect to events occurring
prior to such amendment. For purposes of this Bylaw, the term "Corporation"
shall include any predecessor of the Corporation and any constituent corporation
(including any constituent of a constituent) absorbed by the Corporation
<PAGE>
9
in a consolidation or merger; the term "other enterprise" shall include any
corporation, partnership, joint venture, trust or employee benefit plan.
ARTICLE VI
Books and Records
-----------------
SECTION 1. Location. The books and records of the Corporation
may be kept at such place or places within or outside the State of Delaware as
the Board of Directors or the respective officers in charge thereof may from
time to time determine. The record books containing the names and addresses of
all stockholders, the number and class of shares of stock held by each and the
dates when they respectively became the owners of record thereof shall be kept
by the Secretary as prescribed in the Bylaws and by such officer or agent as
shall be designated by the Board of Directors.
SECTION 2. Addresses of Stockholders. Notices of meetings and
all other corporate notices may be delivered personally or mailed to each
stockholder at the stockholder's address as it appears on the records of the
Corporation.
SECTION 3. Fixing Date for Determination of Stockholders of
Record. (a) In order that the Corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not be more than 60 nor less than 10 days before the date of such
meeting. If no the record date is fixed by the Board of Directors, the record
date for determining stockholders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held. A determination
of stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the Board of Directors may fix a record date, which date shall not be
more than 10 days after the date upon which the resolution fixing the record
date is adopted by the Board of Directors. If no record date has been fixed by
the Board of Directors, the record date for determining stockholders entitled to
consent to corporate action in writing without a meeting, when no prior action
by the Board of Directors is required, shall be the first date on which a signed
written consent setting forth the action taken or proposed to be taken is
delivered to the Corporation by delivery to its registered office in this State,
its principal place of business, or an officer or agent of the Corporation
having custody of the book in which proceedings of meetings of stockholders are
<PAGE>
10
recorded. Delivery made to the Corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by this chapter, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.
(c) In order that the Corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the Board of Directors may fix a record date which
shall be not more than 60 days prior to such action. If no record date is fixed,
the record date for determining stockholders for any such purpose shall be at
the close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
ARTICLE VII
Certificates Representing Stock
-------------------------------
SECTION 1. Certificate; Signatures. The shares of the
Corporation shall be represented by certificates, provided that the Board of
Directors of the Corporation may provide by resolution or resolutions that some
or all of any or all classes or series of its stock shall be uncertificated
shares. Any such resolution shall not apply to shares represented by a
certificate until such certificate is surrendered to the Corporation.
Notwithstanding the adoption of such a resolution by the Board of Directors,
every holder of stock represented by certificates and upon request every holder
of uncertificated shares shall be entitled to have a certificate, signed by or
in the name of the Corporation by the Chairman or Vice-Chairman of the Board of
Directors, or the President or Vice-President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Corporation, representing the number of shares registered in certificate form.
Any and all signatures on any such certificate may be facsimiles. In case any
officer, transfer agent or registrar who has signed or whose facsimile signature
has been placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the Corporation with the same effect as if he or she were such officer,
transfer agent or registrar at the date of issue. The name of the holder of
record of the shares represented thereby, with the number of such shares and the
date of issue, shall be entered on the books of the Corporation.
SECTION 2. Transfers of Stock. Upon compliance with provisions
restricting the transfer or registration of transfer of shares of stock, if any,
shares of capital stock shall be transferable on the books of the Corporation
only by the holder of record thereof in person, or
<PAGE>
11
by a duly authorized attorney, upon surrender and cancellation of certificates
for a like number of shares, properly endorsed, and the payment of all taxes due
thereon.
SECTION 3. Fractional Shares. The Corporation may, but shall
not be required to, issue certificates for fractions of a share where necessary
to effect authorized transactions, or the Corporation may pay in cash the fair
value of fractions of a share as of the time when those entitled to receive such
fractions are determined, or it may issue scrip in registered or bearer form
over the manual or facsimile signature of an officer of the Corporation or of
its agent, exchangeable as therein provided for full shares, but such scrip
shall not entitle the holder to any rights of a stockholder except as therein
provided.
The Board of Directors shall have power and authority to make
all such rules and regulations as it may deem expedient concerning the issue,
transfer and registration of certificates representing shares of the
Corporation.
SECTION 4. Lost, Stolen or Destroyed Certificates. The
Corporation may issue a new certificate of stock in place of any certificate,
theretofore issued by it, alleged to have been lost, stolen or destroyed, and
the Board of Directors may require the owner of any lost, stolen or destroyed
certificate, or his legal representative, to give the Corporator a bond
sufficient to indemnify the Corporation against any claim that may be made
against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of any such new certificate.
ARTICLE VIII
Dividends
---------
Subject always to the provisions of law and the Certificate of
Incorporation, the Board of Directors shall have full power to determine whether
any, and, if any, what part of any, funds legally available for the payment of
dividends shall be declared as dividends and paid to stockholders; the division
of the whole or any part of such funds of the Corporation shall rest wholly
within the lawful discretion of the Board of Directors, and it shall not be
required at any time, against such discretion, to divide or pay any part of such
funds among or to the stockholders as dividends or otherwise; and before payment
of any dividend, there may be set aside out of any funds of the Corporation
available for dividends such sum or sums as the Board of Directors from time to
time, in its absolute discretion, thinks proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the Corporation, or for such other purpose as the Board of Directors
shall think conducive to the interest of the Corporation, and the Board of
Directors may modify or abolish any such reserve in the manner in which it was
created.
<PAGE>
12
ARTICLE IX
Ratification
------------
Any transaction, questioned in any suit on the ground of lack
of authority, defective or irregular execution, adverse interest of director,
officer or stockholder, non-disclosure, miscomputation, or the application of
improper principles or practices of accounting, may be ratified before or after
judgment, by the Board of Directors or by the stockholders, and if so ratified
shall have the same force and effect as if the questioned transaction had been
originally duly authorized. Such ratification shall be binding upon the
Corporation and its stockholders and shall constitute a bar to any claim or
execution of any judgment in respect of such questioned transaction.
ARTICLE X
Corporate Seal
--------------
The corporate seal shall have inscribed thereon the name of
the Corporation and the year of its incorporation, and shall be in such form and
contain such other words and/or figures as the Board of Directors shall
determine. The corporate seal may be used by printing, engraving, lithographing,
stamping or otherwise making, placing or affixing, or causing to be printed,
engraved, lithographed, stamped or otherwise made, placed or affixed, upon any
paper or document, by any process whatsoever, an impression, facsimile or other
reproduction of said corporate seal.
ARTICLE XI
Fiscal Year
-----------
The fiscal year of the Corporation shall be fixed, and shall
be subject to change, by the Board of Directors. Unless otherwise fixed by the
Board of Directors, the fiscal year of the Corporation shall be the calendar
year.
<PAGE>
13
ARTICLE XII
Waiver of Notice
----------------
Whenever notice is required to be given by these Bylaws or by
the certificate of Incorporation or by law, a written waiver thereof, signed by
the person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice.
ARTICLE XIII
Bank Accounts, Drafts, Contracts, Etc.
--------------------------------------
SECTION 1. Bank Account and Drafts. In addition to such bank
accounts as may be authorized by the Board of Directors, the primary financial
officer or any person designated by said primary financial officer, whether or
not an employee of the Corporation, may authorize such bank accounts to be
opened or maintained in the name and on behalf of the Corporation as he or she
may deem necessary or appropriate, and payments from such bank accounts may be
made upon and according to the check of the Corporation in accordance with the
written instructions of said primary financial officer, or other person so
designated by the Treasurer.
SECTION 2. Contracts. The Board of Directors may authorize any
person or persons, in the name and on behalf of the Corporation, to enter into
or execute and deliver any and all deeds, bonds, mortgages, contracts and other
obligations or instruments, and such authority may be general or confined to
specific instances.
SECTION 3. Proxies; Powers of Attorney; Other Instruments. The
Chairman, the President or any other person designated by either of them shall
have the power and authority to execute and deliver proxies, powers of attorney
and other instruments on behalf of the Corporation in connection with the rights
and powers incident to the ownership of stock by the Corporation. The Chairman,
the President or any other person authorized by proxy or power of attorney
executed and delivered by either of them on behalf of the Corporation may attend
and vote at any meeting of stockholders of any company in which the Corporation
may hold stock, and may exercise on behalf of the Corporation any and all of the
rights and powers incident to the ownership of such stock at any such meeting,
or otherwise as specified in the proxy or power of attorney so authorizing any
such person. The Board of Directors, from time to time, may confer like powers
upon any other person.
SECTION 4. Financial Reports. The Board of Directors may
appoint the primary financial officer or other fiscal officer or any other
officer to cause to be prepared and
<PAGE>
14
furnished to stockholders entitled thereto any special financial notice and/or
financial statement, as the case may be, which may be required by any provision
of law.
ARTICLE XIV
Amendments
----------
The Board of Directors shall have power to adopt, amend or
repeal Bylaws. Bylaws adopted by the Board of Directors may be repealed or
changed, and new Bylaws made, by the stockholders, and the stockholders may
prescribe that any Bylaw made by them shall not be altered, amended or repealed
by the Board of Directors.
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....................................... 20
Section 2.02. Acceptance by Trustee....................................... 21
Section 2.03. Representations and Warranties of the Depositor............. 22
Section 2.04. Breach of Representation, Warranty or Covenant.............. 23
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.......... 24
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............ 27
Section 3.08. Retained Interest........................................... 27
Section 3.09. Access to Certain Documentation............................. 27
Section 3.10. Reports by the Depositor.................................... 28
Section 3.11. Charges and Expenses........................................ 29
<PAGE>
ii
ARTICLE IV
DISTRIBUTIONS AND REPORTS TO CERTIFICATEHOLDERS
Section 4.01. Distributions............................................... 29
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............ 33
Section 4.06. Compliance with Withholding Requirements.................... 33
Section 4.07. Optional Exchange........................................... 34
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.......... 41
Section 5.06. Persons Deemed Owners....................................... 42
Section 5.07. Cancellation................................................ 42
Section 5.08. Global Securities........................................... 42
Section 5.09. Notices to Depository....................................... 44
Section 5.10. Definitive Certificates..................................... 44
Section 5.11. Currency of Distributions................................... 45
Section 5.12. Conditions of Authentication and Delivery of New Series..... 46
Section 5.13. Appointment of Paying Agent................................. 48
Section 5.14. Authenticating Agent........................................ 49
Section 5.15. Voting Rights with Respect to Underlying Securities......... 50
Section 5.16. Actions by Certificateholders............................... 51
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............................... 52
Section 5.20. Waiver of Past Defaults..................................... 52
Section 5.21. Right of Certificateholders to Receive Payments Not to
Be Impaired................................................. 53
Section 5.22. Remedies Cumulative......................................... 53
<PAGE>
iii
ARTICLE VI
THE DEPOSITOR
Section 6.01. Liability of the Depositor.................................. 53
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.................... 55
Section 6.05. No Liability of the Depositor with Respect to the
Underlying Securities; Certificateholders to Proceed
Directly Against the Underlying Securities Issuer(s)........ 55
ARTICLE VII
CONCERNING THE TRUSTEE
Section 7.01. Duties of Trustee........................................... 55
Section 7.02. Agreements Between Trustee and Administrative Agents........ 59
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................................ 62
Section 7.06. Trustee's Fees and Expenses................................. 62
Section 7.07. Eligibility Requirements for Trustee........................ 63
Section 7.08. Resignation or Removal of the Trustee; Appointment of
Successor Trustee........................................... 63
Section 7.09. Appointment of Office or Agency............................. 65
Section 7.10. Representations and Warranties of Trustee................... 65
Section 7.11. Indemnification of Trustee by the Depositor; Contribution... 66
Section 7.12. Indemnification of Depositor by Trustee..................... 68
Section 7.13. No Liability of the Trustee with Respect to the Underlying
Securities; Certificateholders to Proceed Directly Against
the Underlying Securities Issuer(s)......................... 68
Section 7.14. The Depositor to Furnish Trustee with Names and Addresses
of Certificateholders....................................... 68
Section 7.15. Preservation of Information................................. 68
Section 7.16. Reports by Trustee.......................................... 69
Section 7.17. Trustee's Application for Instructions from the Depositor... 69
<PAGE>
iv
ARTICLE VIII
MARKET AGENT
Section 8.01. Market Agent................................................ 69
ARTICLE IX
TERMINATION
Section 9.01.Termination upon Liquidation of All Underlying Securities... 70
ARTICLE X
MISCELLANEOUS PROVISIONS
Section 10.01. Amendment.................................................. 71
Section 10.02. Limitation on Rights of Certificateholders................. 72
Section 10.03. Governing Law.............................................. 73
Section 10.04. Notices.................................................... 73
Section 10.05. Notice to Rating Agencies.................................. 74
Section 10.06. Severability of Provisions................................. 75
Section 10.07. Grant of Security Interest................................. 75
Section 10.08. Nonpetition Covenant....................................... 76
Section 10.09. No Recourse................................................ 76
Section 10.10. Article and Section References............................. 77
Section 10.11. Counterparts............................................... 77
Section 10.12. Trust Indenture Act........................................ 77
<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.
<PAGE>
3
"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.
"Call Date": The date on which the Call Right may be
exercised, as specified in the applicable Supplement.
"Call Price": As specified in the applicable Supplement.
<PAGE>
4
"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.
"Class": With respect to any Series, any one of the classes of
Certificates of such Series, each consisting of Certificates having identical
terms.
"Clearing Agency": An organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Closing Date": With respect to any Series, the day on which
Certificates of such Series are first executed, authenticated and delivered, as
specified in the related Supplement.
<PAGE>
5
"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 at which certificated securities are delivered for
registration of transfer, cancellation or exchange (or such other addresses as a
successor Trustee may designate from time to time by notice to the Holders and
the Depositor).
"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 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
<PAGE>
6
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 "USD": 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.
"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
<PAGE>
7
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;
(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
<PAGE>
8
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.
"Extraordinary Trust Expenses": Any and all costs, expenses or
liabilities arising out of the establishment, existence or administration of the
Trust, other than (i)
<PAGE>
9
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 or Retained Interest.
"Independent": When used with respect to any specified Person
means that the Person (1) is in fact independent of the Depositor and of any
Affiliate, (2) does not have any direct or indirect material financial interest
in the Depositor or in any Affiliate and (3) is not connected with the Depositor
as an officer, employee, promoter, underwriter, trustee, partner, director or
person performing similar functions.
"Initial Accrued Interest": With respect to any Series, shall
mean, with respect to each Underlying Security, the amount of interest which
accrued thereon from the Underlying Security Interest Payment Date of such
Underlying Security immediately preceding the Cut-off Date (or, in the event
that the first such Underlying Security Interest Payment Date occurs after the
Cut-off Date, from the date that the Underlying Security was issued) to, but
excluding, the Closing Date.
"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
<PAGE>
11
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.
"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.
<PAGE>
12
"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.
"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
<PAGE>
13
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.
"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
<PAGE>
14
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.
"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.
["Required Rating": With respect to any Series (or Class
within such Series), the rating category (or categories) specified in the
Supplement that, as a condition to the
<PAGE>
15
issuance of such Series or Class, is (or are) the lowest category (or
categories) in which the Certificates of such Series or Class may be categorized
by the Rating Agency.]
"Requisite Reserve Amount": As of any date with respect to any
Series (or Class within such Series) of Certificates, the amount, if any,
required to be maintained in the Reserve Account, if any, for such Series or
Class as specified in or determined pursuant to the related 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 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.
<PAGE>
16
"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.
"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.
<PAGE>
17
"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.
"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.
"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
<PAGE>
18
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 portion of the aggregate voting rights of
[Underlying Securities] which shall be allocated to Certificateholders of each
Class within a given Series (and to the 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
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19
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;
(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.
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20
ARTICLE II
DECLARATION OF TRUSTS; ISSUANCE OF CERTIFICATES;
PURPOSE AND CLASSIFICATION OF TRUSTS
Section 2.01. Creation and Declaration of Trusts; Assignment
of Underlying Securities. (a) The Depositor, concurrently with the execution and
delivery hereof, does hereby agree to Grant to the Trustee, on behalf and for
the benefit of the Certificateholders of each given Series of Certificates and
without recourse, all the right, title and interest of the Depositor, including
any security interest therein for the benefit of the Depositor, in, to and under
the Underlying Securities attributable to each such Series (except for the
Underlying Securities attributable to such Series which are not Granted by the
Depositor, as specified in 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. 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.
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(d) In the case of each delivery of Underlying Securities to
the Trustee, the Depositor shall be deemed thereby to represent and warrant to
the Trustee that:
(i) the Depositor is duly authorized to so deliver such
Underlying Securities;
(ii) the Underlying Securities so delivered are genuine;
(iii) at the time of delivery of the Underlying Securities,
such Underlying Securities are free and clear of any lien, pledge,
encumbrance, right, charge, claim or other security interest (other
than the lien created by the Trust Agreement); and
(iv) such delivery is irrevocable and free of any continuing
claim by the Depositor except such as the Depositor may have as a
Certificateholder of a Certificate.
The above representations and warranties shall survive the
delivery of such Underlying Securities and the Certificates 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
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22
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;
(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.
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23
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 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.
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24
(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.
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
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25
charges, default interest or reinvestment income which may be received by the
Trustee shall be deposited by the Trustee in the Certificate Account and shall
not be retained by the Trustee for its own account.
If, at any time, the Certificate Account for any Series ceases
to be an Eligible Account, the Trustee shall within five Business Days (or such
longer period, not to exceed 30 calendar days, as to which the Rating Agency
Condition is met) establish a new Certificate Account meeting the conditions
specified above and the Trustee shall within five Business Days transfer any
cash and any investments on deposit in the Certificate Account to such new
Certificate Account, and from the date such new Certificate Account is
established, it shall be the Certificate Account for such Series.
(b) The Trustee shall give notice to the Depositor of the
location of each Eligible Account constituting the Certificate Account and prior
to any change thereof, if such Eligible Account is or will be located at an
institution other than United States Trust Company of New York.
Section 3.04. 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 case 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, in which case the settlement of
the liquidation of the Underlying Securities and Related Assets shall occur
promptly after the date of receipt of such notice by the Trustee, 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; 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 deposited by the Trustee 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
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26
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:
(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
<PAGE>
27
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 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
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28
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 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.
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29
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.
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
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30
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 or a Retained Interest 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.
(b) Each Certificate or Retained Interest delivered under this
Trust Agreement upon transfer of or in exchange for or in lieu of any other
Certificate or Retained Interest shall carry the rights to interest accrued and
undistributed, and to accrue, that were carried by such other Certificate or
Retained Interest.
(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, the Certificates and
the Retained Interest, except as otherwise provided, (i) all percentages
resulting from any calculation of accrued interest will be rounded, if
necessary, to the nearest 1/100,000 of 1% (.0000001), with five one-millionths
of a percentage point rounded upward, and (ii) all currency amounts will be
rounded to the nearest one-hundredth of a unit (with .005 of a unit being
rounded upward).
(e) The final distribution of principal and/or premium shall
be made upon presentation and surrender of such Certificates or Retained
Interest 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
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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;
(ii) the Swap Distribution Amount, if any, 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;
(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 to enable
Holders to prepare their tax returns;
(iv) the amount of the distribution on such Distribution Date
to 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) such other customary information as the Trustee deems
necessary or desirable (or that any such Holder reasonably requests in
writing) to enable such Holders to prepare their tax returns;
(vii) 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;
(viii) 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;
(ix) 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;
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32
(x) 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
(xi) 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 subclauses
(i), (ii), (iii), (iv) and (v) above, aggregated for such calendar year or the
applicable portion thereof 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.
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
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33
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.
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
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34
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 or
Retained Interest 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) 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
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35
(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 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;
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(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 each Holder's last address
as it appears in the Certificate Register. 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;
(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
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37
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 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 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 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.
ARTICLE V
THE CERTIFICATES
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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) The Certificates shall be created by a Supplement
authorized by the Depositor, establishing the terms and provisions thereof, and
may be issued in one or more Series, each of which may, subject to the
provisions of the Code and the requirement that each Trust 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.
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),
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39
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 shall
authenticate and deliver in 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.
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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 shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of any Authorized Denominations, of a
like Series, Class and aggregate Certificate Principal Balance or Notional
Amount, as applicable.
(c) Notwithstanding any other provisions of this Section,
unless and until it is exchanged in whole or in part for the individual
Certificates represented thereby, a Global Security representing all or a
portion of the Certificates of a Series (or Class within such Series) may not be
transferred except as a whole by the Depository for such Series or Class to a
nominee of such Depository or by a nominee of such Depository to such Depository
or another nominee of such Depository or by such Depository or any such nominee
to a successor Depository for such Series or Class or a nominee of such
successor Depository.
(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.
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(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 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.
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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, 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
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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 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.
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(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 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.
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(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.
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
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46
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);
(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 Indenture, authenticated and
delivered by the Trustee in accordance with this
Trust Agreement and issued by the Depositor 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;
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47
(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 Company has the corporate power to issue
such Certificates, and has duly taken all necessary
corporate action with respect to such issuance; and
(f) that the issuance of 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 issuance of the Certificates will not result in any breach of any of
the terms, conditions, or provisions of, or constitute a default under, the
Depositor's 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
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48
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 and such exchange
so requires, a co-paying agent in Luxembourg or another European city. Any
Paying Agent shall be permitted to resign as Paying Agent upon 30 days' notice
to the Trustee. In the event that the Trustee shall no longer be the Paying
Agent, the Trustee shall appoint a successor or additional Paying Agent. The
Trustee shall cause each successor to act as Paying Agent to execute and deliver
to Trustee an instrument in which such successor or additional Paying Agent
shall agree with the Trustee that it will hold all sums, if any, held by it for
distribution to the 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
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49
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. Any successor Authenticating Agent upon
acceptance of its appointment hereunder shall become vested with all the rights,
powers and duties of its predecessor hereunder, with like effect as if
originally named as an Authenticating Agent. No successor Authenticating Agent
shall be appointed unless acceptable to the Depositor. The Trustee agrees to pay
to each Authenticating Agent from time to time reasonable compensation for its
services under this Section. The provisions of 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
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50
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 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.
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51
(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 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, 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
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52
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;
(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 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
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53
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.
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,
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54
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.
(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
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55
than the Depositor) formed by or resulting from any such consolidation or
merger, or which shall have received the transfer of all or substantially all of
the property and assets of the Depositor, just as fully and effectually as if
successor Person had been the original party of the first part hereto; and in
the event of any such sale or transfer the predecessor Depositor may be
dissolved, wound up and liquidated at any time thereafter.
Section 6.05. No Liability of the Depositor with Respect to
the Underlying Securities; Certificateholders to Proceed Directly Against the
Underlying Securities Issuer(s). (a) The sole obligor with respect to any
Underlying Security is the Underlying Securities Issuer(s). The Depositor shall
not have any obligation on or with respect to the Underlying Securities; and its
obligations with respect to Certificates shall be solely as set forth in this
Trust Agreement.
(b) The Depositor is not authorized to proceed against the
Underlying Securities Issuer in the event of a default or to assert the rights
and privileges of Certificateholders 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. 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. 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
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instrument corrected, and if the instrument is not corrected to the Trustee's
satisfaction, the Trustee will provide notice thereof to the Depositor and
Certificateholders.
(c) No provision of this Trust Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own misconduct; provided, however, that:
(i) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Trust Agreement,
the Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Trust
Agreement, no implied covenants or obligations shall be read into this
Trust Agreement against the Trustee and, in the absence of bad faith on
the part of the Trustee, the Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the Trustee
that conform to the requirements of this Trust Agreement;
(ii) the Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it 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
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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
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
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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 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.
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(f) The Trustee shall file 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 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
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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 obligating itself to make advances
regarding delinquent Deposited Assets, 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
Administrative Agent shall be required immediately to direct the Trustee to
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.
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;
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(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 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
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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, and the
Trustee agrees that the payment of such amount shall constitute full and final
satisfaction of and payment for all Ordinary Expenses.
(c) If the Prepaid Ordinary Expenses set forth in the
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. 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. 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)
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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 either be (x) paid by the Trustee from the Trust, in the case
of a vote of 100% of the aggregate principal amount of Certificates then
outstanding, or (y) paid by the Trustee (which payment shall be made out of its
own funds and not from monies on deposit in the Trust) in which case the Trustee
shall be entitled to receive, upon demand, reimbursement from those
Certificateholders who have agreed to bear the entire amount of such costs,
expenses or liabilities, on a pro rata basis among such Certificateholders.
Section 7.07. Eligibility Requirements for Trustee. (a) The
Trustee hereunder shall at all times be a corporation or an association which is
not an Affiliate of the Depositor (but may have normal banking relationships
with the Depositor and its Affiliates) organized and doing business under the
laws of any State or the United States, authorized under such laws to exercise
corporate trust powers which shall be eligible to act as a trustee under Section
310(a) of the Trust Indenture Act, having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by Federal or State
authority. If such corporation or association publishes reports of conditions at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 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
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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
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
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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:
(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);
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(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
(vii) no consent, approval, authorization or order of any
court, governmental agency or body is required for the execution,
delivery and performance by the Trustee of, or compliance by the
Trustee with, the Trust Agreement, or for the consummation of the
transactions contemplated by the Trust Agreement, except for such
consents, approvals, authorizations and orders, if any, that have been
obtained prior to the Closing Date.
The representations and warranties of the Trustee set forth in this Section 7.10
shall survive the receipt of Underlying Securities by the Trustee and shall
survive the delivery of the Trust Agreement by the Trustee to the Depositor.
Section 7.11. Indemnification of Trustee by the Depositor;
Contribution. (a) The Depositor agrees, to the extent the Trustee is not
reimbursed pursuant to Section 7.06 hereof, to indemnify the Trustee against,
and hold it harmless from, any loss, expense or liability incurred in connection
with any legal action relating to this Trust Agreement or the Certificates or
the performance of any of the Trustee's duties hereunder, other than any loss,
liability or expense (i) that constitutes a specific liability of the Trustee
under this Trust Agreement or (ii) incurred by reason of wilful misfeasance, bad
faith or negligence in the performance of the Trustee's duties hereunder or by
reason of reckless disregard of the Trustee's obligations and duties hereunder
or as a result of a breach of the Trustee's obligations and duties hereunder.
(b) If the indemnification provided for in the preceding
paragraph is invalid or unenforceable in accordance with its terms, then the
Depositor shall contribute to the amount paid or payable by the Trustee as a
result of such liability in such proportion as is
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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 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) 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.
<PAGE>
68
(g) The indemnity provided in this Section shall survive the
termination or discharge of this Trust Agreement.
Section 7.12. Indemnification of Depositor by Trustee. The
Trustee, in its individual capacity and not from the assets of the Trust, shall
indemnify the Depositor and any successor trustee against any losses, claims,
damages, expenses (including without limitation the Depositor's costs and
expenses in defending itself against any losses, claims or investigations of any
nature whatsoever) or other liabilities, joint or several, which may arise out
of acts performed or omitted by the Trustee or its agents due to its or their
negligence, bad faith or willful misconduct.
Section 7.13. 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 7.14. The Depositor to Furnish Trustee with Names and
Addresses of Certificateholders. The Depositor will furnish to the Trustee
within 15 days after each Record Date with respect to any Distribution Date, and
at such other times as the Trustee may request in writing, within 30 days after
receipt by the Depositor of any such request, a list, in such form as the
Trustee may reasonably require, of all information in the possession or control
of the Depositor as to the names and addresses of the Certificateholders, in
each case as of a date not more than 15 days prior to the time such list is
furnished; provided, however, that so long as the Trustee is the sole Registrar,
no such list need be furnished.
Section 7.15. 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 7.16. Reports by Trustee. If required, within 60 days
after
<PAGE>
69
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 7.17. Trustee's Application for Instructions from the
Depositor. Any application by the Trustee for written instructions from the
Depositor may, at the option of the Trustee, set forth in writing any action
proposed to be taken or omitted by the Trustee under this Trust Agreement and
the date on and/or after which such action shall be taken or such omission shall
be effective, if, but only if, the obligations of the Trustee with respect to
such proposed action or omission are not set forth reasonably clearly in these
Standard Terms and the related 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 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.
<PAGE>
70
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 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.
<PAGE>
71
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
appoint a change in 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 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.
<PAGE>
72
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 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
<PAGE>
73
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 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.
<PAGE>
74
(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.
(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,
<PAGE>
75
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 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
<PAGE>
76
intermediaries, bailees or agents (as applicable) of the Trustee for the purpose
of perfecting such security interest under applicable law.
Accordingly, the Depositor hereby grants to the Trustee a
security interest in the Underlying Securities and all other property described
in clause (y)(2) of the preceding paragraph, for the purpose of securing to the
Trustee the performance by the Depositor of the obligations described in clause
(y)(3) of the preceding paragraph. Notwithstanding the foregoing, the parties
hereto intend the Grant pursuant to Section 2.01 to be a true, absolute and
unconditional sale of the Underlying Securities and assets constituting the
applicable Trust by the Depositor to the Trustee.
(c) The Depositor and the Trustee shall, to the extent
consistent with this Trust Agreement, take such actions as may be necessary to
ensure that, if this Trust Agreement were deemed to create a security interest
in the Underlying Securities, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such for so long as any of the Underlying Securities remain
outstanding. Without limiting the generality of the foregoing, the Trustee shall
file, or shall cause to be filed, all filings necessary to maintain the
effectiveness of any original filings necessary under the Uniform Commercial
Code as in effect in any jurisdiction to perfect the Trustee's security interest
in or lien on the Underlying Securities, including (x) continuation statements
and (y) such other statements as may be occasioned by (1) any change of name of
the Depositor or the Trustee, (2) any change of location of the place of
business or the chief executive office of the Depositor or (3) any transfer of
any interest of the Depositor in any Underlying Security.
Section 10.08. Nonpetition Covenant. Notwithstanding any prior
termination of this Trust Agreement, each of the Trustee (including any
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, 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.
<PAGE>
77
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.
<PAGE>
78
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
- ---------------------------------------------------------------------
(b) 3.11(d)
- ---------------------------------------------------------------------
(c)(1) 1.03
- ---------------------------------------------------------------------
(c)(2) 1.03
- ---------------------------------------------------------------------
(e) 1.03
- ---------------------------------------------------------------------
315(a)(1) 7.01
- ---------------------------------------------------------------------
315(a)(2) 7.03
- ---------------------------------------------------------------------
315(b) 7.01(d)
- ---------------------------------------------------------------------
315(d) 7.01(c)
- ---------------------------------------------------------------------
316(a)(1)(A) 5.19
- ---------------------------------------------------------------------
(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 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), 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 [_____________].
["Required Rating" shall mean, in the case of Moody's, the
rating assigned to the Underlying Securities by Moody's as of the Closing Date,
and, in the case of S&P, the rating assigned to the Underlying Securities by S&P
as of the Closing Date.]
"Series" shall mean Series 199[_]-[Series Designation].
"Specified Currency" shall mean Dollars.
"Trustee Fee" shall mean the payment of [____________] on each
Distribution Date.
<PAGE>
5
"Trust Property" shall mean the Underlying Securities
described on Schedule I hereto.
"Underlying Securities" shall mean [_______________].
"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"
"Business Day"
"Credit Support"
"Credit Support Instrument"
"Credit Support Provider"
"Eligible Expense"
"Exchange Rate Agent"
"Floating Pass-Through Rate"
"Guaranteed Investment Contract"
"Initial Accrued Interest"
"Letter of Credit"
<PAGE>
6
"Limited Guarantor"
"Limited Guaranty"
"Liquidation Price"
"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"
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
<PAGE>
7
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 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 Trustee Fee, 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
<PAGE>
8
receipt by the Trustee of any payment on the Underlying Securities;
[Retained Interest holder]
(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: [___________].
<PAGE>
9
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 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 which 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 or state bankruptcy or
similar law in connection with any obligations relating to the Certificates or
the Trust Agreement.
<PAGE>
B-3
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
Dated: ________ __, 199__
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the [Name of] Certificates, Series 199[__] -
[SERIES DESIGNATION], described in the Trust Agreement referred to herein.
[---------------],
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)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
--------------------------
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2)------
--------------------------
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification No.)
114 West 47th Street 10036-1532
New York, New York (Zip Code)
(Address of principal
executive offices)
--------------------------
MERRILL LYNCH DEPOSITOR, INC
Delaware 13-3891329
(State or other jurisdiction of I.R.S. Employer
incorporation or organization) Identification No.)
World Financial Center
New York, NY 10281
(212) 449-1000
(Address of principal executive offices)
Debt Units
--------------------------
<PAGE>
-2-
GENERAL
1. General Information
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Reserve Bank of New York (2nd District), New York, New
York
(Board of Governors of the Federal Reserve System)
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
2. Affiliations with the Obligor
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3. Voting Securities of the Trustee
2,999,020 shares of Common Stock - par value $5 per share
4. Trusteeships Under Other Indentures
Not applicable.
5. Interlocking Directorates and Similar Relationships with the Obligor or
Underwriters
Not applicable.
<PAGE>
-3-
6. Voting Securities of the Trustee Owned by the Obligor or its Officials
Not applicable.
7. Voting Securities of the Trustee Owned by Underwriters or their
Officials
Not applicable.
8. Securities of the Obligor Owned or Held by the Trustee
Not applicable.
9. Securities of Underwriters Owned or Held by the Trustee
Not applicable.
10. Ownership or Holdings by the Trustee of Voting Securities of Certain
Affiliates or Securities Holders of the Obligor
Not applicable.
11. Ownership or Holdings by the Trustee of any Securities of a Person
Owning 50 Percent or More of the Voting Securities of the Obligor
Not applicable.
12. Indebtedness of the Obligor to the Trustee
Not applicable.
13. Defaults by the Obligor
Not applicable.
<PAGE>
-4-
14. Affiliations with the Underwriters
Not applicable.
15. Foreign Trustee
Not applicable.
16. List of Exhibits
T-1.1 -- Organization Certificate, as amended, issued by the State
of New York Banking Department to transact business as a Trust
Company, is incorporated by reference to Exhibit T-1.1 to Form
T-1 filed on October 6, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 in an amended filing to an
original Registration Statement filed on August 28, 1995
(Registration No. 33-96262).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
T-1.4 -- The By-Laws of United States Trust Company of New York, as
amended, is incorporated by reference to Exhibit T-1.4 to Form
T-1 filed on October 6, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 in an amended filing to an
original Registration Statement filed on August 28, 1995
(Registration No. 33-96262).
T-1.6 -- The consent of the trustee required by Section 321(b) of
the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of January , 1997, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U.S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United
States Trust Company of New York and its parent company, U.S. Trust
Corporation.
<PAGE>
-5-
In answering Item 2 in this statement of eligibility, as to matters
peculiarly within the knowledge of the obligor or its directors, the
trustee has relied upon information furnished to it by the obligor and
will rely on information to be furnished by the obligor and the trustee
disclaims responsibility for the accuracy or completeness of such
information.
---------------------
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, United States Trust Company of New York, a corporation
organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its behalf by
the undersigned, thereunto duly authorized, all in the City of New
York, and State of New York, on the 31st day of July, 1997.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
By: /S/ Andres E. Serrano
--------------------------------
Andres E. Serrano
Vice President
<PAGE>
Exhibit T-1.6
The consent of the trustee required by Section 321(b)of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/s/ Gerard F. Ganey
- -----------------------------------------------------
By: Gerard F. Ganey
Title: Senior Vice President
<PAGE>
Exhibit 1.7
U.S.TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
MARCH 31, 1997
-----------------------------------
(IN THOUSANDS)
ASSETS
- ------
Cash and Due from Banks $ 59,856
Short-Term Investments 213,333
Securities, Available For Sale 968,413
Loans 1,370,272
Less: Allowance for Credit Losses 13,614
------------------------------
Net Loans 1,356,658
Premises and Equipment 61,183
Other Assets 125,938
------------------------------
Total Assets $ 2,785,381
==============================
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 480,539
Interest Bearing 1,738,130
------------------------------
Total Deposits 2,218,669
Short-Term Credit Facilities 271,567
Accounts Payable and Accrued Liabilities 131,642
------------------------------
Total Liabilities 2,621,878
------------------------------
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 49,541
Retained Earnings 101,577
Unrealized Gains (Losses) on Securities
Available for Sale, Net of Taxes (2,610)
------------------------------
Total Stockholder's Equity 163,503
------------------------------
Total Liabilities and
Stockholder's Equity $ 2,785,381
==============================
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank,
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
/s/ Richard E. Brinkmann,
- -----------------------------------------------------
Signature of Officer
Date: June 22, 1997
