As filed with the Securities and Exchange Commission on September 23, 1998
Registration No. 333-60915
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 1
to
FORM S-6
For Registration Under the Securities Act
of 1933 of Securities of Unit Investment
Trusts Registered on Form N-8B-2
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A. EXACT NAME OF TRUST:
McLaughlin, Piven, Vogel Family of Trusts, The Pinnacle Trust
B. NAME OF DEPOSITORS:
McLaughlin, Piven, Vogel Securities, Inc. Reich & Tang Distributors, Inc.
C. COMPLETE ADDRESS OF DEPOSITORS' PRINCIPAL EXECUTIVE OFFICES:
McLaughlin, Piven, Vogel Securities, Inc. Reich & Tang Distributors, Inc.
30 Wall Street 600 Fifth Avenue
New York, New York 10005 New York, New York 10020
D. NAME AND COMPLETE ADDRESS OF AGENT FOR SERVICE:
COPY OF COMMENTS TO:
ALLAN M. VOGEL PETER J. DEMARCO MICHAEL R. ROSELLA, Esq.
President Reich & Tang Distributors, Inc. Battle Fowler LLP
McLaughlin, Piven, Vogel 600 Fifth Avenue 75 East 55th Street
Securities, Inc. New York, New York 10020 New York, New York 10022
30 Wall Street (212) 856-6858
New York, New York 10005
</TABLE>
E. TITLE AND AMOUNT OF SECURITIES BEING REGISTERED:
An indefinite number of Units of McLaughlin, Piven, Vogel Family of
Trusts, The Pinnacle Trust is being registered under the Securities Act
of 1933 pursuant to Section 24(f) of the Investment Company Act of
1940, as amended, and Rule 24f-2 thereunder.
F. PROPOSED MAXIMUM AGGREGATE OFFERING PRICE TO THE PUBLIC OF THE
SECURITIES BEING REGISTERED:
Indefinite
G. AMOUNT OF FILING FEE:
No filing fee required.
H. APPROPRIATE DATE OF PROPOSED PUBLIC OFFERING:
As soon as practicable after the effective date of the Registration
Statement.
/ / Check if it is proposed that this filing will become effective
immediately upon filing pursuant to Rule 487.
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740248.3
<PAGE>
MCLAUGHLIN, PIVEN, VOGEL FAMILY OF TRUSTS, THE PINNACLE TRUST
CROSS-REFERENCE SHEET
Pursuant to Rule 404 of Regulation C
Under the Securities Act of 1933
(Form N-8B-2 Items Required by Instruction as
to the Prospectus in Form S-6)
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Form N-8B-2 Form S-6
Item Number Heading in Prospectus
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I. Organization And General Information
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1. (a) Name of trust.............................................. Front cover of Prospectus
(b) Title of securities issued................................. Front cover of Prospectus
2. Name and address of each depositor.............................. The Sponsors
3. Name and address of trustee..................................... The Trustee
4. Name and address of principal underwriters...................... Distribution of Units
5. State of organization of trust.................................. Organization
6. Execution and termination of trust agreement.................... Trust Agreement, Amendment and Termination
7. Changes of name................................................. None
8. Fiscal year..................................................... Not applicable
9. Litigation...................................................... None
II. General Description of The Trust and Securities of the Trust
10. (a) Registered or bearer securities............................ Book-Entry Units
(b) Cumulative or distributive securities...................... Interest and Principal Distributions
(c) Redemption................................................. Trustee Redemption
(d) Conversion, transfer, etc.................................. Book-Entry Units, Sponsors Repurchase, Trustee
Redemption
(e) Periodic payment plan...................................... Not Applicable
(f) Voting rights.............................................. Trust Agreement, Amendment and Termination
(g) Notice to certificateholders............................... Records, Portfolio, Substitution of Securities, Trust
Agreement, Amendment and Termination, The
Sponsors, The Trustee
(h) Consents required.......................................... Trust Agreement and Amendment, Trust Termination
(i) Other provisions........................................... Tax Status
11. Type of securities comprising units............................. Objective, Portfolio, The Securities, Substitution of
Securities
12. Certain information regarding periodic payment certificates..... Not Applicable
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740248.3
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Form N-8B-2 Form S-6
Item Number Heading in Prospectus
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13. (a) Load, fees, expenses, etc.................................. Summary of Essential Information, Public Offering
Price, Discounts, Sponsors' Profits, Trust
Administration, Trust Expenses and Charges,
Reinvestment Plan
(b) Certain information regarding periodic payment
certificates........................................... Not Applicable
(c) Certain percentages........................................ Summary of Essential Information, Public Offering
Price, Discounts
(d) Price differences.......................................... Discounts, Distribution of Units
(e) Other loads, fees, expenses................................ None
(f) Certain profits receivable by depositors, principal
underwriters, trustee or affiliated persons............ Trust Termination
(g) Ratio of annual charges to income.......................... Not Applicable
14. Issuance of trust's securities.................................. Organization, Book-Entry Units
15. Receipt and handling of payments from purchasers................ Public Offering Price
16. Acquisition and disposition of underlying securities............ Organization, Substitution of Securities, Portfolio,
Portfolio Supervision
17. Withdrawal or redemption........................................ Summary of Essential Information, Market for Units,
Sponsors Repurchase, Trustee Redemption
18. (a) Receipt, custody and disposition of income................. Distributions
(b) Reinvestment of distributions.............................. Reinvestment Plan
(c) Reserves or special funds.................................. Distributions
(d) Schedule of distributions.................................. Not Applicable
19. Records, accounts and reports................................... Records
20. Certain miscellaneous provisions of trust agreement
(a) Amendment.................................................. Trust Agreement and Amendment, Trust Termination
(b) Termination................................................ Trust Agreement and Amendment, Trust Termination
(c) and (d) Trustee, removal and successor..................... The Trustee
(e) and (f) Depositor, removal and successor................... The Sponsors
21. Loans to security holders....................................... None
22. Limitations on liability........................................ The Sponsors, The Trustee Evaluation of the Trust
23. Bonding arrangements............................................ Part II - Item A
24. Other material provisions of trust agreement.................... None
III. Organization, Personnel and Affiliated Persons of Depositor
25. Organization of depositor....................................... The Sponsors
26. Fees received by depositor...................................... Not Applicable
27. Business of depositor........................................... The Sponsors
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740248.3
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Form N-8B-2 Form S-6
Item Number Heading in Prospectus
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28. Certain information as to officials and affiliated persons of
depositor.................................................... Not Applicable
29. Voting securities of depositor.................................. Not Applicable
30. Persons controlling depositor................................... None
31. Payments by depositor for certain services
rendered to trust...................................... Not Applicable
32. Payments by depositor for certain other services
rendered to trust............................................ Not Applicable
33. Remuneration of employees of depositor for certain services
rendered to trust............................................ Not Applicable
34. Remuneration of other persons for certain services
rendered to trust............................................ Not Applicable
IV. Distribution and Redemption of Securities
35. Distribution of trust's securities by states.................... Distribution of Units
36. Suspension of sales of trust's securities....................... None
37. Revocation of authority to distribute........................... None
38. (a) Method of distribution..................................... Distribution of Units
(b) Underwriting agreements.................................... Distribution of Units
(c) Selling agreements......................................... Distribution of Units
39. (a) Organization of principal underwriters..................... The Sponsors
(b) N.A.S.D. membership of principal underwriters.............. The Sponsors
40. Certain fees received by principal underwriters................. The Sponsors
41. (a) Business of principal underwriters......................... The Sponsors
(b) Branch offices of principal underwriters................... None
(c) Salesmen of principal underwriters......................... Not Applicable
42. Ownership of trust's securities by certain persons.............. Not Applicable
43. Certain brokerage commissions received by
principal underwriters................................. Not Applicable
44. (a) Method of valuation........................................ Summary of Essential Information, Statement of
Financial Condition, Liquidity, Distributions
(b) Schedule as to offering price.............................. Summary of Essential Information
(c) Variation in offering price to certain persons............. Distribution of Units, Discounts
45. Suspension of redemption rights................................. Not Applicable
46. (a) Redemption valuation....................................... Summary of Essential Information, Market for Units,
Termination, Offering Price, Sponsors Repurchase,
Trustee Redemption
(b) Schedule as to redemption price............................ Summary of Essential Information
</TABLE>
740248.3
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Form N-8B-2 Form S-6
Item Number Heading in Prospectus
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47. Maintenance of position in underlying securities................ Market for Units, Offering Price, Sponsors Repurchase,
Trustee Redemption
V. Information Concerning the Trustee or Custodian
48. Organization and regulation of trustee.......................... The Trustee
49. Fees and expenses of trustee.................................... Trust Expenses and Charges
50. Trustee's lien.................................................. Trust Expenses and Charges
VI. Information Concerning Insurance of Holders of Securities
51. Insurance of holders of trust's securities...................... Not Applicable
VII. Policy of Registrant
52. (a) Provisions of trust agreement with respect to selection or
elimination of underlying securities................... Portfolio Supervision, Substitution of Securities, Trust
Agreement and Amendment, Trust Termination
(b) Transactions involving elimination of underlying
securities............................................. Not Applicable
(c) Policy regarding substitution or elimination of underlying Portfolio Supervision, Substitution of Securities, Trust
securities............................................. Agreement and Amendment, Trust Termination
(d) Fundamental policy not otherwise covered................... None
53. Tax status of trust............................................. Tax Status
VIII. Financial and Statistical Information
54. Trust's securities during last ten years........................ Not Applicable
55. Hypothetical account for issuers of periodic payment plans...... Not Applicable
56. Certain information regarding periodic payment certificates..... Not Applicable
57. Certain information regarding periodic payment plans............ Not Applicable
58. Certain other information regarding
periodic payment plans................................. Not Applicable
59. Financial statements (Instruction 1(c) to Form S-6)............. Statement of Financial Condition
</TABLE>
740248.3
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<PAGE>
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MCLAUGHLIN, PIVEN, VOGEL FAMILY OF TRUSTS
- --------------------------------------------------------------------------------
THE PINNACLE TRUST
The Trust is a unit investment trust designated McLaughlin, Piven, Vogel Family
of Trusts, The Pinnacle Trust (the "Trust"). The Sponsors are McLaughlin, Piven,
Vogel Securities, Inc. and Reich & Tang Distributors, Inc. The objective of the
Trust is to maximize total return through a combination of capital appreciation
and current dividend income. The Sponsors can not give any assurance that the
Trust's objective will be achieved. The Trust seeks to achieve its objective by
attempting to outperform the Dow Jones Industrial Average ("DJIA") by creating a
portfolio that combines the following three investment strategies: (1) investing
in the DJIA's ten highest dividend yielding common stocks ("Top Ten"), (2)
investing in the five lowest priced stocks of the Top Ten ("Focus Five") and (3)
investing in a single stock which is the second-lowest priced of the Focus Five
("Penultimate Pick"); each determined as of two business days prior to the
Initial Date of Deposit. The name "Dow Jones Industrial Average" is the property
of Dow Jones & Company, Inc., which is not affiliated with the Sponsors and has
not participated in any way in the creation of the Trust or in the selection of
the stocks included in the Trust and has not reviewed or approved any
information included in this Prospectus. Dow Jones & Company, Inc. has not
granted to the Trust or the Sponsors a license to use the Dow Jones Industrial
Average. The value of the Units of the Trust will fluctuate with fluctuations in
the value of the underlying Securities in the Trust. Therefore, Unitholders who
sell their Units may receive more or less than their original purchase price
upon sale. No assurance can be given that dividends will be paid or that the
Units will appreciate in value. The Trust will terminate approximately fifteen
months after the Initial Date of Deposit. Minimum Purchase: 100 Units. The
minimum purchase is 100 Units for individual purchasers, and 25 Units for
purchases by custodial accounts or Individual Retirement Accounts, self-employed
retirement plans (formerly Keogh Plans), pension funds and other tax-deferred
retirement plans.
This Prospectus consists of two parts. Part A contains the Summary of Essential
Information including descriptive material relating to the Trust and the
Statement of Financial Condition of the Trust. Part B contains general
information about the Trust. Part A may not be distributed unless accompanied by
Part B. Please read and retain both parts of this Prospectus for future
reference. The Securities and Exchange Commission ("SEC") maintains a website
that contains reports, proxy and information statements and other information
regarding the Trust which are filed electronically with the SEC. The SEC's
Internet address is http:www.sec.gov. Offering materials for the sale of these
Units available through the Internet are not being offered directly or
indirectly to residents of a particular state nor is an offer of these units
through the Internet specifically directed to any person in a state by, or on
behalf of, the issuer.
================================================================================
================================================================================
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SEC
OR ANY STATE SECURITIES COMMISSION NOR HAS THE SEC OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
PROSPECTUS PART A DATED SEPTEMBER 23, 1998
740253.5
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SUMMARY OF ESSENTIAL INFORMATION AS OF SEPTEMBER 22, 1998:*
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INITIAL DATE OF DEPOSIT: September 23, 1998 MINIMUM VALUE OF TRUST: The Trust may be
AGGREGATE VALUE OF SECURITIES.................. $150,024 terminated if the value of the Trust is less than 40% of
NUMBER OF UNITS................................ 15,567 the aggregate value of the Securities at the completion
FRACTIONAL UNDIVIDED INTEREST IN of the Deposit Period.
TRUST....................................... 1/15,567 CUSIP NUMBERS: Cash: 581774114
PUBLIC OFFERING PRICE PER 100 UNITS Reinvestment: 581774106
Aggregate Value of Securities in TRUSTEE: The Chase Manhattan Bank
Trust.................................... $150,024 TRUSTEE'S FEE: $.86 per 100 Units outstanding
Plus Estimated Organization Costs**......... $208 OTHER FEES AND EXPENSES: $.15 per 100 Units
Divided By 15,567 Units (times 100)......... $965.05 outstanding
Plus Sales Charge of 3.495% of Public SPONSORS: McLaughlin, Piven, Vogel Securities, Inc.
Offering Price........................... $34.95 and Reich & Tang Distributors, Inc.
Public Offering Price +..................... $1,000.00 AGENT FOR SPONSORS: Reich & Tang
SPONSOR'S REPURCHASE PRICE AND Distributors, Inc.
REDEMPTION PRICE PER SPONSORS' PORTFOLIO SUPERVISORY,
100 UNITS++................................. $965.05 BOOKKEEPING AND ADMINISTRATIVE FEE:
EVALUATION TIME: 4:00 p.m. New York Time. Maximum of $.25 per 100 Units outstanding (see
MINIMUM INCOME OR PRINCIPAL "Trust Expenses and Charges" in Part B).
DISTRIBUTION: $1.00 per 100 Units EXPECTED SETTLEMENT DATE o: September 28,
LIQUIDATION PERIOD: Beginning 5 days prior to 1998
the Mandatory Termination Date. RECORD DATES: December 15 and June 15
ROLLOVER NOTIFICATION DATE***: December DISTRIBUTION DATES: December 31 and June 30
1, 1999 or another date as determined by the Sponsors. REINVESTMENT SALES CHARGE: 1.00%
MANDATORY TERMINATION DATE: The earlier of
December 23, 1999 or the disposition of the last Security in the Trust.
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* The business day prior to the Initial Date of Deposit. The Initial Date
of Deposit is the date on which the Trust Agreement was signed and the deposit
of Securities with the Trustee made.
** Investors will reimburse the Sponsors, for all or a portion of the costs
incurred in organizing and offering the Trust (collectively, the "organization
costs")--including costs of preparing the registration statement, the trust
indenture and other closing documents, registering units with the SEC and the
states and the initial audit of the Trust portfolio. The estimated organization
costs will be paid to the Sponsors from the assets of the Trust as of the close
of the initial public offering period. To the extent that actual organization
costs are less than the estimated amount, only the actual organization costs
will be deducted from the assets of the Trust. To the extent that actual
organization costs are greater than the estimated amount, only the estimated
organization costs included in the Public Offering Price will be reimbursed to
the Sponsors.
*** If a Unitholder ("Rollover Unitholder") so specifies prior to the
Rollover Notification Date, the Rollover Unitholder's terminating distribution
will be reinvested as received in an available series of the Pinnacle Trusts if
offered (see "Trust Administration--Trust Termination").
+ Except for the amount representing the estimated organization costs, on
the Initial Date of Deposit there will be no cash in the Income or Principal
Accounts. Anyone purchasing Units after such date will have included in the
Public Offering Price a pro rata share of any cash in such Accounts.
++ Any redemptions of over 2,500 Units may, upon request by a redeeming
Unitholder, be made in kind. The Trustee will forward the distributed securities
to the Unitholder's McLaughlin, Piven, Vogel broker-dealer account at The
Depository Trust Company in book-entry form. As of the close of the initial
offering period, the Sponsors' Repurchase Price and Redemption Price per 100
Units for the Trust will be reduced to reflect its estimated organization cost
per 100 Units. See "Liquidity--Trustee Redemption" in Part B.
o The business day on which all contracts to purchase securities in the
Trust are expected to settle.
A-2
740253.5
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OBJECTIVE. The objective of the Trust is to maximize total return through
capital appreciation and current dividend income. The Trust seeks to achieve its
objective by attempting to outperform the Dow Jones Industrial Average ("DJIA")
(which is not affiliated with the Sponsors) by creating a portfolio that
combines the following three investment strategies: (1) investing in the DJIA's
ten (10) common stocks having the highest dividend yield (the "Top Ten"), (2)
investing in the DJIA's five (5) common stocks having the lowest per share stock
price of the Top Ten (the "Focus Five") and (3) investing in a single stock
which is the DJIA's second-lowest priced of the Focus Five (the "Penultimate
Pick"); each determined as of two business days prior to the Initial Date of
Deposit. The combination of the three investment strategies is hereinafter
referred to as the "Triple Strategy". The Trust's portfolio will be comprised of
ten (10) stocks. Approximately 20% of the Trust's assets will be allocated to
the Top Ten, approximately 60% will be allocated to the Focus Five and
approximately 20% will be allocated to the Penultimate Pick. Within these three
categories, stocks will be purchased in approximately equal dollar amounts. Due
to the fact that all of the Focus Five are also represented in the Top Ten, and
that the Penultimate Pick appears in both the Focus Five and Top Ten, overlap
will result in a difference in the actual weighting of the stocks in the
portfolio as well as the actual weighting of the three strategies relative to
each other in the portfolio on the Initial Date of Deposit. For the actual
percentage of each stock in the portfolio, see "Portfolio" herein. (Also, see
"The Trust--Objective" and "The Trust--The Securities" in Part B.) As used
herein, the term "highest dividend yield" means the yield for each Security
calculated by annualizing the last quarterly or semi-annual ordinary dividend
distributed on that Security and dividing the result by the market value of that
Security as of two business days prior to the Initial Date of Deposit. This rate
is historical, and there is no assurance that any dividends will be declared or
paid in the future on the Securities in the Trust. The Trust's annual total
return may not exceed the DJIA in any one year; however, historically, long term
cumulative returns from these strategies has outperformed the DJIA. As used
herein, the term "Securities" means the common stocks initially deposited in the
Trust and described in "Portfolio" in Part A and any additional common stocks
acquired and held by the Trust pursuant to the provisions of the Indenture.
Further, the Securities and therefore the Units may appreciate or depreciate in
value, dependent upon the full range of economic and market influences affecting
corporate profitability, the financial condition of issuers and the price of
equity securities in general and the Securities in particular. Therefore, there
is no guarantee that the objective of the Trust will be achieved.
PORTFOLIO. The Portfolio contains 10 issues of common stock. 100% of the issues
are represented by the Sponsors' contracts to purchase. Based upon the principal
business of each issuer and current market values, the following industries are
represented in the Portfolio*: Auto Manufacturing, 14.02%; Banking and
Financial, 2.05%; Chemical, 15.85%; Consumer Products, 14.00%; Machinery,
34.01%; Manufacturing, 2.04%; Oil, 4.01%; and Paper, 14.02%. The Focus Five
stocks are Caterpillar Inc., General Motors, International Paper Co., Philip
Morris Companies, Inc. and Union Carbide Corp. and the Penultimate Pick is
Caterpillar Inc., a company with a significant concentration in the machinery
industry.
PUBLIC OFFERING PRICE. The Public Offering Price per 100 Units of the Trust is
equal to the aggregate value of the underlying Securities (the price at which
they could be directly purchased by the public assuming they were available) in
the Trust divided by the number of Units outstanding times 100 plus a sales
charge of 3.495% of the Public Offering Price per 100 Units or 3.621% of the net
amount invested in Securities per 100 Units. In addition, during the initial
offering period, the Public Offering Price will include cash in an amount
sufficient to reimburse the Sponsors for the payment of all or a portion of the
estimated organization costs of the Trust. The price of a single Unit, or any
multiple thereof, is calculated by dividing the Public Offering Price per 100
Units by 100 and multiplying by the number of Units. Any cash held by the Trust
will be added to the Public Offering Price. For additional information regarding
the Public Offering Price, repurchase and redemption of Units and other
essential information regarding the Trust, see the "Summary of Essential
Information." During the initial offering period orders involving at least
25,000 Units will be entitled to a volume discount from the Public Offering
Price. The Public Offering Price per Unit may vary on a daily basis in
accordance with fluctuations in the aggregate value of the underlying Securities
and the price to be paid by each investor will be computed as of the date the
Units are purchased. (See "Public Offering" in Part B.)
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* A trust is considered to be "concentrated" in a particular category or
industry when the securities in that category or that industry constitute
25% or more of the total assets of the portfolio.
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740253.5
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ESTIMATED NET ANNUAL DISTRIBUTIONS. The estimated net annual distributions to
Unitholders (based on the most recent quarterly or semi-annual ordinary dividend
distributed with respect to the Securities) as of two business days prior to the
Initial Date of Deposit per 100 Units was $26.35. This estimate will vary with
changes in the Trust's fees and expenses, actual dividends received, and with
the sale of Securities. In addition, because the issuers of common stock are not
obligated to pay dividends, there is no assurance that the estimated net annual
dividend distributions will be realized in the future.
DISTRIBUTIONS. Dividend distributions, if any, will be made semi-annually on the
Distribution Dates to all Unitholders of record on the Record Date. For the
specific dates representing the Distribution Dates and Record Dates, see
"Summary of Essential Information" in Part A. The final distribution will be
made within a reasonable period of time after the termination of the Trust. (See
"Rights of Unitholders--Distributions" in Part B.) Unitholders may elect to
automatically reinvest distributions (other than the final distribution in
connection with the termination of the Trust), into additional Units of the
Trust, which are subject to a reduced sales charge. See "Reinvestment Plan" in
Part B.
MARKET FOR UNITS. The Sponsors, although not obligated to do so, intend to
maintain a secondary market for the Units and to continuously offer to
repurchase the Units of the Trust both during and after the initial public
offering period. The secondary market repurchase price will be based on the
market value of the Securities in the Trust portfolio and will be the same as
the redemption price. (See "Liquidity--Sponsors Repurchase" for a description of
how the secondary market repurchase price will be determined.) If a market is
not maintained a Unitholder will be able to redeem his Units with the Trustee
(see "Liquidity--Trustee Redemption" in Part B). As a result, the existence of a
liquid trading market for these Securities may depend on whether dealers will
make a market in these Securities. There can be no assurance of the making or
the maintenance of a market for any of the Securities contained in the portfolio
of the Trust or of the liquidity of the Securities in any markets made. The
price at which the Securities may be sold to meet redemptions and the value of
the Units will be adversely affected if trading markets for the Securities are
limited or absent.
UNITS. Evidence of ownership of the Units are recorded in book-entry form at the
Depository Trust Company ("DTC") through the account of McLaughlin, Piven, Vogel
Securities, Inc. Any transfer of Units by Unitholders from their McLaughlin
Piven Vogel brokerage account will result in the automatic redemption of those
Units. (See "Liquidity-Automatic Redemption" in Part B.)
TERMINATION. During the 5-day period prior to the Mandatory Termination Date
(the "Liquidation Period"), Securities will begin to be sold in connection with
the termination of the Trust and all Securities will be sold or distributed by
the Mandatory Termination Date. The Trustee may utilize the services of the
Sponsors for the sale of all or a portion of the Securities in the Trust. Any
brokerage commissions received by the Sponsor from the Trust in connection with
such sales will be in accordance with applicable law. The Sponsors will
determine the manner, timing and execution of the sales of the underlying
Securities. The Sponsors will attempt to sell the Securities during the
Liquidation Period without, in its judgment, materially adversely affecting the
market price of the Securities. All of the Securities will be disposed of by the
end of the Liquidation Period. The Sponsors do not anticipate that the period
will be longer than 5 days, and it could be as short as one day, depending on
the liquidity of the Securities being sold.
Unitholders may elect one of the three options in receiving their terminating
distributions: (1) to receive their pro rata share of the underlying Securities
in-kind, if they own at least 2,500 units, (2) to receive cash upon the
liquidation of their pro rata share of the underlying Securities or (3) to
invest the amount of cash they would have received upon the liquidation of their
pro rata share of the underlying Securities in units of a future series of
Pinnacle Trusts (if one is offered) at a reduced sales charge (see "Rollover
Option"). See "Trust Administration--Trust Termination" in Part B for a
description of how to select a termination distribution option. Unitholders who
have not chosen to receive distributions-in-kind will be at risk to the extent
that the Securities are not sold; for this reason the Sponsor will be inclined
to sell the Securities during the Liquidation Period without materially
adversely affecting the price of the Securities.
ROLLOVER OPTION. Unitholders may elect to rollover their terminating
distributions into the next available series of Pinnacle Trusts at a reduced
sales charge. Rollover Unitholders must make this election on or prior to the
Rollover Notification Date. Upon making this election, a Unitholder's Units will
be redeemed and the proceeds will be
A-4
740253.5
<PAGE>
reinvested in units of the next available series of Pinnacle Trusts. An election
to rollover terminating distributions will generally be a taxable event. See
"Trust Administration--Trust Termination" in Part B for details to make this
election.
RISK CONSIDERATIONS. An investment in Units of the Trust should be made with an
understanding of the risks inherent in an investment in any of the Securities
including, for common stocks, the risk that the financial condition of the
issuers of the Securities may become impaired or that the general condition of
the stock market may worsen (both of which may contribute directly to a decrease
in the value of the Securities and thus in the value of the Units). Further, the
nature of the combination of the three investment strategies in the portfolio
causes the Trust to be concentrated in the Penultimate Pick. The Penultimate
Pick is a company deriving a substantial portion of its income from the
machinery industry. Investors should consider the greater risk of the Trust's
concentration and the effect on their investment versus a more diversified
portfolio and should compare returns available on less concentrated portfolios
before making an investment decision. The portfolio of the Trust is fixed and
not "managed" by the Sponsors. Since the Trust will not sell Securities in
response to ordinary market fluctuation, but only (except for certain
extraordinary circumstances) at the Trust's termination or to meet redemptions,
the amount realized upon the sale of the Securities may not be the highest price
attained by an individual Security during the life of the Trust. In connection
with the deposit of Additional Securities subsequent to the Initial Date of
Deposit, if cash (or a letter of credit in lieu of cash) is deposited with
instructions to purchase Securities, to the extent the price of a Security
increases or decreases between the deposit and the time the Security is
purchased, Units may represent more or less of that Security and more or less of
the other Securities in the Trust. In addition, brokerage fees incurred in
purchasing Securities with cash deposited with instructions to purchase the
Securities will be an expense of the Trust. Price fluctuations during the period
from the time of deposit to the time the Securities are purchased, and payment
of brokerage fees, will affect the value of every Unitholder's Units and the
income per Unit received by the Trust.
The Sponsors cannot give any assurance that the business and investment
objectives of the issuers of the Securities will correspond with or in any way
meet the limited term objective of the Trust. (See "Risk Considerations" in Part
B of this Prospectus.)
REINVESTMENT PLAN. Unitholders may elect to automatically reinvest their
distributions, if any (other than the final distribution in connection with the
termination of the Trust) into additional units of the Trust at a reduced sales
charge of 1.00%. See "Reinvestment Plan" in Part B for details on how to enroll
in the Reinvestment Plan.
UNDERWRITING. McLaughlin, Piven, Vogel Securities, Inc., 30 Wall Street, New
York, New York 10005, will act as Underwriter for all of the Units of
McLaughlin, Piven, Vogel Family of Trusts, The Pinnacle Trust. (See "Public
Offering--Distribution of Units" in Part B).
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<TABLE>
<CAPTION>
MCLAUGHLIN, PIVEN, VOGEL
FAMILY OF TRUSTS
THE PINNACLE TRUST
STATEMENT OF FINANCIAL CONDITION AS OF SEPTEMBER 22, 1998
ASSETS
<S> <C>
Investment in Securities--Sponsor's Contracts to Purchase
Underlying Securities Backed by Letter of Credit (cost $150,024) (Note 1).................. $ 150,024
Cash............................................................................................. 208
------------------
Total............................................................................................ $ 150,232
==================
LIABILITIES AND INTEREST OF UNITHOLDERS
Reimbursement to Sponsors for Organization Costs (Note 2)........................................ $ 208
Interest of Unitholders - Units of Fractional
Undivided Interest Outstanding (Pinnacle Trust: 15,567 Units).............................. 150,024
------------------
Total............................................................................................ $ 150,232
==================
Net Asset Value per Unit......................................................................... $ 9.64
==================
</TABLE>
- -------------------------
Notes to Statement of Financial Condition:
The preparation of financial statements in accordance with generally
accepted accounting principles requires Trust management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual results
could differ from those estimates.
(1) McLaughlin, Piven, Vogel Family of Trusts, The Pinnacle Trust (the
"Trust") is a unit investment trust created under the laws of the State of New
York and registered under the Investment Company Act of 1940. The objective of
the Trust, jointly sponsored by McLaughlin, Piven, Vogel Securities, Inc. and
Reich & Tang Distributors, Inc. (the "Sponsors"), is to maximize total return
through capital appreciation and current dividend income. On September 23, 1998,
the "Date of Deposit", Portfolio Deposits were received by The Chase Manhattan
Bank, the Trust's Trustee, in the form of executed securities transactions, in
exchange for units of the Trust. An irrevocable letter of credit issued by
BankBoston in an amount of $400,000 has been deposited with the Trustee for the
benefit of the Trust to cover the purchases of such Securities as well as any
outstanding purchases of previously- sponsored unit investment trusts of the
Sponsors. Aggregate cost to the Trust of the Securities listed in the Portfolio
is determined by the Trustee on the basis set forth under "Public
Offering--Offering Price" as of 4:00 p.m. on September 22, 1998. The Trust will
terminate on December 23, 1999 or earlier under certain circumstances as further
described in the Prospectus.
(2) A portion of the Public Offering Price consists of cash in an amount
sufficient to reimburse the Sponsors for the per Unit portion of all or part of
the costs of establishing the Trust. These costs have been estimated at $1.34
per 100 Units for the Trust. A payment will be made as of the close of the
initial public offering period to an account maintained by the Trustee from
which the obligation of the investors to the Sponsors will be satisfied. To the
extent that actual organization costs are less than the estimated amount, only
the actual organization costs will be deducted from the assets of the Trust.
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<TABLE>
<CAPTION>
MCLAUGHLIN, PIVEN, VOGEL
FAMILY OF TRUSTS
THE PINNACLE TRUST
PORTFOLIO
AS OF SEPTEMBER 22, 1998
Market
Value of
Stocks as a Market Cost of
Number Percentage Current Value Securities
Portfolio of Ticker of the Dividend Per to the Trust
No. Shares Name of Issuer (1) Symbol Trust (2) Yield (3) Share (4)
----- -------- ------------------- ------ ----------- --------- ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1215 Caterpillar Inc. CAT 34.01% 2.85% $42.0000 $ 51,030
2 37 Chevron Corporation CHV 2.00 3.01 81.0625 2,999
3 52 E.I. du Pont de Nemours & Company DD 2.00 2.43 57.5625 2,993
4 45 Exxon Corporation XON 2.01 2.44 67.0625 3,018
5 369 General Motors Corp. GM 14.02 3.50 57.0000 21,033
6 474 International Paper Co. IP 14.02 2.25 44.3750 21,034
7 35 J.P. Morgan & Company JPM 2.05 4.31 88.0625 3,082
8 43 Minnesota Mining & Manufacturing MMM 2.04 3.09 71.0000 3,053
Co.
9 438 Philip Morris Companies, Inc. MO 14.00 3.33 47.9375 20,997
10 514 Union Carbide Corp. UK 13.85 2.22 40.4375 20,785
------ ----------
0 Total Investment in Securities 100% $ 150,024
====== ==========
</TABLE>
FOOTNOTES TO PORTFOLIO
(1) Contracts to purchase the Securities were entered into on September 22,
1998. All such contracts are expected to be settled on or about the First
Settlement Date of the Trust which is expected to be September 28, 1998.
(2) Based on the cost of the Securities to the Trust.
(3) Current Dividend Yield for each security was calculated by annualizing the
last quarterly or semi-annual ordinary dividend received on the security
and dividing the result by its market value as of the close of trading on
September 22, 1998.
(4) Evaluation of Securities by the Trustee was made on the basis of closing
sales prices at the Evaluation Time on the day prior to the Initial Date
of Deposit. The Sponsors' Purchase Price is $150,310. The Sponsors' Loss
on the Initial Date of Deposit is $286.
The accompanying notes form an integral part of the Financial Statements.
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REPORT OF INDEPENDENT AUDITORS
THE UNITHOLDERS, SPONSORS AND TRUSTEE
MCLAUGHLIN, PIVEN, VOGEL FAMILY OF TRUSTS,
THE PINNACLE TRUST
We have audited the accompanying statement of Financial Condition of
McLaughlin, Piven, Vogel Family of Trusts, The Pinnacle Trust, including the
Portfolio, as of September 22, 1998. This financial statement is the
responsibility of the Trust's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation with The Chase Manhattan Bank, Trustee, of an irrevocable letter of
credit deposited for the purchase of securities, as shown in the financial
statement as of September 22, 1998. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the financial position of McLaughlin, Piven, Vogel
Family of Trusts, The Pinnacle Trust, at September 22, 1998, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
September 22, 1998
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<PAGE>
THREE "DOW BEATING" STRATEGIES
THE TRUST
Investing in the stock market has proven year after year to be a good way
to beat inflation. The Dow Jones Industrial Average (DJIA)* is a leading stock
market indicator that provides the data for this fact. This average is a
sampling of thirty stocks that represent some of the largest and strongest
companies in the world. Their long record of steady earnings, financial
resources and economic power have earned them the investor confidence that has
given them the nickname "blue chip" stocks.
THE STRATEGY
Now you have the opportunity to invest in three strategies simultaneously
that have been proven to "beat" the DJIA without having to spend the time,
effort and money to buy each stock individually. The Pinnacle Trust is a unit
investment trust portfolio designed to take advantage of three winning
strategies. Historically, these three strategies have each individually beaten
the returns of the DJIA over the past twenty-two years. The first strategy is to
pick the Top Ten highest yielding stocks of the thirty stocks that are contained
in the DJIA. The second strategy is to choose the five lowest priced stocks of
the Top Ten. These are called the Focus Five. The last strategy is to choose the
second lowest priced stock of the Focus Five. This is the Penultimate Pick.
These three strategies are then combined to produce a portfolio of ten stocks
with the weighting among the strategies selected by the Sponsors. Each stock's
concentration will reflect the individual weightings of the three strategies.
All four Charts below show the effect these strategies may have on your
investment. Charts A and B reflect hypothetical returns which do not include
sales charges, expenses, commissions, or taxes. Charts C and D, however, reflect
the same hypothetical returns net of sales charges and trust expenses. For
example, if you had invested $10,000 in 1973 in the DJIA, your investment would
be worth approximately $213,856 today. But if, hypothetically, you had invested
the same $10,000 applying the Triple Strategy, your investment would be worth
approximately $1,527,400 ($766,621 net of sales charges and expenses) today.
These hypothetical returns do not reflect the effect of market fluctuations if a
stock in the portfolio of one of the strategies was sold at any point in time.
There can be no assurance that these results will be achieved as past
performance is no guarantee of future results.
[insert chart A] [insert chart B]
[insert chart C] [insert chart D]
The charts assume that all dividends during the one year are reinvested at
the end of that year. The performance of the Hypothetical Triple Strategy
Trust in Charts C and D are net of sales charges (3.495% for the first
year, and 2.995% for each subsequent year) and estimated expenses of
.260%. For a complete explanation to calculate the hypothetical
performance of the Triple Strategy, see "Comparison of Total Returns" in
Part B. There can be no assurance that the Trust will outperform the DJIA
over its 15-month life or over consecutive roll over periods, if
available. The strategy outperformed the DJIA in 18 out of the past 25
years (14 years if trust sales charges and expenses were deducted from the
Hypothetical Triple Strategy Trust performance). (Of course, that also
means the strategy underperformed the DJIA in seven of those years (11
years if trust sales charges and expenses were deducted from the
Hypothetical Triple Strategy Trust performance).)
- --------
* The DJIA is the property of Dow Jones & Company, Inc. and the company is
not affiliated with the Sponsors and has not participated in any way in
the creation of the trust or in the portfolio and has not approved any
information included herein.
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THE TRUST'S CONCEPT
- -------------------
The Trust's concept is a simple one: To create a portfolio which combines
these three "winning" strategies. The diversification of the Top Ten stocks
combined with a concentration of the higher yielding Penultimate Pick and the
Focus Five stocks gives the Trust the opportunity to produce above average
returns. The portfolio is held for approximately 15 months and then it is
liquidated. (For more information see "Options at termination" below.)
TRIPLE STRATEGY TRUST INVESTING
- -------------------------------
Time Invested vs. Investment Timing - This Trust is based on the theory that you
- -----------------------------------
are rolling over your portfolio each year. The Trust may not exceed the DJIA in
any one year; however, historically, long term cumulative returns from this
philosophy beat the DJIA. It's not the timing of the purchase that counts, it's
the length of time that you are invested.
Contrarian Reasoning - Buy what others are selling.
- --------------------
Dividends Count - Dividends contribute greatly to your total return.
- ---------------
Layered Strategies Work - Look at the charts and notice how the DJIA has been
- -------------------------
beaten by these three strategies. It is our opinion that if one strategy works
well then three strategies may work better.
FEATURES
- --------
o Convenience - Ownership of ten blue chip stocks with the ease of a
single purchase.
o Liquidity - You may sell your units on any business day at the then
current net asset value. However, since market values fluctuate, your
units may be worth more or less than your original investment.
o Low minimum investment - May be as low as $1,000.
o Options at termination - You may receive cash, stock-in-kind (unitholders
owning 2,500 units or more) or roll your proceeds into the new Triple
Strategy Trust, if available, at a reduced sales charge. Unitholders may
be subject to tax liability at Trust Termination.
o No management fees - This is an unmanaged portfolio and therefore no
additional management fees are charged.
Risk Considerations - An investment in Units of the Trust should be made with an
understanding of the risks associated with investments in common stocks, which
include the risk that the financial condition of the issuers may become impaired
or that the general condition of the stock market may worsen. In addition,
because the Trust may be considered to be "concentrated" in stocks of companies
deriving a substantial portion of their income from a singular industry, and
that the combination of the three investment strategies causes the Trust to be
"concentrated" in the Penultimate Pick, investors should consider the greater
risk of such concentrations and the effect on their investment versus a more
diversified portfolio and compare those returns before making an investment
decision.
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- --------------------------------------------------------------------------------
MCLAUGHLIN, PIVEN, VOGEL FAMILY OF TRUSTS
- --------------------------------------------------------------------------------
THE PINNACLE TRUST
PROSPECTUS PART B
PART B OF THIS PROSPECTUS MAY NOT BE
DISTRIBUTED UNLESS ACCOMPANIED BY
PART A
THE TRUST
ORGANIZATION. McLaughlin, Piven, Vogel Family of Trusts, The Pinnacle
Trust consists of a "unit investment trust" designated as set forth in Part A.
The Trust was created under the laws of the State of New York pursuant to a
Trust Indenture and Agreement (the "Trust Agreement"), dated the Initial Date of
Deposit, among McLaughlin, Piven, Vogel Securities, Inc. and Reich & Tang
Distributors, Inc., as Sponsors, and The Chase Manhattan Bank, as Trustee.
On the Initial Date of Deposit, the Sponsors deposited with the Trustee
common stock, including funds and delivery statements relating to contracts for
the purchase of certain such securities (collectively, the "Securities") with an
aggregate value as set forth in Part A and cash or an irrevocable letter of
credit issued by a major commercial bank in the amount required for such
purchases. Thereafter the Trustee, in exchange for the Securities so deposited,
has registered on the registration books of the Trust evidence of the Sponsors'
ownership of all Units of the Trust. The Sponsors have a limited right to
substitute other securities in the Trust portfolio in the event of a failed
contract. See "The Trust--Substitution of Securities." The Sponsors may also, in
certain circumstances, direct the Trustee to dispose of certain Securities if
the Sponsors believe that, because of market or credit conditions, or for
certain other reasons, retention of the Security would be detrimental to
Unitholders. See "Trust Administration Portfolio--Supervision."
As of the Initial Date of Deposit, a "Unit" represents an undivided
interest or pro rata share in the Securities and cash of the Trust in the ratio
of one hundred Units for the indicated amount of the aggregate market value of
the Securities initially deposited in the Trust as is set forth in the "Summary
of Essential Information." As additional Units are issued by the Trust as a
result of the deposit of Additional Securities, as described below, the
aggregate value of the Securities in the Trust will be increased and the
fractional undivided interest in the Trust represented by each Unit will be
decreased. To the extent that any Units are redeemed by the Trustee, the
fractional undivided interest or pro rata share in such Trust represented by
each unredeemed Unit will increase, although the actual interest in such Trust
represented by such fraction will remain unchanged. Units will remain
outstanding until redeemed upon tender to the Trustee by Unitholders, which may
include the Sponsors, or until the termination of the Trust Agreement.
DEPOSIT OF ADDITIONAL SECURITIES. With the deposit of the Securities in
the Trust on the Initial Date of Deposit, the Sponsors established a
proportionate relationship among the initial aggregate value of specified
Securities in the Trust. During the 90 days subsequent to the Initial Date of
Deposit (the "Deposit Period"), the Sponsors may deposit additional Securities
in the Trust that are substantially similar to the Securities already deposited
in the Trust ("Additional Securities"), contracts to purchase Additional
Securities or cash with instructions to purchase Additional Securities, in order
to create additional Units, maintaining to the extent practicable the original
proportionate relationship of the number of shares of each Security in the Trust
portfolio on the Initial Date of
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Deposit. These additional Units, which will result in an increase in the number
of Units outstanding, will each represent, to the extent practicable, an
undivided interest in the same number and type of securities of identical
issuers as are represented by Units issued on the Initial Date of Deposit. It
may not be possible to maintain the exact original proportionate relationship
among the Securities deposited on the Initial Date of Deposit because of, among
other reasons, purchase requirements, changes in prices, or unavailability of
Securities. The composition of the Trust portfolio may change slightly based on
certain adjustments made to reflect the disposition of Securities and/or the
receipt of a stock dividend, a stock split or other distribution with respect to
such Securities, including Securities received in exchange for shares or the
reinvestment of the proceeds distributed to Unitholders. Deposits of Additional
Securities in the Trust subsequent to the Deposit Period must replicate exactly
the existing proportionate relationship among the number of shares of Securities
in the Trust portfolio. Substitute Securities may be acquired under specified
conditions when Securities originally deposited in the Trust are unavailable
(see "The Trust--Substitution of Securities" below).
OBJECTIVE. The objective of the Trust is to maximize total return through
capital appreciation and current dividend income. The Trust seeks to achieve its
objective by attempting to outperform the Dow Jones Industrial Average ("DJIA")
(which is not affiliated with the Sponsors) by creating a portfolio that
combines the following three investment strategies: (1) investing in the DJIA's
ten (10) common stocks having the highest dividend yield (the "Top Ten"), (2)
investing in the DJIA's five (5) common stocks having the lowest per share stock
price of the Top Ten (the "Focus Five") and (3) investing in a single stock
which is the DJIA's second-lowest priced of the Focus Five (the "Penultimate
Pick"); each determined as of two business days prior to the Initial Date of
Deposit. The combination of the three investment strategies is hereinafter
referred to as the "Triple Strategy".The Trust's portfolio will be comprised of
ten (10) stocks. Approximately 20% of the Trust's assets will be comprised of
the Top Ten, approximately 60% will be comprised of the Focus Five and
approximately 20% will be comprised of the Penultimate Pick. Within these three
categories, stocks will be purchased in approximately equal dollar amounts. Due
to the fact that all of the Focus Five are also represented in the Top Ten, and
that the Penultimate Pick appears in both the Focus Five and Top Ten, overlap
will result in a difference in the actual weighting of the stocks in the
portfolio as well as the actual weighting of the three strategies relative to
each other in the portfolio on the Initial Date of Deposit. For the actual
percentage of each stock in the portfolio, see "Portfolio" in Part A. (Also see
"The Trust--Objective" and "The Trust--The Securities" in Part B.) As used
herein, the term "highest dividend yield" means the yield for each Security
calculated by annualizing the last quarterly or semi-annual ordinary dividend
distributed on that Security and dividing the result by the market value of that
Security as of two business days prior to the Initial Date of Deposit. This rate
is historical, and there is no assurance that any dividends will be declared or
paid in the future on the Securities in the Trust. As used herein, the term
"Securities" means the common stocks initially deposited in the Trust and
described in "Portfolio" in Part A and any additional common stocks acquired and
held by the Trust pursuant to the provisions of the Indenture.
Investing in DJIA stocks with the highest dividend yields may be effective
in achieving the Trust's investment objective because regular dividends are
common for established companies and dividends have accounted for a substantial
portion of the total return on DJIA stocks as a group. There can be no assurance
that the dividend rates will be maintained. Reduction or elimination of a
dividend could adversely affect the stock price as well. Purchasing a portfolio
of these stocks as opposed to one or two stocks can achieve a more diversified
holding. There is only one investment decision instead of ten. An investment in
the Trust can be cost-efficient, avoiding the odd-lot costs of buying small
quantities of securities directly. An investment in a number of companies with
high dividends relative to their stock prices is designed to increase the
Trust's potential for higher returns. The Trust's return will consist of a
combination of capital appreciation and current dividend income. The Trust will
terminate in approximately fifteen months, at which time investors may choose to
either receive the distributions in kind (if they own at least 2,500 Units), in
cash or reinvest in a subsequent series of Pinnacle Trusts (if available) at a
reduced sales charge. Further, the Securities may appreciate or depreciate in
value, dependent upon the full range of economic and market influences affecting
corporate profitability, the financial condition of issuers and the prices of
equity securities in general and the Securities in particular. Investors should
note that the Trust's selection criteria was applied to the Securities two
business days prior to the Initial Date of Deposit. Since the Sponsors may
deposit additional Securities
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<PAGE>
in connection with the sale of additional Units, the yields on these Securities
may change subsequent to the Initial Date of Deposit. Therefore, there is no
guarantee that the objective of the Trust will be achieved.
THE SECURITIES. Each of the Securities has been taken from the Dow Jones
Industrial Average ("DJIA"). The DJIA comprises 30 common stocks chosen by the
editors of The Wall Street Journal as representative of the broad market and of
American industry. The companies are major factors in their industries and their
stocks are widely held by individuals and institutional investors. Changes in
the components of the DJIA are made entirely by the editors of The Wall Street
Journal without consultation with the companies, the stock exchange or any
official agency. For the sake of continuity, changes are made rarely. Most
substitutions have been the result of mergers, but from time to time, changes
may be made to achieve a better representation. The components of the DJIA may
be changed at any time for any reason. Any changes in the components of the DJIA
after the date of this Prospectus will not cause a change in the identity of the
common stocks included in the Trust's portfolio, including any Additional
Securities deposited in the Trust.
The first DJIA, consisting of 12 stocks, was published in The Wall Street
Journal in 1896. The list grew to 20 stocks in 1916 and to 30 stocks on October
1, 1928. For two periods of 17 consecutive years each, there were no changes to
the list: March 1939 - July 1956 and June 1959 - August 1976. The DJIA last
changed on March 17, 1997.
Stocks Currently Comprising the DJIA
AT&T Corporation International Business Machines Corporation
Allied Signal International Paper Company
Aluminum Company of America Johnson & Johnson
American Express Company J.P. Morgan & Company
Boeing Company McDonald's Corporation
Caterpillar Inc. Merck & Company, Inc.
Chevron Corporation Minnesota Mining & Manufacturing Company
Coca-Cola Company Philip Morris Companies, Inc.
E.I. du Pont de Nemours & Company Proctor & Gamble Company
Eastman Kodak Company Sears, Roebuck & Company
Exxon Corporation Travelers Corp. Inc.
General Electric Company Union Carbide Corporation
General Motors Corporation United Technologies Corporation
Goodyear Tire & Rubber Company Wal-Mart Stores, Inc.
Hewlett-Packard Co. Walt Disney Company
The yield for each Security was calculated by annualizing the last
quarterly or semi-annual ordinary dividend distributed and dividing the result
by the market value of the Security as of two business days prior to the Initial
Date of Deposit. This formula (an objective determination) served as the basis
for the Sponsors' selection of the Top Ten. The companies represented in the
Trust are some of the most well-known and highly capitalized companies in
America. The Securities were selected irrespective of any research
recommendation by the Sponsors. Investing in the stocks of the DJIA may be
effective as well as conservative because regular dividends are common for
established companies and dividends have accounted for a substantial portion of
the total return on stocks comprising the DJIA.
Although the McLaughlin, Piven, Vogel Family of Trusts, The Pinnacle Trust
was not available until this year, during the last 25 years, the strategy of
investing in approximately equal values of the ten highest yielding stocks each
year generally would have yielded a higher total return than an investment in
all 30 stocks which make up the DJIA. The following table shows the hypothetical
performance of investing approximately equal amounts in each of the Top Ten,
Focus Five, Penultimate Pick and the combined Triple Strategy at the beginning
of each year and rolling over the proceeds. The total returns do not reflect
sales charges, commissions or taxes. These results represent past performance of
the Top Ten, Focus Five, Penultimate Pick and Triple Strategy, and should not be
considered
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indicative of future results of the Trust. The Trust's annual total return may
not exceed the DJIA in any one year; however, historically, long term cumulative
total returns from these strategies has outperformed the cumulative returns of
the DJIA. The Top Ten, Focus Five, Penultimate Pick and Triple Strategy each
underperformed the DJIA in certain years. Also, investors in the Trust may not
realize as high a total return as on a direct investment in each of the Top Ten,
Focus Five, Penultimate Pick or Triple Strategy since the Trust has sales
charges and expenses and may not be fully invested at all times. Unit prices
fluctuate with the value of the underlying stocks, and there is no assurance
that dividends on these stocks will be paid or that the Units will appreciate in
value.
The following table compares the actual performance of the DJIA and
approximately equal values of each of the Top Ten, Focus Five, Penultimate Pick
or Hypothetical Triple Strategy Trust in each of the past 25 years, as of
December 31 in each of these years:
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<TABLE>
<CAPTION>
COMPARISON OF TOTAL RETURNS(1)
For Calendar Years ending 12/31/97
(Unless indicated, Total Returns do not include sales charges, commission, taxes or other expenses)
HYPOTHETICAL
DOW JONES HYPOTHETICAL TRIPLE STRATEGY
CALENDAR INDUSTRIAL PENULTIMATE TRIPLE TRUST - NET OF
YEAR AVERAGE TOP TEN OF FOCUS FIVE PICK OF STRATEGY SALES CHARGES &
ENDED (DJIA) DJIA (2) OF DJIA(2) DJIA(2) TRUST(3) EXPENSES(3)(4)
<S> <C> <C> <C> <C> <C> <C> <C>
1973 -13.10% 3.90% 19.60% 73.40% 27.22% 23.47%
1974 -23.10 -1.30 -3.80 -41.70 -10.88 -14.13
1975 44.40 55.90 70.10 157.20 84.68 81.43
1976 22.70 34.80 40.80 55.10 42.46 39.21
1977 -12.70 0.90 4.50 4.30 3.74 0.49
1978 2.70 -0.10 1.70 1.00 1.20 -2.05
1979 10.50 12.40 9.90 -10.10 6.40 3.15
1980 21.50 27.20 40.50 50.60 39.86 36.61
1981 -3.40 5.00 0.00 27.30 6.46 3.21
1982 25.80 23.60 37.40 95.30 46.22 42.97
1983 25.70 38.70 36.10 36.10 36.62 33.37
1984 1.10 7.60 12.60 -2.80 8.52 5.27
1985 32.80 29.50 37.80 26.40 33.86 30.61
1986 26.90 32.10 27.90 29.60 29.08 25.83
1987 6.00 6.10 11.10 3.30 8.54 5.29
1988 16.00 22.90 18.40 19.50 19.52 16.27
1989 31.70 26.50 10.50 12.90 14.18 10.93
1990 -0.40 -7.60 -15.20 -17.40 -14.12 -17.37
1991 23.90 39.30 61.90 185.60 82.12 78.87
1992 7.40 7.90 23.10 69.10 29.26 26.01
1993 16.80 27.30 34.30 39.10 33.86 30.61
1994 4.90 4.10 8.60 -37.40 -1.50 -4.75
1995 36.40 36.70 30.50 21.70 29.98 26.73
1996 28.90 27.90 26.00 28.10 26.80 23.55
1997 24.70 21.60 20.00 49.90 26.30 23.05
</TABLE>
- -------------------------------
(1) Total return does not take into consideration any sales charges,
commissions, expenses or taxes EXCEPT for total returns cited for the
Hypothetical Triple Strategy Trust. The Total Return represents the sum of
Appreciation and Actual Dividend Yield. (i) Appreciation for the Top Ten,
Focus Five and Penultimate Pick is calculated by subtracting the market
value of these stocks as of the first trading day on the New York Stock
Exchange in a given calendar year from the market value of those stocks as
of the last trading day in that calendar year, and dividing the result by
the market value of the stocks as of the first trading day in that calendar
year. Appreciation for the DJIA is calculated by subtracting the opening
value of the DJIA as of the first trading day in each calendar year from the
closing value of the DJIA as of the last trading day in that calendar year,
and dividing the result by the opening value of the DJIA as of the first
trading day in that calendar year. (ii) Actual Dividend Yield for the Top
Ten, Focus Five and Penultimate Pick is calculated by adding the total
dividends received on the stocks in the calendar year and dividing the
result by the market value of the stocks as of the first trading day in that
calendar year. Actual Dividend Yield for the DJIA is calculated by taking
the total dividends credited to the DJIA and dividing the result by the
opening value of the DJIA as of the first trading day in that calendar year.
(2) The Top Ten, Focus Five and Penultimate Pick in any given calendar year were
selected by ranking the dividend yields for each of the stocks in the DJIA
as of the beginning of that calendar year, based upon an annualization of
the last quarterly or semi-annual regular dividend distribution (which would
have been declared in the preceding calendar year) divided by that stock's
market value on the first trading day on the New York Stock Exchange in that
calendar year.
(3) The Total Return Performance for the Hypothetical Triple Strategy Trust is
calculated by combining the Total Return, as calculated in footnote (1)
above, of the three investment strategies, the Top Ten, Focus Five and
Penultimate Pick, in any given calendar year based upon the same weighted
average which this Trust will be employing: 20% comprised of the Top Ten,
60% of the Focus Five and 20% of the Penultimate Pick. Within these three
categories, stocks will be purchased in approximately equal dollar amounts.
Footnote (2) above describes the selection process of each strategy.
(4) Total Return for Hypothetical Triple Strategy Trust is net of sales charges
(3.495% for the first year, 2.995% for each subsequent year) and estimated
expenses of .260%.
These results represent past performance and should not be considered
indicative of future results of this Trust. Unit prices may fluctuate with
the value of the underlying stocks, and there is no assurance that dividends
on these stock will be paid or that the Units will appreciate in value.
Trust performance will differ from the Hypothetical Triple Strategy Trust
because (i) of commissions, (ii) the portfolio is established and liquidated
at different times during the year, (iii) stocks may be purchased and sold
at prices different from those used in determining unit price, (iv) the
Trust may not be fully invested at all times, and (v) stocks may not be
weighted equally. The Triple Strategy Trust may have been concentrated in
different industries than this Trust.
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The contracts to purchase Securities deposited initially in the Trust are
expected to settle in three business days, in the ordinary manner for such
Securities. Settlement of the contracts for Securities is thus expected to take
place prior to the settlement of purchase of Units on the Initial Date of
Deposit.
SUBSTITUTION OF SECURITIES. In the event of a failure to deliver any
Security that has been purchased for the Trust under a contract ("Failed
Securities"), the Sponsors are authorized under the Trust Agreement to direct
the Trustee to acquire other securities ("Substitute Securities") to make up the
original corpus of the Trust.
The Substitute Securities must be purchased within 20 days after delivery
of the notice of the failed contract. Where the Sponsors purchase Substitute
Securities in order to replace Failed Securities, the purchase price may not
exceed the purchase price of the Failed Securities and the Substitute Securities
must be substantially similar to the Securities originally contracted for and
not delivered.
Whenever a Substitute Security has been acquired for the Trust, the
Trustee shall, within five days thereafter, notify all Unitholders of the Trust
of the acquisition of the Substitute Security and the Trustee shall, on the next
Distribution Date which is more than 30 days thereafter, make a pro rata
distribution of the amount, if any, by which the cost to the Trust of the Failed
Security exceeded the cost of the Substitute Security.
In the event no substitution is made, the proceeds of the sale of
Securities will be distributed to Unitholders as set forth under "Rights of
Unitholders--Distributions." In addition, if the right of substitution shall not
be utilized to acquire Substitute Securities in the event of a failed contract,
the Sponsor will cause to be refunded the sales charge attributable to such
Failed Securities to all Unitholders, and distribute the principal and
dividends, if any, attributable to such Failed Securities on the next
Distribution Date.
RISK CONSIDERATIONS
FIXED PORTFOLIO. The value of the Units will fluctuate depending on all of
the factors that have an impact on the economy and the equity markets. These
factors similarly impact the ability of an issuer to distribute dividends.
Unlike a managed investment company in which there may be frequent changes in
the portfolio of securities based upon economic, financial and market analyses,
securities of a unit investment trust, such as the Trust, are not subject to
such frequent changes based upon continuous analysis. All the Securities in the
Trust are liquidated or distributed during the Liquidation Period. Since the
Trust will not sell Securities in response to ordinary market fluctuation, but
only at the Trust's termination or upon the occurrence of certain events, the
amount realized upon the sale of the Securities may not be the highest price
attained by an individual Security during the life of the Trust. Some of the
Securities in the Trust may also be owned by other clients of the Sponsors and
their affiliates. However, because these clients may have differing investment
objectives, the Sponsors may sell certain Securities from those accounts in
instances where a sale by the Trust would be impermissible, such as to maximize
return by taking advantage of market fluctuations. Investors should consult with
their own financial advisers prior to investing in the Trust to determine its
suitability. (See "Trust Administration--Portfolio Supervision" below.)
ADDITIONAL SECURITIES. Investors should be aware that in connection with
the creation of additional Units subsequent to the Initial Date of Deposit, the
Sponsors may deposit Additional Securities, contracts to purchase Additional
Securities or cash with instructions to purchase Additional Securities, in each
instance maintaining the original proportionate relationship, subject to
adjustment under certain circumstances, of the numbers of shares of each
Security in the Trust. To the extent the price of a Security increases or
decreases between the time cash is deposited with instructions to purchase the
Security and the time the cash is used to purchase the Security, Units may
represent less or more of that Security and more or less of the other Securities
in the Trust. Brokerage fees (if any) incurred in purchasing Securities with
cash deposited with instructions to purchase the Securities will be an expense
of the Trust. Price fluctuations between the time of deposit and the time the
Securities are purchased, and payment of brokerage fees, will affect the value
of every Unitholder's Units and the Income per Unit received by the Trust. In
particular, Unitholders who purchase Units during the initial offering period
would experience a dilution of their investment as a result of any brokerage
fees paid by the Trust during subsequent deposits of Additional Securities
purchased with cash deposited. In order to minimize these effects, the Trust
will try to purchase Securities as near as possible to the Evaluation Time or at
prices as close as possible to the prices used to evaluate Trust Units at the
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Evaluation Time. In addition, subsequent deposits to create such additional
Units will not be covered by the deposit of a bank letter of credit. In the
event that the Sponsors do not deliver cash in consideration for the additional
Units delivered, the Trust may be unable to satisfy its contracts to purchase
the Additional Securities. The failure of the Sponsors to deliver cash to the
Trust, or any delays in the Trust receiving such cash, may have significant
adverse consequences for the Trust.
COMMON STOCK. Since the Trust contains common stocks of domestic issuers,
an investment in Units of the Trust should be made with an understanding of the
risks inherent in any investment in common stocks including the risk that the
financial condition of the issuers of the Securities may become impaired or that
the general condition of the stock market may worsen (both of which may
contribute directly to a decrease in the value of the Securities and thus in the
value of the Units). Additional risks include risks associated with the right to
receive payments from the issuer which is generally inferior to the rights of
creditors of, or holders of debt obligations or preferred stock issued by the
issuer. Holders of common stocks have a right to receive dividends only when,
if, and in the amounts declared by the issuer's board of directors and to
participate in amounts available for distribution by the issuer only after all
other claims on the issuer have been paid or provided for. By contrast, holders
of preferred stocks usually have the right to receive dividends at a fixed rate
when and as declared by the issuer's board of directors, normally on a
cumulative basis. Dividends on cumulative preferred stock must be paid before
any dividends are paid on common stock and any cumulative preferred stock
dividend which has been omitted is added to future dividends payable to the
holders of such cumulative preferred stock. Preferred stocks are also usually
entitled to rights on liquidation which are senior to those of common stocks.
For these reasons, preferred stocks generally entail less risk than common
stocks.
Moreover, common stocks do not represent an obligation of the issuer and
therefore do not offer any assurance of income or provide the degree of
protection of debt securities. The issuance of debt securities or even preferred
stock by an issuer will create prior claims for payment of principal, interest
and dividends which could adversely affect the ability and inclination of the
issuer to declare or pay dividends on its common stock or the economic interest
of holders of common stock with respect to assets of the issuer upon liquidation
or bankruptcy. Further, unlike debt securities which typically have a stated
principal amount payable at maturity (which value will be subject to market
fluctuations prior thereto), common stocks have neither fixed principal amount
nor a maturity and have values which are subject to market fluctuations for as
long as the common stocks remain outstanding. Common stocks are especially
susceptible to general stock market movements and to volatile increases and
decreases in value as market confidence in and perceptions of the issuers
change. These perceptions are based on unpredictable factors including
expectations regarding government, economic, monetary and fiscal policies,
inflation and interest rates, economic expansion or contraction, and global or
regional political, economic or banking crises. The value of the common stocks
in the Trust thus may be expected to fluctuate over the life of the Trust to
values higher or lower than those prevailing on the Initial Date of Deposit.
PENULTIMATE PICK. The Trust may be considered to be "concentrated" in
common stock of a particular issuer. Information regarding such company is
available by inspecting or copying certain reports, proxies and informational
statements and other information filed by such company in accordance with the
Securities Exchange Act of 1934 at the public reference facilities maintained at
the Securities and Exchange Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies can be obtained from the Public Reference Section
of the Securities and Exchange Commission at the same address at prescribed
rates.
MACHINERY COMPANIES. The Trust may be considered to be concentrated in the
common stock of a company engaged in the machinery industry and, as a result,
the value of the Units of the Trust may be susceptible to various factors
affecting this industry. The diversified machinery industry includes producers
of agricultural equipment, construction equipment, mining equipment, papermaking
machinery, machine tools, and an assortment of diverse products of specialty
machinery and equipment. Factors affecting the machinery industry, include, but
are not limited to, (1) products of companies in the machinery industry which
may be subject to rapid obsolescence; (2) cyclical business whose performance is
highly sensitive to the economic health of the U.S. and world economies; (3)
various environmental laws and regulations which can be expensive to comply with
and result in significant liability if not complied with; (4) changes in
legislation which could adversely affect a company; (5) competition on a global
scale, which subjects companies within this industry to added risks of foreign
markets, particularly risks
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associated with foreign economic crises and political unrest; and (6) intense
competition within the industry both domestically and in foreign markets which
can lead to intense bidding for contracts which, in turn, could result in a
winning bid which leaves little or no profit margin. In addition, the demand for
diversified machinery generally fluctuates with the performance of the diverse
industries relying on the equipment these manufacturers provide. Therefore, the
machinery industry is susceptible to the fluctuations and risks inherent in
agriculture, housing, mining and manufacturing industries.
The Sponsors believe that the information summarized above for the
machinery companies describes some of the more significant aspects relating to
the risks associated with investing in the Trust which may have a
"concentration" in this industry. The sources of such information are obtained
from research reports as well as other publicly available documents. While the
Sponsors have not independently verified this information, they have no reason
to believe that such information is not correct in all material respects.
YEAR 2000 ISSUE. Many existing computer programs use only two digits to
identify a year in the date field and were designed and developed without
considering the impact of the upcoming change in the century. Therefore, for
example, the year "2000" would be incorrectly identified as the year "1900". If
not corrected, many computer applications could fail or create erroneous results
by or at the Year 2000, requiring substantial resources to remedy. The Sponsors
and Trustee believe that the "Year 2000" problem is material to their business
and operations and have a material adverse effect on the Sponsors' and the
Trustee's results of operations and, in turn, cash available for distribution by
the Trustee. Although the Sponsors and the Trustee are addressing the problem
with respect to their business operations, there can be no assurance that the
"Year 2000" problem will be properly or timely resolved. The "Year 2000" problem
may also adversely affect issuers of the Securities contained in the Trust to
varying degrees based upon various factors. The Sponsors are unable to predict
what effect, if any, the "Year 2000" problem will have on such issuers.
LEGISLATION. From time to time Congress considers proposals to reduce the
rate of the dividends-received deduction which is available to certain
corporations. Enactment into law of a proposal to change the rate would
adversely affect the after-tax return to investors that can take advantage of
the deduction. Investors are urged to consult their own tax advisers. Further,
at any time after the Initial Date of Deposit, legislation may be enacted, with
respect to the Securities in the Trust or the issuers of the Securities.
Changing approaches to regulation, particularly with respect to the environment
or with respect to the petroleum industry, may have a negative impact on certain
companies represented in the Trust. There can be no assurance that future
legislation, regulation or deregulation will not have a material adverse effect
on the Trust or will not impair the ability of the issuers of the Securities to
achieve their business goals.
LEGAL PROCEEDINGS AND LITIGATION. At any time after the Initial Date of
Deposit, legal proceedings may be initiated on various grounds, or legislation
may be enacted, with respect to the Securities in the Trust or to matters
involving the business of the issuer of the Securities. There can be no
assurance that future legal proceedings or legislation will not have a material
adverse impact on the Trust or will not impair the ability of the issuers of the
Securities to achieve their business and investment goals.
GENERALLY. There is no assurance that any dividends will be declared or
paid in the future on the Securities. Investors should be aware that there is no
assurance that the Trust's objective will be achieved.
PUBLIC OFFERING
OFFERING PRICE. In calculating the Public Offering Price, the aggregate
value of the Securities and any cash held to purchase Securities is divided by
the number of Units outstanding. In addition, during the initial offering period
a portion of the Public Offering Price per 100 Units also consists of cash in an
amount sufficient to pay the per 100 Units portion of all or a part of the cost
incurred in organizing and offering the Trust. See "Trust Expenses and Charges."
The aggregate value of the Securities is determined in good faith by the Trustee
on each "Business Day" as defined in the Indenture in the following manner:
because the Securities are listed on a national securities
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exchange, this evaluation is based on the last sale price on that exchange as of
the Evaluation Time (unless the Trustee deems these prices inappropriate as a
basis for valuation). If the Trustee deems these prices inappropriate as a basis
for evaluation, then the Trustee may utilize, at the Trust's expense, an
independent evaluation service or services to ascertain the values of the
Securities. The independent evaluation service shall use any of the following
methods, or a combination thereof, which it deems appropriate: (a) on the basis
of current bid prices for comparable securities, (b) by appraising the value of
the Securities on the bid side of the market or by such other appraisal deemed
appropriate by the Trustee or (c) by any combination of the above, each as of
the Evaluation Time.
VOLUME AND OTHER DISCOUNTS. Units are available at a volume discount from
the Public Offering Price during the initial public offering based upon the
number of Units purchased. This volume discount will result in a reduction of
the sales charge applicable to such purchases. The approximate reduced sales
charge on the Public Offering Price applicable to such purchases are as follows:
NUMBER OF UNITS APPROXIMATE REDUCED SALES CHARGE
--------------- --------------------------------
25,000 but less than 50,000 3.245%
50,000 but less than 100,000 2.995%
100,000 or more 2.745%
For transactions of at least 100,000 Units or more, the Sponsors intends
to negotiate the applicable sales charge and such charge will be disclosed to
any such purchaser.
These discounts will apply to all purchases of Units by the same purchaser
during the initial public offering period. Units purchased by the same
purchasers in separate transactions during the initial public offering period
will be aggregated for purposes of determining if such purchaser is entitled to
a discount provided that such purchaser must own at least the required number of
Units at the time such determination is made. Units held in the name of the
spouse of the purchaser or in the name of a child of the purchaser under 21
years of age are deemed for the purposes hereof to be registered in the name of
the purchaser. The discount is also applicable to a trustee or other fiduciary
purchasing securities for a single trust estate or single fiduciary account.
The holders of units of prior series of Pinnacle Trusts (the "Prior
Series") may "rollover" into this Trust by exchanging units of the Prior Series
for Units of the Trust at their relative net asset values plus the applicable
sales charge. Unitholders maintaining an account at McLaughlin, Piven, Vogel
Securities, Inc. exercising this option, may purchase such Units subject to a
reduced sales charge of 2.995%. An exchange of a Prior Series for Units of the
Trust will generally be a taxable event. The rollover option described herein
will also be available to investors in the Prior Series who elect to purchase
Units of the Trust (see "Trust Termination").
Unitholders with a brokerage account at McLaughlin, Piven, Vogel
Securities, Inc. will receive one commission- free trade to buy equity
securities any time following the first settlement date of the Trust (see
"Summary of Essential Information" in Part A). Unitholders executing a
commission-free trade to buy equity securities will be charged a $14.50
processing fee.
Employees (and their immediate families) of McLaughlin, Piven, Vogel
Securities, Inc. and Reich & Tang Distributors, Inc. (and their affiliates) and
of the special counsel to the Sponsors, may, pursuant to employee benefit
arrangements, purchase Units of the Trust without a Sales charge at a price
equal to the aggregate value of the underlying securities in the Trust, divided
by the number of Units outstanding. Such arrangements result in less selling
effort and selling expenses than sales to employee groups of other companies.
Resales or transfers of Units purchased under the employee benefit arrangements
may only be made through the Sponsors' secondary market, so long as it is being
maintained.
DISTRIBUTION OF UNITS. During the initial offering period and thereafter
to the extent additional Units continue to be offered by means of this
Prospectus, Units will be distributed by the Sponsors and dealers at the Public
Offering Price. The initial offering period is thirty days after each deposit of
Securities in the Trust and the Sponsors may extend the initial offering period
for successive thirty day periods. The Sponsors intend to qualify the Units for
sale in certain states.
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SPONSORS' PROFITS. The Sponsors will receive a combined gross underwriting
commission equal to up to 3.495% of the Public Offering Price per 100 Units
(equivalent to 3.621% of the net amount invested in the Securities).
Additionally, the Sponsors may realize a profit on the deposit of the Securities
in the Trust representing the difference between the cost of the Securities to
the Sponsors and the cost of the Securities to the Trust (See "Portfolio"). The
Sponsors may realize profits or sustain losses with respect to Securities
deposited in the Trust which were acquired from underwriting syndicates of which
they were a member. All or a portion of the Securities deposited in the Trust
may have been acquired through the Sponsors.
During the initial offering period and thereafter to the extent additional
Units continue to be offered by means of this Prospectus, the Underwriter may
also realize profits or sustain losses as a result of fluctuations after the
Initial Date of Deposit in the aggregate value of the Securities and hence in
the Public Offering Price received by the Sponsors for the Units. Cash, if any,
made available to the Sponsors prior to settlement date for the purchase of
Units may be used in the Sponsors' business subject to the limitations of 17 CFR
240.15c3-3 under the Securities Exchange Act of 1934 and may be of benefit to
the Sponsors.
Both upon acquisition of Securities and termination of the Trust, the
Trustee may utilize the services of the Sponsors for the purchase or sale of all
or a portion of the Securities in the Trust. The Sponsors may receive brokerage
commissions from the Trust in connection with such purchases and sales in
accordance with applicable law.
In maintaining a market for the Units (see "Sponsors Repurchase") the
Sponsors will realize profits or sustain losses in the amount of any difference
between the price at which it buys Units and the price at which it resells such
Units.
RIGHTS OF UNITHOLDERS
BOOK-ENTRY UNITS. Ownership of Units of the Trust will not be evidenced by
certificates. All evidence of ownership of the Units will be recorded in
book-entry form at The Depository Trust Company ("DTC") through an investor's
McLaughlin, Piven, Vogel brokerage account. Units held through DTC will be
deposited by the Sponsors with DTC in the McLaughlin, Piven, Vogel DTC account
and registered in the nominee name CEDE & CO. Individual purchases of beneficial
ownership interest in the Trust will be made in book-entry form through DTC.
Ownership and transfer of Units will be evidenced and accomplished directly and
indirectly only by book-entries made by DTC and its participants. DTC will
record ownership and transfer of the Units among DTC participants and forward
all notices and credit all payments received in respect of the Units held by the
DTC participants. Beneficial owners of Units will receive written confirmation
of their purchases and sale from their McLaughlin, Piven, Vogel representative.
Transfer, and the requirements therefor, will be governed by the applicable
procedures of DTC and the Unitholder's agreement with the DTC participant in
whose name the Unitholder's Units are registered on the transfer records of DTC.
DISTRIBUTIONS. Dividends received by the Trust are credited by the Trustee
to an Income Account for the Trust. Other receipts, including the proceeds of
Securities disposed of, are credited to a Principal Account for the Trust.
Distributions to each Unitholder from the Income Account are computed as
of the close of business on each Record Date for the following payment date and
consist of an amount substantially equal to such Unitholder's pro rata share of
the income credited to the Income Account, less expenses. Distributions from the
Principal Account of the Trust (other than amounts representing failed
contracts, as previously discussed) will be computed as of each Record Date, and
will be made to the Unitholders of the Trust on or shortly after the
Distribution Date. Proceeds representing principal received from the disposition
of any of the Securities between a Record Date and a Distribution Date which are
not used for redemptions of Units will be held in the Principal Account and not
distributed until the next Distribution Date. Persons who purchase Units between
a Record Date and a Distribution Date will receive their first distribution on
the Distribution Date after such purchase.
As of each Record Date, the Trustee will deduct from the Income Account of
the Trust, and, to the extent funds are not sufficient therein, from the
Principal Account of the Trust, amounts necessary to pay the expenses of the
Trust
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(as determined on the basis set forth under "Trust Expenses and Charges"). The
Trustee also may withdraw from said accounts such amounts, if any, as it deems
necessary to establish a reserve for any applicable taxes or other governmental
charges that may be payable out of the Trust. Amounts so withdrawn shall not be
considered a part of such Trust's assets until such time as the Trustee shall
return all or any part of such amounts to the appropriate accounts. In addition,
the Trustee may withdraw from the Income and Principal Accounts such amounts as
may be necessary to cover redemptions of Units by the Trustee.
The dividend distribution per 100 Units, if any, cannot be anticipated and
may be paid as Securities are redeemed, exchanged or sold, or as expenses of the
Trust fluctuate. No distribution need be made from the Income Account or the
Principal Account unless the balance therein is an amount sufficient to
distribute $1.00 per 100 Units.
RECORDS. The Trustee shall furnish Unitholders in connection with each
distribution a statement of the amount of dividends and interest, if any, and
the amount of other receipts, if any, which are being distributed, expressed in
each case as a dollar amount per 100 Units. Within a reasonable time after the
end of each calendar year, the Trustee will furnish to each person who at any
time during the calendar year was a Unitholder of record, a statement showing
(a) as to the Income Account: dividends, interest and other cash amounts
received, amounts paid for purchases of Substitute Securities and redemptions of
Units, if any, deductions for applicable taxes and fees and expenses of the
Trust, and the balance remaining after such distributions and deductions,
expressed both as a total dollar amount and as a dollar amount representing the
pro rata share of each 100 Units outstanding on the last business day of such
calendar year; (b) as to the Principal Account: the dates of disposition of any
Securities and the net proceeds received therefrom, deductions for payments of
applicable taxes and fees and expenses of the Trust, amounts paid for purchases
of Substitute Securities and redemptions of Units, if any, and the balance
remaining after such distributions and deductions, expressed both as a total
dollar amount and as a dollar amount representing the pro rata share of each 100
Units outstanding on the last business day of such calendar year; (c) a list of
the Securities held, a list of Securities purchased, sold or otherwise disposed
of during the calendar year and the number of Units outstanding on the last
business day of such calendar year; (d) the Redemption Price per 100 Units based
upon the last computation thereof made during such calendar year; and (e)
amounts actually distributed to Unitholders during such calendar year from the
Income and Principal Accounts, separately stated, of the Trust, expressed both
as total dollar amounts and as dollar amounts representing the pro rata share of
each 100 Units outstanding on the last business day of such calendar year.
The Trustee shall keep available for inspection by Unitholders at all
reasonable times during usual business hours, books of record and account of its
transactions as Trustee, including records of the names and addresses of
Unitholders, a current list of Securities in the portfolio and a copy of the
Trust Agreement.
TAX STATUS
The following is a general discussion of certain of the Federal income tax
consequences of the purchase, ownership and disposition of the Units. The
summary is limited to investors who hold the Units as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code"). Unitholders should
consult their tax advisers in determining the Federal, state, local and any
other tax consequences of the purchase, ownership and disposition of Units.
In rendering the opinion set forth below, Battle Fowler LLP has examined
the Agreement, the final form of Prospectus dated the date hereof (the
"Prospectus") and the documents referred to therein, among others, and has
relied on the validity of said documents and the accuracy and completeness of
the facts set forth therein. In the Opinion of Battle Fowler LLP, special
counsel for the Sponsors, under existing law:
1. The Trust will be classified as a grantor trust for Federal income
tax purposes and not as a partnership or association taxable as a
corporation. Classification of the Trust as a grantor trust will cause the
Trust not to be subject to Federal income tax, and will cause the
Unitholders of the Trust to be treated for Federal income tax purposes as
the owners of a pro rata portion of the assets of the Trust. All income
received by the Trust will be treated as income of the Unitholders in the
manner set forth below.
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2. The Trust is not subject to the New York Franchise Tax on Business
Corporations or the New York City General Corporation Tax. For a
Unitholder who is a New York resident, however, a pro rata portion of all
or part of the income of the Trust will be treated as income of the
Unitholder under the income tax laws of the State and City of New York.
Similar treatment may apply in other states.
3. During the 90-day period subsequent to the initial issuance date,
the Sponsors reserve the right to deposit Additional Securities that are
substantially similar to those deposited in initially establishing the
Trust. This retained right falls within the guidelines promulgated by the
Internal Revenue Service ("IRS") and should not affect the taxable status
of the Trust.
A taxable event will generally occur with respect to each Unitholder when
the Trust disposes of a Security (whether by sale, exchange or redemption) or
upon the sale, exchange or redemption of Units by such Unitholder. The price a
Unitholder pays for its Units, including sales charges, is allocated among its
pro rata portion of each Security held by the Trust (in proportion to the fair
market values thereof on the date the Unitholder purchases its Units) in order
to determine its initial cost for its pro rata portion of each Security held by
the Trust.
For Federal income tax purposes, a Unitholder's pro rata portion of
dividends paid with respect to a Security held by a Trust is taxable as ordinary
income to the extent of such corporation's current or accumulated "earnings and
profits" as defined by Section 316 of the Code. A Unitholder's pro rata portion
of dividends paid on such Security that exceed such current and accumulated
earnings and profits will first reduce a Unitholder's tax basis in such
Security, and to the extent that such dividends exceed a Unitholder's tax basis
in such Security will generally be treated as capital gain.
A Unitholder's portion of gain, if any, upon the sale, exchange or
redemption of Units or the disposition of Securities held by the Trust will
generally be considered a capital gain and will be long-term if the Unitholder
has held its Units for more than one year. Capital gains realized by
corporations are generally taxed at the same rates applicable to ordinary
income, although non-corporate taxpayers who realize long-term capital gains
with respect to Units held for more than one year may be subject to a reduced
tax rate of 20% on such gains, rather than the "regular" maximum tax rate of
39.6%. Tax rates may increase prior to the time when Unitholders may realize
gains from the sale, exchange or redemption of the Units or Securities.
A Unitholder's portion of loss, if any, upon the sale or redemption of
Units or the disposition of Securities held by the Trust will generally be
considered a capital loss and will be long-term if the Unitholder has held its
Units for more than one year. Capital losses are deductible to the extent of
capital gains; in addition, up to $3,000 of capital losses ($1,500 for married
individuals filing separately) recognized by non-corporate Unitholders may be
deducted against ordinary income.
Under Section 67 of the Code and the accompanying Regulations, a
Unitholder who itemizes its deductions may also deduct its pro rata share of the
fees and expenses of the Trust, but only to the extent that such amounts,
together with the Unitholder's other miscellaneous deductions, exceed 2% of its
adjusted gross income. The deduction of fees and expenses may also be limited by
Section 68 of the Code, which reduces the amount of itemized deductions that are
allowed for individuals with incomes in excess of certain thresholds.
After the end of each calendar year, the Trustee will furnish to each
Unitholder an annual statement containing information relating to the dividends
received by the Trust on the Securities, the gross proceeds received by the
Trust from the disposition of any Security, and the fees and expenses paid by
the Trust. The Trustee will also furnish annual information returns to each
Unitholder and to the Internal Revenue Service.
A corporation that owns Units will generally be entitled to a 70%
dividends received deduction with respect to its pro rata portion of dividends
taxable as ordinary income received by the Trust from a domestic corporation
under Section 243 of the Code or from a qualifying foreign corporation under
Section 245 of the Code in the same manner as if such corporation directly owned
the Securities paying such dividends. However, a corporation owning Units should
be aware that Sections 246 and 246A of the Code impose additional limitations on
the eligibility of dividends for the 70% dividends received deduction. These
limitations include a requirement that stock (and therefore Units)
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must generally be held at least 46 days (as determined under Section 246(c) of
the Code) during the 90-day period beginning on the date that is 45 days before
the date on which the stock becomes "ex-dividend." Moreover, the allowable
percentage of the deduction will be reduced from 70% if a corporate Unitholder
owns certain stock (or Units) the financing of which is directly attributable to
indebtedness incurred by such corporation.
As discussed in the section "Termination", each Unitholder may have three
options in receiving his termination distributions, namely (i) to receive its
pro rata share of the underlying Securities in kind, (ii) to receive cash upon
liquidation of its pro rata share of the underlying Securities, or (iii) to
invest the amount of cash it would receive upon the liquidation of its pro rata
share of the underlying Securities in units of a future series of the Trust (if
one is offered). There are special tax consequences should a Unitholder choose
option (i), the exchange of the Unitholder's Units for a pro rata portion of
each of the Securities held by the Trust plus cash. Treasury Regulations provide
that gain or loss is recognized when there is a conversion of property into
property that is materially different in kind or extent. In this instance, the
Unitholder may be considered the owner of an undivided interest in all of the
Trust's assets. By accepting the proportionate number of Securities of the
Trust, in partial exchange for its Units, the Unitholder should be treated as
merely exchanging its undivided pro rata ownership of Securities held by the
Trust into sole ownership of a proportionate share of Securities. As such, there
should be no material difference in the Unitholder's ownership, and therefore
the transaction should be tax free to the extent the Securities are received.
Alternatively, the transaction may be treated as an exchange that would qualify
for nonrecognition treatment to the extent the Unitholder is exchanging its
undivided interest in all of the Trust's Securities for its proportionate number
of shares of the underlying Securities. In either instance, the transaction
should result in a non-taxable event for the Unitholder to the extent Securities
are received. However, there is no specific authority addressing the income tax
consequences of an in-kind distribution from a grantor trust.
Entities that generally qualify for an exemption from Federal income tax,
such as many pension trusts, are nevertheless taxed under Section 511 of the
Code on "unrelated business taxable income." Unrelated business taxable income
is income from a trade or business regularly carried on by the tax-exempt entity
that is unrelated to the entity's exempt purpose. Unrelated business taxable
income generally does not include dividend or interest income or gain from the
sale of investment property, unless such income is derived from property that is
debt-financed or is dealer property. A tax-exempt entity's dividend income from
the Trust and gain from the sale of Units in the Trust or the Trust's sale of
Securities is not expected to constitute unrelated business taxable income to
such tax-exempt entity unless the acquisition of the Unit itself is
debt-financed or constitutes dealer property in the hands of the tax-exempt
entity.
Prospective tax-exempt investors are urged to consult their own tax
advisers concerning the Federal, state, local and any other tax consequences of
the purchase, ownership and disposition of Units prior to investing in the
trust.
RETIREMENT PLANS. This Trust may be well suited for purchase by Individual
Retirement Accounts ("IRAs"), Keogh plans, pension funds and other qualified
retirement plans. Generally, capital gains and income received in each of the
foregoing plans are exempt from Federal taxation. Except with respect to certain
IRAs known as Roth IRAs, distributions from such plans are generally treated as
ordinary income but may, in some cases, be eligible for special 5 or 10 year
averaging or tax-deferred rollover treatment. Five year averaging will not apply
to distributions after December 31, 1999. Ten year averaging has been preserved
in very limited circumstances. Holders of Units in IRAs, Keogh plans and other
tax-deferred retirement plans should consult their plan custodian as to the
appropriate disposition of distributions. Investors considering participation in
any such plan should review specific tax laws related thereto and should consult
their attorneys or tax advisors with respect to the establishment and
maintenance of any such plan. Such plans are offered by McLauglin, Piven, Vogel
Securities, Inc. Fees and charges with respect to such plans may vary.
Before investing in the Trust, the trustee or investment manager of an
employee benefit plan (e.g., a pension or profit sharing retirement plan) should
consider among other things (a) whether the investment is prudent under the
Employee Retirement Income Security Act of 1974 ("ERISA"), taking into account
the needs of the plan and all of the facts and circumstances of the investment
in the Trust; (b) whether the investment satisfies the diversification
requirement of Section 404(a)(1)(C) of ERISA; and (c) whether the assets of the
Trust are deemed "plan assets" under ERISA and the Department of Labor regarding
the definition of "plan assets."
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LIQUIDITY
SPONSORS REPURCHASE. Unitholders who wish to dispose of their Units should
inquire of the Sponsors as to current market prices prior to making a tender for
redemption. The aggregate value of the Securities will be determined by the
Trustee on a daily basis and computed on the basis set forth under "Trustee
Redemption." The Sponsors do not guarantee the enforceability, marketability or
price of any Securities in the Portfolio or of the Units. The Sponsors may
discontinue the repurchase of Units if the supply of Units exceeds demand, or
for other business reasons. The date of repurchase is deemed to be the date on
which redemption requests are received in proper form, by McLaughlin, Piven,
Vogel Securities, Inc., 30 Wall Street, New York, New York 10005 or Reich & Tang
Distributors Inc., 600 Fifth Avenue, New York, New York 10020. Redemption
requests received after 4 P.M., New York Time, will be deemed to have been
repurchased on the next business day. In the event a market is not maintained
for the Units, a Unitholder may be able to dispose of Units only by tendering
them to the Trustee for redemption.
Units purchased by the Sponsors in the secondary market may be reoffered
for sale by the Sponsors at a price based on the aggregate value of the
Securities in the Trust plus a 3.495% sales charge (or 3.621% of the net amount
invested) plus a pro rata portion of amounts, if any, in the Income Account. Any
Units that are purchased by the Sponsors in the secondary market also may be
redeemed by the Sponsors if they determine such redemption to be in its best
interest.
The Sponsors may, under certain circumstances, as a service to
Unitholders, elect to purchase any Units tendered to the Trustee for redemption
(see "Trustee Redemption"). Factors which the Sponsors will consider in making a
determination will include the number of Units of all Trusts which it has in
inventory, its estimate of the salability and the time required to sell such
Units and general market conditions. For example, if in order to meet
redemptions of Units the Trustee must dispose of Securities, and if such
disposition cannot be made by the redemption date (three calendar days after
tender), the Sponsors may elect to purchase such Units. Such purchase shall be
made by payment to the Unitholder not later than the close of business on the
redemption date of an amount equal to the Redemption Price on the date of
tender.
TRUSTEE REDEMPTION. At any time prior to the Evaluation Time on the
business day preceding the commencement of the Liquidation Period (approximately
fifteen months from the Date of Deposit), Units may also be tendered to the
Trustee for redemption upon payment of any relevant tax by contacting the
Sponsors holding such Units in street name. In certain instances, additional
documents may be required, such as trust instrument, certificate of corporate
authority, certificate of death or appointment as executor, administrator or
guardian. At the present time there are no specific taxes related to the
redemption of Units. No redemption fee will be charged by the Sponsors or the
Trustee. Units redeemed by the Trustee will be canceled.
Within three business days following a tender for redemption, the
Unitholder will be entitled to receive an amount for each Unit tendered equal to
the Redemption Price per Unit computed as of the Evaluation Time set forth under
"Summary of Essential Information" in Part A on the date of tender. The "date of
tender" is deemed to be the date on which Units are received by the Trustee,
except that with respect to Units received after the close of trading on the New
York Stock Exchange (4:00 p.m. Eastern Time), the date of tender is the next day
on which such Exchange is open for trading, and such Units will be deemed to
have been tendered to the Trustee on such day for redemption at the Redemption
Price computed on that day.
A Unitholder will receive his redemption proceeds in cash and amounts paid
on redemption shall be withdrawn from the Income Account, or, if the balance
therein is insufficient, from the Principal Account. All other amounts paid on
redemption shall be withdrawn from the Principal Account. The Trustee is
empowered to sell Securities in order to make funds available for redemptions.
Such sales, if required, could result in a sale of Securities by the Trustee at
a loss. To the extent Securities are sold, the size and diversity of the Trust
will be reduced. The Securities to be sold will be selected by the Trustee in
order to maintain, to the extent practicable, the proportionate relationship
among the number of shares of each Stock. Provision is made in the Indenture
under which the Sponsors may, but need not, specify minimum amounts in which
blocks of Securities are to be sold in order to obtain the best price for the
Trust. While these minimum amounts may vary from time to time in accordance with
market conditions, the
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Sponsors believe that the minimum amounts which would be specified would be
approximately 100 shares for readily marketable Securities.
The Redemption Price per Unit is the pro rata share of the Unit in the
Trust determined by the Trustee on the basis of (i) the cash on hand in the
Trust or moneys in the process of being collected, (ii) the value of the
Securities in the Trust as determined by the Trustee, less (a) amounts
representing taxes or other governmental charges payable out of the Trust, (b)
the accrued expenses of the Trust and (c) cash allocated for the distribution to
Unitholders of record as of the business day prior to the evaluation being made.
As of the close of the initial public offering period the Redemption Price per
100 Units will be reduced to reflect the payment of the per 100 Unit
organization costs to the Sponsors. The Trustee may determine the value of the
Securities in the Trust in the following manner: because the Securities are
listed on a national securities exchange, this evaluation is based on the
closing sale prices on that exchange. Unless the Trustee deems these prices
inappropriate as a basis for evaluation or if there is no such closing purchase
price, then the Trustee may utilize, at the Trust's expense, an independent
evaluation service or services to ascertain the values of the Securities. The
independent evaluation service shall use any of the following methods, or a
combination thereof, which it deems appropriate: (a) on the basis of current bid
prices for comparable securities, (b) by appraising the value of the Securities
on the bid side of the market or (c) by any combination of the above.
Any Unitholder tendering 2,500 Units or more of the Trust for redemption
may request by written notice submitted at the time of tender from the Trustee
in lieu of a cash redemption a distribution of shares of Securities and cash in
an amount and value equal to the Redemption Price Per Unit as determined as of
the evaluation next following tender. To the extent possible, in kind
distributions ("In Kind Distributions") shall be made by the Trustee through the
distribution of each of the Securities in book-entry form to the account of the
Unitholder's broker-dealer at DTC. An In Kind Distribution will be reduced by
customary transfer and registration charges. The tendering Unitholder will
receive his pro rata number of whole shares of each of the Securities comprising
the Trust portfolio and cash from the Principal Accounts equal to the balance of
the Redemption Price to which the tendering Unitholder is entitled. If funds in
the Principal Account are insufficient to cover the required cash distribution
to the tendering Unitholder, the Trustee may sell Securities in the manner
described above.
The Trustee is irrevocably authorized in its discretion, if the Sponsors
do not elect to purchase a Unit tendered for redemption or if the Sponsors
tender a Unit for redemption, in lieu of redeeming such Unit, to sell such Unit
in the over-the-counter market for the account of the tendering Unitholder at
prices which will return to the Unitholder an amount in cash, net after
deducting brokerage commissions, transfer taxes and other charges, equal to or
in excess of the Redemption Price for such Unit. The Trustee will pay the net
proceeds of any such sale to the Unitholder on the day he would otherwise be
entitled to receive payment of the Redemption Price.
The Trustee reserves the right to suspend the right of redemption and to
postpone the date of payment of the Redemption Price per Unit for any period
during which the New York Stock Exchange is closed, other than customary weekend
and holiday closings, or trading on that Exchange is restricted or during which
(as determined by the Securities and Exchange Commission) an emergency exists as
a result of which disposal or evaluation of the Bonds is not reasonably
practicable, or for such other periods as the Securities and Exchange Commission
may by order permit. The Trustee and the Sponsors are not liable to any person
or in any way for any loss or damage which may result from any such suspension
or postponement.
A Unitholder who wishes to dispose of his Units should inquire of his
broker in order to determine if there is a current secondary market price in
excess of the Redemption Price.
AUTOMATIC REDEMPTION. In the event a transfer of Units from a Unitholder's
McLaughlin Piven Vogel brokerage account results in the automatic redemption of
those Units, Unitholders will receive an amount equal to the Redemption Price
per Unit computed as of the Evaluation Time set forth under "Summary of
Essential Information: in Part A on the date of transfer. Automatic redemption
proceeds will be paid within three business days following the tender of a
notification of transfer.
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TRUST ADMINISTRATION
PORTFOLIO SUPERVISION. The Trust is a unit investment trust and is not a
managed fund. Traditional methods of investment management for a managed fund
typically involve frequent changes in a portfolio of securities on the basis of
economic, financial and market analyses. The Portfolio of the Trust, however,
will not be managed and therefore the adverse financial condition of an issuer
will not necessarily require the sale of its Securities from the portfolio.
Although the portfolio of the Trust is regularly reviewed, because of the
formula employed in selecting the Top Ten, Focus Five and Penultimate Pick, it
is unlikely that the Trust will sell any of the Securities other than to satisfy
redemptions of Units, or to cease buying Additional Securities in connection
with the issuance of additional Units. However, the Trust Agreement provides
that the Sponsors may direct the disposition of Securities upon the occurrence
of certain events including: (1) default in payment of amounts due on any of the
Securities; (2) institution of certain legal proceedings; (3) default under
certain documents materially and adversely affecting future declaration or
payment of amounts due or expected; (4) determination of the Sponsors that the
tax treatment of the Trust as a grantor trust would otherwise be jeopardized; or
(5) decline in price as a direct result of serious adverse credit factors
affecting the issuer of a Security which, in the opinion of the Sponsors, would
make the retention of the Security detrimental to the Trust or the Unitholders.
Furthermore, the Trust will likely continue to hold a Security and purchase
additional shares notwithstanding its ceasing to be included among the Top Ten,
Focus Five and Penultimate Pick, or even its deletion from the DJIA.
In addition, the Trust Agreement provides as follows:
(a) If a default in the payment of amounts due on any Security occurs
pursuant to provision (1) above and if the Sponsors fail to give immediate
instructions to sell or hold that Security, the Trustee, within 30 days of
that failure by the Sponsors, shall sell the Security.
(b) It is the responsibility of the Sponsors to instruct the Trustee
to reject any offer made by an issuer of any of the Securities to issue
new securities in exchange and substitution for any Security pursuant to a
recapitalization or reorganization, if any exchange or substitution is
effected notwithstanding such rejection, any securities or other property
received shall be promptly sold unless the Sponsors direct that it be
retained.
(c) Any property received by the Trustee after the Initial Date of
Deposit as a distribution on any of the Securities in a form other than
cash or additional shares of the Securities, which shall be retained, or
shall be promptly sold unless the Sponsors direct that it be retained by
the Trustee. The proceeds of any disposition shall be credited to the
Income or Principal Account of the Trust.
(d) The Sponsors are authorized to increase the size and number of
Units of the Trust by the deposit of Additional Securities, contracts to
purchase Additional Securities or cash or a letter of credit with
instructions to purchase Additional Securities in exchange for the
corresponding number of additional Units from time to time subsequent to
the Initial Date of Deposit, provided that the original proportionate
relationship among the number of shares of each Security established on
the Initial Date of Deposit is maintained to the extent practicable. The
Sponsors may specify the minimum numbers in which Additional Securities
will be deposited or purchased. If a deposit is not sufficient to acquire
minimum amounts of each Security, Additional Securities may be acquired in
the order of the Security most under-represented immediately before the
deposit when compared to the original proportionate relationship. If
Securities of an issue originally deposited are unavailable at the time of
the subsequent deposit, the Sponsors may (i) deposit cash or a letter of
credit with instructions to purchase the Security when it becomes
available, or (ii) deposit (or instruct the Trustee to purchase) either
Securities of one or more other issues originally deposited or a
Substitute Security.
TRUST AGREEMENT AND AMENDMENT. The Trust Agreement may be amended by the
Trustee and the Sponsors without the consent of any of the Unitholders: (1) to
cure any ambiguity or to correct or supplement any provision which may be
defective or inconsistent; (2) to change any provision thereof as may be
required by the Securities and Exchange Commission or any successor governmental
agency; or (3) to make such other provisions in regard to matters arising
thereunder as shall not adversely affect the interests of the Unitholders.
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The Trust Agreement may also be amended in any respect, or performance of
any of the provisions thereof may be waived, with the consent of investors
holding 66 2/3% of the Units then outstanding for the purpose of modifying the
rights of Unitholders; provided that no such amendment or waiver shall reduce
any Unitholder's interest in the Trust without his consent or reduce the
percentage of Units required to consent to any such amendment or waiver without
the consent of the holders of all Units. The Trust Agreement may not be amended,
without the consent of the holders of all Units in the Trust then outstanding,
to increase the number of Units issuable or to permit the acquisition of any
Securities in addition to or in substitution for those initially deposited in
such Trust, except in accordance with the provisions of the Trust Agreement. The
Trustee shall promptly notify Unitholders, in writing, of the substance of any
such amendment.
TRUST TERMINATION. The Trust Agreement provides that the Trust shall
terminate upon the maturity, redemption or other disposition, as the case may
be, of the last of the Securities held in such Trust but in no event is it to
continue beyond the Mandatory Termination Date. If the value of the Trust shall
be less than the minimum amount set forth under "Summary of Essential
Information" in Part A, the Trustee may, in its discretion, and shall, when so
directed by the Sponsors, terminate the Trust. The Trust may also be terminated
at any time with the consent of the investors holding 100% of the Units then
outstanding. The Trustee may utilize the services of the Sponsors for the sale
of all or a portion of the Securities in the Trust, and in so doing, the
Sponsors will determine the manner, timing and execution of the sales of the
underlying Securities. Any brokerage commissions received by the Sponsors from
the Trust in connection with such sales will be in accordance with applicable
law. In the event of termination, written notice thereof will be sent by the
Trustee to all Unitholders. Such notice will provide Unitholders with the
following three options by which to receive their pro rata share of the net
asset value of the Trust and requires their election of one of the three options
by notifying the Trustee by returning a properly completed election request (to
be supplied to Unitholders of at least 2,500 Units prior to the commencement of
the Liquidation Period):
1. A Unitholder who owns at least 2,500 units and whose interest in
the Trust would entitle it to receive at least one share of each
underlying Security will have its Units redeemed on the business day
preceding the commencement of the Liquidation Period by distribution of
the Unitholder's pro rata share of the net asset value of the Trust on
such date distributed in kind to the extent represented by whole shares of
underlying Securities and the balance in cash within three business days
next following the commencement of the Liquidation Period. Unitholders
subsequently selling such distributed Securities will incur brokerage
costs when disposing of such Securities. Unitholders should consult their
own tax adviser in this regard;
2. to receive in cash such Unitholder's pro rata share of the net
asset value of the Trust derived from the sale by the Sponsors as the
agents of the Trustee of the underlying Securities during the Liquidation
Period. The Unitholder's pro rata share of its net assets of the Trust
will be distributed to such Unitholder within three days of the settlement
of the trade of the last Security to be sold; and/or
3. to invest such Unitholder's pro rata share of the net assets of
the Trust derived from the sale by the Sponsors as agents of the Trustee
of the underlying Securities during the Liquidation Period, in units of a
subsequent series of The Pinnacle Trusts (the "New Series") provided one
is offered. It is expected that a special redemption and liquidation will
be made of all Units of this Trust held by a Unitholder (a "Rollover
Unitholder") who affirmatively notifies the Trustee on or prior to the
Rollover Notification Date set forth in the "Summary of Essential
Information" for the Trust in Part A. The Units of a New Series will be
purchased by the Unitholder within three business days of the settlement
of the trade for the last Security to be sold. Such purchaser will be
entitled to a reduced sales charge upon the purchase of units of the New
Series. It is expected that the terms of the New Series will be
substantially the same as the terms of the Trust described in this
Prospectus, and that similar options with respect to the termination of
such New Series will be available. The availability of this option does
not constitute a solicitation of an offer to purchase Units of a New
Series or any other security. A Unitholder's election to participate in
this option will be treated as an indication of interest only. At any time
prior to the purchase by the Unitholder of units of a New Series such
Unitholder may change his investment strategy and receive, in cash, the
proceeds of the sale of the Securities. An election of this option will
not prevent the Unitholder from recognizing taxable gain or loss (except
in the case of a loss, if and to the extent the New Series is treated as
substantially identical to the Trust) as a result of the liquidation, even
though no cash will be distributed to pay any taxes. Unitholders should
consult their own tax advisers in this regard.
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Unitholders who do not make any election will be deemed to have elected to
receive the termination distribution in cash (option number 2).
The Sponsors have agreed that to the extent they effect the sales of
underlying securities for the Trustee in the case of the second and third
options during the Liquidation Period free of brokerage commissions. The
Sponsors, on behalf of the Trustee, will sell, unless prevented by unusual and
unforeseen circumstances, such as, among other reasons, a suspension in trading
of a Security, the close of a stock exchange, outbreak of hostilities and
collapse of the economy, by the last business day of the Liquidation Period. The
Redemption Price Per 100 Units upon the settlement of the last sale of
Securities during the Liquidation Period will be distributed to Unitholders in
redemption of such Unitholders' interest in the Trust.
Depending on the amount of proceeds to be invested in Units of the New
Series and the amount of other orders for Units in the New Series, the Sponsors
may purchase a large amount of securities for the New Series in a short period
of time. The Sponsors' buying of securities may tend to raise the market prices
of these securities. The actual market impact of the Sponsors' purchases,
however, is currently unpredictable because the actual amount of securities to
be purchased and the supply and price of those securities is unknown. A similar
problem may occur in connection with the sale of Securities during the
Liquidation Period; depending on the number of sales required, the prices of and
demand for Securities, such sales may tend to depress the market prices and thus
reduce the proceeds of such sales. The Sponsors believe that the sale of
underlying Securities over the Liquidation Period described above is in the best
interest of a Unitholder and may mitigate the negative market price consequences
stemming from the trading of large amounts of Securities. The Securities may be
sold in fewer than five days if, in the Sponsor's judgment, such sales are in
the best interest of Unitholders. The Sponsors, in implementing such sales of
securities on behalf of the Trustee, will seek to maximize the sales proceeds
and will act in the best interests of the Unitholders. There can be no
assurance, however, that any adverse price consequences of heavy trading will be
mitigated.
Section 17(a) of the Investment Company Act of 1940 generally prohibits
principal transactions between registered investment companies and their
affiliates. Pursuant to an exemptive order issued by the SEC, each terminating
Pinnacle Trust can sell Duplicated Securities directly to a New Series. The
exemption will enable the Trust to eliminate commission costs on these
transactions. The price for those securities transferred will be the closing
sale price on the sale date on the national securities exchange where the
securities are principally traded, as certified and confirmed by the Trustee.
The Sponsors may for any reason, in their sole discretion, decide not to
sponsor any subsequent series of the Trust, without penalty or incurring
liability to any Unitholder. If the Sponsors so decide, the Sponsors will notify
the Trustee of that decision, and the Trustee will notify the Unitholders. All
Unitholders will then elect either option 1, if eligible, or option 2.
By electing to "rollover" into the New Series, the Unitholder indicates
his interest in having his terminating distribution from the Trust invested only
in the New Series created following termination of the Trust; the Sponsors
expect, however, that a similar rollover program will be offered with respect to
all subsequent series of the Trust, thus giving Unitholders an opportunity to
elect to "rollover" their terminating distributions into a New Series. The
availability of the rollover privilege does not constitute a solicitation of
offers to purchase units of a New Series or any other security. A Unitholder's
election to participate in the rollover program will be treated as an indication
of interest only. The Sponsors intend to coordinate the date of deposit of a
future series so that the terminating trust will terminate contemporaneously
with the creation of a New Series. The Sponsors reserve the right to modify,
suspend or terminate the rollover privilege at any time.
THE SPONSORS. McLaughlin, Piven, Vogel Securities, Inc. ("MPV") is a New
York corporation engaged in the underwriting and securities brokerage business,
and in the investment advisory business. It is a member of the National
Association of Securities Dealers, Inc. MPV maintains its principal business
offices at 30 Wall Street, New York, New York 10005. The majority shareholder of
MPV is James J. McLaughlin. Mr. McLaughlin may be deemed to be a controlling
person of MPV.
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Reich & Tang Distributors, Inc., a Delaware corporation, is engaged in the
brokerage business and is a member of the National Association of Securities
Dealers, Inc. Reich & Tang is also a registered investment advisor. Reich & Tang
maintains its principal business offices at 600 Fifth Avenue, New York, New York
10020. The sole shareholder of Reich & Tang, Reich & Tang Asset Management, Inc.
("RTAM Inc.") is wholly owned by NEIC Holdings, Inc. which, effective December
29, 1997, was wholly owned by NEIC Operating Partnership, L.P. ("NEICOP").
Subsequently, on March 31, 1998, NEICOP changed its name to Nvest Companies,
L.P. ("Nvest"). The general partners of Nvest are Nvest Corporation and Nvest
L.P. As of March 31, 1998, Metropolitan Life Insurance Company ("MetLife") owned
approximately 47% of the partnership interests of Nvest. Nvest, with a principal
place of business at 399 Boylston Street, Boston, MA 02116, is a holding company
of firms engaged in the securities and investment advisory business. These
affiliates in the aggregate are investment advisors or managers to over 80
registered investment companies. Reich & Tang is Sponsor (and Co-Sponsor, as the
case may be) for numerous series of unit investment trusts, including New York
Municipal Trust, Series 1 (and Subsequent Series), Municipal Securities Trust,
Series 1 (and Subsequent Series), 1st Discount Series (and Subsequent Series),
Multi-State Series 1 (and Subsequent Series), Mortgage Securities Trust, Series
1 (and Subsequent Series), Insured Municipal Securities Trust, Series 1 (and
Subsequent Series), 5th Discount Series (and Subsequent Series), Equity
Securities Trust, Series 1, Signature Series, Gabelli Communications Income
Trust (and Subsequent Series) and Schwab Trusts.
MetLife is a mutual life insurance company with assets of $298 billion at
December 31, 1996. It is the second largest life insurance company in the United
States in terms of total assets. MetLife provides a wide range of insurance and
investment products and services to individuals and groups and is the leader
among United States life insurance companies in terms of total life insurance in
force, which totaled $1.6 trillion at December 31, 1996 for MetLife and its
insurance affiliates. MetLife and its affiliates provide insurance or other
financial services to approximately 36 million people worldwide.
The information included herein is only for the purpose of informing
investors as to the financial responsibility of the Sponsors and their ability
to carry out its contractual obligations. The Sponsors will be under no
liability to Unitholders for taking any action, or refraining from taking any
action, in good faith pursuant to the Trust Agreement, or for errors in judgment
except in cases of its own willful misfeasance, bad faith, gross negligence or
reckless disregard of its obligations and duties.
The Sponsors may each resign at any time by delivering to the Trustee an
instrument of resignation executed by the Sponsors. If at any time either of the
Sponsors shall resign or fail to perform any of their duties under the Trust
Agreement or becomes incapable of acting or becomes bankrupt or their affairs
are taken over by public authorities, then the Trustee may either (a) appoint a
successor sponsor; (b) terminate the Trust Agreement and liquidate the Trust; or
(c) continue to act as Trustee without terminating the Trust Agreement. Any
successor sponsor appointed by the Trustee shall be satisfactory to the Trustee
and, at the time of appointment, shall have a net worth of at least $1,000,000.
THE TRUSTEE. The Trustee is The Chase Manhattan Bank with its principal
executive office located at 270 Park Avenue, New York, New York 10017 (800)
428-8890 and its unit investment trust office at Four New York Plaza, New York,
New York 10004. The Trustee is subject to supervision by the Superintendent of
Banks of the State of New York, the Federal Deposit Insurance Corporation and
the Board of Governors of the Federal Reserve System.
The Trustee shall not be liable or responsible in any way for taking any
action, or for refraining from taking any action, in good faith pursuant to the
Trust Agreement, or for errors in judgment; or for any disposition of any
moneys, Securities or Units in accordance with the Trust Agreement, except in
cases of its own willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations and duties; provided, however, that the Trustee
shall not in any event be liable or responsible for any evaluation made by any
independent evaluation service employed by it. In addition, the Trustee shall
not be liable for any taxes or other governmental charges imposed upon or in
respect of the Securities or the Trust which it may be required to pay under
current or future law of the United States or any other taxing authority having
jurisdiction. The Trustee shall not be liable for depreciation or loss incurred
by reason of the sale by the Trustee of any of the Securities pursuant to the
Trust Agreement.
B-19
740253.5
<PAGE>
For further information relating to the responsibilities of the Trustee
under the Trust Agreement, reference is made to the material set forth under
"Rights of Unitholders."
The Trustee may resign by executing an instrument in writing and filing
the same with the Sponsors, and mailing a copy of a notice of resignation to all
Unitholders. In such an event the Sponsors are obligated to appoint a successor
Trustee as soon as possible. In addition, if the Trustee becomes incapable of
acting or becomes bankrupt or its affairs are taken over by public authorities,
the Sponsors may remove the Trustee and appoint a successor as provided in the
Trust Agreement. Notice of such removal and appointment shall be mailed to each
Unitholder by the Sponsors. If upon resignation of the Trustee no successor has
been appointed and has accepted the appointment within thirty days after
notification, the retiring Trustee may apply to a court of competent
jurisdiction for the appointment of a successor. The resignation or removal of
the Trustee becomes effective only when the successor Trustee accepts its
appointment as such or when a court of competent jurisdiction appoints a
successor Trustee. Upon execution of a written acceptance of such appointment by
such successor Trustee, all the rights, powers, duties and obligations of the
original Trustee shall vest in the successor.
Any corporation into which the Trustee may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Trustee shall be a party, shall be the successor Trustee. The
Trustee must always be a banking corporation organized under the laws of the
United States or any State and have at all times an aggregate capital, surplus
and undivided profits of not less than $2,500,000.
EVALUATION OF THE TRUST. The value of the Securities in the Trust
portfolio is determined in good faith by the Trustee on the basis set forth
under "Public Offering--Offering Price." The Sponsors and the Unitholders may
rely on any evaluation furnished by the Trustee and shall have no responsibility
for the accuracy thereof. Determinations by the Trustee under the Trust
Agreement shall be made in good faith upon the basis of the best information
available to it, provided, however, that the Trustee shall be under no liability
to the Sponsors or Unitholders for errors in judgment, except in cases of its
own willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties. The Trustee, the Sponsors and the Unitholders may
rely on any evaluation furnished to the Trustee by an independent evaluation
service and shall have no responsibility for the accuracy thereof.
TRUST EXPENSES AND CHARGES
Investors will reimburse the Sponsors for all or a portion of the
estimated costs incurred in organizing and offering the Trust (collectively, the
"organization costs")--including the cost of the initial preparation and
execution of the Trust Agreement, registration of the Trust and the Units under
the Investment Company Act of 1940 and the Securities Act of 1933 and state
registration fees, the initial fees and expenses of the Trustee, legal expenses
and other actual out-of-pocket costs. The estimated organization costs will be
paid from the assets of the Trust as of the close of the initial public offering
period (which may be between 30 and 90 days). To the extent that actual
organization costs are less than the estimated amount, only the actual
organization costs will be deducted from the assets of the Trust. To the extent
that actual organization costs are greater than the estimated amount, only the
estimated organization costs included in the Public Offering Price will be
reimbursed to the Sponsors. All advertising and selling expenses, as well as any
or organizational costs not paid by the Trust, will be borne by the Sponsors at
no cost to the Trust.
The Sponsors will receive for portfolio supervisory services to the Trust
an Annual Fee in the amount set forth under "Summary of Essential Information"
in Part A. The Sponsors' fee may exceed the actual cost of providing portfolio
supervisory services for the Trust, but at no time will the total amount
received for portfolio supervisory services rendered to all series of the Equity
Securities Trust in any calendar year exceed the aggregate cost to the Sponsors
of supplying such services in such year. (See "Portfolio Supervision.")
The Trustee will receive, for its ordinary recurring services to the
Trust, an annual fee in the amount set forth under "Summary of Essential
Information" in Part A. For a discussion of the services performed by the
Trustee pursuant to its obligations under the Trust Agreement, see "Trust
Administration" and "Rights of Unitholders."
B-20
740253.5
<PAGE>
The Trustee's fees applicable to a Trust are payable as of each Record
Date from the Income Account of the Trust to the extent funds are available and
then from the Principal Account. Both the Sponsors' and the Trustee's fees may
be increased without approval of the Unitholders by amounts not exceeding
proportionate increases in consumer prices for services as measured by the
United States Department of Labor's Consumer Price Index entitled "All Services
Less Rent."
The following additional charges are or may be incurred by the Trust: all
expenses (including counsel fees) of the Trustee incurred and advances made in
connection with its activities under the Trust Agreement, including the expenses
and costs of any action undertaken by the Trustee to protect the Trust and the
rights and interests of the Unitholders; fees of the Trustee for any
extraordinary services performed under the Trust Agreement; indemnification of
the Trustee for any loss or liability accruing to it without gross negligence,
bad faith or willful misconduct on its part, arising out of or in connection
with its acceptance or administration of the Trust; indemnification of the
Sponsors for any losses, liabilities and expenses incurred in acting as sponsors
of the Trust without gross negligence, bad faith or willful misconduct on its
part; and all taxes and other governmental charges imposed upon the Securities
or any part of the Trust (no such taxes or charges are being levied, made or, to
the knowledge of the Sponsors, contemplated). The above expenses, including the
Trustee's fees, when paid by or owing to the Trustee are secured by a first lien
on the Trust to which such expenses are charged. In addition, the Trustee is
empowered to sell the Securities in order to make funds available to pay all
expenses.
Unless the Sponsors otherwise direct, the accounts of the Trust shall be
audited not less than annually by independent public accountants selected by the
Sponsors. The expenses of the audit shall be an expense of the Trust. So long as
the Sponsors maintain a secondary market, the Sponsors will bear any audit
expense which exceeds $.50 Cents per 100 Units. Unitholders covered by the audit
during the year may receive a copy of the audited financial statements upon
request.
REINVESTMENT PLAN
Income and principal distributions on Units (other than the final
distribution in connection with the termination of the Trust) may be reinvested
by participating in the Trust's Reinvestment Plan. Under the plan, the Units
acquired for participants will be either Units already held in inventory by the
Sponsors or new Units created by the Sponsors' deposit of Additional Securities
as described in "The Trust-Organization" in this Part B. Units acquired by
reinvestment will be subject to a reduced sales charge of 1.00%. Investors
should inform their broker when purchasing their Units if they wish to
participate in the Reinvestment Plan. Thereafter, Unitholders should contact
their broker if they wish to modify or terminate their election to participate
in the Reinvestment Plan. In order to enable a Unitholder to participate in the
Reinvestment Plan, with respect to a particular distribution on their Units,
such notice must be made at least three business days prior to the Record Date
for such distribution. Each subsequent distribution of income or principal on
the participant's Units will be automatically applied by the Trustee to purchase
additional Units of the Trust. The Sponsors reserve the right to demand, modify
or terminate the Reinvestment Plan at any time without prior notice. The
Reinvestment Plan for the Trust may not be available in all states.
OTHER MATTERS
LEGAL OPINIONS. The legality of the Units offered hereby and certain
matters relating to federal tax law have been passed upon by Battle Fowler LLP,
75 East 55th Street, New York, New York 10022 as counsel for the Sponsor.
Carter, Ledyard & Milburn, Two Wall Street, New York, New York 10005 have acted
as counsel for the Trustee.
INDEPENDENT AUDITORS. The Statement of Financial Condition, including the
Portfolio, is included herein in reliance upon the report of Ernst & Young LLP,
independent auditors, and upon the authority of said firm as experts in
accounting and auditing.
PERFORMANCE INFORMATION. Total returns, average annualized returns or
cumulative returns for various periods of the Top Ten, the Focus Five and the
Penultimate Pick, the related index and this Trust may be included from time to
time in advertisements, sales literature and reports to current or prospective
investors. Total
B-21
740253.5
<PAGE>
return shows changes in Unit price during the period plus any dividends and
capital gains, divided by the original public offering price as of the date of
calculation. Average annualized returns show the average return for stated
periods of longer than a year. Sales material may also include an illustration
of the cumulative results of like annual investments in the Top Ten, the Focus
Five and the Penultimate Pick during an accumulation period and like annual
withdrawals during a distribution period. Figures for actual portfolios will
reflect all applicable expenses and, unless otherwise stated, the maximum sales
charge. No provision is made for any income taxes payable. Similar figures may
be given for this Trust applying the Top Ten, Focus Five and Penultimate Pick
investment strategies to other indexes. Returns may also be shown on a combined
basis. Trust performance may be compared to performance on a total return basis
of the Dow Jones Industrial Average, the S&P 500 Composite Price Stock Index, or
performance data from Lipper Analytical Services, Inc. and Morningstar
Publications, Inc. or from publications such as Money, The New York Times, U.S.
News and World Report, Business Week, Forbes or Fortune. As with other
performance data, performance comparisons should not be considered
representative of a Trust's relative performance for any future period.
Pending the approval of the SEC or the National Association of Securities
Dealers Regulation, the Sponsors may also include the performance of
hypothetical portfolios to which the Sponsors have applied the same investment
objectives and selection strategies as described in "The Trust--The Securities"
and which the Sponsors intend to apply to the selection of securities for the
Trust. This performance information is intended to illustrate the Trust's
strategies and should not be interpreted as indicative of the future performance
of the Trust.
B-22
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<PAGE>
[This page intentionally left blank]
B-23
740253.5
<PAGE>
<TABLE>
<S> <C>
No person is authorized to give any information or to MCLAUGHLIN, PIVEN, VOGEL
make any representations not contained in Parts A and B of FAMILY OF TRUSTS,
this Prospectus; and any information or representation not THE PINNACLE TRUST
contained herein must not be relied upon as having been
authorized by the Trust, the Trustee or the Sponsors. The (A UNIT INVESTMENT TRUST)
Trust is registered as a unit investment trust under the
Investment Company Act of 1940. Such registration does not PROSPECTUS
imply that the Trust or any of its Units have been guaranteed,
sponsored, recommended or approved by the United States or DATED: SEPTEMBER 23, 1998
any state or any agency or officer thereof.
------------------ SPONSORS:
This Prospectus does not constitute an offer to sell, or a McLAUGHLIN, PIVEN, VOGEL
solicitation of an offer to buy, securities in any state to any SECURITIES, INC.
person to whom it is not lawful to make such offer in such 30 Wall Street
state. New York, New York 10005
212-248-0750
Table of Contents
REICH & TANG DISTRIBUTORS, INC.
Title Page 600 Fifth Avenue
New York, New York 10020
PART A 212-830-5400
Summary of Essential Information...........................A-2
Statement of Financial Condition...........................A-6
Portfolio..................................................A-7
Report of Independent Auditors.............................A-8 TRUSTEE:
PART B THE CHASE MANHATTAN BANK
The Trust..................................................B-1 4 New York Plaza
Risk Considerations........................................B-6 New York, New York 10004
Public Offering............................................B-8
Rights of Unitholders.....................................B-10
Tax Status................................................B-11
Liquidity.................................................B-14
Trust Administration......................................B-16
Trust Expenses and Charges................................B-20
Reinvestment Plan.........................................B-21
Other Matters.............................................B-21
Parts A and B of this Prospectus do not contain all of the information set
forth in the registration statement and exhibits relating thereto, filed with
the Securities and Exchange Commission, Washington, D.C., under the Securities
Act of 1933, and the Investment Company Act of 1940, and to which reference is
made.
</TABLE>
740253.5
<PAGE>
PART II -- ADDITIONAL INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM A -- BONDING ARRANGEMENTS
The employees of Reich & Tang Distributors, Inc. are covered under Brokers'
Blanket Policy, Standard Form 14, in the amount of $11,000,000 (plus
$196,000,000 excess coverage under Brokers' Blanket Policies, Standard Form 14
and Form B Consolidated). This policy has an aggregate annual coverage of $15
million.
The employees of McLaughlin, Piven, Vogel Securities, Inc. are covered
under Broker's Blanket Policy, Standard Form 14, in the amount of $1,000,000.
ITEM B -- CONTENTS OF REGISTRATION STATEMENT
This Registration Statement on Form S-6 comprises the following papers and
documents:
The facing sheet on Form S-6.
The Cross-Reference Sheet.
The Prospectus consisting of pages.
Undertakings.
Signatures.
Written consents of the following persons:
Battle Fowler LLP (included in Exhibit 3.1)
Ernst & Young LLP
The following exhibits:
*99.1.1 -- Reference Trust Agreement including certain
amendments to the Trust Indenture and Agreement
referred to under Exhibit 99.1.1.1 below.
*99.1.1.1 -- Form of Trust Indenture and Agreement.
99.1.3.5 -- Certificate of Incorporation of Reich & Tang
Distributors, Inc. (filed as Exhibit 99.1.3.5 to Form
S-6 Registration Statement No. 333-44301 of Equity
Securities Trust, Series 16, Signature Series, Zacks
All-Star Analysts Trust III on January 15, 1998 and
incorporated herein by reference).
99.1.3.6 -- By-Laws of Reich & Tang Distributors, Inc.(filed as
Exhibit 99.1.3.6 to Form S-6 Registration Statement
No. 333-44301 of Equity Securities Trust, Series 16,
Signature Series, Zacks All-Star Analysts Trust III on
January 15, 1998 and incorporated herein by
reference).
99.1.3.7 -- Certificate of Incorporation of McLaughlin, Piven,
Vogel Securities, Inc. dated March 8, 1977 and as
amended on January 16, 1979, June 8, 1979, August 27,
1979, May 3, 1982, December 20, 1983 and September 25,
1989. (Filed as Exhibit 99.1.3.7 to Form S-6
Registration Statement No. 333-60915 of McLaughlin,
Piven, Vogel Family of Trusts, The Pinnacle Trust on
August 7, 1998 and incorporated herein by reference).
99.1.3.8 -- By-Laws of McLaughlin, Piven, Vogel Securities Inc.
(Filed as Exhibit 99.1.3.8 to Form S-6 Registration
Statement No. 333-60915 of McLaughlin, Piven, Vogel
Family of Trusts, The Pinnacle Trust on August 7, 1998
and incorporated herein by reference).
*99.3.1 -- Opinion of Battle Fowler LLP as to the legality of
the securities being registered, including their
consent to the filing thereof and to the use of their
name under the headings "Tax Status" and "Legal
Opinions" in the Prospectus, and to the filing of
their opinion regarding tax status of the Trust.
99.6.0 -- Power of Attorney of Reich & Tang Distributors,
Inc., the Depositor, by its officers and a majority of
its Directors (filed as Exhibit 99.6.0 to Form S-6
Registration Statement No. 333-44301 of Equity
Securities Trust, Series 16, Signature Series, Zacks
All-Star Analysts Trust III on January 15, 1998 and
incorporated herein by reference).
99.6.1 -- Power of Attorney of McLaughlin, Piven, Vogel Securities, Inc.
*99.27 -- Financial Data Schedule (for EDGAR filing only).
- --------
* Filed herewith.
740248.3
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, McLaughlin, Piven, Vogel Family of Trusts, The Pinnacle Trust has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, hereunto duly authorized, in the City of New York and
State of New York on the 23rd day of September, 1998.
MCLAUGHLIN, PIVEN, VOGEL FAMILY OF TRUSTS,
THE PINNACLE TRUST
(Registrant)
McLAUGHLIN, PIVEN, VOGEL SECURITIES, INC.
(Depositor)
By /s/ ALLAN M. VOGEL
-------------------------------
Allan M. Vogel
(Authorized Signator)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons, who
constitute the principal officers and a majority of the directors of McLaughlin,
Piven, Vogel Securities, Inc., the Depositor, in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Name Title Date
---- ----- ----
<S> <C>
JAMES C. MCLAUGHLIN Chairman of the Board, Chief
Executive Officer and Director
ALLAN M. VOGEL President, Secretary, Chief Financial
Officer and Director
September 23, 1998
By /s/ ALLAN M. VOGEL
------------------
Allan M. Vogel
Attorney-In-Fact*
- --------
* An executed copy of a Power of Attorney was filed as Exhibit 99.6.1 to Form
S-6 Registration Statement No. 333-60915 on August 7, 1998.
</TABLE>
II-2
740248.3
<PAGE>
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, McLaughlin, Piven, Vogel Family of Trusts, The Pinnacle Trust has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, hereunto duly authorized, in the City of New York and
State of New York on the 23rd day of September, 1998.
MCLAUGHLIN, PIVEN, VOGEL FAMILY OF TRUSTS,
THE PINNACLE TRUST
(Registrant)
REICH & TANG DISTRIBUTORS, INC.
(Depositor)
By /s/ PETER J. DEMARCO
------------------------------
Peter J. DeMarco
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons, who
constitute the principal officers and a majority of the directors of Reich &
Tang Distributors, Inc., the Depositor, in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
RICHARD E. SMITH III President and Director
PETER S. VOSS Director
September 23, 1998
By /s/ PETER J. DEMARCO
--------------------------------
Peter J. DeMarco
as Executive Vice President
and Attorney-In-Fact*
G. NEAL RYLAND Director
EDWARD N. WADSWORTH Executive Officer
STEVEN W. DUFF Director
ROBERT F. HOERLE Managing Director
PETER J. DEMARCO Executive Vice President
RICHARD I. WEINER Vice President
BERNADETTE N. FINN Vice President
LORRAINE C. HYSLER Secretary
RICHARD DE SANCTIS Treasurer
- --------
* Executed copies of Powers of Attorney were filed as Exhibit 99.6.0 to Form
S-6 Registration Statement No. 333-44301 on January 15, 1998.
</TABLE>
II-3
740248.3
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference made to our firm under the Caption "Independent
Auditors" in Part B of the Prospectus and to the use of our report dated
September 22, 1998, in this Registration Statement (Form S-6 No. 333-60915) of
McLaughlin, Piven, Vogel Family of Trusts, The Pinnacle Trust.
ERNST & YOUNG LLP
New York, New York
September 22, 1998
II-4
740248.3
<PAGE>
McLAUGHLIN, PIVEN, VOGEL
FAMILY OF TRUSTS,
THE PINNACLE TRUST
REFERENCE TRUST AGREEMENT
This Reference Trust Agreement (the "Agreement") dated
September 23, 1998 among McLaughlin, Piven, Vogel Securities, Inc., and Reich &
Tang Distributors, Inc., as Depositors and The Chase Manhattan Bank, as Trustee,
sets forth certain provisions in full and incorporates other provisions by
reference to the document entitled "McLaughlin, Piven, Vogel Family of Trusts,
The Pinnacle Trust, and Subsequent Series, Trust Indenture and Agreement" dated
September 23, 1998 and as amended in part by this Agreement (collectively, such
documents hereinafter called the "Indenture and Agreement"). This Agreement and
the Indenture, as incorporated by reference herein, will constitute a single
instrument.
WITNESSETH THAT:
WHEREAS, this Agreement is a Reference Trust Agreement as
defined in Sec tion 1.1 of the Indenture, and shall be amended and modified from
time to time by an Addendum as defined in Section 1.1 (1) of the Indenture, such
Addendum setting forth any Additional Securities as defined in Section 1.1 (2)
of the Indenture;
WHEREAS, the Depositors wish to deposit Securities, and any
Additional Securities as listed on any Addendums hereto, into the Trust and
issue Units, and Additional Units as the case maybe, in respect thereof pursuant
to Section 2.5 of the Indenture; and
NOW THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the Depositors and the Trustee as follows:
Part I
STANDARD TERMS AND CONDITIONS OF TRUST
Section 1. Subject to the provisions of Part II hereof, all
the provisions contained in the Indenture are herein incorporated by reference
in their entirety and shall be deemed to be a part of this instrument as fully
and to the same extent as though said provisions had been set forth in full in
this instrument.
Section 2. This Reference Trust Agreement may be amended and
modified by Addendums, attached hereto, evidencing the purchase of Additional
Securities which have been deposited to effect an increase over the number of
Units initially specified in Part II of this
756777.2
<PAGE>
Reference Trust Agreement ("Additional Closings"). The Depositors and Trustee
hereby agree that their respective representations, agreements and
certifications contained in the Closing Memorandum dated September 23, 1998,
relating to the initial deposit of Securities continue as if such
representations, agreements and certifications were made on the date of such
Additional Closings and with respect to the deposits made therewith, except as
such representations, agreements and certifications relate to their respective
By-Laws and as to which they each represent that their has been no amendment
affecting their respective abilities to perform their respective obligations
under the Indenture.
Part II
SPECIAL TERMS AND CONDITIONS OF TRUST
Section 1. The following special terms and conditions are
hereby agreed to:
(a) The Securities (including Contract Securities) listed in
the Prospectus relating to this series of McLaughlin, Piven, Vogel Family of
Trusts (the "Prospectus") have been deposited in the Trust under this Agreement
(see "Portfolio" in Part A of the Prospectus which for purposes of this
Indenture and Agreement is the Schedule of Securities or Schedule A).
(b) The number of Units delivered by the Trustee in exchange
for the Securities referred to in Section 2.3 is 15,567.
(c) For the purposes of the definition of Unit in item (24) of
Section 1.1, the fractional undivided interest in and ownership of the Trust
initially is 1/15,567 as of the date hereof.
(d) The term Record Date shall mean the fifteenth day of
December and June commencing on December 15, 1998.
(e) The term Distribution Date shall mean the last business
day of December and June commencing on December 31, 1998.
(f) The First Settlement Date shall mean September 28, 1998.
(g) For purposes of Section 6.1(g), the liquidation amount is
hereby specified to be 40% of the aggregate value of the Securities as of the
last deposit of Additional Securities.
(h) For purposes of Section 6.4, the Trustee shall be paid per
annum an amount computed according to the following schedule, determined on the
basis of the number of Units outstanding as of the Record Date preceding the
Record Date on which the compensation is to be
756777.2
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<PAGE>
paid, provided, however, that with respect to the period prior to the first
Record Date, the Trustee's compensation shall be computed at $.86 per 100 Units:
rate per 100 units number of Units outstanding
$0.86 5,000,000 or less
$0.80 5,000,001 - 10,000,000
$0.74 10,000,001 - 20,000,000
$0.62 20,000,001 or more
(i) For purposes of Section 7.4, the Depositors' maximum
annual supervisory fee is hereby specified to be $.25 per 100 Units outstanding.
(j) The Termination Date shall be December 17, 1999.
(k) The fiscal year for the Trust shall end on June 30 of each
year.
IN WITNESS WHEREOF, the parties hereto have caused this
Reference Trust Agreement to be duly executed on the date first above written.
[Signatures on separate pages]
756777.2
-3-
<PAGE>
McLAUGHLIN, PIVEN, VOGEL SECURITIES, INC.
Depositor
By: /s/ Allan M. Vogel
------------------------------
President
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this 18th day of September, 1998, before me personally
appeared Allan M. Vogel, to me known, who being by me duly sworn, said that he
is the President of McLaughlin, Piven, Vogel Securities, Inc., the Depositor,
one of the corporations described in and which executed the foregoing
instrument, and that he signed his name thereto by authority of the Board of
Directors of said corporation.
/s/ Carla Vogel
----------------------------
Notary Public
Carla Vogel
Notary Public, State of New York
No. 02VO5019906
Qualified in Bronx County
Commission Expires November 1, 1999
756777.2
-4-
<PAGE>
REICH & TANG DISTRIBUTORS, INC.
Depositor
By: /s/ Peter DeMarco
--------------------------------
Executive Vice President
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this 21st day of September, 1998, before me personally
appeared Peter DeMarco, to me known, who being by me duly sworn, said that he is
Executive Vice President of the Depositor, one of the corporations described in
and which executed the foregoing instrument, and that he signed his name thereto
by authority of the Board of Directors of said corporation.
/s/ Teresa Scarfone
----------------------------
Notary Public
Teresa Scarfone
NOTARY PUBLIC, State of New York
No. 31-4752576
Qualfied in New York County
Term Expires 8/31/00
756777.2
-5-
<PAGE>
THE CHASE MANHATTAN BANK
Trustee
By: /s/ Rosalia Raviele
-------------------------------
Vice President
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this 23rd day of September, 1998, before me personally
appeared Rosalia Raviele, to me known, who being by me duly sworn, said that
(s)he is an Authorized Signator of The Chase Manhattan Bank, one of the
corporations described in and which executed the foregoing instrument; that
(s)he knows the seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation and that he/she signed his/her name
thereto by like authority.
/s/ Ada Iris Vega
----------------------------
Notary Public
Ada Iris Vega
NOTARY PUBLIC, State of New York
No. 4864106
Qualified in New York County
Commission Expires 6/30/2000
756777.2
-6-
<PAGE>
MCLAUGHLIN, PIVEN, VOGEL FAMILY OF TRUSTS
THE PINNACLE TRUST
for all series formed on or subsequent to the effective
date specified below
----------
TRUST INDENTURE AND AGREEMENT
Among
MCLAUGHLIN, PIVEN, VOGEL SECURITIES, INC.
and
REICH & TANG DISTRIBUTORS, INC.
As Depositors
and
THE CHASE MANHATTAN BANK
As Trustee
----------
Dated: September 23, 1998
756654.2
<PAGE>
<TABLE>
<CAPTION>
MCLAUGHLIN, PIVEN, VOGEL FAMILY OF TRUSTS
THE PINNACLE TRUST
and Subsequent Series
TABLE OF CONTENTS
Page
<S> <C>
INTRODUCTION......................................................................................................1
ARTICLE 1 - DEFINITIONS; CERTIFICATES.............................................................................2
Section 1.1. Definitions................................................................................2
ARTICLE 2 - DEPOSIT OF SECURITIES; DECLARATION OF TRUST;
FORM AND ISSUANCE OF CERTIFICATES............................................................5
Section 2.1. Deposit of Securities......................................................................5
Section 2.2. Declaration of Trust.......................................................................6
Section 2.3. Issue of Units.............................................................................6
Section 2.4. Certain Contracts Satisfactory.............................................................6
Section 2.5. Deposit of Additional Securities...........................................................7
ARTICLE 3 - ADMINISTRATION OF TRUST..............................................................................10
Section 3.1. Initial Cost..............................................................................10
Section 3.2. Income Account............................................................................11
Section 3.3. Principal Account.........................................................................12
Section 3.4. Reserve Account...........................................................................13
Section 3.5. Payments and Distributions................................................................13
Section 3.6. Distribution Statements...................................................................16
Section 3.7. Substitute Securities.....................................................................18
Section 3.8. Sale of Securities........................................................................19
Section 3.9. Counsel...................................................................................20
Section 3.10. Notice and Sale by Trustee...............................................................20
Section 3.11. Reorganization and Similar Events........................................................20
Section 3.12. Notice of Actions........................................................................21
Section 3.13. Notice of Change in Principal Account....................................................21
Section 3.14. Extraordinary Distributions..............................................................21
</TABLE>
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ARTICLE 4 - EVALUATION OF SECURITIES.............................................................................22
Section 4.1. Evaluation of Securities..................................................................22
Section 4.2. Tax Reports...............................................................................22
Section 4.3. Liability of Trustee with respect to Evaluations......................................23
ARTICLE 5 - TRUST EVALUATION, REDEMPTION, PURCHASE, TRANSFER,
INTERCHANGE OR REPLACEMENT OF CERTIFICATES..................................................23
Section 5.1. Trust Evaluation..........................................................................23
Section 5.2. Redemptions by Trustee; Purchases by
Depositors........................................................................25
Section 5.3. Depositor Redemptions.....................................................................28
Section 5.4. Units to be Held Only Through the
Depository Trust Company or a Successor
Clearing Agency...................................................................28
ARTICLE 6 - TRUSTEE; REMOVAL OF DEPOSITORS.......................................................................29
Section 6.1. General Definition of Trustee's
Liabilities, Rights and Duties;
Removal of Depositors.............................................................29
Section 6.2. Books, Records and Reports................................................................33
Section 6.3. Indenture and List of Securities on File..................................................34
Section 6.4. Compensation..............................................................................34
Section 6.5. Removal and Resignation of the Trustee;
Successor.........................................................................35
Section 6.6. Qualifications of Trustee.................................................................37
ARTICLE 7 - DEPOSITORS...........................................................................................37
Section 7.1. Succession................................................................................37
Section 7.2. Resignation of a Depositor................................................................38
Section 7.3. Liability of Depositors and
Indemnification...................................................................38
Section 7.4. Compensation..............................................................................39
Section 7.5. Joint Position of Depositors; Power of
Attorney..........................................................................40
ARTICLE 8 - RIGHTS OF UNITHOLDERS................................................................................41
Section 8.1. Beneficiaries of Trust....................................................................41
Section 8.2. Rights, Terms and Conditions..............................................................41
</TABLE>
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ARTICLE 9 - ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS.......................................................42
Section 9.1. Amendments................................................................................42
Section 9.2. Termination...............................................................................43
Section 9.3. Construction..............................................................................45
Section 9.4. Registration of Units.....................................................................46
Section 9.5. Written Notice............................................................................46
Section 9.6. Severability..............................................................................46
Section 9.7. Dissolution of Depositors Not to
Terminate.........................................................................46
</TABLE>
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MCLAUGHLIN, PIVEN, VOGEL FAMILY OF TRUSTS,
THE PINNACLE TRUST
AND
SUBSEQUENT SERIES
TRUST INDENTURE AND AGREEMENT
DATED SEPTEMBER 23, 1998
This Trust Indenture and Agreement ("Indenture") dated
September 23, 1998, among McLaughlin, Piven, Vogel Securities, Inc., and Reich &
Tang Distributors, Inc., as Depositors and The Chase Manhattan Bank, as Trustee.
WITNESSETH THAT
In consideration of the premises and of the mutual agreements
herein contained, the Depositors and the Trustee agree as follows:
INTRODUCTION
The Depositors concurrently with the execution and delivery
hereof are establishing McLaughlin, Piven, Vogel Family of Trusts, The Pinnacle
Trust (and subsequent Series), wherein certain securities consisting of common
stock and contracts and funds for the purchase of such securities (collectively,
the "Securities") will be deposited by the Depositors, to be held by the Trustee
in trust for the use and benefit of the registered holders of certificates of
ownership (the "Unitholders") to be issued as hereinafter provided. The parties
hereto are entering into this Indenture for the purpose of establishing certain
of the terms, covenants and conditions of McLaughlin, Piven, Vogel Family of
Trusts, The Pinnacle Trust and of each additional series of the McLaughlin,
Piven, Vogel Family of Trusts which may be established from time to time
hereafter. For McLaughlin, Piven, Vogel Family of Trusts, The Pinnacle Trust and
each subsequent series of the McLaughlin, Piven, Vogel Family of Trusts
(sometimes referred to herein as the "Trust") (as to which this Indenture is to
be applicable) the parties hereto shall execute a separate Reference Trust
Agreement incorporating by reference this Indenture and effecting any amendment,
supplement or variation from or to such incorporation by reference with respect
to the related series and specifying for that series (1) the Securities
deposited in trust and the number of Units delivered by the Trustee in exchange
for the Securities pursuant to Section 2.3; (2) the initial fractional undivided
interest represented by each Unit; (3) the first and subsequent Record Dates;
(4) the first and subsequent Distribution Dates; (5) the First Settlement Date;
(6) the liquidation amount for purposes of Section 6.1(g); (7) the Trustee's
fee; (8) the Depositors' fee; (9) the Termination Date; and (10) any other
change or addition contemplated or permitted by this Indenture.
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ARTICLE 1
DEFINITIONS; CERTIFICATES
Section 1.1. Definitions: Whenever used in this Indenture the
following words and phrases, unless the context clearly indicates otherwise,
shall have the following meanings:
(1) "Addendum to the Reference Trust Agreement" shall mean the
addendum which evidences the Additional Securities deposited into the Trust and
the number of Additional Units created.
(2) "Additional Securities" shall mean such Securities as are
listed in Supplementary Schedules to Addendums to the Reference Trust Agreement
and which have been deposited to effect an increase over the number of Units
initially specified in the Reference Trust Agreement.
(3) "Additional Units" shall mean such Units as are issued in
respect of Additional Securities.
(4) "Business Day" shall mean any day other than a Saturday,
Sunday, or other day on which the New York Stock Exchange is closed for trading,
a legal holiday in the City of New York, or a day on which banking institutions
are authorized by law to close.
(5) "Contract Securities" shall mean Securities which are to
be acquired by the Trust pursuant to contracts entered into by the Depositors,
including (i) Securities listed in Schedule A to the Reference Trust Agreement
and (ii) Securities which the Depositors have contracted to purchase for the
Trust pursuant to Sections 2.6 and 3.7.
(6) "Depositors" shall mean McLaughlin, Piven, Vogel
Securities, Inc.("MPV") or its successors in interest and Reich & Tang
Distributors, Inc. ("Reich & Tang") or its successors in interest, or any
successor depositor or depositors appointed as herein provided.
(7) "Distribution Date" shall have the meaning assigned to it
in Part II of the Reference Trust Agreement.
(8) "DTC" shall mean Depository Trust Company, or its
successors.
(9) "Failed Security" shall have the meaning assigned to it
in Section 3.7 hereof.
(10) "First Settlement Date" shall mean the date specified in
Part II of the Reference Trust Agreement.
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(11) "Indenture" shall mean this Trust Indenture and Agreement
as originally executed or, if amended as herein provided, as so amended.
(12) "Original Issue" shall mean an issue of Securities
deposited pursuant to Section 2.1 or any Substitute Securities purchased to
replace any Original Issue which have become Failed Securities.
(13) "Original Proportionate Relationship" shall mean the
proportionate relationship among the number of shares of each Security
established on the deposit made pursuant to Section 2.1. The Original
Proportionate Relationship shall be adjusted, if appropriate, to reflect (1) the
deposit of Substitute Securities and (2) the occurrence of any stock dividend,
stock splits, redemptions, or similar events.
(14) "Prospectus" shall mean the prospectus included in the
registration statement, as amended, on Form S-6 under the Securities Act of
1933, as amended, relating to the Trust on file with the Securities and Exchange
Commission at the time such registration statement, as amended, becomes
effective, except that if the prospectus filed pursuant to Rule 497(b) under the
Securities Act of 1933, as amended, differs from the prospectus on file at the
time such registration statement, as amended, becomes effective, the term
Prospectus shall refer to the Rule 497(b) prospectus from and after the time it
is mailed or otherwise delivered to the Securities and Exchange Commission for
filing.
(15) "Record Date" shall have the meaning assigned to it in
Part II of the Reference Trust Agreement.
(16) "Redemption Form" shall mean the form provided by the
Trustee at the request of holders of Units for the purposes of redeeming such
Units, as such form may be reasonably acceptable to the Depositors and the
Trustee from time to time.
(17) "Reference Trust Agreement" shall mean the indenture for
the particular series of McLaughlin, Piven, Vogel Family of Trusts into which
the terms of this Indenture are incorporated.
(18) "Securities" shall mean such common stock, preferred
stock, ADRs and contracts and funds for the purchase of such securities as are
(i) deposited in irrevocable trust and listed in the Schedule to the Reference
Trust Agreement and (ii) received in exchange or substitution for any Securities
pursuant to Section 3.7 hereof, as may from time to time be
756654.2
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acquired and continue to be held as a part of the Trust to which such Reference
Trust Agreement relates.
(19) "Substitute Security" shall mean a Security purchased by
the Trustee pursuant to Section 3.7 hereof.
(20) "Termination Date" shall have the meaning assigned to it
in Part II of the Reference Trust Agreement.
(21) "Trust" shall mean the Trust created by this Indenture,
which shall consist of the Securities held pursuant and subject to this
Indenture together with all dividends thereon, received but undistributed, any
undistributed cash realized from the sale, redemption, liquidation thereof, such
amounts as may be on deposit in the Reserve Accounts hereinafter established and
all other property and rights to which Unitholders may be entitled under the
provisions of this Indenture.
(22) "Trustee" shall mean The Chase Manhattan Bank, or its
successor or any successor Trustee appointed as herein provided.
(23) "Unit" shall mean the fractional undivided interest in
and ownership of the Trust initially specified in Part II of the Reference Trust
Agreement, the denominator of which shall be decreased by the number of any such
Units redeemed as provided in Section 5.2 and increased by any additional Units
which are specified in a Supplemental Schedule to an Addendum to the Reference
Trust Agreement or a Deposit Certificate.
(24) "Unitholder" shall mean the registered holder of units of
beneficial interest as recorded in book-entry form at DTC, his legal
representatives and heirs and the successors of any corporation, partnership or
legal entity which is a registered holder of any Unit, and as such shall be
deemed a beneficiary of the trust created by the Indenture to the extent of his
pro rata share thereof.
(25) The words "herein," "hereby," "herewith," "hereof,"
"hereinafter," "hereunder," "hereinabove," "hereafter," "heretofore" and similar
words or phrases of reference and association shall refer to this Indenture in
its entirety.
(26) Words importing singular number shall include the plural
number in each case and vice versa, and words importing person shall include
corporations and associations, as well as natural persons.
ARTICLE 2
DEPOSIT OF SECURITIES; DECLARATION OF TRUST;
756654.2
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FORM AND ISSUANCE OF CERTIFICATES
Section 2.1. Deposit of Securities: The Depositors,
concurrently with the execution and delivery of a Reference Trust Agreement,
have deposited with the Trustee in trust the Securities listed in Schedule A to
the Reference Trust Agreement in bearer form or registered in the name of the
Trustee, or its nominee, or duly endorsed in blank or accompanied by all
necessary instruments of assignment and transfer in proper form to be held,
managed and applied by the Trustee as herein provided. In the event that the
purchase of Securities represented by contracts shall not be consummated in
accordance with said contracts, the Trustee shall credit to the Principal
Account pursuant to Section 3.3 hereof the cash or cash equivalents (including
such portion of any letter of credit applicable to such contracts) deposited by
the Depositors, for the purpose of such purchase. Such monies, unless invested
in substitute Securities in accordance with Section 3.7 hereof, shall be
distributed to Unitholders pursuant to Section 3.5 hereof on the Distribution
Date following the failure of consummation of such purchase. The Depositors
shall deliver the Securities listed on said Schedule or Schedules to the Trustee
which were not actually delivered concurrently with the execution and delivery
of the Reference Trust Agreement within 90 days after said execution and
delivery or, if Section 3.7 applies, within such shorter period as is specified
in Section 3.7.
The Trustee is irrevocably authorized hereto to effect
registration of transfer of the Securities in fully registered form in the name
of the Trustee or its nominee.
Section 2.2. Declaration of Trust: The Trustee declares that
it holds and will hold the Trust as Trustee in trust upon the terms herein set
forth for the use and benefit of all present and future Unitholders.
Section 2.3. Issue of Units: The Trustee hereby acknowledges
receipt of the deposit referred to in Section 2.1, and simultaneously with the
receipt of said deposit, pursuant to the Depositors' direction, has registered
on the registration books of the Trust the ownership by the Depositors of such
Units or, if requested by the Depositors, the ownership by DTC of all of such
Units and will cause such Units to be credited at DTC to the account of the
Depositors or, pursuant to the Depositors' direction and as hereafter provided,
the account of the issuer of the letter of credit referred to in Section 2.01.
The Depositors shall not sell, pledge, hypothecate or otherwise transfer such
Units, prior to the effectiveness of the registration statement covering the
Units filed with the Securities and Exchange Commission under the Securities Act
of 1933, except that the Depositors may place the Units as security for any
letter of credit provided in connection with the deposit of contracts described
in Section 2.1.
The number of Units may be increased through a split of the
Units or decreased through a reverse split thereof, as directed by the
Depositors, on any day on which the Depositors are the only Unitholders, which
revised number of Units shall be recorded by the Trustee on its books.
756654.2
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<PAGE>
Section 2.4. Certain Contracts Satisfactory: The Depositors
approve as satisfactory in form and substance the contracts to be assumed by the
Trustee with regard to any Securities listed in Schedule A to the Reference
Trust Agreement and authorizes the Trustee on behalf of the Trust to assume such
contracts and otherwise to carry out the terms and provisions thereof or to take
other appropriate action in order to complete the deposit of the Securities
covered thereby into the Trust.
Section 2.5. Deposit of Additional Securities.
(a) Subject to the requirements set forth below in this
Section, the Depositor may, on any Business Day (the "Trade Date"), subscribe
for Additional Units as follows:
(1) Prior to the Evaluation Time on the Trade Date,
the Depositor shall provide notice (the "Subscription
Notice") to the Trustee, by telecopy or by written
communication, of the Depositor's intention to
subscribe for Additional Units. The Subscription
Notice shall identify the Additional Securities to be
acquired (unless such Additional Securities are a
precise replication of the then existing portfolio)
and shall either (i) specify the quantity of
Additional Securities to be deposited by the
Depositor on the settlement date for such
subscription or (ii) instruct the Trustee to purchase
Additional Securities with an aggregate cost as
specified in the Subscription Notice.
(2) Promptly following the Evaluation Time on such
Business Day, the Depositor shall verify with the
Trustee, by telecopy, the number of Additional Units
to be created.
(3) Not later than the time on the settlement date
for such subscription when the Trustee is to deliver
the Additional Units created thereby (which time
shall not be later than the time by which the Trustee
is required to settle any contracts for the purchase
of Additional Securities entered into by the Trustee
pursuant to the instruction of the Depositor referred
to in subparagraph (1) above), the Depositor shall
deposit with the Trustee (i) any Additional
Securities specified in the Subscription Notice (or
contracts to purchase such Additional Securities
together with cash or a letter of credit in the
amount necessary to settle such contracts) or (ii)
cash or a letter of credit in the amount equal to the
aggregate cost of the Additional Securities to be
purchased by the Trustee, as specified in the
Subscription Notice, together with, in each case,
Cash as defined below. "Cash" means, as to the
Principal Account, cash or other property (other than
Securities) on hand in the Principal Account or
receivable and to be credited to the Principal
Account as of the Evaluation Time on the Business Day
preceding the Trade Date (other than amounts to be
distributed solely to persons other
756654.2
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than persons receiving the distribution from the
Principal Account as holders of Additional Units
created by the deposit), and, as to the Income
Account, cash or other property (other than
Securities) received by the Trust as of the
Evaluation Time on the Business Day preceding the
Trade Date or receivable by the Trust in respect of
dividends or other distributions declared but not
received as of the Evaluation Time on the Business
Day preceding the Trade Date, reduced by the amount
of any cash or other property received or receivable
on any Security allocable (in accordance with the
Trustee's calculation of the monthly distribution
from the Income Account pursuant to Section 3.5) to a
distribution made or to be made in respect of a
Record Date occurring prior to the Trade Date. Each
deposit made during the 90 days following the deposit
made pursuant to Section 2.1 hereof shall replicate,
to the extent practicable, as specified in
subparagraph (b), the Original Proportionate
Relationship. Each deposit made after the 90 days
following the deposit made pursuant to Section 2.1
hereof (except for deposits made to replace Failed
Securities if such deposits occur within 20 days from
the date of a failure occurring within such initial
90 day period) shall maintain exactly the
proportionate relationship existing among the
Securities as of the expiration of such 90 day
period. Each such deposit shall exactly replicate
Cash.
(4) On the settlement date for a subscription, the
Trustee shall, in exchange for the Securities and
cash or letter of credit described above, issue and
deliver to or on the order of the Depositor the
number of Units verified by the Depositor with the
Trustee. No Unit to be issued pursuant to this
paragraph shall be issued or delivered unless and
until Securities, cash or a letter of credit is
received in exchange therefor and no person shall
have any claim to any Unit not so issued and
delivered or any interest in the Trust in respect
thereof.
(5) Each deposit of Additional Securities, shall be
listed in a Supplementary Schedule to an Addendum to
the Reference Trust Agreement stating the date of
such deposit and the number of Additional Units being
issued therefor. The Trustee shall acknowledge in
such Addendum the receipt of the Deposit and the
number of Additional Units issued in respect thereof.
The Additional Securities shall be held, administered
and applied by the Trustee in the same manner as
herein provided for the Securities.
(6) The acceptance of Additional Units by the
Depositor in accordance with the provisions of
paragraph (a) of this Section shall be deemed a
certification by the Depositor that the deposit or
purchase of Additional
756654.2
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Securities associated therewith complies with the
conditions of this Section 2.06.
(7) Notwithstanding the preceding, in the event that
the Sponsors' Subscription Notice shall instruct the
Trustee to purchase Additional Securities in an
amount which, when added to the purchase amount of
all other unsettled contracts entered into by the
Trustee, exceeds 25% of the value of the Securities
then held (taking into account the value of contracts
to purchase Securities only to the extent that there
has been deposited with the Trustee cash or an
irrevocable letter of credit in an amount sufficient
to settle their purchase), the Sponsors shall deposit
with the Trustee concurrently with the Subscription
Notice cash or a letter of credit in an amount such
that, when added to 25% of the value of the
Securities then held (determined as above) the
aggregate value shall be not less than the purchase
amount of the securities to be purchased pursuant to
such Subscription Notice.
(b) Additional Securities deposited during the 90 days
following the deposit made pursuant to Section 2.1 hereof shall maintain as
closely as practicable the Original Proportionate Relationship, except as
provided in this Section. Additional Securities may be deposited or purchased in
round lots; if the amount of the deposit is insufficient to acquire round lots
of each Security to be acquired, the Additional Securities shall be deposited or
purchased in the order of the Security in the Trust most under represented
immediately before the deposit with respect to the Original Proportionate
Relationship. Instructions to purchase Additional Securities under this Section,
shall be in writing and shall direct the Trustee to purchase, or enter into
contracts to purchase, Additional Securities; such instructions shall also
specify the name, CUSIP number, if any, aggregate amount of each such Additional
Security and price or range of price. If, at the time of a subsequent deposit
under this Section, Securities of an Original Issue are unavailable, cannot be
purchased at reasonable prices or their purchase is prohibited or restricted by
applicable law, regulation or policies, in lieu of the portion of the deposit
that would otherwise be represented by those Securities, the Depositors may (A)
deposit (or instruct the Trustee to purchase) Securities of another Original
Issue or replacement securities, or (B) deposit cash or a letter of credit with
instructions to acquire the Securities of such original issue when they become
available.
(c) The Trustee shall have no responsibility for the selection
of Securities deposited hereunder or for maintaining the composition of the
Trust portfolio or for any loss or depreciation resulting from any purchase of
Additional Securities pursuant to the Depositors' direction or from the
Depositors' failure to settle any subscription for Units. The Trustee shall be
indemnified against any loss or liability arising from purchases contracted for
pursuant to this Section in accordance with Section 6.4.
756654.2
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ARTICLE 3
ADMINISTRATION OF TRUST
Section 3.1. Initial Cost: Subject to reimbursement as
hereinafter provided, the cost of organizing the Trust and sale of the Trust
Units shall be borne by the Depositors, provided, however, that the liability on
the part of the Depositors under this section shall not include any fees or
other expenses incurred in connection with the administration of the Trust
subsequent to the deposit referred to in Section 2.1. Upon notification from the
Depositors that the primary offering period is concluded, the Trustee shall
withdraw from the Account or Accounts specified in the Prospectus or, if no
Account is therein specified, from the Principal Account, and pay to the
Depositors the Depositors' reimbursable expenses of organizing the Trust and
sale of the Trust Units in an amount certified to the Trustee by the Depositors
but not in excess of the estimated per-Unit amount set forth in the Prospectus
multiplied by the number of Units outstanding as of the conclusion of the
primary offering period. If the cash balance of the Principal Account is
insufficient to make such withdrawal, the Trustee shall, as directed by the
Depositors, sell Securities identified by the Depositors, or distribute to the
Depositors Securities having a value, as determined under Section 4.1 as of the
date of distribution, sufficient for such reimbursement. The reimbursement
provided for in this section shall be for the account of the Unitholders of
record at the conclusion of the primary offering period. Any assets deposited
with the Trustee in respect of the expenses reimbursable under this section
shall be held and administered as assets of the Trust for all purposes
hereunder. The Depositors shall deliver to the Trustee any cash identified in
the Statement of Net Assets of the Trust included in the Prospectus not later
than the First Settlement Date and the Depositors' obligation to make such
delivery shall be secured by the letter of credit deposited pursuant to sections
2.1 and 2.5. Any cash which the Depositors have identified as to be used for
reimbursement of expenses pursuant to this Section shall be held by the Trustee,
without interest, and reserved for such purpose and, accordingly, prior to the
conclusion of the primary offering period, shall not be subject to distribution
or, unless the Depositors otherwise direct, used for payment of redemptions in
excess of the per-Unit amount payable pursuant to the next sentence. If a
Unitholder redeems Units prior to the conclusion of the primary offering period,
the Trustee shall pay to the Unitholder, in addition to the Redemption Price of
the tendered Units, an amount equal to the estimated per-Unit cost of organizing
the Trust and the sale Trust Units set forth in the Prospectus multiplied by the
number of Units tendered for redemption; to the extent the cash on hand in the
Trust is insufficient for such payment, the Trustee shall have the power to sell
Securities in accordance with Section 5.2. As used herein, the Depositors'
reimbursable expenses of organizing the Trust and sale of the Trust Units shall
include the cost of the initial preparation and typesetting of the registration
statement, prospectuses (including preliminary prospectuses), the indenture, and
other documents relating to the Trust, SEC and state blue sky registration fees,
the cost of the initial valuation of the portfolio and audit of the Trust, the
initial fees and expenses of the Trustee, and legal and other out-of-pocket
expenses related thereto but not including the expenses incurred in the printing
of preliminary prospectuses and prospectuses, expenses incurred in the
preparation and printing of brochures and other advertising materials and any
other selling expenses.
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Section 3.2. Income Account: The Trustee shall collect the
dividends or other like cash distributions on the Securities in the Trust as
such are paid, and credit such amounts, as collected, to a separate account to
be known as the "Income Account."
Section 3.3. Principal Account: (a) The Securities and all
cash, other than amounts credited to the Income Account, received by the Trustee
in respect of the Securities shall be credited to a separate account to be known
as the "Principal Account".
(b) Moneys and/or irrevocable letters of credit required to
purchase Contract Securities or deposited to secure such purchases are hereby
declared to be held specially by the Trustee for such purchases and shall not be
deemed to be part of the Principal Account until (i) the Depositors fail to
timely purchase Contract Securities and have not given the Failed Contract
Notice (as defined in Section 3.7) at which time the moneys and/or letters of
credit attributable to the Contract Securities not purchased by the Depositors
shall be credited to the Principal Account; or (ii) the Depositors have given
the Trustee the Failed Contract Notice at which time the moneys and/or letters
of credit attributable to failed contracts referred to in such Notice shall be
credited to the Principal Account; provided, however, that if the Depositors
also notify the Trustee in the Failed Contract Notice that they have purchased
or entered into a contract to purchase Substitute Securities (as defined in
Section 3.7), the Trustee shall not credit such moneys and/or letters of credit
to the Principal Account unless the Substitute Securities shall also have failed
or are not delivered by the Depositors within two business days after the
settlement date of such Substitute Securities, in which event the Trustee shall
forthwith credit such moneys and/or letters of credit to the Principal Account.
To the extent of moneys, and/or moneys drawn under a letter of credit, deposited
by the Depositors and then held by the Trustee, the Trustee shall credit to the
Principal Account, and to the extent such moneys are insufficient the Depositors
shall deposit in the Principal Account, the difference, if any, between the
purchase price of the failed Contract Securities and the purchase price of the
Substitute Securities, together with any sales charge and accrued dividends
applicable to such difference and distribute such moneys to Unitholders pursuant
to Section 3.5. Cash held or receivable from the Depositors pursuant to Section
2.5 in respect of contracts for purchase of Additional Securities entered into
by the Trustee shall be credited to the Principal Account upon the Trustee's
entering into such contracts.
Section 3.4. Reserve Account: From time to time the Trustee
shall withdraw from the cash on deposit in the Income Account or the Principal
Account such amounts as it, in its sole discretion, shall deem requisite to
establish a reserve for any applicable taxes or other governmental charges that
may be payable out of or by the Trust. Such amounts so withdrawn shall be
credited to a separate account which shall be known as the "Reserve Account".
The Trustee shall not be required to distribute to the Unitholders any of the
amounts in the Reserve Account; provided, however, that if it shall, in its sole
discretion, determine that such amounts are no longer necessary for payment of
any applicable taxes or other governmental charges, then it shall promptly
deposit such amounts in the appropriate account from which withdrawn or, if the
Trust has been terminated or is in the process of termination, the Trustee shall
distribute to each Unitholder such holder's interest in the Reserve Account in
accordance with Section 9.2.
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Section 3.5. Payments and Distributions: Distributions to each
Unitholder from the Income Account are computed as of the close of business on
each Record Date for the following Distribution Date. Distributions from the
Principal Account of the Trust (other than amounts representing failed
contracts, as discussed in Section 3.3.(b)) will be computed as of each Record
Date, and will be made to the Unitholders of the Trust on or shortly after the
next Distribution Date. Proceeds representing principal received from the
disposition of any of the Securities between a Record Date and a Distribution
Date which are not used for redemptions of Units will be held in the Principal
Account and not distributed until the second succeeding Distribution Date or
such later time as hereinafter provided. If a Unitholder is participating in a
Reinvestment Plan, distributions to such Unitholder shall be applied by the
Trustee to purchase Units from the Depositors at the applicable reinvestment
price on the Distribution Date. Persons who purchase Units between a Record Date
and a Distribution Date will receive their first distribution on the second
Distribution Date after such purchase.
As of each Record Date the Trustee shall:
(a) deduct from the Income Account of the Trust, and, to the
extent funds are not sufficient therein, from the Principal Account of the
Trust, amounts necessary to pay any unpaid expenses of the Trust, including
registration charges, Blue Sky fees, printing costs, attorneys' fees, auditing
costs and other miscellaneous out-of-pocket expenses, as certified by the
Depositors, incurred in keeping the registration of the Units and the Trust on a
current basis pursuant to Section 9.4, provided, however, that no portion of
such amount shall be deducted or paid unless the payment thereof from the Trust
is at that time lawful;
(b) deduct from the Income Account or, to the extent funds are
not available in such Account, from the Principal Account, and pay to itself
individually the amounts that it is at the time entitled to receive pursuant to
Section 6.4 or otherwise pursuant to the provisions hereof;
(c) deduct from the Income Account, or, to the extent funds
are not available in such Account, from the Principal Account, and pay an amount
equal to the unpaid fees and expenses, if any, of counsel pursuant to Section
3.9 as certified to it by the Depositors; and
(d) deduct from the Income Account, or, to the extent funds
are not available in such Account, from the Principal Account the estimated
amount that the Depositors are then entitled to receive pursuant to Section 7.4
and hold such amount without interest until such time as it is payable to the
Depositors as set forth below.
On or before the first Distribution Date after the conclusion
of each calendar year, the Trustee shall, upon certification in satisfactory
form to the Trustee, upon which the Trustee may rely, distribute to the
Depositors from the amount so held pursuant to the immediately preceding
paragraph the amounts that the Depositors are at the time entitled to receive
pursuant to Section 7.4 on account of services theretofore performed and
expenses theretofore incurred.
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The Trustee also may withdraw from said accounts such amounts,
if any, as it deems necessary to establish a reserve for any applicable taxes or
other governmental charges that may be payable out of the Trust. Amounts so
withdrawn shall not be considered a part of such Trust's assets until such time
as the Trustee shall return all or any part of such amounts to the appropriate
accounts. In addition, the Trustee may withdraw from the Income and Principal
Accounts such amounts as may be necessary to cover redemptions of Units by the
Trustee.
The Principal Account shall be reimbursed for any amount
withdrawn from the Principal Account under this Indenture in order to satisfy
obligations which, pursuant to the terms hereof, are first to be paid out of the
Income Account to the extent funds are available therein, when sufficient funds
are not available in the Income Account after giving effect to the payment from
the Income Account of all amounts otherwise required to be deducted therefor at
that time when sufficient funds are next available in the Income Account after
giving effect to the payment from the Income Account of all amounts otherwise
required to be deducted therefrom at that time.
On each Distribution Date or within a reasonable period of
time thereafter, the Trustee shall distribute by mail to each Unitholder of
record at the close of business on the preceding Record Date, at the post office
address appearing on the registration books of the Trustee (or, if a Clearing
Agency is the registered Unitholder, the Trustee shall make distributions to
such Clearing Agency in accordance with its applicable procedures), such
holder's pro rata share of the balance in the Income Account calculated as set
forth in the next paragraph, plus such holder's pro rata share of the
distributable cash balance of the Principal Account, as of the preceding Record
Date; provided, however, that funds credited to the Principal Account in the
event of the failure of consummation of a contract to purchase Securities
pursuant to Section 2.1 hereof, funds representing the proceeds of the sale of
Securities pursuant to Section 3.8 hereof, and funds representing the proceeds
of the sale of Securities under Section 5.2, 6.4 or this Section 3.5 in excess
of the aggregate of (i) the amounts needed for the purposes of said Sections and
(ii) such amount as the Depositors have informed the Trustee is to be used to
purchase securities pursuant to Section 3.7 hereof, shall not be distributed
until the following Distribution Date or at such earlier date as shall be
determined by the Trustee. The Trustee shall not be required to make a
distribution from the Principal or Income Account unless the cash balance on
deposit therein available for distribution shall be sufficient to distribute at
least $1.00 per Unit in the case of Units initially offered at approximately
$1,000, or a proportionately lower amount in the case of Units initially offered
at less than $1,000 (e.g., .001 per Unit in the case of Units initially offered
at approximately $1.00).
The Trustee shall compute the amount of the Distribution from
the Income Account (i) by subtracting from the cash balance of the Income
Account computed as of the close of business on such Record Date (a) any unpaid
fees and expenses then deductible pursuant to the foregoing provisions of
Section 3.5 and (b) the Trustee's estimate of other expenses chargeable to the
Income Account pursuant to the Indenture which have accrued as of such Record
Date, or are otherwise properly attributable to the period to which such Income
Distribution relates and (ii)
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by dividing the result of such calculation by the number of Units outstanding on
the applicable Record Date.
The amounts to be so distributed to each Unitholder of the
Trust of record as of each Record Date shall be that pro rata share of the cash
balance as of such Record Date of the Income and Principal Accounts of the
Trust, computed as set forth above, as shall be represented by a notation of the
Units owned by such Unitholder on the registration or other record books of the
Trustee.
In the computation of each such share, fractions of less than
one cent shall be omitted. After any such distribution provided for above, any
cash balance remaining in the Income Account or the Principal Account shall be
held in the same manner as other amounts subsequently deposited in each of such
Accounts, respectively.
For the purpose of distribution as herein provided, the
holders of record on the registration books of the Trustee at the close of
business on each Record Date shall be conclusively entitled to such
distribution, and no liability shall attach to the Trustee by reason of payment
to any such registered Unitholder of record. Nothing herein shall be construed
to prevent the payment of amounts from the Income Account and the Principal
Account to individual Unitholders by means of one check, draft or other proper
instrument, provided that the appropriate statement of such distribution shall
be furnished therein as provided in Section 3.6 hereof.
Section 3.6. Distribution Statements: With each distribution
from the Income or Principal Accounts the Trustee shall set forth, either in the
instrument by means of which payment of such distribution is made or in any
accompanying statement the amount being distributed from each such account
expressed as a dollar amount per Unit.
Within a reasonable period of time after the last business day
of each calendar year, the Trustee shall furnish to each person who at any time
during such calendar year was a Unitholder a statement setting forth, with
respect to such calendar year:
(A) as to the Income Account:
(1) the amount of dividends received on the Securities,
(2) the amounts paid from the Income Account for
redemptions pursuant to Section 5.2,
(3) the deductions for applicable taxes and fees and
expenses of the Trustee and counsel pursuant to Section 3.9, accrued
organization expenses, the annual audit fees referred to in Section
6.2, and the annual fees of the Depositors for portfolio supervisory
services pursuant to Section 7.4,
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(4) the amount distributed from the Income Account,
identifying separately amounts distributed as dividends and as other
income,
(5) any other amount credited to or deducted from the
Income Account, and
(6) the balance remaining after such distributions
and deductions, expressed both as a total dollar amount and as a dollar
amount per Unit outstanding on the last business day of such calendar
year;
(B) as to the Principal Account:
(1) The number of shares of each issue of Securities
sold or liquidated, and the aggregate net proceeds received with
respect to each issue, excluding any portion thereof credited to the
Income Account,
(2) the amounts paid from the Principal Account for
redemption pursuant to Section 5.2,
(3) the deductions for payment of applicable taxes
and fees and expenses of the Trustee and counsel pursuant to Section
3.9, accrued organizational expenses, Deferred Sales Charge, the annual
audit fees referred to in Section 6.2, and the annual fee of the
Depositors for portfolio supervisory services pursuant to Section 7.4,
and
(4) the balance remaining after such distributions
and deductions, expressed both as a total dollar amount and as a dollar
amount per Unit outstanding on the last business day of such calendar
year; and
(C) the following information:
(1) a list of Securities held in the Trust as of the
last business day of such calendar year,
(2) the number of Units outstanding on the last
business day of such calendar year,
(3) the Net Asset Value per Unit based on the last
Trust Evaluation made during such calendar year, and
(4) the amounts actually distributed to Unitholders
during such calendar year from the Income and Principal Accounts,
separately stated, expressed both as total dollar amounts and as dollar
amounts per Unit outstanding on the Record Dates for such
distributions.
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Section 3.7. Substitute Securities: In the event that any
Contract Security or Security to be purchased pursuant to a contract entered
into by the Trustee in accordance with Section 2.5 is not delivered due to any
occurrence, act or event beyond the control of the Depositors and of the Trustee
(such a Contract Security being herein called a "Failed Security"), the
Depositors may instruct the Trustee to purchase Substitute Securities which have
been selected by the Depositors having a cost not in excess of the cost of the
Failed Securities. To be eligible for inclusion in the Trust, the Substitute
Securities which the Depositors select must: (a) be of the same type as that
replaced (e.g., both will be common stock or preferred stock); (b) in the
Depositors' judgment, be substantially similar to the Failed Security, as the
case may be, as respects the investment characteristics which led the Depositors
to select the Failed Security for inclusion in the Trust; and (c) be purchased
prior to, simultaneously with, or no more than twenty days after delivery of
written notice to the Trustee or Depositors, as appropriate, of the failed
contract (the "Failed Contract Notice").
Any Substitute Securities received by the Trustee shall be
deposited hereunder and shall be subject to the terms and conditions of this
Indenture to the same extent as other Securities deposited hereunder. No such
deposit of Substitute Securities shall be made after the earlier of (i) 90 days
after the date of execution and delivery of the applicable Reference Trust
Agreement or (ii) the first Distribution Date to occur after the date of
execution and delivery of the applicable Reference Trust Agreement.
Whenever a Substitute Security is acquired by the Trust
pursuant to the provisions of this Section 3.7, the Trustee shall, within five
days thereafter, mail to all Unitholders notices of such acquisition, including
an identification of the Failed Security and the Substitute Security acquired.
The purchase price of a Substitute Security shall be paid out of the funds in
the principal account attributable to the Failed Security which it replaces. The
Trustee shall not be liable or responsible in any way for depreciation or loss
incurred by reason of any purchase made pursuant to any such instructions from
the Depositors and in the absence of such instructions the Trustee shall have no
duty to purchase any Substitute Securities under this Indenture. The Depositors
shall not be liable for any failure to instruct the Trustee to purchase any
Substitute Security or for errors of judgment in selecting any Substitute
Security.
Section 3.8. Sale of Securities: In order to maintain the
sound investment character of the Trust, the Depositors may direct the Trustee
to sell or liquidate Securities at such price and time and in such manner as
shall be determined by the Depositors, provided that the Depositors have
determined that any one or more of the following conditions exist:
(1) default in payment of amounts due on any of the Securities;
(2) institution of legal proceedings in law or equity seeking to
restrain or enjoin the payment of amounts due or declaration or payment of
regular dividends;
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(3) default under certain documents materially and adversely
affecting future declaration or payment of amounts due or expected;
(4) determination of the Depositors that the tax treatment of the
Trust as a grantor trust would otherwise be jeopardized; or
(5) decline in price that is a direct result of serious adverse
credit factors affecting the issuer of a Security which, in the opinion of the
Depositors, would make the retention of the security detrimental to the Trust or
the Unitholders.
Upon receipt of such direction from the Depositors, upon which
the Trustee shall rely, the Trustee shall proceed to sell the specified Security
in accordance with such direction. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by reason of any sale
made pursuant to any such direction or by reason of the failure of the
Depositors to give any such direction, and in the absence of such direction the
Trustee shall have no duty to sell any Securities under this Section 3.8.
Section 3.9. Counsel: The Depositors may employ from time to
time as it may deem necessary a firm of attorneys for any legal services that
may be required in connection with the disposition of Securities pursuant to
Section 3.8. The fees and expenses of such counsel shall be paid by the Trustee
from the Interest and Principal Accounts as provided for in Section 3.5(c)
hereof.
Section 3.10. Notice and Sale by Trustee: If at any time there
has been a failure by the issuer to pay a dividend that is due and payable, the
Trustee shall notify the Depositors thereof. If within thirty days after such
notification the Trustee has not received any instruction from the Depositors to
sell or to hold or to take any other action in connection with such Securities,
the Trustee shall sell such Securities forthwith, and the Trustee shall not be
liable or responsible in any way for depreciation or loss incurred by reason of
such sale or by reason of any action or inaction in accordance with such written
instructions of the Depositors. The Trustee shall promptly notify the Depositors
of such action in writing and shall set forth therein the Securities sold and
the proceeds received therefrom.
Section 3.11. Reorganization and Similar Events: In the event
that an offer by the issuer of any of the Securities or any other party shall be
made to issue new Securities, the Trustee shall reject such offer. However,
should any exchange or substitution be effected notwithstanding such rejection
or without an initial offer, any Securities, cash and/or property received in
exchange shall be deposited hereunder and shall be promptly sold, if securities
or property, by the Trustee pursuant to the Depositors' direction, unless the
Depositors advise the Trustee to retain such securities or property. The cash
received in such exchange and cash proceeds of any such sales shall be
distributed to Unitholders on the next Distribution Date in the manner set forth
in Section 3.5 regarding distributions from the Principal Account. This section
shall apply, but its application shall not be limited, to public tender offers,
mergers, acquisitions, reorganizations and
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recapitalizations. Unless the Depositors direct that notice be otherwise
provided, the Trustee shall include notice of any Security so acquired in the
annual statement provided to Unitholders pursuant to Section 3.6. Neither the
Depositors nor the Trustee shall be liable to any person for action or failure
to take action pursuant to the terms of this Section 3.11.
Section 3.12. Notice of Actions: In the event that the Trustee
shall have been notified at any time of any action to be taken or proposed to be
taken by holders of any Securities held by the Trust (including, but not limited
to, the making of any demand, direction, request, giving of any notice, consent
or waiver or the voting with respect to election of directors or any amendment
or supplement to any corporate resolution, agreement or other instrument under
or pursuant to which such Securities have been issued) the Trustee shall
promptly notify the Depositors and shall thereupon take such action or refrain
from taking any action as the Depositors shall in writing direct; provided,
however, that if the Depositors shall not within five business days of the
giving of such notice to the Depositors direct the Trustee to take or refrain
from taking any action, the Trustee shall take such action as it, in its sole
discretion, shall deem advisable. Neither the Depositors nor the Trustee shall
be liable to any person for any action or failure to take action with respect to
this section.
Section 3.13. Notice of Change in Principal Account: The
Trustee shall give prompt written notice to the Depositors of all amounts
credited to or withdrawn from the Principal Account pursuant to any provisions
of this Article III, and the balance of such account after giving effect to such
credit or withdrawal.
Section 3.14. Extraordinary Distributions: Any property
received by the Trustee after the initial date of Deposit in a form other than
cash or additional shares of the Securities listed in the Reference Trust
Agreement or of a Substitute Security, which shall be retained by the Trust,
shall be dealt with in the manner described in Section 3.11 and shall be
retained or disposed by the Trustee according to those provisions, provided,
however, that no property shall be retained which the Trustee determines shall
adversely affect its duties hereunder. The proceeds of any disposition shall be
credited to the Income or Principal Account of the Trust, as the Depositors may
direct.
The Trust is intended to be treated as a fixed investment
(i.e., grantor) trust for income tax purposes, and its powers shall be limited
in accordance with the restrictions imposed on such trusts by Treas. Reg.
Section 301.7701-4.
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ARTICLE 4
EVALUATION OF SECURITIES
Section 4.1. Evaluation of Securities: The Trustee shall
determine separately and promptly furnish to the Depositors upon request the
value of each issue of the Securities in the Trust (determined as set forth
below) as of the Evaluation Time on each of the days on which the Trustee shall
make the Trust Evaluation required by Section 5.1. The value of each issue of
Securities shall be determined in good faith by the Trustee in accordance with
the following procedures: If the Securities are listed on one or more national
securities exchanges, such valuation shall be based on the last purchase price
on such exchange which is the principal market thereof, deemed to be the New
York Stock Exchange if the Securities are listed thereon (unless the Trustee
deems such price inappropriate as a basis for valuation). If the Securities are
not so listed, or, if so listed and the principal market therefor is other than
such exchange or there is no purchase price on such exchange, such valuation
shall be based on the last purchase price in the over-the-counter market (unless
the Trustee deems such price inappropriate as a basis for valuation) or if there
is no such purchase price, then the Trustee may utilize, at the Trust's expense,
an independent evaluation service or services to ascertain the values of the
Securities. The independent evaluation service shall use any of the following
methods, or a combination thereof, which it deems appropriate: (a) on the basis
of current bid prices of such Securities as obtained from investment dealers or
brokers (including the Depositors) who customarily deal in securities comparable
to those held by the Trust, or (b) if bid prices are not available for any of
such Securities, on the basis of bid prices for comparable securities, or (c) by
appraisal of the value of the Securities on the bid side of the market or by
such other appraisal as is deemed appropriate, or (d) by any combination of the
above. The Trustee shall be permitted to rely on these evaluations when
determining the Unit Price. The Trustee shall have no responsibility or
liability for the valuations supplied to it by the independent evaluation
service. The Trustee shall also make an evaluation of the Securities deposited
in the Trust as of the time said Securities are deposited under this Indenture
pursuant to Section 2.1. Such evaluation shall be made on the same basis as set
forth above and shall be included in the Schedules attached to the Reference
Trust Agreement.
Section 4.2. Tax Reports: For the purpose of permitting
Unitholders to satisfy any reporting requirements of applicable Federal or State
tax law, the Trustee shall transmit to any Unitholder upon written request any
determinations made by the Trustee pursuant to Section 4.1.
Section 4.3. Liability of Trustee with respect to Evaluations:
The Depositors and the Unitholders may rely on any evaluation furnished by the
Trustee and shall have no responsibility for the accuracy thereof. The
determinations made by the Trustee hereunder shall be made in good faith upon
the basis of, and shall have no liability for errors in, the information
reasonably available to it. The Trustee shall be under no liability to the
Depositors or the Unitholders for errors in information obtained from any
pricing service or similar source of information selected by the Trustee with
reasonable care, or for errors in judgment or any action
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taken in good faith, provided, however, that this provision shall not protect
the Trustee against any liability to which it would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties hereunder.
ARTICLE 5
TRUST EVALUATION, REDEMPTION, PURCHASE, TRANSFER,
INTERCHANGE OR REPLACEMENT OF CERTIFICATES
Section 5.1. Trust Evaluation: The Trustee shall make an
evaluation of the Trust as of the close of trading on the New York Stock
Exchange (sometimes referred to herein as the "Evaluation Time") (1) on the last
Business Day of each of the months of June and December, (2) on the day on which
any unit of the Trust is tendered for redemption (unless tender is made after
the Evaluation Time on such day, in which case Tender shall be deemed to have
been made on the next day subsequent thereto on which the New York Stock
Exchange is open for trading), and (3) on any other day desired by the Trustee
or requested by the Depositors. Such evaluations shall take into account and
itemize separately (a)(1) the cash on hand in the Trust (other than monies on
deposit in the Reserve Account, funds deposited on the date hereof by the
Depositors for the purchase of Securities and not theretofore credited to the
Principal Account pursuant to Section 3.3 and funds in the Principal Account
with respect to which contracts for the purchase of the Substitute Securities
have been entered into pursuant to Section 3.7 hereof), including dividends
receivable on stocks trading ex dividend, (a)(2) the value of each issue of the
Securities in the Trust as determined by the Trustee pursuant to Section 4.1 and
(a)(3) all other assets of the Trust. For each such evaluation there shall be
deducted from the sum of the above (b)(1) amounts representing any applicable
taxes or other governmental charges payable out of the Trust and for which no
deductions shall have previously been made for the purpose of addition to the
Reserve Account, (b)(2) amounts representing accrued fees of the Trustee and
expenses of the Trust including but not limited to unpaid fees of the Trustee
and expenses of the Trust (including legal and auditing expenses), accrued fees
and expenses of the Depositors and their successors, if any, (b)(3) cash held
for distribution to Unitholders of record as of a date on or prior to the
evaluation then being made and (b)(4) unpaid organizational and offering costs
in the estimated amount per Unit set forth in the Prospectus. The value of the
pro rata share of each unit of the Trust determined on the basis of any such
evaluation shall be referred to herein as the "Unit Value."
The sum of (a)(1) and (a)(3) reduced by the sum of (b)(1),
(b)(2), (b)(3) and (b)(4) shall be referred to herein as the "Unit Cash Value".
The Trustee shall promptly advise the Depositors of each
determination of Unit Value made by it as above provided, and, in addition, upon
each valuation by the Trustee under Section 4.1 other than those involved in
such calculations of Unit Value, the Trustee shall promptly furnish to the
Depositors, for purposes of assisting them in maintaining a market in the
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Units, with such information regarding the Principal, Income and Reserve
Accounts as the Depositors may reasonably request.
Section 5.2. Redemptions by Trustee; Purchases by Depositors:
Any Unit tendered for redemption by a Unitholder or his duly authorized attorney
to the Trustee at its unit investment trust office by the registered holder
thereof pursuant to the Redemption Form, shall be redeemed by the Trustee on the
third business day following the day on which tender for redemption is made
(such third business day being herein called the "Redemption Date"). Subject to
payment by such Unitholder of any tax or other governmental charges which may be
imposed thereon, such redemption is to be made by payment on the Redemption Date
of cash equivalent to the Net Asset Value per Unit determined by the Trustee as
of the Evaluation Time on the date of tender, multiplied by the number of Units
being tendered for redemption (herein called the "Redemption Price"). Units
received for redemption by the Trustee on any day after the Evaluation Time will
be held by the Trustee until the next day on which the New York Stock Exchange
is open for trading and will be deemed to have been tendered on such day for
redemption at the Redemption Price computed on that day.
The Trustee may in its discretion, and shall when so directed
by the Depositors in writing, suspend the right of redemption or postpone the
date of payment of the Redemption Price for more than three business days
following the day on which tender for redemption is made:
(1) for any period during which the New York Stock Exchange is
closed other than customary weekend and holiday closings or during
which trading on the New York Stock Exchange is restricted;
(2) for any period during which an emergency exists as a
result of which disposal by the Trust of the Securities is not
reasonably practicable or it is not reasonably practicable fairly to
determine in accordance herewith the value of the Securities; or
(3) for such other periods as the Securities and Exchange
Commission may by order permit,
and the Trustee shall not be liable to any person or in any way for any loss or
damage which may result from any such suspension or postponement.
Not later than the close of business on the day of tender of a
Unit for redemption by a Unitholder other than the Depositors, the Trustee shall
notify the Depositors of such tender. The Depositors shall have the right to
purchase such Unit by notifying the Trustee of their election to make such
purchase as soon as practicable thereafter, but in no event subsequent to the
close of business on the business day on which such Unit was tendered for
redemption. Such purchase shall be made by payment for such Unit by the
Depositors to the Unitholder not later than the close of business on the
Redemption Date of an amount equal to the Redemption Price which would otherwise
be payable by the Trustee to such Unitholder.
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Any Unit so purchased by the Depositors may, at the option of
the Depositors, be tendered to the Trustee for redemption at the corporate trust
office of the Trustee in the manner provided in the first paragraph of this
Section 5.2.
If the Depositors do not elect to purchase any Unit tendered
to the Trustee for redemption, or if a Unit is being tendered by the Depositors
for redemption, that portion of the Redemption Price which represents dividends
shall be withdrawn from the Income Account to the extent funds are available.
The balance paid on any redemption, including accrued dividends, if any, shall
be withdrawn from the Principal Account to the extent that funds are available
for such purpose. If such available balance shall be insufficient, the Trustee
shall sell such Securities from among those designated on the current list for
such purpose as provided below and in the manner, in its discretion, as it shall
deem advisable or necessary in order to fund the Principal Account for purposes
of such redemption. Sales of Securities by the Trustee shall be made in such
manner as the Trustee shall determine, subject to any minimum amount limitations
on sale which shall have been specified by the Depositors and agreed to by the
Trustee. In the event that funds are withdrawn from the Principal Account or
Securities are sold for payment of any portion of the Redemption Price
representing accrued dividends, the Principal Account shall be reimbursed when
sufficient funds are next available in the Income Account for such funds so
applied.
The Depositors shall maintain with the Trustee a current list
of Securities designated to be sold for the purpose of redemption of Units
tendered for redemption and not purchased by the Depositors, and for payment of
expenses hereunder, provided that if the Depositors shall for any reason fail to
maintain such a list, the Trustee, in its sole discretion, may designate a
current list of Securities for such purposes. The net proceeds of any sales of
Securities from such list representing principal shall be credited to the
Principal Account and the proceeds of such sales representing accrued interest
shall be credited to the Income Account.
Neither the Trustee nor the Depositors shall be liable or
responsible in any way for depreciation or loss incurred by reason of any sale
of Securities made pursuant to this Section 5.2.
Units redeemed pursuant to this Section 5.2 shall be canceled
by the Trustee and the Units tendered by Redemption Forms shall be terminated by
such redemptions.
If the related Prospectus for the Trust so provides, a
Unitholder who tenders for redemption Units in an aggregate amount of at least
the amount specified in the Prospectus may request, at the time of tender, to
receive an In Kind Distribution in lieu of cash. Such In Kind Distribution shall
consist of (i) such Unitholder's pro rata portion of each of the Securities, to
the extent of whole shares, and (ii) cash equal to such Unitholder's pro rata
portion of the Income and Principal Accounts follows: (x) a pro rata portion of
the net proceeds of sale of the Securities representing any fractional shares
included in such Unitholder's pro rata share of the Securities and (y) such
other cash as may properly be included in such Unitholder's pro rata share of
the sum of the cash balances of the Income and Principal Accounts in an amount
equal to the Redemption Price on the date of tender less amounts specified in
clauses (i) and (ii)(x) of this sentence. The
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Trustee shall distribute the Unitholder's Securities to the account of the
Unitholder's bank or broker dealer at the DTC. An In Kind Distribution shall be
reduced by customary transfer and registration charges incurred by the Trustee.
Notwithstanding the foregoing provisions of this Section 5.2,
the Trustee is hereby irrevocably authorized in its discretion, in the event
that the Depositors do not elect to purchase any Unit tendered to the Trustee
for redemption (other than Units as to which a valid request for In Kind
Redemption has been made), or in the event that a Unit is being tendered by the
Depositors for redemption, in lieu of redeeming Units tendered for redemption,
to sell such Units in the over-the-counter market or by private sale for the
account of tendering Unitholders at prices which will return to the Unitholders
amounts in cash, net after deducting brokerage commissions, transfer taxes and
other charges, equal to or in excess of the Redemption Prices which such
Unitholders would otherwise be entitled to receive on redemption pursuant to
this Section 5.2. The Trustee shall pay to the Unitholders the net proceeds of
any such sale on the day they would otherwise be entitled to receive payment of
the Redemption Price hereunder.
Section 5.3. Depositor Redemptions: Units tendered for
redemption by the Depositors on any Business Day shall be deemed to have been
tendered before the Evaluation Time on such Business Day provided that the
tendering Depositor advises the Trustee in writing (which may be electronic
transmission) of such tender before the later of 5:00 p.m. New York City time
and the Trustee's close of business on such Business day. By such advice, the
Depositor will be deemed to certify that all Units so tendered were either(a)
tendered to the Depositors or to a retail dealer between the Evaluation Time on
the preceding Business Day and the Evaluation Time on such Business Day or (b)
acquired previously but which the Depositor determined to redeem prior to the
Evaluation Time on such Business Day. On or before payment of the Redemption
Price, the Depositor shall assign or deliver to the Trustee such documents which
the Trustee shall reasonably require to effect the redemption of those Units.
Section 5.4. Units to be Held Only Through the Depository
Trust Company or a Successor Clearing Agency: No Unit may be registered in the
name of any person other than DTC or its nominee (or such other clearing agency
registered as such pursuant to Section 17A of the nominee thereof) (DTC and any
such successor clearing agency are herein referred to as the "Clearing Agency")
unless the Clearing Agency advises the Trustee that it is no longer willing or
able properly to discharge its responsibilities with respect to the Units and
the Trustee is unable to locate a qualified successor clearing agency, in which
case the Trustee shall notify the Clearing Agency and instruct it to provide the
Trustee with the name and address of all persons who are the beneficial owners
of Units as registered on the books of the Clearing Agency (the "Owners"). So
long as a Clearing Agency is the registered holder of the Units, it shall be the
registered holder of the Units for all purposes under this Indenture and the
Owners shall hold their interest in the Units pursuant to such Clearing Agency's
applicable procedures. The Trustee shall be entitled to deal with any Clearing
Agency for all purposes of this Indenture (including the payment of
distributions on the Units and giving of instructions or directions by or to the
Owners) as the sole Unitholder of the Units and shall have no obligations to the
Owners. The rights of the Owners
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shall be exercised only through the Clearing Agency and shall be limited to
those established by law, the applicable procedures of the Clearing Agency and
the agreements between the Owners and the Clearing Agency and its participants.
None of the Depositors nor the Trustee shall have any liability in respect of
any transfers of Units effected by any Clearing Agency. All provisions of this
Indenture relating to the ownership and transfer of Units shall be construed to
effectuate the provisions of this Section.
ARTICLE 6
TRUSTEE; REMOVAL OF DEPOSITORS
Section 6.1. General Definition of Trustee's Liabilities,
Rights and Duties; Removal of Depositors: In addition to and notwithstanding the
other duties, rights, privileges and liabilities of the Trustee otherwise set
forth herein, the liabilities of the Trustee are further defined as follows:
(a) All moneys deposited with or received by the Trustee
hereunder shall be held by the Trustee without interest in trust as part of the
Trust or the Reserve Account until required to be disbursed in accordance with
the provisions of this Indenture and such moneys will be segregated by separate
recordation on the trust ledgers of the Trustee so long as such practice
preserves a valid preference under applicable law, or if such preference is not
so preserved the Trustee shall handle such moneys in such other manner as shall
constitute the segregation and holding thereof in trust within the meaning of
the Investment Company Act of 1940.
(b) The Trustee shall be under no liability for any action
taken in good faith on any appraisal, paper, order, list, demand, request,
consent, affidavit, notice, opinion, direction, evaluation, endorsement,
assignment, resolution, draft or other document, whether or not of the same
kind, prima facie properly executed, or for the disposition of moneys,
Securities or Units pursuant to this Indenture, or in respect of any evaluation
which the Trustee is required to make or is required or permitted to have made
by others under this Indenture or otherwise except by reason of its gross
negligence, lack of good faith or willful misconduct, provided that the Trustee
shall not in any event be liable or responsible for any evaluation made by any
independent evaluation service employed by it pursuant to Section 4.1. The
Trustee may construe any of the provisions of this Indenture, insofar as the
same may appear to be ambiguous or inconsistent with any other provisions
hereof, and any construction of any such provisions hereof by the Trustee in
good faith shall be binding upon the parties hereto. The Trustee shall in no
event be deemed to have assumed or incurred any liability, duty or obligation to
any Unitholder or the Depositors, other than as expressly provided for herein.
(c) The Trustee shall not be responsible for or in respect of
the recitals herein, the validity or sufficiency of this Indenture or for the
due execution hereof by the Depositors, or for the form, character, genuineness,
sufficiency, value or validity of any letter of credit held
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hereunder or any Securities (except that the Trustee shall be responsible for
the exercise of due care in determining the genuineness of Securities delivered
to it pursuant to contracts for the purchase of such Securities) or for or in
respect of the validity or sufficiency of the Units or of the due execution
thereof by the Depositors, and the Trustee shall in no event assume or incur any
liability, duty or obligation to any Unitholder or the Depositors other than as
expressly provided for herein. The Trustee shall not be responsible for or in
respect of the validity of any signature by or on behalf of the Depositors.
(d) The Trustee shall not be under any obligation to appear
in, prosecute or defend any action, which in its opinion may involve it in
expense or liability, unless as often as required, it shall be furnished with
reasonable security and indemnity against such expense or liability as it may
require, and any pecuniary cost of the Trustee from such actions shall be
deductible from and a charge against the Income and Principal Accounts. The
Trustee shall in its discretion undertake such action as it may deem necessary
at any and all times to protect the Trust and the rights and interests of the
Unitholders pursuant to the terms of this Indenture, provided, however, that the
expenses and costs of such actions, undertakings or proceedings shall be
reimbursable to the Trustee from the Income and Principal Accounts, and the
payment of such costs and expenses shall be secured by a lien on the Trust prior
to the interests of the Unitholders.
(e) The Trustee may employ agents, attorneys, accountants and
auditors and shall not be answerable for the default or misconduct of any such
agents, attorneys, accountants or auditors if such agents, attorneys,
accountants or auditors shall have been selected with reasonable care; provided,
however, that if the Trustee chooses to employ DTC in connection with the
storage and handling of, and the furnishing of administrative services in
connection with the Securities, the Trustee will be answerable for any default
or misconduct of DTC and its employees and agents as fully and to the same
extent as if such default or misconduct had been committed or occasioned by the
Trustee. The Trustee shall be fully protected in respect of any action under
this Agreement taken, or suffered, in good faith by the Trustee, in accordance
with the opinion of its counsel, which may be counsel to the Depositors
acceptable to the Trustee. The fees and expenses charged by such agents,
attorneys, accountants or auditors shall constitute an expense of the Trustee
reimbursable from the Income and Principal Accounts as set forth in Section 3.5
hereof.
(f) Other than as provided in Article 7 hereunder, if at any
time there is only one Depositor acting hereunder and said Depositor shall
resign or fail to undertake or perform or become incapable of undertaking or
performing any of the duties which by the terms of this Indenture are required
by it to be undertaken or performed and no express provision is made for action
to be taken by the Trustee in such event, or said Depositor shall be adjudged
bankrupt or insolvent, or a receiver of such Depositor or of its property shall
be appointed, or any public officer shall take charge or control of such
Depositor or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then in any such case, the Trustee may, in its sole
discretion, do any one or more of the following: (1) appoint a successor
Depositor who shall act hereunder in all respects in place of the Depositor, who
shall be compensated semi-annually, at
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rates deemed by the Trustee to be reasonable under the circumstances, by
deduction from the Income Account or from the Principal Account, but no such
deduction shall be made exceeding such reasonable amount as the Securities and
Exchange Commission may prescribe in accordance with Section 26(a)(2)(C) of the
Investment Company Act of 1940; (2) terminate this Indenture and the Trust
created hereby and liquidate the Trust, all in the manner provided in Section
9.2.; or (3) continue to act as Trustee hereunder without terminating this
Indenture, acting in its own absolute discretion without appointing any
successor Depositor and assuming such of the duties and responsibilities of the
Depositor hereunder as the Trustee determines, in its absolute discretion, are
necessary or desirable for the administration and preservation of the Trust, and
receiving additional compensation at rates determined as provided in clause (1).
If the Trustee continues so to act, it is authorized to employ one or more
agents to perform portfolio supervisory services and such other of the services
of the Depositors hereunder as the Trustee determines, in its sole discretion,
to be necessary or desirable. The fees and expenses of such agent or agents
shall be charged to the Trust in accordance with Section 6.4. All provisions of
this Indenture relating to the liability and indemnification of the Trustee,
including, without limitation, subparagraph (e) of this Section, shall apply to
any responsibility assumed or action taken by the Trustee pursuant to this
subparagraph.
(g) If the value of the Trust as shown by any evaluation by
the Trustee pursuant to Section 5.1 hereof shall be less than the liquidation
amount specified in Part II of the Reference Trust Agreement, the Trustee may in
its discretion, and shall, when so directed by the Depositors, terminate this
Indenture and the Trust created hereby and liquidate the Trust, all in the
manner provided in Section 9.2.
(h) In no event shall the Trustee be liable for any taxes or
other governmental charges imposed upon or in respect of the Securities or upon
the dividends thereon or upon it as Trustee hereunder or upon or in respect of
the Trust which it may be required to pay under any present or future law of the
United States of America or any other taxing authority having jurisdiction in
the premises. For all such taxes and charges and for any expenses, including
counsel fees, which the Trustee may sustain or incur with respect to such taxes
or charges, the Trustee shall be reimbursed and indemnified out of the Income
and Principal Accounts of the Trust, and the payment of such amounts so paid by
the Trustee shall be secured by a lien on the Trust prior to the interests of
the Unitholders.
(i) The Trustee, except by reason of its gross negligence,
lack of good faith, reckless disregard of its obligations hereunder or willful
misconduct, shall not be liable for any action taken or suffered to be taken 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 Indenture.
(j) Notwithstanding anything in this Indenture to the
contrary, the Trustee is authorized and empowered to enter into any safekeeping
arrangement or arrangements it deems necessary or appropriate for holding the
Securities then owned by the Trust and the Trustee is authorized and empowered
in its sole right to amend, supplement or terminate any safekeeping
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arrangement or arrangements made under this provision. In addition, the Trustee
is authorized and empowered, at the request and discretion of the Depositors, to
execute and file on behalf of the Trust any and all documents, in connection
with consents to service of process, required to be filed under the securities
laws of the various States in order to permit the sale of Units of the Trust in
such States by the Depositors.
(k) The Trustee in its individual or any other capacity may
become owner or pledgee or, or be an underwriter or dealer in respect of, stock,
bonds or other obligations issued by the same issuer (or an affiliate of such
issuer) or any obligor of any Securities at any time held as part of the Trust
and may deal in any manner with the same or with the issuer (or an affiliate of
the issuer) with the same rights and powers as if it were not the Trustee
hereunder.
(l) The Trust may include a letter or letters of credit for
the purchase of Contract Securities or Additional Securities issued by the
Trustee in its individual capacity for the account of the Depositors, and the
Trustee may otherwise deal with the Depositors with the same rights and powers
as if it were not the Trustee hereunder.
Section 6.2. Books, Records and Reports: The Trustee shall
keep proper books of record and account of all the transactions under this
Indenture at its unit investment trust office including a record of the name and
address of, and the Units issued by the Trust and held by, every Unitholder, and
such books and records shall be open to inspection by any Unitholder at all
reasonable times during the usual business hours, and such books and records
shall be made available to the Depositors upon the request of the Depositors
including, but not limited to, a record of the name and address of every
Unitholder.
Unless the Depositors otherwise direct, the Trustee shall
cause audited statements as to the assets and income of the Trust to be prepared
on an annual basis by independent public accountants selected by the Depositors,
provided, however, that if the Depositors are then making a market for units of
the Trust, the Depositors shall bear the cost of such audit to the extent that
it exceeds $.50/unit of approximately $1000 initial value (or such proportionate
amount in the case of units of greater or lesser initial value). Such audited
statement will be made available to Unitholders upon request.
To the extent permitted under the Investment Company Act of
1940 as evidenced by an opinion of counsel to the Depositors, reasonably
acceptable to the Trustee, the Trustee shall pay, or reimburse to the Depositors
or others, the costs of the preparation of documents and information with
respect to the Trust required by law or regulation in connection with the
maintenance of a secondary market in units of the Trust. Such costs may include
but are not limited to accounting and legal fees, blue sky registration and
filing fees, printing expenses and other reasonable expenses related to
documents required under Federal and state securities laws.
The Trustee shall make such annual or other reports as may
from time to time be required under any applicable state or federal statute or
rule or regulation thereunder.
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Section 6.3. Indenture and List of Securities on File: The
Trustee shall keep a certified copy or duplicate original of this Indenture on
file at its unit investment trust office available for inspection at all
reasonable times during the usual business hours by any Unitholder and the
Trustee shall keep and so make available for inspection a current list of the
Securities.
Section 6.4. Compensation: For services performed under this
Indenture the Trustee shall be paid at the rate per annum set forth in Part II
of the Reference Trust Agreement which shall be computed on the basis of the
greatest number of Units of the Trust outstanding at any time during the period
with respect to which such compensation is being computed. The Trustee may from
time to time adjust its compensation as set forth above provided that the total
adjustment upward does not, at the time of such adjustment, exceed the
percentage of the total increase, after the date hereof, in consumer prices for
services as measured by the United States Department of Labor Consumer Price
Index entitled "All Services Less Rent," or, if such index shall cease to be
published, then as measured by the available index most nearly comparable to
such index. The consent or concurrence of any Unitholder hereunder shall not be
required for any such adjustment or increase, however, the consent of the
Depositors shall be required. Such compensation shall be charged by the Trustee
against the Income and Principal Accounts at the time provided in Section 3.5
provided, however, that such compensation shall be deemed to provide only for
the usual normal and recurring functions undertaken as Trustee pursuant to this
Indenture.
The Trustee shall charge the Income and Principal Accounts at
such times as shall be convenient in its administration of the Trust any and all
expenses, including the fees of counsel which may be retained by the Trustee in
connection with its activities hereunder, and disbursements incurred hereunder
and any extraordinary services performed by the Trustee hereunder. The Trustee
shall be indemnified and held harmless against any loss or liability accruing to
it without gross negligence, bad faith or willful misconduct on its part,
arising out of or in connection with the acceptance or administration of this
trust, including the costs and expenses (including counsel fees) of defending
itself against any claim of liability in the premises. If the cash balances in
the Income and Principal Accounts shall be insufficient to provide for amounts
payable pursuant to this Section 6.4, the Trustee shall have the power to sell
(1) Securities from the current list of Securities designated to be sold
pursuant to Section 5.2 hereof, or (2) if no such Securities have been so
designated, such Securities as the Trustee may see fit to sell in its own
discretion, and to apply the proceeds of any such sale in payment of the amounts
payable pursuant to this Section 6.4. The Trustee shall not be liable or
responsible in any way for depreciation or loss incurred by reason of any sale
of Securities made pursuant to this Section 6.4. Any moneys payable to the
Trustee pursuant to this section shall be secured by a prior lien on the Trust.
Section 6.5. Removal and Resignation of the Trustee;
Successor: The following provisions shall provide for the removal and
resignation of the Trustee and the appointment of any successor Trustee:
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(a) any resignation or removal of the Trustee and appointment
of a successor pursuant to this section shall not become effective until
acceptance of appointment by the successor Trustee as provided in subsection (b)
hereof;
(b) the Trustee or any trustee hereafter appointed may resign
and be discharged of the trust created by this Indenture by executing an
instrument in writing resigning as such Trustee, filing the same with the
Depositors and mailing a copy of a notice of resignation to all Unitholders then
on record not less than sixty days before the date specified in such instrument
when, subject to Section 6.5(d), such resignation is to take effect. Upon
receiving such notice of resignation, the Depositors shall use their best
efforts to promptly appoint a successor Trustee as hereinafter provided, by
written instrument, in duplicate, one copy of which shall be delivered to the
resigning Trustee and one copy to the successor Trustee. In case at any time the
Trustee shall become incapable of acting or shall be deemed incapable of acting
by the written consent of holders owning beneficially 66 2/3% of the outstanding
Units comprising a particular series, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purposes of rehabilitation, conservation, or
liquidation, then in any such case the Depositors may remove the Trustee and
appoint a successor Trustee by written instrument, in duplicate, one copy of
which shall be delivered to the Trustee so removed and one copy to the successor
Trustee; provided that notice of such removal and appointment of a successor
shall be given to each Unitholder then of record;
(c) any successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Depositors and the retiring Trustee an instrument
accepting such appointment hereunder, and such successor Trustee without any
further act, deed or conveyance shall become vested with all the rights, powers,
duties and obligations of its predecessor hereunder with like effect as if
originally named Trustee herein and shall be bound by all the terms and
conditions of this Indenture provided, however, that no successor trustee shall
be under any liability hereunder for occurrences or omissions prior to the
execution of such instrument. Upon the request of such successor Trustee, the
Depositors and the retiring Trustee shall, upon payment of any amounts due the
retiring Trustee or provision therefor to the satisfaction of such retiring
Trustee, execute and deliver an instrument acknowledged by it transferring to
such successor trustee all the rights and powers of the retiring Trustee; and
the retiring Trustee shall transfer, deliver and pay over to the successor
Trustee all Securities and moneys at the time held by it hereunder, together
with all necessary instruments of transfer and assignment or other documents
properly executed necessary to effect such transfer and such of the records or
copies thereof maintained by the retiring Trustee in the administration hereof
as may be requested by the successor Trustee, and shall thereupon be discharged
from all duties and responsibilities under this Indenture. The retiring Trustee
shall, nevertheless, retain a lien upon all Securities and moneys at the time
held by it hereunder to secure any amounts then due the retiring Trustee
hereunder;
(d) in case at any time the Trustee shall resign and no
successor Trustee shall have been appointed and have accepted appointment within
thirty days after notice of resignation has
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been received by the Depositors, the retiring Trustee may forthwith apply to a
court of competent jurisdiction for the appointment of a successor Trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Trustee; and
(e) any corporation into which any Trustee hereunder may be
merged or with which it may consolidate, or any corporation resulting from any
merger or consolidation to which any Trustee hereunder shall be a party, shall
be the successor Trustee under this Indenture without the execution or filing of
any paper, instrument or further act to be done on the part of the parties
hereto, anything herein, or in any agreement relating to such merger or
consolidation, by which any such Trustee may seek to retain certain powers,
rights and privileges theretofore obtaining for any period of time following
such merger or consolidation, to the contrary notwithstanding.
Section 6.6. Qualifications of Trustee: The Trustee, or any
successor thereof, shall be a corporation organized and doing business under the
laws of the United States or any state thereof, which is authorized under such
laws to exercise corporate trust powers and having at all times an aggregate
capital, surplus, and undivided profits of not less than $2,500,000.
ARTICLE 7
DEPOSITORS
Section 7.1. Succession: The covenants, provisions and
agreements herein contained shall in every case be binding upon any successor to
the business of the Depositors. In the event of the death, resignation or
withdrawal of any partner of Reich & Tang or of any successor Depositor which
may be a partnership, the deceased, resigning or withdrawing partner shall be
relieved of all further liability hereunder if at the time of such death,
resignation or withdrawal such Depositor maintains a net worth (determined in
accordance with generally accepted accounting principles) of at least
$1,000,000. In the event of an assignment by a Depositor to a successor
corporation or partnership as permitted by the next following sentence, such
Depositors and, if such Depositor is a partnership, its partners, shall be
relieved of all further liability under this Indenture. The Depositors may
transfer all or substantially all of their assets to a corporation or
partnership which carries on the business of that Depositor, if at the time of
such transfer such successor duly assumes all the obligations of said Depositor
under this Indenture and if at such time such successor maintains a net worth of
at least $1,000,000 (determined in accordance with generally accepted accounting
principles).
Section 7.2. Resignation of a Depositor: If at any time any
Depositor desires to resign its position as Depositors hereunder, it may resign
by delivering to the Trustee an instrument of resignation executed by such
Depositor. Such resignation shall become effective upon the expiration of thirty
days from the date on which such instrument is delivered to the Trustee. Upon
effective resignation hereunder, the resigning Depositor shall be discharged and
shall no longer be liable in any manner hereunder except as to acts or omissions
occurring prior
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to such resignation and any successor Depositor appointed by the Trustee
pursuant to Section 6.1(f) shall thereupon perform all duties and be entitled to
all rights under this Indenture. The successor Depositor shall not be under any
liability hereunder for occurrences or omissions prior to the execution of such
instrument.
Section 7.3. Liability of Depositors and Indemnification: (a)
No Depositor shall be under any liability to any other Depositor, the Trust or
the Unitholders for any action or for refraining from the taking of any action
in good faith pursuant to this Indenture, or for errors in judgment or for
depreciation or loss incurred by reason of the purchase or sale of any
Securities, provided, however, that this provision shall not protect the
Depositors against any liability to which it would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its obligations and
duties hereunder. The Depositors may rely in good faith on any paper, order,
notice, list, affidavit, receipt, evaluation, opinion, endorsement, assignment,
draft or any other document of any kind prima facie properly executed and
submitted to it by the Trustee, the Trustee's counsel or any other person for
any matters arising hereunder. The Depositors shall in no event be deemed to
have assumed or incurred any liability, duty, or obligation to any Unitholder or
the Trustee other than as expressly provided for herein.
(b) The Trust shall pay and hold the Depositors harmless from
and against any loss, liability or expense incurred in acting as Depositors of
the Trust other than by reason of willful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of their reckless
disregard of their obligations and duties hereunder, including the costs and
expenses of the defense against any claim or liability in the premises. The
Depositors shall not be under any obligation to appear in, prosecute or defend
any legal action which in their opinion may involve them in any expense or
liability, provided, however, that the Depositors may in their discretion
undertake any such action which they may deem necessary or desirable in respect
of this Indenture and the rights and duties of the parties hereto and the
interests of the Unitholders hereunder and, in such event, the legal expenses
and costs of any such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust and shall be paid directly by the
Trustee out of the Income and Principal Accounts as provided by Section 3.5.
(c) None of the provisions of this Indenture shall be deemed
to protect or purport to protect the Depositors against any liability to the
Trust or to the Unitholders to which the Depositors would otherwise be subject
by reason of willful misfeasance, bad faith or gross negligence in the
performance of their duties, or by reason of the Depositors' reckless disregard
of their obligations and duties under this Indenture.
(d) Notwithstanding the discharge of a Depositor of the Trust,
such Depositor shall continue to be fully liable in accordance with the
provisions hereof in respect of action taken or refrained from under the
Agreement by the Depositors before the date of such discharge or by the
undischarged Depositors before or after the date of such discharge, as fully and
to the same extent as if no discharge has occurred.
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Section 7.4. Compensation: The Depositors shall receive at the
times set forth in Section 3.5 as compensation for performing portfolio
supervisory services, such amount and for such periods as specified in Part II
of the Reference Trust Agreement. The computation of such compensation shall be
made on the basis of the largest number of units outstanding at any time during
the period for which such compensation is being computed. At no time, however,
will the total amount received by the Depositors for services rendered to all
series of the McLaughlin, Piven, Vogel Family of Trusts in any calendar year
exceed the aggregate cost to them of supplying such services in such year. Such
rate may be increased by the Trustee from time to time, without the consent or
approval of any Unitholder or the Depositors, by amounts not exceeding the
proportionate increase during the period from the date of such Reference Trust
Agreement to the date of any such increase, in consumer prices as published
either under the classification "All Services Less Rent" in the Consumer Price
Index published by the United States Department of Labor or, if such Index is no
longer published, a similar index.
In the event that any amount of the compensation paid to the
Depositors pursuant to Section 3.5 is found to be an improper charge against the
Trust, the Depositors shall reimburse the Trust in such amount. An improper
charge shall be established if a final judgment or order for reimbursement of
the Trust shall be rendered against the Depositors and such judgment or order
shall not be effectively stayed or a final settlement is established in which
the Depositors agree to reimburse the Trust for amounts paid to the Depositors
pursuant to this Section 7.4.
Section 7.5. Joint Position of Depositors; Power of Attorney:
(A) The Depositors shall be jointly and severally liable for the obligations
imposed upon and undertaken by the Depositors hereunder. At all times prior to
the termination of the Trust and while more than one Depositor shall be acting
hereunder, there shall be maintained on file with the Trustee a power of
attorney (which, initially, constitutes part of the Closing Memorandum delivered
by the Trustee and the Depositor in connection with the deposit made pursuant to
Section 2.1) executed in favor of one Depositor by the other Depositor
constituting and appointing the non-executing Depositor the trust and lawful
agent and attorney-in-fact of the executing Depositor to execute and deliver for
and on behalf of the executing Depositor any and all notices, opinions,
certificates, lists, demands, directions, instruments or other documents
provided or permitted to be executed or delivered by the Depositors hereunder or
to take any other action in respect hereof. Such power of attorney shall
continue in effect as to the executing Depositor until written notice of
revocation thereof has been given by such executing Depositor to the Trustee and
the non-executing Depositor. Prior to receipt of such notice of revocation, the
Trustee shall be entitled to rely conclusively upon such power of attorney as
authorizing the non-executing Depositor to give any notice, opinion,
certificate, list, demand, direction, instrument or other document provided for
or permitted hereunder or to take any other action in respect hereof on behalf
of the executing Depositor as to which such power of attorney is in effect.
(a) In the event that the power of attorney referred to in
paragraph (a) shall be revoked by written notice given by an executing Depositor
and it shall not be replaced within one Business Day by another power of
attorney conforming with the requirements of said paragraph,
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the Depositors shall be deemed to have been unable to reach agreement with
respect to an action to be taken jointly by them hereunder and thereupon the
Depositor which has revoked the power of attorney executed by it shall be
discharged hereunder upon the expiration of such one-day period and thereupon
the other Depositor shall act hereunder without the necessity of any other or
further action on the part of the Depositors or of the Trustee.
ARTICLE 8
RIGHTS OF UNITHOLDERS
Section 8.1. Beneficiaries of Trust: By the purchase and
acceptance or other lawful delivery and acceptance of any Unit the Unitholder
shall be deemed to be a beneficiary of the Trust created by this Indenture and
vested with all right, title and interest in the Trust to the extent of the Unit
or Units, subject to the terms and conditions of this Indenture.
Section 8.2. Rights, Terms and Conditions: In addition to the
other rights and powers set forth in the other provisions and conditions of this
Indenture the Unitholders shall have the following rights and powers and shall
be subject to the following terms and conditions:
(a) A Unitholder may at any time prior to the Evaluation Time
on the date the Trust is terminated tender his Unit or Units to the Trustee for
redemption in accordance with Section 5.2.
(b) The death or incapacity of any Unitholder shall not
operate to terminate this Indenture or the Trust, nor entitle his legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court of competent jurisdiction for a partition or winding up
of the Trust, nor otherwise affect the rights, obligations and liabilities of
the parties hereto or any of them. Each Unitholder expressly waives any right he
may have under any rule of law, or the provisions of any statute, or otherwise,
to require the Trustee at any time to account, in any manner other than as
expressly provided in this Indenture, in respect of the Securities or moneys
from time to time received, held and applied by the Trustee hereunder.
(c) No Unitholder shall have any right to vote or in any
manner otherwise control the operation and management of the Trust, or the
obligations of the parties hereto, nor shall anything herein set forth, be
construed so as to constitute the Unitholders from time to time as partners; nor
shall any Unitholder ever be under any liability to any third persons by reason
of any action taken by the parties to this Indenture for any other cause
whatsoever.
756654.2
-32-
<PAGE>
ARTICLE 9
ADDITIONAL COVENANTS; MISCELLANEOUS PROVISIONS
Section 9.1. Amendments: This Indenture may be amended from
time to time by the parties hereto or their respective successors, without the
consent of any of the Unitholders (a) to cure any ambiguity or to correct or
supplement any provision contained herein which may be defective or inconsistent
with any other provision contained herein; (b) to change any provision required
by Securities and Exchange Commission or any successor governmental agency to be
changed; or (c) to make such other provision in regard to matters or questions
arising hereunder as shall not adversely affect the interests of the
Unitholders; provided, however, that the parties hereto may not amend this
Indenture so as to (1) increase the number of Units above the number set forth
in Part II of the Reference Trust Agreement or such lesser amount as may be
outstanding at any time during the term of this Indenture, except as the result
of the deposit of Additional Securities as herein provided, or (2) except in the
manner permitted by the Indenture as in effect on the date of the first deposit
of Securities under a particular Indenture, permit the deposit or acquisition
hereunder of securities either in addition to or in replacement of any of the
Securities.
This Indenture may also be amended from time to time by the
Depositors and the Trustee (or the performance of any of the provisions or this
Agreement may be waived) with the expressed written consent of Unitholders
evidencing 66-2/3% of the Units at the time outstanding under the Indenture for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the rights
of the Unitholders; provided, however, that no such amendment or waiver shall
(i) reduce the interest in the Trust represented by such Units without the
consent of the Unitholder, (ii) reduce the aforesaid percentage of Units, the
holders of which are required to consent to any such amendment, without the
consent of the holders of all Units then outstanding or (iii) affect the duties,
obligations and responsibilities of the Trustee without its consent.
Promptly after the execution of any such amendment the Trustee
shall furnish written notification to all then outstanding Unitholders of the
substance of such amendment.
Section 9.2. Termination: Unless previously terminated
pursuant to the provisions hereof, this Indenture and the Trust created hereby
shall terminate as of the Evaluation Time on the Termination Date or upon the
date of the earlier maturity, redemption, sale or other disposition as the case
may be of the last Security held hereunder; provided that in no event shall the
Trust continue beyond the Mandatory Termination Date specified in the Prospectus
for the Trust.
Written notice of any termination shall be given by the
Trustee to each Unitholder at his address appearing on the registration books of
the Trustee.
756654.2
-33-
<PAGE>
In the event of any termination of the Trust prior to the
Termination Date, the Trustee shall proceed to liquidate the Securities then
held and make the payments and distributions provided for hereinafter in this
Section 9.2 except that in such event, the distribution to each Unitholder shall
be made in cash and shall be such Unitholder's pro rata interest in the balance
of the Principal and Income Account after the deductions herein provided.
In the event that the Trust terminates on the Termination
Date, the Trustee shall, not less than 20 days prior to the Termination Date,
send a written notice to each Unitholder of record owning, as of such date,
2,500 Units and whose interest in the Trust would entitle him to receive at
least one share of each Security. Such notice shall allow such Unitholder to
elect to redeem his Units at the net asset value on the Termination Date and to
receive, in partial payment of the Redemption Price per Unit, an in-kind
distribution of such Unitholder's pro rata share of the Securities, to the
extent of whole shares. The Trustee will honor duly executed requests for such
in-kind distribution received by the close of business on the Termination Date.
Unitholders who do not effectively request an in-kind distribution shall receive
their distribution upon termination in cash. Redemption of the Units of
Unitholders electing such in-kind distribution shall be made on the third
business day following the Termination Date and shall consist of (1) such
Unitholder's pro rata share of Securities (valued as of the Termination Date) to
the extent of whole shares and (2) cash equal to the balance of such
Unitholder's Redemption Price.
On the Termination Date, this Indenture and the Trust created
hereby shall terminate. In connection with such Termination, the Trustee shall
segregate such number of shares of Securities as shall be necessary to satisfy
in-kind distributions to Unitholders electing such distribution.
The balance of the Securities shall be sold over a period
described in the Prospectus of the Trust. The Depositors shall direct the
Trustee to sell the Securities in such manner as the Depositors determine will
produce the best price for the Trust. If so directed, the Trustee shall use the
services of the Depositors to effect such sales.
In the event that the Depositors direct the Trustee that
certain Securities will be sold to a new series of the Trust (a "New Series"),
the Depositors will certify to the Trustee, within five days of each sale from a
Trust to a New Series, (1) that the transaction is consistent with the policy of
both the Trust and the New Series, as recited in their respective registration
statements and reports filed under the Act, (2) the date of such transaction and
(3) the closing sales price on the national securities exchange for the sale
date of the securities subject to such sale. The Trustee will then countersign
the certificate, unless the Trustee disagrees with the closing sales price
listed on the certificate, whereupon the Trustee will promptly inform the
Depositors orally of any such disagreement and return the certificate within
five days to the Depositors with corrections duly noted. Upon the Depositors'
receipt of a corrected certificate, if the Depositors verify the corrected price
by reference to an independently published list of closing sales prices for the
date of the transactions, the Depositors will ensure that the price of Units of
the New Series, and distributions to holders of the Trust with regard to
redemption of their Units or termination of the
756654.2
-34-
<PAGE>
Trust, accurately reflect the corrected price. To the extent that the Depositors
disagree with the Trustee's corrected price, the Depositors and the Trustee will
jointly determine the correct sales price by reference to a mutually agreeable,
independently published list of closing sales prices for the date of the
transaction. The Depositors and Trustee will periodically review the procedures
for sales and make such changes as they deem necessary, consistent with Rule
17a-7(e)(2). Finally, records of the procedures and of each transaction will be
maintained as provided in Rule 17a-7(f).
Within a reasonable period of time after such termination and
liquidation of Securities, the Trustee shall:
(a) deduct from the Income Account or, to the extent that
funds are not available in such account, from the Principal Account and pay to
itself individually an amount equal to the sum of
(1) its accrued compensation for its ordinary recurring
services,
(2) any compensation due it for its extraordinary services,
and
(3) any other costs, expenses, advances or indemnities as
provided herein.
(b) deduct from the Income Account or, to the extent that
funds are not available in such account, from the Principal Account and pay
accrued and unpaid fees of counsel pursuant to Section 3.9;
(c) deduct from the Income Account or the Principal Account
any amounts which may be required to be deposited in the Reserve Account to
provide for payment of any applicable taxes or other governmental charges and
any other amounts which may be required to meet expenses incurred under this
Indenture;
(d) make a final distribution from the Trust of such
Unitholder's pro rata share of the cash balances of the Income and Principal
Accounts and, on the conditions set forth in Section 3.04 hereof, the balance of
the Reserve Account, if any;
(e) together with such distribution to each Unitholder as
provided for in (d), furnish to each such Unitholder a final distribution
statement as of the date of the computation of the amount distributable to
Unitholders, setting forth the data and information in substantially the form
and manner provided for in Section 3.6 hereof; and
(f) distribute to each Unitholder receiving the distribution
provided in paragraph (d) any dividends, which on the Termination Date were
declared, but not received, net of any and all expenses not previously deducted,
within a reasonable time of their receipt.
756654.2
-35-
<PAGE>
The amounts to be so distributed to each Unitholder shall be
that pro rata share of the balance of the total Income and Principal Accounts as
shall be represented by the Units held of record by such Unitholder.
The Trustee shall be under no liability with respect to moneys
held by it in the Income, Reserve and Principal Accounts upon termination except
to hold the same in trust without interest until disposed of in accordance with
the terms of this Indenture.
Upon the Depositors' request, the Trustee will include in the
written notice to be sent to Unitholders referred to in the fourth paragraph of
this section a form of election whereby Unitholders electing a cash distribution
may express interest in investing such cash distribution in units of another
series of McLaughlin, Piven, Vogel Family of Trusts (the "New Series"). The
Trustee will inform the Depositors of all Unitholders who, within the time
period specified in such notice, express such interest. The Depositors will
provide to such Unitholders any applicable sales material with respect to the
New Series and a form, acceptable to the Trustee, whereby a Unitholder may
appoint the Trustee the Unitholder's agent to apply the Unitholder's cash
distribution for the purchase of a unit or units of the New Series. Such form
will specify, among other things, the time by which it must be returned to the
Trustee in order to be effective and the manner in which such purchase shall be
made. This paragraph shall not obligate the Depositors to create any New Series
or to provide any such investment election.
Section 9.3. Construction: This Indenture is executed and
delivered in the State of New York, and all local laws or rules of construction
of such State shall govern the rights of the parties hereto and the Unitholders
and the interpretation of the provisions hereof.
Section 9.4. Registration of Units: The Depositors agree and
undertake to register the Units with the Securities and Exchange Commission or
other applicable governmental agency pursuant to applicable Federal or State
statutes, if such registration shall be required, and to do all things that may
be necessary or required to comply with this provision during the term of the
Trust created hereunder, and the Trustee shall incur no liability or be under
any obligation or expense in connection therewith.
Section 9.5. Written Notice: Any notice, demand, direction or
instruction to be given to the Depositors hereunder shall be in writing and
shall be duly given if mailed or delivered to the agent for the Depositors
designated pursuant to Section 7.5 as follows: if to McLaughlin, Piven, Vogel
Securities, Inc., 30 Wall Street, New York, New York 10005; if to Reich & Tang
Distributors, Inc., 600 Fifth Avenue, New York, New York 10020 or at such other
address as shall be specified by the Depositors to the Trustee in writing. Any
notice, demand, direction or instruction to be given to the Trustee shall be in
writing and shall be duly given if mailed or delivered to the Trustee at 4 New
York Plaza, New York, New York 10004, or such other address as shall be
specified to the Depositors by the Trustee in writing. Any notice to be given to
the Unitholders shall be duly given if mailed or delivered to each Unitholder at
the address of such holder appearing on the registration books of the Trustee.
756654.2
-36-
<PAGE>
Section 9.6. Severability: If any one or more of the
covenants, agreements, provisions or terms of this Indenture shall be held
contrary to any express provision of law or contrary to policy or express law,
though not expressly prohibited, or against public policy, or shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Indenture and shall in no way affect the validity or
enforceability of the other provisions of this Indenture or of the Units or the
rights of the holders thereof.
Section 9.7. Dissolution of Depositors Not to Terminate: The
dissolution of one or all of the Depositors from or for any cause whatsoever
shall not operate to terminate this Indenture or the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed as of the date first above written.
[Signatures and acknowledgments on separate pages.]
756654.2
-37-
<PAGE>
THE CHASE MANHATTAN BANK
Trustee
By: /s/ Rosalia A. Raviele
------------------------------
Vice President
STATE OF NEW YORK )
:ss.:
COUNTY OF NEW YORK )
On this 23rd day of September, 1998, before me personally
appeared Rosalia A. Raviele, to me known, who being by me duly sworn, said that
he is an Authorized Signator of The Chase Manhattan Bank, one of the
corporations described in and which executed the foregoing instrument; that he
knows the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation and that he signed his name thereto by like
authority.
/s/ Ada Iris Vega
------------------------
Notary Public
Ada Iris Vega
NOTARY PUBLIC, State of New York
No. 4864106
Qualified in New York County
Commission Expires 6/30/2000
756654.2
<PAGE>
REICH & TANG DISTRIBUTORS, INC.
Depositors
By: /s/ Peter DeMarco
------------------------------
Authorized Signator
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this 21st day of September, 1998, before me personally
appeared Peter DeMarco, to me known, who being by me duly sworn, said that he is
an Authorized Signator of the Depositors, one of the corporations described in
and which executed the foregoing instrument, and that he signed his name thereto
by authority of the Board of Directors of said corporation.
/s/ Teresa Scarfone
------------------------
Notary Public
Teresa Scarfone
NOTARY PUBLIC, State of New York
No. 31-4752576
Qualfied in New York County
Term Expires 8/31/00
756654.2
<PAGE>
MCLAUGHLIN, PIVEN, VOGEL SECURITIES, INC.
Depositor
By: /s/ Allan M. Vogel
-----------------------------
Authorized Signator
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK )
On this 18th day of September, 1998, before me personally
appeared Allan M. Vogel, to me known, who being by me duly sworn, said that he
is an Authorized Signator of McLaughlin, Piven, Vogel Securities, Inc. the
Depositor, one of the corporations described in and which executed the foregoing
instrument, and that he signed his name thereto by authority of the Board of
Directors of said corporation.
/s/ Carla Vogel
-----------------------------
Notary Public
Carla Vogel
Notary Public, State of New York
No. 02VO5019906
Qualified in Bronx County
Commission Expires November 1, 1999
756654.2
<PAGE>
BATTLE FOWLER LLP
A LIMITED LIABILITY PARTNERSHIP
75 East 55th Street
New York, New York 10022
(212) 856-7000
September 23, 1998
McLaughlin, Piven, Vogel Securities, Inc.
30 Wall Street
New York, New York 10005
Reich & Tang Distributors, Inc.
600 Fifth Avenue
New York, New York 10020
Re: McLaughlin, Piven, Vogel Family of Trusts, The Pinnacle Trust
-------------------------------------------------------------
Dear Sirs:
We have acted as special counsel for McLaughlin, Piven, Vogel
Securities, Inc. and Reich & Tang Distributors, Inc., as Depositors, Sponsors
and Principal Underwriters (collectively, the "Depositors") of McLaughlin,
Piven, Vogel Family of Trusts, The Pinnacle Trust (the "Trust") in connection
with the issuance by the Trust of units of fractional undivided interest (the
"Units") in the Trust. Pursuant to the Trust Agreements referred to below, the
Depositors have transferred to the Trust certain securities and contracts to
purchase certain securities together with an irrevocable letter of credit to be
held by the Trustee upon the terms and conditions set forth in the Trust
Agreements. (All securities to be acquired by the Trust are collectively
referred to as the "Securities").
756754.1
<PAGE>
2
McLaughlin, Piven, Vogel Securities, Inc.
Reich & Tang Distributors, Inc.
September 23, 1998
In connection with our representation, we have examined copies
of the following documents relating to the creation of the Trust and the
issuance and sale of the Units: (a) the Trust Indenture and Agreement and
related Reference Trust Agreement, each of even date herewith, relating to the
Trust (collectively the "Trust Agreements") among the Depositors and The Chase
Manhattan Bank, as Trustee; (b) the Notification of Registration on Form N-8A
and the Registration Statement on Form N-8B-2, as amended, relating to the
Trust, as filed with the Securities and Exchange Commission (the "Commission")
pursuant to the Investment Company Act of 1940 (the "1940 Act"); (c) the
Registration Statement on Form S-6 (Registration No. 333- 60915) filed with the
Commission pursuant to the Securities Act of 1933 (the "1933 Act"), and all
Amendments thereto (said Registration Statement, as amended by said Amendment(s)
being herein called the "Registration Statement"); (d) the proposed form of
final Prospectus (the "Prospectus") relating to the Units, which is expected to
be filed with the Commission this day; (e) certified resolutions of the Board of
Directors of Reich & Tang Distributors, Inc. and of the Board of Directors of
McLaughlin, Piven, Vogel Securities, Inc. authorizing the execution and delivery
by the Depositors of the Trust Agreements and the consummation of the
transactions contemplated thereby; (f) the Certificate of Incorporation of Reich
& Tang Distributors, Inc.; (g) the Certificate of Incorporation, the
Certificates of Amendment of the Certificate of Incorporation and the Bylaws of
McLaughlin, Piven, Vogel Securities, Inc.; and (h) a certificate of an
authorized officer of Reich & Tang Distributors, Inc. with respect to certain
factual matters contained therein.
We have examined the Order of Exemption from certain
provisions of Sections 11(a) and 11(c) of the 1940 Act, filed on behalf of Reich
& Tang Distributors L.P.(the predecessor to Reich & Tang Distributors, Inc.);
Equity Securities Trust (Series 1, Signature Series and Subsequent Series),
Mortgage Securities Trust (CMO Series 1 and Subsequent Series), Municipal
Securities Trust, Series 1 (and Subsequent Series) (including Insured Municipal
Securities Trust, Series 1 (and Subsequent Series and 5th Discount Series and
Subsequent Series)); New York Municipal Trust (Series 1 and Subsequent Series);
and A Corporate Trust (Series 1 and Subsequent Series) granted on October 9,
1996. In addition, we have examined the Order of Exemption from certain
provisions of Sections 2(a)(32), 2(a)(35), 22(d) and 26(a)(2) of the 1940 Act
and Rule 22C-1 thereunder, filed on behalf of Reich & Tang Distributors L.P.;
Equity Securities Trust; Mortgage Securities Trust; Municipal Securities Trust
(including Insured Municipal Securities Trust); New York Municipal Trust; A
Corporate Trust; Schwab Trusts; and all presently outstanding and subsequently
issued series of these trusts and all subsequently issued series of unit
investment trusts sponsored by Reich & Tang Distributors L.P. granted on October
29, 1997.
We have not reviewed the financial statements, compilation of
the Securities held by the Trust, or other financial or statistical data
contained in the Registration Statement and the
756754.1
<PAGE>
3
McLaughlin, Piven, Vogel Securities, Inc.
Reich & Tang Distributors, Inc.
September 23, 1998
Prospectus, as to which you have been furnished with the reports of the
accountants appearing in the Registration Statement and the Prospectus.
In addition, we have assumed the genuineness of all
agreements, instruments and documents submitted to us as originals and the
conformity to originals of all copies thereof submitted to us. We have also
assumed the genuineness of all signatures and the legal capacity of all persons
executing agreements, instruments and documents examined or relied upon by us.
Statements in this opinion as to the validity, binding effect
and enforceability of agreements, instruments and documents are subject: (i) to
limitations as to enforceability imposed by bankruptcy, reorganization,
moratorium, insolvency and other laws of general application relating to or
affecting the enforceability of creditors' rights, and (ii) to limitations under
equitable principles governing the availability of equitable remedies.
We are not admitted to the practice of law in any jurisdiction
but the State of New York and we do not hold ourselves out as experts in or
express any opinion as to the laws of other states or jurisdictions except as to
matters of Federal and Delaware corporate law.
Based exclusively on the foregoing, we are of the opinion that
under existing law:
(1) The Trust Agreements have been duly authorized and entered
into by an authorized officer of each of the Depositors and are a valid and
binding obligation of the Depositors in accordance with their respective terms.
(2) The registration of the Units on the registration books of
the Trust by the Trustee has been duly authorized by the Depositors in
accordance with the provisions of the Trust Agreements and issued for the
consideration contemplated therein, will constitute fractional undivided
interests in the Trust, will be entitled to the benefits of the Trust
Agreements, and will conform in all material respects to the description thereof
contained in the Prospectus. Upon payment of the consideration for the Units as
provided in the Trust Agreements and the Registration Statement, the Units will
be fully paid and non-assessable by the Trust.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of our name in the Registration
Statement and in the Prospectus under the headings "Tax Status" and "Legal
Opinions". We authorize you to deliver copies of this opinion to the Trustee and
the Trustee may rely on this opinion as fully and to the same extent as if it
had been addressed to it.
756754.1
<PAGE>
4
McLaughlin, Piven, Vogel Securities, Inc.
Reich & Tang Distributors, Inc.
September 23, 1998
This opinion is intended solely for the benefit of the
addressees and the Trustee in connection with the issuance of the Units of the
Trust and may not be relied upon in any other manner or by any other person
without our express written consent.
Very truly yours,
/s/
Battle Fowler LLP
756754.1
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND> The schedule contains summary financial
information extracted from the statement of
financial condition as of opening of business on
date of deposit and is qualified in its entirety
by reference to such financial statement.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> SEP-23-1998
<PERIOD-END> SEP-23-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 150,024
<INVESTMENTS-AT-VALUE> 150,024
<RECEIVABLES> 0
<ASSETS-OTHER> 208
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 150,232
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 208
<TOTAL-LIABILITIES> 208
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 15,567
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 150,024
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 0
<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 150,024
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 9.64
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
